RESTRICTED  WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/ACC/SPEC/CHN/1/Rev.7 
12 July 2001 
 
(01-3459) 
Working Party on the Accession of China Original:   English/ 
                  anglais/   inglés 
 
DRAFT REPORT OF THE WORKING PARTY 
ON THE ACCESSION OF CHINA TO THE WTO
1 
 
Revision  
  
 
  
 
 Groupe de travail de 
l'accession de la Chine 
 
PROJET DE RAPPORT DU GROUPE DE TRAVAIL DE 
L'ACCESSION DE LA CHINE À L'OMC
1 
 
Révision  
 
    
 
  
 
 Grupo de Trabajo sobre la 
Adhesión de China  
PROYECTO DE INFORME DEL GRUPO DE TRABAJO 
SOBRE LA ADHESIÓN DE CHINA A LA OMC
1 
 
Revisión  
     
                                                     
 
1 In English only./En anglais seulement./En inglés solamente. WT/ACC/SPEC/CHN/1/Rev.7 
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TABLE OF CONTENTS
 
I. INTRODUCTION ................................................................................................................ ....1 
1. Documentation Provided...................................................................................................... ....1 
2. Introductory  Statements ..................................................................................................... .....1 
II. ECONOMIC POLICIES.......................................................................................................... 4 
1. Non-Discrimination (includi ng national treatment) ..............................................................4 
2. Monetary and Fiscal Policy.................................................................................................. ....7 
3. Foreign Exchange and Payments ............................................................................................7 
4. Balance-of-Payments Measures.............................................................................................10 5. Investment Regime........................................................................................................... .......11 
6. State-Owned and State- Invested Enterprises.......................................................................12 
7. Pricing Policies ............................................................................................................ ............14 
8. Competition Policy.......................................................................................................... ........16 
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES ....................................17 
1. Structure and Powers of the Government ............................................................................17 
2. Authority of Sub-Central Governments ...............................................................................18 3. Uniform Administration  of the Trade Regime.....................................................................18 
4. Judicial Review ............................................................................................................. ..........20 
IV. POLICIES AFFECTIN G TRADE IN GOODS ...................................................................21 
A. TRADING
 RIGHTS .................................................................................................................21 
1. General..................................................................................................................... ................21 
2. Designated Trading.......................................................................................................... .......23 
B. IMPORT  REGULATION.........................................................................................................24 
1. Ordinary Customs Duties..................................................................................................... ..24 
2. Other Duties and Charges.................................................................................................... ..25 
3. Rules of Origin ............................................................................................................. ...........25 
4. Fees and Charges fo r Services Rendered..............................................................................26 
5. Application of Internal Taxes to Imports .............................................................................26 6. Tariff Exemptions ........................................................................................................... ........27 
7. Tariff Rate Quotas .......................................................................................................... ........29 
8. Quantitative Import Restrictions, including Prohibitions and Quotas..............................31 9. Import Licensing............................................................................................................ .........40 
10. Customs Valuation.......................................................................................................... ........42 
11. Other Customs Formalities.................................................................................................. ..43 
12. Preshipment  Inspection..................................................................................................... .....43 
13. Anti-Dumping, Countervailing Duties ..................................................................................44  WT/ACC/SPEC/CHN/1/Rev.7 
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14. Safeguards ................................................................................................................. ..............47 
C. EXPORT  REGULATIONS ......................................................................................................48 
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of 
Internal Taxes to Exports...................................................................................................... .48 
2. Export Licensing and Export Restrictions ...........................................................................48 
3. Export Subsidies ............................................................................................................ .........50 
D. INTERNAL  POLICIES  AFFECTING  FOREIGN  TRADE  IN GOODS..................................51 
1. Taxes and Charges Levied on Imports and Exports ...........................................................51 
2. Industrial Policy, including Subsidies ...................................................................................51 3. Technical Barriers to Trade................................................................................................. ..53 
4. Sanitary and Phytosanitary Measures ..................................................................................59 
5. Trade-Related Investment Measures ....................................................................................60 6. State Trading Entities...................................................................................................... .......61 
7. Special Economic Areas ...................................................................................................... ...63 
8. Government Procurement...................................................................................................... 66 
9. Transit..................................................................................................................... .................67 
10. Agricultural Policies ...................................................................................................... .........67 
11. Trade in Civil Aircraft.................................................................................................... ........69 
12. Textiles ................................................................................................................... ..................69 
13. Measures Maintained  Against China....................................................................................71 
14. Transitional Safeguards .................................................................................................... .....71 
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME.......................................74 
A. GENERAL..................................................................................................................... ...........74 
1. Overview .................................................................................................................... ..............74 
2. Responsible agencies for policy formulation and implementation .....................................80 3. Participation in international intellectual property agreements ........................................81 
4. Application of national and MFN treatment to foreign nationals......................................81 B. SUBSTANTIVE
 STANDARDS  OF PROTECTION,  INCLUDING  PROCEDURES  
FOR   THE  ACQUISITION  AND  MAINTENANCE  OF INTELLECTUAL  
PROPERTY  RIGHTS...............................................................................................................82 
1. Copyright protection ........................................................................................................ ......82 
2. Trademarks, includi ng service marks...................................................................................83 
3. Geographical indications, including appellations of origin.................................................84 
4. Industrial designs.......................................................................................................... ..........85 
5. Patents..................................................................................................................... .................85 
6. Plant variety protection.................................................................................................... ......89 
7. Layout designs of integrated circuits ....................................................................................89 WT/ACC/SPEC/CHN/1/Rev.7 
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8. Requirements on undisclosed information,  including trade secrets and test data............90 
C. MEASURES
 TO CONTROL  ABUSE  OF INTELLECTUAL  PROPERTY  RIGHTS.............91 
D. ENFORCEMENT................................................................................................................. ....91 
1. General..................................................................................................................... ................91 
2. Civil judicial procedures and remedies.................................................................................92 
3. Provisional measures ........................................................................................................ ......93 
4. Administrative procedures and remedies.............................................................................94 5. Special border measures..................................................................................................... ....95 
6. Criminal procedures......................................................................................................... ......96 
VI. POLICIES AFFECTING TRADE IN SERVICES..............................................................96 
1. Licensing ................................................................................................................... ...............96 
2. Choice of Partner ........................................................................................................... .......100 
3. Modification of the Equity Interest .....................................................................................101 
4. Prior Experience Requirement for Es tablishment in Insurance Sector ..........................101 
5. Inspectio n Services......................................................................................................... .......101 
6. Market Research............................................................................................................. ......101 
7. Legal Services.............................................................................................................. ..........102 
8. Minority Shareholder Rights...............................................................................................10 2 
9. Schedule of Specific Commitments .....................................................................................102 VII. OTHE R ISSUES .............................................................................................................. .....102 
1. Notifications............................................................................................................... ............102 
2. Special Trade Arrangements ...............................................................................................102  
3. Transparency ................................................................................................................ ........103 
VIII. CONC LUSIONS .............................................................................................................. .....105  WT/ACC/SPEC/CHN/1/Rev.7 
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 1 I. INTRODUCTION 
1. At its meeting on 4 March 1987, the Council established a Working Party to examine the 
request of the Government of the People's Re public of China ("China" ) (L/6017, submitted on 
10 July 1986) for resumption of its status as a GATT contracting party, and to submit to the Council 
recommendations which may include a Draft Protocol  on the Status of China.  In a communication 
dated 7 December 1995, the Government of Ch ina applied for accession to the Agreement 
Establishing the World Trade Organization ("WTO Ag reement") pursuant to Article XII of the WTO 
Agreement.  Following China's application and pur suant to the decision of the General Council on 
31 January 1995, the existing Working Party on China's Status as a GATT 1947 Contracting Party was transformed into a WTO Accession Working Pa rty, effective from 7 December 1995.  The terms 
of reference and the membership of the Working Party are reproduced in document 
WT/ACC/CHN/2/Rev.8.   
2. The Working Party on China's Status as a C ontracting Party met on 20 occasions between 
1987 and 1995 under the Chairmanship of H.E. Mr. Pierre-Louis Girard (Switzerland).  The Working 
Party on China's Accession to the WTO Agreement met on _________________ and 
_________________ under the same Chairman.  At meetings held on 9 November 2000, 
8 December 2000 and 17 January 2001, Mr. Paul-H enri Ravier, Deputy Director-General of the 
WTO, served as Acting Chairman. 
1. Documentation Provided 
3. The Working Party had before it, to serve as a basis for its discussion, a Memorandum on 
China's Foreign Trade Regime (L/6125) and questions  posed by members of the Working Party on the 
foreign trade regime of China, together with repli es of the Chinese authorities thereto.  In addition, the 
Government of China made available to the Work ing Party a substantial amount of documentation, 
which is listed in document WT/ACC/CHN/23.  
2. Introductory Statements 
4. In statements to the GATT 1947 Working Party and subsequently to the Working Party on 
China's Accession to the WTO, the representative of Ch ina stated that China's consistent efforts to 
resume its status as a contracting party to GATT and accession to the WTO were in line with its 
objective of economic reform to establish a socia list market economy as well as its basic national 
policy of opening to the outside world.  China believed that its WTO accession would increase its economic growth and enhance its economic and trade rela tions with WTO Members. WT/ACC/SPEC/CHN/1/Rev.7 
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5.  Members of the Working Party welcomed Chin a's accession to the WTO and considered that 
its accession would contribute to a strengthening of  the multilateral trading system, enhancing the 
universality of the WTO, bringing mutual benefits  to China and to the other Members of the WTO, 
and ensuring the steady development of the world economy. 
6. The representative of China said that China had a territory of 9.6 million square kilometres 
and, at the end of 1998 a popul ation of 1.25 billion.  Since 19 79, China had been progressively 
reforming its economic system, with the objective of  establishing and improving the socialist market 
economy.  The reform package introduced in 1 994, covering the banking, finance, taxation, 
investment, foreign exchange ("forex") and foreign trade sectors, had brought about major 
breakthroughs in China's socialist market economy.  State-owned enterprises had been reformed by a 
clear definition of property rights and responsibiliti es, a separation of government from enterprise, 
and scientific management.  A modern enterprise system had been created for the state-owned sector, 
and the latter was gradually getting on the track of growth through independent  operation, responsible 
for its own profits and losses.  A nation-wide unifi ed and open market system had been developed.  
An improved macroeconomic regulat ory system used indirect means and market forces to play a 
central role in economic management and the allocati on of resources.  A new tax and financial system 
was functioning effectively.  Financial policy had been separated from commercial operations of the 
central bank, which now focussed on financial regulation and supervisi on.  The exchange rate of the 
Chinese currency Renminbi (also "RMB") had been un ified and remained stable.  The Renminbi had 
been made convertible on current account.  Further liberalization of pricing policy had resulted in the 
majority of consumer and producer products being subject to market prices.  The market now played a 
much more significant role in boosting supply and meeting demand.  
7. The representative of China further noted that  as a result, in 1999, the Gross Domestic 
Product (GDP) of China totaled RMB 8.2054 trillion yuan (approximately US$ 990 billion).  In 1998, 
the net per capita income for rural residents was RMB 2,160 yuan (approximately US$ 260), and the 
per capita dispensable income for urban dwellers  was RMB 5,425 yuan (approximately US$ 655).  In 
recent years, foreign trade had grown substantially.   In 1999, total imports  and exports of goods 
reached US$ 360.65 billion, of which exports stood at US$ 194.93 billion, and imports, US$ 165.72 
billion. Exports from China in 1998 accounted for 3.4 per cent of the world's total.  
8. The representative of China stated that although important achievements have been made in 
its economic development, China was still a developi ng country and therefore should have the right to 
enjoy all the special and preferential treatment ac corded to developing country Members pursuant to 
the WTO Agreement.  WT/ACC/SPEC/CHN/1/Rev.7 
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 3 9. Some members of the Working Party indicated that because of the significant size, rapid 
growth and transitional nature of the Chinese ec onomy, a pragmatic approach should be taken in 
determining China's need for recourse to transitiona l periods and other special provisions in the WTO 
Agreement available to developing country WTO Me mbers.  Each agreement and China's situation 
should be carefully considered and specifically addr essed.  In this regard it was stressed that this 
pragmatic approach would be tailored to fit the specific cases of China's accession in a few areas, 
which were reflected in the relevant provisions set  forth in China's Draft Protocol and Working Party 
Report.  Noting the preceding statements, Members re iterated that all commitments taken by China in 
her accession process were solely those of China and would prejudice neith er existing rights and 
obligations of Members under the WTO Agreemen t nor on-going and future WTO negotiations and 
any other process of accession.  While noting the pr agmatic approach taken in China's case in a few 
areas, Members also recognized the importance of differential and more favourable treatment for 
developing countries embodied in the WTO Agreement. 
10. At the request of interested members of the Wo rking Party, the represen tative of China agreed 
that China would undertake bilateral market a ccess negotiations with respect to industrial and 
agricultural products, and initial commitments in services.  
11. Some members of the Working Party stated th at in addition to undertaking market access 
negotiations in goods and services, close attenti on should also be paid to China's multilateral 
commitments, in particular China's future oblig ations under the Multilateral Agreements on Trade in 
Goods and the General Agreement on Trade in Servi ces ("GATS").  This was of vital importance to 
ensure that China would be able to take full be nefit of WTO membership as quickly as possible, as 
well as to ensure that the value of any market access conditions undertaken were not adversely 
affected by inconsistent measures such as some types of non-tariff measures. 
12. The representative of China stated that the achievement of balance between rights and 
obligations was the basic principle in its negotiation of WTO accession. 
13. Some members of the Working Party expressed  concern over discrepancies in statistical 
information supplied by the Government of Ch ina on trade volume/value.  Members and China 
pursued this issue separatel y in an Informal Group of Experts on Export Statistics. 
14. The Working Party reviewed the foreign trad e regime of China.  The discussions and 
commitments resulting therefrom are contained in pa ragraphs … below and in the Draft Protocol of 
Accession ("Draft Protocol") and in China's Schedules annexed to the Draft Protocol.   WT/ACC/SPEC/CHN/1/Rev.7 
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II. ECONOMIC POLICIES 
1. Non-Discrimination (including national treatment) 
15. Some members expressed concern regarding the application of the principle of non-
discrimination in relation to foreign individuals a nd enterprises (whether wholly or partly foreign 
funded).  Those members stated that China shoul d enter a commitment to accord non-discriminatory 
treatment to all foreign individuals and enterpri ses and foreign-funded enterprises in respect of the 
procurement of inputs and goods and services neces sary for production of goods and the conditions 
under which their goods were produced, marketed or so ld, in the domestic market and for export.  In 
addition, those members said that China should also enter a commitment to guarantee non-discriminatory treatment in respect of the prices  and availability of goods and services supplied by 
national and sub-national authorities and public or state enterprises, in areas including transportation, 
energy, basic telecommunications, other utilities and factors of production. 
16. Some members of the Working Party also raised concerns over China's practice of 
conditioning or imposing restri ctions upon participation in the Chinese economy based upon the 
nationality of the entity concerned.  Those members in  particular raised concerns over such practices 
in relation to the pricing and pr ocurement of goods and services, a nd the distribution of import and 
export licences.  Members of the Working Party requ ested that China enter into a commitment not to 
condition such practices on the nationa lity of the entity concerned.   
17. In response, the representative of China emph asized the importance of the commitments that 
the government was undertaking on non-discriminati on.  The representative of China noted, however, 
that any commitment to provide non-discriminat ory treatment to Chinese enterprises, including 
foreign-funded enterprises, and foreign enterprises and individuals in China, would be subject to other 
provisions of the Draft Protocol and, in partic ular, would not prejudice China's rights under the 
GATS, China's Schedule of Specific Commitments or  commitments undertaken in relation to trade-
related investment measures. 
18. The representative of China further confirmed that  China would provide the same treatment to 
Chinese enterprises, including foreign-funded enterpri ses, and foreign enterprises and individuals in 
China.  China would eliminate dual pricing practic es as well as differences in treatment accorded to 
goods produced for sale in China in comparison to  those produced for export.  The Working Party 
took note of these commitments.   
19. The representative of China confirmed that, cons istent with China's rights and obligations 
under the WTO Agreement and the Draft Protocol, China would provide non-discriminatory treatment  WT/ACC/SPEC/CHN/1/Rev.7 
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 5 to all WTO Members, including Members of the WT O that were separate customs territories.  The 
Working Party took note of this commitment. 
20. Members of the Working Party expressed concer n about certain provisions of Chinese laws, 
regulations, administrative notices and other requirement s which could, directly or indirectly, result in 
less favourable treatment of imported products in  contravention of Article III of the General 
Agreement on Tariffs and Trade ("GATT 1994").  Such requirements included product registration 
and certification, internal taxation, price and prof it controls and all distinct forms of licensing for 
imports, and distribution or sale of imported goods.  Even where such requirements existed in relation 
to domestically produced goods, Members re-iterated that any de facto or de jure less favourable 
treatment of imported goods had to be eliminated in order to ensure full conformity with the principle 
of national treatment. 
21. Some members of the Working Party drew Chin a's attention to the variety of types of 
requirements which could contravene GATT Articl e III. Specific reference was made to the 
procedures, charges and conditions for granting of bu siness licences, whether to import, distribute, re-
sell or retail goods of non-Chinese origin.  Referenc e was also made to taxes and fiscal provisions 
whose impact depended, directly or indirectly, upon the Chinese or non-Chinese origin of the goods 
imported or traded.  Those members drew the atten tion of China to its obligation to ensure that 
product testing and certification requirements, incl uding procedures for in situ inspections, posed no 
greater burden – whether financial or practical - on goods of non-Chinese origin than on domestic 
goods.  Those members underlined that conformity  assessment procedures and standards, including 
safety and other compliance requirements, had to  respect the terms of the WTO Agreement on 
Technical Barriers to Trade ("TBT Agreement") as well as GATT Article III. 
22. The representative of China confirmed that the full respect of all laws, regulations and 
administrative requirements with the principle of  non-discrimination between domestically produced 
and imported products would be en sured and enforced by the date of China's accession to the WTO 
unless otherwise provided in the Draft Protocol or Dr aft Report.  The representative of China declared 
that, by accession, China would repeal and cease to a pply all such existing laws , regulations and other 
measures whose effect was inconsistent with WTO rules on national treatment.  This commitment was 
made in relation to final or interim laws, administrative measures, rules and notices, or any other form 
of stipulation or guideline. The Working Party took note of these commitments.  
23. In particular, the representative of China confir med that measures would be taken at national 
and subnational level, including repeal or modificat ion of legislation, to provide full GATT national WT/ACC/SPEC/CHN/1/Rev.7 
Page 6  
 
treatment in respect of laws, regulations and othe r measures applying to internal sale, offering for 
sale, purchase, transportation, distribution or use of the following: 
- After sales service
 (repair, maintenance and assistance), including any conditions applying to 
its provision, such as the MOFTEC third Decr ee of 6 September 1993 , imposing mandatory 
licensing procedures for the supply of after- sales service on various imported products; 
- Pharmaceutical  products, including regulations, noti ces and measures which subjected 
imported pharmaceuticals to distinct procedures and formulas for pricing and classification, 
or which set limits on profit margins attainab le and imports, or which created any other 
conditions regarding price or local content which could result in less favourable treatment of imported products; 
- Cigarettes
, including unification of the licensing requirements so that a single licence 
authorized the sale of all cigarettes, irrespectiv e of their country of origin, and elimination of 
any other restrictions regarding points of  sale for imported products, such as could be 
imposed by the China National Tobacco Corporation ("CNTC"). It was understood that in the case of cigarettes, China could avail itself of a tr ansitional period of tw o years to fully unify 
the licensing requirements.  Immediately upon accession, and during the two year transitional 
period, the number of retail outlets selling imported cigarettes would be substantially 
increased throughout the territory of China; 
- Spirits
, including requirements applied under Chin a's "Administrative Measures on Imported 
Spirits in the Domestic Market", and other provisions which imposed distinct criteria and 
licensing for the distribution and sale of different categories of spirits, including unification of the licensing requirements so that a single licence authorized the sale of all spirits irrespective 
of their country of origin; 
- Chemicals
, including registration procedures applicab le to imported products, such as those 
applied under China's "Environmental Control Regulations for Initial Imports of Chemical 
Products and Imports a nd Exports of Toxic Chemical Products"; 
- Boilers and pressure vessels , including certification and inspection procedures which had to 
be no less favourable than those applied to goods of Chinese origin, and fees applied by the 
relevant agencies or administrative bodies, whic h had to be equitable in relation to those 
chargeable for like products of domestic origin.  WT/ACC/SPEC/CHN/1/Rev.7 
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 7 The representative of China stated that in the cases of pharmaceuticals, spirits and chemicals cited 
above, China would reserve the right to use a tran sitional period of one year from the date of 
accession in order to amend or repeal the relevant le gislation.  The Working Party took note of these 
commitments.  
2. Monetary and Fiscal Policy 
24. The representative of China stated  that through the reform and opening up in the last two 
decades, China had established a fiscal management sy stem which was compatible with the principles 
of a market economy.  With respect to fiscal revenue , a taxation system with a value-added tax as the 
main element had been established since the taxa tion reform in 1994. With respect to fiscal 
expenditure, over recent years the government had, in line with the public fiscal requirement generally 
exercised by market economies, strengthened its adju stment of the structure of expenditure and given 
priority to public needs so as to ensure  the normal operations of the government. 
25. The representative of China further stated that in  recent years, while pursuing proactive fiscal 
policy, China had implemented proper monetary poli cy and had taken a series of adjusting and reform 
measures which included lowering the interest rate for loans from financial institutions, improving the 
system of required deposit reserves and lowering th e ratio of required reserves, positively increasing 
the input of base money and encouraging th e commercial banks to expand their credit. 
26. In respect of future fiscal policy, the Governme nt of China would further improve its taxation 
system and would continue to improve the effici ency of fiscal expenditure through implementing 
reform measures such as sectoral budget, centralized  payment by the national treasury and zero base 
budget, as well as improving management of fiscal expenditure. With respect to future monetary policy, the central bank would continue to pursue a prudent policy, maintain the stability of RMB, 
promote interest rate liberalization and establish a modern commercial banking system. 
3. Foreign Exchange and Payments 
27. Some members of the Working Party raised concerns about China's use of forex controls to 
regulate the level and composition of trade in goods a nd services.  In response, the representative of 
China stated that its system of forex had undergon e rapid change and that China was now a member 
of the International Monetary Fund ("IMF").  Sign ificant moves had been taken to reform, rationalize 
and liberalize the forex market.  The practice of mu ltiple exchange rates in swap centres had been 
abolished.  China had already unified its forex market  and removed many of the restrictions on the use 
of forex.  WT/ACC/SPEC/CHN/1/Rev.7 
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28. Outlining the historical development of China' s forex reform, the representative of China 
stated that the purpose of China's forex reform wa s to reduce administrative intervention and increase 
the role of market forces.  From 1979, a forex rete ntion system was applied in China, although forex 
swap was gradually developing.  In early 1994, o fficial RMB exchange rates were unified with the 
market rates. The banking exchange system was adopted and a nationwide unified inter-bank forex 
market was established, with c onditional convertibility of the Renm inbi on current accounts.  Since 
1996, foreign investment enterprises ("FIEs") were also permitted into the banking exchange system, 
and the remaining exchange restrictions on curre nt accounts were eliminated. On 1 December 1996, 
China had formally accepted the obligations of Ar ticle VIII of the IMF's Articles of Agreement, 
removing exchange restrictions on current account  transactions.  Accordingly, since then the 
Renminbi had been fully convertible on current acc ounts.  It was confirmed by the IMF in its Staff 
Report on Article IV Consultations with China in 2000 that China had no existing forex restrictions 
for current account transactions. 
29. The representative of China stated that th e State Administration of Foreign Exchange 
("SAFE") was under the auspices of the People's Bank of China ("PBC"), and was the administrative 
organ empowered to regulate forex.  Its main f unctions were to monitor and advise on balance-of-
payments and forex matters.  SAFE was also require d to draft appropriate regulations and monitor 
compliance.  He further noted that domestic and fo reign banks, and financial institutions could engage 
in forex business, with the approval of the PBC.  
30. In response to requests from members of the Working Party for further information, the 
representative of China added that for forex pa yments under current accounts, domestic entities 
(including FIEs) could purchase forex at market exch ange rates from designated banks or debit their 
forex accounts directly upon presentation of valid do cuments.  For payments such as pre-payment, 
commission, etc., exceeding the proportion or lim it, the entities could also purchase forex from the 
banks upon meeting the bona fide test administered  by SAFE.  Forex for personal use by individuals 
could be purchased directly from the banks upon pr esentation of valid documents (within a specified 
limit).  For amounts exceeding the limit, individuals able to prove their need for additional forex 
could purchase it from the banks.  He also noted that current account forex receipts owned by 
domestic entities had to be repatriated into China, so me of which could be retained and some sold to 
the designated banks at market rates.  A verifica tion system for forex payment (imports) and forex 
receipt (exports) had also been adopted. 
31. Concerning the exchange rate regime in partic ular, the representative of China noted that 
since the unification of exchange rates on 1 Janua ry 1994, China had adopted a single and managed 
floating exchange rate regime based on supply an d demand.  PBC published the reference rates of  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 9 
 
 
 
 9 RMB against the US dollar, the HK dollar and Japan ese yen based on the weighted average prices of 
forex transactions at the interbank forex market during the previous day's trading. The buying and 
selling rates of RMB against the US dollar on the in ter-bank forex market could fluctuate within 0.3 
per cent of the reference rate. For the HK dollar and Japanese yen, the permitted range was 1 per cent.   
Designated forex banks could deal w ith their clients at an agreed rate.  Under such contracts the 
exchange rate of the US dollar was required to be within 0.15 per cent of the reference rate, whereas 
for the HK dollar and Japanese yen, the permitted range  was 1 per cent.  The exchange rates for other 
foreign currencies were based on the rates of RMB against the US dollar and cross-exchange rates of other foreign currency on the international mark et. The permitted margin between the buying and 
selling rate could not exceed 0.5 per cent. 
32. The representative of China further noted that since 1 January 1994, designated forex banks 
had become major participants in forex transactions .  On 1 April 1994, the China Foreign Exchange 
Trading System was set up in Shanghai and branches were opened in dozens of cities.  The Shanghai 
Foreign Exchange Trading System had adopted a system of membership , respective quotation, 
concentrated trading and forex market settlement .  Designated forex banks  dealt on the inter-bank 
market according to the turnover position limit on ba nking exchange stipulated by SAFE and covered 
the position on the market. Depending on its macro- economic objectives, the PBC could intervene in 
the forex open market in order to regulate market su pply and demand, and maintain the stability of the 
RMB exchange rate.  
33. The representative of China noted that since 1 July 1996, forex dealing of the FIEs was 
carried out through the banking exchange system.  He further noted that to encourage foreign direct investment, China had granted national treatment to FIEs in exchange administration.  Accordingly, 
FIEs were allowed to open and hold forex settle ment accounts to retain receipts under current 
accounts, up to a maximum amount stipulated by SA FE.  Receipts in excess of the maximum amount 
were required to be sold to desi gnated forex banks.  No restrictions  were maintained on the payment 
and transfer of current transactions by FIEs, a nd FIEs could purchase fore x from designated forex 
banks or debit their forex accounts for any paym ent under current transactions, upon the presentation 
of valid documents to the designa ted forex banks or SAFE for the bona  fide test.  FIEs could also 
open forex accounts to hold foreign-invested cap ital, and they could sell from these accounts upon the 
approval of SAFE.  FIEs could also borrow fore x directly from domestic and overseas banks, but 
were required to register with SAFE afterwards, and obtain approval by SAFE for debt repayment and 
services.  FIEs could make payments from their fo rex accounts or in forex purchased from designated 
forex banks after liquidatio n, upon approval by SAFE according to law.   WT/ACC/SPEC/CHN/1/Rev.7 
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34. The representative of China further noted that  the laws and regulations mentioned above 
were:  Law of the People's Republic  of China on Chinese-Foreign Equi ty Joint Venture;  Law of the 
People's Republic of China on Chinese-Foreign Cont ractual Joint Venture;  Regulations on the 
Exchange System of the People's Republic of China;  and Regulations on the Sale and Purchase of and 
Payment in Foreign Exchange.  
35. Some members of the Working Party stated that China should undertake appropriate 
commitments on its reform of forex. 
36. In response, the representative of China stated  that China would implement its obligations 
with respect to forex matters in accordance with the provisions of the WTO Agreement and related 
declarations and decisions that concerned the IM F.  The representative further confirmed China's 
acceptance of the obligations of Article VIII of the IMF's Articles of Agreement, which provided that 
"no member shall, without the approval of the F und, impose restrictions on the making of payments 
and transfers for current international transactions ".  He stated that, in accordance with these 
obligations, and unless otherwise provided for in th e IMF's Articles of Agreement, China would not 
resort to any laws, regulations or other measu res, including any requirements with respect to 
contractual terms, that would restrict the availa bility to any individual or enterprise of forex for 
current international transactions within its customs territory to an amount related to the forex inflows 
attributable to that individual or enterprise.  He stated, moreover, that China would not subject 
individual requests for forex for the making of pa yments and transfers for current international 
transactions, including the issuance of credit or cred it guarantees for current international transactions 
(e.g., letters of credit; direct loans; guarantees of loans by financial institutions or other entities; or 
insurance of financing by financial institutions or ot her entities), to any form of approval or restriction 
(including a requirement for the presentation of an  invoice), in a manner inconsistent with its 
obligations under the IMF's Articles of Agreemen t.  The Working Party took note of these 
commitments.  
37. In addition, the representative of China stat ed that China would provide information on 
exchange measures as required under Article VIII, S ection 5 of the IMF's Articles of Agreement, and 
such other information on its exchange measur es as was deemed necessary in the context of the 
transitional review mechanism.  The Working Party took note of this commitment.  
4. Balance-of-Payments Measures 
38. Some members of the Working Party stated that China should apply balance-of-payments 
("BOPs") measures only under the circumstances provided for in the WTO Agreement and not as a 
justification for imposition of restrictions on imports  for other protectionist purposes.  Those members  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 11 
 
 
 
 11 stated that measures taken for BOPs reasons should have the least trade disruptive effect possible and 
should be limited to temporary import surcharges, import deposit requirements or other equivalent 
price-based trade measures, and those measures shou ld not be used to provide import protection for 
specific sectors, industries or products. 
39. Those members further stated that any such  measures should be notified pursuant to the 
Understanding on the Balance-of-Payments Provi sions of the GATT 1994 ("BOPs Understanding") 
and to the General Council not later than the im position of the measures, together with a time 
schedule for their elimination and a programme of external and domestic policy measures to be used 
to restore BOPs equilibrium.  Those members also stat ed that following deposit of such a notification, 
the Committee on Balance-of-Payments Restrictions  ("BOPs Committee") should meet to examine 
the notification.  It was noted that paragraph 4 of the BOPs Understanding would be available to 
China in the case of "essential products".  Some members stated that the BOPs Committee should 
review the operation of any BOPs measures taken by China, if so  requested by China or a WTO 
Member. 
40. Some other members considered that, in resp ect of measures taken for BOP purposes, China 
should enjoy the same rights as those accorded to  other developing country WTO Members, as 
provided in GATT Article XVIII:B and the BOPs Understanding.   
41. In response, the representative of  China stated that China considered that it should have the 
right to make full use of WTO BOPs provisions to protect, if necessary, its BOPs situation.  He 
confirmed that China would fully comply with the provisions of the GATT 1994 and the BOPs 
Understanding.  Further to such compliance, China would give preference to application of price-
based measures as set forth in the BOPs Understanding.   If China resorted to measures that were not 
price-based, it would transform such measures in to price-based measures as soon as possible.  Any 
measures taken would be maintained strictly in accordance with the GATT 1994 and the BOPs 
Understanding, and would not exceed what was necessar y to address the particular BOPs situation.  
The representative of China also confirmed that measures taken for BOPs reasons would only be 
applied to control the general leve l of imports and not to protect specific sectors or industries.  The 
Working Party took note of these commitments. 
5. Investment Regime 
42. The representative of China stat ed that since the inception of  the reform and opening up 
policy in the late 1970's, China had carried out a series of reforms of its investment regime. The WT/ACC/SPEC/CHN/1/Rev.7 
Page 12  
 
highly centralized investment administration under the planned economy had been progressively 
transformed into a new pattern of diversification of investors, multi-channelling of capital sources and 
diversification of investment modalities. The govern ment encouraged foreig n investment into the 
Chinese market and had uninterruptedly opened and expanded the scope for investment. At the same 
time, the Government of China also encouraged  the development of the non-state-operated economy 
and was speeding up the opening of areas for non-stat e investment. With China's programme in the 
establishment of its market economy, the construc tion projects of various enterprises utilizing free 
capital and financed by the credit of the enterprise would be fully subject to the decision-making of 
the enterprise concerned and at their own risk. Th e commercial banks' credit activities to all kinds of 
investors would be based on their own evaluation and decision-making, and would be at their own 
risk.  The business activities of interm ediate investment agencies would be fully subject to the market 
and would provide service at the instruction of the investors. These agencies would break up their 
administrative relations with government agen cies and the service activities financed by the 
government would also be subject to the terms a nd conditions agreed in the contracts concerned. 
43. The representative of China further stated that  China had promulgated investment guidelines 
and that the Government of China was in the pr ocess of revising and completing these guidelines.  
Responding to concerns raised by certain members of the Working Party, he confirmed that these 
investment guidelines and their implementation would be in full conformity with the WTO 
Agreement.  The Working Party took  note of this commitment.   
6. State-Owned and State-Invested Enterprises 
44. The representative of China stated that th e state-owned enterprises of China basically 
operated in accordance with rules of market econom y.  The government would no longer directly 
administer the human, finance and material res ources, and operational activities such as production, 
supply and marketing.  The prices of commodities produced by state-owned enterprises were decided 
by the market and resources in operational areas we re fundamentally allocated by the market.  The 
state-owned banks had been commercialized an d lending to state-owned enterprises took place 
exclusively under market conditions.  China was fu rthering its reform of state-owned enterprises and 
establishing a modern enterprise system. 
45. In light of the role that state-owned and state- invested enterprises played in China's economy, 
some members of the Working Party expressed con cerns about the continuing governmental influence 
and guidance of the decisions and activities of such  enterprises relating to the purchase and sale of 
goods and services. Such purchases and sales should be based solely on commercial considerations, 
without any governmental influence or application of discriminatory measures.  In addition, those  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 13 
 
 
 
 13 members indicated the need for Chin a to clarify its understanding of the types of activities that would 
not come within the scope of Article III:8(a) of  GATT 1994.  For example, any measure relating to 
state-owned and state-invested enterprises importing materials and machinery used in the assembly of 
goods, which were then exported or otherwise made available for commercial sale or use or for non-
governmental purposes, would not be considered to be  a measure relating to government procurement. 
46. The representative of China emphasized the e volving nature of Ch ina's economy and the 
significant role of FIEs and the private sector in the economy.  Given the increasing need and 
desirability of competing with private enterprises in  the market, decisions by state-owned and state-
invested enterprises had to be  based on commercial considerations as provided in the WTO 
Agreement.    
47. The representative of China further confirmed th at China would ensure that all state-owned 
and state-invested enterprises would make pur chases and sales based solely on commercial 
considerations, e.g. price, quality, marketability an d availability, and that the enterprises of other 
WTO Members would have an adequate opportunity  to compete for sales to and purchases from these 
enterprises on non-discriminatory terms and conditions.  In addition, the Government of China would 
not influence, directly or indirectly, commercial deci sions on the part of state-owned or state-invested 
enterprises, including the quantity, value or country of origin of any goods purchased or sold, except 
in a manner consistent with the WTO Agreemen t.  The Working Party took note of these 
commitments.   
48. The representative of China confirmed that, w ithout prejudice to China's rights in future 
negotiations in the Government Pr ocurement Agreement, all laws, regulations and measures relating 
to the procurement by state-owned and state- invested enterprises of goods and services for 
commercial sale, production of goods or supply of services for commercial sale, or for non-governmental purposes would not be considered to be laws, regulations and measures relating to 
government procurement. Thus, such purchases or sales would be subject to the provisions of 
Articles II, XVI and XVII of the GATS and Article III of the GATT 1994.  The Working Party took note of this commitment.  
49. Certain members of the Working Party expressed concern about laws, regulations and 
measures in China affecting the transfer of technolog y, in particular in the context of investment 
decisions.  Moreover, these members expressed con cern about measures conditioning the receipt of 
benefits, including investment a pprovals, upon technology transfer.  In their view, the terms and 
conditions of technology transfer, particularly in the context of an investment, should be agreed WT/ACC/SPEC/CHN/1/Rev.7 
Page 14  
 
between the parties to the investment without go vernment interference.  The government should not, 
for example, condition investment approval upon technology transfer.  
50. The representative of China confirmed that Chin a would only impose, apply or enforce laws, 
regulations or measures relating to the transfer  of technology, production processes, or other 
proprietary knowledge to an individual or enterprise in  its territory that were not inconsistent with the 
WTO Agreement on Trade-Related Aspects of Intell ectual Property Rights ("TRIPS Agreement") and 
the Agreement on Trade-Related I nvestment Measures ("TRIMs Agreem ent").  China confirmed that 
the terms and conditions of technology transfer, production processes or othe r proprietary knowledge, 
particularly in the context of an investment, woul d only require agreement between the parties to the 
investment.  The Working Party took note of these commitments. 
7. Pricing Policies  
51. Some members of the Working Party noted th at China had made extensive use of price 
controls, for example in the agricultural sector .  Those members request ed that China undertake 
specific commitments concerning its system of state pr icing.  In particular, those members stated that 
China should allow prices for traded goods and servi ces in every sector to be determined by market 
forces, and multi-tier pricing practices for such goods and services should be eliminated.  Those 
members noted, however, that Chin a expected to maintain price controls on the goods and services 
listed in Annex 4 to the Draft Protocol, and stated th at any such controls should be maintained in a 
manner consistent with the WTO Agreement, in pa rticular Article III of the GATT 1994 and Annex 2, 
paragraphs 3 and 4, of the Agreement on Agri culture.  Those members noted that except in 
exceptional circumstances, and subject to notificati on to the WTO Secretariat, price controls should 
not be extended to goods or services beyond those list ed in Annex 4, and China should make its best 
efforts to reduce and eliminate those controls.  They  also asked that China publish in the appropriate 
official journal the list of goods and services subject to state pricing and changes thereto.  
52. Members expressed the view that price controls and state pricing in China also encompassed 
"guidance pricing" and  regulation of the range of profits that enterprises could enjoy.  Such policies 
and practices would also be subject to China's comm itments.  In their view, price controls should be 
adopted only in extraordinary circumstances and should be removed as soon as the circumstances 
justifying their adoption were addressed. 
53. The representative of China said that China curre ntly applied a mechanism of market-based 
pricing under macro-economic adjustment.  He noted that national treatment wa s applied in the areas 
of government pricing for all imported goods.  There were presently three types of prices:  government price, government guidance price and ma rket-regulated price.  The government price was  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 15 
 
 
 
 15 set by price administration authorities and could not be changed without the approval of these 
authorities. Products and services subject to government  pricing were those having a direct bearing on 
the national economy and the basic needs of the people's livelihood, including those products that 
were scarce in China.   
54. [The representative of China stat ed that when the government prices or government guidance 
prices needed to be adjusted or reset, the agencies concerned should apply to the competent pricing 
authorities for that purpose. He further stated th at in accordance with the Pricing Law of China, a 
system of public hearing on resetting of governme nt price and government guidance price had been 
established. Under this system, the competent pr icing authorities would hold public hearings and 
invite all parties concerned to comment and debate  on the necessity and impact of price adjustment. 
This mechanism had helped to significantly impr ove the rationality and transparency of government 
pricing.  All enterprises in China, regardless of thei r nature and ownership, were free to participate in 
such hearings and voice their opinions and concerns which would be taken into consideration by the 
competent pricing authorities. Meanwhile, governme nt pricing was product- or service-specific, 
regardless of the ownership of enterprises concerne d.  All the enterprises and individuals in China 
enjoyed the same treatment in the process of government pricing.]  
55. He added that the government guidance price mechan ism was a more flexible form of pricing.  
The price administration authorities stipulated either a basic price or floating ranges. The floating range of guidance pricing was generally 5 per cent to 15 per cent.  Enterprises could, within the limits 
of the guidance and taking into account the market situation, make their own decisions on prices.  
With market-regulated prices, enterprises were free to set prices in accordance with supply and 
demand to the extent permitted by generally appli cable laws, regulations and policies concerning 
prices.   
56. The representative of China stated that in fo rmulating government prices and government 
guidance prices, the following criteria were taken in to account:  normal production costs, supply and 
demand situation, relevant government policies and prices of related products. When fixing prices of 
consumer goods, consideration was given to the lim its of consumers' purchasing power.  He noted 
that due to the continued reform of China's price system, the share of government prices had dropped 
substantially and that of market-regulated prices had increased;  of social retailing products, the share 
of government prices was about 4 per cent, that of  government guidance prices 1.2 per cent, and that 
of market-regulated prices 94.7 per cent.  For agri cultural products, the share of government prices 
was 9.1 per cent, government guidance prices 7.1 pe r cent, and market-regulated 83.3 per cent.  For 
production inputs, the share of government prices was 9.6 per cent, that of government guidance WT/ACC/SPEC/CHN/1/Rev.7 
Page 16  
 
prices 4.4 per cent, and market-regulated prices 86 per cent.  The share of directly government-
controlled prices had been much reduced.  The Gove rnment of China considered that China's price 
system was becoming increasingly rationalized, creating a relatively fair marketplace for all 
enterprises to compete on an equal footing. 
57. The representative of China recalled that Annex 4 of the Draft Protocol contained a 
comprehensive listing of all products and services presently subject to government guidance pricing 
and government pricing. 
58. The representative of China confirmed that it w ould publish in the official journal the list of 
goods and services subject to state pricing and changes thereto, together with price-setting mechanisms and policies.  The Working Party took note of these commitments. 
59. The representative of China confirmed that the official journal providing price information 
was the Pricing Monthly of the People's Republic of  China, published in Beijing.  It was a monthly 
magazine listing all products and services priced by th e State.  He further stated that China would 
continue to further its price reform, adjusting the catalogue subject to state pricing and further 
liberalize its pricing policies. 
60. The representative of China further confirmed th at price controls would not be used for 
purposes of affording protection to domestic industries or services providers.  The Working Party took note of this commitment. 
61. In addition, the representative of China confir med that China would apply its current price 
controls and any other price controls from the en try into force of the Draft Protocol in a WTO-
consistent fashion, and would ta ke account of the interests of exporting WTO Members as provided 
for in Article III:9 of the GATT 1994.  The Working Party took note of these commitments. 
8. Competition Policy 
62. The representative of China noted that the Gove rnment of China encouraged fair competition 
and was against acts of unfair competition of all ki nds. The Law of the People's Republic of China on 
Combating Unfair Competition, promulgate d on 2 September 1992 and implemented on 
1 December 1992, was the basic law to maintain the order of competition in the market. In addition, 
the Price Law, the Law on Tendering and Bidding, th e Criminal Law and other relevant laws also 
contained provisions on anti-m onopoly and unfair competition. Chin a was now formulating the Law 
on Anti-Monopoly.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 17 
 
 
 
 17 III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES 
1. Structure and Powers of the Government 
63. The representative of China informed members of  the Working Party that in accordance with 
the Constitution and the Law on Legislation of the People's Republic of China, the National People's 
Congress was the highest organ of state power.  Its permanent body was its Standing Committee.  The National People's Congress and its Standing Committee exercised the legislative power of the State.  
They had the power to formulate the Constitution and laws.  The State Council, i.e., the Central 
People's Government of China, was the executive body of the highest organ of state power.  The State 
Council, in accordance with the Constitution and relevant laws, was entrusted with the power to 
formulate administrative regulations.  The ministri es, commissions and other competent departments 
(hereinafter referred to as "departments'') of the State Council could issue departmental rules within 
the jurisdiction of their respective departments a nd in accordance with the laws and administrative 
regulations.  The provincial people's congresses and their standing committees could adopt local regulations.  The provincial governments had the pow er to make local government rules.  The 
National People's Congress and its Standing Comm ittee had the power to annul the administrative 
regulations that contradicted the Constitution and laws as well as the local regulations that 
contradicted the Constitution, laws and administra tive regulations.  The State Council had the power 
to annul departmental rules and local government ru les that were inconsistent with the Constitution, 
laws or administrative regulations.  The Governme nt of China believed that these features of the 
Chinese legal system would ensure an effective a nd uniform implementation of the obligations after 
China's accession. 
64. The representative of China stated that Ch ina had been consistently performing its 
international treaty obligations in good faith.  According to the Constitution and the Law on the 
Procedures of Conclusion of Treaties, the WTO Ag reement fell within the category of "important 
international agreements" subject to the ratifi cation by the Standing Committee of the National 
People's Congress.  China would ensure that its laws  and regulations pertaining to or affecting trade 
were in conformity with the WTO Agreement and with its commitments so as to fully perform its 
international obligations.  For this purpose, China had commenced a plan to systematically revise its 
relevant domestic laws.  Therefore, the WTO Ag reement would be implemented by China in an 
effective and uniform manner through revising its existing domestic laws and enacting new ones fully 
in compliance with the WTO Agreement. 
 WT/ACC/SPEC/CHN/1/Rev.7 
Page 18  
 
2. Authority of Sub-Central Governments 
65. Several members of the Working Party raised  concerns about the continued presence of 
multiple trade instruments used by different levels  of government within China.  Those members 
considered that this situation resulted in a lesseni ng of the security and pred ictability of access to the 
Chinese market. These Members raised specific concerns regarding the authority of sub-national governments in the areas of fiscal, financial and budgetary activities, specifically with respect to 
subsidies, taxation, trade policy and other issu es covered by the WTO Agreement and the Draft 
Protocol.  In addition, some members expressed c oncerns about whether the central government could 
effectively ensure that trade-related measures intr oduced at the sub-national level would conform to 
China's commitments in the WTO Agreement and the Draft Protocol. 
66. The representative of China confirmed that administrative regulations, departmental rules and 
other central government measures would be prom ulgated in a timely manner so that China's 
commitments would be fully implemented within the relevant time frames.  If administrative 
regulations, departmental rules or other measures were not in place within such time frames, authorities would still honour China's obligations un der the WTO Agreement and Draft Protocol.  The 
representative of China further confirmed that th e central government would undertake in a timely 
manner to revise or annul administrative regulations or departmental rules if they were inconsistent 
with China's obligations under the WTO and Draft Protocol.  The Working Party took note of these 
commitments.   
3. Uniform Administration of the Trade Regime 
67. Members of the Working Party stated that it shou ld be made clear that China would apply the 
requirements of the WTO Agreement and its other accession commitments throughout China's entire 
customs territory, including border trade regions, minority autonomous areas, Special Economic Zones ("SEZs"), open coastal cities, economic and technical development zones and other special 
economic areas and at all levels of government. 
68. The representative of China stated that sub-national governments had no autonomous 
authority over issues of trade policy to the extent that they were related to the WTO Agreement and 
the Draft Protocol.  The representative of China confirmed that China would in a timely manner annul 
local regulations, government rules and other local  measures that were inconsistent with China's 
obligations.  The representative of China further c onfirmed that the central government would ensure 
that China's laws, regulations and other measures, including those of local governments at the sub-
national level, conformed to China's obligations undertaken in the WTO Agreement and the Draft 
Protocol.  The Working Party took note of these commitments.    WT/ACC/SPEC/CHN/1/Rev.7 
 Page 19 
 
 
 
 19 69. Those members of the Working Party also rai sed concerns about whether China's central 
government would be sufficiently informed about  non-uniform practices and would take necessary 
enforcement actions.  Those memb ers stated that China should establish a mechanism by which any 
concerned person could bring to the attention of the central government cases of non-uniform 
application of the trade regime and receive prompt and effective action to address situations in which 
non-uniform application was established.  
70. The representative of China confirmed that the provisions of the WTO Agreement, including 
the Draft Protocol, would be applied uniformly throughout its customs territory, including in SEZs 
and other areas where special regimes for tariffs, ta xes and regulations were established and at all 
levels of government.  The Working Pa rty took note of this commitment. 
71. In response to questions from Members, the representative of China confirmed that laws, 
regulations and other measures included decrees, orders, directives, administrative guidance and 
provisional and interim measures.  He stated that  in China, local governments included provincial 
governments, including autonomous regions and muni cipalities directly under the central government, 
cities, counties and townships.  The representative of China further stated that local regulations, rules 
and other measures were issued by local governments at the provincial, city and county levels acting 
within their respective constitutional powers and fu nctions and applied at their corresponding local 
level.  Townships were only authorized to impl ement measures.  Special economic areas were also 
authorized to issue and implement local rules and regulations. 
72. The representative of China further confirmed that the mechanism established pursuant to 
Section 2(A) of the Draft Protocol would be operativ e upon entry into force of the Draft Protocol.  All 
individuals and entities coul d bring to the attention of central  government authorities cases of non-
uniform application of China's trade regime, in cluding its commitments under the WTO Agreement 
and the Draft Protocol.  Such cases would be referre d promptly to the responsible government agency, 
and when non-uniform application was established, the authorities would act promptly to address the 
situation utilizing the remedies available under Ch ina's laws, taking into consideration China's 
international obligations and the need to provide a meaningful remedy.  The individual or entity notifying China's authorities would be informed promptly in writing of any decision and action taken.  
The Working Party took no te of these commitments. WT/ACC/SPEC/CHN/1/Rev.7 
Page 20  
 
4. Judicial Review 
73. Some members of the Working Party stated that China should designate independent 
tribunals, contact points, and procedures for the prom pt review of all administrative actions relating to 
the implementation of laws, regula tions, judicial decisions and administrative rulings of general 
application referred to in Article X:1 of the GA TT 1994, including administrative actions relating to 
import or export licences, non-tariff measures and tariff-rate quota administration, conformity 
assessment procedures and other measures.  These members sought explicit confirmation that certain 
types of measures, such as decisions relating to st andards and chemical regist ration, would be subject 
to judicial review.  Some members of the Working Party also stated that the administrative actions 
subject to review should also include any actio ns required to be reviewed under the relevant 
provisions of the TRIPS Agreement and the GATS.  These members stated that such tribunals should 
be independent of the agencies entrusted with admi nistrative enforcement of the matter and should not 
have any substantial interest in the outcome of the matter. 
74. Those members of the Working Party stated th at such review procedures should include the 
opportunity for appeal, without penalty, by individua ls or enterprises affected by any administrative 
action subject to review.  If an initial right of app eal were to an administrative body, there should be 
an opportunity to choose to make a further appeal to a judicial body.  Any decision by any appellate body and the reasons therefore would be communica ted in writing to the appellant, together with 
notification of any right to further appeal. 
75. The representative of China confirmed that it woul d revise its relevant la ws and regulations so 
that its relevant domestic laws a nd regulations would be consistent with the requirements of the WTO 
Agreement and the Draft Protocol on procedures for judicial review of administrative actions.  He 
further stated that the tribunals responsible for su ch reviews would be impa rtial and independent of 
the agency entrusted with administrative enforcemen t, and would not have any substantial interest in 
the outcome of the matter.  The Working Party took note of this commitment.  
76. In response to questions from members of th e Working Party, the representative of China 
confirmed that administrative actions related to measures covered under Section 2(D)(1) of the Draft 
Protocol included those relating to national treatment , conformity assessment, the regulation, control, 
supply or promotion of a service, including the gran t or denial of a licence to provide a service and 
other matters, and that such administrative actions  would be subject to the procedures established for 
prompt review under Section 2(D)(2) of the Draf t Protocol, and information on such procedures 
would be available through the enquiry point that China would establish upon accession.  The Working Party took note of these commitments.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 21 
 
 
 
 21 IV. POLICIES AFFECTING TRADE IN GOODS 
A. TRADING  RIGHTS 
1. General 
77. Some members of the Working Party noted that  China was in the process of liberalizing the 
availability of the right to impor t and export goods from China, but that such rights were now only 
available to some Chinese enterprises (totalling 35,00 0).  In addition, foreign-invested enterprises had 
the right to trade, although this was restricted to the importation for production purposes and 
exportation, according to the enterprises’ scope of business.  Those members stated their view that 
such restrictions were inconsistent with WTO requirements, including Articles XI and III of GATT 
1994, and welcomed China's commitment to progressive ly liberalize the availability and scope of the 
right to trade so that within three years of the en try into force of the Draft Protocol all enterprises 
would have the right to import and export all goods  (except for the share of products listed in Annex 
2a to the Draft Protocol reserved for importa tion and exportation by state trading enterprises) 
throughout the customs territory of China.  Tho se members requested that China provide detailed 
information on the process and criteria that it woul d use to increase the number of enterprises with 
trading rights and the scope of products that enterp rises could import and export during the transition 
period. 
78. Some members also noted China's commitment to accord foreign enterprises and individuals, 
including those not invested or regi stered as enterprises in China, no less favorable treatment than that 
accorded enterprises in Chin a with respect to the right to trade except as otherwise provided for in the 
Draft Protocol. Members of the Working Party re quested that China provide detailed information 
regarding the process for such en terprises and individuals to obtain the right to import and export 
goods. 
79. Some members of the Working Party expressed c oncerns that after the transition period any 
linkage between an enterprise's scope of business or business licence and the right to trade would 
constitute a restriction on the right to import and expo rt.  Those members noted that within three years 
after entry into force of the Draft Protocol, Chin a would have to permit all enterprises in China to 
trade in all goods throughout the cu stoms territory of China (except as otherwise provided in the Draft 
Protocol).  
80. The representative of China confirmed that duri ng the three years of transition, China would 
progressively liberalize the scope and availability of trading rights.  WT/ACC/SPEC/CHN/1/Rev.7 
Page 22  
 
(a)  Upon accession, the representative of China confirmed that China would eliminate for both 
Chinese and foreign-invested enterprises any ex port performance, trade balancing, foreign 
exchange balancing and prior experience requi rements, such as in importing and exporting, 
as criteria for obtaining or maintaining the right to import and export.   
(b)  With respect to wholly Chinese-invested en terprises, the representative of China stated that 
although foreign-invested enterprises obtained limited trading rights based on their approved 
scope of business, wholly Chinese-invested ente rprises were now required to apply for such 
rights and the relevant authorities applied a th reshold in approving such applications.  In 
order to accelerate this approval process and incr ease the availability of trading rights, the 
representative of China confirmed that China would reduce the minimum registered capital 
requirement (which applied only to wholly Ch inese-invested enterprises) to obtain trading 
rights to RMB 5,000,000 for year one, RMB 3,000,000 for year two, RMB 1,000,000 for 
year three and would eliminate the examination and approval system at the end of the phase-in period for trading rights.  
(c)  The representative of China also confirmed that during the phase-in period, China would 
progressively liberalize the scope and availab ility of trading rights for foreign-invested 
enterprises.  Such enterprises would be grante d new or additional trading rights based on the 
following schedule.  Beginning one year after en try into force of the Draft Protocol, joint-
venture enterprises with minority share foreign- investment would be granted full rights to 
trade and beginning two years after entry into force of the Draft Protocol majority share 
foreign-invested joint-ventures would be granted full rights to trade.  
(d)  The representative of China also confirmed that  within three years after entry into force of 
the Draft Protocol, all enterprises in China w ould be granted the right to trade. Foreign-
invested enterprises would not be required to est ablish in a particular form or as a separate 
entity to engage in importi ng and exporting nor would new business licence encompassing 
distribution be required to enga ge in importing and exporting. 
[The Working Party took note of these commitments.] 81. (a) The representative of China reconfirmed th at China would eliminate its system of 
examination and approval of trading rights within  three years after entry into force of the 
Draft Protocol.  At that time, China would permit all enterprises in China and foreign 
enterprises and individuals, including sole proprietorships of other WTO Members, to export and import all goods (except for the share of products listed in Annex 2a to the Draft 
Protocol reserved for importation and exportation by state trading enterprises) throughout  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 23 
 
 
 
 23 the customs territory of China.  Such right, however, did not permit im porters to distribute 
goods within China.   Providing distribu tion services would be done in accordance with 
China’s Schedule of Specific Concessions under GATS. 
(b)  With respect to the grant of trading rights  to foreign enterprises and individuals, including 
sole proprietorships of other WTO members, the representative of China confirmed that such rights would be granted in a non-discriminatory and non-discretionary way.  He further 
confirmed that any requirements for obtaining tr ading rights would be for customs and fiscal 
purposes only and would not constitute a barrier to trade.  The representative of China 
emphasized that foreign enterprises and individua ls with trading rights had to comply with 
all WTO-consistent requirements related to importing and exporting, such as those concerning import licensing, TBT and SPS, but confirmed that requirements relating to 
minimum capital and prior experience would not apply. 
The Working Party took no te of these commitments.  
2. Designated Trading 
82. The representative of China stated  that China would adjust and expand its list of enterprises 
under its designated trading regime annually duri ng the transition period, leading up to full 
implementation of the commitment contained in A nnex 2b.  The current criteria for enterprises under 
the designated trading regime included registered capital, import and export volume and the import 
volume of products subject to designated trading in  the previous year, bank credit rating and profits 
and losses. 
83. Members of the Working Party noted China's commitment that it would phase out the 
limitation on the grant of trading rights for goods spec ified in Annex 2b of its Draft Protocol within 
three years of its entry into force.  In responding to questions raised by WTO members, the representative of China confirmed that China would pr ogressively liberalize the right to trade in such 
goods by increasing the number of designated entities permitted to import goods in each of the three 
years of the transition period specified in Annex 2b .  The representative of China added that China 
would eliminate import and export volume as a crite ria for obtaining the right to trade these products, 
reduce minimum capitalization requirements and exte nd the right to register as designated importing 
and exporting enterprises to enterp rises that used such goods in the production of finished goods and 
enterprises that distributed such goods in China.  At  the end of three years, all enterprises in China 
and all foreign enterprises and i ndividuals would be pe rmitted to import and export such goods 
throughout the customs territory of China.  The Working Party took note of these commitments. WT/ACC/SPEC/CHN/1/Rev.7 
Page 24  
 
B. IMPORT
 REGULATION 
1. Ordinary Customs Duties 
84. Members of the Working Party welcomed China' s decision to bind tariffs for all products in 
its schedule on market access for goods.  This acti on would increase the certainty and predictability of 
this aspect of China's trade regime.  Members also noted the substantial unila teral tariff reductions 
made in many sectors by China in recent years. 
85. The representative of China provided members of the Working Party with a copy of the 
Customs Import and Export Tariff of the People's Republic of China ("Customs Tariff") and related 
laws and regulations.  He noted that the Custom s Tariff of China was a charge imposed on imported 
goods. The purpose of levying tariffs was twofold:  (a) to regulate imports so as to promote and 
support domestic production;  and (b) to serve as an important source of revenue for the treasury of 
the central government.  China's tariff policy w as to promote economic reform and opening of the 
economy.  The basic principles for establishing duty  rates were as follows.  Duty-free or low duty 
rates were applied to imported goods which were needed for the national economy and the people's 
livelihood but which were not produced sufficiently  domestically.  Import duty rates on raw materials 
were generally lower than those on semi-manufact ured or manufactured products.  For parts or 
components of machinery, equipment and instrument s which were not produced domestically, or at a 
sufficiently high standard, the import duty was lower than the duty on finished products.  Higher duty 
rates were applied to products which were produ ced domestically or which were considered non-
essential for the national economy and the people's livelihood.   A higher duty was applied to 
imported products, the equivalent of which were produced domestically and the local manufacturer of 
which needed protection. 
86. The representative of China said that Ch ina had adopted the Harmonized Commodity 
Description and Coding System (HS) as from 1 Janua ry 1992 and joined the International Convention 
on the Harmonized Commodity Description and Codi ng System in the same year.  There were 
21 sections, 97 chapters and 7062 eight-digit tariff he adings based on the six-digit HS'96 version in 
the Customs Tariff for the year 2000.  Tariff rates were  fixed by the State Council.  Partial adjustment 
to the duty rates was subject to deliberation and final decision by the State Council Tariff 
Commission.  The simple average of China's import duties in 2000 was 16.4 per cent.  Among the 
7062 tariff headings, tariff rates for 525 headings were below 5 per cent, 1488 were between 5 per 
cent (inclusive) and 10 per cent (exclusive), 202 2 between 10 per cent (inclusive) and 15 per cent 
(inclusive) and 3027 were above 15 per cent.  In formation on tariff rates for specific products and 
import statistical data for recent years had been provided to the Working Party.    WT/ACC/SPEC/CHN/1/Rev.7 
 Page 25 
 
 
 
 25 87. He also noted that currently there were two columns of import duty rates: general rates and 
preferential rates.  The preferential rates applied to  imports originating in countries and regions with 
which China had concluded reciprocal tariff agreem ents, whereas the general rates applied to imports 
from other sources. 
88. The representative of China confirmed that up on accession China would participate in the 
Information Technology Agreement ("ITA") and would eliminate tariffs on all information 
technology products as set out in China's sche dule.  Furthermore, upon accession, China would 
eliminate all other duties and charges for ITA pr oducts.  The Working Party took note of these 
commitments. 
89. Certain members of the Working Party expressed particular concerns about tariff treatment in 
the auto sector.  In response to questions about the tariff treatment for kits for motor vehicles, China 
confirmed that it had no tariff lines for completely  knocked-down kits for motor vehicles or semi-
knocked down kits for motor vehicles.  If China created  such tariff lines, the tariff rates would be no 
more than 10 per cent.  The Working Pa rty took note of this commitment. 
90. China undertook bilateral market access negotiati ons on goods with members of the Working 
Party.  The results of those negotiations were  contained in the Schedule of Concessions and 
Commitments on Goods and formed Annex 10 to the Draft Protocol.  
2. Other Duties and Charges 
91. The representative of China confirmed that Chin a had agreed to bind at zero other duties and 
charges in its Schedule of Concessions and Commitments, pursuant to Article II:1(b) of the GATT 
1994.  The Working Party took note of that commitment. 
3. Rules of Origin 
92. Some members of the Working Party requested information about the adoption and 
application of rules of origin in China, whether in  the context of free trade agreements or otherwise, 
and also requested China to confirm that its rules of origin for both preferential and non-preferential 
trade complied fully with the WTO Agreement on Rules of Origin. 
93. The representative of China noted that the criteri a for making the determination of substantial 
transformation was:  (a) change in tariff classificati on of a four-digit tariff line in the Customs Tariff; 
or (b) the value-added component was 30 per cent or more in the total value of a new product. WT/ACC/SPEC/CHN/1/Rev.7 
Page 26  
 
94. He further noted that under current arrangements , and in accordance with the criteria outlined 
above, when an imported product was processed and manufactured in several countries, the country of 
origin of the product was determined to be the last  country in which the pr oduct underwent substantial 
transformation.  The rules of origin appl ied for statistical purposes were the same.  
95. The representative of China stated  that China's rules of origin for import and export were non-
preferential rules of origin.  Once the internationa l harmonization of non-preferential rules of origin 
was concluded, China would fully adopt and appl y the internationally harmonized non-preferential 
rules of origin.  A mechanism that met the requi rements of Articles 2(h) and 3(f), and Annex II, 
paragraph 3(d) of the Agreement, which require d provision upon request of an assessment of the 
origin of an import [or an export] and outlined th e terms under which it would be provided, would be 
established in China's legal framework by the date  of accession.  The Working Party took note of 
these commitments. 
96. The representative of China further stated that China would not use the rules of origin as an 
instrument to pursue trade objectives directly or indi rectly.  He also confirmed that China would apply 
rules of origin equally for all purposes.  The Working Party took note of these commitments. 
97. The representative of China confirmed that fro m the date of accession, China would ensure 
that its laws, regulations and other measures relating to rules of origin would be in full conformity 
with the WTO Agreement on the Rules of Origin a nd that it would implement such laws, regulations 
and other measures in full conformity with that Ag reement.  The Working Party took note of this 
commitment. 
4. Fees and Charges for Services Rendered 
98. Members of the Working Party noted that as a condition of accession, China should undertake 
a commitment to ensure conformity of Customs fees and charges with Article VIII of the GATT 1994.  The representative of China confirmed that China would comply with Article VIII of GATT 1994 in 
this regard.  The Working Party took note of this commitment. 
5. Application of Internal Taxes to Imports 
99. Some members of the Working Party expressed c oncern that some internal taxes applied to 
imports, including a value-added tax ("VAT") were  not administered in conformity with the 
requirements of the GATT 1994, particularly Article III.  Those members of the Working Party noted 
that China appeared to permit the application of di scriminatory internal taxes and charges to imported 
goods and services, including taxes and charges applie d by sub-national authorities.  Those members  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 27 
 
 
 
 27 requested that China reaffirm that all such internal taxes and charges would be in conformity with the 
requirements of the GATT 1994.   
100. In response, the representative of China noted that there were three major types of taxes 
levied on products and services:  (a) VAT levied  on goods and services for processing, maintenance 
and assembling;  (b) the Consumption Tax on some selected consumer products;  and (c) the Business 
Tax on providing services, transferring intangible assets and selling real estate.   Both the VAT and 
the Consumption Tax were applicable to entities importing goods.  VAT a nd the Consumption Tax on 
imported goods were collected by Customs at the point  of entry.  He noted that VAT was  reimbursed 
once goods were exported.  Exported goods we re exempted from the Consumption Tax. 
101. He further noted that the State Council determin ed all policies concerning the levying of VAT 
and the Consumption Tax, adjustment of tax typ es and tax rates (tax value), as well as the tax 
exemption of VAT, the Consumption Tax and the Bu siness Tax.  The laws and regulations were 
interpreted and implemented by the Ministry of Finance and the State Administration of Taxation. VAT and the Consumption Tax were levied and admi nistered by the State competent departments of 
taxation, while the Business Tax was collected and administered by the local competent departments 
of taxation.  
102. The representative of China confirmed that fro m the date of accession, China would ensure 
that its laws, regulations and othe r measures relating to internal taxes and charges levied on imports 
would be in full conformity with its WTO oblig ations and that it would implement such laws, 
regulations and other measures in full conformity with those obligations.  The Working Party took 
note of this commitment. 
6. Tariff Exemptions 
103. The representative of China stated that the ta riff exemption policy of China was developed 
and implemented in accordance with the Customs Law of the People's Republic of China and the 
Regulations of the People's Republic of China on Im port and Export Duties. The coverage of specific 
tariff reduction or exemption was provided for by the State Council. All the tariff reductions and exemptions were applied on an MFN basis. 
104. The representative of China noted that in accordance with international practices and 
provisions of China's Customs Law, import duty re ductions or exemptions were available for the 
following goods: WT/ACC/SPEC/CHN/1/Rev.7 
Page 28  
 
 (a) A consignment of goods, on which customs duties were estimated below 
RMB 10 yuan; 
 (b) advertising articles and samples,  which were of no commercial value; 
 (c) goods and materials, which were rendered gratis by international organizations or 
foreign governments; 
(d) fuels, stores, beverages and provisions fo r use en route loaded by any means of 
transport, which were in transit across the border; 
 (e) exported goods being replaced;  (f) goods damaged prior to Customs release;  (g) goods covered by international treaties providing for tariff reductions and exemptions 
which China had entered into or acceded to; 
 (h) goods temporarily imported; 
 (i) goods imported under inward processing programmes;  (j) goods imported at zero cost for replacement purposes;  (k) domestic- or foreign-funded projects encouraged by China; 
 (l) articles for scientific research, education and the disabled. 
He noted that goods so imported were required to be put under Customs supervision and control. The 
Customs duty was required to be recovered if such  goods were sold, transferred or used for other 
purposes during the time period of  supervision and control. 
105. Some members of the Working Party expressed c oncerns over the availability and application 
of tariff reductions and exemptions for a variet y of enterprises and other entities, including state 
trading enterprises, state-owned enterprises, forei gn-invested enterprises and not-for-profit entities.  
Similar concerns also existed for exemptions from application of other duties, taxes and charges.  
These members noted the negative effect such reduc tions or exemptions co uld have on revenues and 
predictability and certainty in applica tion of tariff and other trade measures.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 29 
 
 
 
 29 106. The representative of China confirmed that upon en try into force of the Draft Protocol, China 
would adopt and apply tariff reducti ons and exemptions so as to en sure MFN treatment for imported 
goods.  The Working Party took note of this commitment. 
7. Tariff Rate Quotas 
107. Several members of the Working Party expressed  concern over the lack of transparency, 
uniformity and predictability of China's administra tion of its tariff rate quota (TRQ) regime.  Those 
members requested that China enter a commitment to administer TRQs in a simple, transparent, 
timely, predictable, uniform, non-discriminatory, and non-trade restrictive manner, and in a way that would not cause trade distortions.  Those members as ked that China ensure that its TRQ arrangements 
be no more administratively burdensome than abso lutely necessary, and also expressed the hope that 
China would move as quickly as possible to a market-based TRQ allocation process. 
108. Those members of the Working Party also rai sed concerns regarding the administration of 
China's TRQ system and the practices of state trading enterprises in relation to importing such 
products.  These concerns included the current lack  of transparent regulations for administering 
TRQs;  use of administrative guidance;  distortions  introduced into the market due to allocations 
based on government determinations of subnationa l supply and utilization rather than consumer 
preferences and end-user demand;  failure to establish and publish annual TRQ quantities;  trade-
restrictive and non-competitive practices of state trading enterprises;  and general uncertainty, 
inconsistency and discrim ination in trade of bulk commodities.  Those members expressed similar 
concerns about the operation of China's TRQ system  for products subject to designated trading.  
Those members requested that China reduce tariffs  for commodities subject to TRQs, enter into 
access commitments for these commodities, improve the administration of the TRQ regime, and 
ensure that trade would not be distorted by unjus tified government regulation.  Certain members of 
the Working Party also requested that a number of  specified products be removed from China's TRQ 
system and that, upon import, these pr oducts be subject only to tariffs. 
109. The representative of China noted that in 1996,  for the first time, China published a list of 
import products subject to TRQs, together with the tariff rates applicable to imports both in and out 
quota.  Allocation of TRQ was based on historical  performance and state trading administration, 
although China had also tried several other ways of  administration, including import at applied tariff 
rates, first-come-first-served at the point of entry,  and bonded import which was strictly monitored by 
Customs.  China was trying to simplify the TRQ administration regime and procedures in a bid to facilitate use, enhance efficiency and implement further reform. WT/ACC/SPEC/CHN/1/Rev.7 
Page 30  
 
110. The representative of China further noted that, in undertaking market-oriented reform in the 
agricultural sector, China had made progress in freei ng agricultural products from state pricing and in 
guiding farmers to adjust the structure of agricu ltural production based on the demands of the market.  
In connection with that reform pr ocess, in the bilateral negotiati ons with Members, China committed 
that as soon as it became a Member  of the WTO, it would eliminate TRQs on a number of products 
and subject these only to tariffs.  The products concer ned were barley, soybeans, rapeseed, peanut oil, 
sunflower seed oil, corn oil, a nd cottonseed oil.  In addition, China would replace quantitative import 
restrictions on sugar, cotton and three types of fertilizers (DAP, NPK and urea) by TRQs.  The Working Party took note of these commitments. 
111. The representative of China stated that from en try into force of the Draft Protocol, China 
would ensure that TRQs were administered on a transparent, predictable, uniform, fair and non-
discriminatory basis using clearly specified time frames, administrative procedures and requirements 
that would provide effective import opportunities;  that would reflect consumer preferences and end-
user demand;  and that would not inhibit the filling of each TRQ.  China would apply TRQs fully in accordance with WTO rules and principles and with  the provisions set out in China's Schedule of 
Concessions and Commitments on Goods.  The Work ing Party took note of these commitments. 
112. The representative of China confirmed that fo r the goods listed in Annex 2 of the Draft 
Protocol that were subject to a TRQ, China would also apply the provisions of its Schedule relating to 
TRQ administration and related commitments in the Draft Protocol, including the grant of trading 
rights to non-state trading entities to import the TR Q allocations set aside for importation by such 
entities.  For products in Annex 2 of the Draft Protoc ol that were subject to designated trading, China 
confirmed that it would ensure that additional en terprises granted trading rights in accordance with 
China's commitments to phase out designated trading would not be disadvantaged in the allocation of 
TRQ.  The Working Party took note of these commitments. 
113. Some members of the Working Party expressed th e view that allocation decisions were based, 
in large part, on government-determined provincial  supply and utilization ra ther than on commercial 
market criteria that reflected consumer preferences and end-user demand.  Those members expressed concern that China's stated intention to allocate quot a to sub-central authorities and to authorize those 
authorities to then allocate that quota to end-u sers in separate processes would add an unnecessary, 
burdensome step in the procedures and reduce the likelihood that quotas would be filled.  Further, 
those members stated that China' s stated intention with regards to TRQ procedures would not be 
consistent with China's commitments to uniform ad ministration of its trade regime.  Those members 
sought confirmation that China would not establish a separate process of allocation to sub-central  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 31 
 
 
 
 31 authorities, as well as confirmation that all allocatio n and reallocation decisions would be made by a 
single, central authority in China. 
114. The representative of China confirmed that the role of sub-central bodies would be limited to 
purely administrative operations, such as receiving a pplications from end-u sers and forwarding them 
to the central authority;  receiving queries and tran smitting these to the central authority;  reporting on 
allocation and reallocation decisions made by th e central authority and providing information 
regarding such allocations and reallocations upon request;  checking the information in the 
applications to verify that it met the published crite ria;  notifying applicants of any deficiencies in 
their applications;  and providing applicants with an opportunity to cure deficiencies in their 
applications.  After the central authority decided on allocations of quota to end-users, the sub-central 
bodies would issue TRQ certificates accordingly.  Th e representative of China also confirmed that 
China would administer a consistent national allo cation (and reallocation) policy for TRQs, that it 
would not establish a separate process of allocatio n to sub-central authorities and that decisions 
regarding all allocations and realloca tions to end-users would be made by a single, central authority.  
The Working Party took no te of these commitments. 
115. The representative of China further confirmed that China would grant to any enterprise 
possessing the right to trade any product pursuant to Section 5 of the Draft Protocol, the right to 
import goods in Annex 2a (of the Draft Protocol) that  were subject to a TRQ or to an agreed volume 
of imports by non-state trading enterprises.  Such right to import would not extend to the quantity of 
goods specifically reserved for importation by state trading enterprises.  An y enterprise possessing the 
right to trade pursuant to Section 5 of the Draft Protocol would also have the right to import that portion of a TRQ reallocated to non-state trading enterprises pursuant to the agreed rules on TRQ 
administration.  The representative of China also c onfirmed that for goods in Annex 2a (of the Draft 
Protocol) subject to a TRQ, any enterprise granted the right to trade, pursuant to Section 5 of the Draft 
Protocol, would be permitted to import such goods at the out-of-quota rate.  The Working Party took 
note of these commitments.   
8. Quantitative Import Restrictions, including Prohibitions and Quotas 
116. In response to requests for information from members of the Working Party, the 
representative of China noted that China prohib ited or restricted the importation of certain 
commodities, including weapons, ammunition and explosives, narcotic drugs, poisons, obscene 
materials and those foodstuffs, medicines, animals and plants which were in consistent with China's 
technical regulations on food, medicines, animals and plants. WT/ACC/SPEC/CHN/1/Rev.7 
Page 32  
 
117. Some members of the Working Party noted that there were a large number of non-tariff 
measures in existence in China, bo th at the national and sub-national levels, which appeared to have a 
trade restrictive or trade distorting effect.  Those members requested that China undertake a 
commitment to eliminate and not to introduce, re -introduce or apply non-tariff measures other than 
those specifically identified and subj ect to phased elimination in Annex 3 to the Draft Protocol.  The 
representative of China confirmed that China woul d not introduce, re-introduce or apply non-tariff 
measures other than listed in Annex 3 of th e Draft Protocol unless justified under the WTO 
Agreement.  The Working Party t ook note of this commitment.  
118. Some members of the Working Party also rai sed concerns that many non-tariff measures were 
imposed by sub-national authorities in China on a non-transparent, discretionary and discriminatory 
basis.  Those members of the Working Party asked that China undertake a co mmitment to ensure that 
non-tariff measures would only be imposed by the ce ntral government or by sub-national authorities 
with clear authorization from the central government .  Actions lacking authorization from the national 
authorities should not be implemented or enforced.  The representative of China clarified that only the 
central government could issue regulations on non- tariff measures and that these measures would be 
implemented or enforced only by the central  government or sub-national authorities with 
authorization from the central government.  He further stated that sub-national authorities had no right to formulate non-tariff measures.  The Work ing Party took note of these commitments. 
119. Some members of the Working Party noted th at China had provided a list of non-tariff 
measures in respect of which China was prepared  to commence phased elimination, contained in 
Annex 3 of the Draft Protocol.  Those members stat ed that China should eliminate the measures listed 
in accordance with the sche dule provided in Annex 3, during the periods specified in Annex 3.  For 
measures subject to phased elimination, China sh ould provide for growth in the quota over the 
relevant period specified in Annex 3.  Those member s also noted that the protection afforded by the 
measures listed in Annex 3 should not  be increased or expanded in size, scope, or duration, nor any 
new measures be applied, unless justified unde r the provisions of the WTO Agreement.  
120. Those members of the Working Party noted that all non-tariff measures administered by 
China, whether or not referred to in Annex 3 of th e Draft Protocol, which were applied after China's 
accession to the WTO, should be allocated and otherwi se administered in strict conformity with the 
provisions of the WTO Agreement, including Ar ticle XIII of the GATT 1994 and the Agreement on 
Import Licensing Procedures, including notification requirements.  
121. The representative of China stat ed that China had modified Annex 3 on the basis of the 
comments raised by certain members of the Worki ng Party.  He confirmed that only the machinery  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 33 
 
 
 
 33 and electronic products listed in Annex 3 were s ubject to specific tendering requirements and that 
these requirements would be administered pursuant to Chapter III of the Regulation entitled "Interim 
Measures for Import Administration of Machinery and Electronics Products" (approved by the State 
Council on 22 September 1993 and pr omulgated in Order No. 1 by the State Economic and Trade 
Commission and Ministry of Foreign Trade and Ec onomic Cooperation on 7 October 1993).  He also 
confirmed that Annex 3 contained all of the pr oducts subject to quotas, licences and such tendering 
requirements in China and  that, during the rele vant phase-out period, China would implement the 
growth rates for quotas as indicated in Annex 3.  The Working Party took note of these commitments. 
122. Some members of the Working Party requested information on how China would implement 
the quota and licensing requirements for products listed in Annex 3, in particular the procedures and 
criteria for grant of quota allocations and licensing during the phase-out period for these restrictions.  
Members expressed concern about requirements for obtaining a licence or quota allocation which 
often required approvals from various  authorities within an organiza tion as well as approval from both 
the central and sub-national level.  Those member s sought a transparent, streamlined system that 
would issue quota allocations and licences through a si mple, consolidated approval process that would 
ensure full use of the quota and its equitable distribution among importers.  Those members also 
requested information on how China would establish the value of imports for those products whose 
quota was established in terms of value of imports.  The representative of China confirmed that the 
administration of quotas and import licences would be  consistent with the WTO Agreement, including 
Article XIII of the GATT 1994 and the Agreement on Import Licensing Procedures. The allocation of 
quotas and issuance of import licences would go through a simple and transparent procedure, so as to 
ensure the full utilization of quota.  He further stat ed that the establishment of value of imports would 
be based on the information collected by the Cust oms authorities and provisions of the WTO Customs 
Valuation Agreement.    For quota quantities specifi ed in terms of value, China would determine the 
value of any shipment based on the c.i.f. ship va lue listed on the bill of lading.  The Working Party 
took note of these commitments. 
123. The representative of China confirmed that th e products currently covered under the HS 
categories listed in Annex 3 as of the date of accessi on were the only products that would be subject 
to these quotas during the agreed phase-out periods .  Any non-tariff measures covering additional 
products would need to be justified under the WTO Agreement.  Further, the representative of China 
stated that for products listed in Annex 3 as bei ng subject to quota and licensing requirements, any 
entity that will possess the right to trade in the quota year, including enterprises possessing trading 
rights to import such products or inputs for pr oduction purposes under a particular quota category, WT/ACC/SPEC/CHN/1/Rev.7 
Page 34  
 
could apply for a quota allocation and licence to import products listed in Annex 3.  The Working 
Party took note of these commitments. 
124. The representative of China further confirmed th at for products listed in Annex 3, China's 
system for quota allocation and licensing would ensu re that those entities with quota allocations 
would also receive any necessary import licence.  This system would conform to WTO rules, including the WTO Agreement on Import Licensing Procedures, and would be transparent, timely, 
responsive to market conditions and would minimize  the burden on trade.  Applications for a quota 
allocation would need to be submitted to only one orga nization, at one level (central or sub-national) 
for approval.  The relevant or ganization would then issue an import licence based on the quota 
allocation, in most cases within 3 working days and,  in exceptional cases, within a maximum of 10 
working days after a request for the licence.  A licence would be issued for the full amount of the 
quota and would be valid for the calendar year i ssued.  Such licence would be extended once, upon 
request,  for up to 3 months, if the request was made  before 15 December of the current quota year.  
Imports occurring under an extended licence would be  counted against the relevant quota amount for 
the year in which the allocation took place.  The representative of China confirmed that the relevant 
organization for issuing quota allocations and lic ences, amount of quota, including the growth in 
quota provided for in Annex 3, the eight-digit tariff codes and full descriptions of all products covered 
by each quota and procedures for application fo r a quota allocation and licence, including the 
beginning and end date of the application period an d any other relevant procedures or criteria, would 
be published in the official journal referred to in pa ragraph 2(C)(2) of the Draft Protocol at least 21 
days prior to the beginning of the application peri od.  Such application period would be from 1-31 
August.  Quotas would be allocated to applicants no later than 60 days after closure of the application 
period.  The Working Party to ok note of these commitments. 
125. The representative of China stated that Chin a would allocate quotas in accordance with the 
following criteria and procedures which would be published in advance and would be applied in 
conformity with WTO requirements, including th e Agreement on Import Licensing Procedures.  In 
applying these criteria, China would consider th e need to allow for equitable participation by 
producers from WTO Members and take into account the need to maximize the potential for quota 
fill. 
– If the relevant quota quantity exceeded total requests for quota allocations, all requests would 
be approved. 
– In other cases, the criteria for allocation would be as follows:  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 35 
 
 
 
 35 – Historical  performance of applicants where relevant (in cases in which average imports over 
the 3-year period immediately prior to the y ear of China’s accession, for which data was 
available, amounted to less than 75 per cent of the relevant quota, it would be necessary to 
take into account other criteria inter alia  as set forth below); 
– Production or processing capacity, in the case of  intermediate products and raw materials; 
– Experience and ability in producing,  importing,   marketing, or servicing in international 
markets, in the case of finished products or  products destined for wholesale or retail 
distribution; 
– In cases in which average imports over the 3-y ear period immediately prior to the year of 
China’s accession, for which data was available, exceeded 75 pe r cent of the relevant quota, 
applicants that had not previously been allocat ed quota would be allocated 10 per cent of the 
total quota in the first year and the majority of any quota growth in any subsequent year. 
In other cases : – In the first year, twenty- five per cent of the to tal quota would be allocated to applicants that 
had not previously been allocated quota;  how ever, an applicant that had imported under a 
quota on the relevant products in the year prior to China’s accession would not receive a 
decrease in the absolute amount of its quota allocation. 
– In the second year, for the amount of the quota growth as well as an amount equivalent to the 
amount of any quota that had not been filled in the previous year, China would give priority 
consideration to requests from enterprises with foreign ownership equal to or less than fifty 
per cent. 
– In the third and fourth year, if relevant, fo r the amount of the quota growth as well as an 
amount equivalent to the amount of any quota that  had not been filled in the previous year, 
China would give priority consideration to re quests from enterprises with foreign ownership 
greater that fifty per cent. 
– In all cases, a quota-holder receiving an initial a llocation that had fully utilized or contracted 
for its quota allocation would, upon application, receive an allocation in the following year for 
a quantity no less than the quantity imported in the previous year.  A quota-holder that did not WT/ACC/SPEC/CHN/1/Rev.7 
Page 36  
 
import its full allocation would receive a propor tional reduction in its quota allocation in the 
subsequent year unless the quantity was re turned for reallocation by1 September.  
The Working Party took no te of these commitments. 
126. The representative of China confirmed that all co mmercial terms of trade, including product 
specifications, product mix, pricing, and packagi ng, would be at the sole discretion of the quota 
holder, so long as the products are within the relevant quota category.   Allocations would be valid for 
any article or mixture of articles subject to th e same quota as specified in Annex 3 of the Draft 
Protocol.  Allocations would be valid for a peri od of one calendar year from the opening of the quota 
import period.  However, if the holder of a quota a llocation had not contracted for import of the total 
quantity allocated to by 1 September,  the holder was to immediately return  the unused portion of the 
allocation to the relevant authority which would r eallocate the quota immediately, if unfilled requests 
were pending, or otherwise within 10 days after rece ipt of a request for an allocation.  The relevant 
organization would publish notice of the availability  of additional allocations after collecting any 
unused quotas returned by the quota holders.  Licences for goods imported under reallocated quota 
would be extended once, upon request,  for up to 3 months, if the request was made before 15 
December of the current quota year.  Imports occurring under an extended licence would be counted 
against the relevant quota amount for the year in which the re-allocation took place.  The Working 
Party took note of these commitments. 
127. In response to requests for information from members of the Working Party, the 
representative of China noted that China prohib ited or restricted the importation of certain 
commodities, including weapons, ammunition and explosives, narcotic drugs, poisons, obscene 
materials and those foodstuffs, medicines, animals and plants which were in consistent with China's 
technical regulations [and standards] on  food, medicines, animals and plants. 
128. Some members of the Working Party noted that there were a large number of non-tariff 
measures in existence in China, bo th at the national and sub-national levels, which appeared to have a 
trade restrictive or trade distorting effect.  Those members requested that China undertake a 
commitment to eliminate and not to introduce, re -introduce or apply non-tariff measures other than 
those specifically identified and subj ect to phased elimination in Annex 3 to the Draft Protocol.  The 
representative of China confirmed that China woul d not introduce, re-introduce or apply non-tariff 
measures other than listed in Annex 3 of th e Draft Protocol unless justified under the WTO 
Agreement.  The Working Party t ook note of this commitment.  
129. Some members of the Working Party also rai sed concerns that many non-tariff measures were 
imposed by sub-national authorities in China on a non-transparent, discretionary and discriminatory  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 37 
 
 
 
 37 basis.  Those members of the Working Party asked that China undertake a co mmitment to ensure that 
non-tariff measures would only be imposed by the ce ntral government or by sub-national authorities 
with clear authorization from the central government .  Actions lacking authorization from the national 
authorities should not be implemented or enforced.  The representative of China clarified that only the 
central government could issue regulations on non- tariff measures and that these measures would be 
implemented or enforced only by the central  government or sub-national authorities with 
authorization from the central government.  He further stated that sub-national authorities had no right 
to formulate non-tariff measures.  The Work ing Party took note of these commitments. 
130. Some members of the Working Party noted th at China had provided a list of non-tariff 
measures in respect of which China was prepared  to commence phased elimination, contained in 
Annex 3 of the Draft Protocol.  Those members stat ed that China should eliminate the measures listed 
in accordance with the sche dule provided in Annex 3, during the periods specified in Annex 3.  For 
measures subject to phased elimination, China sh ould provide for growth in the quota over the 
relevant period specified in Annex 3.  Those member s also noted that the protection afforded by the 
measures listed in Annex 3 should not  be increased or expanded in size, scope, or duration, nor any 
new measures be applied, unless justified unde r the provisions of the WTO Agreement.  
131. Those members of the Working Party noted that all non-tariff measures administered by 
China, whether or not referred to in Annex 3 of th e Draft Protocol, which were applied after China's 
accession to the WTO, should be allocated and otherwi se administered in strict conformity with the 
provisions of the WTO Agreement, including Ar ticle XIII of the GATT 1994 and the Agreement on 
Import Licensing Procedures, including notification requirements.  
132. The representative of China stat ed that China had modified Annex 3 on the basis of the 
comments raised by certain members of the Worki ng Party.  He confirmed that only the machinery 
and electronic products listed in Annex 3 were s ubject to specific tendering requirements and that 
these requirements would be administered pursuant to Chapter III of the Regulation entitled "Interim 
Measures for Import Administration of Machinery and Electronics Products" (approved by the State Council on 22 September 1993 and pr omulgated in Order No. 1 by the State Economic and Trade 
Commission and Ministry of Foreign Trade and Ec onomic Cooperation on 7 October 1993).  He also 
confirmed that Annex 3 contained all of the pr oducts subject to quotas, licences and such tendering 
requirements in China and  that, during the rele vant phase-out period, China would implement the 
growth rates for quotas as indicated in Annex 3.  The Working Party took note of these commitments. WT/ACC/SPEC/CHN/1/Rev.7 
Page 38  
 
133. Some members of the Working Party requested information on how China would implement 
the quota and licensing requirements for products listed in Annex 3, in particular the procedures and 
criteria for grant of quota allocations and licensing during the phase-out period for these restrictions.  
Members expressed concern about requirements for obtaining a licence or quota allocation which 
often required approvals from various  authorities within an organiza tion as well as approval from both 
the central and sub-national level.  Those member s sought a transparent, streamlined system that 
would issue quota allocations and licences through a si mple, consolidated approval process that would 
ensure full use of the quota and its equitable distribution among importers.  Those members also requested information on how China would establish the value of imports for those products whose 
quota was established in terms of value of imports.  The representative of China confirmed that the 
administration of quotas and import licences would be  consistent with the WTO Agreement, including 
Article XIII of the GATT 1994 and the Agreement on Import Licensing Procedures. The allocation of 
quotas and issuance of import licences would go through a simple and transparent procedure, so as to 
ensure the full utilization of quota.  He further stat ed that the establishment of value of imports would 
be based on the information collected by the Cust oms authorities and provisions of the WTO Customs 
Valuation Agreement.    For quota quantities specifi ed in terms of value, China would determine the 
value of any shipment based on the c.i.f. ship va lue listed on the bill of lading.  The Working Party 
took note of these commitments. 
134. [The representative of China confirmed that  the products currently covered under the HS 
categories listed in Annex 3 as of the date of accessi on were the only products that would be subject 
to these quotas during the agreed phase-out periods .  Any non-tariff measures covering additional 
products would need to be justified under the WTO Agreement.  Further, the representative of China 
stated that for products listed in Annex 3 as bei ng subject to quota and licensing requirements, any 
entity [that possessed the right to trade in the quot a year] [possessing the right to trade], including 
enterprises possessing trading rights to import such  products or inputs for production purposes under a 
particular quota category, could apply for a quota a llocation and licence to import products listed in 
Annex 3.  The Working Party took note of these commitments.] 
135. The representative of China further confirmed th at for products listed in Annex 3, China's 
system for quota allocation and licensing would ensu re that those entities with quota allocations 
would also receive any necessary import licence.  This system would conform to WTO rules, including the WTO Agreement on Import Licensing Procedures, and would be transparent, timely, 
responsive to market conditions and would minimize  the burden on trade.  Applications for a quota 
allocation would need to be submitted to only one orga nization, at one level (central or sub-national) 
for approval.  The relevant or ganization would then issue an import licence based on the quota 
allocation, in most cases within 3 working days and,  in exceptional cases, within a maximum of 10  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 39 
 
 
 
 39 working days after a request for the licence.  A licence would be issued for the full amount of the 
quota and would be valid for the calendar year i ssued.  Such licence would be extended once, upon 
request,  for up to three months, if the request was made before 15 December of the current quota 
year.  Imports occurring under an extended licence  would be counted against the relevant quota 
amount for the year in which the allocation took place.  The representative of China confirmed that 
the relevant organization for issuing quota alloca tions and licences, amount of quota, including the 
growth in quota provided for in Annex 3, the eight-digit tariff c odes and full descriptions of all 
products covered by each quota and procedures for a pplication for a quota allocation and licence, 
including the beginning and end date of the applica tion period and any other relevant procedures or 
criteria, would be published in the official jour nal referred to in paragr aph 2(C)(2) of the Draft 
Protocol at least 21 days prior to the beginning of  the application period.  Such application period 
would be from 1-31 August.  Quotas would be allocat ed to applicants no later than 60 days after 
closure of the application period.  The Working Party took note of these commitments. 
136. The representative of China stated  that China would allocate th e quota in accordance with the 
following criteria and procedures which would be published in advance and would be applied in 
conformity with WTO requirements, including th e Agreement on Import Licensing Procedures. In 
applying these criteria, China would consider th e need to allow for equitable participation by 
producers from WTO Members and take into account the need to maximize the potential for quota 
fill. 
− If the relevant quota quantity exceeded total requests for quota allocations, all requests 
would be approved. 
In other cases, the criteria for allocation would be as follows: 
− Historical performance of applicants where relevant (in cases in which average imports over 
the 3-year period immediately prior to the year  of China's accession, for which data was 
available, amounted to less than 75 per cent of  the relevant quota, other criteria would be 
more important); 
− Production or processing capacity, in the case of intermediate products and raw materials; 
− Experience and ability in producing, importing, marketing, or servicing in international 
markets, in the case of finished products or  products destined for wholesale or retail 
distribution; WT/ACC/SPEC/CHN/1/Rev.7 
Page 40  
 
− In cases in which average imports over the 3-year  period immediately prior to the year of 
China's accession, for which data was available,  exceeded 75 per cent of the relevant quota, 
applicants that had not previously been allo cated quota would be allocated 10 per cent of the 
total quota in the first year and the majority of any quota growth in any subsequent year. 
− In other cases in the first year, twenty-five per cent of the total quota would be allocated to 
applicants that had not previously been allocat ed quota, and in subsequent years, two-thirds 
of quota growth would be allocated to such firms, if quota fill remained below 75 per cent. 
− In all cases, a quota-holder that has fully u tilized or contracted for its quota allocation 
would,  upon application, recei ve an allocation in the followi ng year for a quantity no less 
than the quantity imported in the previous year.  A quota-holder that did not import its full allocation would receive a propor tional reduction in its quota al location in the subsequent 
year unless the quantity was returned for rea llocation by [1 September] [1 October]. 
The Working Party took no te of these commitments. 
137.  The representative of China confirmed that all commercial terms of trade, including product 
specifications, product mix, pricing, and packagi ng, would be at the sole discretion of the quota 
holder, so long as the products are within the relevant quota category.   Allocations would be valid for 
any article or mixture of articles subject to th e same quota as specified in Annex 3 of the Draft 
Protocol.  Allocations would be valid for a peri od of one calendar year from the opening of the quota 
import period.  However, if the holder of a quota a llocation had not contracted for import of the total 
quantity allocated to by [1 Septem ber] [1 October],  the holder was to immediately return the unused 
portion of the allocation to the relevant authority which would reallocate the quota immediately, if unfilled requests were pending, or otherwise within ten days after receipt of a request for an 
allocation.  The relevant organization would publish notice of the availability of additional allocations 
after collecting any unused quotas returned by the quota holders.  Licences for goods imported under 
reallocated quota would be extended once, upon request,  for up to three months, if the request was 
made before 15 December of the current quota year.  Imports occurring under an extended licence 
would be counted against the relevant quota amount fo r the year in which the re-allocation took place.  
The Working Party took no te of these commitments. 
9. Import Licensing 
138. The representative of China confirmed that th e list of all entities responsible for the 
authorization or approval of imports  would be updated and republishe d in the official journal, the  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 41 
 
 
 
 41 MOFTEC Gazette, within one month of any change th ereto.  The Working Party took note of this 
commitment. 
139. In response to requests for additional information about its system of import licensing, the 
representative of China said that the import licensing  system was administered without discrimination 
among countries or regions.  In 1984, the State Coun cil had promulgated the "I nterim Regulations on 
Licensing System for Import Commodities", and MO FTEC and Customs had issued "Detailed Rules 
for the Implementation of the Interim Regulations on Licensing System for Import Commodities".  
The Interim Regulations were unifo rmly implemented throughout China.  In 1999, of the total import 
value of US$ 165.7 billion, imports subject to li censing represented 8.45 per cent, covering US$ 14 
billion.  MOFTEC determined which products should be subject to import licensing according to the 
relevant provisions of the "Foreign Trade Law".   
140. The representative of China further stated that in 1993, China had applied import restrictions 
to 53 product categories.  By 1999, the number had been reduced to 35.  Products covered were (1) 
Processed oil; (2) Wool;  (3) Polyester fibre;  (4) Acrylic fibres;  (5) Polyester fillet;  (6) Natural 
rubber;  (7) Vehicles tyres;  (8) Sodium cyanide;  (9) Sugar;  (10) Fertilizer;  (11) Tobacco and its 
products;  (12) Acetate tow;  (13) Cotton;  (14) Motor vehicles and their key parts;  (15) Motorcycles 
and their engines and chassises; (16) Colour tele vision sets and TV kinescope;  (17) Radios, tape 
recorders and their main parts;  (18) Refrigerators  and their compressor;  (19) Washing machines;  
(20) Recording equipment and its key parts;  ( 21) Cameras and their bodies (without lenses);  (22) 
Watches;  (23) Air conditioners and their comp ressor;  (24) Audio and video tape duplication 
equipment;  (25) Crane lorries and their chassises;  (26) Electronic microscopes;  (27) Open-end spinning machines;  (28) Electronic colour scanners;  (29) Grain;  (30) Vegetable oil;  (31) Wine;  
(32) Colour sensitive material;  (33) Chemical under supervision and control that were used for 
chemical weapon;  (34) Chemicals used to produce narcotics;  and (35) Laser disc production 
facilities.  He also noted that in 1999, there were 13 commodity categories which were imported by 
the foreign trade companies designated by MO FTEC. These categories were as follows:  (1) 
Processed oil;  (2) Fertilizer; (3) Tobacco; (4) Vegeta ble oil; (5) Grain; (6) Natural rubber; (7) Wool; 
(8) Acrylic fibers; (9) Sugar; (10) Cotton; ( 11) Crude oil; (12) Steel; and (13) Plywood. 
141. Concerning the granting and administration of import licences, the representative of China 
said that the examination and approval of the licence  took two to three working days.  Applications 
for import licences could be submitted to the Quota and Licence Administrative Bureau of MOFTEC, or Special Commissioner Offices in 16 provinces, or Commissions of Foreign Economic Relations 
and Trade of various provinces, autonomous regi ons, and municipalities dir ectly under the central WT/ACC/SPEC/CHN/1/Rev.7 
Page 42  
 
government and those with indepe ndent budgetary status. Licensing ag encies authorized by MOFTEC 
could issue import licences on the basis of import documents submitted by the applicants,  approved 
by the competent departments. A licence could not be bought, sold or transferred, and was valid for 
one calendar year.  Import licences could be extended once for up to three months.    
142. Some members of the Working Party expressed c oncern that China's Provisional Procedures 
for the Administration of Automatic Registration for the Import of Special Commodities 
(13 August 1994), in particular the criteria for a pproval of registration, would act as a restraint on 
imports.  The representative of China emphasized that the purpose of the registration system was only to gather statistical information.  He confirmed that China would bring its automatic licensing system 
into conformity with Article 2 of the Agreem ent on Import Licensing Procedures upon entry into 
force of the Draft Protocol.  The Working Party took note of this commitment.   
143. Some members of the Working Pa rty noted that enterprises and individuals seeking to import  
products subject to tariff quota administration requi rements had to go through extensive procedures to 
receive a quota allocation and that the quota certificate would indicate whether the subject good was to be imported through a state trading enterprise or a non-state trading enterprise and would be valid 
for a certain period of time.  Moreover, the entity importing the good would need trading rights.  In 
the light of these multiple requirements, a quota allocation certificate should satisfy any import licensing requirement that might apply. 
144. The representative of China confirmed that China would not require a separate import licence 
approval for goods subject to a TRQ allocation re quirement but would provide any necessary import 
licence in the procedure that granted a quota allocati on.  If quota were reallocated pursuant to China's 
TRQ administration commitments, the provisions rela ting to licensing of such reallocated quantities 
would apply.  The Working Party took note of this commitment. 
10. Customs Valuation 
145. Some members expressed concern regarding the methods used by China to determine duty-
paying value of goods, in particular regarding the pr actice of using minimum [or reference] prices for 
certain goods, which would be incons istent with the Agreement on Im plementation of Article VII of 
the GATT 1994 ("Customs Valuation Agreement").  Other WTO-consistent means were available to 
Members doubting the veracity of declared transaction values. 
146. In response, the representative of China stated  that China had ceased to use and would not 
reintroduce minimum [or reference] prices as a me ans to determine customs value.  The Working 
Party took note of this commitment.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 43 
 
 
 
 43 147. The representative of China consid ered that there would not be situations where the "customs 
value" could not be "ascertained " since the Customs Valuation Ag reement provided several methods 
for valuation. 
148. The representative of China recalled that the overwhelming majority of China's customs 
duties were ad valorem  duties.  The customs or duty-paying value of imported goods was assessed 
according to the c.i.f. price based on the transac tion value, as defined in the Customs Valuation 
Agreement.  If the transaction value of importe d goods could not be dete rmined, the duty-paying 
value was determined based on othe r means provided for in the Customs Valuation Agreement.  He 
also noted that the Customs Law provided for app eal procedures. In the event of a dispute over 
calculation of duty paid or payable with the Cu stoms, the dissatisfied importer could apply to 
Customs for a reconsideration of the case. If the app eal was rejected the importer could sue at the 
People's Court.   
149. The representative of China confirmed that, from the entry into force of the Draft Protocol, 
China would apply fully the Customs Valuati on Agreement, including the customs valuation 
methodologies set forth in Articles 1 through 8 of th e Agreement.  In addition, China would apply the 
provisions of the Decision on the Treatment of Inte rest Charges in Customs Value of Imported Goods, 
and the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment, adopted by the WTO Committee on Customs Valuati on (G/VAL/5).  In accordance with these latter 
provisions, only the cost of the carrier medium itself would be accounted for in determining the 
customs value of carrier media bearing softwa re.  The Working Party took note of these 
commitments.   
11. Other Customs Formalities 
150. The representative of China said that China jo ined the International Convention on the 
Simplification and Harmonisation of Customs Sy stem in 1988 and on 15 June 2000 signed the Draft 
Protocol on the Amendment of the Internationa l Convention on the Simplification and Harmonisation 
of Customs System.  The Customs authorities of Ch ina had only adopted such customs formalities as 
declaration, examination, levying of duties and re lease which were consiste nt with international 
practices. 
12. Preshipment Inspection 
151. The representative of China stated that, curren tly, there were trade and commerce inspection 
agencies (including joint-venture agencies) enga ged in preshipment inspection.  China committed WT/ACC/SPEC/CHN/1/Rev.7 
Page 44  
 
itself to comply with the Agreement on Preshipment Inspection, and would regulate the existing trade 
and commerce inspection agencies and permit the qua lified agencies to be engaged in preshipment 
inspection in line with the government mandate or the terms and conditions of commercial contracts. 
152. Some members of the Working Party request ed information on whether China used the 
services of a private preshipment inspection entity.  The representative of China confirmed that China 
would ensure that, upon accession, any laws and regula tions relating to preshipment inspection by any 
inspection agency, including private entities, would be  consistent with releva nt WTO agreements, in 
particular, the Agreement on Preshipment Inspect ion and the Customs Valuation Agreement.  
Moreover, any fees charged in connection with su ch preshipment inspection would be commensurate 
with the service provided, in conformity with Ar ticle VIII:1 of the GATT 1994.  The Working Party 
took note of these commitments. 
13. Anti-Dumping, Countervailing Duties 
153. Some members of the Working Party raised con cerns that the current investigations by the 
Chinese authority would be judged to be inconsis tent with the Agreement on Implementation of 
Article VI of GATT 1994(Anti-Dumping Agreement) if China were a Member of the WTO today.  In certain cases, the basis for calculating dumping marg ins for a preliminary affirmative determination 
was not disclosed to interested parties.  Furthermor e, the determination of injury and causation did not 
appear to have been made on an objective examinati on of sufficient evidence.  In the views of these 
members, bringing the Chinese anti-dumping rules in to compliance with the WTO Agreement on its 
face was not sufficient. WTO-consistency had to be secured substantively as well. 
154. In response, the representative of China stated  that China promulgated regulation on anti-
dumping and countervailing duties in 1997 with re ference to the Anti-Dumping Agreement and 
Agreement on Subsidies and Countervailing Measures.   He committed to revising China's current 
regulation and procedures prior to its accession in or der to fully implement China’s obligations under 
the AD and SCM Agreements. 
155. Members of the Working Party and the representa tive of China agreed that the term "national 
law" in paragraph 4 of Section 20 of the Draft Protocol, should be in terpreted to cover not only laws 
but also decrees, regulations and administrative rules. 
156. Several members of the Working Party noted that China was continuing the process of 
transition towards a full market economy.  Those members noted that under those circumstances, in 
the case of imports of Chinese origin into a WT O Member, special difficulties could exist in 
determining cost and price comparability in th e context of anti-dumping investigations and  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 45 
 
 
 
 45 countervailing duty investigations.  Those members stated that in such cases, the importing WTO 
Member might find it necessary to take into account  the possibility that a strict comparison with 
domestic costs and prices in China might not always be appropriate.  
157. The representative of China expressed concern with  regard to past measures taken by certain 
WTO Members which had treated China as a non- market economy and imposed anti-dumping duties 
on Chinese companies without identifying or publis hing the criteria used, without giving Chinese 
companies sufficient opportunity to present evidence a nd defend their interests in a fair manner, and 
without explaining the rationale underlying their dete rminations, including with respect to the method 
of price comparison in the determinations.  In r esponse to these concerns, members of the Working 
Party confirmed that in implementing paragraph (1 )(b) of Article 20 of the Draft Protocol ("Price 
Comparability in determining Dumping and Subsidization"), WTO Members would comply with the following: 
(a) When determining price comparability in a particular case in a manner not based on a strict 
comparison with domestic prices or costs in China, the importing WTO Member should 
ensure that it has established and published in  advance (1) the crite ria that it uses for 
determining whether market economy conditi ons prevail in the industry or company 
producing the like product and (2) the methodol ogy that it uses in determining price 
comparability.  With regard to importing WTO Members other than those that have an 
established practice of applying a methodology that includes, inter alia, guidelines that the 
investigating authorities should normally utilize, to the extent possible,  and where necessary 
cooperation is received, the prices or costs in one or more market economy countries that are significant producers of comparable merchandise and that either are at a level of economic development comparable to that of China or are otherwise an appropriate source for the 
prices or costs to be utilized in light of the nature of the industry under investigation, they 
should make best efforts to  ensure that their methodology for determining price 
comparability includes provisions similar to those described above. 
(b) The importing WTO Member should ensure that  is has notified its market-economy criteria 
and its methodology for determining pri ce comparability to the Committee on Anti-
Dumping Practices before they are applied. 
(c) The process of investigation should be tr ansparent and sufficient opportunities should be 
given to Chinese producers or exporters to ma ke comments, especially comments on the 
application of the methodology for determini ng price comparability in a particular case. WT/ACC/SPEC/CHN/1/Rev.7 
Page 46  
 
(d) The importing WTO Member should give no tice of information which it required and 
provide Chinese producers and exporters ample opportunity to present evidence in writing in 
particular case. 
(e) The importing WTO Member should provide  Chinese producers and exporters a full 
opportunity for the defence of their interests in a particular case. 
(f) The importing WTO Member should provide a sufficiently detailed reasoning of its 
preliminary and final determinations in a particular case.
  
 158. The representative of China stated that determ inations made by China during investigations 
initiated pursuant to applications made before the en try into force of the Draft Protocol should be free 
from challenge under the Anti-Dumping Agreement by the Members of the WTO.  He further confirmed that, notwithstanding Article 18.3 of the Anti-Dumping Agreement, 
(a) China would apply the provisions of the Anti-Dumping Agreement to: 
1. proceedings under Article 9.3, including the calculation of margins of 
dumping, in connection with anti-dumping measures adopted before the entry 
into force of the Draft Protocol("existing measures") 
2. reviews of existing measures initiate d under Articles 9.5, 11.2, and 11.3 
pursuant to requests made on or after the entry into force of the Draft 
Protocol. Any review of an existi ng measure under Article 11.3 would be 
initiated no later than five years from the date of its imposition. 
(b) China would also provide the type of judi cial review described in Article 13 of the 
Anti-Dumping Agreement with regard to proceedings under Article 9.3 and reviews 
under Articles 9.5, 11.2, and 11.3. 
 
The Working Party took no te of these commitments. 
159. The representative of China noted that pursu ant to the provisions of “Regulation on Anti-
dumping and Anti-subsidy of the People’s Republic of China”, there were four Chinese government 
bodies responsible for anti-dumping and countervaili ng duty investigations. Their identities and 
responsibilities were as follows:  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 47 
 
 
 
 47 (a) Ministry of Foreign Trade and Economic Cooperation (MOFTEC) 
Receiving anti-dumping and countervailing petitio ns; Conducting investigation on dumping 
and dumping margin and issuing relevant prelim inary determination decisions and notices;  
Negotiating with foreign interested parties on “P rice Undertaking” if necessary;  Providing 
proposal on imposition of definitive anti-dumping or countervailing duties or proposals on duty refund, etc.  There was an Anti-dumping Division established under the Department of 
Treaties and Law of MOFTEC, with responsibility to handle anti-dumping and countervailing 
investigations on alleged imports. 
 
(b) State Economics and Trade Commission (SETC) 
Responsible for the investigation of injury caused to the domestic industry by the dumped or 
subsidized imports, the extent of such injury and making injury findings. 
There was a non-permanent decision and policy-making body in SETC, named the Injury 
Investigation and Determination Committee( “IIDC”), which was composed of six 
commissioners from the relevant departments of SETC. There was a permanent executive office in charge of the investigation of injury  to the industry and submitting its findings to the 
IIDC for approval. 
(c) General Customs Administration (Customs) 
Coordinating anti-dumping investigations w ith MOFTEC; Enforcing anti-dumping measures 
such as collecting cash deposits, dumping or countervailing duties and monitoring its 
implementation. 
(d) Tariff Commission of State Council (TCSC) 
Making final decisions on whether or not to levy the anti-dumping or countervailing duties 
based on the suggestions by MOFTEC with  regard to imposing anti-dumping or 
countervailing duties and reimbursing excess amount of duties, respectively. 
14. Safeguards  
160. The representative of China stated that upon accession, China would implement its 
Regulation on Safeguard by which the future safe guard measures would be regulated.  The drafting 
work of this regulation was still under way.  The contents of this new re gulation would be fully WT/ACC/SPEC/CHN/1/Rev.7 
Page 48  
 
consistent with the Agreement on Safeguards.  He noted that, at present, China was in the process of 
drafting safeguard legislation in accordance with Article 29 of the Foreign Trade Law and the 
Agreement on Safeguards.  The Working Party took note of this commitment.  
C. EXPORT
 REGULATIONS 
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes 
to Exports 
161. Some members of the Working Party raised  concerns over taxes and charges applied 
exclusively to exports.  In their view, such tax es and charges should be eliminated unless applied in 
conformity with GATT Article VIII or lis ted in Annex 6 to the Draft Protocol. 
162. The representative of China noted that the majority of products were free of export duty, 
although 36 items, including tungste n ore, Ferrosilicon and some aluminum products, were subject to 
export duties.  He noted that the duty-paying valu e of exported goods was the F.O.B. price of the 
goods.  
2. Export Licensing and Export Restrictions 
163. The representative of China confirmed that th e list of all entities responsible for the 
authorization or approval of expor ts would be updated a nd republished in the official journal, the 
MOFTEC Gazette, within one month of any change th ereto.  The Working Party took note of this 
commitment. 
164. The representative of China said that China a pplied its export licence system to certain 
agricultural products, resource products and chem icals. China's export licencing system was 
administered in accordance with the "Interim Pr ocedures for the Export Licencing System". In 1992, 
there were 143 categories of products subject to e xport licencing which accounted for 48.3 per cent of 
the total value of the China's exports, but by 1999,  the total number of products subject to export 
licensing had been reduced to 58 categories and 73 ite ms with an export value of US$ 18.5 billion, 
taking up only 9.5 per cent of total exports. Expo rt licences for these products were issued according 
to the stipulated commodity scope respectively by  the Administrative Bureau of Quota and Licence 
(ABQL), the Special Commissioner Offices (SCO) locat ed in 16 provinces and the Commissions of 
Foreign Economic Relations a nd Trade (COFTEC) of various provinces, autonomous regions, 
municipalities directly under the central government and those with independent budgetary status.  
The main criteria used in determining whether a product was subject to export licensing, as set down 
in the Foreign Trade Law, were:  (1) maintenan ce of national security or public interests;  
[(2) protection against shortage of supply in the domestic market or exhaustion of natural resources;]   WT/ACC/SPEC/CHN/1/Rev.7 
 Page 49 
 
 
 
 49 (3) limited market capacity of importing countries or  regions;  or (4) obligations stipulated in 
international treaties.  Export licensing was also used for statistical purposes. 
165. He further noted that an application for an export licence had to be submitted to the licence 
issuing institutions authorized by MOFTEC, togeth er with documents approving the export by the 
competent departments, and other relevant material s (such as the Export Qualification Certificate for 
the enterprises, export contract and so on). The pr ocedures were the same for all export destinations. 
A decision on the request for an export licence normally took three working days. Licences were valid 
for six months and could be extended once.  FIEs  engaged in exporting products not produced by 
them were required to obtain export licences if the products to be exported were subject to the 
licensing requirement.  If the products were not s ubject to licensing, customs clearance would be 
given after examination by Customs on the basis of  export contracts and ot her relevant documents. 
166. Certain members of the Working Party noted the conditions in the GATT 1994 in regard to 
non-automatic licensing and export restrictions.  They pointed out that export prohibitions, restrictions 
and non-automatic licensing could only temporarily be applied under Article XI of the GATT 1994 to 
prevent or relieve critical shortages of foodstuffs  or other products essential to an exporting WTO 
Member.  Article XX of the GATT 1994 also allowed fo r restrictive export measures, but only if such 
measures were made effective in conjunction w ith restrictions on domestic production or 
consumption. 
167. Members of the Working Party welcomed the steady reduction in the number products subject 
to export licensing in China.  Certain members reiterated their request for the submission of a 
complete list of restrictions presently applied.   These members expressed concern that the remaining 
number was still high, covering about ten per cent of e xport trade, and requested that they be either 
reduced further or eliminated by the date of a ccession in order to achieve full compatibility with 
GATT requirements.  Some members expressed partic ular concern about export restrictions on raw 
materials or intermediate products that could be subject to further processi ng, such as tungsten ore 
concentrates, rare earths and other metals. 
168. The representative of China confirmed that Chin a would abide by WTO rules in respect of 
non-automatic export licensing and export restrictions.  The Foreign Trade Law would also be 
brought into conformity with GATT requirements.  Moreover, export restrictions and licensing would 
only be applied, after the date of accession, in  those cases where this was justified by GATT 
provisions.  [The representative of China further c onfirmed that export restrictions on tungsten ore WT/ACC/SPEC/CHN/1/Rev.7 
Page 50  
 
concentrates would be eliminated upon entry into fo rce of the Draft Protocol.]  The Working Party 
took note of these commitments. 
169. The representative of China stat ed that China prohibited expor t of narcotic drugs, poisons, 
materials containing State secrets, precious and rare animals and plants. 
170. Some members of the Working Party expressed c oncern about China's restrictions on exports 
of silk.  Certain other members expressed concer n about export restrictions on other goods, in 
particular raw materials or intermediate products th at could be subject to further processing, such as 
tungsten ore concentrates, rare earths and other me tals.  Members of the Working Party urged China 
to ensure that any such restrictions that were im posed or maintained complied with the terms of the 
WTO Agreement and the Draft Protocol. 
171. The representative of China confirmed that upo n entry into force of the Draft Protocol, 
[remaining non-automatic export] restrictions on expo rts would be [notified to the WTO annually and 
would be] eliminated unless they could be justifie d under the WTO Agreement or the Draft Protocol.  
The Working Party took note of this commitment. 
3. Export Subsidies 
172. Some members of the Working Party noted that China had provided a list of prohibited 
subsidies falling within the scope of Article 3 of the SCM Agreement and a timetable for their 
elimination, in Annex 5b of the Draft Protocol.  T hose members considered this list to be incomplete. 
173. The representative of China confirmed, as provided in Section 11.3 of the Draft Protocol,  that 
it would eliminate all export subsidies, within the meaning of Article 3.1(a) of the SCM Agreement, 
by the time of accession.  To this end, China w ould, by accession, cease to maintain all pre-existing 
export subsidy programmes and, upon accession, make no further payments or disbursements, nor 
forego revenue or confer any ot her benefit, under such programmes.  This commitment covered 
subsidies granted at all levels of government, including tax exemptions, reductions, deferrals or 
forgiveness to enterprises, which were contingent, in law or in fact, upon an obligation to export.  The 
Working Party took note of this commitment. 
174. On the same basis, the represen tative of China confirmed that China would eliminate, upon 
accession, all subsidies contingent upon the use of  domestic over imported goods, within the meaning 
of Article 3.1(b) of the SCM Agreement.  Th e Working Party took note of this commitment.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 51 
 
 
 
 51 D. INTERNAL  POLICIES  AFFECTING  FOREIGN  TRADE  IN GOODS 
1. Taxes and Charges Levied on Imports and Exports 
175. Some members of the Working Party expressed concern about the application of the VAT and 
additional charges levied by sub-central government s on imports.  Non-discriminatory application of 
the VAT and other internal taxes was deemed essential. 
176. The representative of China confirmed that from the entry into force of the Draft Protocol, 
China would ensure that its laws and regulations relating to all fees, charges or taxes levied on 
imports and exports would be in full conformity with its WTO obligations, including Articles I, III:2 
and 4, and XI:1 of the GATT 1994, and that it would al so implement such laws and regulations in full 
conformity with these obligations.  The Work ing Party took note of this commitment. 
2. Industrial Policy, including Subsidies 
177. Some members of the Working Party expressed c oncern that the special features of China's 
economy, in its present state of re form, still created the potential for a certain level of trade-distorting 
subsidization;  this could have an impact not only on access to China's domestic market, but also on 
the performance of Chinese exports in the markets of other WTO Members, and should be subject to 
effective SCM Agreement disciplines.  In view of this, some members felt that it would be inappropriate for China to benefit from certain provi sions of Articles 27 and 29.  The representative of 
China, in turn, considered that certain provisions of these Articles should be available to China, and 
informed the Working Party of the efforts being un dertaken, as part of its ongoing reform process, to 
reduce the availability of certain types of subs idies.  China was committed to implementing the 
SCM Agreement in a manner that wa s fair and equitable to China and to other WTO Members.  In 
line with this approach, the representative of China st ated his intention to reserve the right to benefit 
from the provisions of Articles 27.10, 27.11, 27.12 and 27.15 of the SCM Agreement, while 
confirming that China would not seek to invoke Artic les 27.8, 27.9 and 27.13 of the SCM Agreement.  
The Working Party took no te of these commitments. 
178. Some members of the Working Party, in view  of the special characteristics of China's 
economy, sought to clarify that when state-owne d enterprises (including banks) provided financial 
contributions, they were doing so as government acto rs within the scope of Article 1.1(a) of the 
SCM Agreement.  The representative of China noted , however, that such financial contributions 
would not necessarily give rise to a benefit within the meaning of Article 1.1(b) of the SCM Agreement.  He pointed out that China's objective was that state-owned enterprises, including WT/ACC/SPEC/CHN/1/Rev.7 
Page 52  
 
banks, should be run on a commercial basis and be re sponsible for their own profits and losses.  The 
Working Party took note of this commitment. 
179. Some members of the Working Party, while understanding the difficulties involved in 
gathering information, raised concerns over the comprehensiveness of the subsidy notification which 
China had provided in Annex 5 to the Draft Protocol, as last modified on 31 May 2000.  Some members of the Working Party explained that, as an illustration of the above, certain types of 
subsidies did not appear in Annex 5.  Those members of the Working Party first identified state 
support through the banking system, notably governme nt-owned banks, in the form of policy loans, 
the automatic roll-over of unpaid principal and inte rest, forgiven and non-performing loans, and the 
selective use of below-market interest rates.  Some  members also referred to unreported tax subsidies, 
investment subsidies and subsidies provided by sub-central governments, some of which favoured 
exporting firms.  Other members mentioned subsid ies granted to the telecommunications, footwear 
and shipbuilding sectors.  The representative of China explained that, in common with many other Members, China had experienced difficulty in obtaining accurate data about all types of subsidies.  He 
also indicated that China was attempting to reduce th e availability of certain types of subsidies, in 
particular by reforming its tax system and ma king government-owned banks  operate on a commercial 
basis.  The representative of China stated that  China would progressively work towards a full 
notification of subsidies, as contemplated by Artic le 25 of the SCM Agreement.  The Working Party 
took note of this commitment. 
180. Some members of the Working Party also raised  concerns regarding the subsidies that China 
provided in connection with SEZs and other special economic areas.  Some of these appeared to be 
contingent upon export performance or on the u se of domestic goods.  The representative of China 
noted that the main purpose of such subsidies was to promote regional development and foreign investment.  He confirmed that China would, up on accession, eliminate any such subsidies which 
were inconsistent with the SCM Agreement.  The Working Party took note of this commitment. 
181. Some members of the Working Party requested  information from China on the Steel Import 
Substitution Programme, which appeared to provide e xport subsidies to the big four steel groups in 
China.  In response, the represen tative of China clarified that China did not collect VAT on imported 
and domestically produced steel used as raw material  for the processing trade.  Such a policy, in his 
view, was consistent with WTO rules and the prac tices of many WTO Members, and thus should not 
be considered as subsidies.   
182. Some members of the Working Party request ed information from China on the "China 
High-Tech Product Export Catalogue", which set forth central government export policies for the  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 53 
 
 
 
 53 telecommunications, computer software, aviation and aerospace, lasers, pharmaceuticals, medical 
equipment, new materials and energy industries.  In response, the representa tive of China clarified 
that products listed in the Cata logue would enjoy full VAT rebate  treatment, while other exported 
products would only be given partial VAT rebate  treatment.  Such a policy, in his view, was 
consistent with Article XVI of the GATT 1994 and relevant Annexes of the SCM Agreement.  He 
further confirmed that the VAT rebates were applied only to exported products and not to 
domestically consumed products. 
3. Technical Barriers to Trade 
183. The representative of China stated  that China had set up a TBT notification authority and two 
enquiry points which had been notified to the TBT Committee. Upon accession, notices of adopted and proposed technical regulations,  standards and conformity assessment procedures would be 
published.  The names of the publications where this  information could be found would be included in 
China’s Statement of Implementation and Administ ration under Article 15.2 of the TBT Agreement, 
which would be submitted upon entry into force of the Draft Protocol.  The Working Party took note 
of this commitment. 
184. The representative of China stated that, furthe r to China's implementation of WTO provisions, 
internal mechanisms would exist, upon accession, to inform and consult with, on an ongoing basis, 
government agencies and ministries (at national and s ub-national levels), and private sector interests 
on the rights and obligations under the GATT 1994 a nd the TBT Agreement.  Concerning questions 
from some members of the Working Party on the opportunity for public consultation and comment on 
proposed standards and technical regulations, th e representative of China confirmed that, upon 
accession, China’s procedures would clearly indicate th at such opportunity ex isted and that comments 
would be given due consideration regardless of origin.  The represen tative of China also confirmed 
that, upon accession, China would have in place minimum timeframes for allowing public comment 
on proposed technical regulations, standards and c onformity assessment procedures as set out in the 
TBT Agreement and relevant decisions and recomme ndations adopted by the TBT Committee.   The 
Working Party took note of these commitments.  
185. Several members of the Working Party asked  for information on the extent to which 
international standards were used as the basis for existing Chinese standards, details on China’s plans 
for using international standards as the basis for new standards, and details on China’s plans for 
reviewing existing standards so as to harmonize th em with relevant international standards.   WT/ACC/SPEC/CHN/1/Rev.7 
Page 54  
 
186. In response, the representative of Ch ina stated that, as a full member of,  for example, ISO, 
IEC and ITU, China actively participated in the de velopment of relevant in ternational standards.  
With China’s efforts in restructuring government agencies, China would, not later than four months  
after its accession to the WTO Agreement, notify acceptance of   the Code of Good Practice.  The 
representative of China stated that for government  standardizing bodies, a clear policy existed to 
periodically review existing standards, inter alia , to harmonize them with  relevant international 
standards where appropriate .  Furthermore, China would speed up its  process of revising the current 
voluntary  national , local and sectoral standards so as to harmoni ze them with international standards.  
The Working Party took no te of these commitments. 
187. Some members of the Working Party expressed  concern that China’s use of the terms 
"technical regulations" and "standards" was not always  consistent with the definitions found in the 
TBT Agreement, e.g., China sometime s used the word "standards" to refer to mandatory requirements 
that fell within the definition of "technical re gulations".  These members noted that China had 
developed a number of different types of measures, re ferred to as "standards", at levels other than the 
central government, in particular, regi onal, sectoral, and enterprise levels. 
188. In response, the representative of China stated that China, in its notifications under the TBT 
Agreement, including its notifications under Article 15.2 and in publications referenced therein, and 
in modifications of existing measures, would use the terms "technical regulations" and "standards" 
according to their meanings under the TBT Agreement.  The Working Party took note of these 
commitments. 
189. Some members of the Working Party also express ed concern that China did not use relevant 
and available international standards as the basis for some of its existing technical regulations.  
Several members asked for information on the extent to which international standards were used as 
the basis for existing technical regulations, details on China’s plans for using international standards 
as the basis for new technical regulations, and details on China’s plans for reviewing existing 
technical regulations so as to harmonize standards re ferenced in them with international standards or 
their relevant parts. 
190. In response, the representative of China stated that since 1980, China had taken the active 
adoption of international standards as the basis for technical regulations as a basic policy of 
accelerating industrial modernization and promoti ng economic growth. The representative of China 
confirmed that this policy also required technical regulations to be reviewed every five years, inter 
alia, to ensure that international sta ndards were used in accordance with  Article 2.4 of the Agreement.  
He also confirmed that China would provide this po licy as part of its notification under Article 15.2 of  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 55 
 
 
 
 55 the Agreement .  He noted that as a result of China’s efforts in the past 20 years, the use  of 
international standards as the basis for technical re gulations had increased from 12 per cent to 40 per 
cent.  China had begun formulating a standardizati on development programme in a bid to meet the 
challenges of the 21st century and the requirements provided for in the TBT Agreement, and had 
undertaken to further increase the use of internati onal standards as the basis for technical regulations 
by 10 per cent  in five years.  The representativ e of China also confirmed that China would make 
publicly available procedures to implement Article 2.7 of the Agreement.  The Working Party took 
note of these commitments. 
191. Bearing in mind the relevant provisions of the TBT Agreement, some members of the 
Working Party asked China to identify local government bodies, directly below the central 
government level, and non-governmental organizati ons, that were authorized to adopt technical 
regulations or conformity assessment procedures.  The representative of China replied that China 
would provide a list of relevant local  govern mental and non-governmental bodies upon its accession 
to the WTO Agreement as part of its notifica tion under Article 15.2 of the TBT Agreement. 
192. With respect to conformity assessment proce dures, several members of the Working Party 
asked for information about the extent to which international guides and recommendations were used 
as the basis for existing conformity assessment pro cedures, details on China’s plans for using such 
guides and recommendations as the basis for new conformity assessment procedures, and details on China’s plans for reviewing existing conformity assessment procedures so as to harmonize them with 
relevant international guides and recommendations. 
193. In response, the representative of China stated that China played a full part in the preparation 
by appropriate international standardizing bodies of guides and recommendations for conformity 
assessment procedures, e.g., as a full member of IS O CASCO.  He stated that it was difficult to 
quantify the extent to which such guides and reco mmendations were used as the basis for existing 
conformity assessment procedures.  He confirme d that China would use relevant guides or 
recommendations issued by international standa rdizing bodies as the basis for new conformity 
assessment procedures in accordance with Article 5.4 of the TBT Agreement.  The representative of 
China also stated that existing conformity assessme nt procedures were reviewed concurrently with 
and under the same policy as re lated technical regulations, inter alia , to ensure the use of relevant 
international guides or recommendations in accordance with Article 5.4 of the TBT Agreement.  He 
also confirmed that, upon entry into force of the Draft Protocol, China would ensure that the same 
conformity assessment procedures were applied to both imported and dom estic products.  The 
Working Party took note of these commitments. WT/ACC/SPEC/CHN/1/Rev.7 
Page 56  
 
194. Some members of the Working Party expr essed concerns about the complexity and 
inconsistency of China's conformity assessment regi me with WTO TBT requirements.  In particular, 
those members noted that conformity assessme nt on imported and domes tic products was not 
performed by the same governmental entities and that  this situation could result in less favourable 
treatment for imports.  In response, the representa tive of China stated that the Chinese government 
had already decided to merge CIQ-SA and CSBTS into the State General Administration of the 
People’s Republic of China for Quality Supervis ion and Inspection and Quarantine (AQSIQ), under 
its policy of development of market economy a nd further reform and opening up in China. The 
representative of China confirmed that the AQSIQ was responsible for all policies and procedures 
related to conformity assessment in China.  He further stated that other government ministries and 
agencies developed conformity assessment policies and procedures but that these had to be authorized 
by AQSIQ before they could be enacted. 
195. Some members of the Working Party expressed c oncern about the consistency of the Law of 
the People’s Republic of China on Import-Export Commodity Inspection (“the Law”), and the 
Regulations for the Implementation of that Law (“the Implementing Regulations”), with the TBT 
Agreement.  In particular, provisions for technical  regulations and conform ity assessment procedures 
did not adequately address fundamental obligations such as transparency, non-discrimination, national 
treatment, and the avoidance of unnecessary barriers to trade. 
196. Some members of the Working Party expressed concern about  a conformity assessment 
procedure known as Statutory In spection, which was described, inter alia , in Articles 4, 5, and 6 of 
the Law and Articles 4, 5, and 9 of the Implementing Regulations.  They stated that it was inconsistent 
with the principle of national treatment and constitu ted an unnecessary obstacle to international trade.  
Members of the Working Party agreed that WT/ACC/ CHN/xx, a list of products subject to Statutory 
Inspection, did not prejudge the legal status, nature  or effects of notified technical regulations and 
standards under the WTO Agreement.  The representativ e of China stated that China would bring the 
Law and Implementing Regulations, as well as other relevant legislation and regulations, into 
conformity with the TBT Agreement by the date of  accession.  The Working Party took note of this 
commitment. 
197. Some members of the Working Party expressed concern  about a conformity assessment 
procedure, and the application thereof, known as the Safety Licence System for Import Commodities 
("the System"), which was described in Article 22 of the Law and Article 38 of the Implementing Regulations.  They stated that it was inconsiste nt with the principle of national treatment and 
constituted an unnecessary obstacle to international tr ade (e.g., due to the frequent plant inspections 
required).  In response, the representative of Chin a confirmed that, for technical regulations and  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 57 
 
 
 
 57 conformity assessment procedures related to goods cu rrently subject to the Sa fety Licence System for 
Import Commodities, relevant legislation and re gulations would be brought into full conformity   with 
the TBT Agreement by the date of accession.  Th e Working Party took note of this commitment 
198. Responding to the concerns of members of the Working Party, the representative of China 
confirmed that to eliminate unnecessary barriers to trade, China would not maintain multiple or 
duplicative conformity assessment procedures, nor would it impose requirements exclusively on 
imported products.  The Working Party took note of this commitment. 
199. Some members of the Working Party expressed c oncern with respect to the confidentiality of 
information in connection with conformity assessment  procedures undertaken by China.  In response, 
the representative of China confirmed that China w ould fully implement the obligations of Article 
5.2.4 of the TBT Agreement in this regard.  Th e Working Party took note of this commitment. 
200. Some members of the Working Party expressed  concern about China's practice of not 
accepting the results of conformity assessment by bodies in other WTO Members.  In this regard, 
those members noted the obligation of unilateral acce ptance of the results of conformity assessment as 
described in Article 6.1 of the TBT Agreement.  The representative of China responded that products 
certified by bodies recognized by China would require no additional conformity assessment 
procedures in China, except for random sampli ng of said products.  Furthermore, where random 
sampling was undertaken and China’s test results diff ered from the test results of competent bodies in 
other WTO Members, the representative of China conf irmed that China would act in accordance with 
international guidelines and recommendations, wher e these existed, or would provide a process of 
review with the objective of resolving such di fferences.  Some members of the Working Party 
requested China to make public and update on  an ongoing basis information on conformity 
assessment bodies that were recognized  by China.  The representative of China confirmed that China 
would provide this information.  The Working Party took note of these commitments. 
201. Concerning foreign and joint-venture conform ity assessment bodies, certain members of the 
Working Party noted that China should not maintain  requirements which had the effect of acting as 
barriers to their operation, unless otherwise specifi ed in China’s Schedule of Specific Commitments.   
The representative of China replied that China would not maintain such requirements.  Some 
members also observed that all foreign or joint venture conformity assessment bodies that met 
China’s requirements should be eligible for ac creditation and accorded national treatment.  The 
representative of China confirmed that the accr editation requirements would be transparent and WT/ACC/SPEC/CHN/1/Rev.7 
Page 58  
 
provide national treatment to foreign conformity assessment bodies.   The Working Party took note of 
these commitments. 
202. Some members of the Working Party raised sp ecific concerns regarding such matters as 
(a) registration of initial imports of chemical pr oducts, (b) procedures to obtain and apply “CCIB” 
safety mark and the "Great Wall" mark, (c) automo biles and parts, and (d) the safety and quality 
licence system for boilers and pressu re vessels.  In response, the re presentative of China stated that 
China would  implement the following measures prior to accession to the WTO, unless otherwise 
indicated: 
(a) Registration of Initial Imports of Chemical Products 
− Enact and implement, within one year afte r its accession to the WTO Agreement, a new 
law and relevant regulations  regarding assessment and control of chemicals for the 
protection of the environment, in which comp lete national treatment and full consistency 
with international practices would be ensured. 
− Ensure that chemicals listed in the "invento ry chemicals" annexed to the above new law 
and its regulations would be exempted from a registration obligation and that a unified 
assessment procedure would be established for domestic and imported products under the 
new law and its regulations. 
(b) CCIB Safety Mark and the "Great Wall" Mark 
− Unify the existing certification marks, i.e., the “CCIB” mark and the “Great Wall” mark 
into a new certification mark.  For like imported and domestic goods, all bodies and 
agencies would issue the same mark  and charge the same fee. 
− Accept testing reports for products subject  to the International Electrotechnical 
Commission’s System for Conformity Testing to Standards for Safety of Electrical Equipment (IECEE CB Scheme) to which China was a party, and simplify the procedures 
for obtaining the new, unified certification mark 
− Shorten the time period needed for importers  to obtain both mark s regarding the same 
products,   to no more than  three months . 
(c) Automobiles and Parts 
− Unify its laws, regulations and standards a pplied to domestic and imported automobiles 
and parts.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 59 
 
 
 
 59 − Formulate, publish and implement laws a nd regulations, standards and implementing 
regulations to establish a transparent system  under which all the laws and regulations 
would be applied so as to accord imported pr oducts treatment no less favourable than that 
accorded to like products of national origin. 
(d) Safety and Quality Licence System for Boilers and Pressure Vessels 
− Accord imported products treatment no less fa vourable than that accorded to products of 
national origin, including fees imposed fo r conformity assessment and the effective 
period of factory certification. 
− Adopt international standards as the basis fo r technical regulations and exempt imported 
products from inspection where like domestic  products were not subject to such 
inspection. 
The Working Party took no te of these commitments. 
203. The representative of China confirmed that, except as otherwise specified in the Draft 
Protocol, China would apply all obligations under the TBT Agreement from the date of accession.  
The Working Party took note of this commitment. 
4. Sanitary and Phytosanitary Measures 
204. Some Members of the Working Party expressed c oncerns in relation to the use by China of 
sanitary and phytosanitary ("SPS") procedures as non-tariff barriers and raised specific instances 
where they considered that Chin a's measures were not consistent with the WTO Agreement on the 
Application of Sanitary and Phytosanitary Measu res ("SPS Agreement").  Members sought assurances 
that China would only use SPS measure s to the extent necessary to protect human, animal or plant life 
or health, and that such measures would be based fully on scientific principles.  
205. The representative of China stated that pursuan t to the provisions of the SPS Agreement, 
China applied SPS measures only to the extent necess ary to protect the life and health of human 
beings, animals and plants.  He also noted th at most of China's SPS measures were based on 
international standards, guidelines and recommenda tions.  China would not apply SPS measures in a 
manner which would act as a disguised restriction on  trade.  In accordance with the SPS Agreement, 
China would ensure that SPS measures would not be maintained without sufficient scientific 
evidence.  The Working Party to ok note of these commitments.  WT/ACC/SPEC/CHN/1/Rev.7 
Page 60  
 
206. Members of the Working Party expressed the vi ew that China should comply with the SPS 
Agreement from the date of China's accession and sh ould ensure conformity with the SPS Agreement 
of all its laws, regulations, decrees, requirement s and procedures relating to SPS measures.  In 
response, the representative of China confirmed that China would fully comply with the SPS 
Agreement and would ensure the conformity with the SPS Agreement of all of its laws, regulations, 
decrees, requirements and procedures relating to  SPS measures from the date of accession.  The 
Working Party took note of these commitments.  
207. Members of the Working Party noted that China's notification of laws, regulations and  other 
SPS measures, referred to in the Draft Protocol, was provided in document WT/ACC/CHN/33.  Members of the Working Party agreed that this notif ication did not prejudge the legal status under the 
WTO Agreement of the nature or effects of the notified laws, regulations  and other SPS measures. 
208. The representative of China said that China ha d set up an SPS notification authority and an 
SPS enquiry point which would be notified to the SPS Committee.  SPS measures, including those relating to inspection, had been published in publi cations such as the MOFTEC Gazette.  Information 
could also be gathered from the SPS notification authority or from China's SPS enquiry point. 
5. Trade-Related Investment Measures 
209. The representative of China confirmed that upon accession, as set forth in the Draft Protocol, 
China would comply fully with the TRIMs Agreement, without recourse to Article 5 thereof, and would eliminate foreign-exchange balancing an d trade balancing requirements, local content 
requirements and export performance requirements. Chinese authorities would not enforce the terms 
of contracts containing such requirements.  The allocation, permission or rights for importation and 
investment would not be conditional upon performan ce requirements set by national or sub-national 
authorities, or subject to secondary conditions covering, for example, the conduct of research, the provision of offsets or other forms of industrial compensation including specified types or volumes of 
business opportunities, the use of local inputs or the transfer of technology.  Permission to invest, 
import licences, quotas and tariff rate quotas would be granted without regard to the existence of 
competing Chinese domestic suppliers.  [The repr esentative of China noted, however, that the 
freedom of contract of enterprises should be gua ranteed.]  The Working Party took note of this 
commitment. 
210. In the context of discussions on the government's  Industrial Policy for the Automotive Sector, 
the representative of China confirmed that this polic y would be amended to en sure compatibility with 
WTO rules and principles.  The Working Party took note of this commitment.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 61 
 
 
 
 61 211. The representative of China added that amendments would be made to ensure that all 
measures applicable to motor vehicle producers restricting the categories, types or models of vehicle 
permitted for production, would grad ually be lifted.  Such measures would be completely removed 
two years after accession, thus ensuring that motor vehicle producers would be free to choose the categories, types and models they produced.  Howe ver, it was understood that category authorizations 
by the government could continue to distinguish be tween trucks and buses, light commercial vehicles, 
and passenger cars (including multi-purpose vehicles a nd sport utility vehicles).  The Working Party 
took note of this commitment. 
212. The representative of China confirmed that China also agreed to raise the limit within which 
investments in motor vehicle manufacturing could be approved at provincia l government level only, 
from the current level of US$30 million, to US$6 0 million one year after accession, US$90 million 
two years after accession, and US$150 million four years after accession.  The Working Party took 
note of this commitment. 
213. With respect to the manufacture of motor vehi cle engines, the representative of China also 
confirmed that China agreed to remove the 50 pe r cent foreign equity limit for joint-ventures upon 
accession.  The Working Party took note of this commitment. 
6. State Trading Entities 
214. Some members of the Working Party expressed concern that the activities of China's state 
trading enterprises were not sufficiently tran sparent and were not in accordance with WTO 
obligations.  The representative of China indicated, ho wever, that China's state trading enterprises had 
full management autonomy and responsibility for th eir own profits and losses and that China had 
undertaken broad and significant commitments to improve the transparency of state trading 
enterprises' operation and the measures relating to such operation.  
215. The same members of the Working Party also st ated that China should ensure that the import 
purchasing practices and procedures of state tradi ng enterprises were fully transparent, and in 
compliance with the requirements of the WTO Agreem ent.  They considered that China should also 
refrain from taking any measure to influence or di rect state trading enterp rises as to the quantity, 
value, or country of origin of goods purchased or  sold, except in accordance with the requirements of 
the WTO Agreement.  Those member s also stated that as part of  China's notification under the 
GATT 1994 and the Understanding on the Interpreta tion of Article XVII of the GATT 1994, China WT/ACC/SPEC/CHN/1/Rev.7 
Page 62  
 
should also notify information on state trading, including, in the case of state trading of exported 
goods, domestic procurement prices, contract terms for delivery and financing terms and conditions. 
216. In response, the representative of China stat ed that its state trading enterprises had full 
management autonomy and responsibility for their ow n profits and losses.  However, some members 
of the Working Party again stated that China shoul d undertake a commitment to  ensure that all state 
trading enterprises complied with the requirement s of the WTO Agreement.  The representative of 
China noted that a list of products subject to state tr ading had been provided in Annex 2a of the Draft 
Protocol.  He also confirmed that information on state trading enterprises, as required by the Draft 
Protocol, would be supplied, but stated that such  notification should be without prejudice to the 
commercial interests of the state trading enterprises.  
217. Members of the Working Party took note of th e specific arrangements that would apply for 
fertilizers and crude and processed oil.  A key feat ure of those arrangements related to the annual 
allocation of import quantities.  The differences in  the regimes that would apply to those products 
were noted, in particular in regard to the obliga tion on state enterprises trading in fertilizers to carry 
over to the next year any unused import quantities.  
218. Some members of the Working Party requested  assurances that, for oil products, quantities 
reserved for non-state traders would be allocated in such a manner that they would be fully utilized.  
In this respect, the representativ e of China confirmed that imports allocated to non-state traders of 
crude and processed oil, as specified in Annex 2a of the Draft Protocol, would be carried over to the 
next year if they were not fully utilized.  In add ition, the representative of China agreed that China 
would publish, on a quarterly basis, the requests fo r imports that had been made by non-state traders, 
as well as the licences granted, and would supply in formation relevant to such traders upon request.  
The Working Party took no te of these commitments. 
219. Some members of the Working Party noted that  prior to accession, some enterprises in China 
were permitted to import goods for their prod uction purposes, including those goods included in 
Annex 2a.  The representative of China confirmed th at, notwithstanding section 5, paragraph 1, of the 
Draft Protocol, non-state trading enterprises, includi ng private enterprises, would still be permitted to 
import such goods for production purposes and that national treatment would be provided to such 
imports.  The Working Party took note of these commitments.  
220. Some members of the Working Party expressed c oncerns about supplies of raw materials in 
the textiles sector, and particularly in regard to s upplies of silk, in the light of China's position as the 
major world supplier of silk, currently subject to state trading rights concerning exports.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 63 
 
 
 
 63 221. In this regard, the representative of China c onfirmed that China would progressively abolish 
the system of state trading in respect of silk by measures increasing and extending trading rights, with 
the result that China would remove completely the silk products set out in numbers 10 and 11 of 
Annex 2a-2 to the Draft Protocol (list of products  subject to state trading on exports) and grant the 
right to trade in such products to all individuals  and enterprises no later than 1 January 2005.  Pending 
the implementation of this right, China undertook no t to introduce any changes of a more restrictive 
nature to the existing structures in place for the su pply of silk.  The representative of China further 
confirmed that access to supplies of raw materials in  the textiles sector would remain at conditions no 
less favorable than for domestic users, and gave hi s assurance that access to supplies of raw materials 
as enjoyed under existing arrangements would not be adversely affected following China's accession 
to the WTO.  The Working Party took note of these commitments. 
222. Members of the Working Party noted that dom estic prices for most agricultural commodities 
in China were higher than world prices, and this di fferential allowed China's state trading enterprises 
to import at low prices and then mark up the pr ice when selling the product to wholesalers and 
end-users. Some members expressed concern that th is practice could become more widespread when 
access opportunities were created under TRQs.  Those members were particularly concerned that 
mark-ups could be used to reduce the competitiv eness of imported products and limit the range of 
qualities and grades available to end-users in China.  The representative of China stated that currently 
state trading enterprises did not mark up imported products; instead, they only charged a nominal 
transaction fee.  Consequently, China claimed that its practice was consistent with WTO obligations, 
did not result in any trade-distorting effect, and th at under China's law limits existed on the fees that 
could be charged by state trading enterprises. 
223. The representative of China stated  that China would ensure that no price increase in respect to 
imports, in particular by state trading enterprises, would result in protection beyond that allowed in its 
Schedule of Concessions and Commitments on Goods or  that was not otherwise justified under WTO 
rules.  The Working Party took note of this commitment. 
7. Special Economic Areas 
224. Members of the Working Party noted that th ere was insufficient information available 
concerning special economic areas within China's custom s territory, including border trade regions 
and minority autonomous areas, Special Economic Z ones ("SEZs"), open coastal cities, economic and 
technical development zones and other areas where sp ecial regimes for tariffs, taxes and regulations WT/ACC/SPEC/CHN/1/Rev.7 
Page 64  
 
had been established (collectively referred to as "speci al economic areas"), in particular their names, 
geographic boundaries, and relevant laws, regul ations and other measures relating thereto. 
225. In response, the representative of China st ated that since 1979 China had established a 
number of special economic areas where more open po licies were applied.  They included five SEZs, 
14 open coastal cities, six open cities along the Ya ngtze River, 21 provincial capital cities and 13 
inland boundary cities.  Those speci al economic areas enjoyed greater  flexibility in utilizing foreign 
capital, introducing foreign technology and conduc ting economic cooperation overseas.  At present, 
foreign investors were entitled to certain preferential treatment.  
226. The representative of China further stated that  FIEs located in SEZs or the Economic and 
Technical Development Zones of open coastal cities were entitled to a corporate income tax rate of 15 
per cent (the normal income tax was 33 per cent).  Pr ofits remitted abroad by foreign investors were 
exempted from income tax.  The preferential inco me tax rate of 15 per cent was applicable to 
technology-intensive or knowledge-intensive items or projects with foreign investment of over 
US$30 million, as well as enterprises that operated in the fields of energy, transport and port 
construction.   
227. The representative of China noted that throughout the customs territory of China, a socialist 
market economy system was applied.  In 1999, the foreign trade volume of SEZs accounted for nearly 
one fifth of the nation's total.  The national laws and regulations on taxation were applicable to SEZs 
in a uniform manner. 
228. In response to further requests fo r information, the representative of China indicated that there 
was no plan to establish any new SEZs. The special preferential tariff policies applied to SEZs had 
been eliminated. With the development of Chin a's economic reform and opening up, China would 
implement its tariff policy uniformly throughout its customs territory. Members of the Working Party expressed concern that imported products introduced  from these special economic areas into other 
parts of China's customs territory should be subject to the same treatment in the application of all 
taxes, import restrictions and customs duties and other charges as that normally applied to imports 
into the other parts of China's cu stoms territory. The representative of  China stated that China would 
undertake to ensure such non-discriminatory treat ment.  The Working Party took note of this 
commitment. 
229. Some members of the Working Party also ra ised concerns as to whether the assistance 
provided to minority autonomous regions and other areas of economic poverty was consistent with 
WTO requirements.  In response, the representa tive of China confirmed that China had a clear 
commitment to uniform administration of the trade regime within each such area and that, upon  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 65 
 
 
 
 65 accession, China would ensure that such assistan ce would be implemented consistent with WTO 
obligations.  The Working Party t ook note of this commitment. 
230. Some members of the Working Party requested that China take steps to ensure that all 
products imported into the other parts of the cust oms territory of China from special economic areas 
would be subject to the same normal customs du ties and charges as any other product imported into 
the customs territory of China.  In particular , those members requested that China undertake a 
commitment to apply all taxes, charges and measur es affecting imports, including import restrictions 
and customs and tariff charges, that were normally a pplied to imports into the other parts of China's 
customs territory to all imported products, including physically incorporated components, entering China's customs territory from the special economic areas. 
231. The representative of China confirmed that Ch ina would strengthen the uniform enforcement 
of taxes, tariffs and non-tariff measures on trade between its special economic areas and the other 
parts of China's customs territory.  China further confirmed that statistics on trade between China's 
special economic areas and the other parts of its cu stoms territory would be maintained and improved, 
and would be notified to the WTO on a regular b asis.  The Working Party took note of these 
commitments. 
232. Some members of the Working Party requested that China notify the WTO Secretariat of all 
the relevant laws, regula tions and other measures relating to its special economic areas.  They asked 
that the notification list and identify all those speci al economic areas.  Those members also requested 
that China notify the WTO Secretariat promptly, but in any case within 60 days, of any additions or 
modifications to its special economic areas, including  notification of the laws, regulations and other 
measures relating thereto.   
233. The representative of China confirmed that  China would provide information in its 
notifications describing how the special trade, tariff,  and tax regulations app lied were limited to the 
designated special economic areas, including info rmation concerning their enforcement.  The 
Working Party took note of this commitment. 
234. In response to concerns raised by some memb ers of the Working Party, the representative of 
China confirmed that any preferential arrangements provided to enterprises located within the special 
economic areas would be provided on a non-discrimin atory basis.  The Working Party took note of 
this commitment.  WT/ACC/SPEC/CHN/1/Rev.7 
Page 66  
 
8. Government Procurement 
235. The representative of China stated that in orde r to promote China's government procurement, 
the Ministry of Finance promulgated the Inte rim Regulations on Government Procurement in 
April 1998.  The Interim Regulations were stipulated  in line with the spirit of the WTO Agreement on 
Government Procurement ("GPA") and on the basis of  the relevant provisions of the United Nations 
Model Law on Procurement of Goods , Construction and Services while making reference to the laws 
and regulations of some WTO Members on govern ment procurement. The policy and procedure 
regarding government procurement provided for therei n were consistent with international practice. 
China stuck to the fundamental principles of being open, fair, equitable, efficient and in the public 
interest when carrying out government procuremen t.  At present, China was formulating the 
Government Procurement Law. 
236. Some members of the Working Party stated that  China should become a Signatory to the GPA 
and that prior to its accession to the GPA, China sh ould conduct all government procurement, within 
the meaning of the Draft Protocol, in a transpar ent and non-discriminatory manner.  Those members 
noted that China's public entities engaged excl usively in commercial activities would not be 
conducting government procurement and thus laws, regulations and other measures regulating these 
entities' procurement practices would be fully subject to WTO requirements. 
237. The representative of China stat ed that China intended to beco me a Signatory to the GPA and 
that until such time, all government  entities at the central and sub- central level would conduct their 
procurement in a transparent manner and provide a ll foreign suppliers with equal opportunity to 
participate in that procurement pursuant to the prin ciple of MFN treatment.  Such procurements would 
be subject only to laws, regulations, judicial decisi ons, administrative rulings of general application, 
and procedures (including standard contract clauses)  which had been published and made available to 
the public.  The Working Party took note of these commitments. 
238. Noting China's intention to become a Signatory  of the GPA, some members of the Working 
Party stated that China should, upon entry into for ce of the Draft Protocol, seek to become an observer 
to the GPA, and should initiate negotiations for membership in the Agreement by tabling an 
Appendix 1 offer within two years of accession.   
239. [The representative of China responded that Chin a would initiate negotiations for membership 
in the GPA by tabling an Appendix 1 offer within  two years of accession.  The Working Party took 
note of this commitment.]  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 67 
 
 
 
 67 240. The representative of China stated that in 2005 and, as necessary, every two years thereafter, 
there would be a review to examine China’s ability to accede to the GPA.  Until such time as China 
became a member of the GPA, Ch ina committed itself to apply the MFN principle to all procurement 
by public authorities at all levels.  China would ensu re that, if a procurement by one of its government 
bodies or authorities at central or sub-central level, or any of its public entities other than those engaged exclusively in commercial activities was ope ned to foreign suppliers, it would  provide all 
foreign suppliers with equal opport unity to participate in that procurement (e.g. through the bidding 
process).   The Working Party took note of these commitments.   
9. Transit 
241. The representative of China stated that the cu rrent regulation of transit in China, the 
Regulations of the Customs of the People's Republic  of China on the Supervision and Administration 
of Transit Goods, was consistent with Article V of the GATT 1994. 
10. Agricultural Policies 
242. The representative of China stated that since  China was a country with a vast agricultural 
base, as well as a vast population, agricultural security and food security in particular, was an issue of 
supreme importance. China based its policies on dom estic agricultural supply, especially on balanced 
supply and demand of grains.  Meanwhile, Chin a actively sought international resources as a 
necessary supplement.  
243. While noting this statement, some members of  the Working Party expressed concerns about 
China 's linkage of import policies for agriculture, including TRQ allocations, to domestic production 
policy and the sub-national supply and utilization si tuation.  Those members requested that China 
undertake an appropriate commitment to eliminate th ese practices.  In response China confirmed that 
it would base import policies for agriculture on commer cial considerations onl y.  The Working Party 
took note of this commitment. 
244. Members of the Working Party expressed furthe r concerns in relation to administrative 
guidance provided at the national and sub-national le vel which could have the effect of influencing 
the quantity and composition of agricultural imports.  Members considered reform of these practices 
toward full WTO consistency as an essential element of China 's accession.  To ensure effective 
market access opportunities were created for im ported products, members requested assurances from 
China that agricultural and trade policies would not discriminate in a WTO inconsistent manner 
against imported products.  Consistent with China 's commitment to uniform administration, China WT/ACC/SPEC/CHN/1/Rev.7 
Page 68  
 
confirmed that, by the date of accession, it would not  maintain, resort or revert to guidance plans or 
administrative guidance at the national or sub-nati onal level that regulate the quantity, quality or 
treatment of imports, or constitute import substitutio n practices or other non-tariff measures, including 
those maintained through state trading enterprises at  the national or sub-national level.  The Working 
Party took note of this commitment. 
245. Some members of the Working Party expressed c oncern that large stocks in China of grain 
and cotton had been procured at relatively high prices by state-trading enterprises or other state-
affiliated, state-run, or state-controlled entities a nd noted that exports of these or other government-
purchased products at prices lower than the comparable  price charged for the like product to buyers in 
the domestic market could be challenged as an ex port subsidy or as incons istent with other WTO 
obligations.  These members requested that China en sure that all entities, including state trading 
enterprises and any other state-affiliated, state-run,  or state-controlled entity at the national or sub-
national level operated in accordance with China' s WTO obligations, including those on export 
subsidies.  In response, the representative of Chin a confirmed that all entities in China would operate 
in accordance with China 's WTO obligations, including those on export subsidies.  Further, the 
representative of China stated that national and sub-national authorities wo uld not provide fund 
transfers or other benefits to any entities in Ch ina that would be inconsistent with its WTO 
obligations, including to offset losses accrued throug h exports. The Working Party took note of these 
commitments. 
246. The representative of China confirmed that by the date of accession, China would not 
maintain or introduce any export subsidies on agricu ltural products.  The Working Party took note of 
this commitment. 
247. In implementing Article 6.2 and 6.4 of the Agreement on Agriculture, the representative of 
China confirmed that while China could provide support through government measures of the types described in Article 6.2, the amount of such suppor t would be included in China's calculation of its 
Aggregate Measurement of Support (AMS).  He noted that China's Total AMS Commitment Level 
was set forth in Part IV, Section I of China's Sche dule.  The representative of China further confirmed 
that China would have recourse to a de minimis  exemption for product-specific support equivalent to 
8.5 per cent of the total value of production of a basic agricultural product during the relevant year.  
The representative of China confirmed that China would have recourse to a de minimis  exemption for 
non-product-specific support of 8.5 per cent of the value of China's total agricultural production 
during the relevant year.  Accordingly, these percentages would constitute China's de minimis  
exemption under Article 6.4  of the Agreement on Agriculture.  The Working Party took note of these 
commitments.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 69 
 
 
 
 69 248. China's concessions on agricultural tariffs, and commitments on domestic support and on 
export subsidies for agricultural products were  contained in the Schedule of Concessions and 
Commitments on Goods annexed to the Draft Protocol. 
249. Some members of the Working Party noted th at the domestic support tables of China in 
WT/ACC/CHN/38/Rev… showed China's base total AM S as zero in DS:4.  They also noted that 
product specific support was negative in DS:5. 
11. Trade in Civil Aircraft 
250. In response to questions from members of th e Working Party, the representative of China 
indicated that China was not in a position to co mmit to joining the Agreement on Trade in Civil 
Aircraft at the present stage. 
251. The representative of China confirmed that Chin a would not impose any provisions of offsets 
or other forms of industrial compensation when pur chasing civil aircraft, including specified types or 
volumes of business opportunities.  The Workin g Party took note of this commitment. 
12. Textiles 
252. Some members of the Working Party proposed and the representative of  China accepted that 
the quantitative restrictions maintained by WTO Members on imports of tex tiles and apparel products 
originating in China that were in force on the date prior to the date of the accession of China to the 
WTO should be notified to the Textiles Monitoring Body ("TMB") as being the base levels for the 
purpose of application of Articles 2 and 3 of the WTO Agreement on Textiles and Clothing ("ATC").  
For such WTO Members, the phrase "day prior to  the date of entry into force of the WTO 
Agreement", contained in Article 2.1 of the ATC, s hould be deemed to refer to the day prior to the 
date of accession of China to the WTO.  To th ese base levels, the increase in growth rates provided 
for in Articles 2.13 and 2.14 of the ATC should be applied, as appropriate, from the date of accession 
of China to the WTO.  The Working Party took note of these commitments. 
253. The representative of China agr eed that the following provision s would apply to trade in 
textiles and clothing products until 31 December 20 08 and be part of the terms and conditions for 
China's accession to the WTO: 
(a) In the event that a WTO Member believed that imports of Chinese origin of textiles and 
apparel products covered by the ATC as of the date the WTO Agreement entered into force , WT/ACC/SPEC/CHN/1/Rev.7 
Page 70  
 
were, due to market disruption, threatening to  impede the orderly development of trade in 
these products, such Member could request consu ltations with China with a view to easing 
or avoiding such market disruption.  The Me mber requesting consultations would provide 
China, at the time of the request, with a detailed factual statement of reasons and justifications for its request fo r consultations with current data  which, in the view of the 
requesting Member, showed:  (1) the existence or threat of market disruption;  and (2) the 
role of products of Chinese origin in that disruption; 
(b) Consultations would be held within 30 days of  receipt of the request.  Every effort would be 
made to reach agreement on a mutually satisfactor y solution within 90 days of the receipt of 
such request, unless extended by mutual agreement; 
(c) Upon receipt of the request for consultations , China agreed to hold its shipments to the 
requesting Member of textile or textile products in the category or categories subject to these 
consultations to a level no greater than 7.5 pe r cent (6 per cent for wool product categories) 
above the amount entered during the first 12 m onths of the most recent 14 months preceding 
the month in which the request for consultations was made; 
(d) If no mutually satisfactory solution were re ached during the 90-day consultation period, 
consultations would continue and the Member requesting consultations  could continue the 
limits under subparagraph (c) for textiles or te xtile products in the category or categories 
subject to these consultations; 
(e) The term of any restraint limit established unde r subparagraph (d) would be effective for the 
period beginning on the date of the request for consultations and ending on 31 December of 
the year in which consultations were requested, or where three or fewer months remained in 
the year at the time of the request for cons ultations, for the period ending 12 months after 
the request for consultations; 
(f) No action taken under this provision would re main in effect beyond one year, without 
reapplication, unless otherwise agreed between the Member concerned and China. 
(g)  Measures could not be applied to the same product at the same time under this provision and 
the provisions of Section 19 of the Draft Protocol. 
The Working Party took no te of these commitments.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 71 
 
 
 
 71 13. Measures Maintained Against China 
254. The representative of China stated that WTO Members should eliminate all discriminatory 
non-tariff measures maintained against Chinese expor ts from the date of China's accession to the 
WTO.  In response, some members of the Working Pa rty stated that, in their view, such measures did 
not need to be phased out until such time as Chin a's foreign trade regime fully conformed to WTO 
obligations. 
255. In light of the above, it was agreed that any prohibitions, quantitative restrictions or other 
measures maintained against imports from China in  a manner inconsistent with the WTO Agreement 
would be listed in Annex 8 to the Draft Protocol.  It was further agreed that all such measures would 
be phased out or otherwise dealt with in accordan ce with mutually agreed terms and timetables as 
specified in said annex. 
14. Transitional Safeguards 
256. With respect to implementation of the product- specific safeguard, the representative of China 
expressed particular concern that WTO Members provide due process and use objective criteria in determining the existence of market disruption or trade diversion, because WTO Members did not 
have wide experience in implementing the provisions of  this Section. He stated that with respect to 
trade diversion, WTO Members needed to apply objec tive criteria to determine whether an action by 
China or another WTO Member under the product-sp ecific safeguard to prevent or remedy market 
disruption caused or threatened to  cause significant diversion of trade.  Such criteria should include 
the actual or imminent increase in market share or vol ume of imports from China, the nature or extent 
of the action taken by China or the other WTO Memb er and other similar criteria.  In addition, WTO 
Members should provide an opportunity for importers , exporters and all inter ested parties to submit 
their views on the matter. 
257. Members of the Working Party noted that the Draft Protocol included specific requirements 
that WTO Members needed to follo w in connection with an action under that Section.  Members of 
the Working Party confirmed that in implementing the provisions on market disruption, Members of 
the WTO would comply with those provisions and the following: 
(a) An action to address market disruption would be taken only after an investigation by the 
competent authorities of the importing WTO Member pursuant to procedures previously 
established and made available to the public. WT/ACC/SPEC/CHN/1/Rev.7 
Page 72  
 
(b) The competent authority of the importing Member would publish notice of the 
commencement of any investigation under the product-specific safeguard provisions of the 
Draft Protocol and would, within a reasonable time thereafter, hold a public hearing or 
provide other appropriate means  for the purpose of permitting interested parties to present evidence and their views as to the appropriateness of whether or not to take a measure and to respond to the presentations of other parties. 
(c) In determining whether market disruption ex isted, including the causal link between imports 
which were increasing rapidly, either absolutely  or relatively, and any material injury or 
threat of material injury to the domestic industry,  the competent authorities would consider objective factors, including (1) the volume of imports of the product which was the subject 
of the investigation; (2) the effect of imports of such product on prices in the importing 
WTO Member’s market for the like or direc tly competitive products; (3) the effect of 
imports of such product on the domestic indus try producing like or directly competitive 
products. 
(d) The competent authorities would publish any measure proposed to be taken and provide the 
opportunity, including a public hearing, if requested, or provide other appropriate means, for 
importers, exporters and other interested parties to submit their views and evidence on the 
appropriateness of the proposed measure and whether it would be in the public interest. 
(e) The competent authority woul d promptly publish notice of th e decision to apply a measure, 
including an explanation of the basis for th e decision and the scope and duration of the 
measure. 
(f) The period of application of the measure coul d be extended, provided that the competent 
authorities of the importing WTO Member had determined that action continued to be necessary to prevent or remedy market disr uption.  The competent authorities of the 
importing WTO Member would publish notice of the commencement of any proceeding to 
consider whether to extend the duration of an action and would, within a reasonable time 
thereafter, hold a public hearing or provide  other appropriate means for the purpose of 
permitting all interested parties to have an opp ortunity to present evid ence or their views and 
to respond to the presentations of other parties. 
(g) Except for good cause, no investigation under Section 19 of the  Protocol on the same 
subject matter could be initiated less than one  year after the completion of a previous 
investigation.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 73 
 
 
 
 73 (h) A WTO Member would apply a measure only for such period of time as was necessary to 
prevent or remedy market disruption. 
258. Trade diversion referred to an increase in im ports from China of a product into a WTO 
Member as the result of an action by China or othe r WTO Members pursuant to paragraphs 2, 3 or 7 
of Section 19 of the Draft Protocol.  Members of th e Working Party also noted that the Draft Protocol 
required a determination that any trade diversion w as significant and that the action taken to address 
market disruption had caused or threatened to cause the diversion. 
259. Members of the Working Party agreed that obj ective criteria had be applied in determining 
whether actions to prevent or remedy market di sruption caused or threatened to cause significant 
diversion of trade.   Among the factors to be examined were:  
(a) the actual or imminent increase in market  share of imports from China in the importing 
WTO Member; 
(b) the nature or extent of the action taken or  proposed by China or other WTO Members;  
(c) the actual or imminent increase in the volume of imports from China due to the action taken 
or proposed; 
(d) conditions of demand and s upply in the importing WTO Member’s market for the products 
at issue; and 
(e) the extent of exports from China to the WTO Member(s) applying a measure pursuant to 
paragraphs 2, 3 or 7 of Section 19 of the Draft Protocol and to the importing WTO Member. 
260. A measure taken to address significant diversions of trade would be terminated not later than 
30 days after the expiration of the action taken by the WTO Member or Members involved against 
imports from China. 
261. If the WTO Member or Members taking an acti on to address market disruption notified the 
WTO Committee on Safeguards of any modification of  an action, the competent authorities of the 
WTO Member addressing trade diversion would dete rmine whether a significant diversion of trade 
continued to exist and determine whether to modi fy, withdraw or keep in place the action taken. WT/ACC/SPEC/CHN/1/Rev.7 
Page 74  
 
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME 
A. GENERAL 
1. Overview 
262. The representative of China stated that China ha d made the protection of intellectual property 
rights (IPRs) an essential component of its refo rm and opening-up policy and socialist legal 
construction.  The formulation of la ws and regulations in this field could be traced back to the late 
1970s.  Since then, China had joined relevant intern ational conventions and had actively participated 
in the activities sponsored by releva nt international organizations.  It  had intensified its exchanges and 
cooperation with countries throughout the world in the field of IPR protection.  As a result, 
notwithstanding the initial stage of its development, China's IPR protection system aimed at achieving 
world dimension and world standards.  Lists of administrative rules concerning intellectual property 
rights currently in force in China were presented be low in Table A. The status of ongoing reforms and 
other relevant information was presented in Table B in the following paragraph. 
Table A:  The Administrative Rules of China Concerning Intellectual Property Rights
 
The following three parts were th e administrative rules regarding protection of intellectual property 
right, which were still in force in China. As an impor tant part of China's IPR legal system, these rules 
have a great effect on IPR protection, enforcing the IPR law, etc. 
Part I  Lists of Administrative Rules Regarding Protection of Patent Right Part II  Lists of Administrative Rules Regarding Protection of Trademark Part III  Lists of Administrative Rules Regarding Protection of Copyright 
Part I Lists of Administrative Rules Regarding Protection of Patent Right  
(i)  Regulations Relating to Implementa tion Patent Cooperation Treaty in China 
 (23 November 1993) 
(ii)  Methods on the Showing the Identification of Right of Priority to Applicant made by Patent 
 Office of China (1 March 1988) 
(iii) Regulations on Patent Commissioning (4 March 1991)  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 75 
 
 
 
 75 (iv) Opinions of the Patent Office of China concerning the Implementation of the Regulations 
 on Patent Commissioning (19 April 1991) 
(v) Explanation of the Patent Office of  China on Certain Matters Relating to the 
 Commissioning Involving Foreign Interests (16 November 1987) 
(vi) Decree of Patent Office of China (No.26) (20 November 1989) 
(vii) Decree of Patent Office of China (No.27) (21 December 1989) 
(viii) Decree of Patent Office of  China (No.31) (14 March 1991) 
(ix) Procedures for Administrative Reconsideration of Patent Office of the People's Republic of 
 China (for Trial Implementation) (21 December 1992) 
(x) Methods of Handling the Patent Disputes by the Administrative Authorities for Patent 
 Affairs (4 December 1989) 
Part II Lists of Administrative Rules Regarding Protection of Trademark  
(i) Rules for the Implementation of the Trademark Law of the People's Republic of China  (15 July 1993) 
(ii) Supplementary Provisions Concerning the Punishment of Crimes of Counterfeiting 
 Registered Trademarks made by the Standing Committee National People's Congress 
 (22 February 1993) 
(iii) Circular on the Commodities Demanded to Us e Registered Trademark made by the State 
 Administration for Industry and Commerce (14 January 1988) 
(iv) Circular on the Prohibition from Registering the Other Person's Trademark Abroad without 
 Being Authorized made by State Administration for Industry and Commerce and the  Ministry of Economy and Trade (19 November 1990) 
(v) Interim Provisions on Claims for Priority in Applying for Registration of Trademarks made 
 by State Administration for Industry and Commerce (15 March 1983) WT/ACC/SPEC/CHN/1/Rev.7 
Page 76  
 
(vi) Methods of the Application International Re gistration of Trademark of  Madrid made by the 
 State Administration for Industry and Commerce (2 March 1989) 
(vii) Circular on the Stopping Using the Literal of  "Xiang Bin" or "Champagne" in Varieties of 
 Commodities of Alcohol made by the Stat e Administration for Industry and Commerce 
 (26 October 1989) 
(viii) Circular on Printing and distributing " the Rules regarding the Question of Using Trademark 
 in Can Food for Export" (15 October 1991) 
(ix) Regulations on the Control over the Surrogate of Trademark 
(x) Regulations on the Registration of and the Control over the Collective Trademark and  Certified Trademark (issued on 30 December 1994, revised on 3 December 1998) 
(xi) Interim Provisions on the Cognizance of and the Control over the Renowned Trademark 
 (issued on 24 August 199, revised on 3 December 1998) 
(xii) Regulations on the Control over the Prin ting of Trademark (issued on 5 September 1996, 
 revised on 3 December 1998) 
Part III Lists of Administrative Rules Regarding Protection of Copyright  
(i) Copyright Law of the People's Republic of China (7 September 1990) 
(ii) Regulations for Implementation of Copy right Law of the People's Republic of China 
 (30 May 1991) 
(iii) Provisions on the Implementation of the In ternational Copyright Treaty (25 September 1992) 
(iv) Circular of the Supreme People's Court on Matters regarding Fu rther Implementing the 
 Copyright Law of the People's Republic of China (24 December 1993) 
(v) Circular of the State Press Administration regarding Establishment the Agency of Copyright  Management in Every Provinces Autonomous Regions and Municipalities Directly under the 
 Central Government (5 February 1986) 
(vi) Regulations for Management of the Audio/visual Producers (25 August 1994)  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 77 
 
 
 
 77 (vii) Opinions of the National Copyright Admini stration on Questions Relating to Reprinting the 
 Programs in Advance in Broadcast  and Television (12 December 1987) 
(viii) Circular of the National Copyright Administration of Printing and Distribution "Report 
 Relating to Appropriate Handling the Copy right Question in the Process of Culture 
 Communication with Taiwan" and "Interim Provi sions Relating to the Copyright Question of 
 Pressing the Works Written by Taiwan Compatriots" (8 February 1988) 
(ix) Circular of National Copyright Administ ration regarding the Points for Attention of 
 Transferring Copyright to Taiwan's Press Person (26 December 1987) 
(x) Circular of Newspaper Management Departme nt of the Press and Publication Administration 
 of the People's Republic of China on Ques tions Relating to Reprinting the Programs in 
 Advance in Broadcast and Television (30 March 1988) 
(xi) Opinions of National Copyright Administ ration on Matters Relating to Local Work on 
 Copyright Management (5. 1988) 
(xii) Circular of the National Copyright Administration concerning Procedures of Examining and  Verifying the Copyright Trading Contract  Between the Mainland and Hong Kong, Macao 
 and Taiwan (2 November 1988) 
(xiii) Opinions on Certain Matters of the Nati onal Copyright Administration concerning Handling 
 Copyright Cases (27 December 1988) 
(xiv) Opinion of the Press and Publication Administration, the National Copyright Administration 
 concerning Cooperating in Handling the Reproduc ing without Consent by the Administration 
 of Publishing and Copyright (18 July 1989) 
(xv) Circular of the National Copyright Administration concerning the Standard of Paying 
 Author's Remuneration When the Press Reprin t and Extract the Published Works at Present 
 (27 August 1991) 
(xvi) Interim Provisions of the Standard of Paying Author's Remuneration When the Press Reprint  and Extract the Published Works with the Consent by Law (1 August 1993) WT/ACC/SPEC/CHN/1/Rev.7 
Page 78  
 
(xvii) Interim Provisions of the Standard of Paying Author's Remuneration When Perform the 
 Published Works with the Consent by Law (1 August 1993) 
(xviii) Interim Provisions of the Standard of Paying Author's Remuneration When Record the 
 Published Works with the Consent by Law (1 August 1993) 
(xix) Direction of the Chinese Center of Receiving and Transmitting Author's Remuneration  concerning Receiving and Transmitting Remuneration About the Press Extract the Published  Works 
(xx) Circular of the National Copyright Admini stration concerning Enforcing "the Memorandum 
 of Understanding between the Government of the People's Republic of China and the 
 Government of the United States of Ameri ca on the Protection of Intellectual Property" 
 (29 February 1992) 
(xxi) Urgent Circular concerning Strengtheni ng Administration of Reproducing Compact Discs 
 and Laser Discs (12 April 1994) 
(xxii) Circular of Enforcing "Urgent Circul ar concerning Strengthening Administration of 
 Reproducing Compact Discs and Laser Discs" (12 May 1994) 
(xxiii) Circular concerning Registration of the Organization Reproducing Compact Discs and Laser 
 Discs (29 June 1994) 
(xxiv) Cooperate Circular of the Ministry of Judicial and National Copyright Administration  concerning Bringing Notary Office into Play in  Dealing with the Infringing Copyright Cases 
 (29 August 1994) 
(xxv) Regulations for the Protection of Copyri ght of Computer Software (4 June 1991) 
(xxvi) Measures of the Registration of Copyright of Computer Software (4 June 1992) 
(xxvii) Guide to Classified Coding of Soft ware in Computer Software's Registration 
(xxviii) The Item and Standard of Registration Expenses of Computer Software (18 April 1992) 
 
263. The representative of China stated that fo r accession to the WTO Agreement and compliance 
with the TRIPS Agreement, further amendments had been made to the Patent Law.  The amendments 
to the Copyright Law and the Trademark Law, as well as relevant impl ementing rules covering  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 79 
 
 
 
 79 different areas of the TRIPS Agreement, would also be accomplished upon China's accession to the 
WTO Agreement.  The representative of China stat ed that laws adopted by the National People's 
Congress and administrative regulations, including im plementing rules, issued by the State Council 
were applied and enforced by the people's courts. The Working Party took note of this commitment.   
Table B: Revision of China's IPR Laws in Conformity with the TRIPS Agreement  
The People's Republic of China had conducted an inte nsive work programme to examine and revise the 
IPR laws, administrative regulations and department  rules relating to the implementation of the WTO 
Agreement and China's accession commitments. A list of China's IPR laws, administrative regulations 
and department rules to be revised and abolished wa s hereby notified to the Working Party. Part I of 
the list contained 8 laws and regulations, some of  which had already been included in the lists 
submitted to the Working Party at its June and July meetings. Part II of the list included 4 department 
rules to be revised or abolished for the same reason.  This list gave the names of laws, regulations and 
department rules, reasons for revision or abolishment, and dates of implementation. 
Part I Laws and Administrative Regulations  
Laws and Regulations  Date of Implementation  
1.  Copyright Law of  the People's Republic of 
China To be revised upon accession  
2.  Regulations for the Implementation of the 
Copyright Law of the People's Republic of China To be revised upon accession 
3.  Regulations for the Protection of Computer 
Software To be revised upon accession 
4.  Trademark Law of the People's Republic of 
China To be revised upon accession 
5.  Detailed Rules for the Implementation of the 
Trademark Law of the People's Republic of China To be revised upon accession 
6.  Regulations of the People's Republic of China 
on the Protection of New Varieties of Plants Effective as of 1 October 1997 WT/ACC/SPEC/CHN/1/Rev.7 
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7.  Law of the people's Republic of China Against 
Unfair Competition Effective as of 1 December 1993 
8.  Regulations on the Implementation of the 
Integrated Circuit Layout Design To be effective as of 10 October 2001 
Part II  Department Rules  
Department Rules  Date of Implementation  
1.  Interim Rules on the Administration of Patents 
in Agriculture, Animal Husbandry and Fisheries To be abolished upon accession 
2.  Notice on the Interim Regulation on the 
Protection of Copyright of Books and Magazines To be abolished upon accession 
3.  Notice on the Issuance of the "Detailed Rules 
of Interim Regulations on the Protection of 
Copyright of Books and Magazines", "Publication Intention Contracts" and  "Publication Contracts" To be abolished upon accession 
4.  Interpretation of Article 15(4) of the "Interim 
Regulation on the Protection Copyright of Books and Magazines" To be abolished upon accession 
 
2. Responsible agencies for policy formulation and implementation 
264. The representative of China said that, at present, different agencies were responsible for IPR 
policy formulation and implementation.  The St ate Intellectual Property Office (SIPO) was 
responsible for patent approval; the Trademarks Office under the State Administration for Industry 
and Commerce (SAIC) was responsible for tradem arks registration; the Copyright Office was 
responsible for copyright policy making; SAIC was responsible for anti-unfair competition, including 
the protection of trade secrets; the State Drug Administration (SDA) was responsible for 
administrative protection of pharmaceuticals; the General Customs Administration was responsible 
for border measures;  the Ministry of Agriculture  and the State Administration of Forestry were 
responsible for protection of plant varieties;  the Ministry of Information Industry was responsible for 
the protection of layout designs of integrated circ uits;  and the State General Administration of the  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 81 
 
 
 
 81 People's Republic of China for Quality Supervisio n and Inspection and Quarantine and SAIC were 
responsible for combating counterfeiting activities.   Other agencies like the agency for press and 
publications, the people's courts and police were al so involved in the protection of IPR in China. 
3. Participation in international intellectual property agreements 
265. The representative of China said that China b ecame a member of the World Intellectual 
Property Organization in 1980. In 1985, China beca me a member of the Paris Convention for the 
Protection of Industrial Property. China was one of the first countries that signed the Treaty on 
Intellectual Property in Respect of Integrated Ci rcuits, the negotiation of which was concluded in 
1989. In 1989, China became a member of the Madrid Agreement Concerning the International 
Registration of Marks and in 1992, China beca me a member of the Berne Convention for the 
Protection of Literary and Artistic Works.  In 19 93, China became a member  of the Convention for 
the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms.  
In 1994, China became a member of  the Pate nt Cooperation Treaty and a member of the Nice 
Agreement Concerning the International Classificatio n of Goods and Services for the Purposes of the 
Registration of Marks.  In 1995, China became a memb er of the Budapest Treaty on the International 
Recognition of the Deposit of Microorganisms for th e Purposes of Patent Procedure and applied for 
membership in the Protocols of the Madrid Agre ement Concerning the International Registration of 
Marks. In 1996, China became a member of the Locarno Agreement on Estab lishing an International 
Classification for Industrial Designs; and in 1997 , China became a member of the Strasbourg 
Agreement Concerning the International Patent Cl assification.  Besides the above efforts, China 
participated in the TRIPS negotiations during the Uruguay Round and initialled the Final Act. 
4. Application of national and MFN treatment to foreign nationals 
266. Some members of the Working Party expressed concern that certain provisions of China's 
copyright and trademark laws, as well as China's Ru les on Banning the Infringement of Business 
Secrets (23 November 1995) did not provide national treatment to foreign right-holders.  The Rules 
on Banning Infringements of Business Secrets, for exampl e, defined the "owner" of a trade secret as a 
"citizen, corporation, and other organization" and did not explicitly provide protection for foreign 
individuals or organizations.  Some members of the Working Party further stated that national 
treatment should be fully applied, so that copy right enforcement action by local copyright bureaux 
involving foreign right-holders, would no longer require clearance by the National Copyright Administration in Beijing.   WT/ACC/SPEC/CHN/1/Rev.7 
Page 82  
 
267. The representative of China responded that Ch ina's IPR laws provided that any foreigner 
would be treated in accordance with any agreement concluded between the foreign country and China, 
or in accordance with any international treaty to wh ich both countries were party, or on the basis of 
the principle of reciprocity.  The representative of  China further confirmed that China would modify 
relevant laws, regulations and other measures so as to ensure national and MFN treatment to foreign 
right-holders regarding all intellectual property righ ts across the board in compliance with the TRIPS 
Agreement.  This would include adjustments of th e clearance requirement mentioned in the previous 
paragraph to ensure national treatment.  The Working Party took note of these commitments. 
B. SUBSTANTIVE
 STANDARDS  OF PROTECTION,  INCLUDING  PROCEDURES  FOR  
 THE  ACQUISITION  AND  MAINTENANCE  OF INTELLECTUAL  PROPERTY  RIGHTS 
1. Copyright protection 
268. The representative of China said that the Copy right Law, which was promulgated in 1990, 
established the basic copyright protection system in  China together with the Implementing Rules of 
the Copyright Law (30 May 1991), the Provision s on the Implementation of the International 
Copyright Treaty (25 September 1992) and other relate d laws and regulations.  In principle, this 
system was in compliance with the international IPR treaties and practices.  For the protection of 
copyright and neighbouring rights, not only civil and criminal liabilities but also administrative 
liabilities, were provided for in this system.  He nce the infringing activities could be curbed in a 
timely and effective manner and the legitimate ri ghts of the right-holders could be protected. 
269. Some members of the Working Party expressed concerns about the consistency of China's 
current law on the protection of copyright and relate d rights with the TRIPS Agreement.  In particular, 
members noted the need to clarify the rights of  performers and producers to bring them into 
conformity with the requirements of Article 14 of the TRIPS Agreement.  In  addition, improvements 
were needed with respect to enforcement of copy right to provide expressly for provisional measures 
to preserve evidence, including documentary evid ence and for remedies sufficient to deter further 
infringements. 
270. The representative of China responded that, realizing that there were some existing 
differences between China's copyright laws and the TRIPS Agreement, the amendment to the 
Copyright Law had been accelerated.  The proposed amendments would clarify the payment system 
by broadcasting organizations which use the reco rding products and also include the following 
provisions: rental rights in respect of computer programs and movies, mechanical performance rights, 
rights of communication to the public and relate d protection measures, protection of database 
compilation, provisional measures, increasing the le gitimate compensation amount and strengthening  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 83 
 
 
 
 83 the measures against infringing activities.  Chin a's copyright regime including the Implementing 
Rules of the Copyright Law and the Provisions on th e Implementation of the International Copyright 
Treaty would be amended so as to ensure full cons istency with China's oblig ations under the TRIPS 
Agreement.  The Working Party took note of these commitments. 
2. Trademarks, including service marks 
271. The representative of China stated that the Tr ademark Law, its implementing rules and other 
relevant laws, administrative regula tions and department rules const ituted the existing trademark legal 
system in China.  The objective of these laws was to  provide protection to righ t-holders in line with 
the international conventions a nd prevailing practices regarding intellectual property rights, which 
was embodied both in the regulations on the substa nce and procedures for trademark registration and 
in the protection of trademark exclusive right.  In  order to protect the trademark owner's exclusive 
rights, China's Trademark Law contained not only ci vil and criminal liabilities but also provided for 
administrative punishment of trademark infringers.  This "double-track system" for the protection of 
exclusive rights in trademarks could prevent tr ademark infringements in a timely and effective 
manner and protect the legitimate rights and interest s of these exclusive rights.  In recent years, 
China's judicial and administrative bodies had stepped up their efforts to protect trademark exclusive 
rights within their respective authority.  They had se ttled a large number of cases that were influential, 
domestically and abroad, which provi ded adequate protection to the legitimate rights and interests of 
both Chinese and foreign holders of exclusive rights in trademarks, and received a positive response 
from domestic and foreign right-holders. 
272. Some members of the Working Party reitera ted their concerns about whether certain 
provisions of China's trademark law provided nationa l treatment to foreign owners of trademarks.  
They noted that China's law required foreign owne rs of trademarks to use designated trademark 
agents, while Chinese nationals were permitted to f ile directly with China's Trademark Office.  
Members also noted that China's trademark law did not consider certain signs as eligible for 
protection as required under the TRIPS Agreement.   These included names, letters, numerals and 
colours capable of distinguishing goods and services.   In addition, if registrability of a trademark 
depends on use, China's trademark law should provid e that a non-distinctive mark could qualify for 
registration when it has acquired distinctiveness based on use.  Members also noted that it was not clear under China's law that actual use of a mark was not required before a party could file to register 
a mark.   WT/ACC/SPEC/CHN/1/Rev.7 
Page 84  
 
273. Some members of the Working Party also rai sed concerns about the protection of well-known 
trademarks in China, in particular those not register ed in China.  China's laws and regulations did not 
specifically state the criteria for determining wh ether a mark was well-known and therefore members 
could not determine if it conformed to the require ments of Article 16 of the TRIPS Agreement.  
Moreover, while China had provided protection to "well-known trademarks" ow ned by nationals, such 
protection had, as yet, not been granted to the we ll-known trademarks of foreigners.  Members also 
noted that certain provisions of China's trademark law needed to be extended to unregistered well-
known trademarks.   
274. The representative of China stated that with th e development of China's market economy and 
the further implementation of the TRIPS Agreement,  China's legislative and law enforcement bodies 
had also realized that the existing trademark law fell  somewhat short of fulfilling the requirements of 
the TRIPS Agreement and the Paris Convention in a few aspects and were therefore preparing to 
amend the existing trademark law to fully meet the requirements of the TRIPS Agreement.  Modifications would mainly be made to the following  aspects: to include the trademark registration of 
three-dimensional symbols, combinations of colour s, alphabets and figures; to add the content of 
collective trademark and certification trademark (i ncluding geographical indications); to introduce 
official symbol protection; to protect well-known trad emarks; to include priority rights; to modify the 
existing trademark right confirmation system and offe r interested parties the opportunity for judicial 
review concerning the confirmation of trademark righ ts;  to crack down on all serious infringements;  
and to improve the system for providing damages for trademark infringement.  The Working Party 
took note of these commitments. 
3. Geographical indications, including appellations of origin 
275. The representative of China said that the releva nt rules of the SAIC and the State General 
Administration of the People's Republic of Chin a for Quality Supervision and Inspection and 
Quarantine partly provided protection for geographi cal indications, including appellations of origin, 
and that the amendments to the trademark law w ould have a specific provision on the protection of 
geographical indications. 
276. The members of the Working Party took note of the progress achieved on providing 
protection for geographical indicati ons and reiterated the importance of  China's legislation complying 
with the obligations under the TRIPS Agreement (A rticles 22, 23 and 24).  The representative of 
China shared this assessment and reiterated China's in tention to fully comply with relevant articles in 
the TRIPS Agreement on geographical indications. Th e Working Party took note of this commitment.  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 85 
 
 
 
 85 4. Industrial designs 
277. Some members of the Working Party noted that the industrial design provisions of China's 
patent law appeared to implement substantial por tions of the TRIPS Agreement requirements relating 
to industrial designs.  One notable exception was the area of textile designs.  These members noted 
that designs of WTO Members could be protected  under China's Provisions on the Implementation of 
the International Copyright Treaty as works of applie d art.  Members urged China to incorporate this 
protection into its law and to provide su ch protection to domestic textile designs. 
5. Patents 
278. The representative of China said that in pr eparation for its accession to the WTO, China 
revised its patent law in 1992 for the first time.  China had taken measures to enhance consistency 
with the TRIPS Agreement in terms of major provisions  and protection standards.  In order to increase 
the awareness of the general public on IPR protecti on, and patent protection in particular, to be 
consistent with the TRIPS Agreement, and to build  up a sound social environment for the promotion 
and commercialization of inventions, the Nationa l People's Congress approved the second revision of 
the Patent Law on 25 August 2000.  The revised patent  law, which would take effect on 1 July 2001, 
included the following elements: (1) patent owners  would have the right to prevent others from 
offering for sale the patented product without thei r consent (Article 11);  (2) for utility model and 
design applications or patents, the final decisi on on re-examination and inva lidation would be made 
by the people's courts other than for inventions that were patented prior to the amendment (Articles 41 
and 46);  (3) patent owners could, before institu ting legal proceedings, reque st the people's court to 
take provisional measures such as to order the su spension of infringing acts and to provide property 
preservation (Article 61); and (4) conditions for granting a compulsory licence would be further 
clarified and made consistent  with the TRIPS Agreement. 
279. The representative of China further stated that since its establishment, SIPO had paid great 
attention to strengthening its contacts and coordinatio n with relevant departme nts and ministries in the 
field of IPR law enforcement, especially in the areas of settling inter-agency problems and resolving 
key cases.  At the same time, SIPO had taken appropriate measures to improve the performance of 
local patent authorities in law enforcement.  For example, in June 1999, SI PO convened a nationwide 
working conference, which was attended by re presentatives from local patent administrative 
authorities.  The participants summarized their law enforcement practices over the previous two years 
and also exchanged information on their experiences in their local legislative work with a view to WT/ACC/SPEC/CHN/1/Rev.7 
Page 86  
 
intensifying patent protection.  The conference al so called for the introduction of important patent 
cases reporting and recording system. 
280. The representative of China stated that so far as the range of patent protection and protection 
for new plant varieties were concerned, China had already met the requirements of Article 27 of the 
TRIPS Agreement.  When amending the Patent Law in 1992, China modified Article 25 therein with 
reference to the relevant stipulations in the fi nal text of the TRIPS Agreement and expanded the 
coverage of patent protection to food, beverages,  flavourings, pharmaceuticals and materials obtained 
by chemical methods.  The scope of patent exclus ions would be limited to "scientific discoveries, 
rules and methods of intellectual activities, diagnos tic and therapeutic methods for the treatment of 
diseases, animals and plant varieties, as well as materials obtained by the change of nucleus". 
281. He further stated that Article 5 of China's Pate nt Law stipulated that inventions that violate 
laws of China or social morality or prejudice public interest would not be entitled to patent right.  
While literally there was a difference between Article 5 of China's Patent Law and the TRIPS Agreement, in practice, during the review of patent  applications, the interpretation of "violating laws 
of China" had been restricted to "if laws of Chin a prohibit the sale of a certain patented product, or 
prohibit the sale of products manufactured by a pate nted method, the granting of patent right cannot 
be denied to this product invention or this i nvention of product manufacturing method by relying on 
Article 5 of the Patent Law".  Hence, in essence, he concluded that there was no difference between 
Article 5 of the Patent Law as applied and the TR IPS Agreement.  Nonetheless, China would amend 
the Implementing Rules of the Patent Law to ensure that this provision would be implemented in full 
compliance with Article 27.2 of the TRIPS Agreemen t, which stipulated that: "Members may exclude 
from patentability inventions, the prevention within their territory of the commercial exploitation of 
which is necessary to protect ordre public  or morality, including to protect human, animal or plant life 
or health or to avoid serious prejudice to the environment, provided that such exclusion is not made 
merely because the exploitation is prohibited by th eir law".  The Working Party took note of this 
commitment. 
282. Regarding Article 28 of the TRIPS Agreement (rights conferred), the representative of China 
stated that China's patent law had fully complied with the requirements of the TRIPS Agreement for 
the following reasons.  First, in the 1992 amendmen t to the Patent Law, Article 11 was modified as 
follows: "any entity or individual is, without prior licensing from the patentee, prohibited from 
making, using or selling patented pr oducts or patented processes, or us ing or selling products directly 
obtained by the patented processes for the purpose of production and operation".  It was also prohibited for any entity or individual to import pate nted products or products directly obtained by 
patented processes for the purpose of production a nd operation.  This mo dification expanded the  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 87 
 
 
 
 87 scope of patentees' right, namely the new content of  "the right to prohibit import" and "the effect of 
patented processes is extended to pr oducts directly obtained by pate nted processes".  Second, in 2000, 
when the second amendment was made to the Patent  Law, Article 11 was once again modified. A new 
stipulation was introduced granting patentees the ri ght to prohibit others from offering for sale the 
patented products or products directly obtained by patented processes without the consent of 
patentees.  Therefore, so far as "the right of pa tentees" is concerned, China's Patent Law had fully 
accommodated the requirements of the TRIPS Agreement. 
283. Further to the 1992 amendment, China's Pate nt Law provided for compulsory licences based 
on reasonable terms, for public interest and for depende nt patents.  With regard to the conditions of 
compulsory licences for dependent patents, the Pate nt Law provided that the latter invention should be 
technically more advanced than the earlier one.  The TRIPS Agreement provides that "the invention 
claimed in the second patent shall involve an impor tant technical advance of considerable economic 
significance in relation to the invention claimed in the first patent" (Article 31(l)(i)).  Since the 
provisions of the TRIPS Agreement were more tr ansparent and easier to operate, the relevant 
expressions contained in the TRIPS Agreement were adopted in the new revision.  In addition, the 
following restrictive conditions for granting compul sory licences contained in the Implementing Rules 
of the Patent Law of 1992 had been moved into the Pa tent Law in order to make it more authoritative: 
the decision of SIPO on the granting of a compulsory licence for exploitation would be limited in terms of its scope and duration; when the circum stances which led to such compulsory licence ceased 
to exist and were unlikely to recur, SIPO, upon th e request of the patentee, could terminate the 
compulsory licence after examination;  were inco rporated into the Law (former Article 68 of the 
Implementing Rules of the Patent Law of 1992 had now been moved into Article 51 of the revised 
Patent Law). 
284. The representative of China stated that follo wing the 1992 amendment, the regulations on 
compulsory licensing in China's Patent Law and its implementing rules, as a whole, had fulfilled the 
requirements of the TRIPS Agreement.  However,  some wording and expressions in the Chinese 
regulations were still not identical to the TRI PS Agreement and these regulations still needed 
improvement in respect of the administrative lega l proceedings concerning compulsory licensing.  
Therefore, in the second amendment to the Pate nt Law in 2000, the corresponding amendments and 
modifications to the stipulations on compulsory licensing were mainly made in the following two 
points: (1) Article 53 of the Patent Law was modified  from "a patented invention or utility model is 
technically more advanced than the inventions or  utility models which have obtained patent right 
earlier" into "a later invention or utility model is an important technical progress with striking WT/ACC/SPEC/CHN/1/Rev.7 
Page 88  
 
economic significance as compared to the earlier invention or utility model"; and (2) having been 
subject to appropriate adjustments,  the regulations on the time, scope  and termination of compulsory 
licensing enforcement in Article 68 of the Implem enting Rules of the Patent Law of 1992 were 
integrated into Article 52 of the amended Patent  Law.  Following the above-mentioned amendments, 
China's Patent Law had regulations on compulso ry licensing with clearer structure and improved 
content.  In the representative of China's view, these regulations were fully consistent with the TRIPS 
Agreement.  He also added that up to now China had not issued any compulsory licences for patent 
enforcement. 
285. Some members of the Working Parity noted the improvements in the provisions regarding 
compulsory licensing for patents that the representa tive of China cited.  Some members however, 
requested clarification of the subject matter that w ould be subject to compulsory licensing under the 
Patent Law. 
286. In response, the representative of China agreed that still not all the requirements of Article 31 
of the TRIPS Agreement had been incorporated into  Chinese law, and that Implementing Rules of the 
Patent Law would therefore be modified so as to ensu re that: (1) use without authorization of the right 
holder would only be permitted if, prior to such use,  the proposed user had made efforts to obtain 
authorization from the right-holder on reasonable co mmercial terms and conditi ons (Article 31(b)), 
(2) the right-holder would be paid adequate rem uneration in the circumstances of each case, taking 
into account the economic value of the authorizati on (Article 31(h)); (3) any such use would be 
authorized predominantly for the su pply of the domestic market (Ar ticle 31(f)); and (4) in the case of 
semi-conductor technology, the scope and durati on of such use would only be for public non-
commercial use or to remedy a practice determined after judicial or administrative process to be anti-
competitive (Article 31(c)). The Working Party took note of these commitments. 
287. Regarding Article 32 of the TRIPS Agreement (revocation/forfeiture), the representative of 
China stated that in light of Articles 41 and 46 of  the amended Patent Law, patent applicants or 
patentees of inventions, as well as applicable util ity models and designs, could institute legal 
proceedings in the people's court if they were not satisfied with the review or nullity decisions made 
by the Patent Review Board.  This modification en abled China's Patent Law to be fully consistent 
with TRIPS regarding administrative decisions which were subject to judicial review.   
288. On the duration of patent right protection, the representative of China stated that as early as 
1992 when China made an initial amendment to the Pa tent Law, Article 45 (later converted into 
Article 42 after the second amendment) was modified as: "the duration of inventi ons patent right is 20 
years and the duration of patent right for applicable  utility model and designs is 10 years, counted as  WT/ACC/SPEC/CHN/1/Rev.7 
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 89 of the date of application".  Therefore, Chin a's Patent Law had for a long time accorded with 
Articles 26 and 33 of the TRIPS Agreement concerning the duration of patent rights. 
289. Regarding Article 34 of the TRIPS Agreemen t (process patents: burden of proof), the 
representative of China stated that China's Patent Law was modified in 1992 and 2000, and was now 
in full conformity with the TRIPS Agreement.  Th e amended paragraph 2 of Article 57 reads: "when 
any infringement dispute relates to a process patent  for the manufacture of a new product, any entity 
or individual manufacturing the identical product sha ll furnish proof to the effect that a different 
process is used in the manufacture of its or his product". 
6. Plant variety protection 
290. The representative of China confirmed that China was a party to the 1978 text of the UPOV 
Convention on the Protection of Plant Varieties.  In March 1997, the State Council formulated and promulgated the Regulation on the Protection of New Plant Varieties, thus offering protection for new 
plant varieties in a  sui generis form consistent with the requireme nts of the TRIPS Agreement. A unit 
or an individual that had accomplished the breeding enjoyed an exclusive right in their right-granted 
variety. No unit or individual could, without permission from the owner of the variety rights (referred to as "the variety rights owner"), produce or market for commercial purposes the propagation material of the rights-granted variety, or repeatedly u se for commercial purposes the propagation material of 
the rights-granted variety in the production of th e propagation material of another variety. The 
conditions of non-voluntary licensing were set out in  the regulation. The period of protection of 
variety rights, from the date of grant of the rights, w ould be 20 years for vines, forest trees, fruit trees 
and ornamental trees and 15 years for other plants. 
7. Layout designs of integrated circuits 
291. The representative of China said that China was one  of the first countries to sign the Treaty on 
Intellectual Property in Respect of Integrated Circuits in 1989.  The specific Regulation on the Protection of Layout Designs of Integrated Circ uits, which would implement China's obligations 
under Section 6 of the TRIPS Agreement, was is sued in April 2001 and would be effective on 
1 October 2001.  
292. The representative of China stat ed that China was strengthening the protection of the layout 
designs to support the rapid development of the inte grated circuit industry. The regulations provided 
protection to layout-designs, according to which the following acts if performed without authorization 
of the right holder were unlawful: importing, se lling or otherwise distributing for commercial WT/ACC/SPEC/CHN/1/Rev.7 
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purposes a protected layout-design, an integrated circuit in which a protected layout-design was 
incorporated, or an article incorporating such an integrated circuit only in so far as it continued to 
contain an unlawfully reproduced layout-design.  The exception clause and non-voluntary licensing 
clause were in conformity with Article 37 of TR IPS. The term of protection was 10 years counted 
from the date of filing an application for regi stration or from the first commercial exploitation 
wherever in the world it occurred. In  addition, the protection to the layout-design of integrated circuits 
was in accordance with Article 2 through 7 (other than paragraph 3 of Article 6), Article 12 and 
paragraph 3 of Article 16 of the Treaty on Intellect ual Property in Respect of  Integrated Circuits. 
8. Requirements on undisclosed information, including trade secrets and test data 
293. Some members of the Working Party expressed  concern about China's protection against 
unfair commercial use and disclosure of undisclosed test and other data submitted to authorities in 
China to obtain marketing approval for pharmaceuticals and agricultural chemicals.  They noted that 
China's laws appeared to prohib it the release of information by government officials but did not 
include provisions regarding the prevention of unfair commercial use, as required under Article 39.3 
of the TRIPS Agreement.  Some members requested  that China specifically provide in its law and 
regulations that it would protect against unfair co mmercial use of undisclosed test or other data 
submitted in support of applications for marketin g approval of pharmaceutical or of agricultural 
chemical products which utilize new chemical entiti es, by providing that no person other than the 
person that submitted such data may, without th e permission of the person initially submitting the 
data, rely on such data in support of an applicati on for product approval for a period of at least six  
years from the date on which marketing approval to  the person that submitted the data had been 
granted. 
294. The representative of China said that Article 10 of the Anti-unfair Competition Law provided 
that a business operator must not infringe upon trade secr ets.  Under the same Article, obtaining, using 
or disclosing another's trade secrets by a third part y who clearly knew or ought  to have known that the 
case fell under the unlawful acts listed in the pr eceding paragraph was deemed infringement upon 
trade secrets.  Trade secrets referred to any technol ogy information or business operation information 
which was unknown to the public, could bring about ec onomic benefits to the obligee, had practical 
utility and about which the obligee had adopted secret -keeping measures.  He also stated that 
Article 219 of the Criminal Law had similar definitions on trade secrets. 
295. The representative of China further confirme d that China would, in compliance with 
Article 39.3 of the TRIPS Agreement, provide effe ctive protection against unfair commercial use of 
undisclosed test or other data submitted to authori ties in China as required in support of applications  WT/ACC/SPEC/CHN/1/Rev.7 
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 91 for marketing approval of pharmaceutical or of agricultural chemical pr oducts which utilized new 
chemical entities, except where the disclosure of such data was necessary to protect the public, or 
where steps were taken to ensure that the data are protected against unfair commercial use.  This 
protection would include introduction and enactment of  laws and regulations to make sure that no 
person, other than the person who submitted such data, could, wit hout the permission of the person 
who submitted the data, rely on such data in supp ort of an application for product approval for a 
period of at least six years from the date on whic h China granted marketing approval to the person 
submitting the data.  During this period, any second applicant for market authorization would only be 
granted market authorization if he submits his own da ta.   This protection of data would be available 
to all pharmaceutical and agricultural products wh ich utilize new chemical entities, irrespective of 
whether they were patent-protected or not.  The Working Party took note of these commitments. 
C. MEASURES  TO CONTROL  ABUSE  OF INTELLECTUAL  PROPERTY  RIGHTS 
296. The representative of China said that there were  provisions relating to compulsory licences in 
the Patent Law to prevent abuse of patent right.  He  also stated that the Trademark Law provided that 
the trademark registrant may, by concluding a trad emark licensing contract, authorize another person 
to use its registered trademark.  The licensor would supervise the quality of the goods on which the 
licensee used the licensor's regist ered trademark and the licensee would guarantee the quality of the 
goods on which the registered trademark was to be used. 
297. Some members of the Working Party expressed some concerns as to the compatibility of 
China's rules on control of anti-competitive licen sing practices or conditions with the corresponding 
obligations under Article 40 of the TRIPS Agreement.   The representative of China stated in response 
that China's legislation would comply with th ese obligations, notably as to the request for 
consultations with other Members.  He stated th at these rules would apply across the board to all 
intellectual property rights. The Working Party took note of this commitment. 
D. ENFORCEMENT 
1. General 
298. Some members of the Working Party expressed c oncern that there was a continued need for 
additional enforcement efforts by the Government of China.  They also said that China should 
strengthen the legislative framework for the enforcem ent of intellectual property rights for all right-
holders.  The representative of China stated that wh ere an infringement of intellectual property rights 
was found in China, the person concerned could bri ng a lawsuit to a court.  Since 1992, special IPR WT/ACC/SPEC/CHN/1/Rev.7 
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courts have been set up in major cities such as Be ijing and Shanghai on the basis of their specialized 
collegial panels.  According to China's legisla tion, individuals and enterprises would be held 
responsible for all their IPR infringing activities and s ubject to civil and/or criminal liabilities.  Where 
any person violated the IPR of another person and th e circumstances were serious, the person directly 
responsible would be prosecuted for his criminal liability by applying relevant provisions of the 
Criminal Law.  If found guilty, the person directly responsible could be sentenced to a fixed-term 
imprisonment of no more than seven years or be subject to detention or a fine. 
299. Some members of the Working Party further urged China to ensure the vigorous application 
by Chinese authorities of the enforcement legislation in order to considerably reduce the existing high 
levels of copyright piracy and trademark count erfeiting.  Action should include the closure of 
manufacturing facilities as well as markets and retail s hops that had been the object of administrative 
convictions for infringing activities.  The representati ve of China stated that the measures for cracking 
down on intellectual property piracy were always severe  in China.  In judicial aspects, courts at all 
levels were continuously paying attention to the trial of IPR cases.  As for administration aspects, the 
administrative authorities at all levels were putti ng emphasis on strengthening anti-piracy work.  In 
addition, the administrative authorities were also en hancing the legal publication and education of the 
general public in a bid to ensure that the legal environment of China would be able to meet the 
requirements for enforcing the TRIPS Agreement.  The Working Party took note of these 
commitments . 
2. Civil judicial procedures and remedies 
300. Some members of the Working Party expressed c oncern about certain practices relating to the 
filing of civil judicial actions that made it diffi cult for intellectual property right-holders to pursue 
their rights in China's courts.  China's system  of basing filing fees on the amount of damages 
requested makes large-scale infringement actions  unnecessarily costly.  Members also expressed 
concern  regarding the calculation of damages base d on the infringer's profits.  This, combined with 
China's rules on establishing the level of profits which require evidence of actual sale and which 
disregard inventory and past activity, often resulte d in damage amounts inadequate to compensate for 
the injury that the right-holder has suffered.   
301. The representative of China stat ed that Article 118 of the General Principles of the Civil Law 
provided that if the rights of authorship (copyrights), patent rights, rights of exclusive use of 
trademarks, rights of discovery, rights of invention or rights for scientific and technological research 
achievements of citizens or juridical persons we re infringed upon by such means as plagiarism, 
alteration or imitation, they had the right to demand that the infringement be stopped, its ill effects be  WT/ACC/SPEC/CHN/1/Rev.7 
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 93 eliminated and the damages be compensated for.  He further stated that the Trademark Law, the 
Patent Law and the Copyright Law had similar provisions. 
302. The representative of China further confirmed that, Articles 42 and 43 of the TRIPS 
Agreement would be effectively implemented under the judicial rules of civil procedure.  The 
Working Party took note of this commitment. 
303. The representative of China confirmed that the relevant implementing rules would be 
amended to ensure full compliance with Articles 45 and 46 of the TRIPS Agreement, to the effect that 
damages paid by the infringer to the right-holder would be adequate to compensate for the injury 
suffered because of an infringement of that person' s intellectual property right by an infringer who 
knowingly, or with reasonable grounds to know, enga ged in infringing activity.  The Working Party 
took note of this commitment. 
3. Provisional measures 
304. Members of the Working Party noted that th e TRIPS Agreement required that judicial 
authorities have the authority to order prompt a nd effective provisional measures to (1) prevent an 
infringement of intellectual property from occurring, in particular to prevent the distribution or sale of 
infringing goods, and (2) to preserve the evidence of alleged infringement. 
305. The representative of China stated that in Chin a's Civil Procedure Law there were provisions 
on property preservation, but as yet no explicit sti pulations had been provided to authorize the 
people's court to take measures for the prevention of infringements prior to formal institution of a 
lawsuit by a party involved.  In order to enhance the deterrent power of law against infringements and 
to guarantee that the legitimate rights and inter ests of patentees would not suffer from irreparable 
harm as well as to comply with the TRIPS Agreemen t, China, when amending the Patent Law for the 
second time in 2000, introduced Article 61 to re gulate provisional measures, which provided as 
follows: "where a patentee or any interested part y who can provide any reasonable evidence that his 
right is being infringed or that such infringement is imminent, and any delay in stopping the acts is 
likely to cause irreparable harm to his or its legiti mate rights and interests, he or it may, before 
instituting legal proceedings, request the people's cour t to order the suspension of related acts and to 
provide property preservation". 
306. Some Members of the working party expressed concern that Article 61 of the Patent Law did 
not fully incorporate all requirements of Article 44 of the TRIPS Agreement, and that it was still WT/ACC/SPEC/CHN/1/Rev.7 
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unclear whether holders of intellectual property ri ghts other than patents could rely on a similar 
procedure. 
307. The representative of China stated that Article 61 of the Patent Law would be implemented in 
a way fully consistent with Article 50.1-4 of the TR IPS Agreement.  He also stated that "reasonable 
evidence" in Article 61 of the Patent Law would be, through implementing rules, clarified to mean 
"any reasonably available evidence in order to satis fy with sufficient degree of certainty that the 
applicant is the right-holder and that the applicant' s right is being infringed or that such infringement 
is imminent, and to order the applicant to provide  a security or equivalent assurance sufficient to 
protect the defendant and to prevent abuse". Th e Working Party took note of this commitment. 
4. Administrative procedures and remedies 
308. Members of the Working Party noted that most IPR enforcement in China was done through 
administrative actions.  In this connection, some  members expressed concern about the inadequate 
levels of administrative sanctions in China which,  when coupled with the high threshold for initiating 
criminal prosecutions, made IPR enforcement in Chin a difficult.  Administrative sanctions generally 
amounted to small fines and the loss of infringing i nventory.  Members also stressed the need for 
administrative authorities to refer more cases, includi ng those involving repeat offenders and willful 
piracy and counterfeiting, to the appropriate authorities for initiation of criminal actions. 
309. The representative of China said that the Tradem ark Law provided that in the event of any 
infringement of the right to the exclusive use of a registered trademark, the infringed right holder could request the administrative department for i ndustry and commerce at or above the county level 
for disposition.  The relevant administrative depart ment for industry and commerce had the power to 
order the infringer to stop the infringing act immedi ately and to compensate the infringed right holder 
for its or his losses.  SAIC and its local agencies above the county level could also impose a fine upon 
the infringer.  The Patent Law provided that the patentee and interested party could request the 
administrative authority for patent affairs to handl e the infringing act.  The administrative authority 
could order the infringer to stop the infringing act i mmediately and mediate on damages at the request 
of the parties concerned.  The Copyright Law provi ded that the copyright administration department 
could subject anyone who committed acts of infri ngement to such administrative penalties as 
confiscation of unlawful income from the act or imposition of a fine. 
310. The representative of China stated that most IPR enforcement actions in China resulted in 
administrative measures to address the infringement.  He noted ongoing efforts to strengthen the 
sanctions that were available to administrativ e authorities and the increased attention given to 
enforcement of IPRs.  The representative of China confirmed that the government would continue to  WT/ACC/SPEC/CHN/1/Rev.7 
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 95 enhance its enforcement efforts, including through the application of more effective administrative 
sanctions.  Relevant agencies, including the St ate Administration for Industry and Commerce, the 
State General Administration of the People's Re public of China for Quality Supervision and 
Inspection and Quarantine and the Copyright Office,  now had the authority to confiscate equipment 
used for making counterfeit and pirated products an d other evidence of infringement.  These relevant 
agencies would be encouraged to exercise th eir authority to seize and preserve evidence of 
infringement such as inventory and documents.  Administrative authorities would have the authority 
to impose sufficient sanctions to prevent or deter further infringement and would be encouraged to 
exercise that authority.  Appropriate cases, incl uding those involving repeat offenders and willful 
piracy and counterfeiting, would be referred to rele vant authorities for prosecution under the criminal 
law provisions.  The Working Party took note of these commitments. 
5. Special border measures 
311. The representative of China said that on 5 July 1995 the State Council of the People's 
Republic of China had issued special legislation in  respect of border measures for enforcement of 
intellectual property rights – the Regulations of th e People's Republic of China Governing Customs 
Protection of Intellectual Property Rights – which ca me into effect on 1 October of the same year.  
According to this legislation, China's Customs offi ces must take measures to intercept importation or 
exportation of goods that were proved to be infringing the rights of trademarks, patents or copyrights 
legally protected in China.  China's Customs o ffices were granted authority to investigate any 
suspected shipment and confiscate the goods in case infringement was proved. 
312. Some members of the Working Party expressed c oncerns as to the compatibility of existing 
border measures with obligations under Articles 51 to  60 of the TRIPS Agreement; particularly the 
provisions on suspension of release into free circulat ion by custom authorities (Article 51), rules on 
evidence for initiating this procedure (Article 52), requirements on the security needed to protect the 
defendant (Article 53), rules on notice of the susp ension (Article 54) and its  duration (Article 55), 
rules on indemnification of the importer in case of wr ongful detention (Article 56) and opportunity for 
the right-holder to have the goods detained inspect ed (Article 57). Moreover some expressed their 
concern as to compatibility of rules on actions ex-o fficio by competent authorities and the conditions 
attached (Article 58), as well as to the remedies pr ovided against infringing good s (Article 59) and the 
quantities subject to the  de minimis rules (Article 60). 
313. In response, the representative of China stated that China would provide holders of 
intellectual property rights with pr ocedures related to border measures that comply fully with the WT/ACC/SPEC/CHN/1/Rev.7 
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relevant provisions of the TRIPS Agreement (Article s 51 to 60). The Working Party took note of this 
commitment. 
6. Criminal procedures 
314. The representative of China stated that Articl es 213 to 220 of the Criminal Law (Crimes of 
Infringing on Intellectual Property Rights) provided that whoever seriously infringes the right-holders' 
rights of registered trademarks, patents, copyrights or trade secrets would be sentenced to fixed-term 
imprisonment and would also be fined. 
315. Some members of the Working Party expressed concerns that criminal procedures could not 
be used effectively to address piracy and counterfeiti ng.  In particular, the monetary thresholds for 
bringing a criminal action, as currently applied, were very high and seldom met.  Those thresholds 
should be lowered so as to permit effective action th at would deter future piracy and counterfeiting.  
In response, the representative of China stated that China's admini strative authority would recommend 
that the judicial authority make necessary adjustme nts to lower the thresholds so as to address these 
concerns.  The Working Party took note of this commitment. 
316. Noting the advanced state of protection for intellectual property rights in China, the 
representative of China confirmed that upon accession China would fully apply the provisions of the 
TRIPS Agreement.  The Working Party took note of this commitment. 
VI. POLICIES AFFECTING TRADE IN SERVICES 
1. Licensing 
317. Some members of the Working Party welcomed the broad-ranging and comprehensive 
commitments that China was undertaking to increa se transparency and to provide information to 
governments and service providers on any matter rela ting to the GATS including China's Schedule of 
Specific Commitments.  These members nonetheless expressed concerns regarding the lack of 
transparency in China's current services regime, in  particular with respect to obtaining, extending, 
renewing, denying and terminating licences and ot her approvals required to provide services in 
China's market and appeals of such actions (hereafte r referred to as "China's  licensing procedures and 
conditions"). To be consistent with the provisions of the WTO Agreement, including the Draft 
Protocol and China's Schedule of Specific Commitme nts, members of the Working Party noted that 
China's licensing procedures and conditions should not in themselves act as a barrier to market access 
and should not be more trade restrictive than n ecessary. Those members also expressed the view that 
upon its accession, China should publish (1) a list of au thorities responsible for authorizing, approving  WT/ACC/SPEC/CHN/1/Rev.7 
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 97 or regulating those service sectors in which Ch ina made specific commitments and (2) China's 
licensing procedures and conditions. 
318. The representative of China confirmed that paragraph [344]  regarding publication of a list of 
all organizations that were responsible for aut horizing, approving or regulating service activities for 
each service sector, including those organizations  delegated such authority from the central 
government authorities, would apply. The representa tive of China also confirmed that China would 
publish in the official journal all of China's licensing procedures and conditions upon accession.  The 
Working Party took note of these commitments. 
319. The representative of China also confirmed that upon accession China would ensure that 
China's licensing procedures and conditions would no t act as barriers to market access and would not 
be more trade restrictive than necessary.  In  accordance with China's commitments under the WTO 
Agreement, the Draft Protocol and its Schedule of  Specific Commitments, the representative of China 
confirmed that for those services included in Ch ina's Schedule of Specific Commitments, China 
would ensure that:  
(a) China's licensing procedures and conditions we re published prior to becoming effective;  
(b) In that publication, China would specify reas onable time frames for review and decision by all 
relevant authorities in China's licensing procedures and conditions;  
(c) Applicants would be able to request  licensing without individual invitation;  
(d) Any fees charged, which were not deemed to  include fees determined through auction or a 
tendering process, would be commensurate with the administrative cost of processing an 
application.  
(e) The competent authorities of China would, after receipt of an application, inform the applicant 
whether the application was considered complete  under China's domestic laws and regulations 
and in the case of incomplete applications, identify the additional information that was 
required to complete the application and provide the opportunity to cure deficiencies;  
(f) Decisions would be taken promptly on all applications;  (g) If an application was terminated or denied, the applicant would be informed in writing and 
without delay the reasons for such action. The applicant would have the possibility of WT/ACC/SPEC/CHN/1/Rev.7 
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resubmitting, at its discretion, a new applicati on that addressed the reasons for termination or 
denial; 
(h)  If an application was approved, the applicant would be informed in writing and without delay.  
The licence or approval would enable the app licant to start the commercial operations upon 
registration of the company's name with SAIC for fiscal and other similar administrative purposes.  This registration would be complete d within 2 months of the submission of a 
complete file, as required by public SAIC regulations, and in accordance with China's 
Schedule of Specific Commitments;  
(i) Where China required an examination to li cence professionals, such examinations would be 
scheduled at reasonable intervals.   
The Working Party took no te of these commitments.  
320. Some members of the Working Party also expressed concern about maintaining the 
independence of regulators from those they regulat ed. The representative of China confirmed that for 
the services included in China's Schedule of Specific Commitments, relevant regulatory authorities would be separate from, and not accountable to, any service suppliers they regulated, except for 
courier and railway transportation services.  For these excepted sectors, China would comply with 
other relevant provisions of the WTO Agreement and the Draft Protocol. The Working Party took 
note of these commitments. 
321. The representative of China stat ed that China would consult with WTO Members and develop 
regulations, consistent with Ch ina's Schedule of Specific Commitments and its obligations under 
GATS, on sales away from a fixed location.  The Working Party took note of this commitment. 
322. Some members of the Working Party noted that the World Code of Conduct provided a strong 
ethical basis for regulating sales away from a fixed location.  
323. In response to questions from members of th e Working Party regarding certain terms in 
China's Schedule of Specific Commitments, the representative of China confirmed the following:   
(a) A "master policy" was a policy that provided bl anket coverage for the same legal person's 
property and liabilities located in different places.   A master policy could only be issued by 
the business department of an insurer's head o ffice or that of its authorized province-level 
branch offices.  Other branches were not  allowed to issue master policies.  WT/ACC/SPEC/CHN/1/Rev.7 
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 99 I. Master policy business with the state ke y construction projects as its subject-matter 
insured.  
  If investors on the state key construction projects (i.e., projects that were so listed and 
annually announced by the State Developm ent and Planning Commission) met either 
of the following requirements, they could purchase a master policy from insurers that 
were located in the same place as the investors' legal persons were located. 
  1. The investment on the subject-matte r insured were all from China (including 
the reinvestment from the foreign-invested  enterprises in China) and the sum of 
investment of the investor accounted for over 15 per cent of the total investment. 
  2. The investment was partially from abroad, and partially from China 
(including the reinvestment from the foreign- invested enterprises in China) and the 
sum of investment of the Chinese investor accounted for over 15 per cent of the total 
domestic investment. 
  For those projects that drew all investme nt from abroad, every insurer could provide 
coverage in the form of a master policy. 
 II. A Master policy covering different subj ect-matters insured of the same legal person. 
  For those subject-matters insured located in different places and owned by the same 
legal person (excluding fi nancial, railway, and pos t and telecommunications 
industries and enterprises), a master policy could be issued on the basis of either of 
the following conditions. 
  1. For the sake of payment of the premium tax, insurance companies 
incorporated where the legal person or accoun ting unit of the insurance applicant was 
located, were allowed to issue a master policy. 
 2. If over 50 per cent of the insurance amount of the subject-matter insured was 
from a larger or medium sized city, then insu rers in that city were allowed to issue a 
master policy, no matter whether the insura nce applicant's legal person or accounting 
unit was located in the city. 
(b) Large scale commercial risk  meant an insurance risk wr itten on any large scale commercial 
enterprise if, upon accession, the aggregate annua l premium exceeded 800 thousand RMB and WT/ACC/SPEC/CHN/1/Rev.7 
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the investment was more than 200 million RM B; one year after accession, if the aggregate 
annual premium exceeded 600 thousand RMB and the investment was more than 180 million 
RMB; two years after accession, if the aggr egate annual premium exceeded 400 thousand 
RMB and the investment was more than 150 million RMB. 
(c)  Statutory insurance in China's Schedule of Specific Commitments were limited to the 
following specific categories, and no additional lin es or products would be added:  third party 
auto liability insurance, and driver and ope rator liability for buses and other commercial 
vehicles. 
(d) The representative of China confirmed that any changes to the definition of master policy and 
large scale commercial risk would be consistent with China's Specific Schedule of Commitments and obligations under GATS so as to progressively liberalize access to this 
services sector. 
The Working Party took no te of these commitments. 
324. Members of the Working Party welcomed China' s commitment to permit internal branching 
for insurance firms consistent with the phase-out of geographic restrictions.  Some members noted 
that China had scheduled certain qualifications as  limitations under GATS Ar ticles XVI and XVII that 
foreign insurers had to meet to apply for a licen ce to provide services in China.  These qualifications 
related to a minimum period of establishment in  a WTO member, total assets and maintenance of a 
representative office in China.  These qualificati ons should not apply to those foreign insurance 
companies established in China seeking authorisati on to establish a branch or sub-branch.   The 
representative of China confirmed that the qualificati ons for foreign insurers applying for a licence to 
enter China's market would not apply to foreign insurers already establishe d in China that were 
seeking authorization to establish branches or sub-branches. [He also confirmed that a branch and a 
sub-branch was an extension of the parent enterp rise and not a separate legal entity and that China 
would permit internal branching accordingly on that basis. ]  The Working Party took note of these 
commitments. 
2. Choice of Partner 
325. Some members of the Working Party expressed concern regarding the existing practice of 
imposing conditions on the Chinese companies that were allowed to partner with foreign service 
suppliers.  These members indicated that this could amount to de facto  quotas, as the number of 
potential partners meeting those c onditions might be limited.  The representative of China confirmed 
that a foreign service supplier would be able to pa rtner with any Chinese entity of its choice, including  WT/ACC/SPEC/CHN/1/Rev.7 
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 101 outside the sector of operation of the joint ve nture, as long as the Chinese partner was legally 
established in China.  The joint venture as such  should meet the prudential and specific sectoral 
requirements, on the same basis as those for do mestic enterprises and which must be publicly 
available.  The Working Party took note of these commitments.     
3. Modification of the Equity Interest 
326. The representative of China confirmed that the Ch inese and foreign  partners in an established 
joint venture would be able to discuss the modificati on of their respective equity participation levels 
in the joint venture and implement such modification if agreement was reached by both sides and also 
approved by the authorities.  The representative of China confirmed that such an agreement would be 
approved if consistent with th e relevant equity commitments in China's Schedule of Specific 
Commitments.  The Working Party took note of this commitment. 
4. Prior Experience Requirement for Esta blishment in Insurance Sector  
327. The representative of China confirmed that the merging, division, r estructuring or other 
change of legal form of an insurance company would not impact the prior experience requirements 
included in China's Schedule of Specific Commitment s if the new entity continues to supply insurance 
services.  The Working Party took note of this commitment . 
5. Inspection Services 
328. In response to questions from members of th e Working Party, the representative of China 
confirmed that China would not maintain requirements which had the effect of acting as barriers to the operation of foreign and join t-venture commodity inspection ag encies, unless otherwise specified 
in China's Schedule of Specific Commitments.  Th e Working Party took note of this commitment. 
6. Market Research   
329. Some members of the Working Party expressed c oncern regarding market research activities. 
In response to questions from members in this respect, the representative of China confirmed that, 
upon accession to the WTO, China would remove the prior approval requirement for market research 
services, defined as investigation services designed to secure information on the prospects and performance of an organization's products in the ma rket, including market analysis (of the size and 
other characteristics of a market) and analysis of c onsumer attitudes and preferences.  Market research 
firms registered in China, which were engaged in such services, would only be required to file the 
survey plan and the questionnaire form on record in the statistical agencies of government at or above 
the provincial level.  The Working Party took note of these commitments.   WT/ACC/SPEC/CHN/1/Rev.7 
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7. Legal Services   
330. In response to questions from members of th e Working Party, the representative of China 
clarified that "Chinese national registered lawyer s", as indicated in China's Schedule of Specific 
Commitments, were those Chinese nationals who had obtained a lawyer's certificate and were holding 
a Chinese practising permit and were registered to practice in a Chinese law firm.   
8. Minority Shareholder Rights   
331. With respect to its Schedule of Specific Co mmitments, China confirmed that, while it had 
limited its market access commitments in some sect ors to permit foreigners to hold only a minority 
equity interest, a minority shareholder could enfo rce under China’s laws, regulations and measures, 
rights in the investment.   Moreover, WTO Member s would have recourse to WTO dispute settlement 
to ensure implementation of all commitments in China’s GATS schedule.  The Working Party took 
note of these commitments. 
9. Schedule of Specific Commitments 
332. China's Schedule of Specific Commitments was a nnexed to the Draft Protocol reproduced in 
the Appendix to this Draft Report.  This Schedul e of Specific Commitments contained the market-
access commitments of China in respect of Services.
   
VII. OTHER ISSUES 
1. Notifications 
333. Members of the Working Party requested that  China provide to the WTO Secretariat the 
notifications described in paragraphs … of this Draft Report.   
2. Special Trade Arrangements 
334. Some members of the Working Party raised speci fic concerns in relation to some of China's 
special trade arrangements, including barter trad e arrangements, with third countries and separate 
customs territories, which those members considered not  to be in conformity with WTO requirements.  
In response, the representative of China noted that  China would undertake a commitment in the Draft 
Protocol to eliminate or bring into conformity with WTO requirements, all such special trade 
arrangements that were not in conformity with tho se requirements, by no later than the date of entry 
into force of the Draft Protocol.   WT/ACC/SPEC/CHN/1/Rev.7 
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 103 3. Transparency 
335. Some members of the Working Party expressed concern about the lack of transparency 
regarding the laws, regulations a nd other measures that applied to matters covered in the WTO 
Agreement and the Draft Protocol.  In particular, some members noted the difficulty in finding and 
obtaining copies of regulations and other measures undertaken by various ministries as well as those 
taken by provincial and local authorities.  Tran sparency of regulations and other measures, 
particularly of sub-central authorities, was essentia l since these authorities often provided the details 
on how the more general laws, re gulations and other measures of the central government would be 
implemented and often differed among various juri sdictions. Those members emphasized the need to 
receive such information in a timely fashion so that governments and traders could be prepared to comply with such provisions and could exercise their rights in respect of implementation and 
enforcement of such measures.   The same members emphasized the importance of such pre-
publication to enhancing secure, predictable tradi ng relations.  Those members noted the development 
of the Internet and other means to ensure that information from all government bodies at all levels 
could be assembled in one place and made readily  available.  The creation and maintenance of a 
single, authoritative journal and enquiry point woul d greatly facilitate dissemination of information 
and help promote compliance. 
336. In response, the representative of China noted th at the Government of China regularly issued 
publications providing information on China's foreign trade system, such as the: "Almanac of Foreign 
Economic Relations and Trade" and "The Bulle tin of MOFTEC" published by MOFTEC; "Statistical 
Yearbook of China", published by the State Sta tistical Bureau; "China's Customs Statistics 
(Quarterly)", edited and published by the Customs.  China's laws and regulations of the State Council 
relating to foreign trade were all published, as we re rules issued by departments.  Such laws, 
regulations and rules were available in the "Gazette  of the State Council", the "Collection of the Laws 
and Regulations of the People's Republic of Chin a" and the "MOFTEC Gazette".  The administrative 
regulations and directives relating to foreign trade were also published on MOFTEC's official website 
(http://www.moftec.gov.cn) and in periodicals. 
337. He further noted that there were no forex restri ctions affecting import or export.  Information 
on forex measures was published by the SA FE and was available on SAFE's website 
(http://www.safe.gov.cn) and via the news media. WT/ACC/SPEC/CHN/1/Rev.7 
Page 104  
 
338. The representative of China noted that information concerning the administration of imports 
and exports would be pu blished in the "International Busi ness" newspaper and the "MOFTEC 
Gazette". 
339. He also noted that information on China's customs laws and regulations, import and export 
duty rates, and customs procedures was published in the "Gazette of the State Council" and in the press media, and was available upon request.  The procedures concerning application of duty rates, 
customs value and duty determination, drawback  and duty recovery, as well as the procedures 
concerning duty exemptions and reduction, were also published.  Customs also published monthly 
customs statistics, calculated according to country of  origin and final destination, on the basis of 
eight-digit HS levels. 
340. The representative of China noted that any b ilateral trade agreemen ts concluded between 
China and its trading partners, and protocols on the exchange of goods negotiated under them were 
published in "The Treaty Series of the PRC".  He al so noted that the "Directory of China's Foreign 
Economic Relations and Trade Enterprises" and "China's Foreign Trade Corporations and 
Organizations" were two publications which id entified foreign trade corporations and other 
enterprises in China engaged in foreign trade. 
341. The representative of China stated that the full listing of official journals was as follows:  
Gazette of the Standing Committee of the National People's Congress of the People's Republic of China; Gazette of the State Council of the People's Republic of China; Collection of the Laws of the 
People's Republic of China; Collection of the La ws and Regulations of the People's Republic of 
China; Gazette of MOFTEC of the People's Republic of China; Proclamation of the People's Bank of the People's Republic of China;  and Proclamation of  the Ministry of Finance of the People's Republic 
of China. 
342. The representative of China confirmed that pub lication of all laws, regulations and other 
measures pertaining to or affecting trade in goods, services, TRIPS or the control of forex would 
include the effective date of these measures.  It would also include the products and services affected 
by a particular measure, identified by appropria te tariff line and CPC classification.  The Working 
Party took note of these commitments. 
343. The representative of China confirmed that China would publish in the official journal, by 
appropriate classification and by service where rele vant, a list of all organizations, including those 
organizations delegated such authority from the national authorities, that were responsible for 
authorizing, approving or regulating services activi ties whether through grant of licence or other  WT/ACC/SPEC/CHN/1/Rev.7 
 Page 105 
 
 
 
 105 approval.  Procedures and the c onditions for obtaining such licen ces or approval would also be 
published.  The Working Party took note of these commitments. 
344. The representative of China confirmed that  none of the information required by the 
WTO Agreement or the Draft Protocol to be disclo sed would be withheld as confidential information 
except for those reasons identified in Section 2(C) of the Draft Protocol or unless it would demonstrably prejudice the legitimate commercial interests of particular enterprises, public or private.  
The Working Party took note of this commitment. 
345. The representative of China confirmed that China would make available to WTO Members 
translations into one or more of the official languages of the WTO all la ws, regulations and other 
measures pertaining to or affecting trade in goods, ser vices, TRIPS or the control of forex, and to the 
maximum extent possible would make these laws, re gulations and other measures before they were 
implemented or enforced, but in no case later than 90 days after they were implemented or enforced.  
The Working Party took no te of these commitments. 
346. Members of the Working Party also requested  that China set up an enquiry point where 
information relating to all laws, regulations, judicial  decisions and administra tive rulings of general 
application and other measures pertaining to or affecting trade in goods, services, TRIPS or the 
control of forex could be obtained.   
347. The representative of China confirmed that Chin a would establish or designate one or more 
enquiry points where all information relating to th e laws, regulations and other measures pertaining to 
or affecting trade in goods, services, TRIPS or th e control of forex, as well as the published texts, 
could be obtained and would notify the WTO of any enquiry point and its responsibility.  The 
information would include the names of national or sub-national authorities (including contact points) 
responsible for implementing a particular meas ure.  The Working Party took note of these 
commitments. 
VIII.  CONCLUSIONS 
348. The Working Party took note of the explanations and statements of China concerning its 
foreign trade regime, as reflected in this Draft Report.  The Working Party took note of the 
commitments given by China in relation to cer tain specific matters which are reproduced in 
paragraphs […] of this Draft Report and noted that these commitments are incorporated in 
paragraph 1.2 of the Draft Protocol. WT/ACC/SPEC/CHN/1/Rev.7 
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349. Having carried out the examination of the foreign trade regime of China and in the light of the 
explanations, commitments and concessions made  by China, the Working Party reached the 
conclusion that China should be invited to accede to the Marrakesh Agreement Establishing the WTO 
under the provisions of Article XII.  For this pur pose, the Working Party prepared the Draft Decision 
and Draft Protocol reproduced in the Appendix to  this Draft Report, and took note of China's 
Schedule of Concessions and Commitments on Goods [(document WT/ACC/SPEC/CHN…)] and 
China's Schedule of Specific Commitments on Services [(document WT/ACC/SPEC/CHN…)] that 
were annexed to the Draft Protocol.  It was propo sed that these texts be adopted by the General 
Council when it adopted the Draft Report.  When the Draft Decision was adopted, the Draft Protocol would be open for acceptance by China which would become a WTO Member 30 days after it accepted the said Draft Protocol.  The Working Party ag reed, therefore, that it had completed its work 
concerning the negotiations for the accessi on of China to the WTO Agreement. 
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