WORLD TRADE
ORGANIZATIONG/MA/W/50
11 September 2003
(03-4720)
Committee on Market Access Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM
Communication from Japan
The following communication, dated 8 September 2003, has been received from the
Permanent Mission of Japan.
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1. Japan welcomes that, in its second year after accession, China's implementation  of its
commitments on Market Access has progressed and is now entering a cruising phase. Japan
appreciates China's efforts for developing and impr oving the necessary regulatory framework and for
smoothly implementing its phase-in commitments.  In a transitional period of evolving regulations,
the importance of regulatory transparency, predictability, stability and consistency is paramount; thevalue of market access commitments, and the efforts to implement them, could easily be obscured
through the lack of such elements, either in the regulations themselves or in their application.  The
Transitional Review Mechanism could thus be useful for enabling such transitional efforts to be more
efficient and productive, and it is a pleasure for Japan to be able to contribute to this process.
2. In this context, China is further invited to take the necessary steps to ensure a regular and an
effective application of public comments' procedures, to make well-in-advance publications of lawsand regulations, to avoid any abrupt regulatory change, to make a clear demarcation of departmental
responsibilities, to make improvements in inter-departmental and central-provincial coordination and
consistency, etc.
3. In accordance with Paragraph 18 of the Protocol on the Accession of the People’s Republic of
China, which states that “China shall provide releva nt information to each subsidiary body in advance
of the review”, and in the spirit of the cooperation to render the TRM process most efficient and
effective, Japan requests China to provide, in advance of the meeting of the Committee on Market
Access, responses and any relevant information to the following questions and comments.
1. Tariffs
(i) Tariff rates on photographic products
(1) In the tariff concessions provided by China when it joined the WTO, there is mention of a
commitment to reduce tariffs on photographic pr oducts (HS37) to 0-53.5% in the form of ad valorem
(levied on yuan/yuan) duties as of 2002. However, for 35 items of photographic products (includingordinary photographic film), the government of China has failed to apply the concession rates in the
form of the ad valorem  duties committed to at the time of accession to the WTO. Instead, it has
imposed specific duties (levied on a yuan/square metre basis) by using far more excessive tariff rates
(for example, the concession rate for a finished 35 mm color negative film is 42%, while the specific
duty currently applied is converted to be the equivalent of over 100% in ad valorem  terms). In China'sG/MA/W/50
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January 2003 tariff amendments, the specific duty remains in force across the board within the
Chapter concerned.
Why does China keep this specific duty, when it has already committed its concession tariff
rates in the form of ad valorem  duties?
Is China ready to immediately reduce such excessive degrees of duty to the level of the
concession rates in its Schedule?
(2) Could China provide a specific time schedule for its tariff amendments in order to apply its
tariff concessions committed to at the time of WTO accession, with regard to the 35 items of
photographic products?
2. Quantitative restrictions on imports
(i) Concerns about the implementation of  import quotas on automobiles
(a) The actual automobile imports only registered $3.85 billion from April 2002 to March 2003, a
period subject to the quota for the first fiscal year, which was significantly lower than theimport quota of $7.94 billion.  We would like to know why such a large disparity between
these figures occurred.  Furthermore, the customs-cleared imports in the second quarter in
2003 posted $1.21 billion, as shown in the Exhibit attached hereto.  Multiplying this figure
four fold amounts to only $4.84 billion, which again results in a significant disparity from the
nominal quota for 2003 of $9.125 billion.  We are thus concerned about the implementationof the quota as agreed, and would like to know what measures the Government of China plans
to take in order to improve this year’s implementation.
(b) Annex 3 to the Protocol on the Accession of the PRC states that the items subject to the
import quotas for 2003 are 44 under complete vehicles and only one item, bodies, under autoparts.  We request the Government of China to confirm that there exist no other items subject
to the import quotas for 2003 than these cited above.
(ii) Ensuring of the transparency of the current import quotas on automobiles
(a) In Paragraph 127 of the Report of the Working Party, it has been agreed that the allocation of
quotas and the issuance of import licenses shall be operated in conformity with simple and
transparent procedures pursuant to Article 13 of the GATT 1994 and the WTO Agreements,including Import Licensing Procedures.  Furtherm ore, Article 2 (c) of Annex 1A-IV stipulates
that China shall provide information about the status of the quota allocation and reallocation,
which meet WTO requirements under the Agreement on Import Licensing Procedures and in
accordance with the report of the Working Party.
(b) Japan requests the Government of China to provide information on the status of its quota
allocation and reallocation for 2003 in light of ensuring a transparent system.  More
specifically, we would like the Government of China to present the actual quotas for 2003,
not only item by item, but also by country of origin.
(c) Paragraph 130 (C) of the Report of the Working Party provides that for those quota holders
not having imported their full allocation would receive a proportional reduction in their quota
allocation in the subsequent year, unless the quantity was returned for reallocation by
1 September.  In this connection, we would like to know the number of the quota holders to
whom the Government of China applied this provision at the time of allocating quotas for FY2003, as well as the total number of reductions in quotas.G/MA/W/50
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(d) We have the information that the Government of China controls the number of import
licenses that are granted by category. In particular, the number of import licenses granted for
cars of 2000cc or less displacement in the sedan category is small, which indicates that import
licenses are not granted impartially, regardless of the engine displacement, and are enough to
meet the demand for imported cars.
Is such information true about the method for granting import licenses ?
3. Prohibition of the sale in parallel of Chinese-made automobiles and imported
automobiles to China
(1) It has been reported that the Government of China has a plan to establish a “Law Controlling
the Monopolization of Automobile Brands” to prohibit dealers from selling both imported anddomestic cars. We would like to know whether this is  the case and, if so, ask China to provide details
of such regulation. Depending on the contents, we believe that such regulation should not be
introduced since,  it could violate GATT Article III.
(2) It has been reported that with regard to th e acquisition of the "management right to passenger
vehicles" which is required of retail dealers in passenger vehicles, the Government of China plans to
limit the scope of the management right, either to domestic cars or imported cars. We would like to
know whether this is the case and, if so, ask China to provide details of such regulation. In addition,
we request China to make public the criterion for the granting of a management right to passenger
vehicles. Depending on its contents, we believe that such regulation should not be introduced since, itcould be inconsistent with GATT Article III.
4. Import prohibition policy of used goods
(i) Import Prohibition on used goods
In China, there are many import prohibition measures on used goods. China prohibits imports
of a number of used goods, including worn clothing and automobiles. Japan is concerned by the
consistency of these measures with the WTO Agreement, including GATT Article XI. It is difficult to
understand how China can justify such prohibition of certain used goods for health or environmental
reasons, when all imports of such used goods are prohibited regardless of their physical condition.
Japan would like to know how such import prohibition on used goods is consistent with the WTO
Agreement, and whether it is possible to abolish these measures.
5. Trading Rights
(a) With regard to the phase-in commitments on tr ading rights (joint-venture enterprises with a
minority share of foreign investment) that should be duly implemented within 1 year after accession,
Japan would like to know why the revision of the relevant law, namely, the Foreign Trade Law of
People's Republic of China, has been delayed, and whether there exists a schedule for revision.
(b) With regard to the phase-in commitments on trading rights (joint-venture enterprises with
majority share foreign investment) that should be duly implemented within 2 years after accession,
Japan would like to know the specific schedule and the related procedures for implementation.G/MA/W/50
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2002/04
2003/032003/04
2003/06
Serial
No.HS No. Description of Products Quantity Value Quantity Value
104 84079090 Spark-ignition reciprocation or rotary
internal combustionpiston engines not elsewhere specified or
included732,047 63,151,026
105 84082010 Compression-ignition internal
combustion piston engines(diesel or semi-diesel engines) for theprolusion of vehiclesof Chapter 87, with an output 132.39KW(180H.P.)or more15,701 154,919,387
106 84082090 Compression-ignition internal
combustion piston engines
(diesel or semi-diesel engines) for theprolusion of vehiclesof Chapter 87, with an output less than132.39KW (180H.P.)8,426 24,794,154
248 87012000 Road tractors for semi-trailers (truck
tractors)1,167 58,477,276         370 18,779,036
250 87021020 Coaches for transport of passengers at
aerodrome, diesel5 1,316,211              - 0
251 87021091 Buses with seats ≥30, diesel 217 13,817,371           11 709,571
252 87021092 Buses with 20 ≤seats<30, diesel 44 1,706,040              - 0
253 87021093 Buses with 10 ≤seats<20, diesel 60 1,847,813             4 100,032
254 87029010 Other buses with seats ≥30, nes 198 7,619,848             5 223,844
255 87029020 Other buses with 20 ≤seats<30, nes 427 15,139,704             9 407,153
256 87029030 Other buses with 10 ≤seats<20, nes 3,136 56,826,506         586 10,018,962
258 87032130 Saloon cars, ≤1000 cc, spark-igni
reciprocatng11 70,017           49 238,877
259 87032190 Cars nes, ≤1000 cc, spark-igni
reciprocatng16 108,303             2 13,169
260 87032230 Saloon cars, >1000cc but ≤1500 cc, spark-
igni recip3,229 23,863,951         208 1,924,395
261 87032240 Cross-country cars(4WD), >1000cc
but≤1500cc, spark-igni recip35 278,972           14 116,200
262 87032250 Minibuses (seats ≤9), >1000cc
but≤1500cc,spark-igni recip17 197,960           16 224,163
263 87032290 Cars nes, >1000cc but ≤1500 cc,spark-igni
recip1 9,027              - 0
264 87032314 Saloon cars, >1500cc but ≤2500 cc,spark-
igni recip41,238 718,130,877    18,100 327,579,081
265 87032315 Cross-country cars(4WD),>1500cc
but≤2500 cc,spark-igni recip13,368 230,131,057      2,557 45,121,683
266 87032316 Minibuses(seats ≤9), >1500cc but ≤2500
cc,spark-igni recip12,343 225,249,091      1,643 30,063,158
267 87032319 Cars nes, >1500cc but ≤2500 cc,spark-igni
recip77 1,373,471           21 331,257
268 87032334 Saloon cars >2500cc but ≤3000 cc, spark-
igni recip12,658 348,838,424      5,549 193,179,046
269 87032335 Cross-country cars(4WD), >2500cc
but≤3000 cc, spark-igni recip12,248 274,155,578      3,895 98,330,119G/MA/W/50
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2002/04
2003/032003/04
2003/06
Serial
No.HS No. Description of Products Quantity Value Quantity Value
270 87032336 Minibuses(seats ≤9), >2500cc but ≤3000
cc, spark-igni recip612 13,400,082           20 474,748
271 87032339 Cars nes, >2500cc but ≤3000 cc, spark-
igni recip40 946,199           20 405,920
272 87032430 Saloon cars, >3000 cc, spark-igni recip 11,032 596,279,573      2,989 225,115,998
273 87032440 Cross-country cars(4WD), >3000 cc,
spark-igni recip17,249 543,176,293      3,507 129,015,620
274 87032450 Minibuses (seats ≤9), >3000 cc, spark-igni
recip1,267 156,932,429         157 3,677,773
275 87032490 Cars nes, >3000 cc, spark-igni recip 14 357,633             1 83,220
276 87033130 Saloon cars, ≤500 cc, diesel 0 0              - 0
277 87033140 Cross country cars(4WD), ≤1500cc,
diesel0 0              - 0
278 87033150 Minibuses (seats ≤9), ≤1500cc, diesel 0 0              - 0
279 87033190 Cars nes, ≤1500cc, diesel 0 0              - 0
280 87033230 Saloon cars, >1500cc but ≤2500 cc, diesel 12 231,691             3 71,450
281 87033240 Cross country cars(4WD), >1500cc
but≤2500 cc, diesel15 239,352             3 59,030
282 87033250 Minibuses (seats ≤9), >1500cc but ≤2500
cc,diesel27 361,817             6 91,034
283 87033290 Cars nes, >1500cc but ≤2500 cc, diesel 7 174,005              - 0
284 87033330 Saloon cars, >2500 cc, diesel 9 201,500             1 14,042
285 87033340 Cross country cars(4WD), >2500 cc,
diesel49 1,286,217             8 123,772
286 87033350 Minibuses (seats ≤9), >2500 cc, diesel 20 257,064             2 18,843
287 87033390 Cars nes, >2500 cc, diesel 7 627,629              - 0
288 87039000 Motor cars with seats ≤9, nes 19 350,746             2 67,770
290 87042100 Trucks diesel, g.v.w. ≤5 t 24 401,646             5 25,000
291 87042230 Trucks diesel, 5 t < g.v.w.<14 t 441 4,741,865         100 2,014,267
292 87042240 Trucks diesel, 14 t ≤ g.v.w.≤20 t 276 6,800,272           55 574,722
293 87042300 Trucks diesel, g.v.w. >20 t 6,265 267,837,781      2,536 112,958,225
294 87043100 Trucks spark-igni, g.v.w. ≤5 t 504 7,364,687           69 1,399,793
318 87071000 Bodies for passenger carrying vehicles 10,628 21,433,610      5,082 10,343,960
TOTAL 905,186 3,845,424,155 47,605 1,213,894,933
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