WORLD TRADE  
ORGANIZATION  G/SG/73 
15 November 2004 
 (04-4848) 
Committee on Safeguards  
  
 
CHAIRMAN'S REPORT TO THE COUNCIL FOR TRADE IN GOODS 
ON TRANSITIONAL REVIEW OF CHINA  
 
 
1. The Committee on Safeguards undertook the third transitional review of China's 
implementation of the Agreement on Safeguards pur suant to Paragraph 18 of the Protocol on the 
Accession of the People's Republic of China (WT/ L/432) at its meeting on 25 October 2004.   
2. Annex 1A to the Protocol requires China to submit information regarding the implementation 
of its Regulation on Safeguards.  The information provided by China for the 2003 transitional review 
is contained in document G/SG/W/198. 
3. Japan and Chinese Taipei submitted questions in the context of the transitional review.  Japan's 
questions can be found in document G/SG/Q2/C HN/7, and Chinese Taipei's questions can be f ound in 
G/SG/Q1/CHN/19. 
4. The statements made at the meeting of 25 Oct ober 2004, at which the transitional review was 
Item G of the agenda, are reflected in the minut es of the meeting, which will be circulated as 
document G/SG/M/26.  The relevant paragraphs wh ich reflect the statements made and the discussion 
at the meeting are annexed. 
 
 G/SG/73 
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ANNEX
 [EXTRACT FROM DOCUMENT G/SG/M/26] 
G. TRANSITIONAL  REVIEW  UNDER  PARAGRAPH  18 OF THE  PROTOCOL  OF 
ACCESSION  OF THE  PEOPLE'  S REPUBLIC  OF CHINA  TO THE  WORLD  TRADE  
ORGANIZATION 
1. The Chairman  noted that Paragraph 18 of China's Protocol of Accession provided that all 
subsidiary bodies, including the Safeguards Comm ittee, "which have a mandate covering China's 
commitments under the WTO Agreement or [the] Prot ocol shall, within one year after accession, 
review, as appropriate to their mandate, the implem entation by China of the WTO Agreement and of 
the related provisions of [the] Protocol."  China was to provide relevant information in advance of the 
review, including information specified in Annex 1A to the Protocol.  China could also raise issues 
relating to any reservations under Section 17 or to  any other specific commitments made by other 
Members in the Protocol, in subsidiary  bodies which have a relevant mandate. 
2. The Chairman stated that the Committee must repor t the results of the review promptly to the 
Council for Trade in Goods.  Review was to take place after accession in each year for eight years, 
with a final review in year 10 or at an earlier da te decided by the General Council.  He added that 
there were no procedures set out for the conduct of th e transitional review in the Protocol, except that 
China was to provide relevant information in advan ce of the review.  In accordance with section IV.6 
of Annex 1A to the Protocol, China was required to  notify the Committee of its implementation of its 
Regulation on Safeguards.  The Chairman informed  the Committee that China had recently submitted 
a notification, circulated as G/SG/W/198.  
3. The representative of China  stated that in terms of China's legislation on safeguards, since the 
review of last year, the Chinese Government made  persistent efforts to improve the Chinese legal 
system on safeguards.  The State Counsel of China issued Decree number 403 of the year 2004, which amended the Regulations of the People's Re public of China on Safeguards, issued on 
26
 November 2001. 
4. This amendment reflected WTO rules in regard  to implementation of safeguard measures.  
For example, Article 19 was added with the requireme nt that application of safeguard measures shall 
be in the public interest.  This amended Regulation came into effect  on 1 June 2004, and the full text 
of it has been notified to the Committee on Safe guards on 18 October 2004.  The new provisions 
published in the form of Ministry Decree were one of the implementing rules for the Regulations of 
the People's Republic of China on Safeguards.  The representative of China stated that China would 
notify the provisions to the Safeguards Co mmittee once its translation was accomplished. 
5. With regard to China's implementation of saf eguard measures, the representative of China 
stated that no new safeguard investigation has been initiated by China since the review of last year, 
and so far China has initiated one safeguard investig ation in total.  On 26 December 2003 the Ministry 
of Commerce issued Decree number (2003)76, which conveyed the decision to terminate the 
definitive safeguard measures and to stop levyin g additional duty on steel products.  China has 
notified details to the Committee on Safeguards. 
6. In conclusion, the representative of China stat ed that its legislation and implementation of 
safeguard measures were consistent with the Safeguards Agreement, as well as its relevant 
commitments.   
7. The representative of Chinese Taipei  noted that their submission of questions was delayed, 
and that they were afraid that they would not be able to receive a full reply, but that they would 
appreciate if China would be able to address some of  the questions.  He stated that their questions 
were basically regarding the notifications of the amended Foreign Trade Law and the two other 
regulations on which they have just heard the ex planation from the representative of China.  In  G/SG/73 
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addition, he stated that they did have substan tive questions on the revised Foreign Trade Law, as it 
adapted a trade diversions provisions, and they were quite interested in knowing more detail about it. 
8. The representative of China  stated that with regard to th e questions under the transitional 
review, as far as he knew, China only had questions from  Japan, and that he was surprised to hear that 
the representative of Chinese Taipei also had ques tions for China.  He understood that questions 
should be delivered to the Member concerned with c opies to the Secretariat and in this regard, up to 
now his delegation have not received any questi ons from Chinese Taipei, nor have China been 
reminded in anyway that there was a question.  With  that said, he responded to  the questions raised by 
Japan as follows. 
9. On the question regarding "unforeseen developm ents", when dealing with safeguard cases, 
the competent authorities in China did consider wh ether there were unforeseen developments.  China 
believed that these practices, which were conducte d according to the Regulations of the People's 
Republic of China on Safeguards, were in line with  the requirement of the Agreement on Safeguards. 
10. On the question relating to "public interest", Article 19 of the newly amended Regulations of 
the People's Republic of China on Safeguards stipulated  that adoption of a safeguard measure shall be 
in line with public interest.  Article 12 stipulated  that the Ministry of Commerce of China shall 
provide opportunities for importers, exporters and ot her interested parties to present their views and 
supporting arguments.  In the implementing regula tions, there were also provisions according to 
which interested parties could provide the in formation and submit comments.  These were the 
channels through which public inte rest could be fully reflected.  
11. On the question on "other appropriate means" as  contained in Article 12 of the Regulations on 
Safeguards of China, the representative of China explai ned that they included on-the-spot verification, 
consulting experts, investigating and collecting evidence from other government or departments or 
institutes, etc. 
12. On the question relating to the "domestic industry", Article 10 of the newly amended 
Regulations of the People's Republic of China on Sa feguards provided a clear definition to "domestic 
industry", which was the producers as a whole of the like or directly competitive products within the 
territory of the People's Republic of China, or was those of them whose collective output of the like or 
directly competitive products constitutes a major pr oportion of the total domestic production of those 
products.  When investigating specific cases, the co mpetent authorities would determine that certain 
firms could represent domestic industry only when th eir total output made up a major proportion of 
the total domestic production. 
13. On the issue of "compensation", Article 24 of the newly amended Regulations of the People's 
Republic of China on Safeguards stipulated that prio r to the application of a safeguard measure, the 
Ministry of Commerce of China shall provide ad equate opportunities for consultations with those 
governments of countries or regi ons having substantial interest  as exporters of the products 
concerned.  In these consultations, relevant WTO prov isions would be referred to, and they were also 
the basis for specific compensation measures.  Therefore, the compensation to other Members as a 
result of safeguard measures was, in practice, de alt with through consultations according to WTO 
Rules and Practices. 
14. On the question regarding "provisional measur es", although Article 16 of the newly revised 
Regulations of the People's Republic  of China on Safeguards and Artic le 6 of the WTO Agreement on 
Safeguards were different in wording, they were  not conflicting with each other.  In fact, the 
competent authorities would consider both increase in  imports and injury when determining to take 
provisional safeguard measures.  Article 8 of the Regulations on Safeguards and relevant provisions 
of the Provisions on Investigation of Industry Injury  in Safeguard Measures provided details or factors 
to be considered in determining injury or threat of injury.   G/SG/73 
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15. On the question regarding Article 16 of China’ s Regulations on Safeguards and Article 6 of 
the WTO Agreement on Safeguards, they meant th e same thing.  The “critical circumstances” 
contained in Article 16 of China’s Regulations on Safeguards was the same as the one contained in 
Article 6 of the WTO Agreement on Safeguards. 
16. On the question regarding Article 31 of China’ s Regulations on Safeguards, "discriminatory 
safeguards" meant unfair and discriminatory safegua rd practices/measures not consistent with WTO 
rules and principles, taken by others against China.   According to Article 31 of China’s Regulations 
on Safeguards, China may take appropriate measur e against such practice to uphold its right or 
interest.  That being said, the representative of Chin a emphasised, it should be clarified that there had 
not been any invocation of Article 31 of China’s Regulations on Safeguards up to now. 
17. On the question regarding corresponding measure s in Article 31 of China’s Regulations on 
Safeguards, it was different from the rebalancing measures in the WTO Agreement on Safeguards.  
These corresponding measures in China’s Regulations on Safeguards were targeted at discriminatory 
safeguards applied by others against China, as mentioned earlier. 
18. The representative of Japan
 stated that his delegation put great importance in this process 
because it enhanced the transpar ency and predictability of th e implementation of Members' 
commitments. 
19. He clarified that Japan's questions were based  on the latest regulations as amended by the 
Chinese authorities at the end of March which was, at  the time of the submission of the questions, not 
yet notified. 
20. He stated that he has listened to the respon ses by the Chinese delegation with great interest 
and he would basically report back these responses to his capital.  One follow-up question he had was 
about the last two items, which were related to Ar ticle 31 of the Chinese Regulation.  The response by 
the Chinese delegation was that it was different from the rebalancing measures, but he wanted to clarify: if this was not the same as rebalancing measures, what did these measures correspond to in the 
Safeguards Agreement or any Ag reements in the WTO?   
21. The representative of China
 responded that with regard to Article 31 of China’s Regulations 
on Safeguards, he has made it very clear that until now, there have not been any invocation of this 
Article, and therefore, there were no practices which he could refer to.  But, he stated, when taking 
safeguard measures, the WTO rules and practices w ould be taken into consideration and in this 
regard, China would be WTO-consistent when taki ng safeguard measures according Article 31 of the 
Regulation on Safeguards. 
22. The representative of Korea  asked one follow-up question regarding the "discriminatory 
safeguards".  As the Chinese delegation's answer was very quick, he was not su re if he understood 
correctly.  He asked the Chinese delegation to clarif y if China could take unilateral retaliation action 
against other countries' discriminatory safeguard meas ures.  That is, without referring the matter to the 
DSB. 
23. The representative of Japan  stated that the Chinese delegation made it clear that China would 
adhere to the WTO Rules.  He also stated that he  would like to hear more explanation about this 
specific issue -- how it is related to the rebalanc ing measures sanctioned by the Safeguards Agreement 
and so on.  He also stated that he would very much appreciate if the Chinese delegation could provide 
some form of written version of its responses, so th at he could report the responses to his capital as 
accurately as possible. 
24. The representative of the United States  thanked the Chinese delegation for the written 
information they provided last week as well as for th e information they provided at this meeting, and  G/SG/73 
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that they welcomed this TRM Annual Review.  He stated that the United States would be looking at 
this legislation very closely, and would be fo llowing up as part of the regular committee process 
regarding legislative notification in the next meeting. 
25. The representative of the United States stated  that given the absence of new safeguard 
investigations since the review last year, there was not  really a whole lot to discuss, but he did want to 
reiterate in general terms some of the concerns the United States raised last year that would remain 
concerns as things go forward.  He stated that the United States would obviously be continuing to 
look at any further safeguard proceedings by China with respect to these kinds of issues.  As the 
United States have noted in the past, they had so me concerns about the transparency in China's 
decision-making process with respect to steel safegua rd measures and with respect to some aspects on 
the implementation of those measures, for example,  how quotas for the measures were allocated.  
Some of their exporters have raised some concerns about that.   
26. The United States also had a concern about the criteria China had used in determining which 
WTO Members would be accorded the status of a developing country or region for purposes of 
Article 9.1 of the Safeguards Agreement, partic ularly whether those criteria were clear and 
transparent.  The United States had concern about China's treatment of non-WTO members under 
Article 9.1, which provides for non-application of  safeguard measures to developing-country-WTO-
Members where the import share criteria were met, but it did not provide for exclusion of countries 
that were not WTO Members. 
27. The United States had a concern about how confid ential data submitted during the course of a 
safeguard investigation would be protected, especial ly when outside experts were employed.  There 
were also concerns regarding access to non-confidentia l information from safeguard investigations by 
interested parties, by the general public, in terms of  the procedural requirement s for and limitations on 
that access.  The United States raised the concern earlier about the issue of refunding of safeguard 
duties collected for provisional measures, when  definitive measures were not imposed.  The 
United States was also interested  in the issue regarding the terms and conditions governing extension 
of a safeguard measure. 
28. These were the concerns the United States raised in  the past and, and he was just noting them 
again, and the United States would be looking at these issues as there were any developments going forward.   
29. The representative of the European Communities
 stated that they also might come back on 
some of the issues discussed today with further questions.  He would simply for the moment like to 
express EC’s particular interest in the issue of  Article 31, which was discussed earlier, and the 
possibility that China adopts some kind of counter-mea sure or however they can be called, in the case 
they were subject to discriminatory safeguards.  This was an issue of concern, and he thought that this 
was an issue that required to be clarified, even in the absence of specific actions taken by China.  The 
mere existence of a law allowing for these measures to be invoked was in itself a matter of concern, 
and the EC wished that further discussion take pl ace to clarify exactly under what circumstances and 
based on which conditions such measures would be po ssible.  The EC intended, therefore, to come 
back on these issues with more questions in the future.   
30. The representative of China  took note of the comments made by other delegations, and 
thanked them for all the comments.  He stated th at China was also looking forward to exchanging 
views with Members within the frame of this Committee, and that he would rather encourage 
Members to exchange views with China through the normal procedures of exchange of views, rather 
than TRM, because China’s position with regard to TRM was very clear:  China was not in a position 
to provide written documents or responses to  the questions raised by Members.   G/SG/73 
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31. The Chairman
 noted that China's Protocol of Accession contained no guidelines for reporting 
to the Council for Trade in Goods on the Committee' s transitional review of China's implementation 
of the Agreement.  He proposed that the Committe e follow the same reporting procedure as last year, 
whereby the Chairman, acting on his own responsibility,  would prepare a brief, factual report, with 
references to the documents concerned, and attach ing the portion of the minutes of the meeting which 
relate to the transition review. 
32. The Committee agreed  that the Chairman should prepare the same type of report in respect of 
the 2004 transitional review. 
__________