WORLD TRADE
ORGANIZATIONG/LIC/Q/CHN/2
29 August 2002
(02-4597)
Committee on Import Licensing Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM1
Questions from the UNITED STATES to CHINA
The following communication, dated 26 August 2002, has been received from the Permanent
Mission of the United States.
_______________
Questions regarding notifications required  by the Committee on Import Licensing
1. Rules and information concerning import licensing procedures:   Articles 1.4(a)/8.2(b) of
the Agreement on Import Licensing Procedures (Agreement) state that all rules and information
concerning import licensing procedures, e.g., for submission of an application, eligibility to apply, the
administrative bodies involved, the products covered, should be published and the informationnotified and made available to the Committee on Import Licensing (Committee).  These notifications
were due upon accession.  In addition, China agreed in Section 8 of its Protocol of Accession to notify
certain additional information regarding import and export licensing.
(a) Please indicate when each of these notifications will be supplied.(b) Please also provide a list of the import-related measures for which China will provide
the texts of these measures, and indicate when we can expect to receive them.  The
United States notes that, pursuant to paragraph 334 of the Report of the Working
Party on the Accession of China
2, China is required to provide translations into one or
more of the official WTO languages of all measures pertaining to or affecting trade in
goods, in no case later than 90 days after they were implemented or enforced.
2. Replies to Questionnaire on Import Licensing Procedures:   Article 7.3 of the Agreement
stipulates that Members should complete the annual questionnaire on import licensing procedures
laying out the purposes, criteria, and other administrative requirements of the licensing system.
(a) Please indicate when China will submit this information, which was due upon
accession.
3. Other requirements (new import licensing procedures or changes):  Article 5 of the
Agreement stipulates that Members must notify new or amended import licensing procedures, i.e.,
after the original two notifications.
(a) As China has not yet complied with standard initial notifications to the Committee,
and in light of China’s extensive and changing import licensing system, please
                                                     
1 Pursuant to Section 18 of the Protocol of Accession of the People’s Republic of China, WT/L/432.
2 WT/ACC/CHN/49.G/LIC/Q/CHN/2
Page 2
explain what procedures China is implementing to ensure that the Committee is
notified of Article 5 changes.
Pending the submission of the above informat ion on China’s import licensing requirements
required by the Agreement and China’s accession  agreement, we request the following specific
information, in writing, in advance of the Committee’s 24 September 2002 meeting:
4. Please list all laws, regulations, orders, decrees and other measures (including at the
sub-national level) that China has issued since its accession dealing with import licensing and
indicate which of these measures were taken to comply with the Agreement or the
commitments in China’s accession agreement.
5. What steps has China taken to ensure that the list of all entities responsible for the
authorization or approval of imports will be updated and republished in the official journal,
the MOFTEC Gazette, within one month of any change, as required by paragraph 132 of
China’s Working Party Report?
6. In paragraph 138 of its Working Party Report, China committed that it would not require a
separate import licence approval for goods subj ect to a TRQ allocation requirement but would
provide any necessary import licence in the procedure that granted a quota allocation.  What
steps has China taken to implement this commitm ent and to abolish the requirement to obtain
a separate import licence approval?
7. Please list all import licensing requirements China currently maintains, listing by HS item
number the goods for which import licences are required.
8. For each type of licence, please indicate which government agencies are responsible for
issuing the licences.
9. Please indicate and fully describe relevant changes in procedures and any fees or costs
associated with obtaining a licence.
10. Please report on preferential criteria employed in awarding import licences, e.g., for state-
controlled importer vs. privately owned importers.
11. Please list any current export performance requirements associated with the issuance of an
import licence.
12. We understand that import licences are still bought, sold and transferred between non-
affiliated entities notwithstanding China’s statement in paragraph 135 of the Working Party
Report that this is illegal.  What steps has China taken to counteract this practice?
Questions related to import licen ces issued for inspection permits
We seek confirmation of and additional information on the procedures and requirements that
the State General Administration of Quality Supervision and Inspection and Quarantine (AQSIQ) is
applying in connection with quarantine inspection permits.
13. Please explain AQSIQ’s  procedures for issuance of import inspection certificates.14. Is there a limit placed on access to inspection permits or the amount of product covered by
any one permit for products such as meat and poultry products?G/LIC/Q/CHN/2
Page 3
15. In the light of documentation and procedural requirements, is it possible to obtain import
permits less than 60 days in advance of the planned date of importation for commodities such
as meat products, grain and soybeans?
16. How does AQSIQ handle shipments arriving with less than 60 days' notice?17. Please confirm that importers must secure import inspection permits prior to signing a
contract to purchase foreign commodities with exporters.
18. We are concerned that AQSIQ’s procedures for import inspections are becoming technical
barriers to trade.   Please explain why this is not the case, i.e., how the requirements are
necessary and the least restrictive method of achieving the necessary objective?
Questions related to MOFTEC Order No. 20, 2001, “Measures on the Administration of
Automatic Import Licence of Goods”
19. Annex I of the Measures on the Administration of Automatic Import Licence of Goods ,
entitled “Catalog of Goods Subject to Automatic Import Licence Administration,” lists
products by harmonized tariff code that require import licences.  China has not notified or
provided a justification for imposing a licensing requirement on these products.  When does
China intend to notify and justify these requirements, as provided for in the Agreement and
China’s Protocol of Accession?
20. With regard to the above-referenced catalog (Annex I of the Measures on the Administration
of Automatic Import Licence of Goods ), products are grouped by commodity code into three
sub-catalogs, entitled “Catalog 1,” Catalog 2,” and “Catalog 3.”  It is not clear why the
product list is broken into three sub-catalogs, or what the significance of each catalog is.
(a) Do the procedures for issuing licences for products contained in sub-catalog 1 differ
from the procedures for issuing licences for products contained in sub-catalog 2?
Please explain.
21. Article 7 of the Measures on the Administration of Automatic Import Licence of Goods
specifies the documents that must be submitted to the licensing institutions in addition to theapplication for an import licence.  Section 4 requires the importer to provide the “contract on
agency import concluded between the entrusting party and the import business operator if the
import is subject to entrustment.”  Accord ing to the WTO Import Licensing Agreement,
automatic import licensing should not be used to restrict trade and application procedures are
to be as simple as possible.  The documentation requirements in Article 7 of the Measures on
the Administration of Automatic Import Licence of Goods  appear excessive and go beyond
what is necessary to monitor imports.
(a) Please define the policy of “entrustment,” and identify products subject to
entrustment.
(b) What is the purpose of requiring submission of documents relating to business scope
and the contract for importing the goods?
(c) By requiring unspecified “other necessary documents,” Article 7 of the Measures  may
be inconsistent with the Import Licensing Agreement’s transparency requirements and
could result in delays in issuing licences.  All documentation requirements should be
published with specificity in advance.  Please identify the “other necessary
documents” referred to in Article 7.G/LIC/Q/CHN/2
Page 4
23. Article 9 of the Measures on the Administration of Automatic Import Licence of Goods
appears to limit applicants to “import business operators”, although China has committed in
the Working Party Report (at paragraph 128) that any enterprise with the right to trade will be
permitted to apply for an import licence.  In addition, under Article 2.2(a)(ii) of theAgreement, any enterprise or person with the ri ght to import should be permitted to apply for
an import licence.
(a) What are the requirements to qualify as an “import business operator”?
(b) How do these requirements conform to paragraph 128 of China’s Working Party
Report and Article 2.2(a)(ii) of the Agreement?
24. Article 13 of the Measures on the Administration of Automatic Import Licence of Goods  states
that “the system of one licence for one batch shall be exercised for the automatic import
licence, the same automatic import licence shall not be used in accumulative customs
declaration in batches.”
(a) Why does China require a separate licence for each batch shipped?  These
requirements are burdensome, more restrictive than necessary and may impede trade.
25. Article 10 of the Measures on the Administration of Automatic Import Licence of Goods
refers to the “processing trade,” but it is not clear what this means.  Article 18, however,
indicates that “processing trade” does not refer to imports into bonded zones or export
processing zones.
(a) Please explain what “processing trade” means in Article 10.  In addition, please
explain why “processing trade” is exempted from licensing requirements by
Article 10.
26. Article 15 of the Measures on the Administration of Automatic Import Licence of Goods  states
that  “the automatic import licence administration on the goods of foreign-funded enterprises
shall be conducted in accordance with the present relevant provisions.”
(a) What are the relevant provisions that are applied to licensing of imports by
foreign-funded enterprises?
27. In paragraph 334 of China’s Working Party Report, China committed that it “would make
available to WTO Members translations into one or more of the official languages of theWTO all laws, regulations and other measures pertaining to or affecting trade in goods,
services, TRIPS or the control of foreign exchange, and to the maximum extent possible
would make these laws, regulations and other measures available before they were
implemented or enforced, but in no case later than 90 days after they were implemented or
enforced.”  To date, China has not provided translations of several post-accession measures inthe area of import licensing procedures, which were implemented more than 90 days ago.
Please provide a translation of the following measures in advance of the 24 September 2002
meeting at which the Committee will be reviewing the implementation by China of the WTO
Agreement and the relevant provisions  of China’s Protocol of Accession:
(a) The Measures on the Administration of Automatic Import Licence of Goods  includes
5 annexes.  We have obtained only Annex 1.  Please provide translations of
Annexes 2-5.G/LIC/Q/CHN/2
Page 5
(b) Implementing Rules for the Administratio n of Automatic Licensing of Important
Industrial Products.
Questions related to MOFTEC Order No. 21, 2002, “Measures on the Administration of
Designated Trading on Import of Goods”
28. The Measures on the Administration of Designated Trading on Import of Goods  set forth
rules governing designated trading enterpri ses engaged in the importation of specific
products.  Some, but not all, of these products also appear to be listed in the Catalog of Goods
Subject to Automatic Import Licence Administration.
(a) Please explain your methodologies for grouping products under the Measures  versus
the Catalog.
29. Article 7, Sections 2-4, of the Measures on the Administration of Designated Trading on
Import of Goods describes the schedule and process by which MOFTEC increases the number
of designated trading enterprises in each province, autonomous region, and municipality.
(a) Please explain how MOFTEC intends to ma ke this information known to the public,
in particular end users and sellers of products subject to designated trading.
30. Paragraph 86 of China’s Working Party Report states that China will eliminate import and
export volume as a criterion for obtaining the right to trade in these products (referring to
products in Annex 2B of the Protocol of Accession).  Article 6(4) of the Measures on the
Administration of Designated Trading on Import of Goods , however, requires companies to
submit reports on the “analysis of the domestic and foreign supply and demand and on marketinformation for the import of goods subject to designated trading administration as well as the
information on the purchasing of and selling avenues of the applicant.”
(a) Please explain the relevance of this information, and justify the requirement in light of
China’s commitment in paragraph 86 of the Working Party Report.
Questions related to  MOFTEC Order No. 18 ( 2001), “Regulations on Technology Imports and
Exports,” and State Council Order No. 331 (10 December 2001), “Technology Import and
Export Administrative Regulations”
31. Please explain the relationship between the Regulations on Technology Imports and Exports ,
issued by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) as OrderNo. 18 of 2001, and the Technology Import and Export Administrative Regulations , issued by
the State Council as Order No. 331 (10 December 2001).
32. The MOFTEC Regulations on Technology Imports and Exports  discuss the three-step process
of importing restricted technology:  (1) approval of proposal for import, (2) submission oftechnology import contract and (3) subsequent issuance of import licence.  This three-step
process may violate provisions of China’s accession agreement and General Agreement on
Tariffs and Trade 1994 (GATT) that do not permit the use of approvals in addition to import
or export licences.  If so, such approvals currently required will have to either be abolished or
replaced with licences or, if appropriate, certification requirements.
(a) Please confirm whether the products covered by the Regulations on Technology
Imports and Exports  are listed in Annex 3 of China’s Protocol of Accession.G/LIC/Q/CHN/2
Page 6
(b) If this cannot be confirmed, please justify the issuance of permits for the importation
of technology products in light of Article XI of the General Agreement on Tariffs and
Trade 1994.
33. Articles 12, 14 and 15 of the Regulations on Technology Imports and Exports and Article 9 of
the Technology Import and Export Administrative Regulations  indicate that it may take up to
40 working days to obtain approval to import restricted technology.
(a) This 40-working day period exceeds the 30-calendar day time limit established
Article 3.5(f) of the Agreement.  How does China justify its 40-working day timeperiod?  When will China revise the above-discussed provisions to reflect the
30-calendar day maximum of Article 3.5(f) of the Agreement?
(b) Please confirm whether, following approval  of the proposal to import (Article 12 of
the Regulations on Technology Imports and Exports ) and submission and approval of
the technology import contract (Article 14) , any additional import licence is required
to import the restricted technology product.
(c) If an additional import licence is required, please describe the procedure for obtaining
the additional licence and the amount of time typically required to obtain the
additional licence.
Questions related to “Measures for the Administ ration of Licences for the Import of Goods,”
issued by MOFTEC (1 January 2002)
34. Please explain what is meant by “the list of graded licence issuance” and the “Catalog of
Graded Issuance for Commodities Subject to Administration of Import Licence” in Articles 3and 9 of the Measures for the Administration of Licences for the Import of Goods .
(a)           What is a graded licence?  How does it differ from other licences?
35. In paragraph 129 of China’s Working Party Report, China agreed that for products listed in
Annex 3 as subject to quota, it would ensure that those entities with quota allocations would
also receive any necessary import licence.  This system would conform to WTO rules,including the Agreement on Import Licensing Procedures, and would be transparent, timely,
responsible to market conditions and would minimize the burden on trade.  Import licences
would be granted based on the quota allocation.  A licence would be issued for the full
amount of the quota and would be valid for the calendar year issued.
● Several aspects of Article 11 of the Measures for the Administration of Licences for the
Import of Goods  appear to be inconsistent with China’s commitments in paragraph 129.
● First, Article 11 appears to create a presumption that an import licence may be used for only
one entry and must be used at the specified cu stoms office.  The licence should be modified to
specify that it is good for more than one customs declaration as provided in the Working Party
Report.
● Second, Article 11 imposes a maximum number of times that an import licence may be used,
i.e., 12.  This limitation is not consistent with the provisions of paragraph 129 of the WorkingParty Report.
● Third, Article 11 unduly interferes with the right of a trading enterprise to import goods.  For
example, a trader may need to change the port of arrival for a shipment because of last-minuteG/LIC/Q/CHN/2
Page 7
commercial considerations, but “one licence for one customs office” would not permit such
standard changes.  As such, the licensing procedures are likely to have unnecessary
trade-distortive effects and be “more administratively burdensome than absolutely necessary
to administer the measure,” in contravention of Article 3.2 of the Agreement on Import
Licensing Procedures and paragraph 129 of the Working Party Report.  An import licenceshould permit the importation of the specified quantity of product in one shipment or multiple
shipments, without restriction.
Please address these apparent inconsistencies in detail, and indicate how China intends to
bring Article 11 into compliance with its WTO obligations.
36. In paragraphs 129 and 138 of its Working Party Report and in its Goods Schedule, China
confirmed that a separate import licence approval for goods subject to TRQ or quota would
not be required, but that China would provide any necessary import licence in the procedure
that granted a quota allocation.
(a) In light of Article 7 of the Measures for the Administration of Licences for the Import
of Goods , it is not clear whether or not an entity is required to apply for an import
licence under the Measures  in order to be able to import goods under allocated TRQ
or quota.  Please clarify this matter.  If separate import licence is required, this
requirement should be eliminated and the same process used for granting the quota
allocation should be used for the grant of an import licence.
(b) Similarly, Article 17 of the Interim Measures on the Administration of Tariff-Rate
Quota for Agricultural Imports , issued by State Development and Planning
Commission on January 30, 2002, sets out a separate licensing procedure that follows
quota allocation.  In light of China’s commitment in paragraph 138 of the WorkingParty Report, China should eliminate this separate licensing procedure?
37. Please explain what “processing trade” means in  Article 17 of the Measures for the
Administration of Licences for the Import of Goods .  Does it have the same meaning in all of
the licensing regulations?
38. Article 23 of the Measures for the Administration of Licences for the Import of Goods  states
that “if an import licence drawn is lost, the unit drawing the licence shall report the case to the
department of public security immediately and shall publish the announcement of invalidation
on the national comprehensive or economic newspapers.”
(a) While we understand why the licensee should report a lost licence, why is it the
licensee’s responsibility to publish the announcement of invalidation in the national
comprehensive or economic newspapers?  Is notification of who receives a licence
published comprehensively?
Industrial quotas
40. In paragraph 127 of China’s Working Party Report, China confirmed that the administration
of quotas and import licences for products listed in Annex 3 would be consistent with the
WTO Agreement, including Article XIII of the General Agreement on Tariffs and Trade 1994
and the Agreement on Import Licensing Procedures, and that the allocation of quotas andissuance of import licences would go through a simple and transparent procedure, so as to
ensure the full utilisation of quota.G/LIC/Q/CHN/2
Page 8
(a) Please report on what steps China has taken or will take to fulfill the commitment that
the administration of quotas and import licences for products listed in Annex 3 will be
consistent with the WTO Agreement, including Article XIII of the General
Agreement on Tariffs and Trade 1994 and the Agreement on Import Licensing
Procedures.
(b) Please report on what steps China has taken or will take to fulfill its commitment that
the allocation of quotas and issuance of import licences would go through a simple
and transparent procedure, so as to ensure the full utilisation of the quota.
41. In paragraph 128 of China’s Working Party Report, China confirmed that for products listed
in Annex 3 subject to quota and licensing requirements, any entity that will possess the rightto trade in the quota year, including enterprises possessing trading rights to import such
products or inputs for production purposes under a particular quota category, could apply for a
quota allocation and licence to import products listed in Annex 3.
(a) Please report on how this commitment has been fulfilled.  In particular, please
indicate how companies that will possess trading rights in the quota year will be able
to apply for a quota allocation and import licences for the products listed in Annex 3that are under quota.
42. In paragraph 129 of China’s Working Party Report, China confirmed that for products listed
in Annex 3, the system for quota allocation and li censing would ensure that those entities with
quota allocations would receive necessary import licences and that the system for quota
allocation and licensing would conform to WTO rules, including the WTO Agreement on
Import Licensing Procedures.
China also confirmed that applications for a quota allocation would need to be submitted to
only one organization, at one level (central or sub-national) for approval.  The relevant
organization 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 issued.  Such licence would be extended once, upon
request,  for up to 3 months, if the request was made before 15 December of the current quotayear.  Imports occurring under an extended licence would be counted against the relevant
quota amount for the year in which the allocation took place.
China also confirmed that the relevant organization for issuing quota allocations and licences,
amount of quota, including the growth in quota pr ovided for in Annex 3, the eight-digit tariff
codes and full descriptions of all products covered by each quota and procedures for
application for a quota allocation and licence, including the beginning and end date of the
application period and any other relevant procedures or criteria, would be published in the
official journal at least 21 days prior to the beginning of the application period, that the
application period would be from 1-31 August, and that quotas would be allocated toapplicants no later than 60 days after closure of the application period.
(a) Please describe in detail how these commitments have been fulfilled.(b) Describe precisely how the system for quota allocation and licensing for products in
Annex 3 has been implemented in conform ity with the transparency and procedural
requirements in the WTO Agreement on Import Licensing Procedures and the
additional specific assurances given in paragraph 129.G/LIC/Q/CHN/2
Page 9
(c) Please confirm that the application period for quotas opened on 1 August and that
China will, in fact, allocate these quotas in  conformity with the procedures listed in
para 129 prior to 60 days from the closure of the application period.  Please describe
what steps China is taking to ensure fulfilment of this commitment.
43. In paragraphs 130-31 of China’s Working Party Report, which address the allocation and
utilisation of quotas, China confirmed that it wo uld allocate quotas in accordance with the
criteria listed in these paragraphs, and that procedures which would be published in advance
and would be applied in conformity with WTO requirements, including the Agreement on
Import Licensing Procedures.  China also confirmed that, in applying these criteria, it would
consider the need to allow for equitable participation by producers from WTO Members and
take into account the need to maximize the potential for quota fill.
(a) Please describe precisely what steps China has taken or will take to modify its quota
allocation system to meet the commitment to allocate quotas based on the provisions
of the WTO Agreement on Import Licensing Procedures and on the specific
procedures listed in this paragraph.
(b) Have the procedures been published?(c) Please indicate how China intends to fulfill the commitments in these paragraphs.
Tariff-Rate Quotas
44. In paragraph 116 of its Working Party Report, China agreed that TRQs would be administered
on a transparent, predictable, uniform, fair and non-discriminatory basis using clearly
specified time frames, administrative procedures and requirements that would provideeffective import opportunities, would reflect consumer preferences and end-user demand and
would not inhibit the filing of each TRQ.
(a) Please report on what steps China has taken or will take to fulfill these commitments.
45. In paragraph 119 of its Working Party Report, China agreed that the role of sub-national
authorities would be limited to purely administrative operations.  China also agreed that itwould not establish a separate process of allocation to sub-national authorities and that
decisions regarding all allocations and re-allocations to end-users would be made by a single,
central authority.
(a) Please report on how this commitment has been fulfilled.
46. In the headnotes on TRQ administration (found in Part I, Section 1-B, and Part III, Section A,
of China’s Goods Schedule
3), China committed to reserve a specified portion of each TRQ for
importation through entities other than state trading enterprises.  In addition, in paragraph 120
of its Working Party Report, China committed that  any enterprise possessing the right to trade
(other than state trading enterprises) will be  permitted to import TRQ products reserved for
importation by non-state trading enterprises.
(a) Please report on what steps China has taken or will take to ensure that TRQs reserved
for importation through non-state trading enterprises can be imported by anyenterprise possessing the right to trade.
                                                     
3 WT/ACC/CHN/49/Add.1.G/LIC/Q/CHN/2
Page 10
Other questions
47. In paragraph 23 of China’s Working Party Report, China confirmed that it would unify the
licensing requirements applied under its  Administrative Measures on Imported Spirits in the
Domestic Market so that a single licence authorized the sale of all spirits irrespective of their
country of origin.
(a)            Please report on how this commitment has been fulfilled.
48. In paragraph 136 of China’s Working Party Report, China confirmed its intent to bring its
Provisional Procedures for the Administration of Automatic Registration for the Import of
Special Commodities  (13 August 1994) and, in particular, the criteria for approval of
registration into conformity with Article 2 of the Agreement on Import Licensing Procedures
upon accession.
(a)          Please indicate how China has proceeded to fulfill this commitment.
49. We note that all domestic manufacturers who export are free to purchase raw material
wherever they can buy it, but furniture manufacturers who do not export are still required to
have an import permit which the government will issue only to certain companies.  This
appears to be a benefit based on export performance and a limitation on imports. Please
describe China ’s plans for eliminating this requirement.
__________