RESTRICTEDWORLD TRADE
ORGANIZATIONS/FIN/W/22
11 October 2002
(02-5497)
Committee on Trade in Financial Services Original:  English
COMMUNICATION FROM THE SEPARATE CUSTOMS TERRITORY
OF TAIWAN, PENGHU, KINMEN AND MATSU
Transition Review Mechanism (TRM) in connection with
Paragraph 18 of the Protocol on the Accession
of the People’s Republic of China
The attached paper has been received from the delegation of the Separate Territory of Taiwan,
Penghu, Kinmen and Matsu to the Committee on Trade in Financial Services.
Chinese Taipei welcomes the efforts made by the People’s Republic of China to bring its
regulations on financial markets into conformity with its WTO accession commitments in the area of
financial services.
Chinese Taipei believes that a transparent regu latory regime is in the interests of China as
well as all its trading partners and our main concerns relate to the clarity and the scope of certainregulations. Along with several other Members of the Committee on Trade in Financial Services, we
wish to raise following questions.
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I. INSURANCE
1. According to Part 7.A of China’s Schedule of Specific Commitments on Services, China
pledged that foreign insurers will be permitted to enter China’s insurance market upon accession.  The
China Insurance Regulatory Commission (CIRC) issued Administrative Regulations on Foreign-
Invested Insurance Companies , which came into effect on 1 February 2002:
(a) Articles 5, 6, and 14 of Administrative Regulations on Foreign-Invested Insurance Companies
state that the application of business scope, form of establishment, percentage of foreign
ownership, the geographic coverage and the establishment of branches by Foreign-Invested
Insurance Companies shall be determined by  the CIRC in accordance with the relevant
regulations. Please indicate what the “relevant regulations” are and provide them for our
reference. Please also explain how this regulation conforms to China’s commitments.
(b) According to Part 7.A of China’s Schedule of Specific Commitments on Services, China does
not prohibit the same Foreign-Invested Insurance Company from providing life insurance and
non-life insurance services. However, Article 16 of Administrative Regulations on Foreign-
Invested Insurance Companies states that the same Foreign-Invested Insurance Company is
not permitted to conduct both life insurance and non-life insurance services. Please explain
how this requirement complies with China’s commitments and conforms to GATS
regulations.S/FIN/W/22
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2. According to Part 7.A of China’s Schedule of Specific Commitments on Services, China does
not limit the term of validity of licences for Foreign-Invested Insurance Companies and it clearly
stipulates the geographic coverage available for Foreign-Invested Insurance Companies. However,
according to the “Administrative Regulations for Insurance Brokerage Companies”, which came into
effect on 1 January 2002 and were issued by the CIRC, we would appreciate the clarification of thefollowing matters:
(a) Article 25 of the Regulations stipulates that the validity period for the Licence for Providing
Insurance Brokerage Service is three years, and the licence has to be renewed by application
to the CIRC 60 days before it expires. Please explain why there is a necessity for this
requirement and indicate whether there are any other specific requirements to be taken into
account when applying to renew a licence. Please also explain how this requirement is
consistent with China’s WTO commitments.
(b) Article 40 of the Regulations states that the application for geographic coverage by insurance
brokerage companies will be subject to approval by the CIRC. We should be grateful if China
could explain how this requirement conforms to its WTO accession commitments.
II. BANKING
1. According to Part 7.B of China’s Schedule of Specific Commitments on Services, China is
committed to allowing foreign banks and other financial companies to enter its banking or other
financial markets.  China promulgated Administrative Regulations on Foreign-Invested Financial
Institutions  on 29 December 2001. However, the Administrative Regulations  contain no specific
mention of either the scope of geographic coverage or the client coverage in the running of RMBbusiness.  Please provide information on these aspects in the liberalization schedules and the relevant
legislative process. Please also explain how the Administrative Regulations  comply with China’s
WTO accession commitments.
2. Questions relating to the Detailed Implementing Rules for the Administrative Regulations on
Foreign-Invested Financial Institutions , which took effect from 1 February 2002.
(a) According to its Schedule of Specific Commitments on Services, China pledged that upon its
accession, foreign financial institutions will be permitted to provide foreign currency services.
However, Article 32 of the Detailed Implementing Rules for the Administrative Regulations
on Foreign-Invested Financial Institutions states that foreign financial institutions should
increase their working capital or registered capital before conducting a full range of foreign
currency businesses. It would be appreciated if China could please provide justification for
this requirement and explain how it conforms to GATS principles.
(b) According to China’s Schedule of Specific Commitments on Services, China pledged that
within two years of accession, foreign financial institutions will be permitted to provide
services in local currency (i.e., RMB business) to Chinese enterprises.  However, Article 33 to
Article 36 of the Detailed Implementing Rules for the Administrative Regulations on Foreign-
Invested Financial Institutions stipulates that foreign financial institutions running RMB
businesses are divided into two categories - partial or full-scope RMB businesses - and that
each category requires a different level of working capital or registered capital.  Please
provide the justification for these Articles and explain how this requirement complies with
GATS rules.S/FIN/W/22
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III. SECURITIES SERVICES
1. According to the securities services part of Part 7.B of China’s Schedule of Specific
Commitments on Services, China pledged that upon accession, foreign security services will be
permitted to enter Chinese securities markets.  Article 7 of China’s Regulations of Foreign Capital
Sharing Stocks to Set Up Security Companies  and Article 6 of the Regulations of Foreign Capital
Sharing Stocks to Set Up Fund Management Companies, promulgated on services on 1 June 2002,
requires that the home securities regulator of foreign shareholders must sign a “Memorandum of
Understanding regarding Stock Supervising Co-ope ration” with the Chinese Securities Regulatory
Commission.  Could China please explain why there is a necessity for this requirement and how it
conforms to China’s WTO commitments.
2. According to the same commitments as indicated above, China pledged that upon accession,
foreign securities service suppliers will be permitted to establish joint ventures.  However, Article 7 ofChina’s Regulations of Foreign Capital Sharing Stocks to Set Up Security Companies stipulates that
offshore shareholders should have conducted financial business for ten years or more. Chinese Taipei
would be grateful to have an explanation of how  this requirement conforms both to China’s WTO
accession commitments and the WTO principle of national treatment.
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