G/STR/Q1/CHN/6  
 
2 August 2016  
(16-4146)  Page: 1/3  
Working Party on State Trading Enterprises  Original: English  
 
STATE TRADING 
REPLIES TO QUESTIONS1 POSED BY THE EUROPEAN UNION TO CHINA ON ITS STATE 
TRADING ENTERPRISES NOTIFICATION2 
The following communication, dated 2 August 2016, is being circulated at the request of the 
Delegation of China. 
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Question 1 
In the cover page of its notification, China notes that "As for the products listed in 
Annex 2A1 and 2A2 of the Protoc ol of Accession which are cu rrently not subject to state 
trading administration or the state trading ad ministration of which has been suspended, 
China reserves the right to appl y state trading administration". 
 Questions: Could China clarify which is the ra tionale for this discla imer? In particular, 
could China clarify how this disclaimer compli es with China's commitments, that are: i) 
to progressively abolish state trading in respect of silk measures, increasing and 
extending trading rights, granting the right to  trade to all individuals no later than 1 
January 2005 as well as ii) to  progressive increases in access by non-state trading 
entities to trade in fertilizer and oil and the filling of quantities av ailable for import by 
non-state trading entities (Protocol of Accession p. 9)?  
Reply: 
 
The rationale for "As for the products listed in Annex 2A1 and 2A2 of the Protocol of Accession 
which are currently not subject to state trading administration or the state trading administration 
of which has been suspended, China reserves the right to apply state trading administration" is Paragraph 1 of Article 5 of Protocol On the Accession of China to the World Trade Organization ，i.e. "without prejudice to China's right to regulate trade in a manner consistent with 
the WTO Agreement, China shall progressively libera lize the availability and scope of the right to 
trade, so that, within three years after accession, all enterprises in China shall have the right to 
trade in all goods throughout the customs territory of China except for those goods listed in 
Annex 2A which continue to be subject to state trading in accordance with this Protocol. Such right to trade shall be the right to import or export goods." 
 
1) China respects and has earnestly fulfilled its WTO commitments. According to Announcement No. 64 of 2004 of MOFCOM and the General Administration of Customs, state trading administration on the export of silk was abolis hed since 1 January 2005. In China's notifications 
(G/STR/N/10-15/CHN), the word "suspended" in both the fourth column of line 1 of page 6 and 
paragraph 5 in the Note – Statistical information on page 10 should be "abolished". This is a translation problem and will be corrected in a corrigendum.  
 
                                               
1 G/STR/Q1/CHN/3. 
2 G/STR/N/10/CHN, G/STR/N/11/CHN, G/STR/N/ 12/CHN, G/STR/N/13/CHN, G/STR/N/14/CHN, 
G/STR/N/15/CHN. G/STR/Q1/CHN/6 
 
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  2) The Ministry of Commerce makes annual announcement about the import volume of processed 
oil (fuel oil) for non-state trading in the next year, which, compared to the permitted amount of import at the time of China's accession to WTO, has increased significantly. The details can be found in the announcements at the website of the Ministry of Commerce. For fertilizer, China does 
not set quantitative restrictions on the import by the non-state trading entities. 
 Question 2 
 
2. With reference to Part III of  the notification (description of the functioning of the 
STE) China should reply to each sub-question for each STE. In particular: 
a. At page 9 of its notification, first pa ragraph of Reply (A-C), China mentions 
"… Enterprises that have ob tained trading rights …". 
i. Could China specify which are the " exclusive or special rights " enjoyed by 
the STEs listed in the notifications? 
Reply: 
 
China has provided clear answers in its response s to the questions A-C. For the agricultural 
products subject to state trading, the shares of STEs in both import tariff-rate-quotas and export 
quotas are listed in China's Protocol of Accession. STEs do not enjoy any other exclusive or special rights.  
Question 3 
 
ii. Could China clarify which types of entities other than STEs are allowed to 
engage in importation/exportation, gi ving more detailed information on 
their condition for participation? In particular, could you please clarify 
which are the conditions for "registration"  in order to obtain the TRQ rights?  
Reply: 
 
For the qualification requirements and registration conditions for the non-state trading entities to engage in the permitted import and export of produc ts subject to state trading, please refer to the 
Interim Measures for the Administration of Import Tariff-Rate Quotas of Agricultural Products, the 
Trial Measures for the State Trading Administration  of the Import of Crude Oil, Processed Oil and 
Chemical Fertilizer, the Interim Measures for the Administration of Import Tariff-Rate Quotas of 
Chemical Fertilizer and the announcements issued  annually by the Ministry of Commerce and the 
National Development and Reform Commission.  
Any enterprise with the right to trade is allowe d to engage in the import of the agricultural 
products under import TRQs subject to state trading, except for the shares exclusively allocated to state trading enterprises. Annual announcements are released by the National Development and 
Reform Commission and the Ministry of Commerce at their websites about the application 
conditions and allocation principle for the import  tariff-rate quotas of grains, cotton and sugar. 
Companies can simply follow the procedural re quirements set out in those announcements. 
 
Question 4 
 
iii. China, in its Protocol of accession, committed to progressively increase 
access by non-state entities to trade in oil. According to its notification, it 
seems that oil is still traded by ST Es. Could China clarify whether this 
understanding is correct and, should it be the case, could China clarify what measures they are envisaging in or der to comply with the Accession's 
commitments (point 9 (c): "progressi ve increases in access by non-state 
trading entities to trade in fertilizer  and oil and the filling of quantities 
available for import by non-state trading entities")?  G/STR/Q1/CHN/6 
 
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  Reply: 
 
We think that it is a misunderstanding. Both state trading enterprises and non-state trading 
enterprises are allowed to engage in oil trading. According to the Trial Measures for the State 
Trading Administration of the Import of Crude Oil, Processed Oil and Chemical Fertilizer, the 
volume of imports of crude oil, refined oil and fe rtilizers include figures of both state and non-state 
trading. The enterprises with the qualification of foreign trade and having met the necessary 
conditions for operating products subject to state trading administration may become non-state 
trading enterprises upon registration and filing for record.  Question 5 
 
iv. With reference to the Statistics, the EU would ask China to submit the 
statistical information for each STE (a nd per product), in compliance with 
the notification questionnaire (Tables I, II and III). 
Reply: 
Besides the import TRQs for state trading, the STEs can also act as agents for the import and 
export businesses for various types of other enterpri ses. It is therefore difficult to differentiate 
transactions conducted on their own and on behalf of other enterprises. Statistic of a single STE is its internal information and considered as business secrets, therefore there is no relevant information available. 
 
Question 6  
3. In point 4.2 of its notification, China declares that they are not applying STEs on 
the export of cotton yarn and woven fabrics of cotton since China joined the WTO. The US, in their counter notification, e numerate also "Chinatex Cotton Import and 
E x p o r t  C o . "  a s  o n e  o f  t h e  S T E s  t h a t  s t i l l  s h o u l d  b e  n o t i f i e d  i n  a c c o r d a n c e  w i t h  
Article XVII of the GATT. Could China clarify the legal status of this enterprise and 
whether it continues to enjoy exclusive or special trading rights? 
Reply: 
 
Chinatex Cotton Import and Export Co. is affiliated with China National Textiles Import and Export Co., which was renamed as Chinatex Corporation in May 2005. 
 
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