G/RO/W/227  
 
11 October 2023  
(23-6796) Page: 1/7 
Committee on Rules of Origin  Original: English  
 
  
CHINA'S STUDY ON UTILIZATION BY LDCS OF  
CHINA'S PREFERENCE IN 2020  
The following submission, dated 10 October 2023, is being circulated at the request of the delegation 
of China.  
 
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1  BACKGROUND  
1.1.  On 6 June 2023, the LDC Group submitted a report ( G/RO/W/222 ), which reviewed the 
utilization of China's preferences based on the 2020 import data, to the WTO Committee on Rules 
of Origin containing utilization rates of LDC exports to China under China's LDC preferential trade 
arrangement. In order to verify the issues and conclusion raised by the LDC Group, China has 
extracted its trade statistics and calculate d the utilization rate by Members  and by commodities.  
1.2.  This report , China 's Study on Utilization  by LDCs of China 's Preference in 2020, contains the 
utilization rates and the major findings of the study, which differ from the LDC Group 's report. 
An in-depth analysis has been provided to explain the causes of the differences.  
2  METHOD FOR CALCULATING TH E UTILIZATION RATE  
2.1.  The modalities  for the calculation of "preference utilization" recommended by the 
WTO Secretariat is (please see document G/RO/W/161 ): 
 
2.2.  When extracting  the data, China considered the following three factors as taking its trade 
structure into consideration:  
1. Actual Preferential Import Value (numerator): China provides duty -free and quota free 
treatment for LDC 's exports covering at maximum 98% tariff li nes (LDC -PTA scheme, with 
LDCs that exchanged agreement with China). In addition, Bangladesh;  Cambodia;  Myanmar;  
and Laos  People's Democratic Republic  also enjoy preferential tariff rate in the Asia -Pacific 
Free Trade Agreement or the China -ASEAN Free Trad e Area Agreement. According to the 
Secretariat 's recommendation, the value of goods that enjoyed other FTA preferences should 
be included in the Actual Preferential Import Value. Therefore, for these four Members , the 
Actual Preferential Import Value inclu des the value of goods that enjoyed both LDC PTA and 
other FTAs.  
2. Adjusted Dutiable Imports (denominator): When calculating the value of goods that eligible 
for preferential treatment, it should use the import value of goods that went into domestic 
market and paid the customs duty. The value of re -exported goods and goods that do not 
subject to customs duty should not be included, such as Bonded goods entering special 
customs zone areas, etc.  
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  3. The scope of exclusions: Goods whose Interim Duty Rate is e qual to or lower than the LDC 
PTA tariff rate should not be included in the calculation.  
2.3.  Comparing to the above method of data extraction, the LDC 's report used China 's MFN import 
value and LDC -PTA import value directly from IDB database to calculate the u tilization rate. As such 
data has its limitation, it led to a result that not reflecting the real situation in China.  
3  ANALYSIS OF CHINA 'S UTILIZATION RATE  
3.1  The Utilization Rates of Major Import Members  
3.1.  There are 41 LDCs in total that China has import (see Annex. The order is based on import 
value and utilization rates).  
3.2.  Fourteen  Members have eligible import value over US$100 million, with an average utilization 
rate of 84.6% (Figure 1). There are ten Members have eligible import value between US$5 million 
to US$100 million, with an average utilization rate of 84.6% (Figure 2). There are 17 Members  have 
eligible import value less than US$5 million, and the average utilization rate is 37.64% (Figure 3).  
Figure 1 – Chinese Utilization Rates and Adjusted Dutiabl e imports from LDCs  Adjusted 
Dutiable Imports > US $100 million  
 
 
3.3.  Among the 14 Members that have eligible import value over US$100 million, except for Angola, 
which has a utilization rate of 4%, the utilization rates of the remaining 13 Members  remain at a 
high level, and most of them exceed 94%. The reason for Angola's low utilization rate is that Propane 
(27111200) did not apply for the LDC -PTA tariff rate, and its import value (US$320 million) accounts 
for 85% of the eligible import value of Angola. According to the relevant importer, it did not apply 
for the preferential treatment because it does not aware that Propane could enjoy the 0% tariff rate 
under LDC -PTA. Now the importer is considering applying for the LDC -PTA in the future.  
3.4.  Among t he ten Members that have eligible import value between US$100 million and 
US$5  million (Figure 2), six of them have a utilization rate greater than 95%, and only Somalia has 
a utilization rate below 50%.  
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  Figure 2 – Chinese Utilization Rates and Adjusted Du tiable imports from LDCs  Adjusted 
Dutiable Imports US $5 Million – US$100 million  
 
 
3.5.  Among the 17 Members that have eligible import value less than US$5 million (Figure  3), the 
utilization rate of seven  Members is greater than 70%. The utilization rate of s everal Members  such 
as Sierra Leone and Guinea is zero. Data shows that the eligible import value from relevant Members  
is quite small, most did not exceed US$10,000.  
Figure 3 – Chinese Utilization Rates and Adjusted Dutiable imports from LDCs  Adjusted 
Dutiable Imports < US$5 million  
 
 
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  3.2  The Utilization Rate of Each Tariff Lines  
Figure 4 – Distribution of tariff lines over utilization rates Adjusted Dutiable Imports 
from LDCs > US $10,000  
 
 
3.6.  In 2020, China imported 1,459 tariff lines that are eligible for LDC -PTA, of which 788 tariff lines 
have an import value greater than US$10,000 (see Figure 4 for utilization rate). The value of goods 
with a utilization rate higher than 95% was US$3.57 bill ion, accounting for 60.2% of the total import 
value of the eligible goods; the value of goods with a utilization rate lower than 5% was 
US$930  million, accounting for 15.7%.  
Figure 5 – Distribution of tariff lines over utilization rates Adjusted Dutiable I mports 
from LDCs > US $100,000  
 
 
3.7.  There are 480 tariff lines with an import value greater than US$100,000 (see Figure 5 for 
utilization rate), of which 286 tariff lines have a utilization rate greater than 60%, accounting for 
60% of these tariff lines; 177 tariff lines have a utilization rate of 100% (accounting for 37%); 
67 tariff lines have a utilization rate of 0% (accounting for 14%).  
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  4  CHINA 'S RESPONSE TO THE CONCLUSION OF THE LDC REPORT  
4.1  Low Utilization Rate by the Top 5 Import LDCs  
4.1.  In the LDC report, the top five Members  in terms of eligible import value and utilization rates 
are: Congo (DRC) 1% ; Zambia 1% ; Myanmar 6% ; Bangladesh 44% and Cambodia 41%. According 
to China 's calculations ; the top five Members  are Cambodia 72% ; Myanmar 64% ; Banglad esh 56% ; 
Sudan 100% ; and Angola 4%. The main reasons for these differences are:  
4.2.  First, some goods from Cambodia;  Myanmar;  and Bangladesh enjoyed other FTAs tariff rates 
(Asia-Pacific or ASEAN ). After including these import value into the calculation, the u tilization rates 
of the above three Members  have increased significantly. The LDC 's report has not covered these 
import value.  
4.3.  Secondly, the Interim Duty Rate of China for some goods that imported from Congo (DRC), 
Zambia, and Myanmar  is 0%. Importers do not need to apply for LDC -PTA to enjoy the 0% tariff 
rate. In this case, such goods should not be included in the calculation. After excluding such goods, 
Congo (DRC) ranked 17th as the total eligible import value, with a utilization rate of 99%, and 
Zambi a ranked 23rd, with a utilization rate of 53.3%. For example, Copper (74031111) is the largest 
commodity that Congo (DRC) export to China, and it could enjoy 0% tariff rate without applying for 
LDC-PTA.  
4.2  Low Utilization  Rate for Goods with a Large Import V alue 
4.4.  The LDC report mentioned that the utilization rate of several goods with large import value is 
0%. China found that the Interim Duty Rate for related goods (28469019, 28469099, 72026000, 
74020000, 74031111, 74031119, 81052010, etc.) is 0%. As mentione d above, such goods should 
not be included in the calculation. The Interim Duty Rate for 27111390 and 27111200 is 1%. 
Also, as mentioned  above, some importers were not aware of the LDC -PTA. The import value of such 
goods was accounting for 3.3% of the valu e of the above goods. Now China Customs has helped 
these importers to know the LDC -PTA.  
4.3  Liberian Exports did not Enjoy Preferential Treatment  
4.5.  The LDC report mentioned that Liberia exported "Ships, boats and floating structures " of 
US$28  million to China  under most -favoured -nation (MFN) rate and failed to enjoy the LDC -PTA. 
China 's data shows that in 2020, China imported goods under HS Chapter 89 from Liberia with only 
two tariff lines: 8906.9010 (motorized ships) and 8907.1000 (inflatable  rafts), with a value of 
US$28  million. These goods were declared as repair items which should not be excluded from the 
calculation of preference utilization.  
4.4  Cambodian Exports did not Enjoy Preferential Treatment  
4.6.  The LDC report mentioned that Cambodia exp orted "Art of apparel & clothing access, knitted 
or crocheted" (HS Chapter  61) of US$239 million to China, of which US$108 million paid duty under 
MFN rate and failed to enjoy the LDC -PTA. China 's data shows that US$250 million of goods under 
HS Chapter 61  has been imported from Cambodia, of which US$180 million was imports under the 
China -ASEAN Free Trade Agreement with a utilization rate of 71%.  
4.5  Some Eligible Goods did not Enjoy Preferential Treatment  
4.7.  The LDC report mentioned that a total of 16 tariff lin es with an eligible import value of more 
than US$50 million were paid the MFN tariff rate with a tariff rate margin of 2%. According to Chinese 
data, there are no goods that meet the above conditions. China would like to have the list from the 
LDC Group in  order to be able to verify the result.  
5  CONCLUSIONS AND SUGGESTIONS  
5.1.  To sum up, the rules of origin of China 's LDC -PTA are simple and convenient, and the utilization 
rate is generally high, albeit there are certain cases where the utilization rates of indi vidual LDCs 
and goods are low. The reasons behind need to be studied together with relevant Members. In this G/RO/W/227  
 
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  regard, China is willing to strengthen communication with beneficiary Members  to further understand 
the actual reasons and difficulties. If assista nce in capacity building is needed, China is willing to 
provide support.  
5.2.  At the same time, by comparing the differences between this report and the LDC report, it is 
once again proved China 's point that the study on the utilization rate requires the compre hensive 
data from the preference granting Members . Data limitation of IDB may lead to misleading 
conclusion on the utilization rate. In this regard, China once again calls on all Members  to strengthen 
their communication and cooperation to avoid diminish t he value of our research due to the data 
limitations.  
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  ANNEX  
NUMBER OF TARIFF LINES AND ADJUSTED DUTIABLE IMPORTS OVER UTILIZATION RATES 
CATEGORIES BY MEMBERS  
(Unit US$1,000, in the order of UR and eligible import value)  
Members  UR=0  0<UR<50  50<UR<70  UR>70  
#TL Adjusted 
dutiable 
imports  #TL Adjusted 
dutiable 
imports  #TL Adjusted 
dutiable 
imports  #TL Adjusted 
dutiable 
imports  
Cambodia  432 12,574  67 267,004 32 168,605 157 721,113 
Myanmar  296 119,252  51 213,525  29 42,660 180 514,656 
Bangladesh  319 26,892 72 295,789  21 108,609 78 289,968 
Sudan              41 579,305  
Ethiopia              108 331,769  
Senegal              53 272,449  
Niger              33 220,121  
Lao 100 16,058  3 459 3 740 43 211,779 
Tanzania              96 211,589  
Togo              11 147,014  
Mauritania              34 143,442  
Mozambique              43 140,363  
Congo, DR              19 105,477  
Madagascar              212 79,399  
Mali             29 68,521  
Afghanistan              65 53,915  
Djibouti              11 45,918  
Uganda              45 37,522  
Benin              14 12,859  
Vanuatu              12 5,275  
Burundi              11 3,313  
Gambia              21 2,940  
Malawi              24 2,613  
Burkina Faso              7 2,178  
Republic of Chad              8 1,445  
Timor -Leste              8 1,211  
Zambia          37 36,128      
Nepal          228 14,554      
Rwanda          24 2,909      
Angola      27 381,723          
Somalia      24 5,346          
Republic of Yemen      24 2,458          
Lesotho      15 1,968          
Sierra Leone  80 330              
Guinea  14 136              
Comoros  3 122              
Sao Tome and Principe  4 47              
Eritrea  3 30              
Liberia  2 11              
Central African Republic  1 0.8              
South Sudan  4 0.2              
 
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