WORLD TRADE  
ORGANIZATION  G/L/910 
5 November 2009 
 (09-5538) 
  
  
 
 
REPORT OF THE COUNCIL FOR TRADE IN GOODS 
ON CHINA'S TRANSITIONAL REVIEW  
 
 
1. The Council for Trade in Goods (CTG), at its meeting on 30 October 2009, carried out the 
Transitional Review of China pursuant to paragr aph 18 of the Protocol on the Accession of the 
People's Republic of China (WT/L/432).  2. Japan and the United States submitted questi ons and comments in writing to China on the 
CTG-specific information requirements contained in A nnex 1A of the Protocol and on matters raised 
before subsidiary bodies.  These questions and comments were circulated in documents G/C/W/626 
and G/C/W/628 respectively.  The Annex 1A  information provided by China to the Council for the 
review was circulated in document G/C/W/630.  3. The CTG took note of the reviews that had been  carried out in the CTG subsidiary bodies.   
Furthermore, the Council reviewed the informati on provided by China concerning specific parts of 
Annex 1.A of the Protocol and the questions raised by certain Members.  The statements made at the 
meeting of 30 October 2009 are reflected in the mi nutes of the meeting in document G/C/M/100.  The 
relevant paragraphs which reflect the di scussion under agenda item VII are annexed. 
 
 
     
 
    
 
    
 
     
 
 G/L/910 
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  ANNEX 
 
I. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA  
7.1 The Chairman
 recalled that in accordance with paragra ph 18 of the Protocol of the Accession 
of the People's Republic of China in document WT /L/432, this Council was to report to the General 
Council on the Transitional Review.  As a first step , CTG subsidiary bodies we re required to transmit 
their reports to the Council for Trade in Goods.  As a first step, she would give Members an opportunity to make general comments on those repo rts, and would subsequently propose that the 
Council takes note of the Reviews that had been carri ed out in the CTG subsidiary bodies.  She would 
then move on to the CTG's own report.  The Counc il was required to review the information to be 
provided by China in designated parts of Annex 1.A of the Protocol.  7.2 She added that the following subsidiary bo dies had carried out the Transitional Review:  
Market Access – the report was contained in doc ument G/MA/241:  Agriculture - the report was 
contained in document G/AG/26;  Customs Valua tion - the report was contained in documents 
G/VAL/63;  Import Licensing - the report was contained in document G/LIC/20;  Rules of Origin - the report was contained in document G/RO/68;  Anti-Dumping - the report was contained in document G/ADP/18;  Subsidies and Countervailing Measures - the report was contained in document 
G/SCM/130;  Safeguards - the report was contained in document G/SG/88;  and TRIMs - the report 
was contained in documents G/L/899.  She asked Members if they had general comments on these 
Reviews.  She understood that the reports from th e Committees on Technical Barriers to Trade and 
Sanitary and Phytosanitary Measures had not been  finalized as of this meeting as the SPS Committee 
is meeting this week, and TBT next week.    7.3 The Council took note
 of the reports from the subsidiary bodies.  The Chairs of the 
Committee on Sanitary and Phytosanitary Measur es and the Committee on Technical Barriers to 
Trade would submit their reports dir ectly to the General Council.   
 7.4 The Chairman
 recalled that China was required to provide information to the CTG in 
accordance with paragraph 18.1 of the Protocol of Accession.  The relevant information requirements 
were listed in Annex 1A therein.  China had s ubmitted this information as circulated in document 
G/C/W/630.  She also drew Members' attention to the following documents:  questions from the US in 
documents G/C/W/628  and questions fr om Japan in document G/C/W/626. 
 7.5 The representative of China
 did not wish to add to his delegation's submission.  He informed 
the Council that the document arrived late because th e date of the Council's meeting was advanced.    
 
7.6 The representative of the United States  noted that this was the eighth Transitional Review 
Mechanism for China.  The United States believed that  the TRM continued to be a useful mechanism.  
It helped to provide needed additional transparency  for China's trade regime so that Members could 
better understand and assess the progress that China ha d made in adopting and complying with WTO 
disciplines.  His delegation raised previously s ubmitted questions in its written submission because 
China did not respond to them in the subsidiary  body reviews.  He highlighted a few of his 
delegation's concerns.  Before the Market Acces s committee, his delegation addressed questions to 
China about its export restraints on certain raw materi als - a matter that raised serious WTO concerns.   
China continued to maintain export quotas and e xport duties among other restraints on a number of 
raw materials.  WTO rules generally prohibited e xport quotas.  The same was generally true for 
export duties that China used.  China had made a commitment in its WTO Protocol of Accession 
circumscribing its use of export duties.  It was long past time for China to get rid of its export 
restrictions on raw materials.  China should have  eliminated them when they acceded to the WTO 
nearly eight years ago. His delegation wanted to  see a level playing where competition was fair.   G/L/910 
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  However with China's export restraints, the US  and other WTO Members were significantly 
disadvantaged.  The export restraints artificially ra ised world raw material prices and lowered China's 
domestic prices.  That gave a substantial artific ial advantage to China's downstream producers over 
US and other foreign downstream producers.  
7.7 Before the Market Access Committee, his delegation asked questions specifically about 
export restraints on rare earths, a group of related raw materials that were particularly important to 
industries around the world including the US industry.  His delegation also asked about refined metal 
lead.  China did not respond to these questions so his delegation was submitting them again in 
connection with this Council's TRM.  His delega tion looked forward to China's responses to these 
questions at this meeting. 
 7.8 Other questions submitted for this TRM were  originally submitted in connection with the 
TRM before the Subsidies Committee.  During that  TRM, his delegation highlighted a number of 
serious concerns.  First, it noted that during the Subsidies Committee TRM, China stated that a new 
subsidies notification for 2005-08 would be submitte d in the coming months.  While this would be a 
positive step, China also stated th at the notification would not cont ain any sub-central governmental 
measures.  This was disturbing given that China, after nearly eight years of WTO Membership, had 
still not provided any notification addressing a si ngle sub-central governmental measure despite 
concerns expressed by Members in China's Accessions  working party report about such measures, and 
the issue being raised in several previous tr ansitional reviews of the Subsidies Committee. 
 
7.9 Second, during the Subsidies Committee TRM, the US raised China's obligation under Article 
18.1 and Annex 1A of China's Protocol of Accession.   These obligations dir ected China to provide 
annual economic development program s, China's five year programs  and any industrial or sectoral 
programs or policies promulgated by central and su b-central governmental authorities.  While China 
had provided some information about central gov ernmental industrial plans and policies, China 
appeared not to have provided any of the rele vant information about sub-central governmental 
authorities.  These were serious matters and his dele gation urged China to take swift action to resolve 
these matters in accordance with its WTO obligations.  7.10 Finally during the Subsidies Committee TRM, China did not provide answers to any of the 
US questions regarding sub-central governmental subsidies benefiting China's textile sector.  One 
example of an unanswered question involved a sub- central governmental subsidy program that could 
be found in the Implementation Plan for Reviving Hu nan's Textile Industry 2009-2011.  This program 
appeared to provide export subsidies inconsistent  with China's obligations under Article 3 of the 
Agreement on Subsidies and Countervailing Measur es.  Therefore, China's response to his 
delegation's question about this program was esp ecially important.  Before this Council, his 
delegation resubmitted the questions  to which China did not respond during the Subsidies Committee 
TRM and it hoped to receive China's responses.  7.11 Before concluding, he noted significant US  concerns about matters that fell within the 
jurisdiction of other committees that reported to the Council.  In the area of SPS, China continued to 
maintain a number of measures that were non-transparen t and appeared to lack sc ientific bases such as 
H1N1 restrictions, BSE-related bans, Avian Influen za bans, pathogen standards and residue standards.  
In the investment area, China continued to mainta in various restrictions on foreign investment and 
continued to subject new investments and merger s and acquisitions to vague standards such as 
national economic security.  In the customs valua tion area, China did not seem to uniformly follow 
WTO rules.  The practices of China's customs ad ministration still seemed to vary from port to port 
both in terms of customs clearance procedures and valu ation determinations and, in some cases, these 
gave rise to WTO concerns.  In the area of technica l barriers to trade, China continued to pursue the 
development of unique national standards despite the existence of well established international 
standards, apparently with the objective of pr otecting domestic companies from competing with G/L/910 
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  foreign technologies and standards.  He concluded th at all these matters raised serious concerns for 
his Government.  7.12 The representative of Japan
 raised three issues before the Council's TRM, all related to 
China’s export restrictive measures.  First, Jap an expressed its concern on China’s export licensing 
measures on certain materials such as fluorite, coal , coke and non-ferrous metals.  Her delegation 
understood that China’s justification for these e xport restricting measures was based on GATT Article 
XX.  In order to justify these measures by the ge neral exception under Article XX, China needed to 
convince Members with evidence that China impl emented restrictions on domestic production and 
consumption.  However, actual data regard ing domestic production and consumption on these 
products had not been provided by China.  In this context, Japan asked China:  how it justified its use 
of export licensing measures on each material under Ar ticle XX of the General Agreement on Tariffs 
and Trade 1994;  to provide the data on domestic  production and consumption of each material in 
which am export licensing measure was applied;  to provide some information about whether there 
was a ceiling on domestic production of each materi al in which an export licensing measure was 
applied;  to clarify the extent of difference between the volume of export restriction and the restriction 
on domestic production;  and if it had plans to elim inate or review the export licensing measures.    
 7.13 Second, Japan expressed its concern on Chin a’s export taxes on certain raw materials and 
products, including chemical fertilizers and their raw ma terials, non-ferrous metals, coal and coke.  In 
its Protocol of Accession, China committed to elim inate all taxes and charges applied to exports 
unless specifically provided for in Annex 6 of the Protocol.  However, in her delegation's 
understanding, China imposed export taxes on some items  listed in Annex 6 but at higher levels than 
indicated in the Annex, and China imposed export tax es on some items not listed in Annex 6.  In this 
connection, Japan asked China:  to explain th e purposes of China’s imposition/increase of export 
taxes on chemical fertilizers and thei r raw materials, non-ferrous metals , coal and coke, respectively;  
to explain how China justified its imposition of expo rt taxes in light of the commitments that China 
made in its Protocol of Accession;  if it had a ny plans to eliminate or review the export taxes 
measures.  7.14 Third, her delegation was concerned with Ch ina’s export prohibition on natural sand.  Japan 
asked China:  to explain how it justified its expor t prohibition on natural sand under Article XI of the 
General Agreement on Tariffs and Trade 1994;  to e xplain in detail China’s restrictive measures on 
domestic production and consumption of  natural sand;  to provide the data on the latest trend in 
domestic production and cons umption of natural sand;  if it had plans to eliminate or review the 
export prohibition on natural sand.    
7.15 The representative of the European Communities
 had made submissions to a number of the 
subsidiary bodies and had taken an active part in  this eighth TRM exercise in various committees.  
Transparency was an essential element of the WTO which implied obligations to all Members.  He 
recalled that the scrutiny provided for by the TRM was approved by China as part of its Protocol of Accession.  Despite impressive progress China had made  in integrating into the world based trading 
system, the EC and several WTO Members were s till confronted with some important areas of 
concern.  The TRM mechanism was an important forum for addressing these concerns and China was 
encouraged to participate actively in it.    7.16 While his delegation had seen China participat e in the meetings and, to a certain extent, 
answer questions, this had not always been to his delegation's full satisfaction.  Many of the answers 
had been partial and repetitive and,  more importantly, the replies ha d not addressed the core problems 
highlighted by the EC and other Members.  Among the written questions submitted by the EC which 
it considered had not been adequately answered we re those that dealt with the following:  local 
content requirements;  steel industry development policy;  TRIMS and compatible clauses in contractual arrangements (for example the ques tions submitted in document G/TRIMS/W/69);   G/L/910 
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  questions related to export restric tions (the EC reiterat ed its growing concern regarding China's export 
restraints on a number of key role materials);  and export quotas which we re generally prohibited 
under Article XI of the GATT.  Concerning the last area, he added that as from January 2009, China applied export tariffs on 373 tariff lines in what the EC viewed as a violation of its Protocol of Accession to the WTO.  Here, he referred to hi s delegation's submission to the Market Access 
Committee in document G/MA/W/97. 
 7.17 Lastly, on several industrial sectors such as steel, ship building, petrol chemical, pharmaceuticals, cosmetics, there were long st anding issues raised on several occasions.  His 
delegation's concerns related to issues such as intelle ctual property which had also been raised in the 
framework of the Council for Trad e-Related Aspects of Intellectua l Property Rights, pricing and 
registrations procedures, joint venture limitation s ubsidies, local content requirements and technical 
barriers.  7.18 The representative of China
 noted that the concerns expressed in the statements were not new.  
They repeated issues which had been under debate during all eight transitional reviews both in this 
Council and also in the subsidiary bodies.  China had engaged in this tran sitional review exercise 
seriously.  It had provided numerous detailed responses and clarifications with regard to the concerns 
expressed by Members.  These could be found in the minutes of the meetings.  He considered that 
Members took the floor during this Council because th ey were not satisfied with the responses China 
provided.  This did not mean that China had not provid ed responses in this regard.  With respect to the 
written questions from Japan and the United States, he provided the following points in addition to 
what his delegation had explained in previous review s.  This was without prejudice to his delegation's 
position in ongoing disputes in this regard with some Members in the DSB.    7.19 China maintained export administrative measures on a small number of products for the 
purpose of protecting public interest, conservi ng exhaustible natural resources or undertaking 
obligations under international treaties.  These expor t administrative measures were not new and their 
WTO-related justifications were also provided.  As the largest developing country, China was now 
facing tremendous pressure in natural resource conser vation and protection of the environment.  On 
this particular point, his delega tion had provided many explanatio ns.  The Chinese Government had 
made enormous efforts in this respect.  It now took resource efficiency and environmental protection 
as two fundamental national policies in order to es tablish an energy efficient and environmentally 
friendly society and realise long term sustainable development.  In the past several years, China had already made great achievements,  for example, in comparison with 2005.  The total energy 
consumption per unit of GDP in 2008 was decreased by  more that 10%.  China had also adopted and 
was implementing its national plan for coping with climate change.  If this plan was successfully 
implemented, 620 million tonnes of coal would be  conserved from 2005-2010.   This equalled cutting 
carbon dioxide emissions by 1.5 billion tonnes.  7.20 The export administration of a small number of  products was part of the great efforts of the 
Chinese Government and these measures were not isol ated to specifically or intentionally target 
exports.  All these measures were accompanied with  restrictive measures on domestic production and 
consumption.  Examples in this regard had been pr ovided in all previous meetings.  Today, he added 
more information.  Members could find the cap s on the domestic production of these products on the 
website of the Chinese Ministry of Land and Res ources.  For example, in 2009, the production of 
antimony was capped at 90,180 tons, and that of rare earth at 82,320 tons.  
7.21 With respect to the written questions from the US delegation on subsidies to the textile sector, 
he had no intention of reopening the work already done in that Committee.  He responded briefly to 
the US claim that his delegation did not respond to  these questions in that Committee.  China had 
made detailed explanation on the industrial policies in its five year plan, and also recent adjusting and 
reinvigorating plans which were in response to the challenges of the financial and economical crisis.  G/L/910 
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  These plans were all general policy statements and his delegation had stressed in the Committee on 
Subsidies and Countervailing Measures that genera l policy statement should not be mistaken as 
subsidy programs.  His delegation believed, that to confirm existence of a subsidy program, there 
should be very specific administrative measures specif ying at least what the financial contribution was 
and how it would be utilised.  In that Committee, his delegation noted that, as far as the cities of Wuxi 
and Hangzhou and Hunan and Jiangsu Provinces were concerned, they were all found in relevant 
local plans drafted to state general policy guidelines in response to the financ ial and economic crisis.  
His delegation had no confirmed information on th e existence of concrete measures specifying the 
amount or size of the financial contribution provided , as well as how it is utilised to support the textile 
sector. 
 
7.22 The Chairman
 proposed that the Council take note of the information provided by China in its 
submission and in its responses to the questions ra ised by Members.  Regarding the form of the 
Council's report of the Review, she proposed proceedi ng in the same manner as last year.  This would 
mean that a brief factual report would be prepared with references to the documents, and attached to 
the report, the portion of the minutes of this meeti ng which related to the Tr ansitional Review.  This 
report, as well as the reports of the subsidiary bo dies, would then be transmitted to the General 
Council.    7.23 The Council so agreed
. 
 
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