WORLD TRADE  
ORGANIZATION  G/LIC/14 
2 November 2005 
 
 (05-5159) 
Committee on Import Licensing  
  
 
REPORT TO THE COUNCIL FOR TRADE IN GOODS 
ON CHINA'S TRANSITIONAL REVIEW  
 
 
1. The Committee on Import Licensing, at its meeting on 28 September 2005, carried out the 
third transitional review of China pursuant to Para graph 18 of the Protocol on the Accession of the 
People's Republic of China (WT/L/432).  2. Written comments and questions in connection w ith the transitional review of China's import 
licensing system were submitted in advance by th e United States and the European Communities. 
These submissions were circulated in documents G/LIC/Q/CHN/16 and G/LIC/Q/CHN/17.   
 3. The information and notifications provided by China to the Committee on Import Licensing for its meeting on 28 September 2005, were  circulated in documents G/LIC/W/25 and 
G/LIC/N/3/CHN/4.    
4. The statements made at the meeting of 28 September 2005, where discussions under the 
transitional review took place, are reflected in the minutes of the meeting (G/LIC/M/22, 
paragraphs 3.1-3.20).  The rele vant paragraphs which reflect  this discussion are annexed. G/LIC/14 
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 3. Fourth Transitional Review under paragraph 18 of the Protocol on the Accession of the 
People's Republic of China 
3.1 The Chairperson
 recalled that the third transitional revi ew of the implementation by China of 
the WTO Agreement and of the related provisions of the Protocol, under paragraph 18 of the Protocol 
of Accession of China (WT/L/432), had been carried out in 2004 by the subsidiary bodies of the 
WTO, including the Committee on Import Licensi ng, which had a mandate covering China's 
commitments under the WTO Agreement or China's Pr otocol of Accession.  The Committee's report 
to the Council for Trade in Goods on that review had been circulated in document G/LIC/13.  The 
Committee would conduct the fourth transitional review at the present meeting.  
3.2 The Chairperson
 informed the Committee that since th e last meeting, the Secretariat had 
received two submissions containing  questions and comments on China' s import licensing procedures:  
from the United States (G/LIC/Q/CHN/16) and fro m the European Communities (G/LIC/Q/CHN/17).  
The Secretariat had also received after the airgram convening this meeting was issued a 
communication from China containing information re quired by paragraph IV:3 of Annex 1A of the 
Protocol of Accession which had been circulated in G/LIC/W/25.  In addition, replies to the 
Questionnaire under Article 7:3 of the Agreement, submitted by China the day before the meeting, 
would be before the Committee at its next meeting.  Advance copies of this latest notification which 
would be circulated as G/LIC/N/3/CHN/4 were ava ilable, in English, in the meeting room.   
 3.3 The representative of the European Communities
 welcomed the updated information provided 
by China on its import licensing procedures.  Noting that China had informed the Committee that all 
data except that for Tariff-Rate Quotas (TRQs)  was available on its Ministry of Commerce 
(MOFCOM) website, she asked whether similar elec tronic means of publication were available for 
information on TRQs and, if not, in which form such  data could be accessed.  Her authorities had also 
noted that MOFCOM operated an English language version of its website and requested China to 
confirm that all information regard ing import licensing was available, in English.  She said that import 
licensing procedures of China remained of con tinuing concern as long as the new policy initiatives 
may result in new border formalities in their impl ementation.  The new automobile policy and the 
steel industry policy were examples.  Her author ities encouraged China to provide details on the 
implementation of these policies well in advance to allow other WTO Members to comment on them.  They also looked forward to receiving replies to their detailed written questions circulated in 
document G/LIC/Q/CHN/17.  
 3.4  The representative of China
 said that he would make the following points in response to the 
comments and questions presented to his delegation pr ior to this meeting although, in his view, some 
of them did not necessarily fall within the mandate of the Committee on Import Licensing.  First, on 
the New Automobile Policy  and related issues, his authorities took note of the comments from the 
European Communities.  Howeve r, they believed that the Development Policy for Automobile 
Industry  which came into effect  in 2004 did not incl ude provisions of local content requirement, or 
other TRIMs and national treatment restrictions whic h were inconsistent with  China's obligations in 
the WTO.  The Measures on Administration of Import of  Automobile Components Fulfilling the 
Characteristics of  a Whole Vehicle , was one of the rules to implement the Development Policy for 
Automobile Industry .  The Measures  aimed at streamlining the importation and exportation of 
automobile components into and from China as we ll as strengthening law enforcement against tariff 
evasion and circumvention.  During the enactment of the Measures  and other rules implementing the 
Development Policy for Automobile Industry , including the Implementing Methods for the 
Administration on Distribution of Branded Automobiles  and the Methods for the Administration of 
Second-hand Automobiles , the relevant authorities of the Government, consulted the entire automobile 
industry, including foreign-invested enterprises and other interested parties.   Public comments were 
also solicited via internet or other means, where appropriate.  Furthermore, a 30-day period from 28 
February 2005, the date when the Measures  were published, to 1 April 2005, the date when the  G/LIC/14 
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 Measures  came into affect was also provided consistent with China's accession commitment regarding 
transparency.  China believed that  the process with regard to the Development Policy for Automobile 
Industry  and the rules implementing this policy were  fair and transparent.  Channels for 
communication and exchanges with Members were always open.    
3.5 Regarding automatic import licensing on textil es, he said that the coverage of products was 
reflected in China's Quantitative Restriction notificati ons to the WTO since its accession.  As far as he 
knew, there were no major changes since then.  All products subjected to licensing requirement, 
including textiles, as well as other licensing requirements were published by way of MOFCOM 
announcements which were available on the MOFCOM  website.  Although he was not sure whether 
each one of them was available in English on the website, even if the a nnouncement was available 
only in Chinese, it would not pose a problem since all the products were listed alongside HS numbers.  
As concerned the Development Policy for Steel Industry , he said that it was desirable for enterprises to 
use advanced technology in new projects and not to develop heavily polluting, resource- and energy consuming projects.  The Development Policy for Steel Industry  took this rule and sought to further 
clarify it as an industry policy.  Taking into account the future development of the world steel industry 
and the present stage of development in domestic st eel industry in China, the catalogues of outdated 
production capacity, techniques and products were dete rmined with reference to such criteria as 
energy consumption level, resource consumpti on level, quality of the products, environmental 
pollution level, etc.  Advanced and practical e quipment referred to those which embodied the 
development trend of the steel industry with the characteristics of low level energy and resource 
consumption, high product quality, low level polluti on, etc.  The criteria and other conditions 
established in the Development Policy for Steel Industry , including those concerning granting or 
prohibiting imports, were mandatory in the sense that  they would be implemented in the process of 
verification or approval of an investment project in this field as well as with Customs implementation 
of trade measures.  He said that the policy would be  implemented consistent with China's obligations 
in the WTO and, should there be any specific new tr ade measures adopted in the future as a result of 
this policy, his authorities would observe China's ob ligations in the WTO, including those relating to 
notification.    3.6 Regarding the automatic import licensing administration on iron ore, he informed the Committee that China's QR notification for the y ear 2005 to be submitted to the Committee on Market 
Access would contain all iron ore products subject to  automatic import licensing at HS 8-digit level.  
His authorities were also about to notify to the Committee on Import Licensing pursuant to Article 8.2 
of the Agreement the MOFCOM-GCA joint announcement No. 9 of 2005 regarding the implementation of the automatic import licensing administration on iron ore.  The announcement 
itself was already available on the MOFCOM website.   
 
3.7 Regarding the qualifying criteria for enterprises,  he stated that the automatic import licensing 
administration would be in accordan ce with the provisions of the Measures of Administration of 
Automatic Import Licensing for Goods  and that, as far as he was aware, there was no provision in the 
Measures  that set qualification criteria for enterpri ses applying for automatic import licences.  
However, he was informed that the China Steel Industry Association together with the Commercial 
Chamber for Metals, Minerals a nd Chemicals Importers and Exporte rs were consulting with their 
member enterprises to see whethe r, as an industry self-discipline, a set of rules regarding the 
qualification criteria such as production capacity and trade performance was necessary among the 
enterprises themselves.    
3.8 The representative of the European Communities
 thanked the Chinese delegation for the 
detailed information provide d and requested a written copy of the st atement so as to be able to report 
to her authorities.  G/LIC/14 
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 3.9 The representative of the United States
 thanked the delegation of China for the above 
information and for the documents submitted for this meeting.  He reiterated the US interest in seeing 
China's notifications to this Committee on both iron ore and steel industry policy issues.  There were 
gaps in the information available to the US author ities, hence their questions circulated in document 
G/LIC/Q/CHN/16 about the new requirements, qualifying criteria and fees.   
 
3.10 The representative of China  said that all the procedures and requirements relating to TRQ 
administration were available on the Ministry of Commerce (MOFCOM) and National Development 
and Reform Commission (NDRC) websites, the two Ministries responsible for TRQ administration in 
China.  As concerned the availability of the Englis h versions, he said that owing to huge resource 
restraints and language difficulties it was difficult  for his authorities to have all procedures and 
requirements in English and make them available on the websites.  However, to his knowledge, all 
import licensing procedures were clear and China had submitted notifications to the Committee on 
Import Licensing on all these requirements.  In the case of iron ore, he said that this was a product subject to automatic import licensing which had b een notified to the Committee.  Iron ore products 
subject to the regime would be adjusted or some  products added through public announcements of the 
Ministry of Commerce or the General Administratio n of Customs.  The specific regulation regarding 
iron ore and other regulations revised in 2004 rela ting to China's import licensing procedures were 
translated into English and would be notified to th e Committee shortly.  As regarded the request of the 
EC delegation for written copies of China's statement ma de in the context of the transitional review he 
said that China's position was clear to all Members th at his delegation was not in a position to provide 
the statement in written form. 
 3.11 The representative of Japan
 said that Japan shared the concerns expressed by the European 
Communities on the New Automobile Policy of Chin a (G/LIC/Q/CHN/17) and the measures taken on 
imports of automobile parts fulfilling the characteristics of a whole vehicle.  His delegation would 
raise this matter in the Market  Access Committee for a detailed discussion about the consistency of 
these measures with WTO rules and with th e Protocol of Accession of China.   
 3.12 The representative of the United States
, noting China's statement that there were no qualifying 
criteria in effect for enterprises importing iron ore, sought clarification whether China had implemented qualifying criteria for other products.    
 
3.13 The representative of China
 confirmed that the licensing procedure itself did not contain any 
qualifying criteria for enterprises and said that his authorities had been  informed that some industry associations were consulting themselves to see if  there was some arrangement being implemented 
among the enterprises.  Whereas he did not have much information on this point he said that some of 
the information was perhaps available on the websites of these industry associations.   
 3.14 The representative of the United States
 said that it was useful to hear that there were no 
qualifying criteria per se  in the licensing procedures that would call into question the automatic nature 
of the licence.  He recalled that automatic licensing was purely for statistical purposes and applications for licences should be approved in all cas es.  In his view, if there were qualifying criteria 
of any kind such procedures would fall into the non-automatic licensing category and be of greater 
concern.  3.15 The representative of Australia
 said his authorities had been taking a close interest in this 
issue and thanked China for the information provided. 
 
3.16 The Committee took note  of the statements made.    
 3.17 The Chairperson
 suggested that a factual report on China's transitional review be submitted to 
the Council for Trade in Goods (CTG).  As had been  done previously, this f actual report would refer  G/LIC/14 
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 to the relevant paragraphs of the minutes of this  meeting as well as the oral and written comments and 
questions submitted to China, and the informati on and notifications received from China.  The 
relevant paragraphs of the minutes which reflected the discussion would be annexed to this report.  
 3.18 The representative of China
 suggested that the factual report only refer to the document 
symbol of the minutes of the meeting rather than  attaching to it the relevant paragraphs.   
 3.19 The representative of the United States
, supported by the representative of the European 
Communities , said that they preferred to continue with the past practice of attaching to the factual 
report on the review the relevant paragr aphs of the minutes of the meeting. 
 
3.20 The Committee so agreed .  The report to the CTG on the fourth transitional review was 
circulated in document G/LIC/14.  
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