WORLD TRADE  
ORGANIZATION  G/LIC/15 
10 November 2006 
 
 (06-5403) 
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 30 October 2006, carried out the fifth 
transitional review of China pursuant to Paragra ph 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 Australia. These submissions 
were circulated in documents G/LI C/Q/CHN/18 and G/LIC/Q/CHN/19.   
 3. The information provided by China to the Committee on Import Licensing for its meeting on 
30 October 2006, were circulated in document G/LIC/W/28.    4. The statements made at the meeting, wh ere discussions under the transitional review took 
place, are reflected in the minutes of the meeting (G/LIC/M/24, paragraphs 3.1-3.10).  The relevant 
paragraphs which reflect this discussion are annexed. G/LIC/15 
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3. Fifth Transitional Review Under Paragraph 18 Of The Protocol On The Accession Of 
The People's Republic Of China (WT/L/432). 
 
3.1 The Chairperson
 recalled that the fourth transitional review of the implementation by China 
of the WTO Agreement and of the related provisi ons of the Protocol, under paragraph 18 of the 
Protocol of Accession of China (WT/L/432), had been  carried out in 2005 by the subsidiary bodies of 
the WTO, including the Committee on Import Licens ing, 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/14.  The 
Committee would conduct the fifth transitional review at the present meeting.  He also informed the 
Committee that since the last meeting, the Secr etariat had received two submissions containing 
questions and comments on China's import licen sing procedures:  from the United States 
(G/LIC/Q/CHN/18) and from Australia (G/LIC/Q/CHN/19).  The Secretariat had also received, after the airgram convening this meeting was issued, a communication from China containing information 
required by paragraph IV:3 of Annex 1A of the Pr otocol of Accession which has been circulated in 
document G/LIC/W/28. 
 3.2 The representative of the United States
 highlighted the written questions posed to China 
which referred to: (i) China's steel and iron industry  development policy and practice,  her delegation 
sought more information on the policy encouraging th e use of domestic technology and equipment; 
(ii) China’s attempt to regulate imports of iron ore by granting import licences only to enterprises 
satisfying certain criteria, an issu e raised by her delegation in 2004, in connection with China's policy 
review, when the US noted that it would be asking follow-up questions.  The US was seeking for further information in this regard; and, (iii) th e extent to which China applied import requirements 
similar to those on iron ore to other steel-making i nputs, such as ferrous alloys, ferrous scrap, zinc, 
nickel, aluminium or titanium. 
 
3.3 The representative from Australia
 recalled his delegation's interest, as already expressed in 
previous meetings of the Committee, on the import licensing procedures for iron and copper ore.  Australia had been monitoring those regimes and ha d concerns about their consistency with the WTO 
Agreement on Import Licensing Procedures.  At the l ast meeting, his delegation posed a series of oral 
questions to China, followed by written questions  posed bilaterally.  Since Australia had not yet 
received any response and given the important comme rcial priority for Australia, his delegation had 
not only posed some of those questions again but also a broader set of questions on iron and copper 
ore.    3.4 The representative of the People's Republic of China
 thanked the United States and Australia 
for their questions and comments and, in response to  both delegations, said that: (i)  the steel industry 
development policy outlined opinions of the government towards the de velopment of the steel sector.  
It was aimed at encouraging innovation and en ergy conservation and stre ngthening environmental 
protection.  The policy per se  was not compulsory;  thus no specific rules related to import licensing 
procedures have been enacted.  (ii)  the automati c import licensing regime for iron and copper ore was 
implemented in accordance with the measures ad ministering automatic import licensing for goods, 
already notified to the Committee.  There was no par ticular rule setting out qualification criteria for 
enterprises which apply for a licence.  In this regard , China's Steel Industry Association together with 
the Commercial Chamber for Metals, Minerals and Chemicals Importers and Exporters which include 
Chinese enterprises dealing with import and export of iron and copper ore, had self co-ordination 
within the industry itself.  The Chinese authorities have not received any complaints since it was not a 
government requirement;  in China's opinion, this me chanism should not be subject to the WTO rules.  
(iii) the automatic import licensing regime which a pplied to ferrous alloys, ferrous scraps, zinc, 
nickel, aluminium and titanium, was part of the automatic import licensing procedures already notified by China.  With regard to the specific questions from Australia on China's notification on the 
import licensing regime, the Chinese authorities were  currently in the process of finalising the 
notification, i.e. its translation and the related work , in order to submit it before the end of 2006.  The  G/LIC/15 
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overall import licensing regime in China had alr eady been included in Ch ina's responses to the 
questionnaire which was notified to the Committee.  (iv) with regard to the questions concerning 
MOFCOM's Decree 26, the temporary measures mentioned in it, aimed at seizing automatic import licensing, referred to the governmental measure s for implementing decisions from relevant 
international organizations such as UN Resolutions  or some urgent SPS measures; and, (v) the 
procedures for returning unused automatic import li cences were used for data collection, fiscal trade 
statistics purposes as well as for fighting against ille gal conduct, such as forgery of automatic import 
licences for bound imports which disrupt the market.  3.5 With regard to Australia's enquiry about  written responses, the representative of China
 
reiterated his delegation' s position in this regard and said th at, after having consulted the import 
licensing authorities in Beijing, his delegation would contact Australia directly.  3.6 The delegate from Australia
 sought clarification from China on two points.  The Chinese 
delegation had said, in relation to iron and copper ores, that the government licensing agencies had 
not received complaints concerning the operation of  the regime that had been described as an 
"industry-self regulation" regime; given the con cerns of the Australian government and of the 
Australian industry on this matter, his authorities had in fact made a number of representations to MOFCOM and other Chinese agencies.  He also requ ested clarification on the full name of the second 
industry association mentioned;  the minerals and metals, apart from iron and copper ores, that had 
been described in the Chinese intervention; and finally, the exact number of the MOFCOM decree 
mentioned by China. 
 3.7 In response, the delegate of China
 clarified that the name of the other business association 
was "The Commercial Chamber for Me tals, Minerals and Chemicals Im porters and Exporters";  that 
the other products included ferrous  alloys, ferrous scrap, zinc, nickel, aluminium and titanium which 
were subject to automatic import licensing procedur es and whose details had already been notified to 
the Committee; and, finally, that the MOFCOM's  decree was Decree N°26 on measures administering 
automatic import licensing for goods, the current regulation in place in China, which basically 
described the functioning of the automatic import li censing scheme.  With regard to the European 
Communities request to take part in the discussions between Australia, the US and China,  which the 
EC would prefer to be a multilateral discussion, th e Chinese delegate said that the idea was only to 
clarify bilaterally the specific queries from Australia,  that his delegation was not in a position to have 
a multilateral discussion on the issue and that in or der to avoid misunderstandings he had clarified 
what Australia had asked China.  3.8 The Committee took note
 of the statements made. 
 
3.9 The Chairperson  suggested that, to conclude the  Fi fth Transitional Review under Paragraph 
18 of the Protocol of Accession of the People's Republic of China, a factual report on China's transitional review be submitted to the Council fo r Trade in Goods (CTG).  As had been done 
previously, this factual report would refer to the rele vant paragraphs of the minutes of this meeting as 
well as the oral and written comments and questions submitted to China, and the information received 
from China.  The relevant paragraphs of the minut es which reflected the di scussion would be annexed 
to this report.    3.10 The Committee so agreed
.  The report to the CTG on the fifth transitional review was 
circulated in document G/LIC/15. 
 
 
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