. /.   WORLD TRADE  
ORGANIZATION  G/MA/W/89 
18 September 2007 
 (07-3889) 
Committee on Market Access Original:   English 
  
 
CHINA'S TRANSITIONAL REVIEW MECHANISM  
 
Communication from the United States
 
  
 The following communication, dated 14 September 2007, is being circulated at the request of 
the Delegation of the United States.  
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Export Quotas on Raw Materials  
 
1. The United States remains concerned a bout China’s export quotas (and related export 
licensing requirements) on numerous raw materials.   For example, China maintains export quotas on 
(i) antimony, (ii) coke, (iii) fluorspar, (iv) i ndium, (v) magnesium carbonate, (vi) molybdenum, 
(vii) rare earths, (viii) silicon, (ix) talc, (x) tin, (xi)  tungsten and (xii) zinc, despite the fact that China 
is the world's leading producer of each of th ese raw materials (except for molybdenum, for which 
China is the world’s second leading producer), and despite the fact that China maintains no 
comparable restrictions on domestic sales of these raw materials.  China’s export quotas on these raw 
materials significantly disadvantage U.S. and othe r foreign producers, which use these raw materials 
to make a wide range of downstream products, su ch as steel, chemicals, ceramics, semiconductor 
chips, refrigerants, medical imagery, aircraft, refined petroleum products, fiber optic cables and 
catalytic converters, among numerous others.  Th e export quotas create disadvantages for foreign 
producers by artificially increasing China’s export pri ces for these raw materials, which also drives up 
the world prices.  At the same time, the export quotas artificially lower China’s domestic prices for 
these raw materials due to domestic oversupply, en abling China’s domestic downstream producers to 
produce lower-priced products from these raw materi als and thereby creating significant advantages 
for China’s domestic downstream producers when competing against foreign downstream producers 
both in the China market and in export markets.    
(a) For each of the 12 raw materials identified above, please separately explain how 
China justifies its use of the export quotas under Article XI of the General Agreement 
on Tariffs and Trade 1994. 
 (b) Please separately describe China’s plans for eliminating the export quotas on each of 
the 12 raw materials identified above.  If Ch ina does not have any such plans, please 
explain why it does not. 
 
(c)  The United States understands that Chin a has not notified to the WTO any of the 
export quotas on the 12 raw materials iden tified above, despite China’s commitment 
in paragraph 8.1(b) of Part I of China’ s Protocol of Accession to notify all export 
quotas “listed separately by HS tariff line a nd with the quantities associated with the 
restriction . . . and the justification for main taining the restriction or its scheduled date 
of termination.”  Is the United States’ understanding correct?  If so, please indicate 
when China will submit the required notifications. G/MA/W/89 
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  Value-Added Tax Applied to Diammonium Phosphate  
 
2. The United States continues to have concerns  regarding the Circular about VAT Exemption 
Policy for Certain Farming Materials (No. 113/2001), jointly issued by the Ministry of Finance and the State Administration of Taxation on July 20, 2001, which exempts all phosphate fertilizers except 
diammonium phosphate (DAP) from China's value-adde d tax.  DAP, which is produced in the United 
States, competes with similar phosphate fertiliz ers produced in China, such as monoammonium 
phosphate (MAP).  This measure discourages use of DAP, for which China committed to permit 
access under the TRQ commitments set forth in th e Goods Schedule accompanying its Protocol of 
Accession, in favor of products that are not imported.   
 
(a) Previously, the United States has requested  that China provide data showing China’s 
annual consumption of DAP and MAP, including the amounts sourced domestically 
versus imported amounts.  To date, China h as not provided any of this data.  Please 
provide this data. 
 
(b) During last year’s Transitional Review Mechanism meeting before this Committee, 
China stated that it did not have any plans for revising Circular 113/2001.  Does China currently have any plans to revise this  Circular, particularly to eliminate the 
discriminatory treatment of DAP?  If not, why not? 
 
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