WORLD TRADE  
ORGANIZATION  G/AG/W/66 
30 August 2005 
 (05-3779) 
Committee on Agriculture Original:   English 
  
 
CHINA'S TRANSITIONAL REVIEW MECHANISM 
 
Questions to China from the United States in the c ontext of the Transitional Review Mechanism under 
Paragraph 18 of the Protocol of Accessi on of the People's Republic of China  
 
  The following communication, dated 15 Augus t 2005, has been received from the Delegation 
of the United States, with the request that it be  circulated to Members, for the purposes of the 
Transitional Review to take place at th e Committee's meeting on 22 September 2005. 
 
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State Trading Enterprises 
 1. Please provide a current list of state tradi ng entities ("STEs") involv ed in the purchase and 
sale of agricultural goods, including grains, both domestically and for export.  
2. Please provide the following information on the nature and operations of each of these STEs:  
 (a)  Is the STE a legally independent, profit-making entity?  
 
 (b)  On what basis does the STE decide  to sell domestically or for export?  
 
(c)  Does the STE enjoy any regulatory, tax or other advantages in comparison with 
private entities, either in the domestic purchase or sale of grains or the export of grains? 
 
(d)  Does the STE always immediately resell its stocks, or does it sometimes hold surplus 
stocks?  Does the STE have stock-holding capacity?  If the STE has held surplus stocks, please explain when and for how long it has done so? 
 3. Please explain the roles of all of the producing, trading and consuming entities in the 
distribution chain from the farmer to the consumer  for both domestic and export sales of grains 
produced in China.  Please include an explanation of  the role of private entities as well as their share 
of the market. 
4. In its most recent WTO notification on st ate trading (G/STR/N/9/CHN/Add.1), China 
indicated that over 99 per cent of China's corn e xports in 2002 were accounted for by STEs.  What 
percentages of Chinese corn exports were account ed for by STEs in 2003, 2004 and year-to-date 
2005? G/AG/W/66 
Page 2  
 
 VAT Policies   
 
5. With regard to both domestic sales of agri cultural goods, including grains, and sales for 
export, please provide the following information: 
(a) Please explain whether the value-added ta x ("VAT") is rebated or exempted at any 
stage of the distribution chain.   
 
(b) Please explain how the rebate or exempti on is calculated and identify any "reference" 
or "base" price that is used.   
 
(c) Please explain how often and under what circumstances the "reference" or "base" 
price is adjusted and how this price is linked to actual export prices. 
 6. Is the VAT applied to imports of agricultural goods, including grains, by STEs?  If so, please 
indicate the amount of the VAT. 
7. Is the VAT applied to imports of agricultural goods, including grains, by private entities?  If 
so, please indicate the amount of the VAT. 
8. Article 16.1 of the 1993/1994 State Administration of Tax regulation, Temporary Regulation 
of the Value-added Tax , provides that no VAT is levied on the sale of grain by farmers.   
(a) Please confirm that the VAT is not levied on the sale of grain by farmers to either 
STEs, private entities or any other purchasers.   
 
(b) Has this law or other tax laws governing the sale of grain by farmers been amended 
following the 2001 admission of private traders into the grain market?   
  (c) Are there similar tax polic ies for other agricultural goods? 
 
Corn 
 
9. Are STEs such as COFCO required to pay the VAT on the purchase or sale of corn in China?  
If so, how is the VAT calculated? 
10. Are private traders required to pay VAT on the pu rchase or sale of corn in  China?  If so, how 
is the VAT calculated? 
11. When STEs such as COFCO export corn, do they receive a VAT rebate?  If so, how is the 
rebate calculated?  Is it paid befo re or after the corn is exported? 
12. When private traders export corn, do they receive a VAT rebate?  If so, how is the rebate 
calculated?  Is it paid before or after the corn is exported? 
13. Is the transportation discount that is available fo r corn shipments in the form of an exemption 
from the Railway Construction Fund tax only applied to corn destined for export , or is it also applied 
to corn sold for domestic consumption?  Is there any difference in how the transportation discount is 
applied to STEs versus private traders when they export corn? 
14. Please identify and describe any provincial-level financial support benefiting corn sold for 
domestic consumption or corn destined for export.  G/AG/W/66 
 Page 3 
 
 
 15. Please explain any procedural, regulatory or tax di fferences applicable to the import of corn 
by private entities versus the import of corn by STEs. 
Tariff-rate Quotas 
 
16. For the agricultural commodities subject to ta riff-rate quotas (TRQs), please confirm that:  
(a) the application period for 2006 quota alloca tions will be between 15 and 30 October 2005;  
(b) specific requirements have been published in the International Busin ess Daily and the China 
Economic Herald as well as the websites of the Mi nistry of Commerce and the State Development 
and Reform Commission one month in advance of  the application period; and (c) all 2006 TRQ 
quantities will be allocated by 1 January 2006, in accordance with China's WTO commitments and 
Decree No. 4, the Interim Rules and Regulations for Agricultural Imports Tariff Rate Quota, issued 
27 September 2003. 
17. Please confirm that, in accordance with Part I, Section I-B, paragraph 6.F., of the Goods 
Schedule accompanying its Protocol of Accession, Ch ina is providing, within 10 days of requests by 
industry, information "on the entities which received the allocation" under tariff quotas. 
 
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