WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/TPR/M/161/Add.1 
15 June 2006 
 (06-2907) 
Trade Policy Review Body 
19 and 21 April 2006 Original:   English/Spanish 
                 anglais/espagnol                  inglés/español 
 
TRADE POLICY REVIEW 
PEOPLE'S REPUBLIC OF CHINA 
Minutes of Meeting
 
Addendum  
Chairperson:  H.E. Ms. Claudia Uribe (Colombia)  
 This document contains the advance written qu estions, and interim replies provided by the 
People's Republic of China.1 
  __________________________________________________________________________________  
Organe d'examen des politiques commerciales 
19 et 21 avril 2006 
 
EXAMEN DES POLITIQUES COMMERCIALES 
RÉPUBLIQUE POPULAIRE DE CHINE 
Compte rendu de la réunion
 
Addendum  
Président:  S.E. Mme Claudia Uribe (Colombia) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses  
provisoires fournies par la République populaire de Chine.1 
__________________________________________________________________________________  
Órgano de Examen de las Políticas Comerciales 
19 y 21 de abril de 2006 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
REPÚBLICA POPULAR DE CHINA 
Acta de la reunión
 
Addendum  
Presidente:  Excma. Sra. Claudia Uribe (Colombia) 
 
 En el presente documento figuran las pr eguntas presentadas anticipadamente por escrito, 
junto con las respuestas provisorias facilita das por la República Popular de China.1
                                                      
1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.  WT/TPR/M/161/Add.1 
 Page 3 
 
 
WRITTEN QUESTIONS BY MEMBERS  
QUESTIONS BY THE UNITED STATES1 
PART I  
 The United States welcomes this opportunity to pa rticipate in the first Trade Policy Review of 
the People’s Republic of China (China) since Chin a acceded to the WTO on December 11, 2001.  The 
purpose of the Trade Policy Review Mechanism is  “to contribute to improved adherence by all 
Members to rules, disciplines and commitments . . . and hence to the smoother functioning of the 
multilateral trading system, by achieving greater transparency in, and understanding of, the trade policies of Members.”  In the case of China, Members recognized the overriding importance of 
transparency through a host of provisions in  China’s Protocol of Accession and accompanying 
Working Party Report.  Since China’s accession, China has made notable improvements in the 
transparency of its trade regime, particularly thro ugh the many notifications that it has made to the 
WTO’s councils and committees as well as through its use of numer ous official journals, other 
publications and the Internet to publicize new or modified trade-related la ws, regulations and other 
measures.  Nevertheless, there remains much to be done to further improve transparency in China, as 
China itself agrees in the Secretariat’s report.  This is a critically important area, both from a 
governmental perspective and from a business perspec tive.  Indeed, while the strongest concern of 
U.S. businesses is China’s inadequate enforcemen t of intellectual property rights, their second 
strongest concern focuses on the many aspects of Chin a’s trade regime that still lack transparency. 
ECONOMIC ENVIRONMENT  
Macroeconomic Policies – Monetary  and Exchange Rate Policies
 
1. In paragraphs 14 through 19 of Chapter I, th e report describes China’s exchange rate regime.  
In paragraph 18 of Chapter I, the report concludes that  “[a] more flexible exchange rate regime could 
enable China to operate a more independent m onetary policy, which would be better suited to 
ensuring a low and stable rate of inflation in bot h product and asset markets and allow market forces 
to assume a greater role in determining interest ra tes.   However, the auth orities are concerned about 
the impact of a more flexible exchange rate  on economic growth, macr oeconomic and financial 
stability, employment, domestic enterprises, and foreign trade as well as on neighbouring countries, regions, and the world economy.” 
a. Please describe China’s plans for moving toward a more flexible exchange rate 
regime. 
b. In paragraph 18 of Chapter I, the report  states that it is unlikely that a completely 
freely floating exchange rate can be achieved  with the current set of regulations and 
controls in place.  Please describe the refo rms needed for China to be in a position to 
adopt a completely freely floating exchange rate. 
                                                     
 
 1  The United States is submitting two sets of questi ons in connection with the Trade Policy Review of 
China.  The United States requests that China respond in writing to the questions in Part I by the start of the 
meeting of the Trade Policy Review Body.  The United St ates requests that China respond in writing to the 
questions in Part II no later than one month after the meeting.  WT/TPR/M/161/Add.1 
Page 4  
 
Main Structural Reform Issues – Tax Reforms
 
2. Paragraph 29 of Chapter I of the report explains  that China’s enterprise income tax consists of 
two distinct systems, one for domestic enterprises a nd another, preferential one for a wide range of 
enterprises considered foreign-inv ested enterprises (FIEs).  Paragraph 30 of Chapter I of the report 
and paragraph 201 of Chapter III of the report sugg est that China is considering unifying its dual 
enterprise income tax system by placing domestic enterprises and FIEs on equal tax footing.  Please 
describe China’s plans for reforming these two ta x systems, including the timing currently being 
contemplated. When would be the earliest that China might undertake this reform? 
3.  Paragraph 30 of Chapter I of the report expl ains that China is currently working on a major 
restructuring of the tax system, which may involve a switch in the basis of the value-added tax (VAT) 
from production to consumption, de pending on the success of a pilo t project in Northeast China. 
a.  How long does China plan to monitor th e pilot project in Northeast China before 
deciding on whether or not to switch to a consumption-based VAT for the rest of the country? 
b.  What is China’s current assessment of  the pilot project in Northeast China? 
Main Structural Reform Issues – Labor Market Reforms
 
4. Paragraph 35 of Chapter I of the report expl ains that China initiated measures aimed at the 
gradual relaxation of the hukou registration system in the mid-1990s and the Chinese authorities 
believe that conditions are becoming more ripe for a comprehensive reform of this system.  When 
does China plan to begin a comprehensive reform of the registration system?  Is there any timetable?  
If reform of this system does not mean its abol ition, please describe what further relaxation may 
entail. 
5. Paragraph 35 of Chapter I of the report explai ns that a labor contracting system was gradually 
introduced following the Labor Law’s introduction in  1994, marking a shift away from lifetime job 
tenure.   Please describe how the treatment of regular employees and contract workers differs with regard to wages, hours, working conditions, rights and benefits. 
Main Structural Reform Issues – Capital Market Reforms
 
6.  Paragraph 42 of Chapter I of the report e xplains that state-owned banks in China lend 
“mainly” to state-owned enterprises (SOEs) and that 25 percent of state-owned banks’ loans were non-performing loans (NPLs) at the end of 2004.   Pa ragraph 230 of Chapter III of the report adds that 
SOEs “account for a disproportionate share of NPLs.”    Paragraphs 172 through 174 of Chapter IV of 
the report also discuss NPLs. 
a.  Taking into account the scope of Arti cle 1 of the Agreement on Subsidies and 
Countervailing Measures (Subsidies Agreem ent), does China consider the state-
owned banks’ NPLs to satisfy the two elements  of a subsidy set forth in Article 1 of 
the Subsidies Agreement, i.e., a “financi al contribution” and a “benefit”?  If not, 
please explain. 
b.  Taking into account paragraph 10 of Part  I of China’s Protocol of Accession, which 
provides that subsidies will be viewed as “sp ecific” within the meaning of Article 2 
of the Subsidies Agreement if SOEs are the predominant recipients of such subsidies 
or state-owned enterprises receive disproportio nately large amounts of such subsidies, 
does China consider the state-owned banks ’ NPLs to be “specific” within the 
meaning of Article 2 of the Subsidies Agreement?  If not, please explain.  WT/TPR/M/161/Add.1 
 Page 5 
 
 
TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES  
Institutional and Legal Framework  
7.  According to a footnote to paragraph 8 of Chapter II of the report, one of the functions of the 
National People’s Congress (NPC) is “electing the President of the Supreme People’s Court.”  The 
United States understands that, within China’s instit utional structure, the Supreme People’s Court is 
subordinate to, and therefore not independent of, the NPC. 
a.  Please explain how the Chief Justice, Gr and Justices and other judges of the Supreme 
People’s Court are selected. 
b.  Please explain how the Chief Justice, Gr and Justices and other judges of the Supreme 
People’s Court can be removed. 
c.  Please describe the role of the Communis t Party of China (CPC) in the proceedings 
and decisions of the Supreme People’s Court. 
d. Does the CPC play the same role in th e proceedings and decisions of the lower 
courts? 
8.  Paragraph 21 of Chapter II of the report describes the various ways in which laws and 
regulations are drafted, finalized and approved.  Does any Chinese law or regulation require the NPC, 
the State Council or ministries and agencies to circulate proposed measures for public comment 
before implementing them, as China committed to do in paragraph 2(C)(2) of Part I of China’s 
Protocol of Accession?  If not, how does China envision complying with this commitment on a 
regular basis? 
9.  Paragraph 28 of Chapter II of the report e xplains that “all foreign trade-related laws, 
regulations, and rules” are published by the Ministry of Commerce (MOFCOM) in the China Foreign 
Trade and Economic Cooperation Gazette , now known as the MOFCOM Gazette.  Under China’s 
Protocol of Accession, China committed to establish a single official journal publishing, inter alia , 
“all laws, regulations and other measures pertaining to  or affecting trade in goods, services, TRIPS or 
the control of foreign exchange.”  The term “laws,  regulations and other measures” is defined broadly 
as “laws, regulations and other measures of the cen tral government as well as local regulations, rules 
and other measures issued or applied at the sub- national level.”  The United States understands that, 
until the end of 2005, only trade-related measures issued by MOFCOM, either on its own or jointly 
with other ministries or agencies, were published in the MOFCOM Gazette and that trade-related 
measures issued by other ministries and agencies we re not published in the MOFCOM Gazette.  Since 
then, MOFCOM has attempted to include trade-related measures issued by some of the other 
ministries and agencies, although it still does not incl ude all of their measures, and it does not include 
any trade-related measures from sever al other ministries and agencies. 
a.  Is the United States’ understanding correct?  If not, please identify each central 
government ministry and agency whose measures regularly are published in the MOFCOM Gazette. 
b.  Please describe the scope of sub-nati onal government measures, if any, regularly 
published in the MOFCOM Gazette. 
c. What are China’s plans for implemen ting its commitment to establish a single 
journal? WT/TPR/M/161/Add.1 
Page 6  
 
Trade Agreements and Arrangements
 
10.  Paragraph 44 of Chapter II of the report refers to Table AII.3, which lists the status of China’s 
key notifications to the WTO. 
a.  When will China make its long-overdue notification of domestic support, as required 
by Article 18.2 of the Agreement on Agriculture? 
b.  The United States understands that Chin a has finalized its long-overdue subsidies 
notification, as required by Article 25.1 of the Subsidies Agreement, and is in the 
process of translating it into English.  Wh en will China be in a position to submit its 
notification?  Will it address all of the s ubsidy programs identified in the United 
States’ request under Article 25.8 of the Subsidies Agreement dated 6 October 2004 
(G/SCM/Q2/CHN/9), including the subsidies identified as prohibited under Article 3 
of the Subsidies Agreement?  If not, wh en will China respond to that request?  
Foreign Investment Regime  
11.  Paragraph 89 of Chapter II of the report and paragraph 203 of Chapter III of the report explain 
that China provides tax exemptions for export-oriented  FIEs.  Does China consider this program to be 
a prohibited export subsidy under Article 3 of th e Subsidies Agreement?  If not, why not?  If so, 
please describe China’s plans for withdrawing this subsidy. 
12.  Paragraph 89 of Chapter II of the report e xplains that China provides VAT refunds for FIEs 
that purchase domestically made equipment.  Does China consider this program to be a prohibited 
import substitution subsidy under Article  3 of the Subsidies Agreement?   If not, why?  If so, please 
describe China’s plans for withdrawing this subsidy. 
TRADE POLICIES AND PRACTICES BY MEASURE  
Measures Directly Affecting Imports – Tariffs  
13. Paragraph 21 of Chapter III of the report explains that duty exemptions and reductions may 
apply, inter alia , with regard to goods expor ted out of designated areas.  Does China consider these 
duty exemptions and reductions to  be prohibited export subsidies under Article 3 of the Subsidies 
Agreement?  If not, why?  If so, please describe China’s plans for withdrawing these subsidies. 
Measures Directly Affecting Imports – Import Restrictions  
14. In paragraph 47 of Chapter III, the report identifies several products whose importation is 
prohibited for processing purposes.  While the report explains that the Chinese authorities prohibit the 
importation of these products for processing purposes based on national security, environmental protection or human, animal and plant health and saf ety concerns, the report also explains that China 
imposes these import restrictions for industrial polic y reasons.  Taking into account Article XX of the 
General Agreement on Tariffs and Trade 1994 (GATT 199 4), please explain China’s justifications for 
prohibiting the importation of the following products for processing purposes:  (i) minerals (including 
anthracite, bituminous coking coal and lignite); (ii) fertilizers (including urea and animal and 
vegetable fertilizers); and (iii) the steel products  referenced in footno te 29 to paragraph 47.  WT/TPR/M/161/Add.1 
 Page 7 
 
 
Measures Directly Affecting Imports – State Trading  
15. In paragraph 58 of Chapter III of the report, the Secretariat explains that, under Annex 2A1 to 
China’s Protocol of Accession, China was to have carried out a review with interested Members by 
2004 to establish whether the 15 percent annual grow th rate for processed oil imports by non-state 
trading enterprises should be adjusted in light of th e evolution of trade volumes.  However, China has 
not yet initiated this review.   
a. Have there been any imports of processed  oil by non-state trading enterprises since 
China acceded to the WTO in December 2001 ?  If so, please provide available data 
on those imports. 
b. Please explain why China has not initiate d the review required by Annex 2A1. 
16.  Paragraph 64 of Chapter III of the report c ites the Foreign Trade Law as providing that China 
may subject certain goods to state trading to ensure stable domestic supply, stabilize prices, safeguard 
the environment and protect the environment and e xhaustible natural resour ces.  Paragraph 166 of 
Chapter III of the report adds one other purpose, i.e., to avoid drastic price fluctuations in 
international markets.  Please explain how Chin a meets these objectives while refraining from taking 
any measure to influence or direct import or export state trading enterprises as to the quantity, value 
or country of origin of goods purchased or sold, as China committed to do in paragraph 6.1 of Part I 
of its Protocol of Accession. 
Measures Directly Affecting Imports – Sta ndards and Other Technical Requirements  
17. Paragraph 86 of Chapter III of the report expl ains that MOFCOM is the notifying authority 
for technical barriers to trade (TBT) purposes and th at a large number of government ministries and 
agencies are involved in the formulation of techni cal regulations (including mandatory standards).  
The United States remains concerned because MOFCOM’s  notifications are limited almost entirely to 
technical regulations emanating from the State Admi nistration of Quality Supervision and Inspection 
and Quarantine (AQSIQ) or its subordinate agenci es.  MOFCOM has notified very few technical 
regulations issued by other ministries and agencies.   What steps is China taking to improve its TBT 
notifications? 
18. Paragraph 87 of Chapter III of  the report explains that one of the main functions of the 
Standardization Administration of China (SAC) is to  formulate and develop st rategies for standards.  
Please describe SAC’s current standards strategies.  
19.  Paragraph 89 of Chapter III of the report  describes the process for de veloping standards in 
China.  Can China provide a description of the standards development process in a typical case, 
including the duration of each stage in that pro cess and the overall time for completing the process?  
Please also describe any opportunities for partic ipation by foreigners in this process. 
20. Paragraph 96 of Chapter III of the report expl ains that MOFCOM is the notifying authority 
for sanitary and phytosanitary (SPS) measures.  As many as 10 different ministries and agencies in 
China draft, implement and enforce SPS requirement s.  While China has begun to notify the proposed 
regulatory requirements of a greater number of ministries and agencies, improvements are still 
needed.  Please explain the steps that China is ta king to ensure that all proposed measures modifying 
SPS requirements are notified to the WTO for comment by Members. WT/TPR/M/161/Add.1 
Page 8  
 
Measures Directly Affecting Imports – Government Procurement
 
21. Paragraph 105 of Ch apter III of the report states that, acco rding to the Chinese authorities, 
government procurement accounted for approximately  RMB 165.94 billion in 2003.  Does this figure 
include procurement by sub-central government entiti es, which, according to the report, play a major 
role in government procurement in China?  If no t, please provide the figure for procurement by sub-
central government entities. 
22.  Paragraph 106 of Chapter III of the report di scusses the large number of provincial and local 
government entities engaged in procurement, desc ribing their procurement as several times the 
magnitude of procurement at the central governme nt level for goods, construction and engineering 
services, and other services.  Has China been able to implement its Government Procurement Law 
across all of these levels of government?  If not, please explain. 
Measures Directly Affecting Exports – Export Taxes  
23.  Paragraph 126 of Chapter III of the report d escribes China’s export tax regime and explains 
that, under Annex 6 to China’s Protocol of Accessi on, export duties apply to 84 tariff lines at the HS 
eight-digit level.  Annex 6 requires China to hold co nsultations with affected Members before raising 
any of the export duties listed in Annex 6 with a vi ew to finding a mutually acceptable solution.  In 
March 2006, China reportedly raised the export du ties on refined copper and copper alloys, both of 
which are listed in Annex 6, from 5 to 10 percent. 
a.  Did China hold consultations with a ffected Members in advance of increasing the 
export duties on refined copper and copper a lloys?  If so, please identify the Members 
involved, when the required consultations  took place, and whether a mutually 
acceptable solution was found. 
b.  Has China raised the export duties on any other Annex 6 products since its accession 
to the WTO?  If so, please identify each in stance and explain whether or not it held 
the required Annex consultations. 
c. Does China have any plans to raise the export duties on ferrous and non-ferrous 
scrap? 
24.  Paragraph 126 of Chapter III of the report expl ains that one product – urea – is subject to an 
interim export duty, even though it is not on the lis t of products subject to export duty set forth in 
Annex 6 to China’s Protocol of Accession.  Please justify China’s application of an export duty on 
urea under China’s WTO obligations. 
Measures Directly Affecting Exports – Other Tax Measures Affecting Exports  
25.  Paragraph 130 of Chapter III of the report e xplains that exporters are generally entitled to 
VAT rebates, except that the VAT rebate for partic ular products has periodically been reduced or 
eliminated in order to discourage exports and meet  industrial development goa ls.  The report describes 
this practice of periodically reducing or elimina ting VAT rebates as a levy on exports, while the 
Chinese authorities reportedly disagr ee with this characterization. 
a.  In light of the fact that exporters ar e generally entitled to VAT rebates under China’s 
system, please explain whether China considers its periodic reduction or elimination of VAT rebates for particular exporte d products to be a levy on exports. 
b.  Does China have any plans to discontinue  its practice of periodically reducing or 
eliminating VAT rebates on particular products?  Please explain.  WT/TPR/M/161/Add.1 
 Page 9 
 
 
26.  Paragraph 135 of Chapter III of the re port describes a series of tax exemptions and 
concessions available for FIEs that export over 70 percent of their production volume.  Does China 
consider these programs to be prohibited export subsidies under Article 3 of the Subsidies 
Agreement?  If not, why?  If so, please describe China’s plans for withdrawing these subsidies. 
Measures Directly Affecting Exports – Export  Prohibitions, Restrictions and Licensing  
27.  Paragraph 138 of Chapter III of the report st ates that China maintains export prohibitions on 
several products under processing trade.  Taking into account Article XI of GATT 1994, please 
explain China’s justifications for the export prohibi tions applicable to the following products under 
processing trade:  (a) chemical fertilizers; (b) alumina; and (c) ferro-alloy ore. 
28.  Paragraphs 143 through 145 of Chapter III of the report explain that China maintains export 
quotas on several raw materials, including coke.  
a.  When determining the annual quota amount, the Chinese authorities reportedly 
consider, inter alia , development planning for domes tic industries and international 
and domestic market demand.  Please explain how these considerations are consistent with China’s WTO obligations. 
b.  China produces more than 200 million metr ic tons (MT) of coke annually but only 
allows approximately 14 million MT to be exported.  In the past, China has argued 
that the export quota on coke falls under the exception regarding the conservation of 
exhaustible natural resources, set forth in Article XX of the GATT 1994.  Please 
explain how this export quota, in China’ s view, satisfies the requirements of 
Article XX. 
c.  Did the Chinese authorities consider development planning for domestic industries or 
international and domestic market dema nd when setting the quota amount for coke 
for 2006?  If so, please explain. 
d.  The report states that MOFCOM administers the export quota on coke.  However, the 
United States understands that the Nati onal Development and Reform Commission 
(NDRC) now administers it.  If that is correct, please explain why the responsibility 
for administering the export quota on coke was shifted from MOFCOM to NDRC. 
29.  In paragraphs 148 and 149 of Chapter III, the report explains that some export quotas, such as 
the export quota on fluorspar, are allocated through bidding.  The report further explains that exports 
subject to quota bidding are, inter alia , “those involving large amounts of exhaustible natural 
resources; those having a dominant share in the inte rnational market, and their overall export amounts 
are ‘unlikely to be affected by price fluctuati ons’; those whose supply exceeds demand and thus tend 
to be sold at a low price, which may result in anti-dumping actions in other countries; . . . .” 
a.  Please identify the products that fell under each of the three enumerated categories in 
2005. 
b.  Please explain how each of the three enumerated categories is consistent with China’s 
WTO obligations. 
Measures Directly Affecting Exports – Expo rt Promotion and Marketing Assistance
 
30.  Paragraph 171 of Chapter III of the report d escribes the functions of the Export-Import Bank 
of China (EXIM Bank) as including, inter alia , financial support to promote exports of mechanical 
and electrical products and high and new technology products, including through export credit, as WT/TPR/M/161/Add.1 
Page 10  
 
well as international guarantees for Chinese enterpri ses.  Paragraph 173 of Chapter III of the report 
explains that the EXIM Bank granted $59 billion in  export credits in 2003, most of which supported 
exports of mechanical and electrical products and hi gh and new technology products.  It also explains 
that the EXIM Bank’s use of international guarant ees for Chinese enterprises in creased 132 percent in 
2003 from the previous year. 
a.  Please describe the eligibility criteria for exporters of mechanical and electrical 
products and high and new t echnology products to receive  EXIM Bank export credits. 
b.  Please describe the terms and conditions of  the export credits used by the EXIM Bank 
to support exports of mechanical and elect rical products and high and new technology 
products, and explain how these terms and conditions are WTO-consistent, 
particularly in light of Items (j) and (k) of the Illustrative List of Export Subsidies 
annexed to the Subsidies Agreement. 
c.  Please describe any other financial support provided by the EXIM Bank to support 
exports of mechanical and electrical produc ts and high and new technology products. 
d.  Please describe the terms and conditions of the international guarantees for Chinese 
enterprises provided by the EXIM Bank. 
31.  Paragraph 175 of Chapter III of the report states that NPLs constituted 3.7 percent of the 
EXIM Bank’s outstanding loans in 2003, according to the EXIM Bank.  Does China consider these 
NPLs to be prohibited export subsidies under Artic le 3 of the Subsidies Agreement?  If not, please 
explain. 
32.  Paragraph 176 of Chapter III of the report states the China Export & Credit Insurance 
Corporation (SINOSURE) provides export credit insurance, including short-, medium- and long-term 
insurance as well as investment insu rance and export-related guarantees. 
a.  Please describe the eligibility criteria fo r exporters to receive the above-described 
insurance and guarantees. 
b.  Please describe the terms and conditi ons of the above-described insurance and 
guarantees, and explain how these terms and conditions are WTO-consistent, 
particularly in light of Item (j) of the I llustrative List of Export Subsidies annexed to 
the Subsidies Agreement. 
33. Paragraph 181 of Chapter III of the report stat es that exporters on the list of key export brands 
compiled by MOFCOM enjoy assistance such as export credit insurance through SINOSURE. 
a.  Please identify the criteria used by MOFCOM for selecting key export brands. 
b. Are the terms and conditions for the export credit insurance terms provided to 
exporters of key export bra nds more favorable than those provided by SINOSURE to 
other exporters?  Please explain. 
c. What other assistance is provided by China to exporters of key export brands? 
Measures Affecting Production and Trade – Industrial Policy
 
34. In paragraph 183 of Chapter III, the report explai ns that, in recent years, there has been a shift 
in China toward the use of various indirect policy tools to channel resources into certain activities that 
the Chinese government believes are important for China’s continued growth and development.   WT/TPR/M/161/Add.1 
 Page 11 
 
 
According to the report, these tools include not just measures directly affecting trade, such as tariffs 
and other border tax measures, but also administrative directives to cease certain activities, subsidies, price controls, as well as indirect measures,  such as “guided” credit and tax incentives or 
disincentives.  Does China agree with this assessment?  If not, please explain. 
Measures Affecting Production and Trade – Incentives
 
35.  Paragraph 186 of Chapter III of the report stat es that China continues to  encourage the use of 
locally produced inputs in exports.   
a.  Please describe the measures used by Chin a to encourage the use of locally produced 
inputs in exports.   
b.  Does China consider any of these measur es to be prohibited subsidies under Article 3 
of the Subsidies Agreement?  If not, why?   If so, please describe China’s plans for 
withdrawing these subsidies. 
36. Paragraph 188 of Chapter III of  the report explains that expe nditure for “capital construction” 
is one of the largest direct transfers made by  the Chinese government to SOEs under China’s annual 
budget.  In a footnote, the report quotes from the China Statistical Yearbook in an attempt to explain 
what “capital construction” means in this context,  but the meaning is unclear.  Please clarify this 
matter. 
37. Paragraph 196 of Chapter III of the report e xplains that, according to the Chinese authorities, 
small-scale farmers selling their produce directly ar e exempt from VAT.  Paragraph 23 of Chapter IV 
of the report further explains this VAT exemption.   Meanwhile, the same products, if imported, are 
not entitled to a VAT exemption. 
a. Please identify the applicable laws, re gulations or other measures governing this 
program. 
b. Please explain how China defines “small-scale” farmers. c. What percentage of domestic agricultura l production is represented by sales of small-
scale farmers? 
d. Taking into account Article III of GATT 1994, please explain how China justifies this 
apparent discriminatory VAT treatment. 
Measures Affecting Production and Trade – State-Owned Enterprises
 
38.  Paragraph 227 of Chapter III of the report st ates that the current policy of the State-owned 
Asset Supervision and Administration Commissi on (SASAC) with regard to SOEs includes, inter  
alia, allowing companies “with long-term loss and no hope  to recover or with larger debts than assets” 
to declare bankruptcy.  Can China explain the applic able procedures for an SOE to declare bankruptcy 
and provide statistics on the number and size of SO Es that have declared bankruptcy since SASAC 
was formed in March 2003? 
39. Paragraph 230 of Chapter III of the report st ates that the Chinese government apparently has 
implemented a measure requiring SOEs to provide at  least 50 percent of all investment in a project, 
with the remaining percentage being available in the form of loans from state-owned banks. 
a. Please identify the measure in question, a nd describe the types of projects are covered 
by it. WT/TPR/M/161/Add.1 
Page 12  
 
b. Is the portion of the financing provided by the state-owned banks preferential in 
nature?  Please explain. 
Measures Affecting Production and Trade – Competition Policy
 
40.  Paragraphs 251 through 253 of Chapter III of the report describe the original mandate for, and 
a May 2005 draft of, China’s Anti-Monopoly Law.  Paragraph 44 of Chapte r I and paragraphs 244 
through 246 of Chapter III explain that China l acks a modern, comprehensive competition law and 
describes China’s main challenges as developing effec tive ways (a) to address the continuing role of 
administrative and state monopolies in the economy, (b) to ensure non-discri minatory treatment of 
private enterprises versus SOEs, and (c) to ensure non-discriminatory treatment of foreign companies 
operating in China.  Paragraph 245 of Chapter III states that there is an acknowledged problem 
concerning market “blockages” attributable to local  government administrative and regulatory actions.  
The United States understands that a more recent dr aft of the Anti-Monopoly Law is now circulating 
among China’s ministries and to select domestic enterprises.    
a. Is there a difference in meaning betw een the terms “administrative monopolies” and 
“state monopolies”?  Please explain.  Pleas e also identify any special rights or 
privileges that administrative and state monopolies enjoy. 
b. Please explain how the most recent draft of the Anti-Monopoly Law addresses 
administrative monopolies and state monopolies.   
c. Please explain whether and how the most recent draft of the Anti-Monopoly Law 
applies to monopolistic conduct of state- owned enterprises and state-invested 
enterprises. 
d. Please describe how the most recent draft of the Anti-Monopoly Law, and China's 
other competition laws described in para graphs 248-250 of Chapter III, ensure non-
discriminatory treatment for foreign companies.  
e. Please explain whether the monopolistic conduct of any sectors or industries are 
exempt from the application of the most recent draft of the Anti-Monopoly Law, and 
if so, whether other laws apply to those sectors or industries. 
Measures Affecting Production and Trade – Corporate Governance  
41. Paragraph 271 of Chapter III of the report st ates that China is attempting to bring its 
accounting system into line with international sta ndards, but it is not clear what the remaining 
differences are between China’s accounting system and international standards.  Please describe the 
remaining differences between the two systems a nd explain China’s plans for eliminating these 
differences. 
Measures Affecting Production and Trade – Intellectual Property Rights  
42. Paragraph 273 of Chapter III of the report i ndicates that China is drafting regulations to 
prepare to accede to the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.  Are amendments to the Copyright Law contemplated as part of that accession package? 
43.  Paragraph 279 of Chapter III of the report addresses compulsory licenses under the Patent 
Law.  The report does not, however, address com pulsory licenses under the Copyright Law.  Please 
explain how Article 23 of the Copyright Law, whic h provide for compulsory licenses for textbooks, is 
consistent with the standards for limitations and ex ceptions set forth in Article 13 of the Agreement 
on Trade-Related Intellectual Property Rights (TRIPS Agreement).  WT/TPR/M/161/Add.1 
 Page 13 
 
 
44.  Paragraph 303 of Chapter III of the report states that “[t]he main problems identified by 
China’s major trading partners include:  lack of  coordination among the main enforcement agencies; 
local protectionism and corruption; inadequate dete rrence provided by the system of administrative, 
civil, and criminal penalties; and a lack of su fficient training of pers onnel.”  Paragraph 313 of 
Chapter III of the report further explains that, desp ite China’s efforts to improve the enforcement of 
intellectual property rights in China, “it appears that enforcement remains weak and infringement of 
intellectual property rights widespread.  In additi on to inadequate deterrents provided through the 
prosecution system, it is also claimed that ‘local pr otectionism’ is a major cause of IPR infringement.  
Local protectionism may be the result of discretionary  actions that give preference to local traders and 
producers, and of local corruption, which may provid e local manufacturers or traders of counterfeit 
goods advance notice of police raids; there is also concern that regional admi nistrative agencies lack 
sufficient knowledge and training in IPR enforcem ent.”  Taking into account China’s obligations 
under the TRIPS Agreement, please describe Chin a’s plans for addressing each of the problems 
identified above. 
45. With regard to the issue of inadequate deterrence referenced in paragraph 303 of Chapter III 
of the report, paragraph 10 of Chapter III of the re port states that relatively low fines and penalties 
that are not a sufficient deterrent remain among th e significant problems to be addressed.  Does China 
agree with this assessment?  Please explain. 
TRADE POLICIES BY SELECTED SECTORS  
Agriculture  
46. Paragraph 11 of Chapter IV of the report stat es that households have the right to use farmland 
and have the right to transfer farmland usag e rights by contract but may not sell land. 
a.  To whom may farmers transfer their land use rights?  What restrictions apply? b.  To whom may farmers rent their land?   What restrictions apply? 
Energy – Petroleum
 
47. Paragraph 56 of Chapter IV of the report st ates that private domestic enterprises are permitted 
to engage in the wholesaling and reta iling of oil products in China.   
a. Please describe the procedures and requirements for private domestic enterprises to 
obtain wholesale and retail licenses. 
b. Please provide data on the number of priv ate domestic enterprises that have been 
issued wholesale and retail licenses. 
48. Paragraph 57 of Chapter IV of the report stat es that foreign enterprises have been allowed to 
engage in the retailing of processed oil in China since 2004.   
a. Please describe the procedures and requirements for foreign enterprises to obtain 
retail licenses. 
b. Please provide data on the number of foreign enterprises that have been issued retail 
licenses since 2004. 
c. According to the Services Schedule acco mpanying China’s Protocol of Accession, 
foreign enterprises are to be permitted to engage in the retailing of processed oil in 
China without limitations on market access (or national treatment) by December WT/TPR/M/161/Add.1 
Page 14  
 
2004.  Does China place any ownership or establishment limitations on foreign enterprises seeking to engage in the reta iling of processed oil in China?  Please 
explain. 
49. Paragraph 57 of Chapter IV of the report st ates that China committed in the Services Schedule 
accompanying its Protocol of Accession to allow fo reign enterprises to engage in the wholesaling of 
crude oil in China without any ma rket access or nationa l treatment limitations by December 2006.  
Please describe China’s plans for implementing this commitment. 
Energy – Electricity
 
50. Paragraph 68 of Chapter IV of the repor t explains that China has made progress in 
deregulating its electricity industry by separating electricity production from transmission but has not 
yet separated electricity transmission from distribu tion nor implemented a competitive system for grid 
access and competition at the retail level.  Pl ease describe China’s plan s for undertaking further 
reforms in this area. 
51. Paragraph 68 of Chapter IV of the report expl ains that the biggest obstacle to the reform and 
development of the energy sector, including electricity, are anti-competitive practices and, in 
particular, the operation of monopolies and region-based market segmentation.   
a. Does the current draft of the Anti-M onopoly Law address either of these anti-
competitive practices?   
b. Will the amendments to the Electricity  Law or the new implementing regulations, 
both of which are being drafted (according to paragraph 69 of Chapter IV of the 
report), address either of these anti-competitive practices?   
52. Paragraph 76 of Chapter IV of the report e xplains that, in practice, there is no direct 
correlation between electricity costs and the prices set by the NDRC, as the latter are apparently 
determined as much by political a nd macroeconomic factors.  The report refers to a study suggesting 
that the existing centrally administered pricing syst em has diminished local and foreign interest in 
investing in new generating capacity, and low electricity  prices have been identified as the root cause 
of China’s power shortage problem.  Does Chin a agree with this assessment?  Please explain. 
Manufacturing – Iron and Steel  
53. Paragraph 84 of Chapter IV of the report states that considerable deregulation has taken place 
during the economic reform process in China, a nd as a result government agencies are no longer 
responsible for regulating, inter alia , the steel industry.  As discussed in paragraph 93 of Chapter IV 
of the report, however, NDRC issued a major i ndustrial policy – the Steel Industry Development 
Policy – in July 2005.  Although many aspects of th is new policy have not ye t been implemented, it 
still includes a host of objectives and guidelines that ra ise serious concerns, such as by calling for the 
use of domestically produced steel-manufacturing equipment and domestic technologies whenever 
domestic suppliers exist and by imposing de facto technology transfer requirements.  More generally, 
this policy is troubling because it attempts to di ctate industry outcomes and involves the government 
making decisions that should be made by the mark etplace.  It prescribes the number and size of steel 
producers in China, where they will be located, the types of products that will and will not be 
produced, and the technology that will be used .  This high degree of government direction and 
decision-making regarding the allocation of resources into and out of China’s steel industry is not 
only inconsistent with the spirit of China’s oblig ations as a Member of the WTO, but it raises 
concerns specifically because of the commitment that China made in its WTO accession agreement 
that the government would not influence, directly or indirectly, commercial decisions on the part of 
state-owned or state-invested enterprises.  Does  China have any plans to work toward true  WT/TPR/M/161/Add.1 
 Page 15 
 
 
deregulation of, and the institutionalization of mark et mechanisms in, the steel industry?  Please 
explain. 
54. Paragraph 94 of Chapter IV of the report states that China’s Steel Industry Development 
Policy restricts foreign investment in China’s steel industry.  At the same time, according to 
paragraph 55 of Chapter I of the report, China’s SO Es have invested in several industries in other 
countries, including the steel industry.  Meanwhile, rationalization of productio n and consolidation are 
occurring in steel industries outside of China, and they  are also stated goals of China’s steel policy.  
Please explain the rationale for restricting foreign investment in China’s steel industry and why it is 
consistent with China’s goals of rationaliz ing and consolidating its steel industry. 
55. Paragraph 95 of Chapter IV of the report stat es that China provides assistance in the form of 
tax refunds, discounted interest rates, and funds fo r research and development, etc. to major iron and 
steel projects using newly developed domestic equipmen t.  Does China consider this program to be a 
prohibited subsidy under Article 3 of the Subsidi es Agreement?  If not, why?  If so, please describe 
China’s plans for withdrawing this subsidy. 
56. In paragraph 96 of Chapter IV of the report, th e Secretariat states that China is attempting to 
regulate imports of iron ore by granting import licen ses only to enterprises satisfying certain criteria.  
According to the report, an iron ore importer can obtain an “automatic” import license from MOFCOM only if, inter alia , the importer satisfies criteria set by the Chamber of Commerce for 
Import and Export of Metals, Minerals and Ch emical Products and the China Iron and Steel 
Association.   
a. Taking into account China’s WTO obligations, including those in Article XI of 
GATT 1994 and paragraph 5 of Part I of China’s Protocol of Accession, please 
explain how China justifies these import restrictions. 
b. Are imports of any other steelmaking inputs,  such as ferroalloys, ferrous scrap, zinc, 
nickel, aluminum or titanium, subject to similar import requirements?  If so, please explain the applicable requirements for each product.  
57. Paragraph 98 of Chapter IV of the report discusses China’s efforts to discourage exports 
through reductions of the VAT rebate normally allowed for exported products.  This paragraph 
focuses specifically on steel products.  It appears th at the largest reductions in the VAT rebate apply 
to exports of primary steel products that are used as inputs for finished steel products.   
a.  Please identify the ministries and agenci es involved in deciding on reductions in the 
VAT rebate for steel products. 
b.  Please explain why China decided to discourage exports of the steel products in 
question. 
Manufacturing – Automotive Sector
 
58. As discussed in paragraph 123 of Chapter IV of the report, the NDRC issued a major 
automotive industrial policy in May 2004.  This polic y conflicts with the conc lusion in paragraph 84 
of Chapter IV of the report that considerable de regulation has taken place during the economic reform 
process in China, and as a result government agenci es are no longer respons ible for regulating, inter 
alia, the automotive industry.  The May 2004 automotive industrial policy included provisions 
discouraging the importation of auto parts and en couraging the use of domestic technology, while 
requiring new automobile and automobile engine plan ts to include substantial investment in research 
and development facilities, even though China expr essly committed in its WTO accession agreement 
not to condition the right of investment on the conduct  of research and development.  This policy also WT/TPR/M/161/Add.1 
Page 16  
 
led to new measures, such as the ones that went into effect in April 2005 on the tariff treatment of 
imported auto parts and component s which generate serious WTO c oncerns.  Does China have any 
plans to work toward true deregulation of, and th e institutionalization of market mechanisms in, the 
automotive industry?  Please explain. 
59. Paragraph 124 of Chapter IV of the report states that new investment projects in the 
automotive sector require, inter alia , a research and development facility with investment of no less 
than RMB 500 million.  Taking into account the commi tments that China made in paragraph 7.3 of 
Part I of its Protocol of Accession and paragra ph 203 of the accompanying Working Party Report not 
to condition investment on the conduct of research and development in China, please explain how China justifies this condition. 
60. Paragraph 124 of Chapter IV of the report states that new investment projects in the 
automotive sector require, inter alia , a technology transfer agreement.  Taking into account the 
commitments that China made in paragraph 7.3 of Part I of its Protocol of Accession and paragraph 
203 of the accompanying Working Party Report not to condition investment on the transfer of technology, please explain how Ch ina justifies this condition. 
61.  Paragraph 133 of Chapter IV of the report describes China’s automotive industrial policy.  
The United States understands that China plans to impl ement this policy in part by providing financial 
support, including export credits, to certain domestic  auto or auto parts manufacturers.  MOFCOM is 
reportedly in the process of selecting 100 Chinese auto or auto parts manufacturers to be designated as 
“state level” exporters, which will be targeted fo r financial support.  The selected manufacturers are 
required to have domestically owne d intellectual property, efficien t production methods and a large 
amount of existing exports. 
a.  Please describe the nature of the financial support being contemplated by MOFCOM. b.  If one of the eligibility criteria for the selected manufacturers is having a large 
amount of existing exports, would China c onsider any preferential support provided 
under this contemplated program to be a prohibited export subsidy within the 
meaning of Article 3 of the Subsidies Agreement?  If not, please explain. 
Manufacturing – Electronic and Communications Equipment Industry
 
62. Paragraph 141 of Chapter IV of the report refers to a variety of preferential policies 
supporting the development of domestic software and integrated circuit enterprises, including VAT 
rebates, tariff exemptions for imported equipment for a domestic enterprise’s own use, export loans 
provided by the EXIM Bank and export credit insurance provided by SINOSURE at favorable 
conditions, government procurement preferences, and a special fund set up by the Ministry of 
Information Industry (MII), the NDRC and the Minist ry of Finance to promote domestic enterprises’ 
research and development capabilities.  Does China c onsider the programs administered by the EXIM 
Bank and SINOSURE to be prohibite d subsidies under Article 3 of the Subsidies Agreement?  If not, 
why?  If so, please describe China’s pl ans for withdrawing these subsidies. 
63.  Paragraph 145 of Chapter IV of the report st ates that China provides financial assistance, such 
as export credit insurance by SINOSURE, to select ed exporters in certain sectors, including the 
electronic and communications equipment industries.   
a.  What are the eligibility criteria for the selected exporters? b.  Please describe the nature of the financ ial assistance provided to these exporters.  For 
financial assistance provided in the form of export credit insurance, please explain 
how the terms and conditions of the expor t credit insurance are WTO-consistent,  WT/TPR/M/161/Add.1 
 Page 17 
 
 
particularly in light of Item (j) of the I llustrative List of Export Subsidies annexed to 
the Subsidies Agreement. 
Services – Financial Services  
64. Paragraph 158 of Chapter IV of the report states that foreign equity in the banking sector is 
restricted and follows the commitments that Chin a made in the Services Schedule accompanying its 
Protocol of Accession.  The report explains that the equity share of a single foreign investor in a 
Chinese-foreign joint bank cannot exceed 20 percent, with  the proviso that the equity share of the total 
foreign investment was lower than 25 percent.  However, under banking services in its Services 
Schedule, China agreed that qualified foreign fi nancial institutions were permitted to establish 
Chinese-foreign joint banks, and China did not sched ule any limitation on the percentage of foreign 
ownership in these banks.  In light of this commi tment, please justify China’s limitations on foreign 
ownership in these banks. 
65. Paragraphs 164 throug h166 of Chapter IV of the report describe the capital requirements for 
establishing commercial banks in China.   
a. Please explain the reasoning for requiring foreign banks to maintain minimum capital 
on a branch-by-branch basis at levels th at are extremely high by international 
standards and that do not take into account the proven risk management systems of foreign banks. 
b. What is the status of the review of these capital requirements by the China Banking 
Regulatory Commission? 
66. Paragraph 180 of Chapter IV of the repor t explains that, in the Services Schedule 
accompanying its Protocol of Accession, China co mmitted to lift by December 2006 any remaining 
non-prudential measures restricting ownership, oper ation and juridical form  of foreign financial 
institutions, including with regard to internal br anching and licenses.  Does China anticipate any 
problems in fulfilling this commitment in a timely wa y?  What preparations has China made for the 
removal of the measures in question? 
67. Paragraph 181 of Chapter IV of the report not es that China made commitments its Services 
Schedule on advisory, intermediation and other auxi liary financial services and did not schedule any 
limitations on foreign ownership.  Taking into  account that these commitments include credit 
reference and analysis, investment and portfolio research and advice, and a dvice on acquisitions and 
on corporate restructuring and strategy, please explain China’s justification for proposing a 49 percent foreign equity cap for credit rating agencies. 
68. Paragraph 181 of Chapter IV of the report  states that there are two – presumably Chinese – 
insurance asset management companies in China.  It appears that this small number of insurance asset 
management companies in China results from Article 8 of the Interim Regulations for Insurance 
Assets Management Companies , which became effective in June 2 004 and limits eligibility to insurers 
that have held licenses for more than eight years,  which would exclude all foreign insurers entering 
China’s market since China’s WT O accession in December 2001.  Even though this limitation applies 
to both domestic and foreign insurers, it appears to have a disproportionate impact on foreign insurers 
and would seem to postpone the opening of this sector  until at least eight years after China’s accession 
to the WTO.  Please justify this limitation in light  of China’s WTO national treatment commitments.  
69. Paragraph 209 of Chapter IV of the report  describes the high capital requirements currently 
applicable to fund management companies.  Wh at are China’s plans for bringing these capital 
requirements into line with those found in othe r WTO Members for fund management companies? WT/TPR/M/161/Add.1 
Page 18  
 
Services – Telecommunications Services
 
70. Paragraph 213 of Chapter IV of the repor t discusses deregulation and reform in China’s 
telecommunications services sector, while paragraph 214 of Chapter IV of the report explains that the 
Chinese authorities are seeking a “fair and just, effective and orderly market environment.” 
a. In the area of mobile telecommunicati ons services and so-called “3G licenses,” the 
United States is concerned about recent repor ts that the Chinese government is unsure 
whether China’s market is mature enough for advanced wireless services.  If these 
reports are accurate, is the Chinese gove rnment conducting an “economic needs” 
analysis?  Has the Chinese government decided that the development of the telecommunications market in China, and specifically the kind and number of 
suppliers present, must be managed thr ough government planning?  Please explain 
how these actions would be consistent with  the commitment that China made in the 
Services Schedule accompanying its Protocol of Accession to open up this sector?   
b. The United States is also concerned a bout recent reports suggesting that MII is 
sponsoring and helping to fund large-scale tests of the TD-SCDMA standard while 
halting tests of competing technologies.  These reports also indicate that China may 
provide subsidies totaling as much as RMB 8 billion to support the TD-SCDMA standard, and that MII may give TD-SCDMA networks priority in licensing.  If these 
reports are accurate, please justify these pl ans in light of China’s Services Schedule 
commitments relating to spectrum, i.e., that  “procedures for the allocation and use of 
scarce resources, including frequencies . . . will be carried out in an objective, timely, 
transparent and non-discriminatory manner.” 
71. Paragraph 217 of Chapter IV of the report st ates that a draft of a new Telecommunications 
Law is currently being revised.   
a. When will a draft of the Telecommunicati ons Law be circulated for public comment, 
as required paragraph 2(C)(2) of Part I of China’s Protocol of Accession?   
b. Does the current draft of the Telecommuni cations Law either make MII structurally 
and financially separate from all the teleco mmunications operators and providers or 
move the regulation of this sector outside of MII? 
c. Does the current draft of the Telecomm unications Law provide that foreign service 
suppliers required to form joint ventures with Chinese entities to operate in China are 
free to chose their joint venture partner, and that they could choose a partner from a 
sector outside the sector of operation of the joint venture, consistent with the 
commitment that China made in paragraph 314 of the Working Party Report accompanying its Protocol of Accession? 
72. Paragraph 219 of Chapter IV of the repor t describes China’s capital requirements for 
telecommunications FIEs engaged in national or cr oss provincial basic telecommunications services, 
i.e., registered capital must not be less than RMB 2 billion ($240 million).  In the United States’ view, 
this capital requirement is excessively high, both when viewed in relation to the norms in other 
economies and in the specific context of China’s telecommunications market.  To date, MII has 
provided no compelling rationale for such a requireme nt, and the fact that there has been little or no 
new entry in the basic telecommunications ser vices sector suggests that this requirement is 
functioning as a market entry deterrent , for both Chinese and foreign operators. 
a. Does China consider the capital  requirements imposed by MII for 
telecommunications FIEs engaged in national or cross provincial basic  WT/TPR/M/161/Add.1 
 Page 19 
 
 
telecommunications services to be comparable to those found in other WTO Members?  Please explain. 
 b. Does the current draft of the Telecommu nications Law lower the capital requirements 
for these FIEs? 
PART II
 
ECONOMIC ENVIRONMENT  
Main Structural Reform Issues – Capital Market Reforms  
1.  Paragraph 42 of Chapter I of the report e xplains that state-owned banks in China lend 
“mainly” to state-owned enterprises (SOEs) and that 25 percent of state-owned banks’ loans were non-performing loans (NPLs) at the end of 2004.   Pa ragraph 230 of Chapter III of the report adds that 
SOEs “account for a disproportionate share of NPLs.”    Paragraphs 172 through 174 of Chapter IV of 
the report also discuss NPLs.  The United States understands that China’s first notification of 
subsidies under Article 25.1 of the Subsidies Agreem ent has been finalized and is in the process of 
being translated into English.  Does China’s s ubsidies notification identify the state-owned banks’ 
NPLs as subsidies and provide information on the na ture and extent of these subsidies in accordance 
with paragraph 3 of Article 25?  If not, please provide  the information described in Article 25.3 of the 
Subsidies Agreement for the state-owned banks’ NPLs. 
Developments in Trade and Foreign Invest ment – Composition of Merchandise Trade
 
2. According to paragraph 46 of Chapter II of the report, manufacturing, much of which is 
dominated by foreign-invested enterprises (FIEs) , accounted for 91.4 percent of China’s total 
merchandise exports in 2004.  The report later explai ns that China is trying to encourage domestically 
owned firms to move up the value-added chain as FIEs  appear to account for a greater share of output 
of higher value-added production.  Can China provide  a current estimate of the percentage of content 
that is Chinese in its manufacturing exports?  If so, can China disaggregate this information by 
domestically owned enterprises and FIEs? 
Developments in Trade and Foreign Investment – Foreign Investment  
3. Paragraph 52 of Chapter I of the report discusses  statistics on foreign direct investment (FDI) 
in China.  Please explain why China recently announ ced that it would no longer release statistics on 
contracted FDI. 
TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES  
Institutional and Legal Framework  
4.  Paragraph 26 of Chapter II of the report expl ains that, according to the authorities, China’s 
current laws and regulations establish judicial re view for administrative actions related to the 
implementation of laws, regulati ons and other measures involving trade in goods and services or 
intellectual property rights, as require d by China’s Protocol of Accession.  
a.  Please identify the ministries and agencies whose administrative actions related to the 
implementation of laws, regulations and other measures involving trade in goods and 
services or intellectual property rights are subject to judicial review. 
b.  For each identified ministry or agency , please identify the court that conducts the 
judicial review. WT/TPR/M/161/Add.1 
Page 20  
 
c.  For each identified ministry or agency , please identify the number of times judicial 
review of one of its administra tive actions has been conducted. 
Trade Agreements and Arrangements
 
5. Paragraph 71 of Chapter II of the report stat es that a feasibility study on a China-India Free 
Trade Agreement (FTA) was started in April 2005.  Please describe the nature of the FTA that is 
being studied and explain when China and India anticipate completing their study. 
Foreign Investment Regime  
6.  Paragraph 81 of Chapter II of the report expl ains that foreign investors in the “encouraged” 
category of the Catalogue for the Guidance of Fore ign Investment Industries are permitted to import 
capital equipment duty free.  Is this  program addressed in China’s fina lized but not yet fully translated 
subsidies notification?  If not, please provide th e information described in Article 25.3 of the 
Subsidies Agreement for this program. 
7.  Paragraph 88 of Chapter II of the report and paragraph 203 of Chapter III of the report explain 
that China provides a variety of preferential tax tr eatment to FIEs (as opposed to domestic enterprises) 
invested in industries and regions where investment  is encouraged.  Are these programs addressed in 
China’s finalized but not yet fu lly translated subsidies notification?  If not, please provide the 
information described in Article 25.3 of the Subsidies Agreement for these programs. 
8.  Paragraph 88 of Chapter II of the report and paragraph 203 of Chapter III of the report explain 
that China applies preferential enterprise inco me tax rates to FIEs (as opposed to domestic 
enterprises).  Is this program addressed in China’ s finalized but not yet fully translated subsidies 
notification?  If not, please provide the informati on described in Article 25.3 of the Subsidies 
Agreement for this program. 
9.  Paragraph 89 of Chapter II of the report  and paragraph 203 of Chapter III of the report 
describe income tax exemptions and reductions for FI Es involved in manufacturing.  Is this program 
addressed in China’s finalized but not yet translated  subsidies notification?  If not, please provide the 
information described in Article 25.3 of the Subsidies Agreement for this program. 
10.  Paragraph 89 of Chapter II of the report , paragraph 203 of Chapter III of the report and 
paragraph 139 of Chapter IV of the report describe income tax exemptions and reductions for hi-tech 
FIEs.  Is this program addressed in China’s finalized but not yet translated subsidies notification?  If 
not, please provide the information described in Ar ticle 25.3 of the Subsidies Agreement for this 
program. 
11.  Paragraph 89 of Chapter II of the report and paragraph 203 of Chapter III of the report explain 
that China provides tax exemptions for export-orient ed FIEs.  Is this program addressed in China’s 
finalized but not yet fully translated subsidies no tification?  If not, please provide the information 
described in Article 25.3 of the Subs idies Agreement for this program. 
12.  Paragraph 89 of Chapter II of the report explains that China provides value-added tax (VAT) 
refunds for FIEs that purchase domestically made e quipment.  Is this program addressed in China’s 
finalized but not yet fully translated subsidies no tification?  If not, please provide the information 
described in Article 25.3 of the Subs idies Agreement for this program. 
13.  Paragraph 90 of Chapter II of the report and paragraph 203 of Chapter III of the report refer to 
additional tax refunds and exempti ons for benefiting FIEs.  Are these programs addressed in China’s 
finalized but not yet translated subsidies notification?  If not, please provide the information described in Article 25.3 of the Subsidies Agreement for this program.  WT/TPR/M/161/Add.1 
 Page 21 
 
 
TRADE POLICIES AND PRACTICES BY MEASURE  
Introduction  
14. Paragraph 7 of Chapter III of the report stat es that 3.6 percent of China’s GDP in 2002 was 
spent on extra-budgetary transfers to SOEs.  Are any of these extra-budgetary transfers addressed in China’s finalized but not yet translated subsidies notification?  If not, please provide the information 
described in Article 25.3 of the Subs idies Agreement for this program. 
15. Paragraph 8 of Chapter III of the report stat es that China is trying to encourage the 
development of the non-public sector through grants  and other measures to ease access to finances.  
Are these programs addressed in China’s finalized but not yet translated subsidies notification?  If not, 
please provide the information described in Artic le 25.3 of the Subsidies Agreement for these 
programs. 
Measures Directly Affecting Imports – Procedures
 
16.  Paragraph 16 of Chapter III of the report  discusses data provided by the Chinese authorities 
reflecting a sharp increase in the number of rejections of administrative appeals of decisions taken by the General Administration of Customs (Customs Administration), from 23 percent in 2003 to 
55 percent in 2003 and 60 percent in 2004.   
a. How many appeals were rejected in absolute numbers in 2002, 2003 and 2004? 
b. Please explain why there was a sharp increase in the number of appeals rejected 
during this time period. 
c. How many of the rejected appeals duri ng this time period were appealed to the 
People’s Court? 
Measures Directly Affecting Imports – Tariffs
 
17.  Paragraph 18 of Chapter III of the re port explains that, pursuant to China’s  Regulations on 
Import and Export Duties , the Tariff Commission may apply retaliatory duties, inter alia, when 
countries with a trade agreement with China impose a discriminatory tariff or measure against goods 
originating in China.  In what circumstances would China consider the application of retaliatory duties 
to be consistent with WTO rules? 
18. Paragraph 21 of Chapter III of the report explains that duty exemptions and reductions may 
apply, inter alia , with regard to goods exported out of designated areas.  Are these duty exemptions 
and reductions addressed in China’s finalized but not yet fully translated subsidies notification?  If 
not, please provide the information described in Ar ticle 25.3 of the Subsidies Agreement for this 
program. 
19. Paragraph 21 of Chapter III of the report refers to a number of other duty exemptions and 
reductions.  Are these duty exemptions and reductions addressed in China’s finalized but not yet fully 
translated subsidies notification?  If not, please prov ide the information described in Article 25.3 of 
the Subsidies Agreement for this program. WT/TPR/M/161/Add.1 
Page 22  
 
Measures Directly Affecting Imports – Other Charges Affecting Imports
 
20. Paragraph 43 of Chapter III of the repor t discusses appeals of Customs Administration 
decisions in the area of rules of origin.  The repor t also explains that the Customs Administration does 
not maintain statistics on these appeals.  
a. Are the appeals discussed in this pa ragraph administrative appeals within the 
Customs Administration, or are they appeals to a court?  Please explain. 
b. In the interest of increased  transparency, would China consider collecting and making 
available statistics on these appeals and their outcomes? 
Measures Directly Affecting Imports – Import Restrictions  
21. Paragraph 52 of Chapter III of the report explai ns that an application for an import license 
under the Measures on the Administration of Import licen ses for Goods may be refused if the Ministry 
of Commerce (MOFCOM) believes the asserted justif ication for importation is “unconvincing.”  The 
report further explains that an importer may app eal an adverse MOFCOM decision, but the Chinese 
authorities do not keep statistics on appeals or their outcomes. 
a. Please explain how MOFCOM defines an “ unconvincing” justifi cation for issuance 
of an import license. 
b. Are the appeals discussed in this para graph administrative appeals within MOFCOM, 
or are they appeals to a court?  Please explain. 
c. In the interest of increased  transparency, would China consider collecting and making 
available statistics on these appeals and their outcomes? 
22. In paragraph 57 of Chapter III of the report, the Secretariat explains that, in certain cases, 
importers are not required to obtain automatic import licenses for goods subject to automatic 
licensing. 
a. Please identify the national laws and regulations that provide exemptions from the 
automatic licensing requirement in these cases. 
b. Please identify the goods that are exempt ed in these cases from obtaining automatic 
import licenses. 
23. In paragraph 58 of Chapter III of the report, th e Secretariat explains that disputes arising from 
decisions made by MOFCOM and its provincial an d local offices on automatic import licensing are 
subject to mediation and that a party dissatisfi ed with the mediation outcome can appeal for 
administrative reconsideration with MOFCOM or take  an appeal to a court.  However, the report 
states that the Secretariat could not identify the ru les governing these disputes.  The report adds that 
the Chinese authorities do not collect any statistics on these disputes. 
a. Please identify the laws, regulations or other measures that govern mediation, 
administrative reconsideration and appeals in this area. 
b. In the interest of increased  transparency, would China consider collecting and making 
available statistics on disputes in this area, including the outcomes of mediation, 
administrative reconsideration and appeals?  WT/TPR/M/161/Add.1 
 Page 23 
 
 
24. Can China confirm that the chemical products referenced in paragraph 59 of Chapter III of the 
report (HS 29031910 and HS 29034100) are no longer subject to import quotas? 
Measures Directly Affecting Imports – Contingency Measures  
25. In paragraph 81 of Chapter III of the report, th e Secretariat states that it is not clear whether 
appeals may be taken against safeguard decisions  made by the Chinese authorities.  Please explain 
whether administrative reconsideration and/or appeal s to a court are available for safeguard decisions 
and, if so, identify the applicable laws, regulations and other measures. 
Measures Directly Affecting Imports – Sta ndards and Other Technical Requirements  
26. Paragraph 90 of Chapte r III of the report explains that China began a process of examining all 
existing 21,000 national standards in April 2004 to ch eck their relevance to market requirements and 
their alignment with international standards.  According to the authorities, as a result of this 
examination, 44.2 percent of national standards ar e still applicable, while 44.2 percent are to be 
revised, and the remaining 11.6 percent ha ve been or are to be abolished.  
a. Please explain China’s plans for revising the 44.2 percent of national standards found 
to be in need of revision.  What progress has China made to date?  When does China 
anticipate completing that task?  Have any of the revisions made to date resulted in 
notifications to the Committee on Technical Barriers to Trade? 
b. Please explain China’s progress in abolishi ng the 11.6 percent of national standards 
targeted for being abolished.  When doe s China anticipate completing that task? 
27. Paragraph 90 of Chapter III of the report explai ns that the First Catalogue of Products Subject 
to Compulsory Certification, issued in December 2004, lists the products requiring the CCC mark.  
These products are set forth in Table AIII.4 of the report.  Have there been any additions to the 
Catalogue, not included in Table AIII.4?  If so, please identify them. 
28. In paragraph 92 of Chapter III, the report e xplains that imported or domestically produced 
products used for research and de velopment and testing purposes a nd goods imported for processing 
and re-export, as determined by the Certificati on and Accreditation Administration (CNCA) of the 
State Administration of Quality Supervision an d Inspection and Quarantin e (AQSIQ) in accordance 
with Decree No. 3, are exempt from Chinese Com pulsory Certification (CCC) certification.  
However, the report states that Decree No. 3 was not available to the Secretariat in English. 
a. In its Protocol of Accession, China co mmitted that it “would make available to WTO 
Members translations into one or more of the official languages of the WTO all laws, 
regulations and other measures pertaining to  or affecting trade in goods, services, 
TRIPS or the control of forex, and to the maximum extent possible would make these 
laws, regulations and other measures availa ble before they were implemented or 
enforced, but in no case later than 90 days after they were implemented or enforced.”  Does China consider this commitment to apply to Decree No. 3?  If not, please explain. 
b. Please identify the products that are exempt from CCC certification. 
29. In paragraph 95 of Chapter III, the report e xplains that an applicant dissatisfied with a 
decision made by an accredited certification body (A CB) with regard to CCC certification may either 
request administrative reconsideration by the ACB or  the CNCA and may also take an appeal to a 
court.  The report notes that no statistics were available on these administrative reconsiderations, appeals or their outcomes. WT/TPR/M/161/Add.1 
Page 24  
 
a. Please identify the laws, regulations or other measures that govern administrative 
reconsiderations and appeals in this area. 
b. In the interest of increased  transparency, would China consider collecting and making 
available statistics on disputes in this area, including the outcomes of administrative reconsiderations and appeals? 
30. Paragraph 98 of Chapter I II of the report addresses the procedures for obtaining quarantine 
import permits (QIPs).   
a. Once an application for a QIP is s ubmitted to the local China Inspection and 
Quarantine (CIQ) office, how many days  does that office have to accept the 
application? 
 b. If a shipment fails inspection, is ther e any right of reconsideration or appeal? 
c. The United States understands that AQSIQ Announcement 111, effective 
September 2004, exempts certain animal a nd plant products from the requirement to 
obtain a quarantine import inspection permit in  advance of entry and prior to signing 
an import contract.  Announcement 111 lists th e generic names of certain products in 
the animal products and plant products cat egories that are exempted from the QIP 
requirement, but does not provide sufficient detail for traders or a description of these products based on the HS number.  Please provide a description of the exempted products by HS number. 
d. Is there an application process to ma ke additional products exempt from the QIP 
requirement, or does AQSIQ conduct a regular review of the products requiring a QIP 
to determine if any of them warrant exemption?  
31. In paragraph 103 of Chapter III of the report, th e Secretariat states that it was unable to obtain 
clarification from the Chinese authorities on any specific labeling requirements –  beyond those contained in the Standardization Law, the Food Hygiene Law and the Law on Product Quality – for 
pharmaceuticals, Chinese medicine, cosmetics, geneti cally modified organisms or environmentally 
friendly products.  Please identify any specific labe ling requirements that apply to these products. 
Measures Directly Affecting Exports – Other Tax Measures Affecting Exports
 
32.  Paragraph 135 of Chapter III of the re port describes a series of tax exemptions and 
concessions available for FIEs that export over 70  percent of their production volume.  Are these 
programs addressed in China’s finalized but not yet fully translated subsidies notification?  If not, please provide the information described in Article 25 .3 of the Subsidies Agreement for this program. 
Measures Directly Affecting Exports – Expo rt Promotion and Marketing Assistance
 
33.  Paragraph 175 of Chapter III of the report states that NPLs constituted 3.7 percent of the 
outstanding loans of the  Export-Import Bank of China (EXIM Bank) in 2003, according to the Chinese authorities.  Are these NPLs addressed in Ch ina’s finalized but not yet fully translated 
subsidies notification?  If not, please provide th e information described in Article 25.3 of the 
Subsidies Agreement for this program.  WT/TPR/M/161/Add.1 
 Page 25 
 
 
Measures Affecting Production and Trade – Incentives  
34.  Paragraph 186 of Chapter III of the report stat es that China continues to  encourage the use of 
locally produced inputs in exports.  If any of the meas ures is a subsidy used by China to encourage the 
use of locally produced inputs in exports, please e xplain whether it is addressed in China’s finalized 
but not yet fully translated subsidies notification.  If it is not, please provide the information described 
in Article 25.3 of the Subsidies Agreement for it. 
35. Paragraph 188 of Chapter III of the report expl ains that China compensates SOEs for losses 
due to price controls and other gove rnment policies.  Is this program addressed in China’s finalized 
but not yet translated subsidies notification?  If not, please provide the information described in Article 25.3 of the Subsidies Agreement for this program. 
36. Paragraph 188 of Chapter III of the report e xplains that extra-budgetary transfers to SOEs 
totaled RMB 415.64 billion in 2003.   
a. Please provide a breakdown of these transfers by sector. b. Please describe the purposes of these transfers. c. Are any of these transfers addressed in China’s finalized but not yet translated 
subsidies notification?  If not, please explain. 
37. Paragraph 188 of Chapter III of the report re fers to preferential loans provided by China’s 
policy banks for infrastructure and other projects.  Are these loans addressed in China’s finalized but 
not yet translated subsidies notification?  If not, please provide the information described in Article 25.3 of the Subsidies Agreement for these loans. 
38. Paragraph 204 of Chapter III of the report states that China appear s to provide special 
preferences to priority sectors, including agricultu re, forestry, livestock and fisheries industries, 
transportation, energy, high technology industries,  industries that protect the environment, and 
“industries that use resources in an integrated manne r.”  Please describe the special preferences that 
are provided to these sectors. 
Measures Affecting Production and Trade – Small and Medium-Sized Enterprises
 
39. Paragraph 240 of Chapter III of the report refe rs to four programs providing assistance to 
small and medium-sized enterprises (SMEs), i.e., the “Fund for Supporting Technological Innovation for Technological SMEs,”  the “Development Fund for SMEs,” the “Fund for International Market 
Exploration by SMEs,” and the “Supportive Fund for SMEs on the Service System.”  
a. Please describe the types of assistan ce provided by each of these programs. 
b. Are these programs addressed in China’s fi nalized but not yet translated subsidies 
notification?  If not, please explain. 
40. Paragraph 241 of Chapter III of the report refe rs to a loan guarantee scheme benefiting mainly 
high-tech SMEs. 
a. Please describe the terms and conditions of  the loan guarantees provided to high-tech 
SMEs. 
b. Is this loan guarantee scheme addressed in China’s finalized but not yet translated 
subsidies notification?  If not, please explain. WT/TPR/M/161/Add.1 
Page 26  
 
41. Paragraph 241 of Chapter III of the report states that the Chinese government provides a variety of financial assistance to SMEs under the Law on the Promotion of Small and Medium-Sized 
Enterprises.   
a. Please describe the types of assistance provided under this law. b. Is this law addressed in China’s finalized but  not yet translated subsidies notification?  
If not, please explain. 
Measures Affecting Production and Trade – Intellectual Property Rights
 
42. Paragraph 272 of Chapter III of the report indicates that China is planning further 
amendments to the Patent Law.  What types of am endments to the Patent Law are being considered?  
When does China anticipate finalizing the amendments? 
43.  Paragraph 290 of Chapter III of the report a ddresses requests to cancel the registration of a 
trade mark if it violates, inter alia , other identical or similar trade marks.  Is a preliminary injunction 
available in cases involving non-identical but sim ilar marks?  If so, please describe the requirements 
for issuance of the injunction. 
44.  In paragraphs 295 and 296 of Chapter III, th e report states that geographical indications are 
protected either under the Trademark Law and the  Regulations for the Implementation of the 
Trademark Law , and/or by AQSIQ.   
a. Are foreign-owned geographical indications protected by these measures?  If so, 
please explain how they are protected. 
b. Does the AQSIQ system have a means fo r opposition to geographical indications by 
domestic enterprises or individuals?  Foreign enterprises or individuals? 
c. Does the AQSIQ system have a means for cancellation of geographical indications by 
domestic petitioners?  Foreign petitioners? 
d. Does the AQSIQ system allow for challenge of a geographical indication on the basis 
of a prior trademark registration?  
e. What remedies are available for infringement of a geographical indication under the 
AQSIQ system? 
f. Can decisions of AQSIQ be appealed?  If so, to which court is the appeal taken and 
on what grounds? 
g. Can geographical indications be recogn ized under Chinese law as famous trademarks 
and/or well-known trademarks? 
h. How does China remedy misrepresenta tions of products as originating from a 
particular geographic region, such as identif ying a product as “Made in USA” when it 
is not?  Which ministry or agency has jurisdiction in this area?  
Manufacturing – Iron and Steel  
45. Paragraph 95 of Chapter IV of the report stat es that China provides assistance in the form of 
tax refunds, discounted interest rates, and funds fo r research and development, etc. to major iron and 
steel projects using newly developed domestic equi pment.  Is this program addressed in China’s  WT/TPR/M/161/Add.1 
 Page 27 
 
 
finalized but not yet fully translated subsidies no tification?  If not, please provide the information 
described in Article 25.3 of the Subs idies Agreement for this program. 
Manufacturing – Textiles and Clothing  
46. Paragraph 102 of Chapter IV of the report states that no subsidies have been provided to 
China’s textiles industry since 2000. 
a. Does China agree with this statement?  Please explain. 
b. Paragraphs 9, 18 and 20 of the United States’ request under Article 25.8 of the 
Subsidies Agreement dated 6 October 2004 (G/SCM/Q2/CHN/9) describes subsidies that China has provided to domestic textiles producers.  Are these programs addressed in China’s finalized but not yet fully  translated subsidies notification?  If 
not, please provide the information described in Article 25.3 of the Subsidies 
Agreement for these programs. 
Manufacturing – Electronic and Communications Equipment Industry
 
47. Paragraph 139 of Chapter IV of the report re fers to VAT refunds provided to FIEs by local 
governments.  Are these programs addressed in Chin a’s finalized but not yet translated subsidies 
notification?  If not, please provide the informati on described in Article 25.3 of the Subsidies 
Agreement for these programs. 
48. Paragraph 141 of Chapter IV of the report refers to a variety of preferential policies 
supporting the development of domestic software and integrated circuit enterprises, including VAT 
rebates, tariff exemptions for imported equipment for a domestic enterprise’s own use, export loans 
provided by the EXIM Bank and export credit in surance provided by the China Export & Credit 
Insurance Corporation at favorable conditions, g overnment procurement preferences, and a special 
fund set up by the Ministry of Information Industry (MII), the NDRC and the Ministry of Finance (MOF) to promote domestic enterprises’ research  and development capabilities.  Are all of the 
programs described above addressed in China’s finalized  but not yet translated subsidies notification?  
If not, please provide the information described in Article 25.3 of the Subsidies Agreement for those 
programs. 
49. Paragraph 141 of Chapter IV of the report notes that the Chinese government has adopted 
several measures to assist the development of Ch ina’s electronics and communications industries.  
Earlier in the report, paragraph 86 of Chapter IV refers more generally to industrial policies 
promoting, inter alia , these industries. 
a. China’s largest manufacturer of telecommunications equipment (Huawei 
Technologies) reportedly received a line of credit of approximately $10 billion from 
the China Development Bank for the purpose of funding export growth.  Please describe the terms and conditions of this line of credit, and explain whether China 
considers the provision of this line of credit to have been purely commercial in nature. 
b. Are any Chinese enterprises in the telecommunications equipment industry 
responsible for any of the NPLs of China’ s state-owned commercial or policy banks?  
If so, please explain. WT/TPR/M/161/Add.1 
Page 28  
 
Services – Financial Services
 
50. Paragraph 158 of Chapter IV  of the report describes the lending practices of China’s three 
policy banks, i.e., the Agriculture Development Bank of China, the EXIM Bank and the China 
Development Bank.   
a. Does China agree that loans provided by  each of these policy banks to domestic 
enterprises are subsidies within the meaning of Article 1 of the Subsidies Agreement? 
b. Does China’s finalized but not yet fully tr anslated subsidies notification identify loans 
from these policy banks as subsidies and provi de information on the nature and extent 
of these subsidies in accordance with Article  25.3 of the Subsidies Agreement?  If 
not, please provide the information described in Article 25.3 of the Subsidies 
Agreement for the loans from these policy banks. 
51. Paragraph 169 of Chapter IV of the report expl ains that a decision has been made to establish 
a deposit insurance system in China and that the People’s Bank of China, the China Banking 
Regulatory Commission and MOF are currently drafting implementing regulations and rules.  Please describe the contemplated timing for China’s finalization of these measures and establishment of the 
deposit insurance system. 
52. Paragraph 197 of Chapter IV of the report states that, in its Protocol of Accession, China 
committed to open its annuity market to internat ional participation by December 2004.  Please 
identify the measures governing the procedures and requirements for obtaining the necessary 
licensing for insurers seeking to provide annuity services. 
53. Paragraph 182 of Chapter IV of the report re fers to six Chinese holding companies in China’s 
insurance industry.  Do FIEs have the right to establish holding companies?  If not, please explain, 
taking into account China’s WTO national treatment commitments. 
54. Paragraph 185 of Chapter IV of  the report discusses China’s In surance Law, issued in June 
1995 and amended in October 2002.  In December  2004, the China Insurance Regulatory Commission 
(CIRC) invited public comment on a draft of a new Insurance Law.  The United States provided 
written comments, urging CIRC, inter alia , to harmonize the treatment of domestic and FIE insurers.  
Please explain the status of the draft Insura nce Law and China’s plans for finalizing it. 
55. Paragraphs 194 and 195 of Chapter IV of  the report describe Ch ina’s GATS commitments 
with regard to, inter alia , the opening up of the reinsurance sector.   
a. Article 11 of the Administration of Reinsurance Business Regulations , which took 
effect in December 2005, appears to discriminate against foreign reinsurance 
companies by requiring right of first refusal for 50 percent of each primary 
company’s reinsurance program with domestically licensed reinsurers.  Taking into account the commitments that China made fo r this sector in the Services Schedule 
accompanying its Protocol of Accession, please explain how China justifies this 
limitation. 
 b. With regard to Article 22 of the Administration of Reinsurance Business Regulations , 
can CIRC clarify that a 100 percent-owned subsidiary is an extension of the parent company’s operations, so that the reinsuran ce ceded to the parent company should be 
allowed?   WT/TPR/M/161/Add.1 
 Page 29 
 
 
QUESTIONS BY SWITZERLAND  
REPORT BY THE SECRETARIAT  
I. Economic Environment 
(3) Macroeconomic Policies (i) Monetary and exchange rate policy 
Para. 19.  What is China’s assessment of the July 20 05 reform of the exchange rate regime? 
(ii) Fiscal policy 
Para. 23. On March 14, China's Parliament endorsed the country's 11th Five-Year Plan, which 
focuses on rural development and science and te chnology progress. Could you elaborate on the 
measures intended to alleviate regional income di sparities? What are the measures taken by the 
government to face the aging problem while avoiding a deterioration of the fiscal deficit? Is ageing a 
problem for the reorientation of pub lic expenditure towards education?  
 
(4) Macroeconomic Policies 
(i) Tax reforms  
Para. 30.  One of the government’s goal is the “reducti on of the gap between the rich and the poor”. 
To this end, which products and in dustries will be affected by this restructuring of the tax system? Is 
the new consumption tax on luxury planned to be introduced by April 1 a consequence of these 
measures? The government also intends to abolish agricultural taxes by the end of 2006. Given these 
revenue losses for the local governments, what ki nd of compensation mechanism will be implemented 
and how will the government’s additiona l transfer payments be financed? 
 
II. Trade Policy Regime – Framework and objectives 
(3) Formulation, Administration, and Implementation of Trade Policy 
Box II.2 Local barriers to inter-provincial trade notes th at a number of government measures such as 
budgetary constraints on the provinces and the SOEs, fiscal decentralization and the development of 
SEZs in certain provinces, are all factors that may have led provincial governments to increase the use 
of protectionist measures such as licensing, local taxes and charges, local standards, investment 
approvals, interest rates charged by local ban cs etc. Which measures does the central government 
foresee to remedy to such provincial compartmentation?  
(4) Trade Policy Objectives 
Para. 39  seems to suggest that China c ontinues to encourage the use of local inputs, including by 
foreign investors, to pursue certain trade policy objectives. Could the Chinese authorities explain how 
they intend to ascertain compliance of these measure s with the provisions of the Agreement on Trade-
Related Investment Measures ?  (5) Trade Agreements and Arrangements (iv) Unilateral Preferences 
Para. 73 . The text mentions China granting 39 LDCs un ilateral preferences. Are there other criteria 
than the existence of diplomatic relations for Chin a to grant preferential access to products originating 
from LDCs? In the Report by the Chinese government  it is mentioned that it provides duty-free access 
for most China-bound LDC exports. Does China main ly grant duty-free access for raw material or 
does it also grant access for higher value products? Do es the list of products contain cottons products 
and other semi-finished products for the textiles and clothing industry? 
 WT/TPR/M/161/Add.1 
Page 30  
 
I. Trade Policies and practices by Measure 
(2) Measures directly affecting imports (ii) Tariffs – (a) Overview 
Pages 63-64. Please indicate which products are currently su bject to interim tariff rates as mentioned 
in §19. Please specify the product description and the HS tariff number. 
Para. 20. As the MFN and the interim duty rates are app lied on annual basis and the lower of the two 
possible rates is levied at the border for countries e ligible for MFN duty rates, could China explain for 
which reason the MFN duty rate is not simply redu ced to the interim duty rate as the interim duty 
effectively replaces the MFN duty for the products it applies to ?  
What kind of flexibility does such a situation gi ve to China in future WTO negotiations as the 
negotiations are based on bound duty rates ?  
How does China ensure that  in such a case, the interim duty rate  (which is lower) and not the MFN 
duty rate is levied at the border ?  
(iii) Other charges affecting imports – (c) Inward article duty 
Para 37. please explain what is the meaning of "in excess of  a reasonable amount which suffices 
personal use" in the case an inwa rd duty is levied on luggage a nd other personal items to persons 
entering the Customs Territory of China ?  
How is the reasonable amount established and on the basis of which criteria ?  1. For which reason does the tariff Commission design ate certain products to be subject to the 
inward duty rate regardless if they meet the criteria of "reasonable amount which suffices personal 
use"? 
How do you justify the fact that the inward duty rate  can be higher than the MFN applied rate ? Is the 
inward duty rate higher than the bound rate ? If y es, this would be a breach of WTO obligation under 
article II GATT and should be remedied without delay. 
Please specify which products are prohibited or r estricted under the inward duty regime and the 
justification for such a  prohibition or restriction. 
 
(iii) Other charges affecting imports – (b) Excise tax 
Para 39. We have been informed that China will introduce a new tax on luxury watches at the rate of 
20% from April 1, 2006. Could China confirm that this new tax is an excise tax? Are domestically 
produced luxury watches also touched by this measure? 
 
(v) Import restrictions – (c) Restrictions and licensing 
Para 49. For products such as watches, China still main tains automatic import licensing requirement. 
A non-lot licenses is valid for six months within the same calendar year and may be used to declare 
imports of different batches of im ports carried out within a given period of time. Does the government 
intend to extent the duration of validity and the number of possible uses per license?  
 
(vii) State trading 
Para 63  states that under China's Accession Protocol, the non-state trading share in imports of 
processed and crude oil is to be increased annually by 15% for the first ten years after accession. 
Could the Chinese delegation please explore on the actual state-trading of crude oil, especially if these 
have been reduced during the last years? 
Para 65  also mentions that the review of the annual growth in volume of processed oil imported by 
non-state trading enterprises has not taken place, one of the reasons being the inability to collect the data. Could the Chinese delegation please also elaborate on this issue.   WT/TPR/M/161/Add.1 
 Page 31 
 
 
(ix) Standards and other technical requirements – (c) Product certification 
General remark: The Swiss industry manifests some serious  problems with the China Compulsory 
Certification (CCC) mark. The problems concern espec ially in the complex import procedures like the 
burdensome paperwork which causes a loss of time.  
Para 91 . Products requiring the CCC certificates and marks are listed in the First Catalogue of 
Products Subject to Compulsory Certification. There are especially many products which can be 
judged as low risk products and require anyhow th e CCC. Are there any considerations in progress 
with a view to eliminate CCC mark for low risk products? 
Para 93. Originally there were 132 products requiri ng the CCC mark. At the time being there are 
already 139 products requiring a CCC mark. Is ther e any intention to increase to include further 
products. If yes, what kind of products? 
The product has to be conform with the basic requi rements of the relevant standard for getting the 
CCC mark. How many standards for the CCC mark are based on international standards (ISO and/or 
IEC)? How many of this standards are national, sectoral or local standards? 
The manufacturers have to apply for and receive the CCC before the products can be imported or 
advertised in China. The  cumbersome process dema nds an onsite inspection at the applicant's factory 
in its home country by an accredited Chinese CCC or ganization at the applicant's costs every 12 
months. In our point of view this inspection does cause a unnecessary duplication for manufacturers, 
which are already certified under the relevant internati onal standards. Is there any intention to abolish 
these inspections for low risk products or to  extend the periodicity of the inspections? 
 (x) Government procurement 
General question. Switzerland appreciates the way China takes into account the experiences made by 
other countries with a view to assure consistency of its national legislation with the GPA. What would 
be, in the opinion of China, the main issues to be  resolved in the future for complying with the 
conditions set out in the GPA?  
Para 108. In the light of this paragraph, we understa nd that China's new Government Procurement 
Law - which came into force on 1 January 2003 - is intended to complement the Law on Bid 
Invitation and Bidding or Tendering adopted in 1999, the latter dealing with bidding procedures in the 
public and private sectors. In terms of implementati on, there is of course an interaction between the 
substantive standards and the procedural standards.  Would it be possible to the Government of China 
to inform about the main objectives of the two la ws and about the main differences between the two 
laws? 
Para 109 . According to this paragraph, the law of 2003 covers procurement at all level. Would this 
mean that the laws of 1999 and 2003 also apply to the sub-territorial levels and that no specific legal 
or regulatory framework is foreseen in China for th e government procurements made by the procuring 
entities of the provinces and municipalities? 
Paras 111 and 114 . The report informs in paragraph 111 that the Law on Government Procurement 
provides methods such as "competitive negotiation", while  this method is explained in more details in 
paragraph 114. Would it be possible to the Authoritie s of China to provide more information about the 
functioning and organization of th e method of "competitive negotiation"  and to share the experiences 
made by China through the implementation of this method?  WT/TPR/M/161/Add.1 
Page 32  
 
(4) Measures affecting production and trade 
(i) Industrial policy 
Paras 183-186 . The Secretariat's report indicates that there has been a shift from di rect intervention to 
indirect policy tools to channel resources into certain activities that the Government believes are 
important for China's continued growth and deve lopment. Could the Chinese authorities explain on 
the basis of which criteria decisions are taken to "guide" certain activities, including through credit 
and price controls, subsidies, tax incentives or disincentives ? Also, could the Chinese authorities 
indicate on what basis they seem to have come to the conclusion that decisions made by the Government are likely to be more efficient than market forces to promote economic development ? 
(v) Private sector 
Para. 235 . Could the Chinese authorities explain why official government statistics reportedly only 
include domestic Chinese enterprises as "private enterprises" and exclude other privately owned 
companies, including foreign-invested ones ? What ar e in particular the economic, legal and financial 
consequences of such different classifications ? 
(v) Intellectual Property Rights 
Para. 313.  What concrete measures are taken by your G overnment to address the issues referred to as 
“local protectionism” on page 157, paragraph 313 in order to more e ffectively combat infringement of 
intellectual property rights and to ensure the efficiency of enforcement measures? 
IV. Trade Policies by Selected Sectors 
(3) Energy (i) Petroleum – (a) Reform and industrial structure 
Paras 58-59 . Wholesale and retail prices of oil products are controlled and adjusted periodically. Yet 
the 2005 international oil price increase has touche d the Chinese market with considerable delay, 
causing oil operators to prefer exporting their product s rather than supplying the domestic market. But 
oil exports (and imports) are in large part State controlled. Please inform in detail about the plans to reform the oil price mechanism in China in order to  prevent future price-decoupling of China from the 
rest of the world oil market. 
 
(ii) Electricity  
Para. 63 . Please give some information about the st rategies and instruments China can use for 
increasing the energy efficiency of equipments. 
 
(ii) Electricity – (e) Pricing of electricity 
Para. 76-78 . Electricity pricing is in governmental cont rol. Please inform about the reasons why the 
2002 reform has not permitted to have  better correlations between electricity cost and electricity 
prices. Can you give more information on the implementation of the 2002 reform? 
REPORT BY THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA
 
II. Trade policy development 
Faithfully implement the WTO Accession Commitments 
Intellectual Property Rights 
Para. 60 . The report by the People's Republic of Chin a mentions on page 14, paragraph 60 that 
import as well as export goods suspected of IPR infringe ment can be detained and dealt with by the 
Customs. Please provide statistical information on the number of cases in which such goods were  WT/TPR/M/161/Add.1 
 Page 33 
 
 
seized in the course of importation and exportation by your customs authorities as well as on the 
quantities of the goods seized. 
III. Outlook 
(ii) Build a harmonious society and a harmonious world 
Para. 98 . The report indicates that the MOFCOM initiated “Market Development Project Covering 
Thousand of Villages and Towns” in February 2005  through popularising chain-store operations in 
rural areas. What are the kind of measures foreseen  to achieve the objective? We would also like to 
know if the measures in question are based on market mechanisms criteria or if, on the contrary, they 
are rather founded on planning policies and principles? 
Para 99  stipulates that a new model of industrialisa tion will be followed, categorizing different 
regions as suitable for optimal development, prior ity development, or restricted development or 
development prohibition. What are the instrume nts the Chinese government intents to use to 
implement this “new model of industrialisation”? Does this new policy contain government measures 
that directly intervene in the market competition between regions?  
ADDITIONAL QUESTIONS OF SWITZERLAND  
Report by the Secretariat  
III. T RADE POLICIES AND PRACTICES BY MEASURE  
(2) Measures directly affecting imports (v) Import restrictions – (a) General import prohibitions 
Paras 44-45. Please provide a full list of products subject to  import prohibitions at the HS eight-digit 
level 
 
(v) Import restrictions – (c) Restrictions and licensing 
Para 48.  This paragraph states that despite several ch anges to the Chinese import licensing regime, it 
remains intricate and opaque. Which steps and concre te measure will China take to make its import 
licensing regime more transparent and more simple ? 
Para 52  Please explain what are the criteria used by the competent Chinese authorities to consider 
that the justification for importation is believed to be "unconvincing". 
Para 57.  please clarify which goods are exempted from licenses or relevant laws. 
Para 58.  It seems that the possibility to apply for an administrative review or to lodge administration 
litigation if the parties are not satisfied with the mediation, is not longer valid. Could China clarify 
and specify whether the rule has been replaced  or any changes made to the procedure ? 
Para 59 . please confirm that the tariff quotas for wrist watches has been phased out in 2003 as 
foreseen in the protocol of accession.  
(vii) Contingency measures – (b) safeguards 
Para 80. In addition to the mid-term review conducte d once a safeguard measure exceeds 3 years, 
could China confirm that when it takes a safegua rd measures exceeding one year, it progressively 
liberalizes the measure at regular intervals during th e period of application cons istent with article 7:4 
of the Safeguard agreement?  
Para 81 . Could China specify whether appeals can be made against safeguard decisions taken by the 
authorities and who is the competent authority to which such an appeal must be logged? WT/TPR/M/161/Add.1 
Page 34  
 
QUESTIONS BY JAPAN
 
 
REPORT BY THE SECRETARIAT (WT/TPR/S/161)  
I. ECONOMIC ENVIRONMENT 
(3) MACROECONOMIC POLICIES 
(i)  Monetary and exchange rate policies 
 (p.13, paragraphs 17-19) 
Q1.  
(1) Please indicate the views of the Government  of the People’s Republic of China regarding 
merits and demerits of mainta ining the RMB exchange rate. 
(2) Please indicate the prospects of the Governme nt of the People’s Republic of China for the 
liberalization of capital movement and foreign exchange control. 
(4) MAIN STRUCTURAL REFORM ISSUES 
(i)  Tax reforms  (p.17, paragraph 29) 
Q2. Please indicate the prospects for unifying dir ect taxes on the income of foreign enterprises 
and domestic enterprises, which highly  influences foreign participation. 
 
(iii) Labour market reforms 
 (p.19-20, paragraphs 37-39) 
It is stated in the Report by the Secretariat that  “it is estimated that well over 100 million jobs will 
need to be created during the next decade to absorb the wo rkers laid off as a result of the restructuring 
of the economy, together with migration from rura l areas, and new entrants into the labour force.” 
Q3. In which area does the Government of the Peopl e’s Republic of China consider that well over 
100 million jobs can be created?  (iv) Capital market reforms  (p.21, paragraphs 42-43) 
Q4.  
(1) How will the corporate governance of st ate-owned commercial banks be ensured? 
(2) How will the disclosure of state-owne d commercial banks be  institutionalized? 
(3)  Please indicate the views of the Government of the People’s Republic of China on how it 
intends to operate direct and indirect finance. 
(4) With regard to financing for small and medi um-sized enterprises, Japan considers that it is 
effective to foster medium-sized banks which ar e profitable and well-capitalized.  In this regard, 
please indicate the views of the Government of the People’s Republic of China. 
 
(v) Competition policy 
 (p.22, paragraph 44) 
Japan believes that it is urgently required to estab lish rules for promoting effective competition in the 
People’s Republic of China where both the government sector and the private sector are operating.  Japan has been requesting the Pe ople’s Republic of China to establish a competition law that is 
ensured to be transparent, non-discriminatory and fair for all procedures.  In this regard, the Report by 
the Secretariat raises China’s endeavor to establis h a comprehensive competition law. Japan hopes for 
an early establishment of an effective and compre hensive competition law in order to ensure the 
effectiveness of market mechanism.  WT/TPR/M/161/Add.1 
 Page 35 
 
 
Q5. Please indicate the present status and future  prospects, regarding the establishment of an 
effective and comprehensive competition law.  
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
(5) TRADE AGREEMENTS AND ARRANGEMENTS 
(ii) Regional agreements 
  ASEAN–China free-trade agreement (ACFTA) 
 (p.46-47, paragraphs 51-54) 
According to Annex 2 of the Agreement on Trade in Goods, the conditions for tariff concessions are 
set out according to the rule of reciprocity. 
Q6.   
(1) When the tariff rate for a ta riff line placed by the exporting party in the Sensitive Track is 
over 10%, this trade can be excluded from the covera ge of tariff concessions in ACFTA in line with 
the rule of reciprocity.  This kind of case might lead  to a shrinking of the coverage of liberalization 
under the ACFTA.  In this regard, are there a ny possibilities that the ACFTA can not satisfy 
“substantially all the trade” requirements in Article XXIV of the GATT? 
(2) Are there any customs mech anisms/procedures to give timely notification of the exporting 
Party’s tariff rate and her modification to  the other Parties for reciprocity?  
(3) There are two categories, the normal track a nd the sensitive track in the Agreement on Trade 
in Goods.  According to Annex 2 of the Agreem ent, there is a maximum ceiling for the sensitive 
track. As for China and ASEAN6, is the ceiling “ 400 tariff lines and 10% of total value of imports 
from China or from the ASEAN Member Countries as a whole”?  If so, does China consider whether 
or not it is consistent with Article XXIV of th e GATT agreement as from the viewpoint of a regional 
FTA?  
(6) FOREIGN INVESTMENT REGIME 
(v) International investment agreements 
 (p.57, paragraph 93) 
There is no information on the imposition of performance requirements in China in the Report by the 
Secretariat. 
Q7. Please provide information for the kind of  performance requirements imposed on foreign 
companies in China. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(2) MEASURES DIRECTLY AFFECTING IMPORTS 
(ii) Tariffs  (p.67, paragraph 25) 
Q8.  
(1) Concerning the specific duties that China app lied to certain products that exceed their bound 
rates, please explain how China considers this consistent with the WTO Agreement and whether 
China has any plans to take any measures to en sure compliance with its commitments under the 
GATT Article II (Concession Schedule). (2) Please indicate the HS codes, descriptions a nd specific duties of the 49 items that have 
applied specific duties which exceed their bound duties. 
 
 (p.72, paragraph 33) 
Q9. Japan appreciates that China has established GSP schemes for LDCs.  In this regard, please 
indicate whether China has certain concrete  plans to improve the GSP scheme or not. WT/TPR/M/161/Add.1 
Page 36  
 
(v) Import restrictions 
 (p.78, paragraphs 51) 
The Environmental Management Registration System for the Import and Export of Toxic Chemicals, 
stipulated in the “Regulations for Environmental Management on the First Import of Chemicals and 
the Import and Export of Toxic Chemicals”, which came into force in May 1994, levies ten thousand 
U.S. dollars per contract as a registration fee on fo reign exporters whose expor ts listed chemicals to 
China. 
Q10. Please explain how this system and its enfo rcement are consistent with WTO agreements.  
 
(viii) Contingency measures 
(a) Anti-Dumping and Countervailing 
 (p.83, paragraph 67) 
Since the initiation of an investigation itself may cause an excessive burden on respondents, the 
authority should scrutinize the ac curacy and adequacy of the evid ence provided in the application 
before the initiation of an investigation, pursuan t to Article 5.3 of the ADA.  For example, the 
Ministry of Commerce (MOFCOM) initiated the i nvestigation concerning nucleotide food additives 
on 12 November 2004, based upon data  contained in the application.  However, as shown in the letter 
submitted by the Government of Japan on 4 January  2005, the alleged upward trend in exports from 
Japan did not exist; on the contrary, actual exports from Japan have steadily decreased.  
Q11. Please indicate concretely in what way the au thority examined the accuracy and adequacy of 
data provided in the application. 
 
 (p.86, paragraph 74) 
In the investigation on nucleotide food additives,  MOFCOM made a preliminary determination of 
injury solely depending on the application by th e domestic industry on 4 August 2005, while the 
information submitted by the Government of Japan  indicated a steady decrease in the volume of 
exports.  In making such a determination, the authority did not provide any concrete reasoned 
explanation for why they did not adopt the informati on.  We believe that even if evidence provided by 
an interested party is not accepted, the party should be informed forthwith of the reasons thereof, and 
should have an opportunity to pr ovide further explanations.   
Q12. Please explain how practice mentioned above is  consistent with para graph 6 of Annex II of 
the ADA. 
 
 (p.86, paragraph 74) 
MOFCOM made a positive final finding of injury in the original investigation concerning TDI 
(initiation date: 22 May 2002), while indicators su ch as volume of domestic consumption, production 
of the domestic-like product, sales volume and market  share did not deteriorate.  In addition, an 
objective reasoned explanation was not provided.  Furt hermore, regarding the analysis on causal links 
between the dumped import and material injury, MOFCOM did not undertake the review of the 
existence and the role of a price leader, which app eared to cause a decrease in prices of the domestic -
like product.  
Q13. Please explain the reason why China believes th at the practice indicated above is consistent 
with obligations on objective analysis and reas oned explanations under the ADA, including Article 
3.1, 3.2, 3.4, Article 3.5 and 12.2.1. 
  WT/TPR/M/161/Add.1 
 Page 37 
 
 
 (p.86, paragraph 74) 
Q14. Please explain the consistency of the measures to use adverse facts available or apply at most 
more than 100% of uniform margin and high all othe rs’ rates which are not based on Article 9.4 (ii), 
and without sending questionnaires to exporters w ho did not fulfill an appearance notice, including 
"the known exporters or producers" men tioned in the petitioner’s application . 
 
 (p.86, paragraphs 73-76)  
Q15. Japan is concerned that China has not ye t submitted a subsidy noti fication as required under 
Article 25 of the SCM Agreement.  Please indicat e when a full notification will be submitted?  
 (b) Safeguards  (p.86-87, paragraphs 77-81) 
Q16.  
(1) In the past, China made a reply that th e measures under Article 31 of REGULATIONS OF 
PRC ON SAFEGUARDS differ from those under Artic le 8.2 and 8.3 of the WTO Agreement on 
Safeguards.  In that case, we are concerned that REGULATIONS OF PRC ON SAFEGUARDS could 
be managed does not have any provisions corresp onding to Article 8.2 and 8.3 of the WTO SG 
Agreement.  In this regard, please indicate the view s of the Government of the People’s Republic of 
China. (2) REGULATIONS OF PRC ON SAFEGUARDS does not contain any substantive provisions ensuring the contents related to the following provision; such as: compensation measures under 
Article 8.1 of the WTO SG Agreement, “unforeseen developments” of Article XIX:.1(a) of the GATT 
1994, and the opportunity for the interested parties to “submit their views…as to whether or not the 
application of a safeguard measure would be in public interest” under Article 3.1 of the WTO SG 
Agreement.  Please indicate when China will include  the substantive provisions consistent with the 
WTO SG Agreement in Chinese domestic la ws including REGULATIONS OF PRC ON 
SAFEGUARDS. 
 
(ix) Standards and other technical requirements 
 (p.89, paragraph 88)  
Q17. 
(1) Regarding imported digital cameras, is there a possibility that the voluntary national standards 
of digital cameras, which will be settled in the future  will be used for the legal standards concerning 
inspection?  (2) Are there any possibilities that the voluntar y national standards concerned is used in a 
compulsory manner as the administrative or crimin al penalty is imposed when digital cameras don’t 
pass an inspection?  If so, please provide the grounds on the articles of the law and the administrative 
or criminal penalty.  
 
 (p.89, paragraph 88)  
Q18. Concerning “the Administration on the Control of Pollution Caused by Electronic Information 
Products”: (1) With regard to electronic information products , the contents are still indefinite. Please clarify 
with a scope of product names. 
(2) With regard to “electronic units/components” and “electronic materials”, there are no final products by themselves.  Therefore, Japan hopes the Government of the People’s Republic of China to 
reconsider excluding them for the sake of internationa l consistency.  In this regard, please indicate the 
views of the Government of the People’s Republic of China. WT/TPR/M/161/Add.1 
Page 38  
 
(3) EU’s Directive on the Restriction of Haza rdous Substances (RoHS) does not cover these 
items reused products and spare parts of a product so ld before the date of the implementation of the 
law.  Please indicate whether reused products and spare parts of a product sold before the date of the 
implementation of the law come out of a scope by  “the Administration on the Control of Pollution 
Caused by Electronic Information Products”.    
(4) With regard to “Sectoral standards”, “N ational standards” and the “Catalogue of heavy 
Control of Pollution Caused by Electronic Informa tion Products (hereinafter referred to as “the 
Catalogue”)”, please indicate definite substances and implementation methods. 
(5) As for import products, if these products ar e certified in foreign factories, asquiring the 
certification takes a lot of times and effort.  This seems to be a technical barrier to trade.  Please 
indicate whether the Supplier’s Declaration of Conformity (SDoC) will be allowed. 
 
 (p.89, paragraph 88)  
Q19. Concerning the openness and transparency  of standardization works in China: 
(1) Please provide detailed information on China’s standards-setting process, in particular the 
steps to implement the important principles of ope nness and transparency an d to allow meaningful 
participation by interested parties. (2) How do China’s central government bodies inte rvene in the process of the development of 
sectoral or local standards that will become manda tory so that central government bodies can fulfill 
the notification requirements under Article 2.9.2 and 5.6.2 of the TBT Agreement? 
(3) To what extent is it envisioned that inter ested parties from other WTO Members will be able 
to participate in the standards-setting process in China? 
 
 (p.89-90, paragraphs 86-90)  
Japan hopes China to speed up its process to harmonize with international standards.  
Q20. Please provide detailed information on China’ s policy and any plans to review all existing 
four kinds of domestic standards to ha rmonize with international standards.  
 
 (p.90-91, paragraph 91)  
Q21. Concerning the CCC System:  
(1) Please provide a description or the comparative table between the First Catalogue of Products 
and the HS codes that facilitate the procedures of the certification and customs clearance in China.  
(2) Article 13 of the Regulations of the Pe ople’s Republic of China on Certification and 
Accreditation allows only Chinese certification bodies to engage in CCC certification activities. This 
is not consistent with China’s commitment in Pa ragraph 195 of the Report of the Working Party on 
the accession of China.  Please provide any plans by  China to accredit foreign conformity assessment 
bodies (CABs). 
(3) We recognize that there is a transitional pe riod for the goods conformed with the existing 
standards when GB standards subject to the CCC system are newly developed or amended.  Please 
indicate the time period of the transitional period  and also provide evidence stipulating such a 
transitional period. 
 
(ix) Government procurement  
 (p.97-98, paragraphs 119-121)  
Q22. Concerning government procurement: 
(1) It is stated on page 97, paragraph 119 of the Secretariat Report that "C hina's trading partners 
have expressed concerns about the potential impact of this policy".  Japanese industries also have 
concerns about this set of  measures that the Ministries of Finan ce, Information Industries, and Science 
and Technology, and the NDRC are considering. In this regard, please indicate the schedule and 
possible contents of the measures.   WT/TPR/M/161/Add.1 
 Page 39 
 
 
(2) In its Accession Protocol, China agreed to initiate accession negotiations to the GPA “as soon 
as possible” and we understand that China has been preparing for that.  When does China plan to 
initiate its accession negotiations to the GPA?  
(3) MEASURES DIRECTLY AFFECTING EXPORTS 
(iii) Other tax measures affecting exports 
 (p.100, paragraph 130) 
Q23. Concerning the AT refund scheme for copper, on the 4
th Japan-China Economic Partnership 
Meeting held on December 3, 2005 at MOFA, Japan , a Chinese representative stated that this scheme 
would be abolished on December 31, 2005.  We would like to confirm the current situation. 
  (p.100-102, paragraphs 130-135) 
Q24. According to the notification by the Ministry of Finance on April 29, 2005 and the 
notification on December 9, 2005, the return of the VAT was reduced or abolished in the case that 
nonferrous metals such as rare earths and magnesium are exported.  Please indicate the purpose and 
the present return ratio of the VAT per every HS co de in export.  Please also explain the reason why 
the difference of the return ratio is justified in the return of the VAT. 
 
(iv) Export prohibitions, restrictions, and licensing  (p.103, paragraph 137)  
Japan recognizes that China has prohibited exporting wood charcoal since October 1, 2004.  However, 
according to the Trade Statistics of Japan, while  import volume of wood charcoal from China has 
gradually decreased, the wood charcoal subject to rest riction has still been imported and distributed in 
the Japanese market.  
Q25. 
(1) Concerning the wood charcoal trade of Ch ina, please clarify the following points,  
 (a) Type of wood charcoal subject to export prohibition (standards, volume of domestic 
production and export; 
 (b) Type of wood charcoal permitted to be exported;  (c) Reasons why some type of wood charcoal has been subject to export prohibition; and  (d) Inspection system and implementation of  inspection of wood charcoal subject to 
export prohibition at customs. 
(2) In addition, footnote 115 of page 103 of the Report by the Secretariat states that wood 
charcoal (HS-44020000) is listed as partially prohib ited from export in general trade, but as totally 
prohibited under processing trade.  In this rega rd, please indicate what kinds of processed wood 
charcoal are subject to the export prohibition.   (p.102-106, paragraphs 136-151)  
Q26.  
(1) Please indicate the reason why the “reduction of rare earth export quantities to promote the 
protection of domestic resources” of “the notifi cation regarding export regulatory measures of 
commodity parts requiring the use high energy consumption and highly pollutive resources”, issued on December 9 is conformed with the GATT, incl uding concrete data on the domestic production and 
consumption volumes from 2003 to 2005 and the prospects for 2006 as well as on the recent change 
of presumed reserves of rare earth in China. (2) Please indicate the quantity of export of rare earths from 2003 to 2005 , including the announcement of planned quantity at the beginning of the year, and the final issued gross result.   WT/TPR/M/161/Add.1 
Page 40  
 
(3) Does the Government of the People’s Republic of China have any plans to increase the export 
quantity to a level that does not exert an adverse effect on world trade, in the situation where the 
issuing quantity becomes insufficient from the point of view of the importing country? 
 
(3) MEASURES AFFECTING PRODUCTION AND TRADE 
(ix) Intellectual property rights 
(a) Overview  (p.145, paragraph 272)  
Q27. Please indicate the members and specific activities of the “Nati onal Working Group on 
Intellectual Property Rights and an Intellectual Property Tribunal”. 
 
(d) Trade marks 
 (p.149-150, paragraphs 286-290)  
Q28. We understand that there are four kinds of opportunities to apply for the recognition of a well-
known mark:   
 (a) an opposition process at the Chinese Trademark Office (CTMO);   
 (b) a cancellation process at the Trademark Review and Adjudication Board (TRAB);    (c) a process of trademark administration (i.e. enforcement) at the administrative 
authorities for industry and commerce;  and  
 (d) a trial by the people's court.   (1) Please indicate:  
 (i) concrete examples of materials require d to be submitted for the recognition,  
 (ii) recognition procedures, for each channel from (a) to (d). (2) Please provide statistics of each channel from (a) to (d) on the number of applications, recognitions and rejections of well-known marks by fo reign entities (including separate statistics for 
Japanese entities, only if available) and Chinese en tities for each year after the amendment of the 
Regulations for the Implementation of the Trademark Law in September 2002. 
(3) Please provide information on the number of cases per each year and the major reasons per each case after September 2002, for marks not bein g recognized as well-known even in the case that 
applications were made thr ough the above mentioned routes. 
(4) There are increasing concerns that trademar ks, which are well-known in countries other than 
China and unregistered in China, are improperly file d and/or registered as trademarks by companies in 
China without the genuine owners' permission.  In this regard, please provide information on whether 
any Chinese laws and regulations provide opportunities for the authorities to reject such an 
application or for the genuine owner to oppose or request invalidation of the trademark.   
(5) Please provide the length of time from the filing of applications to the initiation of the examination and the final decision regarding ex amination, opposition by the CTMO and appeal 
examination by the TRAB. 
(6) With regard to the cases where trade names similar to internationally well-known marks are 
registered abroad without the genuine owner's permission, and where those trade names cause 
confusion with the registered trademarks of Japanes e enterprises in China when used in China, please 
explain which laws or regulations are applied to cancellations, injunctions, claims for damages or 
demands for crackdowns by administrative bodies. 
 
(e) Layout-design of integrated circuits 
 (p.151, paragraph 294)  
Q29.  
(1)  Please explain the relationship between the “Bulletin of the IPR Case Meeting by National 
Courts on Several Issues Concerning the Application of the Law in the Trial of Technology Contract 
Disputes” circulated in 2001 (hereinafter “2001 Bull etin”) and the “Interpretation of the Supreme  WT/TPR/M/161/Add.1 
 Page 41 
 
 
People’s Court on Several Issues Concerning the App lication of the Law in the Trial of Technology 
Contract Disputes” issued in December 2004 (hereinafter “2004 Interpretation”).   (2) Japanese industry is concerned that Chinese lo cal authorities usually examine the contents of 
technology import/export contracts when applications for registration are made under Article 17 of the 
Regulation on the Administration of Import and Export Technology. Please confirm that the 
authorities will not examine the contents of contract s with regard to free import/export technology.   
(3) Regarding Article 24 of the Regulation on the Administration of Import and Export Technology, Please clarify whether this provision is mandatory or discretional.  Please also indicate whether the liability of the transferor can be waived  by an agreement between the parties concerned, 
as allowed by the provision of Article 353 of the Contract Law. 
(4) Regarding the provision of “liability for th ird party’s infringement” under Article 24 of the 
Regulation on the Administration of Import and Export Technology, does China has any plans to revise this provision according to the international trend.  
(f) Other IPRs  
(p.151, paragraph 295)  
Q30. Please provide the details and current status of the amendment to the Law to Counter Unfair 
Competition.  
(g) Enforcement 
 (p.153-157, paragraphs 302-313)  
Q31. Japan requested China to provide specific judicial decisions and administrative rulings 
("cases") of IPR enforcement that  China has identified for the years 2001 through the first half of 
2005 in various public statements, pursuant to Ar ticle 63.3 of the WTO Agreement on Trade-Related 
Aspects of Intellectual Property Rights ("TRIPS Agreement").  However,  China has not provided 
any information until now, passing the January 23 date that is the deadline for China.  Please provide 
these information as soon as possible. 
 
 (p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Application of Laws in Handling 
Criminal Cases of infringing Intellectual Property": (1) Japan hopes China to ease the criteria of pr osecution and to strengthen penalties against 
perpetual offenders. In this regard, please indicat e the views of the Government of the People’s 
Republic of China. (2) There was a "three strike" provision that referred to "not reaching these thresholds, but infringing IPR after having been subjected to the ad ministrative penalty twice before having negative 
impact" in Articles 61.4 and 63.3 of the "Provisions of the Supreme People's Procuratorate and the 
Ministry of Public Security Regarding Prosecuti on Standards for Cases involving Economic Crimes" 
issued in April 2001 ("old guidelines").  But in th e new judicial interpreta tion, there is no such 
provision.  Please explain the reason why the "three strike" provision has been deleted from the new 
judicial interpretation. Japan hopes that “three strike” provision will be reintroduced because this 
provision is effective in detering further infringement s. In this regard, please indicate the views of the 
Government of the People’s Republic of China 
(3) There was a provision that violators of a well-known trademark could be prosecuted 
irrespective of the amount of illegal sales or gains in Articles 61.3 and 63.2 of the old guidelines.  
However, Article 12.1 of the new Judicial Interpre tation stipulates that in principle “the value of 
illegal business of infringing goods shall be calculat ed based on their actual selling price”, thereby it 
would be very rare for well-known mark-infringing goods to be calculated with a value higher than 
the original goods.  In this regard, please explai n the reason why the former provision was deleted. 
Please also provide any actual examples where the va lue of illegal business, illegal income or sales of 
well-known mark infringing goods is calculated higher than that applied to usual cases. WT/TPR/M/161/Add.1 
Page 42  
 
(4) Please explain the reason why the prosecution st andard for enterprises is three times higher 
than that for individuals. (5) Please indicate any types of crimes other than IPR infringement for which a prosecution 
standard for enterprises, which is three times hi gher than that for individuals, is applied. 
(6) There seems to be some cases where the prosecution standards in the new judicial 
interpretation are higher than that in the old gu idelines (e.g. Article 3.1.1 of the new judicial 
interpretation).  Please explain why such a cha nge was made in spite of the commitment under 
China's Protocol of Accession. (7) Please explain how the provisions for "serious na ture" (e.g. in Article 1.1.3) and "especially 
serious nature" (e.g. in Article 1.2.3) in the new j udicial interpretation are interpreted and applied in 
actual cases.  Please also provide information of actual cases where such a provision is applied for 
prosecution, if any. 
 
 (p.153, paragraph 303)  
Q33.  
(1) Does China has any plans to strengthen the cooperation among relevant organizations when 
multiple intellectual property rights such as copyright, industrial design and trademark are 
simultaneously infringed as in the case of character goods? (2) Please explain the reason why “an increasing numb er of cases, especially for copyright, are 
being transferred to the courts”.    (p.153-154, paragraph 304)  
Most imitation agricultural chemicals are registered easily through the temporary registration system 
and are not only distributed broadly in China as a test sale but also exported to third-party countries.  The sale of agricultural chemicals in the temporary stage has also problems in  safety aspect, because 
the temporary registration system does not require so me toxicity tests for some chemivals.  Japan 
hopes that such temporary registration system and a t est sale based on this system will be abolished.   
Q34. In this regard, please indicate the views of th e Government of the People’s Republic of China. 
 
 (p.153-157, paragraphs 302-313)  
Q35. Concerning the statistics of the penalties for th e infringement of intellectual property rights:   
(1) Please provide statistics on administrative penalties for the infringement of intellectual 
property rights per each year since Chin a's accession to the WTO, including:   
(a) The number of administrative penalties requested by right holders; and  (b) The number of administrative penalties imposed, divided by administrative bodies, 
types of IPR infringed, provinces and types of penalties imposed. 
(2) Please provide the following statistics related to  criminal cases under Articles 213- 219 of the 
Chinese Criminal Law for each year si nce China's accession to the WTO:   
(a) The number of cases submitted by admini strative bodies to the prosecutor as 
deserving criminal prosecution; 
(b) The number of cases dealt with by the prosecutor directly as deserving criminal 
prosecution; 
(c) the number of cases that the prosecuto r actually prosecutes through the courts; 
(d) the number of cases that the right hol der himself/herself prosecutes through the 
courts; 
(e) The number of cases where criminal pena lties are imposed (sorted by fines, public 
surveillance, detention and fixed-term imprisonment); and 
(f) The number of cases where major penalties ( public surveillance, detention and fixed-
term imprisonment) and additional pe nalties (fines) are imposed together.  WT/TPR/M/161/Add.1 
 Page 43 
 
 
(3) In addition to the items in (2), please provide the following statistics for the first half of 2005: 
(a) The number of the cases which were pr osecuted on the volume of illegal business 
under the new judicial interpretation, including:   (i) The number of cases submitted by admi nistrative bodies to the prosecutor as 
deserving criminal prosecution;  
(ii) The number of cases dealt with by the prosecutor directly as deserving 
criminal prosecution;  
(iii) The number of cases that the prosecu tor has actually prosecuted through the 
courts; and  
(iv) The number of cases where criminal penalties are imposed and the types of 
penalties. 
(b) The number of cases which were prosecuted on the volume of illegal business by 
from 3 to 7 years of imprisonment (e.g. more than 250,000 RMB for forging registered trademarks by individuals) has applied, including:   (i) The number of cases submitted by admi nistrative bodies to the prosecutor as 
deserving criminal prosecution,  
(ii) the number of cases dealt with by the prosecutor directly as deserving 
criminal prosecution,  
  (iii) the number of cases that the pr osecutor actually prosecutes through the 
courts,  
  (iv) the number of cases where criminal penalties have been imposed and the 
types of penalties. 
 
(p.153-157, paragraphs 302-313)  
Q36. Concerning the application of criminal law: 
(1) Please identify whether only administrative pena lties are imposed (i.e. no criminal penalty is 
imposed) in cases where a trademark used is "similar " to a registered trademark (Article 52 of the 
Trademark Law) rather than "identical" (Article  213 of the Criminal Law) without the trademark 
owner's permission. (2) Please confirm that not only administrative but also criminal penalties were applicable in 
cases of service mark infringement.  Please also clarify which laws and regulations  are applied to such 
cases. 
(3) We understand that the provision on recidivists s tipulated in Article 65 of the Criminal Law is 
also applied to repeat IPR offenders.  Please e xplain how "heavier punishment" is defined (i.e. how 
many times heavier than penalties for first offenders ).  Please also provide the number of cases of IPR 
repeat offenders to which Article 65 of the Crim inal Law applies, and information on actual cases 
where "the heavier punishment" was imposed. 
 
(p.153-157, paragraphs 302-313)  
Concerning border measures, it is explained that th e storage fee or disposal cost deducted from the 
deposit of right holders can be compensated by way of repayment from the violator under Chinese laws.  However, the Japanese industry has concerns that it is very difficult to seek compensation from 
the violator for such a fee or cost in reality becau se the violator often disappears, the cost for civil 
action to seek compensation usually exceeds the storag e fee or disposal cost, etc.  We understand that 
the Chinese Customs realizes that the practice of as king right holders to pay for the storage fee or 
disposal cost impedes IPR protection and has made some efforts to alleviate the cost burden on right 
holders.   
Q37. 
(1) Please describe any plans to minimize the cost bur den of right holders in consideration of the 
above-mentioned situation in China. WT/TPR/M/161/Add.1 
Page 44  
 
(2) Please provide the number of cases of confiscation by Chinese Customs, and the volumes of goods confiscated, for the last three years, and pr ovide the number and volume of each confiscation 
that resulted in:   (a) transfer to a public welfare utility;   (b) ransfer to IPR owners in re turn for adequate compensation;  
 (c) auction of goods after removing the infringing characteristics; and  
 (d) destruction, as stipulated in the Regulation of the People's Republic of China on 
Customs Protection of Intellectual Property Rights. 
(3) Please provide Chinese Customs seizure statistics fo r the last three years,  separately by nature 
of IPR, countries of export (import seizure), and countries of destination (export seizure). 
 
 (p.153-157, paragraphs 302-313)  
Q38. 
(1) Please provide us with the rational basis for providing Y. 500,000 as the upper threshold of 
statutory damages.    
(2) Please describe any efforts made or planned to promote IPR protection in local areas and to 
educate local authorities in China.  
IV. Trade Policies by Selected Sectors 
(4) Manufacturing (iv) Automotive sector 
 (p.200-203, paragraphs 122-129)  
Q39.  
(1) As for the regulation system on minimum capital requirements for new entrants of automotive manufactures, this regulation seems to be an obstacl e to new entries into automotive industry.  We 
would like to know if China has plans to relax this regulation. 
(2) According to the Report by the Secretariat, in paragraphs 122 and 129, imports of motor 
vehicles could enter only through the ports of Dalian, Tianjin, Shanghai, Huangpu, Manchuria, 
Shenzhen (Huanggang) and Xinjiang Alashankou.  In this regard, please explain the reason why 
China keeps such a restriction and also indicat e the prospects for the further liberalization. 
 (p.202-203, paragraphs 128-132) 
Q40. 
(1) The “Automobile Industry Development Policy”  and the “Administrative Rules on Imports of 
Auto Parts with Features of Assembling Whole Vehicle” impose tariff rate for complete vehicles on auto parts, which are higher than those China conced ed for auto parts in its schedule of concessions.  
Please indicate the consistency of these regulations with Article II of GATT. (2) Paragraph 203 of the report of the Working Party on the Accession of China committed to 
comply fully with the TRIMs Agreement and elim inate local content requirements relating to 
importation. Despite this commitment, Articles 21 and 22 of the Measures on Importation of Parts for Entire Automobiles (Decree 125) make the applica tion of the lower duty for car parts dependent on 
whether imported car parts are assembled with  a significant proportion of domestic components. 
Failure to localize these components results in the application of a discriminatory tariff.  Some Japanese companies complain that under the Measures, too much time is needed for administering 
certificates for “assembled cars” and it may affect the manufacturing process.  These rules therefore 
appear to improperly condition tariff treatment on the basis of local content.  Please explain how these 
rules are consistent with the commitments made by  China in its Protocol of Accession and Working 
Party Report, Article III of GATT 1994 and the TRIMs Agreement. 
  WT/TPR/M/161/Add.1 
 Page 45 
 
 
(v) Electronic and communications equipment industry 
 (p.206, paragraph 141)  
Q41. According to the announcement made by th e National Development and Reform Commission 
on September 21, 2004, China has amended its po licy and system concerning the semiconductor 
industry.  It was said in the announcement that the governmental support for research, development 
and human resource development of the semiconducto r industry would be continuously provided for 
in the future.  Please provide detailed information of the current situation as well as future plans for 
this support. 
 
(5) Services 
(ii) Commitments under the General Agreement on Trade in Services 
 (p.207-208, paragraphs 146-149)  
Q42. Distribution is a key part of infrastructure in the service sector and its liberalization 
contributes to the development of Members’ economi es as a whole. The liberalization of distribution 
services is one of the issues of greatest interest issues to Japan. 
(1) What are China’s concrete steps towards fu rther liberalization of distribution services?  
(2) Does China have intentions to  make commitments on market access and national treatment in 
mode 1 of Commission Agents’ Services, Wholesale Trade Services and Retailing Services, as well as to make reductions in the existing foreign equity  limitations in mode 3 of Retailing Services?   
(3) With regard to the "Measures for the Admini stration of Foreign Investment in Commercial 
Fields", Japan recognizes that licensing requirement s in the measures are unclear.  Does China have 
any plans to announce the implementing regulations for this administration soon? 
 
(iii) Financial Service 
(a) Overview  (p.209, paragraphs 153-154)  
Q43. 
(1) Please provide detailed data on government ow nership in individual ba nks (SOCBs and JSBs) 
and insurance companies. (2) Please explain the policy objectives of the high degree of government ownership in the financial services sector.  Please also indicate if Ch ina plans to lower the degree of government 
ownership. 
(3) Please indicate how China intends to reduce NPLs.  
 
(b) Banking 
 (p.215, paragraph 167)  
Q44. Please explain why China limits foreign equity participation to a maximum of 20 percent for a 
single foreign investor in existing Chinese domestic banks. This limitation appears to be in conflict 
with China’s schedule of commitments where no lim itations on the foreign equity participation in 
joint banks are scheduled.  
 (p.218, paragraph 174, note299)  
Q45. Where does “the international five categor y classification system” come from? Please explain 
this category classification system. 
 WT/TPR/M/161/Add.1 
Page 46  
 
(c) Insurance 
 (p.221-224, paragraphs 187-198)  
Q46.  
(1) Can it be argued that China imposes on econo mic needs test on the issuance of licenses for 
insurance companies given that th e CIRC considers “the developmen t of the insurance industry and 
the need for fair competition” and gives priority to  applicants wishing to provide insurance services in 
certain areas or sectors?   (2) This appears to be in conflict with China’ s schedule of commitments which clearly states that 
a “license will be issued with no economic need s test or quantitative limits on licenses”. Please 
explain China’s efforts to improve tr ansparency in licensing procedures. 
(3) Please indicate whether China plans to rela x the Y 200 million minimum capital requirement 
for insurance companies.  (4) An aggregate foreign shareholding is perm itted up to 50% in China.  Does China foresee more 
liberalization regarding a single foreign shareholdi ng which is currently restricted up to 20%?  
(5) Please explain why foreign insurance instituti ons are not allowed to engage in statutory 
insurance business. Does China have any policy obj ectives with respect to this restriction which 
discriminates foreign insurance companies?  In addition, please provide detailed information on the 
existing laws and regulations that impose the restrict ion, and to indicate if China has plans to abolish 
the restriction.  
(d) Securities  
 (p.228, paragraph 212)  
Q47. Does China have any plans to further libera lize the cross-border trade in securities business as 
separate from B share business?  
(iv) Telecommunications Services 
 (p.232, paragraph 217)  
Q48. The "Telecommunications Law" which is a basic law on conducting telecommunications 
business is not yet to be constituted.  In order to facilitate telecom operators to enter and expand their 
business in the Chinese market, and to help the de velopment of their business in the Chinese market, 
does China have any plans to enact the "Telecomm unications Act" which is consistent with WTO 
rules and commitments soon?  Please also explai n the time schedule and outline that China is 
currently planning on this. 
 
 (p.232, paragraph 218)  
Q49. 
(1) Regulations on interconnections are est ablished along with the “Regulation on the 
Interconnections between Public Telecommunica tion Networks (Decree 9 of the Ministry of 
Information Industry)”. The scope defined in  article 2 of this regulation includes: 
 (a) fixed local network,   (b) domestic long-distance telecommunications,   (c) international telecommunications ,   (d) IP telephony,  
 (e) cellar mobile networks,  
 (f) mobile satellite networks,  (g) Internet backbone networks and   (h) other telecommunications networks specified by MII.  Please define in detail Internet backbone networks  and their scope, including whether Internet 
backbone networks connecting to th e foreign networks are included or not, and what networks and 
network apparatus are contained in inte rnational Internet backbone networks.  WT/TPR/M/161/Add.1 
 Page 47 
 
 
(2) It is stated in paragraph 218 of the Report by the Secretariat that the “Regulation on the 
Interconnections between Public Telecommunica tion Networks (Decree 9 of the Ministry of 
Information Industry)” stipulates interconnection. Leased circuit, frame relay and IP-VPN, however, 
seem not to be within the scope of interconnections stipulated in this regulation.  We recognize that 
China commits to all the provisions of the Referenc e Paper and the liberalization of domestic packet-
switched data transmission services.  Please indicat e which domestic law and regulations ensure the 
disciplines stipulated in the Reference Paper, incl uding cost-oriented rates and sufficiently unbundled 
interconnections. (3) Article 17 of the “Regulation on Telecommunications”, stipulates that the dominant service provider that has control over basic telecommunicati on facilities is defined as the carrier which should 
be subject to the specific regulations.  Please provi de the names of the operators applicable for the 
specific regulations above. (4) Under Article 18 of the “Regulation on Te lecommunications” and in Article 7 of the 
“Regulation on the Interconnections between Public  Telecommunication Networks (Decree 9 of the 
Ministry of Information Industry)”, dominant service providers are required to establish the 
interconnection agreement concerni ng the rates and process of interc onnection and to be authorized 
by MII.  Does China ensure the conditions committe d in the Reference Paper, including cost-oriented 
rates in the criteria of the standards in the author ization?  If so, please indicate the provisions for the 
grounds and the content of specific criteria in the authorization. (5) Do only dominant service providers have to  accept an interconnection request according to 
the authorized interconnection agreement of all th eir networks as stipulated on article 2 of the 
“Regulation on Telecommunications”?  Is it possible to agree upon the terms and conditions including 
charges, which are not subject to the authorized interconnection agreement? 
 
 (p.233, paragraph 219) 
Q50. 
(1) The “Provisions on Administration of Forei gn Invested Telecommunications Enterprises” 
stipulates the amount of the minimum registered cap ital that Y 2 billion requires for the basic telecom 
services operator providing services across the country or across different provinces, autonomous regions, and municipalities directly under the Central Government.  We have been informed that the 
answer before that China set up the regulation of  the minimum registered capital because of the 
protection of consumer and investor for such a cas e where it needs a huge amount of investment is 
required for installation of the telecom facilities. Me anwhile, we also received the answer that it is 
possible to provide basic telecom services on a re-sal e basis without installation of facilities.  Despite 
the fact that the amount of investment differs betw een whether an enormous amount of investment to 
install the facilities is needed and whether not so mu ch money is made on the re-sale basis, it seems to 
be not reasonable that the same amount of the mini mum registered capital is applied to both cases.  
Please explain the reason for this.  
(2) It is stated in paragraph 219 of the Report by  the Secretariat that befo re China acceded to the 
WTO, foreign investment was not permitted in telecommunication services.  Are there any sectors where foreign investment remains prohibited in tele communications services after the accession to the 
WTO?  (3) There is no reservation in the interna tional gateway for providing international 
telecommunications services in the Specific Commitment of Chin a, and we recognize that the 
international gateway was out of commitment.  Please explain the reason why China excluded the 
international gateway.  
 
 (p.235, paragraphs 227-228)  
Q51. 
(1) Does China have an intention to abolish r estrictions that foreign services suppliers can 
provide telecommunication services only through establishing joint venture enterprises? WT/TPR/M/161/Add.1 
Page 48  
 
(2) It is stated in paragraph 228 of the Report by the Secretariat that Cross-border supply appears 
to be subject to the same restrictions as for mode 3.   Please explain what this means.  Does this mean 
that it is required to provide services only through  the commercial presence which has the telecom 
license?  Or does this mean that it is required only to establish a commercial presence which is not 
required to have the telecom license in China when  the telecom services are provided under mode 1.  
Please specifically explain this point. 
 
(v) Transport  (p.242, paragraphs 252)  
On the occasion of the accession to the WTO, Ch ina enacted “the Regulations of the People’s 
Republic of China on International Maritime Transportation” which entered into force on 
1 January, 2002. According to the Regulations, any foreign shipping company that intends to engage 
in international liner services to and from China shall be registered with the Ministry of 
Communications. Article 17 of the Regulations provides that: 
To be engaged in international liner services,  an application shall be submitted to the 
competent communications department of the State Council; 
The competent communications department of the State Council shall complete examination 
and verification within 30 days from the date of  receipt of the application for international 
liner services.  If the application documents are authentic and complete, registration shall be 
granted and the applicant shall be notified of the result; 
If the application documents are unauthentic a nd incomplete, no registration shall be granted 
and the applicant shall be notified in writing and given the reasons therefore. 
On 27 April 2005, a Japan-Sino joint venture incorp orated under Japanese law applied to the Ministry 
of Communications for registration, according to th e provision of the Regulations, in order to start 
international liner services between Shimonoseki a nd Shanghai.  Even after 30 days had passed and 
thereafter, the Ministry did not notify the applican t of a result or any reason why the registration was 
not granted.  As a result, the Japanese company was not able to start the international liner services 
between Shimonoseki and Shanghai as originally scheduled.  
In China’s WTO commitments, no reservation was made  to the market access of mode 1 regarding the 
international maritime transport services including passenger transportation. Japan understands that 
market access for international maritime transport services of a foreign shipping company is 
substantially hampered by such action of the Gove rnment of the People’s Republic of China of not 
notifying the applicant of the result and the reason w ithin the 30 day deadline clearly stipulated in the 
Regulations. Japan believes that China should notify th e result of the review with the reason in written 
form and confirm not to repeat such process. 
Q52. In this regard, please indicate the views of th e Government of the People’s Republic of China. 
 
In China’s WTO commitments, when  a foreign company establishes a maritime transport company in 
China, foreign investment shall not exceed 49% of th e total registered capital of a joint venture.  We 
recognize that, based on the principle of reciprocity, if  there is a bilateral agreement with China, “the 
wholly-foreign-owned shipping compan y is permitted.”  In relation to this, "The interim provisions on 
examination and approval of wholly-foreign-ow ned shipping companies" provides a special 
arrangement for the establishment of a wholly -foreign-owned shipping company under special 
conditions including "more than 15 years experience as  a marine transport en terprise", "representative 
office in China more than three years", "the exis tence of a scheduled entering of a port where the 
wholly-foreign-owned shipping company is planned to  be located" and “the increase in paid-in capital 
of the wholly-foreign-owned shipping company each time it opens a branch.”  The third condition,  WT/TPR/M/161/Add.1 
 Page 49 
 
 
"the existence of a scheduled entering of a port where the wholly-foreign-owned shipping company is planned to be located", constitut es substantial barriers in the su pply of services for customers who 
reside in the supply inner part of China.   
Q53. Concerning this point, please indicate the view s of the Government of the People’s Republic of 
China, in particular, in light of Article VI.5 of the GATS. 
 
(p.243, paragraphs 258)  
Q54.  Regarding foreign equity limitations which are up to 49% for foreign investment in shipping 
agencies in China, are these limitations stipulated  in the “Regulations on International Maritime 
Transportation”?  If no, which regulation stipulates these limitations? 
 
ADDITIONAL QUESTIONS BY JAPAN
 
 
Report by the People’s Republic of China Secretariat (WT/TPR/G/161)  
I. MACROECONOMIC ENVIRONMENT 
 The Ever Deepening Reform and Opening up 
 (p.6, paragraph 9) 
According to the Report by the People’s Republic of China, Opinions on encouraging, supporting and 
guiding the development of the non-public sectors of  the economy such as the individual and private 
sectors  issued by the State Council, states explicitl y that all market access barriers affecting non-
public sectors should be removed. 
Q1. In this respect, are there any specific lists  for the existing barriers? If so, please provide all 
of the lists.  
 (p.6, paragraph 11) 
Q2. Please indicate specifically what “corpor ate governance structure” means.  Please also 
indicate any prospects for the estab lishment of corporate governance. 
 
 (p.6, paragraph 12) 
Q3. Regarding “multiple share holders”, please provide the specific breakdown of share holders, 
such as each rate shared by the government and by institutional investors. 
 
 (p.7, paragraph 13) 
The Report by the People’s Republic of China states that “support to underdeveloped regions 
increased.” 
Q4. In this respect, please indicate specifically what support is provided. 
  (p.7, paragraphs 16-17)  
Q5. Concerning exchange control and capital movement, please indicate future prospects, 
including timelines for them.  WT/TPR/M/161/Add.1 
Page 50  
 
 (p.7, paragraph 17)  
The Report by the People’s Republic of China stat es that “the RMB convertibility under the capital 
account has been increasing gradually.” 
Q6. In this regard, please indicate which me asures China has taken for increasing the RMB 
convertibility. Please also indicate how these measures have been effective. 
 
 (p.8, paragraph 23)  
Japanese enterprises have been continuously hoping that  abruptly changing or arbitrary application of 
rules in China will be improved soon.  Japan hopes th at China will further endeavour to ensure the 
transparency and predictability of  policies taken by the government. 
Q7. In this regard, please indicate the views of th e Government of the People’s Republic of China. 
 
  Difficulties and Challenges Confronting Development 
 (p.11, paragraph 37)  
In recent years, the regional economic disparity an d the disparity in individual incomes have been 
widening in China.  
Q8. Please indicate which measures China has ta ken for reducing these disparities. Please also 
indicate how these measures have been effective.  
II. TRADE POLICY DEVELOPMENT 
 Faithfully Implement the WTO Accession Commitments 
 Intellectual Property Rights 
 (p.14-15, paragraphs 56-66)  
We recognize that there are still many problems with  the enforcement of intellectual property rights.  
Q9. Concerning the improvement of the enforc ement of intellectual property rights, please 
indicate which measures specifically will be taken. 
 
 (p.14, paragraph 59)  
Q10. Concerning lines 2 to 9 of paragraph 59, please provide us with specific details of the 
"mechanism of legal enforcement whereby differe nt departments are coordinated in combating 
copyright infringement and piracy".  Please also  indicate specifically how this mechanism has 
been effective for combating copyright infringement and piracy. 
 
 (p.14, paragraph 59)  
Q11. With regard to “internet infringement “ in lines 7 to 8 of paragraph 59:  
(1) Are there any lawsuits concerning copyright infringement over P2P networks in China?   
(2) Is it illegal in China to download copies of works from P2P networks for private use as well 
as to upload them without permission by right holders?   
(3) If available, please provide the number of cases that ISPs have taken down for copyright 
infringement, based on the notifications of right holders.   WT/TPR/M/161/Add.1 
 Page 51 
 
 
 (p.15, paragraph 66)  
The Report by the People’s Republic of China states that “the Chinese Government is fully aware that 
like in all other countries the protection of intellect ual property rights is cons trained by the level of 
economic development and other conditions in reality.”   
Q12. 
(1) Please indicate specifically what “constrained by the level of economic development” means.   
In this regard, we believe that in fringement on intellectual property rights is a crime, just as theft or 
murder is a crime, and the level of protection sh ould not be changed according to the "level of 
economic development".  (2) In this respect, please indicate the views of  the Government of the People’s Republic of 
China.   
 
  Promoting Economic Cooperation with Developing Members 
 (p.18, paragraph 89)  
Q13. Does China maintain any import quotas ag ainst exports from LDC’s under the current 
preferential tariffs scheme? WT/TPR/M/161/Add.1 
Page 52  
 
PREGUNTAS DE CHILE
 
 
II. Régimen de la Política Comercial: Marco y Objetivos  
6) Régimen de Inversión Extranjera i) Evolución reciente de la Política de Inversión Extranjera 
 
1. En los párrafos 74 y 88 del informe de S ecretaria se establece que China proporciona un 
número de incentivos para los inversionistas extranje ros que es mejor que el trato nacional, como son 
menores impuestos a las utilidades  y “tax holidays”.  ¿Están estos incentivos sujetos al desempeño 
económico, tales como: la exportación de un cierto monto, el uso de componentes nacionales y la contratación de nacionales? 
 
ii) Marco y Procedimiento Legislativos  
 
1. De acuerdo a lo establecido en el párra fo 79 del informe, ¿existe un procedimiento 
establecido para modificar la Guía para las Industr ias con Inversión Extranjera?  ¿Existe una fecha 
fijada  para la próxima actualización? ¿Puede n los inversionistas y/o otros gobiernos hacer 
comentarios a las modificaciones realizad as, antes que éstas entren en efecto?  
 
2. Se establece en el párrafo 82 del informe que  los inversionistas de las categorías “permitidas” 
que exportan todos sus productos dire ctamente gozan del mismo trato preferencial concedido a los  
“Proyectos Alentados”. ¿Cuáles son estos beneficios adicionales? ¿Se pierden éstos beneficios si los 
requisitos no son cumplidos pa ra un año determinado?  
 iii) Procedimiento de Examen y Aprobación 
 
1. De acuerdo al párrafo 84 del informe, ¿cua ndo los proyectos de inversión presentados para 
aprobación son rechazados, existe alguna manera de solicitar la reconsideración de la decisión?  
¿Pueden los proyectos ser presentados posteriormente, y si es así, cuáles son los requisitos para hacerlo?  
 
iv)  Incentivos a la IED 
 
1. El párrafo 91 del informe establece que "Numerosas provincias proporcionan un servicio de 
ventanilla única a los inversores extranjeros, y cada provincia ha establecido un centro de promoción 
de inversiones".  ¿Incluye el trato brindado a las IEDs obtener los permisos necesarios, tanto a nivel 
local como nacional?  ¿Se pueden obtener benefici os tributarios por medio de estas agencias?  
 
III. Políticas y Prácticas Comerciales por Medidas 
2) Medidas que Afectan Directamente a las Importaciones 
i) Procedimientos 
1. ¿Cuál es el motivo(s) para que algunas mercancías, como las mencionadas en el párrafo 14 
del informe, estén exentas del pago de derechos?  
2. Según lo indicado en el párrafo 16 del inform e ¿Cuál es el motivo más frecuente del rechazo 
de solicitudes de apelación por parte de la Administración de Aduanas?  
ii) Aranceles 
1. De acuerdo a lo señalado en los párrafos 23 y 24 del informe, ¿cuáles son los productos que 
están sujetos a contingentes arancelarios y los pr oductos que tienen entre el 60% y 65% de arancel?   WT/TPR/M/161/Add.1 
 Page 53 
 
 
iv) Valorización de Aduana y Normas de Origen 
1. ¿Cuáles son los “criterios razonables” que permite n determinar la valoración en aduana que se 
mencionan en el párrafo 40 del informe? 
v) Restricciones a la Importación 
1. De acuerdo al párrafo 49 del informe, los productos sujetos a licencias de importación se 
publican anualmente por el Ministerio de Come rcio.  ¿Es posible tener acceso a esta nomina de 
productos en algún sitio Web? ¿Cuáles son los criterios  para  determin ar qué productos estarán sujetos 
a licencias de importación?  
ix)  Normas y Otras Prescripciones Técnicas  
1. ¿Existe un sitio Web donde esté disponible la to talidad de la reglamentación técnica de China 
en materia de importaciones y exportaciones? 
 2 En el párrafo 90 del informe se señala que  del número de  normas nacionales hay 13.000 
normas locales y 1,32 millones de normas empresar iales, pero que no se indica que proporción de 
ellas son obligatorias. ¿En el evento de existir normas obligatorias, puede aclarar los casos y la 
justificación para la  aplicación de normas técnicas obligatorias  “locales” y “empresariales”? 
 3. En el párrafo 91 del informe se indica que los productos que requieran certificación “CCC” 
(Certificación Obligatoria para China) están enumer ados en el Primer Catálogo de Productos Sujetos a 
Certificación Obligatoria. ¿Puede China señalar m ás detalladamente los procedimientos requeridos  
para agregar productos a esta lista , ya que por ejemplo en la pá gina mencionada en el anexo 
(http://www.ccc-mark.com/china-compulsory-certifica tion.html) se establece que los productos que 
requieren dicha certificación corresponden a los de l original “Primer Catálogo” más el catálogo 
adicional de productos de decoración / remode lación doméstica y el catálogo de productos de 
protección de la seguridad  anunciado por la CNCA? 
 
4. China procederá en el 2005 a un examen e xhaustivo  de su sistema de certificación 
obligatoria, CCC. ¿Podrían señalar los principales objetivos  de ese examen?  
 
5. Algunos países han recalcado problemas asoc iados a la incertidumbre respecto de la 
aplicación del trato nacional: poca claridad de los pr ocedimientos para las exenciones; productos de 
bajo riesgo que están en la  lista de productos que se exige certificación obligatoria, etc.  ¿Existe 
alguna instancia entre los reguladores en que se reún an constantemente, para analizar y coordinarse 
respecto a Obstáculos Técnicos al Comercio?  6. ¿Cuál es el procedimiento de notificación a la OMC y manejo de comentarios respecto de proyectos de reglamentos técnicos y/o proced imientos de evaluación de la conformidad? 
 
7. En el párrafo 93 del informe se indica que lo s Organismos de Certificación acreditados con el 
objeto de velar por el cumplimiento de las nor mas, realizarán cada 12 meses inspecciones de 
seguimiento de las instalaciones de producción de  las industrias manufactureras. ¿Esta inspección se 
realizará solamente en China? ¿E sta inspección implica algún beneficio en términos de la facilitación 
del ingreso de las mercancías?  
 WT/TPR/M/161/Add.1 
Page 54  
 
3) Medidas que Afectan directamente a las Exportaciones 
i) Procedimientos 
1. En el párrafo 124 del informe se indica la  existencia de un catálogo de mercancías de 
importación y exportación  sujetas a inspección reglamentaria, que es publicado anualmente por AQSIQ. ¿Dónde se puede encontrar dicho catálogo?  
viii) Medidas Antidumping y Compensatorias  
1. En relación  a lo señalado en el párrafo 66 del informe, ¿porqué razón dos agencias distintas 
se ocupan de la determinación de  dumping y de la determinación del daño, respectivamente, 
especialmente si luego ambas deben coordinarse pa ra establecer el vínculo causal entre uno y otro 
elemento? A su turno,  si el bien investigado es ag rícola y en la determinación de daño participan el 
Ministerio de Comercio y el Ministerio de Agricu ltura ¿significa esto que el informe de Agricultura es 
determinante o sólo se trata de un documento en que  se deja constancia de la opinión de dicho  
Ministerio?   2. El informe de Secretaría indica en el párra fo 67  que las autoridades pueden poner término a 
la investigación sobre la  existencia de dumping, en tre otros, si la investigación  va en contra del 
interés público y/o nacional. ¿En qué consiste ese la  investigación sea contraria al interés público? 
¿En esta materia, las partes tienen oportunidad de proporcionar antecedentes al respecto?  ¿El interés 
público se considera también al momento de decidir la aplicación de una medida y/o su monto? ¿Al 
momento de definir el monto de una medida, est a se rige por la “regla del menor derecho”?  
 
3. De acuerdo a lo señalado en el párrafo 68 del info rme, para la extensión de la vigencia de un 
derecho provisional antidumping, se requiere la ex istencia de una “circunstancia especial” que lo 
justifique, como por ejemplo, la  existencia de casos que abarcan  varias categorías de productos que 
hagan compleja la investigación. ¿Tal ejemplo ha sido establecido por la ley o se trata de una 
explicación dada por la autoridad de acuerdo a la práctica?  
 
4. El criterio de la existencia  de una ‘circunstancia especial’ ¿es igualmente válido para   
extender el plazo de investigación hasta el máximo de 18 meses?  5. El ejemplo utilizado de las ‘diversas categorías de productos’ pareciera indicar que una investigación se conduciría para una amplia gama  de productos. ¿Cómo se concilia esto con  el 
concepto de “producto similar”?  
 6. De acuerdo a lo señalado en el párrafo 78 de l informe, en materia de salvaguardias se utiliza 
el mismo criterio de los casos de antidumping en cu anto a las investigaciones a productos agrícolas y, 
por lo tanto, participa el Ministerio de Agricultura  en la determinación del daño. ¿Puede China señalar 
si  esta misma situación ocurre en los casos de  investigación por derechos compensatorios? 
  WT/TPR/M/161/Add.1 
 Page 55 
 
 
QUESTIONS BY AUSTRALIA  
 
Tax Reform 
 1. We welcome the intention of the Government of China to undertake a major restructuring of 
the tax system (paragraph 30 on page 17 of WT/TPR/S/161).  
a)  What is the nature of the changes that are planned? 
 
2. We refer to exemptions from payment of VAT extended to producers of unprocessed 
agricultural, forestry and fisheries products (para 197 on page 119 of WT/TPR/S/161).  
a) Will the planned restructuring of the tax system address the imposition of VAT on  imported goods where VAT is not imposed  on the internal sale of domestic like 
 products? 
 
Tariff Rate Quotas 
 
3. Tariff rate quotas (TRQs) are applied to im ports of a number of products, reduced recently by 
the elimination of the arrangements for vegetable o ils.  We note, however, in relation to a number of 
the remaining TRQs imports have been at relatively low levels and TRQ administration has in some 
instances been burdensome and lacked transparency.  
a) We would welcome an indication of the G overnment’s intentions in relation to the 
 reform of the remaining TRQ arrangements. 
 
Import Licensing 
 
4. We welcome the notifications made by Chin a in relation to its import licensing regimes. 
 
a) Could China affirm that all products su bject to import licensing under the categories 
of import licensing used in China for the y ear concerned will henceforth be listed in 
its notifications? 
 
b) Could China provide an advance indicati on of the category of import licence (e.g., 
automatic or other (non-automatic)) for wh ich import licensing regimes are operated 
in relation to the following products: 
 
i. Iron ore. 
ii. Alumina. 
iii. Copper. 
 
c) Could China provide details of the import licensing regimes – including, for example, 
the nature and purpose of the measures implemented by the import licensing regime and the applicable restrictions on eligib ility to receive import licenses – that are 
operated in relation to the following products: 
 
i. Iron ore. 
ii. Alumina. 
iii. Copper. WT/TPR/M/161/Add.1 
Page 56  
 
Customs Valuation 
 
5. We welcome China’s requirement for the de termination of customs value primarily on the 
basis of transaction value (para 40 on page 74 of WT/TPR/S/161).  The experience of some Australian 
exporters, however, is that transac tion value is not always the primary basis for customs valuation at 
all points of entry of goods into China. 
 
a) Will China ensure the uniform application of this requirement? 
 
Conformity Assessment 
 
6. In the context of Article 6.1 of the TBT Agreement and paragraph 194 of the Working Party Report on the Accession of China to the WTO: 
 
a) Could China advise what progress it has made in recognizing competent conformity 
assessment bodies in other WTO member countries? 
 
b)  Could China provide information on the ex tent to which it accepts the results of 
conformity assessment undertaken by bodies in other WTO member countries? 
 
c)  Could China advise what steps are being ta ken to increase the extent to which it 
accepts such results? 
 
Sanitary and Phytosanitary Measures 
 
7. We refer to the view expressed by the WTO Secretariat that China’s SPS regime and SPS 
inspection procedures for imports are complex a nd not clear (para 12 on page xi and para 4 on 
page 60 of WT/TPR/S/161).  
a) Could China provide information on re forms that are planned to address this 
problem? 
 
8. We welcome the steps taken by the central Government to remove internal barriers to 
trade between the provinces.  
a) Could China confirm that laws covering internal trade (such as the Law Countering 
Unfair Competition ) require the free trade of im ported products across provincial 
boundaries? 
 
b) Could China provide advice on legislati on aimed at ensuring provincial compliance 
with central Government sanitary and phytosanitary requirements for imported products? 
 
c) Do provinces currently apply any sanitary or phytosanitary restrictions to trade 
between themselves, eg pest free areas? 
 9. We note that under the Administrative Measures on Examination and Approval of Entry 
Animal and Plant Quarantine,  import permits are valid for 6 months and only for that calendar year 
(para 98 on page 92 of WT/TPR/S/161). In some case s this will mean import permits are valid for less 
than 6 months.  
a) Could China please indicate its justificati on for the calendar year limitation in place 
for import permits? 
  WT/TPR/M/161/Add.1 
 Page 57 
 
 
10. Australia acknowledges China’s need to estab lish SPS measures to protect its human, animal 
and plant health status while e xpanding its participation in global agricultural trade.  While we 
congratulate China on its efforts to bring its SPS me asures into conformity with its WTO obligations, 
we urge China to do so in a manner that  minimises disruption to existing trade. 
 
11. We note that expiration/renewal clauses have  been included in recent import protocols for 
Australian agricultural (most notably horticultural)  commodities.  We seek clarification of China's 
policy in relation to expiration/renewal of import protocols, in particular: 
 
a) Are such clauses included in all import protocols for commodities from all countries? 
 
b) Does China intend to include such clauses in all import protocols negotiated in the 
 future?  
 
c) What is China's rationale for incl uding such clauses in import protocols? 
 
12. We welcome China’s announcement thr ough a series of SPS Notifications (dated 
24 October 2003, 13 February 2004 and 3 October 2005)  of its intention to establish standards for 
maximum residue limits for pesticid es and contaminants in food.  However, we are concerned by the 
lack of transparency with regard  to the implementation and enforcement of these new standards, and 
have a number of questions: 
 
a) Have the maximum residue limits no tified to the WTO been implemented? 
 
b) If these standards have been implemented,  what enforcement mechanisms apply in 
 the event of detection of residue above these standards in imported food? 
 
c) Could China advise of any differences be tween Central Govern ment and Provincial 
Governments in the enforcement of residue standards? 
 
d) Where a maximum residue limit has not been established for a pesticide or 
contaminant, what standard will apply? 
 
e) Where the standards notified to the WTO have not been implemented and enforced, 
we would be grateful for advice of the current standard for maximum residue limits of pesticides and contaminates in food that applies. 
 
f) What are the domestic regulations in place for residues in domestic food? 
 
Subsidies 
 
13. We encourage China to provide its notifica tion under Article 25.1 of the SCM Agreement as 
soon as possible, if it has not done so already. 
 
Support for the agriculture sector 
 
14. We encourage China to provide its notificati ons on support for the agricultural sector as soon 
as possible (para 37 on page 172, and Table AII.3, of WT/TPR/S/161), if it has not done so already. 
 
15. Pursuant to the submission of notificati ons on support for the agricultural sector and 
paragraph 238 of the Working Party Report on China’s Accession to the WTO (WT/MIN(01)/3 of 
10 November 2001), we look forward to an early opportunity for China to clarify issues regarding methodology in relation to the classifica tion of its domestic support policies. 
 WT/TPR/M/161/Add.1 
Page 58  
 
a) When does China consider that such a clarification exercise could commence? 
 16. We refer to the introduction by China of ne w direct subsidies in the agriculture sector 
(para 20 on page xiii, para 18 on page 166 and para 39 on page 17 4 of WT/TPR/S/161). 
a) We would welcome a more detailed  description of the new support measures 
implemented over the last two years, and an explanation of the rationale for these new 
policies. 
b) We would also appreciate information on plans for introducing additional measures 
of this nature in the future. 
Services 
17. We would be grateful for details of any plan s China may have to raise the current ceiling on 
foreign equity ownership of stakes in rural financ ial institutions, as reported recently in the Chinese 
media.  We would appreciate details of any regu latory developments in this regard or policy 
announcements to this effect.  We would also be grat eful to hear from China what implications such 
developments may have for wider reform of the fi nancial services sector in China, including whether 
there are any plans to raise foreign equity limits on investments by foreign banks in other types of 
financial institutions in China.  
18. We are aware that there have been several important regulatory developments in the Chinese 
construction sector since China’s accession to the WTO and that a new Construction Law is being drafted.  Would China indicate when the draft Construction law is likely to be promulgated? 
19. In light of recent regulat ory developments, could China please clarify whether foreign 
invested companies may qualify as costing agenci es, supervision entities, tendering agencies or 
surveying entities under the Ministry of Construction (MOC) Decree 200 for the purposes of providing project management services?   
20. We would be grateful if China would indicate whether it contemplates providing any avenues 
for foreign project management providers with speci alised experience and expertise to provide project 
management services in specialised fields on a project-specific basis, without the need to qualify as a 
design or construction company under MOC Decrees 113 and 114 respectively?  
21. We recognize that China’s WTO commitments and subsequent reforms support the gradual 
opening up of China’s transport and logistics sector s to foreign service suppliers.  We would welcome 
additional information on China’s policies and regul ations relating to freight logistics and the 
development of the logistics industries in China since China’s accession. We would be grateful if 
China would indicate: 
a)  how many foreign investment projects have been established under the “Notice 
Relating to the Launch of Pilot Projects for the Establishment of Foreign Invested 
Logistics Enterprises ” issued by MOFTEC (now MOFCOM) with effect from 
July 20, 2002; 
b) in light of China’s approach to gradually opening the transport and logistics sector, 
whether it plans to expand the trial areas in which foreign invested companies may be established under the Notice and/ or raise the current 50% cap on foreign equity 
ownership.   
Legislative Reforms 
 22. When does China expect that its draft Co mpetition Policy Law and draft Telecommunications 
Law will be promulgated?  WT/TPR/M/161/Add.1 
 Page 59 
 
 
QUESTIONS BY NEW ZEALAND  
 
1. Economic environment    (WT/TPR/S/161, page 9, para 12) 
 The Secretariat reports that agriculture accounts fo r a declining share of China’s economic activities 
(“13% of GDP”), but “makes the biggest contribu tion to employment, some 44% in 2002”.  Premier 
Wen Jiabao has recently indicated that the govern ment plans to boost agricultural production and 
improve rural living standards.  Can China outline what policy changes it has in mind here? If it is 
considering subsidies and/or incentives for rural produc tion, what measures will  China take to ensure 
that these are, at most, minimally trade-distorting?  
 
2. Economic environment
   (WT/TPR/S/161, page 17, para 29/30) 
 The Secretariat notes that “domestic enterprises are subject to a statutory income tax rate of 33%, FIEs (foreign invested enterprises) operating in sp ecial economic zones and other zones enjoy reduced 
rates of 15% and 24%”.  It further notes that there are indications that “the authorities may unify the 
dual enterprise income tax system”.  Can China confir m whether or not it has plans to do so, and if it 
does, is it in a position to indicate the time frame in which such a change may occur and what it will 
involve?  
 
3. Trade policy regime: framework and objectives
 (WT/TPR/S/161, page 29 para 2) 
 
The Secretariat notes that “new regulations and rul es are ... being issued on a regular basis to keep up 
with changing economic needs and internationa l commitments” but comments that “while new 
policies and institutions are being drawn up cont inuously, older ones are only partially amended, 
resulting in new institutions being added or appended to the old ones”.   How does China propose to 
streamline the regulations and rules to ensure clarity and transparency, and consistency of 
interpretation at all levels within the system from local to national? 
 4. Trade policies and practices by measure: SPS
 (WT/TPR/S/161, page 60 para 4) 
 The Secretariat observes that “examination and approv al procedures at the border are not clear”.  The 
SPS Agreement requires Members to achieve consistenc y in the application of their appropriate level 
of protection.
  Does China acknowledge that there are differi ng interpretations of central government 
policy by local border inspection teams?  Is it de veloping a strategy to improve understanding and 
ensure consistency of policy in terpretation across all regions? 
 WT/TPR/M/161/Add.1 
Page 60  
 
QUESTIONS BY THE REPUBLIC OF KOREA
 
I. Trade Policies regime Transparency  (WT/TPR/S/161, p. 37, para.27
) 
1. Although the enforcement and amendment of regulations are informed through local media 
and websites, they are done so sporadically. Th ese announcements do not cover the whole content and 
are often informed after the enforcement has alrea dy taken place. Therefore, it is very difficult to 
obtain sufficient information on regulations in a time ly manner. In addition, all legal publications are 
written in Chinese with no English version available.  Therefore, foreigners who are not familiar with 
the local language has very limited  access to legal information.  
- Does the Chinese government have any fu ture plans to improve the practices 
mentioned above? 
2. There are occasions where an investment pl an, which is already approved by the local 
approving office, is refused by the registration o ffice and being required to resubmit such plan with 
modifications. 
- Does the Chinese government have any future plans to improve the consistency and 
cooperation among administrations? 
II. Trade Policies and Practices by Measure 
Customs procedure  (WT/TPR/S/161, p.62-63, para.12, para 15)  
3. Import declaration must be made to customs at  the port of entry within 14 days of the goods 
arrival. In case of delay in declaration, a fine of 0.5% of the total amount of the goods arrival value is 
charged per day.  
- Does the Chinese government ha ve any future plans to revoke the fining policy, or to 
decrease the fining rate? 
4. In case of importing medicines, cosmetics and medical instruments, the Chinese Customs 
request excessive samplings for examination pur poses, thereby detaining the customs procedure. 
- Since China's accession to WTO in 2001, w hat kind of progress in customs procedure 
has the Chinese Customs made, especially in  the field of medicines, cosmetics and 
medical instruments importation? 
Customs valuation (WT/TPR/S/161, p.74, para.40)  
5. In principle, customs value is determined  by Customs on the basis of transaction value. 
However in case of automobiles and some other goo ds, the Chinese Customs determines such value 
not by basing on transaction value, but by Customs' own standards, thereby, often resulting in excessive customs duties. 
 - Only in case where it is not possible to determine the transaction value, the customs 
value should be determined by exceptional  standards. What is the basis for using 
exceptional standards? Please clarify the pro cedure related to determining customs 
valuation.   WT/TPR/M/161/Add.1 
 Page 61 
 
 
6. Foreign companies located in inland China prefer to undergo import declaration of their goods at the port of their inland destination by ut ilizing bonded transportation rather than declaring 
their goods at the port Customs.  However, on some imported goods including automobiles, the 
Chinese Customs puts restrictions to the bonded tran sportation, and requires customs clearance at the 
port Customs, therefore increasing business cost  and time. The Chinese Customs in the bonded 
transportation of some regions de mands documents showing the inland destination customs' approval. 
This results in delay at the bonded tran sportation as well as in customs procedure. 
 - Does the Chinese government have any fu ture plans to lift the restrictions on the 
bonded transportation or simplify the related procedures?  
Standards and technical requirement s( (WT/TPR/S/161, p.91, para.91)
 
7. Telecommunication equipments and devices e xported to China are required to receive a 
Network Access License, and some of the items are also required to receive the China Compulsory Certificates. 
 - Does the Chinese government have any opinion on the integration of the two 
licenses?  
Government procurement (WT/TP R/S/161, p.98, para.120-121)
 
8. China has tried to improve its government pr ocurement system by becoming an observer to 
the GPA since 2002 and participating in the APEC Government Procurement Expert Group meeting.  
- Please explain the measures, if any, the Ch inese government has taken to ensure the 
transparency stipulated in Article XVII of  WTO GPA and provide the information on 
the areas of government procurement allo wed for foreign companies, the procedures 
for foreign companies' participation and media of announcement for international 
tendering.  
- In addition, could it be possible to explain at which point the Chinese government 
intends to actually begin the negotiations to become a member country of the GPA?  
Income tax (WT/TPR/S/161, p.121, para.201)  
9. Recently, there are widespread voices in Chin a on the issue of unification of "Income Tax 
Law for Domestic Enterprises" and "Income Tax La w for Foreign Enterprises", which result in the 
same application of tax rate to domestic and forei gn enterprises.  If the two laws are unified and the 
tax preferences for foreign enterprises are abolishe d, this may not only cause financial difficulty for 
the established foreign enterprises in China but also  provide negative influen ce on a foreign enterprise 
wishing to invest in China. 
- Even if the two laws are to be unified, it may be necessary to provide a grace period 
for foreign enterprises to get adjusted to  the new system. What is the position of 
Chinese government regarding this issue?  
Intellectual property rights (WT/TPR/S/161, p.153-157, para.302-313)  
10. Although there has been a series of drives to regulate the infringement of Intellectual Property 
Rights in China, there are still many cases that bring about a suspicion of the effectiveness of this 
control. For example, some authorities still refuse  to open the documentary evidence of confiscation 
of the goods suspected of infringement. WT/TPR/M/161/Add.1 
Page 62  
 
 - Please explain what kind of actions the Chinese government has taken to effectively 
control the infringement of Intellectual Property Rights in China?  
11. There seems to be a great need for the Ch inese government to reinforce protection on trade-
mark and design of foreign products such as mobile phones.  
 - What are the Chinese government's current measures and future plans related to this 
protection?  
12. When a certain amount of financial losses is in curred from copyright violation, the violator is 
subject to criminal penalties.  
 - What is the method of estimating th e amount of financial losses and what are the 
thresholds?  
13. It seems that it is necessary for the Chinese gove rnment to increase its efforts to protect the 
online IPR by cracking down piracy of online games and provision of online game services 
without license.  
 - Please explain the current administrative measures and any future plans to improve 
the present situation.  
III. Trade policies by sector  Financial services : Banking services(WT/TPR/S/161, p.219, para.178)
 
14. According to paragraph 178, the minimum as set requirement for establishing a subsidiary or 
joint-venture of a foreign financial institution is di fferent from that for opening a branch of a foreign 
financial institution.  
 - In this regard, is there any different treatment in terms of business operation or 
financial supervision?  
15. Paragraph 178 also states that a foreign financial institution should satisfy additional 
conditions in order to engage in local credit business.  
 - Please explain what is the local cred it business in terms of its business scope?  
Financial services : Insurance Services(WT/TPR/S16, p.233, para.194)  
16. Paragraph 194 indicates that no limitations ar e imposed on consumptions  abroad(mode 2) for 
insurance services except for brokerage.  
 - In case of mode 2, how are consumers protected from financial frauds or related 
risks? 
 - Is there any preliminary MOU signed in advance between the CIRC(China 
Insurance Regulatory Commission) and fo reign supervisors for this purpose?  
Financial Services : Securities Servic es (WT/TPR/S161, p.228, para.212)  
17. Paragraph 212 indicates that China's securities ma rket is relatively more  restricted than the 
insurance or banking sector.   WT/TPR/M/161/Add.1 
 Page 63 
 
 
 - Does the Chinese government  have any future plans for an additional opening of 
securities market?  
Financial services: Telecommunication Services)  (page 233, para 219)  
18. The minimum registered capital requirement of Y 2 billion for enterprises providing basic 
telecom services across the country (Y 200 million for local services) appears to be excessively high.  
 - Does the Chinese government have any fu ture plans to reduce such burdensome 
capital requirements?  
19. Please provide the information relate d to on line game on the followings:  
 - Censorship or contents review proce ss for foreign online games to be serviced in the 
China 
 - Review agencies in charge of such review and the review criteria  
 - The time required for the co mpletion of the review process  
 - Differences between foreign and domestic gam es in terms of review process, review 
agencies, review criteria and review time required  
 - More detailed information such as relevant laws and regulations  WT/TPR/M/161/Add.1 
Page 64  
 
QUESTIONS BY INDIA
 
SPS Norms and Trade Facilitation  
Q.1. Agricultural products  
Indian agricultural products including fruits, vegeta bles and rice have been facing a range of non-trade 
barriers in accessing the Chinese Market. It has ta ken China 3 years to finalize the protocol on 
mangoes. In the case of grapes and bitter gourd only  the initial protocols have been signed and 
certification of orchards, etc., still remains to be done. Further we understand th at Chinese procedural 
guidelines for imports of fruits and vegetables from some other countries are not the same, and rice, 
fruits and vegetables from some countries are imported without signing SPS Protocols, whereas it is made applicable on imports from India. China has also refused to process more than one fruit or 
vegetable at a time for PRA. This has slowed dow n the process considerably and made it arbitrary. 
Will the Chinese authorities clarify the procedure followed and ensure that  Indian agricultural 
exporters receive MFN treatment? 
Q.2 Fishery products and sesame seed:
 
In the case of exports of fishery products and ses ame seeds from India to China, India has been 
pursing with the Chinese Quarantine authorities to make  available the technical standards required to 
be met by exporters with a view to ensuring full compliance with Chinese standards and stop sub-
standard consignments. We  have been provided only the general law without giving details of specific 
standards that Indian exporters should meet. Would China take steps to ensu re that their technical 
standards which are required to be met by export ers of fishery products and sesame seeds are made 
available? 
Q.3 Indian Dairy products:  
Indian dairy products entering the Chinese market re quire approvals that are not product specific but 
are given exporter wise. When India sought approval  of Chinese Quarantine authorities  for Indian 
Skimmed Milk Powder (SMP), Whey Protein C oncentrate (WPC) and other products, the Chinese 
authorities agreed only to give exporter specific approvals. Will the Chinese authorities clarify the 
position? 
Q.4 Indian Bovine meat and relat ed processed products (Gelatin):  
These products are not allowed entry into the Chin ese market because of Foot and Mouth Disease in 
India. Chinese quarantine authorities are not prepared to consider the fact that  Indian exporters’ 
overall disease management and processes employed in  food processing ensure that the product, as 
also the surroundings in which the product is processed, are free from FMD. The import of gelatin 
from India remain banned in China. Chinese author ities are not willing to accept Indian bovine meat 
and related processed products even when the di sease management in India is as per international 
scientifically accepted procedures and standards. W ould China take urgent steps to allow market 
access to Indian Bovine meat and related products? 
Q.5 Certification requirements for consumer durables:   
Compulsory certification measures is a major NT B in accessing the Chinese market.  Certification 
remains a difficult, time-consuming and costly pr ocess for certain commodities that are of potential 
interest to India. 
In many cases, foreign companies’ products can only be tested at certain laboratories, and results from 
other competent authorities are unacceptable. The ce rtification process in many cases involves on-site  WT/TPR/M/161/Add.1 
 Page 65 
 
 
inspection of manufacturing facilities outside the count ry, the cost of which is borne by producers. 
This has a specific impact on export of Indian pharmaceutical and cosmetics. 
The costs as well as delay involved in compulsory certification measures are further escalated, as 
foreign manufacturers’ self-certification of conforma nce to standards is not acceptable for certain 
products. Products are required to be tested in  designated laboratories in the country. The 
manufacturing facilities are required to be inspected and certified before products can be certified for 
import into China. In addition, annual follow-up  inspections are carried out and these are time 
consuming and costly for producers and therefor e, discourage imports. Will the Chinese authorities 
streamline the certification process for export of consumer durables and establish necessary 
equivalence in standards and allow sel f certification by the exporting country? 
Q.6 Import licensing restrictions on imports of Iron Ore:   
In February, 2005 the Chinese Ministry of Commerc e notified a plan to implement Automatic Import 
Permit Management System for Iron Ore from 1st March, 2005. This marked a change in Chinese 
policy on imports of iron ore, which were hitherto not subject to any permit or licensing system. In a 
meeting with the Chinese Ministry of Commerce in February, 2005, India had specifically asked 
about the criteria and the modalities of the implemen tation of the Import Permit Management System 
but no satisfactory reply was received. The Indian industry apprehends that through this notification, 
Chinese Government has restricted import licenses to  48 traders and 70 steel producers. The list of 
these traders and steel producers has not been made public so far. Would China clarify its position on 
Automatic Import Permit Management System for Iron ore since it is a major NTB faced by Indian iron ore exporters? 
Q.7 Restrictions on the export of metallurgical coke from China to India:
  
In 2004, Chinese restrictions on expor ts of met coke (a key input in steel production) began to have an 
adverse effect on Indian steel producers. It is lear nt that out of a total production of 210 MT in 2004, 
only 8.3 MT was allowed for exports, compared to 14.3 million in 2003 resulting in substantial 
increase in price.  Additionally through an internal administrati ve order only seven Chinese Coke 
Producers/Trading Companies could export met coke to India. In the middle of last year, one of the 
Chinese government officials was quot ed as saying that effective 1st January, 2006, coke export quota 
system would be eliminated. However, according to the Chinese customs tariff book coke exports 
from China still require export licenses, although no specific information on quotas for 2006 is 
available.  Would China take step s to lift quota restrictions on the met coke including restriction on 
number of Chinese coke producers and trading compan ies to ensure smooth export of met Coke by 
Chinese exporters? 
Q.8 Pharmaceutical imports from India and distribution in China:   
The process of drugs and pharmaceuticals registration in  China is long, and expensive. Both Indian 
exports of drugs and pharmaceuti cals and manufacturing operations of Indian pharma companies in 
China suffer on account of this. Even when the pro duct has been registered, there are administrative 
barriers to the domestic market. Procedures for provi ncial entry and hospital entry are different in 
each province so that for each product exported the company has to separately bid for each province 
separately. Further, the time frame for periodic bi ddings is different in each province. If a company 
has been successfully bidding in any province for, say, the last four years and then is not able to bid 
successfully in the fifth year, it has to start fresh  entry procedures for the province and the hospital 
from the sixth year. It is also understood that Ch ina still requires foreign pharmaceutical companies to 
hire Chinese importers to bring their finished pr oducts into the country. These measures act as NTB’s 
against Indian exports. Would the Chinese author ities like to take necessary remedial measures? WT/TPR/M/161/Add.1 
Page 66  
 
 Import of Books, Magazines & Periodicals
 
Q.9 Trading Rights:  
China has thus far not implemented its trading rights in so far as they relate to importation of books, 
newspapers and magazines.  According to Chin a’s accession agreement to WTO, China’s trading 
rights for books, newspapers and magazines should have been auto matically available to Chinese 
enterprises, Chinese-foreign joint ventures, wholly foreign owned enterprises and foreign individuals 
as of December 11, 2004. Nevertheless so far only State trading enterprises are allowed to import books, newspapers and magazines in China. This is a restrictive provision and impinges on possible 
exports of Indian books, magazines and periodical s to the Chinese market. Would China agree to 
immediately abide by its accession commitment? 
VAT Refund
 
Q.10 VAT Refund on imported components:  
VAT refund on imported inputs can take up to one year in China as against a monthly refund on local 
inputs. This clause favours local companies and is violative of National Treatment clause. Would China remove this anomaly? 
Services:
 
Q.11  The Global Delivery Model requires companies to execute projects in multiple countries 
simultaneously for a client. A branch structure facilitates the Global Delivery Model through easier 
movement of people and better contract structuri ng. It is understood that in China only financial 
institutions are presently allowed to operate on a bran ch structure. However, there are several Indian 
IT companies who would like to operate in China on a branch structure. Would the Government of 
China review this policy and permit Indian IT companies to operate on a branch structure? 
Q.12  China has placed restrictions on opening of ne w offices by an insuran ce company. This is 
because the license granted is on provincial basis ra ther than on an All-Ch ina basis. Would China 
consider reviewing this condition? 
Q.13  China has placed a condition that license will be  granted to only those foreign insurance 
companies which: 
(i) have more than 30 years of establishment experience in a WTO member;  (ii) have a representative office for two consecutive years in China; and  
(iii) have total assets of more than US$ 5 billion.  
These conditions are very stringent.  Would China consider relaxing the conditions? 
Q.14  Foreign vendors are not permitted to bid for the IT security market since these are 
Government backed projects.  On the other hand, do mestic companies can take up such projects.  This 
extends to telecom and financial companies, which constitute a huge chunk of the IT security market.  
Most of these companies are state owned or state b acked.  Will China review this violation of national 
treatment and permit foreign vendors to participat e in bidding process for Government backed IT 
security market?   
Q.15  The Chinese Government has strict control on research, manufacturing and marketing of 
security related products through several certifi cate approval processes.  Foreign vendors are not  WT/TPR/M/161/Add.1 
 Page 67 
 
 
encouraged to participate in su ch areas.  Will China allow the participation of Indian vendors on 
research, manufacturing and marke ting of security related products? 
Q.16  In Construction and Engineer ing Services, there have been  rules issued by the Chinese 
Government on the administration of foreign invest ed construction enterprises and engineering design 
enterprises.  Recently, China issued another measu re viz., “Provisional Measures for Construction 
Project Management” which restricted the provisions of project management services.  Some of the 
restrictions are: - 
(a) Large registered capital requirements.   
(b) Hurdles in recognition of qualifications since the testing of engineers and architects is 
conducted only in Chinese, which is a barrier.   
(c) Stringent experience, residency and qualification requirements. 
(d) In case of design enterprises stringent residency requirements as also stipulations of 
minimum employment of foreign nati onals (these do not apply to domestic 
companies). 
(e) Arbitrary grounds for rejecting applications and restricting market access.  
Will China put in place transparent and clear guidelin es which do not violate the principle of national 
treatment and enable Indian construction companies in providing services?  Will China also facilitate 
recognition of qualifications and allow the testing of architects and engineers to be done in the 
English language? 
Q.17  As per Chinese regulatory framework in financia l Services, the following criteria have to be 
met to upgrade from a representative office to a branch office: - 
a) The representative office should have been in operation for at least two years. 
b) The parent bank should have assets of US$20 billion. 
c) China should have good relations with the c ountry of origin of the bank in question. 
d) As for capital requirements of a branch, a working capital ranging from 
US$12 million to 60 million is required depe nding upon the nature and scope of the 
business. 
e) “Seasoning requirements” which stipulates th at the retail operations of foreign 
banking have to run for a couple of years, before service can be rendered to foreign 
nationals.   
Will China review such restrictive requirements and lower the minimum capital requirement and 
capital adequacy requirement to facilitate the entry of the Indian banks in the foreign market? 
Q.18  To facilitate Indian investment in the IT a nd ITES sector, including software services, China 
should give priority to these sectors and undertake st eps to facilitate investment in these sectors such 
as faculty and student exchange, establishment of a Chinese language and culture centers in multiple 
cities in India and vice-versa in China, better fli ght connectivity and encour aging learning of Chinese 
language in India.  Given the increasing trade be tween China and India, would China put in place a 
liberal visa regime which would provide a definite  time frame and certainty of obtaining visa and 
work permits? WT/TPR/M/161/Add.1 
Page 68  
 
Steel Imports:
 
Q.19  The present customs tariff of 11% imposed by China on the imports of cold rolled products is 
high and restrictive considering the customs tariff in other countries.  Further, in the past few years 
while China has permitted limited quantities of steel products under the quota system on duty free 
basis, a high rate has been maintained for non-quota imports. This is discriminatory and not 
compatible with WTO provisions. Would Chinese au thorities consider withdrawing the quota system 
and bring down the tariff to global levels? 
Q.20  Under the Chinese foreign trade management system, only foreign trade enterprises with 
import-export rights may engage in import and export agency business. They have to apply for the 
corresponding quotas and licenses for importing goods where import/export are restricted. Such quota 
and licensing system is restrictive and needs to be  liberalized in line with WTO requirements. Would 
China consider providing free market access without any restrictions in respect of different steel 
products? 
Legal Services:  
Q21. There are constraints on the registration a nd operation of foreign law firms in China. 
Although China has issued detailed Regulations on the Administration of Foreign Law Firm 
Representative Offices, there are still important barrie rs that remain.  For example, the regulations 
have introduced the concept of “economic needs” requirement that grants wide discretion to the 
Ministry of Justice in determining whether th ere is an actual need for establishment of the 
representative office and  development of the firm’s le gal services in China. This is violative of the 
GATS provision which prohibits economic needs tests where a WTO member makes a specific 
market-access commitment. 
Would China consider opening up its Legal Services  sector so that domestic laws are in consistence 
with the GATS provision? 
Steel Exports:  
Q.22  The Indian steel exporters are facing difficulties in having their Letter of Credit (LOC) 
honoured by China particularly in situations of dec lining steel prices. Would china like to clarify what 
steps it will take to remove the difficulties faced by Indian steel exporters? 
ADDITIONAL QUESTIONS FROM INDIA  
Automotive Import Management Policy of China  
The state supports automakers to strengthen their lo calization capabilities of auto products to promote 
technological advancement of the parts manufacturers and the development of the auto 
manufacturing.  
The automakers, who use imported parts with complete vehicle characteristics are required to report 
to the MOFCOM, Customs and NDRC strictly by the facts and all imported parts for related models 
are required to be declared. 
The identification of auto assembly (system) charac teristics includes the imports of KD parts of the 
whole assembly, or in the form of divided key parts of the assembly or system. Imported key parts, if 
reached or exceeded the regulated am ount, will be identified as assembly. 
- Identification of complete vehicl e characteristics consists of:   WT/TPR/M/161/Add.1 
 Page 69 
 
 
 - engine assembly   - body (including cab) assembly   - transmission assembly   - drive axle assembly   - non-drive axle assembly  
 - frame assembly  
 - steering system and braking system 
- The followings are identified as to cons titute complete vehicle characteristics: 
 (1) Import of both body (including cab) assembly and engine assembly 
 (2) Import of either the engine assembly or  body (including cab) assembly, plus no less 
than three of the rest assemblies (or systems); 
 (3) Import of no less than 5 of the rest ass emblies (or systems), besides engine assembly 
and body (including cab) assembly. 
The state designates the four coastal ports, two land ports as well as the Xinjiang Alashankou port (for 
vehicles imported from the CIS countries and only to be used within the Xinjiang Uygur Autonomous 
Region), as import ports for imported complete vehicles.  
Starting from 2005, all bonded areas will not be a llowed to provide bonded warehousing services for 
vehicles to enter domestic market. 
Would the Chinese authorities clarify the above issues? 
Investment Management Policy of China
 
- Newly-invested projects are require d to meet the following conditions: 
 (1) New motorcycle manufacturers are re quired to have R&D capacities - total 
investment of the project should be no less than RMB 200 million. 
 (2) For a newly-built auto manufacturing project, total investment should be no 
less than RMB 2 billion, of which self-owned capital should be no less than RMB 800 million; a product R&D ins titution should be established with 
investment no less than RMB 500 million. New passenger vehicle or heavy-
duty truck manufacturing projects should include corresponding engine production for the complete vehicles. 
 (3) Production scale requirements for the newly-built investment projects are: for 
heavy duty trucks, no less than 10,000 units per year; for passenger vehicles 
equipped with 4-cylinder engines, no less than 50,000 units per year; for 
passenger vehicles equipped with 6-cy linder engines, no less than 30,000 
units per year. 
- Sino-foreign JVs producing complete vehicles, special purpose vehicles, farming vehicles or 
motorcycles should ensure the st akes held by the Chinese parties are no less than 50% of the 
JVs.  
A foreign investor is allowed to  establish no more than two JVs 
These policies have the effect of restricting Indian  vehicle manufacturers entering into China through 
manufacturing route.  Would the Chinese authoriti es indicate whether they would remove these 
restrictions? WT/TPR/M/161/Add.1 
Page 70  
 
Intellectual Property Rights Violations
 
While most countries have laws to provide some degree of protection of intellectual property rights 
(IPRs), a number of countries do not always adequa tely enforce these laws.  Inadequate enforcement 
of protection for IPRs can have serious negative consequences not only for automakers but also for 
the countries involved, in economic terms as well as in terms of safety.   
Some examples of the impact of IPR infri ngement in the automotive sector include:  
(a) Direct impact on business operations 
- Reduced market performance of genuine products owing to presence of counterfeit 
products in the market 
- Lost royalties 
- Damage incurred to brand image as a result of customer dissatisfaction with 
counterfeit products  
- Cost burden of identifying IPR violators (this cost can be significant in view of the 
complexity of the distribution system) 
(b) Indirect impact on society 
-  There are repercussions on the public at large because of the safety and 
environmental implications of IPR infringement. 
Would the Chinese authorities take steps to check such violation of IPRs? 
ADDITIONAL QUESTIONS BY INDIA  
Customs Procedure  
Q.1 C ustoms officials continue to use minimum reference price instead of actual transaction price 
for valuation of goods.  This makes customs valua tion  unpredictable and uncertain and consequently 
affects imports.  Furthermore, the valuation procedur e followed at different levels  (national and sub-
national) is not uniform, as a result of which, th e duty on products becomes subject to negotiations 
between traders and customs officials leading to indirect cost5s, proliferation of middlemen and time delays.  In addition, depending u pon the port of entry the same product may be subject to case-by-case 
determination of customs value.  Would China cons ider streamlining their customs valuation system? 
Q.2 At some ports, customs officials insist on amendm ent of the entire set of documents if there is 
over-landing or short landing of break bulk cargo (loo se cargo in cartons).  At other ports there is no 
such requirement of document ame ndment.  Would China consider adopting a uniform system at all 
its ports for clearance of goods? 
Q.3 Indian re-exporters, who buy imported raw mate rial and convert it to finished products and 
export out of China, are allowed to import raw materi al only through a specified port.  If they operate 
through other ports, they have to follow extremely difficult procedures to avail duty free clearance of 
cargo.  This problem is further accentuated by th e limited transport links between India and China, 
which do not allow free choice of ports for landing.  Indian companies are often the worse affected.  
Would China clarify its stand on this issue and seek to usher in system where the port restrictions on 
import are abolished?  WT/TPR/M/161/Add.1 
 Page 71 
 
 
Banking Issue  
Q.4 Many bank branches are not authorized to d eal in foreign exchange remittances and the 
process of routing remittances from authorized banks is time consuming.  Would China clarify its position and try to make its system compatible with global practices? 
Q.5 The Indian Automotive Parts and Components I ndustry that has a growing export market in 
China faces constraints in the form of NTBs.  In sp ite of the agreement on technical barriers to trade 
(TBT), additional tests in Chinese laboratories are required for vehicles and parts.  Such tests are 
mandatory even if exporters produce certified test s results supported by certificates of quality from 
reputed international quality management firms.  W ould China take steps to remove this barrier and 
recognize the certificate issued by reputed international quality management firms? WT/TPR/M/161/Add.1 
Page 72  
 
QUESTIONS BY CANADA
 
Report by the Secretariat (WT/TPR/S/161)  
Part I.  Economic Environment, (1) Overview, paragraph 4: 
1. Will increased opportunities for growth, productivity  gains, and employment in rural areas be 
explored through increased foreign direct investment in the mining sector? 
Part I.  Economic Environment, (2) Main Developments: Policy and Economic Performance, 
paragraph 6: 
2. Foreign Direct Investment has enabled strong gains in productivity, output, and employment 
in the manufacturing sector.  How will this success be duplicated in the service sector? 
Part I.  Economic Environment, (3) Macroecono mic Policies, (i) Monetary and exchange rate 
policies, paragraph 17:  
3. How have the authorities determined the sect ors where “window guidance” is necessary to 
decrease credit growth?  Has window guidance been  applied equally across non-public enterprises and 
State-Owned Enterprises? 
Part II.  Trade Policy Regime: Framework and Ob jectives, (2) Institutional and Legal Framework, 
(ii) Legal structure and the legislative process, paragraph 21: 
4. What is the current legislative plan related to the commercial environment? 
5. What is the status of the Bankruptcy Law, and Anti-Monopoly Law? 
6. What is the process for deciding which internati onal and foreign companies are utilized in the 
consultation process?  
Part II. Trade Policy Regime: Framework and Obje ctives, (2) Institutional and Legal Framework, 
(iv) Transparency, paragraph 27: 
7. Despite efforts, China remains amongst th e most opaque countries.  What additional 
initiatives are envisioned to improve transparency?  
Part II.  Trade Policy Regime: Framework and Ob jectives, (3) Formulation, Administration, and 
Implementation of Trade Policy, (ii) Agencies  involved in trade policy implementation, 
paragraph 35: 
8. How is trade policy coordinated between main departments and agencies involved? 
Part II.  Trade Policy Regime: Framework an d Objectives, (4) Trade Policy Objectives, 
paragraph 37: 
9. How does the Chinese government provide gui dance and coordination for enterprises 
investing abroad?   Does the approach di ffer between state-owned enterprises (SOEs)  and non-public 
enterprises?  WT/TPR/M/161/Add.1 
 Page 73 
 
 
Part II.  Trade Policy Regime:  Framework an d Objectives, (6) Foreign Investment Regime, 
(ii) Legislative framework and procedures, paragraph 78: 
10. What criteria are applied to classify sectors as “encouraged, permitted, restricted, and 
prohibited”?  
Part II.  Trade Policy Regime:  Framework an d Objectives, (6) Foreign Investment Regime, 
(iii) Examination and approv al procedure, paragraph 83: 
11. What criteria are applied to determine an “important” project and what is the verification 
procedure? 
Part II.  Trade Policy Regime:  Framework an d Objectives, (6) Foreign Investment Regime, 
(iii) Examination and approv al procedure, paragraph 84: 
12. What is the decision process applied in the exam ination and verification of foreign investment 
projects?  
13. What are the grounds for not accepting an appli cation that is being submitted to the National 
Development and Reform Commission (NDRC)? 
14. What is the difference between the Ministry of Commerce (MOFCOM)  foreign investment 
enterprise (FIE) approval and the NDRC process? 
Part II.  Trade Policy Regime:  Framework an d Objectives, (6) Foreign Investment Regime, 
(iii) Examination and approv al procedure, paragraph 86: 
15. How does the NDRC protect commercially confidential information provided in project 
descriptions? 
Part III.  Trade Policies and Practices by Measure, (1) Introduction, paragraph 1: 
16. What tools are used to provide “guidance” for prices and to channel credit into and away from 
certain sectors? 
Part III.  Trade Policies and Practices by Measure, (1) Introduction, paragraph 4: 
17. Given the dramatic changes in China since 2000  and the commitment to adopt international 
standards, why has the percentage of national sta ndards equivalent to international standards not 
changed? 
Part III. Trade Policies and Practices by Me asure, (1) Introduction, paragraph 5: 
18. What is the expected volume of government procurement at the na tional and sub-national 
level in 2006? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ii) Tariffs, (e) Border trade and other preferences, paragraph 35: 
19. How does China control the border trade in wood products to ensure that the 15-20 kilometer 
range is respected? What is the success of the enforcement of such measures? WT/TPR/M/161/Add.1 
Page 74  
 
Part III.  Trade Policies and practices by meas ure, (2) Measures Directly Affecting Imports, 
(iv) Customs valuation and rules of origin, (a) Customs valuation, paragraph 40: 
20. What process does China use to determine HS Codes for imported products?  What if there is 
a conflict between this choice and the codes that are most commonly used international classification?   
21. What is the procedure if China Customs and an importer disagree on an HS classification? 
22. The most common HS classification for titanium dioxide worldwide is HS2614.  Why did 
China Customs reclassify imports of titanium dioxide from HS2614 to HS3824? 
23. Under what guidelines and lines of responsibilit y does China Customs operate in undertaking 
an investigation?  
24. How are China Customs classification and inv estigation procedures controlled to ensure 
consistency on a national basis? 
Part III.  Trade Policies and practices by meas ure, (2) Measures Directly Affecting Imports, 
(vii) State trading, paragraph 64: 
25. What criteria are applied by state trading enterprises to determine the grade of goods that are 
required?   
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(viii) Contingency measures, (a) Anti-dumping and countervailing, paragraphs 66 and 78: 
26. Can China clarify the reasoning for jointly conducting the investigation  of injury, in anti-
dumping and safeguard investigations involving agricultural products, with the Ministry of 
Agriculture?  
27. What role does the Ministry of Agriculture ha ve in such investigations and does its role 
substantively alter the procedures a nd results of such investigations? 
28. Could China also clarify why joint injury inves tigations with the Ministry of Agriculture do 
not apply to countervail investigations i nvolving imports of agricultural products? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(viii) Contingency measures, (a) Anti-du mping and countervailing, Paragraph 69: 
29. Paragraph 68 states that Chinese regulations for provisional measures provide that such 
measures, “may not exceed four months from the effec tive date set forth in the public notice regarding 
the decision on provisional anti-dumping measures and, in special circumstances, may be extended to nine months.” However, Paragraph 69 states that, “[t]here is no provision in the Regulations for a 
specific time limit for provisional measures”. Can Ch ina please clarify its regulation for the duration 
of provisional anti-dumping measures? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(viii) Contingency measures, (a) Anti-dumping and countervailing, paragraphs 70 and 75: 
30. With respect to judicial review, Canada would appreciate elaboration from China of the 
institutions to which appeals of MOFCOM decisi ons can be made and the procedures for such 
appeals? Specifically, Canada would appreciate cl arification on which Chinese institutions receive 
appeals and conduct reviews of MOFOM decisions under the Law of Administrative Review and the 
Regulation on Administrative Review?   WT/TPR/M/161/Add.1 
 Page 75 
 
 
31. Paragraphs 70 and 75 also state that an appeal  may be made to the Court or the People’s 
Court. Could China please clarify to which specific court an appeal may be made and the procedures for filing such an appeal? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(viii) Contingency measures, (a) Anti-dumping and countervailing, paragraphs 71: 
32. It is reported that China initiated 79 anti-dum ping investigations from 1 January 2002 to 31 
December 2004. Could China confirm how many of these 79 investigations were self-initiated by 
MOFCOM without having received a written applicati on by or on behalf of a domestic industry? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(viii) Contingency measures, (a) Anti-dumping and countervailing, paragraph 81: 
33. Could China clarify which institution is respons ible for the judicial review of safeguard 
decisions by MOFCOM and/or the Ministry of Agriculture, and the process by which parties can 
submit an appeal for such a review? 
Part III.  Trade Policies and practices by meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 88: 
34. How are inconsistencies between enterprise standards and national, sectoral, and local 
standards resolved?   
35. Are enterprise standards utilized in place of lo cal, sectoral, and national standards where these 
latter do not exist or are incomplete? 
Part III.  Trade Policies and practices by meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 90: 
36. How is the Standard Administration of Ch ina intending to align Chinese standards to 
international standards? 
Part III.  Trade Policies and practices by meas ure, (2) Measures Directly Affecting Imports, 
(x) Government Procurement, (f) China’s acces sion to the WTO Agreement on Government 
Procurement, paragraph 120. 
37. When does China anticipate tabling an Appendix 1 offer to the WTO Agreement on 
Government Procurement?   
Part III.  Trade Policies and practices by meas ure, (3) Measures Directly Affecting Imports, 
(iv) Export prohibitions, restrictions, and licen sing, (b) Export Restrictions and licensing, 
paragraph 139:  
38. Please explain the license requirement for the export of raw magnesite. 
39. Why is this product subject to export licensing? 
40. What is the role of the China Chamber of Co mmerce of Metals, Minera ls, and Chemicals in 
granting the license?   
41. How long is the process to obtain a license? WT/TPR/M/161/Add.1 
Page 76  
 
42. What recourse do companies have when licenses are delayed or denied? 
Part III.  Trade Policies and Practices by Measur e, (4) Measures Affecting Production and Trade, 
(ii) Incentives, (a) Direct transfers and subsidies, paragraph 187: 
43. As noted in paragraph 187, China has not notified its subsidies, pursuant to Article 25.1 of the 
Agreement on Subsidies and Countervailing Measures,  since acceding to the WTO.   Although we 
note that Chinese authorities endeavoured, in the cont ext of this review, to provide a new and full 
notification before the end of January 2006, we ha ve not seen that notification yet.  Could China 
provide an indication of when we can expect the submission of this new and full notification?   
Part III. Trade Policies and practices by measure,  (4) Measures Affecting Production and Trade, 
(iii) Legal framework for business, (d) St ate-owned enterprises, paragraph 217:  
44. What are examples of “important matters of the company” where State Assets Supervisions 
and Administration Commission will ma ke decisions on behalf of SOEs? 
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(iii) Legal framework for business, (d) St ate-owned enterprises, paragraph 218:  
45. Under the “Law on Industrial Enterprises Owned by the Whole People”, SOEs are required to 
operate “under the guidance of state plans”.  How ar e they able to heed Article 22 yet still operate on 
a commercial basis?  
Part III.  Trade Policies and Practices by Measur e, (4) Measures Affecting Production and Trade, 
(vii) Competition policy, paragraph 243: 
46. As SOEs operate on a commercial basis, will th ey be subject to the Anti-monopoly Law in a 
manner comparable to non-public enterprises? 
Part III. Trade Policies and Practices by Measure,  (4) Measures Affecting Production and Trade, 
(ix) Intellectual property rights, (f) Other IPRs, paragraph 296: 
47. Paragraph 296 states that “[g]eographical indi cations are registered as collective marks or 
certification marks with the Trademark Office under the same procedures as for trade marks.  It 
appears also that the AQSIQ is involved in implementation of policy concerning geographical 
indications”.  Would China please elaborate on the State General Administration of Quality 
Supervision, Inspection and Quarantine’s (AQSIQ) role with respect to geographical indications, 
including the June 2005 ‘Regulations on Protection of Products of Geographical Indications’? In 
particular, is AQSIQ involved in aspects of standa rdization, certification or accreditation as it relates 
to geographical indications? 
Part III. Trade Policy by Measure, (4) Measures Affecting Production and Trade, (ix) Intellectual 
property rights, (g) Enforcement, paragraph 303: 
48. Paragraph 303 notes that “[t]he main problems id entified by China’s major trading partners 
include: lack of coordination among the main en forcement agencies; local protectionism and 
corruption; inadequate deterrence provided by the system of administrative, civil, and criminal 
penalties; and a lack of sufficient training of personnel.” Canada appreciates China’s efforts on 
intellectual property but also remains concerned ab out China’s enforcement regime for intellectual 
property rights. Would China please provide more details on recent measures it has put in place for 
the enforcement of intellectual property rights? Have these measures produced noteworthy results?  WT/TPR/M/161/Add.1 
 Page 77 
 
 
Part III.  Trade Policy by Measure, (4) Measures  Affecting Production and Trade; (ix) Intellectual 
property rights, (g) Enforcement, paragraph 309: 
49. Paragraph 309 states that “[i]n order to enhan ce the efficiency of seizures by Customs, the 
owner of the intellectual property right may "record" or file their right in writing with Customs.  
Customs must make a decision on whether to "record" the intellectual property right within 30 days of 
accepting all the relevant documentation from the right-holder.”  Would China please elaborate on 
how this decision is made and the difference be tween how recorded and non-recorded intellectual 
property rights are treated? 
Part IV.  Trade Policies by Selected Sectors, (2 ) Agriculture, (iii) Policy instruments, paragraph 28: 
50. Please explain the prohibition of products re ferred to in footnote 44 (HSO 2071429, 
HSO410.0010, HSO507.9020 and HS1211.2010).  Why have these four products been singled out? 
Part IV.  Trade Policies by Selected Sectors, (3) Energy, (i) Petroleum, paragraph 55: 
51. Paragraph 55 states that oil exploration see ms to be dominated by four state-owned 
companies. Moreover, it states that as of Februa ry 2005, “qualified private enterprises may obtain 
prospecting and mining rights”.  Please elaborate on the procedures and requirements for prospecting 
and mining rights: 
a. Are there distinctions between exploration services firms and exploration and 
development firms?  
b. How are licenses/certificates for exploration attributed – on project basis, 
geographical basis, or on a wider basis?  
c. Are there distinctions between na tionals and non-nationals of China?  
d. What are the constraints attached to  licenses/certificates for exploration service 
providers?  
e. Do these license requirements also apply to other service providers on oil fields?  
Part IV.  Trade Policies by Selected Sectors, (4) Manufacturing, (ii) Iron and steel, (a) Market 
structure, paragraph 90: 
52. The Secretariat Report indicates that the Centra l Government has imposed controls on bank 
loans to the steel sector. It is assumed that loan a pplicants in the steel sector must adhere to China’s 
steel policy in order to receive loans.  
a. Does this policy on controlling bank loans apply to loans provided by the national 
government, provincial governments or by both levels of governments?  
b. Is the policy only applicable to state- owned banks and what specific elements of 
China’s steel policy are considered?  
c. Do state-owned banks provide loans at preferential rates to the steel sector under 
certain circumstances? WT/TPR/M/161/Add.1 
Page 78  
 
Part IV.  Trade Policies by Selected Sectors, (4) Manufacturing, (ii) Iron and steel, (a) Market 
structure, paragraph 90: 
53. Paragraph 90 states that local governments ha ve been urged to abolish price discounts on 
electricity to the steel sector. How significan t were the price discounts and has the Central 
Government been successful in its efforts to ur ge local governments to discontinue these discounts? 
Part IV.  Trade Policies by Selected Sectors, (4 ) Manufacturing, (ii) Iron and steel, (b) Regulatory 
framework and restructuring, paragraphs 93--95: 
54. Under paragraphs 46 and 172 of the Working Party Report accompanying China’s Protocol of 
Accession (WT/ACC/CHN/49), China agreed that the government would not influence, directly or 
indirectly, commercial decisions on the part of state-owned or state-invested enterprises, and 
acknowledged that state-owned enterprises, including banks, should be run on a commercial basis.  In 
light of those commitments: 
 a. Please explain how the directives outlin ed in China’s Iron and Steel Industry 
Development Policy (Steel Policy), as drafted by the National Development and Reform Commission and released at the July 20, 2005 executive meeting of the State 
Council, are consistent with paragraphs  46 and 172 of the Working Party Report. 
 b. Please explain the role of China’s state- owned banks in the restructuring of China’s 
steel industry.  What steps has China taken in the past and is it currently taking to ensure that the state-owned banks, which lend to state-owned steel enterprises in China, are operating in a manner consis tent with China’s WTO obligations? 
 c. Which central, provincial, and local ag encies will be responsible for implementation 
of the Steel Policy?  How will conflicts between central, provincial, and/or local 
governments under the Steel Policy be resolved?  
 d. Please describe the administrative measur es that will be used to implement the Steel 
Policy. 
 e. Has China issued any directives or estab lished any plans for the privatization of its 
state-owned steel enterprises.  If so, please describe them.   
 f. Does China foresee limits on the financial support that it will provide to steel 
enterprises under the Steel Policy?  If so, please describe them. 
Part IV.  Trade Policies by Selected Sectors, (4 ) Manufacturing, (ii) Iron and steel, (b) Regulatory 
framework and restructuring, paragraph 93: 
55. It is stated that the Steel Policy will not a pprove new project “in principle”. Could China 
further comment on this statement and identify the means by which approvals will be withheld. 
56. To the extent to which the Steel Policy prescrib es the location of steel mills, does the Central 
or local governments provide for the constructi on of dedicated infrastructure, as defined in 
Article 1.1(a)(1)(iii) of the Agreement on Subs idies and Countervailing Measures, for the steel 
industry?  Further, is there an allowance made  for subsidizing transportation costs for steel?  WT/TPR/M/161/Add.1 
 Page 79 
 
 
Part IV.  Trade Policies by Selected Sectors, (4 ) Manufacturing, (ii) Iron and steel, (b) Regulatory 
framework and restructuring, paragraph 94: 
57. Could China explain the justification for the differences in conditions for domestic as opposed 
to foreign investment in the steel industry and the means by which such criteria will be implemented? 
Part IV. Trade Policies by Selected Sectors, (4 ) Manufacturing, (ii) Iron and steel, (b) Regulatory 
framework and restructuring, paragraph 95: 
58. Article 16 of China’s Steel Policy specifically pr ovides for state support in the form of “tax 
refunds, discounted interest rates, funds for resear ch and other policy support for major iron and steel 
projects utilizing newly developed dom estic equipment.”   Meanwhile, Article 18 of the Steel Policy 
states that for equipment and technology that must be imported due to the lack of domestic ability to 
produce such equipment and technology or due to in sufficient domestic supply, such equipment and 
technology must be modern and practical.  It also states that for current and future large scale equipment, localization of production must be organized. 
a. Please describe all government support provi ded to implement Article 16 of the Steel 
Policy. 
 b. Please describe all government  support provided to encourage China’s steel industry 
to use domestic equipment and technol ogy in furtherance of Article 18. 
 c. It is also stated in paragraph 95 th at the Government will provide a range of 
assistance to iron and steel projects using newly developed dom estic equipment. 
Could China explain the nature of such assistance and confirm our understanding that 
eligibility for such assistance is contingent  on the use of domestically produced over 
imported equipment? 
Part IV.  Trade Policies by Selected Sectors, (4 ) Manufacturing, (ii) Iron and steel, (b) Regulatory 
framework and restructuring, paragraph 96: 
59. Could China explain the rationale behind its re gulation of imports of iron ore and explain the 
rationale for the difference in treatment between  “enterprises satisfying certain requirements” and 
small-scale producers that are, by this measu re, obliged to purchase domestic iron ore? 
Part IV.  Trade Policies by Selected Secto rs, (4) Manufacturing, (iv) Automotive sector, 
paragraph 129: 
60. Please explain the process by which tariffs on auto parts are  applied at the border and how 
any additional charges (or reassessmen ts) are applied based, for example , on a finding that the final 
assembled motor vehicle of which they form  part is deemed to be an import. 
61. Could China explain the rationale behind its "A dministrative Rules on Imports of Auto Parts 
with Features of Assembling Whole Vehicle" and how the choice of thresholds for differentiating 
between imported and domestic vehicles was reached? 
62. Please explain how the requirement that automo tive assemblers complete a self-verification 
procedure under the "Administrative Rules on Impor ts of Auto Parts with Features of Assembling 
Whole Vehicle", in effect imposing an  additional administrative burden on assemblers that use 
any imported parts, is not a violation of Artic le III.4's prohibition on introducing regulations 
that provide less favourable treatment to imported products? WT/TPR/M/161/Add.1 
Page 80  
 
63. Could China explain how a requirement that the total import of vehicle components (by 
cost) not exceed 60% in order to qualif y for reduced tariff treatment on the 
imported components differs from a local content requirement? 
64. Please provide an explanation of the require ments for differentiating between components 
which are categorized by Chinese auditors as "aut omotive unit assemblies" and those which are not, 
with reference to the term "etc" in Article four of  the "Administrative Rules on Imports of Auto Parts 
with Features of Assembling Whole Vehicle". 
65. Could China provide definitions of CKD and SKD kits as used in the "Administrative Rules 
on Imports of Auto Parts with Features of Assembling Whole Vehicle"?   
66. Could China explain how the inclusion of Complete Knock Down (CKD) and 
Semi Knock Down (SKD) kits as being subject to distinct tariff treatment under the "Administrative 
Rules on Imports of Auto Parts with Features of Assembling Whole Vehicle" does not create a separate tariff line with higher tariffs than tho se committed in paragraph 93 of the Working Party 
document to China's WTO accession? 
67. Could China clarify the difference, if any, in th e treatment an imported auto part may receive, 
if it is inserted into an assembly meeting th e definition of an import under Paragraph 22 of 
the "Administrative Rules on Imports of Auto  Parts with Features of Assembling Whole 
Vehicle", when such assembly is used in a new ve hicle deemed an import versus one considered a 
domestic vehicle? 
68. Please clarify how the possibility that two identical imported auto  parts which, under the 
"Administrative Rules on Imports of Auto Parts w ith Features of Assembling Whole Vehicle" could 
receive different tariff classification according to the end use of the part, does not violate 
Chinese obligations under GATT article II? 
69. Could China clarify how a set of regulations which imposes varying charges 
on imported items depending on the amount of local content in a finished product does not create an incentive to include domestic content contrary to GATT article III?  
Part IV.  Trade Policies by Selected Sectors, (5) Services, (i) Overview, paragraph 147: 
70. Please explain how China’s Approved Destination Status  program conforms to China’s WTO 
commitments. 
71. What are the criteria applied to sign an Approved Destination St atus Memorandum of 
Understanding with a WTO member? 
72. How does the tourist quota system referred to in Measures for Administration of Outbound 
Tours operate? 
73. Outbound travellers are limited in the amount of foreign exchange they can acquire and 
therefore are limited in purchasing tourism services abro ad.  Is this not a restriction on current account 
transactions?  Are there other current account restrictions on trade?  WT/TPR/M/161/Add.1 
 Page 81 
 
 
Part IV.  Trade Policies by Sector, (5 ) Services, (iii) Financial Services,  
(b) Banking, paragraph 156: 
74. Canada understands that foreign banks in China ma y apply for a license to deal in derivatives.  
Could China elaborate on the types of derivativ es activities that foreign banks are allowed to 
undertake upon receiving regulatory approval? 
Part IV.  Trade Policies by Sector, (5 ) Services, (iii) Financial Services,  
(b) Banking, paragraph 161: 
75. Paragraph 161 states that in the banking sector  there are self-regulatory organisations (SROs) 
such as the National Association of Banking I ndustry and National Association of Finance 
Companies.   
 a. Is membership to these SROs mandatory for banks (including foreign subsidiaries)? 
 b. If yes, are SROs requirements consis tent with China’s GATS commitments, in 
particular national treatment and market access obligations? 
Part IV.  Trade Policies by Sector; (5 ) Services; (iii) Financial Services;  
(c) Insurance, paragraph 198: 
76. Paragraph 198 indicates that the mandato ry cession requirements for reinsurance under 
China’s GATS schedule were to be phased out by D ecember 2005.  Canada noted that this phase-out 
coincided with the promulgation of new reinsuranc e regulations by the China Insurance Regulatory 
Commission (CIRC). 
 a. On the basis of these new regulations, c ould China explain in detail the process direct 
insurers must follow when buying reinsuran ce?  Please include an explanation of any 
new cession requirements. 
 b. Could China clarify whether direct in surers seeking to purchase reinsurance are 
permitted to use quotations obtained from rein surers outside of China in their final 
offer to reinsurers in China? 
 c. Can China indicate whether it maintains any restrictions on firms engaging in 
reinsurance with their affiliates? If so, do these restrictions apply equally to foreign 
and domestic insurers? 
77. Paragraph 198 suggests that China does not main tain any national treatment limitations for 
mode 3 except that foreign insurance institutions may not engage in statutory insurance business.  
Could China please comment on how it ensures nationa l treatment is provided to foreign-invested 
insurance joint ventures with respect to licensing?  It does not appear that the current treatment given 
by regulatory authorities in approvi ng branch licenses is consistent with China’s GATS commitments.  
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 214: 
78. The Secretariat Report notes that the State is th e majority shareholder in six telecoms service 
providers. The report goes on to say that this structur e may change in order to establish a fair and just, WT/TPR/M/161/Add.1 
Page 82  
 
effective and orderly market environment.  What specific, current conditions are China intending to 
address with these changes? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 215: 
79. The Secretariat Report states that , in each line of basic teleco ms service, including satellite 
services, at least a duopoly exists.  The Secretariat report notes, however, in Table IV.7, that China 
Satellite is the exclusive service provider for sate llite services.  Is there currently a monopoly or 
duopoly on the provision of satellite services? If a duopoly, who, in addition to China Satellite, 
currently provides these services? 
Part IV.  Trade Policies by Selected Sectors,  Services, (iv) Telecommunications services, 
(b) Regulatory structure and measures, paragraph 216:  
80. When will the Telecommunications Law be introduced? 
81. What were the criteria applied to define “basic” and “value added” telecommunications 
services? 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 216: 
82. The Secretariat Report st ates that “other government depart ments” are involved in regulating 
the Internet. 
 a. Which departments this refers to?  b. How does China regulate the internet?  c. What are China’s objectives in regulating the internet? 
 d. What measures are taken to ensure tr ansparency of China’s internet regulatory 
regime? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 217: 
83. The Secretariat Report indicates that Chin a has committed itself to implementing the 
Telecoms Reference Paper, including establishing an independent regulator.  Statements by China in 
the Council for Trade in Services have indicated th at China has separated the regulatory body from 
the operational business, and that the Ministry of Information Industry (MII) can regulate in an impartial, fair and transparent manner, and act as an independent regulator.  What specific measures 
have been taken to ensure that MII is an i ndependent regulator (i.e. is separate from and not 
accountable to any supplier of basic telecommunica tions services, and makes decisions and uses 
procedures which are impartial with r espect to all market participants)? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 218: 
84. The Reference Paper on basic telecoms indicates that a services supplier requesting 
interconnection will have recourse to  an independent domestic body. The Secretariat report indicates 
that Ministry of Information Industry has determin ed interconnection charges in several cases where  WT/TPR/M/161/Add.1 
 Page 83 
 
 
operators have been unable to reach agreement.  Could China provide de tails on how the process 
followed and the criteria used in  making such determinations? 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 220: 
85. The Secretariat Report indicates that MII decides wh ether to approve or reject applications for 
telecoms services licences. By the end of 2005, Ch ina had received 23 formal applications for setting 
up foreign-funded telecommunications enterprises for the provision of value-added telecom services; 
of these, eight have been granted “Examination Opinions on Foreign Investment in Telecommunications Services Provision” by the MII, wh ile four of the applicants have received the 
"Telecommunications Services Operating Licence": 
a. What criteria are used in deciding whether or not such applications will be approved? 
b. What are the measures that must be unde rtaken once an “Examinations Opinions of 
Foreign Investment in Telecommunications Se rvices Provision” has been granted, in 
order to be granted a “Telecommunications Services Operating Licence”?  
c. Are there any review processes available to service providers whose applications are 
rejected? 
d. Which types of telecoms services are covered by the “Telecommunications Services 
Operating Licence”? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
(b) Regulatory structure and measures, paragraph 220:  
86. Have any companies received exemptions of  the conditions required for licenses in value 
added services? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 223:  
87. The Secretariat Report indicates that tariffs  are divided into: (a) government set prices; 
(b) government guided prices; and (c) market adjusted prices. What are the definitions of these three 
pricing categories? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 224: 
88. The Secretariat Report states that monthly char ges, local fixed-line charges, and other basic 
telecom service fees are still subject to government examination and approval.  What criteria are used in determining whether approval will be granted? 
Part IV.  Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 226: 
89. The Secretariat Report states that, under th e Telecommunications Decree, service providers 
must provide universal service.  What provisions are in place to ensure that this obligation is consistent with the Reference Paper on basic tele communications services (i.e. that the universal 
service regime is administered in  a transparent, non-discriminator y and competitively neutral manner 
and not more burdensome than necessary)? WT/TPR/M/161/Add.1 
Page 84  
 
Part IV.  Trade Policies by Selected Sectors, (5 ) Services, (v) Transport, (b) Maritime transport 
services, regulatory system and foreign direct investment, Table IV.9 and paragraph 259:  
90. There appears to be a potential inconsiste ncy between Table IV.9 and paragraph 259 with 
respect to the qualification requirements for Wholly Foreign-Owned (WFO) Shipping Companies. Table IV.9 states that a WFO shipping company must be engaged in shipping for more than 15 years 
and have established a resident representative offi ce in China for more than three years before it 
qualifies for registration. Paragraph 259 states that it must be in operation for more than one year for 
approval under the “Interim Provisions on Examin ation and Approval of Wholly Foreign-owned 
Shipping Companies”.  
a. Are WFO shipping companies allowed to operate during the three-year residency 
period and if so, under what c onditions or restrictions?  
 b. Does the three-year residency period count  toward the one year of operations required 
for approval under the “Interim Provisions on Examination and Approval of Wholly 
Foreign-Owned Shipping Companies”? 
SUPPLEMENTAL QUESTIONS BY CANADA
 
Report by the Secretariat (WT/TPR/S/161)  
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 87: 
1. Can China please provide information whic h better explains how the Standardization 
Administration of China (SAC) implements its main  responsibilities, in particular, the formulation 
and implementation of laws and re gulations, and policies and developm ent strategies for standards, as 
well as in what ways it manages and guides scientific  research and its main priorities in this area? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 88:  
2. Does China have plans to modernize its standa rds infrastructure in line with that of other 
trading economies, including replacing mandatory st andards with voluntary standards, which may 
then be referenced in technical regulations, in k eeping with the preparation, adoption and application 
of standards consistent with A nnex 3 of the WTO TBT Agreement? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 88:  
3. Can China please advise the process(es) and cr iteria utilized in order to determine whether a 
national standard is equivalent to an international standard? 
Part III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 90:  
4. Canada notes that reliance on a wide range of non-conventi onal standards, including local 
standards and enterprise standards has the potential for creating trade barriers. The growth in the 
number of enterprise standards is particularly tro ubling. Could China explain how these standards are  WT/TPR/M/161/Add.1 
 Page 85 
 
 
developed and implemented and to what extent  they adhere to TBT principles, including 
transparency? 
5. It is noted that that there is no data on the percentage of sectoral, local or enterprise standards 
which are equivalent to international standards.  China has indicated that the SAC, relevant sectoral 
and local standardizing bodies are to review all standard s that are at least five years old with a view to 
revising them in line with international standard s or simply adopting the relevant international 
standards. Given the large number of standard s in these categories, can China provide more 
information as to how this effort is proceeding? 
6. It is noted that 44.2% of national standards are to be revised.  Can China please confirm that 
those revised standards which will have an impact  on international trade will be notified to the 
appropriate WTO Committees? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 93: 
7. Does China have any plans to enter into b ilateral agreements with foreign conformity 
assessment bodies (CABs) to authorize applicati on of the CCC mark in the export economy, or 
alternatively designate foreign CABs to test and certify to China’s regulatory requirements in 
accordance with the TBT Agreement? 
8 Does China accept foreign tests produced under the Worldwide System for Conformity 
Testing and Certification of Electrical Equipmen t CB Scheme to meet safety requirements for 
imported electrical products? 
9. Could China explain its participation in  both the International Accreditation Forum 
and International Laboratory Accreditation C ooperation Mutual Recognition Arrangements and 
indicate whether it accepts conformity assessment results based on participation in 
these Arrangements? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requiremen ts, (b) Standards and technical requirements, 
paragraph 95:  
10. We note that decisions taken by any accred ited certification body (ACB) can be appealed 
either to the ACB or the Certification and Accred itation Administration or to a court.  Can China 
please explain in detail each of these appeal options , including any significant differences in the 
approaches? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirements, (e) Labelling, paragraph 102: 
11. What are the laws and regulations governing the fair labelling of goods to prevent fraudulent 
practices that may mislead consumers? 
Part III.  Trade Policies and Practices by Meas ure, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirements, (e) Labelling, paragraph 103: 
12. Could China clarify which laws and regulati ons govern the labelling of genetically modified 
organisms (GMOs) and products derived from GM Os? Which government agency or agencies are 
responsible for the administration a nd implementation of these regulations? WT/TPR/M/161/Add.1 
Page 86  
 
Part III.  Trade Policies and Practices by Measur e, (2) Measures Affecting Production and Trade, 
(ix) Intellectual property rights, paragraph 272: 
13. China has recently announced an intellectua l property rights tribunal under the responsibility 
of the Supreme Court.  Would you please clarify how this tribunal will operate and when it will 
become operational? 
Part IV.  Trade Policies by Selected Sectors, (2 ) Agriculture, (iii) Policy instruments, paragraph 29: 
14. Could China confirm whether it continues to maintain state trading requirements for exports 
of grains (i.e. maize, rice and soybeans)? 
Report by the Government (WT/TPR/G/161)
 
Part I.  Macroeconomic Environment, The  Ever Deepening Reform and Opening Up, 
paragraph 11: 
15. What criteria are used by the State-owned Asset Supervision and Administration Commission 
to determine when an enterprise is “in de fault without hope to regain profitability”? 
Part I.  Macroeconomic Environment, The  Ever Deepening Reform and Opening Up, 
paragraph 13: 
16. What is the status of the value added tax (VAT ) experiment in North East China?  When is a 
broader VAT reform expected? 
Part I.  Macroeconomic Environment, Difficu lties and Challenges Confronting Development, 
paragraph 11: 
17. What definition does China use to as sess “food security”?  Does an overall increase in 
agricultural productivity equate to an increase in food security? 
Part II.  Trade Policy Development, Faithfu lly Implement the WTO Accession Commitments, 
paragraph 46: 
18. Despite China’s past progress in improving transparency, China remains one of the most 
opaque countries.  What further steps will be taken to increase transparency? 
Part II.  Trade Policy Development, Promoting Economic Cooperation with Developing Members, 
paragraph 91: 
19. What are the forms of encouragement the gove rnment is providing for Chinese enterprises to 
invest and engage in economic a nd trade cooperation abroad? Do these measures vary by country and 
sector?  WT/TPR/M/161/Add.1 
 Page 87 
 
 
QUESTIONS BY HONG KONG, CHINA  
Maritime Transport Services  
(WT/TPR/S/161, P. 245, Para. 267) 
1. We note from the Secretariat Report that certain requirements would need to be satisfied 
under the Port Law for private enterprises and FIEs to have the same access to all port services as 
state-owned companies.  We would be grateful if China could let us know what these requirements 
are. 
(WT/TPR/S/161, P. 246, Para. 270) 
2. We understand from the Secretariat Report th at China would phase out its bilateral cargo-
sharing arrangements with Algeria, Bangladesh, Braz il and Zaire in the future.  We would like to 
know if China would consider removing the corres ponding MFN exemption currently maintained for 
such arrangements. WT/TPR/M/161/Add.1 
Page 88  
 
PREGUNTAS DE MÉXICO
 
Subsidios  
En el marco de la Organización Mundial de Comercio en relación con el Acuerdo sobre Subvenciones 
y Medidas Compensatorias, surge la inquietud de establecer cómo se regulará  el caso específico de 
las subvenciones respecto de los productos exporta dos por la República Popular China en condiciones 
de otorgamiento de contribuciones financieras directas o indirectas a sus diversas entidades que intervienen en el comercio y que representan un be neficio para disminuir sus costos productivos, 
siendo esta una práctica común en dicho país. Lo anterior, surge debido a la afectación por dicha 
práctica desleal de comercio exterior a diversas ramas de nuestra producción nacional.  
Entendemos que el gobierno chino no ha notificado ningún subisidio conforme al 21.5 del ASCM. En 
la reunión pasada del Comité sobre Subsidios se les reclamo que no hayan cumplido con sus 
obligaciones. En el texto del informe de la Secret aría se señala en la parte correspondiente que: 
 187. There are no precise figures on the magnitude of subsidies provided by the 
government, many of which are in the form of indirect incentives.  In 2000, China notified its 
subsidies (under Article XXV of the Agreemen t on Subsidies and Countervailing Measures) to 
the Working Party, while negotiating accession to  the WTO.  The subsidies include:  direct 
transfers from the central and local governme nt budgets to certain loss-making SOEs;  
subsidized loans based on a company's export pe rformance in the automobile sector;  tariff 
preferences for locally produced cars;  s ubsidies for poverty alle viation and regional 
development;  and certain tax and tariff pref erences extended to special economic and other 
development zones and for foreign-invested ente rprises (Table AIII.6).  Since acceding to the 
WTO, China has made no notifications under Article 25.1 of the WTO Agreement on Subsidies.  According to the most recent statement by China to the Committee on Subsidies and Countervailing Measures in November 2005, Ch ina "will make all efforts to submit before 
the end of the year".   In the context of this  review, the authorities added that the notification 
was being finalized and would be  submitted before the end of Ja nuary 2006.  In the interim, 
the authorities suggest that the most current in formation on China's subsidies is in China's 
Protocol of Accession to the WTO. 
Este tema es de vital importancia para México y que exhortamos a que China provea la información 
requerida por el ASMC. Por el momento, no cont amos con preguntas específicas, precisamente por 
que se carece de la información mínima para evaluar la politica industrial y comercial de China en ese 
aspecto. 
Normas técnicas
 
La inquietud radica en el desconocimiento de qué tipo de regulaciones técnicas observan 
obligatoriamente en China, con la finalidad de establecer: 
- Las características y/o especificaciones que deban reunir los productos y procesos 
cuando éstos puedan constituir un riesgo para la seguridad de las personas o dañar la 
salud humana, animal, vegetal, el medio ambiente general y laboral, o para la 
preservación de recursos naturales;  
 - Las características y/o especificaciones de  los productos utilizados como materias 
primas o partes o materiales para la fabr icación o ensamble de productos finales 
sujetos al cumplimiento de normas oficiales mexicanas, siempre que para cumplir las 
especificaciones de éstos sean indispensabl es las de dichas materias primas, partes o 
materiales;   WT/TPR/M/161/Add.1 
 Page 89 
 
 
 - Los apoyos a las denominaciones de  origen para productos del país;  
Mecanismos de Salvaguarda  
Será posible la aceptación por parte de China, de  este tipo de medidas excepcionales para proteger 
temporalmente a determinadas industrias nacionales que se ven dañadas o que se enfrentan a una 
amenaza de daño grave, debido a un incremento signi ficativo de las mercancías importadas que fluyen 
al mercado interno en condiciones de competencia leal. 
Procedimientos de verificación  
La inquietud consiste en saber cuáles serán los mecanismos y los conductos de verificación en materia 
de origen y valor, entre otros, a los que China estar ía dispuesta a someterse, inclusive como parte de 
un procedimiento internacional o pactado entre l as partes, como parte de su compromiso de 
cooperación en relación con estos temas, que a manera de ejemplo comprenderían: 
- Validación de información y documentación. - Intercambio de información de importancia  primordial para la  determinación de 
origen y valor como la ubicación de plant as productivas y/o comercializadotas de los 
sujetos de comercio exterior en ese país, así como los precios de sus mercancías. 
- De ser ello posible, inclusive la facilidad  de realizar visitas de verificación de los 
procesos productivos. 
Sujeción a la legislación internacional en ma teria de propiedad industrial e intelectual
 
En este punto, consideramos importante saber cuál es la postura de China respecto de su alineación en 
la legislación internacional en las materias señal adas, y cuáles serían las medidas que estarían 
dispuestos a adoptar para prevenir y desalentar la  producción y comercialización de mercancías que se 
ostenten como productos protegidos, sin contar co n el permiso del titular de la patente o registro 
(piratería). 
Medidas Antidumping y Compensatorias  
a) ¿Cuál es el porcentaje que los solicitantes deben reunir para considerar que actúan en 
representación de la producción nacional?  
b) Observamos que al país o región exportadora y a los solicitantes se les notifica previamente a 
la iniciación de una investigación antidumping ¿esas notificaciones se hacen mediante una publicación o de forma personal? 
c) Por favor, explique de qué fo rma la duración de una medida pr ovisional es compatible con el 
artículo 7.4 del Acuerdo Antidumping, ya que en dicho artículo no se permite extender ese periodo en 
casos diferentes al examen para la aplicación de un  derecho inferior, mientras que en el régimen 
interno de China se permite ante la presencia de "c ircunstancias especiales" tales como la complejidad 
de una investigación. 
d) ¿Cuáles son las características de los exámen es para extender la vigencia de una medida 
antidumping o antisubvenciones? ¿alguno de esos ex ámenes ha durado más de 12 meses en China? 
e) Por favor explique una aparente contradicción entre los párrafos 69 y 68: En el 68 se 
establece la duración de una medida provisional, mientras que en el 69 se menciona que no hay WT/TPR/M/161/Add.1 
Page 90  
 
disposiciones acerca de su duración. Si no hay lí mite a la duración de una medida provisional, 
explique por favor la forma en que ello es compa tible con el artículo 7.4 del Acuerdo Antidumping. 
f) Sobre los procedimientos de reconsideración y judiciales, ¿la reconsideración se tramita ante 
una autoridad distinta a la que emitió la medida o ante la misma autoridad?  ¿cabe la posibilidad de 
presentar una u otra indistintamente o es necesario interponer una de ellas para luego proceder a 
solicitar la otra?  
g) Cuando una investigación es conjunta con el Ministerio de Agricultura, ¿cómo se da la 
sincronización entre los ministerios? ¿en  qué interviene cada dependencia? 
h) ¿Cuál es el porcentaje que los solicitantes deben reunir para considerar que actúan en 
representación de la producción nacional?  
i) Observamos que al país exportador se les notifica previamente a la iniciación de una 
investigación antidumping, ¿esas notificaciones se  hacen mediante una publicación o de forma 
personal?  
j) ¿Es suficiente que la solicitud la presen te una sola persona o empresa para iniciar la 
investigación? Si es así, explique de qué forma es ello compatible con el artículo 4.1 del Acuerdo 
sobre Salvaguardias, mismo que establece que debe  considerarse a una proporción importante de la 
producción total del producto de que se trate.  
k) Explique de qué forma es compatible el pl azo de 10 años de aplicación de una medida de 
salvaguardia con el artículo 7 de l Acuerdo sobre Salvaguardias. 
l) ¿Las tasas de interés aplicables a los créditos otorgados por el EXIM Bank son 
preferenciales? ¿Qué parámetros se utilizan para saber si dichas tasas de interés son preferenciales o 
no? ¿El EXIM Bank exige garantías a los exportadores para autorizar los crédito s? ¿Es posible que se 
autorice un crédito sin garantías o garantizado por una institución u oficina gubernamental? Si las 
tasas son preferenciales y/o no se exigen garan tías y/o se autoriza un crédito garantizado por una 
institución u oficina gubernamental, explique de qué forma es ello compatible con las disposiciones 
del Acuerdo SMC. 
m) Observamos que este párrafo menciona el ot orgamiento de garantías por parte del EXIM 
Bank a empresas chinas. ¿Esas garantías son aplicabl es a créditos obtenidos por empresas chinas en 
instituciones de crédito extranjeras? Explique de qué forma es ese otorgamiento de garantías 
compatible con las disposiciones del Acuerdo SMC. 
Preguntas acerca del Capítulo IV del TPR de China:
 
a) ¿En qué consisten las subvenciones otorgadas por el gobierno de China a su agricultura? ¿en 
qué instrumentos constan? ¿es posible tener acceso a esa información? 
PREGUNTAS ADITIONALES DE MÉXICO  
1. El documento establece como China ha manejado el tipo de camb io para mantener su nivel de 
exportaciones. ¿Que podriamos esperar para los próximos años respecto a la política comercial? 
2. El párrafo 29 de s161-1, establece la dife rencia entre los impuestos para empresas que 
producen para el mercado dómestico vs la de exportación. parecier a de esta información que este 
diferencia podria se considerado un subsidio a la exportación. ¿Cual es punto de vista de China al 
respecto?  WT/TPR/M/161/Add.1 
 Page 91 
 
 
3. En el párrafo 39, se establece que para al gunos sectores productivos existen requisitos de 
utilización de insumos domésticos. ¿en que sect ores se aplican y sus compatibilidad con los 
compromisos de adhesion de China a la omc? 
4. ¿Cuáles son las medidas de promoción a las exportaciones mencionadas en el párrafo 39? ¿Su 
compatibilidad con omc? ¿Podriamos contar con c opias de estos instrumentos, existen en inglés? 
5. Podrian explicarnos a que tasa otorgan prést amos los bancos del gobierno?. normalmente a 
cuantos años son estos prestamos.? Cuales son los sectores beneficiados.?  
6. De conformidad con los compromisos de china en su proceso de adhesion, estaba los cambios 
de regimen sobre las zonas economicas esp eciales. ¿Que cambios se han realizado? 
7. Respecto a los tiempos para realizar la im portaciones agradeceremos se nos informe por que 
se pide tan antelacion en la informacion como los cobros excesivos por errores. 
8. Agradeceremos información detallada resp ecto de las fracciones sujetas a permiso de 
importacion. asi como se han entregado sus notif icaciones respectivas a los comites de licencias, 
normas técnicas, así como sanitarias y fitosanitarias. 
9. China cuenta con tres distintos procedimient os para moniterar las importaciones, licencias, 
monitoreo y licencas automaticas. podria explicar Ch ina la necesidad de todas estas medidas, tomando 
en cuenta que los productos sujetos a dichos m ecanismos es donde se realiza el mayor comercio a 
nivel internacional. pareciera que quiseran  d esentivar las importaciones de estos productos. 
10. ¿Cuales son los tiempos para obtener las licencias de importación? 11. ¿Que pasa si un producto monitoreado excede los niveles de importacion de años anteriores? 
12. China ha dejado sin efecto algun producto al que se le haya dado una licencia automatica. de 
ser este el caso, favor de explicar detalladamente las razones para ello. 
13. En el párrafo 36 de la pa gina 73, se estipula el caso de que en casos especiales se puede 
importar insumos libres  de arancel y exportar. ¿Que pasa si se quedan en china, pagan todo el arancel 
de bien o unicamente el arancel de los insumos importados? WT/TPR/M/161/Add.1 
Page 92  
 
PREGUNTAS ADITIONALES DE MÉXICO (SERVICIOS)
 
Se solicita a China responder a las siguientes pre guntas formuladas con base en lo señalado en el 
documento WT/TPR/S/161, de fecha del 28 de Febrero de 2006: 
IV POLÍTICAS COMERCIALES, POR SECTORES / 5)  Servicios / iii) Servicios financieros 
a) Introducción. 
1. En el párrafo 153 se menciona que el gobier no chino es dueño de una parte significativa del 
sector financiero. México está interesado en conocer  si existe algún plan o proyecto gubernamental 
que modifique esta situación, permitiendo una mayor apertura de este sector. 
IV POLÍTICAS COMERCIALES, POR SECTORES / 5)  Servicios / iii) Servicios financieros 
b) Sistema bancario. 
2. En el párrafo 162 se mencionan una serie de re gulaciones relacionadas con el sector bancario 
de China, que dan sustento al marco jurídico del sect or. México quisiera saber si existe algún sitio en 
Internet en donde se puedan consultar dichas regulaciones. 
IV POLÍTICAS COMERCIALES, POR SECTORES / 5)  Servicios / iii) Servicios financieros 
d) Valores. 
3. En el párrafo 207 se señala que se hicieron modificaciones a la Ley de Compañías y a la Ley 
de Valores, las cuales entraron en vigor el 1 de en ero de este año. México está interesado en conocer 
cuáles fueron esas modificaciones que se realizaron a dichas leyes.  
IV POLÍTICAS COMERCIALES, POR SECTORES / 5) Servicios / iv) Telecomunicaciones 
a) Estructura 
4. En el párrafo 214 se señala que existen dos pr oveedores de servicios de telecomunicaciones 
que dominan prácticamente el mercado (95 por cien to). México está interesado en saber si existen 
planes por parte del gobierno para impulsar una mayor competencia y apertura en el sector, a fin de que se permita el acceso a otros proveedores que así lo deseen. 
IV POLÍTICAS COMERCIALES, POR SECTORES / 5) Servicios / iv) Telecomunicaciones 
b) Estructura regulatoria 
5. En el párrafo 217 se señala que China no cuenta con una ley que rija el sector de 
telecomunicaciones, sin embargo un proyecto de ley está siendo revisado. México está interesado en saber si existe alguna fecha de publicación de  la versión final de dicho proyecto.  
6. En los párrafos 217 y 218 se mencionan que existen “Regulaciones sobre 
Telecomunicaciones”. México solicita una explicación más amplia de cuáles son y en qué consisten dichas regulaciones. 
7. En el párrafo 220 se menciona que no existe una definición clara sobre qué tipos de servicios 
de telecomunicaciones son cubiertos por las licencias de operación. México solicita clarificar y profundizar sobre este punto.  WT/TPR/M/161/Add.1 
 Page 93 
 
 
IV POLÍTICAS COMERCIALES, POR SECTORES / 5) Servicios / v) Transporte a) Servicios 
de transporte aéreo 
8. En el párrafo 233 se menciona que la partic ipación del capital extranjero en empresas aéreas 
domésticas no debe ser mayor al 49 por ciento . ¿Existirá algún proyecto para cambiar dicha 
disposición, en el sentido de hacer al sector más abierto?  
9. En el párrafo 244 se menciona que los extranjeros no podrán operar aeropuertos y servicios 
aeroportuarios de manera exclusiva, sino que un nacional de China deberá tener el control 
mayoritario. México está interesado en conocer cu ál es el porcentaje máximo permitido para que un 
extranjero pueda partic ipar en esas actividades. 
PROPIEDAD INTELECTUAL 
10. El sistema de registro de indicaciones geográficas que se señala en el documento (pag 151-
152) aplica también para las IG extran jeras? Es decir, si un país esta interesado en proteger una IG en 
China utilizaría este sistema? De ser el caso, ¿quienes podrían ser las personas autorizadas para 
solicitar el registro? WT/TPR/M/161/Add.1 
Page 94  
 
QUESTIONS BY TURKEY
 
WT/TPR/G/161 (page 7, para 18) 
The Government report states that the agricultural tax system has undergone fundamental reform and 
as of 2006 the agricultural tax  has been abolished throughout  the country. 
 - Since taxation of agricultural sector has a long history  in China dating back to 
48 years ago, we  appreciate if the Chinese Delegation could give information on the  
experience  gained ? 
 - We would also like seek information on the expectations from the introduced 
agricultural tax reform in terms of   agricultural production and consumption? 
WT/TPR/S/161 (page 8, para 10) I. ECONOMIC ENVIRONMENT /(2) MAIN DEVELOPMENTS: POLICY AND ECONOMIC 
PERFORMANCE 
The Secretariat report mentions that China’s rapi d growth among others  led widening disparities in 
incomes  between urban and rural areas. 
 - Is there any specific regulation to address this problem or any plan by Government  to 
do so? 
WT/TPR/S/161 (page 22, para 44) 
I. ECONOMIC  ENVIRONMENT/(4) MAIN STR UCTURAL REFORM ISSUES (v) Competition 
Policy 
It is understood from the Secretariat Report that th ere are some challenges to adopt comprehensive 
competition law and establish an effective enforcement authority in China. 
However in  a country in which public ownership remains as one of the mainstays in the economy, 
need for an effective competition authority  unqu estionable  to address problems stemming from  anti 
–competitive practices. 
 - What are the developments made in enacting competition law so far? 
 - How  do the rights of private enterprises ar e protected  against  unfair practices ?    
WT/TPR/S/161 (page 41, Box II.2) 
II. TRADE POLICY REGIME:FRAMEWORK AND OBJECTIVES  (3) FORMULATION, 
ADMINISTRATION AND IMPLEMENT ATION OF TRADE POLICY 
The Secretariat report mentions some of the barrier s to inter-provincial trade and the constraints to 
collect data on the  possible effects of gradual  economic reforms. 
Could Chinese authorities can make an assessment if the regional protectionism across provinces had 
also affected the  international trade of China with the rest of the world?  WT/TPR/M/161/Add.1 
 Page 95 
 
 
WT/TPR/S/161 (page 51, para 73) 
II. TRADE POLICY REGIME:FRAMEWORK A ND OBJECTIVES (5) TRADE AGREEMENTS 
AND ARRANGEMENTS  (iv) Unilateral Preferences  
The Secretariat report mentions that unilateral special  preferential tariffs are offered by China  to the 
least developed countries  number of whic h  increased  to 39 as of September 2005. 
- What kind of  pre-conditions does China seek to  grant  unilateral preferential tariffs?  
WT/TPR/S/161 (page 51, para 74, 75) 
II. TRADE POLICY REGIME:FRAMEWO RK AND OBJECTIVES/ (6) FOREIGN 
INVESTMENT REGIME (i) Recent Developments in FDI policy 
As mentioned in the Secretariat Report China is th e largest developing country recipient of Foreign  
Direct Investment. We understand from the report th at the central  and some provincial governments 
also  encourage firms to invest abroad.  
- Is there any differentiation between th e  central and provincial governments in 
implementing investment policies both for inflow and outflow of FDI? 
WT/TPR/S/161 (page 53, para 79, 80, 81) 
II. TRADE POLICY REGIME:FRAMEWO RK AND OBJECTIVES/ (6) FOREIGN 
INVESTMENT REGIME (ii) Legislative Framework and procedures 
It is recognized that,  according to the recently  amended Catalogue for the Guidance of Foreign 
Investment Industries, which entered into force on 1 January 2005,  four  different types of industries 
are listed to take into account for decisions on foreign investment. 
We understand from the  Secretariat report that the recent amendment extends the list of industries in 
the  “encouraged” category which includes indus tries with improved technology and are less 
polluting.   
- Could Chinese delegation clarify the dis tinction between the “encouraged”  and 
“permitted” categories?  
- Under which conditions an “encouraged” industry might be permitted for foreign 
investment.? 
- Is there regular review  for the Guidan ce of Foreign Investment Industries  in 
compliance with the needs of industry?  
WT/TPR/S/161 (page 60, para 3) 
III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
The Secretariat report points out that as import barriers have fallen export regime remains complex 
and there are some measures to manage certain expo rts. It is understood that those measures may be 
altered to meet the demands of the domestic industry and industrial developmental goals.  
- Does China intend to simplify its export regime ? WT/TPR/M/161/Add.1 
Page 96  
 
WT/TPR/S/161 (page 60, para 3,4) 
III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
The Secretariat Report mentions that  the SPS regime  of China is a complex one with a large number 
of laws. It is further noted that in the area of TBT’s the compliance with th e international standards 
remain low. 
- Does China intend to simplify its SPS measures? 
- Does China plan to make its  TBT standards at national level  in line with the  
international standards?  
WT/TPR/S/161 (page 60, para 5)  
III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
It is  noted in the Secretariat Report that Chin a’s Law  on Government Procurement does not include 
purchasing  by state-owned enterprises since accordin g to the report, SOE’s  operate under market 
rules. 
- Could Chinese delegation  clarify on this issue?  
It is further stated in the same paragraph that  th ere is a preference  for state purchases  of domestic 
goods, construction and services and that goods may be purchased from foreigners under exceptional 
circumstances.   
- How could the government procurement prac tices of China can be justified under the 
Government Procurement Agreement to whic h China is a party  while there is a 
preference for state purchases of domestic goods, construction and services? 
- What are exceptional circumstances to purchase goods, construction and services 
from foreigners? 
WT/TPR/S/161 (page 61, para 6)  
III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
We note from the Secretariat report that  although th eir reform dates back to late 1970’s there have 
been quite a large number of stat e owned  enterprises in China. 
- Are there any further challenges to comple te closure of state-owned enterprises other 
than compensation and re-allocation of em ployees and alternative arrangements for 
the social functions including health and education? 
- Could Chinese authorities explain  on which sectors are those state owned enterprises 
mostly wide-spread? 
- What are the ratio of subsidized state owned enterprises in overall ? 
- When does China plan to end subsidize state-owned enterprises?  WT/TPR/M/161/Add.1 
 Page 97 
 
 
WT/TPR/S/161 (page 62, para 11)  
III. TRADE POLICIES AND PRACTICES BY MEASURE (2) MEASURES DIRECTLY 
AFFECTING IMPORTS (i) Procedu res (a) Customs Procedures 
As  stated in the Secretariat Report, under the “Rul es for the Registration of Foreign Trade Operators” 
foreign traders engaged in the import and export of  goods  or technologies are required to register  
with MOFCOM or authorized bodies. 
- Could Chinese delegation explain what does  registration of foreign traders serve for? 
- Is there  any  plan to abolish this requirement of registration?  - What are the formalities  required for registration?     
WT/TPR/S/161 (page 63, para 19, 20) 
III. TRADE POLICIES AND PRACTICES BY MEASURE(2) MEASURES DIRECTLY 
AFFECTING IMPORTS  (ii) Tariffs (a) Overview 
It is noted that under the  Regulations on Import and Export Tariff  there are various kinds of   duty 
rates applied  on imports.  
In this context, the Secretariat report mentions that  interim tariff rates which are usually lower than 
MFN rates are applied to certain goods. It is furthe r noted that where a particular tariff line has an 
interim rate, the lower of the two possible rates is applied at the border for countries eligible for MFN 
duty rates.  
- Could Chinese Delegation clarify under what circumstances interim rates are applied?  - Are exporters  informed in  well advance of  any changes on interim rates?  - Is there an opportunity of accessing interim rates via internet? 
- Could Chinese Delegation clarify the diffe rence between interim rates and general 
duty rates? 
WT/TPR/S/161 (page 75, para 45) 
III. TRADE POLICIES AND PRACTICES BY MEASURE(2) MEASURES DIRECTLY 
AFFECTING IMPORTS  (v) import restrictions(a) General import prohibitions 
- Does China aim to eliminate import pr ohibitions which are according to the 
Secretariat Report  around 6.5% of the tariff lines? 
WT/TPR/S/161 (page 78, para 52) 
III. TRADE POLICIES AND PRACTICES BY MEASURE(2) MEASURES DIRECTLY 
AFFECTING IMPORTS v) import restrictions(c) Rest rictions and licensing /Import Licensing 
In the Secretariat Report it is underlined that accord ing to China’s notification to the WTO, if the 
justification for importation is believed to be “ unconvincing” the application may be refused.   
- Could Chinese delegation explain what is meant  by “unconvincing” ? WT/TPR/M/161/Add.1 
Page 98  
 
WT/TPR/S/161 (page 13, para 19) 
I. ECONOMIC ENVIRONMENT(3)  MACRO ECONOMIC POLICIES (i)Monetary and 
Exchange Rate Policies 
In July 2005 The People’s Bank of China has declar ed that it was moving from a fixed exchanged rate 
regime towards a managed floating one. Since this  move, Secretariat Report mentions that “ the 
nominal effective exchange rate has (as of November 2005) appreciated roughly by 5 %.”  
- Could China please explain, what has been, if  any, the initial effect of exchange rate 
regime change on the foreign trade developmen ts of China in the last two quarters of 
2005 ?  
WT/TPR/S/161 (page 21, para 42) 
I. ECONOMIC ENVIRONMENT/ (3)  MACROECONOMIC POLICIES (iv)  Capital Market 
Reforms 
Secretariat Report mentions that “ State-owned co mmercial banks are among the financial institutions 
most exposed to non-performing loans (NPLs). NPLs  amounted to about 25 % of total loans or 30 % 
of GDP by the end of 2004. 
- Could Chinese Delegation kindly provide information about the sectoral breakdown 
of NPLs for the 2001-2005 period, includi ng especially the textiles and clothing 
sector? 
WT/TPR/S/161 (page44, para 41-45) 
II. TRADE POLICY REGIME:FRAMEWORK AN D OBJECTIVES/ (5) TRADE AGREEMENTS 
AND ARRANGEMENTS (i)WTO 
- Could China kindly provide an assessment about how she views the prospect for 
south-south trade in terms of non agricultural market access negotiations? 
WT/TPR/S/161 (page115, para 187) 
III. TRADE POLICIES AND PRACTICES BY MEASURES (4) MEASURES AFFECTING 
PRODUCTION AND TRADE (ii)Incentives (a) Direct transfers and subsidies 
The Secretariat Report mentions that “Since accedi ng to the WTO, China has made no notifications 
under Article 25.1 of the WTO Agreement on Subsidi es. According to the most recent statement by 
China to the Committee on Subsidies and Counter vailing Measures in November 2005, China will 
make all efforts to submit before the end of the year”  
- Could China give information if she has any prospect about the time that she will 
provide these notifications?   WT/TPR/M/161/Add.1 
 Page 99 
 
 
WT/TPR/S/161 (page 145 ) 
III. TRADE POLICIES AND PRACTICES BY MEASURES (4) MEASURES AFFECTING 
PRODUCTION AND TRADE (ix)In tellectual Propert Rights 
The Secretariat Report mentions that “The Secretariat was unable to obtain clarification from the 
authorities on any specific labeling requirements for pharmaceuticals, Chinese medicine, cosmetics, 
genetically modified organism, or for environmentally friendly products.”  
- Please provide information about the labeling requirements about the above 
mentioned sectors. 
WT/TPR/S/161 (page 153, para 304 ) 
III. TRADE POLICIES AND PRACTICES BY MEASURES (4) MEASURES AFFECTING 
PRODUCTION AND TRADE (ix)Intellectual Property Rights  (g) Enforcement 
Secretariat Reports explains that the “Enforcement of intellectual property rights  in China is complex 
with a large number of responsible authorities...”  and  despite these efforts, it appears that 
enforcement remains weak and infringement of  intellectual property rights widespread.” 
Could Delegation of China provide further inform ation about the government strategy towards 
increasing coordination and strengthening enforcement process in China? 
WT/TPR/S/161 (page 193 ) 
IV. TRADE POLICIES BY SELECTED SECTORS (4) MANUFACTURING  (iii) Textiles and 
Clothing 
The Secretariat Report takes note of “several unusua l features” of VAT rebates applied by China, 
ranging from differences between the rate of VAT act ually charged and the rate rebated, to several 
fluctuations in the VAT rebate rates done either for the sake of meeting industrial development goals 
or reducing accumulated arrears. 
The Report also mentions that the textiles and apparel exports were among the industries most 
affected by the reductions in the rebate rates. 
- In this context, could Chinese delegati on kindly provide information about the 
amount of rebated VAT to the textiles and clothing industry and its  percentage among 
the total amount of VAT repayments? 
The Secretariat Report mentions that the Chin a National Textile and Apparel Industry Council 
(CNTAC) questioned the rationale of the tariff rate quota (TRQ) system for cotton applied by China as for the past few years TRQs in excess of the quota amount have been awarded for imports of cotton. 
- In this regard, could Chinese delegation please elaborate on the reasoning of this 
practice concerning TRQs?  
 - We would also be interested in learning China’s point of view on the effects of VAT 
rebates to the global trade? WT/TPR/M/161/Add.1 
Page 100  
 
QUESTIONS BY MALAYSIA
 
1. How does China apply its manufacturing licen se?  What are the procedures involved in 
applying for this license?  Are the licenses granted automatically?  If no, what are the criteria that 
need to be fulfilled before the license is granted? 
2. Could China explain in detail its Automa tic Import Licensing Administration (AILA) and 
how this mechanism works?  What are the products  that are subjected to AILA and how are these 
products selected? Can China guarantee that this will not be used to manage imports?   
3. Could China explain in detail its Compulso ry Product Certification System (CCC) Mark 
Requirement?  What does this entail a nd what are the costs involved?   
4. Instead of complying with the existing intern ational standards, China is pursuing to set its 
own national standards on products such as IT pr oducts, telecommunications  equipments, and audio 
and video products.  Why are these national st andards necessary when  there are already 
internationally accepted standards in place?  WT/TPR/M/161/Add.1 
 Page 101 
 
 
QUESTIONS FROM THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, 
KINMEN AND MATSU on the Report by the Secretariat (WT/TPR/S/161)  
II.  TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVE 
(4)  TRADE POLICY OBJECTIVES 
(Page 43, paragraphs 37-40) 
According to article 2.1 of the trips agreement, all members of the wto should comply with articles 1 
through 12, and article 19, of the paris convention (1967), which has provisions for priority rights in 
article 4.   Therefore, all members of the wto, including china and the separate customs territory of 
taiwan, penghu, kinmen and matsu, should accept priority rights claims from each other.  However, 
according to article 5 of china’s “related re gulations for accepting taiwanese people’s patent 
applications” , our nationals may claim priority rights only providing that the patent has been filed first 
in a party to the paris convention, to which we are not a signatory.  
Our question to China is, if the patent is first filed in the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu, either by a national of ours or a foreign national, pursuant to Articles 
2.1 and 4 of TRIPS, can priority rights still be claimed in China? 
(6)  FOREIGN INVESTMENT REGIME  
(II)  LEGISLATIVE FRAMEWORK AND PROCEDURES (page, 53, paragraph 81)  
The report states that: “Foreign investors in the ‘e ncouraged’ category are permitted to import capital 
equipment duty free.”  We would appreciate further details of how this scheme operates, as follows: 
i) Are the said foreign investors allowed to import any capital eq uipment duty-free, at any time, 
or are there conditions attached, for example, is it only capital equi pment not produced 
domestically at the time of initial investment that is eligible.  
ii) We wonder also whether this duty-free sch eme may be considered “revenue foregone”, 
benefiting as it does those “encouraged” ent erprises specifically, which would make it a 
subsidy subject to notification under Article 25 of the SCM Agreement.  Further clarification 
from China on this point would be most welcome. 
Page 115, paragraph 187 of the same report, under the subheading “Incentives”,  states that: “Since 
acceding to the WTO, China has made no notifications under Article 25.1 of the WTO Agreement on Subsidies.” 
In light of the fact that more than four years ha ve passed since its accession to the WTO, we would 
ask China to please notify the WTO immediately of  any of its subsidy me asures, and to submit annual 
reports as required under Article 25 of the SCM Agr eement, in order to be in compliance with WTO 
rules. WT/TPR/M/161/Add.1 
Page 102  
 
III.  TRADE POLICIES AND PRACTICES BY MEASURE 
(2)  MEASURES DIRECTLY AFFECTING IMPORTS (i)  Procedures 
(a)  Customs procedures 
(page 62, paragraph 13)   
It is indicated that if the duty is not paid within three months of the payment period, Customs may 
take certain measures, including notification to th e importer’s bank to deduct the amount due directly 
from the account.  
i) Does this mean that all importers who wish to  pay duties at designated banks have to disclose 
their account information to Customs? 
ii) Could China please elaborate on the legal basis for this requirement by its Custom, and 
whether all banks in China holding importers’ accounts are bound by the above-mentioned 
Customs notifications?  
iii) We would also appreciate knowing whether such  measure is applicable as well to an entry for 
which a protest or an appeal against the am ount of duty has been filed with the relevant 
authorities? 
(page 63, paragraph 15)   
According to information provided by China’s auth orities, the internal maximum examination period 
is 48 hours, and in practice the majority of goods are cleared during this period.  
We consider it possible that this relatively l ong throughput time might be the result of frequent 
Customs interventions? Could China please inform us of the average rate, or frequency, of physical 
examinations of imported goods? 
(vi) Trading rights 
(page 81, paragraph 61)   
In light of the statement “Any liberalization in di stribution services is to be carried out in accordance 
with China’s schedule of specific commitments in the GATS.”, some further clarification from China 
on the following aspects would be appreciated: 
(1) China committed to allow wholly foreign-owne d companies to engage in distribution services 
before 11 December, 2004.  According to Ch ina’s “Administrative Measures on Foreign 
Investment in the Commercial Sector”, issu ed after the US-China Joint Commission on 
Commerce and Trade (JCCT) meeting in April 2004, wholly foreign-owned companies are 
allowed to engage in wholesale trade servi ces, commission agents’ services, retailing 
services, franchising, and maintenance and repair services. However, the procedure for applying for the various kinds of operating rights of distribution services remains unclear.   
 We should be grateful for further clarifica tion from China of the relevant application 
procedures for foreign distribution services suppliers? 
(2) According to Article 33 of the “Admin istrative Measures on Commercial Franchising 
Operations”, issued by China’s Ministry of Commerce in December 2004, after foreign-
invested enterprises (FIEs) that intend to enga ge in commercial activities by franchising apply 
to expand their business scope to include “enga ging in commercial activities by franchising”, 
and receive approval by the relevant registration agency, then “FIEs shall register with the 
Administration for Industry and Commerce for am endment to their registrations within one  WT/TPR/M/161/Add.1 
 Page 103 
 
 
month after the receipt of the new FIE approval certificate.”  
 Could China please advise how much time is re quired for the amendment to the registration 
of an FIE to be approved? 
(3) China’s “New National Standards on Classificati on of Retail Industries”, issued jointly by the 
Standardization Administration of China a nd the General Administration of Quality 
Supervision, took effect in October 2004.  
 Do these standards apply equally to both foreign- invested and domestic enterprises, and thus 
conform to national treatment principles?  
(viii) Contingency measures 
a) Anti-dumping and countervailing 
Anti-Dumping: 
(page 83, paragraph 67)  
The report states that “anti-dumping complaints may be brought to the relevant ministry [MOFCOM] 
in writing, by any domestic industry, natural or legal person or relevant organiza tion, on behalf of the 
domestic industry.”  It would appear, however, that a very high proportion of anti-dumping 
investigations have been filed by Chinese national enterprises or companies that are beneficiaries of 
government subsidies.   
i) Would China please explain how its domestic  industries’ pricing and market conditions can 
be validated as being fair in the course of determining that such industries have suffered 
injuries as a result of the dumping of products on the Chinese market from abroad? 
ii) Specifically, how does the investigating author ity separate out the pricing effects of the 
subsidies in its determination of causation? 
(page 84, paragraph 68) We would appreciate further clarification from Ch ina on the following aspects of its anti-dumping 
regulations: 
(1) As indicated in the report, provisional anti-dumping measures may not exceed four months 
from the effective date set forth in the public  notice regarding the decision on provisional anti-
dumping measures and, in special circumstances, may be extended to nine months.  “Special 
circumstances” refers, for example, to cases that i nvolve several categories of products rendering the 
investigation complex.  According to PRC authoriti es, there have been such cases, but no details on 
the number of such extensions were provided to the Secretariat. 
According to Article 7.4 of the Anti-dumping Ag reement (Agreement on Implementation of Article 
VI of the GATT 1994), provisional measures may be extended to a period not exceeding nine months 
in circumstances where it is on request by exporter s representing a significant percentage of the trade 
involved; and when the authorities, in the course of  an investigation, examine whether a duty lower 
than the margin of dumping would be sufficient to remove injury. 
Could China please explain further and, if possi ble, provide specific  examples of, the above-
mentioned “special circumstances” in which the provisional anti-dumping measures may be extended 
to nine months, and show how they are consistent  with Article 7.4 of the Anti-dumping Agreement? 
(2) As also indicated in this section of the report, the decision to implement provisional anti-
dumping measures is made by the Tariff Commission of the State Council on the recommendation of WT/TPR/M/161/Add.1 
Page 104  
 
the Ministry of Commerce.  The WTO Anti-dumping Agreement stipulates that provisional measures of anti-dumping duties may only be implemented when the following three circumstances concurrently apply:  1) an anti-dumping investigatio n has been initiated; 2) a preliminary affirmative 
determination has been made of both dumping and injury, and 3) the implementation of anti-dumping 
duties are determined to be necessar y to prevent such inju ry in the course of the investigation.  We 
find that in almost every case a provisional duty was imposed by the Tariff Commission after the 
preliminary determination was made. 
It would be appreciated if China could please explain how the Trade Commission arrives at its 
determination that a provisional duty should be im posed, and how it substantiates the fact that all 
three circumstances exist as specified by the Agreement?  
Countervailing measures: 
(page 86, paragraphs 75 and 76)  
It is stated that any party that is not sa tisfied with the MOFCOM decision may apply for 
administrative reconsideration under the Law on Admini strative Reconsideration, or file a lawsuit in 
the People's Court. 
We would therefore like to ask China: 
i) How many anti-dumping duties and countervailing duties currently in effect have been 
appealed to the People’s Court? 
ii) Could China please also provide more inform ation regarding its judicial review mechanism.  
For example, what is the typical duration of j udicial reviews undertaken by the Court?  Does 
the Court have the authority to withdraw or rep eal an AD/CVD case outright after it reverses 
the determination of the MOFCOM, or does it only have the authority to reverse the determinations and remand back to MOFCOM for new determinations? 
(ix) Standards and other technical requirements 
(c) Product certification 
(page 91, paragraph 93)  
There are 11 authorized accredited certification bodies (ACBs) and 124 accredited testing laboratories 
(ATLs) in China for processing applica tions and testing for the CCC Mark. 
i) Does China approve any ACBs or ATLs that are lo cated in the territories of other Members?  
If ‘yes’, please provide a list of the foreign AC Bs or ATLs approved by China and information 
on how a certification body or testing laborato ry can become an ACB or ATL (with related 
regulations or procedures). 
ii) If the answer is ‘no’, by when does China pl an to permit the participation of conformity 
assessment bodies located in other Members in the CCC Mark system, as specified in 
Article 6.4 of the TBT Agreement? 
(d) Sanitary and phytosanitary measures 
(page 92, paragraph 98)   
The report indicates that import permits, if issued, fo r animals and plants “are valid for a period of six 
months.”  However, according to China’s General Administration of Quality Supervision, Inspection 
and Quarantine (AQSIQ) Decree No. 25 (“Administ rative Measures on Examination and Approval of 
Entry Animal and Plant Quarantine”), the permit is valid only for the calendar year in which it was 
issued.  WT/TPR/M/161/Add.1 
 Page 105 
 
 
If an import permit is issued during the second half of the calendar year, please could China confirm 
whether the validity remains at six months?   
(page 93, paragraph 99) 
The report also states that, “…there are three methods  of inspection carried out at the border for goods 
subject to SPS measures.”  
Could China please provide further explanation of the principles or rules for categorizing goods 
subject to different inspection methods? 
(4) MEASURES AFFECTING PRODUCTION AND TRADE 
(iv) State-Owned enterprises (SOEs) 
(b)  Reforms 
(pages 130-131, paragraph 224) 
The performance of SOEs from 2001-2004 is shown in  Table III.14. We would appreciate China’s 
clarification of the following:  
i) Are the performance figures for 2005 now availabl e?  If so, we would appreciate having this 
 information. 
ii) In addition, we are interested in knowing whet her China has a plan for future privatization of 
the SOEs and, if so, may we please be informed  of the schedule and the proposed methods of 
privatization? 
(vii) Competition policy 
(d) The forthcoming Anti-monopoly Law (page 141, paragraph 253)   
With reference to the draft of a new “Anti-monopoly  Law” that was released in May 2005, we note 
that “Other important considerations for its effec tiveness will be the sectoral coverage of the law and 
its application in relation to SOEs and to administrative and state monopolies.”  
Could China please explain which sectors, SOEs  or administrative and State monopolies may be 
exempted from the application of this new competition law? 
IV. TRADE POLICIES BY SELECTED SECTORS 
(3) ENERGY 
(i) Petroleum (pages 180-181, paragraphs 55, 56 and 57)   
It is noted that China has decided to open oil ex ploration, petroleum refining, wholesale business, and 
retail business in the oil sector to private enterpri ses or foreign participants, but the information 
regarding the procedures, requirements, and app licants’ qualifications is not available.   
Bearing in mind the transparency and regulatory discip lines as stipulated in the GATS Agreement, 
could China please advise us when the rel evant information could be available? 
(page 181, footnote 119 to paragraph 59) 
Footnote 119  states: “…it is reported that the NDR C [National Development and Reform 
Commission] changed the price adjustment m echanism in 2003. According to these changes, 
domestic prices are adjusted irregularly, according to domestic economic needs.”  WT/TPR/M/161/Add.1 
Page 106  
 
i) Would China please elaborate on what are these “domestic economic needs”? 
ii) Does China take into account any considerati ons other than “domestic economic needs” 
 while adjusting the prices of refined oil products? 
iii) What is the procedure for adjusting prices? 
(page 181, paragraph 59)   
Even though the pricing mechanism envisages price adjustments, pri ces of refined oil products in 
China have been adjusted only three times in 2004 a nd five times in 2005, despite the increase in the 
international crude oil price. 
Could China therefore please advise us of any NDRC plans to mitigate the infl exibility in pricing of 
domestic oil products and what methods it would propose to make these prices follow more closely 
the fluctuations in the international market. 
(page 182, paragraph 61) 
The report also states “… it seems that there is no comprehensive law and no proper regulatory 
framework for the [petroleum] sector.”  
Please advise whether the Chinese government is  planning to establish a comprehensive law and 
proper regulatory framework for the [petroleum] sector?  
(ii) Electricity 
(page 183, paragraph 62)   
The report states: “Also, while efforts to unify the market have been made, it remains fragmented, and 
electricity trade between provinces is low.”   
Therefore, we would like to ask China which policy t ools are used by its relevant authorities to unify 
the market.  Also, what measures, if any, are being adopted in order to mitigate and handle the 
current fragmented situation in the market? 
(a) Electricity reform 
(page 184, paragraph 67)   
This paragraph indicates some of the key measures in the electricity reform plan approved by the 
State Council in April 2002, such as the separa tion of transmission from distribution, and a 
competitive system for grid access and competition at the retail level, have not been introduced.   
i) We would like to know whether the final li beralized framework and exact process of the 
 transition to a competitive power market have been modified?  
ii) If this is something that is being planned,  then what would be the main considerations? 
(5) SERVICES 
(1) Overview 
(page 207, paragraph 147) 
The report mentions that “The main exports of services in 2004 included: tourism, which accounted 
for some 41% of receipts…”  However, China restri cts joint ventures, or wholly foreign-owned travel 
agencies and tour operators in their provision of  services for Chinese people traveling abroad.    WT/TPR/M/161/Add.1 
 Page 107 
 
 
Does China have any plan to ease the above-menti oned market access limitations?  If yes, please 
provide us with relevant information. 
(ii) Commitments under the General Agreement on Trade in Services (pages 208–209, paragraphs 149-152, ref. page 298, Table AIV.2)  
China’s sector specific commitments in the GATS under 1.A.(a) Legal services (excluding practices 
of Chinese law) state that “There are market access limitations on the business scope of services 
provided by foreign representative offices as well as on the qualifications of members of representative offices of foreign law firms”. 
Does China have any plans for easing these market  access limitations by allowing, for example, 
foreign attorneys to hire local attorneys or fo rm partnerships with them, and for lifting the 
requirement that all representatives must reside in Ch ina for at least six months?  If so, when can 
such limitations be expected to be eased? 
(iii) Financial Services  
(d)  Securities Regulatory and legislative framework 
(page 225, paragraph 202)   
According to Article 8 of China’s  “Provisional Ordinance Governing Futures Trading”, members of a 
futures exchange shall be juridical persons regi stered in the People’s Republic of China.   
i) Would China please clarify the qualifications for registering and also show how these 
constraints conform to the WTO’s Understanding of Commitments in Financial Services?  
ii) If a foreign juridical person sets up a branch in China, for example, will the branch be 
allowed to apply for membersh ip of a futures exchange?  
iii) What are the qualification requirements? 
Article 49 of the said “Provisional Ordinance”  states that any organization (including futures 
brokerage firms) or person may not  engage in overseas futures trading without authorization by the 
competent authority.  Furthermore, a violator’s illegal earnings will be confiscated, and a fine worth 
1 to 5 times the amount of illegal earnings will be levied. 
Could China please explain the ra tionale for maintaining this kind of market access limitation on 
overseas futures trading? 
(iv) Telecommunications Services  
(a) Structure  (page 229, paragraph 213)   
“In April 1995, the Directorate General of Telecommunications (DGT) was separated from MPT [the 
Ministry of Post and Telecommunications] to cr eate China Telecom.  As a result of further 
deregulation and reform (including separation of postal and telecommunications services and 
restructuring of telecommunication services), there are currently six main nationwide basic telecommunications service providers.” 
It would be appreciated if China could please provid e us with a comprehensive list of the regulatory 
agencies and the scope of their respective authorities under the Ministry’s charge.  We are particularly interested in learning if there are any measures taken to ensure that the WT/TPR/M/161/Add.1 
Page 108  
 
telecommunications regulatory authority is organizationally separated from State-run 
telecommunications operators and independent of their operations? 
(b) Regulatory structure and measures 
(page 232, paragraph 217)  
We note that “...a new telecommunications law is in preparation and a draft of the new law is 
currently being revised.” 
i) Will China be providing a reasonable period fo r comment on the draft to the appropriate 
authorities before the new law is promulgated? 
ii) Could we please be provided with a draft copy of the new law?  
iii) Apart from the aforementioned telecommunica tions law, are there any other laws and 
regulations that apply to foreign firms inte rested in investing in telecommunications 
businesses in China?  If so, could we please be provided with a copy, or copies? 
(page 232, paragraph 218)   
“The ‘Regulations on Telecommunications’ state that a dominant service provider cannot refuse an 
interconnection requirement of any other ser vices operators of specific networks.” 
It would be appreciated if China could indicate  whether fulfillment of the obligation to unbundle 
network elements is limited to dominant te lecommunications operators, or whether all 
telecommunications operators must fulfil the obligation to unbundle network elements? 
(v) Transport 
(b) Maritime transport services Auxiliary services 
(page 244, paragraph 260) 
“According to the authorities, the establishment of the China United Tally Company (CUTC) on 
18 March 2003 constituted a step to introduce competition in tally services.”   
Could China please provide further details of this step to introduce a competition mechanism in tally 
services? 
Port services 
(page 245, paragraph 267)   
“Foreign investment in port construction and manage ment is listed as ‘encouraged’ in the ‘Catalogue 
for the Guidance of Foreign Investment Industries’.” 
Please advise what advantages the investor can expect  to enjoy by investing in these “encouraged” 
industries, and what are the encouragements? 
(page 245, paragraph 269)  
“In China, a port may have more than one steve doring company, but each stevedoring company is 
confined to one port.”   
If this is the case, we would like to ask China if any exception is permitted for a stevedoring company 
that cannot achieve economies of scale?  WT/TPR/M/161/Add.1 
 Page 109 
 
 
PREGUNTAS DE LA REPÚBLICA ARGENTINA  
Sobre la base del documento  WT/TPR/S/161 , la República Argentina desea formular las siguientes 
preguntas: 
1. En la página 74, párrafo 4, el informe ha ce referencia a que en materia de Obstáculos 
Técnicos al Comercio, China se ha comprometido a adoptar normas internacionales en donde 
corresponda pero que, no obstante, el porcentaje  de normas nacionales equivalentes a normas 
internacionales se ha mantenido inalterado d esde 2000 en torno a un 32 por ciento. 
En la página 110, párrafo 90, el informe hace menc ión a que sólo alrededor del 32 por ciento de las 
normas nacionales, en promedio, eran equivalentes a las normas ISO/CEI durante el período objeto de 
examen.  
¿Prevé el gobierno adoptar medidas para armonizar sus normas y prescripciones técnicas de acuerdo 
los estándares internacionales? 
2. En la página 92, párrafo 46, el informe menc iona que la Ley de Comercio Exterior permite a 
la Autoridad Competente de Comercio Exteri or (MOFCOM) del Consejo de Estado dictar 
prohibiciones o restricciones temporales a las impor taciones de determinados productos. ¿Sobre que 
bases se deciden estas restricciones y que productos abarcan? 
3. En la página 94, párrafo 48, el informe h ace referencia a que desde su adhesión a la OMC, 
China ha introducido varios cambios en su régimen de licencias de importación, pero que éste sigue 
siendo  intrincado y opaco. ¿Tiene previsto el gobi erno continuar con el proceso de reforma de este 
sistema a fin de mejorar y transparentar su funcionamiento? 
4. En la página 113, párrafo 99, el informe menc iona que China, en el caso de las mercancías 
sujetas a medidas sanitarias y fitosanitarias, aplica tres métodos de inspección en frontera que varían 
en función del momento en que se realiza la inspe cción y el plazo en que tarda en despacharse la 
mercadería. ¿Podrían detallar cuáles son los produc tos para los que se aplican los distintos métodos? 
5. En la página 183, párrafo 285, el informe menci ona que, al no estar previstas en la legislación 
vigente, las importaciones paralelas (cuando un ag ente no autorizado directamente por un productor 
importa bienes fabricados por éste para su reventa) no están prohibidas en China. ¿Tiene previsto el 
gobierno estudiar la implementación de alguna legislación que regule este tema? 
6. En la página 240 párrafo 106, el inform e señala que, según el CNTAC (Consejo Nacional de 
la Industria de los Textiles y las Prendas de Ves tir de China) existen restricciones cuantitativas a la 
importación de materias primas para el sector de los textiles y las prendas de vestir, consistentes en 
contingentes arancelarios para el algodón y que el  mismo CNTAC ha cuestionado el fundamento de 
dichos contingentes. ¿El gobierno contempla la pos ibilidad de eliminar estos contingentes para el 
futuro? 
7. En la página 241, párrafo 109, el inform e menciona que China impone restricciones a la 
importación y exportación de determinados pro ductos textiles, que éstas se están eliminando 
paulatinamente. En este sentido, cita sólo un ejem plo de algunos productos de capullos de seda sujetos 
a contingentes y licencias de exportación. ¿Qué otros productos textiles han sido beneficiados con 
estas eliminaciones? 
8. En la página 75, párrafo 8, el informe menc iona que el Gobierno está tratando de estimular el 
desarrollo del sector no público con su asistencia, incluso mediante donaciones y otras medidas para 
facilitar el acceso a la financiación. ¿Podrían exp licar en que consisten estas medidas y sobre que 
bases se aplican? WT/TPR/M/161/Add.1 
Page 110  
 
9. En la página 101, párrafo 64, el informe ha ce referencia a que, en  virtud de la Ley de 
Comercio Exterior de 2004, determinados produc tos pueden ser objeto de comercio de Estado. 
¿Podrían informarnos cuales son esos productos? 
10. En la página 92, párrafo 46 se menciona que  la Ley de Comercio Exterior permite a la 
autoridad competente de comercio Exterior del Co nsejo de Estado dictar prohibiciones o restricciones 
temporales a las importaciones de determinados productos. En la nota al pie el informe indica que 
China no tiene una lista completa de dichas prohibi ciones porque las autoridades afirman que todavía 
no han concluido su elaboración. ¿Cuándo piensa Chin a que podrá tener por concluida dicha lista?, 
¿Puede China adelantar y establecer cuales son los criterios que establece la ley para ordenar dichas 
prohibiciones? 
11. En la página 101, párrafo 64 se menciona que  en virtud de la ley de comercio exterior, 
determinados productos podrán ser objeto de co mercio de Estado. La publicación de listas de 
productos, la forma en que dichos derechos son concedidos a empresas privadas y los criterios que se 
utilizan en la publicación de dichas medidas no resultan del todo adecuadas para un sistema 
transparente y previsible. Está China tomando medid as para que el sistema r esulte más transparente y 
previsible? En su caso cuales? 
12. En la página 107, párrafo 85, China me nciona que actualmente todas sus normas son 
compatibles con las normas OMC. ¿Debemos ente nder acaso que China no posé en absoluto normas 
incompatibles con las normas de los Acuerdos MSF y el OTC? 
13. En la página 107, párrafo 86 China menciona que un gran número de Organismos participan 
en la elaboración de reglamentos técnicos. Lue go menciona a la AQSIQ, la Comisión Nacional de 
Desarrollo y Reforma, la Administración General de  Aduanas, la Administración Estatal de Productos 
Alimenticios y Farmacéuticos y diversos Ministerio s. ¿Para una mejor transparencia, podría China 
enumerar todos los organismos que emitan normas y reglamentos técnicos relacionados con el 
comercio de bienes? 
14. En la página 112, párrafo 97 se menciona que  China mantiene acuerdos bilaterales con países 
sobre su sistema de inspección de exportaciones de carne, que permiten las importaciones de carne de 
proveedores aprobados de estos países. Podría Ch ina informar con cuales países se han firmado 
acuerdos bilaterales de inspección? Asimismo podría  China dar a conocer los criterios y requisitos 
que se tienen en cuanta para la firma de dic hos acuerdos bilaterales?, han sido dicho acuerdos 
notificados a la Secretaría de la OMC? En caso de que no se hayan notificado, cuando cree China que 
podría notificarlos? 
15. La normativa de prohibición al ingreso de pr oductos originados de Argentina debido al brote 
de aftosa se aplica a todos los productos de animal es artiodáctilos, sin especificar productos que no 
conllevan riesgo de transm isión de la enfermedad debido al trat amiento que han sufrido en el proceso 
de elaboración (carne termoprocesada o productos láct eos).  Hasta la fecha no ha habido una respuesta 
oficial sobre los productos lácteos con acceso perm itido.  Qué nivel de riesgo utiliza China para 
determinar el riesgo en el ingreso de productos an imales?  Sigue China los lineamientos de la OIE, 
relacionadas a las enfermedades animales y a los pr oductos derivados o tiene  un nivel de protección 
más estricto? En este último caso, tiene base científic a el nivel más estricto de protección? Es aplicado 
en conformidad con el nivel local de protección o es más estricto que el nivel local de protección? 
16. China ha detenido embarques en los puertos de acceso debido a infracciones a las normas 
sanitarias o estándares de higiene y consecuenteme nte elimina del registro de establecimientos 
aprobados a los establecimientos exportadores.  Sin embargo, no notifica las detenciones en tiempo y 
forma, de manera de poder consta tar, evaluar y/o poder solucionar la causa de la contaminación o 
infracción. China tiene pensado establecer un mecanismo de notificación más previsible y transparente que le dé tiempo suficiente al af ectado para que pueda tomar los recaudos del caso?  WT/TPR/M/161/Add.1 
 Page 111 
 
 
17. China ha publicado estándares c on tolerancia 0 para Salmonella sp. y otras bacterias en carnes 
y se han detenido embarques por estas normativas en los puertos de acceso. Tiene China estudios 
científicos que acrediten la necesidad de tener un grad o de tolerancia tan elevado? Aplica China dicha 
tolerancia a su producción y comercialización de productos similares dentro del territorio? . China 
considera posible la eliminación total de la contaminación de determinadas bacterias?  Que 
mecanismos utiliza para determin ar que el producto doméstico cump le con estos requerimientos de 
tolerancia 0? 
18. Para poder exportar productos cárnicos a China,  los establecimientos deben estar registrados 
ante CNCA.  El proceso de registro no es transparen te ya que es difícil determinar si CNCA aprobará 
solamente los establecimientos inspeccionados in  situ o inspeccionará una muestra de los 
establecimientos y de acuerdo al resultado extenderá la aprobación a los establecimientos propuestos.  
Por otro lado, el proceso de registro ha demostrado se r lento (ya que se debe coordinar la visita al país 
con meses de anticipación), caro (se debe pagar la misión de registro sin poder determinar de 
antemano si se aprobaran un número determinado de plantas o el sistema en su conjunto), una vez 
realizada la visita es difícil estimar el tiempo necesario para la elaboración de los informes, y obtener 
la aprobación del número final de establecimien tos aprobados. ¿China debe inspeccionar todos los 
establecimientos in situ previo al registro?  De no ser necesaria la inspección de todas las plantas, que 
requerimientos utiliza para aprobar el sist ema de inspección de el país exportador? WT/TPR/M/161/Add.1 
Page 112  
 
QUESTIONS BY BRAZIL
 
Monetary Policy 
WT/TPR/S/161 I (3) (i) paragraph 18 The Secretariat report says that “the (Chinese) aut horities are concerned about the impact of a more 
flexible exchange rate on economic growth, macr oeconomic and financial stability, employment, 
domestic enterprises, and foreign trade as well as on  neighboring countries, regions, and the world 
economy. But to the extent that they cannot full y sterilize capital inflows, the outcome may well be 
higher domestic inflation, which would tend to push up the real effective exchange rate in any event. 
Arguably, it would be bett er for the Chinese economy to avoid this higher inflation route to restoring 
external balance since inflation tends to distor t markets”. Could the Chinese delegation comment on 
this reasoning presented in the report? 
Energy WT/TPR/S/161 IV (1) paragraph 03 According to the Secretariat report, “China plan s to supplement its current source of electricity, 
mainly coal, with others, such as hydro and nucl ear power. At the same time, it intends to reduce 
energy costs per unit of GDP by 20% in the next fi ve years”. What are the programs/strategies of the 
Chinese Government to achieve these goals? 
Agriculture Brazil congratulates China because its agricultural a nd trade policies have become less controlled by 
the Government. In the same way we encourage China to change the approach “support versus 
taxation” in the sector as a matter of efficiency. Ne vertheless, we regret the fact that China is not 
notifying timely its agricultural measures to WTO. Also, Brazil laments the fact that most TRQs are 
generally unfilled. 
Question WT/TPR/S/161 IV (2) (iii) (b) Paragraph 38 Since the total national government expenditure on ag riculture is available in details on Table IV.2, 
could the Chinese Government explain why notificat ions on this matter have not yet been issued? 
Intellectual Property WT/TPR/S/161 III (4) (ix) How does Chinese legislation deal with the granting of  patents that concern or make use of genetic 
resources/traditional knowledge vis-à- vis the provi sions of the Convention on Biological Diversity 
that require prior informed consent and benefit-sharing? 
Anti-dumping 
WT/TPR/S/161 III (2) viii (a) In paragraph 71, on page 84, the S ecretariat´s report informs that 52 out of 79 of the investigations 
initiated in China during the period 2002-2004, or 66%,  ended up in the application of final measures,  WT/TPR/M/161/Add.1 
 Page 113 
 
 
or definitive anti-dumping duties as result of fi nal determinations, as Br azil understands it. In 
Chart III.6, on page 85, the report splits that information yearly. 
Could the Chinese Government supply further info rmation on the number of applications for anti-
dumping which were made in the period 2002-2005? How many investigations out of the 30, 22 and 
27 initiated in 2002, 2003 and 2004, respectively, were  object of provisional measures? What is the 
percentage of anti-dumping provisional and final de terminations that were based on facts available 
during the mentioned period, on annual basis? Would it be possible for China to identify a trend on the mentioned proportions in a) (investigations  / applications), b) (provisional measures / 
investigations), and c) (facts available / provisi onal measures and facts available / final measures)? 
Safeguards 
WT/TPR/S/161 III (2) viii (b) 
In paragraph 81, on page 87, the S ecretariat´s report states that it is not clear whether appeals may be 
made against safeguard decisions taken by the authorities. Could the Chinese Government clarify 
such aspect of its safeguards action procedures? 
Competition Policy WT/TPR/S/161 III (4) vii (d)(e) 
In paragraph 253, on page 141, the Secretariat´s report says that ”comments on the draft of the new 
Anti-monopoly Law have emphasized the desirability of benefiting from other countries´experience.” 
In the following paragraph, the report mentions the agreement to establish the China-Europe Dialogue 
on Competition. In which aspects of anti-trust regula tions is China taking into account the experience 
of other countries in terms of setting up its own competition policy? 
Rules of Origin 
WT/TPR/161  III (2) iv (b) paragraph 41 and 42 
Concerning its preferential rules of origin, could China provide some information on the specific 
rules? Are there special provisions for sectors such as textiles or iron? Do they encompass procedures 
such as roll-up, de minimis and cumulation or a dr awback non-prohibition?  Do  they also address the 
question of insufficient working or processing? Wh ich authority is responsible for issuing the 
preferential certificates of origin? In case there is  a prescribed format for them, could China provide 
it? Could China provide information on non-preferential rules of origin?  
Also on rules of origin, the report indicates (page 74, par. 42, table III.3) that according to the rules 
under the Bangkok Agreement, “the value of non-o riginating parts or components used in the 
manufacture must be less than 50% of the f.o.b. valu e of the product”. At the same time, it mentions 
that “the country of origin is defined as the country where the last manufacturing operation takes 
place”. Taking into account such statements, would China explain what are the criteria applied to 
determine the origin of the product? Could China al so clarify the statement according to which “goods 
under the Bangkok Agreement must enter China direc tly”? What are the transportation rules for the 
least developed countries? 
Government procurement 
WT/TPR/161 III (2) (x) 
Is there any offset practice in the Chinese governme nt procurement system? If so, could China explain 
such practices and the corres pondent regulatory framework? WT/TPR/M/161/Add.1 
Page 114  
 
PREGUNTAS DE BOLIVIA AL DOCUMENTO DE LA SECRETARÍA DE LA OMC 
(WT/TPR/S/161 ) 
Observaciones Recapitulativas  
Inciso 1), se menciona que “las reformas económicas  de China, que abrieron la economía tanto al 
comercio internacional como a la inversión extran jera directa (IED) han pe rmitido que la economía 
crezca en un promedio del 9 por ciento al año,  mientras que el PIB por habitante aumentó de 
148 dólares EE.UU. en 1978 a 1.700 dólares EE.UU. en 2005, además de mencionar que la proporción de la población de China que vive por de bajo del nivel mínimo vital (2 dólares EE.UU. al 
día) descendió de casi un 73 por ciento en  1990 a un 32 por ciento en 2003.  
¿Cuál fue el costo social de dichas reformas y cuáles son las medidas estructurales correctivas  
en las cuales se está trabajando, según el párrafo   4 del mencionado subtitulo? Existe alguna 
relación  y políticas macroeconómicas que conside ren la relación del crecimiento económico de 
China  con su crecimiento poblacional? 
¿Cuál será la política monetaria, fiscal, camb iaria y de inversiones del Gobierno de China, 
tomando en cuenta los desafíos que debe hacer frente, en cuanto a desempleo, suministro de 
energía y  mayor capitalización de las emp resas estatales, para mantener el ritmo de 
crecimiento de la economía? 
Jurídico
 
Observaciones Recapitulativas, párrafos 7 al 9, Capítulo II inciso 2), ii). ¿La aplicación de políticas 
comerciales “experimentales” y de reforma fi scal termina a menudo en superposición de 
políticas, instituciones y normas jurídicas. ¿C ómo se resuelven los conflictos de leyes en el 
espacio,  en el tiempo y en cuanto a materia , si  se da una variación en las normas que podrían 
afectar a aquellas establecidas en la normativa com ercial en general, así como para los contratos 
de inversión? 
Observaciones Recapitulativas, inciso 5), iv), párrafo 25 ¿Cuál es el nivel de desregulación que 
quiere alcanzar China en su intento de reforma r el marco normativo para lograr una mayor 
competitividad en los servicios de transpor te terrestre, considerando que actualmente el 
principal proveedor de los mismos es el propio Estado? 
Entorno Económico.  
Inciso 4), v), párrafo 44. ¿Qué modificaciones se deben realizar en la legislación actual sobre 
política de competencia, para cubrir  todos los temas relacionados a ella? 
Capítulo I, inciso 5), iv) Párrafo 54. ¿Cuáles son los mecanismos que el gobiern o chino implementa para evitar que sus 
propios nacionales hagan uso de las preferencias impositivas brindadas a la IED, de acuerdo a 
las características mencionadas en líneas precedentes? 
Area Laboral.
 
Capítulo I iii) párrafo 39 y capítulo III, párrafo 229. El porcentaje de desempleo de mano de obra 
altamente calificada, también es alta, sobrep asando los 9 millones de ciudadanos. ¿cómo 
solucionará el problema del desempleo que origin a la privatización de las empresas estatales, de 
la migración del campo a la ciudad y de los que buscan su primer empleo y, particularmente de 
la mano de obra graduada de universidades y centros de formación de mano de obra calificada?  WT/TPR/M/161/Add.1 
 Page 115 
 
 
Asimismo, ¿qué medidas se están tomando para  que el desempleo no genere un aumento del 
empleo informal? 
Régimen de Política Comercial: Marco y Objetivos  
Capítulo II, inciso 4), iii) 
Párrafos 78 y 82  ¿Cuál es el criterio legal que permite pasar un sector de inversión permitida a inversión 
“alentada” o “restringida” y viceversa? ¿Cuáles son los criterios aplicables para categorizar a 
las inversiones alentadas, restringidas, permitidas y prohibidas; ¿Cómo afectará esta categorización a las negociaciones con los países miembros de la OMC en el marco de las 
Medidas sobre Inversión rel acionadas con el Comercio? 
¿Cuáles son las bases fundamentales para que Ch ina haya aplicado o aplique una política de 
incentivos fiscales para alentar las inversiones  extranjeras principalmente?  ¿Por qué se 
incrementó el umbral de proyect os de categoría alentadas?  
Transparencia.
 
Capítulo II, inciso iv, párrafo 27 ¿Cuáles son los esfuerzos financieros, legislativos y 
administrativos que el gobierno ha destinado y destinará a fin de mejorar su nivel de Transparencia?  
Jurídica
 
Capitulo II, inciso 2), párrafos 5 y 6 El sistema económico socialista como tal, aparenta entrar en 
contradicción con el reconocimiento de inviolabilid ad a la propiedad legal de los ciudadanos, y a 
la protección de sectores no públicos.  Parece ser qu e con el reconocimiento del imperio de la ley 
como política nacional se encontrará una especie de  legitimación a la propiedad privada. ¿Cuál 
es el grado de cohercitividad de la legislació n relacionada con la propiedad privada de los 
extranjeros si ésta entrara en contradicción con la propiedad Pública? 
Capítulo II, inciso 2), iii) párrafos 25 y 26 El sistema de exigibilidad del cumplimiento de la Ley, 
no parece  estar estructurado de una forma clara que  dé seguridad jurídica al proceso de tipo 
judicial, y las disposiciones en temas específico s no hacen más que subsanar algunos de los 
temas de interés comercial en sus procedimient os administrativos, por lo cual, para los 
inversores extranjeros podría rep resentar cierta complejidad sujetarse a disposiciones de tipo 
transitorio. 
¿Existe la posibilidad en un futuro de estable cer un ordenamiento jurídico que integre de 
manera efectiva y sistemática la solución ju risdiccional a las reclamaciones que se pudieran 
sustentar en el ámbito de su derecho interno? 
Solución de Controversias.  
Capítulo II, inciso 6), v) párrafo 93 ¿Cuando China negocia sus acuerdos de Inversión, tiene 
alguna preferencia por un tribunal arbitral intern acional en especial para la solución de sus 
controversias inversionista – Estado Chino,  o da preeminencia al uso de su jurisdicción 
interna? WT/TPR/M/161/Add.1 
Page 116  
 
Políticas y Prácticas Comerciales , Por Medidas
 
Medidas de Salvaguardia  
Capitulo III, inciso 2), viii) párrafos 77 al 81. 
¿Se ha invocado en estos años el mecanismo de  salvaguardia a productos agropecuarios? ¿a qué 
productos y países se les aplicó? 
Medidas Sanitarias y Fitosanitarias.  
Capítulo III, inciso 2),  ix),  d)  
Párrafo 96,  ¿Cómo se puede manejar un sistema cuarentenario de entrada y salida de 
productos? En cuánto aumenta este requisito el  costo? ¿En qué consiste la Ley sobre salud en 
frontera y cuál el costo que demanda? 
Párrafo 98, menciona que desde el pedido del permiso de introducción del producto transcurren 
20 días ¿Cuando sale el permiso, está obligado el im portador a cumplir con el periodo para la 
cuarentena, según el producto? Asimismo, cuánto  tiempo requiere la oficina local de la CIQ 
para procesar la solicitud?  
Política de Competencia  
Capitulo III inciso 4), b) párrafos 139 al 151  ¿Qué medidas deben ser tomadas para flexibilizar la 
entrada de nuevas empresas y gar antizar la competencia justa pa ra ellas ante los  monopolios 
estatales existentes?  
¿Qué modificaciones, en materia institucional, se deben realizar para regular adecuadamente la 
competencia y garantizar los derech os de los actores económicos? 
d) párrafo 253  ¿De qué manera se aplicaría la ley antimonopolio a las empresas estatales? 
Políticas Comerciales Para Determinados Sectores  
Agrícultura.  
Capítulo IV, inciso 2), párrafo 10,  ¿Cómo debería estar estructur ado el mercado de trabajo 
urbano- rural integrado que llegue a absorber de una forma estable y ordenada la migración de 
los trabajadores rurales innecesarios? Además de reducir la brecha de ingresos que existe entre 
hogares rurales y urbanos? 
Párrafo 23 ¿Cuáles son las importaciones de producto s agropecuarios exentos de IVA y cuáles 
sus criterios de elegibilidad?  
Párrafos 27 y 28. Como se menciona en el informe las im portaciones de aceites vegetales por 
empresas del Estado es pequeña, en este sentido,  ¿el grueso de las importaciones de estos 
productos es realizada por empresas privadas? En qué porcentaje? Estas empresas acceden a 
los contingentes arancelarios? Cuáles son las medi das no arancelarias, aparte de contingentes, 
que restringen la importación de productos agropecuarios y cuáles han sido los sectores más 
afectados por estas medidas? 
Apoyo a la Agricultura, párrafo 37,  ¿Cuáles de los productos que reciben subvenciones son 
destinados a la exportación?  WT/TPR/M/161/Add.1 
 Page 117 
 
 
Párrafos 37 al 42, ¿Si bien no se ha hecho la notificación  a la OMC sobre el apoyo interno al 
sector agropecuario, cómo ha afectado éste al incremento de la producción y al incremento de 
las exportaciones agropecuarias de China? ¿Qué otro sector y en que medida recibe apoyo 
interno aparte de los  cereales? 
Párrafos 43 y 44  ¿Cómo se aplica el sistema de regulación de precios en el sector agropecuario y 
cuáles son los sectores a los que más beneficia? Este sistema afectó a las importaciones agropecuarias?  
Apéndice, cuadro AIII.6 Subvenciones notificadas a la OMC. ¿Cómo se aplican estos recursos? 
¿Cuál es su influencia en el sector agrícola debi do a que los mismos se considerarían como un 
subsidio a la exportación en caso de productos exportables, asimismo, en que condiciones se los 
otorga, como créditos y si es así están en las mismas condiciones de mercado?  
Energía.
 
Inciso i) Petróleo. ¿Cuál es el marco legal  para la operación de empresas extranjeras en el sector 
hidrocarburifero? Cuánto se ha avanzado para perm itir la inversión extranjera en este rubro 
de acuerdo a los compromiso s contraídos con la OMC? 
Párrafo 57, Se menciona: que China permitirá la pr opiedad extranjera mayoritaria y no se aplicarán 
restricciones geográficas y cuantitativas ¿se complementará en la legislación china vigente el 
alcance de la participación extranjera?  
Servicios  
Inciso 5), i), Párrafo 147  ¿Qué políticas se tienen  previstas para fomentar un mayor comercio de 
servicios turísticos y de enseñanza? 
Inciso 5), iii), b), párrafos 155 al 181 ¿Cuál será el destino de los Ba ncos Estatales, cuando el 
sistema bancario sea constituido por nuevos Banc os Privados con Inversión Extranjera, que se 
iniciarán al amparo de las nuevas leyes bancarias?  ¿Cuál es el grado de asistencia financiera 
que brindarán a los sectores de las pequeñas y medianas empresas de capital estatal? ¿Se limitarán a financiar a las grandes empresas, f undamentalmente también de capital extranjero 
y del país de procedencia del banco?  
Párrafos 172 al 177 ¿Cuál es la estrategia Estatal para tratar en forma más eficiente un 
problema aún no resuelto y de graves implicac iones, sobre todo por la magnitud que aún 
representan las antiguas deudas incobrables y po rque en todo este período han continuado 
apareciendo nuevos préstamos malos? 
Electricidad.
 
Capítulo IV, inciso 3), ii), párrafo 63 ¿Sustentar, cómo se efectuará la reducción de la demanda de 
electricidad debido a la supresión de la fijación  de precios preferenciales para los productos de 
alto consumo energético? 
Párrafo 64  ¿En base a qué información las autori dades afirman que la tendencia de 
importaciones de electricidad, se ha invertid o incluso superando la oferta a la demanda?  
Párrafo 75 ¿Cómo se puede compatibilizar lo que establece la ley referente a los contingentes de 
distribución de electricidad, con la afirmación de  las autoridades respecto a que “la electricidad 
no se asigna mediante un sistema de contingentes”?  WT/TPR/M/161/Add.1 
Page 118  
 
Párrafo 76 ¿Con la implementación de una nueva política de precios,  es posible que se solucione 
el problema de escasez de energía en China? 
Hierro y Acero.
 
Capitulo IV inciso 4) ii) párrafo 95 ¿Cuál es el mecanismo y normativa que deben seguir las 
empresas para acceder a la asistencia que presta  el Estado a modo de devoluciones fiscales, 
descuento en los tipos de interés, fondo s para la investigación y desarrollo? 
Textiles y Prendas de Vestir.  
Capitulo IV, inciso 4) iii) ¿En qué medida se está cumpliendo el compromiso de ayudar a elevar 
el nivel técnico de la industria textil, dentro de las ocho medidas que implementó China a la 
expiración del ATV?  WT/TPR/M/161/Add.1 
 Page 119 
 
 
PREGUNTAS E INQUIETUDES PLANTEADAS POR LA REPUBLICA DE COLOMBIA  
Reporte de la Secretaría WT/TPR/S/161 II. REGIMEN DE LA POLITICA COMERCIAL: MARCO Y OBJETIVOS. 
1.  Introducción. 
A) En el párrafo 2., se menciona que: “Una es fera fundamental de la s reformas ha sido la 
estructura de las leyes.  La jerarquía de las le yes de China incluye las leyes nacionales, que son 
promulgadas por el Congreso Nacional del Pueblo o su Comité Permanente, el poder legislativo, 
seguidas por reglamentos, que son aprobados por el Consejo de Estado, el poder ejecutivo.  Además 
de los reglamentos, hay normas ministeriales o de partamentales elaboradas por los departamentos de 
gobierno para aplicar los reglamentos.  Los congreso s del pueblo de nivel local y los gobiernos locales 
tienen también facultades para promulgar reglamen tos y normas locales, aunque, cuando se elaboran 
disposiciones legislativas nacionales equi valentes, estas normas se anulan o modifican 
automáticamente”.  Con el fin de hacer seguimiento y actualización a la compleja red normativa de la China, nos seria de utilidad conocer si: 
¿Cuándo se  expiden las leyes, reglamentos y normas  se menciona expresamente las leyes, 
reglamentos y/o normas que se están anulando o m odificando?  ¿Existe algún periódico o medio de 
comunicación oficial, en el que se publique cuál es son exactamente las normas inferiores derogadas 
por las leyes? 
B) En párrafo 2., también se cita que: “En ocasiones, se aplican políticas con carácter 
experimental y se promulgan periódicamente reglamentos y normas para hacer frente a las cambiantes necesidades económicas y a los compro misos internacionales.  El resultado es una compleja red de 
leyes, reglamentos, normas, y disposiciones provisi onales.  En muchos casos, el proceso de adopción 
y aplicación de políticas también sigue siendo complejo, al  participar varios orga nismos en diferentes 
niveles, lo que también repercute en la coherenc ia de las políticas.  Además se están elaborando 
continuamente nuevas políticas e instituciones, las antiguas se modifican sólo parcialmente, y el 
resultado es que se añaden o anexan nue vas instituciones a las antiguas”.  
¿Se tiene previsto establecer algún programa o plan para introducir reformas profundas para 
simplificar estos procedimientos? 
C) En el párrafo 5., se establece que las m odificaciones a la constitución incluyeron, el 
reemplazo de la "economía estatal" por una "ec onomía de propiedad estatal" y de las "empresas 
estatales" por "empresas de propiedad estatal".  Al respecto, nos parece muy interesante que nos precisen: ¿Cuál es concretamente la diferencia en tre la anterior “economía estatal” y la actual 
“economía de propiedad estatal”?, Así mismo, ¿Cuál es concretamente la diferencia entre las 
anteriores “empresas estatales” y las actua les “empresas de propiedad estatal”?. 
D) En el párrafo 6, se menciona que: en la modificación más reciente de la Constitución se 
especificó expresamente la protección de los derechos de propiedad privada, con la afirmación de que 
"la propiedad legal de los ciudadanos es inviolable".   Así mismo, se menciona que en la revisión se 
“incluyó también  la protección de sectores no públic os de la economía, como los sectores individual 
y privado”. 
¿De qué bienes pueden los ciudadanos chinos ser propietarios legales? ¿Los extranjeros residentes en 
China, pueden tener “propiedad legal”?. ¿En qué co nsiste la protección de los sectores no públicos de 
la economía ?.   WT/TPR/M/161/Add.1 
Page 120  
 
2.  Marco Jurídico e Institucional. 
A) El literal i), párrafo 11., aclara que China está dividida administrativamente en provincias, 
regiones autónomas, regiones admi nistrativas especiales, y términos municipales directamente 
dependientes del Gobierno Central.  Además de lo s niveles central y provincial, las jurisdicciones 
administrativas también están subdivididas en ciudad es a nivel de prefectura (incluidas las prefecturas 
autónomas), condados (incluidos los condados autónom os), y municipios (incluidos los municipios 
étnicos). Al respecto, nos gustaría saber si los acu erdos de comercio celebr ados con otros Países 
Miembros o Regiones, rigen y deben ser cumplidos en las regiones, prefecturas, condados y municipios autónomos?. Además, nos gustaría conocer si estas di visiones administrativas pueden 
expedir reglamentos y regulaciones sobre comercio exterior? 
B) El literal i), párrafo 17., menciona que: “El Acuerdo sobre la OMC y el Protocolo de 
Adhesión de China se aplican en el país median te legislación de habilitación”. ¿En qué consiste 
exactamente la “legislación de habilitación”?.   
C) El literal ii), párrafo 18., dice que: “La legislación de China incluye la Constitución, las leyes, 
los reglamentos administrativos, y los reglamentos locales (incluidos los reglamentos autónomos y los 
reglamentos separados) y normas locales (incluid as las normas gubernamentales locales y las normas 
departamentales).  La Constitución es la ley suprema,  seguida por las leyes nacionales, y luego por los 
reglamentos administrativos;  los reglamentos administrativos nacionales tienen supremacía sobre los reglamentos y normas locales.”   
¿En caso de contradicción o aparente contradicci ón entre un reglamento o norma local y un 
reglamento administrativo nacional, cuál  autoridad define la controversia?. 
D) El literal iv), párrafo 27., especifica que: “al elaborarse disposiciones legislativas, deben 
solicitarse las opiniones de organizaciones y el  público mediante, seminarios, reuniones de 
evaluación, y audiencias. Los proyectos de ley ta mbién se publican a efectos de que se formulen 
comentarios, cuando sea necesario.  
Nos gustaría conocer ¿Cuáles proyectos de ley se publican para comentarios? ¿Cuándo no es 
necesario publicar un proyecto de ley? 
E) El literal iv), párrafo 30., menciona que el G obierno ha venido promovie ndo el uso de Internet 
para aumentar la transparencia.  A finales de 2004, se habían inaugurado más de 16.000 sitios Web 
oficiales de Ministerios, comisiones y otros depa rtamentos dependientes del Consejo de Estado, así 
como de gobiernos locales.  Según las autoridades,  la legislación y las medidas administrativas del 
gobierno central y los gobiernos locales se pueden consulta r en su totalidad en Internet.  Al respecto, 
queremos precisar si la totalidad de la legisl ación y las medidas administrativas publicadas en los 
sitios Web oficiales mencionados se encuentran en alguno de los idiomas oficiales de la OMC? ¿En 
caso negativo, aproximadamente qué porcentaje ha sido traducido?  y ¿Cómo se determina cuales 
medidas deben ser traducidas a otro idioma? 
F) En el literal v), párrafo 31., se cita que el al ejamiento progresivo de China de una economía 
centralmente planificada ha llevado a una "descentr alización" de determinados poderes hacia los 
gobiernos locales.  Antes de 1994, la mayoría de  los impuestos eran recaudados por los gobiernos 
locales.  En algunos casos, ello puede haber provocado el uso de impuestos para regular el comercio 
interno. Quisiéramos saber si ¿Existe la posibilidad  de que algún gobierno lo cal destine fondos locales 
o nacionales a apoyar a personas o empresas exportadoras de bienes?  WT/TPR/M/161/Add.1 
 Page 121 
 
 
6.  Régimen de Inversión Extranjera 
ii) Marco y procedimiento legislativo 
A) En el párrafo 76, se dice que: “Desde que accedió a la OMC, China ha relajado las 
restricciones a las empresas con inversión extranje ra;  en 2000 y 2001 se revisaron las tres leyes y se 
redujeron las limitaciones de acceso y las prescripciones de compensación de las exportaciones; 
asimismo, se relajaron las prescripciones en materia de transferencia de tecnología.”. 
Queremos conocer si en la actualidad para todo ti po de inversión extranjera se exigen requisitos de 
desempeño tales como compensación de exportaci ones y transferencia de tecnología?  De ser 
aplicable sólo a ciertos sectores, nos gustaría que fueran señalados explícitamente.  Adicionalmente 
nos gustaría conocer cómo estas respuestas se re lacionan con el Acuerdo sobre las Medidas en 
Materia de Inversiones Relacionadas con el Comercio. 
B) Igualmente se indica en el párrafo 77, que “S egún las autoridades, los inversores extranjeros 
gozarán del mismo acceso que los inversores nacion ales, y cuando se aprueben o revisen las leyes y 
los reglamentos pertinentes, se permitirá la inversión privada en todo sector que no esté 
explícitamente prohibido por la ley.”    
Dado que no especifica en cuáles sectores se permitir á la inversión extranjera y en cuales no, nos 
gustaría conocer cuáles serían los sectores abiertos y si abría algún tipo de requisito específico para la 
inversión en los mismos. 
III. POLITICAS Y PRACTICAS COMERCIALES, POR MEDIDAS 
1.  Introducción  
Se afirma que el porcentaje de normas nacionales que adoptan estándares internacionales se mantiene 
en un 32% desde el año 2000. Así mismo se sostiene que los procedimientos de examen y aprobación 
en frontera no son claros y depende n de un gran número de leyes. ¿Q ué medidas esperan tomarse para 
mejorar los procedimientos en frontera? ¿En que consisten esencialmente los problemas en frontera?  
2.  Medidas que Afectan Directamente a las Exportaciones.   
Literales i), ii), iii), iv), v), y vi 
A) ¿Dentro de la normatividad aduanera de Ch ina se contempla el Régimen Aduanero de 
Almacenamiento o depósito de la mercancía? ¿Cuá nto es el tiempo mínimo y máximo en que una 
mercancía puede permanecer almace nada?  El documento de la Secr etaría no contiene información 
amplia en relación con los proced imientos y sistemas aduaneros. 
B) ¿El registro de operadores de comercio exterior y el registro de comerciantes extranjeros en el 
MOFCOM, es adicional al registro que debe surtir  el importador o exportador ante la Administración 
Aduanera de manera previa a la presen tación de una declaración? (párrafo 12) 
C) En el párrafo 15 se comenta que el período de  examen interno para el despacho de las 
mercancías dura máximo 48 horas. No obstante,  dicho examen se puede ver afectado por las 
“capacidades de los propietarios de los productos” y los servicios portuarios”.  
¿Podrían las autoridades de China, indicarnos que se entiende por “capacidades de los propietarios de 
los productos” en este contexto?  WT/TPR/M/161/Add.1 
Page 122  
 
Se comenta adicionalmente que “la Administración de Aduanas no cobra der echos en concepto de 
despacho ni otros servicios”. Se incluyen aquí los servicios portuarios? ¿Cómo afecta la estructura de 
los servicios portuarios el examen interno para el  despacho? Existe una normativa única para todos los 
puertos en materia de costo de los servicios prestados? 
D) ¿Cuáles son las condiciones para otorgar el de recho de comerciar en frontera? ¿A quienes se 
les otorga éste derecho?  
E) Las licencias de importación de mercancías de negadas por considerarse “no convincente la 
justificación de la solicitud”, pueden ser recurridas? ¿El acto a través de cual se niega la solicitud de licencia o se recurre la negación de la solicitud es pl enamente motivado o justificado por la autoridad 
competente?  
F) En relación con el Reglamento sobre aran celes de importación y exportación, encontramos 
útil conocer si existe un texto unificado en inglés del Arancel con las distintas tarifas aplicadas que 
sirva de guía a los operadores del comercio ex terior. Si existe, donde se puede consultar? 
Cuáles son los criterios para designar los tipos arancelarios provisionales? A qué clase de bienes y 
países se les aplica? Ha considerado China unificar  los tipos  provisionales cuando coinciden con las 
tarifas NMF?  
G) El párrafo 21 señala que “pueden aplicarse exenciones y reducciones de derechos a los 
productos importados o exportados a zonas designadas o desde ellas, a las empresas designadas o para 
usos designados”.   
En la nota de pie de página 13, se especifica qué se entiende por “empresas designadas” y “uso 
designado”. No obstante, nos parece importante conocer  mayores detalles sobre la legislación que se 
aplica y los criterios que utiliza el Consejo de Esta do para determinar en “ci rcunstancias no habituales 
y especiales” las exenciones y re ducciones arancelarias. A qué tipo de empresas y productos se 
conceden determinadas exenciones sobre “la base del uso real del producto”? Se encuentran tales 
medidas en consonancia con el Acue rdo de las Medidas de Inversión relacionadas con el Comercio de 
la OMC? 
H) El Informe de la Secretaría menciona que el arancel NMF aplicado de China tiene 74 tipos 
arancelarios distintos ad-valorem, comprendidos entr e 0 y 65 por ciento, con una amplia dispersión 
arancelaria y con una progresividad nega tiva en los bienes no elaborados.   
¿El gobierno chino tiene previsto introducir en el mediano plazo una mayor racionalización en su 
estructura arancelaria para disminuir costos y mejorar la eficiencia y transparencia de la protección en frontera? 
Literal viii).  Medidas Comerciales Especiales. 
A) Los párrafos 67, 73 y 77 del Examen de Política Comercial de China, mencionan que 
cualquier persona física o jurídica u organización pertinente, puede solicitar ante la autoridad 
competente en nombre de la rama de producción nacional, una investigación por supuesto dumping, 
subvenciones o salvaguardias, respectivamente.  Es posible obtener información sobre la forma por 
medio de la cual se determina que los peticionari os de estas investigaciones representan los intereses 
de la rama de producción nacional?  En China se maneja algún criterio de representatividad mínimo 
necesario para presentar una solicitud e iniciar una investigación? 
B) De acuerdo con el párrafo 68, en China se han presentado "circunstancias especiales" 
que han sustentado la prórroga de medidas antidumpi ng provisionales hasta por 9 meses.  Es posible 
profundizar en las “circunstancias especiales” que se han presentado en China, con el fin de conocer  WT/TPR/M/161/Add.1 
 Page 123 
 
 
las dificultades que se han presentado en ese país al adelantar investigaciones antidumping? Es 
posible conocer algunos ejemplos, relacionados con investigaciones que  abarcan “varias categorías de 
productos”? 
Literal ix)  Normas y otras prescripciones técnica. 
A) En el numeral 84 del literal a), se informa que en China se han promulgado varios 
reglamentos en materia de certificación obligat oria de productos, armonizando así las normas en 
materia de certificación para las mercancías impor tadas y las de producción nacional, incluidos un 
catálogo de productos sujetos a certificación ob ligatoria, reglamentos técnicos, normas y 
procedimientos de evaluación de la conformidad, marcas y derechos. ¿Cuántos reglamentos técnicos 
se han notificado a los miembros de la OMC? ¿Para  qué fecha está previsto que termine el proceso de 
armonización de las normas en materia de certificación para las mercancías importadas y las de 
producción nacional. 
B) En el numeral 85 del literal a), se afirma que en el Comité MSF los miembros han planteado 
su preocupación por la aparente utilización por China de MSF para prohibir las importaciones de 
productos afectados de determinados países en luga r de limitarse a las regiones afectadas de esos 
países y porque al parecer ese país no ha notificad o algunos reglamentos en materia de MSF desde 
2002. Sobre este último aspecto China ha manife stado que cree que los Miembros no han entendido 
correctamente las notificaciones de China. Al respecto, ¿Es criterio de China prohibir las 
importaciones de productos afectados por país en vez de hacerlo por región? ¿Cómo llegó China a la 
conclusión de que los demás miembros no han entendido correctamente sus notificaciones? ¿Ha 
tenido China en cuenta las observacion es de otros países sobre este asunto? 
C) El numeral 86 del literal b), se informa que un gran número de organismos gubernamentales 
participan en la formulación de reglamentos t écnicos. ¿Es posible que ante el gran número de 
organismos gubernamentales que trabajan en la fo rmulación de reglamentos técnicos, algunos de ellos 
no se hayan notificado? ¿Si algunos no se han notifi cado, habrá posibilidad de comentarios por parte 
de otros países miembros? 
D) En el numeral 88 del literal b), se afirma  que en cada una de las categorías de normas 
nacionales, sectoriales y locales hay normas volunt arias y normas obligatorias. ¿Es política de la 
China contar con normas obligatorias y reglamentos técnicos o se ha pensado en sustituir las normas 
obligatorias por reglamentos técnicos? 
E) En el numeral 90 del literal b), se informa que según la SAC el Gobierno de China ha 
promovido la adopción de normas internacional es desde 1994. Además, que la SAC comenzó un 
proceso de examen de las 21.000 normas nacionales en abril de 2004 para comprobar su pertinencia 
con respecto a los requisitos del mercado y su conformidad con las normas internacionales. Las 
normas que no cumplieran estos criterios serían m odificadas o dejarían de aplicarse. ¿Qué tan 
adelantado va ese proceso? ¿Para cuándo está prevista su terminación? 
F) ¿Cuál es la política de procedimiento de evaluación de la conformidad para productos 
regulados que aplica China? ¿Se basa en normas internacionales de evaluación de la conformidad? 
3.  Medidas que Afectan Directamente a las Exportaciones 
Literales i), ii), iii), iv) y v) 
A) ¿La negación de la solicitud de aprobación de un contingente de exportación a una empresa 
tiene recurso alguno? ¿El acto mediante el cual es de negada la solicitud es motivado o justificado?   WT/TPR/M/161/Add.1 
Page 124  
 
B) El caso de los contingentes de exportación que  se asignan mediante licitación ¿Extranjeros y 
nacionales tienen el mismo derecho de participación y valoración de sus puntajes en dicha licitación? 
C) Se afirma que en el caso de tecnologías que se pueden exportar libremente se exige el registro 
del contrato de exportación. ¿Se manejan criterios serios de confidencialidad sobre la información 
consignada en el contrato de exportación? 
D) Existe intención de racionalizar la compleja  estructura en materia de restricciones y de 
impuestos a las exportaciones? 
Literal x)  Contratación Pública. 
A) El párrafo 115 comenta la existencia de un "Catálogo de contratación centralizada", el cual 
establece ciertas prescripciones para las adquisiciones de bienes, proyectos y servicios. Es de nuestro 
interés conocer: ¿Qué tipo de prescripciones contiene este catálogo para bienes, proyectos y servicios?  
Para el caso de prescripciones relativas a requis itos técnicos, dichas prescripciones están basadas en 
normas internacionales? 
B) Adicionalmente nos gustaría saber si es un re quisito para contratar con las entidades públicas 
la inscripción en algún registro de proveedores? Si  es así, es un registro único o existen registros 
especializados por entidad o sector? Cuáles son los requisitos para la inscripción? 
C) El párrafo 116 menciona que de acuerdo c on el Artículo 10 de la Ley de Contratación 
Pública, "... el Gobierno deberá adquirir bienes, obr as y servicios nacionales." Al respecto tenemos las 
siguientes preguntas:  ¿Esta restricción aplica ta mbién para las empresas de propiedad estatal?  
¿Existe alguna medida que establezca los procedim ientos y requisitos de contratación de tales 
empresas, o estos son establecidos por las mismas  empresas? ¿Existe alguna medida que establezca un 
trato discriminatorio a los bienes y servicios extr anjeros en las adquisiciones de estas empresas? ¿La 
obligación de compra nacional es eliminada para proveedores de ciertos países como medida de 
reciprocidad a un trato no discriminatorio a los proveedores chinos en las compras públicas de esos 
países? 
D) Hay entidades públicas de la República Popular  China que realicen compras importantes de 
productos básicos (commodities) como productos agríco las y de la minería? Pueden participar los 
productores extranjeros en la provisión de  tales bienes? En qué condiciones? 
IV. POLITICAS COMERCIALES PARA DETERMINADOS SECTORES 
2).  Agricultura 
A) Podría China proporcionar detalles acerca del régimen de tenencia de tierras? Cuál es el 
beneficio que genera para la pobl ación en general este sistema?   
B) Existe alguna limitación sobre la superfici e que puede ser sembrada de algún cultivo? 
C) Recientemente China eliminó el  impuesto agrícola especial (sp ecial agricultural tax) a todos 
los productos, salvo las hojas de tabaco. ¿Cómo opera este impuesto? Para el caso del tabaco, ¿Cual 
es la tarifa?. Del mismo modo, podrían explicarnos  ¿En qué consiste el nuevo impuesto agrícola que 
se aplica a los demás productos? 
D) Podría China explicar ¿Por qué no se han utilizado plenamente los contingentes que ha 
establecido para algunos productos agrícolas? 
E) ¿Cuál es el método que utiliza ese país pa ra la asignación de contingentes arancelarios?  WT/TPR/M/161/Add.1 
 Page 125 
 
 
F) Si bien, el Protocolo de Adhesión, facultó  a China para imponer de rechos de exportación a 
algunos productos, con el fin de mantener un equilibr io entre la oferta y la demanda en el mercado 
interno, ¿Qué argumentos sustentan la afirmaci ón realizada por China, que estos derechos no 
ocasionan distorsiones en los precios en el mercado interno de ese país con relación a los precios en le mercado mundial?  
G) Teniendo en cuenta que aún continúan fijándose precios mínimos para las compras de arroz y 
trigo, cómo se establecen dichos precios? 
H) Sírvanse proporcionarnos detalles en torno a lo s programas de ayuda directa a los ingresos de 
los agricultores.  
I) Podrían proporcionarnos información sobr e ¿Cómo operan los programas que ofrecen 
insumos subsidiados a los agricultores?  
J) Sírvanse indicarnos los programas de financiami ento apoyados por el Gobierno, a los cuales 
pueden acceder los agricultores. 
K) Sería importante que nos informaran si ¿Chi na ha implementado alguna  medida para limitar 
las importaciones de productos agrícolas?  ¿Qué tip o de medida?  ¿Sobre qué productos?  ¿Por qué 
razones? 
5).  Servicios  
Literal i) Visión general. 
En el párrafo 148., se establece: “En general, el sector de los servicios se caracteriza por la 
intervención del Estado a través de empresas de propied ad estatal y restricciones a la participación del 
sector privado.  Se está llevando a cabo una liber alización gradual en ambos aspectos, aunque se 
mantienen restricciones o prohibiciones para la inversi ón extranjera en capital social en la mayoría de 
los servicios.” .¿Cuáles son aquellos sectores en los que se está adelantando proceso de liberalización 
gradual?, ¿Cuál es el plazo de tiempo estipulado para completar este proceso? 
Literal iii)  Servicios Financieros 
b)  Banca 
A) El documento de la Secretaría señala: “párrafo  181. El suministro transfronterizo de servicios 
bancarios y otros servicios financieros (excluidos  los seguros) se ha dejado sin consolidar, con las 
siguientes excepciones:  suministro y transferenci a de información financiera y procesamiento de 
datos financieros y soporte lógico con ellos re lacionado, por proveedores de otros servicios 
financieros;  y servicios de asesoramiento, de interm ediación y otros servicios financieros auxiliares.”   
A partir de lo anterior, surgen ciertas inquietudes respecto de la prestación de servicios financieros de 
forma transfronteriza, especialmente en lo relacion ado con: i) la promoción de estos servicios por 
parte de entidades extranjeras que no cuentan con una presencia comercial en el país; y ii) el trato que 
se le otorga a las mismas con relación a las entidad es que efectivamente se en cuentran establecidas en 
China. En este sentido, ¿Cuál es el alcance del tr ato nacional que otorga China respecto de los 
proveedores de servicios fina ncieros transfronterizos? 
 WT/TPR/M/161/Add.1 
Page 126  
 
B) En el caso particular del suministro transfr onterizo de servicios financieros, están sometidos 
los proveedores transfronterizos a requisitos regulatorios y de registro, así como al pago de impuestos? 
c) Seguros 
El documento de la Secretaría se ñala: “186. En virtud de la Ley de  Seguros, todas las compañías de 
seguros que ofrecen servicios en China han de estar  debidamente registradas, y todas las personas u 
organizaciones que necesiten cobertura de seguro en China deberán contratarla con una compañía de 
seguros registrada en China.”. Lo anterior significa que está prohibido en China el comercio 
transfronterizo de servicios de seguros? 
Literal iv)  Servicios de telecomunicaciones 
a) El  párrafo 213 señala: “El sector de los servicios de telecomunicaciones ha sido objeto de una 
reforma gradual a partir de 1993.  Hasta entonces, el  único proveedor era el Ministerio de Correos y 
Telecomunicaciones.  ...Desde la desreglamentac ión se ha producido un rápido crecimiento de la 
prestación de servicios de telecomunicaciones”. Tomando en consideración ese proceso de desreglamentación que se inició a partir de 1993, nos gustaría conocer ¿Cuál es en la actualidad la 
regulación aplicable a los servicios de valor agre gado y de Voz sobre IP, y bajo qué condiciones 
específicas pueden entrar a operar proveedores extranje ros de estos servicios en la República Popular 
China?. 
Literal v) Transporte. 
b) Servicios de transporte marítimo 
A) El documento de la Secretaría señala en el párrafo 249.:. “Entre las medidas de 
desreglamentación y reforma aplicadas en el sector figuran las siguientes: actualización de la 
legislación de conformidad con los compromisos contra ídos por China en el marco de la OMC...” Nos 
gustaría poder conocer específicamente:  ¿Hací a donde está encaminada esa actualización de 
legislación para el sector de transporte marítimo? ¿Eso implica el  levantamiento de restricciones a la inversión extranjera y la eliminación de requis itos de nacionalidad para poder prestar ciertas 
actividades? Adicionalmente, ¿Cuál sería el enfo que exacto de la actualización referida en el 
párrafo 249? 
B) En el documento no se aclara si las naves de  bandera china reciben algún tipo de incentivos o 
ayudas de parte del gobierno para que dichas emba rcaciones realicen actividades de reparación y 
mantenimiento en talleres localiza dos en el territorio de la República Popular China. ¿Cuál es la 
situación al respecto en la actualidad? 
C) En el párrafo254, la Secretaría señala:  “El "Reglamento sobre el registro de buques", que 
entró en vigor el 1º de enero de 1995, establ ece que para navegar con pabellón nacional los buques 
deben estar registrados en China y obtener la naciona lidad del país.  Por lo general, las tripulaciones 
son chinas;  cuando es necesario contratar tripulación extranjera se requiere la aprobación del MOC.  
Además, si el buque es propiedad de un ciudadano ch ino, el propietario debe tener su domicilio u 
oficina comercial principal en China;  si el buque  es propiedad de una persona jurídica, su oficina 
comercial principal también debe estar en China... ”.  ¿Significa lo anterior que si una empresa 
extranjera que  posea una serie de naves prestando ser vicios de transporte marítimo en diferentes 
partes del mundo, y tiene solamente una nave regi strada y con pabellón de la República Popular 
China, debe localizar su oficina comercial principa l en territorio chino?, ¿Qué se entiende por oficina 
comercial principal exactamente?, ¿En qué situaci ones exactamente se exige que la tripulación sea de 
nacionalidad china?  WT/TPR/M/161/Add.1 
 Page 127 
 
 
D) El párrafo“255, señala:.” ....Además, se alie nta a las empresas establecidas con inversión 
extranjera a suministrar servicios de transporte mu ltimodal internacional de contenedores;  a partir del 
11 de diciembre de 2005 se permite una participación ex tranjera en el capital social del 100 por cien.”.  
¿La posibilidad de inversión extranjera del 100% se aplica únicamente para las empresas que estaban 
establecidas en la República Popular China con anterioridad al 11 de diciembre de 2005 o a cualquier 
empresa que desee invertir en el sector? 
E) ¿El transporte multimodal internacional de contenedores es igual al transporte multimodal 
internacional de carga? En caso de no ser así, ¿Cuál es la diferencia? 
Preguntas sobre otros Servicios no especifi cados en el documento de la Secretaría.  
A) En el examen de política comercial no se pr esenta información relacionada con los servicios 
profesionales y su regulación. Al respecto consid eramos importante conocer la reglamentación 
existente en la República Popular China que rige la formulación de normas modelo para adelantar 
procesos de homologación y/o convalidación de títulos profesionales.  
B) Es la regulación de los servicios profesiona les establecida a nivel central del gobierno, o 
depende y es potestad de cada división territorial del país (provincias). 
C) En materia de servicios de construcción, cu ál es la regulación (y los sectores específicos) que 
determina los tipos de obras de construcción a los que únicamente pueden acceder empresas de 
propiedad extranjera. Cuál es la razón de dicha limitación? WT/TPR/M/161/Add.1 
Page 128  
 
QUESTIONS BY THE EUROPEAN COMMUNITIES
 
I.  ECONOMIC ENVIRONMENT  
(3) MACROECONOMIC POLICIES  
WTO Secretariat’s Repor t, page 14, para 21: non performing loans  are estimated at 30% of GDP thus 
exceeding gross government debt of 20%.  
- Can China please indicate to what extent th ese loans are held by state controlled banks and 
what proportion of these outstanding loans can be attributed to state owned enterprises? 
WTO Secretariat’s Report, page 16-17, paras 27 and 30: VAT refunds and tax reform:  it is stated that 
China applies a system of differential reimbur sement of VAT when goods are exported thus 
restraining the exports of certain goods and favouring domestic supply.  
- Does China plan to abolish these variated tax ref unds with the current restructuring of the tax 
system? 
II.  TRADE POLICY REGIME : FRAMEWORK AND OBJECTIVES  
(2) INSTITUTIONAL AND LEGAL FRAMEWORK  
WTO Secretariat’s Report, page 29, para 2 and page 36, para 36 
- While theoretically, local regulations contradi cting State laws become automatically null and 
void, practical problems often occur as the outda ted regulations continue to be applied, and 
companies thus face parallel provisions. Does Ch ina have any plans to address this problem?  
(4) TRADE POLICY OBJECTIVES  
Bilateral, regional and global trad e liberalisation is vital for promoting prosperity, growth and 
development to the benefits of the world at larg e. The EC considers that the WTO and multilateral 
liberalisation is the most certain way for promo ting global interests for industrialised countries and 
developing countries at large.  
- How does China judge the relative importance and weight of bilateral/FTA policies and 
further development of the WTO system in t erms of its own trade and development needs?  
- The EC would like to know more about China’ strategy for RTAs. To what extent has China 
analysed and compared the efficiency and level of economic benefits delivered by bilateral 
trade agreements by comparison with  multilaterally agreed liberalisation?  
Sustainable development 
The EC welcomes China’s emphasis on sustainable economic growth and sustainable development. 
Looking at the overall policies of  China: 
- In what ways does China think trade policy c an best contribute to sustainable development? 
- What plans do China have for adoption of policy strategies in order to enhance sustainable 
development? Does the issue of trade and sust ainable development fit into China’ overall 
development strategies? 
- What steps does China take to ensure that its  trade policy does not have any negative effects 
on sustainable development in China and elsewhere?  WT/TPR/M/161/Add.1 
 Page 129 
 
 
Trade and environment 
- What mechanisms does China have in place to ensure adequate coordination of 
environmental policy and trade policy in order to ensure that any environmental policies are 
WTO compatible? 
- What eco-labelling schemes currently operate in China and how do the authorities ensure 
they are WTO compatible?  
- What steps does China consider necessary in order to ensure a smooth articulation between 
WTO rules and trade measures under Mu ltilateral Environmental Agreements? 
Trade and social development 
The EC welcomes the information pr ovided on trade and labour issues.  
- The World Commission on the Social Dimension of Globalisation highlighted the importance 
of linking trade with sustainable domestic polic ies, in particular core labour standards. What 
policies is China implementing that specifically  address the social and labour effects of trade 
liberalisation?  
- In view of the need for large-scale job creation, how does China evaluate the fact that 
employment elasticities of growth have been d ecreasing over the last years? Which measures 
are intended to improve these employment el asticities? In particular, does China have 
policies to foster greater job creation in labour intensive sectors of the economy? 
- How does China intend to manage increasing la bour migration flows within the country as a 
consequence of industrial restructuring? What  role does employment of Chinese abroad play 
in this context? What is the government's st rategy on promoting la bour migration? In which 
sectors, if any, does China have a need of skilled immigration?  
- Does China have policies to reduce income disparities between rural and urban workers and 
between regions, to smooth the industrial transition in the face of trade liberalisation? 
- How does China intend to ensure that employ ment standards covered in national employment 
legislation (e.g. minimum wages, working hours, health and safety at work) are respected in 
all companies including in those directly or  indirectly engaged in international trade ? 
- Is China taking initiatives aimed at ensu ring respect for labour standards in Export 
Processing Zones (EPZs)? 
(6) FOREIGN INVESTMENT REGIME  
The WTO Secretariat’s Report states (page 52, para 77): “ On 25 February 2005, the State Council 
issued "Guidelines on Encouraging and Supporting the Development of the Non-Public Sector 
including Individual and Private Enterprises".  Th e purpose of the guidelines is to improve market 
access by private companies to many industries that we re previously restricted (...).  According to the 
authorities, foreign investors will have the same acc ess as domestic investors and when relevant laws 
and regulations are enacted or revised, private invest ment will be allowed in any sector where it is not 
explicitly forbidden by law”. 
- Could China indicate when it will issue such laws and regulations? WT/TPR/M/161/Add.1 
Page 130  
 
- In view of the challenges indentified in para 57 (part I, page 28), in particular the 
“bottlenecks in land, water, and energy resources as well as environmental protection”, will 
China further liberalise its investment regime by reducing the sectors where FDI is restricted 
or prohibited? Please explain. 
The WTO Secretariat’s Report states (page 53 para 80) states : “Foreign equity limits tend to vary by 
industry and are not necessarily related to the categ ory. Thus, for example, "encouraged" industries 
may have foreign equity restrictions, while "rest ricted" industries may be wholly foreign owned. 
- Is China considering removing some foreign equity limits so as to put them in coherence with 
the system “encouragement” of investment? Please explain. 
WTO Secretariat’s Report (page 56, para 89): FDI incentives : the report  outlines that export oriented 
FIEs enjoy a two year tax exemption and 50% re duction as long as the volume of annual exports 
accounts for more than 70% of the general sales of the enterprise.  
- Can China please explain how this provision is  compatible with Article 3 ASCM and if there 
are any plans to abolish this scheme? 
III.
  TRADE POLICIES AND PRACTICES BY MEASURE  
(2) M EASURES DIRECTLY AFFECTING IMPORTS  
PROCEDURES  
We welcome significant progress in Trade Facilitation reforms in China over recent years. However, 
EU business still faces some difficulties, including in r espect of the consistent application of customs 
requirements, co-ordination between different border agencies and transparency with regard to rules 
and charges.  
- What are China's plans for further reforms in this area?  
CUSTOMS VALUATION AND RULES OF ORIGIN  
Rules of origin 
WTO Secretariat’s Report, page 74, para 41 “The Regulations on Rules of Origin of Import a nd Export Commodities, which entered into force on 
1 January 2005…” 
The Chinese authorities have repealed origin certificates from the European Union when the 
merchandise comes from a Member State different from the Member State that emits the certificate. 
- Could the Chinese authorities accept European merchandise, whatever the Member State 
issuing the origin certificate?  WT/TPR/M/161/Add.1 
 Page 131 
 
 
IMPORT RESTRICTIONS  
General Import Prohibitions 
WTO Secretariat’s Report, page 75,  para 44 
- Could China please clarify the import prohib itions referred to under this paragraph and 
particularly on raw hides, skins and leather, and clothing? Could China provide the details of 
such restrictions, including the specific HS  lines for these products? Moreover, do they apply 
to products of all origins?  
Import Licences  
WTO Secretariat’s Report, page 80,  para 55 
There are reports that the authority to gran t licences is delegated to some non-governmental 
organisations such as the China Chamber of Co mmerce for Import and Exports of Machinery and 
Electronic Products and the China Chamber of Me tals, Minerals and Ch emicals Importers and 
Exporters.  
- Could China clarify if this is the practice and indicate the list of such authorised non- 
 governmental organisations. 
CONTIGENCY MEASURES  
While it would appear that some of the EC concerns  in the fields of anti-dumping and safeguards have 
to some extent been noted in the past period, Chin a’s practice in this area still needs to be seriously 
improved. The EC continues to have serious concerns , particularly regarding the respect of right of 
defence for interested parties, especially in relati on to disclosure of all essential facts (including facts 
on injury) and in the respect of confidential information. 
- Could China please explain what steps it intends to take in order to improve its practice in the 
field of anti-dumping and safeguards? 
STANDARDS AND OTHER TECHNICAL REQUIREMENTS  
(b) Standards and technical requirements 
Referring to page 90 and onwards in the WTO Secretariat’s Report.  
- Para 89. At what stage are non-domestic sta keholders invited to give comments on proposals 
that may effect their operation in, and with, China? 
Para 90.  Since year 2000 the ratio of standards based  on international standards are not increasing 
(see Table III.4). This is very disappointing especially as the number of standards overall are 
increasing. This could in the worst case be inte rpreted  as access to the Chinese market becoming 
increasingly dependent on the conformance to Chinese national standards, which would be against the 
trend in many other countries. It is positive to see that the numbers of national standards are to be 
reduced in the future.  
- We would like to be regularly informed  about the screening process to reduce national 
standards. Furthermore, we would like to be informed if China has information ready on 
which standards will be aligned w ith international standards.  WT/TPR/M/161/Add.1 
Page 132  
 
- The EC has seen on several occasions that Chin a has adopted standards based on international 
standards but with some differences that creat e difficulties for importer s in complying. China 
should make such changes only when they ar e essential to fulfill a legitimate objective.  
- Could China confirm if products in the ICT se ctor are included in the exercise of reducing 
national standards and replacing them with in ternational standards and give details on this. 
Are there any plans in China to introduce a simp ler procedure for declaration of conformity 
e.g. Supplier Declaration of Conformity? 
Para. 91.  The EC have on many occasions and in many fo ra raised concerns about the CCC system.  
- The EC would like to know if there are any plans to reduce the number of products which 
falls under the system. China should treat products differently depending on a risk 
assessment. Less strict procedures should be applie d for products which are of low risk to the 
consumers.  
- Para 92. what is the determining factor wh ether a product is subject to the CCC system or 
not? The number of products falling under this system is unfortunately increasing. 
- Para 93. Are the laboratory results by the ACB made available in full to the 
manufacturer/importer? What are the charges fo r the testing? Are laboratory results kept on 
file in case of retesting, to simplify procedures?  
- We are concerned that China requires, for imported cosmetics, a registration with the 
Ministry of Health while domestic products are subject to a simpler regime. Further, for 
Active Pharmaceutical Ingrediants (API), testing and standards are more stringent and costly for imported goods compared to domestic products. Is China currently looking at simplifying 
and harmonising the importation of cosmetic products and for API? 
- We are concerned with labelling requirements  in various sectors, where we are aware of 
lengthy registration procedures and frequent ch anges in requirements. Does China plan to 
address these problems? 
WTO Secretariat’s Report, page 38, para 28 
- How does the notifying authority (MOFCOM) en sure that the transparency obligations laid 
down in the TBT agreement are comprehensi vely respected, covering proposed technical 
regulations and conformity assessment pro cedures elaborated by the different government 
agencies? 
(d) Sanitary and Phytosanitary measures 
- At policy formulation level, what measu res will China take to ensure that SPS import 
requirements do not discriminate in favour of domestically produced agricultural products? 
- How will China ensure that there will be no o verlaps in requirements between the different 
laws for food both existing and currently being under preparation in the NPC? 
- The EC would invite China to bring its legi slation in line with OIE guidelines on BSE that 
now, inter alia, allow deboned skeletal muscle me at to be traded regardless of BSE status of 
the exporting country. If not, please provide the science to back up Chinese ban of EU 
products.  WT/TPR/M/161/Add.1 
 Page 133 
 
 
- Is China willing to accept the listing of est ablishments based on guarantees provided by 
competent authorities regarding the safety of th e food chain like the EU does for the Chinese 
establishments? 
- Can China indicate the science behind the zero pathogen requirements for testing of all dairy 
products? 
China has taken steps to simplify its administrati on of border measures towards imports in general. 
- Please explain which steps are to be undertak en by China to ease non-tariff barriers, including 
standards and SPS measures, which affect imports into China of agricultural products such as 
fruit and vegetables, dairy products, livestock and wine. 
GOVERNMENT PROCUREMENT  
Referring to the WTO Secretariat’s Report, page 94 onwards 
- Para 105: could China provide statistical dat a (even estimates) of procurement by state-
owned enterprises (SOEs) and public utilities, as  the data provided (accounting only for 1,4% 
of GDP in 2003), seem to have omitted these procurements. 
- Paras 107 and 116: could China provide data ( even estimates) on procurement from foreign 
companies, both established in China or not. 
- Paras 108/109:  Could China explain the respective scope of application between the law on 
government procurement (2003) and the law on bi d invitation and tendering of 1996? Is there 
a definition of government procurement in the law? 
Para 109  states that China's new Government Pr ocurement Law does not cover state-owned 
enterprises (SOEs), even when they may be performing non-commercial or quasi-governmental 
functions. 
- Does China apply the new Law principles of  openness, transparency, fair competition, 
impartiality, and good faith to SOEs ? If yes, can China provide the legal text which enshrines 
these principles. If not, when does China intend to do so? 
- Paras 110 and 120: does China think that 2006 is a reasonable date for initiating 
negotiations to join the WTO Agreement on Go vernment Procurement, taking into account it 
might be a long process? 
- Para 112 : Can China indicate the thresholds ap plicable to sub central entities ? 
- Para 114: When limiting the number of qualified suppliers, does China use permanent list of 
qualified suppliers? If so on which criteria and for what kind of procurement? Are 
procurement covered by a list of permanent s upplier open to suppliers not on the list if the 
latter can prove it has the required qualification? 
Para 115 : China is certainly aware that the requireme nts to qualify can be very burdensome for 
foreign companies. 
- Must these companies provide these requirements  prior to the bidding process (ex ante) or 
only if and when they win the bid (ex post)? What kind of "other requirements stipulated by 
laws and administrative regulations" are there? WT/TPR/M/161/Add.1 
Page 134  
 
- Para 116: does China currently use price prefer ences for local companies or offsets? If yes, 
can China describe in which cond itions and with which magnitude? 
Para 117:  states that "notices of intended procurement and other relevant info rmation typically are 
circulated only in Chinese".  
- Are these notices of intended procurement compulsory for all tendering procedures  or do  they 
apply only to certain procedures, and in that case which ones?  
- To facilitate transparency, does China intend to  have these notices of intended procurement 
some when translated in English?  
- Does China plan to have an English version of  the official government procurement website 
(www.ccgp.gov.cn). Are there any plan to make other media related to government 
procurement, such as the Government Pr ocurement Weekly and Go vernment Procurement 
Magazine, available online. 
(3)
  MEASURES DIRECTLY AFFECTING EXPORTS  
EXPORT RESTRICTIONS   
As mentioned in the WTO Secretar iat’s Report (page 105, para 145),  China maintains a number of 
quotas on e.g. coke, rare earth, etc.  
China manages its coke exports through an export licence system. Important restrictions in 2004 
contributed to important market distortions. For th e time being the market conditions are positive, but 
the system that is judged to be WTO incompatible is still in place.  
- Is China planning to remove export licences on coke? 
Imposing export restrictions on rare earths, China ha s put forward the argument that rare earths were a 
non-renewable resource which required protection.  Ho wever, since there exists abundant reserves of 
rare earths (contrary to what their denomination see ms to suggest), and the domestic production is not 
subjected to any restriction, we consider that  this policy is not in line with WTO rules.  
- What is the current state of play regarding rare earth export restrictions?  
WTO Members should hold consultations be fore introducing export restrictions. 
- Could China clarify whether it hold any consultations on the rise of export taxes on 
unwrought copper and certain copper semi-manufac tured products? Could China provide a 
list of all industrial goods affected by expor t taxes, licences and other restrictions? Are there 
any restrictions on silicon carbide exports? 
EXPORT PROMOTION  
Referring to the WTO Secretariat’s Report, page 11, para 170  
- Could China give information about the aver age prevailing parameters of its export credits 
(currency, repayment term, interest rate, guarantee and insurance premium rates) for 
different types of countries since 2000?    
- Could China indicate how far it follows the provisions of the Arr angement on Officially 
Supported Export Credits of the OECD?  WT/TPR/M/161/Add.1 
 Page 135 
 
 
- Could China clarify its policy in providi ng loans and guarantees for building ships and 
vessels?  
(4)  MEASURES AFFECTING PRODUCTION AND TRADE  
INDUSTRIAL POLICY  
- Could China provide clarification on the relati onship between the policy documents issued by 
the National Development Reform Commission and the laws and regulations issued by Chinese Ministries and regulatory bodies? 
- How is WTO-compliance reviewed fo r these policies and other documents? 
I
NCENTIVES  
WTO Secretariat’s Report, page 115, para 186  mentions that the use of locally produced inputs in 
exports is encouraged. 
- Can China please explain in detail the measu res to which this sentence is referring to and 
how this policy is compatible with Article 3 ASCM?. 
WTO Secretariat’s Report, page 115, para 187: subsidy notification : China’s promise in the last 
WTO Subsidy Committee to submit its subsidy notifi cation before the end of 2005 is mentioned as 
well as a statement by the Chinese authorities that the notification was being finalized and submitted 
before the end of January 2006. So fa r no notification has been received.  
- Can China please advise when it finally  will submit its subsidy notification? 
WTO Secretariat’s Report, page 117, para 190: bail out:  it is stated that recently 45Bio US$ had been 
injected to partially bail out two state – owned banks  to prepare them for restructuring and eventual 
listing on the stock exchange.  
- Can China please explain this operation in mo re detail and give some precisions in regard to 
non performing loans to SOEs in this context? 
WTO Secretariat’s Report, page 124, para 204: tax incentives : the report  mentions several incentives 
which appear to contain export requirements such as 100% tax refund if profits are reinvested in 
export – oriented enterprises or 50% tax reduction if more than 70% of the production is exported.  
- Can China please explain how these schemes a re compatible with Article 3 ASCM and if 
there are plans to abolish these schemes? 
SMALL AND MEDIUM -SIZED ENTERPRISES  
WTO Secretariat’s Report, page 138, para 240: assistance to SMEs:  the report mentions the “Fund 
for International Market Exploration” as one of 4 instruments  providing assistance to SMEs. 
- Can China please explain in detail how this fund works and what the eligibility criteria for 
the beneficiaries are? 
COMPETITION POLICY  
WTO Secretariat’s Report, page  139 onward, paras 243-246 recommend inter alia  that in 
implementing the upcoming Anti-monopoly law it will be important that China addresses the WT/TPR/M/161/Add.1 
Page 136  
 
challenges posed by administrative and state monopo lies. The report finds that China’s economy is 
characterized by extensive administrative and state monopolies.  
- Please describe how China would intend to ad dress the competition problems arising from 
administrative and state monopolies. Will these issu es be dealt with in the new Anti-monopoly 
law and its implementation and/or in other legislation and how these issues will be 
addressed? 
- Please describe also what measures China inte nds to take in order to ensure that laws, 
regulations, interim provision and rules set both at the state and local level do not eliminate or restrict competition. 
The WTO Secretariat’s Report mentions in para  261  that, in 2005, 71.6 % of companies listed on 
China’s two domestic stock exchanges were state- holding companies, but the report does not include 
information on the extent of overall State Ownership in China. 
- Please provide information on the overall public  ownership of companies in China: what 
share of companies operating in China are publicly-owned in general and describe 
differences in public ownership betw een different sectors of economy. 
- Please describe how China en visages in the new Anti-monopoly law and its implementation to 
treat publicly-owned companies as compa red to privately-owned companies.  
The WTO Secretariat’s Report mentions in para  252  that the principal purpose of the new Anti-
monopoly law is to “prohibit monopolistic conduct”. The re port adds that Article I of the law refers to 
the objective of “ensuring the healthy development of the socialist market economy”. The report does 
not, however, mention that the new Anti-monopoly law al so contains a so called public interest test; 
Article I of the law explicitly states that the purpose of the law is to protect public interests. In the 
context of merger review provisions, the new law al so includes under Article 26 the following factor 
to be taken into account in the decision whether to  approve a concentration: “the effect of the 
proposed concentration on the development of the national economy and public interest”. 
- Please describe what is meant with the public  interest in the context of the Anti-monopoly law 
and how China intends to apply the public interest test. How the public interest test is 
intended to be applied in particular in the context of merger review? 
- How does the public interest test work toge ther with the generally conceived aim of 
competition policy, which is econom ic efficiency and consumer benefit? 
In para 247, the WTO Secretariat’s  Report  mentions that tensions could arise in China between the 
implementation of an effective competition polic y and the government development strategy known 
as the “big-corporation and big-group” strategy.  
- Please describe how China w ill ensure the independence of application of the new Anti-
monopoly law from the influence of industrial policy objectives. 
Cartel enforcement 
On the application of the current Price Law,  paragraph 249 of the WTO Secretariat’s Report states : 
"Although it may be acknowledged that the ma ny challenges arising from the structural 
transformation of the Chinese economy may require careful responses on competition issues, hardcore cartels are deemed to be strictly prohibited and the existing Price Law should enable the Authorities to 
deal with them in a straightforward manner.”   WT/TPR/M/161/Add.1 
 Page 137 
 
 
- Are the Authorities (NDRC) considering any action against the recently publicized market 
sharing and pricing strategies among five of the major Chinese producers of light gauge aluminium foil?  
I
NTELLECTUAL PROPERTY RIGHTS  
The EC appreciate the Chinese government’s efforts to step up IP protection and enforcement. The 
changes that have occurred over the last years are summarized in the Report of the WTO Secretariat . 
However, the EC believe that a number of resolute  initiatives and changes are still needed in order to 
increase coordination between all the bodies in charge of  IP enforcement at all levels in China, ensure 
a better level of specialisation of te ams in particular by training offici als, facilitate acce ss to courts by 
simplifying procedures, giving access to information on cases and ensure a better level of deterrence 
of sanctions adopted. 
- Could China explain which measures it intends  to adopt in order to improve effective 
enforcement of IP rights in the forthcoming m onths and, in particul ar, how it intends to 
enhance Border controls at export to avoid th at counterfeit and pirated products leave the 
Chinese territory? 
In Points 58 to 63 of the PRC’s Report (WT/TPR/G/161),  the Chinese government underlines the 
progress made on IP enforcement, in particular rela ted to trademark infringements. One of the easiest 
issues to address should be the closure of big ma rkets operating in definite places and reknown for 
selling almost exclusively fakes. However, the persis tence of a number of such markets in China is a 
source of concern for the EC.  
- How do the Chinese authorities intend to clear out  markets that are famous for selling almost 
exclusively counterfeit and pirated goods throughout China and according to which 
timetable? Which markets will be tackled first? 
In the report made by the PRC (WT/TP/G/161), the Chinese government stresses its will to 
“encourage and guide foreign investments in high technology… ” and indicates that it will “ continue 
its efforts to attract multinational enterprises to  move the manufacturing process of high technology 
and high value-added produc ts and their research and development to China ” (point 23). The EC 
believe that a good level of IP protection, includi ng patents and know-how, is essential to fulfil this 
objective. This includes fair behaviour of Chin ese companies in technology related fields and no 
interference from the government in negotiations be tween stakeholders on the exploitation of these IP 
rights.  
- How do the Chinese authorities intend to ensure  that Chinese compani es can freely and in 
good faith enter into negotiation with European pa tent holders of technologies that are used in 
China in the framework of open standards, in order for the latter to collect royalties for the 
use of these technologies? 
The WTO Secretariat’s Report  mentions, in para  274 , the length of patent protection (20 years). As 
some specific products require long additional peri ods for their development and in order to obtain 
marketing authorizations, a number of countries have decided to compensate for these periods during 
which the patent can not be exploited by an  additional protection mechanism (in the EU: 
Supplementary Protection Certificate for pharmaceutical products.  
- Does China plan to grant additional protection – in the form of patent restoration or 
supplementary protection certificates – to products  that can not be marketed before a specific 
authorization has been given (suc h as pharmaceutical products)? WT/TPR/M/161/Add.1 
Page 138  
 
The EC understand that China is currently working on issuing a State Council regulation fixing tariff 
rates for broadcasting of copyright works. This re gulation is provided in 2001 Copyright Law and is 
the final step that would allow EU copyright hold ers to collect rights for the broadcasting of their 
works.  
- Could the Chinese authorities give a clear ti metable for drafting and adopting this 
regulation? 
The EC understand that the Supreme People’s Court envisages publishing some courts decisions on 
its website. As they have continu ously called for such publication, the EC welcome this initiative.  
- The EC would like to know: 
- When this publication would start?  
- Which kind of decisions would be concerned (only SPC’s decisions or other courts’ 
decisions, even at local level)?  
- Would the main administrative decisions be published too? 
- Would statistics on cases of IP infringements (number of cases, breakdown by type of 
IP right, breakdown by origin of IP right  holder, average decision taken) also be 
disclosed on this website?  
December 2004 Judicial Interpretations on handling criminal cases of IP infringements are now 
implemented for more than one year. The EC believe  that these Interpretations leave certain problems 
opened and would therefore need some clarification.  
Does China intend to clarify or change these Interp retations, according to observations made by the 
industry (Joint Statement of UNICE, US Chamber of Commerce and International Intellectual 
Property Forum) or government authorities in the co ntext of their exchanges with China (for instance 
the EU-China Dialogue on IP)? 
Referring to page 145 in the WTO Secretariat’s  Report 
“Protection of intellectual property rights is essentia l for ensuring the continued inflow of FDI and the 
associated transfer of newly developed technologi es, as well as fostering the development of new 
technologies and services in China over the longer term.” 
- Will it be possible for the authorities to im prove penal prosecution in cases of piracy? 
- Will it be possible for customs authorities to improve control in cases of copies and 
 counterfeiting? 
- What sort of new measures does the Chinese administration intend to  adopt in order to 
improve the effective protection of the IPRs?  WT/TPR/M/161/Add.1 
 Page 139 
 
 
Patents   
Referring to page 147 in the WTO Secretariat’s  Report 
“Patent rights in China are protected under the Pa tent Law, the Implementing Regulations of the 
Patent Law, and rules promulgated by the SIPO to implement the Patent.” 
- Will it be possible for the Chinese authorities to  call for the strictly and necessary information 
avoiding sensitive and confidential information in the process of patent registration, the same 
as in the antidumping process? 
- Will it be possible for the Chinese authorities to  include protection for parts and components’ 
designing under the Patent Law? 
IV.  TRADE POLICIES BY SELECTED SECTORS  
(4) MANUFACTURING  
IRON AND STEEL  
Referring to the WTO Secretariat’s  Report, page 191, in para 93 , the report refers to China's "Steel 
industry development industry" paper issued by  the NDRC, mentioning as one of the targets 
"reducing pollution". In article 30 of the NDRC polic y, last para, referring to high energy consuming 
and high polluting primary processed products, it is stated " Limits will be imposed on the exports of 
high energy consuming and high polluting primary pr ocessed products such as coke, ferroalloys, pig 
iron, steel scrap, and billets (ingots), and export drawbacks on these products will be reduced or 
abolished. 
- What is meant by "limits will be imposed"? Could China further explain what is meant by 
“export drawbacks”? What are the conseque nces of their reduction or abolishment? 
In para 90,  reference is made to "shortage of iron or e supply". In article 30 of NDRC policy paper, 
first para, it is stated "The state encourages en terprises to strengthen international cooperation in 
mining industry resources. The state supports large scale backbone enterprises and corporations to 
establish iron, chrome, manganese, nickel, wast e steel and coking supply bases overseas through 
investment, joint ventures, partnerships and purchases. The state encour ages for needs in raw 
materials such as ore and coke, to be r esolved by relying on  the overseas market. 
- How will the state encourage enterprises?  How will the state support enterprises and 
corporations? What type of measures are envisaged? 
In para 95, the report reads  "The policy also encourages the use of domestically produced equipment 
or technology, and emphasizes efforts to produce such  equipment locally.  The Government provides 
assistance in the form of tax refunds, discounted  interest rates, and funds for research and 
development, etc. to major iron and steel proj ects using newly develope d domestic equipment.  
Equipment and technology that domestic enterprise s are unable to produce may be imported but need 
to be "modern and practical".  
Actually, article 18 of the NDRC policy paper reads "Policies for imported technologies and 
equipments: use of national equipment and technolog ies is encouraged, and import is to be reduced. 
The equipments and technologies that must be import ed because they can not be  made in China or can 
not meet the requirements must be advanced and practical. The manufacturing of the equipments which are largely needed in the future will be  localised. Use of outdated and second hand steel 
production equipments eliminated either  at home or overseas is prohibited. WT/TPR/M/161/Add.1 
Page 140  
 
- How will imports be reduced? How is "advan ced and practical" defined? What criteria have 
to be met to be "advanced and practical"? 
T
EXTILES AND CLOTHING  
WTO Secretariat’s Report, page 193 onwards 
Para 100 refers to the growth rates in the textiles and clothing sector. 
- How does China assess the future growth of the textiles and clothing sector? 
Para 102  mentions that there have been no subsidies to the textile industry since 2000.  
- Could China clarify further if this refers to direct subsidies? Does this also exclude non-
performing or poorly guaranteed loans from st ate-owned banks? Does this also refer to 
support from Provincial authorities?  
- Does the same apply at the local authorities level? More generally, which kind of assistance 
are the Chinese authorities (central or local) still providing to the textile and clothing 
industry? For example, are local governments still offering FIEs ad hoc reductions on land 
use fees and utility charges?   
Para. 104: China encourages FDI in some sections of the textiles and clothing industry.  
- Which sections are concerned by such en couragements? Where do the investments come 
from? Which are the biggest foreign countr ies acting as investors in this regard? 
Para. 105 lais down factors that explain the Chinese compe titiveness in the textile and clothing sector.  
- Do the Chinese authorities consider that the so cial conditions of work, especially those 
applied to the domestic migrant workers, cons titute a limitation or, on the contrary, a 
comparative advantage for the Chinese textile and clothing industry?  
Para. 118: China encourages investment abroad by  textile and clothing companies.  
- In which countries are these in vestments made? On the basis of  which criteria are decisions 
to invest in these countries taken?  
AUTOMOTIVE SECTOR  
Referring to pages 201-203, paras 123 to 1 33, of the WTO Secretariat’s  Report: The new 
"Automotive Industry Development Policy", was issued on 1 June 2004 by the NDRC. The main 
feature of this new policy is the incorporation of China's WTO commitments.2  
However, according, the "Administrative Rules on Im ports of Auto Parts with Features of Assembling 
Whole Vehicle" which entered into force 1st April 2005, CBU units include assembled parts, which, if 
meeting the requirements specified in the new policy, are subject to the same tariffs as CBU units.  In 
addition, if imports of key pieces reach or surp ass stipulated volume, they are considered as 
assembled parts and may be subject to tariff rates applied to CBU units.  
                                                      
2 According to the authorities, the new policy abolished requirements on foreign exchange balancing, 
local content and export pe rformance (WTO document WT/G/L /708, 8 November 2004).  WT/TPR/M/161/Add.1 
 Page 141 
 
 
- Does China intend to bring this legislation in line with WTO rules? 
The 50% equity limit continues to apply to foreign investment in vehicle manufacturing, including 
completely built up units (CBUs), automobiles for special use, agricultural transport vehicles and 
motorcycles. This means that the share owned by a foreign partner in a Joint Venture cannot exceed 
50% and the JV projects a foreign producer can estab lish in China are limited to a number of two for 
the production of passenger cars and commercial vehicles respectively.  
- This is a strong restriction of foreign equity for companies investing in auto and auto 
components manufacturing  in China. When will this restriction be removed? 
Para 132 : Under the "Regulation of Certification and A ccreditation" and "Regulation of Certification 
for Automotive Products", automotive products must  obtain a China Compulsory Certificate (CCC) 
mark and are subject to random inspection at the bord er.  Each vehicle will then be issued with an 
"Inspection and Quarantine Certificate for Enteri ng Commodities" and a "Car Attaching Inspection 
Certificate";   
With reference to our earlier general co mments and questions on the CCC system,  
- Do the Chinese authorities intend to facilitate the homologation process?  
- Provided that there are a limited number of Chinese certification enterp rises, do the Chinese 
authorities intend to enlarge the number and nationality of certifying enterprises? 
Automotive regulations in China are national a nd not consistent with those of the UNECE 1958 
Agreement concerning Uniform Technical Prescriptions and WP.29. A Chinese standard may be a mix of a UNECE Regulation and a National Standard . The adoption of "mixed standards" makes it 
difficult for importers to meet that unique mix of requirements.  
- Does China have any plans to adopt and a ccept UNECE Regulations without changes unique 
to China? 
C
HEMICAL AND PHARMACEUTICAL INDUSTRY  
We are concerned with the absence of prior notifi cation concerning important amendments of Chinese 
legislation on import and export of toxic chemical s with cumbersome and expensive procedures and 
high registration fees (10 000 US$), resulting in the bl ockage of a high number of containers in 
Chinese ports;  
- Please clarify the absence of a TBT notification as concerns the case of a major modification 
of the Law on Import and Export of Toxic Chemical s. Please also clarify the high registration 
fee, according to international standards .   
We are further concerned with the absence of di fferentiation with regards to the registration 
requirements of low volume specialty chemicals in Chinese legislation (as concerns the registration of new chemical substances), which results in very high testing cost (150 000 US$) and impedes business in low volume specialities. 
- Could China inform whether it plans to low er the registration requirements (lower testing 
requirements resulting in lower cost) for the low volume chemicals by introducing three 
volumes bands with adapted testing requirements: (a) < 100 kg/yr volume, (b) 100-1000 kg/yr and (c) mixtures with less than 2% of a new chemical.  WT/TPR/M/161/Add.1 
Page 142  
 
Chinese taxes and quotas on export of fluorspar, th e export tax for phosphorous and irregular VAT 
refunding methods on phosphor ous derivatives all affect the competitive position of EU derivative 
producers of fluorspar and phosphorous. To date, China has refused to modify its practices in the area 
of quotas. This is a serious concern.  
- Could China inform whether it plans to lift the export quota and licence fee for fluorspar, 
abolish the export tax for phosphorus and respect normal TVA refund systems for its 
derivatives. 
Discriminatory standards and the high registration fee (2 US$/kg) with respect to Active 
Pharmaceutical Ingredients result in an  effective import barrier into China. 
- Does China have any plans to apply only th e Chinese pharmacopoeia to imported APIs which 
is normal practise for domestic APIs and lower registration fees by relating them only to their 
administrative costs?  
Concerning cosmetics, different registration require ments apply for imported ordinary cosmetics as 
opposed to Chinese products, which benefit from a facilitated regime. 
- Does China have any plans to eliminate the discrimination in registration requirements for 
imported ordinary cosmetics? 
S
HIPBUILDING  
As indicated, the manufacturing sector has been b ased on investment in export-oriented, capital-
intensive activities, including through government assi stance and public investment.  The result is that 
manufacturing, especially export-oriented manufactur ing, has developed more rapidly than other 
sectors. This is particularly true regarding shipbu ilding where China now has a market share of more 
than 15% world-wide in terms of new orders expressed by CGT.  
China is the third largest shipbuilder in the wo rld with production (completion) of more than 
4 millions CGT in 2005 in comparison with 1.1 milli on CGT in 2000. China has very ambitious plans 
to become the world's largest shipbuilder by 2015.  
- Could China provide information on the sh ipbuilding development plans both in terms of 
capacities and support measures? 
- Does China intend to use direct or indirect support measures (such as tax breaks, exemption 
from business income taxes, preferential polici es for exports of sea-going ships, exemption for 
new ship-leasing institutions fr om paying business taxes for at least five years, and reduced 
business tax rate)? 
(5) SERVICES  
The WTO Secretariat’s Report (part I, p. 28, para 57)  mentions  that “With a view to creating these 
jobs, the Government might usefully reappraise its  broad economic development strategy, which has 
hitherto attached high priority to encouraging e xport-oriented capital-intensive manufacturing, and 
place greater emphasis on removing impediments to the expansion of the services sector, which tends to be less capital-intensive”.  
- More generally, what are the prospects for further liberalisa tion of services sectors in China?  WT/TPR/M/161/Add.1 
 Page 143 
 
 
Financial services  
According to the WTO Secretariat’s Report (page 209 onwards, paras 153, 157 and 183),  the foreign-
owned financial sector remains very small, with foreign banks accounting for only around 1.2% of 
bank assets, and domestic insurance companies accoun ted for 97.7% of the Chinese insurance market. 
- In view of the positive contribution that fo reign financial institutions  can make to financial 
modernisation in China, is China planni ng further measures to ensure that the 
implementation of WTO accession commitments leads to real market access and is not frustrated by overly burdensome regulations?  
Para 166  states that a foreign bank branch that provid es all local currency services is required to have 
Y 500 million in operational capital. Although lowe red somewhat recently, this amount still seems 
extremely high, considering that it has to be fulf illed by each such branch separately and that China 
also requires that the head office abroad of the foreign bank guarantees all liabilities of its branches in 
China. 
- Could China please indicate whether it is planning to reduce further capital requirements? 
Para 168  states in order to encourage investment in cer tain parts of the country the CBRC, instead of 
assessing the profitability of each branch separately wh en considering an application, will take into 
account the profitability of all Chinese branches of the foreign bank.  
- We note that this economic needs test has not been scheduled. Is China planning to apply this 
overall assessment of profitab ility throughout the country? 
In footnote 282 the WTO Secretariat’s Report  explains that there is a threshold of 25% foreign 
ownership in regard to whether a non-listed Chinese financial institution is treated as a foreign-funded 
financial institution or as Chinese by the CBRC. 
- Could China please explain what the difference is in regulation and business scope between a 
foreign-funded financial institutions and a Chinese financial institution, particularly after the 
end of the various transition periods?  
As pointed out in the WTO Secretariat’s Report (para 181),  China has committed banking subsector 
(k) Provision and transfer of financial informa tion, and financial data processing and related 
software by suppliers of other financial services . China’s regulatory regime in this subsector is 
however applied only to foreign supp liers, and the current regulator, thr ough an affiliate, appears to be 
engaged in competition with other suppliers. 
- In light of China’s national treatment commitm ents and the potential for conflicts of interest, 
would China be open to considering a lternative supervisory approaches covering both 
domestic and foreign suppliers, e.g. having the subsector supervised by a financial services 
regulator? 
We also suggest that Table II.1 (list of regulators) mentions Xinhua as the regulator of news agencies 
and financial information service providers. 
Insurance 
- Regarding the insurance sector, could China pr ovide data on the number of applications for 
licences and the number of licences granted, an d on the average time between application 
and the granting of licences? WT/TPR/M/161/Add.1 
Page 144  
 
Telecom services 
For the establishment by foreign investors of join t ventures in the so-called “basic” telecom sector, 
there is a requirement to venture with a ma in Chinese partner in the telecom sector.  
- Could China please indicate when it would a llow the free choice of joint ventures partners, in 
line with the current practice in many countri es where new entrants come from other sectors 
of the economy?  
- Is China not de facto limiting the number of operators to those already on the “basic” market 
by restricting the choice for joint venture partners to those operators? 
- In the area of “value-added” telecom servi ces, could China confirm that foreign service 
suppliers can provide the same value-adde d services as domestic operators on a national 
treatment basis? If so, can China provide dat a on the number of licences granted to foreign 
service suppliers as compared to the total number of licences? 
Air transport : Computer Reservations Services 
In relation to China’s commitments under the GATS for the provision of Computer Reservations 
Services (CRS), the EC notes that a regulation is unde r preparation to cover this area.  CRS providers 
need certainty about the legal environment under which they are operating, and a guarantee on their 
scope of business and on non-discriminat ory principles to be applied.   
- Could China please update Members on the prog ress of legislation that will create a legal 
framework for the sector?  
Construction services 
China's commitments under the GATS relating to c onstruction and related engineering services limit 
the scope of works that can be undertaken by Wh olly Foreign Owned Enterprises to four types of 
projects:  
 - Construction projects wholly financed by foreign investment and/or grants; 
 - Construction projects financed by loans of international financial institutions and 
awarded through internatio nal tendering according to the terms of loans; 
 - Chinese-foreign jointly constructed projects with foreign investment equal to or more 
than 50 % ; and Chinese-foreign jointly cons tructed projects with foreign investment 
less than 50% but technically difficult to  be implemented by Chinese construction 
enterprises alone 
 - Chinese invested construction projects th at are difficult to be implemented by 
Chinese construction enterprises alone can be jointly undertaken by Chinese and 
foreign construction enterprises with th e approval of provincial governments. 
- Could China provide most recent figures of the respective total amounts of projects relating 
to these categories, and of the relative part of the Chinese construction market, which falls 
under these categories? 
- What is the exact legislative and regulatory regime applying to project management? What is 
the articulation between Circular 200 and Decree 29?  WT/TPR/M/161/Add.1 
 Page 145 
 
 
- What is the exact legislative and regulato ry regime ruling construction and engineering 
design? Can China explain the consequences of  Decree 114 and the most recent regulations ? 
Energy services 
- WTO Secretariat’s Report, page 161, para 3 : what is the regulatory regime ruling the 
provision of services incidental to mining at oil and gas fields (e.g. drilling services) by 
foreign service suppliers to companies in ch arge of oil exploration and production ? 
Legal services 
Although this services sector is not specifically addressed in the WTO Secretariat’s Report , Legal 
services are essential for economic development through the role they play in the creation of an 
investment and business frie ndly institutional framework. 
The EC recognises the ongoing efforts of China in  implementing its WTO commitments in the area of 
the legal services. However, two main issues s till need to be addressed by Chinese authorities. 
Severe and burdensome conditions are imposed on fo reign firms, such as the need to start legal 
services operation, a feasibility study, a 9-month ex amination approval period, 3 years of consecutive 
practice before establishing an additional office, 1 partner per office. These requirements constitute a 
de facto ENT.  
- Could China please indicate when it intends to remove these requirements? 
The very broad definition of “Chinese legal affair s”, on which foreign law firms are not allowed to 
provide opinions, contrasts with the restrictive sc ope of “information on the impact of the Chinese 
legal environment”, the area of inter est for the European law firms.   
- Could China please delimit the precise ambit of “Chinese legal affairs”, and provide a 
definition and content of “information on the impact of the Chinese legal environment”? 
Express delivery 
Express delivery services are indispensable fo r the competitiveness of businesses throughout the 
world, including in China. The preparation by the Chinese government of China’s new postal law (7th 
draft) is of interest to foreign operators.  
- Could China please confirm that express de livery will not fall within the reserved/monopoly 
area? That the delivery of parcels, periodi cals and newspapers will be open to competition? 
That express operators shall not be submitted to a burdensome licensing procedure? That the 
independence of the regulator will be ensu red? and that express operators will not be 
submitted to the contribution to a “universal postal service fund”? 
Tourism The EC’s understanding is that the Regulati ons on Administration of Travel Agencies dated 
11 December 2001 establish, in article 11, an economi cs needs test (ENT) for the authorisation of new 
travel agencies. This market access limitation is not reflected in China’s GATS schedule of 
commitments. This has been brought to the atte ntion of the Chinese author ities in several occasions, 
including the 2003 and 2004 TRM processes. 
- Would China please provide Members with information about its plans for aligning the 
regulation of travel agencies with Ch ina’s GATS commitments in the sector?  WT/TPR/M/161/Add.1 
Page 146  
 
PREGUNTAS DE COSTA RICA
 
- Acuerdos y convenios comerciales  
1. ¿Cuáles son las diferencias entre el Mecanismo  de Examen de Transición  establecido en 
Protocolo de Adhesión de China a la OMC, y el actual Mecanismo de Examen de las Políticas Comerciales que lleva a cabo la China? 
2. ¿Cuáles son los argumentos de China para invocar  la Cláusula de Habilitación en relación con 
el Acuerdo Marco para la Coope ración Económica amplia entre la ASEAN y China y la Adhesión de 
China al Acuerdo de Bangkok? 
3. ¿Ha notificado China sus acuerdos regionales al Comité de Acuerdos Regionales de la OMC? 
4. En el contexto de la Zona de Libre Comerc io ASEAN-China, ¿podría China ampliar en qué 
materias se ha llegado a Acuerdos de Reconocimiento Mutuo? ¿Qué se entiende por “trato flexible” 
para miembros como Camboya, Laos, Mynamar y Viet Nam? 
5. En los acuerdos comerciales, en  especial, las zonas de libre comercio de las que forma parte 
China ¿qué tratamiento ha recibido el sector textil? 
6. ¿En qué consisten los programas de cooperaci ón que se han desarrollado en muchos de los 
acuerdos regionales negociados por China? 
- Medidas que afectan directamente a las importaciones  
7. La Ley de Comercio Exterior (2004) de Ch ina establece que el comercio de Estado para 
algunos productos se realiza, entre otras razones, pa ra asegurar el suministro interno, estabilizar los 
precios, salvaguardar la seguridad alimentaria, proteg er el medio ambiente y los recursos agotables. 
¿A  través de que instrumentos de política se procuran estos objetivos? 
 - Procedimientos Aduaneros 
8. ¿De conformidad con el pro cedimiento aduanero cuál es el plazo que tiene la Autoridad 
Aduanera para realizar modificaciones a la obligación tributaria aduanera en el control a posteriori, 
esto es, una vez que se ha autorizado el acto por el cual la Aduana le permite a los interesados disponer de las mercancías que son objeto de un despacho (levante)? 
9. ¿Cuál es el plazo con que cuenta el administrado para rectificar sus declaraciones aduaneras 
cuando ha consignado información incorrecta o c on omisiones, cuáles son los requisitos que se 
establecen al respecto? 
10. ¿Cuál es el procedimiento para la presentación de la declaración aduanera?  ¿Es factible la 
transmisión electrónica? 
 - Valoración en Aduanas y Normas de Origen 
11. En el informe de la Secretaría (página 92 en español) se señala que con arreglo a las Medidas 
de la Administración General de Aduanas sobre la  aplicación de la Ley de Revisión Administrativa 
pueden recurrirse las decisión sobre el origen adopt adas por la Administración de Aduanas ¿Cuál es la 
fase recursiva al respecto, esto es, cuáles recurs os caben contra ese acto y cuál es su trámite? 
12. ¿Existen resoluciones anticipadas para valor y origen? En caso positivo cuáles sus requisitos y 
trámite respectivo?  WT/TPR/M/161/Add.1 
 Page 147 
 
 
13. ¿Las disposiciones relevantes para el sector comercial (leyes, reglamentaciones, circulares, resoluciones), se encuentran disponi bles en Internet?  ¿Se encuentran disponibles tales disposiciones 
en alguno de los idiomas oficiales de la OMC? 
 - Comercio de Estado y empresas propiedad estatal 
14. El mecanismo y los criterios que tiene China para calificar empresas comerciales del Estado a 
empresas que no son propiedad del Estado (incluidas las empresas con inversión extranjera) hace que 
el valor del comercio de Estado sea significativamen te mayor a lo estimado. ¿Qué privilegios tienen 
las empresas dentro de este régimen en relaci ón a aquellas empresas importadoras o exportadoras que 
no se acogen a dicho procedimiento? 
- Medidas comerciales especiales 
15. ¿En qué productos aplicó Canadá medidas compensatorias contra China? 
- Norma y otras prescripciones técnicas 
16. ¿Las competencias de la Administración Esta tal General de Supervisión, Calidad, Inspección 
y Cuarentena (AQSIQ) tienen que ver con otras instituciones de gobierno? ¿Podría explicarse en 
mayor detalle la naturaleza de este modelo institucional? 
17. ¿Acepta China el reconocimiento de “zon as libres o de escasa prevalencia de plagas y 
enfermedades” conforme el Articulo 6 del Acuerdo sobre Medidas Sanitarias y Fitosanitarias o maneja únicamente el concepto de “país libre de plagas y enfermedades”? 
18. ¿Aplican los reglamentos técnicos, ya sean n acionales, sectoriales, locales o empresariales, a 
empresas bajo algún régimen de atracción  de Inversión Extranjera Directa? 
19. ¿Podrían citarse los países con los que China ha firmado acuerdos bilaterales en materia de 
inspección sanitaria y fitosanitaria para facilitar la s exportaciones de carne de éstos hacia China? 
¿Responden éstos a un acuerdo de e quivalencia o al reconocimient o de determinados sistemas, 
procesos o tratamientos? 
20. ¿Cuáles son los criterios para definir el ti po de inspección sanitaria y fitosanitaria en frontera 
en productos destinados a la importación en Chin a?  ¿Conoce el exportador de previo como será 
inspeccionado su producto cuando vaya a ingresar a China? 
 - Contratación pública 
21. El párrafo 105 del Informe de la Secretaría menciona que la Ley de Contratación Pública de 
China favorece de diversas maneras a los proveedores nacionales en los mercados de contratación.  
Por favor sírvanse explicar en detalle en qué cons isten las preferencias establecidas en la Ley de 
Contratación Pública a favor de los proveedores nacionales.  
- Medidas que afectan directamente a las exportaciones  - Comercio de Estado y comercio por empresas designadas 
22. El mecanismo y los criterios que tiene China para calificar empresas comerciales del Estado a 
empresas que no son propiedad del Estado (incluidas las empresas con inversión extranjera) hace que 
el valor del comercio de Estado sea significativamen te mayor a lo estimado. ¿Qué privilegios tienen 
las empresas dentro de este régimen en relación  a aquellas empresas impor tadoras o exportadoras que 
no se acogen a dicho procedimiento? WT/TPR/M/161/Add.1 
Page 148  
 
- Medidas que afectan a la producción y al comercio 
- Textiles 
23. Podrían servirse a ampliar y a detallar los ti pos de subvenciones gubernamentales que fueron 
dadas en los últimos 10 años al sector. 
24. ¿Qué tipo de incentivos reciben las empresas dedi cas al sector en la actualidad?  ¿Qué tipo de 
incentivos le da China a las inversiones extranje ras directas que promociona en los segmentos del 
sector de los textiles y las pr endas de vestir “alentados”? 
25. Podría ampliar en los argumentos expresados  por la CNTAC para cuestionar los fundamentos 
de los contingentes arancelarios para el algodón. ¿Ha logrado este contingente su objetivo de equilibrar la oferta y la demanda  del producto, y ha logrado proteg er a los agricultores? ¿Podría 
detallar de qué manera se busca proteger al agricultor y en que aspectos específicos? 
26. ¿En qué tipo de regí menes se encuentran instaladas las empresas manufactureras de textiles y 
vestidos? ¿Cuáles son las características y ventaj as de los diferentes regímenes si los hubieran? 
27. Se apuntó que el Gobierno de China brinda  asistencia para la exportación a determinados 
exportadores de textiles y prendas de vestir. ¿Podría especificar los medios y alcances de los 
programas de asistencia, así como cuales han sido los logros del mismo? 
28. ¿Podrían especificar cuáles son los países en los que China efectivamente ha fomentado la 
inversión en el extranjero en compañías del sector textil y de prendas de vestir? ¿Cuántos 
beneficiarios ha tenido este programa y el tipo de los mismos (empresas privadas o empresas nacionales, capital mixto)? ¿En qué condiciones se otorgan los préstamos preferenciales aludidos? 
- Promoción de exportaciones/ Pequeñas y medianas empresas/ Gestión empresarial/ 
Incentivos 
29. ¿Los créditos que provee el Banco de Export ación e Importación de China (EXIM) se hacen a 
tasas de mercado o inferiores a ella?  Si el costo de  este crédito de EXIM es inferior al de mercado, 
¿podría esto calificarse como un subsidio a la exportación? 
30. ¿Cuáles son las condiciones generales del seguro de crédito y exportación provisto por 
SINOSURE, incluyendo la prima? 
31. ¿Por qué las tasas de utilización del seguro de crédito y exportación son tan bajas? 
32. ¿Qué forma toma el apoyo del MOFCOM a la PYME para la exploración de nuevos 
mercados, recursos ec onómicos directos o información logística? 
33. ¿El apoyo económico del MOFCOM a la PYME para la exploración de  nuevos mercados no 
es acaso un subsidio al exportador?  
34. ¿En qué forma la política de expansión de las exportaciones agrícolas (del 18 de octubre del 
2004), apoya la I+D de las empresas ag rícolas? ¿Con recursos directos? 
35. ¿Qué tipo de infraestructura financia el “F ondo de Apoyo a la PYME en Relación con el 
Sistema de Servicios?, ¿Infraestructura pública o privada?  WT/TPR/M/161/Add.1 
 Page 149 
 
 
 - Derechos de propiedad Intelectual 
36. ¿Podría indicar si de conformidad con la Le y de Marcas de Fábrica o de Comercio se permite 
el registro de marcas sonoras y olfativas en China? 
37. ¿Podría explicar si el uso de una marca an tes de su registro concede algún tipo de protección 
o garantía para su titular o si los derechos se obtie nen únicamente mediante el registro de la marca? 
38. ¿Podría explicar en detalle como su legi slación implementa el artículo 39, párrafo 3 del 
Acuerdo sobre los ADPIC? 
- Agricultura 
39. Dentro de la transición del modelo económ ico de China, que ha sido reconocido por los 
Miembros de la OMC durante su proceso de Adhesión, ¿cuáles son los elementos de mayor atención 
por el Gobierno de China en relación a la aplicaci ón de su política agropecuar ia en cumplimiento con 
sus obligaciones en la OMC? 
40. La forma en cómo se aplica el IVA a produc tos importados y de producción nacional parece 
favorecer a la producción doméstica. ¿Se aplican los principios de “Trato Nacional” según el Art. III 
del GATT? 
41. Los volúmenes de importación de productos agropecuarios que realizan las empresas 
comerciales del Estado son significativamente impo rtantes y están sujetos a licencias, contingentes 
arancelarios y prohibiciones. ¿En qué caso se dan las prohibiciones, están las mismas a derecho en 
relación con los Acuerdos de la OMC? 
42. Dado en incremento de las ayudas internas al  sector agropecuario en el período 2000-2004 y a 
que China no ha presentado ninguna notificación en ma teria de ayuda interna, ¿podría China explicar 
la naturaleza de las medidas y de este incremento?  
- Régimen de Inversión Extranjera  y Servicios  
43. ¿Cuáles son las restricciones que afrontan las empresas extranjeras dentro de los servicios 
bancarios, de seguros, de telecomunicaciones y de tr ansporte? Dentro de los sectores citados, ¿cuál es 
la proporción de participación estatal y en que por centaje está limitada la participación extranjera? 
44. En términos generales, ¿en qué  consiste la reforma del subsector de los servicios financieros? 
45. En materia de telecomunicaciones, ¿quién es la  autoridad encargada de fijar los controles de 
precios? ¿Cómo se determinan los precios máxi mos o precios con orientación gubernamental? 
46. ¿En qué consiste el trato fiscal preferencial que ofrece China a las empresas extranjeras? 47. ¿A quién le corresponde y cómo se ap lica los controles de capital en China? 
48. ¿Cuáles son los requisitos que se exigen para  beneficiarse del régimen de vacaciones fiscales? 
49. ¿Qué elementos distinguen cada una de las clasificaciones de las ramas de producción en 
“alentadas”, “restringidas”, “prohibidas” y “permitidas? 
50. ¿En qué consiste el sistema de verificación y registro? ¿Rige el mismo procedimiento y se 
exigen los mismos requisitos ante la Comisi ón Nacional de Desarrollo y Reforma y ante las 
comisiones locales de desarrollo y reforma? WT/TPR/M/161/Add.1 
Page 150  
 
51. ¿Subsisten en la actualidad en China limit aciones geográficas, de productos y de clientes 
respecto al funcionamiento de bancos extranjeros? 
52. ¿Cuáles son las medidas in situ y ex situ pa ra la supervisión y la inspección de las compañías 
de seguros?  
53. ¿Cómo funciona el fondo para el suministro  de servicios universales de telecomunicaciones y 
la estructura de costos para compensar a los proveedores por el suministro de esos servicios? 
54. ¿Qué avances concretos ha hecho China desd e su incorporación a la OMC para fortalecer y 
uniformar la aplicación de su política impositiva de incen tivos a la inversión extranjera directa en sus 
zonas económicas especiales con relación a las aplicad as en otras partes del territorio aduanera del 
país? 
55. ¿Qué incentivos fiscales, financieros y de cualqui er otro tipo, otorga China a fin de estimular 
la salida de inversión propiedad de nacionales, en el marco de la disposición relativa al examen y 
aprobación de las inversiones destinadas a gestionar em presas en el extranjero, en vigor desde el 1 de 
octubre del 2004? (En particular, en relación con lo establecido en el artículo No. 2 en cuanto a que el 
Estado “Ayudará y alentará a las empresas” a invertir en el extranjero). 
56. ¿Qué avances ha concretado China en el comp romiso establecido en el Protocolo de Acceso a 
la OMC, en cuanto a la aplicación de todos lo s impuestos, cargas y medidas que afectan a las 
importaciones, incluyendo restricciones a la importa ción y tarifas arancelarias que son aplicadas a las 
importaciones dentro del territorio aduanero de Ch ina, sobre los bienes provenientes de las zonas 
económicas especiales? 
57. ¿Qué compromisos ha adquirido China desde su adhesión a la OMC o espera implementar en 
el futuro, con respecto a la reducción de las po líticas  preferenciales para la atracción de IED 
aplicadas en las zonas para el desarrollo econó mico y tecnológico, ci udades costeras, áreas 
económicas especiales, aplicadas a la zona económica de Pudong y en lo relativo al tratamiento preferencial en cuanto al impuesto sobre la renta corporativa preferencial aplicado para las empresas 
catalogadas como de alta tecnología, y contenid o en el anexo 5A del protocolo de adhesión.? 
58. ¿A qué se debe el poco desarrollo del mercado de seguros en China? ¿Tiene esto relación con 
la forma en que está planteada la regulación, en par ticular en materia de requisitos para obtener la 
autorización de entrada al mercado, como es el caso de aquellas que supeditan la concesión de 
licencias de acuerdo con objetivos de  desarrollo económico y regional?  
59. ¿Se encuentra autorizado en China el comercio transfronterizo de algunos servicios de 
seguros? En caso afirmativo, ¿cuáles servicios  y en qué condiciones pueden prestarse?   
60. ¿Qué función tienen las compañías de gestión de activos de seguros? 
61. ¿Cuáles son las medidas in situ y ex situ pa ra la supervisión y la inspección de las compañías 
de seguros?  
62. ¿Se piensa autorizar a los aseguradores extranjeros para que proporcionen seguros 
obligatorios? ¿Están los servicios de seguros en China sujetos a normas que regulan la competencia? 
¿Cuál es la autoridad encargada de aplicar dichas  normas? Además de la  correduría de seguros, 
¿existe en China la figura del agente de seguros? ¿La correduría de seguros puede ser ejercida sólo 
por personas jurídicas?  
63. ¿A qué obedece la restricción según la cual las empresas que se dedican a seguros de vida 
sólo pueden ser en un 50% propiedad extranjera?  ¿Para la obtención de licencias, se piden a las  WT/TPR/M/161/Add.1 
 Page 151 
 
 
empresas de capital extranjero requisitos distinto s a aquellos que se exigen a empresas chinas? ¿En 
qué consiste la diferencia? 
64. ¿En qué consisten las tarifas fijadas por el Gobierno, las tarifas orientadas por el Gobierno y 
las tarifas ajustadas en función del mercado? ¿A qué servicios y en qué co ndiciones se aplica cada una 
de estas tarifas? 
65. ¿La regulación de las telecomunicaciones en China tiene en cuenta el fenómeno de la 
convergencia tecnológica? ¿La regulación se basa en se rvicios o en redes? ¿Cómo se regulan en China 
los servicios de difusión? 
66. ¿Cómo funciona el fondo para el suministro  de servicios universales de telecomunicaciones y 
la estructura de costos para compensar a los proveedores por el suministro de esos servicios? 
67. ¿Están los servicios de telecomunicacion es en China sujetos a normas que regulan la 
competencia? ¿Cuál es la autoridad encargada de  aplicar dichas normas? ¿Se aplica una regulación 
especial a los operadores dominantes, en qué consiste esa regulación? WT/TPR/M/161/Add.1 
Page 152  
 
QUESTIONS BY PHILIPPINES
 
TRADE POLICIES AND PRACTICES BY MEASURE 1) Sanitary and Phytosanitary Standards (SPS
) 
The Philippines would like to seek clarification on Ch ina's notification process in the context of the 
International Plant Protection Convention and the WTO Agreement on Sanitary and Phytosanitary 
Standards.  Could China please elaborate on its procedures in implementing new SPS-related 
requirements, particularly in notifying trading part ners and in providing the opportunity for concerned 
parties to adjust to the new requirements? 
2) Subsidies and Countervailing Measures  
The Philippines would appreciate it if China can confirm that it provides export tax rebate to its 
finished steel products and some subsidy for certain bolts and nuts.  We would further appreciate it if 
China can provide a brief elaboration on these programs, if indeed provided to Chinese manufacturers. 
3) Customs Valuation
 
The Philippines would appreciate China's clarifi cation on the requirements and supporting documents 
that generally serve as basis for China's Custom s authorities in re-valuing the import cost of goods 
entering China's ports and whether such customs va luation is applied uniformly in all its ports.  WT/TPR/M/161/Add.1 
 Page 153 
 
 
QUESTIONS BY NORWAY  
Maritime transport services 
1. In para 249 in the Secretariat's report it is  stated that there are no cargo preferences for 
domestic shipping companies.  However para 270 c ontains information on bilateral cargo sharing 
arrangements with Algeria, Bangladesh, Brazil and Za ire, and that there are plans to phase out these 
arrangements in the future.  We appreciate these plans, and would like to know how soon these cargo 
sharing arrangements can be phased out? 
Services mode 3  
2. Para 256-259 in the Secretariats report c ontain valuable information on requirements and 
restrictions regarding FDI in the maritime transport sector.  We appreciate that from 11 December 
2005 100% foreign ownership has b een permitted for freight forwarding agencies. We would like to 
know if there are any plans to remove the restri ction on foreign investments for other auxiliary 
maritime transport services i.e. maritime transport agencies where a 49% limitation applies? 
3. The Secretariats report does not contain inform ation regarding land tran sport (road and rail).  
We have noted that the revised offer from Chin a in the services negotiations contains a commitment 
which makes it possible to set up a 100% foreign owned trucking company in China.  We would 
appreciate information regarding the possibility fo r foreign ship-owners to set up a fully foreign 
owned Multimodal Transport Operator that is a comp any that offers door to door transports offering 
all relevant modes of transport, in China. 
Intellectual property rights 
4. Regarding the issue of intellectual property ri ghts, Norway would like to ask what concrete 
measures the Chinese government authorities are planning or executing in order to: 
 A. ensure that IPR holders have effective m eans to defend their rights in court, ensuring 
legislation is in place and that the judicial system functions effectively; 
 B. make the implementation of court ruli ngs effective, this includes that penalties 
imposed must be high enough to deter crim inal acts. There must also be proper 
opportunities to request and quickly adopt temporary measures to stop IPR abuse, by 
injunctions;  
 C. ensure transparency regarding policy processes and all IPR- related legal and 
administrative procedures towards both domestic  and foreign users and stakeholders.  
Energy 
5. Prices in the energy sector are still managed or set by the government. As energy is an 
important production input, price setting can give  certain trade advantages and cause indirect 
subsidization, as we are well aware. Given the objectives of efficient allocation of resources and 
decreasing the use of energy pr unit of GDP, coul d we receive more information about when prices 
are expected to be totally market driven?   
6. Does the Chinese government have plans of givi ng targeted support to poor households that 
might be hard hit by increasing energy prices, give n the 20% annual increase in the government’s tax 
income? WT/TPR/M/161/Add.1 
Page 154  
 
QUESTIONS BY THAILAND
 
WTO Secretariat Report (WT/TPR/S/161) 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVE 
(2) Institutional and Legal Framework  
1. Para 17:  According to the report, China implements  the WTO Agreement and its Protocol of 
Accession through enabling legislation.  However, China has a complex legal structure and hierarchy 
of laws and regulations, as per Chart II.1 of the report.  In which category of domestic law, for 
example, administrative regulations, local regulations , etc., is China’s enabling legislation of its WTO 
commitments?   
(2)(v) Centre-subnational relations a nd local barriers to internal trade  
2. Para 32:  How effective have the central governme nt’s efforts been in reducing local 
protectionism?  For example, have they resulted in  reducing the specific fees levied on non-local 
goods and services entering the local market?  We are al so interested in learning more about sanctions 
or similar measures used to curb the abuse of power by local govern ments affecting trade, which is 
prohibited under Article 7 of the “Law Countering Unfair Competition.” 
(4) Trade policy objectives  
3. Para 39:  What measures, other than export-relate d measures, does China use to promote 
local production and encourage the use of local input s?  Could China please clarify its promotion of 
exports in light of its SCM obligations? 
(5) Trade Agreements and Arrangements  
4. Paras 70 and 71:  Have the Gulf Cooperation Council and India recognized China as a market 
economy?  
(6) Foreign Investment Regime  
5. Para 77:  Paragraph 77 of the Secretariat report  indicates that, according to Chinese 
authorities,  foreign investors will have the same acce ss as domestic investors.  Does this mean  that the 
legislative framework and procedures including exam ination and approval procedure for domestic and 
foreign investors are the same?  Does China provi de the same treatment to domestic and foreign 
investors? 
III. TRADE POLICIES AND PRACTICES BY MEASURES 
(2)(ii)(a) Tariffs overview    
6. Paras 19 – 20:  Does China publish its interim tariff rat es in advance? If so, what information 
is included in the publication, for e.g., does it specify  the period of application for each interim tariff? 
(2)(vi) Trading rights    
7. Para 61:  Please provide the latest status on the liber alization of the scope and availability of 
trading rights granted to foreign invested enterprises.   
(2)(viii)(b) Safeguards  
8. Para 82: During its safeguard investigation on certain steel products in 2002, China imposed 
provisional measures in the form of tariff quotas on the products under investigation, and 
subsequently applied definitive measures only on some  of the investigated products.  Thailand would 
be interested in learning more about China’s treatme nt of imports subjected to tariff quota provisional  WT/TPR/M/161/Add.1 
 Page 155 
 
 
measures which were subsequently found to not have caused serious injury.  For example, how did 
China refund the tariff quotas imposed on these imports?     
(2)(ix)(b) Standards and technical requirements    
9. Para 88:  The report lists the 4 kinds of standards us ed in China, i.e., national, sectoral, local, 
and enterprise, but it is unclear how such standards are applied.  Could China please provide more 
details on the application of these 4 standards, such as  the hierarchy of the standards?  The report also 
indicates that “an enterprise is encouraged  to adopt national, sectoral, and local standards if they are 
available” (emphasis added).  Does this mean th at enterprises need not adopt even mandatory 
standards?    
(2)(ix)(d) SPS measures    
10. Para 98:   The report states that the importation of animals, plants and their products require 
sanitary health certificates issued by the appropriate authority in the country of origin.  Are certificates required for every import permit applica tion?  Regarding import permits, in the case of 
simultaneous importation of several kinds of prod ucts that require impor t permits, is one import 
permit required for each product, or is one permit per importation sufficient? 
The report also indicates that import permits are valid for 6 months during the calendar year 
of issuance.  We would like to know whether any flex ibility exists for permits that are applied for and 
granted at or near the end of the calendar year.  For example, can/will such permits be automatically 
extended for the remainder of the 6 month period that falls in the new calendar year, or must 
applications be resubmitted at the beginning of the new calendar year for all cases?  We would also be 
interested in knowing whether it is possible for local CIQs to issue import permits directly, instead of 
sending applications to AQSIQ in Beijing for processing, which normally takes no less than 30 days.   
11. Para 99:  Could China  please provide more details on the criteria used to select the method of 
inspection for goods subject to SPS measures, and da ta on the percentage of imports subject to SPS 
requirements that have been cleared under the three methods? 
(3)(iii) Other Measures affecting exports
  
12. Para 135 : Could China please clarify its income tax concessions for FIEs meeting certain 
export requirements in light of SCM and TRIMs principles? 
(4) Measures affecting production and trade   
13. Para 196: The report provides some information on how VAT liabilities for small scale 
producers are assessed.  Could China please elaborate on its criteria for determining whether a VAT 
payer is “small-scale?” 
IV. TRADE POLICIES BY SELECTED SECTORS (2) Agriculture
 
14. Para 23: The report mentions that agricultural products produced and sold directly by small-
scale farmers are exempt from VAT, and that VAT is instead collected from the primary purchases of 
agricultural products at the point of sale where the tax is calculated on the value of the trader’s margin 
and not on the product’s value.  The report also st ates that agricultural imports are subject to VAT.  
How is VAT calculated for imported products?  Is it, for example, calculated on the trader’s margin or 
on the value of the product, or are imports subject  to a different method of VAT calculation than 
domestic products?  Please elaborate in light of the WTO principle of national treatment. 
15. Para 26:   Is the process of quota allocation and re -allocation conducted at the national level, 
or by ADRC and MOFCOM agencies at the provincial/local level?  WT/TPR/M/161/Add.1 
Page 156  
 
16. Para 27: Under China’s Protocol of Accession, agri cultural products are subject to import 
by STEs, including maize, rice, wheat, vegetable oil, and sugar. Does China plan to relax the s upply 
and price control of those products in the near future?  
17. Para 28: Which agricultural products are subject to automatic licenses?  Does China intend to 
expand the provision of automatic licenses to  other imports in the near future?  
18. Para 37: Since becoming a member of the WTO, China has not yet notified  its support for 
the agricultural sector, although its Agricultural La w of 2002 provides for several forms of such 
support, including direct subsidies for grain producers. Could China please explain how these 
subsidies are categorized according to WTO regula tions, and when China intends to notify these 
supports to the WTO? 
(4)(iv) Automotive sector
 
Para 129 : Could China please provide more details on the CBU-equivalent tariff rates it collects on 
automotive part imports, particularly in light of SCM and TRIMs principles?  WT/TPR/M/161/Add.1 
 Page 157 
 
 
QUESTIONS BY INDONESIA  
1. On page 60 of the Secretariat Report, we find th at in the area of technical barriers to trade, 
China has four different kinds of Standards, i.e, national, local, sectoral and enterprise and that the 
percentage of national standards equivalent to international standards is only around 32%.  The 
question is that how the Chinese government provi des guarantee so that those standards do not 
constitute unnecessary obstacle to tr ade? Has China already notified t hose kinds of standards to the 
TBT Committee? 
2. On the import policy, China has some products which are subject to import prohibition and 
have been notified under Article XX of the GA TT 1994 (General exceptions), among others, products 
of animal origin, opium, mineral products, rubbers, chemical, raw hides, skin and leather, clothing, 
ash of precious metals and base metals. As prohi bition under Article XX (general exception) could 
only be taken only for specific purposes (public morals ; human, animal and plant health, environment, 
patent and trade marks etc), Indonesia is of the view  that some of those prohibited products could not 
be notified under Article XX of the GATT 1994, such as rubber, clothing, ash of precious metals and 
base metals. We seek clarification on this policy.  
3. Indonesia fully understands that China imposes tariff rates for certain products for specific 
purpose. However, Indonesia has a grave concern on the imposition of tariff rate quota on palm oil 
which is of great interest to Indonesia. Indonesia needs to have justification on the idea behind this 
imposition on this particular product.  
4. According to paragraph 71 of the Secr etariat Report, from 1 January 2002 to 
31 December 2004, 79 antidumping investigation we re initiated and final me asure were taken in 
52 cases. And the figure in page 85 of the Reports show  that the targeted products are chemicals and 
products thereof.  Since China is  a newly acceded member (2001), Indon esia is of the view that China 
is one of the most active users of antidumping in strument and it seems that China has used this 
instrument to protect its domestic industries inst ead of tariffs. Indonesia seeks clarification of this 
observation. WT/TPR/M/161/Add.1 
Page 158  
 
QUESTIONS BY SOUTH AFRICA
 
WT/TPR/S/161 
Summary Observations:   Trade and Trade-related Reforms 
Paragraph 12 (Page ix) : "The SPS regime and SPS procedures remain complex and not very clear;  
a large number of laws and regulations govern implementation in this area." 
1. Could China indicate if they would be revi ewing their SPS regime and procedures to make it 
 more predictable and less complex? 
Paragraph 20 (Page xiii) "nevertheless, state tradi ng is maintained to manage trade for some 
products, as are price controls for some ... and di rect subsidies has been introduced to agriculture." 
2. Which agricultural products are affect ed by state trading and price controls? 
3. Could China give an estimate of the impact of state trading and price control on prices and 
 trade flows? 
4. We note that China has not yet submitte d any notifications under the Agreement on 
 Agriculture and would like to know when these notifications would be forthcoming? 
Section II:  Measures Directly Affecting Imports 
Subsection (ix):  Standards and other technical requirements 
(d) Sanitary and Phytosanitary measures 
Paragraph 98 (page 92): "It is stated that an import permit is valid for 6 months of calendar year it is 
issued." 
5. In the case of a permit being issued in D ecember, will it still be valid for the remaining 
(5) months of the following year? 
"Plants and their products also require sanitary health certificates issued by the appropriate 
authority in the country of origin". 
6. Does this refer to the need fo r a phytosanitary certificate, or to some other certificate issued in 
terms of Codex alimentarius standards?  Do these refer to both plant and animal products? 
(Plant Health (phytosanitary) inspector s issue only phytosanitary certificates.) 
7. Do the 20 days for issuance of permits exclude  the timeframes needed for Pest Risk Analysis 
(PRA)? 
8. Could the PROC indicate the approximate timeframe for their PRA process? 
Section III:  Trade Policies and Practices by Measure 
Paragraph 23 (page 67):  "In addition, 55 tariff lines a re subject to tariff rate quotas, including in HS 
Chapters 10 (wheat and meslin, maize, rice), 11 (cereal flours other than wheat and meslin, cereal 
groats), 15 (soybean oil, palm oil, rape, and must ard oil); 17 (cane or beet sugar), 31 (mineral 
chemical fertilizers), 51 (wool, carded or combed ), and 52 (cotton)".  Paragraph 25 (page 169):  
"With the exception of cotton, imports under TRQs ha ve, in general, been low during the period under 
review;  most TRQs are genera lly unfilled (Table AIV.1)".  WT/TPR/M/161/Add.1 
 Page 159 
 
 
9. Could China state reasons for the low fill rate of these TRQ's? 
Paragraph 24 (Page 67):  China's applied MFN tariffs: "... 10. Of the 0.3% (22 tariff lines) that has ad valorem  rates of 60-65%, how many are for 
agricultural products and what products are involved? 
Paragraph 81, Section III(2)(viii):  "It is not cl ear whether appeals may be made against safeguard 
decisions taken by the authorities." 
11. Are there provisions in place to enable app eals against safeguard decisions?  If so, which 
parties may appeal, and what are the procedures? 
Paragraph 99 (Page 93):  "According to authorities, there are three methods of inspection carried out 
at the border for goods subject to SPS".  These methods differ in the number of days needed to 
complete a transaction. 
12. Could China give details of the products covered by each inspection method, and why the 
timeframes differ? 
Paragraph 103, Section III(2)(ix):  Labelling 
13. What are the labelling requirements with respect to genetically modified organism? 
Paragraph 123, Section III(3)(i):  Restricted exports 
14. Can China please indicate which products exports are restricted? 
Paragraph 168 (page 111): "In 2005, exports subject to state trading were rice;  maize;  cotton;  and 
tobacco" ... among other products. 
15. What impact does the state trading ente rprise have of on product prices?  Does the 
Government provide any subsidi es and/or guarantees to the STEs? 
Paragraph 207 (page 126):  "In its  protocol of accession China agreed that price controls would not 
be extended to additional goods and services..." 
16. When would China eliminate these price contro ls as undertaken in its Protocol of Accession? 
IV.  Trade Policies by Selected Sectors 
Paragraph 2 (page 161):  the Secretariat reports " ... There remain some distortions, however.  For 
example, domestic prices of some produc ts are subject to controls ...". 
17. Could China please indicate which products are still subject to government pricing 
(paragraph 43, page 175) and how does the govern ment price differ from the world market 
price? 
Paragraph 18 (page 165):  The Secretariat reports: "... and the provision of direct subsidies to grain 
farmers." 
18. Could China indicate which grains are subsid ised, as well as details of the subsidy programs 
for each of these grains? 
 WT/TPR/M/161/Add.1 
Page 160  
 
INTERIM RESPONSES BY CHINA 
FIRST DAY (19 APRIL 2006) 
I. Economic environment (3) M
ACROECONOMIC POLICIES  
(i) Monetary and exchange rate policies 
QUESTION:  
United States 
1. In paragraphs 14 through 19 of Chapter I, th e report describes China’s exchange rate regime.  
In paragraph 18 of Chapter I, the report concludes that  “[a] more flexible exchange rate regime could 
enable China to operate a more independent m onetary policy, which would be better suited to 
ensuring a low and stable rate of inflation in bot h product and asset markets and allow market forces 
to assume a greater role in determining interest ra tes.   However, the auth orities are concerned about 
the impact of a more flexible exchange rate  on economic growth, macr oeconomic and financial 
stability, employment, domestic enterprises, and foreign trade as well as on neighbouring countries, regions, and the world economy.” 
a.  Please describe China’s plans for moving towa rd a more flexible exchange rate regime. 
ANSWER: 
On July 21, 2005, China announced a major refor m of the RMB exchange rate regime.  A managed 
floating exchange rate regime with reference to a basket of currencies was put into effect.   
After the reform, RMB is no longer pegged only to  the US dollar. The RMB exchange rate regime is 
more flexible. To give it further flexibility, China needs to further develop its foreign exchange market 
and to strengthen the role of the market in de termining the exchange rate. Chinese enterprises and 
financial organizations also need the foreign exc hange market to develop trading products in greater 
depth and abundance to help them better adapt to a floating rate system. Therefore China will 
actively foster and improve its foreign exchange market, gradually introduce risk-preventing market 
instruments, and strengthen its monitoring mechanism. 
QUESTION:  
United States 
b.  In paragraph 18 of Chapter I, the report st ates that it is unlikely that a completely freely 
floating exchange rate can be achieved with the cu rrent set of regulations and controls in place.  
Please describe the reforms needed fo r China to be in a position to adopt a completely freely floating 
exchange rate. 
ANSWER: 
Pursuant to the announcement of July 21, 2005, China has adopted a managed floating exchange rate 
regime with reference to a basket of  currencies. On August 2, 2005, a larger variety of participants 
were given access to the forward foreign exchange market, the coverage of transactions was 
expanded and the restrictions on trading maturities were eased; banks were allowed to quote at their 
discretion and to provide RMB swaps against forei gn currencies. On August 8, 2005, qualified non-
bank financial institutions and non-financial businesses were allowe d access to the inter-bank foreign  WT/TPR/M/161/Add.1 
 Page 161 
 
 
exchange spot market. RMB-foreign currency swap tr ansactions were introduced to inter-bank 
foreign exchange market. On August 15, 2005, inter-bank foreign exchange forward market was officially introduced. 64 Chinese banks and foreign banks such as Citibank have become members of 
the forward market so far, 50 of them a re foreign banks including 5 from the US.  
Since the introduction of over the counter transac tions and market makers on January 4, 2006, OTC 
market has become the principal part of Ch ina’s foreign exchange markets and the market makers 
have become the leading pl ayers in the markets.   
China will continue of the work of fine tuni ng its RMB exchange rate regime, develop foreign 
exchange market, increase the RMB exchange rate fl exibility, and help financ ial institutions to 
develop independent pricing and risk management capabilities. Since the RMB has the room and 
capability to float independently  upward or downward in response to market changes under the 
current regime, there will be no one-off exchange rate adjustment through official announcement. 
Rather, there will be independent floating under th e current exchange rate regime at the foreign 
exchange market and exchange rate movements among major international currencies. 
QUESTION:  
Japan  Q1.  
(1) Please indicate the views of the Government of the People’s Republic of China regarding merits 
and demerits of maintaining the RMB exchange rate. 
ANSWER: 
China announced a major reform of the RMB exchange rate regime on July 21, 2005.  A managed 
floating exchange rate regime with reference to a basket  of currencies was put into effect.  RMB is no 
longer pegged to the US dollar. After the reform, th e RMB exchange rate regime is more flexible.  
Under the existing regime, RMB has the room and capability of floating independently upward or 
downward in response to market c hanges under the current regime.   
China will further improve the RMB exchange rate regime and promote foreign exchange market 
development.  China will continue to make good use of the managed floating regime and increase the floating band of RMB exchange rate. 
QUESTION: Japan  
(2) Please indicate the prospects of the Governme nt of the People’s Republic of China for the 
liberalization of capital movement and foreign exchange control. 
ANSWER: 
In recent years, while meeting the needs for econom ic development, reform and opening, the Chinese 
government has made progress in relaxing capita l flow and foreign exchange control.  Domestic 
companies investing abroad will be backed with foreign exchange flow after the investment is 
endorsed by the competent governme nt authorities.  In order to foster domestic capital market 
development, the QFII (qualified foreign institutional investor) system has been put in place and has 
accumulatively resulted in 5.97 billion USD of approved investment.   WT/TPR/M/161/Add.1 
Page 162  
 
However, it remains conscious that RMB convertibility  is a complicated and systematic project.  The 
pace of increasing convertibility needs to be matc hed with China’s economic development, macro 
control and financial governance capabilities, matu rity of the financial market and the risk 
management capabilities of the market players.  Work in this respect has to fit into the entire reform 
environment and move forward together with other reform  measures.  At the same time, it has to take 
the international economic situa tion and financial atmosphere into consideration.  China does not 
have a fixed timetable for RMB capital account convertibility. Things can only be settled once 
conditions are ripe. 
QUESTION:  
Switzerland 
Para. 19.  What is China’s assessment of the July 20 05 reform of the exchange rate regime? 
ANSWER: 
The People’s Bank of China (PBOC) unveiled the new managed floating RMB exchange rate regime 
on July 21, 2005, which is adjusted with reference  to a basket of currencies.  The new regime has 
been running smoothly.  We’ve seen RMB exchange rate going up and down with greater elasticity.  
The regime also reflects changes in exchange  rates between major world currencies. 
In the first quarter of 2006, RMB exchange rate registered a daily fluctuation of 24 base points, 
higher than 17 basic points registered between July 21, 2005 and the end of 2005, suggesting a notable increase in RMB exchange rate flexibility.  As of March 31,2006, the nominal exchange rates 
of RMB to US dollar, euro and Yen has increa sed accumulatively by 3.24%, 2.70% and 7.02% 
respectively comparing to those before the reform. . 
QUESTION:  
Brazil  
WT/TPR/S/161 I (3) (i) paragraph 18 
The Secretariat report says that “the (Chinese) aut horities are concerned about the impact of a more 
flexible exchange rate on economic growth, macr oeconomic and financial stability, employment, 
domestic enterprises, and foreign trade as well as  on neighbouring countries, regions, and the world 
economy. But to the extent that they cannot full y sterilize capital inflows, the outcome may well be 
higher domestic inflation, which would tend to push up the real effective exchange rate in any event. 
Arguably, it would be bett er for the Chinese economy to avoid this higher inflation route to restoring 
external balance since inflation tends to distor t markets”. Could the Chinese delegation comment on 
this reasoning presented in the report?  
ANSWER: The concern expressed in the Secretariat Report about China’s exc hange rate policy leading to high 
inflation is unfounded. 
Currently, China’s national economy has maintained a sound momentum of steady and rapid.  In 
general, China’s financial performance is good as  well.  In 2006, China will consolidate the 
interaction of various macro policies, tangibly push forward the building of the socialist “new 
countryside”, actively expand domestic consumer demand, maintain the scale of fixed assets 
investment, and optimize the investment mix.  China will promote industrial restructuring and adjustment of its foreign trade pattern, improve the existed model and  quality of its economic growth.  WT/TPR/M/161/Add.1 
 Page 163 
 
 
At the next stage, China will continue to pr actice a prudent monetary policy, strengthen pre-
adjustment and micro adjustment while keeping cons istency and stability in the total volume and 
make its monetary policy more forward-looking.  Ch ina will better match its policies on local and 
foreign currencies and make the monetary policy more pr oactive and effective.  China will forcefully 
move forward with institutionalizing the financia l market, expanding direct financing c hannels, and 
ensuring holistic and harmonious development in th e financial market.  China will further improve 
the RMB exchange rate regime, diversify its curren cy portfolio, increase the floatability and elasticity 
of the RMB exchange rate, and stabilize the rate on a reasonable and equilibrium level.  Last but not 
the least, China will further deepen reform into foreign exchange administration and strive for 
general balance of international payments.  
QUESTION:  
Mexico ( b) 
1. El documento establece como china ha manejado el  tipo de cambio para mantener su nivel de 
exportaciones. ¿que podriamos esperar para los próximos años respecto a la política comercial? 
ANSWER: 
The IMF rule is that each and every member state ma y freely choose its own exchange rate regime, be 
it a freely floating one, a managed floating one or a fixed one.     
On July 21, 2005, China launched a major reform into the RMB exchange rate regime.  A managed 
floating exchange rate regime with reference to a basket of currencies was put into effect. RMB 
exchange rate was given greater flexibility.  The argument that China has been manipulating the 
exchange rate to maintain export growth  is a false and groundless assumption. 
(4) Main Structural Reform Issues 
(iii) Labour market reforms QUESTION:  
United States 
5. Paragraph 35 of Chapter I of the report expl ains that a labour contracting system was 
gradually introduced following the Labour Law’ s introduction in 1994, marking a shift away from 
lifetime job tenure.  Please describe how the treatment of regular employees and contract workers differs with regard to wages, hours, working conditions, rights and benefits. 
ANSWER: 
Pursuant to the Labour Law of the People’s Republic of  China, as put into effect on January 1, 1995, 
China has so far fully enforced the labour contra ct system.  All employers must establish labour 
contracts with their recruited employees or labourers.  All labourers having labour contracts with their employers are contractual labour.  There is no longer a distinction between official employee 
and contractual employee. 
As for labour compensation, Article 46 of the La bour Law stipulates that sa laries are allocated to 
workers in proportion to their labour; those in the same line of work receive the same compensation 
package.  At present, the vast majority of Ch inese companies differentiate salaries by positions or 
posts.  Different salaries are paid to employees in different labour or working posts.  The criteria for 
determining the salary for a particular post incl ude four major elements, namely labour skills WT/TPR/M/161/Add.1 
Page 164  
 
required in the post, labour responsibilities, la bour intensity and labour  conditions.  When 
determining the salary for a particular employee,  the company also takes into consideration the 
employee’s job performance and contribution to  the company.  Therefore, the salaries are 
differentiated because the employees are in different posts.  People wo rking in the same post enjoy the 
same salary package. 
As for working hours and conditions, all employers must enforce the rule in the Labour Law about 
working hours and provide safety and sanitary conditi ons and necessary protective gears for their 
workers in compliance with state regulations.  Employers may have different working schedules, 
depending on the nature of the job.  But the empl oyees of the same company should have the same 
working hours. 
QUESTION:  
(p.19-20, paragraphs 37-39) 
It is stated in the Report by the Secretariat that  “it is estimated that well over 100 million jobs will 
need to be created during the next decade to absorb the wo rkers laid off as a result of the restructuring 
of the economy, together with migration from rura l areas, and new entrants into the labour force.” 
Q3. In which area does the Government of the Peop le’s Republic of China consider that well over 
100 million jobs can be created? 
ANSWER: 
China has a large population, hence great pressure of unemployment. The job market situation will 
remain grim for some time to come. 
It is expected that in the forthcoming decade, 8 to 10 million new jobs will be generated annually.  In 
terms of job distribution, the jobs in the prima ry industry will be dramatically decreased.  A major 
adjustment in job structure will take place in vari ous areas of the secondary industry.  There will be 
both increases and decreases in job opportunities, but the o ffset results in an increase in total jobs.  In 
the tertiary industry, new opportunities will present them selves.  The number of jobs in this sector is 
likely to see a substantial increase. 
(iv) Capital market reforms 
QUESTION: 
(p.21, paragraphs 42-43) 
Q4.  (1) How will the corporate governance of st ate-owned commercial banks be ensured? 
ANSWER: 
The comprehensive supervision o ver and performance assessment of state owned commercial banks is 
an important guarantee for the substantial reform effects on state-owned commercial banks. China 
Banking Regulatory Commission (CBRC) is constan tly strengthening and impr oving the performance 
assessment of state-owned commercial banks that a re undergoing shareholding system reform. It has 
promulgated and implemented the Guidance on th e Corporation Governance Reform and Supervision 
of Bank of China and China Construction Bank.  WT/TPR/M/161/Add.1 
 Page 165 
 
 
Corporate governance reform is the core of the ref orm of commercial banks, and also the crucial 
element to improve their perf ormance on the stock market and strengthen capital market 
infrastructure. CBRC requires co mmercial banks to take a series of measures including intensifying 
the building of corporation governance mechanism, gi ving full play to the role of independent 
directors, practicing targeted management on senior managers, and establishing a good incentive 
and disciplinary mechanism. Besides, CBRC will furt her consolidate the perf ormance management of 
directors, supervisors, and senior managers, stress the equality between the rights and responsibility 
of supervision. 
QUESTION:  
(2) How will the disclosure of state-owne d commercial banks be institutionalized? 
ANSWER: After completing shareholding system reform and th en getting listed, state-owned commercial banks 
will follow strictly laws and regulations concern ing information disclosure for listed companies. 
unlisted state-owned commercial banks are also subj ect to and under the supervision of the disclosure 
system.  
QUESTION:  
 (3) Please indicate the views of the Government of  the People’s Republic of China on how it intends 
to operate direct and indirect finance. 
ANSWER: 
At present, direct finance is developing slowly in China, with an imbalance between direct and 
indirect finance. The Chinese Central Government i ssued in 2004 Some Opinions on Promoting the 
Reform, Opening and Steady Growth of Capita l Markets, which serves as a clear guidance for 
China’s capital market. The supervision authoriti es in China will provide enough room for the 
development of direct finance, support the development of capital market, form a rational direct/indirect finance proportion, and optimize finance structure.  
QUESTION:  
(4) With regard to financing for small and medi um-sized enterprises, Japan considers that it is 
effective to foster medium-sized banks which ar e profitable and well-capitalized.  In this regard, 
please indicate the views of the Government of the People’s Republic of China. 
ANSWER: 
China attaches great importance to the finance of small and medium sized enterprises, which has 
become an important strategic choice of many commercial banks.  
On the basis of an extensive absorption of domes tic and foreign experiences, CBRC formulated in 
2005 the Guiding Opinions on the Small Enterprise Loan Business of Banks, guiding and encouraging the banking sector to build and improve six mechani sms, namely interest rate risk pricing mechanism, 
independent accounting mechani sm, efficient loan review and approval mechanism, incentive and 
constraint mechanism, professional training m echanism and default information notification 
mechanism. 
Now China’s banking and financial institutions ha ve been changing their management philosophy on 
small enterprise credit business. They have identified the development of small enterprise loan WT/TPR/M/161/Add.1 
Page 166  
 
business as a strategic objective to improve asset quality, adjust credit structure and realize 
sustainable development. Most of the banks have transformed their approach dealing with small 
enterprises from wondering “whether business c an be done” to exploring “how business can be 
done”. Now 7 out of 19 major banking and financial institutions in China have witnessed an over 
30% growth of small enterprise loan business. 
II. Trade Policy Regime:  Framework and Objectives 
(1) Introduction (2) Institutional and Legal Framework 
QUESTION:  
EC  
In WTO Secretariat’s Report, page 29, para. 2 a nd page 36, para. 36, while theoretically, local 
regulations contradicting State laws become auto matically null and void, practical problems often 
occur as the outdated regulations continue to be a pplied, and companies thus face parallel provisions. 
Does China have any plans to address this problem? 
New Zealand  
3.  The Secretariat notes that “new regulations and rules are ... being issued on a regular basis to keep 
up with changing economic needs and internati onal commitments” but comments that “while new 
policies and institutions are being drawn up cont inuously, older ones are only partially amended, 
resulting in new institutions being added or appended to the old ones”.   How does China propose to 
streamline the regulations and rules to ensure clarity and transparency, and consistency of 
interpretation at all levels within the system from local to national? 
ANSWER: 
Transparency and uniform application of trade regim e as committed in the Accession Protocol, which 
in our view includes also consistency of interpret ation at all levels of regulations and rules, are 
ensured in China through sophisticated legal system  including detailed legislation procedures and the 
system of submission of regulations and rules for record and review.  
Transparency is the fundamental principle to be foll owed in the legislation process as requested by 
the Legislation Law. The legislation law, the Regulations on Procedures for the Formulation of 
Administrative Regulations and the Regulations on Procedures for the Formul ation of Rules which  
address systemically the formulation and promulgation pr ocedures for different types of legislation in 
China, all require that in drafting legislation, op inions of relevant organs, organizations and citizens 
shall be extensively solicited through such fo rms as written communications, forums, appraisal 
meetings and hearings when  legislation drafts are made public fo r comments. This has already been a 
general practise when the State Council and ministries and agencies subordinate to it as well as local governments with legislation dra fting power draft legislations. 
According to the stipulations concerning the legal  effect and application of domestic legislation in 
China as contained in the Legislation Law, the legal effect of the Constitution is the highest, and the effect of laws, regulations of the Central Governme nt are higher than that of local regulations and 
rules. When laws of the State and regulations  of the Central Government come into effect, 
contradicting provisions in local regulations and rules become null and void and shall be revised or 
annulled accordingly in time by the promulgating authorities.  WT/TPR/M/161/Add.1 
 Page 167 
 
 
According to the Regulations on Submission of Regulations and Rules for Record, all the regulations 
and rules shall be submitted to the State Council (the  Legislative Affairs Office of the State Council) 
for record and review within 30 days of promulgati on. The record and review process will identify in 
time inconsistency of the local regulations and rules with laws and regulations of the Central 
Government and have it addressed according to the le gislation procedures. In addition to that, 
citizens, enterprises and other entities including government bodies may propose in writing to the 
Legislative Affairs Office of the State Council to  initiate review process whenever they identify 
legislation inconsistency or failure in uniform  application of laws, regulations and rules. 
Apart from that, a massive program on legislati on review was launched nationwide around the time 
of China’s accession to the WTO. The State C ouncil (Central Government) undertook an overall 
sorting out of all the 756 pieces of existing adminis trative regulations promulgated before the end of 
2000 and promulgated the result in its Decree No . 319 in 2001. All the local governments also 
conducted the review of local regulations, rul es and administrative measures in line with the 
principles of uniform application, non-discrimination and transparency. 
In addition, China has also a complete system  of administrative review (administrative 
reconsideration) and judicial review, which are embodied in the Law on Administrative 
Reconsideration and the Administrative Procedure Law and a series of judicial interpretations 
including the Rules on Certain Issues in the Trial of  International Trade Related Administrative Cases 
in the trade area issued by the Supreme People’s Court. If a citizen, a legal person or any other 
organization considers that his/her or its lawful ri ghts or interests have been infringed upon by a 
specific administrative act of an adm inistrative organ or its personne l, he/she or it may apply to 
administrative organs for administrative reconsid eration or may bring a law suit before a people’s 
court. 
With the sophisticated legal system establishe d, China has ensured the implementation of 
transparency principle as required by the law and regulations and will further strengthen the record 
and review process of regulations and rules to ensure  legislation consistency and uniform application 
of the trade regime. 
(i) Institutional structure QUESTION:  United States 
7.a.  Please explain how the Chief Justice, Grand Justices and other judges of the Supreme People’s 
Court are selected.   
b.  Please explain how the Chief Justice, Grand Justices and other judges of the Supreme People’s 
Court can be removed. 
ANSWER: 
Judges of the Supreme People’s Court and people’s c ourts at all other levels are appointed and 
removed in accordance with the stipulations in  the Constitution, the Organic Law of the People’s 
Courts of the People’s Republic of China and th e Judges Law of the People’s Republic of China. 
Please refer to the Constitution and the laws for details. English translati on of the Constitution and 
the laws is available in the WTO Secretariat. WT/TPR/M/161/Add.1 
Page 168  
 
(ii) Legal structure and the legislative process 
QUESTION:  United States 
8. Paragraph 21 of Chapter II of the report describes  the various ways in which laws and regulations 
are drafted, finalized and approved.  Does any Ch inese law or regulation require the NPC, the State 
Council or ministries and agencies to circulate proposed measures for public comment before 
implementing them, as China committed to do in paragraph 2(C)(2) of Part I of China’s Protocol of Accession?  If not, how does China envision comply ing with this commitment on a regular basis? 
ANSWER: 
The text of paragraph 2(C)(2) of Part I of China’s Protocol of Accession reads “China shall establish 
or designate an official journal dedicated to the publication of all laws, regulations and other 
measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange 
and, after publication of its laws, regulations or other measures in such journal, shall provide a 
reasonable period for comment to the appropriate au thorities before such measures are implemented, 
except for those laws, regulations and other measur es involving national security, specific measures 
setting foreign exchange rates or monetary policy and other measures the publication of which would 
impede law enforcement. China shall publish this journal on a regular basis and make copies of all 
issues of this journal readily available to indivi duals and enterprises.” Curren tly new or revised laws 
and regulations in China are all given a period of  time for public comment between promulgation and 
implementation. 
Transparency is the fundamental principle to be foll owed in the legislation process as requested by 
the Legislation Law. The legislation law, the Regulations on Procedures for the Formulation of 
Administrative Regulations and the Regulations on Procedures for the Formul ation of Rules which  
address systemically the formulation and promulgation pr ocedures for different types of legislation in 
China, all require that in drafting legislation, op inions of relevant organs, organizations and citizens 
shall be extensively solicited through such fo rms as written communications, forums, appraisal 
meetings and hearings and when le gislation drafts are made public for comments. This has already 
been a general practise when the State Council and ministries and agencies subordinate to it as well 
as local governments with legislation power draft legislation. 
QUESTION:  Canada I  
6. What is the process for deciding which interna tional and foreign companies are utilized in the 
consultation process?  
ANSWER: 
As required by the Legislation Law, the Regul ations on Procedures for the Formulation of 
Administrative Regulations and the Regulations on Pr ocedures for the Formulation of Rules, it has 
already been a general practise that in draftin g legislation, the State Council and ministries and 
agencies subordinate to it as well as local go vernments with legislation drafting power solicit 
extensively opinions of relevant organs, organi zations and citizens through forms such as written 
communications, forums, appraisal meetings and heari ngs when legislation drafts are made public 
for comments.  WT/TPR/M/161/Add.1 
 Page 169 
 
 
QUESTION:  
Canada 
Report by the Secretariat (WT/TPR/S/161) 
Part II. Trade Policy Regime: Framework and Obj ectives, (2) Institutional and Legal Framework, 
(ii) Legal structure and the legislative process, paragraph 21: 
5. What is the status of the Bankruptcy Law, and Anti-Monopoly Law? 
ANSWER: 
On Bankruptcy Law, the Bankruptcy Law of the Pe ople’s Republic of China (Trial) formulated in 
1986 and Chapter 19, name ly “Procedure for Bankruptcy and De bt Repayment of Legal Person 
Enterprises”, of the Civil Procedure Law of the People’s Republic of China amended in 1991 have 
established the system of the bankruptcy of legal person enterprises.  Ther efore the bankruptcy of 
Chinese enterprises has a legal basis.  In order to further improve the stipulations of relevant laws, 
the legislative bodies have already put the formulation of a new Bankruptcy Law on their legislation agenda.  The newly drafted Bankruptcy Law of the People’s Republic of China (Draft) has been 
submitted according to the Chinese legislation pr ocedure to the Standing Committee of the NPC for 
review.  Presently the Working Committee of Legal Affairs of the Standing Committee of the National 
People’s Congress (NPC) is revising and improving the Bankruptcy Law of the People’s Republic of 
China (Draft). It will submit the Draft to th e Standing Committee for fu rther reviews at an 
appropriate time. 
As regards the Anti-Monopoly Law, it has been put on the legislation agenda of the Standing 
Committee of the NPC.  Currently rel evant department of the State Council is drafting the law.  When 
conditions are ripe the draft will be submitted acco rding to the Chinese legislation procedure to the 
Standing Committee of the NPC for review. 
(iv) Transparency QUESTION:  United States I  
9. a.  Is the United States’ understanding corr ect?  If not, please identify each central government 
ministry and agency whose measures regular ly are published in the MOFCOM Gazette. 
ANSWER: 
The Legislation Law, the Regulations on Proc edures for the Formulation of Administrative 
Regulations and the Regulations on Procedures for th e Formulation of Rules which contain detailed 
promulgation procedures for different types of legisl ation in China all require that standard texts of 
the laws, regulations and rules be promulgated in  the official gazettes of the Standing Committee of 
the National People’s Congress, the State Council and the ministries and commissions which are subordinate to it, among others. In the meantime, the Chinese government has designated the China 
Foreign Trade and Economic Cooperation Gazette und er the Ministry of Commerce as the official 
journal to collect and publish all trade related la ws, regulations and rul es, as committed in the 
Accession Protocol. Apart from laws and regulatio ns which will appear in the MOFCOM Gazette, 
ministries, commissions and other agencies under the State Council as well as municipalities, 
provinces and autonomous regions will also copy to MOFCOM their trade related rules or when 
drafts of these rules are published for public comments. WT/TPR/M/161/Add.1 
Page 170  
 
QUESTION:  
c. What are China’s plans for implementing its  commitment to establish a single journal? 
ANSWER: 
MOFCOM Gazette, that is, the China Foreign Tr ade and Economic Cooperation Gazette is the 
journal to implement China’s commitment.  
QUESTION:  
Canada I 
7. Despite efforts, China remains amongst the most  opaque countries.  What additional initiatives are 
envisioned to improve transparency?  
EC   
Despite China’s past progress in improving transp arency, China remains one of the most opaque 
countries. What further steps will be  taken to increase transparency?  
ANSWER: 
China does not agree to the prejudi ced conclusion. The current legal framework of China can ensure 
the transparency.  
QUESTION:  
Japan II  
Q7 Regarding p.8, paragraph 23, Japanese enterpri ses have been continuously hoping that abruptly 
changing or arbitrary application of rules in Chin a will be improved soon. Japan hopes that China will 
further endeavour to ensure the transparency and predictability of policies taken by the government. 
In this regard, please indicate the views of the Government of the People’ s Republic of China. 
ANSWER: Please refer to the answers to the questions of EC  3, New Zealand 3, US I-8, Canada I-7, Korea 1, 
which have expressed clearly China’s vi ews on the issue of transparency.  
The Chinese Government compiles and publishes annually the English tr anslation of all the laws and 
decisions adopted by the National People’s Cong ress and its Standing Committee as well as all the 
regulations at the State Council level in the previ ous year. This practise starting from 1979 has been 
continued all down these years.  
QUESTION:  Japan  
Q8. (1)  Concerning the specific duties that China applied to certain products that exceed their bound 
rates, please explain how China considers this consistent with the WTO Agreement and whether 
China has any plans to take any measures to en sure compliance with its commitments under the 
GATT Article II (Concession Schedule).  WT/TPR/M/161/Add.1 
 Page 171 
 
 
(2)  Please indicate the HS codes, descriptions a nd specific duties of the 49 items that have applied 
specific duties which exce ed their bound duties. 
ANSWER: 
We confirm that no specific rates levied by China exceed the level of its bound rates . 
(3) Formulation, Administration, and Implementation of Trade Policy 
(ii) Agencies involved in trade policy implementation 
QUESTION:  Turkey  
WT/TPR/S/161 (page 41, Box II.2) 
The Secretariat report mentions some of the barrier s to inter-provincial trade and the constraints to 
collect data on the possible effects of gradual economic reforms. 
Could Chinese authorities can make an assessment if the regional protectionism across provinces had 
also affected the international trade of  China with the rest of the world? 
Australia  
8． We welcome the steps taken by the central G overnment to remove internal barriers to 
trade between the provinces. 
a) Could China confirm that laws covering intern al trade (such as the Law Countering Unfair 
Competition) require the free trade of impor ted products across provincial boundaries? 
ANSWER: 
Chinese laws concerning internal trade, such as Law to Counter Unfair Competition, all require the 
free flow of all goods among different regions.  Gove rnmental departments that impeded the free flow 
of goods between different regions are not authorised  by law, and therefore such actions shall be 
deemed as an “abuse” of administrative power. 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) Introduction 
QUESTION:  Turkey   
The Secretariat report points out that as import barriers have fallen export regime remains complex 
and there are some measures to manage certain expo rts. It is understood that those measures may be 
altered to meet the demands of the domestic indus try and industrial developmental goals. Does China 
intend to simplify its export regime? 
ANSWER: 
After China’s accession to the WTO, China adjus ted the laws, regulations, policies and measures 
relating to import and export according to its WTO commitments and obligations, thus China’s WT/TPR/M/161/Add.1 
Page 172  
 
import and export trading regime was further stre amlined. The new Foreign Trade Law of the 
People’s Republic of China coming into effect as of July 1
st, 2004, together with the Regulation of the 
People's Republic of China on the Administrati on of the Import and Export of Goods, serve as the 
legislative foundation for current administrati on of import and export trade. Based on the above-
mentioned Foreign Trade Law and Regulation on Admi nistration of the Import and Export of Goods, 
the new Measures for the Administration of Licensi ng to Exporting Goods came into effect as of 
January 1, 2005, which set up the administration of export license and export quota license over products subject to export restriction. Moreover, Cata logue of Products subject to Export Licensing is 
published annually in MOFCOM Ga zette and available at the offic ial website of MOFCOM. The 
export regime is therefore transparent and China does not believe the regime is a complex one. 
2) Measures Directly Affecting Imports 
(i) Procedures QUESTION:  United States II  
16.b. Please explain why there was a sharp increase in the number of appeals rejected during this 
time period. 
ANSWER: 
Along with the improvement of administrative regime and enforcement and supervision mechanism of 
the customs, legal awareness of th e customs staff has been significan tly enhanced. The administrative 
enforcement ability of the customs has been raised, and the enforcem ent activities became 
increasingly regulated. Therefore, the proportion of ca ses sustained after administrative review has 
been significantly raised. 
QUESTION:  Korea 
3.  Import declaration must be made to customs at the port of entry within 14 days of the goods 
arrival. In case of delay in declaration, a fine of 0.5% of the total amount of the goods arrival value is 
charged per day. Does the Chinese government have any fu ture plans to revoke the fining policy, or to 
decrease the fining rate?  
ANSWER: 
The Customs Law stipulates that the consignee sha ll make declaration of import goods to the customs 
within 14days of the declaration of the arrival of the means of transport. Where the consignee fails to 
declare the import goods within the time limit presc ribed, a fee for delayed declaration shall be 
imposed by the Customs. The aim for collecting th e delayed declaration fee is to expedite the 
transportation of goods at the ports , and urge the consignee (including the entrusted customs broker) 
to make timely declaration. Such a fee should not be construed as a fine.   WT/TPR/M/161/Add.1 
 Page 173 
 
 
QUESTION:  
Chinese Taipei  
In page 62, paragraph 13, it is indicated that if the duty is not paid within three months of the payment 
period, Customs may take certain measures, includi ng notification to the importer’s bank to deduct 
the amount due directly from the account.  
a. Does this mean that all importers who wish to pay duties at designated banks have to disclose their 
account information to Customs? 
ANSWER: 
According to relevant regulation, when the consigner or consignee registers with the customs, he or 
she shall submit to the customs a copy of docume nt verifying his or her account in the bank, except 
the goods of temporary importation including exhibits and samples for non-trading purposes..  
QUESTION:  Chinese Taipei  
b.  Could China please elaborate on the legal basis for this requirement by its Custom, and whether all 
banks in China holding importers’ accounts are bound by the above-mentioned Customs 
notifications?  
ANSWER: 
Where the enterprises fail to pay duties, the customs does not directly require the banks to deduct the 
amount due, but does so through the court to deduc t the duties from the enterprises’ account.  
QUESTION:  Chinese Taipei 
c.  We would also appreciate knowing whether such  measure is applicable as well to an entry for 
which a protest or an appeal against the amount of duty has been filed with the relevant authorities? 
ANSWER: 
According to the Administrative Reconsideration Law of The People's Republic of China and the 
Administrative Procedure Law of the People’ s Republic of China, during the process of 
administrative reconsideration and litigation, the Cu stoms shall carry on its relevant administrative 
activities. Therefore, even if the duty payment dispute has been subject to reconsideration or litigation, the customs  collects th e duties according to the law. 
QUESTION:  Chinese Taipei 
In page 63, paragraph 15, according to informati on provided by China’s authorities, the internal 
maximum examination period is 48 hours, and in pr actice the majority of goods are cleared during 
this period. We consider it possible that this re latively long throughput time might be the result of 
frequent Customs interventions? Could China please in form us of the average rate, or frequency, of 
physical examinations of imported goods? WT/TPR/M/161/Add.1 
Page 174  
 
ANSWER: 
China Customs has been committed to promoti ng trade safety and facilitation, establishing 
modernized customs system combining effecti ve supervision and operation together, and expediting 
the speed of circulation of legitimate goods while ensuring the safety of supply chain. The 48 hour 
period is the internal maximum examination, but not  the time needed for customs clearance. It does 
not cover customs clearance process of goods not su bject to customs examination and in cases where 
suspected smuggling or rule-breaking activities are de tected, examination thereof shall not subject to 
the time limit either. 
For goods believed to be necessary  for Customs examination the 48 hour period comprises of 3 parts: 
first, operation and transportation by the dock operator; second, the time for notifying and waiting for 
the owner or his agent; third, the time needed fo r customs examination. China Customs has been 
working constantly to shorten the examinati on period and improve efficiency with standardized 
operation and high-tech equipments. How frequen tly the customs examines the inward and outward 
goods depend on the credit and compliance of the enterprises. For those enterprises with good 
compliance record and credit, Chi na Customs facilitates their custom s clearance according to the 
principle of facilitation with compliance. 
QUESTION:  EC 
We welcome significant progress in Trade Facilitation reforms in China over recent years. However, 
EU business still faces some difficulties, including in r espect of the consistent application of customs 
requirements, co-ordination between different border agencies and transparency with regard to rules 
and charges. What are China's plans for further reforms in this area?  
ANSWER: 
China Customs has adopted series of measures to increase transparency and trade facilitation.. 
Firstly, all laws and regulations are explicitly required to be publicized. Article 6(1) of The Measures 
for Publicizing Customs Affairs of the Customs of People’s Republic of China stipulates that Laws, 
regulations, administrative regulations, rules of the General Administration of Customs, the Notice of 
the General Administration of Customs, notice a nd administrative findings of the local Customs 
concerning the rights and obligations of citizens, le gal persons and other organizations shall be made 
public Article 48 of the Management  Measures on the Legislation of the Customs of the People’s 
Republic of China stipulates that  the customs rules shall be publicized in the Gazette of the General 
Administration of Customs. These stipulations clarifi ed the issue of publicizing of laws, regulations 
and customs rules. 
Secondly. rules that have not been made public shall not serve as the legal basis for enforcement. 
Article 10 (2) of The Management Measures on the Legislation of the Customs of the People’s 
Republic of China stipulates that rules of the Cu stoms concerning people’s rights and obligations but 
not made public shall not serve as the basis for cust oms enforcement, and has no legal binding effect. 
This stipulation ensures that the customs’ administr ative behaviour is based on laws, regulations and 
rules. 
Thirdly, the principle of transparency must be obse rved in the legislation process of the Customs. 
Article 28 and 29 of The Management  Measures on the Legislation of the Customs of the People’s 
Republic of China stipulate that before the customs rules are promulgated, opinions of relevant bodies and personnel shall be solicited in the form of seminar or discussion meeting; a hearing shall 
be held where the draft regulation may have be aring on the personal interests of the people  WT/TPR/M/161/Add.1 
 Page 175 
 
 
concerned, which should be taken into consideratio n by the customs. These stipulations ensure the 
stakeholders’ opportunity to air their opinions, and demonstrate the principle of transparency during 
the legislation process. 
Fourthly, on customs charges, since 2004, China Cust oms has further reiterated that all the Customs 
shall levy administrative fees in strict accordan ce with the charging items  and standards spelled out 
in the published Catalogue and should not change th e charging items, broaden the charging scope, 
raising the charging standards, changing the payers, or reduce or exempt the charges.  Items not 
included in the Catalogue will not be subject to ch arges.  Also, it was further clarified that after 
January 1, 2004, if the Customs needs to make an addition or adjustment to the administrative 
charges, such an addition or adjustment must run through with the General Administration of 
Customs (GAC) and be notified to the Ministry  of Finance (MOF) and National Development and 
Reform Commission (NDRC) and can only be made after approval.     
QUESTION:  Chile 
¿Cuál es el motivo(s) para que algunas mercancías , como las mencionadas en el párrafo 14 del 
informe, estén exentas del pago de derechos?  
ANSWER: 
What the Secretariat Report describes here, “tariff reduction and exemption for commodities 
imported from and exported to special regions” refers  to Article 57 of the Customs Law.  It is 
stipulated that imports from and exports to special regions or by special industries (companies) or with special purposes may enjoy tariff reduction or exemption. The term “special regions” mainly 
refer to special economic zones, coastal and in land cities which were opened up, economic and 
technological development zones, high-tech industrial development zones, etc. Please refer to China’s 
recent subsidy notification for definition of these reg ions. Nowadays, basically only internal tax 
reduction and exemptions are still available in these reg ions as indicated in the subsidy notification. 
Import duty reduction and exemptions for these regions have been phased out. 
QUESTION:  
Chile 
Según lo indicado en el párrafo 16 del informe ¿C uál es el motivo más frecuente del rechazo de 
solicitudes de apelación por parte de la Administración de Aduanas? 
ANSWER: 
The main reason for “rejecting the appeal application” was the applicant was unable to provide 
sufficient justifications in the review.  So the autho rity with which the application was made decided 
to keep its administrative ruling.  In every requ est for review, a written reply will be made to the 
applicant no matter whether the administr ative ruling is maintained or not. WT/TPR/M/161/Add.1 
Page 176  
 
(ii) Tariffs 
QUESTION:  United States I  
13. Paragraph 21 of Chapter III of the report explains that duty exemptions and reductions may 
apply, inter alia, with regard to  goods exported out of designated areas.  Does China consider these 
duty exemptions and reductions to  be prohibited export subsidies under Article 3 of the Subsidies 
Agreement?  If not, why?  If so, please describe China’s plans for withdrawing these subsidies. 
ANSWER: 
There could be misunderstanding here. “Special regi ons” described in the Secretariat Report refer to 
special economic zones, coasta l and inland cities which were ope ned up, economic and technological 
development zones, high-tech industrial development zones, etc. Please ref er to China’s recent 
subsidy notification for definition of these regions. Nowadays, basically only internal tax reduction 
and exemptions are still available in these regions as  indicated in the subsidy notification. Import 
duty reduction and exemptions for these regions have been phased out.  
QUESTION:  
United States II 17. Paragraph 18 of Chapter III of the report explains  that, pursuant to China’s Regulations on Import 
and Export Duties, the Tariff Commission may apply re taliatory duties, inter alia, when countries with 
a trade agreement with China impose a discriminator y tariff or measure against goods originating in 
China.  In what circumstances w ould China consider the application of retaliatory duties to be 
consistent with WTO rules? 
ANSWER: Currently, there is no retaliatory duty being applied.  Retaliatory duty is only a deterring means to 
ensure other parties to implement obligations in th eir trade agreement with China. Retaliatory duty if 
applied, will be in accordance with Art.22 co mpensation and the suspen sion of concessions in 
Understanding on Rules and Procedures Governing the Settlement of Disputes. 
QUESTION:  
Switzerland 
pages 63-64. Please indicate which products are current ly subject to interim tariff rates as mentioned 
in §19. Please specify the product description and the HS tariff number. 
ANSWER: 
Products currently subject to interim impor t tariff rates in 2006 are as follows 
303311000511911115159020180400002309 9090240391002503000025101010 
510201025151100251611002516210025 281000252890002530909927011210 
701129027073000270750002707600027 131210270820002710191127101191 
710119927101919271019292802000028 046190280920102812101028182000 
826900028369100283699302840110028 401900284190002901210029022000 
902410029031500290321002903611029 042020290512102905143029053200  WT/TPR/M/161/Add.1 
 Page 177 
 
 
907121129071212290719102909410029 094990291219002914120029141300 
912190029155010291620102916209029 171200291720102917361029211910 
921192029211990292121102921290029 214300292149202921494029221320 
922421029269090293090902930909029 333210293369102941905132061110 
208201032089010330129903301301034 029000350300103701992037024221 
702429137024422370255203801100038 170000382370003824909039011000 
901200039021000390720003907300039 081019391190003911900039119000 
911900039121100392010904001100040 112000401161004011630040116900 
011920040119400401199004012901040 139010410411114408901948022010 
811511056013000680610006815990069 071000702000907002390070049000 
005290070071110700719007011209070 140090701959007020001170200012 
020001971011011710110917115901072 026000720293007202930072031000 
209181072269900730441107304491074 020000740400007410110075011000 
501201075021000760200007606112081 052010810520908112400084079010 
407909084079090840820908409999984 119910841229908414809084223010 
433510084335910843359908442302084 435911844359128448110084483200 
448331084483920844839308448491084 484920844849908451800084518000 
451800084518000845180008451800084 518000845180008451800084518000 
473401084734090847890008479811084 834020850110918501109985015300 
501310085023100850300308504401485 044091850440998507802085144000 
522903185229039852290398522903985 253099852610908529904285299049 
529908185299082853180108537101185 393290854040008545110085462090 
701901187019019870423008704230087 042300870590908708405087085020 
708505087086020870880908708932087 089350870894208708992987089929 
708993987089959870899598708992987 089999880240109001900090019000 
002119090021190900912919013200090 138030900190009014200090189080 
022909090318090903289009033000092 012000920210009205100092059000 
Products currently subject to interim expor t tariff rates in 2006 are as follows 
030192100506909026080000260900002804 7090290220003102100072021100 
202190072022100720229007202300072 024100720249007402000074031100 
403120074031300740319007403210074 032200740323007403290074040000 
407100074072100740722007407290074 081100740819007408210074082200 
408290074091100740919007409210074 092900740931007409390074094000 
409900075021000750220007508901076 011010760110907601200076020000 
604100076042100760429007605110076 051900760521007605290076061120 
606119076061220760612307606124076 069100760692007901111079011190 
90112007901200081101010 
QUESTION:  
Switzerland 
Para. 20. As the MFN and the interim duty rates ar e applied on annual basis and the lower of the two 
possible rates is levied at the border for countries e ligible for MFN duty rates, could China explain for 
which reason the MFN duty rate is not simply redu ced to the interim duty rate as the interim duty 
effectively replaces the MFN duty for the products it applies to?  
ANSWER : 
The interim tariff rate of the products is low er than China’s bound tariff rate in China’s WTO 
Schedule. It is a commonly practised measure by ma ny other WTO members, which is consistent with 
WTO rules.  WT/TPR/M/161/Add.1 
Page 178  
 
QUESTION:  
Switzerland  
What kind of flexibility does such a situation gi ve to China in future WTO negotiations as the 
negotiations are based on bound duty rates?  
ANSWER : 
Interim rates are generally lower than MFN rates,  which are basically bound rates. The basis for 
future negotiations on tariff reduction is bound duty rates of a WTO member.   
QUESTION :  
Switzerland  
How does China ensure that  in such a case, the interim duty rate  (which is lower) and not the MFN 
duty rate is levied at the border ? 
ANSWER : 
The interim duty rate is levied on those products subject to interim duty rates according to the 
annually published Customs Ta riff of Import and Export. 
QUESTION:  
Turkey  It is noted that under the Regulations on Import an d Export Tariff, there are various kinds of duty 
rates applied on imports. In this context, the Secret ariat report mentions that interim tariff rates which 
are usually lower than MFN rates are applied to certain goods. It is further noted that where a particular tariff line has an interim rate, the lower of  the two possible rates is applied at the border for 
countries eligible for MFN duty rates. Could Chin ese Delegation clarify under what circumstances 
interim rates are applied? Are expor ters informed in well advance of any changes on interim rates? Is 
there an opportunity of accessing interim rates via internet? Could Chinese Delegation clarify the 
difference between interim ra tes and general duty rates? 
ANSWER : 
On the import side, if there is an interim duty rate for a product subject to MFN duty rate, the interim 
duty will be levied. If there is an interim duty rate  for a product subject to conventional rate or 
preferential rate, the lower of the rates will be levied. Products subject to normal duty rates could not 
enjoy interim duty rates. For the export, if there is an interim duty rate for a product subject to export 
duty rate, the interim duty rate will be levied. No rmal duty rates are applied for El Salvador and non-
WTO countries or regions which have no agreement with China for reciprocal MFN duty rates or 
preferential duty rates.  Importers could get the lis t for products subject to interim duty rates via 
internet. Products are identified with 8-digit HS tariff lines. 
QUESTION:  Chile 
De acuerdo a lo señalado en los párrafos 23 y 24 del informe, ¿cuáles son los productos que están 
sujetos a contingentes arancelarios y los producto s que tienen entre el 60% y 65% de arancel?  WT/TPR/M/161/Add.1 
 Page 179 
 
 
ANSWER: 
The list for products subject to TRQ administration is already provided in the Secretariat report. 
Please refer to that report. 
(iii) Other charges affecting imports QUESTION:  
Switzerland  Para 37. please explain what is the meaning of "in excess of  a reasonable amount which suffices 
personal use" in the case an inwa rd duty is levied on luggage a nd other personal items to persons 
entering the Customs Territory of China ?  
ANSWER: 
According to the Measures of the People’s Repub lic of China on Custom Administration on Inward 
and Outward Tourists’ Luggage, “personal use” means that the product is used by the traveller 
himself/herself or to be given to the traveller’s families and relatives rather than for sale or for rent. 
“reasonable amount” means the normal amount according to the purpose and duration of stay of the traveller. 
QUESTION:  
Switzerland  
How is the reasonable amount established and on the basis of which criteria ?  
ANSWER: 
Category One products:  Cloth, garment, footwear , caps, hats, artistic pr oducts and handicrafts and 
other goods for daily use no more than 1000 RMB y uan are exempted from duties as long as they 
satisfy the reasonable amount criteria. For each  above-mentioned product above 800 RMB yuan and 
under 1000 RMB yuan, only one item could be exem pted from duty rates. Category Two products: 
Tobacco and alcohol.  (1) For citizens of Hongkong SAR and Macau SAR and mainland citizens who come from and go to Hongkong SAR and Macau SAR for personal reasons, 200 cigarettes or 
50 cigars or 250 grams of tobacco are exempted from duty rates. Only one bottle(no more than 
750ml) of alcohol more than 12 degrees could be exempt ed from duty rates.  (2) For other passengers 
travelling internationally, 400 cigarettes or 100 ci gars or 500 grams of tobacco are exempted from 
duty rates. Only two bottle(no more than 750ml) of  alcohol more than 12 degrees could be exempted 
from duty rates. Category Three, goods for daily  use above 1000 RMB y uan and below 5000 RMB 
yuan.  (1) Diplomatic staff resident aboard, Ch inese students studying aboard, labour staff working 
aboard and people working aboard for the provision of foreign aid, after staying more than 180 days 
aboard, and sailors staying aboard for more than 120 days will be allowed to bring one product of 
this category free of duty.  (2)  Other passengers w ill be allowed to bring one product of this category 
free of duty after staying aboard for one calendar year.  
The above-mentioned criteria have been set with refer ence to practices of other major countries in the 
world. WT/TPR/M/161/Add.1 
Page 180  
 
QUESTION:  
Switzerland  
Please specify which products are prohibited or r estricted under the inward duty regime and the 
justification for such a prohibition or restriction. 
ANSWER: 
At present, products prohibited or restricted for impo rt into China are those selected according to 
various International conventions , for the purpose of environmental protection, animal and plant 
health and etc. , therefore c onsistent with GATT Art. XX 
(iv) Customs valuation and rules of origin QUESTION:  
United States II 20. a. Are the appeals discussed in this para graph administrative appeals within the Customs 
Administration, or are they appeals to a court?  Please explain. 
ANSWER: 
Please refer to Measures of Customs of the People’s Republic of China on Implementing the Law on 
Administrative Review.  
QUESTION:  Canada I 
20.  What process does China use to determine HS Codes for imported products?  What if there is a 
conflict between this choice and the codes that are most commonly used international classification?  
ANSWER: 
Prior to the import and export of goods: 1. importing and exporting enterprises should consult the 
related departments of the Customs. 2. Initial cl assificationenterprises could apply to the Customs 
for initial classification and the Customs will give th eir replies within the timeframe. 3. The Customs 
frequently publishes the notices c oncerning the decisions on class ification by WCO or in accordance 
with Import and Export Tariff of the P.R.C. 
At the time of import and export:  the Customs will ex amine the classification on spot. If the Customs 
have different classification with the enterprises, the Customs will expla in to the enterprises. If the 
enterprises then agree with  the Customs, they will change the cl assification. If the enterprise have 
different opinions and the Customs could not explain to  their content, the on-spot Customs shall ask 
for instructions in written form from their superior Customs.  
The international practice is that countries share th e same first 6 digits of goods and are allowed to 
sub-divide the 6-digit codes. If the first 6 digits  provided by the declaring enterprises and the Customs 
are the same, the codes of the importing country will prevail. If the first 6 digits are not the same, 
declaring enterprises could lodge the complaint to the Customs, which will rep ly according to related 
decisions or interpretations by the WCO. If th e Customs makes a mistake, the mistake shall be 
corrected.  WT/TPR/M/161/Add.1 
 Page 181 
 
 
QUESTION:  
Canada I  
21.  What is the procedure if China Customs and an importer disagree on an HS classification? 
ANSWER: 
If the enterprises have different opinions, they could complain to related department of the Customs, 
the related department will explain and reply w ithin a prescribed timeframe. If enterprises have 
further different opinions with explanation and the reply of the Customs, they could complain to 
superior Customs. The enterprises could also ask for administrative appeals or go to courts 
QUESTION:  Canada I  
22.  The most common HS classification for titanium dioxide worldwide is HS2614.  Why did China 
Customs reclassify imports of titanium dioxide from HS2614 to HS3824? 
ANSWER: 
Products under HS3824 are not titanium dioxide, but titanium minerals  accumulate with registered 
trademark of“Sorelslag®”.  Its proc essing is not consistent  with the general note of Chapter 26 of the 
Import and Export Tariff of the P.R.C that “this kind of processing should not change the chemical 
composition of the abstracted metal”. Therefore, this product could not be classified into 26.14. It is 
classified as 3824.9090 acco rding to its composition 
QUESTION:  Canada  I 
23.  Under what guidelines and lines of responsibility  does China Customs operate in undertaking an 
investigation?  
ANSWER: 
The Customs acts according to The Customs Law of Pe ople’s Republic of China. Art. 33 to Art. 48 of 
the Regulation of the Customs of the People’s Repub lic of China on Administrative Punishment which 
specify in detail the guiding principles, specific  responsibilities and rights in the investigation. 
QUESTION:  
Canada I  
24.  How are China Customs classification and i nvestigation procedures controlled to ensure 
consistency on a national basis? 
ANSWER: 
The consistency of classification by China Custom s is ensured by the way of supervision at three 
levels. The first level is that classification depa rtments of every district Customs which monitor the 
consistency of classification in their Customs distri cts. The second level is that four classification 
centers in China which supervise the classification for their responsible products. The third level is WT/TPR/M/161/Add.1 
Page 182  
 
that the classification office of the Department of  Tariffs of the General Administration of Customs 
which supervises the consistency of classification. 
QUESTION:  Korea 
5.  In principle, customs value is determined by  Customs on the basis of transaction value. However 
in case of automobiles and some other goods, th e Chinese Customs determines such value not by 
basing on transaction value, but by Customs' own standards, thereby, often resulting in excessive 
customs duties. Only in case where it is not possible to determine the transaction value, the customs 
value should be determined by exceptional sta ndards. What is the basis for using exceptional 
standards? Please clarify the procedure rela ted to determining customs valuation.  
ANSWER: According to Art. 55 of the Customs Law of People’s Republic of China and Art. 18 of the Regulation 
of the Customs of the People’s Republic of Ch ina on Import and Export TariffCustoms value of 
import and export goods are assessed and determined by Customs based on the transaction value. If 
the transaction value could not be identified, the Cu stoms value will be determined by the Customs 
with reference to the same or si milar products according to Art. 21 and Art. 27 of the Regulation of 
the Customs of the People’s Republic of China on Import and Export Tariff. There is no “internal 
criteria of the Customs” 
QUESTION:  Korea 
6.  Foreign companies located in inland China pref er to undergo import declaration of their goods at 
the port of their inland destination by utilizing bonde d transportation rather than declaring their goods 
at the port Customs.  However, on some importe d goods including automob iles, the Chinese Customs 
puts restrictions to the bonded transportation, and requires customs clearance at the port Customs, 
therefore increasing business cost and time. The Ch inese Customs in the bonded transportation of 
some regions demands documents showing the inland destination customs' approval. This results in 
delay at the bonded transportation as well as in customs procedure. Does the Chinese government 
have any future plans to lift the restrictions on  the bonded transportation or simplify the related 
procedures? 
ANSWER: 
According to new Development Strategy for Auto mobile Industry adopted on June 1, 2004, China 
eliminated bonded transportation for automobiles und er the item of normal trade and provided that 
“Since 2005, no bonded areas of port Customs could be used to deposit automobiles for the purpose 
of entering domestic market”. Therefore, bonded transportation does not exist anymore.  
Furthermore, the latter part of the question relat es to the coordination of destination Customs and 
import Customs in the process of Customs transfe r. According to the rel ated rules concerning 
Customs transfer, if consigners, consignees or th eir agents for import goods request to go through 
Customs procedures at Customs in Charge which is near them, after approval, they could manage it 
via Customs transfer procedure. Port Customs se nd data concerning transporta tion and goods to the 
Customs in Charge via computer network, and then  things like bill receipt and duty levies could be 
done after the goods are transported to the destinat ion area. Consigners, consignees or their agents 
for import goods could also choose direct transfer or stop-over transfer, and they do not need to 
provide document of confirmation by destination Customs to import Customs in these two kinds of  WT/TPR/M/161/Add.1 
 Page 183 
 
 
transfers. From 2005 on, Customs in China initiate d the reform of “Regional Customs Clearance”, 
with its aim of further simplifying supervising procedures in the process of transfer and raise 
efficiency of Customs clearance. According to the principle of facilitation for law-abiding enterprises, 
law-abiding enterprises could go through Customs in  the way of “declaring at residential Customs 
while inspection and clearance at port Customs”. T hose enterprises could declare at their residential 
Customs and are free to choose any port Cu stoms for inspection and clearance. 
QUESTION:  EC 
Regarding WTO Secretariat’s Report, page 74, para  41, “The Regulations on Rules of Origin of 
Import and Export Commodities, which entered into force on 1 January 2005…” The Chinese 
authorities have repealed origin certificates from the European Union when the merchandise comes 
from a Member State different from the Member Stat e that emits the certificate. Could the Chinese 
authorities accept European merchandise, whatever th e Member State issuing the origin certificate? 
ANSWER: 
At present, WTO harmonized non-preferential rules of  origin haven’t been adopted and put into 
effect. During the transitional period, each member  still decides the origin of imports and exports 
goods according to its relative domestic legislation.  
Regulations of the People’s Republic of China on the Origin of Import and Export Goodshereafter 
called Regulationprovides: “when the consi gnee of import goods go through the customs 
declaration procedure for import goods, they should claim the origin in conformity to criteria set 
stipulated by the provision. After the Customs acce pts the declaration, it should approve the origin of 
import goods according to this ordinance”, namel y in the light of whole acquired, substantial 
transformation criteria and other related provisions wh ich were listed in this regulation, to decide the 
origin of the goods. The Regulation doesn’t stipulate that the certificate of origin is needed when 
import goods are declared to the customs. The certificate of origin endorsed by governments of 
countries other than the origin of the good cannot be  endorsed by Customs. The certificate of origin 
issued by the exporting country will be examined by Customs according to the Regulation when it is 
necessary, then the origin of impor ted goods could be decided.   
QUESTION:  Australia 
We welcome China’s requirement for the determina tion of customs value primarily on the basis of 
transaction value (para 40 on page 74 of WT/TPR/S/161).  The experience of some Australian 
exporters, however, is that transac tion value is not always the primary basis for customs valuation at 
all points of entry of goods into China. 
ANSWER: 
After China’s accession to WTO, China Cust oms has fully implemented the Agreement on 
Implementation of Article VII of the GATT 1994., The Law of the People’s Republic of China on the 
Customs, the Regulation of the People’s Repub lic of China on Import and Export Tariff and the 
Measures of the Customs of the People’s Republic of  China on Determination of the After-tariff Price 
of Import and Export of Goods s tipulate that Customs assesses and determine duties to be paid for 
goods based on the transaction value. China Customs also promulgated many measures in terms of 
evaluation procedure, ensuring that WCO evaluation principle is applied in the whole country. WT/TPR/M/161/Add.1 
Page 184  
 
QUESTION:  
Chile 
¿Cuáles son los “criterios razonabl es” que permiten determinar la valoración en aduana que se 
mencionan en el párrafo 40 del informe  
ANSWER: 
The total of the following items: raw material costs and processing fees for the production of the 
good, normal profits and general fees for the sale to China of goods of the same class or the same 
kind, transportation and related fees before the pro duct is unloaded at the entry point of import, 
insurance premium. (Art. 21 of the Regulation of the People’s Republic of China on Import and Export Tariff) 
QUESTION:  
Mexico 
La inquietud consiste en saber cuáles serán los mecanismos y los conductos de verificación en materia 
de origen y valor, entre otros, a los que China estar ía dispuesta a someterse, inclusive como parte de 
un procedimiento internacional o pactado entre l as partes, como parte de su compromiso de 
cooperación en relación con estos temas, que a manera de ejemplo comprenderían: 
Validación de información y documentación. Intercambio de información de importa ncia primordial para la determinación de origen y valor como 
la ubicación de plantas productivas y/o comercializadotas de los sujetos de comercio exterior en ese 
país, así como los precios de sus mercancías. 
De ser ello posible, inclusive la facilidad de realizar visitas de verificación de los procesos 
productivos. 
ANSWER: 
At present, WTO harmonized non-preferential rules of  origin haven’t been adopted and put into 
effect. During the transitional period, each member  still decides the origin of imports and exports 
goods according to its related domestic legislation.  
Regulations of the People’s Republic of China on the Origin of Import and Export Goods (hereafter 
called Regulation) provides: “when the cons ignee of import goods go through the customs 
declaration procedure for import goods, they should claim the origin in conformity to criteria set 
stipulated by the provision. After the Customs acce pts the declaration, it should approve the origin of 
import goods according to this ordinance”, namel y in the light of whole acquired, substantial 
transformation criteria and other related provisions wh ich were listed in this regulation, to decide the 
origin of the goods. The Regulation stipulates that the certificate of origin is needed when import 
goods are declared to the customs. The certificate of origin endorsed by governments of countries 
other than the origin of the good cannot be endorsed by Customs. The certificate of origin issued by 
the exporting country will be examined by Customs a ccording to The Regulatio n when it is necessary, 
then the origin of imported goods could be decided  WT/TPR/M/161/Add.1 
 Page 185 
 
 
(v) Import restrictions 
QUESTION: United States I  
14. Taking into account Article XX of the Ge neral Agreement on Tariffs and Trade 1994 (GATT 
1994), please explain China’s justifications for prohi biting the importation of the following products 
for processing purposes:  (i) minerals (including anthracite, bituminous coking coal and lignite); 
(ii) fertilizers (including urea and animal and ve getable fertilizers); and (iii) the steel products 
referenced in footnote 29 to paragraph 47. 
ANSWER: 
Processing trade, as a preferential measure for bonded goods, is designed to promote the facilitation 
of trade.  The fact that certain goods are prohi bited from importation in processing trade does not 
necessarily mean that they are also prohibited in nor mal trade (unless otherwise stipulated for special 
reasons).  The prohibition of the importation of  the products for processing purposes suggests only 
the prohibition of such products  as bonded goods.  Minerals, fertilizers and steel products processing 
is considered high-energy-consum ption, high-pollution projects.  Therefore, for purposes of 
protecting the environment, China prohibits the importation of the three above-mentioned products in 
the form of bonded goods. 
QUESTION:  United States II  
21. a. Please explain how MOFCOM defines an “ unconvincing” justification for issuance of an 
import license. 
ANSWER: The import license for the three products mainly aims  to SPS protection, environmental protection 
and national security reasons. Therefore, in the even t that the China’s authority believes that the 
products that can be used for illicit purposes, for instance in the production of drugs and chemical 
weapons, such an application will be rejected.  
QUESTION:  
United States II 
b. Are the appeals discussed in this paragra ph administrative appeals within MOFCOM, or are 
they appeals to a court?  Please explain. 
ANSWER: 
The appeals discussed herein refer to applications to  the license issuing department of MOFCOM for 
its reconsideration of the case.  WT/TPR/M/161/Add.1 
Page 186  
 
QUESTION:  
United States II 
22. a. Please identify the national laws and regulati ons that provide exemptions from the automatic 
licensing requirement in these cases. 
ANSWER: 
Measures for the Administration of Automatic Import Licensing of Goods  
QUESTION:  United States II  
b. Please identify the goods that are exempted  in these cases from obtaining automatic import 
licenses.  
ANSWER: Goods imported in the following ways are exempt ed from obtaining automatic import licenses: 
1. imported for processing and re-exportation pu rposes (excluding crude oil and finished oil); 
2. imported by FIEs as investment or for self-use within the gross investment; 3. imported as samples, 
advertising materials and test pieces, with total value of every import not exceeding 5,000 RMB yuan; 
4. imported temporarily as goods under customs supervision; 5. other imported goods exempted from 
obtaining automatic import license as provided for by laws and regulations of the state.. 
QUESTION:  United States II  
23. a. Please identify the laws, regulations or othe r measures that govern mediation, administrative 
reconsideration and appeals in this area. 
ANSWER: Administrative Reconsideration Law of the People's Republic of China, Administrative Litigation Law 
of the People’s Republic of China, Administrative Licensing Law of the People's Republic of China, 
Implementing Measures on Administrative Recons ideration of the Ministry of Commerce.  
QUESTION:  
United States II  24.  Can China confirm that the chemical products referenced in paragraph 59 of Chapter III of the 
report (HS 29031910 and HS 29034100) are no longer subject to import quotas? 
ANSWER: 
China confirms that there is no mo re import quota for 2006 and thereafter (?).   WT/TPR/M/161/Add.1 
 Page 187 
 
 
QUESTION:  
Switzerland  
Para 49. For products such as watches, China s till maintains automatic import licensing requirement. 
A non-lot licenses is valid for six months within the same calendar year and may be used to declare 
imports of different batches of im ports carried out within a given period of time. Does the government 
intend to extent the duration of validity and the number of possible uses per license?  
ANSWER: 
Measures for the Administration of Automatic Im port Licensing of Goods has  provisions regarding 
the duration and the number of users.  Presently th ere is no intention to revise the provisions. 
QUESTION:  
Switzerland Para 44-45. Please provide a full list of products subj ect to import prohibitions at the HS eight-digit 
level 
ANSWER: 
China can provide such a list.  Members can also  make reference to China’s QR notifications in the 
previous years.  
QUESTION:  Switzerland  
Para 48. This paragraph states that despite several  changes to the Chinese import licensing regime, it 
remains intricate and opaque. Which steps and concre te measure will China take to make its import 
licensing regime more transparent and more simple? 
ANSWER: China disagrees with the Secretariat on the views exp ressed in this paragraph.  In the current Chinese 
import regime for goods, import license administrati on is only imposed upon chemicals that can be 
used to produce chemical weapons and ozone de pleting substances, whereas automatic import 
licensing is required for products whose import information and import data need to be collected.  In 
addition, the Chinese government has notified the WT O on relevant laws and regulations concerning 
these import procedures.  Currently the entire import regime is both transparent and simple. 
QUESTION:  Switzerland  
Para 52 Please explain what are the criteria used by  the competent Chinese authorities to consider that 
the justification for importation is  believed to be "unconvincing". WT/TPR/M/161/Add.1 
Page 188  
 
Turkey 
In the Secretariat Report it is underlined that accord ing to China’s notification to the WTO, if the 
justification for importation is believed to be “ unconvincing” the application may be refused. Could 
Chinese delegation explain what is  meant by “unconvincing”  
ANSWER: 
The import license for the three products mainly aims  to SPS protection, environmental protection 
and national security reasons. Therefore, in the even t that the China’s authority believes that the 
products that can be used for illicit purposes, for instance in the production of drugs and chemical 
weapons, such an application will be rejected. 
QUESTION:  
Switzerland  Para 57. please clarify which goods are exempted from licenses or relevant laws. 
ANSWER: 
Goods imported in the following ways are exempt ed from obtaining automatic import licenses: 
1. imported for processing and re-exportation pu rposes (excluding crude oil and finished oil); 
2. imported by FIEs as investment or for self-use within the gross investment; 3. imported as samples, 
advertising materials and test pieces, with total value of every import not exceeding 5,000 RMB yuan; 4. imported temporarily as goods under customs supervision; 5. other imported goods exempted from 
obtaining automatic import license as provided for by laws and regulations of the state.  
QUESTION:  Switzerland  
Para 58. It seems that the possibility to apply for an administrative review or to lodge administration 
litigation if the parties are not satisfied with the mediation, is not longer valid. Could China clarify 
and specify whether the rule has been replaced  or any changes made to the procedure? 
ANSWER: 
Although the Implementation Rules for the Administration of Automatic Import Licensing of 
Important Industrial Goods is no longer valid, the adm inistrative review element of the Rules is in 
force. Citizens, legal persons and other organizations  can still apply for an administrative review to 
the automatic import licensing administration as prescri bed in the Measures for the Administration of 
Automatic Import Licensing of Goods. 
QUESTION:  Switzerland  
Para 59. please confirm that the tariff quotas for wrist watches has been phased out in 2003 as 
foreseen in the protocol of accession.  WT/TPR/M/161/Add.1 
 Page 189 
 
 
ANSWER: 
China used to exercise import quota administration on wrist watches.  But it has never imposed tariff 
quotas on them.  According to China’s accessi on commitments, China removed the import quota 
administration on watches on 1 January 2003, rep lacing it with automatic import licensing. 
QUESTION:  
Australia  3. (a) We would welcome an indication of the Governme nt’s intentions in relati on to the reform of the 
remaining TRQ arrangements. 
ANSWER: 
China now maintains TRQ arrangements on some important agricultural products and a limited 
number of industrial goods that have a close be aring on the national economy and the people’s 
livelihood.  The regulations and their implementation are in conformity with the China's Protocol of Accession and the Working Party Report.  China has no plan right now to change the TRQ arrangements. 
QUESTION:  
Australia  
4. We welcome the notifications made by China in relation to its import licensing regimes. 
(a) Could China affirm that all products subject to import licensing under the categories of import 
licensing used in China for the year concerned w ill henceforth be listed in its notifications? 
ANSWER: 
The annual notifications on quantitative restrictions in clude a list of all products subject import 
licensing and automatic import licensing under the category of normal trade 
QUESTION:  Australia 
4. We welcome the notifications made by China in relation to its import licensing regimes. 
(b) Could China provide an advance indication of the category of import licence (e.g. automatic or 
other (non-automatic)) for which import licensing re gimes are operated in relation to the following 
products: 1. Iron ore; 2. Alumina; 3.Copper. 
ANSWER: 
All three products are subject to automatic import licensing. QUESTION:  India  
Q7.  In 2004, Chinese restrictions on exports of met coke (a key input in steel production) began to 
have an adverse effect on Indian steel producers. It  is learnt that out of a total production of 210 MT WT/TPR/M/161/Add.1 
Page 190  
 
in 2004, only 8.3 MT was allowed for exports, compared to 14.3 million in 2003 resulting in 
substantial increase in price.  Additionally thro ugh an internal administrative order only seven 
Chinese Coke Producers/Trading Companies could expor t met coke to India. In the middle of last 
year, one of the Chinese government officials was quoted as saying that effective 1st January, 2006, coke export quota system would be eliminated. Ho wever, according to the Chinese customs tariff 
book coke exports from China still require export licenses, although no specific information on quotas 
for 2006 is available.  Would China take steps to  lift quota restrictions on the met coke including 
restriction on number of Chinese coke producers and trading companies to ensure smooth export of 
met Coke by Chinese exporters? 
United States I  
28.  Paragraphs 143 through 145 of Chapter III of the report explain that China maintains export 
quotas on several raw materials, including coke.  
a.  When determining the annual quota amount, the Chinese authorities reportedly consider, inter 
alia, development planning for domestic industries and international and dom estic market demand.  
Please explain how these considerations are c onsistent with China’s WTO obligations. 
EC 
As mentioned in the WTO Secretariat’s Report (p age 105, para 145), China maintains a number of 
quotas on e.g. coke, rare earth, etc.  
China manages its coke exports through an export licence system. Important restrictions in 2004 
contributed to important market distortions. For th e time being the market conditions are positive, but 
the system that is judged to be WTO incompatible is  still in place. Is China pl anning to remove export 
licences on coke? 
ANSWER: 
China puts tight restrictions on the dom estic production and consumption of coke  
On 27 May 2004, the NDRC, Ministry of Finance, MOFCOM, Ministry of Land and Resources, SAIC, 
State Administration of Taxation, State Environmental Protection Administration, CBRC and State 
Electricity Regulatory Commission jointly issued the Urgent Circular on the P ublishing of Relevant 
Opinions Regarding the Checking-up and Standardi zation of the Coke Industry (Fagaichanye No.941, 
2004), demanding all regional governments to conduct an overall check-up of the existing coke producing enterprises, coke production projects und er construction or to be constructed.   
As regard to fluorspar, China be gan putting tight restrictions on mining and exploitation of fluorspar 
in the early 1970s. 
QUESTION:  
Malaysia  
2.  Could China explain in detail its Automatic Import Licensing Administration (AILA) and how this 
mechanism works?  What are the products that are subjected to AILA and how are these products 
selected? Can China guarantee that this will not be used to manage imports?  WT/TPR/M/161/Add.1 
 Page 191 
 
 
ANSWER: 
Automatic import licensing aims to monitoring the import volume of goods and to collecting trade 
statistics.  
According to Decree No.26 issued by MOFCOM and the General Administration of Customs in 2004, 
namely Measures for the Administra tion of Automatic Import Licensing of Goods, as far as the goods 
subject to automatic import licensing is concern ed, the applicant need only apply to an agency 
authorized by MOFCOM for the automatic import li cense.  The recipient of the goods shall submit in 
its application the following materials: 1. the recipient’s certificate in operating import and export 
business, registration document or approval lette r for FIEs (the above-mentioned certificate and 
documents are only requested from applicants who ma ke their first application in a calendar year); 
2. the application form for automatic import licen se (see Annex V for sample); 3. contract of the 
import/export of goods; 4. contract  of import agency (the original copy) if the recipient is importing 
as an entrusted import agent; 5. materials that pr ove the consistency of the use of imported goods or 
the end user with national regulations if there a re special regulations governing the use of the 
imported goods or their end user; 6. product-specific  materials that are required to be submitted by 
the Catalogue; As regards goods subject to autom atic import licensing, the issuing administration 
shall upon receipt of the application, provided that  its content is correct and form complete, promptly 
issue the license within a feasible time period,  and no more than 10 working days under special 
circumstances.  
For more information refer to the documents China submitted to LLC Committee: G/LIC/N/3/CHN/1, 
G/LIC/N/3/CHN/2, G/LIC/N/3/CHN/3, G/LIC/N/3/CHN/4.  
QUESTION:  
Turkey 
Does China aim to eliminate import prohibitions which are according to the Secretariat Report around 
6.5% of the tariff lines? 
ANSWER: 
Currently decisions on import prohibitions concern ing some of the products are all made in 
accordance with relevant international conventions, or for environmental protection, SPS, public 
morals or national security purposes.  They are in c onformity with the stipulations of Article XX, 
GATT.  China does not plan to change. 
QUESTION:  EC 
Regarding WTO Secretariat’s Report, page 75, para 44, could China please clarify the import 
prohibitions referred to under this  paragraph and particularly on ra w hides, skins and leather, and 
clothing? Could China provide the details of such restrictions, including the specific HS lines for these products? Moreover, do they appl y to products of all origins? 
ANSWER: 
Currently the raw hides, skin and leather, and clothing refer to the five 8-digit HS lines including 
05010000, 05021030, 05029020, 05030090 and 63090000.  The purpose of prohibiting the import of 
unprocessed human hair, wasted human hair, bristl es and wasted bristles, badger hair and other 
wasted animal hair used for making brushes, wast ed horse hair and old clothing is to protect the WT/TPR/M/161/Add.1 
Page 192  
 
environment, human as well as animal and plant heal th.  This prohibition is applied to such products 
from all countries and regions in the world. 
QUESTION:  EC 
Regarding WTO Secretariat’s Report, page 80, para 55, there are reports that the authority to grant 
licences is delegated to some non-governmental organisations such as the China Chamber of 
Commerce for Import and Exports of Machinery and Electronic Products and the China Chamber of Metals, Minerals and Chemicals Im porters and Exporters. Could China clarify if this is the practice 
and indicate the list of such authorised non- governmental organisations. 
ANSWER: 
For products subject to import license administration: 
For chemicals under supervision and control that ma y be used for chemical weapon, chemicals used 
to produce narcotics, and ozone-depleting materials, import license will be granted by MOFCOM and 
its authorized entities as long as the import operator obtains import permit fr om respective competent 
authorities. Obtaining import permit is a non-autom atic procedure, and the competent authorities are 
as follows. 
For chemicals under supervision and control that ma y be used for chemical weapon, the competent 
authority is the Office on Implementing the Conven tion on the Prohibition of the Development of 
Chemical Weapons (in NDRC). 
For chemicals used to produce narcotics,  the competent authority is MOFCOM. 
For ozone-depleting materials, the competent aut hority is the State Environmental Protection 
Administration. 
QUESTION:  Chile 
De acuerdo al párrafo 49 del informe, los produc tos sujetos a licencias de importación se publican 
anualmente por el Ministerio de Comercio.  ¿E s posible tener acceso a est a nomina de productos en 
algún sitio Web? ¿Cuáles son los criterios para  de terminar qué productos estar án sujetos a licencias 
de importación? 
ANSWER: 
The list is available at the MOFCOM website . Products currently subject to import license 
administration are only chemicals that can be u sed to produce chemical weapons and ozone depleting 
substances, whose importation according to int ernational conventions should be restricted.  
QUESTION:  
Mexico  
Agradeceremos información detallada respecto de las fracciones sujetas a permiso de importacion. 
Asi como se han entregado sus notificaciones respec tivas a los comites de licencias, normas técnicas, 
así como sanitarias y fitosanitarias.  WT/TPR/M/161/Add.1 
 Page 193 
 
 
ANSWER: 
China over the past four years submitted annually to  the Market Access Committee of the WTO its 
comprehensive QR notifications.  Please refer to the notifications for information about products 
subject to import licensing regime. 
QUESTION:  
Mexico  China cuenta con tres distintos procedimientos para  moniterar las importaciones, licencias, monitoreo 
y licencas automaticas. Podria explicar china la n ecesidad de todas estas medidas, tomando en cuenta 
que los productos sujetos a dichos mecanismos es  donde se realiza el mayor comercio a nivel 
internacional. Pareciera que quiseran  desentivar las importaciones de estos productos? 
ANSWER: The Chinese government has eliminated the import  quota and license control on 1 January 2005.  
Currently only the import licensing regime and automa tic import licensing remain.  All the products 
subject to import licensing regime are chemicals t hat can be used to produce chemical weapons and 
ozone depleting substances.  Th e automatic import licensing is exercised only for import information 
and data collection purposes. 
QUESTION:  Mexico 
¿Cuales son los tiempos para obtener las licencias de importación? 
ANSWER: 
As long as the application requirements are met, the issuing administration shall issue the import 
license within 3 days upon receipt of the applicat ion, and within no more 10 days under special 
circumstances. 
QUESTION:  Mexico  
China ha dejado sin efecto algun producto al que se le  haya dado una licencia automatica. De ser este 
el caso, favor de explicar detalladamente las razones para ello? 
ANSWER: 
The reason why products are no longer subject to aut omatic import licensing is because there is no 
long the necessity to monitor the import volume  of this product for statistical purpose. 
QUESTION: Argentina 
En la página 92, párrafo 46, el informe menciona  que la Ley de Comercio Exterior permite a la 
Autoridad Competente de Comercio Exterior (MOF COM) del Consejo de Estado dictar prohibiciones WT/TPR/M/161/Add.1 
Page 194  
 
o restricciones temporales a las importaciones de determinados productos. ¿Sobre que bases se deciden estas restricciones y que productos abarcan? 
ANSWER: 
The decisions to impose interim import suspensi ons or import restrictions are mainly based on 
relevant decisions of international organisations, e.g. UN resolutions, or measures to suspend or 
restrict import for SPS reasons. 
(vi) Trading rights QUESTION:  India  
Q9.  China has thus far not implemented its trading rights in so far as they relate to importation of 
books, newspapers and magazines.  According to China’s accession agreement to WTO, China’s 
trading rights for books, newspapers and magazines should have been automatically available to 
Chinese enterprises, Chinese-foreign joint ventures , wholly foreign owned enterprises and foreign 
individuals as of December 11, 2004. Nevertheless so  far only State trading enterprises are allowed to 
import books, newspapers and magazines in China. This is a restrictive provision and impinges on 
possible exports of Indian books, magazines a nd periodicals to the Chinese market. Would China 
agree to immediately abide by its accession commitment? 
ANSWER: 
Since importation of books, newspaper and magazines are related to ideology, China administers the 
importation of these products in line with the Forei gn Trade Law of the People’s Republic of China 
and the Regulation on Publication. 
With regard to China’s accession commitment, the Sc hedule of GATS Commitments of China provides 
the following: “For these products , foreign service suppliers will be permitted to engage in the 
distribution of books, newspapers, magazines, within  three years after China' s accession”.  As it 
has committed, China has opened its wholesale and retail market of domestic books, newspapers and 
magazines to foreign investment enterprises. 
(vii) State trading  
QUESTION:  
United States I  
15. a. Have there been any imports of processed oil by non-state trading enterprises since China 
acceded to the WTO in December 2001?  If so, please provide available data on those imports. 
ANSWER: 
Since 2002 China has been exercising state trading over processed oil, allowing at the same time 
certain quantity of import by non-state trading enterpri ses.  From 2002 to 2005, the yearly imports of 
processed oil by non-state trading enterprises were 4.6 million tons, 5.29 million tons and 
6.08 million tons respectively, with  an annual growth rate of 15%  WT/TPR/M/161/Add.1 
 Page 195 
 
 
QUESTION:  
United States 
b. Please explain why China has not initiate d the review required by Annex 2A1.  
ANSWER: 
Following its accession to the WTO, China has b een honouring its commitment on the importation of 
processed oil by non-state trading enterprises.  Over the years, the importation of processed oil on the 
non-state trading side has been on the constant increase, while China never received any requests for 
such a review.  
QUESTION:  United States I  
16. Paragraph 64 of Chapter III of the report cites the Foreign Trade Law as providing that China may 
subject certain goods to state trading to ensure st able domestic supply, stabilize prices, safeguard the 
environment and protect the environment and exha ustible natural resource s.  Paragraph 166 of 
Chapter III of the report adds one other purpose, i.e., to avoid drastic price fluctuations in 
international markets.  Please explain how Chin a meets these objectives while refraining from taking 
any measure to influence or direct import or export state trading enterprises as to the quantity, value 
or country of origin of goods purchased or sold, as China committed to do in paragraph 6.1 of Part I 
of its Protocol of Accession. 
ANSWER: 
According to its accession commitments, China curre ntly conducts trade main ly through state trading 
companies on the exportation of crude oil, processed  oil, coal, tungsten, antimony and silver, and on 
the exportation of rice, corn and cotton.  State tr ading enterprises are fully independent, responsible 
for their own gains and losses, and make their export decisions based on factors such as 
supply/demand and price in the domestic and inter national markets.  The overview of the export 
quotas and the qualification requirements of expor ting enterprises are ava ilable at the MOFCOM 
website.  China made the commitment in its Acces sion Protocol that it w ould avoid adopting any 
measure that could exert influence or give guidance to  state trading enterprises in their purchasing or 
selling the products as regards the quantity, price or  country of origin.  Since WTO accession, the 
Chinese government has been honestly fulfilling its commitments, and has avoided any government’s 
intervention in the economic activities of state trading enterprises. 
QUESTION:  Switzerland   
Para 63 states that under China's Accession Protocol , the non-state trading share in imports of 
processed and crude oil is to be increased annually by 15% for the first ten years after accession. 
Could the Chinese delegation please explore on the actual state-trading of crude oil, especially if these have been reduced during the last years? 
ANSWER: 
The share licensed imports by non-state trading ent erprises increases at an annual rate of 15%, while 
the rest is by state trading enterprises.  The impor ts of crude oil by both state trading and non-state 
trading enterprises have been on th e rise over the past few years. WT/TPR/M/161/Add.1 
Page 196  
 
(viii) Contingency measures 
QUESTION: Switzerland I 
Para 80. In addition to the mid-term review c onducted once a safeguard measure exceeds 3 years, 
could China confirm that when it takes a safegua rd measures exceeding one year, it progressively 
liberalizes the measure at regular intervals during th e period of application with article 7.4 of the 
Safeguard agreement? 
ANSWER: 
Please refer to Article 27 provided in Regulations of  the People’s Republic of China on Safeguards.   
QUESTION: 
Japan: Q11. Please indicate concretely in what way the au thority examined the accuracy and adequacy of 
data provides in the application. 
ANSWER: 
The Chinese authorities examine whether the applic ation contains all the evidence required by 
Regulations of the People’s Republic of China on Anti-Dumping and whether the sources of the 
evidence are reliable. 
QUESTION: Canada 
29. Paragraph 68 states that Chinese regulations  for provisional measures provides that such 
measures, “may not exceed four months from the effec tive date set forth in the public notice regarding 
the decision on provisional anti-dumping measures and, in special circumstances, may be extended to 
nine months,” However, Paragraph 69 states that, “[t]here is no provision in the Regulations for a 
specific time limit for provisional measures”. Can Ch ina please clarify its regulation for the duration 
of provisional anti-dumping measures? 
ANSWER: 
The statement in paragraph 69 “there is no provisio n in the Regulations for a specific time limit for 
provisional measures.” refers to the review proce dure. It means there is no provisional measure 
during review. 
QUESTION: Canada 
32. It is reported that China initiated 79 anti- dumping investigations  from 1 January 2002 to 
31 December 2004.  Could China confirm how many of  these 79 investigations were self-initiated by 
MOFCOM without having received a written applicati on by or on behalf of a domestic industry?  WT/TPR/M/161/Add.1 
 Page 197 
 
 
ANSWER: 
So far, the Chinese government has not yet initia ted any investigation without having received a 
written application by or on be half of a domestic industry. 
QUESTION: Brazil 
Could the Chinese Government supply further info rmation on the number of application for anti-
dumping which were made in the period 2002-2005? 
ANSWER: 
Please refer to China’s notification to the WTO on the number of application for anti-dumping made 
in the period 2002-2005. The statistics of cases wh ere an application is filed but no investigation is 
initiated are regarded as confidential  in accordance to the WTO/ADA. 
QUESTION: Brazil 
How many investigations out of the 3022 and 27  initiated in 2002, 2003 a nd 2004, respectively, 
were object of provisional measures? 
ANSWER: China has applied provisional measures for 27, 21  and 22 anti-dumping cases respectively in the year 
2002, 2003 and 2004. 
QUESTION:  Mexico 
Medidas Antidumping y Compensatorias a) ¿Cuál es el porcentaje que los solicitantes deben reunir para considerar que actúan en 
representación de la producción nacional?  
ANSWER: 
Domestic industry refers to the domestic producers as a whole of the like product in the People’s 
Republic of China, or to those producers whose co llective output of the products constitutes more 
than 50 per cent of the total domestic production of the like product.  
QUESTION: 
b) Observamos que al país o región exportadora y a los solicitantes se les no tifica previamente a la 
iniciación de una investigación antidumping ¿esas no tificaciones se hacen mediante una publicación o 
de forma personal? 
i) Observamos que al país exportador se les notifi ca previamente a la iniciación de una investigación 
antidumping, ¿esas notificaciones se hacen medi ante una publicación o de forma personal? WT/TPR/M/161/Add.1 
Page 198  
 
ANSWER: 
The Chinese government shall notify the government of  the exporting country (region) and applicants 
by letter. 
QUESTION: 
e) Por favor explique una aparente contradicción entre los párrafos 69 y 68: En el 68 se establece la 
duración de una medida provisional, mientras que en el 69 se menciona que no hay disposiciones 
acerca de su duración. Si no hay límite a la duración de  una medida provisional, explique por favor la 
forma en que ello es compatible con el  artículo 7.4 del Acuerdo Antidumping. 
f) Sobre los procedimientos de reconsideración y judiciales, ¿la reconsideración se tramita ante una 
autoridad distinta a la que emitió la medida o an te la misma autoridad? ¿cabe la posibilidad de 
presentar una u otra indistintamente o es necesario interponer una de ellas para luego proceder a 
solicitar la otra?  
ANSWER: 
According to Article 53 of the Anti-Dumping Re gulation of the People’s Republic of China and 
Article 52 of the Countervailing Regulation of the People’s Republic of China, the administrative 
reconsideration concerned shall be conducted by MOFCOM, while the judicial appeal against the 
anti-dumping and countervailing measures shall be app lied to the People’s Court. Administrative 
reconsideration is not a prepositive procedure for judicial appeal.  
QUESTION: 
k) Explique de qué forma es compatible el plazo  de 10 años de aplicación de una medida de 
salvaguardia con el artículo 7 de l Acuerdo sobre Salvaguardias. 
ANSWER: Under Article 9.2 of WTO Agreement on Safeguards , China, as a developing country Member, shall 
have the right to apply the safeguard meas ure for a maximum period of 10 years. 
QUESTION:  Japan I 
(p.86, paragraph 74) 
In the investigation on nucleotide food additives,  MOFCOM made a preliminary determination of 
injury solely depending on the application by th e domestic industry on 4 August 2005, while the 
information submitted by the Government of Japan  indicated a steady decrease in the volume of 
exports.  In making such a determination, the authority did not provide any concrete reasoned 
explanation for why they did not adopt the informati on.  We believe that even if evidence provided by 
an interested party is not accepted, the party should be informed forthwith of the reasons thereof, and 
should have an opportunity to pr ovide further explanations.   
Q12. Please explain how practice mentioned above is consistent with paragra ph 6 of Annex II of the 
ADA.  WT/TPR/M/161/Add.1 
 Page 199 
 
 
ANSWER: 
China’s investigating authorities conduct injury investi gations strictly in accordance with relevant 
laws and regulations of China and the relevant  WTO Agreements. Great importance has been 
attached to ensuring due process, transparency and right of defence for interested parties. With 
regard to the nucleotide food additives case, the autho rities took full consideration of the information 
submitted by the Japanese government on the exports volume and value from Japan. Furthermore, the 
authorities explained why the data in question su bmitted by the Japanese government couldn’t be 
accepted both during the meetings with officials of Japanese Embassy and in the publication of determinations.   
QUESTION: 
(p.86, paragraph 74) 
Japan I 
MOFCOM made a positive final finding of injury in the original investigation concerning TDI 
(initiation date: 22 May 2002), while indicators su ch as volume of domestic consumption, production 
of the domestic-like product, sales volume and market  share did not deteriorate.  In addition, an 
objective reasoned explanation was not provided.  Furt hermore, regarding the analysis on causal links 
between the dumped import and material injury, MOFCOM did not undertake the review of the 
existence and the role of a price leader, which app eared to cause a decrease in prices of the domestic -
like product.  
Q13. Please explain the reason why China believes that  the practice indicated above is consistent with 
obligations on objective analysis and reasoned explanations under the ADA, including Article 3.1, 
3.2, 3.4, Article 3.5 and 12.2.1. 
ANSWER: 
China’s investigating authorities conduct injury investigations and make determinations in 
accordance with relevant laws and regulations of  China as well as the WTO ADA. The authorities 
make objective and thorough analysis of injury and ca usality based on facts and governed by laws. 
QUESTION:  
Canada 
Part III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (viii) 
Contingency measures, (a) Anti-dumping and countervailing, paragraphs 66 and 78: 
26. Can China clarify the reasoning fo r jointly conducting the investigation  of injury, in anti-
dumping and safeguard investigations involving agricultural products, with the Ministry of 
Agriculture?  
27. What role does the Ministry of Agriculture have in such investigations and does its role 
substantively alter the procedures a nd results of such investigations? 
28. Could China also clarify why joint injury inv estigations with the Ministry of Agriculture do 
not apply to countervail investigations i nvolving imports of agricultural products? WT/TPR/M/161/Add.1 
Page 200  
 
Chile 
viii) Medidas Antidumping y Compensatorias  
1. En relación  a lo señalado en el párrafo 66 del informe, ¿porqué razón dos agencias distintas se 
ocupan de la determinación de  dumping y de la determinaci ón del daño, respectivamente, 
especialmente si luego ambas deben coordinarse pa ra establecer el vínculo causal entre uno y otro 
elemento? A su turno,  si el bien investigado es ag rícola y en la determinación de daño participan el 
Ministerio de Comercio y el Ministerio de Agricu ltura ¿significa esto que el informe de Agricultura es 
determinante o sólo se trata de un documento en que  se deja constancia de la opinión de dicho  
Ministerio?  
Mexico 
Medidas Antidumping y Compensatorias 
g) Cuando una investigación es conjunta con el Mi nisterio de Agricultura, ¿cómo se da la 
sincronización entre los ministerios? ¿en qué interviene cada dependencia?  
ANSWER: 
In the industry injury investigations of anti–dum ping and countervailing cases involving agriculture 
products, the Ministry of Agriculture is coordina ting with the Ministry of Commerce in collecting 
related evidences The final determination of indust ry injury shall be worked out jointly by the two 
authorities. 
QUESTION:  EC 
C
ONTIGENCY MEASURES  
While it would appear that some of the EC concerns  in the fields of anti-dumping and safeguards have 
to some extent been noted in the past period, Chin a’s practice in this area still needs to be seriously 
improved. The EC continues to have serious concerns , particularly regarding the respect of right of 
defence for interested parties, especially in relati on to disclosure of all essential facts (including facts 
on injury) and in the respect of confidential information.  
- Could China please explain what steps it intends to  take in order to improve its practice in the 
field of anti-dumping and safeguards? 
ANSWER: 
China’s investigating authorities strictly conform to  the rules of information disclosure and protection 
of confidential information prescribed in Chin a’s laws concerned and the WTO ADA. We will 
continue to make efforts to perfect the legal system of anti-dumping laws and to improve the 
transparency and quality of investigations in  accordance with the relevant laws.  WT/TPR/M/161/Add.1 
 Page 201 
 
 
QUESTION:  
Chinese Taipei 
(page 86, paragraphs 75 and 76)  
It is stated that any party that is not sa tisfied with the MOFCOM decision may apply for 
administrative reconsideration under the Law on Admini strative Reconsideration, or file a lawsuit in 
the People's Court. 
We would therefore like to ask China: i) How many anti-dumping duties and countervailing duties currently in effect have been 
appealed to the People’s Court?  
ANSWER: None of the anti-dumping duties or countervaili ng duties currently in effect has been appealed. 
QUESTION:  
ii) Could China please also provide more information regarding its judicial review mechanism.  
For example, what is the typical duration of judi cial reviews undertaken by the Court?  Does the 
Court have the authority to withdraw or repeal an AD/CVD case outright after it reverses the determination of the MOFCOM, or does it only have the authority to reverse the determinations and 
remand back to MOFCOM for new determinations?  
ANSWER: 
According to Articles 57 and 60 of the Administra tive Procedure Law of the People’s Republic of 
China, the People’s Court shall make a first trial ruling within three months from the date when the 
case is filed.  In hearing appeals, the People’s Cour t shall make a final ruling within two months from 
the date when the petition for appeal is received.  In  the event of special circumstances, extension of 
the duration shall be approved by the Advanced People’s Court.  In the event that the Advanced 
People’s Court needs to extend the duration for the fi rst trial, such an extension shall be approved by 
the Supreme People’s Court.  According to the Prov isions of the Supreme People’ s Court on Several 
Issues Concerning the Application of Laws in th e Hearing of Anti-dumping Administrative Cases and 
Provisions of the Supreme People’ s Court on Several  Issues Concerning the Application of Laws in 
the Hearing of Countervailing Administrative Cases, the People’s Court, while hearing anti-dumping 
administrative cases and countervailing administrative cases, may, depending on different circumstances, adjudicate that the appealed ant i-dumping administrative action or countervailing 
administrative action to be repealed or partly repeale d.  It may also rule that the administrative 
agency retake an anti-dumping administrative action or  countervailing administrative action.  It may 
also reach other adjudications according to th e relevant laws or judicial interpretations. 
QUESTION:  United States II 
Measures Directly Affecting Imports – Contingency Measures 25. In paragraph 81 of Chapter III of the report, the Secretariat states that it is not clear whether 
appeals may be taken against safeguard decisions  made by the Chinese authorities.  Please explain 
whether administrative reconsideration and/or appeal s to a court are available for safeguard decisions WT/TPR/M/161/Add.1 
Page 202  
 
and, if so, identify the applicable laws, regulations and other measures. 
Switzerland II 
Report by the Secretariat 
III. T
RADE POLICIES AND PRACTICES BY MEASURE  
Para 81.  Could China specify whether appeals can be made against safeguard decisions taken by the 
authorities and who is the competent authority to which such an appeal must be logged?  
Canada 
Part III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (viii) 
Contingency measures, (a) Anti-dumping and countervailing, paragraph 81: 
33． Could China clarify which institution is respons ible for the judicial review of safeguard 
decisions by MOFCOM and/or the Ministry of Agriculture, and the process by which parties can 
submit an appeal for such a review?  
Brazil 
Safeguards 
WT/TPR/S/161 III (2) viii (b) 
In paragraph 81, on page 87, the S ecretariat´s report states that it is not clear whether appeals may be 
made against safeguard decisions taken by the authorities. Could the Chinese Government clarify 
such aspect of its safeguards action procedures? 
ANSWER: 
The Foreign Trade Law and Regulation on Safeguar d Measures of China do not contain any 
provision that administrative reconsideration or judicial appeals can be applied for against a 
decision to take safeguard measures.  Presently there has been no judicial appeals against any 
safeguard measure decision.  
QUESTION:  Canada 
Part III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (viii) 
Contingency measures, (a) Anti-dumping and countervailing, paragraphs 70 and 75: 
30. With respect to judicial review, Canada would appreciate elaboration from China of the 
institutions to which appeals of MOFCOM decisi ons can be made and the procedures for such 
appeals? Specifically, Canada would appreciate cl arification on which Chinese institutions receive 
appeals and conduct reviews of MOFOM decisions under the Law of Administrative Review and the 
Regulation on Administrative Review?  
ANSWER: 
According to Article 14 of the Administrative Rec onsideration Law of the People's Republic of China, 
those refusing to accept a specific administra tive action of the MOFCOM may still apply for  WT/TPR/M/161/Add.1 
 Page 203 
 
 
administrative reconsiderations to MOFCOM.  T hose who refuse to accep t the ruling of the 
administrative reconsiderations may apply for adminis trative litigation to the People’s Court or apply 
to the State Council for reconsiderations, the latter sha ll make a final ruling according to law.  within 
MOFCOM the department responsible for administr ative reconsiderations is the Department of 
Treaty and Law.  
QUESTION:  
Canada 
Part III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (viii) 
Contingency measures, (a) Anti-dumping and countervailing, paragraphs 70 and 75: 
31. Paragraphs 70 and 75 also state that an appeal may be made to the Court or the People’s Court. 
Could China please clarify to which specific court an appeal may be made and the procedures for 
filing such an appeal?  
ANSWER:  
Those refusing to accept the ruling by MOFC OM on anti-dumping or countervailing measures may 
apply for administrative litigation to the Second Int ermediate People’s Court of Beijing.  Relevant 
procedures shall follow the provisions of the Admi nistrative Procedural Law of the People’s Republic 
of China. 
(ix) Standards and other technical requirements SPS QUESTION:  
United States I 
20. Paragraph 96 of Chapter III of the report expl ains that MOFCOM is the notifying authority 
for sanitary and phytosanitary (SPS) measures.  As many as 10 different ministries and agencies in 
China draft, implement and enforce SPS requirement s.  While China has begun to notify the proposed 
regulatory requirements of a greater number of ministries and agencies, improvements are still 
needed.  Please explain the steps that China is ta king to ensure that all proposed measures modifying 
SPS requirements are notified to the WTO for comment by Members.  
ANSWER: 
Chinese Central Government pays high attention to implementing the transparency obligation. Up to 
now 241 SPS measures have been notified to WTO. As a new member of WTO and a developing country, China has been consistently perfecti ng  its working system and mechanism to fulfil the 
transparency obligation, especially the notification to  WTO. China has therefore taken the following 
measures: 1. In September 2002 the General Office of  the State Council issued a notice to implement 
the notification and consultation obligation, and sp ecify the notification and consultation authority. 
2. In order to coordinate the relevant authorities in the areas of TBT and SPS, the National Inter-ministry Joint Conference on Technical Barriers to Trade was established in 2002, which involves 
18 relevant agencies and plays an important role in  facilitating the notification of SPS measures. 
3. Under the framework of the system, notificatio n guidelines on SPS measures were provided and 
training courses and special seminars were held to  introduce the WTO/SPS transparency obligation, 
its specific requirements and procedures for notific ation to the relevant departments. All these 
activities have make-known the SPS agreement, im proved the awareness and initiative of different WT/TPR/M/161/Add.1 
Page 204  
 
agencies in making notifications. The SPS National Notification Authority and Enquiry Point also 
play the role of urging and prov iding consultation to other agenc ies in terms of notification. 
Consequently, the notification rate of SPS measures has been steadily rising.   
According to the article of notification obligation in SPS Agreement Annex B, China is not obligated 
to “ensure that all proposed measures modify ing SPS requirements are notified to the WTO for 
comment by Members”. However, China will en sure to notify to WTO SPS measures whenever an 
international standard does not exist or the content is not substantially the same as that of an international standard and if the measures may have a significant effect on trade. 
QUESTION: United States II 
30. Paragraph 98 of Chapter I II of the report addresses the procedures for obtaining quarantine 
import permits (QIPs).   
a.  Once an application for a QIP is submitted to the local China Inspection and Quarantine (CIQ) 
office, how many days does that office have to accept the application? 
ANSWER: 
According to the requirements of the Administrativ e License Law of the People’s Republic of China, 
QIP applications satisfying the stated requirements a re to be accepted by local CIQs on the spot. If 
the application materials are not complete or incons istent with the required format, the applicant will 
receive one time complete notification within 5 days to supplement or correct the application. 
QUESTION: 
b.  if a shipment fails inspection, is ther e any right of reconsideration or appeal?  
ANSWER: 
If a shipment fails inspection, CIQs informs the applicant of the reasons of failure. Applicants could 
resubmit their application, or make an appeal according to the Administrative License Law of the 
People’s Republic of China. 
QUESTION: c.  The United States understands that AQSIQ  Announcement 111, effective September 2004, 
exempts certain animal and plant products fro m the requirement to obtain a quarantine import 
inspection permit in advance of entry and prior to signing an import contract.  Announcement 111 
lists the generic names of certain products in the animal products and plant products categories that 
are exempted from the QIP requirement, but does not provide sufficient detail for traders or a 
description of these products based on the HS number.  Please provide a description of the exempted 
products by HS number. 
ANSWER: 
Whether a QIP is required depends largely on th e quarantine risk of a product. The classification 
method of products in terms of risk is different fr om that of HS. Under the HS, high risk products can 
fall into the same HS code as low risk ones. China w ill take further study to facilitate the exporters in 
the process.  WT/TPR/M/161/Add.1 
 Page 205 
 
 
QUESTION: 
d.  Is there an application process to make add itional products exempt from the QIP requirement, or 
does AQSIQ conduct a regular review of the products  requiring a QIP to determine if any of them 
warrant exemption?  
ANSWER: 
Yes. 
QUESTION: Australia 
Sanitary and Phytosanitary Measures 7. refer to the view expressed by the WTO Secr etariat that China’s SPS regime and SPS inspection 
procedures for imports are complex and not clear (para 12 on page xi and para 4 on page 60 of 
WT/TPR/S/161). 
a) Could China provide information on reforms that are planned to address this problem? 
Turkey 
WT/TPR/S/161 (page 60, para 3,4) III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
The Secretariat Report mentions that the SPS regime  of China is a complex one with a large number 
of laws. It is further noted that in the area of TBT’s the compliance with th e international standards 
remain low. 
- Does China intend to simplify its SPS measures? New Zealand 
4. Trade policies and practices by measure: SPS (WT/TPR/S/161, p60 para 4) 
The Secretariat observes that “examination and approv al procedures at the border are not clear”.  The 
SPS Agreement requires Members to achieve consistenc y in the application of their appropriate level 
of protection.  Does China acknowledge that there are differing interpretations of central government 
policy by local border inspection teams?  Is it de veloping a strategy to improve understanding and 
ensure consistency of policy in terpretation across all regions? 
ANSWER: 
China does not share this observation. Firstly it is  true that a few agenc ies and regulations are 
involved in the SPS regime in China, yet consid ering the complexity and importance of the nature of 
SPS measures, it is normal and necessary for a la rge country like China to maintain the present 
regime. Moreover, functions of different agencies are clearly stipulated. AQSIQ is the only agency 
responsible for inspecting and quarantining imported  and exported agricultural products and food, 
which greatly facilitates trade in agricultural products. Secondly, the inspection and quarantine 
procedure for imported agricultural products and food are regulated by the Law on the Entry and 
Exit Animal and Plant Quarantine, the Law on Import and Export Commodity Inspection and the WT/TPR/M/161/Add.1 
Page 206  
 
Food Hygiene Law, which have been notified to th e WTO. The procedure is  therefore very clear. 
Border CIQs are under AQSIQ’s vertical supervision,  which ensures the uniformity, consistency and 
transparency of import inspection procedures. 
QUESTION: 
Australia: 
8. We welcome the steps taken by the central Government to remove internal barriers to 
trade between the provinces. 
b) Could China provide advice on legislation aime d at ensuring provincial compliance with central 
Government sanitary and phytosanitary  requirements for imported products? 
ANSWER: 
According to relevant provisions of the Law on th e Entry and Exit Animal and Plant Quarantine and 
the Food Hygiene Law, local government is not  entitled to make SPS requirements for import 
products. The inspection and quarantine of importe d product are undertaken by local CIQs, in 
accordance with the unified requirements of AQSIQ,  which ensures that SPS measures are uniformly 
implemented nation wide. 
QUESTION: c)  Do provinces currently apply any sanitary or  phytosanitary restrictions to trade between 
themselves, eg pest free areas?   
ANSWER: 
According to relevant provisions of laws and regulations, provinces,  autonomous regions and 
municipalities directly under the central government are not entitled to establish quarantine measures 
in relation to international trade. Quarantin e requirements for domestic animals and plants, 
including the identification of pest free a reas, will not affect imported products. 
QUESTION: Australia 
9. We note that under the Administrative Measures on Examination and Approval of Entry Animal 
and Plant Quarantine, import permits are valid for 6 months and only for that calendar year (para 98 
on page 92 of WT/TPR/S/161). In some cases this will mean import permits are valid for less than 
6 months. 
Could China please indicate its justification for the calendar year limitation in place for import 
permits? 
Chinese Taipei 
(d) Sanitary and phytosanitary measures 
(page 92, paragraph 98)  The report indicates that import permits, if issued, fo r animals and plants “are valid for a period of six 
months.”  However, according to China’s General Administration of Quality Supervision, Inspection  WT/TPR/M/161/Add.1 
 Page 207 
 
 
and Quarantine (AQSIQ) Decree No. 25 (“Administ rative Measures on Examination and Approval of 
Entry Animal and Plant Quarantine”), the permit is valid only for the calendar year in which it was 
issued.  
If an import permit is issued during the second half of the calendar year, please could China confirm 
whether the validity remains at six months? 
ANSWER: The validity period of the permit is six months , irrespective of the limit of the calendar year. 
QUESTION: Australia 
10. Australia acknowledges China’s need to establis h SPS measures to protect its human, animal and 
plant health status while expanding its particip ation in global agricultural trade.  While we 
congratulate China on its efforts to bring its SPS me asures into conformity with its WTO obligations, 
we urge China to do so in a manner that  minimises disruption to existing trade. 
ANSWER: 
China has always held the view that SPS measures should be aimed at protec ting human, animal and 
plant health and be in line with the principle of WTO/SPS Agreement to minimize disruption to 
existing trade. c 
QUESTION: 
Australia 
11. We note that expiration/renewal clauses have  been included in recent import protocols for 
Australian agricultural (most notably horticultural)  commodities.  We seek clarification of China's 
policy in relation to expiration/renewal of import protocols, in particular:  
a) Are such clauses included in all import protocols for commodities from all   countries? 
b) Does China intend to include such  clauses in all import protocols negotiated in the future?  
c) What is China's rationale for includi ng such clauses in import protocols? 
ANSWER: 
Provisions on validity has been included in all protocols for quarantine of agricultural products 
imports between China and other trading partners, and this practice will continue in the future. 
Provisions of validity are provided so that Chin a could review the protocols in time with the other 
signatory. China believes that with the changing sit uation of disease and the development of industry, 
clauses on quarantine requirements might need to be adjusted in time according to the changed 
situation and new results of risk analysis, which is  benefiting for both the import and export parties. 
If, at the end of the validity period, neither party  finds it necessary to amend the related clauses, the 
protocols may continue its validity. This clause will not affect trade. WT/TPR/M/161/Add.1 
Page 208  
 
QUESTION: 
Australia 
12. We welcome China’s announcement through a series of SPS Notifications (dated 24 October 
2003, 13 February 2004 and 3 October 2005) of its intention to establish standards for maximum 
residue limits for pesticides and contaminants in fo od.  However, we are concerned by the lack of 
transparency with regard to the implementation a nd enforcement of these new standards, and have a 
number of questions: 
a) have the maximum residue limits notified to the WTO been implemented? 
ANSWER: 
National Standards GB2761-2005 Maximum levels of mycotoxins in foods, GB2762-2005 Maximum 
levels of contaminants in foods and GB2763-2005 Ma ximum residue limits for pesticides have been 
notified to the WTO and come into effect on Oct.  1, 2005. Other notified standards are not brought 
into effect yet.  
QUESTION: b) If these standards have been implemented, what  enforcement mechanisms apply in the event 
of detection of residue above these standards in imported food? 
ANSWER: 
Imported food failing to meet these stan dards will be returned or destroyed. 
QUESTION: 
c) Could China advise of any differences betw een Central Government and Provincial 
Governments in the enforcement of residue standards? 
ANSWER: 
There is no difference between Ce ntral Government and Provincial  Governments in the enforcement 
of residue standards. 
QUESTION: 
d) Where a maximum residue limit has not been estab lished for a pesticide or contaminant, what 
standard will apply? 
ANSWER: If a maximum residue limit has not been establishe d for a certain pesticide or contaminant, there will 
be no requirement for a maximum residue limit for this pesticide or contaminant for imported and 
domestic products, but for exporte d food, standards used in the importing country will apply. 
QUESTION: e) Where the standards notified to the WTO have not been implemented and enforced, we would 
be grateful for advice of the current standard  for maximum residue limits of pesticides and 
contaminates in food that applies.  WT/TPR/M/161/Add.1 
 Page 209 
 
 
ANSWER: 
Where the standards notified to the WTO have not been implemented and enforced, the current 
standards will remain valid. 
QUESTION: 
f) What are the domestic regulations in place for residues in domestic food? 
ANSWER: The same regulations concerning maximum residue limit apply equally to both imported and domestic 
food. 
QUESTION: 
Turkey 
- Does China plan to make its TBT standards at  national level in line with the international 
standards?  
ANSWER: 
China does plan to further improve the adoption rate of international standards in formulating 
national standards. China considers the adoption of international standards as  an important national 
technical and economic policy. 
QUESTION: 
India 
SPS Norms and Trade Facilitation 
Q.1 Agricultural products   Indian agricultural products including fruits, vegeta bles and rice have been facing a range of non-trade 
barriers in accessing the Chinese Market. It has ta ken China 3 years to finalize the protocol on 
mangoes. In the case of grapes and bitter gourd only  the initial protocols have been signed and 
certification of orchards, etc., still remains to be done. Further we understand th at Chinese procedural 
guidelines for imports of fruits and vegetables from some other countries are not the same, and rice, 
fruits and vegetables from some countries are imported without signing SPS Protocols, whereas it is made applicable on imports from India. China has also refused to process more than one fruit or 
vegetable at a time for PRA. This has slowed dow n the process considerably and made it arbitrary. 
Will the Chinese authorities clarify the procedure followed and ensure that  Indian agricultural 
exporters receive MFN treatment? 
ANSWER: 
According to the SPS Agreement, China has notified to WTO in 2002 and, promulgated on 
Dec. 31, 2002, Measures of Administration of Risk Analysis of Entry Plant and Plant Products. Based 
on this regulation, China established the Access System for quarantine on agricultural products. 
Permit of first-time import of the relevant agricultu ral products into China shall be based on risk 
analysis. This system conforms to principles of science in SPS Agreement and non-discrimination. WT/TPR/M/161/Add.1 
Page 210  
 
For agricultural products that have historically traded, first-time access system for quarantine does 
not apply to minimize disruption to existing trade. On ly when disease or other risks are detected, at 
the prerequisite of observing SPS Agreement, will China take corresponding measures, including 
returning, destroying, quarantine treatment or forbidding import of the goods etc. Re-importation of 
products whose import is prohibited will be subj ect to the first-time access system. For the 
agricultural products India had been exporting to Ch ina before this regulation took effect, they may 
continue entering the Chinese market  without ta king risk analysis. We believe that the Indian 
agricultural exporters do receive MFN treatment. 
As for whether application for more than one agricu ltural product at a time is acceptable, China 
believes that it is practical to consider the acces s of different agricultura l products one by one.  
QUESTION: India 
Q2. Fishery products and sesame seed: 
In the case of exports of fishery products and ses ame seeds from India to China, India has been 
pursing with the Chinese Quarantine authorities to make  available the technical standards required to 
be met by exporters with a view to ensuring full compliance with Chinese standards and stop sub-
standard consignments. We  have been provided only the general law without giving details of specific 
standards that Indian exporters should meet. Would China take steps to ensu re that their technical 
standards which are required to be met by export ers of fishery products and sesame seeds are made 
available? 
ANSWER: 
China paid high attention to India’s requirement t hat China should provide technical standards on 
fishery products and sesame seed, and provided India with the website where related standards on 
fishery products are available (www.moh.gov.cn). As for the standards of inspection and quarantine 
of sesame seed, China has provided to the Indian Embassy in China on March 13, 2006. 
QUESTION: 
India 
Q3. Indian Dairy products: 
Indian dairy products entering the Chinese market re quire approvals that are not product specific but 
are given exporter wise. When India sought approval  of Chinese Quarantine authorities  for Indian 
Skimmed Milk Powder (SMP), Whey Protein C oncentrate (WPC) and other products, the Chinese 
authorities agreed only to give exporter specific approvals. Will the Chinese authorities clarify the 
position?  
ANSWER: 
China’s approval procedure is product specific inst ead of exporter specific. But only dairy products 
from producers that meet the China’s requirements are allowed for import. China has informed the 
Indian Embassy in China in writing on March 25, 2005 the relevant requirements on imported dairy 
products and asked the Indian side to provide relev ant technical materials for risk analysis, but has 
not received any feedback up until now from any Indian exporters except Mother Dairy India Ltd.   WT/TPR/M/161/Add.1 
 Page 211 
 
 
QUESTION: 
India 
Q4. Indian Bovine meat and rela ted processed products (Gelatin): 
These products are not allowed entry into the Chin ese market because of Foot and Mouth Disease in 
India. Chinese quarantine authorities are not prepared to consider the fact that  Indian exporters’ 
overall disease management and processes employed in  food processing ensure that the product, as 
also the surroundings in which the product is processed, are free from FMD. The import of gelatin from India remain banned in China. Chinese author ities are not willing to accept Indian bovine meat 
and related processed products even when the di sease management in India is as per international 
scientifically accepted procedures and standards. W ould China take urgent steps to allow market 
access to Indian Bovine meat and related products?  
ANSWER:  
Artiodactyls and their products are forbidden by Chinese regulations to be imported to China from 
Foot and Mouth Disease affected countries. For hea lthy animals from areas free from the disease, 
after treatment with high temperature, strong acids or  strong alkali and proved to be negligibly risky, 
and with the certificate issued by the competent authorities of the exporting country, the import is 
allowed. Therefore, China welcomes India to submit to AQSIQ written application and relevant 
technical documents for risk analysis. China would li ke to strengthen cooperation with India in this 
field and have related problems resolved while ensuring safety of the products. 
QUESTION: 
EC S
TANDARDS AND OTHER TECHNICAL REQUIREMENTS  
(d) Sanitary and Phytosanitary measures At policy formulation level, what measures will Chin a take to ensure that SPS import requirements do 
not discriminate in favour of domestically produced agricultural products? 
ANSWER: In formulating SPS measures, China has always be en aiming at protecting human, animal and plant 
health, and strictly fulfilled its notification obligati on by seeking comments from all interested parties. 
Chinese SPS measures equally apply to domestic and imported products. Once entered the Chinese 
market, imported agricultural products are equally t reated as domestic ones. China never holds any 
policy of discrimination against any imported  agricultural products in domestic market. 
QUESTION: 
EC How will China ensure that there will be no overlap s in requirements between the different laws for 
food both existing and currently being under preparation in the NPC? WT/TPR/M/161/Add.1 
Page 212  
 
ANSWER: 
Art. 83 of Legislation Law of the P.R.C stipulates: “with regards to laws…, if they are formulated by 
one and same organ…, if there is inconsistency betw een the new provisions and the old provisions, 
the new provisions shall prevail. Overlap and repetition in legislation are therefore avoided. 
QUESTION: EC 
The EC would invite China to bring its legislation in line with OIE guidelines on BSE that now, inter 
alia, allow deboned skeletal muscle meat to be tr aded regardless of BSE status of the exporting 
country. If not, please provide the science to back up Chinese ban of EU products. 
ANSWER: 
China is making every effort to prevent exposure to BSE. Being the mo st populous developing 
country, China has to be utmost prudent and cautious  in dealing with the BSE to ensure food safety 
and ease the panic of consumers toward BSE. At the same time, China’s policy to ban the importation 
of meat from BSE countries is established on the basis of a scientific, tr ansparent and open analysis. 
Its primary purpose is to ensure the safety of consumers’ health and cattle industry. 
China has noticed that OIE revised the criteria of BSE in 2005, and is carefully studying the new 
criteria and the impact it may impose on internationa l beef trade. China has always held high respect 
for OIE standards. Since 2005, China has been expecting from OIE the risk analysis report or 
technical supporting documents on the revision of BSE criteria. As far as we know, there were not 
such supporting documents when the criteria were re vised in 2005 which di d cause confusion among 
experts in Chinese academic circle. There is not yet  a thorough understanding of BSE in the world 
and the pathogenesis, pathogeny, mode of transmiss ion and diagnosis of living organisms is still 
under research, and some of the research even made th e conclusion that BSE can be spread through 
blood and muscle. These have made it more complex for China’s direct adoption of related OIE 
standard.  
Quarantine policies of China have always been based on the principle of science and openness, and 
never and will never exclude any new scientific eviden ces. According to the result of risk analysis, 
and after referring to OIE standards, China has lifte d the ban on import of cattle semen, embryo and 
protein-free tallow from BSE countries in 2004. Eu rope is an area where BSE occurred early and has 
accumulated a lot of experiences in  preventing BSE and ensuring the guarantee of beef safety. China 
would like to cooperate and communicate with EU  Member States to discuss our concerns over the 
beef trade. 
QUESTION: 
EC 
Is China willing to accept the listing of establishm ents based on guarantees provided by competent 
authorities regarding the safety of the food chain like the EU does for th e Chinese establishments? 
ANSWER: If companies on the listing of establishments prov ided by EU official can meet with China’s 
requirements of food safety and import registr ation, China will accept and grant registration.  WT/TPR/M/161/Add.1 
 Page 213 
 
 
QUESTION: 
EC 
Can China indicate the science behind the zero pa thogen requirements for testing of all dairy 
products? 
ANSWER: 
Pathogen limit requirements for dairy products set by China’s current standards are determined 
according to relevant provisions in Food Hygiene Law of the P.R.C. with risk assessment tools.  
QUESTION: 
EC China has taken steps to simplify its administration of border measures towards imports in general.  
Please explain which steps are to be undertaken  by China to ease non-tariff barriers, including 
standards and SPS measures, which affect imports into China of agricultural products such as fruit 
and vegetables, dairy pro ducts, livestock and wine.  
ANSWER: 
In formulating SPS measures, China has always be en aiming at protecting human, animal and plant 
health status instead of estab lishing NTBs. China always attach es importance to the market access 
requirements of our trading partners. According to the Rules on the Risk Analysis of entry Animal and 
Animal Products and Rules on the Risk Analysis of En try Plant and Plant Products, if the risk level is 
acceptable after risk analysis or after appropriate quarantine measures are app lied to lower the risk 
to that extent, they will be approved to enter into China. 
QUESTION: 
Mexico 1 ： 
- Normas técnicas 
La inquietud radica en el desconocimiento de qué tipo de regulaciones técnicas observan 
obligatoriamente en China, con la finalidad de establecer: 
Las características y/o especificaciones que deban reunir los productos y procesos cuando éstos 
puedan constituir un riesgo para  la seguridad de las personas o dañar la salud humana, animal, 
vegetal, el medio ambiente general y laboural, o para la preservación de recursos naturales;  
Las características y/o especificaciones de los produc tos utilizados como materias primas o partes o 
materiales para la fabricación o ensamble de pr oductos finales sujetos al cumplimiento de normas 
oficiales mexicanas, siempre que para cumplir las especificaciones de éstos sean indispensables las de 
dichas materias primas, partes o materiales;  
Los apoyos a las denominaciones de origen para productos del país; WT/TPR/M/161/Add.1 
Page 214  
 
ANSWER: 
Relevant requirements are available on th e websites of AQSIQ (www.aqsiq.gov.cn), 
CNCA(www.cnca.gov.cn), SAC(www.sac.gov.cn) and oth er websites of related agencies. For specific 
questions, interested parties may directly contact the TBT and SPS national enquiry points. 
QUESTION: ChineseTaipei 
(page 93, paragraph 99) The report also states that, “…there are three methods  of inspection carried out at the border for goods 
subject to SPS measures.”   
Could China please provide further explanation of  the principles or rules for categorizing goods 
subject to different inspection methods? 
ANSWER: 
The purpose of using different inspection methods at the border is to facilitate import and export 
business while ensuring the safety requirements. What method is used depends on the factors such as 
the risk of the goods spreading quarantine pests and disease, the disease status of the original place 
of the goods, whether the package and conveyance of the goods is suitable for destination inspection, 
and whether the importer has bad records of non-compliance, etc. 
TBT QUESTION: 
United States I 17.  Paragraph 86 of Chapter III of the report e xplains that MOFCOM is the notifying authority 
for technical barriers to trade (TBT) purposes and th at a large number of government ministries and 
agencies are involved in the formulation of techni cal regulations (including mandatory standards).  
The United States remains concerned because MOFCOM’s  notifications are limited almost entirely to 
technical regulations emanating from the State Admi nistration of Quality Supervision and Inspection 
and Quarantine (AQSIQ) or its subordinate agen cies. MOFCOM has notified very few technical 
regulations issued by other ministries and agencies.   What steps is China taking to improve its TBT 
notifications?  
ANSWER: 
Since its accession in the end of 2001,  China has been faithfully fulfille d its obligation of  notification, 
and has become the most active Member of  notifying under the TBT Agreement in 2005. 
China's technical regulations, mos tly in the form of mandatory standards, were examined by the SAC 
and published jointly by SAC and AQSIQ or by SAC and other government agencies.  China's 
relevant competent authorities, including AQSIQ, th e CNCA, the Ministry of Information Industry 
(MII), the Ministry of Health (MOH) and the Stat e Environmental Protection Administration (SEPA), 
etc., carried out the conformity assessment, su ch as supervision, certification, accreditation and 
inspection according to their respective functions  and responsibilities.  The proposed draft of these 
technical regulations, notified with the SAC as the "agency responsible", in fact, included the  WT/TPR/M/161/Add.1 
 Page 215 
 
 
regulations within the scope of these different other relevant authorities mentioned. Therefore the 
latter did not need to notify the regulations again under their own name.  
QUESTION: Japan 
(ix) Standards and other technical requirements  (p.89, paragraph 88)  
Q17. (1) Regarding imported digital cameras, is there a possibility that the voluntary national standards of 
digital cameras, which will be settled in the futu re will be used for the legal standards concerning 
inspection?  
ANSWER: The national standard on digital cameras to be form ulated in China is a recommended standard. It 
has to be transformed into a technical regulati on or a mandatory standard before it can be used as 
the legal foundation of inspection. 
QUESTION: (2) Are there any possibilities that the voluntary nati onal standards concerned is used in a compulsory 
manner as the administrative or criminal penalty is imposed when digital cameras don’t pass an 
inspection?  If so, please provide the grounds on th e articles of the law and the administrative or 
criminal penalty.  
ANSWER: 
There is no such possibility. QUESTION: Korea 
Standards and technical requirements(  (WT/TPR/S/161, p.91, para.91)   
7. Telecommunication equipments and devices expor ted to China are required to receive a 
Network Access License, and some of the items are also required to receive the China Compulsory Certificates.  
- Does the Chinese government have any opinion on the integration of the two licenses?  
ANSWER: 
Compulsory certification focuses on the safety an d electromagnetic compatibility of relevant 
products, while Network Access License focuses on th e network compatibility and interoperability of 
telecommunication products. The two systems are differen t. As for the inspection of a product, testing 
report on safety and electromagnetic compatibility a nd on Network Access Perf ormance of the same 
product may be provided together after a one-time test. There is no repetitive test. China has done its 
utmost to simplify the procedures. WT/TPR/M/161/Add.1 
Page 216  
 
QUESTION: 
EC 
S
TANDARDS AND OTHER TECHNICAL REQUIREMENTS  
(b) Standards and technical requirements Referring to page 90 and onwards in the WTO Secretariat’s Report. 
- Para 89. At what stage are non-domestic stak eholders invited to give comments on proposals 
that may effect their operation in, and with, China? 
ANSWER: 
Non-domestic stakeholders are invited to gi ve comments when China notifies relevant mandatory 
standards to the WTO. 
QUESTION: Para 93. 
- We are concerned with labeling requirements in various sectors, where we are aware of 
lengthy registration procedures and frequent change s in requirements. Does China plan to address 
these problems? 
ANSWER: China’ s labeling requirements are product specific but not sector specific. China does not require 
registration for all types of labeling. And there ar e clear and specific procedural requirement for the 
labeling that is required of registrations. China could not agree with EU that China’ s registration 
procedures are “lengthy” and that there are “freque nt changes in requirements” while EU could not 
indicate what specific labeling regi stration procedure it referring to.  
However, to further facilitate trade, we di d simplify our labelling requirements on food and 
cosmetics(G/TBT/N/CHN/190). 
QUESTION: 
Chile ix) Normas y Otras Prescripciones Técnicas  
1. ¿Existe un sitio Web donde esté disponible la tota lidad de la reglamentación técnica de China 
en materia de importaciones y exportaciones? 
ANSWER: 
The national WTO/TBT-SPS notification and enquiry website (WWW.TBT-SPS. gov.cn) was jointly 
established by National Enquiry Center for TBT and National Enquiry Center for SPS. At present most technical regulations on entry-exit are ava ilable on this website. For  any specific enquiry, 
please contact the national enquiry points.  WT/TPR/M/161/Add.1 
 Page 217 
 
 
QUESTION: 
India 
Q5. Certification requirements for consumer durables:  
Compulsory certification measures is a major NT B in accessing the Chinese market.  Certification 
remains a difficult, time-consuming and costly pr ocess for certain commodities that are of potential 
interest to India. 
In many cases, foreign companies’ products can only be tested at certain labouratories, and results 
from other competent authorities are unacceptable. The certification process in many cases involves 
on-site inspection of manufacturing facilities outside  the country, the cost of which is borne by 
producers. This has a specific impact on export of Indian pharmaceutical and cosmetics. 
The costs as well as delay involved in compulsory certification measures are further escalated, as 
foreign manufacturers’ self-certification of conforma nce to standards is not acceptable for certain 
products. Products are required to be tested in  designated labouratories in the country. The 
manufacturing facilities are required to be inspected and certified before products can be certified for 
import into China. In addition, annual follow-up  inspections are carried out and these are time 
consuming and costly for producers and therefor e, discourage imports. Will the Chinese authorities 
streamline the certification process for export of consumer durables and establish necessary 
equivalence in standards and allow sel f certification by the exporting country? 
ANSWER: 
China does not believe compulsory certification meas ures are a NTB in accessi ng the Chinese market. 
According to relevant laws and regulations, certific ation bodies and testing bodies performing China 
Compulsory Certification are designated by the Chin ese Government. By entering into bilateral or 
multilateral agreements between governments or recognized by the Chin ese Government, testing 
results made by conformity assessment bodies can be  mutually recognized or foreign CABs can be 
entrusted to carry out plant inspection and ot her tasks. CCC system is applicable to domestic 
products as well as impor ted products. At present, self-certificati on is not included as an acceptable 
certification mode of CCC system. 
QUESTION:  Chile  
Algunos países han recalcado problemas asociados a la incertidumbre respecto de la aplicación del 
trato nacional: poca claridad de los procedimientos para las exenciones; productos de bajo riesgo que 
están en la  lista de productos que se exige certif icación obligatoria, etc.  ¿Existe alguna instancia 
entre los reguladores en que se reúnan constantem ente, para analizar y coordinarse respecto a 
Obstáculos Técnicos al Comercio? 
ANSWER: 
China has been implementing the WTO/TBT ag reement in a serious way and follows related 
principles in formulating technical regulations, st andards and conform ity assessment procedures. For 
instance, China makes notification in time to solic it comments of interested parties, publishes and 
promulgates relevant provisions in time, establis hes a TBT national enquiry point, accepts and replies 
reasonable enquiries of all kinds and providing necessary materials and documents at request. 
Conditions and requirements for a product to be exempted from CCC certification and relevant 
regulations are available on CNCA website (www.cnca.gov.cn). WT/TPR/M/161/Add.1 
Page 218  
 
QUESTION: 
6. ¿Cuál es el procedimiento de notificación a la OMC y manejo de comentarios respecto de proyectos 
de reglamentos técnicos y/o procedimie ntos de evaluación de la conformidad?  
ANSWER:  
First, it is up to the agencies responsible for the fo rmulation and promulgation of the draft technical 
regulations and conformity assessment procedures to decide whether the draft is to be notified 
according to the requirements of TBT Agreement. If yes, a notification form will be filled by the 
responsible agency and submitted to na tional enquiry point of WTO/TBT for registration. Then it is 
notified to WTO by the notification authority through the Permanent Mi ssion of China to the WTO. 
For comments from other members and interested parties, TBT National Enquiry Center receives and 
transfers with Chinese translation to the dra fting agency which will take adequate consideration and 
provide reply if required. 
QUESTION: Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requi rements, (e) Labelling, paragraph 102: 
i. What are the laws and regulations governing the fair labelling of goods to prevent fraudulent 
practices that may mislead consumers? 
ANSWER: 
Law of the People’s Republic of China on Product Q uality, Law of People’s Republic of China on the 
Protection of Consumer Rights and Interests, Food Hygiene Law, Administration of Production License of Industrial Products, and Rules Govern ing Products Marking and  Labelling, and other 
relevant standards are governing the labelling of goods. 
China’s compulsory certification QUESTION: United States II 
27. Paragraph 90 of Chapter III of the report explai ns that the First Catalogue of Products Subject 
to Compulsory Certification, issued in December 2004, lists the products requiring the CCC mark.  
These products are set forth in Table AIII.4 of the report.  Have there been any additions to the 
Catalogue, not included in Table AIII.4?  If so, please identify them. 
ANSWER: 
Yes, there has been addition to the Catalogue. Fo r detailed list, please visit www.cnca.gov.cn 
QUESTION: 
United States II 28. In paragraph 92 of Chapter III, the report e xplains that imported or domestically produced 
products used for research and de velopment and testing purposes a nd goods imported for processing  WT/TPR/M/161/Add.1 
 Page 219 
 
 
and re-export, as determined by the Certificati on and Accreditation Administration (CNCA) of the 
State Administration of Quality Supervision an d Inspection and Quarantin e (AQSIQ) in accordance 
with Decree No. 3, are exempt from Chinese Com pulsory Certification (CCC) certification.  
However, the report states that Decree No. 3 was not available to the Secretariat in English. 
b. Please identify the products that are exempt from CCC certification. ANSWER: Decree No.3 stipulates a few conditions where products  for self use by diplomats, carried by people 
entering China for scientific research and testing, and  for commodity exhibition are not subject to or 
are exempt from CCC certification. For details, please visit www.cnca.gov.cn. 
QUESTION: United States II 
29. In paragraph 95 of Chapter III, the report e xplains that an applicant dissatisfied with a 
decision made by an accredited certification body (A CB) with regard to CCC certification may either 
request administrative reconsideration by the ACB or  the CNCA and may also take an appeal to a 
court.  The report notes that no statistics were available on these administrative reconsiderations, appeals or their outcomes. 
a. Please identify the laws, regulations or  other measures that govern administrative 
reconsiderations and appeals in this area. 
ANSWER: 
Rules of Administration of Compulsory Certification Products  and Rules for Handling Appeals and 
Complaints of Certification and Accreditation . 
QUESTION: 
b. In the interest of increased transparency , would China consider collecting and making 
available statistics on disputes in this area, includi ng the outcomes of administrative reconsiderations 
and appeals? 
ANSWER: 
Up until now, all complaints ha ve been addressed by the certification bodies. CNCA has not received 
any complaints or appeals concerning the certificat ion results provided by designated certification 
bodies. There has not been any judicial case, eith er. China will consider the suggestion from Canada. WT/TPR/M/161/Add.1 
Page 220  
 
QUESTION: 
Switzerland I 
I. Trade Policies and practices by Measure 
(2) Measures directly affecting imports (ix) standards and other technical requirements – (c) product certification 
General remark: The Swiss industry manifests some serious  problems with the China Compulsory 
Certification (CCC) mark. The problems concern espec ially in the complex import procedures like the 
burdensome paperwork which causes a loss of time.  
Para 91 . Products requiring the CCC certificates and marks are listed in the First Catalogue of 
Products Subject to Compulsory Certification. There are especially many products which can be 
judged as low risk products and require anyhow th e CCC. Are there any considerations in progress 
with a view to eliminate CCC mark for low risk products?  
Para 93. Originally there were 132 products requiri ng the CCC mark. At the time being there are 
already 139 products requiring a CCC mark. Is ther e any intention to increase to include further 
products. If yes, what kind of products?  
The product has to be conform with the basic requi rements of the relevant standard for getting the 
CCC mark. How many standards for the CCC mark are based on international standards (ISO and/or 
IEC)? How many of this standards are national, sectoral or local standards?  
The manufacturers have to apply for and receive the CCC before the products can be imported or 
advertised in China. The  cumbersome process dema nds an onsite inspection at the applicant's factory 
in its home country by an accredited Chinese CCC organization at the applicant's costs every 
12 months. In our point  of view this inspection do es cause a unnecessary duplication for 
manufacturers, which are already certified under the re levant international standards. Is there any 
intention to abolish these inspections for low risk  products or to extend the periodicity of the 
inspections?  
ANSWER: 
The formulation of CCC system in China is consiste nt with the legitimate objectives set by TBT 
Agreement. 
The CCC procedure includes certifica tion application and accepting, sample testing, initial plant 
inspection, certification result assessment and appr oval, and post-certification supervision. In 
principle, the certification period shall not exceed three months. To shorten the period and lessen the 
burden of testing, the CB testing certificates and reports issued under the IECEE-CB scheme are 
recognized, and a large part of the follow-up insp ections are entrusted with the local certification 
bodies. When applying for CCC certification, the manufacturers are required to provide certain 
documents. Full and complete docum ents submitted will help to shorten the certification period. 
Changes in certification requirements are publicized  on the websites of certification and accreditation 
bodies. China is willing to cooperate with other WTO members including Switzerland in this regard 
and improve the CCC system including pr oducts list and working procedure. 
China adopts relevant international standards suitable to China. In the first list of products, electrical 
and electronic products involve 275 testing standards, of which 254 are mandatory national standards, and 89.9% of these standards are based  on international standards (IEC/ISO).  WT/TPR/M/161/Add.1 
 Page 221 
 
 
The product list subject to CCC will be adjusted in accordance with the risk  assessment standard set 
out by  
QUESTION: Japan 
(p.90-91, paragraph 91)  Q21. Concerning the CCC System:  
(1) Please provide a description or the comparative ta ble between the First Cata logue of Products and 
the HS codes that facilitate the procedures of th e certification and customs clearance in China. 
(2) Article 13 of the Regulations of the People’s Republic of China on Certification and Accreditation 
allows only Chinese certification bodies to engage  in CCC certification activities. This is not 
consistent with China’s commitment in Paragra ph 195 of the Report of the Working Party on the 
accession of China.  Please provide any plans by  China to accredit foreign conformity assessment 
bodies (CABs). 
(3) We recognize that there is a transitional pe riod for the goods conformed with the existing 
standards when GB standards subject to the CCC system are newly developed or amended.  Please 
indicate the time period of the transitional period  and also provide evidence stipulating such a 
transitional period. 
ANSWER: 
(1) To facilitate certification and application for inspection, China has already worked out a 
catalogue of CCC products and corresponding HS cod es. For details, please visit www.cnca.gov.cn 
for No. 60 Decree in 2002. 
(2) The Chinese government attaches high importan ce to fulfilling its WTO commitments. According 
to relevant laws and regulations of China,  only domestic conformity assessment bodies can be 
designated to undertake relevant CCC work. With foreign conformity assessment bodies, certification 
work shall be done through mutual agreements between governments or multilateral agreements 
recognized by the Chinese Government. Actually, CABs  of some WTO members, including those of 
Japan, have already undertaken the certification in China. 
(3) The standards for certification in CCC are em bodied in specific certification implementation 
rules. If the standards referred to in the rules onl y note the standard code without year number, it 
means that the certification in CCC shall be done a ccording to the latest version of the standard. 
Otherwise, the specific standard of  the year applies. If, after the national standards are publicized, 
CNCA deems it hard to proceed with certification w ithin the transit period given by the standards 
themselves based on feedback from various par ties, CNCA shall set another transit period. 
QUESTION: 
Malaysia  
4. Could China explain in detail its Compulso ry Product Certification System (CCC) Mark 
Requirement?  What does this entail a nd what are the costs involved?   WT/TPR/M/161/Add.1 
Page 222  
 
ANSWER: 
The procedure, requirements and fees of CCC system have been publicized as public documents on 
the websites of CNCA and relevant certification or  accreditation bodies. The scope subject to 
compulsory certification is determined on the basi s of international practice and China’s specific 
situation in consistency to WTO principles. 
The compulsory certification pro cedure involves certification applic ation and accepting, sample 
testing, initial plant inspection, certification result assessment and approval, and post-certification 
supervision. In principle, the pro cessing period shall not exceed three months. 
QUESTION: EC 
Para. 91. The EC have on many occasions and in ma ny fora raised concerns about the CCC system.  
- The EC would like to know if there are any plans to reduce the number of products which 
falls under the system. China should treat products differently depending on a risk assessment. Less 
strict procedures should be applied for products which are of low risk to the consumers.  
- Para 92. what is the determining factor whether a product is subject to the CCC system or 
not? The number of products falling under th is system is unfortunately increasing.  
- Para 93. Are the labouratory results by the ACB made available in full to the 
manufacturer/importer? What are the charges for the testing? Are labouratory results kept on file in 
case of retesting, to simplify procedures?  
ANSWER: 
CCC products list of China is formulated on the basis  of a legitimate objective in consistency with 
TBT Agreement, through thorough discussion and risk analysis, and under the condition of present 
production and quality level of the domestic market  in China. These legitimate objectives and product 
quality level in the domestic market are the deci sive factors for the application of CCC system. Up 
until now, no products have been found necessary to  be removed from the list due to low risk. 
Certification applicants may request for testing repor ts from the lab when they apply for certification. 
The test result will be recorded, and in the case where the product fails the test, modification and 
retesting is required. The charge rates for testing fees are publicly available. 
QUESTION: Chile 
3. En el párrafo 91 del informe se indica que  los productos que requieran certificación “CCC” 
(Certificación Obligatoria para China) están enumer ados en el Primer Catálogo de Productos Sujetos a 
Certificación Obligatoria. ¿Puede China señalar m ás detalladamente los procedimientos requeridos  
para agregar productos a esta lista , ya que por ejemplo en la pá gina mencionada en el anexo 
(http://www.ccc-mark.com/china-compulsory-certifica tion.html) se establece que los productos que 
requieren dicha certificación corresponden a los de l original “Primer Catálogo” más el catálogo 
adicional de productos de decoración / remode lación doméstica y el catálogo de productos de 
protección de la seguridad  anunciado por la CNCA?  WT/TPR/M/161/Add.1 
 Page 223 
 
 
4. China procederá en el 2005 a un examen exhausti vo  de su sistema de certificación obligatoria, 
CCC. ¿Podrían señalar los principales objetivos  de ese examen? 
7.  En el párrafo 93 del informe se indica que lo s Organismos de Certific ación acreditados con el 
objeto de velar por el cumplimiento de las nor mas, realizarán cada 12 meses inspecciones de 
seguimiento de las instalaciones de producción de  las industrias manufactureras. ¿Esta inspección se 
realizará solamente en China? ¿E sta inspección implica algún beneficio en términos de la facilitación 
del ingreso de las mercancías? 
ANSWER: 
CNCA’s website is www.cnca.gov.cn, instead of www.ccc-mark.com. For products listed under CCC, CNCA shall, upon expir ation of the transit period,  request local 
CIQs to inspect products listed, to ensure those pro ducts in the list without certification are not for 
sales, imported or used in other business operations . At the same time, to guide local CIQs in 
inspection, CNCA provides advice and set re quirements on local CIQ’s inspection.  
In order to shorten the period and lessen the burden during the process of certification, the CB testing 
certificates and reports issued under IECEE-CB sche me are recognized, and the local certification 
bodies are entrusted to undertake a large part of the follow-up inspections . 
QUESTION: ChineseTaipei 
(ix) Standards and other technical requirements 
(c) Product certification 
(page 91, paragraph 93) 
There are 11 authorized accredited certification bodies (ACBs) and 124 accredited testing 
labouratories (ATLs) in China for processing app lications and testing for the CCC Mark.   
i) Does China approve any ACBs or ATLs that are located in the territories of other Members?  
If ‘yes’, please provide a list of the foreign ACBs or ATLs approved by China and information on 
how a certification body or testing labouratory can become an ACB or ATL (with related regulations 
or procedures). 
ii) If the answer is ‘no’, by when does China pl an to permit the participation of conformity 
assessment bodies located in other Members in the CCC Mark system, as specified in Article 6.4 of 
the TBT Agreement? 
ANSWER: 
For CCC certification, through bilateral or multila teral agreements signed or recognized by China 
and other WTO Members, arrangement of mutual recogn ition of conformity assessment results can be 
promoted. WT/TPR/M/161/Add.1 
Page 224  
 
QUESTION: 
Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 93 : 
7. Does China have any plans to enter into bilateral agreemen ts with foreign conformity 
assessment bodies (CABs) to authorize applicati on of the CCC mark in the export economy, or 
alternatively designate foreign CABs to test and certify to China’s regulatory requirements in accordance with the TBT Agreement? 
8. Does China accept foreign tests produced under the Worldwide System for Conformity 
Testing and Certification of Electrical Equipmen t CB Scheme to meet safety requirements for 
imported electrical products?  
9. Could China explain its participation in both the International Accreditation Forum 
and International Labouratory A ccreditation Cooperation Mutual Recognition Arrangements and 
indicate whether it accepts conformity assessment results based on participation in 
these Arrangements? 
ANSWER: 
To facilitate international trade, CNCA should partic ipate actively in international MRAs according 
to the Regulation of Certification and Accred itation. At present CCC recognizes the CB testing 
certificates and testing reports issued by an IECEE- CB member organization. If the foreign CB test 
report is based on a product standar d identical to Chinese standard, no further testing is required. 
For products where standard is different, testing is only required for supplementary items. In addition 
to participating in multilateral IECEE-CB mutual recognition, China also conducts cooperation in 
testing and plant inspection through mutual cooperative agreements between governments and 
certification bodies, so as to lessen the burden on enterprises and facilitate international trade. 
As official members of IAF and ILAC, CNAB and CNAL actively participate in international mutual 
recognition of certification results, such as the th ird-party certification and lab accreditation, and 
signed IAF—MLA and ILAC—MRA respec tively. As the only accreditation body in China, the newly 
established CNAS (established by combining CNAB and CNAL) will participate in activities of IAF 
and ILAC with the aim to promote mutual recognition of certification results.  
QUESTION: Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 95: 
We note that decisions taken by any accredited certifi cation body (ACB) can be appealed either to the 
ACB or the Certification and Accreditation Administ ration or to a court.  Can China please explain in 
detail each of these appeal options, including an y significant differences in the approaches?  WT/TPR/M/161/Add.1 
 Page 225 
 
 
ANSWER: 
In China, administrative review and judicial revi ew comply with relevant law and regulations. The 
interested party appeals to a certification body to  request examination and the reconsideration of 
certification result. In the case that the interested  party deems the certification body’s act seriously 
infringes its legal rights and interests, it can file a complaint to CNCA as an administrative and supervising authority of the certification body. Wherea s a lawsuit filed to the court is a judicial 
remedy for the interested party. 
STANDARDS QUESTION: United States I 
18. Paragraph 87 of Chapter III of  the report explains that one of the main functions of the 
Standardization Administration of China (SAC) is to  formulate and develop st rategies for standards.  
Please describe SAC’s current standards strategies.  
ANSWER: 
China takes every efforts to create a scientific and effective standardization administration system and 
modernized national standardization system. The key focus is to strengthen the standardization 
systems in terms of agricultural products; food and consumer products safety ; public safety; energy 
saving and environmental protection; high and new technology; service sector; and to accelerate the 
updating and improving of standardiza tion in the traditional fields. 
QUESTION: United States I 
19. Paragraph 89 of Chapter III of the report d escribes the process for deve loping standards in 
China. Can China provide a description of the st andards development process in a typical case, 
including the duration of each stage in that pro cess and the overall time for completing the process?  
Please also describe any opportunities for partic ipation by foreigners in this process. 
Japan 
(p.89, paragraph 88)  Q19. Concerning the openness and transparency  of standardization works in China: 
(3) To what extent is it envisioned that interest ed parties from other WTO Members will be able to 
participate in the standards-setting process in China? 
ANSWER: 
China’s national standard development process involves nine stages: preparation, project launching 
(three months), drafting (ten months), comments solic itation (five months), examination (five months), 
ratification (eight months), publication (three mont hs), review (sixty mont hs), and abolishment. 
All types of enterprises registered in China c an propose comments on recommended state standards 
in the project launching and comments solicitati on stages. And the state encourages overseas WT/TPR/M/161/Add.1 
Page 226  
 
enterprises and experts to participate in formul ation and revision of standards by becoming members 
of the technical committees. 
QUESTION: 
Canada II Report by the Secretariat (WT/TPR/S/161) 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 87:  
6. It is noted that 44.2% of na tional standards are to be revised.  Can China please confirm that those 
revised standards which will have an impact on inte rnational trade will be notified to the appropriate 
WTO Committees? 
United States II 
26. Paragraph 90 of Chapte r III of the report explains that China began a process of examining all 
existing 21,000 national standards in April 2004 to ch eck their relevance to market requirements and 
their alignment with international standards.  According to the authorities, as a result of this 
examination, 44.2 percent of national standards ar e still applicable, while 44.2 percent are to be 
revised, and the remaining 11.6 percent ha ve been or are to be abolished.  
a. Please explain China’s plans for revising the 44.2  percent of national standards found to be in 
need of revision.  What progress has China made to date?  When does China anticipate completing 
that task?  Have any of the revisions made to date resulted in notifications to the Committee on 
Technical Barriers to Trade? 
ANSWER: 
After the examination of national st andards, China plans to revise th e 44.2% of national standards in 
three years and will make relevant notificati on according to the TBT Agreement. 
QUESTION: 
United States II 
26. Paragraph 90 of Chapte r III of the report explains that China began a process of examining all 
existing 21,000 national standards in April 2004 to ch eck their relevance to market requirements and 
their alignment with international standards.  According to the authorities, as a result of this 
examination, 44.2 percent of national standards ar e still applicable, while 44.2 percent are to be 
revised, and the remaining 11.6 percent ha ve been or are to be abolished.  
b. Please explain China’s progress in abolishing the 11.6 percent of national standards targeted 
for being abolished.  When does Ch ina anticipate completing that task? 
ANSWER: 
After China completes the examination of national standards, 2513 compulsory standards are 
abolished, of which 1416 were im mediately annulled on Oct. 14
th 2005, and 1097 are to be abolished 
one year after the new standards are formulated.  WT/TPR/M/161/Add.1 
 Page 227 
 
 
QUESTION: 
Japan 
(p.89, paragraph 88)  
Q19. Concerning the openness and transparency  of standardization works in China: 
(1) Please provide detailed information on China’s sta ndards-setting process, in particular the steps to 
implement the important principles of openness and transparency and to allow meaningful 
participation by interested parties. 
ANSWER: 
The procedure of developing national standards is basically the same as developing international 
standards. To ensure openness and transparency in st andards formulation, online application is 
applied in national standards formulation. Any organization or individual can make national standard proposals, and online management is adopted  in national standards formulation. Comments 
from all areas of society are considered during th e launching of standard project, and while drafting 
standards, comments are solicited as widely as possible. 
QUESTION: 
Japan (p.89-90, paragraphs 86-90)  
Japan hopes China to speed up its process to harmonize with international standards.  
Q20. Please provide detailed information on China’s policy and any plans to review all existing four 
kinds of domestic standards to harmoni ze with international standards.  
Canada I 
Part III. Trade Policies and practices by measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 90: 
36. How is the Standard Administration of Ch ina intending to align Chinese standards to 
international standards? 
Canada II 
Report by the Secretariat (WT/TPR/S/161) 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 87: 
5. It is noted that that there is no data on the per centage of sectoral, local or enterprise standards which 
are equivalent to international standards.  China h as indicated that the SAC, relevant sectoral and local 
standardizing bodies are to review all standards that ar e at least five years old with a view to revising 
them in line with international standards or  simply adopting the relevant international WT/TPR/M/161/Add.1 
Page 228  
 
standards. Given the large number of standard s in these categories, can China provide more 
information as to how this effort is proceeding?  
ANSWER: 
To further implement TBT Agreement and improve ha rmonization between national and international 
standards, China cleared the current national standards from 2004 to September 2005. After 
clearance, 2513 standards were abolished, accountin g for 11.6% of total standards; 9526 standards 
continue to be effective, accounting for 44.2%; 9536 standards continue to be used but needing 
immediate revision, accounting for 44.2%. With abolition and the revision of 9536 national standards 
in the coming three years, harmonization between national and internationa l standards shall be 
improved significantly. 
It is in the interest of China to adopt as m any international standards as possible while taking 
China’s practical situation into consideration. Adopting international standards is a significant 
technological and economic strategy of China whic h is of great significance in steering the adoption 
of international standards in national, sector, lo cal and enterprise standards. China will continue to 
speed up the process of adopting international st andards and push forward the implementation of 
international standards adoption strategy. 
QUESTION: Canada I 
Part III.  Trade Policies and Practices by  Measure, (1) Introduction, paragraph 4: 
17、 Given the dramatic changes in China since 2000  and the commitment to adopt international 
standards, why has the percentage of national sta ndards equivalent to international standards not 
changed? 
ANSWER: 
In fact, the number of international standards ado pted by China as national standards has increased 
rapidly in recent years. In 2005, the adoption rate  reached over 45%. As the number of national 
standards is increasing rapidly, the rise of ad option rate does not a ppear as significant.  
QUESTION: 
Canada I Part III. Trade Policies and practices by measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 88: 
34． How are inconsistencies between enterprise standards and national, sectoral, and local 
standards resolved?  
ANSWER: 
The implementation of the Standardization Law eliminates the inconsistencies between these 
standards.  WT/TPR/M/161/Add.1 
 Page 229 
 
 
QUESTION: 
Canada I 
35、 Are enterprise standards utilized in place of lo cal, sectoral, and national standards where these 
latter do not exist or are incomplete?  
ANSWER: Yes. QUESTION: Malaysia:  
b) Instead of complying with the existing intern ational standards, China is pursuing to set its 
own national standards on products such as IT pr oducts, telecommunications  equipments, and audio 
and video products.  Why are these national st andards necessary when  there are already 
internationally accepted standards in place?  
ANSWER: 
When developing national standards, China pays full a ttention to the content of current international 
standards and the consistency of the national standar ds to the international standards. However, as 
China enjoys its own advanced technologies in IT, telecom and video/audio industries, developing national standards helps to improve the application of these technologies worldwide. 
QUESTION: 
EC 
S
TANDARDS AND OTHER TECHNICAL REQUIREMENTS  
(b) Standards and technical requirements Referring to page 90 and onwards in the WTO Secretariat’s Report. 
Para 90. Since year 2000 the ratio of standards based on international standards are not increasing (see 
Table III.4). This is very disappointing especially as the number of standards overall are increasing. This could in the worst case be interpreted  as access to the Chinese market becoming increasingly 
dependent on the conformance to Chinese national standards, which would be  against the trend in 
many other countries. It is positive to see that the numbers of national standards are to be reduced in 
the future.  
- We would like to be regularly informed  about the screening process to reduce national 
standards. Furthermore, we would like to be in formed if China has information ready on which 
standards will be aligned with  international standards.  
- The EC has seen on several occasions that Chin a has adopted standards based on international 
standards but with some differences that create di fficulties for importers in complying. China should 
make such changes only when they are essential to fulfill a legitimate objective.  
- Could China confirm if products in the ICT s ector are included in the exercise of reducing 
national standards and replacing them with internati onal standards and give de tails on this. Are there WT/TPR/M/161/Add.1 
Page 230  
 
any plans in China to introduce a simpler procedur e for declaration of conformity e.g. Supplier 
Declaration of Conformity? 
ANSWER: 
In fact, the number of internationals standards adopted by China has increased rapidly in recent 
years. In 2005, 3352 standards have been develope d by adopting or modifying the existing 
international standards (ISO, IEC, ITU) With the annual adoption rate of o ver 45%. However as the 
number of national standards is increasing rapidly, the rise of adoption rate does not appear as 
significant. In adopting international standards, all nati ons and regions will have to take into account 
the practical situation of their countries. Where th ere is inconsistency with international standards, 
China will make notification to the WTO if the proposed standard may have a significant effect on 
trade of other Members. When developing nat ional standards in IT, telecom and video/audio 
industries, China pays full attention to the c ontent of current international standards and the 
consistency of the national standards to the inter national standards As for the progress in clearing 
China’s national and sector standards, we will provid e updated information pr omptly on the website 
of SAC: www.sac.gov.cn.  
Currently in CCC system, China has no plan to intr oduce SDoC as method of conformity assessment 
QUESTION: Chile 
2. En el párrafo 90 del informe se señala que del número de  normas nacionales hay 
13.000 normas locales y 1,32 millones de normas empr esariales, pero que no se indica que proporción 
de ellas son obligatorias. ¿En el evento de existir  normas obligatorias, puede aclarar los casos y la 
justificación para la  aplicación de normas técnicas obligatorias  “locales” y “empresariales”? 
ANSWER: 
About 14.6% of national standards are compulsory . Local standards are compulsory in the local 
regions. Enterprise standards are established by the enterprise and applicable only in that enterprise. 
For details, please visit www.sac.gov.cn or consult the TBT national enquiry point. 
QUESTION: ChineseTaipei: 
(vi) Trading rights 
(page 81, paragraph 61)  (3) China’s “New National Standards on Classificati on of Retail Industries”, issued jointly by the 
Standardization Administration of China and the Gene ral Administration of Quality Supervision, took 
effect in October 2004.  
Do these standards apply equally to both foreign-in vested and domestic enterprises, and thus conform 
to national treatment principles?  
ANSWER: 
Yes, these standards, voluntary in nature, equally  apply to all enterpri ses registered in China.   WT/TPR/M/161/Add.1 
 Page 231 
 
 
QUESTION: 
EC 
Automotive regulations in China are national a nd not consistent with those of the UNECE 1958 
Agreement concerning Uniform Technical Prescriptions and WP.29. A Chinese standard may be a 
mix of a UNECE Regulation and a National Standard . The adoption of "mixed standards" makes it 
difficult for importers to meet that unique mix of requirements.  
Does China have any plans to adopt and accept UNECE Regulations without changes unique to 
China?  
ANSWER: 
China has been actively supporting the harmonization of the international technical regulations and 
Chinese Government has always attach ed great importance to the facilita tion of interna tional trade of 
auto products and would carry out positive studies on these matters;  China would consider its 
membership of this agreement at an appropriate future time. 
QUESTION: EC 
Para 132: Under the "Regulation of Certification a nd Accreditation" and "Regulation of Certification 
for Automotive Products", automotive products must  obtain a China Compulsory Certificate (CCC) 
mark and are subject to random inspection at the bord er.  Each vehicle will then be issued with an 
"Inspection and Quarantine Certificate for Enteri ng Commodities" and a "Car Attaching Inspection 
Certificate";  With reference to our earlier ge neral comments and questions on the CCC system,  
1．Do the Chinese authorities intend to facilitate the homologation process?  
2．Provided that there are a limited number of Chinese certification enterprises, do the Chinese 
authorities intend to enlarge the number a nd nationality of certifying enterprises?  
ANSWER: 
According to relevant laws and regulations, for pr oducts covered by CCC, the inspection formalities 
on import/export shall be simplified.  For imported vehicles that ha ve acquired CCC certification, the 
border inspection authorities only conduct simple  compliance check. The import inspection and 
quarantine formalities can usually be completed within three working days. 
QUESTION: 
Canada II Report by the Secretariat (WT/TPR/S/161) 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirements, (b ) Standards and technical requirements, paragraph 
87:  
1. Can China please provide information which better explains how the Standardization 
Administration of China (SAC) implements its main  responsibilities, in particular, the formulation WT/TPR/M/161/Add.1 
Page 232  
 
and implementation of laws and re gulations, and policies and developm ent strategies for standards, as 
well as in what ways it manages and guides scientific  research and its main priorities in this area? 
ANSWER: 
Standardization Administration of China (SAC) is the agency empowered by the State Council to 
administer standardization at the central government level. It’s entitled to provide technical support 
for legislation of relevant laws and to d evelop and enforce policies and measures relating to 
standards. 
SAC is responsible for publiciz ing standardization development st rategy and plan, organizing the 
application of and approving scientific research projects. 
Prioritized fields for scientific res earch include: research on relevan cy with international standards; 
research on standards in high-tech industry of advan ced features and with independent intellectual 
property right and potential to evolve into indu strialization; research on testing standards of 
technical trade barriers; research on standards for public safety technology; and research on 
standards for infrastructure and public interest. 
QUESTION:  
Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirements, (b ) Standards and technical requirements, paragraph 
88:  
2. Does China have plans to modernize its standard s infrastructure in line with that of other 
trading economies, including replacing mandatory st andards with voluntary standards, which may 
then be referenced in technical regulations, in k eeping with the preparation, adoption and application 
of standards consistent with Anne x 3 of the WTO TBT Agreement?  
ANSWER: 
In China, mandatory standard is one of the major forms of technical regulations of TBT Agreement. 
There is no plan now to abolish mandatory standards. As for improving stan dards infrastructure, 
China actively participates in activities of relevant  international standards organizations, adopts 
international standards, attaches high importance to strengthening communication with other WTO 
members, learns from good experience of ot her members, and keeps improving China’s standards 
infrastructure. 
QUESTION: Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirement s, (b) Standards and technical requirements, 
paragraph 88: 
3. Can China please advise the process(es) and crite ria utilized in order to determine whether a 
national standard is equivalent to an international standard?   WT/TPR/M/161/Add.1 
 Page 233 
 
 
ANSWER: 
According to Provisions of Administrative Meas ure of Adopting International Standards, China’s 
adoption of international standards can be class ified as identical and modified. Identical adoption 
means the standards are identical to international st andards in technical content and textual structure 
or, identical to international standards in techni cal content with only slight editing modification. 
Modified adoption means there is technical diff erence with international standards, with the 
difference specified and reason accounted for, a llowing for editing modification. Modified adoption 
does not involve the situation where only a few or uni mportant articles in international standards are 
included. In modified adoption, China’s standards shall be corresponding to international standards 
in textual structure, and textual structure change is  allowed only when the change does not affect the 
comparison between China’s and international standards. 
There are also national standards which are non- equivalent to international standards. Non-
equivalency refers to only a correspondence to interna tional standards. Detailed methods for marking 
shall follow the Standardization Working Guidelines   Section 2: Rules of Adopting International 
Standards (GB/T 20000.2). Procedures of developi ng standards shall follow Guiding Principles for 
Standardization work   Section 1: The Structure and Compiling rules of Standards (GB/T1.1). Both of 
the above mentioned rules correspond w ith ISO/IEC guiding principles. 
QUESTION:  
Canada II 
Part III. Trade Policies and Practices by Measu re, (2) Measures Directly Affecting Imports, 
(ix) Standards and other technical requirements, (b ) Standards and technical requirements, paragraph 
90: 
4. Canada notes that reliance on a wide range of non-conventiona l standards, including local 
standards and enterprise standards has the potential for creating trade barriers. The growth in the 
number of enterprise standards is particularly tro ubling. Could China explain how these standards are 
developed and implemented and to what extent  they adhere to TBT principles, including 
transparency?  
ANSWER: 
According to relevant Chinese laws, local standards  can be formulated where there is no national or 
sector standards but there is need to have the un ified requirements in provinces, autonomous regions 
or municipalities directly under central administrat ion as following: safety and health requirements 
for industrial products; stipulated requirements reg arding medicines, veterinarian medicines, food 
hygiene, environmental protection, energy conserva tion, and seeds by relevant laws and regulations ; 
and other requirements by laws and regulations. 
Enterprise standards are categorized : (1) Standards  developed when there is no national, sector or 
local standards; (2) Standards higher than national,  sector or local standard, to improve product 
quality and promote technical progress; (3) Optiona l or supplementary standards for national and 
sector standards; (4) Standards for techniques, fr ock, semi-products and methods; (5) Management 
and working standards in production and business opera tion. Enterprises standards only apply to 
individual enterprises and not binding to the oth ers, and will not constitute barriers to international 
trade. 
The above standards must be filed with SAC for records. SAC will exami ne whether there is 
inconsistency with national or sector standards and with international obligations, and will 
coordinate relevant parties to make corrections. WT/TPR/M/161/Add.1 
Page 234  
 
(x)  Government procurement 
QUESTION: United States I 
21. Paragraph 105 of Chapter III of the report st ates that, according to the Chinese authorities, 
government procurement accounted for approximately  RMB 165.94 billion in 2003.  Does this figure 
include procurement by sub-central government entiti es, which, according to the report, play a major 
role in government procurement in China?  If no t, please provide the figure for procurement by sub-
central government entities.  
22. Paragraph 106 of Chapter III of the report discusses the large number of provincial and local 
government entities engaged in procurement, desc ribing their procurement as several times the 
magnitude of procurement at the central governme nt level for goods, construction and engineering 
services, and other services.  Has China been able to implement its Government Procurement Law across all of these levels of government?  If not, please explain. 
Turkey 
WT/TPR/S/161 (page 60, para 5)  III. TRADE POLICIES AND PRACTICES BY MEASURE (1) INTRODUCTION 
It is noted in the Secretariat Report that Chin a’s Law on Government Procurement does not include 
purchasing  by state-owned enterprises since accord ing to the report, SOE’s operate under market 
rules. 
Could Chinese delegation clarify on this issue? 
EC 
Para 109 states that China's new Government Procurement Law does not  cover state-owned 
enterprises (SOEs), even when they may be performing non-commercial or quasi-governmental 
functions. 
- Does China apply the new Law principles of  openness, transparency, fair competition, 
impartiality, and good faith to SOEs? If yes, can Ch ina provide the legal text which enshrines these 
principles. If not, when does China intend to do so? 
- Para 112 : Can China indicate the thresholds applicable to sub central entities ? 
Para 109 . According to this paragraph, the law of 2003 covers procurement at all level. Would this 
mean that the laws of 1999 and 2003 also apply to the sub-territorial levels and that no specific legal 
or regulatory framework is foreseen in China for th e government procurements made by the procuring 
entities of the provinces and municipalities? 
ANSWER: The Government Procurement Law of China is applic able to government agencies at all levels. Local 
government procurement is include d in the national government proc urement value publicized by the 
central government.  WT/TPR/M/161/Add.1 
 Page 235 
 
 
QUESTION: 
EC 
- Paras 108/109:  Could China explain the respective scope  of application between the law on 
government procurement (2003) and the law on bi d invitation and tendering of 1996? Is there a 
definition of government procurement in the law? 
Switzerland 
Para 108. In the light of this paragraph, we understa nd that China's new Government Procurement 
Law - which came into force on 1 January 2003 - is intended to complement the Law on Bid 
Invitation and Bidding or Tendering adopted in 1999, the latter dealing with bidding procedures in the 
public and private sectors. In terms of implementati on, there is of course an interaction between the 
substantive standards and the procedural standards.  Would it be possible to the Government of China 
to inform about the main objectives of the two la ws and about the main differences between the two 
laws? 
ANSWER: 
The Government Procurement Law of China is applic able to government agencies at all levels. Please 
refer to Article 2 of the Government Procurement Law for the definition of government procurement. 
The Law on Bid Invitation and Tendering is in prin ciple applicable to bid invitation and tendering 
behaviours within the territory of the People’s Republic of China, but is compulsorily applicable to construction engineering works, including both gov ernment procurement engineering works and non-
government procurement engineering works. As is clea rly stipulated in Article 4 of the Government 
Procurement Law, where government procuremen t engineering works takes the form of public 
bidding, the Law on Bid Invitation and Tendering shall prevail. For government procurement 
engineering works that meet the bid invitation limit of  the state council, the Law on Bid Invitation and 
Tendering shall only prevail when the form of pub lic bidding is selected. Except for that, the 
Government Procurement Law shall prevail if there is any stipulation on that kind of procurement. 
Where public bidding is adopted for the procuremen t of goods and services by the government, the 
Government Procurement Law and the Administrati ve Measures on Tenders and Bids for Government 
Procured Goods and Services shall prevail. The Administ rative Measures is not inconsistent with the 
Law on Bid Invitation and Tendering. 
The Law on Bid Invitation and Tendering and the Government Procurement Law are applicable to 
government agencies at all levels. 
QUESTION: 
Switzerland I Paras 111 and 114 . The report informs in paragraph 111 that the Law on Government Procurement 
provides methods such as "competitive negotiation", while  this method is explained in more details in 
paragraph 114. Would it be possible to the Authoritie s of China to provide more information about the 
functioning and organization of th e method of "competitive negotiation"  and to share the experiences 
made by China through the implementation of this method? 
ANSWER: 
Where competitive negotiation is adopted for procurem ent, the procurement party shall select no less 
than three suppliers to negotiate on price, technica l specifications, design and service requirements of WT/TPR/M/161/Add.1 
Page 236  
 
the procurement, and determine the conclusive s upplier under the principle that the procurement 
requirements and lowest offer are met. 
Article 38 where the form of competitive negotiati on is adopted for procurement, the following 
procedure should be observed: 
(1) Formation of a negotiation team. The team s hall comprise more than three members in odd 
number who are representatives and relevant experts of the procurement party, among them experts 
should account for no less than two-thirds  of the total number of is members. 
(2) Preparation of negotiation documents. These documents shall definitely specify the 
procurement and contents of negotiation, terms and c onditions of the draft contract, the criterion for 
conclusion of transaction, etc. 
(3) Listing the names of suppliers to be invited to  negotiation. The negotiation team shall select 
no less than three suppliers from among those elig ible on the list and send them the negotiation 
document. 
(4) Negotiation. All members of the negotiation te am shall together negotiate with candidate 
suppliers respectively. During the period of negotia tion, neither party may disclose the technical 
know-how, price and other information of any other supplier. If there is any material change in the 
negotiation documents, the negotiation team shall notify in writing all the suppliers participating in 
the negotiation. 
Determination of the conclusive supplier. After co mpletion of negotiation, the negotiation team shall 
demand all participant suppliers to give a final o ffer within a given deadline, and the procurement 
party shall select from the candidates suggested by  the negotiation team and determine the conclusive 
supplier under the principle that the procurement req uirements in amount, quality, service and lowest 
offer are all met and notify the result to  all the failing participant suppliers.  
QUESTION: Japan 
Q22. Concerning government procurement: (1) It is stated on page 97, paragraph 119 of the Secr etariat Report that "China's trading partners have 
expressed concerns about the potential impact of this  policy".  Japanese industries also have concerns 
about this set of measures that the Ministries of  Finance, Information Industries, and Science and 
Technology, and the NDRC are considering. In th is regard, please indicate the schedule and possible 
contents of the measures.  
ANSWER: 
The Chinese government is asking relevant enterpri ses and experts to assess the feedback from all 
walks of society on the Draft Implementation Me asures on Government Procurement of Software. 
Authorities concerned will revise  the Measures according to th e assessment, the WTO rules and the 
international practice. Opinions will be widely solicited again for the revised draft, thus the final 
version will not be promulgated in a near future.  WT/TPR/M/161/Add.1 
 Page 237 
 
 
QUESTION: 
Korea 
Government procurement (WT/TPR/S/ 161, p.98, para.120-121)     
8.  China has tried to improve its government pr ocurement system by becoming an observer to the 
GPA since 2002 and participating in the APEC G overnment Procurement Expert Group meeting.  
- In addition, could it be possible to explain at which point the Chinese government intends to 
actually begin the negotiations to become a member country of the GPA?  
EC 
- Paras 110 and 120: does China think that 2006 is  a reasonable date for initiating negotiations 
to join the WTO Agreement on Government Procur ement, taking into account it might be a long 
process? 
Canada 
Part III. Trade Policies and practices by measu re, (2) Measures Directly Affecting Imports, 
(x) Government Procurement, (f) China’s acces sion to the WTO Agreement on Government 
Procurement, paragraph 120:  
37. When does China anticipate tabling an Appendi x 1 offer to the WTO Agreement on Government 
Procurement?  
Japan 
(ix) Government procurement 
(p.97-98, paragraphs 119-121)  Q22. Concerning government procurement: 
(2) In its Accession Protocol, China agreed to in itiate accession negotiations to the GPA “as soon as 
possible” and we understand that China has been prepar ing for that.  When does China plan to initiate 
its accession negotiations to the GPA? 
ANSWER: 
The Chinese government plans to commence formal  negotiations to join the GPA and submit its 
Appendix I GPA offer of coverage by no later than December 2007. 
QUESTION: Canada 
Part III. Trade Policies and Practices by  Measure, (1) Introduction, paragraph 5: 
18. What is the expected volume of government proc urement at the national an d sub-national level in 
2006? WT/TPR/M/161/Add.1 
Page 238  
 
ANSWER:  
It is expected that in 2006, national governme nt procurement will reach RMB 300 billion yuan. 
QUESTION: EC 
- Para 114: When limiting the number of qualifie d suppliers, does China use permanent list of 
qualified suppliers? If so on which criteria and fo r what kind of procurement? Are procurement 
covered by a list of permanent s upplier open to suppliers not on the list if the latter can prove it has 
the required qualification? 
Para 115: China is certainly aware that the requi rements to qualify can be very burdensome for 
foreign companies. 
- Must these companies provide these requirement s prior to the bidding process (ex ante) or 
only if and when they win the bid (ex post)? What kind of "other requirements stipulated by laws and administrative regulations" are there? 
ANSWER: 
The qualification requirements for suppliers stipulated  by the Government Pr ocurement Law of China 
are all basic conditions that ensure suppliers’ capab ility to fulfil contracts. Up till now, China has no 
plan of compiling a list of fixed suppliers. 
QUESTION: 
Para 117: states that "notices of intended procurem ent and other relevant information typically are 
circulated only in Chinese".  
- Are these notices of intended procurement compulsory for all tendering procedures or do they 
apply only to certain procedures, and in that case which ones?  
- To facilitate transparency, does China intend to have these notices of intended procurement 
some when translated in English?  
- Does China plan to have an English version of the official government procurement website 
(www.ccgp.gov.cn). Are there any plan to make othe r media related to government procurement, such 
as the Government Procurement Weekly and Govern ment Procurement Magazine, available online. 
ANSWER: 
At present, government procurem ent information is publicized mainly in the Chinese language. 
English version is not yet available for the China Government Procurement Website (www.ccgp.gov.cn). The on-line Chinese version of Go vernment Procurement Information Weekly is 
under construction.   WT/TPR/M/161/Add.1 
 Page 239 
 
 
(4) Measures Affecting Production and Trade 
(ii) Incentives QUESTION: United States I 
36. Paragraph 188 of Chapter III of  the report explains that expe nditure for “capital construction” 
is one of the largest direct transfers made by  the Chinese government to SOEs under China’s annual 
budget.  In a footnote, the report quotes from the China Statistical Yearbook in an attempt to explain what “capital construction” means in this context,  but the meaning is unclear.  Please clarify this 
matter. 
ANSWER:  
The usage of “capital construction”  as a translation might have caused some confusion. According to 
the China Finance Yearbook (2005) and Item of Receipts and Payments for Government Budget, the 
“capital construction” covers the non-gratuitous  use and appropriation of funds for capital 
construction, outlay of capital as well as the loans on capital construc tion approved by the 
government for special purpose or policy purpose,  and the expenditure with discount paid in an 
overall way within the amount of the funds appropriat ed to the departments for capital construction, 
so as to meet the public need in economic devel opment and public utility development. The capital 
construction includes the following items: Capita l Construction for Urban Construction; Cultural 
Capital Construction; Sports Capital Construc tion; Water Conservancy Capital Construction; 
Meteorology Capital Construction; and Capital Construction for South-to-North Water Transfer 
Project, etc. the capital construction is an item under the fiscal expenditure, but is not transfer 
payment of central government to State-owned Enterprises. Moreover, the expression in Paragraph 
188 “the capital construction……is the largest trans fer payment” is incorrect (the report used the 
word “transfers”, not “transfer payment”), these are different concepts. 
QUESTION: 
United States I 35. a. Please describe the measures used by China to encourage the use of locally produced inputs in 
exports.   
b. Does China consider any of these measures to be prohibited subsidies under Article 3 of the 
Subsidies Agreement?  If not, why?  If so, pleas e describe China’s plans for withdrawing these 
subsidies. 
ANSWER:   
The Chinese government does not have such measures to increase the p ercentage of local products in 
its exportation.  WT/TPR/M/161/Add.1 
Page 240  
 
(vii)  Competition policy 
QUESTION: United States I 
Measures Affecting Production and Trade – Competition Policy 
40. Paragraphs 251 through 253 of Chapter III of the report describe the original mandate for, and 
a May 2005 draft of, China’s Anti-Monopoly Law.  Paragraph 44 of Chapte r I and paragraphs 244 
through 246 of Chapter III explain that China l acks a modern, comprehensive competition law and 
describes China’s main challenges as developing effec tive ways (a) to address the continuing role of 
administrative and state monopolies in the economy, (b) to ensure non-discri minatory treatment of 
private enterprises versus SOEs, and (c) to ensure non-discriminatory treatment of foreign companies 
operating in China.  Paragraph 245 of Chapter III states that there is an acknowledged problem 
concerning market “blockages” attributable to local  government administrative and regulatory actions.  
The United States understands that a more recent dr aft of the Anti-Monopoly Law is now circulating 
among China’s ministries and to select domestic enterprises.    
a. Is there a difference in mean ing between the terms “administ rative monopolies” and “state 
monopolies”?  Please explain.  Please also identify any special rights or privileges that administrative 
and state monopolies enjoy.  
ANSWER: 
Administrative monopoly refers to the action of abusing administrative power by the government and 
its affiliated departments. The main body of th e administrative monopolising activities are the 
government and its affiliated departments. The means is mainly the abuse of administrative power.  
The purpose is to protect the interests of the regi on or the department, restrain competition.  The 
forms of administrative monopoly are regional bl ockade, discrimination a gainst non-local products, 
etc.  The term “administrative monopoly” is in th e English language equivalent to “state action to 
restrain or distort market competition.” Generally  speaking state monopoly can be interpreted as 
monopolised operation by the state.  
QUESTION: (3) MEASURES AFFECTING PRODUCTION AND TRADE 
(p.151, paragraph 295)  Q30. Please provide the details and current status of the amendment to the Law to Counter Unfair 
Competition.  
ANSWER: 
Progress of the amendment: 1. In the course of the amendi ng the Law to Counter Unfair 
Competition, relevant departments of the Chinese government have worked out a draft amendment to 
the Law to Counter Unfair Competition on the basis  of the materials about competition polices of 
many other countries.  They have also solicited fo r many times opinions on the amendment to the Law 
from different parties in the society.  On this basis, the present Opinion Soliciting Draft of the 
Amendment to the Law to Counter Unfair Competition is formulated following seven previous drafts.    WT/TPR/M/161/Add.1 
 Page 241 
 
 
Contents that are proposed to be amended include:  expanding the scope of the main body of the Law 
to Counter Unfair Competition; increasing the ty pes of unfair competition actions and competition 
restraining actions; improving operab ility by specifying and improvi ng provisions concerning unfair 
competition actions in the current law; strengthening  administrative enforcement, improving the legal 
responsibility system, and so on.  
QUESTION: 
Australia  
Legislative Reforms 
22． When does China expect that its draft Comp etition Policy Law and draft Telecommunications 
Law will be promulgated? 
ANSWER:  
Both the Anti-Monopoly Law and the Telecommunica tions Law have been put on the legislation 
agenda of the Standing Committee of the NPC for 2006.  The reviews of these two draft laws are 
proposed to start in August 2006. Currently relevant  department of the State Council is drafting the 
law which will be submitted according to the Chinese legislation procedure to the Standing 
Committee of the NPC for review. China will proceed with the legislation of the Telecommunications 
Law strictly in accordance with relevant stipulations of the Legislation Law and other laws and regulations.  
QUESTION: Brazil 
Competition Policy 
WT/TPR/S/161 III (4) vii (d)(e) In paragraph 253, on page 141, the Secretariat’s report says that ”comments on the draft of the new 
Anti-monopoly Law have emphasized the desirability of benefiting from other countries’ experience.” 
In the following paragraph, the report mentions the agreement to establish the China-Europe Dialogue 
on Competition. In which aspects of anti-trust regula tions is China taking into account the experience 
of other countries in terms of setting up its own competition policy? 
ANSWER: 
The drafting process of Anti Monopoly Law of China fully reflected the principle of transparency, 
non-discrimination and fairness. In the drafting, MOFC OM, the Legislative Affairs Office of the State 
Council and other departments held many seminar s with anti-monopoly law enforcement officials, 
experts on anti-monopoly laws from the U.S., the E.U. and Japan, and domestic and foreign 
enterprises. On those occasions, relevant issues relating to China’s anti-monopoly legal regime were 
discussed, and opinions from foreign experts were taken to the largest possible extent.  
QUESTION: EC 
WTO Secretariat’s Report, page 139 onward, paras 243-246 recommend inter alia that in 
implementing the upcoming Anti-monopoly law it will be important that China addresses the WT/TPR/M/161/Add.1 
Page 242  
 
challenges posed by administrative and state monopo lies. The report finds that China’s economy is 
characterized by extensive administrative and state monopolies.  
- Please describe how China would intend to address the competition problems arising from 
administrative and state monopolies. Will these i ssues be dealt with in the new Anti-monopoly law 
and its implementation and/or in other legi slation and how these issues will be addressed? 
- Please describe also what measures China intends  to take in order to ensure that laws, 
regulations, interim provision and rules set both at the state and local level do not eliminate or restrict 
competition. 
ANSWER:  
The Anti Unfair Competition Law of the People’s Re public of China which took into effect since 
December 1, 1993, is a combining legislation re gulating both unfair competition and competition 
restrictive behaviours. Besides, ot her economic laws and regulations su ch as the Price Law, the Law 
on Bid Invitation and Tendering and Regulation on Telecommunications also stipulate the 
prohibitions on unfair competition. 
China has set up a preliminary legal regime of anti-unfair competition, based on the Anti-Unfair 
Competition Law, and supported by relevant adm inistrative and local regulations, which has 
effectively solved some practic al problems in law enforcement. 
Besides, the Chinese government has also issued 70 administrative interpretations on law application 
problems faced by industrial and commercial adm inistrative authorities in anti-unfair competition 
law enforcement. 
QUESTION: 
EC The WTO Secretariat’s Report mentions in Para 252 that the principal purpose of the new Anti-
monopoly law is to “prohibit monopolistic conduct”. The re port adds that Article I of the law refers to 
the objective of “ensuring the healthy development of the socialist market economy”. The report does 
not, however, mention that the new Anti-monopoly law al so contains a so called public interest test; 
Article I of the law explicitly states that the purpose of the law is to protect public interests. In the 
context of merger review provisions, the new law al so includes under Article 26 the following factor 
to be taken into account in the decision whether to  approve a concentration: “the effect of the 
proposed concentration on the development of the national economy and public interest”. 
- Please describe what is meant with the public in terest in the context of the Anti-monopoly law 
and how China intends to apply the public interest test . How the public interest test is intended to be 
applied in particular in the context of merger review? 
- How does the public interest test work toge ther with the generally conceived aim of 
competition policy, which is economic efficiency and consumer benefit? 
ANSWER: 
As for public interest mentioned in the draft of Anti-Monopoly Law, specific stipulations could be 
found in the future implementation regulation, rules and guidelines.   WT/TPR/M/161/Add.1 
 Page 243 
 
 
Corporate governance 
QUESTION: United States I 
Measures Affecting Production and Trade – Corporate Governance 
41. Paragraph 271 of Chapter III of the report states that China is attempting to bring its 
accounting system into line with international sta ndards, but it is not clear what the remaining 
differences are between China’s accounting system and international standards.  Please describe the 
remaining differences between the two systems a nd explain China’s plans for eliminating these 
differences. 
ANSWER: 
The Chinese Ministry of Finance promulgated the new Accounting Standards for Business Enterprises 
on Feb 15 2006, which includes one basic standar d and 38 specific standards, and will enter into 
effect as of Jan 1, 2007 for listed companies. The Chinese standard differs fr om the international 
standard only in the aspects of related parties di sclosure and reversing of assets impairment. Chinese 
government made a lot of efforts to narrow thes e differences, such as having held a series of 
dialogues and meetings with the International Financial Reporting Council in 2005, with the aim to 
improve communication and harmonize with international standards 
(ix) Intellectual property rights  Patents  QUESTION: EC 
In the report made by the PRC (WT/TP/G/161), the Chinese government stresses its will to 
“encourage and guide foreign investments in high technology…” and indicates that it will “continue 
its efforts to attract multinational enterprises to  move the manufacturing process of high technology 
and high value-added pro ducts and their research and developm ent to China” (point 23). The EC 
believe that a good level of IP protection, includi ng patents and know-how, is essential to fulfil this 
objective. This includes fair behaviour of Chin ese companies in technology related fields and no 
interference from the government in negotiations be tween stakeholders on the exploitation of these IP 
rights.  
- How do the Chinese authorities intend to ensu re that Chinese companies can freely and in 
good faith enter into negotiation with European patent  holders of technologies that are used in China 
in the framework of open standards, in order for the latter to collect royalties for the use of these 
technologies? 
ANSWER: 
Article 11 of Patent Law requires no entity or in dividual may, without the authorization of the 
patentee, exploit the patent. Article 10 of Law agai nst Unfair Competition prohibits using know-how 
without the consent of the right owner. The Article 352 of Contract Law said the transferee that fails 
to pay royalties as contracted shall make up the pay ment of royalties and pay a damage for breach of 
contract as contracted, and, if failing to make up the payment of royalties and pay the damage, the 
transferee shall cease its exploitation of the patent or utilization of the technical know-how, return the WT/TPR/M/161/Add.1 
Page 244  
 
technical information and bear the liability for brea ch of contract. The transferee that exploits the 
patent or utilizes the technical know-how in excess of the contracted scope or allows a third party, 
without the consent of the transferor, to exploit th e patent or to utilize the technical know-how shall 
cease its contract-breaching acts and bear liability fo r breach of contract. The transferee that violates 
its contracted obligation of maintain ing confidentiality shall bear the liability for breach of contract.    
QUESTION: 
EC 
The WTO Secretariat’s Report mentions, in para. 274,  the length of patent protection (20 years). As 
some specific products require long additional peri ods for their development and in order to obtain 
marketing authorizations, a number of countries have decided to compensate for these periods during 
which the patent can not be exploited by an  additional protection mechanism (in the EU: 
Supplementary Protection Certificate for pharmaceutical products.  
- Does China plan to grant additional protecti on – in the form of patent restoration or 
supplementary protection certificates – to products  that can not be marketed before a specific 
authorization has been given (such as pharmaceutical products)? 
ANSWER: At present China has no plan to grant additional protection – in the form of patent restoration or 
supplementary protection certificates – to products  that can not be marketed before a specific 
authorization has been given. 
QUESTION: EC 
The EC understand that the Supreme People’s Court envisages publishing some courts decisions on 
its website. As they have continu ously called for such publication, the EC welcome this initiative.  
The EC would like to know: - When this publication would start?  
- Which kind of decisions would be concerne d (only SPC’s decisions or other courts’ 
decisions, even at local level)?  
- Would the main administrative decisions be published too? 
- Would statistics on cases of IP infringements (number of cases, breakdown by type of IP 
right, breakdown by origin of IP right holder, average decision taken) also be disclosed on 
this website?  
ANSWER: 
On March.3 of 2006, the website for China Inte llectual Property Rights Judgment Documents is 
formally opened to the outside (http://ipr.chinacour t.org).  The website continuously publishes the 
part of judgment documents on the civil sector of Intellectual Property Rights taking into effect in 
2005 including the judgment, determination and int ermediation of Supreme Courts and local courts. 
Besides the website, the courts of some develope d areas such as Beijing have published judgment 
documents in the website  WT/TPR/M/161/Add.1 
 Page 245 
 
 
In addition the social public can also know the e fficient civil judgment documents through a lot of 
ways including reading publishes of courts documents and files. 
QUESTION: EC 
Referring to page 147 in the WTO Secretariat’s Report “Patent rights in China are protected under the Patent Law, the Implementing Regulations of the 
Patent Law, and rules promulgated by the SIPO to implement the Patent.” 
- Will it be possible for the Chinese authorities to call for the strictly and necessary information 
avoiding sensitive and confidential in formation in the process of patent registration, the same as in the 
antidumping process? 
ANSWER: During the process of patent application and registr ation, Chinese IPR authorities only review the 
patent application and grant patent rights based  upon application documents submitted by the 
applicant voluntarily. China never requests the applicant s to provide any technical information that 
the applicant itself does not intend to protect with a patent or is not claimed in his application. If a 
patent applicant wants to obtain protection on some sensitive information, he or she must disclose 
such information in the applicati on process. Patent shall not protect confidential information which is 
not claimed in the patent application. 
QUESTION: EC 
Will it be possible for the Chinese authorities to include protection for parts and components’ 
designing under the Patent Law? 
ANSWER: 
The parts and components, which can be used and so ld independently, are protected by design patent 
according to China’s Patent Law and its Implementing Rules. 
QUESTION: 
United States II 42. Paragraph 272 of Chapter III of the report indicates that China is planning further 
amendments to the Patent Law.  What types of am endments to the Patent Law are being considered?  
When does China anticipate finalizing the amendments? 
ANSWER: 
China has just begun an across-the-board amendm ent of the Patent law on the issues jointly 
concerned by the patent applicants, patent right  owners, judicial authorities and the public.  The 
amendment is expected to finish at the end of 2008. WT/TPR/M/161/Add.1 
Page 246  
 
QUESTION: 
Brazil 
WT/TPR/S/161 III (4) (ix) 
How does Chinese legislation deal with the granting of  patents that concern or make use of genetic 
resources/traditional knowledge vis-à- vis the provi sions of the Convention on Biological Diversity 
that require prior informed consent and benefit-sharing? 
ANSWER: 
In an effort to reflect the three principles incl uding national sovereignty, prior informed consent and 
benefit- sharing provided by the Convention on  Biological Diversity, China is working on the new 
measures in the Patent Law, to require a paten t application using genetic  resource or traditional 
knowledge to disclose the resource of the abo ve genetic resource or traditional knowledge.  
Copyright QUESTION: United States I 
43.  Paragraph 279 of Chapter III of the report addresses compulsory licenses under the Patent 
Law.  The report does not, however, address com pulsory licenses under the Copyright Law.  Please 
explain how Article 23 of the Copyright Law, whic h provide for compulsory licenses for textbooks, is 
consistent with the standards for limitations and ex ceptions set forth in Article 13 of the Agreement 
on Trade-Related Intellectual Property Rights (TRIPS Agreement). 
ANSWER 
China’s Copyright Law does not cover compulsory license provisions. What the Article 23 of the 
Copyright Law defines is statutory license inste ad, which applies to compiling and publishing 
textbooks for the purpose of nine-year compulsory educ ation. This provision is fully in compliance 
with the Article 13 of TRIPS. 
QUESTION: Japan II 
(p.14, paragraph 59)  
Q10. Concerning lines 2 to 9 of paragraph 59, please provide us with specific details of the 
"mechanism of legal enforcement whereby differe nt departments are coordinated in combating 
copyright infringement and piracy".  Please also indicate specifically how this mechanism has been 
effective for combating copyright infringement and piracy. 
ANSWER: 
About the mechanism of legal enforcement wher eby different departments are coordinated in 
combating copyright infringement and piracy: In  2004, the Chinese government formed the National 
Working Group on IPR Protection headed by Madame Wu  Yi, Vice Premier of the State Council.  The 
Working Group was charged with deploying and coordinating IPR protection efforts across the 
country.  It consists of 12 members, including patent, trademark and copyright administrations,  WT/TPR/M/161/Add.1 
 Page 247 
 
 
ministry of public security, SPC, SPP, and the Gen eral Administration of Customs, among others.  
One important function of the Working Group is  to organize and coordinate nation-wide special 
campaign on IPR protection.  Between August 2004  and the end of 2005, the Working Group waged a 
1.5-year-long special campaign, with positive results. 
Trademark 
QUESTION: 
Japan 
(4) There are increasing concerns that trademar ks, which are well-known in countries other than 
China and unregistered in China, are improperly file d and/or registered as trademarks by companies in 
China without the genuine owners' permission.  In this regard, please provide information on whether 
any Chinese laws and regulations provide opportunities for the authorities to reject such an 
application or for the genuine owner to oppose or request invalidation of the trademark.   
ANSWER:   
As regards the protection of well-k nown foreign trademarks that are un registered in China, Para 1 of 
Article 13 of the Trademark Law clearly stipulates th at “If a trademark, for which an application for 
registration is filed, of the same or similar commod ity is the copy, imitation or translation of a well-
known trademark of others which hasn’t been registe red in China, and misleads the public and leads 
to possible damage to the interests of the registrant  of that well-known trademark, it shall not be 
registered and shall be prohibited from use.” 
QUESTION: Japan  
(5) Please provide the length of time from the filing of  applications to the initiation of the examination 
and the final decision regarding examination, oppos ition by the CTMO and appeal examination by the 
TRAB. 
ANSWER:   
In recent years, the number of applications for tr ademark registration surged by an annual increase 
of 100,000 pieces. Currently it takes approximately 24 m onths from the submission of the application 
to the first action by the trademark administrati on.  The length of the time shall be extended 
accordingly in cases where there is disagreement or dispute.  We are taking proactive measures to try 
to shorten the time length of the registration cycle. 
QUESTION: Japan  
(6) With regard to the cases where trade names similar to in ternationally well-known marks are 
registered abroad without the genuine owner's permission, and where those trade names cause 
confusion with the registered trademarks of Japanes e enterprises in China when used in China, please 
explain which laws or regulations are applied to cancellations, injunctions, claims for damages or 
demands for crackdowns by administrative bodies. WT/TPR/M/161/Add.1 
Page 248  
 
ANSWER: 
Please see Articles 13, 31 and 41 of the Trademark La w, and Article 53 of the Implementation Rules 
of the Trademark Law and Article 13 of the Regul ations on the Recognition and Protection of Well-
known Trademarks for solutions to the conflicts of  trade names and trademarks.  Legal remedies can 
also be provided by the Counter Unfair Competition Law. 
QUESTION: 
Korea 
11. There seems to be a great need for the Chinese government to reinforce protection on trade-mark 
and design of foreign products such as mobile phones.  
- What are the Chinese government's current measures and future plans related to this 
protection?  
ANSWER: 
Under China’s Trademark Law, for any mark that is registered in the Trademark Office, its registrant 
shall enjoy the exclusive right and it shall be protected  by law. No matter the registrant is domestic or 
foreign and no matter on what kinds of goods in respect  of which the mark is used, the registrant shall 
enjoy the same rights and shall be equally protect ed. If a foreign product wants to acquire trademark 
protection in China, the right holder shall file a trademark application for registration with the 
Trademark Office to acquire trademark registration. 
QUESTION: United States II 
43.  Paragraph 290 of Chapter III of the report a ddresses requests to cancel the registration of a 
trade mark if it violates, inter alia, other identical or similar trade marks.  Is a preliminary injunction 
available in cases involving non-identical but sim ilar marks?  If so, please describe the requirements 
for issuance of the injunction. 
ANSWER: 
The present Patent Law, Trademark Law and Copyright Law and corresponding judicial 
interpretations all contained provisions concerni ng judicial injunctions before the lawsuit.  The 
concerned right holder could file an application to the court.  After the court had accepted the 
application, it would determine whether judi cial injunctions would be implemented.  
QUESTION: Japan  
Q28. We understand that there are four kinds of opportunities to apply for the recognition of a well-
known mark:   
(a) an opposition process at the Chinese Trademark Office (CTMO);   (b) a cancellation process at the Trademark Re view and Adjudication Board (TRAB);    WT/TPR/M/161/Add.1 
 Page 249 
 
 
(c) a process of trademark administration (i.e. en forcement) at the administrative authorities for 
industry and commerce;  and  
(d) a trial by the people's court.   (1) Please indicate:  (i) concrete examples of materials require d to be submitted for the recognition,  
ANSWER: The article 14 of Trademark Law (2001) and Article  3 of the Provisions on the Determination and 
Protection of Well-known Marks2003specify the concrete factors considered when determining 
well-known marks. Please refer to h ttp://www.ctmo.gov.cn for details. 
QUESTION: 
Japan (ii) recognition procedures, for each channel from (a) to (d). 
ANSWER: 
The administrative procedures and judicial procedures are different in respect to the determination of 
well-known marks.  
The former includes the cases of opposition, disputes and administrative enforcement. Please refer to 
Article 5 and 45 of Regulation on the Implementa tion of Trademark Law and relevant provisions 
under the Provisions on the Determination and Protection of Well-known Marks2003. The 
judicial procedures are subject to the Tradema rk Law, the Interpretation on Several Issues of 
Concrete Application of Laws in Handling Civ il Cases Concerning Dissension on Internet Domain 
Name and the Interpretation on Several Issues of C oncrete Application of Laws in Handling Civil 
Cases Concerning Dissension on Trademark Rights both issued by the Supreme People’s Court. The 
right owner can bring an action for trademark and domain infringement in the court of the place 
where the infringement action took place or where the defendant is located pursuant to the law. The 
Chinese People’s Courts can determine whether the registered trademark concerned is well-known or 
not according to the requirements of the party and concrete cases. Th ere is no need to determine the 
well-known trademark if the case can be dealt w ith without determining the well-known mark. 
QUESTION: Japan 
(2) Please provide statistics of each channel from (a) to (d) on the number of applications, 
recognitions and rejections of well-known marks by fo reign entities (including separate statistics for 
Japanese entities, only if available) and Chinese en tities for each year after the amendment of the 
Regulations for the Implementation of the Trademark Law in September 2002. 
ANSWER: 
TMO and TRAB do not have statistics on well-known ma rk applications for determination and the 
numbers of rejections. However, information on  those well-known marks determined through 
opposition, dispute or administrative enforcement ca ses can be found on http://www.ctmo. gov.cn.. WT/TPR/M/161/Add.1 
Page 250  
 
From July 2001 to August 2005, the People’s Cour ts across the country determined 72 well-known 
trademarks in total. Among the 42 cases determined  from January to October of 2005, the owners of 
9 cases are foreigners. The Trademark Office, the Trademark Review and Adjudication Board and the 
Chinese People’s Courts shall equally determine and protect the well-known trademark no matter the 
owners are domestic or foreign in a view to safegu ard the legitimate right and interests of trademark 
owners domestic and abroad.  
IPR Legislation and Enforcement  
QUESTION: Japan  
(g) Enforcement (p.153-157, paragraphs 302-313)  
Q31. Japan requested China to provide specific judi cial decisions and administrative rulings ("cases") 
of IPR enforcement that China h as identified for the years 2001 through the first half of 2005 in 
various public statements, pursuant to Article 63. 3 of the WTO Agreement on Trade-Related Aspects 
of Intellectual Property Rights ("TRIPS Agreem ent"). However, China has not provided any 
information until now, passing the January 23 date that  is the deadline for China.  Please provide these 
information as soon as possible. 
ANSWER: 
China had carefully examined the request submitted by the U.S., Japan and Switzerland to the TRIPS 
Council for IPR enforcement information based on Article 63.3 of the TRIPS Agreement, Chinese 
Ambassador Mr. SUN Zhenyu replied in his le tter on 22 December 2005, and provided detailed 
explanations in this regard. 
China believes that, so far as the transparency requi rement is concerned, China has strictly fulfilled 
and implemented all the obligations under Article  63 of TRIPS. China shall not bear any extra 
obligations which go beyond Article  63.3 of the TRIPS Agreement.  
Nevertheless, China has furnished information about IPR legislation and enforcement through 
bilateral exchanges and cooperation outside the fram ework of Article 63.3 of the TRIPS Agreement. 
QUESTION: Japan 
Q27. Please indicate the members and specific activities of the “National Working Group on 
Intellectual Property Rights and an Intellectual Property Tribunal”. 
ANSWER:  
In order to further strengthen the leadership and coordination of the IPR protection work and 
intensify the protection efforts, the State C ouncil established the State Working Group on IPR 
Protection in August 2004.  The Group is heade d by Vice Premier Wu Yi.  Member organisations 
include 10 governmental departments, such as Mini stry of Public Security, Ministry of Information 
Industry, MOFCOM, General Administration of Customs, SAIC, AQSIQ, General Administration of 
News and Publications (Copyright Administration), SFDA, the Legislative Affairs Office of the State  WT/TPR/M/161/Add.1 
 Page 251 
 
 
Council, and the Supreme People’s Court and Supreme Pe ople’s Procuratorate.  The executive office 
of the Working Group is located in MOFCOM, in  charge of day-to-day work of the Group. 
Since its inception, the Working Group has achieved the following: I. Promoting special campaigns on IPR protection. II. Intensifying communication and coordination on IPR protection. 
III. Greatly promoting education and publicity activities on IPR protection. 
IV. Exploring long-term working mechanisms, e.g., promoting the implementation of “IPR Protection 
Network Project”, setting up reporting and complaint centres across the country.  
QUESTION: Turkey 
WT/TPR/S/161 (page 153, para 304 ) 
III.TRADE POLICIES AND PRACTICES BY MEASURES (4) MEASURES AFFECTING 
PRODUCTION AND TRADE (ix)Intellectual Property Rights 
(g) Enforcement Secretariat Reports explains that the “Enforcement of intellectual property rights  in China is complex 
with a large number of responsible authorities...”  and  despite these efforts, it appears that 
enforcement remains weak and infringement of  intellectual property rights widespread.” 
- Could Delegation of China provide further information about the government strategy 
towards increasing coordination and stre ngthening enforcement process in China? 
ANSWER: 
Most recently, in order to p ress forward the enforcement of nati onal IPR protection, the Chinese 
government developed meticulous programs for IPR protection with the effect of promoting 
technological innovation.  The general office of  the National Working Group on IPR Protection 
joined hands with relevant departments in formul ating the 2006 Action Plan on IPR Protection in 
China, which outlines the objectives of IPR protecti on for 2006.  The General Office of the State 
Council also published the Action Program on IPR Protection (2006-2007), which puts on the 
national agenda such items as strengthening en forcement, combating violations and crimes, 
improving laws and regulations, reinforcing en forcement staff and enhance public advocacy and 
education, with a view to installing a long-standing mechanism.   
Objectives for different stages have been iden tified and comprehensive arrangements for establishing 
an IPR protection system where administrative and judici al protection work in parallel, right holders 
can safeguard their own interests and rights, industries can exercise self-discipline and 
intermediaries and the public both have roles to play.  
Regarding the coordination efforts made by China dealing with IPR protection, please refer to our 
responses to Q27 of Japan. WT/TPR/M/161/Add.1 
Page 252  
 
QUESTION: 
Japan 
(e) Layout-design of integrated circuits 
(p.151, paragraph 294)  Q29.  
(1) Please explain the relationship between the “Bu lletin of the IPR Case Meeting by National Courts 
on Several Issues Concerning the Application of the Law in the Trial of Technology Contract 
Disputes” circulated in 2001 (hereinafter “2001 Bull etin”) and the “Interpretation of the Supreme 
People’s Court on Several Issues Concerning the App lication of the Law in the Trial of Technology 
Contract Disputes” issued in December 2004 (hereinafter “2004 Interpretation”).  
ANSWER: The Bulletin of the IPR Case Meeting by Na tional Courts on Several Issues Concerning the 
Application of the Law in the Trial of Technology Contract Disputes is not a judicial interpretation, nor does it have the effect of a judicial interpretati on.  After publishing the Interpretation, the Bulletin 
was no longer a guiding document for the trial of technology contract disputes.  The Contract Law 
and the Interpretation shall be the legal basis for the trial of technology contract disputes. 
QUESTION: Japan  
(f) Other IPRs  
(p.151, paragraph 295)  Q30. Please provide the details and current status of the amendment to the Law to Counter Unfair 
Competition. 
ANSWER:  
Progress of the amendment: 1. in the amendment to  the Law to Counter Unfair Competition, relevant 
departments of the Chinese government have coll ected materials on competition policies from home 
and abroad, and have formulated the draft version of the amendment to the Law to Counter Unfair 
Competition.  They have for several times solicited  opinions from the commerce and industry 
administrations, relevant experts and scholars, relev ant enterprises and intermediary agencies, and 
thus formed the public opinions on the amendmen t to the Law to Counter Unfair Competition.  On 
this basis, the current Law to Counter Unfair Comp etition (opinion soliciting amendment draft) came 
into being after 7 previous revisions. 
Content of the proposed amendment includes: expandi ng the scope of the main body governed by the 
Law to Counter Unfair Competition; increasing the number of unfair competition and restrictive 
competition actions, enhancing th e operability by specifying and improving the unfair competition 
provisions in the existing law; intensifying administrative enforcement; improving the legal 
responsibility system, etc.  WT/TPR/M/161/Add.1 
 Page 253 
 
 
QUESTION: 
Japan  
(p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(1) Japan hopes China to ease the cr iteria of prosecution and to strengthen penalties against perpetual 
offenders. In this regard, please indicate the view s of the Government of the People’s Republic of 
China. 
ANSWER:   
Comparing with previous regulations, the Interpret ation on Several Issues of Concrete Application of 
Laws in Handling Criminal Cases of infringing In tellectual Property issued by the Supreme People’s 
Court and Supreme People’s Proc uratorate in December 2004 has largely lowered the criminal 
threshold for crimes such as trademark infringeme nt and copyright infringement.  Articles 65 and 66 
of the Criminal Law of China provides for severe punishment on recidivists. 
QUESTION: 
Japan  (p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(2) There was a "three strike" provision that referre d to "not reaching these thresholds, but infringing 
IPR after having been subjected to the administrativ e penalty twice before having negative impact" in 
Articles 61.4 and 63.3 of the "Provisions of the S upreme People's Procuratorate and the Ministry of 
Public Security Regarding Prosecution Standards for Cases involving Economic Crimes" issued in 
April 2001 ("old guidelines").  But in the new judicial interpretation, there is no such provision.  Please explain the reason why the "three strike" pr ovision has been deleted from the new judicial 
interpretation. Japan hopes that “three strike” provi sion will be reintroduced because this provision is 
effective in deterring further infringements. In  this regard, please indicate the views of the 
Government of the People’s Republic of China. 
ANSWER:  
The Judicial Interpretations jointly issued by  the Supreme People’s Court and Supreme People’s 
Procuratorate issued in 2004 has no provision for the conviction of the infringement conducted by a 
doer who has born administrative liability or received  administrative penalty.  Provisions of the 
Supreme People's Procuratorate and the Ministry of Public Security Regarding Prosecution 
Standards for Cases involving Economic Crimes i ssued in 2001 provides for criminal liability 
investigation on the infringement activity by a doer who has borne twice administrative liability (two 
administrative penalties).   
The 2004 Interpretation has taken into consideration the different li ability categories administrative 
responsibility and criminal responsibility fall into.  Once a doer has been held liable to the 
administrative penalty, the doer shall not be held li able to criminal penalty.  Otherwise, it will be 
against the principle of “no one is to be punished tw ice for the same crime”.  In the event that the WT/TPR/M/161/Add.1 
Page 254  
 
doer with a previous administrative infringement record commits new administrative infringement, 
the doer shall be given administrative penalty accord ingly.  Only when the infringement reaches the 
criminal threshold can criminal investigations be imposed on the doer.  Therefore, the 2004 
Interpretation has no such provisions. 
QUESTION: 
Japan  (p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(3) There was a provision that violators of a well-known trademark could be prosecuted irrespective 
of the amount of illegal sales or gains in Articl es 61.3 and 63.2 of the old guidelines.  However, 
Article 12.1 of the new Judicial Interpretation stipul ates that in principle “the value of illegal business 
of infringing goods shall be calculated based on thei r actual selling price”, thereby it would be very 
rare for well-known mark-infringing goods to be calculated with a value hi gher than the original 
goods.  In this regard, please explain the reason w hy the former provision was deleted. Please also 
provide any actual examples where the value of illegal business, illegal income or sales of well-
known mark infringing goods is calculated hi gher than that applied to usual cases. 
ANSWER: 
The Regulation of 2001 has such a provision, but the 2004 Interpretation has not.  The main reasons 
are:  
1. Chinese administrative regulations, civil laws, civil judicial interpretations, the civil and 
administrative judicial practices of the court have all provided special protections over well-known 
trademarks.  That the Interpretation has no such  a provision for well-k nown trademarks shall not 
affect the spirit of providing special protection over well-known trademarks as enshrined by Chinese laws and judicial practices.  
2. Normally well-known trademarks are also regist ered trademarks.  Registered trademarks protected 
by the Criminal Law already include well-know n trademarks.  By enhancing the protection over 
registered trademarks, the Interpretation has ac tually enhanced the protection over well-known 
trademarks at the same time.   
3. Well-known trademarks and the products usually have higher prices than ordinary registered 
trademarks and products.  The Interpretation states that  the value involved in the infringing activity 
can be calculated using the middle market price or  the marked price of the infringed product, thus 
making it easier for well-known trademarks infringing  action to reach the criminal threshold.   
Therefore, the special protection over well-known trademarks has already been embodied, although 
not so explicitly, in the Interpretation.  WT/TPR/M/161/Add.1 
 Page 255 
 
 
QUESTION: 
Japan  
(p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(4) Please explain the reason why the prosecution sta ndard for enterprises is three times higher than 
that for individuals. 
ANSWER: 
The Judicial Interpretations jointly issued  by the Supreme People’s Court (SPC) and Supreme 
People’s Procuratorate (SPP) has the provision that  the prosecution standard for enterprises is three 
times higher than that for individuals.  The main reasons are as follows:  
1. Enterprises in China are of various economic system s.  The purpose of IPR infringement is to gain 
profits.  The gains of a single natural person crime  belong to that person only, whereas the gains of a 
unit crime belong to the unit, not the individuals.  In accordance with the Chinese Criminal Law, the 
chief personnel directly in charge of the unit an d other people directly res ponsible shall be held 
accountable in the case of unit crimes.  In view of the fact that the gains of unit crimes and individual 
crimes belong to different beneficiaries, it shoul d be necessary to distinguish the prosecution 
standards for units and individuals considering that  those who are responsible the crime but do not 
directly gain benefits from it and those who are chiefly  in charge of the unit shall also be held 
accountable to criminal prosecutions.  This is also in line with the principle that the punishment fits 
the crime.   
2. According to relevant judicial interpretati ons,  in cases where individuals, for purpose of 
committing crimes, set up companies, enterprises or administrative in stitutions and commit crimes, or 
where companies, enterprises or administrative institu tions set up by individuals mainly engage in 
criminal activities after their establishment, people responsible for the crime shall be subject to the 
individual prosecution threshold.  There is no question of being lenient on such crimes.   
3. Some previous interpretations held that the prosecution standard for units should be five times 
higher than that for individuals.  Considering that  it will not be conducive to the crackdown on unit 
crimes involving IPR if the five-times-higher standar d continues to be used, the 2004 Interpretation 
provides for the three-times-higher standard.   
It is fair to say that the Interpretation has la rgely lowered the quantitative threshold for the conviction 
and sentencing of unit crimes.  The gap between pr osecution thresholds for individual crimes and unit 
crimes has been narrowed; therefore the crack down on unit IPR infringing crimes has been 
intensified.  
QUESTION: Japan  
(p.153, paragraph 302)  Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": WT/TPR/M/161/Add.1 
Page 256  
 
(5) Please indicate any types of crimes other than IPR infringement for which a prosecution standard 
for enterprises, which is three times higher than that for individuals, is applied. 
ANSWER: 
Article 24 in the 2001 Regu lations stipulates for the criminal ac t of illegally absorbing public savings, 
the prosecution standard for enterprise is 5 times that for individuals.  In Article 41 on fundraising 
fraud, the standard for enterprises is 5 times that for individuals.  More examples can be found in the 
law. 
QUESTION: Japan  
(p.153, paragraph 302)  Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(6) There seems to be some cases where the prosecu tion standards in the new judicial interpretation 
are higher than that in the old guidelines (e.g. Article  3.1.1 of the new judicial interpretation).  Please 
explain why such a change was made in spite  of the commitment under China's Protocol of 
Accession. 
ANSWER: 
Article 3 of the Judicial Interpretations jointly  issued by the Supreme People’s Court and Supreme 
People’s Procuratorate stipulates the criminaliz ation standards for illegal manufacturing and selling 
of fake trademarks are 20,000 pieces in quantity or illegal operating value of 50,000 RMB or illicit 
proceeds of 30,000 RMB; the standards for forgery, unauthorized manufacturing or selling of forged 
or illegal manufactured trademarks are 10,000 pieces in quantity, or illegal operating value of 
30,000 RMB or illicit proceeds of 20,000 RMB.  Th e prosecution standards in Article 63 of the 2001 
Regulations are 20,000 pieces (sets) in quantity, or  illegal proceeds of 20,000 RMB or illegal 
operating value of over 200,000 RMB. 
By comparing the two versions, the 2004 Interpretati ons substantially lowered the criminalization 
threshold.  However, viewing the judicial interpret ations on criminalization of IPR violations as a 
whole, the composing elements of various charges n eed to be consistent an d there should be a general 
balance between all crimes.  Therefo re, there is a small di stinction with respect to the amount of illicit 
proceeds.  In the 2004 Interpretations, Article  3.1.2 still maintains the monetary threshold of 
RMB 20,000.   
QUESTION: 
Japan  (p.153, paragraph 302)  
Q32. Concerning “Interpretation on Several Issues of Concrete Applicati on of Laws in Handling 
Criminal Cases of infringing Intellectual Property": 
(7) Please explain how the provisions for "serious na ture" (e.g. in Article 1.1.3) and "especially 
serious nature" (e.g. in Article 1.2.3) in the new j udicial interpretation are interpreted and applied in  WT/TPR/M/161/Add.1 
 Page 257 
 
 
actual cases.  Please also provide information of actual cases where such a provision is applied for 
prosecution, if any. 
ANSWER: 
The Judicial Interpretations jointly issued by  the Supreme People’s Court and Supreme People’s 
Procuratorate in December 2004 takes the form of examples plus summary provisions.  The 
illustrated examples are primarily typical and comm only-seen IPR crimes, however, violations in real 
life are more complicated.  In order not to leave out any serious violation or crime which is not in the 
illustrated examples, a summary provision is made after the illustration, namely the expression of 
“other serious criminal acts”.  This expression norma lly means that the severity of the referenced 
crime is close to that of an illustrated criminal act.  
QUESTION: 
Japan 
Q35: 
(2) Please provide the following statistics related to criminal cases under Articles 213- 219 of the 
Chinese Criminal Law for each year si nce China's accession to the WTO:  . 
 (a) The number of cases submitted by administrative bodies to the prosecutor as 
deserving criminal prosecution; 
 (b) The number of cases dealt with by the prosecutor directly as deserving criminal 
prosecution; 
 (c) The number of cases that the prosecutor actually prosecutes through the courts;  (d) The number of cases that the right holder himself/herself prosecutes through the 
courts; 
 (e) The number of cases where criminal pena lties are imposed (sorted by fines, public 
  surveillance, detention and fixed-term imprisonment); and 
 (f) The number of cases where major penalties (public surveillance, detention and fixed-
  term imprisonment) and additional penalties (fines) are imposed together. 
ANSWER: Please find an update on IPR cases processed every year in China after its accession as follows: 
1. In 2002, prosecuting authorities across China accepted 529 transferred IPR infringement cases 
involving 869 persons.  374 resulted in  prosecution, involving 593 persons. 
2. In 2003, prosecuting authorities across China accepted 476 transferred IPR infringement cases 
involving 886 persons.  335 resulted in prosecution, involving 600 persons.  (In breakdown, 288 were 
trademark infringement cases involving 498 persons , no case related to patents, 15 related to 
copyright involving 28 persons and 32 relate d to trade secrets involving 74 persons). 
3. In 2004, prosecuting authorities across China accepted 508 transferred IPR infringement cases 
involving 931 persons.  368 resulted in prosecution, involving 638 p ersons. (In breakdown, 315 were WT/TPR/M/161/Add.1 
Page 258  
 
trademark infringement cases involving 548 persons, 2 cases related to patents involving 2 persons, 
13 related to copyright involving 17 persons and 38 related to trade secrets involving 71 persons). 
4. In 2005, prosecuting authorities across China accepted 795 transferred IPR infringement cases 
involving 1442 persons.  537 resulted in prosecution, involving 968 persons.   
QUESTION: 
Japan Q35: 
(3) In addition to the items in (2), please provide  the following statistics for the first half of 2005: 
 (a) The number of the cases which were prosecuted on the volume of illegal business 
under the new judicial interpretation, including:   
  (i) the number of cases submitted by ad ministrative bodies to the prosecutor as 
deserving criminal prosecution;  
  (ii) the number of cases dealt with by  the prosecutor directly as deserving 
criminal prosecution;  
  (iii) the number of cases that the pro secutor has actually prosecuted through the 
courts; and  
  (iv) the number of cases where criminal  penalties are imposed and the types of 
penalties. 
ANSWER: 
In December 2004, China promulgated the Judicial Interpretations for criminalizing IPR violations.  
However, China is unable to provide the figure as req uested by No.35(3)(a) in the question list on the 
number of cases prosecuted on the volume of illegal business under the new judicial interpretations in 
the first half of 2005, because the prosecuting authority has no broken- down statistics on this. 
QUESTION: Japan II 
(p.15, paragraph 66)  The Report by the People’s Republic of China states that “the Chinese Government is fully aware that 
like in all other countries the protection of intellect ual property rights is cons trained by the level of 
economic development and other conditions in reality.”   
Q12. (1) Please indicate specifically what “constrained by  the level of economic development” means.   
In this regard, we believe that in fringement on intellectual property rights is a crime, just as theft or 
murder is a crime, and the level of protection sh ould not be changed according to the "level of 
economic development".  
(2) In this respect, please indicate the views of the Government of the People’s Republic of China.    WT/TPR/M/161/Add.1 
 Page 259 
 
 
ANSWER: 
China has rigorously cracked down on IPR violati ons by strictly following its IPR laws and 
regulations. China believes that the level of IPR protec tion in a country is closely linked to its level of 
economic development, and this is a common sense.   
Japan used to be one of the countries in the 1960s and 1970s which had the most rampant IPR 
infringements. As the Japanese economy developed, it s IPR legislation gradually improved and public 
awareness for IPR protection increased. However, we  cannot understand that, when Japan has just 
made a little progress in IPR protection compared with  its past, it starts to deny the fact that 
developing countries like China are still restrained in  terms of IPR protection by their levels of 
economic development.   
WIPO, World Bank and WTO all acknowledge that developing countries are challenged in terms of 
IPR protection as a result of economic, financia l, human resource and manageme nt constraints.  
China kindly requests that Japan read the UNCTAD Report --- Intellectual Property Rights, Implications for Development:  Policy Discu ssion Paper--- to get a better understanding of the 
situation. 
QUESTION: 
EC 
In Points 58 to 63 of the PRC’s Report (WT/ TPR/G/161), the Chinese government underlines the 
progress made on IP enforcement, in particular rela ted to trademark infringements. One of the easiest 
issues to address should be the closure of big ma rkets operating in definite places and reknown for 
selling almost exclusively fakes. However, the persis tence of a number of such markets in China is a 
source of concern for the EC.  
- How do the Chinese authorities intend to clear out  markets that are famous for selling almost 
exclusively counterfeit and pirated goods throughout  China and according to which timetable? Which 
markets will be tackled first? 
ANSWER: 
China pays great attention to the selling of infr inging goods in commodity trading markets and has 
taken many forceful measures to address the probl em.  Those measures have resulted in some 
progress. 
First, China strengthens the responsibility of the ma rket host.  While keeping a close watch on the 
booth owners, a new focus was placed on the ma rket host.  Commodity trading markets where the 
selling of counterfeit and pirated products runs rampant will face temporary or p ermanent closure 
and the market host will be subject to a fine.  For example, the Shanghai Municipal Government 
announced to close the Xiangyang Road Market .  Beijing imposed fines on Wantong and 6 other 
markets in 2005. 
Second, China intensifies protection for well- known domestic and foreign trademarks in those 
markets. 
Third, China puts enforcement staff in position in  some major markets to intensify checking. 
Fourth, China introduces credit into supervisi on.  Beijing industry and commerce authorities opened 
a credit file for market distributors (booth owners) in  major markets in the capital.  Distributors 
selling infringing goods will be locked in the alarm system for close watch.  Repeated offenders will WT/TPR/M/161/Add.1 
Page 260  
 
be forced to retreat from the market and may not engage in selling activities in Beijing’s commodity 
markets for a prescribed period of time. 
Fifth, China carries out specialized crackdown efforts.   After the special campaigns ended, the SAIC 
instructed in 2006 its subsidiaries in the f our localities of Beijing,  Shanghai, G uangdong and 
Zhejiang to take further actions to increase ch ecking and supervision on local commodity trading 
markets.  An intensive campaign was waged be tween mid-February and late-April of this year. 
Above all, China will continue to crack down on  the selling of counterfeit and pirated goods in 
commodity trading markets, with a focus on those plagued by rampant violations, met with strong 
public opposition and having adverse impacts.  The market host will be urged to streamline its 
management and administrative enforcement agenci es will intensify their supervisory functions.  
Markets which long and repeatedly engage in sellin g counterfeits and pirated goods will be ordered 
to reform on a given timeframe or be shut down if the violations are serious in circumstances.  
QUESTION: EC 
December 2004 Judicial Interpretations on handling criminal cases of IP infringements are now 
implemented for more than one year. The EC believe  that these Interpretations leave certain problems 
opened and would therefore need some clarification.  
- Does China intend to clarify or change these Interpretations, according to observations made 
by the industry (Joint Statement of UNICE, US Chamber of Commerce and International Intellectual 
Property Forum) or government authorities in the cont ext of their exchanges wi th China (for instance 
the EU-China Dialogue on IP)? 
ANSWER: The Interpretations on Issues Relating to the App lication of Law in Criminal Cases Involving IPR 
Infringement of the SPC and SPP took effect as of December 22, 2004.  The SPC and SPP have 
closely followed on the enforcement of the Interpretations in handling IPR infringements and crimes 
and the some problematic areas, with a view to further improving the Interpretations.  However, 
China reiterates that the judicial interpretati ons of China’s supreme adjudicating and prosecuting 
agencies are also part of having juridical indepe ndence and they can only be revised according to 
China’s laws and their actual implementation. 
QUESTION:  
EC 
Referring to page 145 in the WTO Secretariat’s  Report “Protection of intellectual property rights is essentia l for ensuring the continued inflow of FDI and the 
associated transfer of newly developed technologi es, as well as fostering the development of new 
technologies and services in China over the longer term.” 
- Will it be possible for the authorities to improve penal prosecution in cases of piracy?  
ANSWER: 
In recent years, the Chinese government has con tinuously intensified criminal enforcement efforts 
against violations including piracy.  In December 2004, the SPC and SPP jointly issued the  WT/TPR/M/161/Add.1 
 Page 261 
 
 
Interpretations on Issues Relating to the App lication of Law in Criminal Cases Involving IPR 
Infringement, clarifying the standards for sent encing and indictment and lowering the criminal 
thresholds.  Between 1998 and 2005, various IPR crimes run through public securities authorities 
across China increased by 40% annually.  In the special campaign for IPR protection between 
November 2004 and late 2005, public  security, prosecuting and cour t authorities coordinated closely 
and closed substantially more cases. 
China will continue to seriously crack down on in fringement and piracy, firmly take out production 
lines for pirated CDs, harshly treat criminal activities of transporting pirated goods  by post, air, road 
or railway, straighten out illegal booths and street  vendors selling pirated CDs, and combat piracy of 
books, publications, textbooks, and copyright infr ingement and piracy over the Internet.  Criminal 
liabilities will be imposed in cases of suspected piracy where relevant laws and regulations are 
violated and criminal liabilities apply. 
QUESTION: United States I 
44. Paragraph 303 of Chapter III of the report st ates that “[t]he main problems identified by 
China’s major trading partners include:  lack of  coordination among the main enforcement agencies; 
local protectionism and corruption; inadequate dete rrence provided by the system of administrative, 
civil, and criminal penalties; and a lack of su fficient training of pers onnel.”  Paragraph 313 of 
Chapter III of the report further explains that, desp ite China’s efforts to improve the enforcement of 
intellectual property rights in China, “it appears that enforcement remains weak and infringement of 
intellectual property rights widespread.  In additi on to inadequate deterrents provided through the 
prosecution system, it is also claimed that ‘local pr otectionism’ is a major cause of IPR infringement.  
Local protectionism may be the result of discretionary  actions that give preference to local traders and 
producers, and of local corruption, which may provid e local manufacturers or traders of counterfeit 
goods advance notice of police raids; there is also concern that regional admi nistrative agencies lack 
sufficient knowledge and training in IPR enforcem ent.”  Taking into account China’s obligations 
under the TRIPS Agreement, please describe Chin a’s plans for addressing each of the problems 
identified above. 
ANSWER:   
Regarding the coordination of IPR enforcemen t, please refer to China’s response to  
Q.27 of Japan. Regarding the prosecution of IPR cases, please ref er to our response to EC’s questions above. 
Regarding the local protectionism, please refer to our response to questions raised by Switzerland 
according to para.313 of the Secretariat’s Report. 
QUESTION: Canada II 
Part III. Trade Policies and Practices by Measure , (2) Measures Affecting Production and Trade, 
(ix) Intellectual property rights, paragraph 272: 
1. China has recently announced an intellectual property rights tribunal under the responsibility 
of the Supreme Court.  Would you please clarify how this tribunal will operate and when it will 
become operational? WT/TPR/M/161/Add.1 
Page 262  
 
ANSWER: 
On March 3 2006, the Supreme Court held press conf erence to declare that the Third Civil Tribunal 
of the Supreme Court and those Tribunals responsible for dealing with the intellectual property rights 
cases in the local courts are permitted to be nam ed as the “IPRS Tribunal” while they can still use 
their current names at the same time. 
In fact, as early as in 1993, the high and interm ediary courts of Beijing Municipality established the 
IPRS Tribunals which are in charge of IPRS ca ses. In 1996 the Supreme Court established the IPRS 
Tribunal which was responsible for the instruction and supervision on the trial of IPRs across the 
country. A institutional reform of courts took pla ce in 2000 and the name of “IPRS Tribunal” was 
changed to “The Third Tribunal”. In fact, desp ite the recent resumption of the name of “IPRS 
Tribunal” on March 3 2006,  the trial organizations sp ecialized in IPRs cases are always functioning 
well in China. 
Switzerland 
Para. 313. What concrete measures are taken by your  Government to address the issues referred to as 
“local protectionism” on page 157, paragraph 313 in order to more e ffectively combat infringement of 
intellectual property rights and to ensure the efficiency of enforcement measures? 
ANSWER:   
For a long time, we have been taking a series of me asures to eliminate the in terference with the IPR 
protection by the local protectionism and hence to  strengthen the protection of IPR substantially. 
First, we keep away the local protectionism through the setup of the organizing mechanism. The 
Customs system is under perpendicular organization to lead in the whole country, so are the 
departments of industry and commerce as well as q uality supervision below the provincial level. All 
these are objectively conducive to the prevention from local protectionism. 
Second, we leash the local prot ectionism through institutions. According to Chinese laws, the right 
holders are entitled to the rights of applying adminis trative review or administrative litigation if he 
perceives the enforcement action by an administration department as violation of his legal rights. The 
administrative litigation reaches the final judgemen t after two trials. The right holder can appeal 
through the procedure for supervision upon adjud ication under some special circumstances. 
Third, we establish regional law enforcement coordination mechan isms. The IPR departments have 
set up a national law enforcement coordination mechanism on patent.  
For the next step, we will push ahead the integra tion of IPR protection into the government working 
schedule as a significant issue and into the over all planning on the local economic and social 
development across the country. The responsibility system and the responsibility assigning system of 
IPR protection should be implemented, as well as  the well-protected supervision and reporting system 
for IPR protection. The accountability system should be  formulated in a bid to publicly criticize those 
areas with serious problems and to investigate relat ed leaders with responsibility. Those who carry 
out local protectionism activities, enshield or connive illegal activities should be seriously punished in 
line with laws. 
EC 
The EC appreciate the Chinese government’s efforts to step up IP protection and enforcement. The 
changes that have occurred over the last years are summarized in the Report of the WTO Secretariat. 
However, the EC believe that a number of resolute  initiatives and changes are still needed in order to  WT/TPR/M/161/Add.1 
 Page 263 
 
 
increase coordination between all the bodies in charge of  IP enforcement at all levels in China, ensure 
a better level of specialisation of te ams in particular by training offici als, facilitate acce ss to courts by 
simplifying procedures, giving access to information on cases and ensure a better level of deterrence of sanctions adopted. 
- Could China explain which measures it intends  to adopt in order to improve effective 
enforcement of IP rights in the forthcoming months  and, in particular, how it intends to enhance 
Border controls at export to avoid that counte rfeit and pirated products leave the Chinese territory? 
ANSWER: 
Please refer to the provisions in the Regulations  on Customs Protection of Intellectual Property for 
Border control measures.  
Please kindly refer to China’s response to Turkey’s questions on enforcement matters. 
IV TRADE POLICIES BY SELECTED SECTORS (3) Energy QUESTION:  
EU 
Energy services  
- WTO Secretariat’s Report, page 161, para 3:  what is the regulatory regime ruling the 
provision of services incidental to mining at oil and gas fields (e.g. drilling services) by foreign 
service suppliers to companies in charge of oil exploration and production ? 
ANSWER: 
Foreign service-providers who supply technical or  labour services to exploration and development 
companies face no regulatory restrictions. Foreign servi ce-providers should be selected by oil and 
gas exploration right holders or mining right holders and a contract should be signed for the provision of services.  
QUESTION:  
Canada Part IV. Trade Policies by Selected Sectors,  (3) Energy, (i) Petroleum, paragraph 55: 
51. Paragraph 55 states that oil exploration see ms to be dominated by four state-owned 
companies. Moreover, it states that as of Februa ry 2005, “qualified private enterprises may obtain 
prospecting and mining rights”.  Please elaborate on the procedures and requirements for prospecting 
and mining rights: 
a. Are there distinctions between exploration services firms and exploration and development 
firms?  
b. How are licenses/certificates for exploration attributed – on project basis, geographical basis, 
or on a wider basis?  WT/TPR/M/161/Add.1 
Page 264  
 
c. Are there distinctions between nati onals and non-nationals of China?  
d. What are the constraints attached to licenses/certificates for exploration service providers?  
e. Do these license requirements also apply to other service providers on oil fields?  
ANSWER: 
a. Exploration service-providers are allowed to  provide technical and labour services to 
exploration and development firms that have obtained mining licences. At present, the 
technical service capability of those providers is assessed by the mining right holders, and 
signing a technical service contract is a p rerequisite. Companies engaged in oil exploration 
and development can only be established with the approval of the State Council. Those 
companies can apply for oil and gas exploration and mining licences according to law. So far 
only four state-owned oil companies have been approved by the State Council. 
b. In China, the exploration licence is establis hed according to law, and has the maximum area 
limit for various mines. After obtaining the exp loration licence, firms should also implement 
the minimal exploration input in per square kilometre. 
c. State-owned and non state-owned enterprises may apply for exploration licenses according to 
law. However, oil companies applying for oil and gas exploration licen ces are subject to the 
approval of the State Council. 
d. Exploration service-providers offer technica l services to licensed exploration right holders. 
The providers do not need to apply for exp loration and development licenses for mineral 
resources, but should be equipped with corres ponding technical producti on capability, and be 
chosen by the mining right holders. 
e. Other oil service-providers can only offer ser vices to licensed mining right holders, and are 
not required to apply for mineral resources exp loration and development licences. The State 
verifies the qualification and certification of technical service-providers. The standards for 
technical qualification are expected to be published at the end of 2006. 
United States I 
47. Paragraph 56 of Chapter IV of the report st ates that private domestic enterprises are permitted 
to engage in the wholesaling and reta iling of oil products in China.   
a. Please describe the procedures and requirements for private domestic enterprises to obtain 
wholesale and retail licenses. 
b. Please provide data on the number of private domestic enterprises that have been issued 
wholesale and retail licenses. 
ANSWER: At present, there are 2,445 such wholesaling enterp rises in China, among which 1,630 are solely-
funded enterprises by CNPC and Sinopec, accounting for 66.7% of the total; there are 815 wholesaling enterprises besides th ese two major operators, accoun ting for 33.3% of the total. 
By the end of 2005, there had been 51.8 thousand petr oleum stations of various ownerships in China, 
accounting for 56.3% of the total number of refuelling stations in the country.  WT/TPR/M/161/Add.1 
 Page 265 
 
 
On December 11th, 2004, China opened up its domestic reta iling market for finished oil products.  
Domestic and foreign-funded enterprises, regardless of their ownership struct ure, are all allowed to 
apply with relevant commerce authorities of the to wnship or city wher e they’re located for 
engagement in the retailing of finished oil pro ducts. However they have to meet the conditions 
contained in the industry development program for petroleum stations in provinces or cities where 
they’re located as well as in the Interim Measures  on the Administration of the Market for Finished 
Oil Products (2004). Having passed the prelimina ry examination by commerce authorities at city 
level, the application will be submitte d to authorities at the provincial level for further examination.  
An affirmative examination result will lead to the issuance of the “Certificate of Approval for 
Retailing Business of Finished Oil Products”. 
Domestic wholesaling in China shall be conducte d in the form of “concentrated wholesaling” 
through CNPC and SINOPEC. Other enterprises c an apply with the Ministry of Commerce for 
wholesaling licenses for finished oil products after they have entered into a supply agreement with the 
above two major companies and have met the relevant re quirements set forth in the Interim Measures 
for the Administration of Finished Oil Products. 
QUESTION:  
United States 1 
48. Paragraph 57 of Chapter IV of the report stat es that foreign enterprises have been allowed to 
engage in the retailing of processed oil in China since 2004.   
a. Please describe the procedures and requirements for foreign enterprises to obtain retail 
licenses. 
b. Please provide data on the number of foreign en terprises that have been issued retail licenses 
since 2004. 
c. According to the Services Schedule accompan ying China’s Protocol of Accession, foreign 
enterprises are to be permitted to engage in the retailing of processed oil in China without 
limitations on market access (or national treatment) by December 2004.  Does China place 
any ownership or establishment limitations on foreign enterprises seeking to engage in the 
retailing of processed oil in China?  Please explain. 
ANSWER: 
According to the relevant commitments China made upon its WTO accession, the Industrial 
Catalogue Guiding Foreign Investment (Revised ed ition, 2004) and the Interim Measures on the 
Administration of the Market for Finished Oil Products, the applica tion for new business 
establishment, mergers and acquisitions and the en largement of business scope with respect to 
domestic retailing of finished oil products, shall be filed by the enterprise concerned with the 
provincial commerce authority of where the enterpri se is located, and be submitted to the Ministry of 
Commerce for approval. Next the enterprise will go th rough the business registration procedure with 
the administration of industry and commerce against th e approval document issued by the Ministry of 
Commerce. After that, the enterprise shall apply with  the provincial commerce authority of where it is 
located for the building of the petroleum station and  the retailing license for fi nished oil products in 
line with the principle of national treatment.  
In light of China’s commitments concerning retailing of finished oil products in  its WTO Protocol of 
Accession, for any foreign-invested enterprise owni ng over 30 petroleum stations within the borders 
of China, majority foreign shareholding of the joint venture is not allowed.  WT/TPR/M/161/Add.1 
Page 266  
 
By the end of 2005, there had been totally 747 petr oleum stations with foreign shareholding that 
received certificates of approval for retailing of finished oil products. 
QUESTION:  
United States 1 
49. Paragraph 57 of Chapter IV of the report st ates that China committed in the Services Schedule 
accompanying its Protocol of Accession to allow fo reign enterprises to engage in the wholesaling of 
crude oil in China without any ma rket access or nationa l treatment limitations by December 2006.  
Please describe China’s plans for implementing this commitment. 
ANSWER: 
According to China’s WTO commitments upon accessi on, China will open up its wholesaling business 
for crude oil products to foreign investors at the end of December, 2006. At present, MOFCOM is 
joining forces with other agencies in formulating the administrative measures  for crude oil products 
wholesaling.  
QUESTION:  ChineseTaipei 
(pages 180-181, paragraphs 55, 56 and 57)  
It is noted that China has decided to open oil expl oration, petroleum refining, wholesale, and retail in 
the oil sector to private enterprises or foreign participants, but the information regarding the 
procedures, requirements, and applicants ’ qualifications is not available.   
Bearing in mind the transparency and regulatory di sciplines as stipulated in the GATS Agreement, 
could China please advise us when the rele vant information could be available? 
ANSWER: The procedures and documents with respect to the application for oil exploration licences are clearly 
provided for in laws and regulations, such as the Mineral Resources Law,  Measures for Registering 
Exploration Blocks on Mineral Resources, and Measures for the Administration of the Mining of Mineral Resources. Regulations on the terms, procedures and documents with respect to the 
applications of a new oil exploration and developmen t company are expected to be issued before the 
end of 2006. 
For other information, please refer to our responses to Q.48 and Q.49 of the United States.  WT/TPR/M/161/Add.1 
 Page 267 
 
 
INTERIM RESPONSES TO QUESTIONS 
SECOND DAY (21 APRIL 2006) 
III. TRADE POLICIES AND PRACTICES BY MEASURE (3) Measures directly affecting exports 
(iv) Export prohibitions, restrictions, and licensing 
QUESTION: United States I  
27. Paragraph 138 of Chapter III of the report stat es that China maintains export prohibitions on 
several products under processing trade.  Taking into account Article XI of GATT 1994, please 
explain China’s justifications for the export prohibi tions applicable to the following products under 
processing trade:  (a) chemical fertilizers; (b) alumina; and (c) ferro-alloy ore. 
ANSWER: 
Processing trade in nature is a tariff-bonded measure for imports to be processed in China and then 
re-exported. Those products subject to import prohi bitions under processing trade are allowed to be 
imported under normal trade. Prohi bition under processing trade only means the products concerned 
will not be granted the tariff-bonded treatment when being imported. Processing of chemical 
fertilizers, alumina and ferro-alloy causes high ener gy consumption and pollution, therefore China no 
longer encourages processing these products in China by eliminating the tariff-bonded treatment for 
import of these products. 
QUESTION: 
United States 
b. China produces more than 200 million metric t ons (MT) of coke annually but only allows 
approximately 14 million MT to be exported.  In the past, China has argued that the export quota on coke falls under the exception regarding the conserva tion of exhaustible natural resources, set forth in 
Article XX of the GATT 1994.  Please explain how th is export quota, in China’s view, satisfies the 
requirements of Article XX. 
ANSWER: 
Coal resource is insufficient in China, and the suppl y is greatly challenged. The exploited volume of 
coking coal, fat coal, gas coal and lean coal which are used to produce coke takes up 80-90% of the current verified reserves. Real s pan for exploitation is only around 40 years. With increasing pressure 
in resource supply and demand, China now is a net importer of coking coal. China imported 
7.2 million tons of coking coal (2  million tons of net import) in 2005, increased by 150% compared 
with 2003. With the aim of protecting exhaustible resources, China puts tight restrictions on domestic 
production and consumption of coke and the expor t is also administered with export quota. WT/TPR/M/161/Add.1 
Page 268  
 
QUESTION:  
United States 
c. Did the Chinese authorities consider development planning for domestic industries or 
international and domestic market demand when se tting the quota amount for coke for 2006?  If so, 
please explain. 
ANSWER: While setting the coke export quota for 2006, China had taken into consideration the demand of both 
domestic and foreign markets. In 2005, China issued 14.72 million tons of coke export quota, while the amount of coke exported was only 12.76 million tons, decreased by 15% as compared to 2004. 
The decrease in coke exports is cl early not due to quota restriction,  but to the increase in coke supply 
from the international market, which weakens the demand of coke exported fr om China. In January 
and February this year, coke export amounted to only 1.97 million tons, witnessing a decease by 
14.3% compared to 2004. However, in the same period, coke export price underwent sharp decrease 
by 41.6% than 2004, down to USD119.6 /ton, which demonstrated the fact that coke exports from 
China had already surpassed the de mand in the international market.  
QUESTION:  
United States 
d. The report states that MOFCOM administers th e export quota on coke.  However, the United 
States understands that the National Development and Reform Commission (NDRC) now administers 
it. If that is correct, please explain why the res ponsibility for administering the export quota on coke 
was shifted from MOFCOM to NDRC. 
ANSWER:  
The National Development and Reform Commission  (NDRC) and MOFCOM jointly administer the 
annual export quotas on co ke. Export quota licenses are issued by MOFCOM. 
QUESTION: United States I  
29-a. Please identify the products that fell under each  of the three enumerated categories in 2005. 
ANSWER: 
The quotas on iris and its products , carborundum, fluorspar block ( powder), talcum block (powder), 
heavy (light) sintered magnesium, bauxite, liquorice and its products were allocated through bidding 
in 2005. 
QUESTION: 
Japan  Q25 Japan recognizes that China has prohibited e xporting wood charcoal si nce October 1, 2004.  
However, according to the Trade Statistics of Ja pan, while import volume of wood charcoal from 
China has gradually decreased, the wood charcoal s ubject to restriction has still been imported and 
distributed in the Japanese market.   WT/TPR/M/161/Add.1 
 Page 269 
 
 
(1) Concerning the wood charcoal trade of Ch ina, please clarify the following points,  
(a) Type of wood charcoal subject to expor t prohibition (standards , volume of domestic 
production and export; 
ANSWER:  
Wood charcoal subject to export prohibition is part of 44020000, specifically wood charcoal using 
wood as raw material. Wood charcoal not using wood as  raw material, such as shell or nut charcoal, 
and dust charcoal is not subject to export prohibition . 
QUESTION: Japan  
(b) Type of wood charcoal permitted to be exported; 
ANSWER: Wood charcoal other than the prohibite d part is permitted to be exported. 
QUESTION: Japan 
(c) Reasons why some type of wood charcoal has been subject to export prohibition; and 
ANSWER:  
The reason is to export prohibition to preser ve forests and to protect the environment. 
QUESTION: Japan 
(d) Inspection system and implementation of in spection of wood charcoal subject to export 
prohibition at customs. 
ANSWER: Because only wood charcoal using wood as raw mat erial is subject to export restriction, and the 
products are difficult to distinguish from other wood charcoals by external features, the Customs 
watches very closely products going through the Customs to ensure the e ffectiveness of export 
prohibition measures. 
QUESTION:  
Japan 
(2) In addition, footnote 115 of page 103 of the Report by the Secretariat states that wood 
charcoal (HS-44020000) is listed as partially prohib ited from export in general trade, but as totally 
prohibited under processing trade.  In this rega rd, please indicate what kinds of processed wood 
charcoal are subject to the export prohibition. WT/TPR/M/161/Add.1 
Page 270  
 
ANSWER:  
All wood charcoal products, including the charcoal using wood as direct material and all other wood 
charcoal not using wood as direct material, are prohibited under processing trade. However, it 
should be noted that processing trade in nature is a tariff-bonded measure for imports to be processed 
in China and then re-exported. Those products s ubject to import prohibitions under processing trade 
are not prohibited from being imported under normal trade. Prohib ition under processing trade only 
means the products concerned will not be granted  the tariff-bonded treatment when imported. 
QUESTION: Canada I  
38.  Please explain the license requirement for the export of raw magnesite.   
ANSWER:  
Heavy and light sintered magnesium is subject to export quota administration. The export quotas are 
allocated by way of tendering. Enterprises obtaining  quotas should obtain export licenses from a 
Special Commissioner’s Offices of MOFCOM in China. 
QUESTION: 
Canada I  39.  Why is this product subject to export licensing?   
ANSWER:   
The production of heavy and light sintered magnesium  has considerable impacts on the environment. 
Export restriction on this product falls under th e GATT1994 Article XX General Exception, 
particularly “(b) necessary to protect human, anima l or plant life or health; and (g) relating to the 
conservation of exhaustible natural resources if such me asures are made effective in conjunction with 
restrictions on domestic production or consumption”, among others. 
QUESTION: Canada I  
40. What is the role of the China Chamber of Commerce of Metals, Minerals, and Chemicals in 
granting the license?   
ANSWER:   
The China Chamber of Commerce of Metals, Minerals , and Chemicals is not involved in issuing the 
license. 
QUESTION: Canada I 
41. How long is the process to obtain a license?    WT/TPR/M/161/Add.1 
 Page 271 
 
 
ANSWER:  
If all the required documents are presented correctly , the license can be obtained within 3 working 
days from the day when the quota is obtained through bidding.  
QUESTION: Canada I 
42.  What recourse do companies have when licenses are delayed or denied? 
ANSWER:  
Companies complaining about unreasonable delays or  denials may apply for administrative review 
with MOFCOM (Department of Treaties and Law)  according to the Implementing Measures on 
Administrative Review of MOFCOM and the Law on Administrative Review, or bring a lawsuit to a 
competent people’s court according to the Regulatio ns on Administration of the Import and Export of 
Goods and Administrative Procedure Law. 
(4) Measures Affecting Production and Trade 
(iv) State-owned enterprises (SOEs) 
QUESTION: 
UNITED STATES I 38. Paragraph 227 of Chapter III of the report stat es that the current policy of the State-owned 
Asset Supervision and Administration Commission (SAS AC) with regard to SOEs includes, inter alia, 
allowing companies “with long-term loss and no hope to  recover or with larger debts than assets” to 
declare bankruptcy.  Can China explain the applicab le procedures for an SOE to declare bankruptcy 
and provide statistics on the number and size of SO Es that have declared bankruptcy since SASAC 
was formed in March 2003? 
ANSWER:  
1. SOE bankruptcy procedures:  Currently, there are two approaches to liquidate stat e-owned enterprises which are unable to sustain 
further business operation. One of them is through po licy-related bankruptcy; the other is to liquidate 
the bankrupted enterprise accordi ng to the Bankruptcy Law of the People’s Republic of China (trial 
version) and the Civil Procedure Law for Enterprises of the PRC. 
The first step is to set up a liquidation team. As  the next step, the liqui dation team takes over the 
bankrupting enterprise in terms of asset management , liquidation, valuation, disposal and allocation. 
The third step is asset allocation of the bankruptin g enterprise. Before the a llocation, the liquidation 
team shall appropriate liquidation fees including f ees arising from assets involved in assets 
management, selling, and allocation and the litigatio n costs of the bankruptcy cases. After paying up 
the liquidation fees, the assets involved in the ban kruptcy should be paid out in the following order: 
payable staff and workers’ salaries and labor insur ance costs, tax payment due and in arrears, 
liabilities owed by the bankrupting enterprise to the cred itors. The fourth step is the termination of the 
liquidation process. After allocation of the assets invo lved in the bankruptcy, the liquidation team will 
report to the competent people’s court about the liquidation and allocation and apply with the court 
to terminate the bankruptcy process. Owners of liab ilities who have not been paid so far will not be 
paid as from now on. The last step is to can cel registration. When the enterprises have gone WT/TPR/M/161/Add.1 
Page 272  
 
bankruptcy and the assets involved in bankruptcy a re allocated, and the legal persons of those 
enterprises cease to exerci se their civil conduct capacity, the liq uidation team shall apply with the 
relevant business registration office for the cancella tion of the original enterprise registration. 
The procedures of policy-related bankruptcy are the same as the liquidation procedures provided for 
by the Bankruptcy Law of the People’s Republic of  China (trial version). The only difference lies in 
that after paying the liquidation fees, the liquidate d assets shall first be used to pay for employee 
replacement in the policy-related bankruptcy. 
2. Statistics information with respect to SOEs going bankruptcy: 
Since 2003, 578 programs for policy-led bankruptcy have become active, involving 1.89 million of 
employees. 
QUESTION: 
Canada 2 
Part I. Macroeconomic Environment, The Ever Deepening Reform and Opening Up, paragraph 11: 
15. What criteria are used by the State-owned Asset Supervision and Administration Commission to 
determine when an enterprise is “in defau lt without hope to regain profitability”? 
ANSWER:  
The criterion against which a SOE is considered “b eyond the hope of regaining profit-making” is 
whether the SOE suffers long-term losses with mo re liabilities than assets in terms of value. 
QUESTION: Canada  
Part III. Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade, (iii) 
Legal framework for business, (d) State- owned enterprises, paragraph 218:  
45.Under the “Law on Industrial Enterprises Owne d by the Whole People”, SOEs are required to 
operate “under the guidance of state plans”.  How ar e they able to heed Article 22 yet still operate on 
a commercial basis?  
ANSWER:  
The Law on Industrial Enterprises Owned by the Whole People was promulgated in 1988. After 
27 years of reform, China’s economic regime has undergone substantial changes. Now China has no 
mandatory production plan. All state-owned enterprises are in a free position to operate on a commercial basis, running the business, engaging  in decision-making and being responsible for 
profits and losses on their own.  
Now more than 50 percent of state-owned companies or iginally registered according to the “Law on 
Industrial Enterprises” have been re-registered according to the Company Law. In the future, the 
great majority of state-owned enterprises will be  registered according to the Company Law.   WT/TPR/M/161/Add.1 
 Page 273 
 
 
QUESTION: 
EC  
The WTO Secretariat’s Report mentions in para 26 1 that, in 2005, 71.6 % of companies listed on 
China’s two domestic stock exchanges were state- holding companies, but the report does not include 
information on the extent of overall State Ownership in China. 
- Please provide information on the overall public  ownership of companies in China: what 
share of companies operating in China are publicly -owned in general and describe differences in 
public ownership between different sectors of economy. 
ANSWER:  
In China, public-owned companies mainly include  various types of companies within the public 
ownership economy, including listed companies which the state owns a controlling stake. 
In China, public ownership economy mainly in cludes public-owned companies and collective-owned 
companies, public-owned companies stand for stat e-owned companies. Collective-owned companies 
post a relatively dynamic presence in the first and t ertiary industries. Howeve r, their share in the 
overall national economy is not that high after 27-year reform. At present, in China’s statistics, we 
have a relatively complete set of figures for st ate-owned companies and collective-owned industrial 
companies across the country. 
For statistics on SOEs and collective-owned industria l companies, please refer to Page 131 of the 
WTO Secretariat Report WT/TPR/S/161.  
Please look for additional data from China in th e chart below from the Secretariat’s Report. 
Table III.14 
Performance of SOEs, 2001-04  
 2001 2002 2003 2004 
Number of SOEs  173,504 158,712 149,988 137,753 
Employment (million)a 48.2 44.6 42.3 39.8 
 (billion Yuan)  
Profits realized  281.1 378.6 495.1 752.5 
Value added 1836.4 
(18.9% of GDP) 2174.8 
(20.7% of GDP%) 2615.3 
(22.3% of GDP) 3402.9 
(24.9% of GDP) 
Value of assetsb  8,790.2
(64.9% of total assets) 8,909.5
(60.9% of total assets) 9,452.0 
(56% of total assets) 10,159.3 
(52.0% of total assets) 
Value addedb  1,465.2
(51.7% of total value 
added) 1,593.5
(48.3% of total value 
added) 1,883.8 
(44.9% of total value 
added) 2,321.3 
(46.8% of total value 
added) 
.. Not available. a Employment for state owned and state holding enterprises. 
b Data only for state owned and st ate holding industry enterprises. 
Note: Data only for SOEs above "designated size" where designated size is sales of over Y 5 million. 
Source:  Data provided by the authorities. WT/TPR/M/161/Add.1 
Page 274  
 
Collective-owned Industrial Enterprises 
Value added Total Asset Sales Revenue Employee 
Year 
Billion 
yuan proportion Billion 
yuan proportion Billion yuan proportion Thousand 
persons proportion 
2001 261.5 9.2 801.4 5.9 905.7 9.7 4,640 12.1 
2002 255.3 7.7 734.6 5.0 880.0 8.0 3,830 10.3 
2003 255.2 6.1 690.2 4.1 876.7 6.1 4,800 8.3 
Proportion refers to proportion in state-owned and non-stat e-owned above designated size industrial enterprises. 
IV. TRADE POLICIES BY SELECTED SECTORS 
(1) Introduction (2) Agriculture 
(i) Features and market developments 
(ii) Policy objectives and administration QUESTION:  Mexico 11a  
- Preguntas acerca del Capítulo IV del TPR de China:  a) ¿En qué consisten las subvenciones otorgadas por el gobierno de China a su 
agricultura? ¿en qué instrumentos constan? ¿es posible tener acceso a esa información? 
ANSWER: 
Detailed information on subsidies related to the agriculture sector is available in the domestic 
support notification China submitted pursuant to Article 18.2 of the Agreement on Agriculture in 
January 2006 and the subsidy notifica tion submitted in April 2006 purs uant to Article XVI:1 of the 
GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures. 
(3) ENERGY (ii) Electricity QUESTION:  
United States I 50. Paragraph 68 of Chapter IV of the repor t explains that China has made progress in 
deregulating its electricity industry by separating electricity production from transmission but has not 
yet separated electricity transmission from distribu tion nor implemented a competitive system for grid 
access and competition at the retail level. Please describe China’s plans for undertaking further 
reforms in this area.  WT/TPR/M/161/Add.1 
 Page 275 
 
 
ANSWER: 
The reform programme of the electricity indust ry was launched in 2002. Up till now China has 
completed separation of electricity production from grid transmission, and separation of transmission 
from distribution is making progress. In the coming five years the reform will be further advanced to 
improve regional electricity markets and to study  further transmission and distribution separation 
with trials to be implemented. Retail of electricity  will also be gradually open to competition when the 
timing is due. 
There are no major changes made to the 2002 reform programme of this sector, and work in this 
regard is going on. 
QUESTION:  
United States I  51-b. Will the amendments to the Electricity La w or the new implementing regulations, both of 
which are being drafted (according to  paragraph 69 of Chapter IV of the report), address either of 
these anti-competitive practices?   
United States I  
52. Paragraph 76 of Chapter IV of the report e xplains that, in practice, there is no direct 
correlation between electricity costs and the prices set by the NDRC, as the latter are apparently 
determined as much by political a nd macroeconomic factors.  The report refers to a study suggesting 
that the existing centrally administered pricing syst em has diminished local and foreign interest in 
investing in new generating capacity, and low electricity  prices have been identified as the root cause 
of China’s power shortage problem.  Does Chin a agree with this assessment?  Please explain. 
ANSWER: China does not agree with this viewpoint. As a matter of fact the electricity prices in China are set 
according to the cost of the enterprises op erating under normal market conditions. Currently the 
power grid price of the electricity producing enterprises is roughly at the same level as in other countries, which is attractive for in vestors to enter this sector. Therefore, production capacity of the 
sector has been continuously increa sing in China. By the end of 2005 the overall capacity has reach 
500 million kilowatts and the part newly added in 2004 and 2005 surpassed 100 million kilowatts. 
Profits of the electricity producin g enterprises have also increased. In 2005 profits of the enterprises 
were 11.7% more than in 2004. Production capac ity under construction is more than 200 million 
kilowatts, which will satisfy the de mand growth in the near future. 
(4) Manufacturing 
(i) Overview 
(ii) Iron and Steel QUESTION:  
United States I 
55. Paragraph 95 of Chapter IV of the report stat es that China provides assistance in the form of 
tax refunds, discounted interest rates, and funds fo r research and development, etc. to major iron and 
steel projects using newly developed domestic equipmen t.  Does China consider this program to be a WT/TPR/M/161/Add.1 
Page 276  
 
prohibited subsidy under Article 3 of the Subsidi es Agreement?  If not, why?  If so, please describe 
China’s plans for withdrawing this subsidy. 
ANSWER: 
There is no such assistance for major iron a nd steel projects using domestic equipment. 
QUESTION:  
United States I  53. Paragraph 84 of Chapter IV of the report states that considerable deregulation has taken place 
during the economic reform process in China, a nd as a result government agencies are no longer 
responsible for regulating, inter alia , the steel industry.  As discussed in paragraph 93 of Chapter IV of 
the report, however, NDRC issued a major industr ial policy – the Steel Industry Development Policy 
– in July 2005.  Although many aspects of this ne w policy have not yet been implemented, it still 
includes a host of objectives and guidelines that raise serious concerns, such as by calling for the use 
of domestically produced steel-manufacturing equipment and domestic technologies whenever 
domestic suppliers exist and by imposing de facto te chnology transfer requirements.  More generally, 
this policy is troubling because it attempts to di ctate industry outcomes and involves the government 
making decisions that should be made by the mark etplace.  It prescribes the number and size of steel 
producers in China, where they will be located, the types of products that will and will not be 
produced, and the technology that will be used .  This high degree of government direction and 
decision-making regarding the allocation of resources into and out of China’s steel industry is not 
only inconsistent with the spirit of China’s oblig ations as a Member of the WTO, but it raises 
concerns specifically because of the commitment that China made in its WTO accession agreement 
that the government would not influence, directly or indirectly, commercial decisions on the part of 
state-owned or state-invested enterprises.  Does  China have any plans to work toward true 
deregulation of, and the institutionalization of mark et mechanisms in, the steel industry?  Please 
explain. 
ANSWER: 
The Steel Industry Development Policy outlined opi nions of the government towards development of 
the sector. It is not compulsory in itself. Th ere is no government’s interference in commercial 
decisions of enterprises, including steel sector. Ther efore China sees no inconsistency in this regard 
with the accession commitments. 
QUESTION:  
United States I  
54. Paragraph 94 of Chapter IV of the report states that China’s Steel Industry Development 
Policy restricts foreign investment in China’s steel i ndustry.  At the same time, according to paragraph 
55 of Chapter I of the report, China’s SOEs have invested in several industries in other countries, 
including the steel industry. Meanwhile, rationaliza tion of production and consolidation are occurring 
in steel industry outside of China, and they are al so stated goals of China’ s steel policy.  Please 
explain the rationale for restricting foreign investment in China’s steel industry and why it is 
consistent with China’s goals of rationaliz ing and consolidating its steel industry. 
ANSWER: 
Macro regulation including measures aiming at reducing investment was introduced on some of the 
overheated sectors such as the iron and steel sector because exc essive production capacity entails  WT/TPR/M/161/Add.1 
 Page 277 
 
 
great waste of resources. The measu res were not targeted at foreign investment but at all investment 
regardless of their origin. The ma cro regulation was designed to cu rb over vicious competition in 
domestic market as well as its seri ous impact on international market. 
QUESTION:  
United States I  
56-a. Taking into account China’s WTO obligations, including those in Article XI of GATT 1994 
and paragraph 5 of Part I of China’s Protocol of  Accession, please explain how China justifies these 
import restrictions. 
ANSWER: 
Iron ore is subject to automatic import licensing, which is to monitor the import for statistical 
purposes. This is not import restriction.  
QUESTION: United States  
56-b. Are imports of any other steelmaking inputs, such as ferroalloys, ferrous scrap, zinc, nickel, 
aluminium or titanium, subject to similar import requ irements?  If so, please explain the applicable 
requirements for each product.  
ANSWER: 
The products mentioned in the question are subject to automatic import licensing.  
Information regarding automatic import licensi ng of these products can be found on MOFCOM 
website http://english.mofcom.gov.cn.    
Information on industry associations rel ated to these products is as follows: 
1. China Steel Industry Association, http://www.chinaisa.org.cn; 
2. China Commercial Chamber for Metals, Mi nerals and Chemicals Importers and Exporters, 
http://www.cccmc.gov.cn/englishweb/engdefault.aspx. 
QUESTION:  
Canada I 
54-a. Please explain how the directives outlined in China’s Iron and Steel Industry Development 
Policy (Steel Policy), as drafted by the National Development and Reform Commission and released 
at the July 20, 2005 executive meeting of the State Council, are consistent w ith paragraphs 46 and 172 
of the Working Party Report. 
ANSWER : 
The Steel Industry Development Policy is a paper ou tlining the opinions of the government towards 
development of the sector. It is not compulsory in itself. A major element of China’s on-going reform 
is to gradually eliminate government’s interference  in commercial decisions of enterprises and it is WT/TPR/M/161/Add.1 
Page 278  
 
the same in steel industry. China therefore does not see inconsistency in this  regard with the Working 
Party Report. 
QUESTION: Canada 
54-e. Has China issued any directives or establishe d any plans for the privatization of its state-
owned steel enterprises.  If so, please describe them.  
ANSWER: 
In the reform of the state-owned enterprises which include also those in iron and steel sector, state-
owned enterprises are accelerating the process of corporate transformation and have their investors 
being diversified. Joint stock system  is introduced and is pushed to be the main vehicle of public 
ownership. 
QUESTION: Canada I 
56. To the extent to which the St eel Policy prescribes the location of steel mills, does the Central or 
local governments provide for the construction of dedicated infrastructure, as defined in Article 
1.1(a)(1)(iii) of the Agreement on Subsidies and Countervailing Measures, for the steel industry?  
Further, is there an allowance made for subsidizing transportation costs for steel? 
ANSWER: 
China has provided no assistance as defined in Article 1.1(a)(1)(iii) of the Agreement on Subsidies 
and Countervailing Measures for the steel industry, nor allowance for subsidizing transportation 
costs for steel.  
QUESTION: 
Canada I 
58-a. Please describe all government support provided to implement Article 16 of the Steel Policy. 
ANSWER: 
There are no support measures taken by  the government to implement Article 16 of the Steel Industry 
Development Policy. 
QUESTION: Canada I 
58-b Please describe all government support provided to encourage China’s steel industry to use 
domestic equipment and technolog y in furnace of Article 18. 
ANSWER: 
There are no assistance measures taken by the go vernment to implement Article 18 of the Steel 
Industry Development Policy as described in this question.  WT/TPR/M/161/Add.1 
 Page 279 
 
 
QUESTION: 
Canada I 
58-c It is also stated in paragraph 95 that the Government will provide a range of assistance to iron 
and steel projects using newly deve loped domestic equipment. Could China explain the nature of such 
assistance and confirm our understanding that eligibility  for such assistance is contingent on the use of 
domestically produced over imported equipment? 
ANSWER: 
There have been no assistance meas ures taken by the government to implement the Steel Industry 
Development Policy as described in this question 
(iv) Automotive sector 
QUESTION:  
United States I  
58. Does China have any plans to work toward true deregulation of , and the institutionalization of 
market mechanisms in, the automo tive industry?  Please explain. 
ANSWER: 
In consistency with China’s reform on governme nt’s duty and operation, the Automotive Industry 
Development Policy reformed the investment adminis tration regime for investment projects in the 
automotive sector and changed the original approv al procedure as said in the 1994 Automotive 
Industry Development Policy to registration and verific ation procedures. This is a true deregulation 
of the sector. China believes the reform is good for automotive development of the enterprises on their 
own initiatives. 
QUESTION:  
United States I  
59. Paragraph 124 of Chapter IV of the report states that new investment projects in the 
automotive sector require, inter alia, a research a nd development facility with investment of no less 
than RMB 500 million.  Taking into account the commi tments that China made in paragraph 7.3 of 
Part I of its Protocol of Accession and paragra ph 203 of the accompanying Working Party Report not 
to condition investment on the conduct of research and development in China, please explain how China justifies this condition. 
ANSWER: 
China sees no inconsistency of the provision in th e Automotive Industry Deve lopment Policy with the 
Accession Protocol and Working Party Report co mmitments. Establishment of research and 
development institutions are initiatives of enterpri ses. In the new investment projects verified, 
establishments of research and development instituti ons are all proposed by enterprises. Therefore, 
the Automotive Industry Development Policy enc ourages this practice to push forward the 
development of new products, new technology and new crafts by enterprise s, to enhance market 
competition and to protect the interests of the consum ers. It is therefore not the situation as said in 
para. 203 of the Working Party Report. WT/TPR/M/161/Add.1 
Page 280  
 
QUESTION:  
United States I 
60. Paragraph 124 of Chapter IV of the report states that new investment projects in the 
automotive sector require, inter alia, a technolog y transfer agreement.  Taking into account the 
commitments that China made in paragraph 7.3 of Part I of its Protocol of Accession and paragraph 
203 of the accompanying Working Party Report not to condition investment on the transfer of 
technology, please explain how Ch ina justifies this condition. 
ANSWER: 
Technology transfer or cooperation agreement is in cluded in the Annex to the Automotive Industry 
Development Policy. However, this is not a compulsory  requirement. Most of the products in the joint 
venture automotive enterprises are in troduced from the foreign partner in the enterprises and this 
involves IPR issues. An agreement between the IPR owner and the transferee is a common practice to 
avoid future disputes in this respect. If such  an agreement has been entered into, then the 
documentation is required to be provided to the authorities as part of the project documents when 
being verified. 
QUESTION:  
United States II 
48. Paragraph 141 of Chapter IV of the report refers to a variety of preferential policies 
supporting the development of domestic software and integrated circuit enterprises, including VAT 
rebates, tariff exemptions for imported equipment for a domestic enterprise’s own use, export loans 
provided by the EXIM Bank and export credit in surance provided by the China Export & Credit 
Insurance Corporation at favourable conditions, gov ernment procurement preferences, and a special 
fund set up by the Ministry of Information United States (MII), the NDRC and the Ministry of Finance (MOF) to promote domestic enterprises’ research and development capabilities.  Are all of the programs described above addressed in China’ s finalized but not yet translated subsidies 
notification?  If not, please provide the informati on described in Article 25.3 of the Subsidies 
Agreement for those programs. 
ANSWER: 
The recently submitted subsidy notification contai ns a series of existing assistance measures for 
software and integrated circuit enterprises. Please refer to the notification for detailed 
information. 
QUESTION:  
Japan  
Q41. According to the announcement made by th e National Development and Reform Commission 
on September 21, 2004, China has amended its po licy and system concerning the semiconductor 
industry. It was said in the announcement that th e governmental support for research, development 
and human resource development of the semiconducto r industry would be continuously provided for 
in the future.  Please provide detailed information of the current situation as well as future plans for 
this support.  WT/TPR/M/161/Add.1 
 Page 281 
 
 
ANSWER:  
The recently submitted subsidy notification contai ns a series of current assistance measures for 
software and integrated circuit enterprises. Please ref er to the notification for detailed information. In 
the current assistance measures th ere is no discrimination against sales of foreign software and 
integrated circuit products in the Chinese mark et. The Chinese government considers continuing the 
support in future in areas of basic technology devel opment and training of professionals, which China 
believes will also be consistent with WTO rules. 
(5) Services (i) Overview 
QUESTION:  
EC 
The WTO Secretariat’s Report (part I, p. 28, para 57) mentions that “With a view to creating these 
jobs, the Government might usefully reappraise its  broad economic development strategy, which has 
hitherto attached high priority to encouraging e xport-oriented capital-intensive manufacturing, and 
place greater emphasis on removing impediments to the expansion of the services sector, which tends 
to be less capital-intensive”.  
- More generally, what are the prospects for furt her liberalisation of services sectors in China? 
ANSWER: 
In the course of the DDA Round, China has initiated plans to further liberalize its service sectors like 
translation service, road transport and cleansing service, etc. 
(iii) Financial Service Banking QUESTION:  
United States 1 
65. Paragraphs 164 throug h166 of Chapter IV of the report describe the capital requirements for 
establishing commercial banks in China.   
 a. Please explain the reasoning for requiring foreign banks to maintain minimum capital 
on a branch-by-branch basis at levels th at are extremely high by international 
standards and that do not take into account the proven risk management systems of foreign banks. 
 b. What is the status of the review of  these capital requirements by the China Banking 
Regulatory Commission? 
EC 
Para 166  states that a foreign bank branch that pr ovides all local currency services is required to have 
Y 500 million in operational capital. Although lowe red somewhat recently, this amount still seems 
extremely high, considering that it has to be fulf illed by each such branch separately and that China WT/TPR/M/161/Add.1 
Page 282  
 
also requires that the head office abroad of the foreign bank guarantees all liabilities of its branches in 
China. 
- Could China please indicate whether it is planning to reduce further capital requirements? 
ANSWER:  
When joining the WTO, China committed to openi ng its banking sector in a gradual manner. Foreign-
funded banks have different choices with respect to  business scope, target customers and so on. 
Currently, the same foreign bank may have differe nt business scopes and target customers for its 
different branches in China and may face different risks. Therefore, we impose individual operational 
capital requirements on different branches. 
As for the burden of operational capital on foreign  banks, the CBRC has lowered the threshold of 
capital or operational capital for foreign banks, with simplified classifications. In December, 2005, 
the highest level of the operational capital for branches of foreign banks offering RMB services to 
various types of customers (including individual  residents) was lowered to RMB 400 million from 
previously RMB 500 million. The threshold for forei gn-owned or joint-venture banks was down from 
RMB 300 million to RMB 200 million. At the current  stage, the settings in different amounts and 
levels of the operational capital can meet the need of foreign banks for differentiation. In the future, 
the CBRC will continue to develop appropriate re quirements based on the performance and risk 
management capabilities of foreign banks.  
QUESTION:  
EC Para 168 states in order to encourage investment in  certain parts of the country the CBRC, instead of 
assessing the profitability of each branch separately wh en considering an application, will take into 
account the profitability of all Chinese branches of the foreign bank.  
- We note that this economic needs test has not been scheduled. Is China planning to apply this 
overall assessment of profitab ility throughout the country? 
ANSWER: 
China exercises no “economic needs test” with respec t to the establishment of foreign bank branches 
and has no plan to change its current practice. China would kindly ask the EC to review its question. 
QUESTION:  
EC 
In footnote 282 the WTO Secretariat’s Report explains that there is a threshold of 25% foreign 
ownership in regard to whether a non-listed Chinese financial institution is treated as a foreign-funded 
financial institution or as Chinese by the CBRC. 
- Could China please explain what the difference is in regulation and business scope between a 
foreign-funded financial institutions  and a Chinese financial institution,  particularly after the end of 
the various transition periods?   WT/TPR/M/161/Add.1 
 Page 283 
 
 
ANSWER: 
The major difference in treatment between domestic and foreign- funded banks is that foreign banks 
enjoy an income tax rate of 15%, whereas their dom estic counterparts are subject to a rate of 33%, 
meaning foreign banks are treated prefer entially in terms of income tax. 
QUESTION:  
Japan: 
(p.209, paragraphs 153-154)  Q43. (2) Please explain the policy objectives of the high degree of government ownership in the 
financial services sector.  Please also indicate if Ch ina plans to lower the degree of government 
ownership.  
ANSWER: 
As a fledging financial market, China faces great c hallenges with respect to financial security and 
monitoring difficulty. Thus the Chinese Government maintains two principles on the reform of state-
owned commercial banks. The first principle is that  the state should hold majority shares to ensure 
financial security. The second principle is that th e state should continue to push forward the 
shareholding reform in a steadfas t manner, and improve internal c ontrol and the regulatory system.  
At this point, China has no plan to lower the percentage of state ownership in those SOCBs. 
QUESTION:  
Japan: (p.218, paragraph 174, note299)  
Q45. Where does “the international five categor y classification system” come from? Please explain 
this category classification system. 
ANSWER: 
The internationally prevailing credit management met hod is to categorize loans based on their risk 
levels, and set corresponding loss provisions for loans  on specific risk levels. The risk-based loan 
classification method adopted by China’s banking re gulator is a ‘five-level classification system’ 
(classification within commercial banks may have mo re levels, for example, up to 10). Under this 
system, according to their repayment possibilities,  loans are classified on 5 levels, namely pass, 
special-mentioned, substandard, d oubtful and loss (loans on the last  3 levels are categorized as “non-
performing loans”).  
The definitions of the five levels are as follows:  1) Pass: Borrowers can honour the terms of the contracts. There is no reason to doubt 
their ability to repay the principal and int erest of loans in full and on a timely basis. 
 2) Special-mentioned: Borrowers are currently able to serve their loans, though 
repayment may be adversely aff ected by specific factors. WT/TPR/M/161/Add.1 
Page 284  
 
 3) Substandard: Borrowers’ abilities to serve their loans are in question. Borrowers 
cannot depend on their normal business re venues to pay back the principal and 
interest. Losses may ensue, even  when guarantees are invoked. 
 4) Doubtful: Borrowers cannot pay back principal and interest in full and significant 
losses will occur, even when  guarantees are invoked. 
 5) Loss: Principal and interest of loans ca nnot be recovered or only a small portion can 
be recovered after taking all possible measures and resorting to necessary legal 
procedures. 
QUESTION:  
India 
Q.17  As per Chinese regulatory framework in fina ncial Services, the following criteria have to be 
met to upgrade from a representative office to a branch office: - 
 a) The representative office should have b een in operation for at least two years. 
 b) The parent bank should have assets of US$ 20 billion  c) China should have good relations with the country of origin of the bank in question. 
 d) As for capital requirements of a branch, a working capital ranging from 
US$ 12 million to 60 million is required de pending upon the nature and scope of the 
business. 
 e) “Seasoning requirements” which stipulates that the retail operations of foreign 
banking have to run for a couple of years, before service can be rendered to foreign 
nationals.   
Will China review such restrictive requirements and lower the minimum capital requirement and 
capital adequacy requirement to facilitate the entry of the Indian banks in the foreign market?   
ANSWER: 
China welcomes Indian banks to China’ s market. Based upon financial risks assessment, China has 
lowered for many times the requirement on the establishment of financial institutions and the 
operational capital requirement since its WTO accession. In December 2003, China lowered the 
operational capital requirement on branches of forei gn banks.  At the top level, the threshold was 
down from 600 million RMB to 500 million.  The th reshold was further lowered from 500 million to 
400 million RMB in last December. 
QUESTION:  
Korea 
14. According to paragraph 178, the minimum as set requirement for establishing a subsidiary or 
joint-venture of a foreign financial institution is di fferent from that for opening a branch of a foreign 
financial institution.  
In this regard, is there any different treatment in terms of business operation or  financial supervision?   WT/TPR/M/161/Add.1 
 Page 285 
 
 
ANSWER: 
Currently, the CBRC has no differential treatm ent for foreign-invested legal entities and foreign 
bank’ s branches with regard to business scope. How ever, the indicators used for regulatory purposes 
are different.  For example, for a foreign-invested  legal entity, the CBRC uses a full capital adequacy 
ratio (CAR) examination as well as loan concentr ation ratio and affiliated loan index examination. 
Additionally, the CBRC adopts the CAMELS evaluation system on legal entities yet the ROCA 
evaluation system on branches. 
QUESTION:  
Korea  
15. Paragraph 178 also states that a foreign financial institution should satisfy additional 
conditions in order to engage in local credit business.  
Please explain what is the local credit business in terms of its business scope? 
ANSWER: 
The accurate term should be “RMB (local currency) business” 
QUESTION:  
Canada: 70. Canada understands that foreign banks in China ma y apply for a license to deal in derivatives.  
Could China elaborate on the types of derivativ es activities that foreign banks are allowed to 
undertake upon receiving regulatory approval? 
ANSWER: 
After obtaining the license to operate financial d erivatives, a foreign-invested bank may engage in 
forwards, futures, swaps and options derivatives in line with the Interim Measures for Administration 
of Derivative Transactions of Financial Institutio ns. As to the specific product range, no further 
approval is needed from the CBRC, however, a notification is required. 
QUESTION:  
71. Paragraph 161 states that in the banking sector  there are self-regulatory organisations (SROs) 
such as the National Association of Banking I ndustry and National Association of Finance 
Companies.   
 a. Is membership to these SROs mandatory for banks (including foreign subsidiaries)? 
 b. If yes, are SROs requirements consis tent with China’s GATS commitments, in 
particular national treatment and market access obligations? 
ANSWER: 
The membership of the National Association of Banking Industry is voluntary. WT/TPR/M/161/Add.1 
Page 286  
 
QUESTION:  
Bolivia 
Inciso 5), iii), b), párrafos 155 al 181 ¿Cuál será el d estino de los Bancos Esta tales, cuando el sistema 
bancario sea constituido por nuevos Bancos Privados con Inversión Extranjera, que se iniciarán al 
amparo de las nuevas leyes bancarias? ¿Cuál es el grado de asistencia financiera que brindarán a los 
sectores de las pequeñas y medianas empresas de capital estatal? ¿Se limitarán a financiar a las 
grandes empresas, fundamentalmente también de capita l extranjero y del país de procedencia del 
banco?  
ANSWER: 
1. The reform of state-owned commercial banks is to transform those banks into modern 
incorporated commercial banks with international co mpetitiveness.  Currently, the Bank of China, 
China Construction Bank and the Industrial and Co mmercial Bank of China are pushing ahead the 
reform according to their respective timetabl es and have made gradual achievements. With the 
adoption of such major financial restructuring measures and spinning off non-performing loans, their 
financial conditions have notably improved.  They  have practically established a framework of 
corporate governance, defined and clarified right s and obligations, and basically shaped up an 
internal governance mechanism of effective check and balance.  Their internal control and risk 
management capacities have also been substantia lly enhanced. Internal management reform over 
corporate structure, business operation flow and hu man resources management is also being phased 
in. Up to now, the above-mentioned three banks ha ve completed restructuring and been transformed 
into shareholding companies.  Chi na Construction B ank has been successfully listed in Hong Kong.  
Improvement has been seen in terms of profitability , asset performance and capital strength. There is 
a good momentum as shown in all the major re gulatory indicators. The Agricultural Bank is 
accelerating efforts to formulate a reform program in preparation for reform as soon as possible.  
We have full confidence to see China’s state-owne d commercial banks meet their reform goals in the 
near future.  
2. The central government and banking regulatory authorities place great emphasis on the 
financing of not only big but also small and me dium-sized enterprises (SMEs). The CBRC has 
recently introduced a series of mechanisms and inno vation-centered guidelines to encourage SME 
financing. SMEs have become preferred second-in- line customers of strategic choice for many 
commercial banks. 
By extensively drawing experience from both at home and abroad, the CBRC promulgated the 
Guidelines on Bank Lending to Small and Medium -sized Enterprises, and cautioned financial 
institutions on “Six Mechanisms”, namely, risk-ba sed interest rate setting mechanism, independent 
accounting mechanism, efficient loan examination & approval mechanism, incentive & constraint 
mechanism, professional training mechanism , and contract-breach reporting mechanism. 
Besides, state-owned commercial banks, the fin anciers for SMEs also include other types of 
businesses, even foreign-invested enterprises. By th e end of 2005, the balance of lending by major 
financial institutions to SMEs had reached 2,677 .553 billion RMB, an increase of 205.736 billion 
compared to the beginning of the year and accounting for 16.37% of the total bank lending.  WT/TPR/M/161/Add.1 
 Page 287 
 
 
Insurance 
QUESTION:  
United States I 
66. Paragraph 180 of Chapter IV of the repor t explains that, in the Services Schedule 
accompanying its Protocol of Accession, China co mmitted to lift by December 2006 any remaining 
non-prudential measures restricting ownership, oper ation and juridical form  of foreign financial 
institutions, including with regard to internal br anching and licenses.  Does China anticipate any 
problems in fulfilling this commitment in a timely wa y?  What preparations has China made for the 
removal of the measures in question? 
ANSWER: 
China’s accession commitments have been made well k nown to enterprises.  In due course, there will 
be official announcements to the public, with whic h the remaining non-prudential restrictive measures 
will be removed as committed. 
QUESTION:  
68. Paragraph 181 of Chapter IV of the report states that there are two – presumably Chinese – 
insurance asset management companies in China.  It appears that this small number of insurance asset 
management companies in China results from Artic le 8 of the Interim Regulations for Insurance 
Assets Management Companies, whic h became effective in June 2004 a nd limits eligibility to insurers 
that have held licenses for more than eight years,  which would exclude all foreign insurers entering 
China’s market since China’s WT O accession in December 2001.  Even though this limitation applies 
to both domestic and foreign insurers, it appears to have a disproportionate impact on foreign insurers 
and would seem to postpone the opening of this sector  until at least eight years after China’s accession 
to the WTO.  Please justify this limitation in light  of China’s WTO national treatment commitments. 
ANSWER: 
With regard to the CIRC’s Interim Regulations  on Insurance Assets Management Companies, the 
requirement that only insurers that have held licen ses for more than 8 years are permitted to apply to 
establish an insurance asset management company  is non-discriminative and based on prudential 
considerations. 
QUESTION:  
52. Paragraph 197 of Chapter IV of the report states that, in its Protocol of Accession, China 
committed to open its annuity market to internat ional participation by December 2004.  Please 
identify the measures governing the procedures and requirements for obtaining the necessary 
licensing for insurers seeking to provide annuity services. 
ANSWER: 
1. At present, the defined contribution plan (the  DC plan) based on trus t is permitted in China 
and the applicable regulations are the Provisi onal Measures on Enterprise Annuities and the 
Provisional Measures on the Ent erprise Annuities Fund Management. 
2. The process for application and approval of enterprise annuities fund management are 
provided for in the Provisional Measures on the Qualification for Enterprise Annuities Fund 
Management Institutions. WT/TPR/M/161/Add.1 
Page 288  
 
QUESTION:  
53. Paragraph 182 of Chapter IV of the report re fers to six Chinese holding companies in China’s 
insurance industry.  Do FIEs have the right to establish holding companies?  If not, please explain, 
taking into account China’s WTO national treatment commitments. 
ANSWER: 
With regard to the establishment of financial holding companies, the Memorandum of Understanding 
on Division of Responsibilities and Collaboration in  Financial Supervision and Regulation between 
the CBRC, CSRC and CIRC reached in June, 2004 shows how China regulates these financial holding companies in the case of separate supervision  on different lines of financial business. Article 
8 of the Memorandum stipulates, “The supervision of  a financial holding company is subject to the 
principle of separate supervision on different lin es of business. The supervision over the parent 
company of the financial holding company rests with the relevant commission, depending on the nature of the company’s principal business. The different subsidiaries of the financial holding 
company are under separate supervision depending on the nature of each subsidiary’s business 
activities. Where a financial institution has oversea s establishments, its respective supervisory 
commission should exercise supervision over the overseas establishment and establish certain 
working relations with the host country superviso ry authority. Where a financial holding company is 
established by a commercial entity, its supervision and regulation should be  exercised in accordance 
with relevant arrangements jointly established by the three commissions.” 
QUESTION:  
54. Paragraph 185 of Chapter IV of  the report discusses China’s In surance Law, issued in June 
1995 and amended in October 2002.  In December  2004, the China Insurance Regulatory Commission 
(CIRC) invited public comment on a draft of a new Insurance Law.  The United States provided written comments, urging CIRC, inter alia, to harm onize the treatment of domestic and FIE insurers.  
Please explain the status of the draft Insura nce Law and China’s plans for finalizing it. 
ANSWER: 
Efforts to amend the Insurance Law are progressing in strict a ccordance with relevant rules and 
procedures on legislation. The CIRC is involved in this process and has solicited opinions from all 
sectors including foreign insurance companies in  line with the procedural requirement. 
QUESTION:  
55. Paragraphs 194 and 195 of Chapter IV of  the report describe Ch ina’s GATS commitments 
with regard to, inter alia, the openi ng up of the reinsurance sector.   
 a. Article 11 of the Administration of Re insurance Business Regulations, which took 
effect in December 2005, appears to discriminate against foreign reinsurance companies by requiring right of first refusal for 50 percent of each primary company’s reinsurance program with domestically licensed reinsurers.  Taking into account the commitments that China made fo r this sector in the Services Schedule 
accompanying its Protocol of Accession, please explain how China justifies this 
limitation. 
 b. With regard to Article 22 of the Admi nistration of Reinsurance Business Regulations, 
can CIRC clarify that a 100 percent-owned subsidiary is an extension of the parent company’s operations, so that the reinsuran ce ceded to the parent company should be 
allowed?  WT/TPR/M/161/Add.1 
 Page 289 
 
 
ANSWER: 
The Regulations on Reinsurance Business is app licable to Chinese and foreign insurance companies 
operating in China.  Both are treated equally. 
On connected party transaction, please refer to the Regulations of the People’s Republic of China on 
Administration of Foreign-Funded Insurance Companies. 
QUESTION:  
EC 
According to the WTO Secretariat’s Report (p age 209 onwards, paras 153, 157 and 183), the foreign-
owned financial sector remains very small, with foreign banks accounting for only around 1.2% of 
bank assets, and domestic insurance companies accoun ted for 97.7% of the Chinese insurance market. 
In view of the positive contribution that foreig n financial institutions can make to financial 
modernisation in China, is China planning furthe r measures to ensure that the implementation of 
WTO accession commitments leads to real market access and is not frustra ted by overly burdensome 
regulations?   
ANSWER: 
Although foreign insurance companies have a short hi story of presence in China and limited influence 
on the market, they are developing at an amazingly rapid pace. In 2004, the market share of foreign 
insurance companies was only 2.27%, but it increased sharply to 6.92% in 200 5.  In particular, 
insurance companies from the EU had very outstandi ng performance. A single Group Insurance 
Policy had brought 20 billion Yuan of premiums to Generali China Life Insu rance. One important 
reason for such rapid development of foreign insu rance companies is their active attitude towards 
China’s market opening of and faithful fulfilment of WTO obligation. 
QUESTION:  
EC 
- Regarding the insurance sector, could China pr ovide data on the number of applications for 
licences and the number of licences granted, and on the average time between application and the 
granting of licences? 
ANSWER: 
Applications for entering into insurance services a re examined and approved strictly in accordance 
with relevant laws and regulations, and the pro cess thereof is fully tran sparent. For further 
information concerning approval, please log on to the CIRC official website (www.circ.gov.cn). 
QUESTION:  
Japan Q46. 
(1) Can it be argued that China imposes on econo mic needs test on the issuance of licenses for 
insurance companies given that th e CIRC considers “the developmen t of the insurance industry and WT/TPR/M/161/Add.1 
Page 290  
 
the need for fair competition” and gives priority to  applicants wishing to provide insurance services in 
certain areas or sectors?   
(2) This appears to be in conflict with China’ s schedule of commitments which clearly states that 
a “license will be issued with no economic need s test or quantitative limits on licenses”. Please 
explain China’s efforts to improve tr ansparency in licensing procedures. 
(3) Please indicate whether China plans to rela x the Y 200 million minimum capital requirement 
for insurance companies.  
(4) An aggregate foreign shareholding is perm itted up to 50% in China.  Does China foresee more 
liberalization regarding a single foreign shareholdi ng which is currently restricted up to 20%?  
(5) Please explain why foreign insurance instituti ons are not allowed to engage in statutory 
insurance business. Does China have any policy obj ectives with respect to this restriction which 
discriminates foreign insurance companies?  In addition, please provide detailed information on the 
existing laws and regulations that impose the restrict ion, and to indicate if China has plans to abolish 
the restriction. 
ANSWER: 
“Developing the insurance business and ensuring fa ir competition” refers to the creation of a 
favourable environment for the development of in surance companies from which all market players 
including foreign insurers can benefit. It is a misu nderstanding of China’s insurance policy to equal 
this to the economic needs test.  
The market access qualification, shareholding p ercentage requirement and the statutory insurance 
business restrictions are all based on the principle of prudence. Taking into consideration the actual 
0market access commitments made to the insuran ce sector, China has no plan to change such 
requirements and restrictions. 
QUESTION:  
India 
Q.12 China has placed restrictions on opening of ne w offices by an insuran ce company. This is 
because the license granted is on provincial basis ra ther than on an All-Ch ina basis. Would China 
consider reviewing this condition? 
Q.13 China has placed a condition that license will be granted to only those foreign insurance 
companies which: 
 (i) have more than 30 years of establishment experience in a WTO member;   (ii) have a representative office for two consecutive years in China; and  
 (iii) have total assets of more than US$ 5 billion.  
These conditions are very stringent.  Would Ch ina consider relaxing the conditions?   
ANSWER: 
Since December 11th 2004, there has been no geogr aphic restriction on foreign insurance companies 
in China anymore. Foreign insurance companies me eting certain qualifications are allowed to apply  WT/TPR/M/161/Add.1 
 Page 291 
 
 
for the establishment of operational institutions  nationwide. The market access qualification and 
scope are based on the principle of prudence, and are in line with the actual development situation of 
China’s insurance sector. China has no plan to change the requirements. 
QUESTION:  
Korea 
Financial services : Insurance Services(WT/TPR/S16, p.233, para.194)     
16. Paragraph 194 indicates that no limitations ar e imposed on consumptions  abroad(mode 2) for 
insurance services except for brokerage.  
- In case of mode 2, how are consumers protect ed from financial frauds or related risks? 
- Is there any preliminary MOU signed in advance between the CIRC(China Insurance 
Regulatory Commission) and foreign supervisors for this purpose?  
ANSWER: 
The insurance sector is highly re gulated in most WTO members. Market  conduct is a main element of 
insurance regulation. Meanwhile, China has acti vely engaged in regional cooperation on insurance 
regulation in Asia, enhanced bilateral exchanges on insurance regulation, and signed MOUs on 
insurance regulatory cooperation to protect the interests of Chinese policy-buyers abroad. 
QUESTION:  
Canada Part IV. Trade Policies by Sector; (5) Services; (iii)  Financial Services; (c) Insurance, paragraph 198: 
76、 Paragraph 198 indicates that the mandato ry cession requirements for reinsurance under 
China’s GATS schedule were to be phased out by D ecember 2005.  Canada noted that this phase-out 
coincided with the promulgation of new reinsuranc e regulations by the China Insurance Regulatory 
Commission (CIRC). 
a. On the basis of these new regulations, could Chin a explain in detail the process direct insurers 
must follow when buying reinsurance?  Please  include an explanation of any new cession 
requirements. 
b. Could China clarify whether direct insurers seeking to purchase reinsurance are permitted to 
use quotations obtained from reinsurers outside of Chin a in their final offer to  reinsurers in China? 
c. Can China indicate whether it maintains any rest rictions on firms engaging in reinsurance 
with their affiliates? If so, do these restrictions apply equally to foreign and domestic insurers? 
ANSWER: 
a. For details about regulations concerning an insurance company buying reinsurance, please 
refer to the Provisions on the Admini stration of Reinsurance Business; 
b. For details about regulations concerning an  insurance company purchasing from re-insurers 
outside China, please check China’s WT O commitments in reinsurance sector; WT/TPR/M/161/Add.1 
Page 292  
 
c. For details about regulations concerning firms  engaging in reinsurance with their affiliates, 
please refer to the Notice on Reinsu rance Businesses between Fore ign-Funded Insurance Companies 
and Their Affiliates and the Notice on Amendments to  the Implementing Rules of Administrative 
Approval by the China Insurance Regulatory Commission.   
QUESTION:  
77. Paragraph 198 suggests that China does not ma intain any national treatment limitations for 
mode 3 except that foreign insurance institutions may not engage in statutory insurance business.  
Could China please comment on how it ensures nationa l treatment is provided to foreign-invested 
insurance joint ventures with respect to licensing?  It does not appear that the current treatment given 
by regulatory authorities in approvi ng branch licenses is consistent with China’s GATS commitments.  
ANSWER: 
Examination and approval of applic ations for insurance market a ccess is undertaken by a Chinese 
insurance regulator in strict accordance with relev ant regulations. By the end of 2005, there had been 
altogether 82 insurance companies in China (ins urance shareholding companies and insurance asset 
management companies not included), 44 of which were foreign companies, taking up 54% of the 
total. Foreign insurance companies fully  enjoy national treatment in China. 
In terms of branch licenses, Chinese government tr eats Chinese and foreign insurance companies 
equally and fairly, and examines and approves the applications of insurance companies for 
establishing branches based on the principle of prudence.  
Securities QUESTION: 
The United States   Part I 69. Paragraph 209 of Chapter IV of the report describes the high capital requirements currently 
applicable to fund management companies.  Wh at are China’s plans for bringing these capital 
requirements into line with those found in othe r WTO Members for fund management companies? 
ANSWER: 
As fund management business is only starting in  China, the creditworthiness requirement on the 
shareholders of the fund management firm is relati vely high.  Currently, registered capital is an 
important parameter for us to assess the creditworth iness of the shareholders.  As for overseas 
shareholders, we find it even more difficult to know their creditworthiness than for domestic 
shareholders.  Therefore, we see the registered  capital requirement as applied on major domestic 
shareholders an important means of assessing the creditworthiness of overseas shareholders.  As fund 
management business develops in China, we will impr ove our system of reviewing the credentials of 
domestic and overseas shareholders. 
QUESTION:  
ChineseTaipei 
(page 225, paragraph 202)  
According to Article 8 of China’s “Provisional Or dinance Governing Futures Trading”, members of a 
futures exchange shall be juridical persons regi stered in the People’s Republic of China.    WT/TPR/M/161/Add.1 
 Page 293 
 
 
i) Would China please clarify the qualifications for registering and also show how these 
constraints conform to the WTO’s Understanding of 
 Commitments in Financial Services?  ii) If a foreign juridical person sets up a branch in China, for example, will the branch be allowed 
to apply for membership of a futures exchange?  
iii) What are the qualification requirements? 
ANSWER: 
According to the Provisional Ordinance Govern ing Futures Trading, a foreign investor may only 
become the member of a futures exchange after it is  legally registered as a corporate legal person 
according to Chinese law within Chinese borders.  This requirement meets China’s commitment to the 
WTO’s Annex on Financial Services.  As the branch of a foreign juridical person in China is not 
viewed as such, it does not meet the precondition set  forth in the Ordinance, hence unable to become 
the member of a futures exchange. 
According to relevant stipulations of three futu res exchanges in China, a corporate legal person 
registered within Chinese borders must meet the following requirements to gain membership of a 
futures exchange. 
 (1) It must be a corporate legal person registered within the territory of the People’s 
Republic of China. 
 (2) It must acknowledge and abide by the ar ticles of association and operating rules of 
the futures exchange, 
 (3) A broker membership applicant must ow n registered capital of 30 million RMB or 
above.  Non-broker membership applicant s with Zhengzhou Commodity Exchange 
and Dalian Commodity Exchange must own reg istered capital of 5 million RMB or 
above.  Non-broker membership applicants with Shanghai Futures Exchange must own registered capital of 10 million RMB or above. 
 (4) The applicant must have a clean track reco rd and good reputation.  It must not have 
records in the most recent three years of seri ous violations of law or of being 
dismissed from a futures exchange. 
 (5) It must have a functional organization al structure and financial management system 
as well as a complete futures business management system. 
 (6) It must have a certified staff, a fixed  premise and necessary facilities to run the 
operation. 
 (7) A broker membership applicant must have the Futures Broker License issued by the 
China Securities Regulatory Commission (CSRC). 
 (8) It must meet other requirements by  the CSRC and the specific futures exchange. WT/TPR/M/161/Add.1 
Page 294  
 
QUESTION:  
ChineseTaipei 
Article 49 of the said “Provisional Ordinance” st ates that any organization (including futures 
brokerage firms) or person may not  engage in overseas futures trading without authorization by the 
competent authority.  Furthermore, a violator’s ille gal earnings will be confiscated, and a fine worth 1 
to 5 times the amount of illegal earnings will be levied.   
Could China please explain the rationale for maintaining this kind of market access limitation on 
overseas futures trading? 
ANSWER: 
(1) Renminbi is controlled under the capital account.  Futures trading is a high-risk category 
under this account.  There is great uncertainty as  to the impact of futures trading on cross-border 
capital flow.  Therefore, at the current stage, dom estic companies and individuals are under strict 
control in overseas futures trading. 
(2) State-owned enterprises encountered high ri sks in overseas futures trading a few years ago, 
suggesting that the existing governance and risk manage ment regime still fell short of the requirement 
for high-risk transactions like overseas futures trading.  However, as many SOEs do have the need to 
maintain assets value and to hedge risks through overseas futures trading, we  currently exercise 
rigorous market access and regulation on th e overseas futures transactions of SOEs. 
Other Financial Service Matters 
QUESTION:  
Costa Rica 
1. ¿Cuáles son las restricciones que afrontan las empresas extranjeras dentro de los servicios 
bancarios, de seguros, de telecomunicaciones y de tr ansporte? Dentro de los sectores citados, ¿cuál es 
la proporción de participación estatal y en que por centaje está limitada la participación extranjera? 
ANSWER: Please refer to China’s accessions schedules of  GATS for any services restrictions. Additional 
Information can be found on the official webs ites of relevant government bodies such as 
www.cbrc.gov.cn, www.circ.gov.cn,  www.mii.gov.cn, and www.sasac.gov.cn. 
Taking China’s banking sector as an example, acco rding to China’s WTO commitments, when the 
transitional period ends at the e nd of 2006, China will lift all restrictions over foreign investment in 
the banking sector, with a few exceptions. First, foreign investors applying for wholly-foreign owned 
or joint banks or financial companies must have a tota l asset value of more than 10 billion USD at the 
end of the year prior to the year when the applicat ion is filed.  Second, foreign investors applying for 
opening branches must have a total asset value of mo re than 20 billion at the end of the year prior to 
the year of application.  Third, foreign investors wanting to offer RMB services must have had three 
years of operation in China and have been making pr ofits for two consecutive years prior to the year 
of application. Apart from that, the China Banking Regulatory Commission will also, in line with international prudential and regulatory standards, apply prudential regulatory measures to protect 
the depositors and ensure a stable, sound  and functional financial system.   WT/TPR/M/161/Add.1 
 Page 295 
 
 
Before the transitional period ends, China’s geographical restrictions over foreign       invested banks 
only apply to the RMB business, which has been lib eralized in 25 cities, including 5 cities with 
autonomous liberalization. Similarly, customer restrictions apply only to RMB business. Currently, 
foreign invested banks are not allowed to offer RM B services to Chinese residents. According to 
China’s WTO commitments, all these restrictions will have been phased out when the transitional 
period ends.  
The statistics on the share of state-owned assets in the total capitalization of the banking sector are 
not available. The follow ing statistics on government shareholding in state-owned and share-holding 
banks are provided for reference: th e Industrial and Commerce Bank of China, 90.9%; Agricultural 
Bank of China, 100%; Bank of China, 79 %; China Construction Bank, 70.9%, Bank of 
Communications, 23.4%; and Industrial Bank, 30.2%. Th ere is no government shareholding in other 
incorporated banks.  
Some provisions provide for the cap on foreign sha reholding.  1) According to the Law of the 
People’s Republic of China on Sino-foreign Join t-equity Ventures, and the Regulations of the 
People’s Republic of China on the Administrati on of Foreign Invested Financial Institutions and the 
Implementing Rules thereof, China allows forei gn banks to establish wholly foreign owned banks, 
joint venture banks or branches provid ed that the foreign shareholding is no less than 25%, otherwise 
it will not be regulated as a foreign invested bank. 2) According to the Measures on the Administration of Foreign Investment and Sharehol ding in Chinese Financial Institutions, foreign 
financial institutions can join shares in Chinese financial institutions, under the condition that the 
shareholding of one single foreign financial institu tion shall be no more than 20% and that combined 
shareholding by multiple foreign investors no more than 25%. 
QUESTION:  
Australia  
17. We would be grateful for details of any plan s China may have to raise the current ceiling on 
foreign equity ownership of stakes in rural financ ial institutions, as reported recently in the Chinese 
media.  We would appreciate details of any regu latory developments in this regard or policy 
announcements to this effect.  We would also be grat eful to hear from China what implications such 
developments may have for wider reform of the fi nancial services sector in China, including whether 
there are any plans to raise foreign equity limits on investments by foreign banks in other types of 
financial institutions in China.  
ANSWER: 
As an emerging market in transition, China has fulfilled commitments to liberalizing its financial 
service sector at the time of WTO accession. 
Firstly, to take banking sector as an example, (1) To  promote the reform of state-owned commercial 
banks. After the shareholding system reform of the state-owned banks such as the Bank of China (BOC) and China Construction Bank (CCB) in 2003, th e same reform was initiated in the Industrial 
and Commercial Bank of China (ICBC) in 2005. At present, BOC, CCB, ICBC and the Bank of 
Communications have all achieved initial results.  Their financial conditions have improved 
significantly and their corporate governan ce and internal management upgraded.  
(2) To deepen the reform of ru ral credit cooperatives. Since the pilot project of rural credit 
cooperatives reform was initiated in June 2003, pi lot projects have now penetrated 30 provinces 
throughout China (except Tibet), and the reform has generated preliminary results. The new 
supervision and management system of rural cr edit cooperatives have been put in place. The 
provincial government adopted three ways of manage ment, namely, the establishment of cooperatives WT/TPR/M/161/Add.1 
Page 296  
 
at provincial level (in 26 provinces and municipalitie s), restructuring into rural commercial banks as 
single legal persons in a city (in Beijing and Shangh ai), and establishment of rural cooperative banks 
as legal persons respectively at the municipal and township level (in Tianjin ). The ownership reform 
of rural credit cooperatives is progressing steadily. Based on their real situations, different localities 
adopted three business models (joint stock, coopera tive and joint stock cooperative) in four forms 
(rural commercial banks, rural cooperative banks, unified legal persons at city/county level, and two-
layered legal persons at township and village levels) . This reform measure was taken in line with the 
reality and different guidelines were made on each category. 
(3) To promote the reform of other financial in stitutions. China will actively promote the reform 
of financial asset management companies, improve its research into the system and mechanism of 
non-performing asset disposal, urge asset management  companies to strengthen internal management 
while improving the effectiveness, and promote sustained and healthy development of asset 
management companies. Further research should focu s on the respective functions of the National 
Development Bank, Agricultural Development Bank of China and the EXIM (Export-Import) Bank, 
and the legislation process concerning policy banks s hould be carried out. As part of the package 
reform in the postal service, the reform of postal sa vings institutions has picked up at high speed, and 
the establishment of a Postal Savings Bank has b een put on the agenda. China will continue with the 
reform of non-banking financial ins titutions, so that trust and investment companies will embark on 
the right business track. China will promote regulat ed development of small and medium-sized local 
financial institutions while encouraging capital inj ection in the restructuring of financial institutions 
such as urban credit cooperatives and urban commercial banks. 
(iv) Telecommunications services 
QUESTION:  
The United States   Part I 
71. Paragraph 217 of Chapter IV of the report st ates that a draft of a new Telecommunications 
Law is currently being revised.   
a. When will a draft of the Telecommunications  Law be circulated for public comment, as 
required paragraph 2(C)(2) of Part I of China’s Protocol of Accession?   
ANSWER: 
The Telecommunications Law has already been put on the 2006 legislative agenda of the standing 
committee of the National People’s Congress which will review the law in August 2006.  The law is 
now moving forward in the legislative process.   MII is actively coordinating with relevant 
departments on legislative study, t esting, and improvement as well as  the review so as to promulgate 
the law as soon as possible. 
In this process, China will strictly follow the legi slative procedures set forth in the Law on Legislation 
and other relevant laws.  
QUESTION:  
The United States   Part I 
b. Does the current draft of the Telecommunica tions Law either make MII structurally and 
financially separate from all the telecommunications  operators and providers or move the regulation 
of this sector outside of MII?  WT/TPR/M/161/Add.1 
 Page 297 
 
 
ANSWER: 
In 1998, China formed the Ministry of Information Industry and separated the entity from the business 
sector.  MII is now fully independent and free fr om business managing functio ns.  The management 
functions over the staff, property and assets of a company have been returned to the company or 
transferred to competent authorities.  So, MII is now in a position to exercise fair, open and just 
regulation over the telecom industry. 
The requirement on an “independent regulator” defined  in the Reference Paper is, “the regulator is 
separated from and has no responsib ility to any provider of basic telecom services.  The decision and 
procedure used by the regulator are fair to all market participants.”  MII fully complies with such 
requirement as an “independent regulator”. 
QUESTION:  
The United States   Part I 
72. Paragraph 219 of Chapter IV of the repor t describes China’s capital requirements for 
telecommunications FIEs engaged in national or cr oss provincial basic telecommunications services, 
i.e., registered capital must not be less than RMB 2 billion ($240 million).  In the United States’ view, 
this capital requirement is excessively high, both when viewed in relation to the norms in other 
economies and in the specific context of China’s telecommunications market.  To date, MII has 
provided no compelling rationale for such a requireme nt, and the fact that there has been little or no 
new entry in the basic telecommunications ser vices sector suggests that this requirement is 
functioning as a market entry deterrent , for both Chinese and foreign operators. 
 a. Does China consider the capital  requirements imposed by MII for 
telecommunications FIEs engaged in national or cross provincial basic 
telecommunications services to be comparable to those found in other WTO Members?  Please explain. 
 b. Does the current draft of the Telecommu nications Law lower the capital requirements 
for these FIEs? 
Korea 
18. The minimum registered capital requirement of Y 2 billion for enterprises providing basic 
telecom services across the country (Y 200 million for local services) appears to be excessively high.  
- Does the Chinese government have any future  plans to reduce such burdensome capital 
requirements?  
ANSWER: 
The minimum registered capital requirement on forei gn invested telecom companies stipulated in the 
Provisions on Administration of Foreign Invested Te lecommunications Enterprises is identical to the 
requirement on domestic telecom companies.  It meets the principle of national treatment. 
Telecom is a capital-intensive industry with economies of scale.  If the registered capital is too low 
upon establishment of the company, it will be d ifficult to offer services and to protect investor 
interests, and companies may easily withdraw for some reason, impairing the interests of the 
subscribers.  In short, excessively low regist ered capital may jeopardize industry, business and 
consumer interests. WT/TPR/M/161/Add.1 
Page 298  
 
China has a large territory and a huge population.  It spends massively on building telecom networks.  
QUESTION:  
Japan  
(p.232, paragraph 217)  Q48. The "Telecommunications Law" which is a basic law on conducting telecommunications 
business is not yet to be constituted.  In order to facilitate telecom operators to enter and expand their 
business in the Chinese market, and to help the de velopment of their business in the Chinese market, 
does China have any plans to enact the "Telecomm unications Act" which is consistent with WTO 
rules and commitments soon?  Please also explai n the time schedule and outline that China is 
currently planning on this. 
ANSWER: 
The Telecommunications Law has already been put on the 2006 legislative agenda of the standing 
committee of the National People’s Congress wh ich will review the law in August 2006.   
QUESTION:  
Japan  (p.232, paragraph 218)  
Q49. (1) Regulations on interconnections are est ablished along with the “Regulation on the 
Interconnections between Public Telecommunica tion Networks (Decree 9 of the Ministry of 
Information Industry)”. The scope defined in  article 2 of this regulation includes: 
 (a) fixed local network,  
 (b) domestic long-distance telecommunications,   (c) international telecommunications ,   (d) IP telephony,  
 (e) cellar mobile networks,  
 (f) mobile satellite networks,  (g) Internet backbone networks and   (h) other telecommunications networks specified by MII.  
Please define in detail Internet backbone networks  and their scope, including whether Internet 
backbone networks connecting to th e foreign networks are included or not, and what networks and 
network apparatus are contained in inte rnational Internet backbone networks. 
ANSWER: 
China’s Internet backbone networks currently incl ude 10 interconnecting providers, namely, China 
Telecom, China Mobile, China Unicom, China Railc om, China Satcom, China Education Net, Great 
Wall Net, CSTNet and Trade and Economic Net. 
The Internet backbone networks select their own equipment from  telecom equipment which has 
already been licensed by MII for network connection.    WT/TPR/M/161/Add.1 
 Page 299 
 
 
QUESTION:  
Japan  (p.232, paragraph 218)  
Q49. (2) It is stated in paragraph 218 of the Report by the Secretariat that the “Regulation on the 
Interconnections between Public Telecommunica tion Networks (Decree 9 of the Ministry of 
Information Industry)” stipulates interconnection. Leased circuit, frame relay and IP-VPN, however, 
seem not to be within the scope of interconnections stipulated in this regulation.  We recognize that 
China commits to all the provisions of the Referenc e Paper and the liberalization of domestic packet-
switched data transmission services.  Please indicat e which domestic law and regulations ensure the 
disciplines stipulated in the Reference Paper, incl uding cost-oriented rates and sufficiently unbundled 
interconnections. 
ANSWER: 
Regulations on the interconnection between teleco m networks including the Telecommunications 
Regulations of the People’s Republic of China an d the Regulations on the Interconnections between 
Public Telecommunication Networks (Decree 9 of th e Ministry of Information Industry) have been 
publicly issued with copies available from  MII’s official website (www.mii.gov.cn). 
At present, the scope of regulation on interconnec tion between telecom networks covers 7 types of 
networks (fixed local network, domestic l ong-distance telecommunications, international 
telecommunications, IP telephony, cellar mobile ne tworks, mobile satellite networks, and Internet 
backbone networks) between six basic telecom ser vice providers (China Telecom, China Netcom, 
China Mobile, China Unicom, China Satcom and China Railcom).  The interconnections regarding 
leased circuit, frame relay and IP-VPN are not in the scope. 
MII is now studying cost-oriented inter-ne twork rates and unbundling network elements. 
QUESTION:  
Japan  (p.232, paragraph 218)  
Q49. (3) Article 17 of the “Regulation on Telecommunications”, stipulates that the dominant service 
provider that has control over basic telecommunicati on facilities is defined as the carrier which should 
be subject to the specific regulations.  Please provi de the names of the operators applicable for the 
specific regulations above. 
ANSWER: 
The Regulations on the Interconnections between Public Telecommunication Networks (MII Decree 
No.9) clearly defines the dominant te lecom service operator.  Before it was divided into the south part 
and the north part, China Telecom used to be th e dominant telecom service operator.  After the 
separation, MII is now looking at changes in th e telecom market to study the issue of dominant 
telecom service operator. WT/TPR/M/161/Add.1 
Page 300  
 
QUESTION:  
Japan  
(p.232, paragraph 218)  
Q49. 
(4) Under Article 18 of the “Regulation on Te lecommunications” and in Article 7 of the 
“Regulation on the Interconnections between Public  Telecommunication Networks (Decree 9 of the 
Ministry of Information Industry)”, dominant service providers are required to establish the interconnection agreement concerni ng the rates and process of interc onnection and to be authorized 
by MII.  Does China ensure the conditions committe d in the Reference Paper, including cost-oriented 
rates in the criteria of the standards in the author ization?  If so, please indicate the provisions for the 
grounds and the content of specific criteria in the authorization. 
ANSWER: 
Regulations on the interconnection between teleco m networks including the Telecommunications 
Regulations of the People’s Republic of China an d the Regulations on the Interconnections between 
Public Telecommunication Networks (Decree 9 of th e Ministry of Information Industry) have been 
publicly issued with copies available from  MII’s official website (www.mii.gov.cn). 
Pursuant to the Telecommunications Regulations of the People’s Republic of China, the 
interconnection between public telecom netwo rks and between a public telecom network and a 
specialized telecom network is subject to an  inter-network agreement reached between the 
interconnecting parties through cons ultations and in accordance with the inter-network regulations of 
the competent informati on industry authority of the State Coun cil.  The interconnection agreement 
shall be notified to the competent information industry authority and be kept on file.  The filing of the 
agreement is subject to the Telecommunications Re gulations of the People’s Republic of China and 
the Regulations on the Interconnections betw een Public Telecommunication Networks.  
QUESTION:  
Japan  (p.232, paragraph 218)  
Q49. (5) Do only dominant service providers have to  accept an interconnection request according to 
the authorized interconnection agreement of all th eir networks as stipulated on article 2 of the 
“Regulation on Telecommunications”?  Is it possible to agree upon the terms and conditions including 
charges, which are not subject to the authorized interconnection agreement? 
ANSWER: 
Pursuant to the Telecommunications Regulations of  the People’s Republic of China, the dominant 
telecom service operator can not turn  down an interconnection request  from other telecom operators 
or a specialized network operator. 
Pursuant to the Measures on Rate Settlement  for Interconnections between Public 
Telecommunications Networks and Rate Apportion in  Relays, telecom service operators shall settle 
interconnection rates in accordance with the Table of Rate Settleme nt for Interconnections between  WT/TPR/M/161/Add.1 
 Page 301 
 
 
Telecom Networks.  The settling arrangements and standards for services unidentified in the Table 
will be determined by the telecom operators throug h consultation.  If no agreement is reached, the 
competent telecom authority may be requested to intervene.  
QUESTION:  
Japan  (p.233, paragraph 219)  
Q50. (2) It is stated in paragraph 219 of the Report by  the Secretariat that befo re China acceded to the 
WTO, foreign investment was not permitted in telecommunication services.  Are there any sectors 
where foreign investment remains prohibited in tele communications services after the accession to the 
WTO?  
ANSWER: 
Foreign investment and operation is currently prohibite d in those not specified in China’s Schedules 
of Accession. 
QUESTION:  
Japan  (p.235, paragraphs 227-228)  
Q51. (1) Does China have an intention to abolish r estrictions that foreign services suppliers can 
provide telecommunication services only through establishing joint venture enterprises? 
ANSWER: 
According to China’s Commitments on G ATS, foreign services suppliers can provide 
telecommunication services only through establishing join t venture enterprises.  China has no plan to 
make an adjustment to that. 
QUESTION:  
Japan  
(p.235, paragraphs 227-228)  
Q51. (2) It is stated in paragraph 228 of the Report by the Secretariat that Cross-border supply appears 
to be subject to the same restrictions as for mode 3.   Please explain what this means.  Does this mean 
that it is required to provide services only through  the commercial presence which has the telecom 
license?  Or does this mean that it is required only to establish a commercial presence which is not 
required to have the telecom license in China when  the telecom services are provided under mode 1.  
Please specifically explain this point. WT/TPR/M/161/Add.1 
Page 302  
 
ANSWER: 
China’s accession commitments on mode 1 telecom services refer to the section on mode 3.  Mode 3 is 
about the requirements on the establishment of a commercial presence. Based on this commitment, 
the market access restriction is applied equally  to cross-border provision of telecom services and 
commercial presence. 
QUESTION:  
India 
Q.14 Foreign vendors are not permitted to bid for the IT security market since these are 
Government backed projects.  On the other hand, do mestic companies can take up such projects.  This 
extends to telecom and financial companies, which constitute a huge chunk of the IT security market.  
Most of these companies are state owned or state b acked.  Will China review this violation of national 
treatment and permit foreign vendors to participat e in bidding process for Government backed IT 
security market? 
ANSWER: 
China does not restrict the participation of foreign firms in bidding for IT security projects. When 
China opens a public tender for its information security project, the project host requires that the 
bidder have third-party certification as a qualified info rmation security service provider.  If a foreign 
company intends to bid in a Chinese informati on security project, it should first qualify as an 
information system security service provider.  The certification in this  area is conducted in China by 
the China Information Technology Security Certification Center (www.itsec.gov.cn). 
QUESTION:  
Canada 
79. The Secretariat Report states that, in each lin e of basic telecoms service, including satellite 
services, at least a duopoly exists.  The Secretariat report notes, however, in Table IV.7, that China 
Satellite is the exclusive service provider for sate llite services.  Is there currently a monopoly or 
duopoly on the provision of satellite services? If a duopoly, who, in addition to China Satellite, 
currently provides these services? 
ANSWER: 
In the field of satellite communication services, besi des China Satcom, there are other operators, for 
example, the leasing and re-sale of transponder by Sino Satcom Company Limited and VSAT service 
by Beijing Instec Satellite Communications Tech nology Company Limited and some 40 other 
companies. 
Part IV. Trade Policies by Selected Sectors, Services, (iv) Telecommunications services, (b) 
Regulatory structure and measures, paragraph 216:  
QUESTION:  
Canada 80. When will the Telecommunications Law be introduced?  WT/TPR/M/161/Add.1 
 Page 303 
 
 
ANSWER: 
The Telecommunications Law has already been put on the 2006 legislative agenda of the standing 
committee of the National People’s Congress whic h will review the law in August 2006.    
QUESTION:  
Canada 81. What were the criteria applied to define  “basic” and “value added” telecommunications 
services?   
ANSWER: 
Basic and value-added telecom services are defined using criteria from the Telecommunications 
Regulations.  Basic telecom services  refer to the provision of pub lic network infrastructure, public 
data transmission and basic telephony services.  Valu e-added telecom services refer to telecom and 
information services provided via public network infrastructure. 
QUESTION:  
Canada 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 216: 
82. The Secretariat Report states that “other government departme nts” are involved in regulating 
the Internet.   
a. Which departments this refers to? 
b. How does China regulate the internet? 
c. What are China’s objectives in regulating the internet? 
d. What measures are taken to ensure transparen cy of China’s internet regulatory regime? 
ANSWER: 
Pursuant to the Administrative Measures on Internet  Information Service, th e competent information 
industry authority of the State Council and tel ecom regulators of provinces, autonomous regions and 
municipalities exercise supervision and administrati on over the information s ervices provided over 
the Internet.  Press and publication, education, health, drug, industry and commerce administration 
and public securities authorities exercise supervisi on and administration over the information 
contents provided over the Internet  in their respective jurisdiction. 
With respect to the public policy on Internet go vernance, China has a system where “the government 
plays the main role, all parties concerned are in volved and the decisions are made in a democratic, 
transparent and efficient way”.  It means the government administers the Internet by law and 
encourages self-discipline and management within the industry. 
The aims of monitoring the In ternet are to create a secure and reliable Internet application 
environment which respects relevant international standards, to promote fast and sound development 
of the Internet in China, to regulate Internet se rvice and use, to safeguard user and public interest, to 
promote Internet use and the sharing of networked information resources, and last but not the least, 
to enhance the contributions of the Internet to the national economy, cultural and information industry. WT/TPR/M/161/Add.1 
Page 304  
 
The Internet is ruled by law.  Laws and regulat ions for monitoring and administering the Internet 
such as the Decision of the Standing Committ ee of the National People’s Congress on Ensuring 
Internet Security, the Telecommunications Regulations of the People’s Republic of China, and the Administrative Measures on Internet Informati on Services, and the Administrative Measures on 
Internet E-mail Services have all been issued.  China will continue to update and improve the legal 
framework governing Internet administr ation based on the real situation. 
In the process of formulating Internet-related policies and regulations, China will widely solicit 
comments and opinions and make full use of the Internet to publish those policies and regulations. 
QUESTION:  
Canada Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 217: 
83. The Secretariat Report indicates that Ch ina has committed itself to implementing the 
Telecoms Reference Paper, including establishing an independent regulator.  Statements by China in 
the Council for Trade in Services have indicated th at China has separated the regulatory body from 
the operational business, and that the Ministry of Information Industry (MII) can regulate in an 
impartial, fair and transparent manner, and act as an independent regulator.  What specific measures 
have been taken to ensure that MII is an i ndependent regulator (i.e. is separate from and not 
accountable to any supplier of basic telecommunica tions services, and makes decisions and uses 
procedures which are impartial with r espect to all market participants)? 
ANSWER: In 1998, China formed the Ministry of Information Industry and separated the entity from the business 
sector.  MII is now fully independent and free fr om business managing functio ns.  The management 
functions over the staff, property and assets of a company have been returned to the company or 
transferred to competent authorities.  So, MII is now in a position to exercise fair, open and just 
regulation over the telecom industry. MII fully co mplies with such requirement as an “independent 
regulator”. 
QUESTION:  
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 218: 
Canada 
84. The Reference Paper on basic telecoms indicates that a services supplier requesting 
interconnection will have recourse to  an independent domestic body. The Secretariat report indicates 
that Ministry of Information Industry has determin ed interconnection charges in several cases where 
operators have been unable to reach agreement.  Could China provide de tails on how the process 
followed and the criteria used in  making such determinations? 
ANSWER: 
Pursuant to the Telecommunications Regulations of the People’s Republic of China, in cases where 
the interconnecting parties are unable to reach an  agreement through consu ltation, either party, 
within 60 days of the interconnection request, may apply for coordination with the competent 
information industry authority of the State Counc il or telecom regulators in provinces, autonomous  WT/TPR/M/161/Add.1 
 Page 305 
 
 
regions and municipalities, depending on the coverage of the interconnection.  The telecom authority 
receiving the application shall coordinate in the principles of technical feasibility, commercial 
viability, fairness and justness and mutual concessions in  an effort to achieve an agreement.  If still no 
agreement can be reached within 45 days of th e requested coordination by one or both the 
interconnecting parties, the coordina ting authority will randomly invite  experts in telecom technology 
and other fields for collective study and optional in terconnection plans.  The coordinator shall base 
its mandatory decision on the result of the experts’ study and the optional plans and impose the decision to enable the interconnection.  
QUESTION:  
Canada Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 220: 
85. The Secretariat Report indicates that MII decides whether to approve or reject applications for 
telecoms services licences. By the end of 2005, Ch ina had received 23 formal applications for setting 
up foreign-funded telecommunications enterprises for the provision of value-added telecom services; 
of these, eight have been granted “Examination Opinions on Foreign Investment in 
Telecommunications Services Provision” by the MII, wh ile four of the applicants have received the 
"Telecommunications Services Operating Licence": 
c. What criteria are used in deciding whether or not such applications will be approved? 
d. What are the measures that must be undertak en once an “Examinations Opinions of Foreign 
Investment in Telecommunications Services Pr ovision” has been granted, in order to be 
granted a “Telecommunications Services Operating Licence”?  
e. Are there any review processes available to ser vice providers whose applications are rejected? 
f. Which types of telecoms services are covered by the “Telecommunications Services 
Operating Licence”? 
ANSWER: China strictly follows its accession commitments and the Provisions on Administration of Foreign 
Invested Telecommunications Enterprises, the Te lecommunications Regulations of the People’s 
Republic of China and the Administrative Measures  on Licensing Administration on Telecom Service 
Operators in the approval of forei gn invested telecom enterprises. 
After obtaining the Opinion on Assessment of the Telecom Services by a Foreign Invested Operator, 
the major Chinese investor in the applying foreign invested telecom company shall apply with the 
competent foreign trade and economic authority for the Foreign Invested Enterprise (FIE) Approval 
Certificate, with which it shall proceed to the Ministry of Information Industry (MII) to get the 
Operating License for Telecom Services. 
If the applicant believes it has met the mandatory requirements for applying the operating license but 
its application was not processed by the MII acco rding to the rules, then it may apply for an 
administrative review. 
The operators of both basic and value-added teleco m services can only prov ide services with the 
operating license.  WT/TPR/M/161/Add.1 
Page 306  
 
QUESTION:  
Canada 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
(b) Regulatory structure and measures, paragraph 220:  
86. Have any companies received exemptions of  the conditions required for licenses in value 
added services? 
ANSWER: 
An operator of value-added te lecom services must apply for th e operating license for telecom 
services, following the same procedural requiremen ts stipulated in the Telecommunications 
Regulations of the People’s Republic of Chi na and the Administrative Measures on Licensing 
Administration on Telecom Servi ce Operators without exception. 
QUESTION:  
Canada 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 223: 
87. The Secretariat Report indicates that tariffs  are divided into: (a) government set prices; 
(b) government guided prices; and (c) market adjusted prices. What are the definitions of these three pricing categories? 
ANSWER: 
Pursuant to Article 3 of the Price Law of  the People’s Republic of China (passed on 
December 29, 1997 by the standing committee of th e National People’s Congress), market adjusted 
prices refer to prices established by the opera tors themselves based on  market competition.  
Government guided prices refer to prices (typica lly including a benchmark price and a floating band) 
established by the pricing authority or other relev ant authorities of the government with respect to 
their respective pricing power and scope in accordan ce with the Price Law.  Government-set prices 
refer to prices established by the competent pricing authority or other relevant authorities of the 
government with respect to their respective pricing power and scope in accordance with the Price 
Law.  
QUESTION:  
Canada Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 224: 
88. The Secretariat Report states that monthly char ges, local fixed-line charges, and other basic 
telecom service fees are still subject to government examination and approval.  What criteria are used 
in determining whether approval will be granted?  WT/TPR/M/161/Add.1 
 Page 307 
 
 
ANSWER: 
In 2002, the Ministry of Information Indus try and the former State Development Planning 
Commission (SDPC) formulated the Procedural Re quirements on the Approval and Filing of Telecom 
Service Charges (Trial) based on the Price La w and the Telecommunicatio ns Regulations.  The 
Requirements elaborates in great detail on the pro cedures for establishing and adjusting telecom 
service charges. 
In approving the application of a telecom operato r for service charge determination or adjustment, 
the approval authority normally looks at whether th e application material is complete, reviews the 
reasons and justifications for the service charge adj ustment, and assesses the impacts of the service 
charge adjustment on the telecom market, other telecom operators and the consumers. 
QUESTION:  
Canada 
Part IV. Trade Policies by Selected Sectors, (5) Services, (iv) Telecommunications services, 
paragraph 226: 
89. The Secretariat Report states that, under th e Telecommunications Decree, service providers 
must provide universal service.  What provisions are in place to ensure that this obligation is 
consistent with the Reference Paper on basic tele communications services (i.e. that the universal 
service regime is administered in  a transparent, non-discriminator y and competitively neutral manner 
and not more burdensome than necessary)? 
ANSWER: 
The Ministry of Information Industry (MII) is closely working with other authorities to set up the fund 
and to complete the cost compensa tion mechanism for the universal service. 
QUESTION:  
Chinese Taipei 
(page 229, paragraph 213)  
“In April 1995, the Directorate General of Telecommunications (DGT) was separated from MPT [the 
Ministry of Post and Telecommunications] to cr eate China Telecom.  As a result of further 
deregulation and reform (including separation of postal and telecommunications services and 
restructuring of telecommunication services), there are currently six main nationwide basic telecommunications service providers.” 
It would be appreciated if China could please provide  us with a comprehensive list of the regulatory 
agencies and the scope of their respective authorities under the Ministry’s charge.  We are particularly 
interested in learning if there are any measures take n to ensure that the telecommunications regulatory 
authority is organizationally separated from State -run telecommunications ope rators and independent 
of their operations? 
ANSWER: In 1998, China formed the Ministry of Information Industry and separated the entity from the business 
sector.  MII is now fully independent and free fr om business managing functio ns.  The management 
functions over the staff, property and assets of a company have been returned to the company or WT/TPR/M/161/Add.1 
Page 308  
 
transferred to competent authorities.  So, MII is now in a position to exercise fair, open and just 
regulation over the telecom industry. 
The requirement on an “independent regulator” defined  in the Reference Paper is, “the regulator is 
separated from and has no responsib ility to any provider of basic telecom services.  The decision and 
procedure used by the regulator are fair to all market participants.”  MII fully complies with such 
requirement on an “independent regulator”. 
Pursuant to the Telecommunications Regulations of the People’s Republic of China, telecom 
regulators in provinces, autonomous regi ons and municipalities exercise supervision and 
administration over telecom businesses within their own jurisdiction under the leadership of MII. 
QUESTION:  
Chinese Taipei We note that “...a new telecommunications law is in preparation and a draft of the new law is 
currently being revised.” 
i) Will China be providing a reasonable period for comment on the draft to the appropriate 
authorities before the new law is promulgated? 
ii) Could we please be provided with a draft copy of the new law?  
ANSWER: 
The Telecommunications Law has already been put on the 2006 legislative agenda of the standing 
committee of the National People’s Congress which will review the law in August 2006.  The law is now moving forward in the legislative process.   MII is actively coordinating with relevant 
departments on legislative study, t esting, and improvement as well as  the review so as to promulgate 
the law as soon as possible. 
Prior to its implementation of the Telecommunica tions Law, China will solicit public comments by 
strictly following the legislative procedures set fort h in the Legislation Law and other relevant laws.  
QUESTION: 
ChineseTaipei iii) Apart from the aforementioned telecommunications law, are there any other laws and 
regulations that apply to foreign firms interested  in investing in telecommunications businesses in 
China?  If so, could we please be provided with a copy, or copies? 
ANSWER: 
The Telecommunications Regulations of the Peopl e’s Republic of China (State Council Decree 
No.291), the Provisions on Administration of Fo reign Invested Telecommunications Enterprises 
(State Council Decree No.333) and the Administ rative Measures on Operating License of Telecom 
Service Providers (Decree 19 of th e Ministry of Information Industry) have elaborate stipulations on 
the application for the operating license and its proc edure.  These above-mentioned Regulations have 
all been officially issued an d are available from MII’s official website (www.mii.gov.cn).  WT/TPR/M/161/Add.1 
 Page 309 
 
 
QUESTION:  
ChineseTaipei (page 232, paragraph 218)   
“The ‘Regulations on Telecommunications’ state that a dominant service provider cannot refuse an 
interconnection requirement of any other ser vices operators of specific networks.” 
It would be appreciated if China could indicate whether fulfilment of the obligation to unbundle 
network elements is limited to dominant te lecommunications operators, or whether all 
telecommunications operators must fulfil th e obligation to unbundle network elements? 
ANSWER: 
MII is now studying the issue of unbundling network elements. 
QUESTION:  
EC 
- In the area of “value-added” telecom services,  could China confirm that foreign service 
suppliers can provide the same value-added servi ces as domestic operators  on a national treatment 
basis? If so, can China provide data on the number of licences granted to foreign service suppliers as 
compared to the total number of licences? 
ANSWER: 
China can reaffirm that foreign service-suppliers can provide the same value-added services as 
domestic operators on a national treatment basis. 
So far, 5 foreign invested telecom companies have rec eived license to operate telecom services.  
Construction QUESTION: Australia  
18. We are aware that there have been several important regulatory developments in the Chinese 
construction sector since China’s accession to the WTO and that a new Construction Law is being 
drafted.  Would China indicate when the draft C onstruction law is likely to be promulgated?   
ANSWER: 
The Chinese government is not drafting a new Constr uction Law, but rather made amendments to the 
original version, with the purposes of improving admi nistration by law, inhibit corruption, integrate 
an open market, promote healthy and rapid developme nt of the construction sector, ensure greater 
quality and safety in project cons truction and bring the Law in bett er compliance with international 
practices.  A revised version of the Law has been pu t on the 2006 legislative agenda of the standing 
committee of the National People’s Congress.  It  will be reviewed by the NPC before it is 
promulgated and put into effect. WT/TPR/M/161/Add.1 
Page 310  
 
QUESTION:  
Australia  
19. In light of recent regulat ory developments, could China please clarify whether foreign 
invested companies may qualify as costing agenci es, supervision entities, tendering agencies or 
surveying entities under the Ministry of Construction (MOC) Decree 200 for the purposes of 
providing project management services?   
ANSWER: 
According to MOC Decree 200, a company with one  or more credentials such as project surveying, 
designing, construction, supervisi ng, costing and tendering agent may engage in engineering project 
management.  If a foreign invested enterprise has al ready qualified for design and construction in line 
with MOC Decree No.113 and No.114, then it ma y engage in engineering project management 
without applying for extra credentials.  Currently , MOC and the Ministry of Commerce (MOFCOM) 
are formulating the Administrative Measures on th e Administration of Foreign Invested Construction 
Engineering and Service Companies.  Once the Me asures becomes effective, foreign invested 
enterprises may apply for the cr edentials for project supervising, costing and tending agent in 
accordance with the Measures and engage  in engineering project management. 
QUESTION:  
Australia  
20. We would be grateful if China would indicate whether it contemplates providing any avenues 
for foreign project management providers with speci alised experience and expertise to provide project 
management services in specialised fields on a project -specific basis, without the need to qualify as a 
design or construction company under MOC Decrees 113 and 114 respectively?  
ANSWER: 
In line with China’s accession commitments, in the case of cross-border supply of engineering 
services with the exception of design, a foreign servi ce-provider needs to partner with a specialized 
organization in China.  Therefore, foreign servi ce-providers may engage in engineering project 
management by partnering with a qualified Chinese company.  
QUESTION:  
EC 
China's commitments under the GATS relating to c onstruction and related engineering services limit 
the scope of works that can be undertaken by Wh olly Foreign Owned Enterprises to four types of 
projects:  
 - Construction projects wholly financed by foreign investment and/or grants; 
 - Construction projects financed by loans of international financial institutions and 
awarded through internatio nal tendering according to the terms of loans; 
 - Chinese-foreign jointly constructed projects with foreign investment equal to or more 
than 50% ; and Chinese-foreign jointly cons tructed projects with foreign investment 
less than 50% but technically difficult to  be implemented by Chinese construction 
enterprises alone  WT/TPR/M/161/Add.1 
 Page 311 
 
 
 - Chinese invested construction projects th at are difficult to be implemented by 
Chinese construction enterprises alone can be jointly undertaken by Chinese and 
foreign construction enterprises with th e approval of provincial governments. 
- Could China provide most recent figures of the respective total amounts of projects relating to 
these categories, and of the relative part of the Chinese construction market, which falls under these 
categories? 
ANSWER: 
China does not have statistics broken down into those f our categories at this poi nt.  So no such figures 
can be furnished. 
QUESTION:  
EC - What is the exact legislative and regulatory re gime applying to project management? What is 
the articulation between Circular 200 and Decree 29? 
ANSWER: 
Pursuant to the Construction Law of the People’s Re public of China and the Regulations on Quality 
Management in Construction Projects, companies e ngaged in construction engi neering need to obtain 
relevant credentials for project surveying, designing , construction, supervising, costing and tendering 
agent.  In order for existing qualified compani es to broaden their service scope and reduce the 
number of credential applications, no separate cre dential application is required for engineering 
project management.  According to the Trial Measures for the Management of Construction 
Engineering Projects (MOC Decree 200), a company w ith one or more credentials such as project 
reconnaissance, designing, construc tion, supervising, costing and tendering agent may automatically 
engage in engineering project management. The Tria l Measures applies to all companies engaged in 
engineering project management within the Chines e territory, including both domestic and foreign 
invested ones. 
QUESTION:  
EC 
- What is the exact legislative and regulator y regime ruling construction and engineering 
design? Can China explain the consequences of  Decree 114 and the most recent regulations? 
ANSWER: 
Pursuant to the Construction Law of the People’s Republic of China, the Bidding and Tendering Law 
of the People’s Republic of China, the Regulations on Certified Architects of the People’s Republic of 
China, the Regulations on Q uality Management in Construc tion Engineering Projects, the 
Regulations on Surveying and Design in  Construction Engineering Proj ects, and the Regulations on 
Safe Production Management in Construction Engineering Projects, the Chinese government 
supervises and manages construction and design ac tivities conducted by companies and individuals 
within the territory of the People’s Republic of China at various control points such as market 
regulation and the management of quality, tec hnology and engineering professionals.  Companies 
wanting to engage in constructi on and design activities need to obtain the credentials for construction 
or project design before they can actually start th e services within the scope of their credentials.  In 
the course of service provision, the companies ne ed to abide by relevant rules on bidding and WT/TPR/M/161/Add.1 
Page 312  
 
tendering and quality and safety management.  Professionals in construction and design must be 
certified and their activities are subject to supervision and management. 
The Regulations on the Administration of Foreign Invested Construction Engineering and Design 
Companies (MOC and MOFTEC Decree No.114) ap plies to foreign invested construction 
engineering and design companies set up within the terr itory of the People’s Republic of China.  It 
provides for the establishment of foreign invested  construction engineering and design companies, 
their applications for credentials and the approval , and the supervision and management of design 
activities, etc. 
As of December 1, 2002 when Decree No.114 took  effect, foreign invested design companies shall be 
accorded with the same set of criteria as their domestic counterpar ts when applying for credentials.  
A foreign invested design company needs to meet the “1/4” and “1/8”requirements  in order to obtain 
the credential.  It means, if the applicant is a w holly foreign-owned design company, then the number 
of foreign service providers certified in China as architects and engineers shall be no less than 1/4 of the total certified staff in the applying foreign invest ed design company according to the credential 
classification standards, and the number of foreign service providers with professional design 
experience shall be no less than 1/4 of the total backbone technical staff according to the credential 
classification standards.  If the applicant is a Si no-foreign joint-equity or contractual design 
company, the minimum percentage requirement shall be 1/8, and each of the foreign service providers 
needs to stay accumulatively no less th an six months in China every year.  
Tourism QUESTION:  
EC The EC’s understanding is that the Regulations on Administration of Travel Agencies dated 11 
December 2001 establish, in article 11, an economics needs test (ENT) for the authorisation of new 
travel agencies. This market access limitation is not reflected in China’s GATS schedule of 
commitments. This has been brought to the atte ntion of the Chinese author ities in several occasions, 
including the 2003 and 2004 TRM processes. 
- Would China please provide Members with info rmation about its plans for aligning the 
regulation of travel agencies with China’s GATS commitments in the sector? 
ANSWER: 
We are now making further improvements on the said  Regulations. Before the legislative process runs 
through, China will maintain its existing practice wh ile Article 11.2 will not be used to turn down 
applications for establishing forei gn-invested travel agencies. 
QUESTION:  Canada 
70. Please explain how China’s Approved Destinati on Status program conforms to China’s WTO 
commitments.  WT/TPR/M/161/Add.1 
 Page 313 
 
 
ANSWER: 
Any WTO member may apply with China for the stat us as an overseas traveling destination for 
Chinese citizens. China’s Approved Destination St atus arrangement does not contradict its accession 
commitments.  
The idea of signing Approved Destination Status (ADS) agreements was originally proposed by some 
foreign country. With the introduction of this prog ram, China also has its own considerations with 
respect to protecting the safety, as well as the legitimate rights and interests of Chinese citizens 
traveling out of China. The stat us is granted upon application. 
QUESTION:  Canada 
72. How does the tourist quota system referred to  in Measures for Administration of Outbound 
Tours operate? 
ANSWER: 
The tourist quota system has already phased out. The relevant laws and regulations are now being 
updated. 
QUESTION: 
ChineseTaipei 
(page 207, paragraph 147) 
The report mentions that “The main exports of services in 2004 included: tourism, which accounted 
for some 41% of receipts…”  However, China restri cts joint ventures, or wholly foreign-owned travel 
agencies and tour operators in their provision of  services for Chinese people traveling abroad.   
Does China have any plan to ease the above-menti oned market access limitations?  If yes, please 
provide us with relevant information. 
ANSWER: 
China has no plan at this point to ease the market access limitations. 
__________