WORLD TRADE  
ORGANIZATION   
G/LIC/23 
21 October 2011 
 (11-5259) 
Committee on Import Licensing  
  
 
REPORT TO THE COUNCIL FOR TRADE IN GOODS 
ON CHINA'S TRANSITIONAL REVIEW  
 
 
1. The Committee on Import Licensing, at its meeting on 14 October 2011, carried out the Ninth 
and Final Transitional Review of China pursuant to  Paragraph 18 of the Protocol on the Accession of 
the People's Republic of China (WT/L/432).  2. The information provided by China to the Committee and related to the Ninth Transitional 
Review as required by Paragraph IV:3 of Annex 1A of the Protocol of Accession, was circulated in 
document G/LIC/W/39.   
  3. The discussions that took place under the transitional review are contained in the minutes of that meeting (G/LIC/M/34, paragraphs 4.1 - 4.13) and are annexed hereto.  
 
 
 
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 G/LIC/23 
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  ANNEX 
 
4. Final Transitional Review under Paragraph 18 of the Protocol on the Accession of the 
People's Republic of China (WT/L/432). 
 4.1 The Chairperson recalled that the eighth tran sitional review of the implementation by China 
of the WTO Agreement and of the related provisi ons of the Protocol, under paragraph 18 of the 
Protocol of Accession of China (WT/L/432), had been  carried out in 2009 by the subsidiary bodies of 
the WTO, including the Committee on Import Licens ing, which had a mandate covering China's 
commitments under the WTO Agreement or China's Pr otocol of Accession.  The Committee's report 
to the Council for Trade in Goods on that revi ew was circulated in document G/LIC/20.  The 
Committee would conduct the Ninth and Final Transitiona l Review at this meeting.  He also informed 
the Committee that, since the last meeting, the Secretariat had rece ived, after the Airgram convening 
this meeting had been issued, a communication from China containing information required by 
paragraph IV:3 of Annex 1A of the Protocol of  Accession which has been circulated in document 
G/LIC/W/39. 
 4.2 In G/LIC/W/39, China indicated that its current import licensing procedures included import licences administration, automatic import licensing and tariff rate quota administration.  It also 
explained that, pursuant to the Law on Foreign Trade  and the Regulations on Administration of 
Import and Export of Goods , the Ministry of Commerce (MOFCOM) issued the Measures for the 
Administration of Import License for Goods , and the Measures for the Administration of Automatic 
Import Licensing for Goods .  Based on the latter, MOFCOM and the General Administration of 
Customs (GAC) annually issued the Catalogue of Goods Subject to Automatic Import Licensing 
Administration  and the  Catalogue of Goods Subject to Import License Administration .  These two 
catalogues, circulated as a MOFCOM Announcemen t and issued in the second semester of each 
calendar year but implemented only in the following  year, listed all the products subject to import 
licensing procedures, except those under Tariff Rate Quota (TRQ) administration.  4.3 Regarding the ILPs to administer TRQs, China's submission indicated that the current 
applicable rules were the Interim Measures  on the Administration of Tariff Rate Quota for 
Importation of Agricultural Products and the Interim Measures on the Administration of Tariff Rate 
Quota for Importation of Fertilizers .  Based on these rules, MOFCOM and the National Development 
and Reform Commission (NDRC) issued annually the Implementing Rules on the Administration of 
Tariff Rate Quota for Importa tion of Wool and Wool Tops , the Application and Allocation Methods of 
Tariff Rate Quota for Importation of Sugar , the  Quantities, Allocation Principles and Application 
Procedures of Tariff Rate Quota for Importation of Fertilizers , and the  Quantities, Application 
Conditions and Allocation Methods  of Tariff Rate Quota for Importation of Grain and Cotton .  These 
rules circulated as MOFCOM and NDCR announcements, were issued in the s econd half of the year 
but implemented in the following year.  Pursua nt to MOFCOM Announcement No. 93 in 2005, TRQ 
administration for importation of soybean oil, pa lm oil and rapeseed oil was eliminated on 
1 January 2006 and replaced by automatic import licensing administration.  
 
4.4 China's submission also stat ed that the aforementioned basic laws, regulations, rules and 
announcements concerning its import licensing procedur es, as well as other supplementary ones, were 
WTO consistent.  China's aforementioned legisla tion was available in China Foreign Trade and 
Economic Cooperation Gazette and accessible from the websites of the Central Government of China 
(http://www.gov.cn) and/or MOFCOM (http://www.mofcom.gov.cn).  
 
4.5 China was currently working on adjustme nts to its notifications under the various 
transparency provisions in the Agreement in order to better fulfil its notification obligations and put 
them in accordance with the new notifica tion formats adopted by the Committee.  
  G/LIC/23 
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  4.6 The delegate of the United States recalled that  when acceding to the WTO, China agreed to an 
annual transitional review mechanism (TRM) to  be conducted before the 16 WTO committees and 
councils during eight years with a final review in  year 10.  The TRM was established because China 
was admitted as a WTO Member before it had revised all of its trade-related laws and regulations to 
become WTO-compatible.  The annual TRM had provi ded an opportunity to review multilaterally 
with China, the efforts it had taken to implement specific commitments in its Protocol of Accession 
and to comply with its obligations regarding th e WTO Agreements and its Annexes.   The US 
highlighted steps China had undertaken in reformi ng its economy and legal regime to comply with 
WTO obligations.  Nevertheless, in the area of IL Ps there remained several concerns pertaining 
specifically to iron ore and agricultural products.   
 
4.7 With regard to iron ore, a key steel i nput for which Chinese steel producers had become 
increasingly dependent on foreign suppliers, he indicated that in  2005, China began imposing new 
ILPs which restricted licences to a limited number of traders and steel producers without making a 
public list of qualified enterprises or qualifying crit eria, and setting a goal to import at least 50 per 
cent of its iron ore from Chinese-invested enterp rises located abroad. Directing iron ore imports 
toward certain producers or sources distorted trade significantly, particularly as China was the largest 
iron ore importer in the world, and global prices for iron ore have reached high levels, led by Chinese demand.  The overall licensing system seemed to be part of a programme to control raw material 
prices in favour of unfair advantages to China's downs tream steel producers.  Despite several requests, 
China still maintained restrictive ILPs for iron ore.   
 
4.8 Concerning the IL requirements for agricultural products, the US considered that for several 
years, China's regulatory authorities had administer ed inspection-related requirements for issuing 
Quarantine Inspection Permits (QIP) and Automati c Registration Forms (ARF) in an arbitrary 
manner.  For nearly all traded agricultural comm odities, China's State administration of Quality 
Supervision, Inspection and Quarantine not only required importers to obtain a QIP prior to signing purchase contracts but also slowed down or suspende d its issuance in a discretionary manner, without 
notifying traders in advance nor providing any explanation.  China had been urged to eliminate such 
QIPs as there appeared to be no scientific basis and se rved as an unjust and restrictive barrier to trade 
which affected imports of poultry, pork and beef.  
 
4.9 Based on China's ARFs regime applied to  poultry, soybeans, pork and dairy products, 
MOFCOM allocated to an importer, yearly vo lumes of imports of particular commodities. 
Nevertheless, in administering ARFs, MOFCOM exercised its discr etion to slow down imports from 
selected Members.  The US also urged China to eliminate ARFs entirely.  
 
4.10 In response, the delegate of China drew  the US' attention to document G/LIC/W/39;  
indicated that most of the issues on iron ore had been clarified in previous TRM opportunities;  and 
that the measure had statistical purposes. 
 
4.11. The Committee took note of the communication circulated by China and of the statements 
made. 
 
4.12 The Chairperson suggested that, to c onclude the Final Transitional Review under 
Paragraph 18 of the Protocol of Accession of th e People's Republic of China, a factual report on 
China's transitional review be submitted to the Coun cil for Trade in Goods (CTG).  As had been done 
previously, this factual report would refer to the rele vant paragraphs of the minutes of this meeting as 
well as to the information received from China.  The relevant paragraphs of the minutes which 
reflected the discussion would be annexed to this report.   
 
4.13 The Committee so agreed.  The report to the CTG on the Final Transitional Review was 
circulated in document G/LIC/23. 
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