WORLD TRADE  
ORGANIZATION  G/C/W/538 
8 November 2005 
 
 (05-5231) 
Council for Trade in Goods Original:   English 
  
 
TRANSITIONAL REVIEW MECHANISM PURSUANT TO 
SECTION 18 OF THE PROTOCOL ON THE ACCESSION 
OF THE PEOPLE'S REPUBLI C OF CHINA (“CHINA”) 
 
Questions from the Europe an Communities to China
 
 
 
 The following communication, dated 7 No vember 2005, has been received from the 
delegation of the European Communities.  
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 The EC welcomes progress made by China in the implementation of many of its commitments under its Accession Protocol. It we lcomes the positive trend in informing foreign 
parties and the industry ahead of introducing  legislation. It also notes with satisfaction the setting up 
of bilateral dialogues on various topics that allow for increased sharing of views and experience early 
in the process of reform and legislative drafting, and should help avoid the creation of obstacles to 
trade. 
 At the same time, the EC attaches a great im portance to the transiti onal review mechanism, 
and considers that it is of utmost importance to en sure a proper and meaningful functioning of this 
mechanism. The EC has raised a number of questi ons during the reviews in the committees that report 
to the Council for Trade in Goods. The EC wishes he re to concentrate on those questions of utmost 
concern and for which no detailed responses were gi ven, notwithstanding the fact that for all 
questions raised in the committees it would very much welcome answers from China. 
 
1. Chinese exports restrictions  
 The EC refers to its 2004 communication in wh ich it had reminded China of its commitments  
 
• to eliminate, upon accession, export restrictions unless they could be justified under WTO 
rules (§ 165 of the Working Party Report) and 
 
• to notify any possible export restrictions to the WTO. 
  Justification requested for the existing export r estrictions by the EC since the TRM exercise 
of 2002 has not been provided  by the Chinese authorities nor was it transmitted to the WTO. 
  The EC thus remains concerned about the WTO compliance of a number of the export restrictions maintained by China.  China is th erefore urged to comply with its accession related 
commitments and to bring its export regime of ra w materials into conformity with WTO rules.  
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  The EC attaches particular importance to and re fers to earlier bilateral exchanges on coke and 
rare earths. It urges China:  
• to notify in line with Part I-Section 8 (b) of  the Protocol of accession  the quantities associated 
with the export restrictions imposed on th e products listed in the Chinese document of 
17 October 2003 (and on any other product that may not be included in this list);  and  
 
• to transmit to the WTO the justification for theses export restrictions;  or 
 
• When no such justification exists, correctly notify to the WTO when and how it intends to 
bring its coke export regime in line with WTO rules and also to transmit all necessary 
information when this will be case for rare earths. 
 
 The EC is also concerned that a number of e xport restrictions maintained by China may affect 
the supply of raw hides and skins for European tanners.   In this context, the EC would like to urge China:  
• to clarify and notify the products subject to export restrictions and taxes; 
 
• to transmit to the WTO the justification for theses export restrictions. 
 
2. Automobiles 
 The EC refers to its concerns regarding the New Automobile Policy (hereafter “NAP”) 
already voiced in last year’s transitional review, especially with a view to the wide scope of state 
intervention and the uncertainty about the implem enting regulations that will supplement the new 
policy. Given the experience of how the NAP was devel oped, the EC wishes to stress the transparency 
obligations under WTO rules with regard to the outstanding implementation regulations of the NAP. 
Publishing drafts of these implementing regul ations well in advance would allow other WTO 
Members to comment on them.  
 As indicated in the Committee on Market Access,  the EC has particular concerns regarding 
the Administrative measures for the import of auto mobile components fulfilling the characteristics of 
a whole vehicle.   
 
These measures are: 
 
• likely to invalidate some of China’s WTO ac cession commitments (abolition of local content 
requirements and TRIMs, national treatment obligation); 
 
• in violation of WCO classification criteria (as reclassification of car parts as whole vehicles 
leads to a payment of double import tax). 
 
 The measures will have a major negative economic and technical impact on the EC 
manufacturers and on the development of the Chinese automotive industry itself.   
 
 The EC therefore urges China to review its  new legislation regarding WTO and WCO aspects 
and to be open for a constructive in depths discussion on this matter in order to develop solutions that 
are both, promoting China’s goals of further loca lization of parts production and facilitating business 
for EC automobile manufacturers.  
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 3. Subsidies Notifications 
 Despite the assurances given by China to the SCM Committee that it would do its best to 
provide a New and Full Subsidy Notification, to da te, nearly four years after China’s accession to the 
WTO, there is still no such notification. The EC reite rates its dissatisfaction that China has so far not 
fulfilled this obligation resulting from its accession to  the WTO and strongly urges China to provide a 
subsidy notification as soon as possible. 
 
4. Government Procurement 
 In paragraph 341 of the Report of the Working Party on the Accession of China to the WTO, 
China committed “to initiate negotiation for member ship in the Government Procurement Agreement 
by tabling an Appendix 1 offer as soon as possible”. Nearly four years after China accession to the 
WTO, the EC would be grateful if China could communicate a calendar and indicate  measures it is 
taking to do so.  
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