. /.  RESTRICTED  WORLD TRADE  
ORGANIZATION  S/FIN/W/60 
29 October 2007 
 (07-4650) 
Committee on Trade in Financial Services Original:   English 
  
 
COMMUNICATION FROM AUSTRALIA 
 
Transitional Review Mechanism Pu rsuant to Paragraph 18 of 
 
the Protocol of Accession of the People's Republic of China ("China")  
 
 
 The following communication, dated 26 Octobe r 2007, from the Delegation of Australia, is 
being circulated to the Members of the Committee on Trade in Financial Services. 
 
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1. Australia acknowledges the important work that  China has undertaken to implement its WTO 
commitments for financial services.  Australia re cognises that China’s accession to the WTO and its 
own economic reform program  have led to the development and ex pansion of the financial sector and 
allowed greater access for foreign firms into China’s financial services markets. 
2. Australia recognises the importance of th e transitional review, as mandated under 
paragraph 18 of China’s accession protocol, as a useful mechanism in clarifying and assisting in the effective implementation of China’s financial services commitments.  In this context, Australia wishes 
to clarify China’s implementation of commitm ents as it relates to the securities market. 
I. SECURITIES 
3. China’s WTO accession commitments include a commitment with regard to securities, that 
within three years of China’s accession, foreign securities institutions will be permitted to establish 
joint ventures with foreign minority ownership not exceeding one third to engage (without a Chinese 
intermediary) in underwriting A
1 shares and in underwriting and trading B2 and H3 shares as well as 
government and corporate debts and launching of f unds.  It was also specified that criteria for 
authorisation to deal in China’s financial industr y would be solely prudential and would not contain 
needs tests or quantitative limits on licences. 
 4. We understand from recent media reports that  the China Securities Regulatory Commission 
has submitted draft rules to China’s State Council wh ich would limit foreign investors to investing in 
publicly traded brokerages and cap foreign ownership at 20 per cent.  
 
• Could China confirm whether such draft rules are being considered? 
 
                                                     
 
1 Shares traded domestically by Chinese nationals and Chinese juridical persons. 
2 Shares traded domestically by foreign nationals and foreign juridical persons. 
3 Shares listed on overseas exchanges and traded freely where the underlying asset is China based. S/FIN/W/60 
Page 2  
 
  II. REGULATORY ENVIRONMENT 
5. In accordance with China’s commitment in Part 1 – Section 2 (c) (1) of its 
Protocol of Accession, China agreed to make available to WTO Members, upon request, all laws, regulations and other measures pertaining to or af fecting trade in goods, services, TRIPS or the 
control of foreign exchange befo re such measures are implemente d or enforced.  Accordingly, 
Australia would appreciate China providing a copy of  the draft regulations, if such regulations are 
being considered, as soon as possible prior to their implementation. 
• If such rules are being considered, could China explain how such rules would be consistent 
with China’s WTO accession commitments? 
III. LICENSING 
6. As part of its Strategic Economic Dialogue w ith the United States, China agreed to remove a 
block on the entry of new foreign securities firms and resume licensing securities companies, 
including joint-ventures, in the second half of 2007 .  The justification for the ban on new licenses, 
instituted in September 2006, was to allow the dom estic industry time to consolidate and improve. 
• Could China please clarify the rationale for the suspension of licensing foreign securities 
companies and whether this is in accordan ce with China’s commitment that criteria for 
authorisation to deal in China’s financ ial industry would be solely prudential? 
 
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