WORLD TRADE  
ORGANIZATION   
G/L/977 
16 November 2011 
 (11-5897) 
  
  
 
REPORT OF THE COUNCIL FOR TRADE IN GOODS 
ON CHINA'S NINTH AND FINAL TRANSITIONAL REVIEW  
 
 
1. The Council for Trade in Goods (CTG), at its meeting on 7 November 2011, carried out the 
ninth and final Transitional Review of China pur suant to paragraph 18 of the Protocol on the 
Accession of the People's Republic of China (WT/L/432).  2. Japan posed questions and comments in wr iting to China on the CTG-specific information 
requirements contained in Annex 1A of the Protocol  and on matters raised before subsidiary bodies.  
The questions and comments by Japan were ci rculated in document G/MA/W/106.  Annex 1A  
information provided by China to the Council for the review was circulated in document G/C/W/661.  3. The CTG took note of the reviews that had been  carried out in the CTG subsidiary bodies.   
Furthermore, the Council reviewed the informati on provided by China concerning specific parts of 
Annex 1.A of the Protocol and the questions raised  by Japan, Mexico, the United States (US) and the 
European Union (EU).  The statements made at th e meeting of 7 November 2011 are reflected in the 
minutes of the meeting in document G/C/M/108
1.  The relevant paragraphs from the minutes which 
reflect the discussion under agenda item XIV are annexed.   
 
_______________ 
 
   
 
    
 
    
 
     
                                                      
1 To be issued at a later date. G/L/977 
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  ANNEX 
 
XIV.  TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA  
14.1 The Chairman recalled that in  accordance with paragraph 18 of  the Protocol of the Accession 
of the People's Republic of China in document WT /L/432, this Council was to report to the General 
Council on the Transitional Review.  CTG subsidiary  bodies were required to transmit their reports to 
the Council for Trade in Goods.  First, he gave Members an opportunity to make general comments 
on those reports, and subsequently proposed that th e Council takes note of the Reviews that had been 
carried out in the CTG subsidiary bodies.  He then  moved to the CTG's own report.  The Council was 
required to review the information to be provided by China in designated parts of Annex 1.A of the 
Protocol.  14.2 He added that the following subsidiary b odies had carried out the Transitional Review:  
Market Access – the report was contained in doc ument G/MA/258:  Agriculture - the report was 
contained in document G/AG/27;  Customs Valu ation - the report was contained in document 
G/VAL/66;  Import Licensing - the report was contained in document G/LIC/23;  Rules of Origin - the report was contained in document G/RO/72;  Anti-Dumping - the report was contained in document G/ADP/21;  Subsidies and Countervailing Measures - the report was contained in document 
G/SCM/140;  Safeguards - the report was contained in document G/SG/96;  and TRIMs - the report 
was contained in documents G/L/963; SPS - the re port was contained in document G/SPS/57.  He 
asked Members for general comments on those Review s. He noted that the report from the Committee 
on Technical Barriers to Trade had not been finalized  at the time of the Council meeting as the TBT 
Committee was meeting that week.   14.3 The Council took note of the reports from the subsidiary bodies.  The Chair of the Committee 
on Technical Barriers to Trade would submit the report directly to the General Council.   
 14.4 The Chairman recalled that China was requi red to provide information to the CTG in 
accordance with paragraph 18.1 of the Protocol of Accession.  The relevant information requirements 
were listed in Annex 1A therein.  China had s ubmitted this information as circulated in document 
G/C/W/661.  He also drew Members' attention to the questions from Japan in document 
G/MA/W/106. The Chair gave the floor to China to introduce its submission. 
 14.5 The representative of China stated that he pr eferred to respond after other Members had taken 
the floor. 
 
14.6 The representative of Japan  stated that, on the 10th anniversary of China's accession to the 
WTO and final Transitional Review Mechanis m (TRM) under the Protocol of Accession, his 
delegation wanted to highlight not only the role of   the TRMs, which had ensured transparent review 
of China's efforts to comply with its obligations, but  also China's efforts to answer the questions posed 
by Members.  However, Japan cons idered that China had not fully responded to the questions, like in 
the Committee on Market Access on 14 October 2011, where Japan raised some issues concerning 
export restrictions and export taxes and China suggest ed that these be taken up to this Council.  He 
then indicated that the Chinese government had issu ed export restrictions on several raw material 
products, including rare earths, tungsten, antimony, indium, molybdenum, tin coke, etc.  In rare 
earths, China's Ministry of Commerce (MOFCOM) had announced that, according to its policy, the 
total amount of export quotas was confined to approximately 8,000 tons in 2010, marking a 40 per 
cent decrease when compared to 2009.  The total am ount for 2011 was expected to be approximately 
the same as for 2010.  Moreover, ferroalloys had recently been included in the coverage of export 
quotas; and, as a result, the amount of quotas for ra re earth had decreased significantly.  China's 
explanations that these measures were taken to prot ect exhaustible natural resources were contradicted  G/L/977 
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  by the increased amount of Chinese domestic consumption of these products.  Thus, these measures 
appeared to benefit domestic users of the metals.  Japan also recalled that China's export duties on 
various raw materials, including rare earths, t ungsten, antimony, indium, molybdenum, tin, fluorite, 
and hydrogen fluoride had been rai sed several times since November 2006 and requested explanations 
from China as to how and whether it had plans to eliminate those export restrictions. 
 
14.7 On China's implementation of export licensi ng on coal, Japan indicated that, whereas a 
sufficient number of export licences used to be issued  in terms of China's export amount of coal, the 
number of export licences had decreased over the past few years.  This trend might hamper smooth trade flow of coal.  China's domestic production and c onsumption of coal seemed  to be in expansion, 
but it was unclear if the export licensing measures on  coal had been adopted in conjunction with the 
restrictions on domestic production a nd/or consumption, as stipulated in GATT Article XX (g).  This 
raised concerns with regard to the consistency of such measures with GATT Article XI; thus, China 
should clarify how it justified export licensing on coal under the GATT. Moreover, while China was 
committed to eliminating export taxes-with the exce ption of those which are listed in Annex 6 in 
China's Protocol of Accession- it had raised export ta xes on coking coal and had levied taxes on steam 
coal and anthracite since August 2011.  China shoul d also explain how it justified its export taxes in 
relation to its commitment upon accession, and indicate any plans to review the export licensing measures and imposition of export taxes on coal.   14.8 Japan recalled that in March 2006, MOFCOM  had announced export prohibition on natural 
sand and on 5 January 2007 it announced that this  would take effect from March 2007. China had 
explained that the purpose of the prohibition was to preserve natural resources and that, in parallel, 
production and consumption of natu ral sand had also been restricted. China should provide detailed 
explanation on its measures, including legislativ e measures and quantitative restrictions on domestic 
production and consumption of na tural sand.  The Japanese industry sector had not only submitted 
inquiries on the particularities of the measures, but al so requested their repeal .  On several occasions 
Japan had posed questions on the WTO consistency of China's export prohibition on natural sand but 
had not received sufficient explanations from China.  14.9 On export taxes on fertilizers and their raw ma terials, Japan indicated  that since 2008 China 
had levied its export taxes on fertilizers and their ra w materials as follows:  China levied 100 per cent 
special export tax on 32 items of the chemical fer tilizers and their raw materials from 20 April to 30 
September 2008; a total of six items including phos phate rock, were added to the list of the above 
items, making them subject to the 100 per cent special export tax on May 2008; currently, a total of eight items had been levied;  and, during periods of  high demand, China had levied 75 per cent special 
export tax on items such as urea and ammonium phosphate, in addition to a 35 per cent export tax 
levied during such periods.  Since these products we re not listed in Annex 6 of the Protocol, Japan 
was concerned that the aforementioned measures were  inconsistent with the commitment to abolish 
export taxes in accordance with section 3, Article 11 of China's WTO Protocol of Accession.  Despite 
several inquiries by Japan regarding China's futu re plans to eliminate these export taxes on the 
aforementioned TRM and TPR, China had not provided  any concrete explanation.  Therefore, he 
requested China to provide e xplanations on this issue.  
 
14.10 As to Trade Related Investment Measures (TRIMs), Japan recalled that at the TRIMs 
Committee on 4 October it recognized China's effort s in recent years to simplify the verification 
processes for investment projects, but had indicated that China had to further improve the application 
of the system, especially in rural areas, through e nhancing transparency and predictability on the 
implementation and through a substa ntial elimination of remaining foreign capital restrictions under 
the "Law on Management of Foreign Investment in Commercial Sectors". Japan was also concerned that performance requirements on local content or on  technology transfer still remain as impediments 
for foreign investors in China.  Japan had also poi nted out that, in spite of China's commitments in 
paragraph 7.3, Part I of the Protocol of Acce ssion and paragraph 203 of China's Working Party G/L/977 
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  Report, China was still imposing technology transf er requirements in the new-energy vehicles 
production by "Access Regulations for New-Energy Vehicle Manufacturers and Products".  At the 
TRIMS Committee meeting, Japan asked China to clar ify the consistency of this measure with its 
Protocol of Accession but had not yet received concrete explanations.  
14.11  With regard to the Committee on Agriculture, Japan indicated that Section11.3 of Part 1 of 
the Protocol of Accession stipulated that China should eliminate all taxes and charges applied to 
exports unless specifically provided for in Annex 6 of the Protocol or applied in conformity with the 
provisions of Article VIII of GATT 1994.  At  the Committee meeting in September 2011, Japan 
expressed its concerns on China's introduction of ex port taxes and charges on agricultural products in 
terms of volatility of world food prices and request ed for China's view on the consistency with the 
Protocol of Accession and the relevant WTO provi sions concerning export taxes and charges.  
 14.12 With regard to the forthcoming meeting of the Committee on Technical Barriers to Trade 
(TBT), Japan looked forward to receiving from China,  comprehensive responses regarding standards, 
conformity assessment procedures, regulation for information security and "Regulations of the 
People's Republic of China on Certification and Accreditation" and "Measures for the Administration 
of Certification Bodies" in China.  Even though th is was the final occasion to review China's progress 
in fulfilling its accession commitments, Japan woul d continue monitoring China's progress in the 
standing committees.    
14.13 The delegate of Mexico recalled that her dele gation had made its concerns apparent in several 
Committees, but in particular at the Committee on Cu stoms Valuation where it had serious concerns.  
Mexico recognized the initiatives undertaken by the Chinese government to ensure China's full 
integration into the multilateral trading system and to comply with its Protocol of Accession.  In spite 
of significant reforms which over the last ten years led China to a thriving economy, Mexico had 
concerns on the industrial policies aimed at promoting national industries and the increasing 
government intervention in the economy; these coul d distort international trade.  Government 
intervention in the operation and design of inv estment strategies of the Chinese state-trading 
enterprises also caused concern.  China had made significant progress in certain areas, such as the 
steel sector, where plans to incr ease mergers between companies, a reduction or cancelling of credits 
and the closure of a number of small plants had b een implemented in order to reduce the capacity of 
state trading enterprises.  However, the Mexican pr ivate sector remained concerned by the continuing 
governmental intervention in setting levels of produc tion and exports of its trade-owned enterprises; 
this caused distortion in international trade of steel .  The Chinese government also intervened in other 
sectors such as automotive, chemicals construc tion, machinery and equipment, information 
technology, iron and steel and nonferrous meta ls where, given the 2008 crisis, the Chinese 
government had implemented a number of stimulus packages.  Mexico recognized the efforts carried 
out by China in order to improve transparency to  its practices and commercial measures. However, 
the Mexican private sector was still concerned th at there were significant short-comings on the 
transparency of the Chinese industrial policies, which were still based on significant government 
intervention.  In some sectors, in particular leat her and footwear, there were concerns about potential 
government participation in the ownership of ente rprises as well as lack of information about the 
government's participation.  Mexico requested the Chinese authorities to continue its efforts towards 
the full implementation of the WTO obligations, as was agreed in China's Protocol of Accession. 
 14.14 The delegate of the United States recalled that the TRM was created  largely because China 
was admitted to WTO membership before it had revised all of its trade-related laws and regulations to 
become WTO-compatible, and because China was allo wed a variety of transition periods before it 
took on certain WTO obligations.  Active monitori ng of China's implementation progress through the 
TRM was considered an important mechanism to help  ensure that China succ essfully integrated into 
the WTO's open, market-oriented and rules-based trading system and to help ensure that WTO 
Members benefited fully from liberalized trade with China.  During the initial phase-in period  G/L/977 
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  following its accession to the WTO, China implem ented a set of sweeping commitments, including 
reducing tariffs, eliminating non-tariff barriers that denied national treatment and market access for 
goods and services imported from other WTO Members, and making legal improvements in intellectual property protections and in transparency .  These actions deepened China's integration into 
the international trading system, facilitating and strengthening China's rule of law and economic 
reform.  Trade and investment also expanded dr amatically between China and its many trading 
partners.   14.15 Nevertheless, even though China had taken many impressive steps to reform its economy 
since joining the WTO ten years ago, the overall pict ure remained complex, given a troubling trend in 
China toward increased state inte rvention in the Chinese economy in recent years.  She noted that 
frequently, trade frictions with China could be tr aced to China's pursuit of industrial policies that 
relied on excessive, trade-distorting government inte rvention intended to promote or protect China's 
domestic industries and state-owned enterprises and th at this government intervention reflected the 
fact that China's movement away from a centra lly planned economy toward a free-market economy 
governed by rule of law remained incomplete.  To  date, all of the committees that report to this 
Council had conducted their TRMs, with the excep tion of the Committee on Technical Barriers to 
Trade. In the statements that the United States made before those committees, it noted the progress 
that China had made in implementing the Protocol  of Accession commitments and in complying with 
the obligations that China had taken on under the many agreements that make up the WTO 
Agreement during its first 10 years of WTO member ship. However, the United States also noted 
many areas of on-going concern, evidencing a troubli ng trend toward increased state intervention in 
China's economy. Her delegation wanted to highlight, at the meeting, some of the key on-going issues 
that it raised in the TRMs before the Council's subsidiary bodies.   14.16 She recalled that, before the Committee on Ag riculture, the United States noted that national 
treatment in connection with China's application of its value-added tax (V AT) had been a concern for 
some time.  It appeared that sales of agricultura l commodities produced and sold by farmers in China, 
such as wheat, cotton and corn, were exempted from the VAT and that sales of agricultural inputs 
produced and sold in China, such  as seed, pesticide, herbicide, agricultural machinery and certain 
fertilizers, were also exempted fro m the VAT.  However, when these same products were imported, it 
appeared that they were assessed the VAT at the ra te of 13 per cent. Her delegation also noted that 
China's TRQ system for bulk agricultural commod ities continued to be impaired by inadequate 
transparency, inordinately benefited state tradi ng enterprises rather than the private sector, and 
suffered from low fill rates for many of the commod ities. In addition, it was difficult to provide an 
assessment of whether China had adhered to its co mmitments with regard to agricultural subsidies 
because it appeared that, even after 10 years of WTO membership, China had failed to notify all of its 
subsidies to the WTO, as required by Article 25 of the Agreement on Subsidies and Countervailing 
Measures (Subsidies Agreement).  The United States ur ged China to reconsider its use of non-tariff 
barriers, like its discriminatory application of th e VAT to agricultural products, which created an 
uneven playing field in China to the detriment of fo reign producers and their products. She also urged 
China to take immediate steps to improve transparen cy, both with regard to its TRQ regime and its 
use of subsidies.  
14.17 She recalled that before the Committee on Tr ade-Related Investment Measures (TRIMs), the 
US had explained that even though China had revised  many laws and regulations on foreign-invested 
enterprises to eliminate WTO-inconsistent requireme nts relating to export performance, local content, 
foreign exchange balancing and technology tran sfer, some of those measures continued to 
"encourage" the use of local content or technology transfer, without formally requiring it. Moreover, 
enterprises from the United States and other Memb ers continued to report that some Chinese 
government officials, who typically retained a high degree of discretion when reviewing investment 
applications, still considered factors such as local  content and technology transfer when deciding G/L/977 
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  whether to approve an investment even in the absence of a measure expressly encouraging it. She 
indicated that the auto sector was one sector that  the US highlighted as having been particularly 
plagued by this type of government intervention, a nd the latest manifestation could be seen in a series 
of problematic actions being taken by the Chinese g overnment related to the so-called "new energy 
vehicles", or NEVs. Another sector impacted by troubling investment restrictions was the steel sector.  
However, these two sectors were by no means the only a ffected sectors.  In a number of other sectors, 
her delegation and other Members had become incr easingly concerned over the last few years about 
new restrictions on investment being proposed and implemented by China. Often, these restrictions 
were accompanied by other problematic industrial po licies, such as the increa sed use of subsidies, 
preferences for using domestic rather than impor ted goods, and the development of China-specific 
standards. Many of these investment restrictions c ould be traced to the five-year plans that guided 
China's industrial development. She urged China to reconsider its heavy reliance on investment 
restrictions as a tool of industrial policy and to re view its existing investment restrictions, particularly 
with regard to NEVs, in light of its WTO co mmitments and make appropriate revisions where 
necessary.  
14.18 Before the Committee on Market Access, her delegation noted that serious market access 
problems had arisen over the last 10 years as a result of various Chinese government industrial 
policies, and that many of these problems had involved fundamental WTO obligations, such as 
national treatment, non-discrimination and transpar ency.  The United States referenced four WTO 
compliance matters that could not be resolved th rough dialogue and led to the initiation of dispute 
settlement proceedings, including 
China - VAT on Integrated Circuits (DS309), China - Measures 
Affecting Imported Auto Parts (DS339, DS340 and DS342), China - Publications and Audiovisual Products 
(DS363) and, most recently, China - Export Restraints on Raw Materials (DS394, DS395 and DS398). 
With regard to the last of these WTO cases, China - Export Restraints on Raw Materials, she indicated 
that the complainants had challenged China's export r estraints as applied to a representative sample of 
nine raw materials and that a WTO panel had recently  rejected all of China's defences and ruled in 
favour of the complainants.  The United States urged China to abandon its use of export restraints not 
only on these nine raw materials, but also other raw materials, including rare earths, tungsten and antimony.  
14.19 She recalled that before the Committee on Import Licensing, her delegation addressed a 
variety of import licensing requirements being imposed  by China that raised questions about China's 
commitment to implementation of the Agreemen t on Import Licensing Procedures. Her delegation 
specifically referenced China's import licensing sy stem for iron ore, China's regime for issuing 
Quarantine Inspection Permits (QIPs) for products su ch as poultry, pork and beef, and China's regime 
for issuing Automatic Registration Forms (ARFs) fo r poultry, pork, soybeans and dairy products. The 
United States urged China to take a path that would promote rather than restrict trade and specifically 
to abandon its use of restrictive import licensing pr ocedures for iron ore; and, eliminate its QIP and 
ARF regimes.  
14.20 She indicated that before the Committee on Sa nitary and Phyto-sanitary Measures (SPS), her 
delegation noted that over the last ten year s China's regulatory authorities had imposed non-
transparent SPS measures apparently lacking a scientific basis that restricted imports of a number of 
key US agricultural exports and that, in many instan ces, the US efforts to resolve China's underlying 
concerns were hindered by China's inability to provi de relevant risk assessments or its science-based 
rationale for maintaining its import restrictions. She stated that examples of problematic SPS 
measures currently in place included a ban on US b eef products, zero tolerance standards for certain 
pathogens in imported raw meat and poultry that were generally considered  unachievable and were 
apparently not applied to domestic raw meat a nd poultry, and lengthy bans on poultry from various 
US
 states in response to cases of low-pathogenic avia n influenza.  The United States urged China to  G/L/977 
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  fully embrace the disciplines of the SPS Agreement and ensure that its SPS measures were based on 
international standards or science-based risk analysis procedures.  
14.21 She also indicated that be fore the Anti-Dumping Committee, her delegation noted that while 
China had made significant progress in developing  a legal framework for its anti-dumping regime 
over the past  ten years, it had more to do to ma ke its anti-dumping investigative and decision-making 
processes fully transparent and procedurally fair fo r all parties, as envisioned by the Anti-Dumping 
Agreement. The United States later noted before the Subsidies Committee that these same concerns 
applied to China's countervailing duty regime. Separately, the US also drew attention to the fact that, 
in recent years, China had initiated anti-dumpi ng and countervailing duty  investigations under 
troubling circumstances. The United States added th at some of these investigations had generated 
WTO disputes in which multiple WTO violations had b een alleged, including claims of inconsistency 
not only with fundamental obligations  relating to transparency and procedural fairness, but also key 
aspects of the injury determinations. The United States had initiated two of those disputes, one 
involving grain-oriented electrical steel (DS414) and the other involving broiler products (DS427). 
14.22 As to the Committee on Subsidies and Count ervailing Measures, her delegation emphasized 
that it was particularly troubling that, throughout  its first ten years of WTO membership, China 
appeared to have made frequent use of subsidies th at were prohibited by the Subsidies Agreement. To 
date, the United States had br ought three separate WTO cases cha llenging scores of Chinese central, 
provincial and local government subsidies as prohibi ted. While China either repealed the challenged 
measures or eliminated the challenged benefits in those measures after being challenged at the WTO, 
there were concerns that China continued to  face WTO challenges alleging significant use of 
prohibited subsidies at every level of government  even after ten years of WTO membership. As 
pointed out, the Subsidies Agreement's disciplines  were clear and straightforward, and it was 
unacceptable for China or any other Member to main tain prohibited subsidies.   Her delegation also 
highlighted another troublesome problem in the subs idies area: despite being one of the top traders 
among WTO Members, China had a poor record of compliance with its transparency obligations 
under the Subsidies Agreement.  China continued to  maintain an opaque subsidies regime, and until 
last month it had submitted only one of its require d subsidies notifications under Article 25 of the 
Subsidies Agreement since joining the WTO ten year s ago. That notification, submitted in 2006, was 
incomplete as it failed to notify any subsidi es provided by provincial and local government 
authorities, as well as numerous cen tral government subsidies. China did submit a new notification in 
October 2011 after the US took the extraordinary step of submitting a coun ter notification under 
paragraph 10 of Article 25 of the Subsidies Agreement, but China's new notification was again 
incomplete. 
14.23 With regard to the Customs Valuation Committ ee, she indicated that her delegation noted that 
it appeared that China's implementation of its ob ligations under the Agreement on Implementation of 
Article VII of the General Agreem ent on Tariffs and Trade 1994 (the  Customs Valuation Agreement) 
had been inconsistent from port to port, both in te rms of customs clearance procedures and valuation 
determinations. The US specifically highlighted Chin a's improper use of "reference pricing" for many 
high technology products, China's automatic adding of  royalties and license fees to the dutiable value 
of goods such as computers that include pre-insta lled software, and China's assessment of duties on 
digital products based on the imputed value of the content rather than the value of the underlying 
carrier medium. The United States urged China to ta ke immediate steps to ensure that its customs 
valuation measures were fully and uniformly implemented.  
14.24 The US had described concer ns before several committees a bout the efforts that China had 
made to comply with a series of commitments from its Protocol of Accession that were designed to 
ensure that trade with China would be predictable and transparent. First, with regard to China's 
commitment to publish all laws, regulations and ot her measures pertaining to or affecting trade in G/L/977 
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  goods or services, her delegation  noted that while China had complied with this commitment in many 
respects, it still did not appear that China publis hed measures that provide "internal guidance." 
Second, with regard to China's commitment to publish measures for comments before implementing 
them, China had made improvements over the years, but it appeared that China had still not institutionalized a notice and comme nt mechanism for all Chinese agen cies. Third, with regard to 
China's commitment to make available all laws, regulations and other me asures pertaining to or 
affecting trade in goods or services in one or more  WTO languages, it appeared that China had made 
only limited progress in implementing this commitment.  
14.25 In conclusion, the US delegate stated that overall, while China had made noteworthy progress 
in implementing the Protocol of Accession commitme nts and in complying with obligations that it 
took on under the many agreements that make up the WTO Agreement, more work lied ahead if 
China was to fully integrate into the WTO's open, market-oriented and rules-based trading system and 
if other WTO Members were to benefit fully from lib eralized trade with China. The United States was 
committed to continuing its engagement with China, both here at the WTO and bilaterally, in order to 
achieve these objectives. 
14.26 The representative of the European Uni on indicated that China's WTO accession was 
probably the most defining economic development th e world had witnessed over the last decade and 
the ninth and final Transitional Review Mechanis m (TRM) provided the EU with the opportunity to 
review the implementation of China’s commitment s since joining the WTO by the end 2001. Since 
then, China's exports had increased 6-fold in just over a decade, ma king China the world's number one 
exporting nation. China was also the EU's second larg est trading partner, while the EU was China's 
biggest export market and number one trading partne r. He highlighted the tremendous efforts China 
had done in the run-up to and in the years follo wing its WTO accession. First of all, the EU 
acknowledged that China had implem ented its tariff reductions according to the schedule. Accession 
to the WTO had also given a new impetus to Chin ese law-making because of the specific consultation 
and publication obligations that WTO membership entails. The EU had learnt that in the process, 
China reviewed over 2000 pieces of laws and regulations  at the central level alone, in addition to tens 
of thousands more at the provincial level; this wa s complemented by a nation-wide awareness-raising 
and information campaign.    
14.27 Despite these huge efforts and impressive achie vements, it was important to note that WTO 
membership was not a one-off event but a commitme nt that required on-going work, especially in a 
fast developing country like China that was catch ing up rapidly and very actively regulating its 
markets, often in very short time. In fact, it ought to  become an in-built reflex to ensure that its rules 
and legislation respect WTO rules and basic princi ples such as non-discrimination, transparency, and 
national treatment. That was applicable to each  and every WTO Member, but especially leading 
trading nations ought to lead by example. Given China's size – already the world's number one exporter and soon also the world's biggest economy,  all that it does or does not do, had an impact on the rest of the world, including in the case of domestic and internal market regulations.   
 14.28 Despite the impressive progress China had made  since 2001 in integrating to the rules-based 
world trading system, WTO Members were still confr onted with some important areas of concern and 
significant challenges remained in realising the bene fits of many of the commitments that China had 
de jure  implemented.  He noted that his delegation, like many others, had taken active part in this 
TRM in a number of CTG sub-committees, incl uding the Committees on SPS, Market Access, 
TRIMS, Anti-dumping, Subsidies and Countervailing measures where the EU had made statements 
and presented written submissions.  The EU was surp rised that China, in some of these Committees, 
had thanked those Members who had re mained silent during the TRM.  In  this regard, he recalled that 
transparency was an essential element of the WTO,  that the scrutiny provided for by the TRM was  G/L/977 
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  part of China's Protocol of Accession, and that each and every WTO Member, regardless of its size, 
had an equal right to exercise its rights.   14.29 With regard to the Committee on Market Acces s, the EU encouraged China to reconsider 
procedures, to engage in a substantive review of  its Compulsory Certification scheme and to act 
responsibly as a WTO Member who is a significant raw materials consumer and producer worldwide. 
The EU appreciated China's concerns with regard to sustainable management of natural resources and 
encouraged  environmental considerations in this fi eld but considered that export restrictions were not 
the appropriate and WTO consistent approach to  achieve these objectives. The EU had repeatedly 
endeavoured to find a constructive solution thro ugh dialogue but because of the reticence of the 
Chinese party to engage in such dialogue, had to r esort to WTO litigation.  His delegation expected 
the final ruling in this dispute in December and hoped China would be willing to engage with it in 
finding a systemic solution to export restrictions on many raw materials.   14.30 In the TRIMS Committee, the EU had raised  China's investment approval process where, 
despite efforts to enhance tran sparency, further streamlining was needed. His delegation also 
highlighted many restrictions on foreign investment , including complete bans on foreign investment 
in certain sectors, reflecting the government's continuing role as a very active manager of the 
economy, as well as some local content requirement s. He called on China to implement all of its 
investment measures in a way that ensu res transparency and predictability.  
 
14.31 As to the Committee on SPS, the EU's main con cerns related to transparency such as access to 
legislation and procedures, SPS notifications we re coming in big volumes and in Chinese only 
therefore, possibilities for real commenting remain limit ed. On administrative procedures for export 
applications, the EU noted general slow progress.  Another concern related to the fact that Chinese 
legislation was not yet aligned to several internati onal standards; in this context, the EU raised 
differences between the Chinese list of authorized food additives and processing aids and the list 
considered safe by international standard-se tting bodies.  Additionally, China had not given a 
scientific justification for this deviation. China s hould continue its efforts to fulfil the responsibilities 
deriving from its WTO membership in this area.   14.32 In the context of the Committee on Subsidies and Countervailing Measures, the EU had raised 
the issue of notifications, recalling that WTO Memb ers were under the obligation to submit regular 
notifications of subsidies in the area of trad e in goods under the SCM Agreement (ASCM).  His 
delegation was interested in hearing China's intenti ons in this respect.  With regard to the Committee 
on Anti-dumping (AD),  the EU emphasised its concer ns relating to the nature and standards applied 
in Chinese proceedings related to the use of anti-dumping instruments, highlighting that AD 
proceedings should be initiated only if all WTO co nditions were met, regardless of any retaliatory 
motive whatsoever.   14.33 In conclusion, the EU felt that, ten years after its accession to the WTO, China had moved 
from being an emerging economy to a global economi c power and its WTO membership had certainly 
not been alien to this transformation. The EU recognized and welcomed China's continuous efforts 
over the past ten years to implement its WTO commitm ents and encouraged it to continue in the same 
path, so as to ensure that its domestic rules a nd legislation faithfully respect WTO rules and basic 
principles such as non-discrimination, transparency , and national treatment.  The EU looked forward 
to continuing this review in the remaining m eetings of the WTO bodies, such as the Committee on 
Technical Barriers to Trade (TBT) and the General Council. 
 
14.34 The delegate of China thanked Japan, the US , Mexico and the EU for their statements and 
expressed the appreciation of his delegation for the constructive silence of all other Members that 
might not have been willing to take the floor unde r this agenda item ever or at the TRM.  He 
expressed that China had spared no efforts to fulfil most comprehensively and seriously, its G/L/977 
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  tremendous commitments made upon its accession to th e WTO on 10 November 2001.  Since then, 
China had reduced tariffs, eliminated all non-tariff m easures, and made available the right to trade to 
all individuals and businesses which drastically lowered the threshold for people engaging in trade.  
With the duly and complete implementation of tariff reduction commitments each year in the transitional period, China's average tariff on goods  had reduced from 15.3 per cent at the time  of 
accession to 9.8 per cent in 2011; this was lower th an the average tariff level of other developing 
country Members.  China had overhauled 2300 laws, re gulations and departmental rules at the central 
level and 190,000 trade-rela ted regulations, policies and measures at  the local level. As the biggest 
developing country of the world and a stalwart suppo rter of the multilateral trading system, China had 
done its best endeavours to fulfil its WTO obligatio ns and promote transparency, liberalization and 
trade facilitation internally and abroad.  In th e same vein, it submitted to the Goods Council, 
document G/C/W/661 containing the information requ ested in Annex 1A of China's Protocol of 
Accession.  China looked forward to furthering eff ective discussions with other Members during this 
final TRM and in the future at the re gular meetings of the Goods Council. 
 
14.35 The Chinese delegate thanked Japan for resp ecting the division of labour between this 
Council and the Committee on Market Access and fo r having submitted their questions to the latter 
prior to this Council.  Some of the verbal questi ons by other delegations had already been addressed 
in previous reviews under the subsidiary bodies of this Council or at other various arenas, including 
through bilateral talks. China's deliberations, clarif ication and argument had be en clear and consistent 
and it would be inappropriate to reopen those topi cs and repeat China's position already stated in 
previous transitional reviews this year.   
 14.36 In response to Japan's written question on th e export restrictions and export tariff on some 
nonferrous raw materials, the Chinese delegate indi cated that rare-earths, tungsten, molybdenum, 
antimony, tin, and other nonferrous raw material s were non-renewable and exhaustible natural 
resources.  China was also facing serious resour ce depletion and environment pollution challenges 
during the exploitation of the above-mentioned raw materials; therefore it had imposed both export 
restrictions and strict control of domestic mining and production on such raw materials so as to protect the environment through improving the ra tional exploitation and utilization of resources as 
such.  This policy and practice fully complied with  WTO rules.  With regard to rare-earths he 
indicated that it was widely known that China had a bout 30 per cent of global reserves of rare-earths 
but had produced and supplied 95 per cent of the world's total demand and, accordingly and 
undoubtedly, endured most of the pollutions.  It wa s unsustainable, unrealistic  and unfair to expect 
China to meet the majority of the global demand for rare-earths in the long run with relatively a much 
smaller proportion of global reserves.  Thus, China adopted restrictive measures for the exploitation, production and export of rare-earth s considering environmental pr otection and economical use of 
limited resources.  He noted that those measures we re implemented in a way fully consistent with 
WTO rules and agreements, including the national treat ment principle. He furthered that in 2010, 
China produced 89,000 tons of rare-earths, a yea r-on-year decrease of 31 per cent.  The decrease of 
production was proportionate to the adjustment of export quotas and all available data disapproved the 
alleged statement of Japan that there had been an increase of production of rare-earths in China 
despite export measures in place.  Furthermore, in  2011, the export quotas of rare-earths were 24,000 
tons and the export volume only accounted for 34 pe r cent of export quotas. China believed that the 
decreasing export of rare-earths wa s mainly caused by market power rather than the adjusted export 
quotas.  14.37 Regarding coke and natural sand, the Chinese delegate stated that that China had taken 
consistent and WTO-compliant export measures to promote the rational exploitation of resources and 
protect the environment.  Unsurprisingly, its c oke reserve accounted for about 22 per cent of the 
world's total while its production ta kes were one third of the world's total.  China noted that reduced 
export in the past years had taken place in the context of the plummeting world demand for coke, 
mainly due to the negative impact of the global financ ial crisis.  China had tried its best to provide far  G/L/977 
 Page 11 
 
 
  bigger export quotas than the volume of realized export in order to safeguard and promote free trade. 
China's coke export quotas totalle d 10 million tons in 2010, which was significantly higher than the 
33.5 million tons of export realized in the same year.  With regard to natural sand, he reminded 
Members that China had notified in 2007, under qu antitative restrictions notification category, its 
export measure on natural sand, which was offi cially put into effect on 1 March 2007.  
 
14.38   On questions concerning the export quot as and export tariff of coal, the Chinese delegate 
stated that China's analysis had proved again that  the decreasing coal export volume from China was 
not caused by the adjustment of coal export quotas .  The over-exploitation of coals had resulted in 
increasingly depleting resources for consumption and severe damages to the environment in China. 
Therefore, it was justified and imperative for China to  adopt export measures on coal fully in line with 
the WTO rules.  He also indicated that China calcu lated and decided its total coal export quotas, based 
on a comprehensive consideration of domestic s upply and demand, global market demand and quotas 
used in real terms in the previous year.  Additiona lly, in recent years coal price in the global market 
had always been lower than that in the domestic market and, as a natural response to the market 
situation, the trade volume of coal agreed under Sino-Japan Long-term Agreement had been reduced 
substantially.  Moreover, due to the same unf avourable export market conditions, Chinese coal 
enterprises were showing less and less interest in coal export business, resulting in a huge decrease of 
export volume from 45.43 million tons in 2008 to 19,03 million tons in 2010, a drop of 58.1 per cent.  
As a result of this, the Chinese government modera tely adjusted its coal export quotas from 47.7 
million tons in 2008 to 45 million tons in 2010, a drop of only 5.7 per cent.  Facts and data had proven 
that the coal export quotas provided were consisten tly and drastically higher than actual coal export 
volume in recent years; thus, China's export measur es had little to do with the decrease of export to 
Members like Japan.  14.39 With regard to the questions from Japan on ex port tariffs of chemical fertilizers and other raw 
materials, the Chinese delegate expressed that Ch ina had an enormous population with little arable 
land, thus it was always a cardinal task for China to feed its 1.3 billion people.  As an important 
agricultural means of production, chemical fertili zer had played an important role in increasing 
agricultural output and farmers' income. China did make several adjustments to the export tariff of 
related products during 2008-2010 and was willing a nd ready to conduct further discussions with 
concerned Members so as to exchange accurate in formation in the future.  Japan's written assertion 
that "China has raised export taxes on coking coal and has levied taxes on steam coal and anthracite 
since August 2011" was incorrect given that nothing had changed since August 2011. Thus, China would refrain from taking further comment s on this problem on this occasion.  
 14.40 China concluded by stating that it had c overed everything in hand and reassured Members 
that it was ready and willing to continue discussions  at all appropriate arenas in the future.  The 
Chinese delegate thanked the Secretariat for its wo rk during the past ten years in China's TRM.  
 14.41 The Chairman proposed that the Council take note of the information provided by China in its 
submission and its responses to the questions rai sed by Members.  Regarding the form of the 
Council's report of the Review, he proposed proceed ing in the same manner as in previous years.  
This meant that a brief factual report would be prep ared, with references to the documents and attach 
to the report, the portion of the minutes of this me eting relating to the Transitional Review.  This 
report, as well as the reports of the subsidiary bo dies, would then be transmitted to the General 
Council.    
14.42 The Council so agreed. 
 
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