WORLD TRADE  
ORGANIZATION  G/MA/W/72 
7 September 2005 
 (05-3895) 
Committee on Market Access Original:   English 
  
 
CHINA'S TRANSITIONAL REVIEW MECHANISM  
 
Communication from Japan
 
  
 The following communication, dated 6 September 2005, is being circulated at the request of 
the Delegation of Japan.  
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Questions and Comments of Japan on the Implementation by China 
 
of its Commitments on Market Access  
  Japan welcomes that, in the fourth year af ter China’s accession, the implementation of its 
commitments on market access has evolved from simple progress into a cruising phase. In a 
transitional period of evolution of regulations, the importance of regulatory transparency, 
predictability, stability and consistency is para mount; the value of market access commitments and 
the efforts to implement them could be easily clou ded by insufficiency of such elements either in 
regulations themselves or in their application. The Transitional Review Mechanism could be useful in 
making those transitional efforts more efficient and productive, and Japan is delighted to be making a 
positive contribution to this process. 
  In this context, China is fu rther invited to take the necessar y steps to ensure a regular and 
effective application of public comments procedur es, prompt publication of laws and regulations, 
predictability of regulatory changes, clear demarc ation of departmental responsibilities within the 
different departments involved as well as betw een central and provincial authorities, etc. 
 
 In accordance with Paragraph 18 of the Protoc ol on the Accession of the People’s Republic of 
China, which states that “China shall provide releva nt information to each subsidiary body in advance 
of the review” and in the spirit of cooperation in rendering the TRM process more efficient and 
effective, Japan requests China to provide prior to the meeting of the Committee on Market Access, 
the responses and relevant information to the following questions and comments. 
 
1. Customs duty regarding “Complete Automobile Feature” 
 
(a) Japan is very much concerned about Chapte r XI of the Auto Industry Development Policy 
published on 1 June 2004. In particular, under the conditions which Articles 55, 56 and 57 
stipulate, Chinese authorities are given discreti on to find “complete automobile feature” in 
components of automobiles, and consequen tly to impose tariff rates for a complete 
automobile which is higher th an the one for its components. 
 (b) Japan understands that customs duties should be  imposed on the products at the point of their 
entry into the importing country. If the unit of imports at the point of entry is automobile 
components, such as bodies or engines, the cust oms duty applicable for them shall naturally G/MA/W/72 
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 be the one for automobile components. If the tari ff rate for complete automobiles is imposed 
on components of automobiles, which is actually higher than the tariff rate for components, in accordance with the Auto Indu stry Development Policy, we suspect that it may be 
inconsistent with Article II of the GATT. Japan  would like to urge China to clarify its position 
on this issue. 
 
(c) In addition, according to Paragraph 93 of  the Working Party Report on the accession of 
China, China clearly confirmed that it had no ta riff lines for completely knocked-down kits or 
semi-knocked down kits for automobiles and stated  as well that if China were to create such 
tariff lines, the tariff rates would be no more than  10 percent. Even if China is to claim that 
this policy serves the purpose of preserving cust oms revenue, Japan would like to urge China 
to confirm that it will continue to a dhere to the Paragraph 93 set out above. 
 
2. Tariff rates on photographic products 
 
(a) At the time of its accessi on to the WTO, China committed to reduce tariffs on photographic 
products (HS37) to 0-53.5% in the form of ad valorem  (levied on yuan/yuan) duties as of 
2002. However, for 35 items of photographic pr oducts, including ordinary photographic film, 
China has imposed specific duties (levied on yuan/square meter basis) far exceeding the 
committed concession rates. For example, alt hough the concession rate for the finished 35mm 
colour negative film is 24% in 2005, the duty currently imposed is a specific duty of 96 
yuan/㎡, which is equivalent to more than twice the concession rates in the ad valorem  terms.  
 
 Although Japan has no intention of admitting the current Chinese position on applying 
specific duties, we carefully listened to  China’s explanation regarding how the ad valorem  
duties are converted into equivalent specific duties at a bilateral meeting at an expert level in 
August this year. China explained how the authorities estimate import prices of the 35mm 
colour negative film, which is multiplied by the ad valorem  duty to calculate the equivalent 
specific duty, based on the inte rnational average retail price and assumed distribution margin 
rates. Japan, however, considers that this practice is neither reasonable nor acceptable.      
 
(b) In this context, Japan would like to urge Ch ina to clarify the legitimate reason, if any, why 
China continues to keep these sp ecific duties in spite of the co mmitment by China in the form 
of ad valorem duties to provide a specific sch edule for the application of tariff concessions 
committed at the time of WTO accession in the fo rm of ad valorem duties with regard to the 
35 items of photographic products. 
 
3. Customs classification 
 (a) There are some cases in China where d ecisions on customs classifications differ among 
officials even in the same customs district. As  a result, some Japanese companies have been 
obliged to pay higher tariffs without being able  to appeal. Japan understands that China has 
two types of formal decisions on tariff classification: one is “Advance Decision” and the other 
is “Administrative Ruling”. Compared to “A dvance Decision”, which is valid only for one 
year and only within the governing customs district, Japan believes that “Administrative 
Ruling” is more desirable, for it is made pub lic all over China and is effective to all the 
importers on a permanent basis. However, in pr actice, we are not aware of any cases where an 
Administrative Ruling has ever been issued. 
 (b) In this context, we would like to urge Chin a to ensure transparency  in accordance with the 
WTO rules and to improve the situation by using the Administrative Ruling scheme 
effectively, as well as to resolve case s such as the one described below.  G/MA/W/72 
 Page 3 
 
 
  
 [case]  A company exporting commercial audio-visual equipment to China had previously 
been allowed to clear the customs without an y tariffs being imposed under the oral guidance 
given by the officials of the customs district in Shanghai. One day, however, another 
organization in the same customs zone held an investigation and, as a result, a 30% tariff was 
imposed, to which the company could not object. The company applied for an Advance Decision regarding customs classification of this product at the end of that year, without 
receiving any clear response for over a year after that. 
 
4. Import prohibition of used goods 
 
(a)  China implements an across-the-board prohibition on imports of used goods including 
second-hand clothing on the ground of the necessity “to protect human, animal or plant life or health.” However, Japan is greatly concerned about the consistency of the import prohibition 
with the WTO rules, especially GATT Article XI. 
 
(b)  Second-hand clothing exported from Japan h as not caused any hygiene-related problems with 
any other importing countries. Therefore, Jap an considers the import prohibition measure 
imposed by China is not justified under the WTO rules. 
 (c)  In this context, Japan would like to urge China  - to abolish such an import prohibition measure, 
 - to explain the position of the Chinese Gove rnment on the consistency, if any, with 
WTO rules regarding this import prohibition measure. 
 
5. Export Restrictions 
 
(a) Japan understands that China implements e xport licensing on exports of cokes. Because not 
enough licenses were issued last year, the export price of Chinese cokes soared and has left 
the world market disrupted. This year, although there have not been any big disruptions so far, the export licensing measure still exists. Japan is greatly concerned about the issuance 
plan for 2005 because half of all licenses remain  unissued. Since this measure is not made 
effective in conjunction with restrictions on domestic production or consumption, Japan 
considers that it is not consistent with GA TT Article XI and cannot be justified under GATT 
Article XX (g) regarding the conserva tion of exhaustible natural resources. 
 (b) In view of the above, Japan would like to ur ge China to clarify its position on the consistency 
of export licensing measures, if any, with the WT O rules regarding such export restrictions.  
If there is any plan to reform export licensing measures, we would like to know the details. 
 
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