. /.  WORLD TRADE  
ORGANIZATION  G/RO/W/105 
14 September 2005 
 (05-4024) 
Committee on Rules of Origin Original:   English 
  
 
TRANSITIONAL REVIEW MECHANISM  
PURSUANT TO PARAGRAPH 18  OF THE PROTOCOL  
ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA 
 
 
 The following communication, dated 13 September 2005, is being circulated at the request of 
the Delegation of the Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu. 
 
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Questions from the Separate Customs Territory of Taiwan
, 
Penghu, Kinmen and Matsu  
 
 In paragraph 101 of the Report of the Working Party on China’s Accessi on, China has stated 
that, upon its accession, in accordance with the provisi ons of the WTO Agreement on Rules of Origin, 
in particular Article 2(b), it would not use the ru les of origin as an instrument to pursue trade 
objectives, directly or indirectly.  Furthermore, Ch ina confirmed that it would apply rules of origin 
equally for all purposes, and also committed to ensu ring that its laws, regulations and other measures 
relating to rules of origin would be issued a nd promulgated in full conformity with the WTO 
Agreement on Rules of Origin. China also confirme d that it would make available to WTO Members 
translations into one or more of the official la nguages of the WTO, all la ws, regulations and other 
measures pertaining to or affecting trade in goods and services.  
  We recognize China’s efforts to improve its business environment and its implementation of 
WTO commitments over the past few years, with the aim of further integrating with the global 
economy. In line with this goal, it would be appreciated  if China could provide further clarification, in 
its responses to our questions below, of certa in aspects of its implementation of the above 
commitments. 
 1. On 3 September 2004, the Chinese government issued new “Regulations on the Place of 
Origin for Imported and Exported Goods”, eff ective 1 January 2005. These new regulations 
supersede the previous 1986 and 1992 versions. We should be grateful if China could please 
advise when these new regulations will be notified to this Committee. 
 2. As outlined in Article 10 of the new “Regul ations on the Place of Origin for Imported and 
Exported Goods”, the Chinese customs agency can ignore the origin of imported goods if those goods are processed or treated with th e aim of circumventing China’s trade remedy 
measures, such as anti-dumping, countervailing and safeguard measures. 
  Article 2(a) of the WTO Agreement on Rules of Origin requires that, when issuing 
administrative determinations of general app lication, the requirements to be fulfilled are 
clearly defined. In addition, Article 2(b) requires that Members do not use the rules of origin as an instrument to pursue trade objectives, directly or indirectly. 
 
 G/RO/W/105 
Page 2  
 
  We would therefore appreciate knowing: 
 (i)  How China determines whether the processing or treatment of goods is aimed at 
circumvention, and how the methods used by China in this respect are consistent with 
the above-mentioned requirements in Articles 2(a) and 2(b).  
 
(ii)  In the event that an exporter di sagrees with China’ s anti-circumvention 
determination, is there any procedure in place to which exporters can have recourse?    
 3. Separately, China has promulgated on 6 December 2004, Notice No.122 by the Customs 
General Administration stipulating the criteria fo r determining substantial transformation, as 
referred to in China’s “Regulations on the Plac e of Origin for Imported and Exported Goods”. 
These criteria include, amongst others, the tariff heading, the value added content, and manufacturing or processing. For the value added c ontent to confer origin, the total value of 
the raw materials and related costs incurred must be greater than or equal to 30% of the value 
of the final manufacturing products.  
  Some further clarification from China on the following aspects would be most appreciated: 
  (i)  According to Article 2(a) (ii) of th e WTO Agreement on Rules of Origin, in cases 
where the ad valorem  percentage criterion is applie d, the method for calculating this 
percentage shall also be indicat ed in the rules of origin.  
   The exact methodology, however, does not seem to be very clearly defined in 
Notice No.122.  For example, could Chin a please clarify whether the calculation of 
the value of the final manufactured product is based on CIF or on FOB prices?  In 
addition, we would appreciate knowing what  prices should be used to calculate the 
total value of the raw materials and related costs.  
 (ii)  Article 2(g) of the Agreement on Ru les of Origin requires that all laws and 
regulations, etc. relating to rules of origin should be published in the interests of transparency.  China’s Noti ce No.122 suggests that details of the methodology used 
for calculations relating to the manufactu ring or processing process and the value 
added content are set out in a “checklist”. 
   It would be appreciated if China could please advise where this checklist may be 
found, and also provide us with a copy. 
 
(iii)  According to Article 2(j) of the Ag reement on Rules of Origin, any administrative 
action which Members “... take in  relation to the determinati on of origin is reviewable 
promptly by judicial, arbitral or administrative tribunals or procedures, ...”  
   Please could China confirm whether this kind of mechanism is contained in its 
existing domestic laws and regulations, and, if so, please could China elaborate on the 
details, and provide us with a copy  of the relevant regulations.   
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