. /.   WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CHN/32 
5 October 2007 
 (07-4266) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
TRANSITIONAL REVIEW MECHANISM PURSUANT TO 
SECTION 18 OF THE PROTOCOL ON THE ACCESSION 
OF THE PEOPLE'S REPUBLIC OF CHINA 
 
Questions from the EUROPEAN COMMUNITIES to CHINA  
   The following communication, dated 3 October 2007, is being circulated at the request of the Delegation of the European Commission.   
 
_______________ 
  
 Article 10 of the Accession Protocol of the People's Republic of China ("China")
1 sets out 
China's obligations regarding subsidies.   
 
 In particular, Article 10.1 contains an  unambiguous obligation for China to:   
 
"[…] notify the WTO of any subsidy within the meaning of Article 1 of the 
Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), granted 
or maintained in its territory, organized  by specific product, including those 
subsidies defined in Article 3 of the SC M Agreement.  The information provided 
should be as specific as possible, followi ng the requirements of the questionnaire on 
subsidies2 as noted in Article 25 of the SCM Agreement."   
 
 However, it was only on 11 April 2006 that Ch ina submitted its first subsidy notification for 
the period 2001 to 2004 following its accession in 2001.3  A number of WTO Members, including the 
European Communities, had repeatedly urged China to abide by its WTO obligations, including by 
the submission of a subsidy notification.  Such a notification should, by providing the necessary 
degree of detailed and specific information, allow other WTO Members to assess the WTO 
compatibility of notified measures and to consider  possible further steps, including questions 
regarding the notification and the initiation of WTO dispute settlement.     While China's submission of the notification is to  be welcomed, a closer reading of it reveals 
that it falls well short of the requirements set out in Article 10.1 of the Accession Protocol and 
Article 25 of the SCM Agreement.   
  This prompted a number of WTO Members, including the European Communities, to pose questions to China regarding the notification.  Despite reassurances from China that the answers 
                                                     
 
1 WT/L/432.   
2 G/SCM/6/Rev.1.   
3 G/SCM/N/123/CHN.   G/SCM/Q2/CHN/32 
Page 2  
 
  would be provided by end-June 2007 it was only on 7 September 2007 that China submitted answer to 
the questions.
4   
  A reading of these answers reveal that not  in any single reply China has provided the 
statistical data as requested by th e European Communities.  The reason for the failure to provide this 
data is said to be due to a lack of available sta tistics.  The European Comm unities reminds China that 
this is a clear obligation under Article 25.3 SCM Agreement to provide su ch data and alleged 
unavailability of the data is not a valid excuse.  Moreover, answers provided in response to certain 
questions (e.g. I. 2(c), 3(b);  II.1,2,3,4,5,6) ar e either partial or flawed and contradictory to 
Article 25.10 SCM Agreement as regards question II.1,2,3,4,5,6.  Article 25.10 SCM Agreement 
requires Members to notify promptly any measure wh ich is considered to be a subsidy by another 
Member.  Consequently, the various explanations  provided by China do not fulfil these notification 
requirements under Article 25 SCM Agreement.     Already on previous occasions  the European Communities has expressed its concern over the 
apparent unwillingness of China to abide by its WTO obligations, including the fundamental 
principles of transparency and accountability, and has encouraged China to subm it a complete subsidy 
notification and provide answers to questions from other WTO Members.    
Likewise, the European Communities, given its s ubstantial trade interest, obtained third party 
rights in the dispute against China regarding export subsidies and im port substitution measures.
5  
During the course of the two rounds of consultations , the European Communities stressed the need for 
all WTO members, including China, to observe its WTO obligations, including by observing the fundamental principle of transparency and by submitting a complete subsidy notification.  The 
European Communities further noted that failure by any WTO Member, including China, to do so 
could lead to the initiation of WTO dispute settlement.   
 
 The European Communities has also reserved its third part rights for the panel proceedings in 
this dispute.     Based on the above, the European Communities notes  the continuing failure of China to fulfil 
its WTO obligations and urges China to provide comp lete answers to the questions I. 2(c), 3(b);  
II.1,2,3,4,5,6 and provide all statistics requested by  the European Communities.  Should China not be 
able to do so at present stage, Ch ina is requested to indicate when it will be able to provide statistical 
data as stipulated in Article 25.3 SCM Agreement.     The European Communities also notes that despite  the fact that subsidies at all levels of 
government must be notified, China only notified su bsidies at central government level.  Can China 
confirm that it will submit a complete subsidy notifi cation already for the next notification, which was 
due by 30 June this year?  If not China is requested to  indicate when it will fulfil this WTO obligation.   
   
__________ 
 
 
                                                     
 
4 G/SCM/Q2/CHN/25.   
5 China – Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and Other 
Payments (DS358/DS35).