RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/266 
19 September 2005 
 (05-4120) 
Council for Trade in Services Original:   English 
  
 
 
COMMUNICATION FROM AUSTRALIA 
 
Transitional Review Mechanism in connection with Paragraph 18 of 
 
the Protocol on the Accession of the People's Republic of China  
 
 
 The following communication, dated 14 Septem ber 2005, from the delegation of Australia is 
being circulated to the Members of the Council for Trade in Services.   
  
Questions and Comments of Australia on the Implementation by China 
of its Commitments on Trade in Services 
 
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I. TELECOMMUNICATIONS 
1. A modern telecommunications structure can be an important driver of economic growth.  As 
noted in the recent statement by a number of Members interested in the liberalisation of telecommunications services (TN/S/W/50), open markets for telecoms services encourage investment, 
promote economic development and s timulate innovation and the availab ility of telecoms services at 
competitive prices.  Australia acknowledges and welc omes the reforms China is undertaking in this 
sector, and takes a keen interest in China’s steps toward a pro-co mpetitive regulatory environment for 
telecommunications.  2. Australia notes that the Telecommunications Re ference Paper, which forms part of China’s 
Schedule of Specific Commitments, underpins market  access commitments in the telecommunications 
sector through agreed pro-competitive regulatory prin ciples.  Accordingly, Australia would appreciate 
China addressing the following questions (at paragra phs 3 to 6) relating to implementation of the 
Reference Paper.  Australia would also welcome cl arification of issues relating to the provision of 
value added telecommunications services ( VAS), as outlined in paragraph 7 below. 
 
3. How does China ensure uniformity in the application of the measures and principles 
contained in the Reference Paper across the People’s Republic of China?  4. In the context of further implementation of the specific principles and measures set forth in 
the Reference Paper, will China please indicate whether, and to what extent, China’s draft 
telecommunications law will specifically introduce detailed measures and guidelines:  
(i) to implement paragraph 2.2 of the Re ference Paper (in order to ensure that 
interconnection rates are genuinely related to cost, including specific guidance on issues such as the costing methodology for in terconnection rates, and also to ensure 
access by competitors to essential facilities without disadvantage); S/C/W/266 
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 (ii) to implement paragraph 2.5 of the Re ference Paper (in order to ensure (1) the 
independence of the domestic body responsib le for dispute resolution related to 
interconnection issues, (2) that benchmarks  for timeliness of dispute resolution are 
reasonable and are readily understood by the industry and potential entrants, and (3) 
that criteria for approval, rationale for decisions made, and actions taken by the 
regulator are transparent); and 
  (iii) to implement paragraph 4 of the Refere nce Paper (in order to ensure that licensing 
conditions are fair and transparent, and that rights and obligations are clearly 
established and reasonable)? 
 5. In implementing the requirement s of paragraph 2.2 of the Refe rence Paper, can China indicate 
specifically each of the interconnection services that it presently requires incumbent carriers 
to offer?  Will the draft telecommunications law alter these arrangements? 
 
6. Australia notes that pursuant to paragraph 2.4 of the Reference Paper, major suppliers should 
make interconnection agreements or refere nce interconnection offers (RIO) publicly 
available. Will China please provide the RI O or standard terms and conditions of 
interconnection, or otherwise indicate how these might be obtained from the relevant Chinese providers?   
 
7. Will China please indicate (i) how many new dom estic operators and (ii) how many foreign 
invested operators have been licensed to pr ovide VAS since the last Transitional Review 
Mechanism?  Can China please clarify whether th ere are differences in the VAS that domestic 
operators may be authorised to provide compar ed with the VAS (as listed in China’s Schedule 
of Specific Commitments) that foreign- invested operators may provide?   
 
II. LEGAL 
8.  Australia welcomes China’s endeavours in  liberalising the legal services sector and 
acknowledges that, as agreed upon accession, China has removed the quantitative and 
geographic limitations on the establishment of representative offices of foreign law firms in 
China.  Australia further notes that Chin a’s revised GATS offer reflects this positive 
development.  However, Australia is concerned that these restrictions have been replaced by 
the introduction of new restrictive measures that  include an economic needs test (ENT) which 
could act as de-facto quantitative or geographic limitations.  The particular provisions that 
concern Australia are Clauses 1 and 2 of Article 4 of the Provisions on the Execution of the 
'Regulation of Foreign Law Firms Representative o ffices in China' (Ministry of Justice Order 
No. 73 promulgated on 4 July 2002), which identify criteria for the establishment of a 
representative office, including inter alia,  (i) status of social and economic development of 
the location where such representative offi ce is proposed to be established and (ii) 
development need for legal services of the location where such representative office is 
proposed to be established.  Will China please indicate whether any applications for the 
establishment of representative offices of foreign law firms have been rejected as a result of 
failure to satisfy the above criteria since July 2002? 
 
III. CONSTRUCTION, ARCHITECTURAL AND ENGINEERING SERVICES 
9. In December 2004, the Ministry of Construction (MOC) issued the Provisional Measures on 
Construction Project Management , known as Circular 200.  Australia understands that 
Circular 200 requires inter alia  that entities wishing to provide project management services 
in China must be qualified in one of six c onstruction-related regim es including, among others,  S/C/W/266 
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 “design”.  Australian architects and engineers wishing to provide project management 
services in China are therefore required to qualify under Circular 200 in one of these six 
disciplines – which, in effect, requires them to be licensed in China as a “construction” 
company pursuant to MOC Decree 113.  Austra lia is concerned that such a requirement, 
which imposes a range of specific conditio ns including high capitalisation and assets 
requirements, undermines Ch ina’s GATS commitments relating to the provision of 
architectural and engineering services by foreign service suppliers.  For example, engineers or architects may find it very difficult to qualify as “construction” companies – even though they 
may be well qualified to provide the relevant pr oject management services in their area of 
expertise.  Does China have any plans to  allow for design and engineering project 
management services to be provided by professi onals that are not “construction” companies 
within the scope of MOC Decree 113?  If so, will they be regulated separately? 
  
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