. /.  WORLD TRADE  
ORGANIZATION  G/LIC/Q/CHN/17 
13 September 2005 
 (05-3969) 
Committee on Import Licensing Original:   English 
  
 
 
CHINA'S TRANSITIONAL REVIEW MECHANISM
1 
 
Questions and Comments from the EUROPEAN COMMUNITIES to CHINA2 
 
 
 The following communication, dated 7 September 2005, is being circulated at the request of 
the Permanent Delegation of the European Communities.  
_______________ 
 
  The European Communities is transmitting co mments and questions well in advance of the 
meeting of the Import Licensing Committee of 28 September 2005, in order for the Chinese 
authorities to reply and to complete any information that may be incomplete.  
 Once the information to be provided by China in accordance with paragraph 8, and 
paragraph IV.3(a) of Annex 1A of its accession protoc ol has been received, the EC might come back 
with additional questions.   The EC's comments and questions relate to th e following priority items, the New Automobile 
Policy, textiles products subject to import licensing, and the Steel Industry Policy: 
 New Automobile Policy
 
  The EC refers to the China’s New Automobile  Policy and the concerns voiced by the EC in 
this regard, especially with a view to the wide sc ope of state intervention and the uncertainty about the 
implementing regulations that supplement the new po licy.  Given the experience of how the NAP was 
developed, the EC wishes to stress the transparency  obligations under WTO rules with regard to the 
outstanding implementation regulations of the NAP.  Publishing drafts of these implementing 
regulations well in advance would allow other WTO Members to comment on them. 
 
 In this context, the administrative measu res for the import of automobile components 
fulfilling the characteristics of a whole vehicle, in pa rticular, have the potential to invalidate some of 
China’s WTO accession commitments (abolition of lo cal content requirements and TRIMs, national 
treatment obligation).  The measures will have a ma jor negative economic and technical impact on the 
EC manufacturers and on the development of the Chinese automotive industry itself.  The envisaged 
procedures risk to have restrictive effects on trade. 
  
                                                     
 
1 Pursuant to Paragraph 18 of the Protocol on the Accession of the People's Republic of China 
(WT/L/432). 
2 See Understanding on Procedures for th e Review of Notifications (G/LIC/4). G/LIC/Q/CHN/17 
Page 2  
 
  The EC therefore urges China to review its new legislation regarding WTO aspects and to be 
open for a constructive in-depth discussion on this ma tter in order to develop solutions that are both 
promoting China’s goals of further localization of parts production and facilitating business for EC 
automobile manufacturers.   
Textile products subject to import licensing procedures
 
  The EC notes that a number of textile products are subject to import licensing procedures in China. Would China please:  
- Indicate the exact coverage of textile pro ducts subject to import licensing procedures. 
- Confirm whether updates to the list of produc ts covered (including textile products) are 
available on the MOFCOM website in English. 
- Confirm whether the current import licensing pr ocedures and any changes to these procedures 
are equally available on the MOFCOM website in English. 
Steel Industry Development Policy
 
  China recently released the “Steel Industry De velopment Policy” to provide guidance to the 
healthy development of the steel industry in China.   Article 17 of that policy envisages a ban on outdated techniques and equipments. For this 
purpose, a list of outdated production capacity, t echniques and products has been or will be 
established. Article 18 of the policy promotes impo rt substitution and bans imports of outdated and 
second-hand steel production equipment.  Imported equipment must be advanced and practical. 
 - Will these and other elements of the “Steel Industry Development Policy” have mandatory 
character, and by when will Chin a proceed to formal enactment? 
- Please explain on what basis the list of outda ted production capacity, techniques and products 
(Article 17 of the Steel Industry Developmen t Policy) has been or will be established. 
- What will be the conditions for granting or prohibiting imports, and in particular: 
a) How does China define “outdated equipments”? 
b) How does China define “advanced and practical” equipment? 
c) By what procedures does China intend to implement these criteria and any other 
conditions established in the “Steel Indus try Development Policy” for granting or 
prohibiting imports? 
-  When will China notify the products con cerned and the import procedures applied? 
 
 
__________