WORLD TRADE  
ORGANIZATION   
G/TBT/W/344 
9 November 2011 
 (11-5787) 
Committee on Technical Barriers to Trade Original:   English 
  
 
TRANSITIONAL REVIEW MECHANISM PURSUANT TO SECTION 18 OF THE 
PROTOCOL ON THE ACCESSION OF THE PEOPLE’S REPUBLIC OF CHINA  
 
Communication from the European Union 
 
 
 The following communication, dated 9 November 2011, is being circulated at the request of the delegation of the European Union. 
 
_______________ 
 
 
I. GOOD REGULATORY PRACTICE AND TRANSPARENCY 
1. Good regulatory practice in all its dimensions (e.g . stakeholder consultation at an early stage, 
impact assessment, proportionality of measures with objectives pursued, etc.) is the key prerequisite 
to achieve a transparent and accountable regulatory fr amework. In this context, the European Union 
welcomes the improvements in the transparency a nd predictability of Chin a's regulatory process and 
related implementation measures – particularly enc ouraging is, for instance, the gradual increase in 
the number of  public calls for comments.  
2. Nevertheless, these practices are still not uniform across the board, and their application 
varies depending on the regulatory body in charge  – while some Chinese ministries and agencies 
appear to be more sensitized to China's role a nd obligations as a WTO Member, others have yet to 
fully embrace the transparency provisions enshrine d in the TBT Agreement. Overall opacity of the 
system in certain areas remains, which is detrimenta l to the predictability that businesses need in order 
to operate. For instance, on occasion, regulations and circulars issued by Chinese authorities apply 
with retroactive effect or are enforced in a discre tionary and inconsistent manner. There are also many 
instances where mandatory requiremen ts are enforced without prior stakeholder consultation, or even 
publication of the rules in question.  
3. The EU would therefore like to reiterate its re quest for China to consistently call for public 
consultations on all new draft laws and administra tive measures that may have a significant effect on 
trade, and to provide a reasonable period for comment s on these drafts, in order to allow stakeholders 
to adequately examine the proposals and give c onsidered comments. The EU would also like to 
encourage China to expand its use of Regulatory Imp act Assessments, with a view to ensuring that its 
technical legislation is fit for purpose, and is not more burdensome than necessary to achieve a legitimate objective. 
4. An area of regulation where significant concerns  exist in this regard is Information and 
Communication Technology (ICT), under the regulatory authority of the Ministry of Industry and 
Information Technology (MIIT). This sector is ofte n confronted with instances in which mandatory 
requirements are introduced without prior TBT notifica tion, publication or even internal notice - as in 
the case of voluntary standards made mandatory, either de jure or de facto, through their referencing 
in mandatory conformity assessment procedures. One example is wireless Internet access for G/TBT/W/344 
Page 2  
 
  handheld devices, where the MIIT requires products to also be enabled for the Chinese GB 15629.11-
2003 WAPI (Wireless Authentication Privacy Infrastructur e) standard, in addition to the international 
ISO/IEC 8802-11 WiFi standard, in order to be placed on the Chinese market – it is worth recalling that these requirements were never published, consul ted with industry, or notified to the WTO. The 
EU would therefore reiterate its longstanding request  for MIIT reconsider its practices, and ensure 
improved transparency, more comprehensive stakehol der consultation and enha nced predictability of 
its regulatory activities. 
5. Another example is the field of Information Technology (IT) security, where China's 
regulatory approach continues to be a key concer n for the European Union. Taken together, these 
measures either exclude, or threaten to exclude foreign and foreign-invested companies from broad 
segments of the Chinese market for IT security pr oducts. The measures of most concern to European 
industry are the Regulation on Commercial Encryption Codes, managed by the Office of State Commercial Cryptography Administration (OS CCA), and the Multi-Level Protection Scheme 
(MLPS) under the leadership of the Ministry for Public Security (MPS). Various implementing rules, administrative measures and technical guidelines add to the difficulty of navigating this complex 
regulatory environment, which on the whole lacks transparency and proper stakeholder consultation.  
6. With regard to the OSCCA Regulation on Commercial Encryption Codes, the EU has 
welcomed past indications from Chinese authoriti es, including OSCCA, that its revision would be 
finalized in the course of 2011, and would address EU  industry concerns – nevertheless, China has yet 
to make the draft revised regulation publicly ava ilable and notify it to the WTO. We would therefore 
like to take the opportunity of China’s final Tr ansitional Review Mechan ism to ask for a clear 
indication of the timeline of the revision process, as well as a firm commitment on the part of China 
that this revision will be undertaken in a transparen t manner, and involve a formal consultation of all 
stakeholders, including foreign and foreign-invested  companies. Furthermore, we would like to renew 
our request that China notifies this regulation to the TBT Committee while still in draft stage, so that 
comments from other Members can be duly taken into account.  
7. Over the past two years, the Multi-Level Protec tion Scheme has slowly crept into existence, 
gradually taking over sectors of the economy not rega rded as critical to national security anywhere 
else in the world – from public utilities compani es to banks, mobile phone companies or civil 
aviation. As a result, references to MLPS complian ce in calls for tenders issued by state-owned 
enterprise in the affected sectors are increasingl y common, and the number of information systems 
classified in levels three and above (i.e. national security sensitive) has increased exponentially – thus 
excluding foreign and foreign-invested IT provi ders from several economically very significant 
segments of the Chinese market. The EU would th erefore once again call on China to remove the 
discriminatory elements inherent to the MLPS (most notably, Article 21 of the 2007 Administrative Measures), and enter into a meaningful dialogue with foreign and foreign-invested industry, as well as 
concerned trade partners, with a view to clarifying and refining the MLPS.   
8. Cosmetics is another sector where transparency and predictability could be further improved. 
During the past two years, there has been a great nu mber of rules introduced by China's State Food 
and Drug Administration (SFDA), whose speed of ad option and often short period for implementation 
have posed considerable difficulties to foreign co smetics industry in China. The EU acknowledges the 
progress achieved by the SFDA in recent times in applying good regulatory pr actice principles, and 
hopes that this positive trend will continue, so that future serious trade disruptions are avoided. The 
EU would therefore encourage th e SFDA to undertake systematic im pact assessments and industry 
consultations, and notify all TBT -related measures to the TBT Committee while in draft stage. 
Finally, comprehensive guidance for implementati on of all new rules, as well as an adequate 
transition period, should be ensured, in order to a llow industry to comply with the new requirements.   G/TBT/W/344 
 Page 3 
 
 
  II. LEVEL OF REGULATION 
9. The EU notes with concern that China's regulator y framework in the TBT area continues to be 
characterised by the systematic use of mandatory st andards, almost invariably combined with third-
party conformity assessment.  
10. For instance, the China Compulsory Certification  (CCC) system remains a major obstacle 
for foreign companies (and in particular small and medium sized enterprises (SMEs) exporting to 
China), due to the complexity, costs and length  of the procedure. Furthermore, since the 
implementation of the CCC in 2003, there has been a steady growth in the number of products subject 
to CCC procedures, beyond its original objective of protecting consumer safety.  
11. The EU appreciates China's continued bilateral e ngagement on this issue, as well as the recent 
efforts to alleviate some of the administrative burde n of the CCC. However, substantial efforts are still 
needed in order to alleviate EU operators' concerns . The EU therefore stresse s the need for China to 
engage in a comprehensive review of the CCC, in order to replace the current "one size fits all” 
approach with one that takes due account of products ' different levels of health and safety risks. For 
lower-risk products, 'lighter' approaches such as a Supplier's Declaration of Conformity should be 
considered, while for higher-risk products - wher e third party conformity assessment would still be 
required - manufacturers should be allowed to  choose between quality assurance and product 
verification modules.   
12. In this context, the EU is also worried about the possible introduction of third-party 
conformity assessment for the purpose of China' s legislation on the restriction of hazardous 
substances (RoHS) in electrical and electronic pr oducts (notified as G/TBT/N/CHN/140/Rev.1). The 
EU has doubts that such a third party certification w ould be necessary, given that the risk controlled 
by the requirements only appears when the produc ts become waste, and not when used by the 
consumer. The EU would therefore like to reiterate  its request for China to refrain from mandating 
third party certification in this context, and rely inst ead on an approach which is more proportionate to  
the risk to be managed – for instance, a system of Supplier's Declaration of Conformity (SDoC), 
coupled with post-market surveillance. The EU rema ins available to share information with China on 
its own experience with managing an SDoC  system under the EU RoHS legislation.  
13. The EU also remains concerned by overly detailed regulation in specific sectors, often going 
beyond what can be justified on grounds of consumer  health and safety. For example, mobile phone 
features and components (e.g. battery size, data ex change format), or qualitative aspects in textiles 
(e.g. odour, color fastness) should be left for th e market, rather than prescribed by mandatory 
requirements.  
III. INTERNAL REGULATORY COORDINATION 
14. As emphasized before, clarity, transparency a nd predictability of the regulatory framework 
are key concerns for foreign and foreign-invested companies present on the Chinese market.  In some 
cases, however, several ministries or agencies exer cise concurrent regulatory powers over the same 
products and with the same objectives, thereby lead ing to situations in which a product that has 
already been tested and certified by one regulatory body needs to obtain approval from another one, which also has authority to regulate the issue in question. The EU therefore underlines the need for 
improved coordination in order to  avoid overlapping requirements.  
15. The area of IT security described above is a perhaps the best illustration of this problem – 
there, the sector is regulated by multiple minist ries and agencies, such as OSCCA, MIIT, MPS and 
General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) / China National 
Certification and Accreditation Administration (CNCA); medical devices is another example of a G/TBT/W/344 
Page 4  
 
  sector where duplicative conformity assessment syst ems (one managed by AQSIQ, the other one by 
SFDA) based on different standards continue to coexist. A third example is motor vehicles fuel 
consumption and emissions, where no fewer than four entities (National Development and Reform 
Commission - NDRC, MIIT, Ministry of Environmental Protection - MEP, Ministry of Transport - MOT) have regulatory competence, and often overlap  with each other's work. The motor vehicles 
sector in general is plagued by duplicative proc edures, managed by a variety of uncoordinated 
authorities – for instance, before a motor vehicl e can be placed on the road, it has to receive a 
production authorization from the MIIT, the CCC certificate from AQSIQ, a vehicle license from the MPS (which will also carry out testing in accordance with specific GB standards for vehicle safety), a 
fuel consumption certificate from the MOT and an emissions certificate from the MEP - in addition, 
additional emission tests would also be required by  the Beijing Environmental Protection Bureau if it 
the vehicle is to be registered in the capital.  
IV. STANDARDIZATION  
A. P
ARTICIPATION OF FOREIGN -OWNED COMPANIES ESTABLISHED IN CHINA IN DOMESTIC 
STANDARDISATION WORK AND TRANSPARENCY IN STANDARD -SETTING  
16. The EU is pleased to note significant im provements in recent years concerning the 
participation of foreign and foreign-invested companies in standardization work , in particular in the 
development of national sta ndards developed by Technical Committees managed by the 
Standardisation Administration of China (SAC). Howe ver, in some sectors (e.g. ICT), participation of 
foreign companies in standard-setting is still constr ained to observer status, while in others (e.g. 
Internet or information security), no involvement  is allowed. As some of these standards go to 
underpin mandatory certification schemes such as the CCC,  foreign companies are, in effect, lack the 
opportunity to providing meaningful input in the regu latory process at the standards drafting stage.   
17. The EU also calls for more transparency in the standard-setting process . Practices vary 
across sectors, with the development of industrial standards giving rise to specific concerns. Whereas 
national standards projects are normally posted on th e SAC website for public consultation, industry 
standard-setting is much more opa que. Currently, over 60 entities appear  to have competence to draw 
up industrial standards in China, many of which will go on to become either de jure  or de facto  
mandatory. Furthermore, mandatory standards are often subject to extremely short transitional 
periods.    
B. IMPLEMENTATION OF INTERNATIONAL STANDARDS – NATIONAL DEVIATIONS  
18. The EU notes with appreciation China’s achie vements with regard to the rate of adoption of 
international standards  and its commitment, as expressed in its 12th Five-year Plan (2011-2015), to 
the continuous alignment of its domestic technica l regulations and standards with international 
standards. 
19. However, the EU remains concerned about deviations of Chinese-specific national 
compulsory standards from international standards without demonstration that such standards were 
inadequate or ineffective for the objectives pursued. In  this context, the EU would be interested in 
receiving an update on progress made by China toward s meeting its own target of 85% alignment by 
2010, as stated in the 11th Five-Year Plan, and how its statistics on alignment to international 
standards are compiled – for instance, whether par tial adoption of an international standard counts 
towards this target. 
20. A related problem is the delayed adoption of international standards , or of the latest versions 
thereof. A good example is the medical devi ces sector, where many standards originate from 
superseded versions of IEC or ISO standards, and have not yet been upgraded to take account of the  G/TBT/W/344 
 Page 5 
 
 
  latest international developments; moreover, such standards are often being used to test products 
manufactured in accordance with the most recent vers ions of the relevant international standards, 
leading to either a duplication of conformity assessm ent activities, or to a decision not to supply the 
Chinese market with the latest products, thus deny ing Chinese consumers the benefits of the highest 
state-of-the-art technology. 
21. The EU also continues to encourage increased participation in inter national standard setting 
bodies , also as a means to further China's objectives under the 12th Five-year Plan. This is particularly 
relevant for sectors in which there is a widely shar ed goal to develop common global solutions, rather 
than diverging national ones (e.g. green technologies, smart grids, etc.)  
C. HOME-GROWN  STANDARDS 
22. In the IT sector in particular, numerous home- grown standards have been developed over the 
years, which feature unique Chinese technologies ra ther than working within the international 
standardization system. This results in blacklisti ng certain features of products, thereby preventing 
innovative products from being placed on the Chinese market. The case of information security is 
particularly worrisome: the "National Informati on Security Technology Standardisation Committee 
(TC260)" does not allow any kind of participation of  foreign-owned or foreign-invested enterprises. 
This, combined with China's increasingly restrictive measures in the sector (see section on IT security 
above) is a great source of concern to EU industry.  
D. VOLUNTARY STANDARDS RENDERED MANDATORY THROUGH CONFORMITY ASSESSMENT 
PROCEDURES  
23. A further source of concern for the EU is th e practice whereby standards initially developed 
as "voluntary industrial standards" are later made  mandatory, typically by referencing them in 
mandatory conformity assessment procedures without any prior warning about this policy change. By 
the same token, no notification to the TBT Committee is generally made.  
24. The EU takes the view that the practice of re ndering industrial standards mandatory in this 
way is inconsistent with the transparency obliga tions enshrined in the WTO TBT Agreement. The EU 
is of the opinion that, if a standard is made manda tory, it should take the form  of a national technical 
regulation and should therefore be notified under the TBT Agreement. 
__________