WORLD TRADE
ORGANIZATIONG/LIC/Q/CHN/3
28 August 2002
(02-4591)
Committee on Import Licensing Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM
Questions from JAPAN to CHINA
The following communication, dated 27 August 2002, has been received from the Permanent
Mission of Japan.
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Japan welcomes China's efforts to implement its commitments under its Protocol of
Accession1 to the WTO.  We have the view that the Transitional Review Mechanism (TRM) would
contribute to improved adherence by China to rules, disciplines and its commitments, if it would be
operated in a meaningful and productive manner.
While China has committed to provide relevant information to each subsidiary body in
advance of the review under the Protocol of Accession to the WTO, such information has not yet been
received.
We therefore submit our comments well in advance of the Committee on Import Licensing of
24 September 2002, in order for the Chinese authority to reply and to submit necessary information.
Japan looks forward to working with China and other Members, so as to ensure the transparencycommitted to under the Protocol, and would appreciate it if China responds to our comments in
written form ten days before the meeting.
 Import quotas on motor vehicles
(1) Notification of information on procedures of import quota on motor vehicles
- In accordance with Article 1, paragraph 4(a) of the Agreement on Import Licensing
Procedures, procedures for submitting applications shall be published in the sources notified
to the Committee in all circumstances, whenever practicable, 21 days prior to the effectivedate of the requirement.  Please inform us of where the publication is available.
- In addition, under Article 5, paragraph 1 of the Agreement, Members which institute import
licensing procedures or changes in licensing procedures shall notify the Committee of such
within 60 days of publication.  Please confirm that China has not yet instituted importlicensing procedures or changes, since China has not yet notified in this regard.
                                                     
1 WT/L/432.G/LIC/Q/CHN/3
Page 2
(2) Publication and provision of information on the implementation of import quotas on
automobiles
In accordance with the relevant provisions under the Agreement on Import Licensing
Procedures, please provide the necessary information as follows:
(i) With respect to Article 1, paragraph 4(a) of the Import Licensing Agreement (information to
be published)
- The eligibility of the applicant, and in particular, relationship to trading rights
- Paragraph 128 of the Report of the Working Party2
Is there any entity without trading rights that has qualified as an applicant?  If so, what
conditions apply to such entities?  What kind of entities have been qualified as applicants so far?
(ii) With respect to Article 3, paragraph 5(a) of the Import Licensing Agreement (information to
be provided upon the request of any Member):
- Information (both on the basis of application and actual allocation) on the value of import
quotas for complete vehicles, CKD and parts, broken down respectively by country of origin,
engine displacement and company.
- According to paragraph 4 of "Implementation Rules on the Quota Administration on Imports
of Machinery and Electrical Products", the Ministry of Foreign Trade and Economic
Cooperation (MOFTEC) is responsible for examining and supervising the status of allocation
of import licences.  Please provide relevant information on the current status of import quota
allocation distributed by the following entities:  all provinces, autonomous regions,
municipalities directly under the central government and those with independent budgetarystatus, coastal open cities, and by external economic trading management departments of
special economic zones and State Council-related machinery/electrical products import/export
administrative offices.
- According to paragraph 129 of the Report of the Working Party, August is the application
period, and quota allocations will be made no later than 60 days after closure of the
application period.  Please confirm this schedule for 2003 that quotas will be allocated by30 October.
(3) Reallocation of unused quotas
We are requesting that unused quotas for this year be returned and reallocated as specified in
the Report of the Working Party3.  Please explain when and how China does this, and if not, please
explain why.   In this connection, the Report of the Working Party provides that the deadline for
return of unused quotas is 1 September, but China started the actual allocation of quotas for the
current year in April.  Does China intend to postpone the deadline for return of unused quotas?  If so,
until when?
                                                     
2 WT/ACC/CHN/49.
3 Paragraphs 130 and 131.G/LIC/Q/CHN/3
Page 3
(4) Concern over priority consideration to new entrants in quota allocation
China should give priority consideration to new entrants in allocating quotas, as committed4.
Please explain how China implements this obligation and specify what amount of quota has been
allocated to new entrants.
(5) Rules concerning quota system for motor vehicles
We have the view that "Implementation Ru les on the Quota Administration on Imports of
Machinery and Electrical Products" should specify the following points so as to embody this scheme
provided for in the Report of the Working Party5:
(i) Priority consideration to be given to new entrants, enterprises with foreign ownership equal to
or less than 50 per cent, and enterprises with foreign ownership greater than 50 per cent in
allocating quota.
(ii) An import licence to be issued in most case s within three working days, and in exceptional
cases, within a maximum of ten working days, after a request for a licence.
(iii) An import licence to be extended once, upon request, for up to three months, if the request is
made before 15 December of the current quota year.
(iv) The procedures for requests for extension mentioned in (iii) above.
(v) Methodology of quota reduction for holders failing to return unused quotas, and the date of
reduction.
Japan appreciates China's response on this issue.
(6) Extension of period for quota allocation
       Paragraph 129 of the Report of the Working Party provides that import licences would be
extended once, upon request, by up to three months, if the request is made before 15 December.  We
would appreciate it if China would ensure that fo r this year, the effective period for all quotas and
related import licences be extended by three months, since the allocation of quota was delayed for
three months.
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4 Paragraphs 128 and 130 of report of Working Party.
5 Paragraphs 127, 129, and 130 of report of Working Party.