Once demand has been determined, the government allocates a quota to provinces and special economic zones who in turn distribute it to the end-users. Quota amounts are often unannounced and allocation remains opaque to outsiders. Monopoly importers, such as exist for theatrical film imports, are able to establish de facto quotas that maximize their monopoly rents. Specifically, the bilateral agreement with the United States requires China to eliminate existing quotas for the top U.S. priority products upon accession and phase-out remaining quotas, generally in two years but no later than Jan. 1, 2005. Quota levels will grow at an annual rate of 15 percent from levels at or above current trade, and will be administered consistent with China's WTO commitments.
Import licenses Many products that are subject to import quotas also require import licenses.
Since the early 1990s, China has eliminated many import license requirements, a process that is likely to continue as preparations are made for China's WTO accession. Licenses are still required, however, for a number of items important to the United States, including grains, vegetable oil, cotton, iron and steel products, commercial aircraft, passenger vehicles, hauling trucks, and rubber products. China is considering adding more license requirements in an effort to combat smuggling. The regulations governing the TRQ Administration have not been made public and TRQ quantities are not announced, inhibiting trade in these goods. These issues were addressed in the bilateral market access agreement on China's accession.