WORLD TRADE
ORGANIZATIONG/ADP/Q1/CHN/21
G/SCM/Q1/CHN/21
8 May 2003
(03-2461)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Replies to the Questions Posed by the UNITED STATES 1
Regarding the Notification of CHINA2
The following communication, dated 6 May 2003, has been received from the Permanent
Mission of China.
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Q1. The United States thanks China for its notification of its countervailing duty provisional
rules and regulations3  to the Committee on Subsidies and Countervailing Measures as required
by Article 32.6 of the Agreement on Subsidies and Countervailing Measures ("ASCM").
We understand that some rules that apply to countervailing duty proceedings have been
issued by the Chinese government, but do not appear to have been notified to the Committee.
For example:
(a) In September 2002, the Supreme People’s Court issued the Rules by the Supreme
People’s Court on the Issues Regarding Judicial Review of Countervailing
Administrative Case .
(b) The State Economic and Trade Commission (SETC) issued the Rules for  Injury
Investigations and Determinations for Countervailing Duty Investigations  in
December 2002.
(c) The Regulation for Respecting Confidentiality by Government officials, which
governs the protection of confidential in formation submitted to the Government
of China.
Q2. When will China notify the translated text of these and any other relevant rules to the
Committee?
Reply
We will notify these laws and regulations when we finish the translated text of these relevant
documents.
                                                     
1 G/ADP/Q1/CHN/15-G/SCM/Q1/CHN/15
2 G/SCM/N/1CHN/1 + Suppl.1
3 G/SCM/N/1/CHN/1 (11 September 2002);  G/SCM/N/1/CHN/1/Suppl.1 (18 February 2003)G/ADP/Q1/CHN/21
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Q3. Several sets of rules were issued by th e Ministry of Foreign Trade and Economic
Cooperation (MOFTEC) for anti-dumping proceed ings, for which no counterpart rules appear
to have been issued for countervailing duty pr oceedings.  These additional rules include:
(a) Provisional Rules for Sampling for Anti-Dumping Investigations;
(b) Provisional Rules for Information Disclosure in Anti-Dumping Investigations;
(c) Provisional Rules for Access to Non-Confidential Information in Anti-Dumping
Investigations;
(d) Provisional Rules for Price Undertakings in Anti-Dumping Investigations;
(e) Provisional Rules on New Shipper Review in Anti-Dumping Investigations;
(f) Provisional Rules on Refund of Anti-Dumping Duty ; and
(g) Provisional Rules on Interim Review of Dumping and Dumping Margins.
Does MOFTEC intend to issue similar rules for countervailing duty proceedings as it
did for anti-dumping proceedings?
Reply
China hasn’t formulated similar rules for countervailing duty proceedings.  Based on the
published provisional regulations and their implementation, China will determine whether it isnecessary to formulate some relative rules according to  the Regulations on countervailing measures
and referring to ASCM.
Q4. Article 1 of the notified regulations speci fies that they are "formulated in accordance
with the Foreign Trade Law of the People’s Republic of China…". Does "Foreign Trade Law"refer exclusively to Law No. 19-586 adopted 12 May 1994 by the Seventh Session of the
Standing Committee of the Eighth National People’s Congress? If not, what other laws apply tothe notified regulations and provisional rules? Have these other laws been notified to the
Committee?
Reply
Foreign Trade Law of the People’s Republic of China refers to the Law adopted at the
Seventh Session of the Standing Committee of the Eighth National People’s Congress and
promulgated by Decree No. 22 of the Chairman of the People’s Republic of China in 1994.
Q5. Throughout this document, we refer to MOFTEC, SETC and the State Council Tariff
Commission as these are the organs cited in the noti fied regulations and rules.  In light of recent
government restructuring, please identify the specific government entities that will be
administering China’s countervailing rules and regulations, and the particular rules and
regulations for which each entity will be responsible.
Reply
MOFTEC and SETC were reorganized in the recent government restructure and the Ministry
of Commerce came into existence.  The Ministry of Commerce will be responsible for the affairs of
countervailing duty investigation.
Q6. With regard to Article 6 of the notified regulations:G/ADP/Q1/CHN/21
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(a) Paragraph 3 reflects the calculation method described in ASCM Article 14(c),
but omits the statements in the ASCM article that loan guarantees are not
considered benefits unless there is a differe nce in what would have been paid for
a comparable loan guarantee that th e firm could actually obtain from
commercial sources (plus fees).  Is the intent of Paragraph 3 to mirror the
requirements of ASCM Article 14(c)?
Reply
The calculation method provided in the Chinese Regulations is consistent with Article 14(c)
of the ASCM.
(b) How does Paragraph 5 take into account the standards for determining the
market price specified in ASCM Art 14(d)?
Reply
The economic indices in the Regulations will be prescribed in the rules which will be
published in the future.
Q7. Paragraph 3 of Article 8 of the notified re gulations discusses the competent authority’s
examination of pricing and indicates that the authority should examine “price undercutting” of
the subsidized imports.  Please explain how th is language is consistent with ASCM Art15.2,
under which the investigating authorities are “to consider whether there has been a significant
price undercutting by the subsidized imports as compared with the price of a like product of the
importing Member…”.
Reply
The provision concerning price undercutting in the notified Regulations is consistent with
Article15.2 of ASCM.  They all refer to the price undercutting by the subsidized imports as compared
with the price of a domestic like product.  There are similar provisions in the Art.18 of the  Provisional
Rules for Initiation of Countervailing Investigation .
Q8. Please clarify the standards of evidence th at applicants must meet in providing each
type of information specified in Articles 14 and 15 of the notified regulations and Articles 15
through 22 of the Provisional Rules on Initiation of Countervailing Investigations .
Reply
Articles 11 through 22 of the Provisional Rules on Initiation of Countervailing Investigations
have clarified Articles 14 and 15 of the regulations in detail .  The investigating authorities will
examine the evidence submitted by the applicants and decide whether to initiate an investigationaccording to the Articles 11 through 22 of the Provisional Rules on Initiation of Countervailing
Investigations and combined with the articles of the regulations.
Q9. Article 16 of the notified regulation s and corresponding articles of MOFTEC’s
Provisional Rules on Initiation of Countervailing Investigations do not include the provision of
ASCM Art11.3 that requires the authorities to examine the accuracy and adequacy of the
evidence provided in the application to determine whether it is sufficient to justify the initiation
of an investigation.  Also, Article 16 does not include the provision of ASCM Art11.5 specifying
that the authorities shall avoid publicizing an application for investigation prior to anG/ADP/Q1/CHN/21
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investigation being initiated.  How does China intend to meet the requirements of ASCM
Arts. 11.3 and 11.5?
Reply
According to the regulations and rules promul gated by China, an applicant shall provide
plenty of materials of evidence to support his claim while he submits his application, and the
investigating authorities will affirm by various means the accuracy of the evidence.  The modus
operandi of China is consistent with ASCM.  Art.39 of Provisional Rules on Initiation of
Countervailing Investigations  provides that the application for initiation of a countervailing duty
investigation shall not be publicized if MOFTEC dete rmines not to initiate the investigation.  This is
consistent with the Art.11.5 of the ASCM .
Q10. Please confirm that Article 18 of the notified regulations and Article 44 of the
Provisional Rules on Initiation of Countervailing Investigations  are intended to implement the
provisions of ASCM Art11.6.  How does China en visage implementing this provision, including
collecting the evidence required by ASCM Art. 11 before self-initiating an investigation?  Is
MOFTEC the only organization that has auth ority to self-initiate countervailing duty
proceedings?
Reply
Article 18 of the Regulations  and Article 44 of the Provisional Rules on Initiation of
Countervailing Investigations  are consistent with ASCM Art11.6.
The second paragraph of Article 44 provides that if the authorities decide to initiate a
countervailing duty investigation on its own initi ative, the evidence available shall meet the
requirements specified in Article 3.  So the provisions on self-initiation are consistent with ASCM
Art. 11.6.
At present, only Ministry of Commerce can decide to initiate a countervailing duty
investigation on its own initiative.
Q11. With regard to the Provisional Rules for Initiation of Countervailing Investigations :
(a) Do Articles 8 and 9 of the Rules  concern solely how an “industry” is defined for
ascertaining whether there is sufficient support for the application for purposes
of ASCM Art11.4, or do they also relate to how the industry is defined forconducting injury analysis for purposes of ASCM Art.15?
Reply
The definition of domestic industry in the Rules is consistent with ASCM Art. 11.4.
(b) Article 9 of the Rules , which specifies when MOFTEC may define the domestic
industry on a regional basis, does not require that there be a concentration of
subsidized imports into the region.  Assuming that Article 9 is pertinent to
injury analysis, how is this provision consistent with the last sentence of ASCMArt16.2?G/ADP/Q1/CHN/21
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Reply
Article 9 of the Rules is consistent with the Art. 16.2 of the ASCM.
(c) Do Articles 18 and 19 of the Rules require an applicant to choose whether its
application is based on material injury to the domestic industry or threat of
material injury?  Can an applicant file an application based on allegations of
both material injury and threat?
Reply
An applicant should not file an application based on allegations of both material injury and
threat.
(d) If an applicant files its application solely  on an allegation of threat of material
injury pursuant to Article 19 of the Rules , is the applicant then free to omit from
its application the price and volume information specified in subparagraphs (1),
(2), and (3) of Article 18 of the Rules ?  If so, please explain how the provisions of
Article 19 of the Rules  are consistent with Article 11.2(iv) of the ASCM.
Reply
An applicant shall provide the information about price and quantity according to Article 19.
Q12. Regarding the Provisional Rules for Questionnaires in Countervailing Duty
Investigations :
(a) Article 13 of the Rules requires that responses and supporting materials be
translated into simplified Chinese characters.  For voluminous supporting
documents, such as company annual reports, will MOFTEC allow parties to
limit translation to only the relevant portions of the documents?
Reply
If the supporting documents are in a foreign language, the applicant shall provide both the full
texts of the foreign language documents and a Chinese translation of the relevant parts of the texts.
(b) What explanation will MOFTEC provide to parties submitting information of
the grounds for its conclusion under Article 20 of the Rules  that the reasons for
requesting confidential treatment are insufficient?
Reply
The investigating authorities shall notify the applicant and explain the reason.
(c) (c) Article 20 of the Rules  provides that MOFTEC will request amendment of a
request for confidential treatment in two situations: 1) the original reason given
for the request is deemed insufficient; or 2) the non-confidential summary  (or
reason given for not providing such a summary) is deemed insufficient.
However, Article 20 only explains what will happen in one of those situations if
the amendment continues to be deemed insufficient (i.e. if the amended non-
confidential summary is still insufficient, the material will be disregarded).G/ADP/Q1/CHN/21
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Article 20 of the Rules  does not explain what steps will be taken if the amended
reason for requesting confidentiality is sti ll deemed insufficient. In such a case,
will the materials be disregarded or treated as non-confidential?
Reply
In these circumstances, the materials will be disregarded according to the second paragraph of
this Article.
(d) What does MOFTEC do with material which has been submitted to it, but which
it will disregard under Article 20 because of an insufficient non-confidentialsummary?
Reply
The Chinese investigating authorities have the right not to treat that part of materials as
confidential information.
Q13. Regarding the Provisional Rules for the Conduct of Public Hearings in Countervailing
Duty Investigations :
(a) Please clarify what type of information would fall within the definition of “state
secrets” or “personal privacy” under Article 4 of the Rules .
Reply
State secrets in the law on guarding state secrets of the People’s Republic of China , refer to
the proceedings that are relative to the safety and interests of state, and that those matters that can only
be made known to certain people and in a certain period of time.  Paragraph 3 of Article 7 of the
Replies to Some Questions about How to Trial Cases of Honour Right which was promulgated by the
Supreme People’s Court on 7 August 1993, clearly stipulates that if the privacy of others is publicized
without permission, and as a result their honour are damaged, the action should be treated as
infracting  other’s honour right.
(b) Articles 5 through 10 of the Rules  suggest that holding a hearing is at the
discretion of MOFTEC.  How is this Article consistent with ASCM Art12.2,
which states, “interested parties shall have the right to present information
orally”?
Reply
Articles 5 through 10 of the Rules for the Conduct of Public Hearings in Countervailing Duty
Investigations  provide some proceedings of hearings, but will not bereave or hinder interested parties’
right to present information orally.  Even if hearings aren’t hold, interested parties can still present
information orally to investigating auth orities according to these provisions.
(c) Article 14 of the Rules  suggests that only interested parties may attend a
hearing. Does China allow for public attendance at hearings?G/ADP/Q1/CHN/21
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Reply
Investigating authorities will decide whether the public may attend the hearings, on the basis
of the situation and characteristic of the case and the objective condition of the meeting place.
Q14. With regard to the Provisional Rules for On-the-Spot Verification in Countervailing Duty
Investigations :
(a) Please clarify the intent of the statement in Article 4 of the Rules  that MOFTEC
will only conduct verifications of exporters who have been fully cooperative in
the investigation.  For example, will failure to provide a small, discrete amountof data while otherwise cooperating to the best of their ability prevent any
verification from occurring?
Reply
Article 3 of the Provisional Rules for On-the-Spot Verification in Countervailing Duty
Investigations  provides that the on-the-spot verification provided for in these Rules refers to the
procedure by which MOC dispatches its officials to the exporting country (region) concerned during
the investigation to verify truthfulness, accuracy and adequacy of the materials submitted by the
exporters and producers and to collect further information and materials.  The investigating authoritiesmay make their decision based on the facts available, without verifying truthfulness, accuracy and
adequacy of the material, if exporters do not fully co-operate during the investigation process.
(b) Please clarify the meaning and intent of Article 6 of the Rules .  What factors will
MOFTEC consider in determining whet her the “particular circumstances” of
each case call for verification?
Reply
If the investigating authorities confirm the truthfulness, accuracy and adequacy of the
materials submitted by the exporters and producers, the verification is not needed.
(c) Under what circumstances does MOFTEC foresee using non-government
experts to assist in verification, as indicated in Article 12 of the Rules ?  What is
the penalty should such experts breach their obligation of confidentiality with
respect to certain company information?
Reply
There is no countervailing duty case in China so far.  Therefore, we do not have such
experiences in the countervailing investigation practice.  If experts have breached the confidentiality
requirements, the Chinese investigating authorities wi ll treat it according to the relative domestic laws
and regulations strictly.
(d) If, under Article 16 of the Rules , the verification team decides to use Chinese as
the working language, will MOFTEC provide translators?G/ADP/Q1/CHN/21
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Reply
If the verification team decides to use Chinese as the working language, the investigating
authorities may decide whether to provide translators based on the specific situation, or theinvestigating authorities may request the responding company to provide translators.
(e) Please clarify what is envisioned as a “reasonable period” and elaborate as to the
level of detail that will be disclosed in MOFTEC reports of the results of
verification, as envisioned under Article 19 of the Rules .
Reply
After verification, the investigating authorities wi ll determine the period to disclose the results
of verification, based on the specific situation, such as content of investigation and complexity of the
results of verification.
(f) Article 21 of the Rules indicates that facts available may be applied when
verification fails to be completed as scheduled due to delay caused by exporters
and producers in question.  What allowance will MOFTEC make for
circumstances where it is not possible for the company to reasonably respond in
the time allotted for verification?
Reply
If the situation mentioned arises, the investigating authorities will provide a chrysalis, but the
company should comply with those requirements as provided in Article 21.  Otherwise, the
investigating authorities may make their determination whether subsidy exists and the amount of
subsidy on the basis of facts available.
(g) Will MOFTEC conduct verifications of questionnaire responses only in initial
investigations, or will MOFTEC also conduct verifications in interim reviews?
Under what circumstances will MOFTEC conduct a verification in a review?
Reply
The on-the-spot verification will normally be carried out by MOFTEC after the preliminary
determination.  However, the on-the-spot verification may alternatively be carried out before the
preliminary determination based upon the merits of each case according to Article 7 of theProvisional Rules for On-the-Spot Verification in Countervailing Duty Investigations.
Article 50 of the notified Regulation prescribes that the review proceedings shall be
conducted with reference to the relevant provisions of these Regulations on countervailing
investigation.  The investigating authorities may also conduct a verification in a review.
Q15. Article 22 of the notified regulations does not provide a definition of “interested
parties,” which is particularly important with respect to the treatment of and access to
confidential information. How does China define interested parties and how does that definition
comply with ASCM Art12.9?G/ADP/Q1/CHN/21
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Reply
“Interested parties” is defined as the applicants, the known exporters and importers, other
interested organizations and parties.  The definition of “interested parties” is consistent with Art 12.9of ASCM.
Q16. Article 22 of the notified regulations states  that “[a]n interested party may request the
investigating authorities to treat the information it provided as confidential if it considers that
any disclosure of such information will crea te significantly adverse effects.”  How does
MOFTEC define what constitutes “significantly adverse effects”?
Reply
“significantly adverse effects” commonly refers to that the parties who provide the
information or produce the information have lost their intersts significantly.
Q17. How does China interpret the following provisions in Article 45 of the notified
regulations: (1) “the subsidized imports increased massively during a short period of time;”
(2) “such increase has caused injury which is difficult repair to a domestic industry;” and (3)
“such products have benefited from the subsidy ”?
Reply
The Article mentioned is consistent with Art20.6 of ASCM.
Q18. Article 29 of the notified regulations indi cates that any decision to apply provisional
measures is proposed by MOFTEC, but decided by the State Council Tariff Commission (the
“Tariff Commission”).  The same requirement applies to final determinations, as specified in
Article 38.  What oversight rules govern the Tariff Commission’s decisions?  What discretion
does the Tariff Commission have in setting countervailing duties or otherwise modifying
MOFTEC’s recommendations?  Does the Tariff Co mmission have the authority to increase the
countervailing duty determined by MOFTEC?
Reply
The Tariff Commission will make his decision based on the suggestion made by MOFTEC
(Now by MOC).
Article 29 also specifies that countervailing duties will be collected by Chinese Customs.
What provisions are available to an importer to  seek redress in the event of a dispute over
classification of imported merchandise and/or an error in the amount of the duty collected by
Chinese Customs?  This question also applies to disputes over the amount of any duties to be
refunded under Article 46 of the notified regulations.
Reply
China will formulate rules on this issue in later stage.
Q19. In regard to Article 47 of the notified regulations, will countervailing measures expire
automatically after five years if no review is undertaken?  If not, what procedures are required
to apply for revocation of the countervailing measures?  Please clarify the meaning of “may be
extended as appropriate” as used in Article 47.  For example, will there be a finite extension ofG/ADP/Q1/CHN/21
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the countervailing measure?  Will another review be required to remove the measure at a later
date, and if so, how soon following the fifth anniversary may such a review be requested?
Under what circumstances, and based upon wh at information will China conduct the review
specified in Article 47?  What rules will China follow in conducting such a review?
Reply
China will formulate the rules on review of c ountervailing measures, in order to regulate the
proceedings and the entities related to review.  Before the rules are published, the practice on review
will not collide with relative Articles of ASCM.
Q20. Article 54 of the notified regulations specifies that MOFTEC and SETC may take
“appropriate measures” to prevent circumvention of countervailing measures.  Please describe
how the authorities will determine whether such  circumvention has occurred, and the types of
measures the authorities may take if  such circumvention has occurred?
Reply
Up to now, China hasn’t formulated explicit rules on circumvention of countervailing
measures.  China will decide whether to formulat e explicit rules on circumvention of countervailing
measures , on the basis of the objective need of specific situations.
Q21. Article 55 of the notified regulations sp ecifies that China may take "corresponding
measures" when any country "discriminatorily" imposes countervailing measures against
exports from China.  Based on what authority in  the ASCM could China take such an action?
Under what circumstances does China foresee ap plying this provision (i.e. what would be
considered as "discriminatory" wi thin the meaning of Article 55)?  What sorts of actions would
be taken against another country?  Is there any law prohibiting use of Article 55 prior to
exhausting other remedies such as the WTO dispute settlement process?
Reply
Up to now, China hasn’t any case in related to this article.
Q22. Please elaborate on how judicial reviews will be conducted, including specific entities
that will conduct the reviews and the procedures under which such reviews would be conducted.
Does China intend to notify the Committee of The Administrative Review Law of the People’s
Republic of China,  The Administrative Litigation Procedure Law of the People’s Republic of
China , Article 14  of the Law of the People’s Republic of China on Administrative Reconsideration
and the Law of the People’s Republic of China on Administrative Litigation Procedure ?
Reply
Any party may apply for administrative reconsideration, or file a lawsuit in the people's
courts, according to the Article 52 of the Regulations.  Any party should comply with t he Law of the
People’s Republic of China on Admi nistrative Reconsideration when applying for administrative
reconsideration, and should comply with the Law of the People’s Republic of China on Administrative
Litigation Procedure when  filing a lawsuit in the people's court.
Q23. What are the procedures for requesting and conducting appeals to the State Council
Tariff Commission referred to in Article 52 of the notified regulations?  Which courts have
jurisdiction over the findings of the Tariff Comm ission in appeals of countervailing measureG/ADP/Q1/CHN/21
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decisions?  What laws and regulations govern such actions and what standard of evidence is
required for the appeal?  Will China be issuing rules concerning such appeals?
Reply
China will formulate rules on this issue in later stage.
Q24. Please explain the differentiation between the terms "country" and "region" as used in
the notified regulations (e.g. Article 4).
Reply
The word “region” mentioned in these Regulations refers to a separated customs territory.
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