 
 
RESTRICTED  WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/ACC/SPEC/CHN/1/Rev.6 
15 December 2000 
 (00-5499) 
Working Party on the 
Accession of China  
 
 
DRAFT REPORT OF THE WORKING PARTY 
ON THE ACCESSION OF CHINA TO THE WTO1 
 
Revision  
  Following the Chairman's remarks at the conc lusion of the Fourteenth Meeting of the 
Working Party on 8 December 2000, this further revi sion of the Draft Report of the Working Party on 
the Accession of China to the WTO is being circ ulated on the Chairman's own responsibility.  This 
revision takes into account developments during th e Fourteenth Meeting and is submitted to the 
Working Party for the purpose of  facilitating further discussions. 
 
 Groupe de travail de 
l'accession de la Chine 
 
PROJET DE RAPPORT DU GROUPE DE TRAVAIL DE 
L'ACCESSION DE LA CHINE À L'OMC
1 
 
Révision  
 
 Suite aux remarques formulées par le Président à l'issue de la quatorzième réunion du Groupe 
de travail le 8 décembre 2000 à l'OMC, cette nouv elle révision du projet de rapport du Groupe de 
travail de l'accession de la Chine à l'OMC est dist ribuée sous la responsabilité du Président.  Cette 
révision tient compte des faits nouveaux intervenus au cours de la quatorzième réunion du Groupe de 
travail et est soumise au Groupe po ur faciliter la suite des débats. 
 
 
Grupo de Trabajo sobre la 
Adhesión de China 
 
PROYECTO DE INFORME DEL GRUPO DE TRABAJO 
SOBRE LA ADHESIÓN DE CHINA A LA OMC1 
 
Revisión  
  Como consecuencia de las observaciones form uladas por el Presidente al concluir la 
decimocuarta reunión del Grupo de Trabajo del 8 de  diciembre de 2000, se distribuye esta nueva 
revisión del proyecto de informe del Grupo de Trabaj o sobre la Adhesión de China a la OMC bajo la 
responsabilidad del Presidente.  La presente revi sión tiene en cuenta los nuevos acontecimientos que 
se han producido durante la decimocuarta reunión y se somete al Grupo de Trabajo con el fin de 
facilitar la continuación de los debates. 
 
                                                     
 
1 In English only./En anglais seulement./En inglés solamente.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page i 
 
 
TABLE OF CONTENTS  
 
I. INTRODUCTION ................................................................................................................ ....1 
1. Documentation provided...................................................................................................... ....1 
2. Introductory statements ..................................................................................................... ......1 
II. ECONOMIC POLICIES.......................................................................................................... 3 
1. Non-discrimination (includi ng national treatment)...............................................................3 
2. Monetary and Fiscal Policy.................................................................................................. ....6 
3. Foreign Exchange and Payments ............................................................................................7 4. Balance-of-Payments Measures.............................................................................................10 
5. Investment Regime........................................................................................................... .......11 
6. State-Owned and State- Invested Enterprises.......................................................................12 
7. Pricing Policies ............................................................................................................ ............13 
8. Competition Policy.......................................................................................................... ........15 
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES ....................................16 
1. Structure and Powers of the Government ............................................................................16 
2. Authority of Sub-Central Governments ...............................................................................17 3. Uniform Administration  of the Trade Regime.....................................................................17 
4. Judicial Review ............................................................................................................. ..........18 
IV. POLICIES AFFECTIN G TRADE IN GOODS ...................................................................19 
A. TRADING
 RIGHTS .................................................................................................................19 
B. IMPORT  REGULATION.........................................................................................................20 
1. Ordinary Customs Duties..................................................................................................... ..20 
2. Other Duties and Charges.................................................................................................... ..21 
3. Rules of Origin ............................................................................................................. ...........21 
4. Fees and Charges fo r Services Rendered..............................................................................22 
5. Application of Internal Taxes to Imports .............................................................................22 
6. Tariff Exemptions ........................................................................................................... ........23 
7. Tariff Rate Quotas .......................................................................................................... ........25 
8. Quantitative Import Restrictions, including Prohibitions and Quotas..............................27 9. Import Licensing............................................................................................................ .........31 
10. Customs Valuation.......................................................................................................... ........33 
11. Other Customs Formalities.................................................................................................. ..34 
12. Preshipment  Inspection..................................................................................................... .....34 
13. Anti-Dumping, Countervailing Duties ..................................................................................35 14. Safeguards ................................................................................................................. ..............35 
C. EXPORT
 REGULATIONS ......................................................................................................35 WT/ACC/SPEC/CHN/1/Rev.6 
Page ii  
 
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of 
Internal Taxes to Exports...................................................................................................... .35 
2. Export Licensing and Export Restrictions ...........................................................................35 3. Export Subsidies ............................................................................................................ .........37 
D. INTERNAL
 POLICIES  AFFECTING  FOREIGN  TRADE  IN GOODS..................................38 
1. Taxes and Charges Levied on Imports and Exports ...........................................................38 2. Industrial Policy, including Subsidies ...................................................................................38 3. Technical Barriers to Trade................................................................................................. ..40 
4. Sanitary and Phytosanitary Measures ..................................................................................40 5. Trade-Related Investment Measures ....................................................................................41 
6. State Trading Entities...................................................................................................... .......42 
7. Special Economic Areas ...................................................................................................... ...44 
8. Government Procurement...................................................................................................... 46 
9. Transit..................................................................................................................... .................47 
10. Agricultural Policies ...................................................................................................... .........47 
11. Trade in Civil Aircraft.................................................................................................... ........47 
12. Textiles ................................................................................................................... ..................48 
13. Measures Maintained  Against China....................................................................................49 
14. Transitional Safeguards .................................................................................................... .....49 
15. Transitional Review Mechanism ...........................................................................................49 V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME.......................................50 
A. GENERAL..................................................................................................................... ...........50 
1. Overview .................................................................................................................... ..............50 
2. Responsible agencies for policy formulation and implementation .....................................50 3. Participation in international intellectual property agreements ........................................51 4. Application of national and MFN treatment to foreign nationals......................................51 
B. SUBSTANTIVE
 STANDARDS  OF PROTECTION,  INCLUDING  PROCEDURES  
FOR  THE  ACQUISITION  AND  MAINTENANCE  OF INTELLECTUAL  
PROPERTY  RIGHTS...............................................................................................................52 
1. Copyright protection ........................................................................................................ ......52 
2. Trademarks, includi ng service marks...................................................................................53 
3. Geographical indications, including appellations of origin.................................................54 
4. Industrial designs.......................................................................................................... ..........54 
5. Patents..................................................................................................................... .................55 
6. Plant variety protection.................................................................................................... ......58 
7. Layout designs of integrated circuits ....................................................................................59 8. Requirements on undisclosed information,  including trade secrets and test data............59  WT/ACC/SPEC/CHN/1/Rev.6 
 Page iii 
 
 
C. MEASURES  TO CONTROL  ABUSE  OF INTELLECTUAL  PROPERTY  RIGHTS.............60 
D. ENFORCEMENT................................................................................................................. ....60 
1. General..................................................................................................................... ................60 
2. Civil judicial procedures and remedies.................................................................................61 3. Provisional measures ........................................................................................................ ......62 
4. Administrative procedures and remedies.............................................................................63 
5. Special border measures..................................................................................................... ....64 
6. Criminal procedures......................................................................................................... ......64 
VI. POLICIES AFFECTING TRADE IN SERVICES..............................................................65 
1. Licensing ................................................................................................................... ...............65 
VII. OTHE R ISSUES .............................................................................................................. .......67 
1. Notifications............................................................................................................... ..............67 
2. Special Trade Arrangements .................................................................................................6 7 
3. Transparency ................................................................................................................ ..........67 
VIII. CONC LUSIONS .............................................................................................................. .......70 
  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 1 
 
 
I. INTRODUCTION 
1. At its meeting on 4 March 1987, the Council established a Working Party to examine the 
request of the Government of the People's Re public of China ("China" ) (L/6017, submitted on 
10 July 1986) for resumption of its status as a GATT contracting party, and to submit to the Council 
recommendations which may include a Draft Protocol  on the Status of China.  In a communication 
dated 7 December 1995, the Government of Ch ina applied for accession to the Agreement 
Establishing the World Trade Organization ("WTO Ag reement") pursuant to Article XII of the WTO 
Agreement.  Following China's application and pur suant to the decision of the General Council on 
31 January 1995, the existing Working Party on China's Status as a GATT 1947 Contracting Party 
was transformed into a WTO Accession Working Pa rty, effective from 7 December 1995.  The terms 
of reference and the membership of the Working Party are reproduced in document 
WT/ACC/CHN/2/Rev.8.   
2. The Working Party on China's Status as a C ontracting Party met on 20 occasions between 
1987 and 1995 under the Chairmanship of H.E. Mr. Pierre-Louis Girard (Switzerland).  The Working 
Party on China's Accession to the WTO Agreement met on _________________ and _________________ under the same Chairman.   
1. Documentation provided 
3. The Working Party had before it, to serve as a basis for its discussion, a Memorandum on 
China's Foreign Trade Regime (L/6125) and questions  posed by members of the Working Party on the 
foreign trade regime of China, together with repli es of the Chinese authorities thereto.  In addition, the 
Government of China made available to the Work ing Party a substantial amount of documentation, 
which is listed in document WT/ACC/CHN/23.  
2. Introductory statements 
4. In statements to the GATT 1947 Working Party and subsequently to the Working Party on 
China's Accession to the WTO, the representative of Ch ina stated that China's consistent efforts to 
resume its status as a contracting party to GATT and accession to the WTO were in line with its 
objective of economic reform to establish a socia list market economy as well as its basic national 
policy of opening to the outside world.  China believed that its WTO accession would increase its economic growth and enhance its economic and trade rela tions with WTO Members. 
5.  Members of the Working Party welcomed Chin a's accession to the WTO and considered that 
its accession would contribute to a strengthening of  the multilateral trading system, enhancing the WT/ACC/SPEC/CHN/1/Rev.6 
Page 2  
 
universality of the WTO, bringing mutual benefits  to China and to the other Members of the WTO, 
and ensuring the steady development of the world economy. 
6. The representative of China said that China had a territory of 9.6 million square kilometres 
and, at the end of 1998 a popul ation of 1.25 billion.  Since 19 79, China had been progressively 
reforming its economic system, with the objective of  establishing and improving the socialist market 
economy.  The reform package introduced in 1 994, covering the banking, finance, taxation, 
investment, foreign exchange ("forex") and foreign trade sectors, had brought about major 
breakthroughs in China's socialist market economy.  State-owned enterprises had been reformed by a 
clear definition of property rights and responsibiliti es, a separation of government from enterprise, 
and scientific management.  A modern enterprise system had been created for the state-owned sector, and the latter was gradually getting on the track of growth through independent  operation, responsible 
for its own profits and losses.  A nation-wide unifi ed and open market system had been developed.  
An improved macroeconomic regulat ory system used indirect means and market forces to play a 
central role in economic management and the allocati on of resources.  A new tax and financial system 
was functioning effectively.  Financial policy had been separated from commercial operations of the 
central bank, which now focussed on financial regulation and supervisi on.  The exchange rate of the 
Chinese currency Renminbi (also "RMB") had been un ified and remained stable.  The Renminbi had 
been made convertible on current account.  Further liberalization of pricing policy had resulted in the 
majority of consumer and producer products being subject to market prices.  The market now played a 
much more significant role in boosting supply and meeting demand.  
7. The representative of China further noted that  as a result, in 1999, the Gross Domestic 
Product (GDP) of China totaled RMB 8.2054 trillion yuan (approximately US$ 990 billion).  In 1998, 
the net per capita income for rural residents was RMB 2,160 yuan (approximately US$ 260), and the 
per capita dispensable income for urban dwellers  was RMB 5,425 yuan (approximately US$ 655).  In 
recent years, foreign trade had grown substantially.   In 1999, total imports  and exports of goods 
reached US$ 360.65 billion, of which exports stood at US$ 194.93 billion, and imports, US$ 165.72 
billion. Exports from China in 1998 accounted  for 3.4% of the world's total.  
8. The representative of China stated that although important achievements had been made in its 
economic development, China was s till a developing country and therefore should have the right to 
enjoy all the special and preferential treatment ac corded to developing country Members pursuant to 
the WTO Agreement. 
9. Some members of the Working Party indicated that because of the significant size, rapid 
growth and transitional nature of the Chinese ec onomy, a pragmatic approach should be taken in  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 3 
 
 
determining China's need for recourse to transitiona l periods and other special provisions in the WTO 
agreements available to developing country WTO Me mbers.  Each agreement and China's situation 
should be carefully considered and specifically addressed. 
10. At the request of interested members of the Wo rking Party, the represen tative of China agreed 
that China would undertake bilateral market a ccess negotiations with respect to industrial and 
agricultural products, and initial commitments in services.  
11. Some members of the Working Party stated th at in addition to undertaking market access 
negotiations in goods and services, close attenti on should also be paid to China's multilateral 
commitments, in particular China's future oblig ations under the Multilateral Agreements on Trade in 
Goods and the General Agreement on Trade in Servi ces ("GATS").  This was of vital importance to 
ensure that China would be able to take full be nefit of WTO membership as quickly as possible, as 
well as to ensure that the value of any market access conditions undertaken were not adversely 
affected by inconsistent measures such as some types of non-tariff measures. 
12. The representative of China stated that the achievement of balance between rights and 
obligations was the basic principle in its negotiation of WTO accession. 
13. Some members of the Working Party expressed  concern over discrepancies in statistical 
information supplied by the Government of Ch ina on trade volume/value.  Members and China 
pursued this issue separatel y in an Informal Group of Experts on Export Statistics. 
14. The Working Party reviewed the foreign trad e regime of China.  The discussions and 
commitments resulting therefrom are contained in pa ragraphs … below and in the Draft Protocol of 
Accession ("Draft Protocol") and in China's Schedules annexed to the Draft Protocol.   
II. ECONOMIC POLICIES 
1. Non-discrimination (including national treatment) 
15. Some members expressed concern regarding the application of the principle of non-
discrimination in relation to foreign individuals a nd enterprises (whether wholly or partly foreign 
funded).  Those members stated that China shoul d enter a commitment to accord non-discriminatory 
treatment to all foreign individuals and enterpri ses and foreign-funded enterprises in respect of the 
procurement of inputs and goods and services neces sary for production of goods and the conditions 
under which their goods were produced, marketed or so ld, in the domestic market and for export.  In 
addition, those members said that China should also enter a commitment to guarantee non-discriminatory treatment in respect of the prices  and availability of goods and services supplied by WT/ACC/SPEC/CHN/1/Rev.6 
Page 4  
 
national and sub-national authorities and public or state enterprises, in areas including transportation, 
energy, basic telecommunications, other utilities and factors of production. 
16. Some members of the Working Party also raised concerns over China's practice of 
conditioning or imposing restri ctions upon participation in the Chinese economy based upon the 
nationality of the entity concerned.  Those members in  particular raised concerns over such practices 
in relation to the pricing and pr ocurement of goods and services, a nd the distribution of import and 
export licences.  Members of the Working Party requ ested that China enter into a commitment not to 
condition such practices on the nationa lity of the entity concerned.   
17. In response, the representative of China emph asized the importance of the commitments that 
the government was undertaking on non-discriminati on.  The representative of China noted, however, 
that any commitment to provide non-discriminat ory treatment to Chinese enterprises, including 
foreign-funded enterprises, and foreign enterprises and individuals in China, would be subject to other 
provisions of the Draft Protocol and, in partic ular, would not prejudice China's rights under the 
GATS, China's Schedule of Specific Commitments or  commitments undertaken in relation to trade-
related investment measures. 
18. The representative of China further confirmed that  China would provide the same treatment to 
Chinese enterprises, including foreign-funded enterpri ses, and foreign enterprises and individuals in 
China.  China would eliminate dual pricing practic es as well as differences in treatment accorded to 
goods produced for sale in China in comparison to  those produced for export.  The Working Party 
took note of these commitments.   
19. The representative of China confirmed that, cons istent with China's rights and obligations 
under the WTO Agreement and the Draft Protocol, China would provide non-discriminatory treatment 
to all WTO Members, including Members of the WT O that were separate customs territories.  The 
Working Party took note of this commitment. 
20. Members of the Working Party expressed concer n about certain provisions of Chinese laws, 
regulations, administrative notices and other requirement s which could, directly or indirectly, result in 
less favourable treatment of imported products in  contravention of Article III of the General 
Agreement on Tariffs and Trade ("GATT 1994").  Such requirements included product registration 
and certification, internal taxation, price and prof it controls and all distinct forms of licensing for 
imports, and distribution or sale of imported goods.  Even where such requirements existed in relation 
to domestically produced goods, Members re-iterated that any de facto  or de jure less favourable 
treatment of imported goods had to be eliminated in order to ensure full conformity with the principle 
of national treatment.  WT/ACC/SPEC/CHN/1/Rev.6 
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21. Some members of the Working Party drew Chin a's attention to the variety of types of 
requirements which could contravene GATT Articl e III. Specific reference was made to the 
procedures, charges and conditions for granting of bu siness licences, whether to import, distribute, re-
sell or retail goods of non-Chinese origin.  Referenc e was also made to taxes and fiscal provisions 
whose impact depended, directly or indirectly, upon the Chinese or non-Chinese origin of the goods 
imported or traded.  Those members drew the atten tion of China to its obligation to ensure that 
product testing and certification requi rements, including procedures for in situ  inspections, posed no 
greater burden – whether financial or practical - on goods of non-Chinese origin than on domestic 
goods.  Those members underlined that conformity  assessment procedures and standards, including 
safety and other compliance requirements, had to  respect the terms of the WTO Agreement on 
Technical Barriers to Trade ("TBT Agreement") as well as GATT Article III. 
22. The representative of China confirmed that the full respect of all laws, regulations and 
administrative requirements with the principle of  non-discrimination between domestically produced 
and imported products would be en sured and enforced by the date of China's accession to the WTO 
unless otherwise provided in the Draft Protocol or Dr aft Report.  The representative of China declared 
that, by accession, China would repeal and cease to a pply all such existing laws , regulations and other 
measures whose effect was inconsistent with WTO rules on national treatment.  This commitment was 
made in relation to final or interim laws, administrative measures, rules and notices, or any other form of stipulation or guideline. The Working Party took note of these commitments.  
23. In particular, the representative of China confir med that measures would be taken at national 
and subnational level, including repeal or modificat ion of legislation, to provide full GATT national 
treatment in respect of laws, regulations and othe r measures applying to internal sale, offering for 
sale, purchase, transportation, distribution or use of the following: 
- After sales service
 (repair, maintenance and assistance), including any conditions applying to 
its provision, such as the MOFTEC 3rd Decree of 6 September 1993, imposing mandatory 
licensing procedures for the supply of after- sales service on various imported products; 
- Pharmaceutical  products, including regulations, noti ces and measures which subjected 
imported pharmaceuticals to distinct procedures and formulas for pricing and classification, 
or which set limits on profit margins attainab le and imports, or which created any other 
conditions regarding price or local content which could result in less favourable treatment of imported products; 
- Cigarettes
, including unification of the licensing requirements so that a single licence 
authorized the sale of all cigarettes, irrespectiv e of their country of origin, and elimination of WT/ACC/SPEC/CHN/1/Rev.6 
Page 6  
 
any other restrictions regarding points of  sale for imported products, such as could be 
imposed by the China National Tobacco Corporation ("CNTC"). It was understood that in the 
case of cigarettes, China could avail itself of a tr ansitional period of tw o years to fully unify 
the licensing requirements.  Immediately upon accession, and during the two year transitional 
period, the number of retail outlets selling imported cigarettes would be substantially 
increased throughout the territory of China; 
- Spirits
, including requirements applied under Chin a's "Administrative Measures on Imported 
Spirits in the Domestic Market", and other provisions which imposed distinct criteria and 
licensing for the distribution and sale of different categories of spirits, including unification of the licensing requirements so that a single licence authorized the sale of all spirits irrespective 
of their country of origin; 
- Chemicals
, including registration procedures applicab le to imported products, such as those 
applied under China's "Environmental Control Regulations for Initial Imports of Chemical 
Products and Imports a nd Exports of Toxic Chemical Products"; 
- Boilers and pressure vessels , including certification and inspection procedures which had to 
be no less favourable than those applied to goods of Chinese origin, and fees applied by the 
relevant agencies or administrative bodies, whic h had to be equitable in relation to those 
chargeable for like products of domestic origin. 
The representative of China stated that in the cases of pharmaceuticals, spirits and chemicals cited 
above, China would reserve the right to use a tran sitional period of one year from the date of 
accession in order to amend or repeal the relevant le gislation.  The Working Party took note of these 
commitments.  
2. Monetary and Fiscal Policy 
24. The representative of China stated  that through the reform and opening up in the last two 
decades, China had established a fiscal management sy stem which was compatible with the principles 
of a market economy.  With respect to fiscal revenue , a taxation system with a value-added tax as the 
main element had been established since the taxa tion reform in 1994. With respect to fiscal 
expenditure, over recent years the government had, in line with the public fiscal requirement generally 
exercised by market economies, strengthened its adju stment of the structure of expenditure and given 
priority to public needs so as to ensure  the normal operations of the government. 
25. The representative of China further stated that in  recent years, while pursuing proactive fiscal 
policy, China had implemented proper monetary poli cy and had taken a series of adjusting and reform  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 7 
 
 
measures which included lowering the interest rate for loans from financial institutions, improving the 
system of required deposit reserves and lowering th e ratio of required reserves, positively increasing 
the input of base money and encouraging th e commercial banks to expand their credit. 
26. In respect of future fiscal policy, the Governme nt of China would further improve its taxation 
system and would continue to improve the effici ency of fiscal expenditure through implementing 
reform measures such as sectoral budget, centralized  payment by the national treasury and zero base 
budget, as well as improving management of fiscal expenditure. With respect to future monetary 
policy, the central bank would continue to pursue a prudent policy, maintain the stability of RMB, 
promote interest rate liberalization and establish a modern commercial banking system. 
3. Foreign Exchange and Payments 
27. Some members of the Working Party raised concerns about China's use of forex controls to 
regulate the level and composition of trade in goods a nd services.  In response, the representative of 
China stated that its system of forex had undergon e rapid change and that China was now a member 
of the International Monetary Fund ("IMF").  Sign ificant moves had been taken to reform, rationalize 
and liberalize the forex market.  The practice of mu ltiple exchange rates in swap centres had been 
abolished.  China had already unified its forex market  and removed many of the restrictions on the use 
of forex.  
28. Outlining the historical development of China' s forex reform, the representative of China 
stated that the purpose of China's forex reform wa s to reduce administrative intervention and increase 
the role of market forces.  From 1979, a forex rete ntion system was applied in China, although forex 
swap was gradually developing.  In early 1994, o fficial RMB exchange rates were unified with the 
market rates. The banking exchange system was adopted and a nationwide unified inter-bank forex 
market was established, with c onditional convertibility of the Renm inbi on current accounts.  Since 
1996, foreign investment enterprises ("FIEs") were also permitted into the banking exchange system, 
and the remaining exchange restrictions on curre nt accounts were eliminated. On 1 December 1996, 
China had formally accepted the obligations of Ar ticle VIII of the IMF's Articles of Agreement, 
removing exchange restrictions on current account  transactions.  Accordingly, since then the 
Renminbi had been fully convertible on current acc ounts.  It was confirmed by the IMF in its Staff 
Report on Article IV Consultations with China in 2000 that China had no existing forex restrictions 
for current account transactions. 
29. The representative of China stated that th e State Administration of Foreign Exchange 
("SAFE") was under the auspices of the People's Bank of China ("PBC"), and was the administrative 
organ empowered to regulate forex.  Its main f unctions were to monitor and advise on balance-of-WT/ACC/SPEC/CHN/1/Rev.6 
Page 8  
 
payments and forex matters.  SAFE was also require d to draft appropriate regulations and monitor 
compliance.  He further noted that domestic and fo reign banks, and financial institutions could engage 
in forex business, with the approval of the PBC.  
30. In response to requests from members of the Working Party for further information, the 
representative of China added that for forex pa yments under current accounts, domestic entities 
(including FIEs) could purchase forex at market exch ange rates from designated banks or debit their 
forex accounts directly upon presentation of valid do cuments.  For payments such as pre-payment, 
commission, etc., exceeding the proportion or lim it, the entities could also purchase forex from the 
banks upon meeting the bona fide  test administered by SAFE.  Forex for personal use by individuals 
could be purchased directly from the banks upon pr esentation of valid documents (within a specified 
limit).  For amounts exceeding the limit, individuals able to prove their need for additional forex 
could purchase it from the banks.  He also noted that current account forex receipts owned by 
domestic entities had to be repatriated into China, so me of which could be retained and some sold to 
the designated banks at market rates.  A verifica tion system for forex payment (imports) and forex 
receipt (exports) had also been adopted. 
31. Concerning the exchange rate regime in partic ular, the representative of China noted that 
since the unification of exchange rates on 1 Janua ry 1994, China had adopted a single and managed 
floating exchange rate regime based on supply an d demand.  PBC published the reference rates of 
RMB against the US dollar, the HK dollar and Japan ese yen based on the weighted average prices of 
forex transactions at the interbank forex market during the previous day's trading. The buying and 
selling rates of RMB against the US dollar on the inte r-bank forex market could fluctuate within 0.3% 
of the reference rate. For the HK dollar and Japanes e yen, the permitted range was 1%.   Designated 
forex banks could deal with their clients at an agreed  rate.  Under such contracts the exchange rate of 
the US dollar was required to be within 0.15% of  the reference rate, whereas for the HK dollar and 
Japanese yen, the permitted range was 1%.  The ex change rates for other foreign currencies were 
based on the rates of RMB against the US dollar a nd cross-exchange rates of other foreign currency 
on the international market. The permitted margin between the buying and selling rate could not 
exceed 0.5%. 
32. The representative of China further noted that since 1 January 1994, designated forex banks 
had become major participants in forex transactions .  On 1 April 1994, the China Foreign Exchange 
Trading System was set up in Shanghai and branches were opened in dozens of cities.  The Shanghai 
Foreign Exchange Trading System had adopted a system of membership , respective quotation, 
concentrated trading and forex market settlement .  Designated forex banks  dealt on the inter-bank 
market according to the turnover position limit on ba nking exchange stipulated by SAFE and covered  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 9 
 
 
the position on the market. Depending on its macro- economic objectives, the PBC could intervene in 
the forex open market in order to regulate market su pply and demand, and maintain the stability of the 
RMB exchange rate.  
33. The representative of China noted that since 1 July 1996, forex dealing of the FIEs was 
carried out through the banking exchange system.  He further noted that to encourage foreign direct investment, China had granted national treatment to FIEs in exchange administration.  Accordingly, 
FIEs were allowed to open and hold forex settle ment accounts to retain receipts under current 
accounts, up to a maximum amount stipulated by SA FE.  Receipts in excess of the maximum amount 
were required to be sold to desi gnated forex banks.  No restrictions  were maintained on the payment 
and transfer of current transactions by FIEs, a nd FIEs could purchase fore x from designated forex 
banks or debit their forex accounts for any paym ent under current transactions, upon the presentation 
of valid documents to the designa ted forex banks or SAFE for the bona  fide test.  FIEs could also 
open forex accounts to hold foreign-invested cap ital, and they could sell from these accounts upon the 
approval of SAFE.  FIEs could also borrow fore x directly from domestic and overseas banks, but 
were required to register with SAFE afterwards, and obtain approval by SAFE for debt repayment and 
services.  FIEs could make payments from their fo rex accounts or in forex purchased from designated 
forex banks after liquidatio n, upon approval by SAFE according to law.   
34. The representative of China further noted that  the laws and regulations mentioned above 
were:  Law of the People's Republic  of China on Chinese-Foreign Equi ty Joint Venture;  Law of the 
People's Republic of China on Chinese-Foreign Cont ractual Joint Venture;  Regulations on the 
Exchange System of the People's Republic of China;  and Regulations on the Sale and Purchase of and 
Payment in Foreign Exchange.  
35. Some members of the Working Party stated that China should undertake appropriate 
commitments on its reform of forex. 
36. In response, the representative of China stated  that China would implement its obligations 
with respect to forex matters in accordance with the provisions of the WTO Agreement and related 
declarations and decisions that concerned the IM F.  The representative further confirmed China's 
acceptance of the obligations of Article VIII of the IMF's Articles of Agreement, which provided that 
"no member shall, without the approval of the F und, impose restrictions on the making of payments 
and transfers for current international transactions ".  He stated that, in accordance with these 
obligations, and unless otherwise provided for in th e IMF's Articles of Agreement, China would not 
resort to any laws, regulations or other measu res, including any requirements with respect to 
contractual terms, that would restrict the availa bility to any individual or enterprise of forex for WT/ACC/SPEC/CHN/1/Rev.6 
Page 10  
 
current international transactions within its customs territory to an amount related to the forex inflows 
attributable to that individual or enterprise.  He stated, moreover, that China would not subject 
individual requests for forex for the making of payments and transfers  for current international 
transactions, including the issuance of credit or cred it guarantees for current international transactions 
(e.g., letters of credit; direct loans; guarantees of loans by financial institutions or other entities; or 
insurance of financing by financial institutions or ot her entities), to any form of approval or restriction 
(including a requirement for the presentation of an  invoice), in a manner inconsistent with its 
obligations under the IMF's Articles of Agreemen t.  The Working Party took note of these 
commitments.  
37. In addition, the representative of China stat ed that China would provide information on 
exchange measures as required under Article VIII, S ection 5 of the IMF's Articles of Agreement, and 
such other information on its exchange measur es as was deemed necessary in the context of the 
transitional review mechanism.  The Working Party took note of this commitment.  
4. Balance-of-Payments Measures 
38. Some members of the Working Party stated that China should apply balance-of-payments 
("BOPs") measures only under the circumstances provided for in the WTO Agreement and not as a 
justification for imposition of restrictions on imports  for other protectionist purposes.  Those members 
stated that measures taken for BOPs reasons should have the least trade disruptive effect possible and 
should be limited to temporary import surcharges, import deposit requirements or other equivalent 
price-based trade measures, and those measures shou ld not be used to provide import protection for 
specific sectors, industries or products. 
39. Those members further stated that any such  measures should be notified pursuant to the 
Understanding on the Balance-of-Payments Provi sions of the GATT 1994 ("BOPs Understanding") 
and to the General Council not later than the im position of the measures, together with a time 
schedule for their elimination and a programme of external and domestic policy measures to be used 
to restore BOPs equilibrium.  Those members also stat ed that following deposit of such a notification, 
the Committee on Balance-of-Payments Restrictions  ("BOPs Committee") should meet to examine 
the notification.  It was noted that paragraph 4 of the BOPs Understanding would be available to 
China in the case of "essential products".  Some members stated that the BOPs Committee should 
review the operation of any BOPs measures taken by China, if so  requested by China or a WTO 
Member.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 11 
 
 
40. Some other members considered that, in resp ect of measures taken for BOP purposes, China 
should enjoy the same rights as those accorded to  other developing country WTO Members, as 
provided in GATT Article XVIII:B and the BOPs Understanding.   
41. In response, the representative of  China stated that China considered that it should have the 
right to make full use of WTO BOPs provisions to protect, if necessary, its BOPs situation.  He confirmed that China would fully comply with the provisions of the GATT 1994 and the BOPs 
Understanding.  Further to such compliance, China would give preference to application of price-
based measures as set forth in the BOPs Understanding.   If China resorted to measures that were not 
price-based, it would transform such measures in to price-based measures as soon as possible.  Any 
measures taken would be maintained strictly in accordance with the GATT 1994 and the BOPs 
Understanding, and would not exceed what was necessar y to address the particular BOPs situation.  
The representative of China also confirmed that measures taken for BOPs reasons would only be 
applied to control the general leve l of imports and not to protect specific sectors or industries.  The 
Working Party took note of these commitments. 
5. Investment Regime 
42. The representative of China stat ed that since the inception of  the reform and opening up 
policy in the late 1970's, China had carried out a series of reforms of its investment regime. The 
highly centralized investment administration under the planned economy had been progressively 
transformed into a new pattern of diversification of investors, multi-channelling of capital sources and 
diversification of investment modalities. The govern ment encouraged foreig n investment into the 
Chinese market and had uninterruptedly opened and expanded the scope for investment. At the same 
time, the Government of China also encouraged  the development of the non-state-operated economy 
and was speeding up the opening of areas for non-stat e investment. With China's programme in the 
establishment of its market economy, the construc tion projects of various enterprises utilizing free 
capital and financed by the credit of the enterprise would be fully subject to the decision-making of 
the enterprise concerned and at their own risk. Th e commercial banks' credit activities to all kinds of 
investors would be based on their own evaluation and decision-making, and would be at their own 
risk.  The business activities of interm ediate investment agencies would be fully subject to the market 
and would provide service at the instruction of the investors. These agencies would break up their administrative relations with government agen cies and the service activities financed by the 
government would also be subject to the terms a nd conditions agreed in the contracts concerned. 
43. The representative of China further stated that  China had promulgated investment guidelines 
and that the Government of China was in the pr ocess of revising and completing these guidelines.  
Responding to concerns raised by certain members of the Working Party, he confirmed that these WT/ACC/SPEC/CHN/1/Rev.6 
Page 12  
 
investment guidelines and their implementation would be in full conformity with the WTO 
Agreement. 
6. State-Owned and State-Invested Enterprises 
44. The representative of China stated that th e state-owned enterprises of China basically 
operated in accordance with rules of market econom y.  The government would no longer directly 
administer the human, finance and material res ources, and operational activities such as production, 
supply and marketing.  The prices of commodities produced by state-owned enterprises were decided 
by the market and resources in operational areas we re fundamentally allocated by the market.  The 
state-owned banks had been commercialized an d lending to state-owned enterprises took place 
exclusively under market conditions.  China was fu rthering its reform of state-owned enterprises and 
establishing a modern enterprise system. 
45. In light of the role that state-owned and state- invested enterprises played in China's economy, 
some members of the Working Party expressed con cerns about the continuing governmental influence 
and guidance of the decisions and activities of such  enterprises relating to the purchase and sale of 
goods and services. Such purchases and sales should be based solely on commercial considerations, 
without any governmental influence or application of discriminatory measures.  In addition, those 
members indicated the need for Chin a to clarify its understanding of the types of activities that would 
not come within the scope of Article III:8(a) of  GATT 1994.  For example, any measure relating to 
state-owned and state-invested enterprises importing materials and machinery used in the assembly of 
goods, which were then exported or otherwise made available for commercial sale or use or for non-
governmental purposes, would not be considered to be  a measure relating to government procurement. 
46. The representative of China emphasized the e volving nature of Ch ina's economy and the 
significant role of FIEs and the private sector in the economy.  Given the increasing need and 
desirability of competing with private enterprises in  the market, decisions by state-owned and state-
invested enterprises had to be  based on commercial considerations as provided in the WTO 
Agreement.    
47. The representative of China further confirmed th at China would ensure that all state-owned 
and state-invested enterprises would make pur chases and sales based solely on commercial 
considerations, e.g. price, quality, marketability an d availability, and that the enterprises of other 
WTO Members would have an adequate opportunity  to compete for sales to and purchases from these 
enterprises on non-discriminatory terms and conditions.  In addition, the Government of China would 
not influence, directly or indirectly, commercial deci sions on the part of state-owned or state-invested 
enterprises, including the quantity, value or country of origin of any goods purchased or sold, except  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 13 
 
 
in a manner consistent with the WTO Agreemen t.  The Working Party took note of these 
commitments.   
48. The representative of China confirmed that, w ithout prejudice to China's rights in future 
negotiations in the Government Pr ocurement Agreement, all laws, regulations and measures relating 
to the procurement by state-owned and state- invested enterprises of goods and services for 
commercial sale, production of goods or supply of services for commercial sale, or for non-
governmental purposes would not be considered to be laws, regulations and measures relating to 
government procurement. Thus, such purchases or sales would be subject to the provisions of 
Articles II, XVI and XVII of the GATS and Article III of the GATT 1994.  The Working Party took note of this commitment.  
49. Certain members of the Working Party expressed concern about laws, regulations and 
measures in China affecting the transfer of technolog y, in particular in the context of investment 
decisions.  Moreover, these members expressed con cern about measures conditioning the receipt of 
benefits, including investment a pprovals, upon technology transfer.  In their view, the terms and 
conditions of technology transfer, particularly in the context of an investment, should be agreed 
between the parties to the investment without go vernment interference.  The government should not, 
for example, condition investment approval upon technology transfer.  
50. The representative of China confirmed that Chin a would only impose, apply or enforce laws, 
regulations or measures relating to the transfer  of technology, production processes, or other 
proprietary knowledge to an individual or enterprise in  its territory that were not inconsistent with the 
WTO Agreement on Trade-Related Aspects of Intell ectual Property Rights ("TRIPS Agreement") and 
the Agreement on Trade-Related I nvestment Measures ("TRIMs Agreem ent").  China confirmed that 
the terms and conditions of technology transfer, production processes or othe r proprietary knowledge, 
particularly in the context of an investment, woul d only require agreement between the parties to the 
investment.  The Working Party took note of these commitments. 
7. Pricing Policies  
51. Some members of the Working Party noted th at China had made extensive use of price 
controls, for example in the agricultural sector .  Those members request ed that China undertake 
specific commitments concerning its system of state pr icing.  In particular, those members stated that 
China should allow prices for traded goods and servi ces in every sector to be determined by market 
forces, and multi-tier pricing practices for such goods and services should be eliminated.  Those 
members noted, however, that Chin a expected to maintain price controls on the goods and services 
listed in Annex 4 to the Draft Protocol, and stated th at any such controls should be maintained in a WT/ACC/SPEC/CHN/1/Rev.6 
Page 14  
 
manner consistent with the WTO Agreement, in pa rticular Article III of the GATT 1994 and Annex 2, 
paragraphs 3 and 4, of the Agreement on Agri culture.  Those members noted that except in 
exceptional circumstances, and subject to notificati on to the WTO Secretariat, price controls should 
not be extended to goods or services beyond those list ed in Annex 4, and China should make its best 
efforts to reduce and eliminate those controls.  They  also asked that China publish in the appropriate 
official journal the list of goods and services subject to state pricing and changes thereto.  
52. Members expressed the view that price controls and state pricing in China also encompassed 
"guidance pricing" and  regulation of the range of profits that enterprises could enjoy.  Such policies 
and practices would also be subject to China's comm itments.  In their view, price controls should be 
adopted only in extraordinary circumstances and should be removed as soon as the circumstances 
justifying their adoption were addressed. 
53. The representative of China said that China curre ntly applied a mechanism of market-based 
pricing under macro-economic adjustment.  He noted that national treatment wa s applied in the areas 
of government pricing for all imported goods.  There were presently three types of prices:  government price, government guidance price and ma rket-regulated price.  The government price was 
set by price administration authorities and could not be changed without the approval of these 
authorities. Products and services subject to government  pricing were those having a direct bearing on 
the national economy and the basic needs of the people's livelihood, including those products that were scarce in China.   
54. He added that the government guidance price mechan ism was a more flexible form of pricing.  
The price administration authorities stipulated either a basic price or floating ranges. The floating range of guidance pricing was generally 5% to 15 %.  Enterprises could, within the limits of the 
guidance and taking into account the market situati on, make their own decisions on prices.  With 
market-regulated prices, enterprises were free to se t prices in accordance with supply and demand to 
the extent permitted by generally applicable laws, regulations a nd policies concerning prices.   
55. The representative of China stated that in fo rmulating government prices and government 
guidance prices, the following criteria were taken in to account:  normal production costs, supply and 
demand situation, relevant government policies and prices of related products. When fixing prices of 
consumer goods, consideration was given to the lim its of consumers' purchasing power.  He noted 
that due to the continued reform of China's price system, the share of government prices had dropped substantially and that of market-regulated prices had increased;  of social retailing products, the share 
of government prices was about 4%, that of governme nt guidance prices 1.2%, and that of market-
regulated prices 94.7%.  For agricultural produc ts, the share of government prices was 9.1%,  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 15 
 
 
government guidance prices 7.1%, and market-regulated 83.3%.  For production inputs, the share of 
government prices was 9.6%, that of government gu idance prices 4.4%, and market-regulated prices 
86%.  The share of directly government-controlled prices had been much reduced.  The Government 
of China considered that Chin a's price system was becoming increasingly rationalized, creating a 
relatively fair marketplace for all ente rprises to compete on an equal footing. 
56. The representative of China recalled that Annex 4 of the Draft Protocol contained a 
comprehensive listing of all products and services presently subject to government guidance pricing 
and government pricing. 
57. The representative of China confirmed that it w ould publish in the official journal the list of 
goods and services subject to state pricing and changes thereto, together with price-setting mechanisms and policies.  The Working Party took note of these commitments. 
58. The representative of China confirmed that the official journal providing price information 
was the Pricing Monthly of the People's Republic of  China, published in Beijing.  It was a monthly 
magazine listing all products and services priced by th e State.  He further stated that China would 
continue to further its price reform, adjusting the catalogue subject to state pricing and further 
liberalize its pricing policies. 
59. The representative of China further confirmed th at price controls would not be used for 
purposes of affording protection to domestic industries or services providers.  The Working Party took note of this commitment. 
60. In addition, the representative of China confir med that China would apply its current price 
controls and any other price controls from the en try into force of the Draft Protocol in a WTO-
consistent fashion, and would ta ke account of the interests of exporting WTO Members as provided 
for in Article III:9 of the GATT 1994.  The Working Party took note of these commitments. 
8. Competition Policy 
61. The representative of China noted that the Gove rnment of China encouraged fair competition 
and was against acts of unfair competition of all ki nds. The Law of the People's Republic of China on 
Combating Unfair Competition, promulgate d on 2 September 1992 and implemented on 
1 December 1992, was the basic law to maintain the order of competition in the market. In addition, 
the Price Law, the Law on Tendering and Bidding, th e Criminal Law and other relevant laws also 
contained provisions on anti-m onopoly and unfair competition. Chin a was now formulating the Law 
on Anti-Monopoly. WT/ACC/SPEC/CHN/1/Rev.6 
Page 16  
 
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES 
1. Structure and Powers of the Government 
62. The representative of China informed members of  the Working Party that in accordance with 
the Constitution and the Law on Legislation of the People's Republic of China, the National People's 
Congress was the highest organ of state power.  Its permanent body was its Standing Committee.  The 
National People's Congress and its Standing Committee exercised the legislative power of the State.  
They had the power to formulate the C onstitution and laws.  The State Council, i.e., the Central 
People's Government of China, was the executive body of the highest organ of state power.  The State 
Council, in accordance with the Constitution and relevant laws, was entrusted with the power to 
formulate administrative regulations.  The ministri es, commissions and other competent departments 
(hereinafter referred to as "departments'') of the State Council could issue departmental rules within 
the jurisdiction of their respective departments a nd in accordance with the laws and administrative 
regulations.  The provincial people's congresses and their standing committees could adopt local regulations.  The provincial governments had the pow er to make local government rules.  The 
National People's Congress and its Standing Comm ittee had the power to annul the administrative 
regulations that contradicted the Constitution and laws as well as the local regulations that 
contradicted the Constitution, laws and administra tive regulations.  The State Council had the power 
to annul departmental rules and local government ru les that were inconsistent with the Constitution, 
laws or administrative regulations.  The Governme nt of China believed that these features of the 
Chinese legal system would ensure an effective a nd uniform implementation of the obligations after 
China's accession. 
63. The representative of China stated that Ch ina had been consistently performing its 
international treaty obligations in good faith.  According to the Constitution and the Law on the 
Procedures of Conclusion of Treaties, the WTO Ag reement fell within the category of "important 
international agreements" subject to the ratifi cation by the Standing Committee of the National 
People's Congress.  China would ensure that its laws  and regulations pertaining to or affecting trade 
were in conformity with the WTO Agreement and with its commitments so as to fully perform its 
international obligations.  For this purpose, China had commenced a plan to systematically revise its 
relevant domestic laws.  Therefore, the WTO Ag reement would be implemented by China in an 
effective and uniform manner through revising its existing domestic laws and enacting new ones fully 
in compliance with the WTO Agreement. 
64. [In response to questions from some members of the Working Party, the representative of 
China stated that pursuant to Artic le 142 of the General Principles of Civil Law, if any international 
treaty concluded or acceded to by China containe d provisions differing from those in China's civil  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 17 
 
 
laws, the provisions of the international treaty woul d apply, unless the provisions were ones on which 
China had announced reservations for ratificati on.  Upon ratification by the National People's 
Congress, the WTO Agreement would have the status of domestic law.] 
2. Authority of Sub-Central Governments 
65. Several members of the Working Party raised  concerns about the continued presence of 
multiple trade instruments used by different levels  of government within China.  Those members 
considered that this situation resulted in a lesseni ng of the security and pred ictability of access to the 
Chinese market. These Members raised specific concerns regarding the authority of sub-national 
governments in the areas of fiscal, financial and budgetary activities, specifically with respect to 
subsidies, taxation, trade policy and other issu es covered by the WTO Agreement and the Draft 
Protocol.  In addition, some members expressed c oncerns about whether the central government could 
effectively ensure that trade-related measures intr oduced at the sub-national level would conform to 
China's commitments in the WTO Agreement and the Draft Protocol. 
66. The representative of China stated that sub-national governments had no autonomous 
authority over issues of trade policy to the extent that they were related to the WTO Agreement and 
the Draft Protocol.  The representative of China fu rther confirmed that the central government would 
ensure that China's laws, regulations and other me asures, including those of local governments at the 
sub-national level, conformed to China's obligations  undertaken in the WTO Agreement and the Draft 
Protocol.  The Working Party took note of this commitment.  
3. Uniform Administration of the Trade Regime 
67. Members of the Working Party stated that it shou ld be made clear that China would apply the 
requirements of the WTO Agreement and its other accession commitments throughout China's entire 
customs territory, including border trade regions, minority autonomous areas, Special Economic 
Zones ("SEZs"), open coastal cities, economic and technical development zones and other special 
economic areas and at all levels of government. 
68. Some members of the Working Party raised concerns in relation to the uniformity of 
administration of the foreign trade and economic regi me within China.  In particular, those members 
raised concerns about measures taken by sub-nationa l authorities in China.  In this regard, the 
representative of China confirmed that the central  government would ensure that China's laws, 
regulations and other measures, including local re gulations, rules and other measures of government 
agencies of the sub-national level conformed to the obligations undertaken by China in the WTO 
Agreement and the Draft Protocol.  This incl uded all fiscal, financial and budgetary activities 
performed by the sub-central governments.  The Working Party took note of this commitment. WT/ACC/SPEC/CHN/1/Rev.6 
Page 18  
 
69. Those members of the Working Party also rai sed concerns about whether China's central 
government would be sufficiently informed about  non-uniform practices and would take necessary 
enforcement actions.  Those memb ers stated that China should establish a mechanism by which any 
concerned person could bring to the attention of the central government cases of non-uniform 
application of the trade regime and receive prompt and effective action to address situations in which 
non-uniform application was established.  
70. The representative of China confirmed that the provisions of the WTO Agreement, including 
the Draft Protocol, would be applied uniformly throughout its customs territory, including in SEZs 
and other areas where special regimes for tariffs, ta xes and regulations were established and at all 
levels of government.  The Working Pa rty took note of this commitment. 
71. In response to questions from Members, the representative of China confirmed that laws, 
regulations and other measures included decrees, orders, directives, administrative guidance and 
provisional and interim measures.  He stated that  in China, local governments included provincial 
governments, including autonomous regions and muni cipalities directly under the central government, 
cities, counties and townships.  The representative of China further stated that local regulations, rules 
and other measures were issued by local governments at the provincial, city and county levels acting 
within their respective constitutional powers and fu nctions and applied at their corresponding local 
level.  Townships were only authorized to impl ement measures.  Special economic areas were also 
authorized to issue and implement local rules and regulations. 
72. The representative of China further confirmed that the mechanism established pursuant to 
Section 2(A) of the Draft Protocol would be operativ e upon entry into force of the Draft Protocol.  All 
individuals and entities coul d bring to the attention of central  government authorities cases of non-
uniform application of China's trade regime, in cluding its commitments under the WTO Agreement 
and the Draft Protocol.  Such cases would be referre d promptly to the responsible government agency, 
and when non-uniform application was established, the authorities would act promptly to address the 
situation utilizing the remedies available under Ch ina's laws, taking into consideration China's 
international obligations and the need to provide a meaningful remedy.  The individual or entity notifying China's authorities would be informed promptly in writing of any decision and action taken.  
The Working Party took no te of these commitments. 
4. Judicial Review 
73. Some members of the Working Party stated that China should designate independent 
tribunals, contact points, and procedures for the prom pt review of all administrative actions relating to 
the implementation of laws, regula tions, judicial decisions and administrative rulings of general  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 19 
 
 
application referred to in Article X:1 of the GA TT 1994, including administrative actions relating to 
import or export licences, non-tariff measures and tariff-rate quota administration, conformity 
assessment procedures and other measures.  These members sought explicit confirmation that certain 
types of measures, such as decisions relating to st andards and chemical regist ration, would be subject 
to judicial review.  Some members of the Working Party also stated that the administrative actions 
subject to review should also include any actio ns required to be reviewed under the relevant 
provisions of the TRIPS Agreement and the GATS.  These members stated that such tribunals should 
be independent of the agencies entrusted with admi nistrative enforcement of the matter and should not 
have any substantial interest in the outcome of the matter. 
74. Those members of the Working Party stated th at such review procedures should include the 
opportunity for appeal, without penalty, by individua ls or enterprises affected by any administrative 
action subject to review.  If an initial right of app eal were to an administrative body, there should be 
an opportunity to choose to make a further appeal to a judicial body.  Any decision by any appellate body and the reasons therefore would be communica ted in writing to the appellant, together with 
notification of any right to further appeal. 
75. The representative of China confirmed that it woul d revise its relevant la ws and regulations so 
that its relevant domestic laws a nd regulations would be consistent with the requirements of the WTO 
Agreement and the Draft Protocol on procedures for judicial review of administrative actions.  He 
further stated that the tribunals responsible for su ch reviews would be impa rtial and independent of 
the agency entrusted with administrative enforcemen t, and would not have any substantial interest in 
the outcome of the matter.  The Working Party took note of this commitment.  
76. In response to questions from members of th e Working Party, the representative of China 
confirmed that administrative actions related to measures covered under Article X:1 of the 
GATT 1994 included those relating to national treatme nt, conformity assessment, the regulation, 
control, supply or promotion of a service, including the grant or denial of a licence to provide a 
service and other matters, and that such administrati ve actions would be subject to the procedures 
established for prompt review under Section 2(D) of the Draft Protocol, and information on such 
procedures would be available through the enquiry point that China would establish upon accession.  
The Working Party took no te of these commitments. 
IV. POLICIES AFFECTING TRADE IN GOODS 
A. TRADING
 RIGHTS 
 [To be completed] 
 WT/ACC/SPEC/CHN/1/Rev.6 
Page 20  
 
B. IMPORT
 REGULATION 
1. Ordinary Customs Duties 
77. Members of the Working Party welcomed China' s decision to bind tariffs for all products in 
its schedule on market access for goods.  This acti on would increase the certainty and predictability of 
this aspect of China's trade regime.  Members also noted the substantial unila teral tariff reductions 
made in many sectors by China in recent years. 
78. The representative of China provided members of the Working Party with a copy of the 
Customs Import and Export Tariff of the People's Republic of China ("Customs Tariff") and related 
laws and regulations.  He noted that the Custom s Tariff of China was a charge imposed on imported 
goods. The purpose of levying tariffs was twofold:  (a) to regulate imports so as to promote and 
support domestic production;  and (b) to serve as an important source of revenue for the treasury of 
the central government.  China's tariff policy w as to promote economic reform and opening of the 
economy.  The basic principles for establishing duty  rates were as follows.  Duty-free or low duty 
rates were applied to imported goods which were needed for the national economy and the people's 
livelihood but which were not produced sufficiently  domestically.  Import duty rates on raw materials 
were generally lower than those on semi-manufact ured or manufactured products.  For parts or 
components of machinery, equipment and instrument s which were not produced domestically, or at a 
sufficiently high standard, the import duty was lower than the duty on finished products.  Higher duty rates were applied to products which were produ ced domestically or which were considered non-
essential for the national economy and the people's livelihood.   A higher duty was applied to 
imported products, the equivalent of which were produced domestically and the local manufacturer of 
which needed protection. 
79. The representative of China said that Ch ina had adopted the Harmonized Commodity 
Description and Coding System (HS) as from 1 Janua ry 1992 and joined the International Convention 
on the Harmonized Commodity Description and Codi ng System in the same year.  There were 
21 sections, 97 chapters and 7062 eight-digit tariff he adings based on the six-digit HS'96 version in 
the Customs Tariff for the year 2000.  Tariff rates we re fixed by the State Council. Partial adjustment 
to the duty rates was subject to deliberation and final decision by the State Council Tariff 
Commission.  The simple average of China's import duties in 2000 was 16.4%.  Among the 7062 
tariff headings, tariff rates for 525 headings were  below 5%, 1488 were between 5% (inclusive) and 
10% (exclusive), 2022 between 10% (inclusive) and 15% (inclusive) and 3027 were above 15%.  
Information on tariff rates for specific products and import statistical data for recent years had been 
provided to the Working Party.    WT/ACC/SPEC/CHN/1/Rev.6 
 Page 21 
 
 
80. He also noted that currently there were two columns of import duty rates: general rates and 
preferential rates.  The preferential rates applied to  imports originating in countries and regions with 
which China had concluded reciprocal tariff agreem ents, whereas the general rates applied to imports 
from other sources. 
81. The representative of China confirmed that up on accession China would participate in the 
Information Technology Agreement ("ITA") and would eliminate tariffs on all information 
technology products as set out in China's sche dule.  Furthermore, upon accession, China would 
eliminate all other duties and charges for ITA pr oducts.  The Working Party took note of these 
commitments. 
82. Certain members of the Working Party expressed particular concerns about tariff treatment in 
the auto sector.  In response to questions about the tariff treatment for kits for motor vehicles, China 
confirmed that it had no tariff lines for completely  knocked-down kits for motor vehicles or semi-
knocked down kits for motor vehicles.  If China created  such tariff lines, the tariff rates would be no 
more than 10%.  The Working Party took note of this commitment. 
83. China undertook bilateral market access negotiati ons on goods with members of the Working 
Party.  The results of those negotiations were  contained in the Schedule of Concessions and 
Commitments on Goods and formed Annex 10 to the Draft Protocol.  
2. Other Duties and Charges 
84. The representative of China confirmed that Chin a had agreed to bind at zero other duties and 
charges in its Schedule of Concessions and Commitments, pursuant to Article II:1(b) of the GATT 1994.  The Working Party took note of that commitment. 
3. Rules of Origin 
85. Some members of the Working Party requested information about the adoption and 
application of rules of origin in China, whether in  the context of free trade agreements or otherwise, 
and also requested China to confirm that its rules of origin for both preferential and non-preferential 
trade complied fully with the WTO Agreement on Rules of Origin. 
86. The representative of China noted that the criteri a for making the determination of substantial 
transformation was:  (a) change in tariff classificati on of a four-digit tariff line in the Customs Tariff; 
or (b) the value-added component was 30% or more in the total value of a new product. 
87. He further noted that under current arrangements , and in accordance with the criteria outlined 
above, when an imported product was processed and manufactured in several countries, the country of WT/ACC/SPEC/CHN/1/Rev.6 
Page 22  
 
origin of the product was determined to be the last  country in which the pr oduct underwent substantial 
transformation.  The rules of origin applied for statistical purposes were the same.  However, for 
statistical purposes, the General Customs Administ ration ("Customs") also recorded countries of 
consumption and trading countries. 
88. The representative of China stated  that China's rules of origin for import and export were non-
preferential rules of origin.  Once the internationa l harmonization of non-preferential rules of origin 
was concluded, China would fully adopt and appl y the internationally harmonized non-preferential 
rules of origin.  A mechanism that met the requi rements of Articles 2(h) and 3(f), and Annex II, 
paragraph 3(d) of the Agreement, which require d provision upon request of an assessment of the 
origin of an import or an export and outlined th e terms under which it would be provided, would be 
established in China's legal framework by the date  of accession.  The Working Party took note of 
these commitments. 
89. The representative of China further stated that China would not use the rules of origin as an 
instrument to pursue trade objectives directly or indi rectly.  He also confirmed that China would apply 
rules of origin equally for all purposes.  The Working Party took note of these commitments. 
90. The representative of China confirmed that fro m the date of accession, China would ensure 
that its laws, regulations and other measures relating to rules of origin would be in full conformity 
with the WTO Agreement on the Rules of Origin a nd that it would implement such laws, regulations 
and other measures in full conformity with that Ag reement.  The Working Party took note of this 
commitment. 
4. Fees and Charges for Services Rendered 
91. Members of the Working Party noted that as a condition of accession, China should undertake 
a commitment to ensure conformity of Customs fees and charges with Article VIII of the GATT 1994.  The representative of China confirmed that China would comply with Article VIII of GATT 1994 in this regard.  The Working Party took note of this commitment. 
5. Application of Internal Taxes to Imports 
92. Some members of the Working Party expressed c oncern that some internal taxes applied to 
imports, including a value-added tax ("VAT") were  not administered in conformity with the 
requirements of the GATT 1994, particularly Article III.  Those members of the Working Party noted 
that China appeared to permit the application of di scriminatory internal taxes and charges to imported 
goods and services, including taxes and charges applie d by sub-national authorities.  Those members  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 23 
 
 
requested that China reaffirm that all such internal taxes and charges would be in conformity with the 
requirements of the GATT 1994.   
93. In response, the representative of China noted that there were three major types of taxes 
levied on products and services:  (a) VAT levied  on goods and services for processing, maintenance 
and assembling;  (b) the Consumption Tax on some selected consumer products;  and (c) the Business 
Tax on providing services, transferring intangible assets and selling real estate.   Both the VAT and 
the Consumption Tax were applicable to entities importing goods.  VAT a nd the Consumption Tax on 
imported goods were collected by Customs at the point  of entry.  He noted that VAT was  reimbursed 
once goods were exported.  Exported goods we re exempted from the Consumption Tax. 
94. He further noted that the State Council determin ed all policies concerning the levying of VAT 
and the Consumption Tax, adjustment of tax typ es and tax rates (tax value), as well as the tax 
exemption of VAT, the Consumption Tax and the Bu siness Tax.  The laws and regulations were 
interpreted and implemented by the Ministry of Finance and the State Administration of Taxation. VAT and the Consumption Tax were levied and admi nistered by the State competent departments of 
taxation, while the Business Tax was collected and administered by the local competent departments 
of taxation.  
95. The representative of China confirmed that fro m the date of accession, China would ensure 
that its laws, regulations and othe r measures relating to internal taxes and charges levied on imports 
would be in full conformity with its WTO oblig ations and that it would implement such laws, 
regulations and other measures in full conformity with those obligations.  The Working Party took 
note of this commitment. 
6. Tariff Exemptions 
96. The representative of China stated that the ta riff exemption policy of China was developed 
and implemented in accordance with the Customs Law of the People's Republic of China and the 
Regulations of the People's Republic of China on Im port and Export Duties. The coverage of specific 
tariff reduction or exemption was provided for by the State Council. All the tariff reductions and 
exemptions were applied on an MFN basis. 
97. The representative of China noted that in accordance with international practices and 
provisions of China's Customs Law, import duty re ductions or exemptions were available for the 
following goods: 
 (a) A consignment of goods, on which customs duties were estimated below 
RMB 10 yuan; WT/ACC/SPEC/CHN/1/Rev.6 
Page 24  
 
 (b) advertising articles and samples,  which were of no commercial value; 
 (c) goods and materials, which were rendered gratis by international organizations or 
foreign governments; 
(d) fuels, stores, beverages and provisions fo r use en route loaded by any means of 
transport, which were in transit across the border; 
 (e) exported goods being replaced; 
 (f) goods damaged prior to Customs release; 
 (g) goods covered by international treaties providing for tariff reductions and exemptions 
which China had entered into or acceded to; 
 (h) goods temporarily imported;  (i) goods imported under inward processing programmes; 
 (j) goods imported at zero cost for replacement purposes; 
 (k) domestic- or foreign-funded projects encouraged by China; 
 (l) articles for scientific research, education and the disabled. He noted that goods so imported were required to be put under Customs supervision and control. The 
Customs duty was required to be recovered if such  goods were sold, transferred or used for other 
purposes during the time period of  supervision and control. 
98. Some members of the Working Party expressed c oncerns over the availability and application 
of tariff reductions and exemptions for a variet y of enterprises and other entities, including state 
trading enterprises, state-owned enterprises, forei gn-invested enterprises and not-for-profit entities.  
Similar concerns also existed for exemptions from application of other duties, taxes and charges.  
These members noted the negative effect such reduc tions or exemptions co uld have on revenues and 
predictability and certainty in applica tion of tariff and other trade measures. 
99. The representative of China confirmed that upon en try into force of the Draft Protocol, China 
would adopt and apply tariff reducti ons and exemptions so as to en sure MFN treatment for imported 
goods.  The Working Party took note of this commitment.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 25 
 
 
7. Tariff Rate Quotas 
100. Several members of the Working Party expressed  concern over the lack of transparency, 
uniformity and predictability of China's administra tion of its tariff rate quota (TRQ) regime.  Those 
members requested that China enter a commitment to administer TRQs in a simple, transparent, 
timely, predictable, uniform, non-discriminatory, and non-trade restrictive manner, and in a way that would not cause trade distortions.  Those members as ked that China ensure that its TRQ arrangements 
be no more administratively burdensome than abso lutely necessary, and also expressed the hope that 
China would move as quickly as possible to a market-based TRQ allocation process. 
101. Those members of the Working Party also rai sed concerns regarding the administration of 
China's TRQ system and the practices of state trading enterprises in relation to importing such 
products.  These concerns included the current lack  of transparent regulations for administering 
TRQs;  use of administrative guidance;  distortions  introduced into the market due to allocations 
based on government determinations of subnationa l supply and utilization rather than consumer 
preferences and end-user demand;  failure to establish and publish annual TRQ quantities;  trade-
restrictive and non-competitive practices of state trading enterprises;  and general uncertainty, 
inconsistency and discrim ination in trade of bulk commodities.  Those members expressed similar 
concerns about the operation of China's TRQ system  for products subject to designated trading.  
Those members requested that China reduce tariffs  for commodities subject to TRQs, enter into 
access commitments for these commodities, improve the administration of the TRQ regime, and 
ensure that trade would not be distorted by unjus tified government regulation.  Certain members of 
the Working Party also requested that a number of  specified products be removed from China's TRQ 
system and that, upon import, these pr oducts be subject only to tariffs. 
102. The representative of China noted that in 1996,  for the first time, China published a list of 
import products subject to TRQs, together with the tariff rates applicable to imports both in and out 
quota.  Allocation of TRQ was based on historical  performance and state trading administration, 
although China had also tried several other ways of  administration, including import at applied tariff 
rates, first-come-first-served at the point of entry,  and bonded import which was strictly monitored by 
Customs.  China was trying to simplify the TRQ administration regime and procedures in a bid to facilitate use, enhance efficiency and implement further reform. 
103. The representative of China further noted that, in undertaking market-oriented reform in the 
agricultural sector, China had made progress in freei ng agricultural products from state pricing and in 
guiding farmers to adjust the structure of agricu ltural production based on the demands of the market.  
In connection with that reform pr ocess, in the bilateral negotiati ons with Members, China committed 
that as soon as it became a Member  of the WTO, it would eliminate TRQs on a number of products WT/ACC/SPEC/CHN/1/Rev.6 
Page 26  
 
and subject these only to tariffs.  The products concer ned were barley, soybeans, rapeseed, peanut oil, 
sunflower seed oil, corn oil, a nd cottonseed oil.  In addition, China would replace quantitative import 
restrictions on sugar, cotton and three types of fertilizers (DAP, NPK and urea) by TRQs.  The 
Working Party took note of these commitments. 
104. The representative of China stated that from en try into force of the Draft Protocol, China 
would ensure that TRQs were administered on a transparent, predictable, uniform, fair and non-
discriminatory basis using clearly specified time frames, administrative procedures and requirements 
that would provide effective import opportunities;  that would reflect consumer preferences and end-
user demand;  and that would not inhibit the filling of each TRQ.  China would apply TRQs fully in accordance with WTO rules and principles and with  the provisions set out in China's Schedule of 
Concessions and Commitments on Goods.  The Work ing Party took note of these commitments. 
105. The representative of China confirmed that fo r the goods listed in Annex 2 of the Draft 
Protocol that were subject to a TRQ, China would also apply the provisions of its Schedule relating to 
TRQ administration and related commitments in the Draft Protocol, including the grant of trading 
rights to non-state trading entities to import the TR Q allocations set aside for importation by such 
entities.  For products in Annex 2 of the Draft Protoc ol that were subject to designated trading, China 
confirmed that it would ensure that additional en terprises granted trading rights in accordance with 
China's commitments to phase out designated trading would not be disadvantaged in the allocation of 
TRQ.  The Working Party took note of these commitments. 
106. Some members of the Working Party expressed th e view that allocation decisions were based, 
in large part, on government-determined provincial  supply and utilization ra ther than on commercial 
market criteria that reflected consumer preferences and end-user demand.  Those members expressed concern that China's stated intention to allocate quot a to sub-central authorities and to authorize those 
authorities to then allocate that quota to end-u sers in separate processes would add an unnecessary, 
burdensome step in the procedures and reduce the likelihood that quotas would be filled.  Further, 
those members stated that China' s stated intention with regards to TRQ procedures would not be 
consistent with China's commitments to uniform ad ministration of its trade regime.  Those members 
sought confirmation that China would not establish a separate process of allocation to sub-central 
authorities, as well as confirmation that all allocatio n and reallocation decisions would be made by a 
single, central authority in China. 
107. The representative of China confirmed that the role of sub-central bodies would be limited to 
purely administrative operations, such as receiving a pplications from end-u sers and forwarding them 
to the central authority;  receiving queries and tran smitting these to the central authority;  reporting on  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 27 
 
 
allocation and reallocation decisions made by th e central authority and providing information 
regarding such allocations and reallocations upon request;  checking the information in the 
applications to verify that it met the published crite ria;  notifying applicants of any deficiencies in 
their applications;  and providing applicants with an opportunity to cure deficiencies in their 
applications.  After the central authority decided on allocations of quota to end-users, the sub-central 
bodies would issue TRQ certificates accordingly.  Th e representative of China also confirmed that 
China would administer a consistent national allo cation (and reallocation) policy for TRQs, that it 
would not establish a separate process of allocatio n to sub-central authorities and that decisions 
regarding all allocations and realloca tions to end-users would be made by a single, central authority.  
The Working Party took no te of these commitments. 
8. Quantitative Import Restrictions, including Prohibitions and Quotas 
108. In response to requests for information from members of the Working Party, the 
representative of China noted that China prohib ited or restricted the importation of certain 
commodities, including weapons, ammunition and explosives, narcotic drugs, poisons, obscene 
materials and those foodstuffs, medicines, animals and plants which were in consistent with China's 
technical regulations [and standards] on  food, medicines, animals and plants. 
109. Some members of the Working Party noted that there were a large number of non-tariff 
measures in existence in China, bo th at the national and sub-national levels, which appeared to have a 
trade restrictive or trade distorting effect.  Those members requested that China undertake a 
commitment to eliminate and not to introduce, re -introduce or apply non-tariff measures other than 
those specifically identified and subj ect to phased elimination in Annex 3 to the Draft Protocol.  The 
representative of China confirmed that China woul d not introduce, re-introduce or apply non-tariff 
measures other than listed in Annex 3 of the Pr otocol unless justified under the WTO Agreement.  
The Working Party took note of this commitment.  
110. Some members of the Working Party also rai sed concerns that many non-tariff measures were 
imposed by sub-national authorities in China on a non-transparent, discretionary and discriminatory 
basis.  Those members of the Working Party asked that China undertake a co mmitment to ensure that 
non-tariff measures would only be imposed by the ce ntral government or by sub-national authorities 
with clear authorization from the central government .  Actions lacking authorization from the national 
authorities should not be implemented or enforced.  The representative of China clarified that only the 
central government could issue regulations on non- tariff measures and that these measures would be 
implemented or enforced only by the central  government or sub-national authorities with 
authorization from the central government.  He further stated that sub-national authorities had no right to formulate non-tariff measures.  The Work ing Party took note of these commitments. WT/ACC/SPEC/CHN/1/Rev.6 
Page 28  
 
111. Some members of the Working Party noted th at China had provided a list of non-tariff 
measures in respect of which China was prepared  to commence phased elimination, contained in 
Annex 3 of the Draft Protocol.  Those members stat ed that China should eliminate the measures listed 
in accordance with the sche dule provided in Annex 3, during the periods specified in Annex 3.  For 
measures subject to phased elimination, China sh ould provide for growth in the quota over the 
relevant period specified in Annex 3.  Those member s also noted that the protection afforded by the 
measures listed in Annex 3 should not  be increased or expanded in size, scope, or duration, nor any 
new measures be applied, unless justified unde r the provisions of the WTO Agreement.  
112. Those members of the Working Party noted that all non-tariff measures administered by 
China, whether or not referred to in Annex 3 of th e Draft Protocol, which were applied after China's 
accession to the WTO, should be allocated and otherwi se administered in strict conformity with the 
provisions of the WTO Agreement, including Ar ticle XIII of the GATT 1994 and the Agreement on 
Import Licensing Procedures, including notification requirements.  
113. The representative of China stat ed that China had modified Annex 3 on the basis of the 
comments raised by certain members of the Worki ng Party.  He confirmed that only the machinery 
and electronic products listed in Annex 3 were s ubject to specific tendering requirements and that 
these requirements would be administered pursuant to Chapter III of the Regulation entitled "Interim 
Measures for Import Administration of Machinery and Electronics Products" (approved by the State Council on 22 September 1993 and pr omulgated in Order No. 1 by the State Economic and Trade 
Commission and Ministry of Foreign Trade and Ec onomic Cooperation on 7 October 1993).  He also 
confirmed that Annex 3 contained all of the pr oducts subject to quotas, licences and such tendering 
requirements in China and  that, during the rele vant phase-out period, China would implement the 
growth rates for quotas as indicated in Annex 3.  The Working Party took note of these commitments. 
114. Some members of the Working Party requested information on how China would implement 
the quota and licensing requirements for products listed in Annex 3, in particular the procedures and 
criteria for grant of quota allocations and licensing during the phase-out period for these restrictions.  
Members expressed concern about requirements for obtaining a licence or quota allocation which 
often required approvals from various  authorities within an organiza tion as well as approval from both 
the central and sub-national level.  Those member s sought a transparent, streamlined system that 
would issue quota allocations and licences through a si mple, consolidated approval process that would 
ensure full use of the quota and its equitable distribution among importers.  Those members also requested information on how China would establish the value of imports for those products whose 
quota was established in terms of value of imports.  The representative of China confirmed that the 
administration of quotas and import licenses would be consistent with the WTO Agreement, including  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 29 
 
 
Article XIII of the GATT 1994 and the Agreement on Import Licensing Procedures. The allocation of 
quotas and issuance of import licenses would go through a simple and transparent procedure, so as to 
ensure the full utilization of quota.  He further stat ed that the establishment of value of imports would 
be based on the information collected by the Cust oms authorities and provisions of the WTO Customs 
Valuation Agreement.    For quota quantities specifi ed in terms of value, China would determine the 
value of any shipment based on the c.i.f. ship va lue listed on the bill of lading.  The Working Party 
took note of these commitments. 
115. [The representative of China confirmed that  the products currently covered under the HS 
categories listed in Annex 3 as of the date of accessi on were the only products that would be subject 
to these quotas during the agreed phase-out periods .  Any non-tariff measures covering additional 
products would need to be justified under the WTO Agreement.  Further, the representative of China 
stated that for products listed in Annex 3 as bei ng subject to quota and licensing requirements, any 
entity [that will possess the right to trade in the quota  year] [possessing the right to trade], including 
enterprises possessing trading rights to import such  products or inputs for production purposes under a 
particular quota category, could apply for a quota a llocation and licence to import products listed in 
Annex 3.  The Working Party took note of these commitments.] 
116. The representative of China further confirmed th at for products listed in Annex 3, China's 
system for quota allocation and licensing would ensu re that those entities with quota allocations 
would also receive any necessary import licence.  This system would conform to WTO rules, 
including the WTO Agreement on Import Licensing Procedures, and would be transparent, timely, 
responsive to market conditions and would minimize  the burden on trade.  Applications for a quota 
allocation would need to be submitted to only one orga nization, at one level (central or sub-national) 
for approval.  The relevant or ganization would then issue an import license based on the quota 
allocation, in most cases within 3 working days and,  in exceptional cases, within a maximum of 10 
working days after a request for the license.  A license would be issued for the full amount of the 
quota and would be valid for the calendar year issued.  Such license would be extended once, upon request,  for up to 3 months, if the request was made  before 15 December of the current quota year.  
Imports occurring under an extended license would be  counted against the relevant quota amount for 
the year in which the allocation took place.  The representative of China confirmed that the relevant 
organization for issuing quota allocations and lic ences, amount of quota, including the growth in 
quota provided for in Annex 3, the eight-digit tariff codes and full descriptions of all products covered 
by each quota and procedures for application fo r a quota allocation and license, including the 
beginning and end date of the application period an d any other relevant procedures or criteria, would 
be published in the official journal referred to in pa ragraph 2(C)(2) of the Draft Protocol at least 21 
days prior to the beginning of the application peri od.  Such application period would be from 1-31 WT/ACC/SPEC/CHN/1/Rev.6 
Page 30  
 
August.  Quotas would be allocated to applicants no later than 60 days after closure of the application 
period.  The Working Party to ok note of these commitments. 
117. The representative of China stated  that China would allocate th e quota in accordance with the 
following criteria and procedures which would be published in advance and would be applied in 
conformity with WTO requirements, including th e Agreement on Import Licensing Procedures. In 
applying these criteria, China would consider th e need to allow for equitable participation by 
producers from WTO Members and take into account the need to maximize the potential for quota 
fill. 
 – If the relevant quota quantity exceeded total requests for quota allocations, all 
requests would be approved. 
 
 – In other cases, the criteria for allocation would be as follows: 
   • Historical performance of applicants where relevant (in cases in 
which average imports over the 3-year period immediately prior to the year of 
China's accession, for which data is available, amounted to less than 
75 percent of the relevant quota, other criteria would be more important); 
   • Production or processing capacity, in the case of intermediate 
products and raw materials; 
   • Experience and ability in producing, importing, marketing, or 
servicing in international markets, in the case of finished products or products 
destined for wholesale or retail distribution; 
  
 – In cases in which average imports over the 3-year period immediately prior to the 
year of China's accession, for which data is available, exceeded 75 percent of the 
relevant quota, applicants that had not pr eviously been allocated quota would be 
allocated 10 percent of the total quota in th e first year and the majority of any quota 
growth in any subsequent year. 
  – In other cases in the first year, twenty-five percent of the total quota would be 
allocated to applicants that had not pr eviously been allocated quota, and in 
subsequent years, two-thirds of quota growth  would be allocated to such firms, if 
quota fill remained below 75 percent.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 31 
 
 
 
 – In all cases, a quota-holder that has fully utilized or contracted for its quota allocation 
shall, upon application, receive an allocation in the following year for a quantity no 
less than the quantity imported in the previous year.  A quota-holder that does not import its full allocation will receive a propor tional reduction in its quota allocation in 
the subsequent year unless the quantity is re turned for reallocation by [1 September] 
[1 October]. 
 The Working Party took no te of these commitments. 
 118.  The representative of China confirmed that all commercial terms of trade, including product 
specifications, product mix, pricing, and packagi ng, would be at the sole discretion of the quota 
holder, so long as the products are within the relevant quota category.   Allocations would be valid for 
any article or mixture of articles subject to th e same quota as specified in Annex 3 of the Draft 
Protocol.  Allocations would be valid for a peri od of one calendar year from the opening of the quota 
import period.  However, if the holder of a quota a llocation had not contracted for import of the total 
quantity allocated to by [1 Septem ber] [1 October],  the holder was to immediately return the unused 
portion of the allocation to the relevant authority which would reallocate the quota immediately, if unfilled requests were pending, or otherwise within 10 da ys after receipt of a request for an allocation.  
The relevant organization would publish notice of the availability of additional allocations after 
collecting any unused quotas returned by the quota holders.  Licenses for goods imported under reallocated quota would be extended once, upon request,  for up to 3 months, if the request was made before 15 December of the current quota year.  Imports occurring under an extended license would be 
counted against the relevant quota amount for the year in which the re-allocation took place.  The 
Working Party took note of these commitments. 
9. Import Licensing 
119. The representative of China confirmed that th e list of all entities responsible for the 
authorization or approval of imports  would be updated and republishe d in the official journal, the 
MOFTEC Gazette, within one month of any change th ereto.  The Working Party took note of this 
commitment. 
120. In response to requests for additional information about its system of import licensing, the 
representative of China said that the import licensing  system was administered without discrimination 
among countries or regions.  In 1984, the State Coun cil had promulgated the "I nterim Regulations on 
Licensing System for Import Commodities", and MO FTEC and Customs had issued "Detailed Rules WT/ACC/SPEC/CHN/1/Rev.6 
Page 32  
 
for the Implementation of the Interim Regulations on Licensing System for Import Commodities".  
The Interim Regulations were unifo rmly implemented throughout China.  In 1999, of the total import 
value of US$ 165.7 billion, imports subject to licen sing represented 8.45%, covering US$ 14 billion.  
MOFTEC determined which products should be subject  to import licensing according to the relevant 
provisions of the "Foreign Trade Law".   
121. The representative of China further stated that in 1993, China had applied import restrictions 
to 53 product categories.  By 1999, the number had been reduced to 35.  Products covered were (1) 
Processed oil; (2) Wool;  (3) Polyester fibre;  (4) Acrylic fibres;  (5) Polyester fillet;  (6) Natural 
rubber;  (7) Vehicles tyres;  (8) Sodium cyanide;  (9) Sugar;  (10) Fertilizer;  (11) Tobacco and its products;  (12) Acetate tow;  (13) Cotton;  (14) Motor vehicles and their key parts;  (15) Motorcycles and their engines and chassises; (16) Colour tele vision sets and TV kinescope;  (17) Radios, tape 
recorders and their main parts;  (18) Refrigerators  and their compressor;  (19) Washing machines;  
(20) Recording equipment and its key parts;  ( 21) Cameras and their bodies (without lenses);  (22) 
Watches;  (23) Air conditioners and their comp ressor;  (24) Audio and video tape duplication 
equipment;  (25) Crane lorries and their chassises;  (26) Electronic microscopes;  (27) Open-end 
spinning machines;  (28) Electronic colour scanners;  (29) Grain;  (30) Vegetable oil;  (31) Wine;  
(32) Colour sensitive material;  (33) Chemical under supervision and control that were used for 
chemical weapon;  (34) Chemicals used to produce narcotics;  and (35) Laser disc production facilities.  He also noted that in 1999, there were 13 commodity categories which were imported by 
the foreign trade companies designated by MO FTEC. These categories were as follows:  (1) 
Processed oil;  (2) Fertilizer; (3) Tobacco; (4) Vegeta ble oil; (5) Grain; (6) Natural rubber; (7) Wool; 
(8) Acrylic fibers; (9) Sugar; (10) Cotton; ( 11) Crude oil; (12) Steel; and (13) Plywood. 
122. Concerning the granting and administration of import licences, the representative of China 
said that the examination and approval of the licence  took two to three working days.  Applications 
for import licences could be submitted to the Quota and Licence Administrative Bureau of MOFTEC, 
or Special Commissioner Offices in 16 provinces, or Commissions of Foreign Economic Relations 
and Trade of various provinces, autonomous regi ons, and municipalities dir ectly under the central 
government and those with indepe ndent budgetary status. Licensing ag encies authorized by MOFTEC 
could issue import licences on the basis of import documents submitted by the applicants,  approved 
by the competent departments. A licence could not be bought, sold or transferred, and was valid for 
one calendar year.  Import licences could be extended once for up to three months.    
123. Some members of the Working Party expressed c oncern that China's Provisional Procedures 
for the Administration of Automatic Registration for the Import of Special Commodities 
(13 August 1994), in particular the criteria for a pproval of registration, would act as a restraint on  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 33 
 
 
imports.  The representative of China emphasized that the purpose of the registration system was only 
to gather statistical information.  He confirmed that China would bring its automatic licensing system 
into conformity with Article 2 of the Agreem ent on Import Licensing Procedures upon entry into 
force of the Draft Protocol.  The Working Party took note of this commitment.   
124. Some members of the Working Pa rty noted that enterprises and individuals seeking to import  
products subject to tariff quota administration requi rements had to go through extensive procedures to 
receive a quota allocation and that the quota certificate would indicate whether the subject good was 
to be imported through a state trading enterprise or a non-state trading enterprise and would be valid for a certain period of time.  Moreover, the entity importing the good would need trading rights.  In the light of these multiple requirements, a quota allocation certificate should satisfy any import licensing requirement that might apply. 
125. The representative of China confirmed that China would not require a separate import licence 
approval for goods subject to a TRQ allocation re quirement but would provide any necessary import 
licence in the procedure that granted a quota allocati on.  If quota were reallocated pursuant to China's 
TRQ administration commitments, the provisions rela ting to licensing of such reallocated quantities 
would apply.  The Working Party took note of this commitment. 
10. Customs Valuation 
126. Some members expressed concern regarding the methods used by China to determine duty-
paying value of goods, in particular regarding the practice of using minimum or reference prices for 
certain goods, which would be incons istent with the Agreement on Im plementation of Article VII of 
the GATT 1994 ("Customs Valuation Agreement").  Other WTO-consistent means were available to 
Members doubting the veracity of declared transaction values. 
127. In response, the representative of China stated  that China had ceased to use and would not 
reintroduce minimum or reference prices as a means to  determine customs value.  The Working Party 
took note of this commitment. 
128. The representative of China considered that ther e would not be situations where the "normal 
transaction value" could not be "ascertained" since the Customs Valuation Agreement provided 
several methods for valuation. 
129. The representative of China recalled that the overwhelming majority of China's customs 
duties were ad valorem  duties.  The customs or duty-paying value of imported goods was assessed 
according to the c.i.f. price based on the transac tion value, as defined in the Customs Valuation 
Agreement.  If the transaction value of importe d goods could not be dete rmined, the duty-paying WT/ACC/SPEC/CHN/1/Rev.6 
Page 34  
 
value was determined based on othe r means provided for in the Customs Valuation Agreement.  He 
also noted that the Customs Law provided for app eal procedures. In the event of a dispute over 
calculation of duty paid or payable with the Cu stoms, the dissatisfied importer could apply to 
Customs for a reconsideration of the case. If the app eal was rejected the importer could sue at the 
People's Court.   
130. The representative of China confirmed that, from the entry into force of the Draft Protocol, 
China would apply fully the Customs Valuati on Agreement, including the customs valuation 
methodologies set forth in Articles 1 through 8 of th e Agreement.  In addition, China would apply the 
provisions of the Decision on the Treatment of Inte rest Charges in Customs Value of Imported Goods, 
and the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment, adopted by the WTO Committee on Customs Valuati on (G/VAL/5).  In accordance with these latter 
provisions, only the cost of the carrier medium itself would be accounted for in determining the 
customs value of carrier media bearing softwa re.  The Working Party took note of these 
commitments.   
11. Other Customs Formalities 
131. The representative of China said that China jo ined the International Convention on the 
Simplification and Harmonisation of Customs Sy stem in 1988 and on 15 June 2000 signed the 
Protocol on the Amendment of the Internationa l Convention on the Simplification and Harmonisation 
of Customs System.  The Customs authorities of Ch ina had only adopted such customs formalities as 
declaration, examination, levying of duties and re lease which were consiste nt with international 
practices. 
12. Preshipment Inspection 
132. The representative of China stated that, curren tly, there were trade and commerce inspection 
agencies (including joint-venture agencies) enga ged in preshipment inspection.  China committed 
itself to comply with the Agreement on Preshipment Inspection, and would regulate the existing trade 
and commerce inspection agencies and permit the qua lified agencies to be engaged in preshipment 
inspection in line with the government mandate or the terms and conditions of commercial contracts. 
133. Some members of the Working Party request ed information on whether China used the 
services of a private preshipment inspection entity.  The representative of China confirmed that China 
would ensure that, upon accession, any laws and regula tions relating to preshipment inspection by any 
inspection agency, including private entities, would be  consistent with releva nt WTO agreements, in 
particular, the Agreement on Preshipment Inspect ion and the Customs Valuation Agreement.  
Moreover, any fees charged in connection with su ch preshipment inspection would be commensurate  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 35 
 
 
with the service provided, in conformity with Ar ticle VIII:1 of the GATT 1994.  The Working Party 
took note of these commitments. 
13. Anti-Dumping, Countervailing Duties 
 [To be completed] 
 
14. Safeguards  
134. The representative of China stated that upon accession, China would implement its 
Regulation on Safeguard by which the future safe guard measures would be regulated.  The drafting 
work of this regulation was still under way.  The contents of this new re gulation would be fully 
consistent with the Agreement on Safeguards.  He noted that, at present, China was in the process of 
drafting safeguard legislation in accordance with Article 29 of the Foreign Trade Law and the Agreement on Safeguards.  The Working Party took note of this commitment.  
C. EXPORT
 REGULATIONS 
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes 
to Exports 
135. Some members of the Working Party raised  concerns over taxes and charges applied 
exclusively to exports.  In their view, such tax es and charges should be eliminated unless applied in 
conformity with GATT Article VIII or lis ted in Annex 6 to the Draft Protocol. 
136. The representative of China noted that the majority of products were free of export duty, 
although 36 items, including tungste n ore, Ferrosilicon and some aluminum products, were subject to 
export duties.  He noted that the duty-paying valu e of exported goods was the F.O.B. price of the 
goods.  
2. Export Licensing and Export Restrictions 
137. The representative of China confirmed that th e list of all entities responsible for the 
authorization or approval of expor ts would be updated a nd republished in the official journal, the 
MOFTEC Gazette, within one month of any change th ereto.  The Working Party took note of this 
commitment. 
138. The representative of China said that China a pplied its export licence system to certain 
agricultural products, resource products and chem icals. China's export licencing system was 
administered in accordance with the "Interim Pr ocedures for the Export Licencing System". In 1992, 
there were 143 categories of products subject to export licencing which accounted for 48.3% of the 
total value of the China's exports, but by 1999,  the total number of products subject to export WT/ACC/SPEC/CHN/1/Rev.6 
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licensing had been reduced to 58 categories and 73 ite ms with an export value of US$ 18.5 billion, 
taking up only 9.5% of total exports. Export licences for these products were issued according to the 
stipulated commodity scope respectively by th e Administrative Bureau of Quota and Licence 
(ABQL), the Special Commissioner Offices (SCO) locat ed in 16 provinces and the Commissions of 
Foreign Economic Relations a nd Trade (COFTEC) of various provinces, autonomous regions, 
municipalities directly under the central government and those with independent budgetary status.  
The main criteria used in determining whether a product was subject to export licensing, as set down 
in the Foreign Trade Law, were:  (1) maintenan ce of national security or public interests;  
(2) protection against shortage of supply in the dom estic market or exhaustio n of natural resources;  
(3) limited market capacity of importing countries or  regions;  or (4) obligations stipulated in 
international treaties.  Export licensing was also used for statistical purposes. 
139. He further noted that an application for an export licence had to be submitted to the licence 
issuing institutions authorized by MOFTEC, togeth er with documents approving the export by the 
competent departments, and other relevant material s (such as the Export Qualification Certificate for 
the enterprises, export contract and so on). The pr ocedures were the same for all export destinations. 
A decision on the request for an export licence normally took three working days. Licences were valid 
for six months and could be extended once.  FIEs  engaged in exporting products not produced by 
them were required to obtain export licences if the products to be exported were subject to the 
licensing requirement.  If the products were not s ubject to licensing, customs clearance would be 
given after examination by Customs on the basis of  export contracts and ot her relevant documents. 
140. Certain members of the Working Party noted the conditions in the GATT 1994 in regard to 
non-automatic licensing and export restrictions.  They pointed out that export prohibitions, restrictions 
and non-automatic licensing could only temporarily be applied under Article XI of the GATT 1994 to 
prevent or relieve critical shortages of foodstuffs  or other products essential to an exporting WTO 
Member.  Article XX of the GATT 1994 also allowed fo r restrictive export measures, but only if such 
measures were made effective in conjunction w ith restrictions on domestic production or 
consumption. 
141. Members of the Working Party welcomed the steady reduction in the number products subject 
to export licensing in China.  Certain members reiterated their request for the submission of a 
complete list of restrictions presently applied.   These members expressed concern that the remaining 
number was still high, covering about 10 per cent of e xport trade, and requested that they be either 
reduced further or eliminated by the date of a ccession in order to achieve full compatibility with 
GATT requirements.  Some members expressed partic ular concern about export restrictions on raw  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 37 
 
 
materials or intermediate products that could be subject to further processi ng, such as tungsten ore 
concentrates, rare earths and other metals. 
142. The representative of China confirmed that Chin a would abide by WTO rules in respect of 
non-automatic export licensing and export restrictions.  The Foreign Trade Law would also be brought into conformity with GATT requirements.  Moreover, export restrictions and licensing would 
only be applied, after the date of accession, in  those cases where this was justified by GATT 
provisions.  The representative of China further conf irmed that export restrictions on tungsten ore 
concentrates would be eliminated upon entry into force of the Draft Protocol.  The Working Party 
took note of these commitments. 
143. The representative of China stat ed that China prohibited expor t of narcotic drugs, poisons, 
materials containing State secrets, precious and rare animals and plants. 
144. Some members of the Working Party expressed c oncern about China's restrictions on exports 
of silk.  Certain other members expressed concer n about export restrictions on other goods, in 
particular raw materials or intermediate products th at could be subject to further processing, such as 
tungsten ore concentrates, rare earths and other me tals.  Members of the Working Party urged China 
to ensure that any such restrictions that were im posed or maintained complied with the terms of the 
WTO Agreement and the Draft Protocol. 
145. The representative of China confirmed that upo n entry into force of the Draft Protocol, 
restrictions on exports would be eliminated unless they could be justified under the WTO Agreement 
or the Draft Protocol.  The Working Party took note of this commitment. 
3. Export Subsidies 
146. Some members of the Working Party noted that China had provided a list of prohibited 
subsidies falling within the scope of Article 3 of the SCM Agreement and a timetable for their 
elimination, in Annex 5b of the Draft Protocol.  T hose members considered this list to be incomplete. 
147. The representative of China confirmed that it woul d eliminate all export subsidies, within the 
meaning of Article 3.1(a) of the SCM Agreement, by the time of accession, including fiscal or other 
financial measures referred to in  Article 1 of the SCM Agreement which were contingent upon export 
performance.  To this end, China would, by accession, cease to maintain all pre-existing export 
subsidy programmes and, upon accession, make no further payments  or disbursements, nor forego 
revenue or confer any other benefit, under such  programmes.  This commitment covered subsidies 
granted at all levels of government, including tax exemptions, reductions, deferrals or forgiveness to WT/ACC/SPEC/CHN/1/Rev.6 
Page 38  
 
enterprises, which were contingent, in law or in  fact, upon an obligation to export.  The Working 
Party took note of this commitment. 
148. On the same basis, the represen tative of China confirmed that China would eliminate, upon 
accession, all subsidies contingent upon the use of  domestic over imported goods, within the meaning 
of Article 3.1(b) of the SCM Agreement.  Th e Working Party took note of this commitment. 
D. INTERNAL
 POLICIES  AFFECTING  FOREIGN  TRADE  IN GOODS 
1. Taxes and Charges Levied on Imports and Exports 
149. Some members of the Working Party expressed concern about the application of the VAT and 
additional charges levied by sub-central government s on imports.  Non-discriminatory application of 
the VAT and other internal taxes was deemed essential. 
150. The representative of China confirmed that from the entry into force of the Draft Protocol, 
China would ensure that its laws and regulations relating to all fees, charges or taxes levied on 
imports and exports would be in full conformity with its WTO obligations, including Articles I, III:2 
and 4, and XI:1 of the GATT 1994, and that it would al so implement such laws and regulations in full 
conformity with these obligations.  The Work ing Party took note of this commitment. 
2. Industrial Policy, including Subsidies 
151. Some members of the Working Party expressed c oncern that the special features of China's 
economy, in its present state of re form, still created the potential for a certain level of trade-distorting 
subsidization;  this could have an impact not only on access to China's domestic market, but also on 
the performance of Chinese exports in the markets of other WTO Members, and should be subject to 
effective SCM Agreement disciplines.  In view of this, some members felt that it would be 
inappropriate for China to benefit from certain provi sions of Articles 27 and 29.  The representative of 
China, in turn, considered that certain provisions of these Articles should be available to China, and 
informed the Working Party of the efforts being un dertaken, as part of its ongoing reform process, to 
reduce the availability of certain types of subs idies.  China was committed to implementing the 
SCM Agreement in a manner that was fair and equi table to China and to other WTO Members.  [In 
line with this approach, the representative of China st ated his intention to reserve the right to benefit 
from the provisions of [Articles 27.10, 27.11, 27.12 and 27.15] of the SCM Agreement, while 
confirming that China would not seek to invoke [Articles 27.8, 27.9, 27.13 and 29.2] of the SCM Agreement.  The Working Party took note of these commitments.] 
152. Some members of the Working Party, in view  of the special characteristics of China's 
economy, sought to clarify that when state-owne d enterprises (including banks) provided financial  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 39 
 
 
contributions, they were doing so as government acto rs within the scope of Article 1.1(a) of the 
SCM Agreement.  The representative of China noted , however, that such financial contributions 
would not necessarily give rise to a benefit within the meaning of Article 1.1(b) of the 
SCM Agreement.  He pointed out that China's objective was that state-owned enterprises, including 
banks, should be run on a commercial basis and be re sponsible for their own profits and losses.  The 
Working Party took note of this commitment. 
153. Some members of the Working Party, while understanding the difficulties involved in 
gathering information, raised concerns over the comprehensiveness of the subsidy notification which 
China had provided in Annex 5 to the Draft Protocol, as last modified on 31 May 2000.  Some members of the Working Party explained that, as an illustration of the above, certain types of 
subsidies did not appear in Annex 5.  Those members of the Working Party first identified state 
support through the banking system, notably governme nt-owned banks, in the form of policy loans, 
the automatic roll-over of unpaid principal and inte rest, forgiven and non-performing loans, and the 
selective use of below-market interest rates.  Some  members also referred to unreported tax subsidies, 
investment subsidies and subsidies provided by sub-central governments, some of which favoured 
exporting firms.  Other members mentioned subs idies granted to the telecommunications and 
shipbuilding sectors.  The representative of China explained that, in common with many other Members, China had experienced difficulty in obtaining accurate data about all types of subsidies.  He 
also indicated that China was attempting to reduce th e availability of certain types of subsidies, in 
particular by reforming its tax system and ma king government-owned banks  operate on a commercial 
basis.  The representative of China stated that  China would progressively work towards a full 
notification of subsidies, as contemplated by Artic le 25 of the SCM Agreement.  The Working Party 
took note of this commitment. 
154. Some members of the Working Party also raised  concerns regarding the subsidies that China 
provided in connection with SEZs and other special economic areas.  Some of these appeared to be 
contingent upon export performance or on the u se of domestic goods.  The representative of China 
noted that the main purpose of such subsidies was to promote regional development and foreign investment.  He confirmed that China would, up on accession, eliminate any such subsidies which 
were inconsistent with the SCM Agreement.  The Working Party took note of this commitment. 
155. Some members of the Working Party request ed information from China on the subsidies 
provided to the Chinese footwear industry that were con tingent upon the use of domestic materials.  In 
response, the representative of China explained that no such subsidy programme existed.  
[………………………………………………] WT/ACC/SPEC/CHN/1/Rev.6 
Page 40  
 
156. Some members of the Working Party requested  information from China on the Steel Import 
Substitution Programme, which appeared to provide e xport subsidies to the big four steel groups in 
China.  In response, the represen tative of China explained that China did not collect VAT on imported 
and domestically-produced steel used as raw materi al by processing trade enterprises.  Such a policy 
was consistent with WTO rules and identical to th e practices of VAT rebate of many WTO Members, 
and thus should not be considered  subsidies.  […………………………………………] 
157. Some members of the Working Party request ed information from China on the "China 
High-Tech Product Export Catalogue", which set forth central government export policies for the 
telecommunications, computer software, aviation and aerospace, lasers, pharmaceuticals, medical equipment, new materials and energy industries.  In  response, the representative of China explained 
that products listed in the Catalogue  would be given full VAT rebate tr eatment, in contrast with partial 
VAT rebate applied to other expor ted products.  Such policy was cons istent with Article XVI of the 
GATT 1994 and relevant Annexes of the SCM Agreement.  [………………………………………...] 
3. Technical Barriers to Trade 
 [To be completed] 
 
4. Sanitary and Phytosanitary Measures 
158. Sanitary and Phytosanitary Measures Some  members of the Working Party expressed 
concerns in relation to the use by China of sanita ry and phytosanitary ("SPS") procedures as non-tariff 
barriers and raised specific instances where they cons idered that China's measures were not consistent 
with the WTO Agreement on the Application of  Sanitary and Phyto sanitary M easures ("SPS 
Agreement").  These members sought assurances that  China would not use SPS measures to restrict 
trade, that SPS measures would only be imposed to the extent necessary to protect human, animal or 
plant life or health, and that such measures w ould be based fully on scientific principles.  
159. The representative of China stated that pursuan t to the provisions of the SPS Agreement, 
China applied SPS measures only to the extent necess ary to protect the life and health of human 
beings, animals and plants.  He also noted that most of China's SPS measures were equivalent to 
international standards, guidelines and recommenda tions.  China would not apply SPS measures in a 
manner which would act as a disguised restriction on  trade.  In accordance with the SPS Agreement, 
China would ensure that SPS measures would not be maintained without sufficient scientific 
evidence.  The Working Party to ok note of these commitments.  
160. Members expressed the view that China should apply the SPS Agreement from the date of 
China's accession and should ensure  conformity with the SPS Agreemen t of all its laws, regulations  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 41 
 
 
and practices relating to SPS measures.  In response,  the representative of China confirmed that China 
would fully apply the SPS Agreement from the da te of accession and would ensure the conformity 
with the SPS Agreement of all of its laws, regulat ions and practices relating to SPS measures.  The 
Working Party took note of these commitments.  
161. Members of the Working Party noted that China' s notification of laws, regulations and other 
SPS measures, referred to in the Draft Protocol, was provided in document WT/ACC/CHN/33.  
Members of the Working Party agreed that this notif ication did not prejudge the legal status under the 
WTO Agreement of the nature or effects of the no tified laws, regulations and other measures.  The 
representative of China also submitted an ac tion plan for implementation of China's SPS 
commitments, circulated to the Working Party in WT/ACC/CHN/XX.  The action plan outlined the 
steps that China was taking to ensure full implem entation of the SPS Agreement, including revision of 
its laws, regulations and other measures.  
162. The representative of China said that China ha d set up an SPS notification authority and an 
SPS enquiry point which would be notified to the SP S Committee.  Laws, regulations, rules, standards 
and procedures relating to SPS measures, including inspection, had been published in publications 
such as the MOFTEC Gazette.  Information coul d also be gathered from the SPS notification 
authority or from China's SPS enquiry point.  
5. Trade-Related Investment Measures 
163. The representative of China confirmed that upon accession, as set forth in the Draft Protocol, 
China would comply fully with the TRIMs Agreement, without recourse to Article 5 thereof, and would eliminate foreign-exchange balancing an d trade balancing requirements, local content 
requirements and export performance requirements. Chinese authorities would not enforce the terms 
of contracts containing such requirements.  The allocation, permission or rights for importation and 
investment would not be conditional upon performan ce requirements set by national or sub-national 
authorities, or subject to secondary conditions covering, for example, the conduct of research, the provision of offsets or other forms of industrial compensation including specified types or volumes of 
business opportunities, the use of local inputs or the transfer of technology.  Permission to invest, 
import licences, quotas and tariff rate quotas would be granted without regard to the existence of 
competing Chinese domestic suppliers.  The Work ing Party took note of this commitment. 
164. In the context of discussions on the government's  Industrial Policy for the Automotive Sector, 
the representative of China confirmed that this polic y would be amended to en sure compatibility with 
WTO rules and principles.  The Working Party took note of this commitment. WT/ACC/SPEC/CHN/1/Rev.6 
Page 42  
 
165. The representative of China added that amendments would be made to ensure that all 
measures applicable to motor vehicle producers restricting the categories, types or models of vehicle 
permitted for production, would grad ually be lifted.  Such measures would be completely removed 
two years after accession, thus ensuring that motor vehicle producers would be free to choose the categories, types and models they produced.  Howe ver, it was understood that category authorizations 
by the government could continue to distinguish be tween trucks and buses, light commercial vehicles, 
and passenger cars (including multi-purpose vehicles a nd sport utility vehicles).  The Working Party 
took note of this commitment. 
166. The representative of China confirmed that China also agreed to raise the limit within which 
investments in motor vehicle manufacturing could be approved at provincia l government level only, 
from the current level of US$ 30 million, to US$ 60 million one year after accession, US$ 90 million 
two years after accession, and US$ 150 million four years after accession.  The Working Party took 
note of this commitment. 
167. With respect to the manufacture of motor vehi cle engines, the representative of China also 
confirmed that China agreed to  remove the 50% foreign equity limit for joint-ventures upon 
accession.  The Working Party took note of this commitment. 
6. State Trading Entities 
168. Some members of the Working Party expressed concern that the activities of China's state 
trading enterprises were not sufficiently tran sparent and were not in accordance with WTO 
obligations.  The representative of China indicated, ho wever, that China's state trading enterprises had 
full management autonomy and responsibility for th eir own profits and losses and that China had 
undertaken broad and significant commitments to improve the transparency of state trading 
enterprises' operation and the measures relating to such operation.  
169. The same members of the Working Party also st ated that China should ensure that the import 
purchasing practices and procedures of state tradi ng enterprises were fully transparent, and in 
compliance with the requirements of the WTO Agreem ent.  They considered that China should also 
refrain from taking any measure to influence or di rect state trading enterp rises as to the quantity, 
value, or country of origin of goods purchased or  sold, except in accordance with the requirements of 
the WTO Agreement.  Those member s also stated that as part of  China's notification under the 
GATT 1994 and the Understanding on the Interpreta tion of Article XVII of the GATT 1994, China 
should notify information on state trading, including, in the case of state trading of exported goods, 
domestic procurement prices, contract terms fo r delivery and financing terms and conditions.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 43 
 
 
170. In response, the representative of China stat ed that its state trading enterprises had full 
management autonomy and responsibility for their ow n profits and losses.  However, some members 
of the Working Party again stated that China shoul d undertake a commitment to  ensure that all state 
trading enterprises complied with the requirement s of the WTO Agreement.  The representative of 
China noted that a list of products subject to state tr ading had been provided in Annex 2a of the Draft 
Protocol.  He also confirmed that information on state trading enterprises, as required by the Draft 
Protocol, would be supplied, but stated that such  notification should be without prejudice to the 
commercial interests of the state trading enterprises.  
171. Members of the Working Party took note of th e specific arrangements that would apply for 
fertilizers and crude and processed oil.  A key feat ure of those arrangements related to the annual 
allocation of import quantities.  The differences in  the regimes that would apply to those products 
were noted, in particular in regard to the obliga tion on state enterprises trading in fertilizers to carry 
over to the next year any unused import quantities.  
172. Some members of the Working Party requested  assurances that, for oil products, quantities 
reserved for non-state traders would be allocated in such a manner that they would be fully utilized.  
In this respect, the representativ e of China confirmed that imports allocated to non-state traders of 
crude and processed oil, as specified in Annex 2a of the Draft Protocol, would be carried over to the 
next year if they were not fully utilized.  In add ition, the representative of China agreed that China 
would publish, on a quarterly basis, the requests fo r imports that had been made by non-state traders, 
as well as the licences granted, and would supply in formation relevant to such traders upon request.  
The Working Party took no te of these commitments. 
173. Some members of the Working Party noted that  prior to accession, some enterprises in China 
were permitted to import goods for their prod uction purposes, including those goods included in 
Annex 2a.  The representative of China confirmed th at, notwithstanding section 5, paragraph 1, of the 
Draft Protocol, non-state trading enterprises, includi ng private enterprises, would still be permitted to 
import such goods for production purposes and that national treatment would be provided to such 
imports.  The Working Party took note of these commitments.  
174. Some members of the Working Party expressed c oncerns about supplies of raw materials in 
the textiles sector, and particularly in regard to s upplies of silk, in the light of China's position as the 
major world supplier of silk, currently subject to state trading rights concerning exports. 
175. In this regard, the representative of China c onfirmed that China would progressively abolish 
the system of state trading in respect of silk by measures increasing and extending trading rights, with 
the result that China would remove completely the silk products set out in numbers 10 and 11 of WT/ACC/SPEC/CHN/1/Rev.6 
Page 44  
 
Annex 2a-2 to the Draft Protocol (list of products  subject to state trading on exports) and grant the 
right to trade in such products to all individuals  and enterprises no later than 1 January 2005.  Pending 
the implementation of this right, China undertook no t to introduce any changes of a more restrictive 
nature to the existing structures in place for the su pply of silk.  The representative of China further 
confirmed that access to supplies of raw materials in  the textiles sector would remain at conditions no 
less favorable than for domestic users, and gave hi s assurance that access to supplies of raw materials 
as enjoyed under existing arrangements would not be adversely affected following China's accession 
to the WTO.  The Working Party took note of these commitments. 
176. Members of the Working Party noted that dom estic prices for most agricultural commodities 
in China were higher than world prices, and this di fferential allowed China's state trading enterprises 
to import at low prices and then mark up the pr ice when selling the product to wholesalers and 
end-users. Some members expressed concern that th is practice could become more widespread when 
access opportunities were created under TRQs.  Those members were particularly concerned that 
mark-ups could be used to reduce the competitiv eness of imported products and limit the range of 
qualities and grades available to end-users in China.  The representative of China stated that currently 
state trading enterprises did not mark up imported products; instead, they only charged a nominal 
transaction fee.  Consequently, China claimed that its practice was consistent with WTO obligations, 
did not result in any trade-distorting effect, and th at under China's law limits existed on the fees that 
could be charged by state trading enterprises. 
177. The representative of China stated  that China would ensure that no price increase in respect to 
imports, in particular by state trading enterprises, would result in protection beyond that allowed in its 
Schedule of Concessions and Commitments on Goods or  that was not otherwise justified under WTO 
rules.  The Working Party took note of this commitment. 
7. Special Economic Areas 
178. Members of the Working Party noted that th ere was insufficient information available 
concerning special economic areas within China's custom s territory, including border trade regions 
and minority autonomous areas, Special Economic Z ones ("SEZs"), open coastal cities, economic and 
technical development zones and other areas where sp ecial regimes for tariffs, taxes and regulations 
had been established (collectively referred to as "speci al economic areas"), in particular their names, 
geographic boundaries, and relevant laws, regul ations and other measures relating thereto. 
179. In response, the representative of China st ated that since 1979 China had established a 
number of special economic areas where more open po licies were applied.  They included five SEZs, 
14 open coastal cities, six open cities along the Ya ngtze River, 21 provincial capital cities and 13  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 45 
 
 
inland boundary cities.  Those speci al economic areas enjoyed greater  flexibility in utilizing foreign 
capital, introducing foreign technology and conduc ting economic cooperation overseas.  At present, 
foreign investors were entitled to certain preferential treatment.  
180. The representative of China further stated that  FIEs located in SEZs or the Economic and 
Technical Development Zones of open coastal cities were entitled to a corporate income tax rate of 
15% (the normal income tax was 33%).  Profits re mitted abroad by foreign investors were exempted 
from income tax.  The preferential income tax rate of 15% was applicable to technology-intensive or 
knowledge-intensive items or projects with forei gn investment of over US$30 million, as well as 
enterprises that operated in the fields of energy, transport and port construction.   
181. The representative of China noted that throughout the customs territory of China, a socialist 
market economy system was applied.  In 1999, the foreign trade volume of SEZs accounted for nearly 
one fifth of the nation's total.  The national laws and regulations on taxation were applicable to SEZs 
in a uniform manner. 
182. In response to further requests fo r information, the representative of China indicated that there 
was no plan to establish any new SEZs. The special preferential tariff policies applied to SEZs had 
been eliminated. With the development of Chin a's economic reform and opening up, China would 
implement its tariff policy uniformly throughout its customs territory. Members of the Working Party expressed concern that imported products introduced  from these special economic areas into other 
parts of China's customs territory should be subject to the same treatment in the application of all 
taxes, import restrictions and customs duties and other charges as that normally applied to imports 
into the other parts of China's cu stoms territory. The representative of  China stated that China would 
undertake to ensure such non-discriminatory treat ment.  The Working Party took note of this 
commitment. 
183. Some members of the Working Party also ra ised concerns as to whether the assistance 
provided to minority autonomous regions and other areas of economic poverty was consistent with 
WTO requirements.  In response, the representa tive of China confirmed that China had a clear 
commitment to uniform administration of the trade regime within each such area and that, upon accession, China would ensure that such assistan ce would be implemented consistent with WTO 
obligations.  The Working Party t ook note of this commitment. 
184. Some members of the Working Party requested that China take steps to ensure that all 
products imported into the other parts of the cust oms territory of China from special economic areas 
would be subject to the same normal customs du ties and charges as any other product imported into 
the customs territory of China.  In particular , those members requested that China undertake a WT/ACC/SPEC/CHN/1/Rev.6 
Page 46  
 
commitment to apply all taxes, charges and measur es affecting imports, including import restrictions 
and customs and tariff charges, that were normally a pplied to imports into the other parts of China's 
customs territory to all imported products, including physically incorporated components, entering 
China's customs territory from the special economic areas. 
185. The representative of China confirmed that Ch ina would strengthen the uniform enforcement 
of taxes, tariffs and non-tariff measures on trade between its special economic areas and the other 
parts of China's customs territory.  China further confirmed that statistics on trade between China's 
special economic areas and the other parts of its cu stoms territory would be maintained and improved, 
and would be notified to the WTO on a regular b asis.  The Working Party took note of these 
commitments. 
186. Some members of the Working Party requested that China notify the WTO Secretariat of all 
the relevant laws, regula tions and other measures relating to its special economic areas.  They asked 
that the notification list and identify all those speci al economic areas.  Those members also requested 
that China notify the WTO Secretariat promptly, but in any case within 60 days, of any additions or 
modifications to its special economic areas, including  notification of the laws, regulations and other 
measures relating thereto.   
187. The representative of China confirmed that  China would provide information in its 
notifications describing how the special trade, tariff,  and tax regulations app lied were limited to the 
designated special economic areas, including info rmation concerning their enforcement.  The 
Working Party took note of this commitment. 
188. In response to concerns raised by some memb ers of the Working Party, the representative of 
China confirmed that any preferential arrangements provided to enterprises located within the special 
economic areas would be provided on a non-discrimin atory basis.  The Working Party took note of 
this commitment.  
8. Government Procurement 
189. The representative of China stated that in orde r to promote China's government procurement, 
the Ministry of Finance promulgated the Inte rim Regulations on Government Procurement in 
April 1998.  The Interim Regulations were stipulated  in line with the spirit of the WTO Agreement on 
Government Procurement ("GPA") and on the basis of  the relevant provisions of the United Nations 
Model Law on Procurement of Goods , Construction and Services while making reference to the laws 
and regulations of some WTO Members on govern ment procurement. The policy and procedure 
regarding government procurement provided for therei n were consistent with international practice.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 47 
 
 
China stuck to the fundamental principles of being open, fair, equitable, efficient and in the public 
interest when carrying out government procuremen t.  At present, China was formulating the 
Government Procurement Law. 
190. Some members of the Working Party stated that  China should become a Signatory to the GPA 
and that prior to its accession to the GPA, China sh ould conduct all government procurement, within 
the meaning of the Draft Protocol, in a transpar ent and non-discriminatory manner.  Those members 
noted that China's public entities engaged excl usively in commercial activities would not be 
conducting government procurement and thus laws, regulations and other measures regulating these 
entities' procurement practices would be fully subject to WTO requirements. 
191. The representative of China stat ed that China intended to beco me a Signatory to the GPA and 
that until such time, all government  entities at the central and sub- central level would conduct their 
procurement in a transparent manner and provide a ll foreign suppliers with equal opportunity to 
participate in that procurement pursuant to the prin ciple of MFN treatment.  Such procurements would 
be subject only to laws, regulations, judicial decisi ons, administrative rulings of general application, 
and procedures (including standard contract clauses)  which had been published and made available to 
the public.  The Working Party took note of these commitments. 
192. Noting China's intention to become a Signatory  of the GPA, some members of the Working 
Party stated that China should, upon entry into for ce of the Draft Protocol, seek to become an observer 
to the GPA, and should initiate negotiations for membership in the Agreement by tabling an 
Appendix 1 offer within two years of accession.  The representative of China responded that China 
would give serious consideration to this request. 
9. Transit 
193. The representative of China stated that the cu rrent regulation of transit in China, the 
Regulations of the Customs of the People's Republic  of China on the Supervision and Administration 
of Transit Goods, was consistent with Article V of the GATT 1994. 
10. Agricultural Policies 
 [To be completed] 
 
11. Trade in Civil Aircraft 
194. In response to questions from members of th e Working Party, the representative of China 
indicated that China was not in a position to co mmit to joining the Agreement on Trade in Civil 
Aircraft at the present stage. WT/ACC/SPEC/CHN/1/Rev.6 
Page 48  
 
195. The representative of China confirmed that Chin a would not impose any provisions of offsets 
or other forms of industrial compensation when pur chasing civil aircraft, including specified types or 
volumes of business opportunities.  Members of the Working Party took note of this commitment. 
12. Textiles 
196. Some members of the Working Party proposed and the representative of  China accepted that 
the quantitative restrictions maintained by WTO Members on imports of tex tiles and apparel products 
originating in China that were in force on the date prior to the date of the accession of China to the 
WTO should be notified to the Textiles Monitoring Body ("TMB") as being the base levels for the 
purpose of application of Articles 2 and 3 of the WTO Agreement on Textiles and Clothing ("ATC").  
For such WTO Members, the phrase "day prior to  the date of entry into force of the WTO 
Agreement", contained in Article 2.1 of the ATC, s hould be deemed to refer to the day prior to the 
date of accession of China to the WTO.  To th ese base levels, the increase in growth rates provided 
for in Articles 2.13 and 2.14 of the ATC should be applied, as appropriate, from the date of accession 
of China to the WTO.  The Working Party took note of these commitments. 
197. The representative of China agr eed that the following provision s would apply to trade in 
textiles and clothing products until 31 December 20 08 and be part of the terms and conditions for 
China's accession to the WTO: 
 (a) In the event that a WTO Member believed that imports of Chinese origin of textiles 
and apparel products covered by the ATC were , due to market disruption, threatening 
to impede the orderly development of tr ade in these products, such Member could 
request consultations with China with a view to easing or avoiding such market 
disruption.  The Member requesting consultati ons would provide China, at the time of 
the request, with a detailed factual statement of reasons and justifications for its request for consultations with current data  which, in the view of the requesting 
Member, showed:  (1) the existence or threat of market disruption;  and (2) the role of products of Chinese origin in that disruption; 
 (b) Consultations would be held within 30 da ys of receipt of the request.  Every effort 
would be made to reach agreement on a mutually satisfactory solution within 90 days of the receipt of such request, unless extended by mutual agreement; 
 (c) Upon receipt of the request for consultations, China agreed to hold its shipments to 
the requesting Member of textile or textile  products in the category or categories 
subject to these consultations to a level no greater than 7.5 per cent (6 per cent for  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 49 
 
 
wool product categories) above the amount entered during the first 12 months of the 
most recent 14 months preceding the month in which the request for consultations 
was made; 
 (d) If no mutually satisfactory solution we re reached during the 90-day consultation 
period, consultations would continue and the Member re questing consultations could 
continue the limits under subparagraph (c) for textiles or textile products in the 
category or categories subject to these consultations; 
 (e) The term of any restraint limit establis hed under subparagraph (d) would be effective 
for the period beginning on the date of th e request for consultations and ending on 
31 December of the year in which consultations were requested, or where three or fewer months remained in the year at the ti me of the request for consultations, for the 
period ending 12 months after the request for consultations; 
 (f) No action taken under this provision would re main in effect beyond one year, without 
reapplication, unless otherwise agreed between the Member concerned and China. 
The Working Party took no te of these commitments. 
13. Measures Maintained Against China 
198. The representative of China stated that WTO Members should eliminate all discriminatory 
non-tariff measures maintained against Chinese expor ts from the date of China's accession to the 
WTO.  In response, some members of the Working Pa rty stated that, in their view, such measures did 
not need to be phased out until such time as Chin a's foreign trade regime fully conformed to WTO 
obligations. 
199. In light of the above, it was agreed that any prohibitions, quantitative restrictions or other 
measures maintained against imports from China in  a manner inconsistent with the WTO Agreement 
would be listed in Annex 8 to the Draft Protocol.  It was further agreed that all such measures would 
be phased out or otherwise dealt with in accordan ce with mutually agreed terms and timetables as 
specified in said annex. 
14. Transitional Safeguards 
 [To be completed] 
 
15. Transitional Review Mechanism 
 [To be completed] 
 WT/ACC/SPEC/CHN/1/Rev.6 
Page 50  
 
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME 
A. GENERAL 
1. Overview 
200. The representative of China stated that China ha d made the protection of intellectual property 
rights an essential component of its reform and ope ning-up policy and socialis t legal construction.  
The formulation of laws and regulations in this fi eld could be traced back to the late 1970s.  Since 
then, China had joined relevant international co nventions and had actively participated in the 
activities sponsored by relevant international orga nizations.  It had intensified its exchanges and 
cooperation with countries throughout the world in the field of IPR protection.  As a result, 
notwithstanding the initial stage of its development, China's IPR protection system aimed at achieving world dimension and world standards.  Lists of administrative rules concerning intellectual property 
rights currently in force in Ch ina are presented in Table A. 
201. The representative of China stated that for accession to the WTO and compliance with the 
TRIPS Agreement, further amendments had been made  to the Patent Law.  The amendments to the 
Copyright Law and the Trademark Law, as well as relevant implementing rules covering different 
areas of the TRIPS Agreement, would also be acco mplished upon China's accession to the WTO.  The 
representative of China stated that laws adopted by the National People's Congress and administrative 
regulations, including implementing rules, issued by the State Council were applied and enforced by 
the people's courts. The Working Party took note of this commitment.  The status of ongoing reforms 
and other relevant information is presented in Table B. 
2. Responsible agencies for policy formulation and implementation 
202. The representative of China said that, at present, different agencies were responsible for IPR 
policy formulation and implementation.  The St ate Intellectual Property Office (SIPO) was 
responsible for patent approval; the Trademarks Office under the State Administration for Industry 
and Commerce (SAIC) was responsible for tradem arks registration; the Copyright Office was 
responsible for copyright policy making; SAIC was responsible for anti-unfair competition, including 
the protection of trade secrets; the State Drug Administration (SDA) was responsible for administrative protection of pharmaceuticals; the General Customs Administration was responsible 
for border measures;  the Ministry of Agriculture  and the State Administration of Forestry were 
responsible for protection of plant varieties;  the Ministry of Information Industry was responsible for 
the protection of layout designs of integrated circ uits;  the State Bureau of Quality and Technical 
Supervision and SAIC were res ponsible for combating counterfeiting activities.  Other agencies like  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 51 
 
 
the agency for press and publications, the people's courts and police were also involved in the 
protection of IPR in China. 
3. Participation in international intellectual property agreements 
203. The representative of China said that China b ecame a member of the World Intellectual 
Property Organization in 1980; in 1985, China be came a member of the Paris Convention for the 
Protection of Industrial Property; China was one of the first countries that signed the Treaty on 
Intellectual Property in Respect of Integrated Ci rcuits, the negotiation of which was concluded in 
1989; in 1989, China became a member of the Ma drid Agreement Concerning the International 
Registration of Marks; in 1992, China became a me mber of the Berne Convention for the Protection 
of Literary and Artistic Works;  in 1993, China became a member of the Convention for the 
Protection of Producers of Phonograms Against Unaut horized Duplication of Their Phonograms;  in 
1994, China became a member of  the Patent Coope ration Treaty;  in 1994, China became a member 
of the Nice Agreement Concerning the Internationa l Classification of Goods and Services for the 
Purposes of the Registration of Marks;  in 1995, China became a member of the Budapest Treaty on 
the International Recognition of the Deposit of Microor ganisms for the Purposes of Patent Procedure.  
In 1995, China applied for membership in the Pr otocols of the Madrid Agreement Concerning the 
International Registration of Marks; in 1996, Ch ina became a member of the Locarno Agreement on 
Establishing an International Classification for Indu strial Designs; and in 1997, China became a 
member of the Strasbourg Agreement Concerning the International Patent Classification.  Besides the 
above efforts, China participated in the TRI PS negotiations during the Uruguay Round and initialled 
the Final Act. 
4. Application of national and MFN treatment to foreign nationals 
204. Some members of the Working Party expressed concern that certain provisions of China's 
copyright and trademark laws, as well as China's Ru les on Banning the Infringement of Business 
Secrets (23 November 1995) did not provide national treatment to foreign right-holders.  The Rules 
on Banning Infringements of Business Secrets, for exampl e, defined the "owner" of a trade secret as a 
"citizen, corporation, and other organization" and did not explicitly provide protection for foreign 
individuals or organizations.  Some members of the Working Party further stated that national 
treatment should be fully applied, so that copy right enforcement action by local copyright bureaux 
involving foreign right-holders, would no longer require clearance by the National Copyright 
Administration in Beijing.   
205. The representative of China responded that Ch ina's IPR laws provided that any foreigner 
would be treated in accordance with any agreement concluded between the foreign country and China, WT/ACC/SPEC/CHN/1/Rev.6 
Page 52  
 
or in accordance with any international treaty to wh ich both countries were party, or on the basis of 
the principle of reciprocity.  The representative of  China further confirmed that China would modify 
relevant laws, regulations and other measures so as to ensure national and MFN treatment to foreign 
right-holders regarding all intellectual property righ ts across the board in compliance with the TRIPS 
Agreement.  This would include adjustments of th e clearance requirement mentioned in the previous 
paragraph to ensure national treatment.  The Working Party took note of these commitments. 
B. SUBSTANTIVE
 STANDARDS  OF PROTECTION,  INCLUDING  PROCEDURES  FOR  THE  
ACQUISITION  AND  MAINTENANCE  OF INTELLECTUAL  PROPERTY  RIGHTS 
1. Copyright protection 
206. The representative of China said that the C opyright Law was promulgated in 1990, which 
established the basic copyright protection system in  China together with the Implementing Rules of 
the Copyright Law (30 May 1991), the Provision s on the Implementation of the International 
Copyright Treaty (25 September 1992) and other relate d laws and regulations.  In principle, this 
system was in compliance with the international IPR treaties and practices.  For the protection of 
copyright and neighbouring rights, not only civil and criminal liabilities but also administrative 
liabilities, were provided for in this system, hence the infringing activities coul d be curbed in a timely 
and effective manner and the legitimate rights of the right-holders could be protected. 
207. Some members of the Working Party expressed concerns about the consistency of China's 
current law on the protection of copyright and relate d rights with the TRIPS Agreement.  In particular, 
members noted the need to clarify the rights of  performers and producers to bring them into 
conformity with the requirements of Article 14 of the TRIPS Agreement.  In  addition, improvements 
were needed with respect to enforcement of copy right to provide expressly for provisional measures 
to preserve evidence, including documentary evid ence and for remedies sufficient to deter further 
infringements. 
208. The representative of China responded that, realizing that there were some existing 
differences between China's copyright laws and the TRIPS Agreement, the amendment to the 
Copyright Law had been accelerated at present.  The amendment would soon be submitted to the 
Standing Committee of the National People's Congress.  The proposed amendments would clarify the 
payment system by broadcasting organizations whic h use the recording products and also include the 
following provisions: rental rights in respect of computer programs and movies, mechanical performance rights, rights of communication to the public and related protection measures, protection 
of database compilation, provisional measures, increasing the legitimate compensation amount and 
strengthening the measures against infringing activ ities.  China's copyright regime including the 
Implementing Rules of the Copyright Law and the Provisions on the Implementation of the  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 53 
 
 
International Copyright Treaty would be amended so as to ensure full consistency with China's 
obligations under the TRIPS Agreement.  The Working Party took note of these commitments. 
2. Trademarks, including service marks 
209. The representative of China stated that the Tr ademark Law, its implementing rules and other 
relevant laws, administrative regula tions and department rules const ituted the existing trademark legal 
system in China.  The objective of these laws was to  provide protection to righ t-holders in line with 
the international conventions a nd prevailing practices regarding intellectual property rights, which 
was embodied both in the regulations on the substa nce and procedures for trademark registration and 
in the protection of trademark exclusive right.  In order to protect the trademark exclusive right, 
China's Trademark Law contained not only civil and criminal liabilities but also administrative 
punishment against trademark infringers.  This "dou ble-track system" of the protection of trademark 
exclusive right could prevent trademark infringeme nts in a timely and effective manner and protect 
the legitimate rights and interests of the holders of trademark exclusive rights, which had been 
appreciated by various parties.  In recent years, China's judicial and administrative bodies had stepped 
up their efforts to protect trademark exclusive rights within their respective authorization.  They had 
settled a great deal of cases that were influential,  domestically and abroad, which provide adequate 
protection to the legitimate rights and interests of both Chinese and foreign holders of trademark 
exclusive right, thus receiving a positive respon se from domestic and foreign right-holders. 
210. Some members of the Working Party reiterated concerns about whether certain provisions of 
China's Trademark Law provided national treatment to  foreign trademark owners.  They noted that 
China's law required foreign trademark owners to  use designated trademark agents, while Chinese 
nationals were permitted to file directly with China's Trademarks  Office.  Members also noted that 
China's Trademark Law did not consider certain si gns as eligible for protection as required under the 
TRIPS Agreement.  These included names, letters, numerals and colours capable of distinguishing 
goods and services.  In addition, if registrability of a trademark depends on use, China's Trademark Law should provide that a non-distinctive mark c ould qualify for registration when it has acquired 
distinctiveness based on use.  Memb ers also noted that it was not clear under China's law that actual 
use of a mark was not required before a party could file to register a mark.   
211. Some members of the Working Party also rai sed concerns about the protection of well-known 
trademarks in China, in particular those not register ed in China.  China's laws and regulations did not 
specifically state the criteria for determining wh ether a mark was well-known and therefore members 
could not determine if it conformed to the require ments of Article 16 of the TRIPS Agreement.  
Moreover, while China had provided protection to "well-known trademarks" owned by Chinese 
nationals, such protection had, as yet, not been gran ted to the well-known trad emarks of foreigners.  WT/ACC/SPEC/CHN/1/Rev.6 
Page 54  
 
Members also noted that certain provisions of Ch ina's trademark law needed to be extended to 
unregistered well-known trademarks.   
212. The representative of China stated that with th e development of China's market economy and 
the further implementation of the TRIPS Agreement,  China's legislative and law-enforcing bodies had 
also realized that their existing Trademark Law fe ll somewhat short of fulfilling the requirements of 
the TRIPS Agreement and the Paris Convention in a few aspects and were therefore preparing to 
amend the existing Trademark Law to fully meet  the requirements of the TRIPS Agreement.  
Modifications would mainly be made to the following  aspects: to include the trademark registration of 
three-dimensional symbols, combination of colour s, alphabets and figures; to add the content of 
collective trademark and certificate trademark (i ncluding geographical indications); to introduce 
official symbol protection; to protect well-known tr ademarks; to include priority right; to modify 
existing trademark right confirmation system and offe r the interested party opportunity for judicial 
review concerning the confirmation of trademark righ t;  to crack down all serious infringements;  and 
to improve the system of compensation.  The Working Party took note of these commitments. 
3. Geographical indications, including appellations of origin 
213. The representative of China said that the releva nt rules by SAIC and the State Bureau of 
Quality and Technical Supervision partly provid ed protection for the geographical indications 
including appellations of origin and that the amen dment to the Trademark Law would have a specific 
provision on the protection of geographical indications. 
214. The members of the Working Party took note of the progress achieved on geographical 
indications and reiterated the importance for the Ch inese legislation to comply with the obligations 
under the TRIPS Agreement (Articles 22, 23 and 24) .  The representative of China shared this 
assessment and reiterated China's intention to full y comply with relevant articles in the TRIPS 
Agreement on geographical indications. The Work ing Party took note of this commitment. 
4. Industrial designs 
215. Some members of the Working Party noted that the industrial design provisions of China's 
Patent Law appeared to implemen t substantial portions of the TRIP S Agreement requirements relating 
to industrial designs.  One notable exception was the area of textile designs.  These members noted 
that designs of WTO Members could be protected  under China's Provisions on the Implementation of 
the International Copyright Treaty as works of applie d art.  Members urged China to incorporate this 
protection into its law and to provide su ch protection to domestic textile designs.  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 55 
 
 
5. Patents 
216. The representative of China said that in prep aration for the accession to the WTO, China 
revised its Patent Law in 1992 for the first time.  China had taken measures to enhance consistency 
with the TRIPS Agreement in terms of major provisions  and protection standards.  In order to increase 
the awareness of the general public on IPR protection,  and patent protection in particular, and to be 
consistent with the TRIPS Agreement and to build  up a sound social environment for the promotion 
and commercialization of inventions, the Nationa l People's Congress approved the second revision of 
the Patent Law on 25 August 2000.  The revised Pate nt Law, which would take effect on 1 July 2001, 
included the following elements: (1) Patent owners  would have the right to prevent others from 
offering for sale the patented product without its consent (Article 11);  (2) For utility model and 
design applications or patents, the final decision of  re-examination and invalid ation would be made by 
the people's courts other than the inventions that  were already covered (Articles 41 and 46);  (3) 
Patent owners could, before instituting legal proceedings, requ est the people's court to take 
provisional measures such as to order the suspension of infringing acts and to provide property 
preservation (Article 61);  (4) Conditions for grantin g compulsory license would be further clarified 
and made consistent with the TRIPS Agreement. 
217. Since its establishment, SIPO had paid great attention to strengthen its contact and 
coordination with relevant departme nts and ministries in the field of IPR law enforcement, especially 
in the areas of settling inter-agency problems and resolving key cases.  At the same time, SIPO had 
taken appropriate measures to improve the performance of local pate nt authorities in law enforcement.  
For example, in June 1999, SIPO convened a nati onwide working conference, which was attended by 
representatives from local patent administrative aut horities.  The participants summarized their law 
enforcement practices over the previous two years an d also exchanged their experiences in their local 
legislative works with a view to intensifying pate nt protection.  The conference also called for the 
introduction of important patent case s reporting and recording system. 
218. The representative of China stated that so far as the range of patent protection and protection 
for new plant varieties were concerned, China had already met the requirements of Article 27 of the 
TRIPS Agreement.  When amending the Patent Law in 1992, China modified Article 25 therein with 
reference to relevant stipulations  in the final text of the TRIPS Agreement and expanded the coverage 
of patent protection to food, beverage, flavourings, pharmaceuti cals and materials obtained by 
chemical methods.  The scope of patent exclusions  would be limited to "scientific discoveries, rules 
and methods of intellectual activ ities, diagnostic and therapeutic methods for the treatment of 
diseases, animals and plant varieties, as well as materials obtained by the change of nucleus". WT/ACC/SPEC/CHN/1/Rev.6 
Page 56  
 
219. He further stated that Article 5 of China's Pate nt Law stipulated that inventions that violate 
laws of China or social morality or prejudice public interest would not be entitled to patent right.  
Therefore, literally, there was a difference between Article 5 of China's Patent Law and the TRIPS 
Agreement.  However, in practice, during the revi ew of patent applications, the interpretation of 
"violating laws of China" had been restricted to "if laws of China prohibit the sale of a certain 
patented product, or prohibit the sale of products ma nufactured by a patented method, the granting of 
patent right cannot be denied to this product i nvention or this invention of product manufacturing 
method by relying on Article 5 of the Patent Law".  Hence, in essence, he concluded that there was no 
difference between Article 5 of the Patent Law as applied and the TRIPS Agreement.  Nonetheless, 
China would amend the Implementing Rules of the Pate nt Law to ensure that this provision would be 
implemented in full compliance with Article 27.2 of the TRIPS Agreement, which stipulated that: 
"Members may exclude from patentability inventions , the prevention within their territory of the 
commercial exploitation of which is necessary to protect ordre public  or morality, including to protect 
human, animal or plant life or health or to  avoid serious prejudice to the environment, provided that 
such exclusion is not made merely because th e exploitation is prohibited by their law ".  The 
Working Party took note of this commitment. 
220. Regarding Article 28 of the TRIPS Agreement (rights conferred), the representative of China 
stated that China's Patent Law had fully complie d with the requirements of the TRIPS Agreement 
because of the following reasons.  First, in the 1992 amendment to the Patent Law, Article 11 was 
modified as follows: "any entity or individual is, without prior licensing from the patentee, prohibited 
from making, using or selling patented products or  patented processes, or using or selling products 
directly obtained by the patented processes for the purpose of production and operation".  It was also 
prohibited for any entity or individual to import pate nted products or products directly obtained by 
patented processes for the purpose of production a nd operation.  This mo dification expanded the 
scope of patentees' right, namely the new content of  "the right to prohibit import" and "the effect of 
patented processes is extended to pr oducts directly obtained by pate nted processes".  Second, in 2000, 
when the second amendment was made to the Patent  Law, Article 11 was once again modified. A new 
stipulation was introduced granting patentees the ri ght to prohibit others from offering for sale the 
patented products or products directly obtained by patented processes without the consent of 
patentees.  Therefore, so far as "the right of pa tentees" is concerned, China's Patent Law had fully 
accommodated the requirements of the TRIPS Agreement. 
221. Further to the 1992 amendment, China's Pate nt Law provided for compulsory licenses based 
on reasonable terms, on public inter est and for dependent patents.  With regard to the conditions of 
compulsory licenses for dependent patents, the Patent  Law provided that the latter invention should be 
technically more advanced than the earlier one.  The TRIPS Agreement provides that "the invention  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 57 
 
 
claimed in the second patent shall involve an impor tant technical advance of considerable economic 
significance in relation to the invention claimed in the first patent" (Article 31(l)(i)).  Since the 
provisions of the TRIPS Agreement were more tr ansparent and easier to operate, the relevant 
expressions contained in the TRIPS Agreement were adopted in the new revision.  In addition, the 
following restrictive conditions for granting compul sory licenses contained in the Implementing Rules 
of the Patent Law of 1992 had been moved into the Pa tent Law in order to make it more authoritative: 
the decision of SIPO on the granting of a compulso ry license for exploitation would be limited in 
terms of its scope and duration; when the circumstances which led to such compulsory license ceased 
to exist and were unlikely to recur, SIPO, upon th e request of the patentee, could terminate the 
compulsory license after examination;  were inco rporated into the Law (former Article 68 of the 
Implementing Rules of the Patent Law of 1992 had now been moved into Article 51 of the revised 
Patent Law). 
222. The representative of China stated that follo wing the 1992 amendment, the regulations on 
compulsory licensing in China's Patent Law and its implementing rules, as a whole, had fulfilled the 
requirements of the TRIPS Agreement.  However,  some wording and expressions in the Chinese 
regulations were still not identical to the TRI PS Agreement and these regulations still needed 
improvement in respect of the administrative lega l proceedings concerning compulsory licensing.  
Therefore, in the second amendment to the Pate nt Law in 2000, the corresponding amendments and 
modifications to the stipulations on compulsory licensing were mainly made in the following two 
points: (1) Article 53 of the Patent Law was modified  from "a patented invention or utility model is 
technically more advanced  than the inventions or utility mode ls which have obtained patent right 
earlier" into "a later invention or utility model is an important technical progress with striking 
economic significance  as compared to the earlier invention or utility model"; and (2) having been 
subject to appropriate adjustments,  the regulations on the time, scope  and termination of compulsory 
licensing enforcement in Article 68 of the Implem enting Rules of the Patent Law of 1992 were 
integrated into Article 52 of the amended Patent  Law.  Following the above-mentioned amendments, 
China's Patent Law had regulations on compulso ry licensing with clearer structure and improved 
content.  In the representative of China's view, these regulations were fully consistent with the TRIPS 
Agreement.  He also added that up to now China had not issued any compulsory licensing for patent 
enforcement. 
223. Some members of the Working Parity noted the improvements in the provisions regarding 
compulsory licensing for patents that the representa tive of China cited.  Some members however, 
requested clarification of the subject matter that w ould be subject to compulsory licensing under the 
Patent Law.   WT/ACC/SPEC/CHN/1/Rev.6 
Page 58  
 
224. In response, the representative of China agreed that still not all the requirements of Article 31 
of the TRIPS Agreement had been incorporated into  Chinese law, and that Implementing Rules of the 
Patent Law would therefore be modified so as to ensu re that: (1) use without authorization of the right 
holder would only be permitted if, prior to such use,  the proposed user had made efforts to obtain 
authorization from the right-holder on reasonable commercial  terms and conditions (Article 31(b)), 
(2) the right-holder would be paid adequate remuneration in the circumstances of each case , 
taking into account the economic value  of the authorization (Article 31(h)); (3) any such use would 
be authorized  predominantly for the supply of the domestic market  (Article 31(f)); and (4) in the 
case of semi-conductor technology, the scope and dura tion of such use would only be for public non-
commercial use or to remedy a practice determined after judicial or administrative process to be anti-
competitive (Article 31(c)). The Working Party took note of these commitments. 
225. Regarding Article 32 of the TRIPS Agreement (revocation/forfeiture), the representative of 
China stated that in light of Articles 41 and 46 of  the amended Patent Law, patent applicants or 
patentees of inventions, as well as applicable util ity models and designs, could institute legal 
proceedings in the people's court if they were not satisfied with the review or nullity decisions made 
by the Patent Review Board.  This modification en abled China's Patent Law to be fully consistent 
with TRIPS regarding administrative decisions which were subject to judicial review.   
226. On the duration of patent right protection, the representative of China stated that as early as 
1992 when China made an initial amendment to the Pa tent Law, Article 45 (later converted into 
Article 42 after the second amendment) was modified as: "the duration of inventi ons patent right is 20 
years and the duration of patent right for applicable  utility model and designs is 10 years, counted as 
of the date of application".  Therefore, Chin a's Patent Law had for a long time accorded with 
Articles 26 and 33 of the TRIPS Agreement concerning the duration of patent rights. 
227. Regarding Article 34 of the TRIPS Agreemen t (process patents: burden of proof), the 
representative of China stated that China's Patent Law was modified in 1992 and 2000, and was now 
in full conformity with the TRIPS Agreement.  Th e amended paragraph 2 of Article 57 reads: "when 
any infringement dispute relates to a process patent  for the manufacture of a new product, any entity 
or individual manufacturing the identical product sha ll furnish proof to the effect that a different 
process is used in the manufacture of its or his product". 
6. Plant variety protection 
228. The representative of China confirmed that China was a party to the 1978 text of the UPOV 
Convention on the Protection of Plant Varieties.  In March 1997, the State Council formulated and promulgated the Regulation on the Protection of New Plant Varieties, thus offering protection for new  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 59 
 
 
plant varieties in a  sui generis form consistent with the requirement s of the TRIPS Agreement.  [Brief 
explanation of the Regulation.] 
7. Layout designs of integrated circuits 
229. The representative of China said that China was one  of the first countries to sign the Treaty on 
Intellectual Property in Respect of Integrated Circu its in 1989.  The specific draft Regulation on the 
Protection of Layout Designs of Integrated Circu it, which would comply with China's obligations 
under Section 6 of the TRIPS Agreement, was being prepared and was expected to be accomplished 
upon China's accession. [Brief explanation of the Regula tion.]  The representative of China stated that 
China was strengthening the protection of the layout  designs to support the rapid development of the 
software industry. 
8. Requirements on undisclosed information, including trade secrets and test data 
230. Some members of the Working Party expressed  concern about China's protection against 
unfair commercial use and disclosure of undisclosed test and other data submitted to authorities in 
China to obtain marketing approval for pharmaceuticals and agricultural chemicals.  They noted that 
China's laws appeared to prohib it the release of information by government officials but did not 
include provisions regarding the prevention of unfair commercial use, as required under Article 39.3 
of the TRIPS Agreement.  Some members requested  that China specifically provide in its law and 
regulations that it would protect against unfair co mmercial use of undisclosed test or other data 
submitted in support of applications for marketin g approval of pharmaceutical or of agricultural 
chemical products which utilize new chemical entiti es, by providing that no person other than the 
person that submitted such data may, without th e permission of the person initially submitting the 
data, rely on such data in support of an applicati on for product approval for a period of at least six  
years from the date on which marketing approval to  the person that submitted the data had been 
granted. 
231. The representative of China said that Article 10 of the Anti-unfair Competition Law provided 
that a business operator must not infringe upon trade secr ets.  Under the same Article, obtaining, using 
or disclosing another's trade secrets by a third part y who clearly knew or ought  to have known that the 
case fell under the unlawful acts listed in the pr eceding paragraph was deemed infringement upon 
trade secrets.  Trade secrets referred to any technol ogy information or business operation information 
which was unknown to the public, could bring about ec onomic benefits to the obligee, had practical 
utility and about which the obligee had adopted secret -keeping measures.  He also stated that 
Article 219 of the Criminal Law had similar definitions on trade secrets. WT/ACC/SPEC/CHN/1/Rev.6 
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232. The representative of China further confirme d that China would, in compliance with 
Article 39.3 of the TRIPS Agreement, provide effe ctive protection against unfair commercial use of 
undisclosed test or other data submitted to authori ties in China as required in support of applications 
for marketing approval of pharmaceutical or of agricultural chemical pr oducts which utilized new 
chemical entities, except where the disclosure of such data was necessary to protect the public, or 
where steps were taken to ensure that the data are protected against unfair commercial use.  This 
protection would include introduction and enactment of  laws and regulations to make sure that no 
person, other than the person who submitted such data, could, wit hout the permission of the person 
who submitted the data, rely on such data in supp ort of an application for product approval for a 
period of at least six years from the date on whic h China granted marketing approval to the person 
submitting the data.  During this period, any second applicant for market authorization would only be 
granted market authorization if he submits his own da ta.   This protection of data would be available 
to all pharmaceutical and agricultural products wh ich utilize new chemical entities, irrespective of 
whether they were patent-protected or not.  The Working Party took note of these commitments. 
C. MEASURES
 TO CONTROL  ABUSE  OF INTELLECTUAL  PROPERTY  RIGHTS 
233. The representative of China said that there were provisions relating to compulsory licenses in 
the Patent Law to prevent abuse of patent right.  He  also stated that the Trademark Law provided that 
the trademark registrant may, by concluding a trad emark licensing contract, authorize another person 
to use its registered trademark.  The licensor would supervise the quality of the goods on which the 
licensee used the licensor's regist ered trademark and the licensee would guarantee the quality of the 
goods on which the registered trademark was to be used. 
234. Some members of the Working Party expressed some concerns as to the compatibility of 
China's rules on control of anti-competitive licen sing practices or conditions with the corresponding 
obligations under Article 40 of the TRIPS Agreement.   The representative of China stated in response 
that China's legislation would comply with th ese obligations, notably as to the request for 
consultations with other Members.  He stated th at these rules would apply across the board to all 
intellectual property rights. The Working Party took note of this commitment. 
D. ENFORCEMENT 
1. General 
235. Some members of the Working Party expressed c oncern that there was a continued need for 
additional enforcement efforts by the Government of China.  They also said that China should 
strengthen the legislative framework for the enforcem ent of intellectual property rights for all right-
holders.  The representative of China stated that wh ere an infringement of intellectual property rights  WT/ACC/SPEC/CHN/1/Rev.6 
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was found in China, the person concerned could bri ng a lawsuit to a court.  Since 1992, special IPR 
courts have been set up in major cities such as Be ijing and Shanghai on the basis of their specialized 
collegial panels.  According to China's legisla tion, individuals and enterprises would be held 
responsible for all their IPR infringing activities and s ubject to civil and/or criminal liabilities.  Where 
any person [passed off] the IPR of another person and the circumstances were serious, the person 
directly responsible would be prosecuted for his crim inal liability by applying relevant provisions of 
the Criminal Law.  If found guilty, the person direc tly responsible could be sentenced to a fixed-term 
imprisonment of no more than seven years or be subject to detention or a fine. 
236. Some members of the Working Party further urged China to ensure the vigorous application 
by Chinese authorities of the enforcement legislation in order to considerably reduce the existing high 
levels of copyright piracy and trademark count erfeiting.  Action should include the closure of 
manufacturing facilities as well as markets and retail s hops that had been the object of administrative 
convictions for infringing activities.  The representati ve of China stated that the measures for cracking 
down on intellectual property piracy were always severe  in China.  In judicial aspects, courts at all 
levels were continuously paying attention to the trial of IPR cases.  As for administration aspects, the 
administrative authorities at all levels were putti ng emphasis on strengthening anti-piracy work.  In 
addition, the administrative authorities were also e nhancing the legal publication and education to the 
general public in a bid to ensure the legal envi ronment of China to meet the requirements for 
enforcing the TRIPS Agreement.  The Wo rking Party took note of these commitments . 
2. Civil judicial procedures and remedies 
237. Some members of the Working Party expressed c oncern about certain practices relating to the 
filing of civil judicial actions that made it diffi cult for intellectual property right-holders to pursue 
their rights in China's courts.  China's system  of basing filing fees on the amount of damages 
requested makes large-scale infringement actions  unnecessarily costly.  Members also expressed 
concern  regarding the calculation of damages base d on the infringer's profits.  This, combined with 
China's rules on establishing the level of profits which require evidence of actual sale and which 
disregard inventory and past activity, often resulte d in damage amounts inadequate to compensate for 
the injury that the right-holder has suffered.   
238. The representative of China stat ed that Article 118 of the General Principles of the Civil Law 
provided that if the rights of authorship (copyrights), patent rights, rights on exclusive use of 
trademarks, rights of discovery, rights of invention or rights for scientific and technological research 
achievements of citizens or juridical persons we re infringed upon by such means as plagiarism, 
alteration or imitation, they had the right to demand that the infringement be stopped, its ill effects be WT/ACC/SPEC/CHN/1/Rev.6 
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eliminated and the damages be compensated for.  He further stated that the Trademark Law, the 
Patent Law and the Copyright Law had similar provisions. 
239. The representative of China further confirmed that, Articles 42 and 43 of the TRIPS 
Agreement would be effectively implemented under the judicial rules of civil procedure.  The 
Working Party took note of this commitment. 
240. The representative of China confirmed that the relevant implementing rules would be 
amended to ensure full compliance with Articles 45 and 46 of the TRIPS Agreement, to the effect that 
damages paid by the infringer to the right-holder would be adequate to compensate for the injury 
suffered because of an infringement of that person' s intellectual property right by an infringer who 
knowingly, or with reasonable grounds to know, enga ged in infringing activity.  The Working Party 
took note of this commitment. 
3. Provisional measures 
241. Members of the Working Party noted that th e TRIPS Agreement required that judicial 
authorities have the authority to order prompt a nd effective provisional measures to (1) prevent an 
infringement of intellectual property from occurring, in particular to prevent the distribution or sale of 
infringing goods, and (2) to preserve the evidence of alleged infringement. 
242. The representative of China stated that in Chin a's Civil Procedure Law there were provisions 
on property preservation, but as yet no explicit sti pulations had been provided to authorize the 
people's court to take measures for the prevention of infringements prior to formal institution of a 
lawsuit by a party involved.  In order to enhance the deterrent power of law against infringements and 
to guarantee that the legitimate rights and inter ests of patentees would not suffer from irreparable 
harm as well as to comply with the TRIPS Agreemen t, China, when amending the Patent Law for the 
second time in 2000, introduced Article 61 to re gulate provisional measures, which provided as 
follows: "where a patentee or any interested part y who can provide any reasonable evidence that his 
right is being infringed or that such infringement is imminent, and any delay to stop the acts is likely 
to cause irreparable harm to his or its legitimate right s and interests, he or it may, before instituting 
legal proceedings, request the people's court to or der the suspension of related acts and to provide 
property preservation". 
243. Some Members of the working party expressed concern that Article 61 of the Patent Law did 
not fully incorporate all requirements of Article 44 of the TRIPS Agreement, and that it was still 
unclear whether holders of intellectual property ri ghts other than patents could rely on a similar 
procedure.  WT/ACC/SPEC/CHN/1/Rev.6 
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244. The representative of China stated that Article 61 of the Patent Law would be implemented in 
a way fully consistent with Article 50.1-4 of the TR IPS Agreement.  He also stated that "reasonable 
evidence" in Article 61 of the Patent Law would be, through implementing rules, clarified to mean 
"any reasonably available evidence in order to satis fy with sufficient degree of certainty that the 
applicant is the right-holder and that the applicant' s right is being infringed or that such infringement 
is imminent, and to order the applicant to provide  a security or equivalent assurance sufficient to 
protect the defendant and to prevent abuse". Th e Working Party took note of this commitment. 
4. Administrative procedures and remedies 
245. Members of the Working Party noted that most IPR enforcement in China was done through 
administrative actions.  In this connection, some  members expressed concern about the inadequate 
levels of administrative sanctions in China which,  when coupled with the high threshold for initiating 
criminal prosecutions, made IPR enforcement in Chin a difficult.  Administrative sanctions generally 
amounted to small fines and the loss of infringing i nventory.  Members also stressed the need for 
administrative authorities to refer more cases, includi ng those involving repeat offenders and willful 
piracy and counterfeiting, to the appropriate authorities for initiation of criminal actions. 
246. The representative of China said that the Tradem ark Law provided that in the event of any 
infringement of the right to the exclusive use of a re gistered trademark, the infringed could request the 
administrative department for industry and commerce at or above the county level for disposition.  
The relevant administrative department for indus try and commerce had the power to order the 
infringer to stop the infringing act immediately and to  compensate the infringed for its or his losses.  
SAIC and its local agencies above the county level could also impose a fine upon the infringer.  The 
Patent Law provided that the patentee and interested party could request the administrative authority 
for patent affairs to handle the infringing act.  The administrative authority could order the infringer to 
stop the infringing act immediately and mediate on dama ges at the request of the parties concerned.  
The Copyright Law provided that anyone who comm itted acts of infringement were subjected by the 
copyright administration department to such administrative penalties as confiscation of unlawful 
income from the act or imposition of a fine. 
247. The representative of China stated that most IPR enforcement actions in China resulted in 
administrative measures to address the infringement.  He noted ongoing efforts to strengthen the 
sanctions that were available to administrativ e authorities and the increased attention given to 
enforcement of IPRs.  The representative of China confirmed that the government would continue to 
enhance its enforcement efforts, including through the application of more effective administrative 
sanctions.  Relevant agencies, including the St ate Administration for Industry and Commerce, the 
State Bureau of Quality and Technical Supervision and the Copyright Office, now had the authority to WT/ACC/SPEC/CHN/1/Rev.6 
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confiscate equipment used for making counterfe it and pirated products and other evidence of 
infringement.  These relevant agencies would be enc ouraged to exercise their authority to seize and 
preserve evidence of infringement such as inventory and documents.  Administrative authorities 
would have the authority to impose sufficient sanct ions to prevent or deter further infringement and 
would be encouraged to exercise that authority.  Appropriate cases, including those involving repeat 
offenders and willful piracy and counterfeiting, would be referred to relevant authorities for 
prosecution under the criminal law provisions.  The Working Party took note of these commitments. 
5. Special border measures 
248. The representative of China said that on 5 July 1995 the State Council of the People's 
Republic of China had issued a special legislati on in respect of border measures of intellectual 
property rights – the Regulations of the People's Re public of China Governing Customs Protection of 
Intellectual Property Rights – which came into effect  on 1 October of the same year.  According to 
this legislation, China's Customs offices must take  measures to intercept importation or exportation of 
goods that were proved to be infringing the rights  of trademarks, patents or copyrights legally 
protected in China.  China's Cu stoms offices were granted authorit y to investigate any suspected 
shipment and confiscate the goods in case infringement was proved. 
249. Some members of the Working Party expressed c oncerns as to the compatibility of existing 
border measures with obligations under Articles 51 to  60 of the TRIPS Agreement; particularly the 
provisions on suspension of release into free circulat ion by custom authorities (Article 51), rules on 
evidence for initiating this procedure (Article 52), requirements on the security needed to protect the 
defendant (Article 53), rules on notice of the susp ension (Article 54) and its  duration (Article 55), 
rules on indemnification of the importer in case of wr ongful detention (Article 56) and opportunity for 
the right-holder to have the goods detained inspect ed (Article 57). Moreover some expressed their 
concern as to compatibility of rules on actions ex-o fficio by competent authorities and the conditions 
attached (Article 58), as well as to the remedies pr ovided against infringing good s (Article 59) and the 
quantities subject to the  de minimis rules (Article 60). 
250. In response, the representative of China stated that China would provide holders of 
intellectual property rights with pr ocedures related to border measures that comply fully with the 
relevant provisions of the TRIPS Agreement (Article s 51 to 60). The Working Party took note of this 
commitment. 
6. Criminal procedures 
251. The representative of China stated that Articl es 213 to 220 of the Criminal Law (Crimes of 
Infringing on Intellectual Property Rights) provided that whoever seriously infringes the right-holders'  WT/ACC/SPEC/CHN/1/Rev.6 
 Page 65 
 
 
rights of registered trademarks, patents, copyrights or trade secrets would be sentenced to fixed-term 
imprisonment and would also be fined. 
252. Some members of the Working Party expressed concerns that criminal procedures could not 
be used effectively to address piracy and counterfeiti ng.  In particular, the monetary thresholds for 
bringing a criminal action, as currently applied, were very high and seldom met.  Those thresholds 
should be lowered so as to permit effective action th at would deter future piracy and counterfeiting.  
In response, the representative of China stated that China's admini strative authority would recommend 
that the judicial authority make necessary adjustme nts to lower the thresholds so as to address these 
concerns.  The Working Party took note of this commitment. 
253. Noting the advanced state of protection for intellectual property rights in China, the 
representative of China confirmed that upon accession China would fully apply the provisions of the 
TRIPS Agreement.  The Working Party took note of this commitment. 
VI. POLICIES AFFECTING TRADE IN SERVICES 
1. Licensing 
254. Some members of the Working Party welcomed the broad-ranging and comprehensive 
commitments that China was undertaking to increa se transparency and to provide information to 
governments and service providers on any matter rela ting to the GATS including China's Schedule of 
Specific Commitments.  These members nonetheless expressed concerns regarding the lack of 
transparency in China's current services regime, in  particular with respect to obtaining, extending, 
renewing, denying and terminating licenses and ot her approvals required to provide services in 
China's market and appeals of such actions (hereafte r referred to as "China's  licensing procedures and 
conditions"). To be consistent with the provisions of the WTO Agreement, including the [Draft] 
Protocol and China's Schedule of Specific Commitme nts, Members of the Working Party noted that 
China's licensing procedures and conditions should not in themselves act as a barrier to market access 
and should not be more trade restrictive than n ecessary. Those members also expressed the view that 
upon its accession, China should publish (1) a list of au thorities responsible for authorizing, approving 
or regulating those service sectors in which Ch ina made specific commitments and (2) China's 
licensing procedures and conditions.  
255. The representative of China confirmed that paragraph [214] regarding publication of a list of 
all organizations that were responsible for aut horizing, approving or regulating service activities for 
each service sector, including those organizations  delegated such authority from the central 
government authorities, would apply. The representa tive of China also confirmed that China would WT/ACC/SPEC/CHN/1/Rev.6 
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publish in the official journal all of China's licensing procedures and conditions upon accession.  The 
Working Party took note of these commitments. 
256. The representative of China also confirmed that upon accession China would ensure that 
China's licensing procedures and conditions will not act  as barriers to market access and will not be 
more trade restrictive than necessary.  In accordance with China's commitments under the WTO 
Agreement, the [Draft] Protocol and its Schedul e of Specific Commitments, the representative of 
China confirmed that for those services included in  China's Schedule of Specific Commitments, China 
will ensure that:  
 (a) China's licensing procedures and co nditions are published prior to becoming 
effective;  
 
 (b) In this publication, China will specify reasonable time frames for review and decision 
by all relevant authorities in China' s licensing procedures and conditions;  
  (c) Applicants will be able to request licensing without individual invitation;  
 
 (d) Any fees charged, which are not deemed to include fees determined through auction 
or a tendering process, would be commensur ate with the administrative cost of 
processing an application.  
 
 (e) The competent authorities of China would, after receipt of an application, inform the 
applicant whether the application is consid ered complete under China's domestic laws 
and regulations and in the case of incomp lete applications, identify the additional 
information that is required to complete the application and provide the opportunity 
to cure deficiencies;  
  (f) Decisions will be taken promptly on all applications;   
 (g) If an application is terminated or denied , the applicant will be informed in writing and 
without  delay the reasons for such action. The applicant would have the possibility of 
resubmitting, at its discretion, a new application that addresses the reasons for termination or denial; 
 
 (h) If an application is approved, the app licant will be informed in writing and without 
delay.  The information provided will incl ude the date of entry into force of the  WT/ACC/SPEC/CHN/1/Rev.6 
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license or approval [(i.e the right to start the commercial operations for which the 
license was issued)] which normally shoul d be immediate and in accordance with 
China's Schedule of Specific Commitments;  
  (i) Where China required an examination to license professionals, such examinations 
would be scheduled at reasonable intervals.   
 
The Working Party took no te of these commitments.  
 257. Some members of the Working Party also expressed concern about maintaining the 
independence of regulators from those they regulate.  The representative of China confirmed that for 
the services included in China's Schedule of Specific Commitments, relevant regulatory authorities 
will be separate from, and not accountable to, any service suppliers they regulate, except for courier 
and railway transportation services. For these excepted sectors, China will comply with other relevant 
provisions of the WTO Agreement and this [Draft] Protocol. The Working Party took note of these 
commitments. 
VII. OTHER ISSUES 
1. Notifications 
258. Members of the Working Party requested that  China provide to the WTO Secretariat the 
notifications described in paragraphs … of this Draft Report.   
2. Special Trade Arrangements 
259. Some members of the Working Party raised speci fic concerns in relation to some of China's 
special trade arrangements, including barter trad e arrangements, with third countries and separate 
customs territories, which those members considered not  to be in conformity with WTO requirements.  
In response, the representative of China noted that  China would undertake a commitment in the Draft 
Protocol to eliminate or bring into conformity with WTO requirements, all such special trade 
arrangements that were not in conformity with tho se requirements, by no later than the date of entry 
into force of the Draft Protocol.  
3. Transparency 
260. Some members of the Working Party expressed concern about the lack of transparency 
regarding the laws, regulations a nd other measures that applied to matters covered in the WTO 
Agreement and the Draft Protocol.  In particular, some members noted the difficulty in finding and 
obtaining copies of regulations and other measures undertaken by various ministries as well as those WT/ACC/SPEC/CHN/1/Rev.6 
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taken by provincial and local authorities.  Tran sparency of regulations and other measures, 
particularly of sub-central authorities, was essentia l since these authorities often provided the details 
on how the more general laws, re gulations and other measures of the central government would be 
implemented and often differed among various juri sdictions. Those members emphasized the need to 
receive such information in a timely fashion so that governments and traders could be prepared to comply with such provisions and could exercise their rights in respect of implementation and 
enforcement of such measures.   The same members emphasized the importance of such pre-
publication to enhancing secure, predictable tradi ng relations.  Those members noted the development 
of the Internet and other means to ensure that information from all government bodies at all levels 
could be assembled in one place and made readily  available.  The creation and maintenance of a 
single, authoritative journal and enquiry point woul d greatly facilitate dissemination of information 
and help promote compliance. 
261. In response, the representative of China noted th at the Government of China regularly issued 
publications providing information on China's foreign trade system, such as the: "Almanac of Foreign 
Economic Relations and Trade" and "The Bulle tin of MOFTEC" published by MOFTEC; "Statistical 
Yearbook of China", published by the State Sta tistical Bureau; "China's Customs Statistics 
(Quarterly)", edited and published by the Customs.  China's laws and regulations of the State Council 
relating to foreign trade were all published, as we re rules issued by departments.  Such laws, 
regulations and rules were available in the "Gazette  of the State Council", the "Collection of the Laws 
and Regulations of the People's Republic of Chin a" and the "MOFTEC Gazette".  The administrative 
regulations and directives relating to foreign trade were also published on MOFTEC's official website 
(http://www.moftec.gov.cn) and in periodicals. 
262. He further noted that there were no FOREX restrictions affecting import or export.  
Information on FOREX measures was published by th e SAFE and was available on SAFE's website 
(http://www.safe.gov.cn) and via the news media. 
263. The representative of China noted that information concerning the administration of imports 
and exports would be pu blished in the "International Busi ness" newspaper and the "MOFTEC 
Gazette". 
264. He also noted that information on China's customs laws and regulations, import and export 
duty rates, and customs procedures was published in the "Gazette of the State Council" and in the press media, and was available upon request.  The procedures concerning application of duty rates, customs value and duty determination, drawback  and duty recovery, as well as the procedures 
concerning duty exemptions and reduction, were also published.  Customs also published monthly  WT/ACC/SPEC/CHN/1/Rev.6 
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customs statistics, calculated according to country of  origin and final destination, on the basis of 
eight-digit HS levels. 
265. The representative of China noted that any b ilateral trade agreemen ts concluded between 
China and its trading partners, and protocols on the exchange of goods negotiated under them were 
published in "The Treaty Series of the PRC".  He al so noted that the "Directory of China's Foreign 
Economic Relations and Trade Enterprises" and "China's Foreign Trade Corporations and 
Organizations" were two publications which id entified foreign trade corporations and other 
enterprises in China engaged in foreign trade. 
266. The representative of China stated that the full listing of official journals was as follows:  
Gazette of the Standing Committee of the National People's Congress of the People's Republic of China; Gazette of the State Council of the People's Republic of China; Collection of the Laws of the 
People's Republic of China; Collection of the La ws and Regulations of the People's Republic of 
China; Gazette of MOFTEC of the People's Republic of China; Proclamation of the People's Bank of the People's Republic of China;  and Proclamation of  the Ministry of Finance of the People's Republic 
of China. 
267. The representative of China confirmed that pub lication of all laws, regulations and other 
measures pertaining to or affecting trade in goods , services, TRIPS or the control of FOREX would 
include the effective date of these measures.  It would also include the products and services affected 
by a particular measure, identified by appropria te tariff line and CPC classification.  The Working 
Party took note of these commitments. 
268. The representative of China confirmed that China would publish in the official journal, by 
appropriate classification and by service where rele vant, a list of all organizations, including those 
organizations delegated such authority from the national authorities, that were responsible for 
authorizing, approving or regulating services activi ties whether through grant of licence or other 
approval.  Procedures and the c onditions for obtaining such licen ces or approval would also be 
published.  The Working Party took note of these commitments. 
269. The representative of China confirmed that  none of the information required by the 
WTO Agreement or the Draft Protocol to be disclo sed would be withheld as confidential information 
except for those reasons identified in Section 2(C) of the Draft Protocol or unless it would 
demonstrably prejudice the legitimate commercial interests of particular enterprises, public or private.  
The Working Party took note of this commitment. WT/ACC/SPEC/CHN/1/Rev.6 
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270. The representative of China confirmed that China would make available to WTO Members 
translations into one or more of the official languages of the WTO all la ws, regulations and other 
measures pertaining to or affecting trade in goods, services, TRIPS or the control of FOREX, and to 
the maximum extent possible would make these laws , regulations and other measures before they 
were implemented or enforced, but in no case later than 90 days after they were implemented or 
enforced.  The Working Party took note of these commitments. 
271. Members of the Working Party also requested  that China set up an enquiry point where 
information relating to all laws, regulations, judicial  decisions and administra tive rulings of general 
application and other measures pertaining to or affecting trade in goods, services, TRIPS or the 
control of FOREX could be obtained.   
272. The representative of China confirmed that Chin a would establish or designate one or more 
enquiry points where all information relating to th e laws, regulations and other measures pertaining to 
or affecting trade in goods, services, TRIPS or the control of FOREX, as well as the published texts, 
could be obtained and would notify the WTO of any enquiry point and its responsibility.  The 
information would include the names of national or sub-national authorities (including contact points) 
responsible for implementing a particular meas ure.  The Working Party took note of these 
commitments. 
VIII.  CONCLUSIONS 
273. The Working Party took note of the explanations and statements of China concerning its 
foreign trade regime, as reflected in this Draft Report.  The Working Party took note of the 
commitments given by China in relation to cer tain specific matters which are reproduced in 
paragraphs […] of this Draft Report and noted that these commitments are incorporated in 
paragraph 1.2 of the Draft Protocol. 
274. Having carried out the examination of the foreign trade regime of China and in the light of the 
explanations, commitments and concessions made  by China, the Working Party reached the 
conclusion that China should be invited to accede to the Marrakesh Agreement Establishing the WTO 
under the provisions of Article XII.  For this pur pose, the Working Party prepared the Draft Decision 
and Draft Protocol reproduced in the Appendix to  this Draft Report, and took note of China's 
Schedule of Concessions and Commitments on Goods [(document WT/ACC/SPEC/CHN…)] and 
China's Schedule of Specific Commitments on Services [(document WT/ACC/SPEC/CHN…)] that 
were annexed to the Draft Protocol.  It was propo sed that these texts be adopted by the General 
Council when it adopted the Draft Report.  When the Draft Decision was adopted, the Draft Protocol would be open for acceptance by China which would become a WTO Member 30 days after it  WT/ACC/SPEC/CHN/1/Rev.6 
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accepted the said Draft Protocol.  The Working Party ag reed, therefore, that it had completed its work 
concerning the negotiations for the accessi on of China to the WTO Agreement. 
 
__________ 
 