RESTRICTED WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/ACC/SPEC/CHN/1/Rev.5
15 November 2000
(00-4850)
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 conclusion of the Thirteenth Meeting of the Working
Party on 9 November 2000, this further revision of the Draft Report of the Working Party on the
Accession of China to the WTO is being circulated on the Chairman's own responsibility.  This
revision takes into account developments during the Thirteenth Meeting and is submitted to theWorking Party for the purpose of facilitating further discussions.
Groupe de travail del'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 treizième réunion du Groupe de
travail le 9 novembre 2000, cette nouvelle révision du projet de rapport du Groupe de travail de
l'accession de la Chine à l'OMC est distribuée sous la responsabilité du Président.  Cette révision tient
compte des faits nouveaux intervenus au cours de la treizième réunion du Groupe de travail et est
soumise au Groupe pour faciliter la suite des débats.
Grupo de Trabajo sobre laAdhesión de China
PROYECTO DE INFORME DEL GRUPO DE TRABAJO
SOBRE LA ADHESIÓN DE CHINA A LA OMC
1
Revisión
Como consecuencia de las observaciones formuladas por el Presidente al concluir la
decimotercera reunión del Grupo de Trabajo del 9 de noviembre de 2000, se distribuye esta nuevarevisión del proyecto de informe del Grupo de Trabajo sobre la Adhesión de China a la OMC bajo la
responsabilidad del Presidente.  La presente revisión tiene en cuenta los nuevos acontecimientos que
se han producido durante la decimotercera reuni ón 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.5
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TABLE OF CONTENTS
I. INTRO DUCTION ................................................................................................................. ...1
1. Documentation provided....................................................................................................... ...1
2. Introductory  statements ...................................................................................................... .....1
II. ECONOMIC POLICIES..........................................................................................................3
1. Non-discrimination (including 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.......................................................................127. Pricing Policie s ............................................................................................................. ...........14
8. Competitio n Policy........................................................................................................... .......16
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES....................................16
1. Structure and Powers of the Government ............................................................................16
2. Authority of Sub-Central Governments ...............................................................................173. Uniform Administration of the Trade Regime.....................................................................18
4. Judicial Review .............................................................................................................. .........19
IV. POLICIES AFFECTING TRADE IN GOODS ...................................................................20
A. TRADING RIGHTS ............................................................................................................... ..20
B. IMPORT RE GULATIO N.........................................................................................................20
1. Ordinary Customs Duties...................................................................................................... .20
2. Other Duties and Charges..................................................................................................... .22
3. Rules of  Orig in .............................................................................................................. ..........22
4. Fees and Charges for Services Rendered..............................................................................23
5. Application of Internal Taxes to Imports .............................................................................236. Tariff Exemptions............................................................................................................ .......24
7. Tariff Rate  Quotas ........................................................................................................... .......25
8. Quantitative Import Restrictions, including Prohibitions and Quotas..............................28
9. Import Licensing............................................................................................................. ........28
10. Customs Valuation........................................................................................................... .......30
11. Other Customs Formalities................................................................................................... .31
12. Preshipment Inspec tion...................................................................................................... ....31
13. Anti-Dumping, Countervailing Duties..................................................................................31
14. Safeguards .................................................................................................................. .............31WT/ACC/SPEC/CHN/1/Rev.5
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C. EXPORT RE GULATI ONS ......................................................................................................32
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of
Internal Taxes to Exports...................................................................................................... .32
2. Export Licensing and Export Restrictions ...........................................................................32
3. Export Subsidies ............................................................................................................. ........34
D. INTERNAL POLICIES AFFECTI NG FOREIGN TRADE  IN GOODS.................................34
1. Taxes and Charges Levied on Imports and Exports ...........................................................34
2. Industrial Policy, including Subsidies...................................................................................35
3. Technical Barriers to Trade.................................................................................................. .35
4. Sanitary and Phytosanitary Measures..................................................................................35
5. Trade-Related Investment Measures ....................................................................................36
6. State Trading Entities....................................................................................................... ......37
7. Special Economic Areas ....................................................................................................... ..39
8. Government Procurement......................................................................................................4 1
9. Transit...................................................................................................................... ................42
10. Agricultural  Poli cies ....................................................................................................... ........42
11. Trade in Ci vil Ai rcraft ..................................................................................................... ......42
12. Textiles .................................................................................................................... .................43
13. Measures Maintained  Against China....................................................................................44
14. Transitional Safeguards ..................................................................................................... ....44
15. Transitional Review Mechanism ...........................................................................................44
V. TRADE-RELATED INTELLECTUAL  PROPERTY REGIME.......................................45
VI. POLICIES AFFECTING TRADE IN SE RVICES..............................................................45
VII. OTHER ISSUES ............................................................................................................... ......45
1. Notifica tions................................................................................................................ .............45
2. Special Trade Arrangements .................................................................................................45
3. Transparency ................................................................................................................. .........45
VIII. CONCLUSIONS ............................................................................................................... ......48WT/ACC/SPEC/CHN/1/Rev.5
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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 Republic of China ("China") (L/6017, submitted on10 July 1986) for resumption of its status as a GATT contracting party, and to submit to the Councilrecommendations which may include a Draft Protocol on the Status of China.  In a communication
dated 7 December 1995, the Government of China applied for accession to the AgreementEstablishing the World Trade Organization ("WTO Agreement") pursuant to Article XII of the WTOAgreement.  Following China's application and pursuant to the decision of the General Council on31 January 1995, the existing Working Party on China's Status as a GATT 1947 Contracting Partywas transformed into a WTO Accession Working Party, 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 Contracting Party met on 20 occasions between
1987 and 1995 under the Chairmanship of H.E. Mr. Pierre-Louis Girard (Switzerland).  The WorkingParty 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 theforeign trade regime of China, together with replies of the Chinese authorities thereto.  In addition, theGovernment of China made available to the Working 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 China stated that China's consistent efforts toresume its status as a contracting party to GATT and accession to the WTO were in line with itsobjective of economic reform to establish a socialist market economy as well as its basic nationalpolicy of opening to the outside world.  China believed that its WTO accession would increase itseconomic growth and enhance its economic and trade relations with WTO Members.
5.  Members of the Working Party welcomed China's accession to the WTO and considered that
its accession would contribute to a strengthening of the multilateral trading system, enhancing theWT/ACC/SPEC/CHN/1/Rev.5
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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 population of 1.25 billion.  Since 1979, China had been progressively
reforming its economic system, with the objective of  establishing and improving the socialist market
economy.  The reform package introduced in 1994, covering the banking, finance, taxation,investment, foreign exchange ("forex") and foreign trade sectors, had brought about majorbreakthroughs in China's socialist market economy.  State-owned enterprises had been reformed by aclear definition of property rights and responsibilities, 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, responsiblefor its own profits and losses.  A nation-wide unified and open market system had been developed.An improved macroeconomic regulatory system used indirect means and market forces to play a
central role in economic management and the allocation 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 supervision.  The exchange rate of theChinese currency Renminbi (also "RMB") had been unified and remained stable.  The Renminbi hadbeen made convertible on current account.  Further liberalization of pricing policy had resulted in themajority of consumer and producer products being subject to market prices.  The market now played amuch 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 theper capita dispensable income for urban dwellers was RMB 5,425 yuan (approximately US$ 655).  Inrecent years, foreign trade had grown substantially.  In 1999, total imports and exports of goodsreached US$ 360.65 billion, of which exports stood at US$ 194.93 billion, and imports, US$ 165.72billion. 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 still a developing country and therefore should have the right toenjoy all the special and preferential treatment accorded 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 economy, a pragmatic approach should be taken inWT/ACC/SPEC/CHN/1/Rev.5
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determining China's need for recourse to transition al periods and other special provisions in the WTO
agreements available to developing country WTO Members.  Each agreement and China's situationshould be carefully considered and specifically addressed.
10. At the request of interested members of the Working Party, the representative of China agreed
that China would undertake bilateral market access negotiations with respect to industrial and
agricultural products, and initial commitments in services.
11. Some members of the Working Party stated that in addition to undertaking market access
negotiations in goods and services, close attention should also be paid to China's multilateralcommitments, in particular China's future obligations under the Multilateral Agreements on Trade inGoods and the General Agreement on Trade in Services ("GATS").  This was of vital importance toensure that China would be able to take full benefit of WTO membership as quickly as possible, aswell as to ensure that the value of any market access conditions undertaken were not adverselyaffected 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 China on trade volume/value.  Members and Chinapursued this issue separately in an Informal Group of Experts on Export Statistics.
14. The Working Party reviewed the foreign trade regime of China.  The discussions and
commitments resulting therefrom are contained in paragraphs … below and in the Draft Protocol ofAccession ("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 and enterprises (whether wholly or partly foreign
funded).  Those members stated that China should enter a commitment to accord non-discriminatory
treatment to all foreign individuals and enterprises and foreign-funded enterprises in respect of theprocurement of inputs and goods and services necessary for production of goods and the conditionsunder which their goods were produced, marketed or sold, in the domestic market and for export.  Inaddition, 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 byWT/ACC/SPEC/CHN/1/Rev.5
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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 restrictions 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 procurement of goods and services, and the distribution of import andexport licences.  Members of the Working Party requested that China enter into a commitment not tocondition such practices on the nationality of the entity concerned.
17. In response, the representative of China emphasized the importance of the commitments that
the government was undertaking on non-discrimination.  The representative of China noted, however,that any commitment to provide non-discriminatory treatment to Chinese enterprises, includingforeign-funded enterprises, and foreign enterprises a nd 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 enterprises, and foreign enterprises and individuals inChina.  China would eliminate dual pricing practices  as well as differences in treatment accorded to
goods produced for sale in China in comparison to those produced for export.  The Working Partytook note of these commitments.
19. The representative of China confirmed that, consistent 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 WTO that were separate customs territories.  TheWorking Party took note of this commitment.
20. Members of the Working Party expressed concern about certain provisions of Chinese laws,
regulations, administrative notices and other requirements which could, directly or indirectly, result inless favourable treatment of imported products in contravention of Article III of the GeneralAgreement on Tariffs and Trade ("GATT 1994").  Such requirements included product registrationand certification, internal taxation, price and profit controls and all distinct forms of licensing forimports, 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 favourableWT/ACC/SPEC/CHN/1/Rev.5
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treatment of imported goods had to be eliminated in order to ensure full conf ormity with the principle
of national treatment.
21. Some members of the Working Party drew China's attention to the variety of types of
requirements which could contravene GATT Article III. Specific reference was made to the
procedures, charges and conditions for granting of business licences, whether to import, distribute, re-
sell or retail goods of non-Chinese origin.  Reference was also made to taxes and fiscal provisionswhose impact depended, directly or indirectly, upon the Chinese or non-Chinese origin of the goodsimported or traded.  Those members drew the attention of China to its obligation to ensure thatproduct testing and certification requirements, 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, includingsafety and other compliance requirements, had to respect the terms of the WTO Agreement onTechnical 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 producedand imported products would be ensured and enforced by the date of China's accession to the WTOunless otherwise provided in the Draft Protocol or Draft Report.  The representative of China declaredthat, by accession, China would repeal and cease to apply all such existing laws, regulations and othermeasures whose effect was inconsistent with WTO rules on national treatment.  This commitment wasmade in relation to final or interim laws, administrative measures, rules and notices, or any other formof stipulation or guideline. The Working Party took note of these commitments.
23. In particular, the representative of China confirmed that measures would be taken at national
and subnational level, including repeal or modification of legislation, to provide full GATT nationaltreatment in respect of laws, regulations and other 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, notices and measures which subjected
imported pharmaceuticals to distinct procedures and formulas for pricing and classification,
or which set limits on profit margins attainable and imports, or which created any otherWT/ACC/SPEC/CHN/1/Rev.5
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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, irrespective of their country of origin, and elimination of
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 thecase of cigarettes, China could avail itself of a transitional period of two years to fully unifythe licensing requirements.  Immediately upon accession, and during the two year transitionalperiod, the number of retail outlets selling imported cigarettes would be substantiallyincreased throughout the territory of China;
- Spirits, including requirements applied under China'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 applicable to imported products, such as those
applied under China's "Environmental Control Regulations for Initial Imports of Chemical
Products and Imports and Export s 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, which 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 transitional period of one year from the date ofaccession in order to amend or repeal the relevant legislation.  The Working Party took note of thesecommitments.
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 system which was compatible with the principles
of a market economy.  With respect to fiscal revenue, a taxation system with a value-added tax as themain element had been established since the taxation reform in 1994. With respect to fiscalWT/ACC/SPEC/CHN/1/Rev.5
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expenditure, over recent years the government had, in line with the public fiscal requirement generally
exercised by market economies, strengthened its adjustment of the structure of expenditure and givenpriority 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 policy and had taken a series of adjusting and reform
measures which included lowering the interest rate for loans from financial institutions, improving thesystem of required deposit reserves and lowering the ratio of required reserves, positively increasingthe input of base money and encouraging the commercial banks to expand their credit.
26. In respect of future fiscal policy, the Government of China would further improve its taxation
system and would continue to improve the efficiency of fiscal expenditure through implementingreform measures such as sectoral budget, centralized payment by the national treasury and zero basebudget, as well as improving management of fiscal expenditure. With respect to future monetarypolicy, 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 and services.  In response, the representative ofChina stated that its system of forex had undergone rapid change and that China was now a memberof the International Monetary Fund ("IMF").  Significant moves had been taken to reform, rationalize
and liberalize the forex market.  The practice of multiple exchange rates in swap centres had been
abolished.  China had already unified its forex market and removed many of the restrictions on the useof forex.
28. Outlining the historical development of China' s forex reform, the representative of China
stated that the purpose of China's forex reform was to reduce administrative intervention and increasethe role of market forces.  From 1979, a forex retention system was applied in China, although forexswap was gradually developing.  In early 1994, official RMB exchange rates were unified with themarket rates. The banking exchange system was adopted and a nationwide unified inter-bank forex
market was established, with conditional convertibility of the Renminbi on current accounts.  Since
1996, foreign investment enterprises ("FIEs") were also permitted into the banking exchange system,
and the remaining exchange restrictions on current accounts were eliminated. On 1 December 1996,China had formally accepted the obligations of Article VIII of the IMF's Articles of Agreement,removing exchange restrictions on current account transactions.  Accordingly, since then theWT/ACC/SPEC/CHN/1/Rev.5
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Renminbi had been fully convertible on current accounts.  It was confirmed by the IMF in its Staff
Report on Article IV Consultations with China in 2000 that China had no existing forex restrictionsfor current account transactions.
29. The representative of China stated that the State Administration of Foreign Exchange
("SAFE") was under the auspices of the People's Ba nk of China ("PBC"), and was the administrative
organ empowered to regulate forex.  Its main functions were to monitor and advise on balance-of-payments and forex matters.  SAFE was also requir ed to draft appropriate regulations and monitor
compliance.  He further noted that domestic and foreign banks, and financial institutions could engagein 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 payments under current accounts, domestic entities(including FIEs) could purchase forex at market exchange rates from designated banks or debit theirforex accounts directly upon presentation of valid documents.  For payments such as pre-payment,
commission, etc., exceeding the proportion or limit, 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 presentation of valid documents (within a specifiedlimit).  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 bydomestic entities had to be repatriated into China, some of which could be retained and some sold to
the designated banks at market rates.  A verification system for forex payment (imports) and forexreceipt (exports) had also been adopted.
31. Concerning the exchange rate regime in particular, the representative of China noted that
since the unification of exchange rates on 1 January 1994, China had adopted a single and managedfloating exchange rate regime based on supply and demand.  PBC published the reference rates ofRMB against the US dollar, the HK dollar and Japanese yen based on the weighted average prices offorex transactions at the interbank forex market during the previous day's trading. The buying andselling rates of RMB against the US dollar on the inter-bank forex market could fluctuate within 0.3%of the reference rate. For the HK dollar and Japanese yen, the permitted range was 1%.   Designatedforex banks could deal with their clients at an agreed rate.  Under such contracts the exchange rate ofthe 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 exchange rates for other foreign currencies were
based on the rates of RMB against the US dollar and cross-exchange rates of other foreign currencyWT/ACC/SPEC/CHN/1/Rev.5
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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-bankmarket according to the turnover position limit on ba nking exchange stipulated by SAFE and covered
the position on the market. Depending on its macro-economic objectives, the PBC could intervene inthe forex open market in order to regulate market supply and demand, and maintain the stability of theRMB 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 settlement accounts to retain receipts under currentaccounts, up to a maximum amount stipulated by SAFE.  Receipts in excess of the maximum amountwere required to be sold to designated forex banks.  No restrictions were maintained on the paymentand transfer of current transactions by FIEs, a nd FIEs could purchase forex from designated forex
banks or debit their forex accounts for any payment under current transactions, upon the presentationof valid documents to the designated forex banks or SAFE for the bona fide test.  FIEs could alsoopen forex accounts to hold foreign-invested capital, and they could sell from these accounts upon the
approval of SAFE.  FIEs  could also borrow forex 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 forex accounts or in forex purchased from designatedforex banks after liquidation, 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 Equity Joint Venture;  Law of thePeople's Republic of China on Chinese-Foreign Contractual Joint Venture;  Regulations on theExchange System of the People's Republic of China; and Regulations on the Sale and Purchase of andPayment in Foreign Exchange.
35. Some members of the Working Party stated that China should undertake appropriate
commitments on its reform of forex.WT/ACC/SPEC/CHN/1/Rev.5
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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 IMF.  The representative further confirmed China'sacceptance of the obligations of Article VIII of the IMF's Articles of Agreement, which provided that
"no member shall, without the approval of the Fund, 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 the IMF's Articles of Agreement, China would not
resort to any laws, regulations or other measures, including any requirements with respect tocontractual terms, that would restrict the availability to any individual or enterprise of forex forcurrent international transactions within its customs territory to an amount rela ted to the forex inflows
attributable to that individual or enterprise.  He stated, moreover, that China would not subjectindividual requests for forex for the making of payments and transfers  for current international
transactions, including the issuance of credit or cr edit 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 other entities), to any form of approval or restriction(including a requirement for the presentation of an invoice), in a manner inconsistent with itsobligations under the IMF's Articles of Agreement.  The Working Party took note of thesecommitments.
37. In addition, the representative of China stated that China would provide information on
exchange measures as required under Article VIII, Section 5 of the IMF's Articles of Agreement, andsuch other information on its exchange measures 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 ajustification for imposition of restrictions on imports for other protectionist purposes.  Those membersstated that measures taken for BOPs reasons should have the least trade disruptive effect possible andshould be limited to temporary import surcharges, import deposit requirements or other equivalent
price-based trade measures, and those measures should 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 Provis ions of the GATT 1994 ("BOPs Understanding")
and to the General Council not later than the im position of the measures, together with a timeWT/ACC/SPEC/CHN/1/Rev.5
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schedule for their elimination and a programme of external and domestic policy measures to be used
to restore BOPs equilibrium.  Those members also stated that following deposit of such a notification,the Committee on Balance-of-Payments Restrictions ("BOPs Committee") should meet to examinethe 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 WTOMember.
40. Some other members considered that, in respect of measures taken for BOP purposes, China
should enjoy the same rights as those accorded to other developing country WTO Members, asprovided 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.  Heconfirmed 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 notprice-based, it would transform such measures into  price-based measures as soon as possible.  Any
measures taken would be maintained strictly in accordance with the GATT 1994 and the BOPsUnderstanding, and would not exceed what was necessary to address the particular BOPs situation.The representative of China also confirmed that measures taken for BOPs reasons would only beapplied to control the general level of imports and not to protect specific sectors or industries.  TheWorking Party took note of these commitments.
5. Investment Regime
42. The representative of China stated 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. Thehighly centralized investment administration under the planned economy had been progressivelytransformed into a new pattern of diversification of investors, multi-channelling of capital sources anddiversification of investment modalities. The gove rnment encouraged foreign 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-st ate investment. With China's programme in the
establishment of its market economy, the construction projects of various enterprises utilizing freecapital and financed by the credit of the enterprise would be fully subject to the decision-making ofthe enterprise concerned and at their own risk. The commercial banks' credit activities to all kinds ofWT/ACC/SPEC/CHN/1/Rev.5
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investors would be based on their own evaluation and decision-making, and would be at their own
risk.  The business activities of intermediate invest ment agencies would be fully subject to the market
and would provide service at the instruction of the investors. These agencies would break up theiradministrative relations with government agencies and the service activities financed by the
government would also be subject to the terms and 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 process of revising and completing these guidelines.Responding to concerns raised by certain members of the Working Party, he confirmed that theseinvestment 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 the state-owned enterprises of China basically
operated in accordance with rules of market economy.  The government would no longer directlyadminister the human, finance and material resources, and operational activities such as production,supply and marketing.  The prices of commodities produced by state-owned enterprises were decidedby the market and resources in operational areas were fundamentally allocated by the market.  Thestate-owned banks had been commercialized and lending to state-owned enterprises took place
exclusively under market conditions.  China was furthering its reform of state-owned enterprises andestablishing 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 concer ns about the continuing governmental influence
and guidance of the decisions and activities of such enterprises relating to the purchase and sale ofgoods 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 China to clarify its understanding of the types of activities that wouldnot come within the scope of Article III:8(a) of GATT 1994.  For example, any measure relating tostate-owned and state-invested enterprises importing materials and machinery used in the assembly ofgoods, 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 evolving nature of China's economy and the
significant role of FIEs and the private sector in the economy.  Given the increasing need anddesirability of competing with private enterprises in the market, decisions by state-owned and state-WT/ACC/SPEC/CHN/1/Rev.5
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invested enterprises had to be based on commercial considerations as provided in the WTO
Agreement.
47. The representative of China further confirmed that China would ensure that all state-owned
and state-invested enterprises would make purchases and sales based solely on commercial
considerations, e.g. price, quality, marketability and availability, and that the enterprises of other
WTO Members would have an adequate opportunity to compete for sales to and purchases from theseenterprises on non-discriminatory terms and conditions.  In addition, the Government of China wouldnot influence, directly or indirectly, commercial decisions on the part of state-owned or state-investedenterprises, including the quantity, value or country of origin of any goods purchased or sold, exceptin a manner consistent with the WTO Agreement.  The Working Party took note of thesecommitments.
48. The representative of China confirmed that, without prejudice to China's rights in future
negotiations in the Government Procurement 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 togovernment procurement. Thus, such purchases or sales would be subject to the provisions ofArticles II, XVI and XVII of the GATS and Arti cle 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 technol ogy, in particular in the context of investment
decisions.  Moreover, these members expressed concern about measures conditioning the receipt of
benefits, including investment approvals, upon t echnology transfer.  In their view, the terms and
conditions of technology transfer, particularly in the context of an investment, should be agreedbetween the parties to the investment without gove rnment interference.  The government should not,
for example, condition investment approval upon technology transfer.
50. The representative of China confirmed that China would only impose, apply or enforce laws,
regulations or measures relating to the transfer of technology, production processes, or otherproprietary knowledge to an individual or enterprise in its territory that were not inconsistent with theWTO Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") and
the Agreement on Trade-Related Investment Measures ("TRIMs Agreement").  China confirmed that
the terms and conditions of technology transfer, production processes or other proprietary knowledge,WT/ACC/SPEC/CHN/1/Rev.5
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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 that China had made extensive use of price
controls, for example in the agricultural sector.  Those members requested that China undertakespecific commitments concerning its system of state pricing.  In particular, those members stated thatChina should allow prices for traded goods and services in every sector to be determined by marketforces, and multi-tier pricing practices for such goods and services should be eliminated.  Thosemembers noted, however, that China expected to ma intain price controls on the goods and services
listed in Annex 4 to the Draft Protocol, and stated that any such controls should be maintained in a
manner consistent with the WTO Agreement, in particular Article III of the GATT 1994 and Annex 2,
paragraphs 3 and 4, of the Agreement on Agriculture.  Those members noted that except inexceptional circumstances, and subject to notification to the WTO Secretariat, price controls shouldnot be extended to goods or services beyond those listed in Annex 4, and China should make its bestefforts to reduce and eliminate those controls.  They also asked that China publish in the appropriateofficial 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 policiesand practices would also be subject to China's commitments.  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 currently applied a mechanism of market-based
pricing under macro-economic adjustment.  He noted that national treatment was applied in the areasof 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 theseauthorities. Products and services subject to government pricing were those having a direct bearing onthe 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 mechanism was a more flexible form of pricing.
The price administration authorities stipulated either a basic price or floating ranges. The floatingrange of guidance pricing was generally 5% to 15%.  Enterprises could, within the limits of theWT/ACC/SPEC/CHN/1/Rev.5
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guidance and taking into account the market situation, make their own decisions on prices.  With
market-regulated prices, enterprises were free to set prices in accordance with supply and demand tothe extent permitted by generally applicable laws, regulations and policies concerning prices.
55. The representative of China stated that in formulating government prices and government
guidance prices, the following criteria were taken into account:  normal production costs, supply and
demand situation, relevant government policies and prices of related products. When fixing prices ofconsumer goods, consideration was given to the limits of consumers' purchasing power.  He notedthat due to the continued reform of China's price system, the share of government prices had droppedsubstantially and that of market-regulated prices had increased;  of social retailing products, the shareof government prices was about 4%, that of govern ment guidance prices 1.2%, and that of market-
regulated prices 94.7%.  For agricultural products, the share of government prices was 9.1%,government guidance prices 7.1%, and market-regulated 83.3%.  For production inputs, the share ofgovernment prices was 9.6%, that of government guidance 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 China's price system was becoming increasingly rationalized, creating arelatively fair marketplace for all enterprises 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 pricingand government pricing.
57. The representative of China confirmed that it would 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 the State.  He further stated that China wouldcontinue to further its price reform, adjusting the catalogue subject to state pricing and furtherliberalize its pricing policies.
59. The representative of China further confirmed that 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.WT/ACC/SPEC/CHN/1/Rev.5
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60. In addition, the representative of China confirmed that China would apply its current price
controls and any other price controls from the entry into force of the Draft Protocol in a WTO-consistent fashion, and would take account of the interests of exporting WTO Members as providedfor 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 Government of China encouraged fair competition
and was against acts of unfair competition of all kinds. The Law of the People's Republic of China onCombating Unfair Competition, promulgated on 2 September 1992 and implemented on1 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, the Criminal Law and other relevant laws also
contained provisions on anti-monopoly and unfair co mpetition. China was now formulating the Law
on Anti-Monopoly.
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'sCongress was the highest organ of state power.  Its permanent body was its Standing Committee.  TheNational People's Congress and its Standing Committee exercised the legislative power of the State.They had the power to formulate the Cons titution 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 minist ries, 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 an d in accordance with the laws and administrative
regulations.  The provincial people's congresses and their standing committees could adopt localregulations.  The provincial governments had the power to make local government rules.  TheNational People's Congress and its Standing Committee had the power to annul the administrativeregulations that contradicted the Constitution and laws as well as the local regulations thatcontradicted the Constitution, laws and administrative regulations.  The State Council had the powerto annul departmental rules and local government rules that were inconsistent with the Constitution,laws or administrative regulations.  The Government of China believed that these features of the
Chinese legal system would ensure an effective and uniform implementation of the obligations after
China's accession.WT/ACC/SPEC/CHN/1/Rev.5
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63. The representative of China stated that China 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 Agreement fell within the category of "importantinternational agreements" subject to the ratification 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 itsrelevant domestic laws.  Therefore, the WTO Agreement would be implemented by China in aneffective and uniform manner through revising its existing domestic laws and enacting new ones fullyin 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 Article 142 of the General Principles of Civil Law, if any internationaltreaty concluded or acceded to by China contained provisions differing from those in China's civil
laws, the provisions of the international treaty would apply, unless the provisions were ones on which
China had announced reservations for ratification.  Upon ratification by the National People'sCongress, 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 membersconsidered that this situation resulted in a lessening  of the security and predictability of access to the
Chinese market. These Members raised specific concerns regarding the authority of sub-nationalgovernments in the areas of fiscal, financial and budgetary activities, specifically with respect to
subsidies, taxation, trade policy and other issues covered by the WTO Agreement and the DraftProtocol.  In addition, some members expressed conc erns about whether the central government could
effectively ensure that trade-related measures introduced 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 further confirmed that the central government wouldensure that China’s laws, regulations and other measures, including those of local governments at thesub-national level, conformed to China’s obligations  undertaken in the WTO Agreement and the Draft
Protocol.  The Working Party took note of this commitment.WT/ACC/SPEC/CHN/1/Rev.5
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3. Uniform Administration of the Trade Regime
67. Members of the Working Party stated that it should be made clear that China would apply the
requirements of the WTO Agreement and its other accession commitments throughout China's entirecustoms territory, including border trade regions, minority autonomous areas, Special EconomicZones ("SEZs"), open coastal cities, economic and technical development zones and other specialeconomic 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-national authorities in China.  In this regard, therepresentative of China confirmed that the central government would ensure that China’s laws,
regulations and other measures, including local regulations, rules and other measures of government
agencies of the sub-national level conformed to the obligations undertaken by China in the WTOAgreement and the Draft Protocol.  This included all fiscal, financial and budgetary activitiesperformed by the sub-central governments.  The Working Party took note of this commitment.
69. Those members of the Working Party also raised concerns about whether China's central
government would be sufficiently informed about non-uniform practices and would take necessaryenforcement actions.  Those members stated that China should establish a mechanism by which anyconcerned person could bring to the attention of the central government cases of non-uniformapplication 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 SEZsand other areas where special regimes for tariffs, taxes and regulations were established and at alllevels of government.  The Working Party 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 andprovisional and interim measures.  He stated that in China, local governments included provincialgovernments, including autonomous regions and municipalities 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 actingwithin their respective constitutional powers and functions and applied at their corresponding localWT/ACC/SPEC/CHN/1/Rev.5
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level.  Townships were only authorized to implement 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 operative upon entry into force of the Draft Protocol.  All
individuals and entities could bring to the attention of central government authorities cases of non-
uniform application of China's trade regime, including its commitments under the WTO Agreementand the Draft Protocol.  Such cases would be referred promptly to the responsible government agency,and when non-uniform application was established, the authorities would act promptly to address thesituation utilizing the remedies available under China’s laws, taking into consideration China’sinternational obligations and the need to provide a meaningful remedy.  The individual or entitynotifying China’s authorities would be informed promptly in writing of any decision and action taken.The Working Party took note 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 prompt review of all administrative actions relating tothe implementation of laws, regulations, judicial decisions and administrative rulings of generalapplication referred to in Article X:1 of the GATT 1994, including administrative actions relating toimport or export licences, non-tariff measures and tariff-rate quota administration, conformityassessment procedures and other measures.  These members sought explicit confirmation that certain
types of measures, such as decisions relating to standards and chemical registration, would be subject
to judicial review.  Some members of the Working Party also stated that the administrative actionssubject to review should also include any actions required to be reviewed under the relevantprovisions of the TRIPS Agreement and the GATS.  These members stated that such tribunals shouldbe independent of the agencies entrusted with administrative enforcement of the matter and should nothave any substantial interest in the outcome of the matter.
74. Those members of the Working Party stated that such review procedures should include the
opportunity for appeal, without penalty, by individuals or enterprises affected by any administrativeaction subject to review.  If an initial right of appeal 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 communicated in writing to the appellant, together withnotification of any right to further appeal.WT/ACC/SPEC/CHN/1/Rev.5
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75. The representative of China confirmed that it would revise its relevant laws and regulations so
that its relevant domestic laws and regulations would be consistent with the requirements of the WTOAgreement and the Draft Protocol on procedures for judicial review of administrative actions.  Hefurther stated that the tribunals responsible for such reviews would be impartial and independent of
the agency entrusted with administrative enforcement, 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 the Working Party, the representative of China
confirmed that administrative actions related to measures covered under Article X:1 of theGATT 1994 included those relating to national treatment, conformity assessment, the regulation,control, supply or promotion of a service, including the grant or denial of a licence to provide aservice and other matters, and that such administrative actions would be subject to the proceduresestablished 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 note of these commitments.
IV. POLICIES AFFECTING TRADE IN GOODS
A. TRADING RIGHTS
[To be completed]
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 action would increase the certainty and predictability ofthis aspect of China's trade regime.  Members also noted the substantial unilateral tariff reductionsmade 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 relatedlaws and regulations.  He noted that the Customs Tariff of China was a charge imposed on importedgoods. The purpose of levying tariffs was twofold:  (a) to regulate imports so as to promote andsupport domestic production;  and (b) to serve as an important source of revenue for the treasury of
the central government.  China's tariff policy was to promote economic reform and opening of the
economy.  The basic principles for establishing dut y 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'sWT/ACC/SPEC/CHN/1/Rev.5
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livelihood but which were not produced sufficiently domestically.  Import duty rates on raw materials
were generally lower than those on semi-manufactured or manufactured products.  For parts orcomponents 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 produced domestically or which were considered non-
essential for the national economy and the people's livelihood.   A higher duty was applied toimported products, the equivalent of which were produced domestically and the local manufacturer ofwhich needed protection.
79. The representative of China said that China had adopted the Harmonized Commodity
Description and Coding System (HS) as from 1 January 1992 and joined the International Conventionon the Harmonized Commodity Description and Coding System in the same year.  There were21 sections, 97 chapters and 7062 eight-digit tariff headings based on the six-digit HS'96 version inthe Customs Tariff for the year 2000.  Tariff rates were 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 7062tariff headings, tariff rates for 525 headings were below 5%, 1488 were between 5% (inclusive) and10% (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 beenprovided to the Working Party.
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 agreements, whereas the general rates applied to imports
from other sources.
81. The representative of China confirmed that upon accession China would participate in the
Information Technology Agreement ("ITA") and would eliminate tariffs on all informationtechnology products as set out in China's schedule.  Furthermore, upon accession, China wouldeliminate all other duties and charges for ITA products.  The Working Party took note of thesecommitments.
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 cr eated such tariff lines, the tariff rates would be no
more than 10%.  The Working Party took note of this commitment.WT/ACC/SPEC/CHN/1/Rev.5
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83. China undertook bilateral market access negotiations on goods with members of the Working
Party.  The results of those negotiations were contained in the Schedule of Concessions andCommitments on Goods and formed Annex 10 to the Draft Protocol.
2. Other Duties and Charges
84. The representative of China confirmed that China 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 GATT1994.  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-preferentialtrade complied fully with the WTO Agreement on Rules of Origin.
86. The representative of China noted that the criteria for making the determination of substantial
transformation was:  (a) change in tariff classification 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
origin of the product was determined to be the last country in which the product underwent substantialtransformation.  The rules of origin applied for statistical purposes were the same.  However, forstatistical purposes, the General Customs Admini stration ("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 international harmonization of non-preferential rules of originwas concluded, China would fully adopt and apply the internationally harmonized non-preferentialrules of origin.  A mechanism that met the requirements of Articles 2(h) and 3(f), and Annex II,
paragraph 3(d) of the Agreement, which required provision upon request of an assessment of the
origin of an import or an export and outlined the terms under which it would be provided, would beestablished in China's legal framework by the date of accession.  The Working Party took note ofthese commitments.WT/ACC/SPEC/CHN/1/Rev.5
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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 indirectly.  He also confirmed that China would applyrules of origin equally for all purposes.  The Working Party took note of these commitments.
90. The representative of China confirmed that from the date of accession, China would ensure
that its laws, regulations and other measures relatin g 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 Agreement.  The Working Party took note of thiscommitment.
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 inthis regard.  The Working Party took note of this commitment.
5. Application of Internal Taxes to Imports
92. Some members of the Working Party expressed concern 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 discriminatory internal taxes and charges to importedgoods and services, including taxes and charges applied by sub-national authorities.  Those membersrequested 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, maintenanceand assembling;  (b) the Consumption Tax on some se lected 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 and the Consumption Tax on
imported goods were collected by Customs at the poin t of entry.  He noted that VAT was  reimbursed
once goods were exported.  Exported goods were exempted from the Consumption Tax.
94. He further noted that the State Council determined all policies concerning the levying of VAT
and the Consumption Tax, adjustment of tax types and tax rates (tax value), as well as the taxexemption of VAT, the Consumption Tax and the Business Tax.  The laws and regulations wereWT/ACC/SPEC/CHN/1/Rev.5
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interpreted and implemented by the Ministry of Finance and the State Administration of Taxation.
VAT and the Consumption Tax were levied and administered by the State competent departments oftaxation, while the Business Tax was collected and administered by the local competent departmentsof taxation.
95. The representative of China confirmed that from the date of accession, China would ensure
that its laws, regulations and other measures relating to internal taxes and charges levied on importswould 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 tooknote of this commitment.
6. Tariff Exemptions
96. The representative of China stated that the tariff exemption policy of China was developed
and implemented in accordance with the Customs Law of the People's Republic of China and theRegulations of the People's Republic of China on Import and Export Duties. The coverage of specifictariff reduction or exemption was provided for by the State Council. All the tariff reductions andexemptions 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 reductions or exemptions were available for thefollowing goods:
(a) A consignment of goods, on which customs duties were estimated below
RMB 10 yuan;
(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 for 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;WT/ACC/SPEC/CHN/1/Rev.5
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(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 otherpurposes during the time period of supervision and control.
98. Some members of the Working Party expressed concerns over the availability and application
of tariff reductions and exemptions for a variety of enterprises and other entities, including statetrading enterprises, state-owned enterprises, foreig n-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 reductions or exemptions could have on revenues and
predictability and certainty in application of tariff and other trade measures.
99. The representative of China confirmed that upon entry into force of the Draft Protocol, China
would adopt and apply tariff reductions and exemp tions so as to ensure MFN treatment for imported
goods.  The Working Party took note of this commitment.
7. Tariff Rate Quotas
100. Several members of the Working Party expressed concern over the lack of transparency,
uniformity and predictability of China’s administration 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 thatwould not cause trade distortions.  Those members as ked that China ensure that its TRQ arrangements
be no more administratively burdensome than absolutely necessary, and also expressed the hope thatChina would move as quickly as possible to a market-based TRQ allocation process.
101. Those members of the Working Party also raised 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 allocationsWT/ACC/SPEC/CHN/1/Rev.5
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based on government determinations of subnational 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 discrimination 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 intoaccess commitments for these commodities, improv e the administration of the TRQ regime, and
ensure that trade would not be distorted by unjustified government regulation.  Certain members ofthe Working Party also requested that a number of specified products be removed from China’s TRQsystem and that, upon import, these products 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 byCustoms.  China was trying to simplify the TRQ administration regime and procedures in a bid tofacilitate 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 freeing agricultural products from state pricing and inguiding farmers to adjust the structure of agricultural production based on the demands of the market.In connection with that reform process, in the bi lateral negotiations with Members, China committed
that as soon as it became a Member of the WTO, it would eliminate TRQs on a number of products
and subject these only to tariffs.  The products concerned were barley, soybeans, rapeseed, peanut oil,sunflower seed oil, corn oil, and cottonseed oil.  In addition, China would replace quantitative importrestrictions on sugar, cotton and three types of fertilizers (DAP, NPK and urea) by TRQs.  TheWorking Party took note of these commitments.
104. The representative of China stated that from entry 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 timeframes, 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 fill ing of each TRQ.  China would apply TRQs fully inWT/ACC/SPEC/CHN/1/Rev.5
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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 for 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 TRQ allocations set aside for importation by suchentities.  For products in Annex 2 of the Draft Protocol that were subject to designated trading, Chinaconfirmed that it would ensure that additional enterprises granted trading rights in accordance withChina’s commitments to phase out designated trading would not be disadvantaged in the allocation ofTRQ.  The Working Party took note of these commitments.
106. Some members of the Working Party expressed the view that allocation decisions were based,
in large part, on government-determined provincial  supply and utilization rather than on commercial
market criteria that reflected consumer preferences and end-user demand.  Those members expressed
concern that China’s stated intention to allocate quota to sub-central authorities and to authorize those
authorities to then allocate that quota to end-users 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 intent ion with regards to TRQ procedures would not be
consistent with China’s commitments to uniform administration of its trade regime.  Those memberssought confirmation that China would not establish a separate process of allocation to sub-centralauthorities, as well as confirmation that all allocation and reallocation decisions would be made by asingle, 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 applications from end-users and forwarding themto the central authority;  receiving queries and transmitting these to the central authority;  reporting onallocation and reallocation decisions made by the central authority and providing informationregarding such allocations and reallocations u pon request;  checking the information in the
applications to verify that it met the published criteria;  notifying applicants of any deficiencies intheir applications;  and providing applicants with an opportunity to cure deficiencies in theirapplications.  After the central authority decided on allocations of quota to end-users, the sub-centralbodies would issue TRQ certificates accordingly.  The representative of China also confirmed that
China would administer a consistent national allocation (and reallocation) policy for TRQs, that it
would not establish a separate process of allocation to sub-central authorities and that decisionsWT/ACC/SPEC/CHN/1/Rev.5
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regarding all allocations and reallocations to end-users would be made by a single, central authority.
The Working Party took note of these commitments.
8. Quantitative Import Restrictions, including Prohibitions and Quotas
[To be completed]
9. Import Licensing
108. The representative of China confirmed that the list of all entities responsible for the
authorization or approval of imports would be upda ted and republished in the official journal, the
MOFTEC Gazette, within one month of any change thereto.  The Working Party took note of thiscommitment.
109. 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 "Interim Regulations on
Licensing System for Import Commodities", and MOFTEC and Customs had issued "Detailed Rulesfor the Implementation of the Interim Regulations on Licensing System for Import Commodities".The Interim Regulations were uniformly implemented throughout China.  In 1999, of the total importvalue of US$ 165.7 billion, imports subject to licensing represented 8.45%, covering US$ 14 billion.MOFTEC determined which products should be subject to import licensing according to the relevantprovisions of the "Foreign Trade Law".
110. 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 itsproducts;  (12) Acetate tow;  (13) Cotton;  (14) Motor vehicles and their key parts;  (15) Motorcyclesand their engines and chassises; (16) Colour television sets and TV kinescope;  (17) Radios, taperecorders 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 compressor;  (24) Audio and video tape duplicationequipment;  (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 forchemical weapon;  (34) Chemicals used to produce narcotics;  and (35) Laser disc productionfacilities.  He also noted that in 1999, there were 13 commodity categories which were imported byWT/ACC/SPEC/CHN/1/Rev.5
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the foreign trade companies designated by MOFTEC. These categories were as follows:  (1)
Processed oil;  (2) Fertilizer; (3) Tobacco; (4) Vegetable oil; (5) Grain; (6) Natural rubber; (7) Wool;(8) Acrylic fibers; (9) Sugar; (10) Cotton; (11) Crude oil; (12) Steel; and (13) Plywood.
111. Concerning the granting and administration of import licences, the representative of China
said that the examination and approval of the lice nce took two to three working days.  Applications
for import licences could be submitted to the Qu ota and Licence Administrative Bureau of MOFTEC,
or Special Commissioner Offices in 16 provin ces, or Commissions of Foreign Economic Relations
and Trade of various provinces, autonomous regions, and municipalities directly under the centralgovernment and those with independent budgetary st atus. Licensing agencies authorized by MOFTEC
could issue import licences on the basis of import documents submitted by the applicants,  approvedby the competent departments. A licence could not be bought, sold or transferred, and was valid forone calendar year.  Import licences could be extended once for up to three months.
112. Some members of the Working Party expressed concern 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 approval of registration, would act as a restraint onimports.  The representative of China emphasized that the purpose of the registration system was onlyto gather statistical information.  He confirmed that China would bring its automatic licensing systeminto conformity with Article 2 of the Agreement on Import Licensing Procedures upon entry intoforce of the Draft Protocol.  The Working Party took note of this commitment.
113. Some members of the Working Party noted that enterprises and individuals seeking to import
products subject to tariff quota administration requirements 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 validfor a certain period of time.  Moreover, the entity importing the good would need trading rights.  Inthe light of these multiple requirements, a quota allocation certificate should satisfy any importlicensing requirement that might apply.
114. 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 allocation.  If quota were reallocated pursuant to China'sTRQ administration commitments, the provisions rela ting to licensing of such reallocated quantities
would apply.  The Working Party took note of this commitment.WT/ACC/SPEC/CHN/1/Rev.5
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10. Customs Valuation
115. 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 forcertain goods, which would be inconsistent with the Agreement on Implementation of Article VII ofthe GATT 1994 ("Customs Valuation Agreement").  Other WTO-consistent means were available toMembers doubting the veracity of declared transaction values.
116. 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 Partytook note of this commitment.
117. The representative of China considered that there would not be situations where the "normal
transaction value" could not be "ascertained" since the Customs Valuation Agreement provided
several methods for valuation.
118. 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 transaction value, as defined in the Customs ValuationAgreement.  If the transaction value of imported goods could not be determined, the duty-payingvalue was determined based on other means provid ed for in the Customs Valuation Agreement.  He
also noted that the Customs Law provided for appeal procedures. In the event of a dispute overcalculation of duty paid or payable with the Customs, the dissatisfied importer could apply to
Customs for a reconsideration of the case. If the appeal was rejected the importer could sue at the
People's Court.
119. The representative of China confirmed that, from the entry into force of the Draft Protocol,
China would apply fully the Customs Valuation Agreement, including the customs valuationmethodologies set forth in Articles 1 through 8 of the Agreement.  In addition, China would apply theprovisions of the Decision on the Treatment of Interest 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 Valuation (G/VAL/5).  In accordance with these latterprovisions, only the cost of the carrier medium itself would be accounted for in determining the
customs value of carrier media bearing software.  The Working Party took note of these
commitments.WT/ACC/SPEC/CHN/1/Rev.5
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11. Other Customs Formalities
120. The representative of China said that Chin a joined the International Convention on the
Simplification and Harmonisation of Customs Syst em in 1988 and on 15 June 2000 signed the
Protocol on the Amendment of the International Convention on the Simplification and Harmonisationof Customs System.  The Customs authorities of China had only adopted such customs formalities asdeclaration, examination, levying of duties and release which were consistent with internationalpractices.
12. Preshipment Inspection
121. The representative of China stated that, currently, there were trade and commerce inspection
agencies (including joint-venture agencies) engaged in preshipment inspection.  China committeditself to comply with the Agreement on Preshipmen t Inspection, and would regulate the existing trade
and commerce inspection agencies and permit the qualified agencies to be engaged in preshipmentinspection in line with the government mandate or the terms and conditions of commercial contracts.
122. Some members of the Working Party requested information on whether China used the
services of a private preshipment inspection entity.  The representative of China confirmed that Chinawould ensure that, upon accession, any laws and regulations relating to preshipment inspection by any
inspection agency, including private entities, would be consistent with relevant WTO agreements, in
particular, the Agreement on Preshipment Inspection and the Customs Valuation Agreement.Moreover, any fees charged in connection with such preshipment inspection would be commensuratewith the service provided, in conformity with Article VIII:1 of the GATT 1994.  The Working Party
took note of these commitments.
13. Anti-Dumping, Countervailing Duties
[To be completed]
14. Safeguards
123. The representative of China stated that upon accession, China would implement its
Regulation on Safeguard by which the future safeguard measures would be regulated.  The draftingwork of this regulation was still under way.  The contents of this new regulation would be fullyconsistent with the Agreement on Safeguards.  He noted that, at present, China was in the process ofdrafting safeguard legislation in accordance with Article 29 of the Foreign Trade Law and theAgreement on Safeguards.  The Working Party took note of this commitment.WT/ACC/SPEC/CHN/1/Rev.5
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C. EXPORT REGULATIONS
1. Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes
to Exports
124. Some members of the Working Party raised concerns over taxes and charges applied
exclusively to exports.  In their view, such taxes and charges should be eliminated unless applied in
conformity with GATT Article VIII or listed in Annex 6 to the Draft Protocol.
125. The representative of China noted that the majority of products were free of export duty,
although 36 items, including tungsten ore, Ferrosil icon and some aluminum products, were subject to
export duties.  He noted that the duty-paying value of exported goods was the F.O.B. price of thegoods.
2. Export Licensing and Export Restrictions
126. The representative of China confirmed that the list of all entities responsible for the
authorization or approval of expor ts would be updated and republished in the official journal, the
MOFTEC Gazette, within one month of any change thereto.  The Working Party took note of thiscommitment.
127. The representative of China said that China applied its export licence system to certain
agricultural products, resource products and ch emicals. China's export licencing system was
administered in accordance with the "Interim Procedures for the Export Licencing System". In 1992,there were 143 categories of products subject to export licencing which accounted for 48.3% of thetotal value of the China's exports, but by 1999, the total number of products subject to export
licensing had been reduced to 58 categories and 73 items with an export value of US$ 18.5 billion,
taking up only 9.5% of total exports. Export licence s for these products were issued according to the
stipulated commodity scope respectively by the Administrative Bureau of Quota and Licence(ABQL), the Special Commissioner Offices (SCO) located in 16 provinces and the Commissions of
Foreign Economic Relations and 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 downin the Foreign Trade Law, were:  (1) maintenance of national security or public interests;(2) protection against shortage of supply in the domestic market or exhaustion 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.WT/ACC/SPEC/CHN/1/Rev.5
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128. He further noted that an application for an export licence had to be submitted to the licence
issuing institutions authorized by MOFTEC, together with documents approving the export by thecompetent departments, and other relevant materials (such as the Export Qualification Certificate forthe enterprises, export contract and so on). The procedures 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 bythem were required to obtain export licences if the products to be exported were subject to thelicensing requirement.  If the products were not subject to licensing, customs clearance would begiven after examination by Customs on the basis of export contracts and other relevant documents.
129. 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 toprevent or relieve critical shortages of foodstuffs or other products essential to an exporting WTO
Member.  Article XX of the GATT 1994 also allowed for restrictive export measures, but only if such
measures were made effective in conjunction with restrictions on domestic production orconsumption.
130. 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 acomplete list of restrictions presently applied.  These members expressed concern that the remainingnumber was still high, covering about 10 per cent of export trade, and requested that they be eitherreduced further or eliminated by the date of accession in order to achieve full compatibility with
GATT requirements.  Some members expressed partic ular concern about export restrictions on raw
materials or intermediate products that could be subject to further processing, such as tungsten oreconcentrates, rare earths and other metals.
131. The representative of China confirmed that China would abide by WTO rules in respect of
non-automatic export licensing and export restrictions.  The Foreign Trade Law would also bebrought 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 GATTprovisions.  The representative of China further confirmed that export restrictions on tungsten oreconcentrates would be eliminated upon entry into force of the Draft Protocol.  The Working Party
took note of these commitments.
132. The representative of China stated that China prohibited export of narcotic drugs, poisons,
materials containing State secrets, precious and rare animals and plants.WT/ACC/SPEC/CHN/1/Rev.5
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133. Some members of the Working Party expressed concern about China's restrictions on exports
of silk.  Certain other members expressed concern about export restrictions on other goods, inparticular raw materials or intermediate products that could be subject to further processing, such astungsten ore concentrates, rare earths and other metals.  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.
134. The representative of China confirmed that upon entry into force of the Draft Protocol,
restrictions on exports would be eliminated unless they could be justified under the WTO Agreementor the Draft Protocol.  The Working Party took note of this commitment.
3. Export Subsidies
135. 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 theirelimination, in Annex 5b of the Draft Protocol.  Those members considered this list to be incomplete.
136. The representative of China confirmed that it wo uld 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 exportperformance.  To this end, China would, by accession, cease to maintain all pre-existing exportsubsidy programmes and, upon accession, make no further payments or disbursements, nor foregorevenue 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
enterprises, which were contingent, in law or in fact, upon an obligation to export.  The WorkingParty took note of this commitment.
137. On the same basis, the representative of China confirmed that China would eliminate, upon
accession, all subsidies contingent upon the use of domestic over imported goods, within the meaningof Article 3.1(b) of the SCM Agreement.  The Working Party took note of this commitment.
D. INTERNAL POLICIES AFFECTING FOREIGN TRADE IN GOODS
1. Taxes and Charges Levied on Imports and Exports
138. Some members of the Working Party expressed concern about the application of the VAT and
additional charges levied by sub-central governments on imports.  Non-discriminatory application ofthe VAT and other internal taxes was deemed essential.WT/ACC/SPEC/CHN/1/Rev.5
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139. 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 onimports and exports would be in full conformity with its WTO obligations, including Articles I, III:2and 4, and XI:1 of the GATT 1994, and that it would also implement such laws and regulations in full
conformity with these obligations.  The Working Party took note of this commitment.
2. Industrial Policy, including Subsidies
[To be completed]
3. Technical Barriers to Trade
[To be completed]
4. Sanitary and Phytosanitary Measures
140. Sanitary and Phytosanitary Measures Some members of the Working Party expressed
concerns in relation to the use by China of sanitary and phytosanitary ("SPS") procedures as non-tariffbarriers and raised specific instances where they considered that China's measures were not consistentwith the WTO Agreement on the Application of Sanitary and Phytosanitary Measures ("SPSAgreement").  These members sought assurances that China would not use SPS measures to restricttrade, that SPS measures would only be imposed to the extent necessary to protect human, animal orplant life or health, and that such measures would be based fully on scientific principles.
141. The representative of China stated that pursuant to the provisions of the SPS Agreement,
China applied SPS measures only to the extent nece ssary 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 recommendations.  China would not apply SPS measures in amanner 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 scientificevidence.  The Working Party took note of these commitments.
142. 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 Agreement of all its laws, regulationsand practices relating to SPS measures.  In response, the representative of China confirmed that Chinawould fully apply the SPS Agreement from the date of accession and would ensure the conformity
with the SPS Agreement of all of its laws, regulations and practices relating to SPS measures.  The
Working Party took note of these commitments.WT/ACC/SPEC/CHN/1/Rev.5
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143. 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 notification did not prejudge the legal status under theWTO Agreement of the nature or effects of the notified laws, regulations and other measures.  The
representative of China also submitted an action plan for implementation of China's SPS
commitments, circulated to the Working Party in WT/ACC/CHN/XX.  The action plan outlined thesteps that China was taking to ensure full implementation of the SPS Agreement, including revision ofits laws, regulations and other measures.
144. The representative of China said that China had set up an SPS notification authority and an
SPS enquiry point which would be notified to the SPS Committee.  Laws, regulations, rules, standardsand procedures relating to SPS measures, including inspection, had been published in publicationssuch as the MOFTEC Gazette.  Information could also be gathered from the SPS notificationauthority or from China's SPS enquiry point.
5. Trade-Related Investment Measures
145. The representative of China confirmed that upon accession, as set forth in the Draft Protocol,
China would comply fully with the TRIMs Agreemen t, without recourse to Article 5 thereof, and
would eliminate foreign-exchange balancing a nd trade balancing requirements, local content
requirements and export performance requirements. Chinese authorities would not enforce the termsof contracts containing such requirements.  The allocation, permission or rights for importation and
investment would not be conditional upon performance requirements set by national or sub-national
authorities, or subject to secondary conditions covering, for example, the conduct of research, theprovision of offsets or other forms of industrial compensation including specified types or volumes ofbusiness opportunities, the use of local inputs or th e transfer of technology.  Permission to invest,
import licences, quotas and tariff rate quotas would be granted without regard to the existence ofcompeting Chinese domestic suppliers.  The Working Party took note of this commitment.
146. In the context of discussions on the government's Industrial Policy for the Automotive Sector,
the representative of China confirmed that this pol icy would be amended to ensure compatibility with
WTO rules and principles.  The Working Party took note of this commitment.
147. 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 vehiclepermitted for production, would gradually be lifted.  Such measures would be completely removedtwo years after accession, thus ensuring that moto r vehicle producers would be free to choose theWT/ACC/SPEC/CHN/1/Rev.5
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categories, types and models they produced.  However, it was understood that category authorizations
by the government could continue to distinguish between trucks and buses, light commercial vehicles,and passenger cars (including multi-purpose vehicles and sport utility vehicles).  The Working Partytook note of this commitment.
148. The representative of China confirmed that Chin a also agreed to raise the limit within which
investments in motor vehicle manufacturing could be  approved at provincial government level only,
from the current level of US$ 30 million, to US$ 60 million one year after accession, US$ 90 milliontwo years after accession, and US$ 150 million four years after accession.  The Working Party tooknote of this commitment.
149. 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 uponaccession.  The Working Party took note of this commitment.
6. State Trading Entities
150. 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, however, that China's state trading enterprises hadfull management autonomy and responsibility for their own profits and losses and that China hadundertaken broad and significant commitments to improve the transparency of state tradingenterprises' operation and the measures relating to such operation.
151. The same members of the Working Party also stated that China should ensure that the import
purchasing practices and procedures of state trading enterprises were fully transparent, and incompliance with the requirements of the WTO Agreement.  They considered that China should alsorefrain from taking any measure to influence or direct state trading enterprises as to the quantity,value, or country of origin of goods purchased or sold, except in accordance with the requirements ofthe WTO Agreement.  Those members also stated that as part of China's notification under theGATT 1994 and the Understanding on the Interpretation of Article XVII of the GATT 1994, Chinashould notify information on state trading, including, in the case of state trading of exported goods,domestic procurement prices, contract terms for delivery and financing terms and conditions.
152. In response, the representative of China stated that its state trading enterprises had full
management autonomy and responsibility for their own profits and losses.  However, some membersof the Working Party again stated that China should undertake a commitment to ensure that all statetrading enterprises complied with the requirements  of the WTO Agreement.  The representative ofWT/ACC/SPEC/CHN/1/Rev.5
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China noted that a list of products subject to state trading had been provided in Annex 2a of the Draft
Protocol.  He also confirmed that information on state trading enterprises, as required by the DraftProtocol, would be supplied, but st ated that such notification should be without prejudice to the
commercial interests of the state trading enterprises.
153. Members of the Working Party took note of the specific arrangements that would apply for
fertilizers and crude and processed oil.  A key feature of those arrangements related to the annualallocation of import quantities.  The differences in the regimes that would apply to those productswere noted, in particular in regard to the obligation on state enterprises trading in fertilizers to carryover to the next year any unused import quantities.
154. 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 representative of China confirmed that imports allocated to non-state traders ofcrude 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 addition, the representative of China agreed that China
would publish, on a quarterly basis, the requests for imports that had been made by non-state traders,as well as the licences granted, and would supply information relevant to such traders upon request.The Working Party took note of these commitments.
155. Some members of the Working Party noted that prior to accession, some enterprises in China
were permitted to import goods for their production purposes, including those goods included inAnnex 2a.  The representative of China confirmed that, notwithstanding section 5, paragraph 1, of theDraft Protocol, non-state trading enterprises, including 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.
156. Some members of the Working Party expressed concerns about supplies of raw materials in
the textiles sector, and particularly in regard to supplies of silk, in the light of China's position as themajor world supplier of silk, currently subject to state trading rights concerning exports.
157. In this regard, the representative of China confirmed that China would progressively abolish
the system of state trading in respect of silk by measures increasing and extending trading rights, withthe result that China would remove completely the silk products set out in numbers 10 and 11 ofAnnex 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 not  to introduce any changes of a more restrictiveWT/ACC/SPEC/CHN/1/Rev.5
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nature to the existing structures in place for the supply of silk.  The representative of China further
confirmed that access to supplies of raw materials in the textiles sector would remain at conditions noless favorable than for domestic users, and gave his assurance that access to supplies of raw materialsas enjoyed under existing arrangements would not be adversely affected following China's accession
to the WTO.  The Working Party took note of these commitments.
158. Members of the Working Party noted that domestic prices for most agricultural commodities
in China were higher than world prices, and this differential allowed China's state trading enterprisesto import at low prices and then mark up the price when selling the product to wholesalers andend-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 thatmark-ups could be used to reduce the competitiveness of imported products and limit the range ofqualities and grades available to end-users in China.  The representative of China stated that currentlystate 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 that under China's law limits existed on the fees thatcould be charged by state trading enterprises.
159. 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 itsSchedule of Concessions and Commitments on Goods or that was not otherwise justified under WTOrules.  The Working Party took note of this commitment.
7. Special Economic Areas
160. Members of the Working Party noted that there was insufficient information available
concerning special economic areas within China’s customs territory, including border trade regionsand minority autonomous areas, Special Economic Zones (“SEZs”), open coastal cities, economic andtechnical development zones and other areas where special regimes for tariffs, taxes and regulationshad been established (collectively referred to as “special economic areas”), in particular their names,geographic boundaries, and relevant laws, regulations and other measures relating thereto.
161. In response, the representative of China stated that since 1979 China had established a
number of special economic areas where more open policies were applied.  They included five SEZs,
14 open coastal cities, six open cities along the Yangtze River, 21 provincial capital cities and 13inland boundary cities.  Those special economic areas enjoyed greater flexibility in utilizing foreignWT/ACC/SPEC/CHN/1/Rev.5
Page 40
capital, introducing foreign technology and conducting economic cooperation overseas.  At present,
foreign investors were entitled to certain preferential treatment.
162. 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 remitted abroad by foreign investors were exempted
from income tax.  The preferential income tax rate of 15% was applicable to technology-intensive orknowledge-intensive items or projects with foreign investment of over US$30 million, as well asenterprises that operated in the fields of energy, transport and port construction.
163. 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 nearlyone fifth of the nation's total.  The national laws and regulations on taxation were applicable to SEZsin a uniform manner.
164. In response to further requests for 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 China's economic reform and opening up, China wouldimplement its tariff policy uniformly throughout its customs territory. Members of the Working Partyexpressed concern that imported products introduced from these special economic areas into otherparts of China's customs territory should be subject to the same treatment in the application of alltaxes, import restrictions and customs duties and other charges as that normally applied to importsinto the other parts of China's customs territory. The representative of China stated that China wouldundertake to ensure such non-discriminatory treatment.  The Working Party took note of this
commitment.
165. Some members of the Working Party also raised concerns as to whether the assistance
provided to minority autonomous regions and other areas of economic poverty was consistent withWTO requirements.  In response, the representative of China confirmed that China had a clearcommitment to uniform administration of the trad e regime within each such area and that, upon
accession, China would ensure that such assistance would be implemented consistent with WTOobligations.  The Working Party took note of this commitment.
166. Some members of the Working Party requested that China take steps to ensure that all
products imported into the other parts of the customs territory of China from special economic areas
would be subject to the same normal customs duties and charges as any other product imported into
the customs territory of China.  In particular, those members requested that China undertake aWT/ACC/SPEC/CHN/1/Rev.5
Page 41
commitment to apply all taxes, charges and measures affecting imports, including import restrictions
and customs and tariff charges, that were normally applied to imports into the other parts of China'scustoms territory to all imported products, including physically incorporated components, enteringChina's customs territory from the special economic areas.
167. The representative of China confirmed that China would strengthen the uniform enforcement
of taxes, tariffs and non-tariff measures on trade between its special economic areas and the otherparts of China's customs territory.  China further confirmed that statistics on trade between China'sspecial economic areas and the other parts of its customs territory would be maintained and improved,and would be notified to the WTO on a regular basis.  The Working Party took note of thesecommitments.
168. Some members of the Working Party requested that China notify the WTO Secretariat of all
the relevant laws, regulations and other measures relating to its special economic areas.  They askedthat the notification list and identify all those special 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 othermeasures relating thereto.
169. The representative of China confirmed that China would provide information in its
notifications describing how the special trade, tariff, and tax regulations applied were limited to thedesignated special economic areas, including in formation concerning their enforcement.  The
Working Party took note of this commitment.
170. In response to concerns raised by some members 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-discriminatory basis.  The Working Party took note ofthis commitment.
8. Government Procurement
171. The representative of China stated that in order to promote China's government procurement,
the Ministry of Finance promulgated the Interim Regulations on Government Procurement inApril 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 lawsand regulations of some WTO Members on government procurement. The policy and procedureregarding government procurement provided for ther ein were consistent with international practice.WT/ACC/SPEC/CHN/1/Rev.5
Page 42
China stuck to the fundamental principles of being open, fair, equitable, efficient and in the public
interest when carrying out government procurem ent.  At present, China was formulating the
Government Procurement Law.
172. 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 should conduct all government procurement, within
the meaning of the Draft Protocol, in a transparent and non-discriminatory manner.  Those membersnoted that China's public entities engaged exclusively in commercial activities would not beconducting government procurement and thus laws, regulations and other measures regulating theseentities' procurement practices would be fully subject to WTO requirements.
173. The representative of China stated that China intended to become a Signatory to the GPA and
that until such time, all government entities at the central and sub-central level would conduct theirprocurement in a transparent manner and provide all foreign suppliers with equal opportunity toparticipate in that procurement pursuant to the principle of MFN treatment.  Such procurements would
be subject only to laws, regulations, judicial decisions, administrative rulings of general application,
and procedures (including standard contract clauses) which had been published and made available tothe public.  The Working Party took note of these commitments.
174. Noting China’s intention to become a Signatory of the GPA, some members of the Working
Party stated that China should, upon entry into force of the Draft Protocol, seek to become an observerto the GPA, and should initiate negotiations for membership in the Agreement by tabling anAppendix 1 offer within two years of accession.  The representative of China responded that Chinawould give serious consideration to this request.
9. Transit
175. The representative of China stated that the current regulation of transit in China, the
Regulations of the Customs of the People's Republic of China on the Supervision and Administrationof Transit Goods, was consistent with Article V of the GATT 1994.
10. Agricultural Policies
[To be completed]
11. Trade in Civil Aircraft
176. In response to questions from members of the 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.5
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177. The representative of China confirmed that China would not impose any provisions of offsets
or other forms of industrial compensation when purchasing civil aircraft, including specified types orvolumes of business opportunities.  Members of the Working Party took note of this commitment.
12. Textiles
178. Some members of the Working Party proposed and the representative of China accepted that
the quantitative restrictions maintained by WTO Members on imports of textiles and apparel productsoriginating 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 thepurpose 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, should be deemed to refer to the day prior to the
date of accession of China to the WTO.  To these base levels, the increase in growth rates providedfor in Articles 2.13 and 2.14 of the ATC should be applied, as appropriate, from the date of accessionof China to the WTO.  The Working Party took note of these commitments.
179. The representative of China agreed that the following provisions would apply to trade in
textiles and clothing products until 31 December 2008 and be part of the terms and conditions forChina'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 trade in these products, such Member could
request consultations with China with a view to easing or avoiding such marketdisruption.  The Member requesting consultations would provide China, at the time ofthe request, with a detailed factual statement of reasons and justifications for itsrequest for consultations with current data which, in the view of the requestingMember, 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 days 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 categoriessubject to these consultations to a level no greater than 7.5 per cent (6 per cent forWT/ACC/SPEC/CHN/1/Rev.5
Page 44
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 consultationswas made;
(d) If no mutually satisfactory solution were reached during the 90-day consultation
period, consultations would continue and the Member requesting consultations could
continue the limits under subparagraph (c) for textiles or textile products in thecategory or categories subject to these consultations;
(e) The term of any restraint limit established under subparagraph (d) would be effective
for the period beginning on the date of the request for consultations and ending on31 December of the year in which consultations were requested, or where three orfewer months remained in the year at the time of the request for consultations, for theperiod ending 12 months after the request for consultations;
(f) No action taken under this provision would remain in effect beyond one year, without
reapplication, unless otherwise agreed between the Member concerned and China.
The Working Party took note of these commitments.
13. Measures Maintained Against China
180. The representative of China stated that WTO Members should eliminate all discriminatory
non-tariff measures maintained against Chinese exports from the date of China's accession to theWTO.  In response, some members of the Working Party stated that, in their view, such measures did
not need to be phased out until such time as China's foreign trade regime fully conformed to WTO
obligations.
181. 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 Agreementwould 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 accordance with mutually agreed terms and timetables asspecified in said annex.
14. Transitional Safeguards
[To be completed]
15. Transitional Review Mechanism
[To be completed]WT/ACC/SPEC/CHN/1/Rev.5
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V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
[To be completed]
VI. POLICIES AFFECTING TRADE IN SERVICES
[To be completed]
VII. OTHER ISSUES
1. Notifications
182. 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
183. Some members of the Working Party raised specific concerns in relation to some of China's
special trade arrangements, including barter trade 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 DraftProtocol to eliminate or bring into conformity  with WTO requirements, all such special trade
arrangements that were not in conformity with those requirements, by no later than the date of entryinto force of the Draft Protocol.
3. Transparency
184. Some members of the Working Party expressed concern about the lack of transparency
regarding the laws, regulations and other measures that applied to matters covered in the WTOAgreement and the Draft Protocol.  In particular, some members noted the difficulty in finding andobtaining copies of regulations and other measures undertaken by various ministries as well as those
taken by provincial and local authorities.  Transparency of regulations and other measures,particularly of sub-central authorities, was essential since these authorities often provided the detailson how the more general laws, regulations and other measures of the central government would beimplemented and often differed among various jurisdictions. 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 trading relations.  Those members noted the developmentof the Internet and other means to ensure that in formation from all government bodies at all levels
could be assembled in one place and made readily available.  The creation and maintenance of aWT/ACC/SPEC/CHN/1/Rev.5
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single, authoritative journal and enquiry point would greatly facilitate dissemination of information
and help promote compliance.
185. In response, the representative of China noted that 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 Bulletin of MOFTEC" published by MOFTEC; "Statistical
Yearbook of China", published by the State Statistical Bureau; "China's Customs Statistics(Quarterly)", edited and published by the Customs.  China's laws and regulations of the State Councilrelating to foreign trade were all published, as were 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 China" and the "MOFTEC Gazette".  The administrativeregulations and directives relating to foreign trade were also published on MOFTEC's official website
(http://www.moftec.gov.cn) and in periodicals.
186. He further noted that there were no FOREX restrictions affecting import or export.
Information on FOREX measures was published by  the SAFE and was available on SAFE's website
(http://www.safe.gov.cn) and via the news media.
187. The representative of China noted that information concerning the administration of imports
and exports would be published in the "International Business" newspaper and the "MOFTECGazette".
188. 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 thepress 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
customs statistics, calculated according to country of origin and final destination, on the basis ofeight-digit HS levels.
189. The representative of China noted that any bilateral trade agreements concluded between
China and its trading partners, and protocols on the exchange of goods negotiated under them werepublished in "The Treaty Series of the PRC".  He also noted that the "Directory of China's Foreign
Economic Relations and Trade Enterprises" and "China's Foreign Trade Corporations andOrganizations" were two publications which identified foreign trade corporations and other
enterprises in China engaged in foreign trade.WT/ACC/SPEC/CHN/1/Rev.5
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190. 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 ofChina; Gazette of the State Council of the People's Republic of China; Collection of the Laws of thePeople's Republic of China; Collection of the Laws 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 Republicof China.
191. The representative of China confirmed that publication of all laws, regulations and other
measures pertaining to or affecting trade in goods, services, TRIPS or the control of FOREX wouldinclude the effective date of these measures.  It would also include the products and services affectedby a particular measure, identified by appropriate tariff line and CPC classification.  The WorkingParty took note of these commitments.
192. The representative of China confirmed that China would publish in the official journal, by
appropriate classification and by service where relevant, a list of all organizations, including those
organizations delegated such authority from the national authorities, that were responsible forauthorizing, approving or regulating services activities whether through grant of licence or otherapproval.  Procedures and the conditions for obtaining such licences or approval would also bepublished.  The Working Party took note of these commitments.
193. The representative of China confirmed that none of the information required by the
WTO Agreement or the Draft Protocol to be disclosed would be withheld as confidential informationexcept 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.
194. 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 laws, regulations and othermeasures pertaining to or affecting trade in goods, services, TRIPS or the control of FOREX, and tothe maximum extent possible would make these laws, regulations and other measures before theywere implemented or enforced, but in no case later than 90 days after they were implemented orenforced.  The Working Party took note of these commitments.
195. Members of the Working Party also requested that China set up an enquiry point where
information relating to all laws, regulations, judicial decisions and administrative rulings of generalWT/ACC/SPEC/CHN/1/Rev.5
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application and other measures pertaining to or affecting trade in goods, services, TRIPS or the
control of FOREX could be obtained.
196. The representative of China confirmed that China would establish or designate one or more
enquiry points where all information relating to the 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.  Theinformation would include the names of national or sub-national authorities (including contact points)responsible for implementing a particular measure.  The Working Party took note of thesecommitments.
VIII.  CONCLUSIONS
197. 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 thecommitments given by China in relation to certain specific matters which are reproduced inparagraphs […] of this Draft Report and noted that these commitments are incorporated inparagraph 1.2 of the Draft Protocol.
198. 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 theconclusion that China should be invited to accede to the Marrakesh Agreement Establishing the WTOunder the provisions of Article XII.  For this purpose, 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…)] thatwere annexed to the Draft Protocol.  It was proposed that these texts be adopted by the GeneralCouncil when it adopted the Draft Report.  When the Draft Decision was adopted, the Draft Protocolwould be open for acceptance by China which would become a WTO Member 30 days after itaccepted the said Draft Protocol.  The Working Party agreed, therefore, that it had completed its workconcerning the negotiations for the accession of China to the WTO Agreement.
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