WORLD TRADE
ORGANIZATIONG/RO/W/94
12 November 2002
(02-6213)
Committee on Rules of Origin Original:  English
CHINA'S TRANSITIONAL REVIEW MECHANISM
The following communication, dated 6 November 2002, has been received from the
Permanent Mission of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.
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Questions from the Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu
China’s TRM at the Committee of Rules of Origin
I. Paragraph 100 of the Report of the Working Party on the accession of China
(WT/ACC/CHN/49) stipulates that 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 be established in China's legal framework by the date of
accession. We thus have the following questions:
A. Question on the period of validity of assessments of origin and on the period of
implementation : Pursuant to Article 2 (h), Article 3 (f), and Annex II, Paragraph 3 (d) of the
WTO Agreement on Rules of Origin, assessments of the origin to be accorded to a good are
to be issued as soon as possible but no later than 150 days after requests. Such assessments
shall remain valid for three years provided that the facts and conditions, including the rules
of origin, under which they have been made remain comparable. However,
-   The “Temporary Regulations (Revised) of the PRC Customs on Origin of Imported
Goods,” does not specify neither the deadline for Customs to issue an assessment of
the origin of a good nor the period of validity of such a Customs’ ruling on origin.
Please inform us of how many days Customs needs to issue an assessment after the
receipt of a properly-documented request, and how long the assessment remains validif the rules, facts and conditions of origin remain comparable.
B. Question concerning judicial, arbitral or administrative tribunals or procedures to review
any administrative action in  relation to the determination of origin:  Article 2 (j), Article 3
(h), and Annex II, Paragraph 3 (f) of the Agr eement stipulate, “Any administrative action
which they take in relation to the determination of origin is reviewable promptly by judicial,
arbitral or administrative tribunals or procedures, independent of the authority issuing the
determination, which can effect the modification or reversal of the determination.” In
addition, the Protocol on the accession of China Article 2 (D) 2 states, “If the initial right of
appeal is to an administrative body, there shall in all cases be the opportunity to choose to
appeal the decision to a judicial body.” However,G/RO/W/94
Page 2
-    Article 9 of “Temporary Regulations of the PRC Customs on Origin of Imported Goods”
states that the PRC General Administration of Customs makes the final ruling if there
is any opposition on the implementation of the regulations. It is our understanding
that the PRC Customs authority is the body that both determines the origin of goods
and reassesses the appeal. Please explain how this regulation conforms to theAgreement on Rules of Origin and the China’s accession Protocol.
C. Question concerning confidentiality of information : Article 2 (k), Article 3 (i), and Annex II,
Paragraph 3 (g) state, “[A]ll information that is by nature confidential or that is provided on
a confidential basis for the purpose of the application of rules of origin is treated as strictly
confidential by the authorities concerned, wh ich shall not disclose it without the specific
permission of the person or government providing such information, except to the extentthat it may be required to be disclosed in the context of judicial proceedings.” However,
- the “Temporary Regulations (Revised) of the PRC Customs on Origin of Imported
Goods,” contains no clause of confidentiality. Please explain how the aforementioned
Regulation conforms to WTO rules in terms of preserving confidentiality.
II. Question concerning the method of calculating the percentage of substantial transformation :
Article 2 (a), Subparagraph (ii) of the Agreement on Rules of Origin, “[I]n cases where the ad
valorem percentage criterion is applied, the method for calculating this percentage shall also
be indicated in the rules of origin.” In addition, Paragraph 98 of China’s Working PartyReport states 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 per cent or more in the total value of a new product.”
However,
-    Article 3 of China’s “Temporary Regulations (Revised) of the PRC Customs on Origin
of Imported Goods” states, “[S]ubstantial process means that the percentage of an
after-processed product or the value-added component is more than 30 percent of the
total product value.” Please indicate the method for calculating this percentage in
order to conform to the WTO Agreement.
III. Question on  conferring origin on a good’s processing : According to Article 2 (a),
Subparagraph (iii) of the Agreement on Rules of Origin, “[I]n cases where the criterion of
manufacturing or processing operation is prescribed, the operation that confers origin on the
good concerned shall be precisely specified.” However,
-   Article 6 (2) of China’s “Regulations of  the PRC Customs on Origin of Exported Goods”
describes “products that partially or wholly use imported raw materials or parts that
within PRC territory undergo their primary and final manufacturing and processing
that cause their external appearance and substantial form or their use to change
substantially.” Furthermore, Article 28 of “Implementing Measures of the
Regulations of the PRC Customs on Origin of Exported Goods ” states, “…MOFTECwill make and promulgate further manufacturing and processing lists accordingly.”
Please provide the information on the manufacturing and processing lists and explain
how these two regulations conform to the Agreement on Rules of Origin.
IV. Question on punishment for import of products whose origin is falsely reported or
counterfeited : Article 2 (g), Article 3(e) and Paragraph 3 (c) of Annex II of the Agreement on
Rules of Origin state, “[T]heir laws, regulations judicial decisions and administrative rulings
of general application relating to rules to rules of origin are published as if they were subjectG/RO/W/94
Page 3
to, and in accordance with, the provisions of paragraph 1 of Article X of GATT 1994.”
However,
-   According to Article 8 of “Temporary Regula tions of the PRC Customs on Origin of Imported
Goods”, which states “Regarding the false reporting or counterfeiting of the origin of imported goods,the PRC Customs will administer punishments according to regulations.” Please indicate if the
punishments on false reporting or counterfeiting have already been published.
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