WORLD TRADE
ORGANIZATIONG/SG/Q1/CHN/13
20 October 2003
(03-5534)
Committee on Safeguards Original:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLE 12.6 OF THE AGREEMENT
Replies to Questions Posed by the UNITED STATES1 Regarding the Notification of
the PEOPLE'S REPUBLIC OF CHINA2
The following communication, dated 17 October 2003, has been received from the Permanent
Mission of the People's Republic of China.
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Q1. Article 5 of the notified rules defines “thr eat of serious injury” to mean “serious injury
that is clearly imminent and will occur if no measures are taken.”  Please explain how this
definition is consistent with the definition in Article 4.1(b) of the WTO Safeguards Agreement,which does not refer to the taking of measures.
Reply
The “measures” in Article 5 of the Rules on Investigations and Determinations of Industry
Injury for Safeguards (referred to as the Rules below) refers to the measures defined in the
Regulations of the People’s Republic of China on Safeguards, which only indicates the clear and
imminent features of the serious injury and is consistent with the Agreement on Safeguards (referred
to as the Agreement below).
Q2. Article 6 states that the “determination of threat of serious injury shall be based on
facts” and then lists factors relating to producti on capacity, inventories, exporting capacity, and
the “possibility” of continuation of export increases to China.  How is this consistent with the
requirement in Article 2.1 of the WTO Safeguards Agreement that the serious injury or threatof serious injury be to the domestic industry?  For example, would an increase in foreign
capacity alone provide a basis for determining that the domestic industry is threatened with
serious injury, or would the investigating authority (the State Economic and Trade Commission
(“SETC”) be required to find that factors relating to the condition of the domestic industry
showed the industry to be threatened with seri ous injury?  What is meant by “ possibility” of
continuation of export increases, and how is th is term distinguished from “allegation, conjecture
or remote possibility” in Article 4.1(b) of the WTO Safeguards Agreement?
Reply
1. The requirements of the Rules are consistent with that of the Agreement.  The factors listed in
Article 6 of the Rules, which are used to evaluate the impact of the import products on the domestic
                                                     
1 G/SG/Q1/CHN/9
2  G/SG/N/1/CHN/2/Suppl.2 (15 April 2003).G/SG/Q1/CHN/13
Page 2
industry, are the further specification of the requirements and are consistent with the Agreement.  The
increase of the foreign production capacity is one of the factors that should be considered when
evaluating whether there is the threat of the serious injury.
2. Article 4.2(a) of the Agreement clearly states the investigating authority should evaluate all
the related and quantifiable factors that have an impact on the industry situation.  Article 7 of the
Rules clearly states Chinese investigating authority  should investigate all index including all other
factors.
3. The “possibility” in Article 6 of the Rules means to explain the trends of continuation of
export increase based on the foreign productivity, inventories, exporting capacity and actual export to
China, which is consistent with the WTO requirements.
Q3. Article 8 lists certain factors relating to causation that the SETC must consider.  Would
all of these factors be “factors other th an increased imports” within the meaning of
Article 4.2(b) of the WTO Safeguards Ag reement?  How would the SETC address the
requirement in Article 4.2(b) that injury from  factors other than increased imports “not be
attributed to increased imports”?
Reply
1. The factors listed in Article 8 of the Rules are included in the “factors other than increased
imports” within the meaning of Article 4.2(b) of the Agreement.
2. The Chinese investigating authority will analyze a ll the factors listed in Article 8 of the Rules
and will not attribute the domestic industry injuries to the increased imports if they result from the
factors listed in Article 8 of the Rules.  The content concerned in Article 8 of the Rules is consistent
with the requirements stated in Article 4.2(b) of the Agreement that “domestic industry injuries from
factors other than increased imports should no be attributed to increased import”.  The Chineseinvestigating authority will make a strict fulfillment of the requirements in the investigation on the
specific cases, as it did in the investigation on the case of iron and steel safeguard measures.  
Q4. Article 9 defines the terms “like product” and “directly competitive product.”  China
appears to use the same definition for  “like product” as in, for example, footnote 46 of the
WTO Agreement on Subsidies and Countervailing Measures, which has no “directly
competitive product” counterpart.  What is the basis for China’s use of this definition in its
safeguards investigations rules?  How would China differentiate between domestic products
“closely resembling” the imported product (but which are not identical), and domestic products
that are “directly competitive” with the import ed product?  Would China interpret Article 9
such that domestic and imported products that are found to be “like” could not also be
considered “directly competitive” with each other in similarity of use and substitutability?
Reply
1. The Rules and the Agreement are consistent on the definition of “directly competitive
product”.
2. According to Article 9 of the Rules, the use and substitutability should be taken into
consideration when investigating the like products.
Q5. The first sentence of Article 11 states that “[i]n the determination of injury to industry,
SETC may exclude the products under investigation or part thereof that did not cause injury to
domestic industry.”  The meaning of this provision, which does not appear to implement anyG/SG/Q1/CHN/13
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portion of the Safeguard Agreement, is unclear.  Could China provide an example of a factual
situation in which SETC would apply this provision?  How can SETC determine that a portion
of the product under investigation did not cause injury before it has concluded its investigation
of injury?
Reply
1. The example provided: according to Article 11 of the Rules, the Chinese investigating
authority took an objective attitude and made the no-injury determination for most products under
investigation in the final determination of the investigation of iron and steel products in 2002.  The
products in the case above are examples of the products or part of products that may be excluded in
Article 11 of the Rules.
2. The Chinese investigating authority draws the conclusion of "a portion of the product under
investigation did not cause injury" in the industry injury determination after instead of before the
careful and thorough investigation, which is exactly what is stated in Article 11 of the Rules.
Q6. Article 12 states that the SETC in conducting investigations and making determinations
“shall” take into account the “public interest” and may examine the potential impact ofsafeguard measures thereon.  How would the SETC do this, and at what point in the process?
Will interested parties be allowed an opportunity to present evidence in this respect?
Reply
The Chinese investigating authority allows the interested parties to present evidence and
comments.  It listens to the reviews of all the parties concerned including the domestic downstreamcustomers and evaluates the possible impacts of safeguard measures on the parties concerned, which
will be considered and reflected in the determination based on the facts.
Q7. Article 13 states that the period of investigation is “normally the 3 years immediately
prior to the initiation of an investigation.”  Do es this mean 3 calendar years?  Why 3 years and
not 5 years?  Does “normally” mean that Ch ina would sometimes envision examining longer
periods or shorter periods?  Under what circums tances?  Would China also collect interim year
data for the most recent period?  What would Chin a do if the availability of data for the period
“immediately prior” to the initiation of the investigation were delayed?
Reply
The “3 years” in the Rules means that there should be at least 3 years, normally calendar
years.  At present, there is only one case of safeguard measures in China, of which the period ofinvestigation is 5 years.  The investigating author ity should try to collect data for the most recent
period.  The situation that the data were delayed and cannot be obtained has never occurred.
Q8. Article 14, which relates to the contents of petitions, gives petitioners the choice of
supplying 3 to 5 years of data in support of their petition.  Why does China give petitioners achoice?  Wouldn’t this encourage petitioner s to choose periods most favourable to an
affirmative determination?  In light of Article 13, would the SETC be bound to base its period
of investigation on the years of data provided by the petitioner?  Please explain how a
determination based on a period of investigation of the petitioner’s choosing would constitute a
determination on the basis of “objective” eviden ce within the meaning of Article 4.2(a) and (b)
of the WTO Safeguards Agreement.G/SG/Q1/CHN/13
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Reply
By asking the petitioners to supply the data in 3 to 5 years’ time, the investigating authority
avoids both the over-simplified analysis of the inadequate data of less than 3 years to determine
whether injury has occurred and the extra burden for the petitioners for supplying data of over 5 years.
According to the Rules, the petitioners should supply at least date of the most recent 3 years and dataof 5 years at most.  The investigating authority will made the final decision on the periods of
investigation.
Q9. Please specify the entities that may be treated as interested parties pursuant to
Article 17(4) of the Rules, which states that “others” may be granted interested party status.
Reply
The interested parties include all the parties directly or indirectly related such as the
customers, the industrial organizations for the customers, raw materials suppliers and their relative
industrial organizations.
Q10. Article 18 explains how an interested party may participate, and appears to limit
participation by lawyers to Chinese law firms and lawyers.  Please explain exactly who mayparticipate, for example on behalf of a foreign producer or exporter.  Does the term “legal
representatives” mean lawyers, or does it refer to  any person authorized to act on behalf of the
interested party?  Why are foreign lawyers excluded?
Reply
1. “The legal representatives” refer to the legal re presentatives of the enterprises rather than the
lawyers.
2. The participation of lawyers should be lawyer s from Chinese side, which is in accordance
with the respective Chinese laws.
Q11. In circumstances where SETC engages exp erts in a safeguard investigation pursuant to
Article 20, how will China ensure that these expe rts maintain the confidentiality of the data
examined?
Reply
The Chinese laws provides for the experts’ obligation to maintain the confidentiality.  Each
trade such as accountants and lawyers has its own rules and regulations.  The Rules also clearly states
the obligation to maintain confidentiality.  Those who violate the obligation will be under thepunishment of the relative law.
Q12. Articles 32-34 appear to limit access to, and copying of, non-confidential information to
interested parties, including apparently the final determination.  Please explain how these
procedures are consistent with the requirements of Articles 3.1 and 4.2(c) of the WTOSafeguards Agreement, which refer to public notice, public hearings, and publication of reports
(except in the case of confidential information).
Reply
The content in the Rules is consistent with the principles of the Agreement and makes
specification on some procedures.G/SG/Q1/CHN/13
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Q13. What is the “relevant certificate” required by Article 33?  How do interested parties
obtain this certificate?
Reply
The “relevant certificates” refers to the content in Article 18 of the Rules and the effective
documents for responding registration.
Q14. What are the procedural formalities referred to in Article 33?  Where can interested
parties obtain information on these procedural formalities?
Reply
The ways for the access to non-confidential in formation has already been in effect and the
content of the accessible information is under improvement after the organizational reform of theChinese government.
Q15. Articles 36 and 37 provide for “preliminary findings” and a “preliminary
determination.”  What is the purpose of a prel iminary decision, and must the SETC make such
a determination in all instances?  In the absence of a full investigation, what evidence will beconsidered in making a preliminary determinat ion?  At what point in time will the
determination be made?  Are the standards fo r “preliminary” and “final” determinations the
same?  What is the effect of an affirmative or negative preliminary determination?  Can a
provisional remedy be imposed following an affirmative preliminary determination?  Would a
negative preliminary determination result in termination of the investigation?
Reply
1. The purpose of a “preliminary determination” is to timely inform the interested parties of the
preliminary decisions made by the investigating authorities so that further injuries can be prevented.
2. Making a preliminary determination is part of the whole procedure.3. The Chinese investigating authority will base its preliminary determination on the evidence
and data obtained from the preliminary investigation; and the final determination will be made by on
the basis of the evidence and data from a full investigation.
4. There is no clear requirement in the Rules as to the time requirement for a preliminary
determination as of today.
5. If an affirmative preliminary determination is made, the investigation will be carried on and
provisional safeguard measures may be adopted; if a negative preliminary determination is made, the
Chinese investigating authority will terminate the investigation.
Q16. Article 39 provides for the SETC to make a “determination” at the time of a mid-term
review (which would be conducted if the safegu ard measure exceeds 3 years).  Please describe
the nature of the determination that would be made and the procedures relating to such
reviews.G/SG/Q1/CHN/13
Page 6
Reply
16. The interim review is to evaluate the impact and the effectiveness of the safeguard measures,
and the adjustment of domestic industries, the main purpose of which is to decide whether to
continue, to loosen or to terminate the safeguard measures.  The procedure will follow the relative
rules on safeguard measures investigations.
Q17. When parties provide requested informatio n in Chinese, as required by Article 43, must
the entire document be translated under all circumstances, or where documents are lengthy,
may the parties submit translations of only the pertinent parts of those lengthy documents?
Reply
Any documents, materials or information provided by the interested parties should be in
standard Chinese.  Non-Chinese documents should be  submitted both in the original text an in a
Chinese translation and should the Chinese text shall prevail.
Q18. Does China’s safeguard law provide for safeguard measures on a provisional basis when
critical circumstances are found to exist?  If so, has China drafted rules that provide for the
application of such measures, and what are those rules?
Reply
There is no other laws on safeguard measures currently in China except the Regulations of the
People’s Republic of China on Safeguards.
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