 
  WORLD TRADE  
ORGANIZATION  G/LIC/13 
22 November 2004 
 (04-5063) 
Committee on Import Licensing  
  
 
REPORT TO THE COUNCIL FOR TRADE IN GOODS 
ON CHINA'S TRANSITIONAL REVIEW  
 
 
1. The Committee on Import Licensing, at its meeting on 30 September 2004, carried out the 
third transitional review of China pursuant to S ection 18 of the Protocol on the Accession of the 
People's Republic of China (WT/L/432).  2. Written comments and questions in connection w ith the transitional review of China's import 
licensing system were submitted in advance by  Japan, the United States and the European 
Communities. These submissions were circulated in documents G/LIC/Q/CHN/11, G/LIC/Q/CHN/12, 
G/LIC/Q/CHN/13, respectively.  3. The information and notifications provided by China to the Committee on Import Licensing for its meeting on 30 September 2004, were  circulated in documents G/LIC/W/23 and 
G/LIC/N/3/CHN/3.   
 
4. The statements made at the meeting of 30 September 2004, where discussions under the 
transitional review took place, are reflected in the minutes of the meeting (G/LIC/M/20, 
paragraphs 3.1-3.29).  The rele vant paragraphs which reflect  this discussion are annexed. 
 G/LIC/13 
Page 2  
 
 3. Transitional review under Section 18 of the Protocol of Accession of the People's 
Republic of China 
 
3.1 The Chairperson
 reminded Members that the second transitional review of China's 
implementation of the WTO Agreement and related pr ovisions of the Protocol, under Paragraph 18 of 
the Protocol of Accession of China, was carried out in 2003 by the subsidiary bodies of the WTO.  
This included the Committee on Import Licensi ng, which had a mandate covering China's 
commitments under the WTO Agreement or China's Protocol of Accession.  The report to the Council for Trade in Goods on last year’s review was circul ated in document G/LIC/11.  The third  transitional 
review was conducted at this meeting. 
 
3.2 The Chairperson stated that China was require d to provide relevant information, including 
information specified in Annex 1A, to each subsid iary body in advance of the review.  Each 
subsidiary body was required to report the results of  such review promptly to  the relevant Council (for 
this Committee the Council for Trade in Goods) whic h in turn reported promptly to the General 
Council.  According to Paragraph 18  of the Protocol, the transitional review takes place each year 
after accession for eight years, followed by a final review in the tenth year or at an earlier date decided by the General Council.  Under paragraph 3(a) of Annex 1A  China was required to notify the 
Committee on Import Licensing of "implementation of the provisions of the Agreement on Import 
Licensing Procedures and the WTO Agreement applying the measures set out in Section 8 of the Protocol including provision of the time taken to grant an import licence".  Paragraph 1 of Section 8  
of the Protocol set out the measures which China was to undertake to facilitate compliance with the 
WTO Agreement and provisions of the Agreement on Import Licensing Procedures.  China was also 
required, inter alia , to submit the notification of its import licensing procedures to the Committee  and 
to report annually to the Committee on its automatic import licensing procedures, explaining the circumstances which give rise to these requirement s and justifying the need for their continuation.  
This report should also provide the information lis ted in Article 3 of the Licensing Agreement.   
 3.3 In addition, Section VII(a) of Annex 1A of the Protocol  referred to responses to specific 
questions in the context of the transitional review mechanism, which should be notified to the relevant 
subsidiary body.  The Chairperson informed the members that since the last meeting, the Secretariat received three submissions containing questions and comments, G/LIC/Q/CHN/11 from Japan, 
G/LIC/Q/CHN/12 from the United States and G/LIC/Q/CHN/13 from the EC. 
 3.4 The Chairperson suggested that the review be conducted  in two parts: first, under 
Section IV.3(a) of Annex 1A, and ther eafter under Section VII(a) of Annex 1A. 
 
3.5 China submitted a communication late in th e day of 27 September 2004 which was available 
in English at the meeting.    3.6 Taking the floor under Section IV.3(a) of Annex 1A
, the first representative of China  stated 
that this was not the first time for this Committee to conduct a transitional review;  this was the third 
year.  He did not feel it was necessary to quote a ll paragraphs from the China's Protocol of Accession 
and felt it might be useful just to remind the members of the Committee which questions, comments, 
and documents from Members, including China, had b een received in advance of the review so that  
Members could follow the practice of the Tran sitional Review as was done in the past.   
 3.7 He offered a brief account of China's e fforts in implementing its WTO commitments and 
obligations pursuant to this committee and intr oduced the Administrative Licensing Law of the 
People's Republic of China, which entered into fo rce on 1 July 2004.  The enactment and enforcement 
of this law was of great importance for implem enting China's obligations under the WTO Import 
Licensing Agreement.  It demonstrated the firm commitment and earnest efforts on the part of the 
Chinese Government to establish and maintain a transparent open and non-discriminatory import  G/LIC/13 
 Page 3 
 
 
 licensing procedure and other trade-related aspects of the licensing process.  It was designed to 
regulate the Chinese Government's activities of administrative licensing at various levels.  
Trade-related administrative licensing, including im port licensing, naturally fell into the jurisdiction 
of this law.  Under the relevant WTO rules and China's accession commitments, administrative 
licensing should be carried out in a transparent and regular manner.  The restrictive effect of 
administrative licensing conditions and procedures should be no more than is necessary.  This 
understanding of the Chinese Government was one of th e key reasons that led to the enactment of the 
law.  This law contained specific provisions on the right of agencies to carry out such administration 
of the procedures and fees concerned.  Thanks to th is law and the newly revised Foreign Trade Law of 
the People's Republic of China, the import licensing regime of the country was further streamlined.   
 
3.8 Prior to this session China had submitted to the Committee its responses to the questionnaire 
on import licensing procedures for 2004 pursuant to Article 7.3 of the Agreement on Import Licensing Procedures.  China also elaborated on its 2004 import licensing regime through the provision of relevant information pursuant to Annex 1A of its Accession Protocol.    The questionnaire responses 
and Annex 1A information made reference to quite a number of Chinese laws, regulations and 
proclamations for which translation efforts were underway.  It was estimated that the work of 
translation could be completed in a couple of months .  Then notifications would be submitted to this 
Committee.   In the context of this transitional review the delegation received a number of questions 
from some Members.    
3.9 A second delegate from China
 made a comment concerning the avoidance of unnecessary 
repetitive work under the transitional review and different Committees in the WTO.  A number of the questions that were received under the Import Li censing Committee had already been raised under the 
Market Access Committee and had already been replied to  clearly and in detail by China.  There was  
a clear distinction among the mandates of the Comm ittees or Councils and other bodies in the WTO.  
The relevance between the impl ementation of China's commitment of accession and each body's 
sphere of mandates was also clearly defined.  Chin a was serious about answering the questions raised 
by Members, but did not agree that Members could raise the same questions repetitively in different Committees.  Members should try their best to obser ve the relevance between their questions and the 
mandates of each of the 17 bodies that had the ma ndate to conduct the transitional review.  The 
Chinese Delegation would make an objective judgmen t concerning the advance questions raised and 
decide the most relevant or most appropriate  Committee or Council where discussions would be 
addressed.  In doing so they would avoid repetitive wo rk on the same work raised in other bodies.  
They would bear in mind the question's relevance to  the mandate of each of the Committees as well as 
whether the representative of the relevant author ities was available in the Chinese delegation present 
at the transitional review in different Committees.  He requested the understanding and cooperation of 
Members concerned in this regard.   
 3.10 China responded to questions recei ved in advance from Members as follows: 
 (a)   Question concerning the entities responsible for authorization of tariff rate quotas for the 
importation of agricultural products :  this information was contained in announcement No. 54 
of 2003 which was jointly promulgated by th e Ministry of Commerce (MOFCOM) and the 
National Development and Reform Commission (NDRC).  
 (b)   Question concerning the entities responsible  for the authorization of tariff quotas for the 
importation of fertilizers:   this information was found in Decree No. 27 of 2002, jointly 
promulgated by the former State Econom ic and Trade Commission and the General 
Administration of Customs.   
 (c)  Question concerning the entities responsible for the authorization of automatic import 
licensing:   this information was found in the Measures on Administrati on of Automatic Import G/LIC/13 
Page 4  
 
 Licensing for Goods  promulgated by the former Mini stry of Foreign Trade Economic 
Cooperation, now MOFCOM as Ministry Degree No. 20 of 2001.  
 (d)  Question concerning the entities responsible  for the authorization of import licenses and 
import quota licenses:   this information was found in the Measures on Administration of 
Import Licenses for Goods  promulgated as Ministry Degree No. 22 of 2001, also by the 
former Ministry of Foreign Trade a nd Economic Cooperation, now MOFCOM.   
  All of these announcements could be found in the China Foreign Trade and Economic 
Cooperation Gazette and on the website of MOFCOM.  Some had already been translated and 
submitted to the Committee as notifications and those not yet notified were in the process of 
translation and would be notified in the coming few months.  The delegate pointed out a typographical 
error in Annex 1A of the Protoc ol of Accession document G/LIC/W/23.  The website address in the 
fourth line of the  last paragraph of the document should read www.mofcom.gov.cn not ch.    
(e)  Question concerning the buying, selling and transferring of import licenses:
  it was explicitly 
stipulated as illegal in article 34 of the newl y revised Foreign Trade Law and Articles 66 and 
67 of the Regulations on Administration of Impor t and Export of Goods.  In addition, these 
stipulations were again embodied in the implem enting rules of these laws and regulations that 
included the Measures on Administration of Import Licenses for Goods, the Measures on 
Administration of Automatic Import Licensing for Goods, the Interim Measures on 
Administration of Tariff Rate Quota for Importa tion of Agricultural Products and the Interim 
Measures on the Administration of Tariff Rate Quota for Importation of Fertilizers etc. 
 (f)  Questions concerning the newly revised
 Foreign Trade Laws , the issuer of trading rights  and  
quantitative restrictions on importation of automobiles:   these issues were repetitive and the 
Committee on Market Access and the Council for Tr ade in Goods were respectively the right 
places to deal with thes e issues.  In the transitional review conducted a few days previously in 
the Committee on Market Access, the delegate had responded to these questions in detail 
where he also made it clear that the responses di d not in any way affect their  judgment on the 
relevance of these questions in the sphere of  the Committee's mandates.  He concluded by 
saying that, firstly, the Foreign Trade Law will be  implemented in a way consistent to China's 
WTO commitments and obligations.  Secondly, China would continue to implement it's 
commitments made on the reduction of non-tariff measures in 2005. 
 (g)  Question concerning the Measures on Administration of Foreign Investment in Commercial 
Fields :  this fell into the sphere of distributio n service which should be dealt with under the 
Council for Trade in Services and should not be dealt with in the Import Licensing 
Committee. 
 (h)  Question concerning the quarantine inspecti on and related certificate of China's quarantine 
authorities:   this was an SPS issue and should be dea lt with in the transitional review of the 
SPS Committee to avoid repetitive travel to Ge neva of officials from the quarantine and 
inspection authorities. 
 3.11 The Chairperson
 noted that she was encouraged by China's commitment taken in this 
Committee that China would fully ob serve its obligations taken at the moment of accession to the 
WTO.  
 
3.12 The delegate from the United States  asked whether there was any one place or particular 
Gazette citations that compiled all the laws, items and regulations or whether it was necessary to go to the various sources.   G/LIC/13 
 Page 5 
 
 
 3.13 The delegate from the European Communities  acknowledged receipt of the answers to the 
agreement C3 and stated that they might raise extra questions later.  She further stated that she had 
consulted the MOFCOM website but found that the most recent rules dated from 1991, and she had 
not found information about the implementation or pu blication of legal texts.  She questioned whether 
the website would be updated. 
 
3.14 She affirmed that the EC did raise questi ons in another context such as the Committee on 
Market Access but they still had issu es pending, such as the right to tr ade and certain restrictions to 
importing and exporting especially with regard to the right to trade, referring to Article 9 of the new 
revised trade law.  The EC would like explanations  as to when and in what way detailed provisions 
concerning the right to trade would be made public.  She stated that apparently this was not the case 
so far, and that they would like to have an indica tion of the content of these provisions.  She stated 
that they had taken note of the fact that article 9 of the Foreign Trade Law said that registration would 
not be required if the rules and administrative pr ovisions and laws otherwis e provided.  She would 
like an explanation of this or an explanation on wh en registration would not be required.  Could they 
have assurances that this would not give rise to discrimination?  In additi on they had concerns about 
restrictions to imports and e xports and wondered about the comp atibility with WTO rules of any 
possible restrictions that might be introduced by  China under the revised version of the new Foreign 
Trade law.  The EC also had very serious con cerns about the services sectors and would be raising 
questions in a communication that would be a ddressed to the Councils on Goods and Services. 
 
3.15 The delegate from Japan  requested clarification on two points.  First, since the first 
Transitional Review was held, Japan expressed concern about China's implementation of import quotas of automobiles.  Since the phasing out period of the non-tariff measures was coming soon, rather than raising the issue of import quotas of au tomobiles, Japan requested that China confirm that 
on 1 January 2005 it would completely eliminate non- tariff measures on their automobile sector and 
would thereafter not implement new measures.  In pa rticular, the delegate wanted clarification that 
after 1 January 2005 there would be no need for Jap anese automobile manufacturers or importers to 
apply for any non-automatic import licences.    3.16 Second, Japan was concerned about reports  from Japanese manufacturers regarding the lack 
of transparency in issuing import licences on automobiles shown in document G/LIC/Q/CHN/11 we  
understand  that a  certain automobile with 30 seat s or more had been subject to automatic import  
licensing procedures.   In  practice only a limited number of Jap anese applications were approved.  
The reasons behind this were unknown but Japan hoped that the concerns prevailing within Japan's 
auto industry will disappear quickly.  If such misa pplication occurs again, Japan directed China to 
request  further opportunity to take up this issue bi-laterally for more profound discussion.  
 
3.17 Finally, the delegate expressed  Japan's str ong desire that China ensure that automatic import 
licensing procedures shall not have trade-restricting effects.   3.18 The Chairperson
 announced that there would be a correction or a revision to G/LIC/W/23, 
correcting the website address. 
 
3.19 The delegate from Canada  raised a problem that Canada had experienced in the application of 
China's import licensing procedures.  It was Canada 's understanding that China required all shipments 
of recyclable materials destined  for China markets to be certified for quality prior to export under 
requirements set out in AQSIQ notices 48-2002 an d 115-2003.  The Chinese certification agency in 
the US, China Certification and Inspection Compan y (CCIC), had informed Canadian Government 
officials that they would provide inspectors for Cana dian shipments of recyclable materials only if the 
Canadian facility would pay for the inspectors' travel and accommodation expenses.  The Canadians 
confirmed with US exporters and US association re presentatives that US-based  recyclable material 
exporters were charged only for the inspection service and not for any travel or accommodation G/LIC/13 
Page 6  
 
 expenses.  This meant that there was preferential tr eatment provided to US based recyclable material 
exporters in their shipments to China, in comparis on to that provided to Canadian exporters. Canada 
noted that the Agreement on Import Licensing Pro cedures provides for non-discriminatory treatment, 
equitable administration, neutral impact on trade, an d equal eligibility across firms.  In addition, the 
Preshipment Inspection Agreement provides for inspec tion in the customs territory of the exporter.  
This issue was raised bilaterally with Chinese offi cials in Ottawa.  Canada requested that this 
particular situation be investigated and that Ca nadian recycling companies be accorded treatment 
consistent with the Agreement on Import Licensing Procedures and that this treatment should be as 
favorable as that extended to US exporters.    
3.20 The delegate from China
 provided follow-up to the questi ons.  First he addressed the issue 
raised by the US concerning a compilation list of en tities by stating that these entities were listed in all 
relevant decrees and announcements of all the releva nt authorities.  To facilitate the work of the 
Committees China was preparing the translations of all these relevant documents.  Some of them had 
been completed and the rest would be completed in a couple months.  He felt that the translations of 
the full texts of these documents would give Members a clear understanding of the information 
provided in the earlier statement.  On the questi on of the difficulty the EC representative had when 
surfing the website of MOFCOM, the delegate thought the information was very much up to date.  He 
had  personally been in Geneva for about thre e weeks and used the website a lot to update 
information, but could recognise the difficulty because the language could be a difficult point for Members, and as he had stated they were doing the translation of all the documents related to this 
Committee and making the notifications.  This could also be addressed. 
 3.21 On the question of the trading rights, the Chinese delegate did not know whether the 
representative of the EC had communicated with th eir  representative who would be representing the 
EC in the Market Access Committee meetings beca use they have already responded to exactly the 
same questions in that Committee's meeting and al so they did not think that the committee on Import 
Licensing was the appropriate body to address the tradi ng rights issue.  He did not repeat in detail 
what he had said in that Committee's meeting but assured the Committee that the newly revised 
Foreign Trade Law would be implem ented consistently with their WTO obligations and commitments 
and the implementing rules with regard to the tradi ng rights had also been promulgated.  For that he 
hoped the EC delegate could consult the inform ation they had provided in the Market Access 
Committee. 
 3.22 On the questions from Japan, the Chinese dele gate thought he had made  a very clear response 
in his statement when he said that in the y ear 2005 they would continue to implement their 
commitments with regard to the reduction of their non-tariff measures.  Concerning another point that 
the Japanese delegate had raised in his interventi on, the Chinese delegate thought the non-automatic 
licensing regime in China was consistent with thei r obligations or commitments within the Agreement 
on Import Licensing Procedures and they did not see any reason why they should abolish this 
automatic import licensing regime.  Because of the large amount of non-tariff measures eliminated in 
the short period of time after China's accession they be lieved that the monitoring of the trade of these 
products was very important and the automatic import licensing regime was a good way through 
which they could closely monitor the latest developm ents of trade in these products.  He did not see 
the necessity to abolish the auto matic import licensing regime but he assured the Committee that this 
regime would be implemented in a way consistent with the obligations for this Organization. 
 3.23 In response to the question from the Canadian  delegate, the Chinese delegate stated that he 
could not get into the details because they did not  have the information available.  This question 
related to the measures adopted by their quarantin e and inspection authorities and he hoped that they 
could deal with this issue in the coming month in the SPS or TBT Committee meetings in order to 
avoid repetitive travel to Geneva of their people fro m that authority.  He also suggested that more 
detailed information be provided in advance of th e meeting so they could prepare for the responses.  G/LIC/13 
 Page 7 
 
 
  
3.24 The delegate from Japan  stated that there had been a misunderstanding between their 
questions and the answers.  Japan did not deny Ch ina's right to conduct automatic import licensing as 
mentioned but acknowledged that in 2004 a certain type of automobile had been subject to automatic 
licensing.  They had found a case of misapplication because their industry had stated that in some 
cases only limited numbers of applications had be en approved this year.  This should not have 
happened under automatic licensing so it was requested that the message go to Beijing. 
 3.25 The delegate from Canada
 stated that they would put their issue in writing and sort out where 
it should be addressed and how.  She stated that it was not clear if this was a TBT issue.  It was 
inspection for quality prior to export but in this case  it was access to the inspection services to get an 
import licence.  3.26 The delegate from the United States
 stated that  the AQSIQ issue had licensing components.  
He would like responses in one month's time and w ould revert to the issue in a later meeting. 
 
3.27 The delegate from China  thought he recalled that in the Market Access Committee or in the 
questions provided, the request was made that th ey abolish or eliminate the automatic licensing 
provision.  Concerning the issue raised  by the Japanese delegation, he had  checked with Chinese 
licensing services and they didn't find that their practi ces are inconsistent with stipulations in their 
own decrees or announcements or regulations no r the obligations under this committee and he 
reminded Members they have the new law of admi nistrative licensing and the law on administrative 
procedures which provide the procedures that can be relied on by the Japanese companies for their 
difficulties.  3.28 The delegate of Japan
 felt that discussion would be difficult at the meeting because it was 
really to be debated based on actual facts of what they are doing at customs and other occasions.  He 
also conveyed the message to the capital and would like  further discussion on this issue in the future. 
 3.29 The Committee concluded the review.  In accordance with the practice used after the two 
previous reviews the Committee requested the Secr etariat to prepare a brief factual report for 
submission to the CTG, with references to the docu ments concerned and the portion of the minutes of 
the meeting which relate to  the transitional review. 
 
__________ 