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II. |
China’s 1st Two Years of WTO Membership |
It should be noted at the outset that there are two very large overarching issues that are not taken up in the context of this research report but which are being separately pursued by domestic parties -- the issues of China's currency valuation and China's labor practices.[1] Both are potentially of enormous importance to the US-China bilateral trade relationship but are not further addressed in this report.
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A. |
Compliance Efforts |
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1. |
Modification to laws, regulations |
Accession to the WTO provided a catalyst for sweeping legal reform in China. WTO membership put the Chinese legal system under scrutiny, as China needed to bring its trade-related legal regime into conformity with the WTO Agreements and to honor its obligations with respect to development of the rule of law. In the meantime, as the development of the market economy and privatization gains momentum, China believes there is a need to foster internally a transparent, predictable and fair legal environment conducive for the smooth operation of its economic reform.[2]
Both prior to and after WTO accession, China devoted considerable efforts in the reform of its legal system. In December 2002, in the context of the first transitional review held by the General Council, the Chinese representative reported with respect to the overhaul of China's laws and regulations:
[T]o meet the needs of the WTO accession, his government, in accordance with its commitments, had launched a massive program regarding the enactment, amendment and repeal of laws, regulations, and administrative rules, policies and measures which are relevant to or affecting trade in goods, trade in services, trade-related intellectual property rights and assurance of transparency and uniform application of trade regime. In September 2001, the State Council had issued a circular requesting the local governments to review local regulations, administrative rules, policies and measures in line with the principles of uniform application, non-discrimination and transparency. This work had been basically finished.[3]
As indicated in the minutes of the meeting, the Chinese representative also outlined China's efforts in improving the transparency of its trade regime and ensuring uniform application of its trade policy as integral parts of China's reform of the legal framework:
[I]n accordance with Annex 1A to China's Accession Protocol, relevant economic data and information had been provided to the General Council in a timely manner as required by this review. during this first year after China's accession, the notification obligations had been fulfilled with more than 300 pieces of notifications made according to various WTO agreements. A large amount of information had been submitted in advance of review held at subsidiary bodies.
In line with the accession commitments, the China WTO Notification and Enquiry Center had been set up by the Chinese government immediately after the accession to provide enquiry service on trade-related information for all members, enterprises and individuals. The establishment of this enquiry point had been notified to the WTO.
The Chinese government had also designated Foreign Economic and Trade Gazette as the official journal for the laws, regulations and other measure relating to or affecting trade in goods, trade in services, TRIPS and TRIMS, as these laws, regulations and measures could not be enforced before their publication.
* * *
[T]o implement China's commitments, a relatively sophisticated legal system had already been put in place to ensure the uniform implementation of trade policy. According to the existing legislation in China, any enterprise or individual could bring cases of non-uniform application of laws, regulations, administrative rules, policies and measures to the attention of a relevant authority. The governmental administration and institutional reform undertaken by China had formed solid basis for the implementation of this system.[4]
At the Sino-American Legal Exchange Seminar in December 2002, Mr. Li Yuede, Deputy General-Director of the Research Department of the Legislative Affairs Office of the State Council, detailed China's achievement in revamping its laws and regulations:
After the Sino-American bilateral negotiations concerning China's accession to the WTO were concluded in November 1999, the Chinese Government immediately started adjusting its trade-related domestic legal regime. * * * Until now, at the central level, as arranged by the plan for formulating, revising, repealing relevant domestic laws, the National People's Congress and its Standing Committee has enacted or revised 14 recent laws, * * *; the State Council has formulated or revised 37 administrative regulations, * * * repealed 12 administrative regulations, and stopped implementing 34 other relevant documents; and the relevant departments of the State Council has enacted, revised or repealed about 1000 department rules and other measures. The Supreme People's Court has repealed 20 relevant judicial interpretations and made relevant interpretations for the adjudication of new administrative cases that may arise after the accession. * * * The local regulations and local government rules revised or repealed by the 31 provinces, autonomous regions and municipalities directly under the Central Government and 49 larger cities, together with the relevant documents and other measures the implementation of which was stopped by the foregoing localities totaled more than 190,000, including 1,130 local regulations and 4,490 local government rules.[5]
China has made a determined and good-faith effort to reform its legal system. As the US-China Business Council has commented:
The provisions of a large number of new and amended laws that have been adopted since December 2001 have brought many areas of China's trade and investment regimes into line with WTO obligations and demonstrate the seriousness with which the PRC government has approached the challenge of WTO compliance."[6]
The following tables illustrate the degree to which China has promulgated newly enacted or revised laws and regulations pertaining to trade, both in preparation for and following accession. Many of the laws and regulations listed below have been notified to the WTO (see Appendix 7 for a list of laws and regulations notified by China to the WTO since accession).
In summary, for trade in goods, China:
· promulgated a series of regulations and administrative measures concerning import administration of goods, including import quotas, specific tendering, import licensing, automatic import licensing and tariff rate quotas;
· promulgated new laws and regulations in antidumping, countervailing and safeguard measures to bring the trade remedy regime into conformity with the WTO rules.
For the investment regime, China:
· revised the basic laws concerning foreign investment, i.e., Law on Chinese-Foreign Equity Joint Venture, Law on Chinese-Foreign Contractual Joint Venture, and Law on Wholly Foreign Owned Enterprises. The revision includes the elimination and cessation of enforcement of requirements on trade and foreign exchange balancing, local content, export performance, compulsory technology transfer, etc.
· promulgated the revised Provisions on Guiding Foreign Investment Direction and Industrial Catalogue for Foreign Investment. Under the new provisions and catalogue, China has liberalized further the restrictions imposed on the proportion of foreign equity in investment projects and opened new sectors to foreign investment. The newly opened sectors include telecommunications, urban water supply and drainage, construction and operation of gas and heat distribution network, which were previously prohibited from any foreign investment.[7]
For trade in services, China :
· issued a series of new regulations and administrative rules in various service sectors (e.g., banking, insurance, legal, telecommunications, freight forwarding, tourism services, audio-visual related services, etc.) to consolidate the legal basis upon which improved market access opportunities for foreign services suppliers rested.[8]
For intellectual property rights protection, China:
· conducted across-the-board amendment of IPR laws and regulations to bring IPR protection in line with the requirements laid out by the TRIPS Agreement respecting copyright, patent, and trademark;
· adopted new regulations governing the protection of layout design of integrated circuits and new varieties of plants;
· with respect to the details of the legal revisions, for example, the amended Trademark Law adds the provisions regarding the protection of geographic indications and well-known trademarks, expands the scope of eligible subject matter of a trademark, stipulates the right of priority, and provides for judicial review of the administrative decisions related to trademark registration. The revised Copyright Law enlarges the scope of protection, clarifies the rights of performers and producers, adds the provisional measures of property and evidence preservation, and stipulates the amount of statutory damages. The revised Patent Law stipulates conditions for granting compulsory licenses, and adds the provision of judicial review for administrative decision regarding patent of utility model and design.[9]
i. Trade in Goods
Import administration
|
Regulation |
Date |
Notified to WTO |
|
effective 01 Jan 2002 |
X |
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Measures on administration of import of machinery and electronic products |
effective 01 Jan 2002 |
X |
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Implementation rules on the administration of import quotas of machinery and electronic products |
effective 01 Jan 2002 |
X |
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Implementation rules on the administration of import of specific machinery and electronic products |
effective 01 Jan 2002 |
X |
|
Interim measures on the administration of import quotas of natural rubber |
effective 05 Feb 2002 |
X |
|
Implementation rules on the administration of import tariff rate quota of wool and wool tops of 2002 |
effective 05 Mar 2002 |
X |
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The quantity, conditions of application and allocation methods of import tariff rate quota of important agricultural products of 2002 |
effective 10 Feb 2002 |
X |
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Interim measures on the administration of import tariff rate quota for agricultural products |
effective 05 Feb 2002 |
X |
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Interim measures on the administration of import tariff rate quota for agricultural products (new) |
effective 27 Sep 2003 after amendment |
|
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Implementation rules on the administration of automatic import licensing of important industrial products |
effective 01 Feb 2002 |
X |
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Measures on the administration of import licences for goods |
effective 01 Jan 2002 |
X |
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Circular on the reallocation of import tariff rate quota for important agricultural products of 2002 |
N/A |
X |
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Measures on the administration of automatic import licensing of goods |
effective 01 Jan 2002 |
X |
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The allocation methods for import quantity of automobile tyres under import quota and application procedures in the year 2002 |
promulgated on 18 Jan 2002 |
X |
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The allocation method for import quantity of processed oil under import quota and application procedures in the year 2002 |
promulgated on 18 Jan 2002 |
X |
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The allocation methods for import quantity fertilizer under tariff rate quota and application procedures in the year 2002 |
promulgated on 18 Jan 2002 |
X |
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Decree on the adjustment of the import quotas (non-state trading) for processed oil, automobile tyres and crude oil of 2002 |
promulgated on 13 Aug 2002 |
X |
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The allocation methods for import quantity of processed oil under import quota and application procedures in the year 2003 |
promulgated on 31 July 2002 |
X |
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The allocation methods for import quantity of automobile tyres under import quota and application procedures in the year 2003 |
promulgated on 31 July 2002 |
X |
|
Implementing Rules on the Allocation of Tariff Rate Quota for Import of Important Agricultural Products for 2003 |
N/A |
X |
|
The Pronouncement on the Re-allocation of the Import Tariff Quota for Important Agricultural Products for 2003 |
N/A |
X |
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Implementation Rules on the Administration of Tariff Rate Quota for Import of Wool and Wool Tops for 2003 |
N/A |
X |
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Total Import Volume and Application Procedures for Crude Oil for Non-State Trading in 2004 |
N/A |
X |
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Total Import Volume, Quota Allocation Criteria and Application Procedures for Processed Oil for Non-State Trading in 2004 |
N/A |
X |
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Total Amount of Import, Allocation Principles and Application Procedures for the Tariff Rate Quota on Chemical Fertilizer for 2003 |
N/A |
X |
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Implementation Rules on the Allocation of Tariff Rate Quota for Import of Natural Rubber for 2003 |
N/A |
X |
|
Interim Measures for the Administration of Import under State Trading for Crude Oil, Processed Oil and Chemical Fertilizer |
N/A |
X |
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The Application Criteria, Documentation and Procedures Needed in the Submission for the Registration of the Right to Deal in the Non-State Trading Imports of Crude Oil, Processed Oil and Fertilizers |
N/A |
X |
Trade Remedy Regime
|
Regulation |
Date |
Notified to WTO |
|
Regulations on Antidumping |
effective 01 Jan 2002 |
X |
|
Provisional Rules on Initiation of Antidumping Investigations |
effective 13 Mar 2002 |
X |
|
Provisional Rules on Questionnaire in Antidumping Investigation |
effective 15 Apr 2002 |
X |
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effective 13 Mar 2002 |
X |
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Provisional Rules on Sampling in Antidumping Investigations |
effective 15 Apr 2002 |
X |
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Provisional Rules on Disclosure of Information on Antidumping Investigations |
effective 15 Apr 2002 |
X |
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Provisional Rules on On-the-Spot Verification in Antidumping Investigations |
effective 15 Apr 2002 |
X |
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Provisional Rules on Access to Non-Confidential Information in Antidumping Investigations |
effective 15 Apr 2002 |
X |
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Provisional Rules on Price Undertakings in Antidumping Investigations |
effective 15 Apr 2002 |
X |
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Provisional Rules on New Shipper Review in Antidumping Investigations |
effective 15 Apr 2002 |
X |
|
Provisional Rules on Refund of Antidumping Duty |
effective 15 Apr 2002 |
X |
|
Provisional Rules on Interim Review of Dumping and Dumping Margin |
effective 15 Apr 2002 |
X |
|
Rules on Investigations and Determinations of Industry Injury for Antidumping |
effective 15 Jan 2003 |
X |
|
Rules on Public Hearings with regard to Investigations of Injury to Industry |
effective 15 Jan 2003 |
X |
|
Regulations on Anti-subsidy |
effective 01 Jan 2002 |
X |
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Provisional Rules for Initiation of Countervailing Investigation |
effective 13 Mar 2002 |
X |
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Provisional Rules for Questionnaire in Countervailing Investigation |
effective 15 Apr 2002 |
X |
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Provisional Rules for On-the-spot Verification of Countervailing Investigation |
effective 15 Apr 2002 |
X |
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Provisional Rules for Conduct of Public Hearing in Countervailing Duty Investigation |
effective 13 Mar 2002 |
X |
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Rules on Investigations and Determinations of Industry Injury for Countervailing Measures |
effective 15 Jan 2003 |
X |
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Regulations on Safeguard |
effective 01 Jan 2002 |
X |
|
Provisional Rules on Initiation of Safeguard Investigations |
effective 13 Mar 2002 |
X |
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Provisional Rules on Hearing in Safeguard Investigations |
effective 13 Mar 2002 |
X |
|
Rules on Investigations and Determinations of Industry Injury for Safeguard |
effective 15 Jan 2003 |
X |
|
Provisions of the Supreme People's Court on Certain Issues Concerning the Applicability of Law in the Hearing and Handling of Antidumping Administrative Cases |
effective 01 Jan 2003 |
|
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Provisions of the Supreme People's Court on Certain Issues Concerning the Applicability of Law in the Hearing and Handling of Anti-subsidy Administrative Cases |
effective 01 Jan 2003 |
|
Rules of Origins
|
Regulation |
Date |
Notified to WTO |
|
Proclamation of the General Administration of Customs of the People's Republic of China on Establishment of Pre-determination on Origin of Imports |
effective 11 Dec 2001 |
X |
|
Provisional Rules of Origin for Imports under the First Agreement on Trade Negotiations among Developing Member Countries or the Economic and Social Commission for Asia and the Pacific |
effective 01 Jan 2002 |
X |
Customs Valuation
|
Regulation |
Date |
Notified to WTO |
|
Rules on Determination on Customs Valuation of Imported and Exported Goods |
effective 01 Jan 2002 |
X |
|
The Customs Regulations of the People’s Republic of China Regarding Determination on Customs Value of Royalties and License Fees Related to the Imported Goods |
effective 01 July 2003 |
X |
ii. Trade in Services
|
Regulation |
Date |
Notified to WTO |
|
Regulations on Administration of Foreign-Funded Financial Institutions |
effective 01 Feb 2002 |
X |
|
Regulations on International Maritime Transportation |
effective 01 Feb 2002 |
X |
|
Regulations on Administration of Travel Agencies |
amended on 11 Dec 2001 |
X |
|
Measures on the Trial of Foreign-Invested Merchandising Enterprises |
effective 25 June 1999 |
X |
|
Measures for Administration of Sino-Foreign Contractual Distribution Ventures of Audio-Visual Products |
effective 10 Dec 2001 |
X |
|
Provisional Regulations Governing the Foreign Invested Movie Theater |
effective 25 Oct 2000 |
X |
|
Rules for Establishing Foreign-Invested Securities Companies |
effective 01 June 2002 |
X |
|
Rules for Establishing Foreign-Invested Fund Management Companies |
effective 01 June 2002 |
X |
|
Proclamation by the People's Bank of China on the Related Issues of Foreign-Funded Financial Institutions' Market Access |
effective 09 Dec 2001 |
X |
|
Regulations on Administration of Foreign Funded Insurance Companies |
effective 01 Feb 2002 |
X |
|
Measures for Administration of Representative Offices of Foreign-Capital Financial Institutions in China |
effective 18 July 2002 |
X |
|
Provisions on Administration of Foreign Investment in Road Transport Sector |
effective 20 Nov 2001 |
X |
|
Provisions on Administration of International Freight Forwarding Agency Enterprises with Foreign Investment |
effective 1 Jan 2003
|
X |
|
Regulations on Administration of Foreign Invested Telecommunications Enterprises |
effective 1 Jan 2002 |
X |
|
Regulations on Exploitation of Offshore Petroleum Resources in Cooperation with Foreign Enterprises |
effective 23 Sep 2001 |
X |
|
Regulations on Exploitation of On-shore Petroleum Resources in Cooperation with Foreign Enterprises |
effective 23 Sep 2001 |
X |
|
Supplementary Circular Concerning the Handling of Delivery Services of Inward-and–Outward Letters and Articles with Letter Nature |
effective 5 Sep 2002 |
X |
|
Implementing Rules of the Regulations of the People’s Republic of China on International Maritime Transportation |
effective 1 Mar 2003 |
X |
|
Measures for the Administration of Foreign-invested International Freight Forwarding Agencies |
effective 10 Jan 2003 |
X |
|
Measures Governing Foreign Invested Distribution Enterprises for Books, Newspapers and Periodicals |