The Foreign Service Journal, January 2003

were 28 percent lower than the pre- vious market year. Moreover, how these regulations are implemented could still put next year’s imports at risk. Administration of tariff rate quo- tas was not only sluggish, but, in the case of agricultural commodities, also marked by lack of transparency and poor cooperation by Chinese officials. China was very late in issu- ing new TRQ administrative regula- tions and the actual TRQ allocations themselves. For example, although agricultural TRQ allocations were mandated for Jan. 1, 2002, they were not made until April for private enterprises and July for state trading enterprises. Additionally, the State Development Planning Commission has repeatedly refused to provide the embassy (or other foreign trade partners, to the best of our knowledge) with a list of the allocations made. Commodity traders complained that some allocations had not been made in economically viable lots, as required. Most egregious was the creation of a sub-quota that requires re-export of processed goods. The State Economic and Trade Commission was also late in issu- ing fertilizer TRQ allocations, although it did provide the embassy with a list of recipients and quantities. Nonetheless, some industry traders have complained of a lack of transparency as well as quotas having been held back by the SETC and Chinese industry associations. In a number of cases, the Chinese Administration for Quality Supervision and Inspection and Quarantine has applied questionable sanitary and phytosanitary stan- dards to block meat and other agricultural imports from the United States and other countries. It has also used questionable technical standards for fertilizers, cell phones, automobiles and other industrial imports. AQSIQ is also requiring importers of agricultural com- modities to apply for “quarantine certificates” that appear to be a form of import quota in violation of China’s WTO accession commitment. Contrary to the WTO principle of national treatment, the State Administration of Taxation has used preferential tax policies to favor cate- gories of fertilizers that are produced domestically as opposed to imports. China’s Customs office continues to permit large volumes of bulk commodity items to be imported for use throughout China through the Russian border areas at half duty and value- added tax rates. It requires end-use certificates for the import of 15 information technology products, contrary to the principles of the Information Technology Agreement. Some local authorities reportedly also continue to impose local con- tent requirements in the automobile sector despite China’s commitment to eliminate such trade-related investment measures. While having enacted regulations permitting increased foreign access to China’s financial services market, the People’s Bank of China has estab- lished capital and net asset requirements that may be considered non-tariff barriers to entry by all but the largest foreign banks and financial institutions. Beyond this, the PBOC has yet to issue implementing regulations for non-bank automobile financing companies. The China Insurance Regulatory Commission has also estab- lished similarly high capital requirements for new entrants. At the same time, the CIRC has refused to permit foreign insurance branches to establish additional branches within China. In other services sectors, China issued new regula- tions requiring that express delivery companies file for entrustment with the State Postal Bureau, thus establish- ing the Postal Bureau as both a regulator and competitor (in the form of China Post’s express mail service) in the market. Subsequently, the Postal Bureau issued new reg- ulations limiting the scope of business of other express delivery firms that would have violated its WTO commit- ment not to roll back previously licensed services. After repeated interventions by the U.S. government, China eventually agreed to repeal the restrictions. Nonetheless, it continues to require that entrustment be filed with the Postal Bureau which, although not necessarily a violation of a WTO commitment, could create potential difficul- ties that would impose new restrictions. Similarly, the Ministry of Justice has issued new regulations that could further restrict the services and expansion of foreign law firms in China. At an Embassy Beijing-organized conference in October 2002, U.S. industry representatives acknowl- edged that the Chinese government has amended its intellectual property rights laws to comply with TRIPS, F O C U S J A N U A R Y 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 59 In general, China has made substantial progress in implementing its WTO commitments. But it has fallen short in a number of areas.