As part of its WTO commitments, China has removed import quota licensing control over refined oil products, natural rubber, vehicle tyres, motor vehicles under certain tariff codes and key parts thereof from 1 January 2004. In 2006, only three categories of commodities are subject to import quotas and licensing control. At the same time, as WTO members have lifted restrictions on certain Chinese exports (such as textiles), China has also cancelled the quota and licensing requirements on the export products concerned. In addition, China has introduced reforms in the import management of agricultural products. Certain bulk agricultural produce such as wheat, grain and cotton which used to be under absolute quota management are now subject to tariff-rate quota management. In fact, direct administrative measures such as quota and licensing control have been slashed since China's WTO accession.
In December 2001, China promulgated a series of new administrative measures for import and export in keeping with its WTO commitments. These include Regulations of the People's Republic of China on the Administration of the Import and Export of Goods, Measures for the Administration of Import Licensing Control, Provisions for the Administration of Export Licensing Control, Measures for the Administration of the Import of Mechanical and Electronic Products, Measures for the Administration of Designated Operators of Certain Imports, Measures for the Administration of Quotas for Export Commodities, Measures for the Administration of Automatic Import Licensing Control, Implementing Rules for the Administration of Import Quotas for Mechanical and Electronic Products, and the New Foreign Trade Law amended in April 2004. These rules have formed a new administrative framework for the quota management and licensing control of imports and exports.
Import Quotas and Licensing
According to the New Foreign Trade Law amended in April 2004, import goods and technologies are divided into four categories, namely prohibited imports, restricted imports, free imports, and goods under tariff-rate quota management. Among these, import goods under quantitative restrictions are subject to quota management and licensing control while restricted technology imports are under licensing control. In principle, free imports are not subject to any restrictions. However, due to the need to monitor import goods, the foreign trade department under the State Council has introduced the automatic licensing system on certain free import goods and has published a catalogue on them. For the import of technologies classified as free imports, registration and contract filing formalities are required.
For the import of goods and technologies subject to quota and licensing control in general trade, it is necessary to obtain prior approval of the foreign trade department under the State Council or the foreign trade department in conjunction with other relevant departments under the State Council. For the import of commodities subject to automatic import licensing, the consignee should apply for automatic licensing before customs declaration and obtain prior approval of the foreign trade department or their appointed agents.
China has also revised certain documents governing the administration of imports by FIEs in accordance with its WTO commitments. FIEs importing items subject to quota and licensing control for investment purpose or own use, or for manufacturing products for domestic sale, or for domestic sale in China directly, should apply for the required import quota, import licence or automatic import licensing. FIEs importing within their investment limit raw materials, parts and components for investment purpose or own use, or goods subject to automatic licensing, are not required to obtain an Automatic Import Licence. Commodities imported for processing trade subject to licensing control are exempt from import licence, with the exception of classied chemicals, poisonous chemicals and ozone depleting substances.
Export Quotas and Licensing
China imposes restrictions on the export of certain commodities. These include domestic resources that might be depleted and are in short supply or need conservation in China, and goods destined for countries or regions with limited market capacity and whose exports therefore have to be restricted. Goods under export restriction are subject to quota and licensing management while technologies under export restriction are subject to licensing control. For commodities subject to export quota control in general trade, it is necessary to apply for an export license by presenting the export quota certificate. For the export of commodities subject to export licensing, it is necessary to apply for an export license by presenting the export contract. However, FIEs exporting items subject to quota management and licensing control must first obtain approval from the Ministry of Commerce before applying to the relevant department for an export licence. For the export of commodities whose export quotas are obtainable through open tender, utilization's with compensation or bidding without compensation, application for the license should be made after a successful bid has been made and the quota amount confirmed.