PRC, Foreign Trade Law (Revised)

 (Adopted at the 8^th Session of the Standing Committee of the 10^th National People's Congress and promulgated on 6 April 2004, and effective as of 1 July 2004.)

PART ONE: GENERAL PROVISIONS

Article 1: This Law is formulated in order to further open up to the outside world, develop foreign trade, maintain order in foreign trade activities, protect the lawful rights and interests of foreign trade operators, and promote the healthy development of the socialist market economy.

Article 2: This Law shall apply to foreign trade and the protection of intellectual property rights related to foreign trade.

For the purposes of this Law, the term "foreign trade" shall refer to the import and export of goods and technology and trade in international services.

Article 3: The State Council department in charge of foreign trade shall be in charge of foreign trade throughout the country in accordance with this Law.

Article 4: The State shall implement a unified foreign trade system, encourage the development of foreign trade and safeguard fair and free foreign trade order.

Article 5: The People's Republic of China shall promote and develop trade relations with other countries and regions based on the principles of equality and mutual benefit, conclude or accede to regional economic and trade agreements such as agreements on tariff alliance and free trade zone, and participate in regional economic organizations.

Article 6: The People's Republic of China shall, in accordance with international treaties and agreements that it has concluded or acceded to, or based on the principles of mutual benefit and reciprocity, grant other signatories or acceding parties most favoured nation treatment or national treatment and any other treatment in regard to foreign trade.

Article 7: If a country or region adopts sanctions, restrictions or other similar measures of a discriminatory nature in regard to trade against the People's Republic of China, the People's Republic of China may adopt corresponding measures against such country or region in accordance with actual circumstances.

PART TWO: FOREIGN TRADE OPERATORS

Article 8: For the purposes of this Law, the term "foreign trade operators" shall refer to legal persons, other organizations or individuals that handle business registration or other practice procedures according to law and engage in foreign trade business activities in accordance with the provisions of this Law and other relevant laws and administrative regulations.

Article 9: Foreign trade operators engaged in import and export of goods or technology shall handle registration of record filing with the State Council department in charge of foreign trade or its appointed organizations, except where laws, administrative regulations or the State Council department in charge of foreign trade stipulate(s) that registration of record filing is not necessary. Specific procedures for registration of record filing shall be formulated by the State Council department in charge of foreign trade. Where a foreign trade operator has not handled registration of record filing according to provisions, customs shall not handle customs declaration and inspection and release procedures for the imported and exported goods.

Article 10: Engagement in international service trade shall comply with the provisions of this Law and other relevant laws and administrative regulations.

Work units that engage in contracting of foreign projects or foreign labour cooperation shall possess the appropriate quality or qualifications. Specific procedures shall be formulated by the State Council.

Article 11: The State may implement administration of State trading on the import and export of certain goods. Import and export business of goods subject to administration of State trading may only be operated by authorized enterprises, except where the State permits the import and export business of certain quantity of goods subject to administration of State trading to be operated by non-authorized enterprises. The catalogue of goods subject to administration of State trading and enterprises authorized to operate shall be determined, adjusted and announced by the State Council department in charge of foreign trade in conjunction with other relevant departments of the State Council.

Customs shall not release the goods subject to administration of State trading that are imported or exported without authorization in violation of Paragraph One of this Article.

Article 12: A foreign trade operator may, upon entrustment of another party, act as an agent on its behalf to conduct foreign trade business within the scope of business.

Article 13: A foreign trade operator shall, in accordance with the regulations formulated by the State Council department in charge of foreign trade or other relevant departments of the State Council in accordance with the law, submit documents and information related to its foreign trade business activities to the relevant departments. The relevant departments shall maintain the confidentiality of the trade secrets of providers.

PART THREE: IMPORT AND EXPORT OF GOODS AND TECHNOLOGY

Article 14: The State permits free import and export of goods and technology, except as otherwise stipulated in laws and administrative regulations.

Article 15: The State Council department in charge of foreign trade may, based on the needs for monitoring import and export, implement automatic licensing for import and export on certain free import and export goods and announce the catalogue thereof.

In the case of import and export goods subject to automatic licensing, where a consignee or consignor submits an application for automatic licensing before handling customs declaration procedures, the State Council department in charge of foreign trade or its appointed organizations shall grant licensing. Where the procedures for automatic licensing have not been completed, customs shall not release the goods.

To import and export free import and export technology, registration for record filing of contracts shall be handled with the State Council department in charge of foreign trade or its appointed organizations.

Article 16: The State may restrict or prohibit the import or export of relevant goods and technology for the following reasons:

1. it is necessary to restrict or prohibit import or export in order to safeguard State security, public interests or public morals;
2. it is necessary to restrict or prohibit import or export in order to protect human health or safety, the lives or health of animals and plants, and the environment;
3. it is necessary to restrict or prohibit import or export in order to implement measures related to the import and export of gold and silver;
4. it is necessary to restrict or prohibit export due to a shortage of domestic supply or in order to effectively protect natural resources that may be exhausted;
5. it is necessary to restrict export due to limited capacity of the markets of importing countries or regions;
6. it is necessary to restrict export due to serious chaos in the export operation order;
7. it is necessary to restrict import in order to establish, or accelerate the establishment of, specific domestic industries;
8. it is necessary to restrict the import of agricultural, animal husbandry and fishery products in any form;
9. it is necessary to restrict import in order to safeguard the international financial position and the balance of payments of the country;
10. other circumstances in which it is necessary to restrict or prohibit import or export in accordance with the provisions of laws and administrative regulations; and
11. other circumstances in which it is necessary to restrict or prohibit import or export in accordance with the provisions of international treaties or agreements that the People's Republic of China has concluded or acceded to.

Article 17: The State may, in order to safeguard State security, adopt any necessary measures on the import and export in relation to fission and fusion substances, and the goods and technology related to the substances from which these types of substances are derived, and the import and export in relation to arms, ammunition or other military materials.

During war time or in order to safeguard world peace and security, the State may adopt any necessary measures regarding import and export of goods and technology.

Article 18: The State Council department in charge of foreign trade in conjunction with other relevant departments of the State Council shall formulate, adjust and announce catalogues of goods and technology that are restricted or prohibited from import or export in accordance with Articles 16 and 17 hereof.

The State Council department in charge of foreign trade may, independently or in conjunction with other relevant departments of the State Council, decide on an interim basis to restrict or prohibit the import or export of specific goods and technology other than those in the catalogues stipulated in the preceding paragraph within the scope stipulated in Articles 16 and 17 hereof, upon approval of the State Council.

Article 19: The State shall implement administration in forms such as quota and licensing on goods the import or export of which is restricted. Technology the import or export of which is restricted shall be subject to licensing control.

Goods and technology subject to quota or licensing control may only be imported or exported upon the permission of the State Council department in charge of foreign trade, independently or in conjunction with other relevant departments of the State Council, in accordance with the provisions of the State Council.

The State may implement tariff quota control on certain import goods.

Article 20: Quotas for import and export goods and tariff quotas shall be allocated by the State Council department in charge of foreign trade or other relevant departments of the State Council within their respective scope of authority and on the basis of the principles of openness, fairness, impartiality and efficiency. Specific procedures shall be formulated by the State Council.

Article 21: The State shall implement a unified commodity quality evaluation system and carry out certification, inspection and quarantine of imported and exported commodities in accordance with the provisions of the relevant laws and administrative regulations.

Article 22: The State shall implement administration of place of origin on imported and exported goods. Specific procedures shall be formulated by the State Council.

Article 23: Where there are stipulations in other laws and administrative regulations on the restriction or prohibition of import and export of cultural relics, wild animals and plants and their products, etc., the stipulations of the relevant laws and administrative regulations shall prevail.

PART FOUR: INTERNATIONAL SERVICE TRADE

Article 24: The People's Republic of China shall grant, in accordance with its commitments in regard to international service trade in international treaties or agreements to which it is a signatory or acceding party, market access or national treatment to other signatories or acceding parties in such treaties or agreements.

Article 25: The Sate Council department in charge of foreign trade and other relevant departments of the State Council shall administer international service trade in accordance with the provisions of this Law and other relevant laws and administrative regulations.

Article 26: The State may restrict or prohibit the relevant international service trade for any of the following reasons:

1.       restriction or prohibition is necessary in order to safeguard State security, public interests or public morals;

2.       restriction or prohibition is necessary in order to protect human health or safety, the lives or health of animals and plants, and the environment;

3.       restriction is necessary in order to establish, or accelerate the establishment of, specific domestic service industries;

4.       restriction is necessary in order to safeguard the balance of foreign exchange payments of the country;

5.       other circumstances in which restriction or prohibition is necessary in accordance with the provisions of laws and administrative regulations; and

6.       other circumstances in which restriction or prohibition is necessary in accordance with the provisions of international treaties or agreements that the People's Republic of China has concluded or acceded to.

Article 27: The State may, in order to safeguard State security, adopt any necessary measures on international service trade in relation to military, and the international service trade in relation to fission and fusion substances, and the substances from which these types of substances are derived.

During war time or in order to safeguard world peace and security, the State may adopt any necessary measures regarding international service trade.

Article 28: The State Council department in charge of foreign trade in conjunction with other relevant departments of the State Council shall formulate, adjust and announce catalogues of market access to international service trade in accordance with Articles 26 and 27 hereof and the provisions of other relevant laws and administrative regulations.

PART FIVE: PRODUCTION OF INTELLECTUAL PROPERTY RIGHTS RELATED TO FOREIGN TRADE

Article 29: The State shall protect intellectual property rights related to foreign trade in accordance with the laws and administrative regulations on intellectual property.

Where imported goods infringe upon intellectual property rights and harm foreign trade order, the State Council department in charge of foreign trade may adopt measures such as prohibition of the import of goods produced or sold by the infringer within a certain time period.

Article 30: Where an owner of intellectual property rights commits any one of the acts such as preventing licensees from inquiring about the validity of intellectual property rights specified in the licensing contract, giving compulsory package licence, stipulating terms of exclusive grant back rights in licensing contracts, thereby harming the order of fair competition in foreign trade, the State Council department in charge of foreign trade may adopt necessary measures to eliminate such harm.

Article 31: Where any country or region fails to grant national treatment to the legal persons, other organizations or individuals of the People's Republic of China in regard to protection of intellectual property rights, or fails to provide sufficient and effective protection of intellectual property rights to goods, technology or services that originate from the People's Republic of China, the State Council department in charge of foreign trade may, in accordance with the provisions of this Law and other relevant laws and administrative regulations and, based on the international treaties and agreements that the People's Republic of China has concluded or acceded to, adopt necessary measures on trade with such country or region.

PART SIX: FOREIGN TRADE ORDER

Article 32: In the course of foreign trade business activities, no act of monopoly that violates the provisions of laws and administrative regulations on anti-monopoly may be implemented.

Where an act of monopoly is implemented in foreign trade business activities and the fair competition of the market is harmed thereby, the matter shall be handled in accordance with the provisions of laws and administrative regulations on anti-monopoly. If an illegal act specified in the preceding paragraph is committed and foreign trade order is harmed thereby, the State Council department in charge of foreign trade may adopt necessary measures to eliminate the harm.

Article 33: In the course of foreign trade business activities, no acts of unfair competition such as selling commodities at an unfairly low price, colluding in the submission of tenders, publishing false advertisements and engaging in commercial bribery may be implemented.

Implementation of acts of unfair competition in foreign trade business activities shall be handled in accordance with the provisions of laws and administrative regulations on unfair competition.

Where an illegal act specified in the preceding paragraph has been committed and foreign trade order is harmed thereby, the State Council department in charge of foreign trade may adopt measures such as prohibition of the import and export of the relevant goods and technology by the business operator to eliminate the harm.

Article 34: The following acts may not be committed in foreign trade activities:

1. forging or altering marks of place of origin of imported and exported goods, or forging, altering or trading certificates of place of origin of imported and exported goods, import or export licences, certificates of import or export quotas, or other import and export supporting documents;
2. obtaining export tax refunds by means of deception;
3. smuggling;
4. evasion of certification, inspection and quarantine stipulated in laws and administrative regulations; and
5. other acts in violation of the provisions of laws and administrative regulations.

Article 35: In the course of foreign trade business activities, foreign trade operators shall comply with the provisions of the State on foreign exchange control.

Article 36: Where foreign trade order is harmed in violation of the provisions hereof, the State Council department in charge of foreign trade may announce to the public thereof.

PART SEVEN: FOREIGN TRADE INVESTIGATION

Article 37: In order to safeguard foreign trade order, the State Council department in charge of foreign trade may, independently or in conjunction with other relevant departments of the State Council, conduct investigation of the following matters in accordance with the provisions of laws and administrative regulations:

1. impact of import and export of goods, technology and international service trade on the domestic industry and its competitiveness;
2. trade barriers of the relevant countries or regions;
3. issues that require investigation for determining whether foreign trade remedial measures such as anti-dumping, anti-subsidy or safeguard measures shall be adopted according to law;
4. acts of evasion of foreign trade remedial measures;
5. issues related to the security and interest of the State in foreign trade activities;
6. issues that require investigation for implementing Article 7, Paragraph Two of Article 29, Article 30, Article 31, Paragraph Three of Article 32 and Paragraph Three of Article 33 hereof; and
7. other matters affecting foreign trade order that require investigation.

Article 38: Initiation of foreign trade investigation shall be publicly announced by the State Council department in charge of foreign trade.

Investigation may be conducted by means such as written questionnaire, hearings, on-site investigation and investigation through entrustment.

The State Council department in charge of foreign trade shall, in accordance with investigation results, issue an investigation report or render a ruling on handling, and publish an announcement thereof.

Article 39: Relevant work units and individuals shall provide cooperation and assistance during foreign trade investigation.

When conducting foreign trade investigation, the State Council department in charge of foreign trade, other relevant departments of the State Council and their working personnel shall have the obligations of maintaining the confidentiality of the State secrets and trade secrets that come to their knowledge.

PART EIGHT: FOREIGN TRADE REMEDIES

Article 40: The State may adopt appropriate foreign trade remedial measures in accordance with foreign trade investigation results.

Article 41: Where products of another country or region imported into the market of China at prices lower than their normal value by way of dumping result in substantial injury or threat of substantial injury to a related domestic industry that has already been established, or substantially impede the establishment of a related domestic industry, the State may adopt anti-dumping measures to eliminate or mitigate such injury, threat of injury or impediment.

Article 42: Where products of another country or region exported to the market of a third country at prices lower than their normal value result in substantial injury or threat of substantial injury to a related domestic industry that has already been established, or substantially impede the establishment of a related domestic industry, the State Council department in charge of foreign trade may, in response to applications by the domestic industries, conduct consultation with the government of the third country and request for its adoption of appropriate measures.

Article 43: Where imported products that directly or indirectly accept specific subsidies granted in any form by the exporting countries or regions result in substantial injury or threat of substantial injury to a related domestic industry that has already been established, or substantially impede the establishment of a related domestic industry, the State may adopt anti-subsidy measures to eliminate or mitigate such injury, threat of injury or impediment.

Article 44: Where a large increase in the quantity of imported products results in serious injury or threat of serious injury to a related domestic industry that produces similar or directly competitive products, the State may adopt necessary safeguard measures to eliminate or mitigate such injury or threat of injury, and may also provide necessary support to the domestic industry.

Article 45: Where an increase in the services provided to China by service providers of another country or region results in injury or threat of injury to a related domestic industry that provides similar or directly competitive services, the State may adopt necessary remedial measures to eliminate or mitigate such injury or threat of injury.

Article 46: Where a large increase in the import of certain products into the market of China due to restriction on import of a third country results in injury or threat of injury to a related domestic industry that has already been established, or substantially impede the establishment of a related domestic industry, the State may adopt necessary remedial measures to restrict the import of such products.

Article 47: Where a country or region that has concluded or jointly acceded to an economic and trade treaty or agreement with the People's Republic of China violates the provisions thereof, leading to the loss of or damage to the interests that the People's Republic of China is entitled to according to such treaty or agreement, or impediment of the realization of goals thereof, the government of the People's Republic of China shall have the right to request the government of the relevant country or region to adopt appropriate remedial measures, and may suspend or terminate the performance of relevant obligations according to such treaty or agreement.

Article 48: The State Council department in charge of foreign trade shall conduct bilateral or multilateral consultation, negotiation and resolution of disputes regarding foreign trade in accordance with the provisions of this Law and other relevant laws.

Article 49: The State Council department in charge of foreign trade and other relevant departments of the State Council shall establish an alarm and contingency mechanism for import and export of goods, technology and international service trade, in order to cope with sudden and unusual circumstances in foreign trade activities and safeguard State economic security.

Article 50: The State may adopt counter-evasion measures against acts of evasion of the foreign trade remedial measures stipulated herein.

PART NINE: PROMOTION OF FOREIGN TRADE

Article 51: The State shall formulate foreign trade development strategies and establish and improve the mechanism for promotion of foreign trade.

Article 52: The State shall establish and improve financial institutions serving foreign trade operations, and establish foreign trade development funds and risk funds in accordance with the needs of the development of foreign trade.

Article 53: The State shall use import and export credits, export credit insurance, export tax refunds and other methods for promoting foreign trade to develop foreign trade.

Article 54: The State shall establish foreign trade public information service system to provide information services to foreign trade operators and other public.

Article 55: The State shall adopt measures to encourage the exploration of international markets by foreign trade operators, and shall use various means such as overseas investment, contracting of foreign projects and foreign labour cooperation to develop foreign trade.

Article 56: Foreign trade operators may establish and join relevant associations and chambers of commerce in accordance with the law.

The relevant associations and chambers of commerce shall abide by laws and administrative regulations, provide their members with services related to foreign trade in areas such as production, marketing, information and training according to the articles of association, bring coordination and self-discipline into full play, submit applications for foreign trade remedial measures according to law, safeguard the interests of members and the industry, put forward the suggestions of the members in relation to foreign trade to the relevant departments of the government, and engage in foreign trade promotion activities.

Article 57: Chinese organizations for the promotion of international trade shall, in accordance with their articles of association, develop foreign networks, hold exhibitions, provide information and consultancy services and engage in other foreign trade promotion activities.

Article 58: The State shall support and promote the engagement in foreign trade by small- and medium-sized enterprises.

Article 59: The State shall support and promote the development of foreign trade in autonomous regions of ethnic minorities and in economically underdeveloped areas.

PART TEN: LEGAL LIABILITY

Article 60: Where, in violation of Article 11 hereof, goods subject to administration of State trading are imported or exported without authorization, the State Council department in charge of foreign trade or other relevant departments of the State Council shall impose a fine of less than Rmb 50,000. Where the circumstances are serious, the department(s) may, within three years from the effective date of the decision on administrative penalty, refuse to accept applications for engaging in import and export business of goods subject to administration of State trading of the perpetrator, or revoke the authorization already granted to such perpetrator for engaging in import and export of other goods subject to administration of State trading.

Article 61: Where goods that are prohibited from import and export are imported or exported, or goods under restriction of import and export are imported or exported without authorization, such act shall be handled and penalized by customs according to the provisions of the relevant laws and administrative regulations. Where a criminal offence is constituted, criminal liability shall be pursued according to law.

Where technology that is prohibited from import and export is imported or exported, or technology under restriction of import and export is imported or exported without authorization, such act shall be handled and penalized according to the provisions of the relevant laws and administrative regulations. Where there are no stipulations in laws or administrative regulations, the State Council department in charge of foreign trade shall order rectification, confiscate the illegal income, and impose a fine of not less than one time and not more than five times of the illegal income. Where there is no illegal income or the illegal income is less than Rmb 10,000, a fine of not less than Rmb 10,000 and not more than Rmb 50,000 shall be imposed. Where a criminal offence is constituted, criminal liability shall be pursued according to law.

Beginning from the effective date of the decision on administrative penalty or the effective date of the decision on criminal penalty specified in the two preceding paragraphs, the State Council department in charge of foreign trade or other relevant departments of the State Council may refuse to accept applications for import and export quota or licence of the perpetrator within three years, or prohibit the perpetrator to engage in import and export business activities related to the relevant goods and technology for a period of not less than one year and not more than three years.

Article 62: In the case of engagement in prohibited international service trade or engagement in restricted international service trade without authorization, such act shall be penalized according to the provisions of the relevant laws and administrative regulations. Where there are no stipulations in laws or administrative regulations, the State Council department in charge of foreign trade shall order rectification, confiscate the illegal income, and impose a fine of not less than one time and not more than five times the illegal income. Where there is no illegal income or the illegal income is less than Rmb 10,000, a fine of not less than Rmb 10,000 and not more than Rmb 50,000 shall be imposed. Where a criminal offence is constituted, criminal liability shall be pursued according to law.

The State Council department in charge of foreign trade may prohibit perpetrators to engage in the relevant international trade service business activities for a period of not less than one year and not more than three years from the effective date of the decision on administrative penalty or the effective date of the decision on criminal penalty specified in the preceding paragraph.

Article 63: Violation of Article 34 hereof shall be penalized according to the provisions of the relevant laws and administrative regulations. Where a criminal offence is constituted, criminal liability shall be pursued according to law.

The State Council department in charge of foreign trade may prohibit perpetrators to engage in the relevant foreign trade business activities for a period of not less than one year and not more than three years from the effective date of the decision on administrative penalty or the effective date of the decision on criminal penalty specified in the preceding paragraph.

Article 64: Where a foreign exchange operator is prohibited from engaging in the relevant foreign trade business activities according to Articles 61 to 63 hereof, customs shall not handle the procedures for customs declaration and inspection and release for the relevant imported and export goods of such foreign trade operator according to the prohibition decision rendered by the State Council department in charge of foreign trade; and the foreign exchange administrative department or designated foreign exchange banks shall not handle the relevant procedures for settlement and sale of foreign exchange, within the prohibition period.

Article 65: Where working personnel responsible for foreign trade administration work according to this Law are derelict in their duties, practise graft or abuse their power, and a criminal offence is constituted thereby, criminal liability shall be pursued according to law. Where it is insufficient to constitute a criminal offence, administrative penalty shall be imposed according to law.

Where working personnel responsible for foreign trade administration work according to this Law take advantage of their position to extort property from other parties or illegally accept property from other parties to seek benefits for such parties, and a criminal offence is constituted thereby, criminal liability shall be pursued according to law. Where it is insufficient to constitute a criminal offence, administrative penalty shall be imposed according to law.

Article 66: Where a party involved in foreign trade business activities is dissatisfied with a specific administrative act of the department responsible for foreign trade administrative work according to this Law, it may apply for administrative review or institute an administrative action at a people's court according to law.

PART ELEVEN: SUPPLEMENTARY PROVISIONS

Article 67: Where there are other stipulations in laws or administrative regulations on the administration of foreign trade relating to military materials, fission and fusion substances or substances that derive from these types of substances, and the administration of import and export of cultural products, such stipulations shall prevail.

Article 68: The State shall adopt flexible measures to grant preferential treatment and convenience to promote trade between border regions of China and neighbouring countries and trading between border residents at fairs within each other's territories. Specific procedures shall be formulated by the State Council.

Article 69: This Law shall not apply to separate tariff zones of the People's Republic of China.

Article 70: This Law shall be implemented as of 1 July 2004.

中华人民共和国对外贸易法

（修订） 

（2004年4月6日第十届全国人民代表大会常务委员会第八次会议通过并公布，自2004年7月1日起施行。）

第一章 总 则

第一条 为了扩大对外开放，发展对外贸易，维护对外贸易秩序，保护对外贸易经营者的合法权益，促进社会主义市场经济的健康发展，制定本法。

第二条 本法适用于对外贸易以及与对外贸易有关的知识产权保护。

本法所称对外贸易，是指货物进出口、技术进出口和国际服务贸易。

第三条 国务院对外贸易主管部门依照本法主管全国对外贸易工作。

第四条 国家实行统一的对外贸易制度，鼓励发展对外贸易，维护公平、自由的对外贸易秩序。

第五条 中华人民共和国根据平等互利的原则，促进和发展同其他国家和地区的贸易关系，缔结或者参加关税同盟协定、自由贸易区协定等区域经济贸易协定，参加区域经济组织。

第六条 中华人民共和国在对外贸易方面根据所缔结或者参加的国际条约、协定，给予其他缔约方、参加方最惠国待遇、国民待遇等待遇，或者根据互惠、对等原则给予对方最惠国待遇、国民待遇等待遇。

第七条 任何国家或者地区在贸易方面对中华人民共和国采取歧视性的禁止、限制或者其他类似措施的，中华人民共和国可以根据实际情况对该国家或者该地区采取相应的措施。

第二章 对外贸易经营者

第八条 本法所称对外贸易经营者，是指依法办理工商登记或者其他执业手续，依照本法和其他有关法律、行政法规的规定从事对外贸易经营活动的法人、其他组织或者个人。

第九条 从事货物进出口或者技术进出口的对外贸易经营者，应当向国务院对外贸易主管部门或者其委托的机构办理备案登记；但是，法律、行政法规和国务院对外贸易主管部门规定不需要备案登记的除外。备案登记的具体办法由国务院对外贸易主管部门规定。对外贸易经营者未按照规定办理备案登记的，海关不予办理进出口货物的报关验放手续。

第十条 从事国际服务贸易，应当遵守本法和其他有关法律、行政法规的规定。

从事对外工程承包或者对外劳务合作的单位，应当具备相应的资质或者资格。具体办法由国务院规定。

第十一条 国家可以对部分货物的进出口实行国营贸易管理。实行国营贸易管理货物的进出口业务只能由经授权的企业经营；但是，国家允许部分数量的国营贸易管理货物的进出口业务由非授权企业经营的除外。实行国营贸易管理的货物和经授权经营企业的目录，由国务院对外贸易主管部门会同国务院其他有关部门确定、调整并公布。

违反本条第一款规定，擅自进出口实行国营贸易管理的货物的，海关不予放行。

第十二条 对外贸易经营者可以接受他人的委托，在经营范围内代为办理对外贸易业务。

第十三条 对外贸易经营者应当按照国务院对外贸易主管部门或者国务院其他有关部门依法作出的规定，向有关部门提交与其对外贸易经营活动有关的文件及资料。有关部门应当为提供者保守商业秘密。

第三章 货物进出口与技术进出口

第十四条 国家准许货物与技术的自由进出口。但是，法律、行政法规另有规定的除外。

第十五条 国务院对外贸易主管部门基于监测进出口情况的需要，可以对部分自由进出口的货物实行进出口自动许可并公布其目录。

实行自动许可的进出口货物，收货人、发货人在办理海关报关手续前提出自动许可申请的，国务院对外贸易主管部门或者其委托的机构应当予以许可；未办理自动许可手续的，海关不予放行。

进出口属于自由进出口的技术，应当向国务院对外贸易主管部门或者其委托的机构办理合同备案登记。

第十六条 国家基于下列原因，可以限制或者禁止有关货物、技术的进口或者出口：

第十七条 国家对与裂变、聚变物质或者衍生此类物质的物质有关的货物、技术进出口，以及与武器、弹药或者其他军用物资有关的进出口，可以采取任何必要的措施，维护国家安全。

在战时或者为维护国际和平与安全，国家在货物、技术进出口方面可以采取任何必要的措施。

第十八条 国务院对外贸易主管部门会同国务院其他有关部门，依照本法第十六条和第十七条的规定，制定、调整并公布限制或者禁止进出口的货物、技术目录。

国务院对外贸易主管部门或者由其会同国务院其他有关部门，经国务院批准，可以在本法第十六条和第十七条规定的范围内，临时决定限制或者禁止前款规定目录以外的特定货物、技术的进口或者出口。

第十九条 国家对限制进口或者出口的货物，实行配额、许可证等方式管理；对限制进口或者出口的技术，实行许可证管理。

实行配额、许可证管理的货物、技术，应当按照国务院规定经国务院对外贸易主管部门或者经其会同国务院其他有关部门许可，方可进口或者出口。

国家对部分进口货物可以实行关税配额管理。

第二十条 进出口货物配额、关税配额，由国务院对外贸易主管部门或者国务院其他有关部门在各自的职责范围内，按照公开、公平、公正和效益的原则进行分配。具体办法由国务院规定。

第二十一条 国家实行统一的商品合格评定制度，根据有关法律、行政法规的规定，对进出口商品进行认证、检验、检疫。

第二十二条 国家对进出口货物进行原产地管理。具体办法由国务院规定。

第二十三条 对文物和野生动物、植物及其产品等，其他法律、行政法规有禁止或者限制进出口规定的，依照有关法律、行政法规的规定执行。

第四章 国际服务贸易

第二十四条 中华人民共和国在国际服务贸易方面根据所缔结或者参加的国际条约、协定中所作的承诺，给予其他缔约方、参加方市场准入和国民待遇。

第二十五条 国务院对外贸易主管部门和国务院其他有关部门，依照本法和其他有关法律、行政法规的规定，对国际服务贸易进行管理。

第二十六条 国家基于下列原因，可以限制或者禁止有关的国际服务贸易：

第二十七条 国家对与军事有关的国际服务贸易，以及与裂变、聚变物质或者衍生此类物质的物质有关的国际服务贸易，可以采取任何必要的措施，维护国家安全。

在战时或者为维护国际和平与安全，国家在国际服务贸易方面可以采取任何必要的措施。

第二十八条 国务院对外贸易主管部门会同国务院其他有关部门，依照本法第二十六条、第二十七条和其他有关法律、行政法规的规定，制定、调整并公布国际服务贸易市场准入目录。

第五章 与对外贸易有关的知识产权保护

第二十九条 国家依照有关知识产权的法律、行政法规，保护与对外贸易有关的知识产权。

进口货物侵犯知识产权，并危害对外贸易秩序的，国务院对外贸易主管部门可以采取在一定期限内禁止侵权人生产、销售的有关货物进口等措施。

第三十条 知识产权权利人有阻止被许可人对许可合同中的知识产权的有效性提出质疑、进行强制性一揽子许可、在许可合同中规定排他性返授条件等行为之一，并危害对外贸易公平竞争秩序的，国务院对外贸易主管部门可以采取必要的措施消除危害。

第三十一条 其他国家或者地区在知识产权保护方面未给予中华人民共和国的法人、其他组织或者个人国民待遇，或者不能对来源于中华人民共和国的货物、技术或者服务提供充分有效的知识产权保护的，国务院对外贸易主管部门可以依照本法和其他有关法律、行政法规的规定，并根据中华人民共和国缔结或者参加的国际条约、协定，对与该国家或者该地区的贸易采取必要的措施。

第六章 对外贸易秩序

第三十二条 在对外贸易经营活动中，不得违反有关反垄断的法律、行政法规的规定实施垄断行为。

在对外贸易经营活动中实施垄断行为，危害市场公平竞争的，依照有关反垄断的法律、行政法规的规定处理。有前款违法行为，并危害对外贸易秩序的，国务院对外贸易主管部门可以采取必要的措施消除危害。

第三十三条 在对外贸易经营活动中，不得实施以不正当的低价销售商品、串通投标、发布虚假广告、进行商业贿赂等不正当竞争行为。

在对外贸易经营活动中实施不正当竞争行为的，依照有关反不正当竞争的法律、行政法规的规定处理。

有前款违法行为，并危害对外贸易秩序的，国务院对外贸易主管部门可以采取禁止该经营者有关货物、技术进出口等措施消除危害。

第三十四条 在对外贸易活动中，不得有下列行为：

第三十五条 对外贸易经营者在对外贸易经营活动中，应当遵守国家有关外汇管理的规定。

第三十六条 违反本法规定，危害对外贸易秩序的，国务院对外贸易主管部门可以向社会公告。

第七章 对外贸易调查

第三十七条 为了维护对外贸易秩序，国务院对外贸易主管部门可以自行或者会同国务院其他有关部门，依照法律、行政法规的规定对下列事项进行调查：

第三十八条 启动对外贸易调查，由国务院对外贸易主管部门发布公告。

调查可以采取书面问卷、召开听证会、实地调查、委托调查等方式进行。

国务院对外贸易主管部门根据调查结果，提出调查报告或者作出处理裁定，并发布公告。

第三十九条 有关单位和个人应当对对外贸易调查给予配合、协助。

国务院对外贸易主管部门和国务院其他有关部门及其工作人员进行对外贸易调查，对知悉的国家秘密和商业秘密负有保密义务。

第八章 对外贸易救济

第四十条 国家根据对外贸易调查结果，可以采取适当的对外贸易救济措施。

第四十一条 其他国家或者地区的产品以低于正常价值的倾销方式进入我国市场，对已建立的国内产业造成实质损害或者产生实质损害威胁，或者对建立国内产业造成实质阻碍的，国家可以采取反倾销措施，消除或者减轻这种损害或者损害的威胁或者阻碍。

第四十二条 其他国家或者地区的产品以低于正常价值出口至第三国市场，对我国已建立的国内产业造成实质损害或者产生实质损害威胁，或者对我国建立国内产业造成实质阻碍的，应国内产业的申请，国务院对外贸易主管部门可以与该第三国政府进行磋商，要求其采取适当的措施。

第四十三条 进口的产品直接或者间接地接受出口国家或者地区给予的任何形式的专向性补贴，对已建立的国内产业造成实质损害或者产生实质损害威胁，或者对建立国内产业造成实质阻碍的，国家可以采取反补贴措施，消除或者减轻这种损害或者损害的威胁或者阻碍。

第四十四条 因进口产品数量大量增加，对生产同类产品或者与其直接竞争的产品的国内产业造成严重损害或者严重损害威胁的，国家可以采取必要的保障措施，消除或者减轻这种损害或者损害的威胁，并可以对该产业提供必要的支持。

第四十五条 因其他国家或者地区的服务提供者向我国提供的服务增加，对提供同类服务或者与其直接竞争的服务的国内产业造成损害或者产生损害威胁的，国家可以采取必要的救济措施，消除或者减轻这种损害或者损害的威胁。

第四十六条 因第三国限制进口而导致某种产品进入我国市场的数量大量增加，对已建立的国内产业造成损害或者产生损害威胁，或者对建立国内产业造成阻碍的，国家可以采取必要的救济措施，限制该产品进口。

第四十七条 与中华人民共和国缔结或者共同参加经济贸易条约、协定的国家或者地区，违反条约、协定的规定，使中华人民共和国根据该条约、协定享有的利益丧失或者受损，或者阻碍条约、协定目标实现的，中华人民共和国政府有权要求有关国家或者地区政府采取适当的补救措施，并可以根据有关条约、协定中止或者终止履行相关义务。

第四十八条 国务院对外贸易主管部门依照本法和其他有关法律的规定，进行对外贸易的双边或者多边磋商、谈判和争端的解决。

第四十九条 国务院对外贸易主管部门和国务院其他有关部门应当建立货物进出口、技术进出口和国际服务贸易的预警应急机制，应对对外贸易中的突发和异常情况，维护国家经济安全。

第五十条 国家对规避本法规定的对外贸易救济措施的行为，可以采取必要的反规避措施。

第九章 对外贸易促进

第五十一条 国家制定对外贸易发展战略，建立和完善对外贸易促进机制。

第五十二条 国家根据对外贸易发展的需要，建立和完善为对外贸易服务的金融机构，设立对外贸易发展基金、风险基金。

第五十三条 国家通过进出口信贷、出口信用保险、出口退税及其他促进对外贸易的方式，发展对外贸易。

第五十四条 国家建立对外贸易公共信息服务体系，向对外贸易经营者和其他社会公众提供信息服务。

第五十五条 国家采取措施鼓励对外贸易经营者开拓国际市场，采取对外投资、对外工程承包和对外劳务合作等多种形式，发展对外贸易。

第五十六条 对外贸易经营者可以依法成立和参加有关协会、商会。

有关协会、商会应当遵守法律、行政法规，按照章程对其成员提供与对外贸易有关的生产、营销、信息、培训等方面的服务，发挥协调和自律作用，依法提出有关对外贸易救济措施的申请，维护成员和行业的利益，向政府有关部门反映成员有关对外贸易的建议，开展对外贸易促进活动。

第五十七条 中国国际贸易促进组织按照章程开展对外联系，举办展览，提供信息、咨询服务和其他对外贸易促进活动。

第五十八条 国家扶持和促进中小企业开展对外贸易。

第五十九条 国家扶持和促进民族自治地方和经济不发达地区发展对外贸易。

第十章 法律责任

第六十条 违反本法第十一条规定，未经授权擅自进出口实行国营贸易管理的货物的，国务院对外贸易主管部门或者国务院其他有关部门可以处五万元以下罚款；情节严重的，可以自行政处罚决定生效之日起三年内，不受理违法行为人从事国营贸易管理货物进出口业务的申请，或者撤销已给予其从事其他国营贸易管理货物进出口的授权。

第六十一条 进出口属于禁止进出口的货物的，或者未经许可擅自进出口属于限制进出口的货物的，由海关依照有关法律、行政法规的规定处理、处罚；构成犯罪的，依法追究刑事责任。

进出口属于禁止进出口的技术的，或者未经许可擅自进出口属于限制进出口的技术的，依照有关法律、行政法规的规定处理、处罚；法律、行政法规没有规定的，由国务院对外贸易主管部门责令改正，没收违法所得，并处违法所得一倍以上五倍以下罚款，没有违法所得或者违法所得不足一万元的，处一万元以上五万元以下罚款；构成犯罪的，依法追究刑事责任。

自前两款规定的行政处罚决定生效之日或者刑事处罚判决生效之日起，国务院对外贸易主管部门或者国务院其他有关部门可以在三年内不受理违法行为人提出的进出口配额或者许可证的申请，或者禁止违法行为人在一年以上三年以下的期限内从事有关货物或者技术的进出口经营活动。

第六十二条 从事属于禁止的国际服务贸易的，或者未经许可擅自从事属于限制的国际服务贸易的，依照有关法律、行政法规的规定处罚；法律、行政法规没有规定的，由国务院对外贸易主管部门责令改正，没收违法所得，并处违法所得一倍以上五倍以下罚款，没有违法所得或者违法所得不足一万元的，处一万元以上五万元以下罚款；构成犯罪的，依法追究刑事责任。

国务院对外贸易主管部门可以禁止违法行为人自前款规定的行政处罚决定生效之日或者刑事处罚判决生效之日起一年以上三年以下的期限内从事有关的国际服务贸易经营活动。

第六十三条 违反本法第三十四条规定，依照有关法律、行政法规的规定处罚；构成犯罪的，依法追究刑事责任。

国务院对外贸易主管部门可以禁止违法行为人自前款规定的行政处罚决定生效之日或者刑事处罚判决生效之日起一年以上三年以下的期限内从事有关的对外贸易经营活动。

第六十四条 依照本法第六十一条至第六十三条规定被禁止从事有关对外贸易经营活动的，在禁止期限内，海关根据国务院对外贸易主管部门依法作出的禁止决定，对该对外贸易经营者的有关进出口货物不予办理报关验放手续，外汇管理部门或者外汇指定银行不予办理有关结汇、售汇手续。

第六十五条 依照本法负责对外贸易管理工作的部门的工作人员玩忽职守、徇私舞弊或者滥用职权，构成犯罪的，依法追究刑事责任；尚不构成犯罪的，依法给予行政处分。

依照本法负责对外贸易管理工作的部门的工作人员利用职务上的便利，索取他人财物，或者非法收受他人财物为他人谋取利益，构成犯罪的，依法追究刑事责任；尚不构成犯罪的，依法给予行政处分。

第六十六条 对外贸易经营活动当事人对依照本法负责对外贸易管理工作的部门作出的具体行政行为不服的，可以依法申请行政复议或者向人民法院提起行政诉讼。

第十一章 附则

第六十七条 与军品、裂变和聚变物质或者衍生此类物质的物质有关的对外贸易管理以及文化产品的进出口管理，法律、行政法规另有规定的，依照其规定。

第六十八条 国家对边境地区与接壤国家边境地区之间的贸易以及边民互市贸易，采取灵活措施，给予优惠和便利。具体办法由国务院规定。

第六十九条 中华人民共和国的单独关税区不适用本法。

第七十条 本法自2004年7月1日起施行。

PRC, Foreign Trade Law (Revised)

Ref no: 5800/2004.04.06

Introduction

The amended Foreign Trade Law of the People's Republic of China was adopted by the Standing Committee of the National People's Congress on 6 April 2004, and will take effect on 1 July 2004. The Amended Law includes revisions and additions that will have material impact on China's current foreign trade regime and activities. This article intends to provide an overview of the Law through analyzing the relevant legislative background, the provisions of the Law and their potential impact.

Legislative Background

The current PRC, Foreign Trade Law ("1994 Foreign Trade Law") was enacted and became effective in 1994. This 1994 Foreign Trade Law has set forth in principle the legal framework for the State to administer foreign trade activities with the emphasis on the government's oversight of the enterprises that engage in foreign trade activities. However, with the rapid growth of China's foreign trade, this 10-year-old 1994 Foreign Trade Law is no longer suitable for the changing environment.

On one hand, with China's accession to the World Trade Organization (WTO), the Chinese government needs to fulfil its accession commitments at the level of Chinese basic law on foreign trade. On the other hand, the sluggish world economy has given rise to a new wave of trade protectionism. China is facing more dumping charges than any other country. Since 1990, one out of every six dumping cases has allegedly involved Chinese products. Under these circumstances, the Chinese government has a strong desire to guide Chinese importers and exporters to play under and take advantage of international trade rules within the WTO regime for their interests, and to protect China's related industries and market in accordance with WTO provisions. 

Accordingly, all these demands have caused the emergence of the amended PRC, Foreign Trade Law (the "Amended Law") on 6 April 2004.

An Overview of the Amended Law

Consisting of 70 articles in 11 parts, the Amended Law includes 26 more articles and three more parts in comparison with the 1994 Foreign Trade Law.

As expected, the Amended Law reflects China's WTO accession commitments, which relate to the scope of foreign trade operators, the availability of foreign trading rights, State trading, and automatic import and export licensing. 

Secondly, the Amended Law includes various permissible (while which might be controversial in certain text) measures under the WTO regime to facilitate foreign trade, maintain foreign trade order and provide remedies and protection for legitimate foreign trade operators and domestic industries in China. These measures mainly include (i) restriction or prohibition of imports and exports; (ii) protection of intellectual property rights related to foreign trade; (iii) prohibition of violation of antitrust laws and regulations, unfair competition or other disruptive activities in the context of foreign trade; (v) foreign trade investigation; and (vi) foreign trade remedies.

Thirdly, the Amended Law incorporates the existing elements or lower-level regulations in the foreign trade regime of China (which mostly appeared after the promulgation of the 1994 Foreign Trade Law), aiming to have the general picture of Chinese foreign trade regime better reflected in the Chinese basic law on foreign trade. Incorporation of provisions on participation in regional free trade arrangements, policy on restriction of the import or export of gold, silver and wild animals, export control policies, tariff quota, the regime of certifying, inspecting and quarantining imports and exports and rules of origin into the Foreign Trade Law will in turn guarantee upper-level legislative support and backing for these mechanisms.

Fourthly, some additions have been made in the Amended Law to strengthen the State's monitoring of foreign trade activities and services for foreign trade operators. These mainly include (i) the establishment of precaution and emergency-handling mechanisms to cope with contingencies and unusual circumstances in foreign trade activities; and (ii) the establishment of a public information service system to provide foreign trade information services to foreign trade operators.

Finally, the part "Legal Liability" of the 1994 Foreign Trade Law has also been re-tailored at the end of the Amended Law to include more detailed penalties in anticipation of potential violations.

The discussion below will focus on those changes in foreign trading rights, restriction and prohibition of import and export, protection of intellectual property rights, foreign trade order, foreign trade investigations and foreign trade remedies, which are the major changes in the Amended Law.

Foreign Trading Rights

Foreign Trading Right of Individuals
Under the 1994 Foreign Trade Law, individuals are not eligible to engage in import and export trading activities. However, this will become history with the effectiveness of the Amended Law. Under the Amended Law, the term "foreign trade operator" covers all legal persons, other organizations and individuals engaged in foreign trade activities.

There seem to be two reasons for this change. Firstly, certain individuals have long engaged in operations in the areas of technology trading, service trade and frontier trade. The Foreign Trade Law as a basic law on foreign trade shall recognize the status of these individuals. Secondly, in accordance with Sub-article 2 of Article 5 of the Protocol on the Accession of the People's Republic of China (the "Protocol of Accession"), "except as otherwise provided for in this Protocol, all foreign individuals and enterprises, including those not invested or registered in China, shall be accorded treatment no less favourable than that accorded to enterprise in China with respect to the right to trade". The general view is that, if foreign individuals have the right to trade, Chinese nationals shall also have such right. 

It should be noted that not all individuals could act as foreign trade operators upon the implementation of the Amended Law. According to Article 8 of the Amended Law, only individuals that have registered with the appropriate industry and commerce bureaux or have handled business registration may act as foreign trade operators. This point has also been partly reflected in the Administration of Foreign Investment in Commercial Sectors Procedures (the "Procedures"), promulgated at around the same time as the Amended Law and will be effective on 1 June 2004, which provide that all foreign individuals must engage in commission sales agency business, wholesaling, retailing or franchising through their foreign-invested enterprises ("FIEs") in China. In other words, foreign individuals will have to establish FIEs in order to import goods for resale in China.

Overall, granting foreign trading rights to individuals will probably result in a rapid growth of the number of foreign trade operators in a short time. Accordingly, the Chinese government will face the new task of regulating more individuals engaging in foreign trade. Some experts are concerned that such rapid growth might lead to vicious competition among Chinese exporters, and hence the deterioration of the quality of Chinese exports. 

From "Approval" to "Filing for Record"
Under the 1994 Foreign Trade Law, an economic organization shall meet the stipulated conditions and apply to the Ministry of Commerce ("MOFCOM") for approval in order to undertake import and export trading either for self-use or for further distribution. As a major improvement, Article 9 of the Amended Law provides that "foreign trade operators that engage in import and export of goods or technologies shall file a record with the department in charge of foreign trade under the State Council or its entrusted agencies", which will actually change the original "approval" system into a "filing for record" system.

Under this "filing for record" system, foreign trade operators may be entitled to engage in foreign trade activities simply by filing a record with an appropriate authority, which is purely a procedural matter. 

However, in the initial draft of the Amended Law, the term "registration" instead of "filing for record" was used, which has aroused huge concern in the business community. The reason for such huge concern is that it was not entirely clear whether "registration" would contain approval requirement in disguised form. After the deliberation of NPC Finance and Economy Committee, the Legal Office of the State Council and MOFCOM, it was decided that "filing for record" should replace "registration" in order to more clearly define the nature of new foreign trade regime and to demonstrate the government's determination to open up the foreign trade sector.  

The specific measures on "filing for record" will be formulated and promulgated by MOFCOM separately.

Foreign Trading Rights of FIEs
Under the 1994 Foreign Trade Law, FIEs are generally exempted from the MOFCOM approval requirement for importation of their self-used goods for production or non-production purposes, and for the exportation of their self-manufactured products. However, they are generally not allowed to import merchandises for distribution in China without further authorization that is currently reserved for a very limited number of FIEs.

The Amended Law itself is silent on whether, with the implementation of the Amended Law, all FIEs will be allowed to import merchandises for further distribution in China. However, a confirmative answer has been given in the Procedures, which stipulate that all FIEs may have their business scope expanded to include the right to distribution so that non-self-use or non-self-manufactured goods may be imported or exported for distribution (with only one exception of wholly foreign-owned enterprises, which will be allowed to engage in distribution after 11 December 2004).

State Trading
A new provision was added as Article 11 in the Amended Law to address the issue of State trading. This Article provides that: "The State may exercise State trading administration over the import and export of certain goods. The import and export of the goods under State trading administration shall only be undertaken by authorized enterprises; however, the State may permit that the import and export of certain amount of the goods under State trading administration be undertaken by non-authorized enterprises. The catalogues of the goods under State trading administration and the authorized enterprises shall be determined, adjusted and promulgated by the department in charge of foreign trade under the State Council together with other departments under the State Council."

Under the WTO regime, a government is permitted to reserve the right to import or export certain key merchandises for State trading, and to only grant such reserved right to private entities under certain circumstances. In the Protocol of Accession, China has reserved such State trading rights. Although the specifics of such State trading reservations are not directly provided in the Amended Law, it is widely expected that the granting of such exclusive licences or concessions will accord to China's WTO accession commitments as detailed in Sub-article 1 of Article 5 of the Protocol of Accession.

Restriction and Prohibition of Import and Export

Compared with the 1994 Foreign Trade Law, the scopes of restriction and prohibition of import and export are expanded in the Amended Law. Articles 16, 17 and 18 of the Amended Law are the major articles related to restriction and prohibition of import and export.

The Amended Law includes the following four circumstances in the scope of restricted or prohibited import or export: (i) where it is necessary to restrict import or export in order to safeguard public morality; (ii) where it is necessary to restrict import or export in order to protect the lives or health of animals and plants; (iii) where it is necessary to restrict import or export in order to implement relevant measures governing the import and export of gold or silver; (iv) the import or export of goods or technologies related to fission or fusion substances or any substances from which fission or fusion substances are derived; or (v) weapons, ammunition or other materials for military use.

Protection of Intellectual Property Rights

The Amended Law displays the determination of the Chinese government to further enhance the protection of intellectual property rights related to foreign trade by including a brand new part titled "Protection of Intellectual Property Rights Related to Foreign Trade".

According to Article 29 of the Amended Law, in the event that any imported goods are considered to have infringed intellectual property rights, and cause harm to the foreign trade order, the department in charge of foreign trade under the State Council may take such actions as prohibiting the import of the related goods produced and sold by the infringing entities within a certain period of time. 

Pursuant to Article 40 of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS"), members may adopt, consistently with the other provisions of TRIPS, appropriate measures to prevent or control licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition. Accordingly, Article 30 of the Amended Law provides that the State may take necessary actions against those activities of preventing licensees from raising questions about the validity of intellectual property rights contained in licensing contracts, demanding for compulsory package licence, or stipulating exclusive grant back conditions in licensing contracts if such activities cause harm to the fair competition order of foreign trade. 

Article 31 of the Amended Law also provides that the State may take necessary actions on trade with a country or region if such country or region fails to grant national treatment to Chinese legal persons, other organizations or individuals, or to goods, technologies or services originating from China, for protection of intellectual property rights.

All these provisions are very general and will require further implementing rules. The implementing rules shall be consistent with the procedural requirements of WTO.

Foreign Trade Order

The Amended Law includes two brand new articles, Articles 32 and 33, to prohibit violations of antitrust laws and regulations or unfair competition in connection with foreign trade respectively. The two articles are very general in nature. 

According to Article 32, there shall not be any monopoly act in violation of the relevant antitrust laws and regulations in foreign trade activities. In the event that a monopoly act in foreign trade activities results in harm to fair market competition, it shall be handled in accordance with the relevant antitrust laws and regulations; if such monopoly act also causes harm to foreign trade order, the department in charge of foreign trade under the State Council may take necessary actions to eliminate such harm. Since China's antitrust law is still being drafted, these provisions will actually be implemented only after the enactment of China's antitrust law.

According to Article 33, no unfair competition activity such as improper sale of goods at low prices, bidding collusion, use of false advertisements or commercial bribery shall be undertaken in foreign trade. Unfair competition in foreign trade activities shall be handled in accordance with the relevant anti-unfair competition laws and regulations; if such unfair competition action also causes harm to foreign trade order, the department in charge of foreign trade under the State Council may take necessary actions to eliminate such harm, including prohibiting the import and export of the goods and technologies of such operators that engage in unfair competition. Since China already has an Anti-unfair Competition Law and has accumulated experiences in implementing such law, it seems that foreign trade operators may seek guidance by referring to such law and experiences.

Foreign Trade Investigation

Foreign trade investigation has become an important legal method for many countries to protect their domestic industries and market order. In order to deal with an increasing number of abuses of remedies and to protect the interests of domestic industries to a maximum extent, a special part entitled "Foreign Trade Investigation" is included in the Amended Law.

In accordance with this part, the department in charge of foreign trade under the State Council may conduct investigations on (i) the influence of import and export of goods, technologies or international services trade on the domestic industry and its competitiveness; (ii) trade barriers of the related countries or regions; (iii) whether countervailing, anti-dumping or safeguard measures should be taken; (iv) evasion of trade remedies; (v) the security and interest of the State in foreign trade activities; (vi) prohibitive or restrictive policies of a discriminatory nature against PRC by any country or region; (vii) whether imported goods infringe upon intellectual property rights and cause harm to foreign trade order; (viii) abuse of intellectual property rights including preventing licensees from raising questions about the validity of intellectual property rights contained in licensing contracts, demanding for compulsory package licence, or stipulating exclusive grant back conditions in licensing contracts; (ix) non-national treatment for protection of intellectual property rights by foreign governments; (x) monopoly acts in foreign trade; (xi) unfair competition in foreign trade; or (xii) any other matters affecting the foreign trade order that require investigation.

This part also includes a very general description of the procedures and measures for MOFCOM to conduct investigations. It also imposes confidentiality obligations on the relevant government workers with regard to State secrets and commercial secrets.

Foreign Trade Remedies

In accordance with Article 40 of the Amended Law, the State may take appropriate remedies measures in accordance with the results of foreign trade investigation.

The Amended Law authorizes the State to adopt anti-dumping, countervailing and safeguards measures. Article 45 of the Amended Law provides that "where services provided by foreign services providers to the People's Republic of China increase in such quantities that cause or threaten to cause injury to the domestic industries providing similar or directly competitive services, the State may provide necessary remedies to the domestic industries to eliminate or mitigate such injury or threat", which is allegedly based on the emergency safeguard measures as provided in Article 10 of the WTO General Agreement Trade in Services ("GATS"). 

Moreover, Article 46 of the Amended Law provides that "where certain products imported to the People's Republic of China increase dramatically, due to the restriction on import of the same by a third country, in such quantities that cause or threaten to cause injury to China's existing industry, or result in impediment to the establishment of domestic industries, the State may apply necessary remedies by restricting the import of such products", which is allegedly a countermeasure for Article 16 of the Protocol of Accession. This provision has been criticized in the drafting process as having no basis in the WTO and not complying with the SCM Agreement, which allows for safeguard actions only under specified conditions not in any way predicated upon the acts of third countries. 

Article 50 of the Amended Law provides that "the State shall take anti-circumvention measures against evasion of trade remedies provided by this Law", which is based on Article XX of the General Agreement on Tariff and Trade (1994).

It will be interesting to see how these foreign trade remedies are implemented by MOFCOM in China.

By Jun Wei, Partner and Lucy Chen, Associate,
Hogan & Hartson LLP, Beijing