The 5th Amendment to the Customs Law of the People’s Republic of China (PRC)

Following the 30th meeting of the Standing Committee of the 12^th National People's Congress on 4 November 2017, the Customs Law of the PRC (herein referred to as “the Customs Law”) had been amended for its fifth time by further cancelling certain administrative permissions and approval processes and promoting the reform of simplified administration and power delegation.

In August 2016, the Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) jointly issued the Announcement [2016] No.45 (herein referred to as “the Announcement No.45”) to formally cancel the approval of processing trade business.  Subsequently, the revised Customs Law deleted the relevant description of ‘approval documents” and exempted the reason to apply for domestic sale of bonded processing materials or finished products.

GAC Announcement regarding Promoting the Paperless Application and Cancelling the Filing Procedure of Import Tax Reduction (Announcement [2017] No.58)

To push forward the reform of standardising the protocol and improving the efficiency of nationwide customs clearance, GAC decided to promote the paperless application and cancelling the filing procedure of import tax reduction in China since 15 December 2017. Unless specifically regulated by GAC, the applicant or its agent for income tax reduction can submit an application form of import tax reduction and the corresponding information of electronic data through the QP preloaded customer portal to GAC, instead of making submission in paper form. In addition, during the first time of online application, the applicant (or its agent) can also submit the relevant information, such as the qualification of an entity, the qualification of a project and the quota (amount) of duty exemption, without making a separate filing with GAC in advance.

GAC Announcement on Publishing the Standard of Origin and Relevant Matters of New Zero Tariff Commodities in Hong Kong and Macau since 1 January 2018 (Announcement [2017] No.59)

Based on the Closer Economic Partnership Arrangement between Mainland China and Hong Kong (Hong Kong CEPA), the Closer Economic Partnership Arrangement between Mainland China and Macao (Macao CEPA) and the relevant supplementary agreements, GAC formulated the Standard Table of Origin of New Zero Tariff Commodities under Hong Kong CEPA since 1 January 2018 and the Standard Table of Origin of New Zero Tariff Commodities under Macao CEPA since 1 January 2018, along with the following announcements in relation to the modifications on the standard of origin of certain Hong Kong commodities that enjoy the preferential treatment of commodity trade:

1. The abovementioned two tables shall use simplified commodity names effective from 1 January 2018. The scope of new zero tariff commodities in Hong Kong and Macau is the same as the scope of commodity corresponding to the HS codes listed under 2017 PRC Import and Export Tariff Schedule.
   
2. The standard of origin of HS code 3920.9990 listed under the Standard Table of Origin of Hong Kong Commodities that Enjoy the Preferential Treatment of Commodity Trade (2012 edition) (GAC Announcement [2011] No.82) have been modified.  The revised standard will be effective from 1 January 2018.
   

GAC Announcement on Abolishing the Formality Matters after the End of Transition Period in relation to Bank Guarantee Mechanism in Processing Trade Business (Announcement [2017] No.62)

On 14 December 2017, to implement the instruction from the State Council regarding the abolishment of bank guarantee mechanism in processing trade business (herein referred to as “the deposit account”), GAC and MOFCOM announced on the formality matters after the end of transaction period as follows, which will come into force since 2 February 2018: 

1. The management of “real transfer” to the deposit account will be changed to customs guarantee matters. As such, enterprises will no longer need to open a deposit account at banks and will be able to proceed the formalities as customs guarantee matters.
2. For the guarantee provided in the form of deposit, when the guarantee matters are discharged, enterprises can proceed with refund of deposit and the relevant interests with the in-charge customs authority by providing with finance receipts. The interest shall be calculated on the benchmark interest rate for current deposit published by the People's Bank of China from the receipt date of deposit payment in the account designated by Customs to the issuance date of notification of deposit refund.
   

GAC Announcement on Implementing China-Georgia Free Trade Agreement (Announcement [2017] No.64)

China-Georgia Free Trade Agreement (herein referred to as “China–Georgia FTA” or “the FTA”) will come into force on 1 January 2018.  The FTA includes the following articles: 

1. The code of the FTA is “20”. In accordance with GAC Announcement (2016) No.51 and GAC Announcement (2017) No.13, the consignor/consignee or its agent of the goods imported and exported under the FTA should select the “Declaration of No Origin” within the “Unrealised Electronic Network” when filling in the China Customs Import (Export) Declaration Form or the China Customs Goods Entry/Exit Registration Form.
2. The quantity of the commodities subject to the FTA preferential tariff rate in the Customs Import Declaration Form should be no more than that indicated on the Certificate of Origin, and the unit of transaction in the Form should be consistent with that indicated on the Certificate. For exports, the exported commodities under the same Certificate of Origin should be declared in one Customs Export Declaration Form.
   
3. The Certificate of Origin of Georgia shall be issued by Georgia Customs, whilst the Certificate of Origin of China shall be issued by local Entry-Exit Inspection and Quarantine Authorities (CIQ) under General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), China Council for the Promotion of International Trade (CCPIT) and its local branches.
   

GAC Announcement on 2018 Tariff Adjustment Plan (Announcement [2017] No.65)

Upon the approval of the State Council, the 2018 Tariff Adjustment Plan (Shui Wei Hui [2017] No.27) will take effect on 1 January 2018. The Plan makes adjustment against import tariff rates, export tariff rates and tax items.

1. For import tariff rates, the Plan adjusts some most favoured nation (MFN) rates, quota tariff rates and FTA tariff rates. The commodity scope and tariff rates of special preferential tariff rates remain unchanged, among which:
   1. MFN rates: With effect from 1 January 2018, provisional rates shall be implemented on 984 items of imported commodities, among which the provisional rates of 27 items of information and technology (IT) products would be valid until 30 June 2018. The MFN rates of the IT products listed out under the Appendix of the Amendment to Tariff Concession Schedule of the Entry of the PRC into the WTO should continue to be reduced for their second and third times from 1 January 2018 to 30 June 2018 and from 1 July 2018 respectively. The MFN rates of broken rice under HS code 10064010 and 10064090 shall be entitled to 10% MFN rate since 1 July 2018.
      
   2. Quota tariff rates: Tariff quota rates should continue to be applied for eight items of commodities including wheat, without changing the duty rates. The provisional rate of three items, including three fertilisers, namely urea, compound fertiliser and hydrogen phosphate, shall continue to be 1%. Sliding standard tax should continue to be implemented on the quantity of cottons exceeding the import quota.
      
   3. FTA tariff rates: Tariff rates for the commodities under China - Georgia FTAs will be partially implemented.  The tariff rates for certain commodities under the FTAs between China and ASEAN, Pakistan, Korea, Iceland, Switzerland, Costa Rica, Peru, Australia, New Zealand and under the Closer Economic Partnership Arrangements (CEPA) between Mainland China and Hong Kong as well as Macau should be further reduced.
      
2. Regarding export tariff rates, the Plan will impose export duties on 202 items of exported goods, such as soldering iron.
   
3. The tariff schedule and the Commodity Name and Coding Coordination System will be synchronously republished and certain HS codes will be adjusted where necessary. There are a total of 8,549 items under the 2018 tariff schedule after republication and adjustment.
   

GAC Announcement on Revised Standards of Filling in Customs Declaration Forms for Imports and Exports (Announcement [2017] No.69)

On 27 December 2017, GAC issued the Standards of Filling in Customs Declaration Forms (Announcement [2017] No.69) to amend the previous version. The amendment will take effect from 1 January 2018 and mainly modifies the 35th item “Goods name and specification” and adds two compulsory items - “Brand type” and “Export benefit circumstance”. It shall be noted that the “Brand” is an essential declaration element to assess customs value, and it will be reviewed for the purpose of intellectual property protection and customs valuation.  However, the abovementioned “Brand type” is another item which is different from the “Brand”.   

MOFCOM, GAC and AQSIQ jointly announced the Catalogue of Goods Subject to Import and Export Licenses for 2018 (Announcement [2017] No.89)

MOFCOM, GAC and AQSIQ jointly announced the Catalogue of Goods Subject to Import and Export Licenses for 2018 effective from 1 January 2018.  The Catalogue of Goods Subject to Import and Export Licenses for 2017 announced on 30 December 2016 shall be simultaneously abolished.

GAC Decree on Decision of Amending the Administrative Measures of the PRC on Temporary Imports and Exports (Decree [2017] No.233)

On 20 November 2017, the Administrative Measures of the PRC on Temporary Imports and Exports has been approved at the executive meeting of the GAC, effective from 1 February 2018. The Administrative Measures of the PRC on Temporary Imports and Exports issued on 1 March 2007 (Decree No.157) and the Decision of GAC on Amending the Administrative Measures of the PRC on Temporary Imports and Exports issued on 25 December 2013 (Decree No.212) shall be simultaneously abolished.

GAC Decree on the Decision of Abolition and Revision of Certain Rules (Decree [2017] No.235)

On 20 November 2017, the Decision of GAC on Abolition and Revision of Certain Rules has been approved at the executive meeting of GAC, effective from 1 February 2018.  GAC decides to revise 23 rules, including the Measures of PRC Customs for Supervision and Control of Luggage and Articles Carried by Inbound and Outbound Passengers.

GAC Decree on the Provisional Measures on Administration of PRC Customs Pre-Ruling (Decree [2017] No.236)

On 12 December 2017, the Provisional Measures on Administration of PRC Customs Pre-Ruling has been approved at the executive meeting of GAC, effective from 1 February 2018. According to the Provisional Measures, the Customs could conduct pre-rulings on the customs matters related to actual import and export activities at the time of application prior to the actual import and export of goods.

1. Customs matters that can adopt pre-ruling include: classification, country of origin, certificate of origin, dutiable prices, valuation method and other customs matters of import and export commodities. Dutiable prices contain royalty payment, commission, insurance and freight, special relationship and other factors related to the determination of dutiable price.
   
2. The applicants for pre-ruling shall be related to the actual import and export activities, and should be the foreign trade operators registered at the customs office.
   
3. Applicants shall apply for pre-ruling to the in-charge customs at the place of registration three months prior to the proposed import or export. In special circumstances, pre-ruling can be applied within three months of the proposed import or export. 
   
4. Each Application Form for Pre-ruling can only contain one kind of customs matter and shall be valid for 3 years.
   

China and Maldives Officially Signed the Free Trade Agreement 

On 7 December 2017, the two countries signed the China-Maldives Free Trade Agreement (herein referred to as “China–Maldives FTA”). China - Maldives FTA is the 16th FTA that China has ever signed, and it is Maldives's first bilateral FTA with a foreign country. It covers trade of goods, trade of services, investments and economic and technical cooperation. In term of trade of goods, the agreed zero-tariff products and the import amount of both countries account for almost 96%. Most of China's industrial products and agricultural products, such as flowers, plants and vegetables, exported to Maldives will benefit from this FTA.  Maldives' most superior export products, such as aquatic products, will also enjoy zero tariff rate. In term of trade of services, both countries will further open their service departments based on their WTO commitment. In term of investment, they have promised to provide investors and their investment with national and the MFN treatment to encourage mutual investment and provide the benefit of convenience and effective protection. At the same time, they reached broad consensus in rules of origin, customs procedures and trade facilitation, trade remedy, technical trade barriers as well as sanitation and phytosanitary measures. 

After signing the FTA, the two countries will follow the related domestic procedures. The FTA will come into force and its preferential policies will benefit the enterprises and people of the two countries as soon as possible.

Xiamen Customs issued the announcement to launch pilot bonded warehousing program regarding parallel import of automobiles in areas under special customs supervision 

On 22 December 2017, Xiamen Customs issued the Announcement to launch pilot bonded warehousing business regarding parallel import of automobiles in areas under special customs supervision within the pilot free trade zone of Fujian (herein referred to as “special customs supervision areas”). For the parallel imported automobiles, enterprises shall make import declaration to the Customs or handle re-exportation formalities within the prescribed bonded warehousing period – i.e. three months without extension. The Customs will manage via logbook for the parallel imported automobiles based on the vehicle identification code. Enterprises should apply for registration to in-charge Customs with the qualification result issued by the Xiamen Administrative Committee of Fujian Free Trade Zone. For the customs declaration, the enterprises should file the Entry Registration with the Customs according to the Standards for Filing in Customs Declaration Forms, and remark “Parallel imported automobiles” in the Form with written guarantee. Import declaration should be conducted by the enterprises within three months from the entry clearance date of the pilot imported automobiles, and special certificate for parallel imported automobiles would be required. Transfer between different special customs supervision areas or transfer between different warehousing enterprises within the same special customs supervision area should be approved by both inbound and outbound customs authorities of the parallel imported autos.  The bonded warehousing period should be calculated on a continuous basis.

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