Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation

Official Reply of the Ministry of Foreign Trade and Economic Cooperation to Report on Questions about Import Certificate to Enterprises with Foreign Investment

WaiJingMaoZiTongJinHanZi [2000] No.565

August 9, 2000

The Shanghai Special Commissioner's Office of the Ministry of Foreign Trade and Economic Cooperation:

The Report on Questions about Import Certificate to Enterprises with Foreign Investment (WaiJingMaoHuTeHanZi [2000] No.19) is duly received, and now reply you on the relevant questions as follows:

The existing regulations on import quota license administration over enterprises with foreign investment are worked out in accordance with the three basic laws for enterprises with foreign investment in China and provisions concerning the administration of import of goods. Article 2 of the recently publicized Circular on Issues concerning Standard Rules governing the Issuance of Import Certificates to Enterprises with Foreign Investment ( WaiJingMaoZiTongJinHanZi [2000] No.498) is not contradictory to the questions your office reported. The main reasons are:

I.

It is simply for the purpose of protecting the legally approved foreign trade right of enterprises with foreign investment capable of trading products for their own use that the state distributes separate import quota to enterprises with foreign investment and allow them to import self-use products within their business scope, while continuing the practice of limiting the trade of some products to authorized companies. Article 2 of Document No.498 provides that the second item, " Import Applicant", in the import certificate must be the same enterprise as in the third item , " Import Agent" does not mean to ban the foreign trade agency business among enterprises. As this Ministry knows, foreign trade companies such as SINOCHEM and COFCO with more authorized company business can continue to sign agency contracts according to the provisions of Document No. 498. The only difference is that enterprises with foreign investment must now make the payment by themselves to their overseas customers and apply to customs by themselves (or entrust a broker). Therefore, the provisions of Document No. 498 is not contradictory to Article 9 of the Interim Regulations of the People's Republic of China concerning the Licensing System for Import of Goods which says "can entrust relevant foreign trade companies to order from overseas market".

II.

Document No.498 provides that Item 2, " Import Applicant" must be the same company as in Item 3, " Import Agent". Therefore, in line with the relevant provisions on import license application and issuance, "Importer" should corresponds to " Import Agent" and "Consignee" to "Import Applicant", i.e. the same enterprise with foreign investment. In this way, there will not be confusion in the process of import license issuing work.

III.

With regard to the reported issue concerning fertilizer import of Jiangxi Jinyu Quanyuan Fertilizer Co. Ltd., a result is found after investigation that the company's import business through agent (including goods storage on ships) is not substantively affected, so long as it pays agent fees. In addition, since the company knows the market changes well, it does not ignore cost accounting of raw materials for reason of agent import by authorized foreign trade company.

The official reply is hereby given.