Even with the turbulence of the global finance markets and the world economy and the uncertainty in the years to come, due to trade facilitation measures, China in 2008 still witnessed a continuing growth of international trade in goods-reportedly rising 17.8 percent with a total imports and exports 2561.63 billion US dollars. Slowdown is inevitable due to the global economic crisis though, cost-saving trade facilitation can still make contribution.
A number of regulatory, policy and technical developments to promote customs compliance and trade facilitation, including, but not limited to:
Strengthening coordination and consistency of customs classification and valuation;
The enterprise classification and AEO programs for customs and trade compliance, facilitation and security;
Customs process for periodical entry, advance release, immediate release of customs clearance to provide efficient and cost-saving customs and trade facilitation assistance to the compliant companies;
Customs enforcement of intellectual property rights to enjoin exportation of infringing commodities from China into countries of destinations;
Customs Automation and Trade Facilitation by integrating more agencies such as the Ministry of Commerce, the State Administration for Quarantine, Inspection and Quality (AQSIQ), the State Taxation Administration, the Administration for Foreign Exchange into the E-Port customs and trade automation platform;
Conclusion of several Free Trade Agreements such as China-Singapore FTA and upgrade of rules of origin for the FTAs and other customs duty preferential programs;
Customs cooperation with the US for C-TPAT validation and with EU for Secure and Smart international trade lane and AEO mutual recognition;
Customs Transparency Regulations based on the State Council's Regulations regarding Public Information;
Customs and trade facilitation measures to coordinate the government's efforts to stabilize the Chinese economy with stimulus packages and other economic policies;
Change of Inward processing trade prohibitions and restrictions;
VAT export rebate and export duty adjustments for managing export of intermediate and downstream products;
Adjustments for foreign exchange control regulations;
Implementation of certain government procurement rules;
The developments for customs and trade regulation initiated and implemented by the Chinese government also invite the further considerations from the trade.
Uniformity, consistency and transparency
While uniformity, consistency and transparency of customs law, regulations, rules and implementation across the customs districts, have been improved dramatically over the past decade, there are still issues that the customs districts deal with in different processes and manners and result in unfair treatments and compliance concerns for businesses operating in different customs districts.
Customs valuation and classification
Since Customs revenue in China is the critical portion of the Chinese central government's dispensable revenue, with the global emphasis over the transfer pricing and its relationship with customs valuation, it is understandable that revenue collection and protection is one of the priorities for China customs. The technical issues such as customs valuation of the related party transactions and customs valuation of royalties and license fees and classification have increasingly become the customs valuation and revenue collection issues of which different interpretations often times occur in different districts and at different levels.
Drawback Program for Processing Trade
Most of the inward processing trade manufacturers utilize customs bond program to import materials and components with import customs duties and taxes deferred and then re-export the processed commodities. Some of the inward processing trade manufacturers would like to utilize the customs duty drawback provided in the Customs law to import materials and components with customs duties and taxes paid and then refund them when the processed goods are exported.
VAT export rebate policy
In recent years, the Chinese government has used the VAT rebate for export as a policy tool to encourage or discourage exportation. The constant changes of the VAT rebate rates for industry and trade considerations have created uncertainties for the business community to forecast the feasibility of the transactions and even sometimes stalled the fulfillment of some business transactions.
We recognize that the volume of cross-border trade of China has increased significantly in past decade and that the customs and trade authorities, with traditional tasks such as revenue collection and new challenges such as customs border enforcement of intellectual property rights, product safety and supply chain compliance and security, are increasingly using information technology, risk management techniques, and customs and trade compliance programs to enforce customs and trade laws and regulations and facilitate the efficient flow of the legitimate trade. China will and has to encourage informed compliance and facilitate trade in order to meet the challenges by:
Further improving central based programs such as administrative ruling for classification and valuation and detailed implementing rules for district/local Customs in order to facilitate uniformity and consistency of implementation and enforcement of laws and regulations across different points of entry;
Further enhancing coordination between government agencies, especially for transfer pricing and customs valuation issues between customs and tax authorities; technical standards, product safety issues between customs and AQSIQ; foreign exchange payment for trade in goods and customs valuation issues between Customs and the Administration for Foreign Exchange;
Initiating centralization of the E-Port customs automation project and merge the district-based sub-centers into one national center;
Advancing customs and trade partnership in order to foster mutual information exchange, understanding and trust;
Maintaining a stable and standard VAT rebate for export policy;
Clarifying the conditions and standards with trading partners for the recognition of China's market economy status and guide China graduate from the process in order to stabilize the trade relationship and trade flow.
All the parties in the supply chain process shall seek ways of reducing administrative burdens and transactional costs on legitimate trade.
By ZhaoKang JIANG
Sandler, Travis & Rosenberg, P.A.
Beijing, China
China World Tower 1, Suite 2705
1 Jianguomenwai Avenue
Beijing 100004, P.R.China
Tel: +86(10)6505-9900
Fax: +86(10)6505-7390
Washington, DC, USA
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Washington, DC 20004
Tel: +1(202)216-9307
Fax: +1(202)330-5990
Email:zjiang@strtrade.com