FOREIGN TRADE LAW OF THE PEOPLE'S REPUBLIC OF CHINA

FOREIGN TRADE LAW OF THE PEOPLE'S REPUBLIC OF CHINA (Adopted at the 7th Session of the Standing Committee of the 8thNational People's Congress and Promulgated on May 12, 1994) Whole document FOREIGN TRADE LAW OF THE PEOPLE'S REPUBLIC OF CHINA (Adopted at the 7th Session of the Standing Committee of the 8th National People's Congress and Promulgated on May 12, 1994) Chapter I Principles Article 1 This Law is formulated with a view to developing the foreign trade, maintaining the foreign trade order and promoting a healthy development of the socialist market economy.

Article 2 Foreign trade as mentioned in this Law shall cover the import and export of goods, technologies and the international trade in services.

Article 3 The authority responsible for foreign trade and economic relations under the State Council is in charge of the administration of the foreign trade of the entire country pursuant to this Law.

Article 4 The State shall apply the foreign trade system on a uniform basis and maintain a fair and free foreign trade order in accordance with law.

The State encourages the development of its foreign trade, exercises the initiative of localities and safeguards the autonomy of business operation of the foreign trade dealers.

Article 5 The People's Republic of China promotes and develops trade ties with other countries and regions on the principles of equality and mutual benefit.

Article 6 The People's Republic of China shall, under international treaties or agreements to which the People's Republic of China is a contracting party or a participating party, grant the other contracting parties or participating parties, or on the principles of mutual advantage and reciprocity, grant the other party most-favored-nation treatment or national treatment within the field of foreign trade.

Article 7 In the event that any country or region applies discriminatory prohibition, restriction or other like measures against the People's Republic of China in respect of trade, the People's Republic of China may, as the case may be, take counter-measures against the country or region in question.

Chapter II Foreign Trade Dealers Article 8 Foreign trade dealers as mentioned in this Law shall cover the legal entities and other organizations engaged in foreign trade dealings in compliance with the provisions of this Law.

Article 9 A foreign trade dealer who intends to engage in the import and export of goods and technologies shall fulfill the following requirements and acquire the permit from the authority responsible for foreign trade and economic relations under the State Council: 1. having its own name and corporate structure; 2. having definite scope of business in foreign trade; 3. having place of business, financial resources and professional personnel essential to the foreign trade dealings which it intends to engage in; 4. having a required record of import and export which were effected on its behalf or having necessary sources of goods for import or export; 5. other requirements provided in relevant laws and administrative regulations.

The detailed rules for the implementation of the preceding paragraph are to be laid down by the State Council.

Enterprises with foreign investment shall be exempt from the permit requirement provided in paragraph 1 with respect to their import of non-productive articles for their own use, import of equipments and raw materials and other articles necessary for their production as well as the export of the products they produce under the relevant provisions of laws and administrative regulations governing enterprises with foreign investment.

Article 10 The establishment and operation of enterprises and organizations engaged in international trade in services shall be in compliance with the provisions of this Law and other relevant laws and administrative regulations.

Article 11 Foreign trade dealers shall enjoy full autonomy in their business operation and be responsible for their own profits and losses in accordance with law.

Article 12 In foreign trade activities foreign trade dealers should honor their contracts, ensure the quality of the commodity and perfect the after-sale services.

Article 13 Any organization or individual without foreign trade operation permit may entrust a foreign trade dealer located in China as its agent to conduct its foreign trade business within the business scope of the latter.

The entrusted foreign trade dealer shall provide the principal with actual business information such as market situation, commodity prices and client position. The agent and the principal shall conclude and sign an agency agreement, in which the rights and obligations of both parties should be specified.

Article 14 Foreign trade dealers are obligated to provide documents and information in relation to their foreign trade dealings to the relevant authorities pursuant to the regulations of the authority responsible for foreign trade and economic relations under the State Council. The relevant authorities shall not disclose the business proprietary information provided by the dealers.

Chapter III Import and Export of Goods and Technologies Article 15 The State allows free import and export of goods and technologies except where laws or administrative regulations provided otherwise.

Article 16 The State may impose restrictions on the import or export of goods and technologies in any of the following circumstances: (1) where the import or export shall be restricted in order to safeguard the national security or public interest; (2) where the export shall be restricted on account of domestic shortage in supply or effective protection of exhaustible domestic resources; (3) where the export shall be restricted due to the limited market capacity of the importing country or region; (4) where the import shall be restricted in order to establish or accelerate the establishment of a particular domestic industry; (5) where the restriction on the import of agricultural, animal husbandry or fishery products in any form is necessary; (6) where the import shall be restricted in order to maintain the State's international financial status and the balance of international payments.

(7) where, as the international treaties or agreements to which the People's Republic of China is a contracting party or a participating party require, the import or export shall be restricted.

Article 17 The State prohibits the import or export of any goods or technologies in any of the following circumstances: (1) where such goods or technologies will endanger national security or public interest; (2) where the import or export of such goods or technologies must be prohibited in order to protect human life or health; (3) where such goods or technologies will disrupt the ecological environment; (4) where the import or export of such goods or technologies shall be prohibited in accordance with the provisions of international treaties or agreements to which the People's Republic of China is a contracting party or participating party.

Article 18 The authority responsible for foreign trade and economic relations under the State Council shall, in collaboration with the relevant authorities under the State Council and in accordance with the provisions of Article 16 and Article 17 of this Law, formulate, adjust and publish the list of goods and technologies whose import or export are subject to restrictions or prohibitions.

Upon the approval of the State Council the authority responsible for foreign trade and economic relations under the State Council may, within the framework of Article 16 and Article 17, independently or in collaboration with the relevant authorities under the State Council determine, on a temporary basis, to impose restriction or prohibition on the import or export of particular goods or technologies not included in the list mentioned in the preceding paragraph.

Article 19 Goods whose import or export is restricted shall be subject to quota and/or licensing control; technologies whose import or export is restricted shall be subject to licensing control.

Import or export of any goods and technologies subject to quota and/or licensing control will be effected only with the approval of the authorities responsible for foreign trade and economic relations under the State Council or the joint approval of the foregoing authorities and other authorities concerned under the State Council in compliance with the provisions of the State Council.

Article 20 Import and export quotas of goods shall be distributed on the basis of the conditions including but not limited to the actual import or export performance and capability of the applicants in foreign trade dealings and on the basis of the principles of efficiency, impartiality, transparency and fair competition by the authority responsible for foreign trade and economic relations under the State Council or the relevant authorities under the State Council within their respective responsibilities.

The ways and means of the distribution of quotas are to be regulated by the State Council.

Article 21 Where the import or export of goods, articles such as cultural relics, wildlife animals, plants and the products thereof are prohibited or restricted by other laws or administrative regulations, the provisions of the laws and regulations in question shall be observed.

Chapter IV International Trade in Services Article 22 The State promotes the progressive development of the international trade in services.

Article 23 With respect to international trade in services, the People's Republic of China, pursuant to the commitments made in international treaties or agreements to which the People's Republic of China is a contracting party or a participating party, grants the other contracting parties and participating parties market access and national treatment.

Article 24 The State may restrict international trade in services on the basis of any of the following considerations: 1. in order to safeguard the national security or public interest; 2. in order to protect the ecological environment; 3. in order to establish or accelerate the establishment of a particular domestic service industry; 4. in order to maintain the State's balance of international payments; 5. other restrictions provided in relevant laws and administrative regulations.

Article 25 The State prohibits any international trade in services which: 1. may endanger national security or public interest; 2. is contrary to the international obligations undertaken by the People's Republic of China; 3. is prohibited by relevant laws and administrative regulations.

Article 26 The authority responsible for foreign trade and economic relations under the State Council and the relevant authorities under the State Council are responsible for the administration of international trade in services in accordance with this Law and other relevant laws and administrative regulations.

Chapter V Foreign Trade Order Article 27 In foreign trade activities, foreign trade dealers shall operate their business in accordance with law and abide by the principle of fair competition and are prohibited from the following acts: (1) forgery, distortion or trading of certificates of country of origin and import or export licenses; (2) infringement on the intellectual property rights protected by the laws of the People's Republic of China; (3) squeezing out competitors with undue conducts of competition; (4) defrauding the State of the refunded tax on exports; (5) other acts contrary to the provisions of laws and administrative regulations.

Article 28 In foreign trade activities, foreign trade dealers shall settle and use foreign exchanges in accordance with relevant regulations of the State.

Article 29 Where a product is imported in such increased quantities as to cause or threaten to cause serious injury to domestic producers of like or directly competitive products, the State may take necessary safeguard measures to remove or ease such injury or threat of injury.

Article 30 Where a product is imported at less than normal value of the product and causes or threatens to cause material injury to an established domestic industry concerned, or materially retards the establishment of a particular domestic industry, the State may take necessary measures in order to remove or ease such injury or threat of injury or retardation.

Article 31 Where an imported product is subsidized in any form directly or indirectly by the country of export and causes or threatens to cause material injury to an established domestic industry concerned or materially retards the establishment of a domestic industry, the State may take necessary measures in order to remove or ease such injury or threat of injury or retardation.

Article 32 In the events referred to in Article 29, Article 30 and Article 31, the authority or agency designated by the State Council shall conduct investigations and make determinations in accordance with relevant laws and administrative regulations.

Chapter VI Promotion of Foreign Trade Article 33 The State shall establish and improve financial institutions for foreign trade and establish funds for foreign trade development and risk as the development of foreign trade requires.

Article 34 The State may take import and export credit, export tax refund and other foreign trade promotion measures for the purpose of the development of foreign trade.

Article 35 Foreign trade dealers may establish or join Chambers of Commerce for Importers and Exporters in accordance with law.

Chambers of Commerce for Importers and Exporters shall abide by relevant laws and administrative regulations, coordinate and guide the foreign trade activities of their members under their Articles of Association, provide advisory services, report to the relevant authorities of the Government the suggestions of their members with respect to foreign trade promotion, and actively promote foreign trade.

Article 36 The international trade promotion organization of China shall, in accordance with its Articles of Association, engage in development of foreign trade relations, sponsor exhibitions, provide information and advisory services and carry out other foreign trade promotive activities.

Article 37 The State shall support and promote the development of foreign trade in national autonomous areas and economically under-developed areas.

Chapter VII Legal Liabilities Article 38 Anyone who smuggles goods that are subject to import or export prohibitions or restrictions, and hereby commits criminal offenses, shall be subject to criminal prosecution pursuant to the Supplementary Decision on the Punishment of Smuggling Crimes. Those offenses of smuggling which do not constitute crimes shall be subject to sanctions under the provisions of the Customs Law. In addition, the authority responsible for foreign trade and economic relations under the State Council may withdraw the foreign trade operation permit of the offender in question.

Article 39 Anyone who commits forgery distortion of certificates of country of origin or license for import or export shall be subject to criminal prosecution under Article 167 of the Criminal Law. Anyone who commits trading of certificates of country of origin or license for import or export or trading of forged or distorted certificates of country of origin or license for import or export shall be subject to criminal prosecution in the light of Article 167 of the Criminal Law.

Where the criminal offenses referred to in the preceding paragraph are committed by an entity, the entity in question shall be imposed fine while the persons in charge of the entity directly responsible for the offenses and other persons directly responsible for the offenses shall be subject to criminal prosecutions in accordance with or in the light of Article 167 of the Criminal Law. In addition, the authority responsible for foreign trade and economic relations under the State Council may withdraw the foreign trade operation permit of the entity in question.

Anyone who knowingly uses forged or distorted import or export license in importing or exporting goods shall be imposed sanctions in accordance with the provisions of Article 38 of this Law.

Article 40 Anyone who imports or exports technologies that are subject to import or export prohibitions or restrictions in violation of this Law and commits criminal offenses, shall be subject to criminal prosecutions in the light of the Supplementary Decision on the Punishment of Smuggling Crime.

Article 41 Personnel serving in the State's foreign trade authorities who commit any neglect of duty, malpractice, irregularities or abuse of power, which constitute criminal offenses, shall be subject to criminal prosecutions pursuant to law; as to those offenses which do not constitute crimes, administrative sanctions shall apply.

Personnel serving in the State's foreign trade authorities who extort property from others with job convenience or illegally accept others' property and seek advantages for them in return and thus commit criminal offenses shall be subject to criminal prosecutions in accordance with the Supplementary Decision on the Punishment of Embezzlement and Bribery Crimes; where such conducts do not constitute criminal offenses, administrative sanctions shall apply.

Chapter VIII Final Provisions Article 42 The State applies flexible measures, provides favorable conditions and conveniences to the trade between the towns on the frontier and those towns of neighboring countries on frontier as well as trade among border residents. Detailed rules are to be laid down by the State Council.

Article 43 This Law shall not apply to the separate customs territories of the People's Republic of China.

Article 44 This Law shall enter into force as of July 1, 1994.