STATE TRADING

Questions Posed By the United States
regarding the notification of CHINA^[1]

The following communication, dated 7 June 2016, is being circulated at the request of the Delegation of the United States.

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The United States thanks China for its notification and poses the following questions:

Question 1

In 2003, the Secretariat circulated a format^[2] and guidelines for Members to use to notify their individual state trading enterprises (STEs). Following the proper format allows Members to fully understand the legal basis and functions of each individual STE being notified. Upon review of China's notification, it appears that China is the only WTO Member that has failed to follow this format. Could China please explain why it has failed to do so? If this omission was in error, please indicate when China will submit a corrected notification.

Question 2

In prior instances when China was pressed by Members to explain why it had not provided a notification for prior years, China responded that "China's STE system had not undergone any changes in general except regarding the products subject to STEs."^[3] However, after review of China's most recent STE notification, this does not appear to be the case. In its 2002 and 2003 notifications, China notified 109 STEs. In contrast, in the 2015 version, China only notified 25 STEs. Some of those STEs were carried over from the 2002-03 notifications, while others were only previously identified through alternative means like, for example, the U.S. counter‑notification. Please explain this discrepancy and, if possible, identify on an STE-individual basis why certain STEs were no longer being notified. If this was done in error, please indicate when China will submit a corrected notification.

Question 3

In the listing covering vegetable oil, China has not listed any individual STEs, but merely provided a reference to Annex 2A1 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 4

In the listing covering tea, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 5

In the listing covering soybean, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 6

In the listing for antimony and antimony products, and the listing for silver, China has not listed any individual STEs, but merely provided references to several MOFTEC/MOFCOM announcements and MOFCOM circulars. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 7

In the listing for tobacco, China has not listed any individual STEs, but merely provided a reference to a MOFTEC announcement. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 8

In the listing for silk, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 9

In the listing for unbleached silk, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 10

In the listing for cotton yarn, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 11

In the listing for woven fabrics of cotton, China has not listed any individual STEs, but merely provided a reference to Annex 2A2 of its protocol of accession. Per the 2003 format and guidelines, please identify the specific STEs that are being notified. If China is unable to do so, please explain why.

Question 12

In Section 4 – Statistical Information, China states that China would not be providing data regarding certain products because state trading of those products was suspended during the notification period. Please explain why trading information is not being reported for the years prior to the suspension of activities. If this is in error, please indicate when China will submit a corrected notification.

Question 13

For the tables containing the statistical information, please explain why the data has not been provided on a STE-specific basis. If this is in error, please indicate when China will submit a corrected notification.

Question 14

For the same tables, please explain why no data is being reported for the following categories: import quantity of state trading enterprises, average procurement price, average representative domestic sales price, and mark-up for most of the products covered by the notification. This level of transparency is important for Members to understand whether market considerations are being taken into consideration when the STEs establish prices for the identified products. If this was done in error, please indicate when China will submit a corrected notification.

Also, why are there two columns for average representative domestic sales price for grain, sugar, tobacco, crude oil, processed oil, chemical fertilizer, and cotton? If this was done in error, please indicate when China will submit a corrected notification.

Question 15

For Table III – Domestic Activities, please explain why China reported "not available" and clarify when the notification will be updated to provide such information to the Woking Party.

Question 16

The most recent notification by China provides very little information in terms of a response to the status of the entities listed in the U.S. counter-notification. As stated in the counter-notification, of the 153 STEs counter-notified, 44 were ones that had been explicitly self-identified by China as STEs or otherwise qualify as STEs under paragraph 1 of the Understanding. Please explain why China, whether through this notification or otherwise, has not provided an update to Members regarding these STEs. In past Working Party meetings^[4] as well as in bilateral discussions, China stated that it was reviewing the counter-notification and reserved the right to make comments or clarifications. If China is unable to provide a response to some or all of the information contained in the counter-notification, please explain why.

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