ANNEX 1

NOTES ON TARIFF RATE QUOTA commitments FROM CHINA'S SCHEDULE

1._       Tariff quotas indicated in the third column are volumes for calendar year 2001. Tariff quota concessions will be implemented according to the date specified in the "implementation" column. The implementation column indicates the date (referring to 1 January of the year indicated) when the final quota quantity will be achieved. The tariff quota concessions are subject to equal annual adjustments (occurring on 1 January of each year), unless otherwise specified in the last column ("Other terms and conditions").

2._       The People's Republic of China (hereinafter referred to as "China") shall maintain its in‑quota applied and bound rates (and, upon removal of the tariff‑quota, its applied and bound rates) for HS 1514 (rape or colza (canola) oil and its fractions, whether or not refined, but not chemically modified) at a level equal to that for HS 1507 (soya‑bean oil and its fractions, whether or not refined, but not chemically modified) and for HS 1205 (rape or colza (canola) seeds, whether or not broken).

3._       The growth rate for the TRQ volume for canola (rapeseed) oil shall be no less than the growth rate for the TRQ volume for soybean oil.

4._       An entity granted a tariff quota allocation (quota‑holder) may engage in importation through state‑trading enterprises and/or through entities possessing the right to trade other than state‑trading enterprises, including direct importation by the quota holder, as indicated on documentation issued with the allocation or reallocation of the tariff quota quantities.

5._       Application: All applications for an allocation of the tariff‑quota will be submitted to the State Development and Planning Commission (SDPC). Specific conditions for applying for a tariff‑quota allocation will be published in the official journal one month in advance of the application period, which will be from 15 October to 30 October.

6._       Allocation:

a.   The entire tariff‑quota quantity established in Section I‑B shall be allocated to end users by 1 January each year. Inquiries regarding tariff‑quota allocations can be made to the SDPC, with responses provided within 10 working days. Any additional requirement for importation will be automatic under the terms of the Agreement on Import Licensing Procedures. China shall equitably distribute allocations within each portion of the tariff‑quota to ensure complete tariff‑quota utilization and to establish a tariff‑quota system that is open, transparent, fair, responsive to market conditions, timely, minimally burdensome to trade and reflects end user preferences.

b.   In the first year, allocations to end users by the SDPC of the tariff‑quota reserved for importation through state‑trading enterprises shall be based on a first‑come, first‑served system or the requests of the applicants and their historical import performance, production capacity, or other relevant commercial criteria, subject to specific conditions to be published one month in advance of the opening of the application period so as to ensure an equitable distribution and complete tariff‑quota utilization. In the first year, no less than 10% of the tariff‑quota reserved for importation through state‑trading enterprises will be allocated to new quota‑holders.

c.   In the first year, allocations to end users by the SDPC of the tariff‑quota reserved for importation through entities other than state‑trading enterprises shall be based on a first‑come, first‑served system or the requests of the applicants and their historical import performance, production capacity, or other relevant commercial criteria. No less than 10% of the tariff‑quota reserved for importation through entities other than state‑trading enterprises will be allocated to new quota‑holders. This tariff‑quota will be limited to entities that do not receive any special or exclusive rights or privileges, and will include allocations to joint ventures, wholly foreign‑funded enterprises, and private enterprises.

d.   Except in cases where tariff‑quota is allocated on a first‑come, first‑served basis, and in accordance with China's Schedule of Concessions and Commitments on Goods, a quota‑holder that has imported under a tariff‑quota shall, upon application, receive an allocation of the tariff‑quota in the following year for a quantity no less than the quantity imported the previous year. For all methods of allocation, a quota‑holder that does not import its full allocation under a tariff‑quota will receive a proportional reduction in the tariff‑quota allocation in the subsequent year unless the quantity is returned to the SDPC prior to 15 September. A quota holder that has failed to import its full allocation in two consecutive years and has returned that unused portion by 15 September shall have its quota allocated in the following year on the basis of its fill rate in the most recent year, and will not benefit from any additional reallocations until and unless there are no other applications. The means of calculating the penalty will be included in the TRQ regulation in force and publicly available, and will be applied in a consistent and equitable manner.

e.   Allocations will be established for commercially viable shipping quantities and provisions will be made for partial shipments against a single tariff‑quota allocation. All commercial terms of trade, including product specification, pricing, packaging, etc., will be at the sole determination of the importer and the exporter taking into full account the demands of the end user. Tariff‑quota allocations will be valid for any item or mixture of items subject to the same tariff‑quota.

f.    Inquiries on the entities which received the allocation can be made to the SDPC which shall provide the information within 10 days.

7._       Term: The tariff‑quota for each product will be opened on 1 January each year, unless otherwise specified in the Schedule. Tariff‑quota allocations will be valid for the calendar year.

8._       Reallocation:

a._     In any year, if a quota‑holder has not contracted for the total quantity by 15 September, it shall return the unused portion of the tariff‑quota quantity to the SDPC for reallocation.

b._     Applications for reallocation of the tariff‑quota will be accepted by the SDPC from 1 September to 15 September and new allocations shall be assigned by 1 October. Specific conditions for applying for reallocation of tariff quotas will be published in the official journal one month in advance of the application period. Such allocations, which shall be to new applicants and to entities other than those returning quotas under sub‑paragraph 8.a. above, will be assigned on a first‑come, first‑served basis. Quota‑holders allocated a share of the tariff‑quota reserved for importation through entities other than state‑trading enterprises may import through any entity that has a right to trade in any product as specified in Section 5 of China's Protocol of Accession.

c._      Inquiries on the entities which received the reallocations can be made to the SDPC which will provide the information within 10 days.

d._     In situations where goods have been shipped from their port of origin before 31 December of any year, but are entered after 31 December of that year, China shall extend the validity of the tariff quota documents and shall count such shipments against the tariff quota allocation for the year in which the tariff quota was initially allocated.

9._       Consultations: With a view to maintaining a transparent and open tariff quota system, upon request from any WTO Member, China shall consult with the Member on the administration of the tariff quota to ensure that the tariff quota will be allocated in a transparent, equitable and non‑discriminatory manner and that the tariff quota will be fully utilized.

Notes:

1._    The share of the tariff‑quota reserved for importation through state‑trading enterprises is specified in column 7 of Section I‑B. The remainder of the tariff‑quota quantity is reserved for importation through any non‑state trading enterprise possessing the right to trade in any product as set forth in Section 5 of China's Protocol of Accession.

In any year, if the quantity of the tariff‑quota reserved for importation through state‑trading enterprises has not been contracted for by 15 August, quota‑holders will have the right to trade or to import through any entity with the right to trade any product under Section 5 of China's Protocol of Accession.

2._    China shall ensure that the applied duty for soybean oil, rapeseed oil, palm oil, peanut oil, cottonseed oil, sunflower seed oil, and corn oil is no greater than the applied duty for any one of these oils or for any other vegetable oil. Of the vegetable oils subject to tariff quota (i.e., soybean oil, rapeseed oil, and palm oil), if the tariff‑quota for any one oil is autonomously increased, the tariff‑quotas for the other two will be increased commensurately. Beginning 1 January 2006, China will remove soybean oil, rapeseed oil and palm oil from Annex 2A of the Protocol of Accession and will grant the right to trade such oils to all individuals and enterprises.

3._    All quota holders, that have already fully used or contracted their tariff‑quota allocations in any year by 15 September shall also be eligible for reallocation of tariff‑quota from other quota holders that have returned their allocations.