Tariffs
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China’s average tariff on pharmaceuticals is currently 7.0 percent.
This will be reduced to 4.7 percent. Reductions on all but one pharmaceutical
product will be completed by January 1, 2003.
Trading Rights and Distribution
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Prior to its accession, through various means, China restricted the number
of companies that had the right to import and export goods as well as the
types of goods that these companies could import. China has agreed,
upon its accession, to eliminate any export performance, trade or foreign
exchange balancing, and prior experience requirements as criteria for obtaining
or maintaining the right to import and export. Chinese enterprises
will also have full trading rights upon accession, subject to certain minimum
registered capital requirements. Joint ventures with minority foreign ownership
will be granted full trading rights within one year after accession, and
joint ventures with majority foreign ownership will be granted full trading
rights within two years after accession. All enterprises, including
those in the pharmaceutical industry, will be granted full trading rights
within three years after accession (except with regard to a limited number
of products reserved for state trading enterprises, as identified in Annex
2A to the Protocol).
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For enterprises and individuals that are not invested in China, the right
to import and export will be granted in a non-discriminatory and non-discretionary
way. Any requirements will be for customs and fiscal purposes only.
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Prior to its accession, China did not generally permit foreign companies
to distribute products through wholesale and retail systems in China or
to provide related distribution services, such as repair and maintenance
services. These prohibitions will be eliminated three years after
accession for pharmaceuticals. (See sector report on Distribution
Services)
Import Procedures
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China has agreed to bring both its automatic and non-automatic import licensing
systems into conformity with the WTO Agreement on Import Licensing, ensuring
that these systems will not function as trade barriers and will comply
with the principles of national treatment and nondiscrimination.
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China will no longer condition importation or investment approvals on whether
competing domestic suppliers exist or on performance requirements of any
kind, such as export performance, local content, technology transfer, offsets,
foreign exchange balancing, or research and development.
Intellectual Property Rights
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In accordance with the WTO agreement on Trade-Related Intellectual Property
Rights (TRIPs), China is obligated to comply with internationally accepted
norms for protecting and enforcing the intellectual property rights of
U.S. and other foreign companies and individuals in China.
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China is in the process of modifying its intellectual property laws and
regulations, including those relating to patents, trademarks, trade secrets,
test data and copyrights. In addition, China has committed to strengthen
the enforcement of these laws and regulations by its courts and the responsible
administrative agencies.
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China has agreed to protect undisclosed test or other data submitted to
its authorities to obtain marketing approval of pharmaceuticals and agricultural
chemical products so as to ensure that no person can rely on previously
submitted data, without the permission of the submitter, for at least six
years from the date on which China grants marketing approval to the person
submitting the data. Any second applicant for market authorization
will be granted such authorization only if he submits his own data.
The protection of such data will be available to all pharmaceutical and
agricultural chemical products that use new chemical entities whether or
not they are patent-protected.
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China has further agreed that it will only impose, apply or enforce laws,
regulations or other measures relating to the transfer of technology that
are consistent with with the WTO agreement on Trade-Related Investment
Measures (TRIMs) and the TRIPs agreement.
Price Controls
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Within one year after accession, China has committed to provide national
treatment with respect to regulations, notices, and measures relating to
procedures and formulas for the pricing and classification of imported
pharmaceuticals or measures that set limits on profit margins attainable
or that create any other conditions regarding price or local content.
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China has agreed not to use price controls to afford protection to the
domestic pharmaceutical industry, and China has agreed that its application
of price controls will not have the effect of limiting or otherwise impairing
China’s market access commitments.
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A comprehensive list of those pharmaceuticals that are subject to price
controls is set out in Annex
4 to the Protocol. Price controls will not be extended to additional
goods and services except in exceptional circumstances and must be notified
to the WTO and published.
Taxes
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China has agreed to ensure that its laws, regulations, and other measures
relating to internal taxes and charges levied on imports comply with WTO
rules and are applied uniformly to both foreign and domestic enterprises.
This obligation applies not only to national taxes but to provincial and
local taxes as well.
Subsidies
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China has agreed to eliminate all subsidies on industrial goods that are
prohibited under WTO rules, i.e., export and import substitution subsidies.
(See separate report on Import
Related Issues)
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