Compilation of Export Import Policies of December 2021

The framework of China's export control mainly consists of the Export Control Law of the People's Republic of China (effective since December 1, 2020), the Catalogue of Technologies Prohibited or Restricted from Export (revised on August 28, 2020), and the Provisions on the Unreliable Entity List (effective since September 19, 2020). Export control means taking measures to prohibit or restrict the export of items, including dual-use items, military products, nuclear materials, and other goods, technologies, and services associated with the safeguarding of national security and interests and the fulfilment of international obligations such as non-proliferation. As a common practice in the international world, it will further contribute to the optimization of license management, the improvement of law enforcement, compliance promotion, and the fulfillment of international obligations. 

Therefore, enterprises need to build an effective import and export compliance system and a commodity compliance database for their import and export practices as soon as possible.

The information about the export controls on China's dual-use items, military products, and nuclear materials is shown as follows:

 2022 will be an important year for changes to customs codes.This update involves the addition of 1,063 new HS codes, the deletion of 665 and the modification of 1,097. Part of fiberglass products under 7019 were updated on January 10, with 64 added and 32 deleted.

HMG's commodity management system will synchronize the customs code update on the update day. The data will be synchronized to local archival databases (local customs account books) through one-time update of the classification database to ensure the consistency of customs codes. And prompts will be set up in all systems for modified and deleted customs codes to avoid potential misuses, as a way to safeguard the code update for all users in the New Year.

Relevant announcements are shown as follows:

Notice of the Customs Tariff Commission of the State Council on the 2022 Tariff Adjustment Plan (CTCSC No.18 [2021])

http://gss.mof.gov.cn/gzdt/zhengcefabu/202112/t20211215_3775137.htm

Announcement No.119 of 2021 of the General Administration of Customs (Announcement on Implementing the 2022 Tariff Adjustment Plan)

http://www.customs.gov.cn//customs/302249/302266/302267/4123301/index.html

Announcement of the Customs Tariff Commission of the State Council on the Sixth Extension of Tariffs Exclusion List of U.S. Products Subject to Additional Tariffs (CTCSC Announcement, No. 9 [2021])

http://gss.mof.gov.cn/gzdt/zhengcefabu/202112/t20211224_3777971.htm

This revision of the Explanatory Notes to the Customs Tariff was based on the 2017 version, involving 14 chapters and 19 headings. The modification of general notes, heading notes, and annexes clarified the classification of relevant commodities.

The General Administration of Customs issued the measures for the administration of exporters to coincide with the successful launch of RCEP on January 1. According to relevant provisions, enterprises that meet the following three requirements are eligible to apply to be an approved exporter: 1) being an Authorized Economic Operator; 2) understanding the rules of origin under relevant preferential trade agreements; 3) having established a file administration system for qualification of origin. After being approved, such enterprises can issue declarations of origin for goods originated from China that they produce and export to other parties without having to apply for certificates of origin to certification institutions. Relevant goods are eligible for preferential tariff treatment under free trade agreements while other parties are making an import declaration. 

However, it is necessary to confirm whether the customs of the import and export country has received the information of approved exporters of the other party before import and export. For example, the issuer of RCEP declarations of origin of Japan currently recognized by the China customs is JCCI and the China customs has not received any information about other approved exporters from Japan.

The official coming into force of RCEP means the most promising free trade zone with the biggest population involved on the biggest economic scale has come true. The first batch of participating countries include six ASEAN members, which are Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, and four non-ASEAN members, which are China, Japan, New Zealand, and Australia. According to news released by the Ministry of Trade, Industry and Energy of South Korea on December 6, 2021, approved by its National Assembly and having been communicated to the Secretariat of ASEAN, RCEP will come into force in South Korea as of February 1, 2022.

Although the implementation of RCEP received wide media coverage, the Free Trade Agreement between China and Cambodia that came into force on the same day will also benefit enterprises in our city. The Free Trade Agreement between the PRC and the Kingdom of Cambodia (the China-Cambodia FTA) came into force as of January 1, 2022. The liberalization of goods trade and the service market access of the China-Cambodia FTA both represent the highest level among China's agreements with other free trade partners.

In terms of goods, the proportion of zero-tariff products in goods trade granted to Cambodia by China reached 97.53%, and that granted to China by Cambodia reached 90%, both the highest level given by each side to its FTA partners. In terms of services, the two sides opened their markets in service further based on the FTAs they are already engaged in, reflecting the highest level among the two sides’ agreements with their FTA partners respectively.

By the end of 2021, China customs signed mutual AEO agreements with 47 countries and regions and 21 economies, such as Singapore, South Korea, and the EU, ranked first in the world in the number of mutual recognition countries and regions.

Major adjustments include: to add or reduce the provisional import tariff rates on some medical equipment and devices and consumer products; to impose zero tariff on radium chloride injection, a new anti-cancer drug; to lower import tariffs on some medical products, such as intracranial thrombectomy stents and artificial joints; to reduce the import tariffs on key parts such as graphite accessories for silicon carbide (a third generation of new semiconductor material) epitaxy, high-voltage cables for high-speed trains, membrane electrode assemblies, and bipolar plates for fuel cells.

In recent years, China has been advancing high-level opening-up in depth and relaxing foreign investment access steadily. The national negative list and the FTZ negative list were revised in four consecutive years, from 2017 to 2020. Special measures for foreign investment access were reduced to 33 and 30 items from 93 and 122 items respectively, and a batch of crucial opening-up measures were released in fields such as finance and automobile. 

The 2021 Negative List for Foreign Investment Access revised this time was further shortened, in which the administrative system for foreign investment access was improved and the administration accuracy was enhanced. The new national and FTZ negative lists were condensed to 37 and 27 items respectively, reflecting the further opening up of China.

The policy mainly involves three catalogues: the Catalogue of Crucial High-Tech Equipment and Products that Enjoy the State Support (2021), the Catalogue of Imported Key Parts and Raw Materials for Crucial High-Tech Equipment and Products (2021), and the Catalogue of Crucial High-Tech Equipment and Products Not Exempted from Tax in Imports (2021), all of which shall come into force as of January 1, 2022. 

It is important to note that parts and raw materials imported duty-free under the import tax policies for crucial high-tech equipment are goods under customs control, meaning within the customs control period, they are not allowed to be transferred, used for other purposes and disposed in other manners without the evaluation and consent of the customs.

Compared to the 2009 Emergency Examination and Approval Procedures for Medical Devices, the new one modified Food and Drug Administration to Medical Products Administration, Food and Drug Administration Departments to Medical Products Administration Departments, and China Food and Drug Administration (CFDA) to National Medical Products Administration (NMPA). The provisions regarding various medical devices, the timeliness of relevant permissions and licenses, and relevant conditions were further clarified. Entities at all levels of the Emergency Examination and Approval Procedures for Medical Devices and the corresponding procedures were further clarified.

In accordance with the Cai Shui Document No. 36 of 2016, insurance services for export goods provided by domestic units and individual salesmen, including export goods insurance and export credit insurance, shall be exempt from VAT. Goods insurance is a sort of property damage insurance, whereas export credit insurance is a sort of credit insurance. In addition to them, there are also liability insurance and guarantee insurance, which were not exempt from VAT. This oversight was dealt with in this Announcement, which resolved the VAT exemption issue of liability insurance and guarantee insurance, so that the VAT exemption policy can cover the whole series of property insurance for export goods. 

However, this Announcement only dealt with the VAT issue of insurance of goods sold and exported by domestic sellers. The VAT of insurance of export goods purchased by domestic buyers still need to be paid (in this case, the taxpayer is a foreign seller and the domestic buyer pays the tax on behalf of the former). Therefore, although insurance companies are not mentioned in the announcement, it is actually a preferential policy tailored for domestic insurance companies.