The Revised Equity Joint Venture Law and WTO Accession

On March 15 2001, the Fourth Session of the Ninth National People's Congress passed the revised PRC Sino-Foreign Equity Joint Venture Law (中华人民共和国中外合资经营企业法)(Revised EJV Law). The revisions provide an interesting case study into China's ability to meet the requirements of WTO membership.

As expected, the revisions are ostensibly designed to satisfy the requirements of WTO membership, in particular the requirement of 'national treatment'. For example, under the Revised EJV Law, Chinese-foreign equity joint ventures (EJVs) are no longer required to procure insurance from a Chinese insurance company. Now, EJVs may obtain insurance from any insurance company in China. In addition, the Revised EJV Law abandons the requirement under the previous EJV Law that states that EJVs must give priority to domestically purchased raw materials, fuel and parts. These amendments are clearly designed to remove legal restrictions that discriminate in favour of domestic Chinese enterprises.