Unravelling Trading and Distribution Rights for FIEs after WTO

Fangda Partners

The right of foreign investment enterprises (FIEs) to import and distribute goods in China is one of the focal areas of China's accession to the WTO and is provided for in both China's Protocol of the Accession (the Protocol) and the Schedule of Specific Commitments on Services (the Schedule), Annex 9 of the Protocol. Accordingly, a specific section on the extent and time schedule of the opening of the wholesale and retail trade sectors to foreign investment is included in the new Foreign Investment Industrial Guidance Catalogue  (外商投资产业指导目录) issued on March 11 2002.

There are two aspects to this issue. The first concerns FIE's rights to trade after WTO. The second, more important aspect is whether FIEs will be permitted to resell the goods they import in the China market; this is the so-called "distribution" of goods in China. The Protocol, the Schedule and the Working Party Report address these issues. But the explanations are not so straightforward due to the complexity of these documents.¹