Circular on Issues Relevant to the Administration of Trade in Bonded Zones and Bonded Logistics Parks

(Issued by the General Offices of the Ministry of Commerce and the General Administration of Customs on July 13 2005.)

Shang Zi Zi [2005] No.76

All departments in charge of commerce of the provinces, autonomous regions, municipalities directly under the central government, cities with independent development plans and the Xinjiang Production and Construction Corps, and all directly subordinate customs branches:

In order to earnestly fulfil China's commitments in respect of its accession to the World Trade Organization and improve the trade administration on enterprises in bonded zones and bonded logistics parks, we hereby notify you of the relevant issues as follows:

1. Enterprises and individuals in bonded zones and bonded logistics parks may lawfully obtain the right to trade and apply for the right to distribution in accordance with the PRC Foreign Trade Law, the Measures for Registration for the Record of Foreign Trade Operators, the Measures for the Administration of Foreign Investment in the Commercial Sector and other related provisions. Enterprises and individuals that have obtained the aforementioned authorization may lawfully launch trade activities with enterprises and individuals outside the zones and parks in China (including those that have not obtained the right to trade). Foreign-invested enterprises that have obtained the right to distribution may lawfully engage in distribution activities in China.

2. Foreign trade operators in bonded zones or bonded logistics parks that sell products to parties outside the zones and parks in China or procure products from parties outside the zones and parks in China shall abide by relevant state provisions on such areas as the administration of import and export, foreign exchange, and taxation.

(1) For incoming and outgoing goods between bonded zones or bonded logistics parks and areas outside the zones and parks in China, import and export procedures shall be carried out in accordance with relevant customs provisions. Enterprises in a zone or park that distribute goods to areas outside the zones and parks in China as a foreign trade operator shall handle formalities such as customs clearance and verification and reconciliation of foreign exchange in the name of an enterprise in the zone or park. Purchases of goods from enterprises or individuals in the zones or parks by enterprises or individuals outside the zones and parks shall be handled in accordance with current provisions.

(2) Incoming and outgoing goods between foreign trade operators in bonded zones or bonded logistics parks and parties outside China shall not be subject to import and export licensing unless otherwise explicitly provided by international treaties participated in or concluded by the People's Republic of China, or by laws, administrative regulations or relevant rules.

(3) For textiles included in the List of Commodities Subject to Temporary Textiles Export Control that enter bonded zones or bonded logistics parks from outside the zones and parks in China, customs will not verify the licence but will wait until the aforementioned textiles are actually leaving China and will then carry out, in accordance with relevant provisions and on the strength of the licence, inspection and release of the textiles that are being exported to countries or regions that require temporary textiles export control.

3. The establishment of enterprises in bonded zones and bonded logistics parks shall comply with state industrial policies. Any enterprise in the zone or park may not engage in production or operation activities of sectors in which the state prohibits investment.

4. Taxation, customs regulation and foreign exchange administration matters of all types of enterprises in bonded zones and bonded logistics parks shall be handled in accordance with relevant provisions of the State Administration of Taxation, General Administration of Customs and State Administration of Foreign Exchange.