On March 20, the 13th National People's Congress of China has formally reached an agreement on the institutional reform plan of the Chinese governmental agencies submitted by the State Council. According to the restructuring plan, many governmental agencies related to import and export operations will be integrated or simplified, and the related parties’ working scope shall be adjusted as well.
Tradewin has summarized the developments as relates to import/export as follows:
The responsibilities and personnel of China and Inspection Quarantine (CIQ) shall be integrated into China Customs.
For a long time, the main responsibilities of Import and Export Inspection and Quarantine have been managed by CIQ, a subordinate agency of General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ). According to the restructuring plan, these responsibilities will be totally incorporated into China Customs.
China Customs will be responsible for the supervision and taxation of all the import and export goods at ports as well as the management of admittance measures for all kinds of goods. Since April 20th, 2018, the import and export quarantine issues have been formally operated by China Customs.
The enterprises only need to do a one-time declaration and the related physical inspection during declaration will be conducted by Customs once. It will greatly help the clearance efficiency at the port.
Meanwhile, quarantine related requirements will be combined into Customs’ post entry audit process, which requires more knowledge on customs and trade compliance management for the enterprises.
In addition, the Chinese Armed Police Force has been assisting China Customs in the management of import and export affairs at ports since the 1990s. After the integration of CIQ into Customs, the Chinese Armed Police Force will no longer assist Customs’ supervision. This may result in a lack of workers of China.
It is expected that the follow-up internal restructuring of Customs will happen throughout 2018, affecting the related customs clearance, inspection and quarantine operations.
The newly established National Market Supervision and Administration Bureau (hereinafter “NMSAB”) will be responsible for the administration of market-access measures in China, such as imported food/medicine, anti-monopoly enforcement and certification of product quality.
This will replace the former responsibilities of many agencies including CFDA, NDRC, MOFCOM, CNCA, and SAC.
All above shall be under the responsibilities of NMSAB according to the restructuring reform plan, with the exception of the administration on imported drugs, for which a separate China Drug Administration Bureau shall be established.
AQSIQ and CFDA will cease to exist. The new establishment of NMSAB will bring certain delay for the recent qualification application on the relevant import and export goods. It will take time for smooth operation after NMSAB establishes local authorities throughout the country.
A newly established State Intellectual Property Bureau of the P.R.C. (hereinafter “SIPB”) under the NMSAB will be responsible for intellectual property, trademarks and geographical indications of origin. This will replace the former activities of SIPO, SAIC, and AQSIQ on this matter.
China Customs actively cooperates with the SIPB, and has cancelled the application charges for the intellectual property rights registration for import and export goods with Customs. This may encourage enterprises to more actively participate in the intellectual property protection of their products.
Once the goods in doubt for intellectual property infringement are discovered, China Customs will detain the goods and contact SIPB and the applicant. If the violation was confirmed, the relevant IOR/EOR will be punished by China Customs.
Local office of State Administration of Taxation (hereinafter “SAT”) and the Local Taxation Bureau will be integrated.
After the Local Taxation Bureau is integrated into SAT, only one tax bureau will be responsible for the taxation, such as relevant local taxes and non-tax revenue (including all kinds of surtax or fees for education), VAT, corporate and personal income tax, export tax refund.
The new local tax bureau shall be administered by SAT and local government, but China Customs is still in charge for import VAT collection.
These changes in relevant governmental agencies and personnel may impact the import and export activities, supply chain arrangements as well as trade compliance programs.
However, these reforms will ultimately help improve the overall economic environment, including customs clearance, market-access measures on product quality, and investment environment of foreign-invested enterprises.
As far as we know, the implementation of the reform will be landed on local government level within 2018.
Tradewin will continue to follow up the specific governmental adjustments and possible impacts on our clients. We are also glad to provide the risk assessment and suggestions on the improvement of import and export environment to our clients timely.