Member Article

The Ministry of Commerce (“MOFCOM”) promulgated the Provisional Measures for the Administration of Processing Trade in Export Processing Zones on 22 November 2005. The Measures replace regulations of the same name with effect from 1 January 2006. Definitions The Provisional Measures define an export processing zone (“Zone”) as a specified area subject to closed supervision by the Customs. Export processing trade is defined as the production and business activity whereby an enterprise inside a Zone (“Zone enterprise”) processes or assembles goods with raw materials, parts and components, elements, packaging materials, etc. purchased outside or inside China and ships the finished goods out of China. Zone enterprises shall be enterprises established in the Zones with independent legal person status. If they are foreign-invested, the relevant formalities shall be completed in accordance with the regulations regarding the administration of foreign investment enterprises. Establishment In order to engage in export trading, a Zone enterprise must, upon the strength of its valid establishment approval document, submit to the administrative committee of the Zone a written application report. For projects where special requirements apply, it may also be necessary to submit an approval document issued by the relevant authority. If the application satisfies the conditions, the administrative committee shall issue an “Approval Certificate for Processing Trade Business in an Export Processing Zone” within 10 working days from the date of receipt of the application. Operations The Provisional Measures provide that goods leaving a Zone to an area outside China or entering a Zone from outside China are not subject to the import and export quota or permit system unless otherwise prescribed by the state. If goods leave a Zone to, or enter a Zone from, China proper, the relevant import or export procedures have to be attended to and if the goods fall under the import and export permit system, relevant documentation shall be submitted to the administrative committee of the Zone. The Provisional Measures permit enterprises in Zones to provide after-sales maintenance services for electro-mechanical products exported from China.