CHINA (SHANGHAI) PILOT FREE TRADE ZONE (CSPFTZ)

Following the official launch of the China Shanghai Pilot Free Trade Zone (CSPFTZ), EUCTPII will continue providing technical assistance to the Shanghai Municipal Government and national and local Ministry departments in the following four sectors: (i) Monetary Policy, (ii) Liberalisation of Services, (iii) Trade Facilitation and (iv) Legal and Economic Framework. In the period between late 2013 and early 2014, two positive announcements in field of legal services were made following two activities organised with the Ministry of Justice:

  • the revision of the Regulation overseeing the administration of foreign law firm representative offices in China;
  • The approval of the launch of a pilot programme in CSPFTZ exploring how to foster closer cooperation between Chinese and foreign law firms.
Building upon these positive outcomes, EUCTPII organised a seminar on the globalisation and regulation of the legal profession. The seminar provided Chinese legislators with a platform to discuss the benefits of opening-up China's legal services market thus improving the European Union-China trade and investment environment.

The People's Bank of China released detailed financial reform guidelines to support the establishment of the CSPFTZ which may include liberalising foreign exchange rates. In order to support these developments, EUCTPII organised a study assignment for delegates of the State Administration of Foreign Exchange (SAFE) - China's foreign-exchange regulator. The study assignment aimed at informing China's foreign exchange regulators about international practice and experience on foreign exchange policies. In particular, with regards to the EU's experiences in regulating capital account liberalisation, taking into account the challenges faced during financial crises.



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PRODUCT SAFETY AND CONSUMER PROTECTION top
Improving the EU-China trade and investment environment:

The Minister from the State Administration for Industry and Commerce (SAIC) of the People's Republic of China (PRC), Zhang Mao and the European Union's commissioner for consumer policy, Neven Mimica, met for the first time in China at the seminar on Consumer Protection (26 June, 2014) organised by EUCTPII, days after the joint statement signed in Brussels between China and EU in which it was agreed to work together in a number of areas, sharing experiences and communicating more effectively with consumers and producers.

Group Photo of EU-China Consumer Protection Seminar on June 26, 2014

The seminar aimed to put this new cooperation into practice, providing an opportunity for the EU and China to work together to improve consumer and product safety with economic operators, particularly in the rapidly growing e-commerce sector. In the light of the increasing supply of goods and services outside our internal market and the growth of e-commerce on a worldwide scale, international cooperation is an important dimension that needs to be further developed", said Commissioner Mimica, "It is especially important to pursue cooperation with partners with whom we have strong economic ties, such as China".

The keynote speakers invited from the regulatory bodies, research institutes, and e-commerce service organisations from EU and China delivered wide-ranging presentations on Alternative Dispute Resolutions (ADR), Online Dispute Resolutions (ODR), and e-commerce developments. Mr. Christophe Decker on behalf of DG SANCO provided an overview of Directive 2013/11/EU on consumer ADR and regulation (EU) No 524/2013 on consumer ODR. His counterpart, Mr. Huang Jianhua, Deputy Director-General of Consumer Protection Bureau, SAIC, introduced consumer ADR initiatives implemented by SAIC. The participants discussed key regulatory and institutional aspects of ADR/ODR, and implications for EU-China cross-border transactions.

As China further enhances its regulatory environment on consumer dispute resolutions, EUCTPII will continue contributing to these discussions through close cooperation with SAIC, deepening the value of these exchanges and highlighting EU practices that are most relevant to China's needs. A study visit of Chinese officials in Europe is planned for the last quarter of 2014 aiming to further promote the European regulatory model on consumer dispute resolutions.

COSMETICS AND MEDICAL DEVICES top
Since June 2014, the Chinese government no longer requires cosmetics manufacturers to first test their products on animals. Europe is the biggest producer of cosmetics in the world. Until now, EU manufacturers could not export to China as animal testing of finished cosmetic products and cosmetic ingredients is prohibited in the EU. Since 2012, EUCTPII has been providing technical assistance to the Chinese government (CFDA and AQSIQ) on alternative methods to animal testing.

In early 2014, EUCTPII organised the 5th CFDA-DG SANCO Cosmetics Expert Exchange Roundtable with the collaboration of China Food and Drug Administration (CFDA) and the Directorate General for Health and Consumers (DG SANCO). Focusing on legislative developments in China and EU, officials from CFDA and DG SANCO discussed critical issues such as Free Sale Certificates (FSCs), changes to ingredient management, establishment of Chinese inventory list, alternative methods to animal testing and criteria for claims and claim substantiation.


A delegation of CFDA officials visited Joint Research Centre in Italy on alternative methods to animal testing
 
FINANCIAL STABILITY AND POLICIES top

Strengthening China's financial regulation and improving its financial stability framework; Informing the regulation of China's credit information market.

The improvement of China's credit information system and the implementation of policies ensuring greater financial stability were amongst the main work areas defined by China's central bank, the People's Bank of China (PBOC), in early 2014. To support China's effort in this area, EUCTPII organised two study assignments including:

SECURITIES AND INSURANCE top

Advancing the development, supervision and reform of China's pension and social security systems, medical insurance coverage and derivatives markets

Significant steps were taken in recent years to improve China's pension and social security systems but gaps remain with international standards. EUCTPII provided technical expertise to officials from the China Insurance Regulatory Commission (CIRC) through the organisation of:

  • A study assignment on Pensions and Health Insurance Supervision which provided Chinese delegates with a reference framework for the CIRC as it considers reforming and re-designing China's pension and long-term care system. It also provided the delegation with specific examples of how to encourage commercial companies in China to participate in the social security system in order to support the reinforcement of China's social safety net.

China's securities regulator (CRSC) is developing the country's futures and financial derivatives markets. In support of this, EUCTPII organised:

Officials from the CIRC engage in discussions with European counterparts regarding Pensions and Health Insurance Supervision on May 13-20, 2014.
  • A seminar on the development and supervision of derivatives market in Shanghai for officials from the CRSC and also from various securities exchanges throughout China. The seminar provided a platform for Chinese regulators and industry experts and their European counterparts to discuss practical issues linked to OTC and listed derivatives from a regulatory, supervisory and industry perspective.
OVERALL SERVICES top

Working towards enhancing cross-border trade in services between the EU and China.

Both China's services sector and the share of European exports of services directed towards China have been growing in recent years. EUCTPII supported four activities in this area:

  • The significant increase of cross-border trade of services and the rapid development of the Internet has led to a growing electronic cross-border delivery of services. EUCTPII supported two studies on cross-border trade in services which examined the EU's approach to cross-border trade in services and the evolving EU regime of data protection and its impact on the regulation of cross-border trade in services. The dissemination seminar organised by EUCTPII in June 2014 provided Chinese officials with a reference framework which will be useful to decide the future of China's data protection regime.

EU-China Workshop on key services trade issues in regional agreements in June 2014
  • According to the Chinese government, Free Trade Agreements (FTAs) could offer a new platform to further open up China's economy while speeding up domestic reform and facilitating China's accession to the Trade in Services Agreement (TiSA). In order to facilitate the dialogue between Chinese and European stakeholders on key services trade Issues in regional agreements, EUCTPII organised a 3-day seminar to enhance China's policy-making skills and knowledge in the field of services industry and trade by learning from the EU economic integration and previous FTA negotiations.
ANIMAL HEALTH top
Harmonising the use of risk analysis to ensure food safety:

The Chinese Food Safety Law and the European food safety regulatory environment, rely on the assessment of risk to ensure that agriculture products are safe for consumption. EUCTPII organised a Workshop on African Swine Fever (May 16, 2014) to enhance the capacity of the Chinese competent authorities on risk analysis of African Swine Fever. This promoted the understanding of the epidemiological measures implemented by the EU to prevent and control this disease after the detection of two cases in Poland.

The EUCPTII continues to support the implementation of the three-year agreement signed by the Chinese Ministry of Agriculture (MOA) and the French Agency for Food, Environmental and Occupational Health & Safety (ANSES) towards the twinning of the Chinese Animal Health and Epidemiology Center (CAHEC) located in Qingdao, China, and ANSES's Animal Health Laboratory located in Maisons-Alfort, France. The Study Assignment to Standardise Animal Health Reference Laboratories (March-April, 2014) enhanced further CAHEC laboratory's capacity to support China's compliance with international standard to ensure the animal origin food safety.
Bacteria training in the ANSES laboratory in France on May 16, 2014
 
FOOD SAFETY top
Supporting the development of food standards in China: Risk assessment is fundamental for the development of food standards in China and the EU.

In order to enhance the capacity of Chinese institutions to review and enforce standards, EUCTPII supported a Study Assignment on Risk Assessment of Schmallenberg disease (SBV) (June 2014), a Workshop on Fruit Juice Authentication (May 7-9, 2014), and a Study Assignment on Food Contact Materials (May 12-19, 2014). These activities contribute to the harmonisation of the EU-China trade and the control and prevention of fraudulent practices associated to the trade of agricultural products.

NPC's Delegates interact with the food safety parliamentary commission in Lisbon

 

The Food Safety Law of PRC entered into force on 1 June 2009, but four years later China is still facing challenges to enforce food and feed safety. In response to these ongoing challenges, the Chinese government is reviewing the Food Safety law and is carrying out a public consultation. To help this process, the Chinese National People's Congress (NPC) demonstrated interest in understanding different processes and the stakeholders involved in the development and enforcement of the EU Food Safety regulatory instruments. In June 2014, EUCTPII organised a study assignment to enhance NPC's understanding of the technical and political aspects related to the development and enforcement of the EU food safety regulatory environment.

Geographical Indications (GI) and Fighting Counterfeiting in Alcoholic Beverages top

Enabling Laboratory exchanges to fight counterfeiting in trade of alcoholic beverages and to enhance quality and safety of alcoholic products
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EU-China Workshop on Laboratory Cooperation and Technical Exchanges on Alcoholic Beverages on March 25, 2014
Trade of alcoholic beverages between EU and China has been growing rapidly in recent years, while the safety and authentication of these products is becoming an increasingly prominent concern for consumers as well as producers and governments due to counterfeiting or lack of traceability. On March 25, 2014, AQSIQ and the EU Delegation to China jointly organised EU-China Workshop on Laboratory Cooperation and Technical Exchanges on Alcoholic Beverages to facilitate networking between Chinese and EU researchers and laboratories for alcoholic beverages. This activity enhanced the cooperation between Chinese and EU laboratories in the area of scientific methods to ensure the authenticity, safety and traceability of alcoholic beverages traded between China and the EU.
 
PLANT HEALTH top
Promoting "Farm to Fork" strategies and food security:

The EU has some of the highest food safety requirements in the world, which recognise that food safety starts at the farm. Considering the importance of animal feed within the food chain, this strategy includes regulations to ensure that feed and feed additives are safe for terrestrial and aquatic animal consumption. To assist Chinese MOA's needs, EUCTPII organised a Study Assignment on Feed Safety (June, 2014) in order to enhance institutional capacity in the field of regulations which ensure feed safety and security. This study enhanced their understanding of the latest progress of new technologies and practices to promote food security and safety.


Farm visit in England during the study assignment
REGULATORY REFORM top

Supporting fair market conditions between retailers and suppliers

To ensure China's transition from an export growth model to one driven by consumption, the retail sector plays an important role. In recent years, the retail sector has experienced high growth rates, not without creating new challenges in the retailer-supplier relationship such as extra fees charged to suppliers by retailers with a dominant market position. To address these challenges, the Ministry of Commerce (MOFCOM) is currently preparing new legislation in the form of a Retailers and Suppliers Fair-trade Regulation, as one of the main tasks of the State Council's annual year plan for 2013/14.

In order to better prepare the drafting on market regulations for the retail industry, MOFCOM requested assistance from EUCTPII to understand the best practices in developed countries with mature markets. A high-level delegation from MOFCOM's Department of Market Supervision, the State Council Legislative Affairs Office (SCLAO), and the China Chain Store & Franchise Association, met with regulators in Brussels, Berlin and Paris, as well as industry associations and retailers to learn about regulatory approaches in Europe. EU's internal market is an important reference for China not just due to its maturity but also to the fact that European corporation hold strong positions in the retail chain in China.

Meeting at the Paris Appeal Court in May 2014.

In this context, European industry associations presented the Supply Chain Initiative as an example for self-regulatory approaches in a market economy, which may serve as a reference point for China.

COMPETITION POLICY top

Fostering exchanges on competition policy

During the 2014 Report on the Work of the Government, China announced to move towards a more open and market-oriented economy, which requires a fair and transparent competition policy framework. While the Anti-Monopoly Law and the Anti-unfair Competition Law fundamentally contribute to such a regime, China's Anti-Monopoly Enforcement Agencies (AMEA) share a high interest in exchanging experiences with their European counterparts.

European experts discussing with MOFCOM officials behavioral remedies during the 8th EU-China Competition Week in Beijing

The EUCTPII organised a series of structured dialogues between the Chinese AMEAs and DG Competition under the 8th EU-China Competition Week, which was held from 10 to 14 of March 2014 in Beijing. Topics included basic concepts regarding the abuse of a dominant market position, behavioural remedies in merger cases, as well as cartel investigations on automobile and online retail industries. To access the week's detailed agenda and the presentations delivered, please visit the EU-China Competition Policy mini-website: www.euchinacomp.org

EXTERNAL TRADE STATISTICS top

Improving the accuracy and accessibility of China's external trade statistics continues to be a priority for GACC and a key area of customs cooperation between the EU and China. In addition, improving the comparability of the external trade statistics produced by the EU and by China is a priority action under the recently agreed EU-China Strategic Framework on Customs Cooperation 2014-17. EUCTPII supported a study assignment on trade data quality control, analysis and dissemination (16-17 June 2014) for officials of GACC to visit Her Majesty's Revenue and Customs in the UK to learn EU good practice management of trade data to ensure quality, accuracy and accessibility for policy-makers and the broader public. As GACC progressively implements improvements to its trade data management practices in line with UN standards (IMTS 2010), the study assignment was a timely input to these efforts. The related mirror comparison of EU-China external trade statistics has identified high level discrepancies between import/export statistics that have been causing ongoing difficulties for both EU and Chinese policymakers in trade statistics analysis. As the EU-China trade relationship grows, policy makers need accurate, accessible statistics on bilateral trade flows to inform trade and economic policy development. Accordingly, a database which allows the discrepancies to be easily identified has been created, and a stage two report due in the third quarter of 2014 will explain the causes and will make recommendations to improve comparability.

TRADE FACILITATION AND CUSTOMS MODERNISATION top

Improving the efficiency and accuracy of customs valuation is a priority under China's ongoing customs modernisation programme as it can protect revenue while also reducing trade costs for business. The workshop on customs valuation (10-12 March 2014) brought together European, Chinese, international and private sector experts to exchange knowledge on technical valuation decisions and dispute resolution, and also how to respond to calls from industry for trade facilitation reform. In this regard, EU experts outlined a structured regime for cooperation between customs and taxation authorities on transfer pricing, which provided a model for GACC as it considers ways to improve the accuracy and speed of transfer pricing decisions. GACC expressed particular interest in EU and US regimes for customs guarantees which, if implemented, would have significant trade facilitation benefits. To follow through on this promising development, EUCTP is planning a study and seminar on the implementation of a Chinese customs guarantee scheme in the third quarter of 2014.

 

 
EU and Chinese experts at the workshop on customs valuation in Guilin