Other BriefingsChina Cancels Foreign Trade Operator Registration, Simplifying Import and Export Procedures
China has amended the Foreign Trade Law to simplify registration procedures for foreign trade operators. From now on, companies and individuals no longer need to undergo registration and filing with local commerce authorities and will automatically obtain the right to import and export products to and from China. We explain the latest changes, what requirements are still in place for foreign trade operators, and how this may affect China foreign trade.
On December 30, 2022, the National People’s Congress (NPC) passed an amendment to China’s Foreign Trade Law, which abolished the requirement for certain filing and registration procedures for foreign trade operators, according to an announcement from China’s Ministry of Commerce (MOFCOM).
According to the MOFCOM announcement, from December 30, 2022 onward, local commerce authorities have ceased handling the registration of foreign trade operators. This means that companies applying for import and export licenses, technology import and export contract registration certificates, quotas, state trade qualifications, and other relevant certificates and qualifications, will no longer be required to provide foreign trade operator filing and registration materials.
This marks a major reform to foreign trade management and is an important step in promoting trade liberalization and facilitation, according to the announcement. It will also help to further optimize the business environment, leverage the growth potential of foreign trade, and promote high-quality trade development and further opening to the outside world.
The filing and registration procedures had been in place since 2004. However, in 2019, the NPC authorized the State Council to temporarily suspend Article 9 of the Foreign Trade Law for a trial period of three years. According to MOFCOM spokesperson Shu Jueting said in a press interview that, upon assessment of this three-year trial, “we believe that the conditions and time are ripe for canceling the registration of foreign trade operators nationwide”.
What has changed for foreign trade operators?
The announcement specifically said that the NPC had approved the removal of Article 9 of the Foreign Trade Law. Article 9 stipulates that “Foreign trade operators engaged in the import and export of goods or technology shall complete record filing and registration with the competent foreign trade department of the State Council or an institution entrusted by it.”
It also stated that “If the foreign trade operator fails to go through the filing and registration procedures in accordance with the regulations, [China] customs will not handle the customs declaration, inspection, and release procedures for the imported and exported goods.”
This requirement meant additional paperwork and a longer wait for foreign trade operators to get approval to carry out import and export business with China. Now, foreign trade operators can automatically receive the right to import and export goods after having set up an entity and received a business license. This will not only speed up and simplify the process of getting started in China import and export business, but will also help to reduce costs and lower the barrier to entry for small and medium-sized enterprises.
What are the current requirements for foreign trade operators?
Previously, the first step for foreign trade operators to begin import and export business (after completing business registration) was to complete registration and filing with the local commerce department. With the removal of Article 9 of the Foreign Trade Law, foreign trade operators can now skip this step and move straight onto the part of the administrative process.
The next step is to go through customs registration to obtain the customs registration (CR) code in order to fill out the customs declaration forms. The customs registration procedures are normally completed by the importer or can be handled by a trade broker. Foreign trade operators also need to apply for an Electronic Port IC Card, which can be completed through China Electronic Port’s online portal.
In addition, goods that are imported to China must still have the requisite quality certificates, such as the China Compulsory Certification (CCC), and meet China’s various guobiao (GB 国标) standards. An import license or automatic import license is also required for each consignment of goods, depending on the category of goods that are being imported.
Foreign trade operators should also be aware of which goods are permitted, prohibited, and restricted from import and export.
What does the amendment mean for China trade?
The cancelation of the filing and registration requirements for foreign trade operators marks a significant step for the streamlining of trade with China. The move is also in line with China’s economic goals for 2023, which are focused heavily on returning to the high level of growth seen before the pandemic. Foreign trade, and in particular exports, is an incredibly important part of China’s economy. Although foreign trade remained relatively strong in 2022, it nonetheless experienced a slowdown from the high level of growth in 2021. Stimulating foreign trade is therefore an important aspect of achieving China’s economic targets in 2023 and beyond.
China recently lifted the majority of its COVID-19 restrictions, including both domestic restrictions on movement and international travel restrictions. Along with the removal of registration procedures, this change will significantly enhance the business environment for foreign trade operators and make it much easier for foreign companies engaging in import and export business to source products, meet with business partners and suppliers, and secure supply chains.
According to the MOFCOM notice, the ministry will continue to work on facilitating and optimizing foreign trade in the future. This will include “improving the level of public services […] improve foreign trade policies and measures, promote the optimization and upgrading of trade in goods, innovate on development mechanisms of trade in services, continue to promote trade innovation, and promote high-quality development.”
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China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
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