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International Trade and Customs Affairs Newsletter, June, 2020

Release time：2020-07-03 16:20
China Increases Efforts to Build Free Trade Areas
 
From May to June 2020, the Chinese government has issued three major policies on customs special supervision areas.
 
I. Promulgation of the General Plan for the Construction of Hainan Free Trade Port 
 
On June 1, 2020, the CPC Central Committee and the State Council issued the General Plan for the Construction of Hainan Free Trade Port. The overall plan includes four parts: overall requirements, system design, step-by-step arrangement and organization, and implementation. According to the plan's contents, Hainan Free Trade Port will have breakthrough preferential policies in taxation, market access, foreign exchange, management of foreign personnel, and so on. Some of the preferential policies are as follows:
 
Taxation 
 
1. Personal income tax for talents is up to 15%.
 
2. Encouraged enterprises will implement a 15% corporate income tax.
 
3. The import of self-use production equipment by enterprises shall exempt from import duty, import value-added tax and consumption tax.
 
4. The import of operating vehicles and yachts shall exempt from import duty, import value-added tax and consumption tax.
 
5. The import of raw materials and auxiliary materials for production shall exempt from import duty, import value-added tax and consumption tax.
 
6. Imported goods purchased by island residents shall exempt from import duty, import value-added tax and consumption tax.
 
7. The tax-free shopping quota for departure increase to 100,000 yuan per person per year and the variety increase.
 
8. By 2025, enterprises in tourism, modern service industries and high-tech industries will exempt from income tax on income from a new foreign direct investment.
 
9. The capital expenditure of an enterprise can be deducted before tax or accelerated depreciation and amortization.
 
10. Tax exemption for the import and sale of overseas exhibits at the exhibition.
 
11. Goods originating in Hainan or with an added value of more than 30% in the processing of imported materials will be exempted from import duties when entering the mainland. 12. Allowing the entry and exit of Hainan Island flights to be filled with bonded jet fuel.
 
13. Export tax rebates shall be granted to domestic vessels registered in China Yangpu Port and engaged in international transportation. 14. Domestic vessels engaged in the same ship transportation of domestic and foreign trade using China Yangpu Port as a transit port are allowed to refill bonded oil.
 
Access
 
1. Implement the negative list of cross-border service trade in Hainan Free Trade Port.
 
2. Implementation of the market access commitment and entry system.
 
3. Implement the special list of market access for Hainan Free Trade Port.
 
4. Implement the negative list of foreign investment access in Hainan Free Trade Port.
 
5. Government procurement treats domestic and international enterprises equally.
 
Foreign personnel management 
 
1. Implement a more convenient visa-free entry policy.
 
2. Use the salary level as the primary indicator to evaluate the human resources category.
 
3. Implement negative list management for work permits of foreign personnel.
 
4. Foreigners are allowed to serve as legal representatives of legal institutions, institutions and state-owned enterprises.
 
For more preferential policies, please refer to the Overall Plan for the Construction of Hainan Free Trade Port.
 
II. Yangshan Special Comprehensive Bonded Zone Officially Begins Operation 
 
Since 1990, China has established various special customs supervision areas during different periods of reform and opening up. On May 16, 2020, the Yangshan Special Comprehensive Bonded Zone officially put into operation, and it became the only special comprehensive bonded zone among the 151 customs special supervision zones in China. It is currently with the highest degree of openness, the most preferential policies, and the most fully functional special supervision zone. Its characteristics are as follows:
 
Declaration mode
 
Except for goods that must be declared by laws and regulations, the "First Line" direct release of the goods not involved the certificate or inspection, and the enterprise can directly pick up and deliver the goods. The "Second Line" has changed from the previous two-sided declaration system to the one-sided declaration system for enterprises outside the zone.
 
Trade control
 
For the goods involved in international conventions, treaties, agreements/safety access management, the supervision documents and entry inspections need to check on the "first line". The rest goods need to check on the "second line".
 
District management
 
Customs cancel account book management and do not require enterprises in the zone to set up separate account books. Enterprise can carry out business such as transfer, assembly, storage, processing, manufacturing, trading, display, research and development, remanufacturing, testing and maintenance, distribution service. There is no storage period for the goods in the Yangshan Special Comprehensive Bonded Zone.
 
While implementing a higher level of trade liberalization and facilitation policies systems, the special comprehensive protection zone will also put higher requirements for enterprise self-discipline management.
 
III. Enterprises in the comprehensive bonded area can carry out maintenance business on 55 types of products
 
In 2019, the State Council of China proposed the development of comprehensive bonded areas into "five major centers" with global influence and competitiveness, one of which is the "testing and maintenance center". To this end, the Ministry of Commerce, the Ministry of Ecology and Environment and the General Administration of Customs issued the Announcement No. 16 of 2020: Announcement on Supporting Enterprises in Comprehensive Bonded Zones to Carry out Maintenance Services on May 14, 2020, which clarifies the following issues:
 
1. Enterprises in the zone can carry out global maintenance services from overseas or outside the special customs supervision area within the territory, such as aerospace, shipping, rail transportation, construction machinery, CNC machine tools, communication equipment, precision electronics, etc. 55 categories of products. (The specific HS Codes of the goods are: 8406, 8411, 8412, 8413, 8414, 8421, 8425, 8427, 8429, 8430, 8432, 8443, 8455, 8456, 8457, 8458, 8459, 8460, 8461, 8462, 8463, 8465, 8467, 8468, 8471 8473, 8486, 8501, 8517, 8526, 8527, 8531, 8534, 8542, 8608, 8801, 8802, 8804, 8805, 8905, 9006, 9008, 9011, 9013, 9014, 9015, 9026, 9027, 9028, 9029, 9030, 9031, 9032, 9104, 9401)
 
2. The leftovers, old parts, defective parts, etc. generated or replaced during the entry maintenance process shall not sell within the territory. All of them shall be re-shipped out of the country, or destroyed and disposed of.
 
Announcement No.18 [2020] of the Ministry of Commerce: Announcement on Final Determination of Sunset Review on Perchlorethylene from the US and the EU
 
On May 30, 2020, Ministry of Commerce of the People's Republic of China (the "MOFCOM") MOFCOM issued Announcement No. 18 of 2020, making the final determination of sunset review on perchlorethylene from the US and the EU.
 
On May 30, 2014, the MOFCOM issued Announcement, deciding to impose anti-dumping duty on perchlorethylene from the US and the EU since May 31, 2014. On May 31, 2019, upon the request of domestic industry, the MOFCOM issued Announcement, deciding to initiate the sunset review on perchlorethylene from the US and the EU.
 
After investigation, the MOFCOM determined that, if terminating the anti-dumping measures, the dumping of perchlorethylene from the US and the EU will continue or reoccur and the injury to domestic industry will continue or reoccur. Therefore, the anti-dumping measures on perchlorethylene from the US and the EU will continue for another five years from May 31, 2020 and the duty rate is as below:
 
EU companies:

Name of company Margin rate
Dow Deutschland Anlagengesellchaft mbH 27.6%
SOLVAY BENVICEURO PE-FRANCE S.A.S 27.6%
All others 27.6%

US companies:

Name of Company Margin rate
Occidental Chemical Corporation 71.8%
Axiall Corporation 71.8%
The Dow Chemical Company 71.8%
PPG Industries 71.8%
All others 71.8%

Announcement No.15 [2020] of the Ministry of Commerce: Announcement on Final Determination of Countervailing Investigation on Barley from Australia
 
On May 18, 2020, the MOFCOM issued Announcement No. 15 of 2020, making the final determination of countervailing investigation on barley from Australia.
 
On December 21, 2018, the MOFCOM issued Announcement No. 99 of 2018, making public its decision to initiate a countervailing investigation against barley from Australia.
 
MOFCOM made an investigation on whether subsidy and subsidy amount exist; whether the subject merchandise causes injury to China domestic industry and the injury extent, as well as the causal link between subsidy and injury. The MOFCOM determined that, the barley from Australia obtained subsidy and China domestic industry did suffer material injury and there is causal link between subsidy and material injury. Therefore, the MOFCOM decided to impose countervailing duty on barley from Australia since May 19, 2020 and the countervailing duty rate is 6.9%.
 
Announcement No.14 [2020] of the Ministry of Commerce: Announcement on Final Determination of Anti-dumping Investigation on Barley from Australia
 
On May 18, 2020, the MOFCOM issued Announcement No. 14 of 2020, making the final determination of anti-dumping investigation on barley from Australia.

On November 19, 2018, the MOFCOM issued Announcement No. 89 of 2018, making public its decision to initiate an anti-dumping investigation against barley from Australia.
 
MOFCOM made an investigation on whether dumping and dumping margin exist; whether the subject merchandise causes injury to China domestic industry and the injury extent, as well as the causal link between dumping and injury. The MOFCOM determined that, the barley from Australia dumped and China domestic industry did suffer material injury and there is causal link between dumping and material injury. Therefore, the MOFCOM decided to impose anti-dumping duty on barley from Australia since May 19, 2020 and the duty rate of the respondents is as follows.

Name of Company Margin rate
The lluka Trust 73.6%
Kalgan Nominees Pty Ltd 73.6%
JW & JI Madonal & Sons  73.6%
Haycroft Enterprises 73.6%
All others 73.6%

Announcement No.9 [2020] of the Ministry of Commerce: Announcement on Final Determination of Sunset Review on Certain Alloy-Steel Seamless Tubes and Pipes for High Temperature and Pressure Service from the US and the EU
 
On May 9, 2020, the MOFCOM issued Announcement No. 15 of 2020, making the final determination of sunset review on certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU.

On May 9, 2014, the MOFCOM issued Announcement, deciding to impose anti-dumping duty on certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU since May 10, 2014. On June 14, 2019, the MOFCOM issued Announcement, deciding to adjust the anti-dumping duty rate on certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU since June 14, 2019. On May 9, 2019, upon the request of domestic industry, the MOFCOM issued Announcement, deciding to initiate the sunset review on certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU since May 10, 2019.
 
After investigation, the MOFCOM determined that, if terminating the anti-dumping measures, the dumping of certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU will continue or reoccur and the injury to domestic industry will continue or reoccur. Therefore, the anti-dumping measures on certain alloy-steel seamless tubes and pipes for high temperature and pressure services from the US and the EU will continue for another five years from May 10, 2020 and the duty rate is as below: 

US companies:

Name of company Margin rate
Wyman-Gordon Forgings, Inc 101.0%
All others 147.8%

EU companies:

Name of Company Margin rate
Vallourec Deutschaland GmbH 57.9%
Vallourec Tubes France 57.9%
IBF S.P.A 60.8%
All others 60.8%



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Edited : Wanruo Zhang and Yuqing Wang

 

This is legal information provided by DHH to clients and other lawyers. The information contained in this letter shall not be regarded as a legal opinion of DHH or its attorneys. If you are interested in learning more about the content of this newsletter, please contact an attorney practicing in this field. 

DHH International Trade and Customs Affairs Team ("DHH Customs Team") is composed of lawyers with extensive experience in the international trade and customs fields. Areas of expertise include anti-dumping, countervailing duties, anti-smuggling, Customs legal system regulations, customs inspections, trade in value-added -manufacturing products, enterprise management, and customs supervision and control. We are devoted to maintaining our position as one of the top international trade and customs affairs teams in China. Our scope of services include: representing clients in administrative and criminal cases; duty disputes resolution; advising concerning customs clearance; protection of intellectual property rights during the customs process; review of and advising on company customs compliance and risk management policies and procedures; advising concerning AEO applications; as well as servicing all other legal needs arising in the customs and international trade areas. 
 

 

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