Construction Industry's WTO Commitments

In the World Trade Organization (WTO) entry negotiations concerning the construction industry, China presented itself as a developing country, persisted in the basic principles of mutual benefits and a win-win strategy, and promised to implement the commitments it will undertake as a WTO member country as it aims to achieve the maximum protection in the development of China's construction industry. As a result, China's construction industry will open its doors to the outside world in a progressive and limited way.

1. Commitments to prospects, design and consulting services

A. Limitations in market access
(1) Unbound for cross-border deliveries of plan designs, other types of cross-border deliveries are required in cooperation with Chinese design institutes;
(2) Only joint ventures (JV) with a foreign majority ownership are permitted. Within the first five years of China's accession to the WTO, only wholly foreign-owned enterprises will be permitted.

B. Limitations on national treatment:
Foreign service providers must be certified architects, engineers or enterprises engaging in construction design, engineering and urban planning in their resident countries.

2. Commitments to construction

A. Limitations in market access:
Sino-foreign JV enterprises with a foreign majority ownership are permitted. Within the first three years of China's accession to the WTO, wholly foreign-owned enterprises will be permitted. Wholly foreign-owned enterprises can only undertake the following four types of construction projects:
(1) Construction projects wholly financed by foreign investments and/or grants.
(2) Construction projects financed by loans from international financial institutions awarded through international tendering according to the terms of the loans.
(3) Chinese-foreign jointly constructed projects with a foreign investment equal to or more than 50 percent; and Chinese-foreign jointly constructed projects with a foreign investment less than 50 percent but technically difficult to be implemented by Chinese construction enterprises alone.
(4) Chinese-invested construction projects difficult to implement by Chinese construction enterprises alone can be jointly undertaken by Chinese and foreign construction enterprises with approval from the provincial government.

3. Commitments to national treatment:
There is little difference in requirements in registered capital between the present Sino-foreign JV enterprises and Chinese enterprises.
The limitations will be abolished within three years of China's entry into the WTO.

4. Commitments to related countries:
Apart from the above two-part commitments, commitments made in bilateral talks upon joining the WTO with Japan are also adaptable to all WTO member countries.
(1) According to the principle of national treatment, China will do its best to lower the standard minimum amount of registered capital for wholly foreign-owned construction enterprises and Sino-foreign JV and cooperation construction enterprises.
(2) In the regulations (within three years of China's WTO membership), China will put the contracting performance of the parent companies into consideration when fixing the new qualification level for wholly foreign-owned construction enterprises.
(3) China will retain the present regulations that stipulate foreign construction enterprises can contract construction work without establishing a business presence in China until the new regulations allowing wholly foreign-owned construction enterprises in China come into effect.
(4) China will publicize a notice before the deadline for the present regulations. Even if the regulations are abolished, construction contracts approved beforehand will be implemented.

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