Chapter I General Principles

Article 1 This Regulation is enacted in accordance with the relevant provisions of the Foreign Trade Law of the People’s Republic of China with a view to promoting the healthy development of foreign trade.

Article 2 When the amount of imported products increases so that material damage or threat of material damage (hereinafter referred to as in general damage unless otherwise specified) is caused to the domestic industry that produces similar products or directly competitive products, investigations will be made as pursuant to the provisions of this Regulation and safeguard measures will be taken accordingly.

Chapter II Investigations

Article 3 Relevant natural persons, legal persons or other organizations (hereinafter referred to as applicants) in the domestic industry may, as pursuant to the provisions of this Regulation, file an application in written form to the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as MOFTEC) for taking safeguard measures.
MOFTEC shall make a timely examination over the application of the applicants so as to decide whether to accept for investigation or not.

Article 4 Though having not received any written application for taking safeguard measures, yet the MOFTEC has adequate proofs to believe that the domestic industry has been damaged as a result of the increase of imported products, it may still decide to register as a case for investigation.

Article 5 The decision to register as a case for investigation shall be publicized by MOFTEC.
MOFTEC shall inform the Committee on Safeguard of the WTO (hereinafter referred to as the Committee on Safeguards) of the decision to register a case for investigation in a timely way.
MOFTEC shall be responsible for the investigation and determination of increase in the amount of imported products.
The investigation and determination of damages shall be in the charge of the State Economic and Trade Commission (hereinafter, “SETC”), and the investigation of the damages of agricultural products for taking safeguard measures shall be made by the SETC and the Ministry of Agriculture.

Article 7 The term “increase of the amount of imported products” shall refer to the absolute increase or relative increase of the amount of imported products as compared to the home production.

Article 8 The following elements shall be taken into account in the determination of the damages caused to the domestic industry by the increase of the amount of imported products:
1. The absolute and relative increase rate and the increased amount of the imported products;
2. The proportion of the increased products in the domestic market;
3. The influence of the imported products on the domestic market, including the influence on the domestic industry in terms of quantity, sales amount, market share, productivity, capacity utilization, profits and losses, employment, etc;
4. Other elements that cause damages to the domestic industry.
The determination of the threat to cause material damages shall be based on facts instead of simply on charges, conjectures or minor possibilities.
When determining the damages caused by the increase of amount of imported products on the domestic industry, the damages caused to the domestic market by those elements other than the increase of import may not be attributed to the increase of import.

Article 9 In the process of making investigations, MOFTEC shall timely publicize detailed analyses of the cases and those elements relevant to the examination, etc.

Article 10 The term “domestic industry” shall refer to the entirety of producers that produce similar or directly competitive products within the People’s Republic of China or the entirety of the producers whose total volume forms a major part of the total volume of similar products or directly competitive products of the whole country.

Article 11 MOFTEC and SETC shall, on the basis of objective facts and proofs, determine whether there exist causal relations between the increase in the amount of imported products and the damage of the domestic industry.

Article 12 MOFTEC and SETC shall offer chances to the import business operators, export business operators and other parties concerned to state their opinions and arguments.##Investigations may be made by way of questionnaires or hearings or other means.

Article 13 The relevant materials obtained in investigations may, if the providers thereof think it necessary to be kept confidential, be handled as confidential by MOFTEC and SETC.##If the application for keeping confidential is well-grounded, the materials provided shall be handled as confidential, and, at the same time, the provider of the materials shall be requested to provide a non-confidential summary of the materials concerned.

Article 14 A statement of the result of investigation of the increase in the amount of imported products and the damage incurred therefrom as well as the reasons shall be publicized by MOFTEC. ##MOFTEC shall timely inform the result of investigation and relevant information to the Committee on Safeguard.

Article 15 An initial award shall be made by MOFTEC and SETC on the basis of the result of investigations and shall be publicized by MOFTEC.

Article 16 In case the initial award affirms the increase in the amount of imported products and damages and that there exist causal relations between the two, MOFTEC and SETC shall continue the investigation and make a final award on the basis of the result of investigations which shall be publicized by MOFTEC.

Chapter III Safeguard Measures

Article 17 Under the emergent circumstances when definite proofs show that, with the increase in the amount of imported products, irremediable damage will be caused to the domestic industry unless provisional measures are taken, an initial award may be made so as to take provisional safeguard measures.##Safeguard measures may be taken by way of raising the tariffs.

Article 18 To take provisional safeguard measures, MOFTEC shall put forward a proposal, and the Tariff Policy Committee of the State Council shall, on the basis of the proposals of MOFTEC, make a decision which shall be publicized by MOFTEC. The decision shall be implemented by the customs as of the day of publication.

Article 19 The period for the implementation of the provisional safeguard measures shall commence on the day when the decision is publicized and shall not last for 200 days.

Article 20 In case the final decision affirms an increase in the amount of imported products and damage has been caused to the domestic industry, safeguard measures may be taken.
Safeguard measures may be taken by way of raising tariffs, limiting the quantity, etc.

Article 21 Where a safeguard measure is taken by way of raising tariffs, MOFTEC shall put forward a proposal and the Tariff Policy Committee of the State Council shall, on the basis of the proposal of MOFTEC, make a decision which shall be publicized by MOFTEC; where a safeguard measure is taken by way of limiting the quantity, MOFTEC shall make a decision which shall be publicized. The customs shall implement the decision as of the day of publication.
MOFTEC shall timely inform the Committee on Safeguard of the decision to take safeguard measures and other relevant information.

Article 22 Where a safeguard measure is taken, the quantity of import after limiting the quantity shall not be smaller than the average recent three representative years with, however, the exception when there are good reasons to believe that it is necessary to take the safeguard measure of limiting quantity to certain degrees so as to prevent or remedy material damages.
If the taking of safeguard measures requires a distribution of quantity between relevant exporting countries (regions) or countries (regions) of origin, MOFTEC may negotiate with the relevant exporting countries or countries (regions) of origin concerning the distribution of quantity.

Article 23 Safeguard measures shall be targeted at the products in the process of import without regard to the countries (regions) of origin.

Article 24 The taking of safeguard measures shall be limited to the prevention or remedial of serious damages and to the range necessary for facilitating the domestic industry.

Article 25 Prior to the taking of safeguard measures, MOFTEC shall offer opportunities to the governments of the countries (regions) that have a material interest in the export business operators of relevant products.

Article 26 In case the final award decides not to take safeguard measures, the provisional tariffs that have been levied shall be refunded.####Chapter IV The Term and Review of Safeguard Measures

Article 27 The implementation of a safeguard measure shall not last more than 4 years.
If the following conditions are met, the term for implementing a safeguard measure may be extended:
1. The safeguard measure decided as pursuant to the provisions of this Regulation remains to be necessary for preventing or remedy serious damages;
2. Proofs show that the relevant domestic industry is undergoing readjustment;
3. The obligation to inform relevant parties for negotiations has been performed;
4. The measure during the extended term shall not be stricter than that during the term prior to the extension.
The term and the extension thereof of a safeguard measure shall not be up to 8 years at maximum.

Article 28 If the term for implementing a safeguard measure is more than 1 year, the safeguard measure shall be gradually relaxed during the term of implementation according to fixed intervals.

Article 29 If the term for implementing a safeguard measure is more than 3 years, MOFTEC and SETC shall make a mid-term review of the said measure during the term of implementation.
The review shall include the impact of the safeguard on the domestic industry, the readjustment of the domestic industry, etc.

Article 30 If the safeguard measure is to raise tariffs, MOFTEC shall, on the basis of the review and pursuant to the provisions of the present Regulation, suggest to keep, cancel or accelerate the pace of relaxing the measure of raising of tariffs, and the Tariff Policy Committee of the State Council shall make a decision according to the suggestion of MOFTEC and have it publicized by MOFTEC. If the safeguard measure is to limit the quantity or by other means, MOFTEC shall, according to the result of review and according to the provisions of the present Regulation, decide to keep, cancel or accelerate the pace of relaxing the measure of limiting the quantity and have it publicized.

Article 31 If a safeguard measure is to be taken against a same imported product, the time interval between the two measures shall not be shorter than the term for implementing the first safeguard measure and shall not be less than 2 years.
If the following conditions are met, a safeguard measure whose term for implementation is 180 days or less than 180 days shall not be subject to the restriction of the preceding paragraph:
1. More than a year has passed as of the day of implementing the safeguard measure against a imported product;
2. Safeguard measures are not applied to a same product for more than 2 times during the 5 years as of the day when the safeguard measure is implemented

Chapter V Supplementary Provisions

Article 32 If any country (region) takes discriminatory safeguard measures against the product exported by the People’s Republic of China, the People’s Republic of China may, according to the practical circumstances, take corresponding measures.

Article 33 MOFTEC shall be responsible for the negotiation, informing and dispute settlement relating to safeguard measures.

Article 34 MOFTEC and SETC may formulate detailed measures for implementation according to the present Regulation.

Article 35 The present Regulation shall be implemented as of January 1, 2002

Editor/Compiler: Shanghai International Lawyers