Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation

Order of the Ministry of Foreign Trade and Economic CooperationMeasures on the Administration of Passive Quotas for Textile Products

No.28

The Measures on the Administration of Passive Quotas for Textile Products which was enacted according to the Foreign Trade Law of the People's Republic of China and the Regulation of the People's Republic of China on the Administration of the Import and Export of Goods has been passed at the tenth ministerial meeting of the year 2001 of the Ministry of Foreign Trade and Economic Cooperation and won the consent of the State Administration of Customs and the State Administration of Quality Supervision and Quarantine upon discussion, and are hereby promulgated for implementation as of January 1, 2002.

Minister of the Ministry of Foreign Trade and Economic Cooperation Shi Guangsheng

December 20, 2001

Measures on the Administration of Passive Quotas for Textile Products

Chapter I General Provisions

Article 1

The present Measures have been formulated on the basis of the Foreign Trade Law of the People's Republic of China and the Regulation on the Administration of the Import and Export of Goods and according to the Agreement on Textile Products and Clothing of the World Trade Organization and the commitments of China with regard to textile products after its accession to the WTO.

Article 2

Definitions

The term "passive quotas for textile products" (hereinafter referred to as "textile quotas") shall refer to the quantitative restrictions on the export of textile fabrics like cotton, wool, chemical fibers, silk, hemp and other plant fibers and the products thereof that are restricted by the country of import. The classification and measurement unit of textile quotas shall be based on relevant agreements.

Country of restriction this term refers to the countries mentioned in the notices of the Textile Monitoring Body ("TMB") under the WTO that have restrictions of textile quotas over the textile products of China, including the United States, Canada, European Union, and Turkey.

Industrialist and industrialist quota According to the notices submitted by China and EU to the TMB under the WTO, the European Commission shall provide to the MOFTEC of China a list of some of the processors and producers from the EU before the end of each year, and the enterprises included in the list are the "EU industrialists" for the next year. According to relevant provisions, a part of the quotas from all categories shall be reserved with within 115 days from the day when the agreement year for Categories II and III of export to EU begins and within 180 days after the day when the agreement year for Categories V, VI, VII, VIII, XV and XXVI of export to EU begins, and the quotas herein mentioned are the "quotas for EU industrialists".

Quota for the Europe Fair According to the notices submitted by China and EU to the TMB under the WTO, this term refers to the passive quotas for textile products that are independent from the normal passive quotas established specially by both parties for the purpose of performing the contracts concluded at the European Fair.

Exporting Enterprise This term refers to the various enterprises (including enterprises with foreign investment) that have the qualifications for engaging in the export of textile products and clothing.

Performance Quota This term refers to the quotas that are not subject to bid invitations and control of total quantity, but are independently applied by enterprises according to their export performances.

Export performance This term refers to the export performance of the textile products restricted by the countries of restriction and the export performance of the non-quota textile products of the whole world. The term "export performance of the textile products restricted by the countries of restriction" refers to the quantity of customs clearance actually made by the countries of restriction or of the quantity of import licenses exchanged for the textile products under the different quotas during a certain period of time. The term "export performance of the non-quota textile products of the whole world" refers to amount of money incurred from the export of products under various quotas to the countries and regions not restricted by quotas during a certain period of time. The export performance of textile products under export quotas to the countries of restriction shall be based on the statistics of the customs of the state, and the export performance of the non-quota textile products of the whole world shall be based on the statistics of the Chinese customs.

Export license This term refers to the export licenses of textile products needed for exporting to the countries of restriction, the licenses of silk and hemp products, certificates of handiworks, certificates of origin, etc.

Rate of issue This term refers to the proportion of the quantity of quotas issued according to the export license of a certain kind of quota in the total amount of quotas obtained by various means (it is classified into that of the whole country, that of a local place and that of an enterprise).

Rate of customs clearance (rate of use) This term refers to the proportion of the amount of customs clearance actually made in the country of restriction or the import licenses exchanged of a certain kind of quotas in the total amount of quotas obtained by various means (it is classified into that of the whole country, that of a local place and that of an enterprise).

Article 3

The organs of quota administration and the functions and duties thereof

The quotas for the textile products to be exported to the countries of restriction shall be subject to the hierarchical administration.

The Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as "MOFTEC") shall be the administrative organ for textile quotas. It is responsible for the negotiation, conclusion and execution of multilateral trade rules with the countries of restriction, the formulation of rules on the administration of textile quotas, the allocation of textile quotas and supervision and guidance of the issuance of certificates for the export of textile products and the textile products actually exported.

Under the authorization of the MOFTEC, all provinces, autonomous regions, municipalitie directly under the Central Government, the municipalities separately listed on the State plan and the capital city of eight provinces (Harbin, Changchun, Shenyang, Xi'an, Nanjing, Wuhan, Chengdu, Guangzhou) (hereinafter referred to as "local administrative department of foreign trade authorized by the MOFTEC) shall be the administrative organ of textile quotas of the local place; they shall be responsible for the allocation and administration of quotas to the exporting enterprises of the locality, shall report to the MOFTEC about the allocation, use and administration of quotas of the locality, and shall supervise and inspect the use of quotas as well as the actual export of the exporting enterprises within the locality.

Article 4

The functions of the issuing authorities and the departments for the transmission of the electronic data of certificates

The Quota License Affairs Bureau under the MOFTEC (hereinafter referred to as "QLAB") is the issuing authority of textile quotas authorized by the MOFTEC.

The functions of the QLAB in the aspect of textile quotas are:

1.

Being responsible for the uniform printing, distribution and inspection of export licenses for textile products, the allocation of the numbers of certificates, and for accepting the registration of export licenses of textile products, signatures of issuers and numbers for archivist purposes;

2.

Administering the issuing authorities according to relevant provisions, inspecting to see whether the issuing authorities have issued licenses according to the allocated quotas, and reporting to the MOFTEC on the monthly basis about inspections of the issuance of certificates by the issuing authorities;

3.

Being responsible for the internal inspection of the data of export licenses issued by the issuing authorities, the data customs clearance abroad, for investigating false evidences and perjuries, and reporting regularly to the MOFTEC about the inspections.

The administrative departments of foreign trade at all places shall, under the authorization of the QLAB, be responsible for the issuance and administration of licenses for the export of textile products.

The China International Electronic Commerce Center (hereinafter referred to as "CIECC") shall, under the authorization of the MOFTEC, be responsible for the statistics of the issuance of licenses for the export of textile products and the exchange of the electronic data of the licenses for the export of textile products to the countries of restriction.

Article 5

The ways of quotas allocation

The textile quotas are allocated by way of invitations for bid, independent applications and allocation according to performances. The MOFTEC shall, on the basis of the use of quotas in the preceding year, publicize lists of quotas to be allocated by way of invitation for bid, independent applications and allocation according to performances before September 10 of each year, and may make necessary readjustments according to the use of quotas of the year.

Chapter II The System of Export License

Article 6

The system of quota and export license shall be applied to the export of textile products to the countries of restriction; the customs shall be responsible for supervision, and the organs for the entry and exit inspection and quarantine shall be responsible for inspection according to relevant provisions.

Article 7

Export licenses shall be issued by the QLAB and the local issuing authorities authorized thereby according to the total amount of quotas granted by the MOFTEC and the quantity of quotas allocated by the local administrative departments of foreign trade. The customs offices shall examine and release goods according to the export licenses. With regard to the textile products for export subject to statutory inspections and the commodities included in the lists of textile products for export that are subject to the inspection of inspection authorities, the customs offices shall also inspect the instruments of customs clearance issued by the inspection and quarantine organs for the goods departing the country.

Article 8

The year affixed to the export licenses shall be identical to the year of departure of goods.

The declaration of customs for the departing goods under the export licenses shall be made no later than December 31 of the year; in case of overdue, the declaration of customs shall not be accepted by the customs offices and the goods shall not be released.

Article 9

An approval shall be obtained for each export license, and the certificates may not be transferred, not may the certificates be altered. If it is necessary to make any alterations, a new export license shall be issued.

Article 10

The application for and issuance of export licenses shall be executed according the relevant administrative rules concerning the passive quotas for textile products.

Chapter III The Invitation for Bid for Quotas

Article 11

The MOFTEC shall arrange for bid invitations for the quotas of some of the textile products according to the principle of "efficiency, impartiality, openness and fair competition".

Article 12

The invitation for bid for quotas shall be made in accordance to the Measures for the Bid Invitation for Export Commodities and the Detailed Rules for the Implementation of the Bid Invitation for the Passive Quotas for Textile Products.

Chapter IV The Independent Application for Quotas

Article 13

The determination of quota types subject to independent application

The MOFTEC shall control the total amount of the quota types for the textile products whose rate of customs clearance between January and August of the current year and that for the previous year are both below 40% percent in the next year, and the exporting enterprises may independently apply for export licenses.

The MOFTEC shall publicize the list of quota types subject to the control of total amount for the next year in September of the current year, and, where it is necessary, make readjustments prior to December 15 of the current year.

Article 14

The allocation of quotas subject to independent application

The MOFTEC shall, before December 15 of each year, distribute the quotas that are no less than two times of the quantity of quotas subject to independent application fed back by all the local places for the next year to the administrative departments of foreign trade authorized by the MOFTEC, and the quantity of quotas for the enterprises directly under the Central Government shall be distributed to the QLAB, and shall publish the concrete quantities on the website of the CIECC. Where there are no feedbacks of customs clearance in any local place, the MOFTEC shall distribute to the place according to the minimum quantity ever fed back by other places.

All issuing authorities shall issue export licenses to the exporting enterprises under their respective jurisdictions within the limit of total amount granted by the MOFTEC. As for the enterprises that have performances of customs clearance in the previous year, the issuing authorities shall reserve the preemptive right to use quotas equal to the quantity of export performance for half a year.

Article 15

The use of quotas subject to independent applications

When exporting textile products under the types of quotas subject to independent applications, the exporting enterprises shall, prior to the conclusion of sales contracts, inquire the local issuing authorities about the quota types and the quantity of quotas remained or make inquisitions through the website of CIECC. They may not conclude sales contracts until they confirm that there are additional quotas. After the conclusion of contracts, they shall apply to the local issuing authority immediately on the basis of the contracts for export licenses.

The issuing authorities shall, after receiving the application of the enterprises, examine the sales contract of the said enterprises, and may not issue export licenses to the enterprises until they confirm that there are additional quotas of relevant types for the locality.

Article 16

The readjustment of the quantity of quotas subject to independent applications

The local administrative departments of foreign trade may, when the rate of issuance of licenses for the quotas subject to independent application in the locality reaches 90%, apply to the MOFTEC for granting additional quotas. The enterprises directly under the Central Government may, when the rate of issuance of licenses for the quotas subject to independent application in the locality reaches 100%, apply to the MOFTEC for granting additional quotas.

The MOFTEC shall decide whether to approve the applications or not and the quantity to be approved according to the rate of customs clearance of relevant types of the local and central enterprises that have made the applications.

Article 17

The examination of the quotas subject to independent applications

The MOFTEC shall make irregular samplings of the documents of customs declaration that have been passed the examination of the customs offices as well as the sheet of the export licenses returned by the customs offices of the exporting enterprises obtained by way of independent applications. In case any exporting enterprise that intentionally occupies the quotas subject to independent applications but fail to use them for actual export, the MOFTEC shall, according to the seriousness of the circumstances, disqualify the said enterprise from independently applying for some or all types of quotas subject to independent applications. In case any issuing authority indulges the enterprises to intentionally occupy quotas, the MOFTEC shall deal with the said issuing authority according to the Provisions on the Administration of Export Licenses.

Article 18

The readjustment of the types of quotas subject to independent applications

As for the quotas subject to independent applications which are no longer subject to independent applications due to the rise in use rate, the MOFTEC may, on the basis of the export performances of the local can central enterprises during the previous quota year (including the export performances of all kinds of enterprises), allocate the performance quotas according to the principle of allocating performance quotas.

Chapter V The Administration of Performance Quotas

Article 19

The performance quotas shall be allocated on the basis of the export performances of the local and central enterprises in the export of textile products during the previous quota year; the export performance consists of that of textile products exported to the countries of restriction and that of non-quota textile products of the world.

Article 20

The performance quotas for textile products exported to the countries of restriction

The performance quotas for textile products exported to the countries of restriction are allocated for three times: the first initial allocation, the second initial allocation and the final allocation.

The first initial allocation shall be made in October of the previous year of the quota year, and the allocation shall be made on the basis of the export performances in the export of textile products to the countries of restriction between January and August of the previous quota year times a quotient.

The second initial allocation shall be made in December of the previous year, and the allocation shall be made on the basis of the export performances in the export of textile products to the countries of restriction between January and November of the previous quota year times a quotient.

The final allocation shall be made in March of the current year, and the allocation shall be made on the basis of the export performances in the export of textile products to the regions of restriction between January and November of the previous quota year times a quotient. The export performance in the export of textile products to the countries of restriction during the whole of the previous quota year shall be based on the statistics at the end of February of the ending quota year.

The enterprises may conclude transactions according to the initially allocated quotas prior to the granting of final allocation. The export performance in the export of textile products to the countries of restriction within the whole of a quota year shall be based on the quantity of final allocations.

Article 21

The performance quotas for the export of non-quota textile products of the world

The performance quotas for the export of non-quota textile products of the world shall be allocated twice a year: in January and April of the quota year.

The performance quotas for the export of non-quota textile products of the world determined as pursuant to Article 17 of the present Measures shall be allocated by the MOFTEC to the local and central enterprises whose non-quota textile products of the world has come up to a certain amount which shall be calculated according to the following formula. The export performance of the non-quota textile products of the world shall be 100% of the export value of textile products under the item of general trade (including frontier trade) summed up by the Chinese customs plus 30% of the export value of textile products under the item of processing with imported materials:

The export performance quota of non-quota textile products of a certain type = the total amount of export performance quota of non-quota textile products of the world of this type * a coefficient of the export value of non-quota textile products of the world

The coefficient of export value of non-quota textile products of the world = the export performance of local (central enterprises) in non-quota textile products or the world of this type ¡Â the export performance of non-quota textile products of the world in the whole country

The export performance of all kinds of enterprises in the non-quota textile products of the world shall be calculated in the statistics of performances and the quotas determined according to Article 17 of the present Measures shall be allocated to the enterprises on the basis of their export performance in the non-quota textile products of the world.

In the allocation of export performance quotas for the non-quota textile products of the world, the MOFTEC may, according to the specific circumstances, use a certain proportion of quota for certain types to reward the enterprises that have made outstanding achievements in the export of home made famous-brand products or for carrying out other policies.

Article 22

The origin of performance quotas

The origin of performance quotas for the export of non-quota textile products to the countries of restriction shall be the quotas prescribed in the bilateral or multilateral agreement in the previous quota year.

The origin of performance quotas for the export of non-quota textile products of the world shall be:

1.

Quotas for the annual increase rate as prescribed in bilateral or multilateral agreements;

2.

Quotas for handling flexible clauses (carryforward, transfer of certain types, advance borrowing) determined by the MOFTEC according to he prescriptions of bilateral or multilateral agreements and the use of quotas;

3.

The quotas handed in by the local and central enterprises;

4.

The quotas confiscated according to Chapter VIII of the present Measures.

Chapter VI The Administration of Industrialist Quotas

Article 23

The qualifications of the applicant enterprises

An exporting enterprise shall have acquire the qualifications for applying for industrialist quotas after it has entered into contracts with an industrialist from the EU concerning the export of textile products subject to industrialist quotas as provided in the notices.

Article 24

The procedures for application

The MOFTEC shall, after receiving the list of industrialist quotas provided by the European Commission, distribute them to the local administrative departments of foreign trade authorized by the MOFTEC.

The domestic enterprises shall, after concluding contracts with EU industrialists according to their actual business demands, submit the original text of the contracts that have been signed by both parties and attached with the official cachets of both parties to the local administrative department of foreign trade authorized by the MOFTEC for examination and approval. The local administrative departments of foreign trade authorized by the MOFTEC shall, after confirming the truthfulness of the contracts according to the above-mentioned provisions, gather all the official texts of the contracts each month and submit them together with the applications to the MOFTEC during the period between the 20th and the end of each month.

The applications for the type II and III quotas as well as the corresponding contracts shall be submitted to the MOFTEC within 115 days after the quota year begins; the applications for other types of quotas as well as the corresponding contracts shall be submitted to the MOFTEC within 180 days after the quota year begins. The applications submitted beyond the time periods shall be invalid ones and may not be accepted.

Article 25

The ways of allocation of quotas

The MOFTEC shall gather up all the applications of the local administrative departments of foreign trade authorized by the MOFTEC and the central enterprises at the end of each month during the months January to June of each year, and shall, within the first 10 working days of the next month, allocate the quotas to the central enterprises and the local enterprises via the local administrative departments of foreign trade authorized by the MOFTEC.

If the total amount of quotas applied for a certain industrialist gathered up by the MOFTEC for each month does not exceed the industrialist quotas of this type provided in the agreements that remain at the current month, the MOFTEC shall satisfy the applications of all enterprises for the quotas of this type; if it exceeds the industrialist quotas of this type provided in the agreements that remain at the current month, the MOFTEC shall allocate the quotas according to a certain proportion of the total amount of quotas applied by all the enterprises within the current month.

Article 26

The ways of administration

The industrialist quotas acquired by the enterprises may not be changed into normal quotas; in case any of the contracts concluded with any EU industrialist cannot be performed, the enterprise shall hand the industrialist quotas in.

For all the industrialist quotas subject to bid invitations, an amount of money for winning bids for industrialist quotas shall be collected according to the negotiated bid invitation prices for this type of the current year prior to the allocation of quotas. Within 30 days after the allocation of quotas, the Chinese exporting enterprises that acquires industrialist quotas shall pay a caution money which equals 30% of the amount of money for winning bids for industrialist quotas to the designated bank accounts. In case any enterprise that fails to pay the caution money within the time limit, the industrialist quotas thereof shall be taken back by the MOFTEC, and the said enterprise shall be disqualified from applying for industrialist quotas within the next two years.

The Detailed Rules for the Implementation of the Bid Invitations for Passive Quotas of Textile Products shall be observed in the use of quotas subject to bid invitations.

Chapter VII The Administration of Quotas for European Fairs

Article 27

Requirements for the use of quotas

As pursuant to the requirements of the administrative procedures of the EU, the quotas for the European fairs can be used only for the performance of contracts during the next year concluded at the Berlin Progress Partnership Fair (hereinafter referred to as "Berlin Fair") which is held in Berlin, Germany, in November each year.

Article 28

The qualifications for enterprises to participate in the allocation of quotas for fairs

1.

The enterprises the attend the Berlin Fair for two consecutive years and have business operation performances;

2.

The applicant enterprises that have outstanding performances in the normal export of textile products to the EU.

Article 29

Principles for allocating quotas

The MOFTEC shall determine the plans for allocating the quotas for the next year according to the rate of license issuance of the enterprises that have participated in the fairs between January and September of each quota year with reference to the average rate of license issuance of the whole country:

1.

The enterprises whose rate of license issuance of a certain type is higher than the average rate of the whole country shall acquire all the quotas allocated to the enterprises of this type for the current year;

2.

The enterprises whose rate of license issuance is lower than the average rate of the whole country shall have their quotas deducted in proportion to the allocated quotas of the current year;

3.

The remained quotas of all types shall be allocated to the enterprises that participated in the fairs and that have high rates of license issuance of the type and the new applicants for participating in the fairs that have outstanding performances in the normal export of textile products to the EU;

4.

The standards for allocating the quotas for the European fairs whose normal types of quotas are subject to independent applications shall be relaxed.

Article 30

The procedures of allocation

The MOFTEC shall distribute the plan of initial allocation of the quotas for the next year to the central enterprises and the local enterprises via the local administrative departments of foreign trade authorized by the MOFTEC in October each year prior to the holding of the Berlin Fair according to the provisions of Article 29 of the present Measures. It may be the basis for the participating enterprises to conclude contracts at the Berlin Fair, but not the basis for the issuing authorities to issue licenses.

After the Berlin Fair is ended, the MOFTEC shall, according to the contractual quantity reached at the Berlin Fair and by reference to the allocation plan made prior to the holding of the Fair, complete the relevant statistics and then distribute the official plan of allocating the quotas for the European fairs for the next year within 10 working days to the central enterprises and the relevant local enterprises via the local administrative departments of foreign trade authorized by the MOFTEC. The official plan shall be the basis for the issuing authorities to issue licenses. As for the quantity of quotas undetermined prior to the holding of the Berlin Fair and the quotas for which no contracts are concluded at the Fair, the MOFTEC shall select those enterprises that have the intent to conclude contracts on the basis of these quotas prior to the ending of the Berlin Fair.

Article 31

Fees for the quotas subject to bid invitations

The fees for the quotas subject to bid invitations involved in the quotas for the European fairs shall be determined by the MOFTEC by reference to the negotiated prices of bids of the current year for this type of quotas and shall be distributed to the enterprises.

Article 32

Way of participating in the fairs

The enterprises that obtains quotas for the European fairs shall be allowed to participate in the Berlin Fair of the year. The MOFTEC shall entrust relevant enterprises to organize the enterprises concerned to attend, while the MOFTEC shall be responsible for the coordination with the relevant authorities responsible for the holding of the Berlin Fair.

Chapter VIII The Turn-over and Transfer of Quotas

Article 33

The turn-over of quotas

The quotas unused by the local enterprises (including the EU industrialist quotas) shall be turned over to the MOFTEC via the local administrative departments of foreign trade authorized by the MOFTEC, and the central enterprises shall turn their unused quotas directly to the MOFTEC.

The local administrative departments of foreign trade authorized by the MOFTEC and the central enterprises shall turn over the unused quotas to the MOFTEC no later than October 31 of the quota year.

The quotas that have not been turned over to the MOFTEC after October 31 and for which no licenses have been issued for the export of relevant textile products shall be taken back by the MOFTEC and be reallocated.

If there are no feedback data from the countries of restriction for the licenses issued (i.e., bad licenses) by March 1 of the second year of the quota year, the performance of quota for the license of this quota of the relevant companies shall be revoked.

Article 34

The transfer of quotas

In order to increase the overall use rate of the quotas, provide channels to the enterprises with insufficient quotas to obtain quotas, encourage the flow of quotas to the enterprises with real capabilities, the MOFTEC permits the quotas other than the industrialist quotas and the quotas for the European fairs to be transferred according to relevant procedures. The transfer of the quotas subject to bid invitations shall be executed according to the provisions of the Measures for the Bid Invitation of Quotas for the Export of Commodities and the Detailed Rules for Implementing the Bid Invitation of Passive Quotas for Textile Products.

The transfer of quotas is classified into the intra-regional transfer and inter-regional transfer.

The term "intra-regional transfer" refers to the transfer of quotas between the local enterprises within a same region. The intra-regional transfer of quotas is not subject to the approval of the MOFTEC, instead, it is automatically processed by the CIECC after the local administrative departments of foreign trade authorized by the MOFTEC has submitted the electronic data concerning the readjustment of quotas among enterprises to the CIECC on the basis of the applications of the enterprises for transferring and accepting quotas. The local administrative departments of foreign trade authorized by the MOFTEC shall submit the quotas within 2 working days after receiving the applications for transferring and accepting quotas, and shall inform the enterprises concerned of the result of quota transfer.

The term "inter-regional transfer" refers to the transfer of quotas between the enterprises of different regions or that between a central enterprise and a local enterprise or that between the central enterprises. The inter-regional transfer of quotas shall be registered at the MOFTEC by the local administrative departments of foreign authorized by the MOFTEC where the transferring enterprises are situated or by the central enterprises by way of written applications. The MOFTEC shall, within 2 working days after receiving the applications for transferring and accepting quotas, inform the CIECC to make registrations, and inform the QLAB,the relevant local administrative departments of foreign trade authorized by the MOFTEC or the central enterprises concerned of the result of quota transfer.

Chapter IX Inspections and Feedbacks

Article 35

Electronic inspections of licenses are carried out to the export of textile products under the agreements of export to the countries of restriction.

Article 36

Before the interlinked management of the export of textile products between the foreign trade departments and the General Administration of Customs, the MOFTEC makes follow-up inspections to the actual use of quotas on the basis of the data of license issuance provided by the CIECC and the customs clearance data provided by the countries of restriction.

After the interlinked management, the MOFTEC makes follow-up inspections to the actual use of quotas on the basis of the data of license issuance provided by the CIECC, the data of shipment provided by the customs and the data of customs clearance provided by the countries of restriction. The specific measures for the inspections shall be separately formulated.

Chapter X Penalty Provisions

Article 37

The export of restricted textile products to the countries of restriction shall be in conformity with the rules of origin of textile products of the countries of restriction. It is prohibited to, in an effort to evade the provisions of bilateral or multilateral agreements, export the products whose origin is in China to the countries of restriction by way of any third country or regions; it is prohibited to use the quotas of China to export the products whose origin is in any third country or region to the countries of restriction.

In case any one who violates the provisions concerning the exporting country as the place of origin by making use of the export license, certificate of origin or label of any third country (region) to export the products whose origin is China to the countries of origin, the MOFTEC may deduct the quotas of the same or related types of the illegal exporting enterprise for the current or the next year. If the value of goods involved in the illegal transit of goods is less than 5 million US dollars, the enterprises concerned shall be disqualified from engaging in the export business for 6 months; if the value of goods involved in the illegal transit of goods is equal to or more than 5 million US dollars, the enterprises concerned shall be disqualified from engaging in the export business.

Article 38

In case any one violates relevant provisions concerning the transfer of quotas, the MOFTEC may deduct twice the amount of the quotas of the enterprises concerned in relevant type of transferred quotas or other relevant types of quotas for the current quota year.

Article 39

Any one who alters or counterfeits any license for the export of textile products or obtains quotas or licenses for the export of textile products by unfair means such as cheat, etc shall be punished according to the legal liabilities as provided in Chapter VII of the Regulation of the People's Republic of China on the Administration of the Import and Export of Goods. The MOFTEC may deduct the quotas of the enterprise concurrently as a punishment or even revoke the qualifications of the enterprise to apply for quotas.

Chapter XI Supplementary Provisions

Article 40

If any enterprise fails to make normal use of quotas as a result of force majeure or other good reasons, it may, after providing relevant certificates and upon the approval of the MOFTEC, have it quotas that fails to be used normally calculated in its export performances.

Article 41

The present Measures shall enter into force as of January 1, 2002. The Measures of the Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China on the Administration of Quotas for the Import and Export of Textile Products (issued by the MOFTEC on December 31, 1992), the Circular concerning Relevant Issues about the Independent Application for Licenses for Passive Quotas of the Textile Products Not in Short Supply under the Control of Total Quantity (WaiJingMaoGuanFangHanZi [1998] No. 373 ), the Circular on Relevant Issues About Strengthening the Administration of the Independent Application for the License of Passive Quotas of Textile Products Subject to the Control of Total Amount (WaiJingMaoGuanFangHanZi [1999] No. 336), the Trial Measures for the Administration of Industrialist Quotas for the Export to EU (WaiJingMaoGuanFa [1999] No. 32 ), the Circular concerning Relevant Supplementary Provisions to the Trial Measures for the Administration of Industrialist Quotas for the Export to EU (WaiJingMaoGuanFangHanZi [2000] No. 1 ), the Circular concerning Relevant Issues about Encouraging Enterprises to Make Good Use of the Passive Quotas of Textile Products (WaiJingMaoGuanFangHanZi [1999] No. 241) and the Circular concerning Relevant Issues about the Passive Quotas Subject to Independent Application by Enterprises with Foreign Investment under the Control of Total Amount (WaiJingMaoGuanFangHanZi [1999] No. 354) shall be repealed concurrently. In case any other measures that contradict with the present Measures, the present Measures shall prevail.

Article 42

The Ministry of Foreign Trade and Economic Cooperation shall be responsible for the interpretation of these Measures.