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	REPLACING COTTON IMPORTS WITH DOMESTICALLY PRODUCED COTTON RULE (TRIAL)

	(Jijingmao No. 161 (2000) of the State Development Planning Committee, Ministry of Finance, Ministry of Foreign Trade and Economic Cooperation, the Customs Administration, State Administration of Taxation, State Administration of Foreign Exchange, State Textile Industry Bureau, and Chinese Supple Cooperation Association promulgated on March 1, 2000, and come into force as of the same day)


SUBJECT : COTTON INDUSTRY
ISSUING DEPARTMENT : STATE PLANNING COMMITTEE (DISSOLVED), AND 8 OTHERS
ISSUE DATE : 03/01/2000
IMPLEMENT DATE : 03/01/2000
LENGTH : 1,159 words
TEXT :

In line with the resolution of the State Council, this rules is formulated in order to solve the overstock of domestic cotton, to simplify operation procedures, to alleviate enterprises' burden, to encourage enterprises to use domestic cotton in processing export products, to maintain and enlarge the export market and export scale of the textile products and garments.

Article 1. Replacing import cotton with domestically produced cotton refers to using domestic produced cotton to substitute imports of raw cotton, cotton yarn and coarse cloth for processing exports. Domestic cotton entering the exports substituting imports supervision warehouse (hereinafter "supervision warehouse" in brief) approved by the Customs, and export processing enterprises buying domestic cotton from supervision warehouse are subject to the export and imports declaration procedures of the Customs.

Article 2. On foreign trade management. Foreign Trade and Economic Committee (Department, bureau) of all provinces, autonomous regions, municipality under direct control and cities directly under State's planning shall verify the qualification of enterprises using domestic cotton for processing exports with local industrial administration according to the enterprises' processing capability and achievement in exports and imports of raw cotton, cotton yarn, and cotton cloth in past, and report the enterprise list to the local Customs for file, and send copies to the local Department (Bureau) of Finance, State Bureau of Taxation and relevant banks; check the contract of buying cotton under domestic cotton exports substituting imports, and check the corresponding export contract of manufacturing products, the validity of the processing export contract is 6 months, and issue approval documents (not license) to the processing enterprises which have a qualification, a signed contract of buying domestic cotton and a processing export contract in sequence of application and as required by contract.

Article 3. On the Customs management. The Customs Administration shall verify and publicize the supervision warehouse according to three exporters' application specified in Article 4 of this regulation. Domestic cotton in the supervision warehouse shall be checked-out according to current policy of processing trade, or directly declare to the Customs and go across the border. The Customs of all regions shall process the registration record procedures according to approval documents issued by provincial foreign economic and trade administrative department and contract, and issue the processing trade booklet, and conduct supervision and verification.

Domestic cotton under exports substituting imports for deep processing is subject to current policy on processing trade.

The storage period of domestic cotton in supervision warehouse shall not exceed 1 year. In case the checkout procedure is not conducted in a Customs specified period (3 months) after maturity, the cotton shall be disposed by the Customs according to the Customs Law.

Article 4. On the business operation of cotton. The supply business of Xinjiang cotton under exports substituting imports shall be conducted by China textile cotton import and export company, Xinjiang autonomous region textile and flax company and Xinjiang agriculture settlement export & import company (hereinafter "exporters" in brief); supply business of cotton outside of Xinjiang under exports substituting imports shall be operated by China textile cotton export & import company. Exporters shall go through cotton check-in export procedure at the Customs with export declaration form. Under the same quality and price, exporters shall give priority to supply Xinjiang cotton. It shall be guaranteed that cotton is supplied in international standard and that the inspection certificate issued by the State across-border inspection and quarantine bureau be provided on the request of cotton-buying enterprises. Exporters shall submit the plan of domestic cotton exports substituting imports to the State Planning Committee, MOFTEC and MOF in advance for registration and then can be carried out. The development of contract sign and implementation shall be reported once half month to the State Planning Committee, MOFTEC and MOF on mid and end day of each month.

Export processing enterprises may sign a contract of cotton under exports substituting imports with exporters in international market price directly or through a local company with an import license (exporters are excluded hereinafter). The deliver place shall be a supervision warehouse of domestic cotton under exports substituting imports, export processing enterprises shall go through check-out import procedure with processing trade import declaration form. The remittance may be conducted in an international popular form such as letter of credit, cash, collection and draft.

Article 5. Policy guarantee on tax, bank credit and foreign exchange administration. The local state taxation bureau where exporters are located shall process the tax rebate for exporters in 5% rebate rate of VAT upon presentation of an export declaration form of domestic cotton check-in supervision warehouse, a VAT special invoice and a tax collection memo. However, non-processed cotton under exports substituting imports goes out of border directly from supervision warehouse shall not apply to tax rebate. After export processing enterprises export manufacturing products by using cotton under exports substituting imports, the local state taxation bureau shall rebate tax of manufacturing products in line with the processing trade.

Commercial banks shall provide short-term loans for working capital to the export processing enterprises using domestic cotton under exports substituting imports based on the processing trade approval documents issued by provincial foreign economic and trade administrative department and export processing contract according to commercial bank's credit principle, terms of loans and request of contract. The specific terms of loans shall be set by bank and enterprises. The funds under loans shall be used in a specified purpose and repaid in time.

Domestic enterprises buying domestic cotton under exports substituting imports from three exporters may settle in RMB or its own foreign exchange, but shall not buy foreign exchange for payments. When domestic cotton under exports substituting imports is settled in foreign exchange, foreign exchange verification is not required.

Article 6. Domestic cotton bought under exports substituting imports and its manufacturing products shall not be sold, transferred, pledged or used for other purposes in any form without authorization.

Processing export enterprises using domestic cotton under exports substituting imports fail to export in a required processing period may apply to provincial foreign economic and trade administrative department for extending once, and the extended period shall not exceed 6 months. In case, the manufacturing products can not be exported in time after extension and be sold in domestic market, the Customs shall dun import duty of the imported raw material and VAT and interest from delayed payments of tax in line with the processing trade; the taxation department shall impose VAT as required. With respect to duty evasion by selling in domestic market without authorization or smuggling, penalty shall be proceeding according to the Customs Law. In case a serious result takes place, the person concerned shall be suited for legal responsibility.

Article 7. This rule shall come into effect as of March 1, 2001. Circular on Printing the Provisional Rules on Xinjiang Cotton Exports Substituting Imports (Jijingmao [1999] No. 352) jointly promulgated by eight ministries such as the State Planning Committee, Ministry of Finance, MOFTEC shall be nullified at the same time.