Customs Import and Export Tariff of the People's Republic of China of 2007 version (hereinafter 'Customs Import and Export Tariff ' ) , promulgated by China Customs General Administration on January1st,2007, , enters into effect. The new version makes the biggest adjustment on the old import and export tariff in China in past 10 years.

This adjustment involves 1600 tax item numbers of 8 digits, occupying 20% of all tax item numbers of 8 digits, including mechanical and electrical products, chemical industry products, textile, woodwork, base metal and alloy, etc.

In some degree, Manuals of improvement trade which can be used in two successive years, proof of tax relief and clearance of license will be influenced by the new Customs Import and Export Tariff
The mainly changes on the import tariffs are as follows:

First of all, this year marks the sixth year of entry into WTO for China and China ends up the transition period. Complying strictly to the commitment of tariff diminution to WTO made by China, this new Customs Import and Export Tariff makes the corresponding regulations concerning the products within range of obligation of tariff diminution.

Second, temporary tariff rates decided on the partial import goods, such as picking-cotton machine, are carried out.

Third, conventional import tariff rate or concessionary import tariff rate is regulated according to the relevant trade agreement or preferential tariff agreement assigned between China and relevant countries and regions.

Fourth, it's regulated that free tariff is levied on the products which are completed within the Hongkong special administrative region and Macao special administrative Region according to the relevant standards.

The mainly changes on the export tariff are as follows: the temporary tariff rate is carried out on the partial export goods, such as billet. Regarding the general trade and frontier minor transaction, the seasonal temporary tariff rates will be carried out.

In the afternoon of January 18, 2007, the Shanghai Industrial and Commercial Administrative Bureau finds 17 international brands involving coats, jacket and pants sold in more than ten department stores don't meet the standard in quality regulated in China and requires the relevant department stores to stop selling these unqualified goods.

According to the Shanghai Industrial and Commercial Administrative Bureau, the brands that failed bureau tests include Burberry, MaxMara, Dior, Armani, Zara and Ermengildo Zegna, ect. These unqualified brands are due to the problems ranged from high concentrations of a potentially dangerous chemical to shoddy dyes.

The 99 percent of the unqualified goods representing 17 foreign brands are imported from foreign countries.

Among the unqualified brands, a skirt with the Spanish label Zara contains twice the allowed level of formaldehyde; some clothing contains the chemical linked to cancer; A Spanish-brand Mango coat whose label says it contains 20 percent cashmere has a content of only 1.7 percent.

Some citizens, who usually buy clothing of famous fashion brands to ensure quality, express that now they are skeptical about those.

So, foreign exporters to China should concentrate on the negative impact of this incident, and strictly review the quality of their products for exportation to China.

From January 1 of this year, the tax rate on the urban land use has been raised by two times from those set in 1988, which was decided by State Council at the end of last year.

This increased tax rate will be applied to both domestic business and foreign-funded enterprises in China, that is to say, all the organizations and individuals engaged in business in China should comply with this regulations equally.

The New tax rate prescribes the scope of tax rate levied in different areas in China. The definite standard of tax rate leaves to be enacted by local governments according to the local economic situations and land conditions.

Since January 17 of this year, the price for industrial land sale has a base line.

The Standard of Minimum Prices for National Industrial Land Sale, issued by China's Ministry of Land and Resource at the end of last year, stipulates the standard of minimum prices for the industrial land sale and this Standards takes effect on the January 17,2007.

The standard emphasizes that the price for the industrial land should not be less than the price regulated in this standard when the local governments sell the land for industrial use and fix the price of the assigned land-use rights.

The land for industry should be remised by means of public bidding. Neither the base price nor the final negotiated price can be less than the relevant minimum price stipulated in this standard.
According to the new standard, industrial land across China has been categorized into 15 classes based on the local economic situation and soil condition. The price range extends from 60 yuan per square meter in some counties in the northwestern Xijing Uygur Autonomous Region to 840 yuan per square meter in Shanghai.

So, the increased cost of land use should be paid more attention to when foreign investors try to build a factory within the territory of China.

New Judicial interpretation on Marine Insurance Issued in China. In order to uniform the standards on trial of cases from Marine Insurance , the Supreme Court of PRC publishes the related judicial interpretation, Regulation on Trial of Disputes from Marine insurance on November 28 in the year of 2006, which will take effect on January 1 next year .

The contents of this judicial interpretation primarily involves regulations on the disputes arising from contract of marine insurance which is ruled under the Maritime Code and on the disputes arising from issues related to the marine insurance which appears when the insurer are enforcing the subrogation right against any person responsible for the loss.

The contents of this judicial interpretation focus on those provisions that are frequently discussed in judicial practice but not regulated definitely in the Maritime Code. To summarize, this interpretation includes the following four sections: the application of law, termination of marine contract resulting from breach of utmost good faith, insurance cover, the performance of subrogation right by the insurer.

In the section of application of law, this judicial interpretation prescribes: the cases on the Marine Insurance should be first ruled under the Maritime Code ; in case that there are no related regulations in Maritime Code , the Insurance Law will govern; In case that there are no related regulations in both Maritime Code and Insurance Law, some related regulations in Contract Law and the General Principles of Civil Law of PRC shall apply to these cases.

Utmost good faith, which is embodied by the provisions of warranties and disclosure especially to the insured, is one of the most important principle in the Marine Insurance Law. To complete the related regulations in the current Maritime Code, this judicial interpretation further prescribe definitely that the insured is entitled to enter a plea with the estoppel of the insurer in case of the breach of warranties and disclosures by the insured. In addition, it also provides that the accurate time for termination of contract enforced by the insurer and the liability to the insured for the failure of the written notice after the breach of warranties.

Before this interpretation, it is still a debatable problem whether the issues that the carriers do not delivery the goods against the original B/L belongs to the insurance cover because the Maritime Code does not states it. Therefore, in order to eliminate this confusion, in the section of insurance cover, this interpretation regulates that the loss arising from the carrier who does not delivery the goods against the original B/L under the contract on the carriage of goods by sea shall not be covered by the insurance, unless otherwise agreed upon by the parties.

In the section of subrogation right of the insurer, this interpretation regulates that the subrogation right of the insurer and the contract of marine insurance belongs to different legal nexus, as well as that the limitation periods shall be discontinued when the insurer perform the subrogation right to bring an action under the insured's name against the third person liable for the loss. With these new interpretation, the obstacle to the insurer which arises from difference of limitation periods between the contract of insurance and any other legal nexus will be eliminated.

In January, 2007, the Chinese State Council decides to continue to collect the Port Construction fees from the consignees and consignors who discharge and load goods in the quay within the control scope of the port open up to foreigners in China as before.

The port construction fees is collected for the purpose to repair and improve the basic constructions in the port. In china, the port construction fees has been collected since the year of 1986. The Measures for the Collection of Port Construction fees, issued by State Council in 1985, and The Regulations for Implementing the Measures for the Collection of port construction fees, issued jointly by Ministry of Communication and Ministry of Finance, have governed the standards of collection of port construction fees in China.

According to the relevant Chinese authorities, the measures and standards for collection of port construction fees are going to be revised this year.

Therefore, the sellers and buyers who need to discharge or load goods in the port of China should pay attention to the articles of collection of port construction fees and should state clearly the payment of the collection of port construction fees in the sales contract to avoid the proposed disputes on this aspect.