RESTRICTEDWORLD TRADE
ORGANIZATIONS/FIN/W/34
20 November 2003
(03-6204)
Committee on Trade in Financial Services Original:  English
COMMUNICATION FROM THE SEPARATE CUSTOMS TERRITORY OF
TAIWAN, PENGHU, KINMEN AND MATSU
Transitional Review Mechanism in connection with Paragraph 18 of
the Protocol on the Accession of the People's Republic of China
The following communication, dated 19 November 2003, from the Delegation of the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Ma tsu is being circulated to the Members of the
Committee on Trade in Financial Services.
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1. We welcome the efforts made by the People’s Republic of China to bring its regulations on
financial markets into closer conformity with its WTO accession commitments in the area of financial
services.  It is a common belief that a transparent regulatory regime is as much in the interests of the
Member as it is of its trading partners. The Delegation of the Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu is therefore pleased to have the opportunity of this Transitional ReviewMechanism (TRM) to raise the following comments and questions.
2. In line with our submission for the TRM pr ocess in 2002 (S/FIN/W/22), our first major
concern continues to be the minimum capital requirements that apply to nearly all foreign-funded
financial operators.  In the case of working capital for banks, for example, the requirements range
from RMB 100 million to 600 million per branch, which are excessively high by international
standards.  The requirement levels also tend to discriminate against smaller banks that wish to provide
specialized services and, quite frankly, in terms of effective regulation, they do not appear to benecessary.
3. We understand that China is contemplating the reduction of the minimum capital
requirements for foreign-invested insurance comp anies.  We would like to see a similar approach
being taken by China’s relevant competent authorities in other financial sectors.
4. Our second concern relates to the multi-stage licensing process, an issue raised by several
Members in the TRM exercise last year.  The current licensing procedures for banks involve Initial
Review and Final Approval stages.  This also applie s to foreign banks’ representative offices wishing
to upgrade their operation to branches after two years have elapsed, according to Article 7 of China’s
Detailed Implementing Rules for the Administrative Regulations on Foreign-Invested Financial
Institutions .  The process altogether could take more than 8 months, before a final decision of
approval or denial is given.
5. In this connection, the Delegation of the Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu would like to quote from paragraph 308 of the Working Party Report for the
consideration of China’s relevant authorities.  In this paragraph, China agreed that its “licensing
procedures and conditions would not act as trade barriers to market access and would not be moretrade restrictive than necessary.”
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