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Shanghai Clarifies Applicability of Cross-Border Trade in Services’ Negative List

Shanghai recently issued two policy documents intended to clarify the role of the Negative List with regard to the cross-border trade in services, with a particular focus on its implications for the operation of the city’s Pilot Free Trade Zone (FTZ).

Among the headline issues addressed by the two documents were the following:

  • For the purposes of the two documents “Cross-border trade in services” was defined as “commercial activities delivered by overseas service providers to customers within the FTZ”
  • In terms of the priorities and operational parameters of the cross-border trade in services, legal compliance, institutional innovation and the delegation of power with effective oversight, together with advancing the aims of both the Belt and Road Initiative and the Yangtze River Delta Economic Belt, were all deemed to be paramount
  • Any cross-border trade in services activities featuring on the Negative List are subject to approval by the relevant government department, while any such trade not specifically vetoed by the List should be managed in accordance with the principle of equal treatment for overseas and domestic service providers

In all, the Cross-Border Trade in Services Negative List details 159 special management measures across 13 categories, all classified in line with the Industrial Classification for National Economic Activities (GB/T4754-2017). These include measures targetted at specific industries, restrictions related to the cross-border validity of professional qualifications and measures applicable to all industries with regard to performance levels. In the case of issues not specifically addressed by the Negative List, including national security, public order, cultural concerns, finance and government procurement, the existing provisions detailed elsewhere prevail.

In the case of service providers operating out of Hong Kong, Macau or Taiwan, the measures relating to overseas service providers may be used as reference points. In cases where preferential cross-border trade in services terms are detailed under the provisions of CEPA, ECFA or any other Free Trade Agreement deemed to be relevant, the terms specified by such agreements will be deemed to have precedence.

The two policy documents in question are the Measures of the China (Shanghai) Pilot FTZ Regarding the Implementation of the Negative List Management Model for the Cross-Border Trade in Services and the Special Management Measures (Negative List) of the China (Shanghai) Pilot FTZ for the Cross-Border Trade in Services (2018). Both directives were issued in accordance with the Plan for Comprehensively Deepening the Reform and Opening-Up of the China (Shanghai) Pilot Free Trade Zone (FTZ) and the 100 Measures for the Further Opening-Up of Shanghai.

For further details (in Chinese), please access the following links:

Excerpts from the Shanghai Municipal Government’s Press Briefing with Regard to the Trade in Services’ Negative List (9 Oct 2018)

Circular of the Shanghai Municipal People’s Government on the Issuance of the Measures of the China (Shanghai) Pilot FTZ for the Implementation of the Negative List Management Model for the Cross-Border Trade in Services

Special Management Measures (Negative List) of the China (Shanghai) Pilot FTZ for the Cross-Border Trade in Services (2018)

Content provided by Picture: HKTDC Research
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