SUMMARY OF U.S.-CHINA BILATERAL WTO AGREEMENT

l consulting, business and computer related services, motion pictures and video and sound recording services. China will also participate in the Basic Telecommunications and Financial Services Agreements. GRANDFATHERING China will grandfather the existing level of market access already in effect at the time of China's accession for U.S. services companies currently operating in China. This will protect existing American businesses operating under contractual or shareholder agreements or a license from new restrictions as China phases in their commitments. DISTRIBUTION AND RELATED SERVICES China generally prohibits foreign firms from distributing products other than those they make in China, or from controlling their own distribution networks. Under the Agreement, China has agreed to liberalize wholesaling and retailing services for most products, including imported goods, throughout China in three years. In addition, China has agreed to open up the logistical chain of related services such as maintenance and repair, storage and warehousing , packaging, advertising, trucking and air express services, marketing, and customer support in three to four years. TELECOMMUNICATIONS China now prohibits foreign investment in telecommunications services. For the first time, China has agreed to permit direct investment in telecommunications businesses. China will also participate in the Basic Telecommunications Agreement. Specific commitments include: Regulatory Principles ?- China has agreed to implement the pro?competitive regulatory principles embodied in the Basic Telecommunications Agreement (including interconnection rights and independent regulatory authority) and will allow foreign suppliers to use any technology they choose to provide telecommunications services. China will gradually phase out all geographic restrictions for paging and value-added services in two years, mobile voice and data services in five years, and domestic and international services in six years. China will permit 50 percent foreign equity share for value-added and paging services two years after accession, 49 percent foreign equity share for mobile voice and data services five years after accession, and for domestic and international services six years after accession. INSURANCE Currently, only two U.S. insurers have access to China's market. Under the agreement: China agreed to award licenses solely on the basis of prudential criteria, with no economic-needs test or quantitative limits on the number of licenses issued. China will progressively eliminate all geographic limitations within 3 years. Internal branching will be permitted consistent with the elimination of these restrictions. China will expand the scope of activities for foreign insurers to include group, health and pension lines of insurance, phased in over 5 years. Foreign property and casualty firms will be able to insure large-scale commercial risks nationwide immediately upon accession. China agreed to allow 50 percent ownership for life insurance. Life insurers may also choose their own joint venture partners. For non-life, China will allow branching or 51 percent ownership on accession and wholly owned subsidiaries in 2 years. Reinsurance is completely open upon accession (100 percent, no restrictions). BANKING Currently foreign banks are not permitted to do local currency business with Chinese clients (a few can engage in local currency business with their foreign clients). China imposes severe geographic restrictions on the establishment of foreign banks. China has committed to full market access in five years for U.S. banks. Foreign banks will be able to conduct local currency business with Chinese enterprises starting 2 years after accession. Foreign banks will be able to conduct local currency business with Chinese individuals from 5 years after accession. Foreign banks will have the same rights (na