On 23 July, the Ministry of Commerce and the Customs issued the Catalogue of Products under the Restricted Category in Processing Trade, which will come into effect on 23 August 2007. The newly promulgated catalogue covers a total of 1,853 products under 10-digit commodity codes mainly coming from labor-intensive industries such as plastic raw materials and products, textile yarn, fabrics and furniture.

Enterprises engaging in the processing trade of products under the restricted category are subject to the customs duty deposit system. They are required to open a customs duty deposit account at a designated bank and pay into this account an actual deposit when they file their processing trade contracts with the commerce departments. Categories A and B enterprises have to pay a deposit equivalent to 50% of the import-related taxes. Category C enterprises are required to pay a deposit equivalent to 100% of the sum of payable import tax and value-added tax of all bonded imported materials.

In the central and western regions, Categories A and B business enterprises with their processing units located in the same regions are subject to "nominal payment" of customs duty deposit. As for Category C enterprises, 100% actual payment of customs duty deposits is required.

For details of the above catalogue and its implementation measures in Chinese, please visit http://www.mofcom.gov.cn/aarticle/b/c/200707/20070704918873.html or email with your questions.