Preferential Market Access: China’s DFQF Scheme for LDC Products

China’s DFQF scheme for LDCs came into effect on 1 July 2010, and was renewed on 1 January 2015. Currently, the scheme covers 97 per cent of all tariff lines, in accordance with Annex F provisions of the Hong Kong Ministerial Declaration. The scheme is accessible to all LDCs having diplomatic relations with China.   On 1 March 2017, the General Administration of Customs of China (GACC) issued the Administrative Measures of the PRC Customs on Rules of Origin of Imported Goods from the Least Developed Countries Entitled to Special Preferential Tariff Treatment (GACC Decree No. 231, “the Decree”), which made exporting goods to China easier for LDCs by expanding the criteria that determine the national source of a product and streamlining the consignment process.

China also offers preferential treatment 90 per cent of all tariff lines on exports from Cambodia, Lao People’s Democratic Republic and Myanmar, under the China-ASEAN Free Trade Agreement. Lao PDR and Bangladesh also benefit from special tariffs for LDCs under the Asia Pacific Trade Agreement for a limited number of products.

In October 2019, the LDC Group at the WTO presented to the Committee on Rules of Origin an analysis of the utilization of China’s tariff preferences, summarized as follows: “Tanzania, for the LDC Group, presented its second analysis of the use of preferences by LDCs in a preference-granting member, following the group’s initial report on Switzerland last spring. The presentation on China showed low usage of preferences for the majority of tariff lines and wide variations in utilization rates among LDCs, with the result that a significant amount of some LDC exports to China are being charged most favoured nation (MFN) tariff rates instead of receiving duty-free treatment. Tanzania said the purpose of the presentations was not to accuse any particular member but to look and see how utilization rates could be improved. China replied that it was ready to work with LDCs to see what the reasons for the low utilization rates were but noted that utilization of tariff preferences under separate free trade agreements might be the cause, particularly for South Asian and Southeast Asian LDCs. In addition, more than 10 African LDCs, including Tanzania, Ethiopia and Mali, were enjoying preference utilization rates above 80% on their China-bound exports, China said.”

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