Cross-Border Trade in Services(Policy Interpretation

Cross-Border Trade in Services(Policy Interpretation - Part III)

en.hainan.gov.cn

Updated: 2023-08-18

On July 23, 2021 the Ministry of Commerce issued the "Special Administrative Measures for Cross-border Trade in Services in the Hainan Free Trade Port (Negative List)", which defines 70 special management measures in 11 categories for overseas service providers, in effect from Aug 26, 2021. The negative list reflects the highest level of opening-up in the cross-border service trade field in China, and the level of openness in some areas even exceeds China's original WTO commitments.

Q7. What is the relationship between the Negative List on Cross-border Trade in Services in Hainan and the previous two negative lists? How will it be expanded beyond Hainan?

The Negative List on Cross-border Trade in Services in Hainan is different from the negative lists of market access and foreign investment access in positioning and functionality. The negative list of market access is applicable to domestic and overseas market players, including domestic enterprises and foreign-invested enterprises. Special management measures targeting only overseas market players are not included in the negative list of market access. The negative list of foreign investment access and the Negative List on Cross-border Trade in Services in Hainan only list special management measures for overseas market players or individuals.

According to the relevant definitions in the WTO General Agreement on Trade in Services, trade in services is divided into four modes of supply: cross-border supply, consumption abroad, commercial presence and movement of natural persons. Among them, the commercial presence mode belongs to investment, and the other three modes are collectively called cross-border trade in services. The Negative List on Cross-border Trade in Services in Hainan lists the special management measures for overseas service providers to provide services to the Hainan FTP through cross-border supply, consumption abroad and movement of natural persons. In areas not covered in this list, domestic and overseas services and service providers are treated equally in the Hainan FTP.

The Negative List is the first negative list in the field of cross-border trade in services. To implement this model on a larger scale, it is necessary to control the rhythm and progress well and adhere to the general tone of making steady progress. In the implementation of the negative list of foreign investment access, China first launched a pilot project in the China (Shanghai) Pilot Free Trade Zone in 2013, and then gradually expanded to free trade zones in Guangdong, Tianjin and Fujian. After gaining enough experience, the first nationwide negative list of foreign investment access was issued in 2017 with the approval of the Communist Party of China Central Committee and the State Council.

Going forward, we will actively leverage the role of the Hainan FTP as a pioneer, summarize and evaluate the operation of the Negative List in a timely manner, and on this basis, study and formulate negative lists of cross-border trade in services in pilot free trade zones, promoting a higher-level institutional opening-up through pilot projects in a wider range.

Q8. What is the overall situation in the promotion of cross-border trade in services in Hainan? What are the characteristics and highlights?

In recent years, with the generous support of national ministries and commissions, Hainan has actively implemented the national deployment and adopted a series of measures to promote the development of cross-border trade in services. In terms of cross-border supply, the People's Bank of China and other financial regulators issued the Opinions on Financial Support for Hainan's Comprehensive Deepening of Reform and Opening-up, and the dedicated internet channel for the Hainan FTP was officially launched. With regard to the movement of natural persons, Hainan has formulated accreditation standards for foreign "top-notch and urgently needed" talents, launched 38 professional qualification examinations and individually recognized 219 overseas professional qualifications. As for consumption abroad, Hainan has taken the lead in launching pilot projects of mobile payment service for inbound tourists and promoted self-guided yacht tours in Hainan, Hong Kong and Macao.

Driven by these measures, Hainan's cross-border trade in services shows a favorable momentum of development. The growth rate increased by 16.8 percent and 20.3 percent in 2018 and 2019 respectively. Hainan's cross-border trade in services mainly presents the following characteristics: market attention has been greatly increased; the structure of trade in services has been continuously optimized, with knowledge-intensive and technology-intensive new service trade now accounting for 66.5 percent of the total; the cluster development effect of characteristic services is obvious; replicable and widely applicable experience has been accumulated; and cross-border trade in services has been included in Hainan's high-quality development assessment index system.

Q9. What are the highlights of the Negative List in terms of fields and scope?

First, in terms of talent policy, the Negative List has adopted more open policies. The restrictions on overseas individuals taking more than 10 professional qualification examinations, such as certified metrology engineers, certified engineers in survey and design, and certified fire protection engineers, have been lifted, providing convenience for outstanding overseas talents to participate in the construction of the Hainan FTP.

Second, in terms of improvement in the freedom and convenience of transportation, the Negative List has adopted more open sea transportation and air transportation policies. For example, the restriction that foreign ship inspection institutions could not employ or send personnel for ship inspection activities in China if they did not set up ship inspection firms in China has been cancelled. The restrictions on overseas service providers engaging in aeronautical meteorological services have also been lifted.

Third, there are specific measures to expand the opening-up of professional services. For example, the representative offices of overseas law firms in Hainan are allowed to engage in some commercial non-litigation legal affairs involving Hainan, law firms in Hainan are allowed to employ foreign lawyers as foreign legal advisers and lawyers from Hong Kong and Macao as legal advisers, and restrictions on overseas service providers engaging in customs declaration are lifted.

Fourth, in terms of expanding the opening-up of the financial sector, overseas individuals are now allowed to apply for opening securities accounts or futures accounts, and can apply for consulting qualifications for securities investment and futures investment.

Q10. Apart from the Negative List, what specific measures does the Ministry of Commerce have to support the development of Hainan's service sector?

The Ministry of Commerce has adopted a series of measures to support the development of Hainan's service sector. These include the issuance of the Overall Plan for the Comprehensive Pilot Projects of Further Opening up the Service Sector in Hainan; the launch of a pilot program for comprehensively deepening the innovation and development of trade in services in Hainan province; the issuance of the Circular on Several Measures to Promote Trade Liberalization and Facilitation of the Hainan Free Trade Port, with 15 measures involving the development of trade in services; the joint hosting of the first China International Consumer Products Expo; and continued support for Hainan in building a national export base for traditional Chinese medicine services and digital services.

These measures can be summarized into three aspects: first, optimizing the systems and mechanisms for the development of Hainan's service sector and further promoting reforms to streamline the government, delegate power, and improve government services; second, improving the convenience and factor guarantee for the development of Hainan's service sector, including allowing overseas professionals to obtain domestic practice qualifications; and third, exploring innovative development models, promoting regional cluster development, expanding new business forms and models, and promoting the transformation of traditional fields.