Provisions of China (Shanghai) Free Trade Zone (the “Provisions”) (中国(上海)自由贸 易试验区条例),  issued by the  Standing  Committee of  Shanghai Municipal People's  Congress

The  Provisions  comprise the most comprehensive legislation by Shanghai’s  highest legislative body on the Shanghai Free Trade Zone (“FTZ”) since it was  launched in September 2013, covering aspects such as the management system,  investment opening-up, trade facilitation, financial services, taxation  administration, comprehensive regulation, and the legal environment of FTZ.

The Provisions  were enacted  based  on the General Plan on FTZ that the State  Council  issued on  September 27, 2013 (see our Legal Flash of September 2013). By  reiterating the following principles for developing FTZ, they aim to:

  • encourage market players, promote reform and innovation within FTZ for  matters not restricted by laws or regulations;
  • apply national treatment  to  foreign investment within FTZ, except  any sectors specified in the Negative List;
  • simplify the formalities of company registration within FTZ;
  • allow FTZ-incorporated companies to carry out reinvestment and business activities outside FTZ;
  • launch a regulatory reform on customs, inspection and quarantine;
  • establish a uniform window responsible for the administration of  transactions,  logistics, processing and warehousing  related to international trade;
  • launch the pilot reforms of RMB capital account convertibility, financial  market interest rate liberalization, cross-border use of RMB, and foreign  exchange management reform;
  • innovate the  administration within FTZ and  encourage government  management to shift its focus from ex ante examination and approval to  interim and ex post review.
  • improve the legal environment of FTZ by  establishing sound legal  frameworks covering commercial rights, labor issues, intellectual property  rights, environment protection and dispute resolution.

The  Provisions overrule the  Regulations on Shanghai  Waigaoqiao Free Trade  Zone, issued on December 19, 1996. Date of issue: July 25, 2014. Date of effectiveness: August 1, 2014.