On March 3, 2009, the new Administrative Measures on Technology Prohibited or Restricted from Import, and new Administrative Measures on the Registration of Technology Import and Export Contracts took effect. The Import Measures and Registration Measures replace the previous import measures and registration measures effective since January 1, 2002. Both the Import Measures and the Registration Measures were issued by the Ministry of Commerce of the PRC (MOFCOM) on February 1, 2009 under the Administrative Regulations on the Import and Export of Technology, in effect since December 10, 2001.
The Regulations classify technology into three categories:
- Technology whose import and export is prohibited;
- Technology whose import and export is restricted, and
- Technology that may be imported or exported freely subject to registration with MOFCOM.
MOFCOM maintains an up-to-date catalogue of prohibited and restricted technologies. This catalogue, entitled the Chinese Catalogue of Technologies Prohibited or Restricted from Import (the Catalogue), is a valuable resource for parties to technology transfer agreements. Prohibited technologies may not be imported. Restricted technologies, on the other hand, may be imported if the importers obtain a Technology Import License (a License) in accordance with the Import Measures. Technologies not listed as prohibited or restricted are considered permitted and may be imported freely without a License. However, all international technology transactions for technologies that can be imported or exported freely must be registered with MOFCOM and have a valid Technology Import/Export Certificate (a Certificate) as directed by the Registration Measures.
According to the Import Measures, MOFCOM will delegate the responsibility to license parties to import restricted technologies to the provincial-level commerce departments (Provincial Commerce Authorities). Before they apply to the Provincial Commerce Authorities, however, applicants must complete an online registration on the MOFCOM website. Once they have completed the online registration process, applicants that plan to import restricted technologies may file an application with the Provincial Commerce Authorities. Within 30 business days, the Provincial Commerce Authorities will conduct a technology and trade review of the application; if it approves the application, the Provincial Commerce Authorities will issue a standard letter of intent for the import, which is valid for three years.
Once the applicant receives the letter of intent, it may sign a technology transfer contract with a foreign party, and the applicant must submit the letter of intent, as well as a copy of the technology transfer contract and documents evidencing the parties’ legal status, to the Provincial Commerce Authorities in order to apply for a License. The Provincial Commerce Authorities will conduct a contract review of the application within 10 business days after it receives all of these documents; and if it approves the application, the Provincial Commerce Authorities will issue a License to the applicant.
Alternatively, an applicant may sign a technology transfer contract before it submits its original application to the Provincial Commerce Authorities. In this case, the applicant may submit a copy of the signed contract and all related documents to apply for the License directly without having executed a letter of intent. The Provincial Commerce Authorities will conduct a technology and trade review within 30 business days upon its acceptance of the required documents; and if it approves the application, it will conduct a contract review within 10 business days after its approval. In either case, the technology transfer contracts will take effect on the date of issuance of the License.
Unlike contracts that involve restricted technologies, contracts to transfer permitted technologies are subject to registration only in accordance with the Registration Measures. The MOFCOM’s local branches are usually responsible for the collection of registration documents and the issuance of Certificates, unless the contracts (or projects of which they are a part) involve government investment or special government approval.
Applicants that plan to import permitted technologies must complete the online registration process on the MOFCOM website. Once they have completed this process, they may file an application to obtain a Certificate. In addition to the standard application form, the applicants must submit a copy of their technology transfer or license contracts, as well as the incorporation documents of the contract parties, either to MOFCOM or to its local branches.
For the first time, the Registration Measures set a time limit for the registration of technology import/export contracts. All contracts subject to registration, except those providing royalty payments, must be registered within 60 days following the contract’s effective date. Contracts subject to royalty payments must be registered within 60 days after the base amount for the first royalty payment is accrued.
The Registration Measures clearly provide that registration does not affect the validity of technology transfer contracts that take effect upon execution. This indicates that registration is not a condition for the import or export of permitted technologies, but rather a formality that may be completed after the fact. Still, the Registration Measures require that the registration be amended whenever there is a change in the Certificate’s registered items due to an amendment to the technology transfer contract.