Balancing openness and security, the revision of the Foreign Trade Law provides guarantees for high-quality development of foreign trade | Expert interpretation

Recently, the Standing Committee of the National People's Congress voted to pass the newly revised Foreign Trade Law of the People's Republic of China (hereinafter referred to as the "Foreign Trade Law"), which will come into effect on March 1, 2026.

Since its promulgation in 1994, the law underwent its first comprehensive revision in 2004, followed by two revisions to individual provisions in 2016 and 2022. This is the second systematic revision.

The newly revised Foreign Trade Law, consisting of 11 chapters and 83 articles, aims to actively adapt to the development trend and environmental changes of foreign trade, coordinate development and security, and is of great significance for promoting high-level opening up to the outside world, maintaining foreign trade order, and protecting the legitimate rights and interests of foreign trade operators.

Xu Xin, Vice Dean of the School of International Organizations (School of Trade Negotiation) at Shanghai University of International Business and Economics, told First Financial Journalist that this amendment was completed against the backdrop of complex domestic and international environments. It not only meets the inherent requirements of promoting high-level opening-up and achieving high-quality development in China, but also provides solid legal support for dealing with external unilateralism, protectionism, and various forms of bullying, "she said.

Highlighting the main theme of "high-level opening-up to the outside world"

Xu Xin stated that this amendment to the law, through the addition and revision of multiple clauses in the general provisions, clearly reflects the orientation of "high-level opening up to the outside world".

For example, the first article of Chapter One clearly emphasizes the promotion of "high-level" opening up to the outside world and adds the phrase "promoting high-quality development of foreign trade". The third article clarifies that foreign trade work should "adhere to serving the economic and social development of the country and promoting the construction of a strong trading nation".

In addition, the newly added sixth and seventh articles are closely related to this goal. Article 6 stipulates that "actively connect with international high standard economic and trade rules, and actively participate in the formulation of international economic and trade rules"; Article 7 specifies that "the state shall establish a trade policy compliance mechanism that is in line with internationally recognized rules".

Ren Qing, a partner at Beijing Global Law Firm, told First Financial reporters that Article 7 is a prominent manifestation of the law amendment in promoting institutional openness. He said, "Several years ago, China established this mechanism through a State Council document, requiring all departments and localities to conduct compliance reviews against World Trade Organization (WTO) rules before formulating trade policies. The inclusion of it into law this time demonstrates China's firm determination to uphold the multilateral trading system and continue to promote trade liberalization at the institutional level. This is in stark contrast to the unilateralism and protectionism pursued by some countries, demonstrating China's attitude of adhering to opening up to the outside world and respecting international rules. ”

Xu Xin added that "internationally accepted rules" are an open expression with a scope larger than WTO rules, leaving legal interfaces and institutional space for China's future accession to high standard economic and trade agreements such as the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA).

Mature practice institutionalization, stable market expectations

Xu Xin stated that another major highlight of this revision is to elevate the institutional innovation that has been proven mature through practice into law, in order to enhance the stability and transparency of the system.

She gave an example, stating that Article 23 provides clear regulations on processing trade, although its proportion in the total trade volume has decreased, it still holds an important position. This clause clarifies the management norms of processing trade and the conditions for domestic sales, which helps to stabilize the expectations of all parties, especially foreign-funded enterprises. Article 27: Drawing on the General Agreement on Trade in Services of the WTO, four modes of provision for trade in services have been clarified, while maintaining inclusiveness towards new business models while establishing a basic framework. Article 31: The implementation of a negative list management system for cross-border service trade has been formally established, and it has been clarified that service trade conducted through commercial existence should comply with the Foreign Investment Law, achieving the connection between laws.

Ren Qing commented on this, "(Article 31) Clearly implementing a negative list management system in the field of cross-border service trade marks that China has reached an international advanced level in service trade management and is an important manifestation of high-level openness

In addition, the newly revised Articles 32 and 33 of the Foreign Trade Law further strengthen the protection of intellectual property rights related to foreign trade. Xu Xin stated that his philosophy has shifted from the past "defense" to actively "empowerment" and "service", supporting enterprises in maintaining and innovating intellectual property in the global market.

System construction of trade promotion system

Xu Xin stated that this amendment has systematically strengthened trade promotion measures, covering multiple newly added clauses.

For example, Article 56 has added content to promote balanced development of trade. Xu Xin believes that this conveys a neutral and objective stance: China pursues "stable exports and expanded imports" to achieve dynamic balanced development, rather than simply pursuing trade surplus.

In addition, Article 59 involves new forms of trade such as e-commerce; Article 60 focuses on digital trade, and the final text is more specific than the draft, clearly stating "supporting the use of electronic bills of lading, electronic invoices, etc., and promoting international mutual recognition of digital certificates, electronic signatures, etc."; Article 63 emphasizes providing support services for foreign trade operators to explore international markets; Article 64: The addition of promotion measures for trade supporting links such as logistics and exhibitions reflects the overall support attitude towards establishing a trade ecosystem; Article 66: Committed to building a diversified mechanism for resolving foreign trade disputes, in line with the revision of the Arbitration Law, to optimize the business environment; Article 70 starts from the top-level design and adds principled clauses to strengthen the construction of the foreign trade talent team, which has long-term strategic significance.

Enrich response tools and defend the multilateral trading system

The newly revised Foreign Trade Law has also enriched and improved the legal toolbox for foreign struggle, supplemented and perfected corresponding countermeasures, and perfected relevant legal responsibilities.

Ren Qing introduced that from the perspective of safeguarding national sovereignty, security, and development interests, this revision is of great significance in at least three aspects.

Firstly, the security exception clause has been improved. This is mainly reflected in Articles 17, 18, 29, and 30. These provisions, while adhering to the principle of free trade, authorize the competent authorities to take corresponding measures when necessary to safeguard security interests. For example, Articles 18 and 29 have added the phrase "other necessary measures", while Articles 19 and 30 have expanded their scope of application from "wartime" to "other emergency situations in international relations".

Ren Qing believes that these revisions make the relevant measures more flexible and fully comply with the general exceptions and security exceptions clauses in WTO rules, which means that China has further utilized the institutional space to maintain its own security within the framework of international rules. He emphasized that even when improving the security exception clauses, we still strictly follow the general exceptions and security exceptions under the WTO framework, and have not created measures beyond international rules. This reflects China's emphasis on maintaining consistency with the multilateral system while safeguarding its necessary interests. ”

Secondly, add Article 40 and corresponding legal liability clauses. Ren Qing stated that similar regulations have already been reflected in the "Regulations on the List of Unreliable Entities". This time, it is authorized at the legal level to take countermeasures against specific overseas individuals or organizations, which not only enhances authority but also expands the applicability of future measures. Xu Xin also stated that the second paragraph of the article prohibits assisting in the evasion of countermeasures, and defines the subject as any individual or organization, which is conducive to ensuring the implementation of countermeasures.

Finally, the revision of Article 51 is highly practical and targeted. The newly added second paragraph of this article clarifies that if the dispute settlement mechanism stipulated in relevant treaties or agreements cannot operate normally, resulting in the loss or damage of China's interests under the treaty or agreement, or the inability to achieve the objectives of the treaty or agreement, China may take corresponding measures according to the actual situation.

Ren Qing analyzed that this is mainly to address the difficulties in enforcing rulings caused by the paralysis of the WTO Appellate Body, and to provide a legal basis for safeguarding one's legitimate rights and interests when multilateral mechanisms fail.

Xu Xin added that the principle provision of "trade adjustment assistance" in Article 55 is also worth paying attention to. This system aims to provide necessary assistance from relevant governments when domestic industries are damaged due to significant changes in the trade environment, in order to stabilize the industrial and supply chains. It is an auxiliary relief tool in complex international economic and trade environments.