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> China’s Accession Protocol
> Relationship with other WTO agreements

A.0.1 China’s Accession Protocol     back to top

A.0.1.1 China — Auto Parts, para. 214
(WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R)

The Panel proceeded, therefore, on the basis that the commitment made by China in paragraph 93 of its AccessionWorking Party Report is enforceable in WTO dispute settlement proceedings and should be interpreted in accordance with the customary rules of interpretation as codified in Articles 31 and 32 of the Vienna Convention. Neither of these propositions has been disputed at any point in these proceedings, including in this appeal.

A.0.1.2 China — Publications and Audiovisual Products, paras. 194-196
(WT/DS363/AB/R)

… [A] measure can regulate both goods and services and that, as a result, the same measure can be subject to obligations affecting trade in goods and obligations affecting trade in services. This does not necessarily mean that the same measure would also be subject to China’s trading rights commitments, because a measure regulating goods may not affect who has the right to trade those goods. In this dispute, however, it is uncontested that Article 30 of the Film Regulation restricts who may engage in the importation of films. The issue raised by China’s appeal is whether what is imported by the entity designated under Article 30 is a good. In other words, in this dispute, the applicability of China’s trading rights commitments to Article 30 of the Film Regulation depends on the issue of whether that provision regulates goods. …

We do not see the clear distinction drawn by China between “content” and “goods”. Neither do we consider that content and goods, and the regulation thereof, are mutually exclusive. Content can be embodied in a physical carrier, and the content and carrier together can form a good. …

Moreover, as the Panel properly found, China’s trading rights commitments refer to the right to trade in “all goods”. The applicability of China’s trading rights commitments to a measure is triggered when that measure concerns who may import a good. … the fact that cinematographic films are imported “simultaneously, physically in conjunction with the right to provide the service in question” shows that, where physical carriers are used for purposes of importing and licensing the content of films, Article 30 of the Film Regulation has an inevitable, rather than “incidental”, effect on who may import goods. The inevitable effect of Article 30 on the importation of goods confirms the Panel’s finding that Article 30 “would necessarily affect” who may engage in the importation of goods where relevant content is to be imported on hard-copy cinematographic films. In our view, therefore, the Panel correctly found that the mere fact that the import transaction involving hardcopy cinematographic films may not be the “‘essential feature’ of the exploitation of the relevant film” does not preclude the application of China’s trading rights commitments to the Film Regulation.

 
A.0.2 Relationship with other WTO agreements     back to top

A.0.2.1 China — Publications and Audiovisual Products, paras. 218, 226-230, 233
(WT/DS363/AB/R)

Looking first to the overall structure of the first sentence of paragraph 5.1, we note that the sentence contains a commitment, or obligation, undertaken by China, namely, to progressively liberalize the right to trade and ensure that, within three years of accession, all enterprises in China have the right to import and export all goods. This obligation is, however, qualified by the introductory clause of the first sentence: “Without prejudice to China’s right to regulate trade in a manner consistent with the WTO Agreement”.

…

… Under paragraph 5.1, China undertakes a commitment in respect of traders, in the form of a commitment to grant to all enterprises in China the right to import and export goods. At the same time, this commitment, or obligation, is made subject to, and may not detrimentally affect, China’s right to regulate trade in a manner consistent with the WTO Agreement. We see the obligations assumed by China in respect of trading rights, which relate to traders, and the obligations imposed on all WTO Members in respect of their regulation of trade in goods, as closely intertwined. This is particularly true of China’s trading rights commitments, on the one hand, and the obligations imposed on all WTO Members under Articles III and XI of the GATT 1994, on the other hand, as certain WTO Members expressly recognized during the negotiations on China’s accession to the WTO. Such inter-linkage is also reflected in paragraph 5.1 itself. Read as a whole, this provision is clearly concerned with trade in goods. …

The close relationship between restrictions on entities engaged in trade and GATT obligations relating to trade in goods has also been recognized in previous GATT panel and WTO panel and Appellate Body reports, where measures that did not directly regulate goods, or the importation of goods, have nonetheless been found to contravene GATT obligations. Thus, for example, restrictions imposed on investors, wholesalers, and manufacturers, as well as on points of sale and ports of entry, have been found to be inconsistent with Article III:4 or Article XI:1 of the GATT 1947 or 1994. In addition, the Illustrative List in Annex 1 to the Agreement on Trade-Related Investment Measures (the “TRIMs Agreement”) sets out a number of requirements imposed on enterprises that are deemed to be inconsistent with either Article III:4 or Article XI:1 of the GATT 1994, and Article 3 of the TRIMs Agreement states that all exceptions under the GATT 1994 apply, as appropriate, to the provisions of the TRIMs Agreement. These considerations suggest that measures that restrict the rights of traders may violate GATT obligations with respect to trade in goods.

Returning to the introductory clause of paragraph 5.1, we recall our observation above that the reference to China’s power to regulate trade “in a manner consistent with the WTO Agreement” seems to us to encompass both China’s power to take regulatory action provided that its measures satisfy prescribed WTO disciplines and meet specified conditions (for example, an SPS measure that conforms to the SPS Agreement) and China’s power to take regulatory action that derogates from WTO obligations that would otherwise constrain China’s exercise of such power — that is, to relevant exceptions.

China’s power to regulate trade in goods is disciplined by the obligations set out in Annex 1A of the WTO Agreement. In our view, the introductory clause of paragraph 5.1 cannot be interpreted in a way that would allow a complainant to deny China access to a defence merely by asserting a claim under paragraph 5.1 and by refraining from asserting a claim under other provisions of the covered agreements relating to trade in goods that apply to the same or closely linked measures, and which set out obligations that are closely linked to China’s trading rights commitments.…

All of the above suggests to us that the introductory clause of paragraph 5.1 should be interpreted as follows. Any exercise of China’s right to regulate trade will be protected under the introductory clause of paragraph 5.1 only if it is consistent with the WTO Agreement. This will be the case when China’s measures regulating trade are of a type that the WTO Agreement recognizes that Members may take when they satisfy prescribed disciplines and meet specified conditions. Yet, these are not the only types of WTO-consistent measures that may be protected under the introductory clause of paragraph 5.1. Whether a measure regulating those who may engage in the import and export of goods falls within the scope of China’s right to regulate trade may also depend on whether the measure has a clearly discernible, objective link to the regulation of trade in the goods at issue. In considering whether such a link is discernible, it may be relevant whether the measure regulating who may engage in trade is clearly and intrinsically related to the objective of regulating the goods that are traded. In addition, such a link may often be discerned from the fact that the measure in question regulates the right to import and export particular goods. This is because the regulation of who may import and export specific goods will normally be objectively related to, and will often form part of, the regulation of trade in those goods. Whether the necessary objective link exists in a specific case needs to be established through careful scrutiny of the nature, design, structure, and function of the measure, often in conjunction with an examination of the regulatory context within which it is situated. When such a link exists, then China may seek to show that, because its measure complies with the conditions of a GATT 1994 exception, the measure represents an exercise of China’s power to regulate trade in a manner consistent with the WTO Agreement and, as such, may not be impaired by China’s trading rights commitments.

…

For all these reasons, we consider that the provisions that China seeks to justify have a clearly discernible, objective link to China’s regulation of trade in the relevant products. In the light of this relationship between provisions of China’s measures that are inconsistent with China’s trading rights commitments, and China’s regulation of trade in the relevant products, we find that China may rely upon the introductory clause of paragraph 5.1 of its Accession Protocol and seek to justify these provisions as necessary to protect public morals in China, within the meaning of Article XX(a) of the GATT 1994. Successful justification of these provisions, however, requires China to have demonstrated that they comply with the requirements of Article XX of the GATT 1994 and, therefore, constitute the exercise of its right to regulate trade in a manner consistent with the WTO Agreement. …

The texts reproduced here do not have the legal standing of the original documents which are entrusted and kept at the WTO Secretariat in Geneva.