Kathryn Phillips
Henri Saint-Surin
Lazaro Sandoval
DS 363
CHINA — PUBLICATIONS AND
AUDIOVISUAL PRODUCTS
1
HISTORY & CONTEXT
Issue:
China — Measures Affecting Trading Rights and
Distribution Services for Certain Publications and
Audiovisual Entertainment Products
Request for Consultations:
April 10, 2007
Complainant:
United States
Respondent:
China
Third Parties:
Australia, European Union, Japan, Korea, Chinese
Taipei
2
HISTORY & CONTEXT
Similar Precedents and Proceedings –
•
DS362 China — Measures Affecting the Protection and Enforcement of
Intellectual Property Rights (Complainant: United States)
•
DS124 European Communities — Enforcement of Intellectual Property
Rights for Motion Pictures and Television Programs (Complainant:
United States)
•
DS86 Sweden — Measures Affecting the Enforcement of Intellectual
Property Rights (Complainant: United States);
•
DS28 Japan — Measures Concerning Sound Recordings (Complainant:
United States)
3
HISTORY & CONTEXT
Issue #1

U.S. sought to reverse
Chinese measures affecting
the trading rights and
distribution of U.S. films,
audiovisual home
entertainment products,
sound recordings and
publications.
China measures reserve to certain
Chinese designated and wholly or
partially state-owned enterprise
the right to import audiovisual
entertainment products
Issue #2
China measures that impose
market access restrictions and
discriminatory limitations on
foreign service providers seeking
to engage in the distribution of
audiovisual entertainment
products
4
VIEW OF U.S. INDUSTRY
•
The U.S. entertainment and
“content” industry (Motion Picture
Association, etc.) argued that
Chinese measures were severely
damaging to their economic interest
in the region.
•
Industry sought the right to import
and distribute in China on a
nondiscriminatory basis.
• Industry also argued the
fact that China controlled
which countries could
import these products,
raised prices and led to
piracy and counterfeits
5
VIEW OF CHINESE GOVERNMENT
•
China claimed these restrictions where in
place to “establish a content review
mechanism and a system for the selection of
imported cultural goods’”
• China argued cultural goods have
an impact on societal and individual
morals and thus only approved
import entities are authorized to
import the relevant “cultural goods”
and carry out content review at the
border.
6
•
•
REGARDING DISTRIBUTION
REGARDING TRADING RIGHTS
SERVICES
Measures that restrict exchange
privileges with respect to imported
•
Certain measures that restrict
films for theatrical release,
market access for, or discriminate
audiovisual home entertainment
against, foreign suppliers of
products (DVDs, videocassettes),
distribution services for publications
sound recordings and publications
and foreign suppliers of audiovisual
(books, magazines, newspapers)
services for audiovisual home
entertainment products.
Measures at issue appear not to allow
all Chinese enterprises and all
•
These appear to accord less
foreign enterprises and individuals
favorable treatment to foreign
the right to import the products into
suppliers of distribution services for
China. Also, foreign individuals and
publications than that accorded to
enterprises, are accorded treatment
Chinese suppliers.
less favorable than that accorded to
enterprises in China with respect to
the right to trade.
THE CONTESTED ISSUE IN DETAIL
7
AGREEMENTS AND PROVISIONS REGARDING
TRADING RIGHTS
•
•
The measures at issue are inconsistent with China's
obligations under the provisions of paragraphs 1.2, 5.1 and
5.2 of Part I of the Protocol of Accession
Measures are also inconsistent with China’s obligations
under Article III:4 and article XI:I of the GATT 1994
8
AGREEMENTS AND PROVISIONS REGARDING
TRADING RIGHTS (CONT’D)




Protocol of Accession; Part I
Paragraph 1.2: The WTO Agreement to which China accedes
shall be the WTO Agreement as rectified, amended or
otherwise modified by such legal instruments as may have
entered into force before the date of accession.
Paragraph 5.1: Without prejudice to China's right to regulate
trade in a manner consistent with the WTO Agreement, China
shall progressively liberalize the availability and scope of the
right to trade. Such right to trade shall be the right to import
and export goods. All such goods shall be accorded national
treatment under Article III of the GATT 1994.
Paragraph 5.2: All foreign individuals and enterprises,
including those not invested or registered in China, shall be
accorded treatment no less favorable than that accorded to
enterprises in China with respect to the right to trade.
9
AGREEMENTS AND PROVISIONS REGARDING
TRADING RIGHTS (CONT’D)


Article III:4 of GATT 1994: The products of the territory of any
contracting party imported into the territory of any other
contracting party shall be accorded treatment no less favorable
than that accorded to like products of national origin in respect
of all laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation,
distribution or use.
Article X1:1 of the GATT 1994: No prohibitions or restrictions
other than duties, taxes or other charges, whether made
effective through quotas, import or export licenses or other
measures, shall be instituted or maintained by any contracting
party on the importation of any product of the territory of any
other contracting party.
10
AGREEMENTS AND PROVISIONS REGARDING
DISTRIBUTION SERVICES


Measures affecting publications and audiovisual
home entertainment products appear to be
inconsistent with China’s obligations under articles
XVI and XVII of the GATS.
These articles relate to Market Access for and the
National Treatment of foreign suppliers
11
AGREEMENTS AND PROVISIONS REGARDING
DISTRIBUTION SERVICES (CONT’D)


Article XVI (1) of GATS: With regards to market access each
member shall accord services and service suppliers of any
other Member treatment no less favorable than that
provided for under the terms, limitations and conditions
agreed and specified in its Schedule.
Article XVII (1) of GATS: each Member shall accord to
services and service suppliers of any other Member, in
respect of all measures affecting the supply of services,
treatment no less favorable than that it accords to its own
like services and service suppliers .
12
DECISION OF THE PANEL
•
China's trading rights commitments
• Panel findings: China had policies that limited trade in these
products
• State-owned enterprises were given importation rights
• Foreign-invested enterprises in China prohibited from importing
• China is in breach of its Accession Working Party Report and
Accession Protocol
• Have to grant in a non-discretionary manner the right to trade
• China appealed some of the findings relating to films and
unfinished audiovisual products but the Appellate Body
upheld the Panel's findings
13
DECISION OF THE PANEL
•
GATT Article 20.a (exceptions) Appellate Body found that
China could invoke Article 20.a of GATT 1994 to justify
provisions found to be inconsistent with China's trading
rights commitments under its Accession Protocol and
Working Party Report
• Appellate Body upheld the Panel's conclusion that China
had not demonstrated that the relevant provisions were
"necessary" to protect public morals, and that, as a
result, China had not established that these provisions
were justified under Article 20.a
14
DECISION OF THE PANEL
•
GATS Article 16 (market access) and 17 (national treatment)
• Panel decided that China's measures for distribution
services for reading materials and AVHE products were
inconsistent with these articles of the GATS
• Appellate body held up this finding
• China's measures prohibiting foreign-invested entities
from engaging in the distribution of sound recordings in
electronic form were inconsistent with the national
treatment obligation of article 17
15
DECISION OF THE PANEL
•
GATT Article 3.4 (national treatment)
• Panel found that certain measures for distributing
imported reading materials were inconsistent with
national treatment article of GATT 1994
16
IMPLEMENTATION OF RECOMMENDATIONS
•
•
On 12 July 2010, China and the United States informed the
DSB that they had agreed that the reasonable period of time
for China to implement the recommendations and rulings of
the DSB shall be 14 months from the date of adoption of the
Appellate Body and panel reports.
China made efforts to implement the rulings and
recommendations of the DSB, and has completed amendments
to most measures at issue, including Regulations on the
Management of Publications, Regulations on the Management
of Audiovisual Products, Provisions on the Administration of
the Publications Market and Catalogue of Industries for
Guiding Foreign Investment.
17