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The following story is from the September 24 issue of International
Trade Reporter
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China Files Appeal of WTO Ruling
Against Chinese Audiovisual Restrictions
GENEVA—China Sept. 22 filed an appeal against a World Trade Organization panel ruling which found that certain restrictions imposed by China on the sale and distribution of audiovisual works as well as music download services violate global trade rules.
The Chinese appeal was filed shortly before the WTO's Dispute Settlement Body was scheduled to meet to formally adopt the panel ruling. The DSB meeting was cancelled as a result of the Chinese appeal.
The WTO's Appellate Body is normally required to issue its findings on the appeal within 90 days.
In a ruling made public Aug. 12, the WTO panel backed a complaint filed by the United States that China's restrictions on foreign suppliers of books, newspapers, periodicals, DVDs, sound recordings, and digitalized music distributed over the Internet violated nondiscrimination provisions and market access commitments under the WTO's General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), and China's 2001 WTO accession protocol (26 ITR 1129, 8/20/09).
The panel also rejected Chinese claims that its restrictions on cinema releases and audiovisual products could nevertheless be excluded from WTO disciplines under Article XX (a)
of the General Agreement on Tariffs and Trade (GATT). Article XX (a)
allows an exclusion if the measures in question are “necessary to protect public morals.”
The panel, however, rejected several U.S. claims, among them the claim that China's duopoly for film distribution violated WTO rules by discriminating against foreign film imports.
Article XX Finding Appealed
In its appeal, China said the panel erred in finding that its Article XX(a) exemption claim had no legal basis. The panel ruled that China has not demonstrated that any of the relevant measures were “necessary” to protect public morals, within the meaning of Article XX (a).
China argued that the panel failed to take account of the actual impact the measures had on the protection of public morals in China and that the panel erroneously considered the restrictive impact the Chinese measures had on trading rights of importers when making its Article XX(a) determination.
China also argued that the panel erred in finding that restrictions on the distribution of digitalized music over the Internet were covered by China's GATS market access commitments, arguing that sector 2.D of its schedule covering “sound recording distribution services” did not cover sound recordings in non-physical form.
China also argued the panel erred in determining that China's trading rights commitments under its accession protocol covered hard-copy cinema films, and in ruling that Article 5 under China's 2001 Audiovisual Products Regulation and Article 7 under China's Audiovisual Products Importation Rule violate WTO requirements by introducing qualifying criteria and discretion into a process that China committed to be “nondiscretionary.”
By Daniel Pruzin
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