Tuesday, December 22, 2009
Yesterday, the World Trade Organization Appellate Body (AB) rejected China's appeal of a WTO panel decision in favor of the United States finding that China had violated its WTO commitments by imposing certain restrictions on print and audiovisual materials. The Report of the Appellate Body in China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products upheld the panel's findings that China violated its Protocol of Accession to the WTO by its rules on film regulation and film enterprise, as well as its rules on audiovisual products regulaton and importation. The AB disagreed with the panel on one point - it held that the panel erred in finding that China's publication regulation is likely to protect "public morals" in China within the meaning of Article XX(a) of the General Agreement on Tariffs and Trade (GATT), but upheld the panel's ultimate conclusion that the relevant regulations did not meet all the criteria of the Article XX exception. The AB also upheld the panel's findings that China's rules regarding distribution of sound recordings violated Article XVII of the General Agreement on Services (GATS). In conclusion, the AB made its usual recommendation that the WTO Dispute Settlement Body request that China bring its measures into conformity with its WTO obligations. China now has a reasonable time to decide how to comply before any enforcement measures may be taken.