Thursday, August 7, 2014

WTO Appellate Body Rejects China's Appeal in Rare Earths Dispute

WTOThe World Trade Organization (WTO) Appellate Body (AB) issued its decision today in China-Measures Related to the Exportation of Rare Earths, Tungsten and Molybenum, DS431.  The United States initiated this matter against China in 2012 alleging that China maintains export restrictions on these products that violate the rules of the WTO and the General Agreement on Tariffs and Trade (GATT).  

In March 2014, the WTO dispute resolution panel issued its findings that China had violated its obligations under the WTO through its export duties and quotas, which were not justified under Article XX of GATT.  Both China and the United States appealled certain aspects of that ruling to the WTO AB.  The AB consolidated the dispute with similar disputes filed by Japan and the European Union.

China did not appeal the final conclusions of the panel, but instead disagreed with the panel's interpretation and application of the exceptions contained in GATT Article XX.  The United States filed a limited appeal challenging the panel's rejection of certain exhibits.

Earlier today, the WTO AB issued its decision upholding the interpretation and application by the panel of GATT Article XX.  It found it unnecessary to rule on the United States' appeal.  The WTO AB's ruling should provide guidance for future claims of exemption under Article XX.

China now must bring its export restrictions on rare earths into compliance with its WTO obligations. For more information, visit the WTO website here.


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