WTO Appellate Body rules favorably on most aspects of
decision in favor of U.S. in U.S.‑China copyright dispute
On December 21, 2009, the Appellate Body of the World Trade
Organization (WTO) issued its report (ABR) regarding the U.S.‑China dispute
over “Measures Affecting Trading Rights and Distribution Services for Certain
Publications and Audiovisual Entertainment Products” (DS363). The products at
issue include movies for theater release, DVDs, music, books and journals. The
ABR largely upholds the prior, very lengthy Dispute Settlement Report of August
2009, which sided with the U.S. on most issues. See 2009 International Law
Update 95.
The dispute first came before the WTO in 2007. The U.S.
asked for consultations with China about (1) certain Chinese measures that
restrict trading rights as to imported movies for theater release, audio‑visual
home entertainment products (videos/DVDs), sound recordings and publications
(books, magazines, newspapers, electronic publications); and (2) certain
Chinese measures that restrict market access for foreign suppliers. Because the
consultations were unsuccessful, the DSB set up a Panel in November 2007. The
DSB Report was almost 500 pages long.
The Appellate Body now:
(1) upholds the Panel’s conclusions, in [paragraph
8.1.2(c)(ii), (iii), (vi), and (vii) of] the Panel Report, that Article 30 of
the Film Regulation and Article 16 of the Film Enterprise Rule are inconsistent
with China’s trading rights commitments [in ¶¶ 1.2 and 5.1 of China’s Accession
Protocol and paragraphs 83(d) and 84(a) and (b) of China’s Accession Working
Party Report;]
(2) upholds the Panel’s conclusions, [in paragraph
8.1.2(d)(I) and (v) of the Panel Report727], that Article 5 of the 2001
Audiovisual Products Regulation and Article 7 of the Audiovisual Products
Importation Rule are inconsistent with China’s obligation, in [paragraph 1.2 of
]China’s Accession Protocol [and paragraph 84(b) of China’s]
(3) finds that, by virtue of [the introductory clause of
paragraph 5.1 of] China’s Accession Protocol, China may, in this dispute,
invoke Article XX(a) of the GATT 1994 to justify provisions found to be
inconsistent with China’s trading rights commitments under its Accession
Protocol and Working Party Report;
(4) upholds the Panel’s conclusion, [in paragraph 8.2.(a)(I)
of the Panel Report,] that China has not shown that the relevant provisions are
“necessary” to protect public morals, within the meaning of Article XX(a) of
the GATT 1994. As a result, China has not established that these provisions are
justified under Article XX(a).
(5) upholds the Panel’s conclusion, [in paragraph
8.2.3(b)(I) of the Panel Report], that the provisions of China’s measures
prohibiting foreign‑invested entities from engaging in the distribution of
sound recordings in electronic form are inconsistent with Article XVII of the
GATS.
The Appellate Body recommends that China bring the measures
at issue into compliance with China’s Accession Protocol, China’s Accession
Working Party Report, the GATS, and the GATT 1994.
Citation: China—Measures Affecting Trading Rights and
Distribution Services for Certain Publications and Audiovisual Entertainment Products
(DS363). The report is available at www.wto.org; U.S. Trade Representative
press release of 21 December 2009, available at www.ustr.gov.
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