WTO Appellate Body rules favorably on most aspects of decision in favor of U.S. in U.S.‑China copyright dispute


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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