restrictions were justified under this provision. Accordingly, the Panel concluded that China's trading rights restrictions breach its WTO obligations.
On 7 August 2014, the Appellate Body report was circulated to Members.
Summary of key findings
On 25 April 2014, China notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On the same day, China also appealed the panel report in dispute DS433. In addition, the United States had appealed the panel report in dispute DS431 on 8 April 2014, and China filed an other appeal on 17 April 2014 in the same dispute.
The Appellate Body consolidated the appellate proceedings in DS431, DS432, and DS433 before a single Appellate Body Division, harmonized the timetable of the three appellate proceedings, and held one oral hearing for all three proceedings. On 24 June 2014, upon expiry of the 60-day period specified in Article 17.5 of the DSU for DS432 and DS433, the Appellate Body informed the DSB that the Appellate Body Reports in all three consolidated appeals will be circulated to WTO Members no later than Thursday, 7 August 2014. The Appellate Body issued three Appellate Body Reports in one single document on 7 August 2014.
China did not appeal any of the above conclusions of the Panel, but appealed only limited aspects of the Panel's reasoning and certain intermediate findings. According to China, its appeal was intended to obtain clarification of the systemic relationship between specific provisions in China’s Accession Protocol, and other WTO agreements, and of the rights of WTO Members to protect and conserve their exhaustible natural resources.
First, China appealed an intermediate Panel finding in reaching its conclusion that Article XX of the GATT 1994 is not available to justify a breach of Paragraph 11.3 of China's Accession Protocol. China contended that the Panel erred in rejecting China's interpretation of Paragraph 1.2 of China's Accession Protocol and Article XII:1 of the Marrakesh Agreement as meaning that each provision of China's Accession Protocol is an integral part of the Marrakesh Agreement or of the Multilateral Trade Agreement to which that provision “intrinsically relates”.
The Appellate Body declined to accept China's interpretation of Paragraph 1.2 of China's Accession Protocol and Article XII:1 of the Marrakesh Agreement, and found that the Panel did not err in rejecting China's “intrinsic relationship” test. The Appellate Body found that Article XII:1 of the Marrakesh Agreement, while providing the generalrule for acceding to the WTO, does not provide specific guidance on how individual terms of accession relate to the rights and obligations under the Marrakesh Agreement and the Multilateral Trade Agreements. The Appellate Body found that Paragraph 1.2 of China's Accession Protocol, which provides that the Protocol “shall be an integral part of the WTO Agreement”, serves to build a bridge between the package of Protocol provisions and the package of existing WTO rights and obligations. As a result, the Marrakesh Agreement, the Multilateral Trade Agreements, and China's Accession Protocol form a single package of rights and obligations that must be read together. Yet, such interpretation does not in itself answer the questions of whether there is an objective link between an individual provision in China's Accession Protocol and existing obligations under the Marrakesh Agreements and the Multilateral Trade Agreements, or whether China may rely on an exception provided for in those agreements to justify a breach of such Protocol provision. Such questions must be answered through a thorough analysis of the relevant provisions on the basis of the customary rules of treaty interpretation and the circumstances of the dispute.
Second, China appealed limited aspects of the Panel's interpretation and application of Article XX(g) of the GATT 1994, in connection with its findings that the export quotas at issue are not measures “relating to” the conservation of exhaustible natural resources, and are not “made effective in conjunction with” restrictions on domestic production or consumption. The Appellate Body found that, contrary to what China alleged, the Panel did not, either in its interpretation or in its application of Article XX(g), consider itself bound to limit its analysis to an examination of the design and structure of the measures at issue, to the exclusion of evidence of the effects of China's export quotas . Rather, the Panel rightly considered that it should focus on the measures' design and structure rather than on their effects in the marketplace. With respect to the “relating to” requirement, the Appellate Body found that the Panel did not err in its reasoning regarding the signals sent to foreign and domestic consumers by China's export quotas on rare earths and tungsten, or in rejecting China's argument that, by virtue of these signalling functions, China's export quotas on rare earths and tungsten “relate to” conservation. With respect to the “made effective in conjunction with” requirement, the Appellate Body found that the Panel erred to the extent that it suggested that “even-handedness” is a separate requirement that must be fulfilled in addition to the requirements expressly provided for in Article XX(g) , and to the extent that it suggested that Article XX(g) requires the burden of conservation to be evenly distributed, for instance in the case of export restrictions, between foreign consumers, on the one hand, and domestic producers or consumers, on the other hand. However, the Appellate Body also considered that any such error did not taint the remaining elements of the Panel's interpretation of the second clause of subparagraph (g). The Appellate Body also rejected multiple allegations by China that the Panel failed to comply with its duty, under Article 11 of the DSU, to make an objective assessment of the matter. Accordingly, the Appellate Body upheld the Panel's findings that China's export quotas on rare earths, tungsten, and molybdenum are not justified under Article XX(g) of the GATT 1994.
At its meeting on 29 August 2014, the DSB adopted the Appellate Body report and the panel report, as upheld by the Appellate Body report.
Reasonable period of time
At the DSB meeting on 26 September 2014, China stated that it intended to implement the DSB's recommendations and ruling in a manner that respects its WTO obligations. China added that it would need a reasonable period of time to do so.
restrictions were justified under this provision. Accordingly, the Panel concluded that China's trading rights restrictions breach its WTO obligations.
On 7 August 2014, the Appellate Body report was circulated to Members.
Summary of key findings
On 25 April 2014, China notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On the same day, China also appealed the panel report in dispute DS433. In addition, the United States had appealed the panel report in dispute DS431 on 8 April 2014, and China filed an other appeal on 17 April 2014 in the same dispute.
The Appellate Body consolidated the appellate proceedings in DS431, DS432, and DS433 before a single Appellate Body Division, harmonized the timetable of the three appellate proceedings, and held one oral hearing for all three proceedings. On 24 June 2014, upon expiry of the 60-day period specified in Article 17.5 of the DSU for DS432 and DS433, the Appellate Body informed the DSB that the Appellate Body Reports in all three consolidated appeals will be circulated to WTO Members no later than Thursday, 7 August 2014. The Appellate Body issued three Appellate Body Reports in one single document on 7 August 2014.
China did not appeal any of the above conclusions of the Panel, but appealed only limited aspects of the Panel's reasoning and certain intermediate findings. According to China, its appeal was intended to obtain clarification of the systemic relationship between specific provisions in China’s Accession Protocol, and other WTO agreements, and of the rights of WTO Members to protect and conserve their exhaustible natural resources.
First, China appealed an intermediate Panel finding in reaching its conclusion that Article XX of the GATT 1994 is not available to justify a breach of Paragraph 11.3 of China's Accession Protocol. China contended that the Panel erred in rejecting China's interpretation of Paragraph 1.2 of China's Accession Protocol and Article XII:1 of the Marrakesh Agreement as meaning that each provision of China's Accession Protocol is an integral part of the Marrakesh Agreement or of the Multilateral Trade Agreement to which that provision “intrinsically relates”.
The Appellate Body declined to accept China's interpretation of Paragraph 1.2 of China's Accession Protocol and Article XII:1 of the Marrakesh Agreement, and found that the Panel did not err in rejecting China's “intrinsic relationship” test. The Appellate Body found that Article XII:1 of the Marrakesh Agreement, while providing the generalrule for acceding to the WTO, does not provide specific guidance on how individual terms of accession relate to the rights and obligations under the Marrakesh Agreement and the Multilateral Trade Agreements. The Appellate Body found that Paragraph 1.2 of China's Accession Protocol, which provides that the Protocol “shall be an integral part of the WTO Agreement”, serves to build a bridge between the package of Protocol provisions and the package of existing WTO rights and obligations. As a result, the Marrakesh Agreement, the Multilateral Trade Agreements, and China's Accession Protocol form a single package of rights and obligations that must be read together. Yet, such interpretation does not in itself answer the questions of whether there is an objective link between an individual provision in China's Accession Protocol and existing obligations under the Marrakesh Agreements and the Multilateral Trade Agreements, or whether China may rely on an exception provided for in those agreements to justify a breach of such Protocol provision. Such questions must be answered through a thorough analysis of the relevant provisions on the basis of the customary rules of treaty interpretation and the circumstances of the dispute.
Second, China appealed limited aspects of the Panel's interpretation and application of Article XX(g) of the GATT 1994, in connection with its findings that the export quotas at issue are not measures “relating to” the conservation of exhaustible natural resources, and are not “made effective in conjunction with” restrictions on domestic production or consumption. The Appellate Body found that, contrary to what China alleged, the Panel did not, either in its interpretation or in its application of Article XX(g), consider itself bound to limit its analysis to an examination of the design and structure of the measures at issue, to the exclusion of evidence of the effects of China's export quotas . Rather, the Panel rightly considered that it should focus on the measures' design and structure rather than on their effects in the marketplace. With respect to the “relating to” requirement, the Appellate Body found that the Panel did not err in its reasoning regarding the signals sent to foreign and domestic consumers by China's export quotas on rare earths and tungsten, or in rejecting China's argument that, by virtue of these signalling functions, China's export quotas on rare earths and tungsten “relate to” conservation. With respect to the “made effective in conjunction with” requirement, the Appellate Body found that the Panel erred to the extent that it suggested that “even-handedness” is a separate requirement that must be fulfilled in addition to the requirements expressly provided for in Article XX(g) , and to the extent that it suggested that Article XX(g) requires the burden of conservation to be evenly distributed, for instance in the case of export restrictions, between foreign consumers, on the one hand, and domestic producers or consumers, on the other hand. However, the Appellate Body also considered that any such error did not taint the remaining elements of the Panel's interpretation of the second clause of subparagraph (g). The Appellate Body also rejected multiple allegations by China that the Panel failed to comply with its duty, under Article 11 of the DSU, to make an objective assessment of the matter. Accordingly, the Appellate Body upheld the Panel's findings that China's export quotas on rare earths, tungsten, and molybdenum are not justified under Article XX(g) of the GATT 1994.
At its meeting on 29 August 2014, the DSB adopted the Appellate Body report and the panel report, as upheld by the Appellate Body report.
Reasonable period of time
At the DSB meeting on 26 September 2014, China stated that it intended to implement the DSB's recommendations and ruling in a manner that respects its WTO obligations. China added that it would need a reasonable period of time to do so.
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