China-Measures Related to Exportation of Various Raw Materials, Report of the Appellate Body

Article excerpt

I Introduction

On 30 January 2012, the Appellate Body of the World Trade Organization ('WTO') published its decision in relation to China--Measures Related to Exportation of Various Raw Materials. (1) The dispute was between China and the United States, Mexico and the European Union ('EU') ('the complainants'). (2) This case note examines the Appellate Body's findings on the applicability of art XX of the Ceneral Agreement on Tariffs and Trade 1994 (3) as an exception to para 11.3 of the Accession of the People's Republic of China. (4) Although the appeal also raised issues concerning the Understanding on Rules and Procedures Governing the Settlement of Ditputes (5) and the interpretation and application of arts XI-(2)(a) and XX(g) of CATT 1994, a discussion of these issues is beyond the scope of this case note.

The Appellate Body's discussion of the applicability of art XX of the CATT 1994 as an exception to para 11.3 of China's Accession Protocol provides much-needed guidance on whether the art XX exceptions may be invoked to exempt Members from obligations arising from agreements other than the CATT 1994. This case note argues that the Appellate Body took a somewhat limited textualist approach to this issue. The implications of such an approach are that there appears to be a presumption against Members relying on an exception under art XX of the GATT 1994 unless the accession protocol explicitly provides for such a possibility. Accordingly, states currently negotiating their accession protocols and intending to exempt themselves from an obligation using art XX of the CATT 1994 will need to make intentions clear in the text of the accession protocol itself.

II Overview of the Dispute

The Panel was established in response to complaints by the complainants regarding measures China had imposed on the exportation of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc ('raw materials'). The measures China had imposed that were the subject of the complaints included: export duties, export quotas, export licensing arrangements, and minimum export price requirements. The complainants asked the Panel to consider the consistency of China's measures on raw materials with arts VIII(1)(a), VIII(4), X(1), X(3)(a) and XI(1) of the CATT 1994, China's Accession Protocol and the Report of the Working Party on the Accession of China. (6) The Panel found substantially in favour of the complainants. China's appeal to the Appellate Body concerned issues of law and legal interpretations developed in the Panel Reports, China--Measures Related to the Exportation of Raw Materials. (7)

For the purpose of this case note, the main point of contention was whether China had violated its obligations under para 11.3 of China's Accession Protocol, which obliges China to eliminate all taxes and charges applied to exports (subject to two exceptions described below). China's main argument was that it was not in breach of its obligations under para 11.3 because it was able to invoke an exception to these obligations under art XX of the CATT 1994. Article XX prescribes exceptions to the obligations that parties to the CATT 1994 would otherwise be required to observe. The Appellate Body's central question with respect to this part of the dispute, then, was whether China could invoke art XX of the CATT 1994 to exempt itself from an agreement other than the CATT 1994.

III Appellate Body's Findings on the Applicability of art XX of the GATT 1994

A Was Para 11.3 of China's Accession Protocol 'Specific and Circumscribed'?

China submitted that the Panel had erred in its finding that China did not have recourse to the exceptions contained in art XX of the CATT 1994 in order to justify a violation of its export duty commitments in para 11.3 of China's Accession Protocol. (8) In support of its argument, China contended that the Panel had erred in its determination that there was no textual basis in China's Accession Protocol for invoking art XX in defence of a claim under para 11. …

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