WT/DS543/R/Add.1  
 
15 September  2020 
(20-6162) Page: 1/57 
  Original: English  
 
  
UNITED STATES — TARIFF MEASURES ON CERTAIN GOODS FROM CHINA  
REPORT OF THE PANEL  
Addendum  
 
This addendum  contains Annexes A to C to the Report of the Panel to be found in document  
WT/DS543/R . 
 
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 WT/DS543/R/Add.1  
 
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LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES OF THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of China  12 
Annex  B-2 Integrated executive summary of the arguments of the United States  20 
ANNEX  C 
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the argume nts of  Australia  42 
Annex  C-2 Integrated executive summary of the arguments of  Brazil  44 
Annex  C-3 Integrated executive summary of the arguments of  the European Union  46 
Annex C -4 Integrated executive summary of the arguments of Japan  49 
Annex C -5 Integrated executive summary of the arguments of  New Zealand  51 
Annex C -6 Integrated executive summary of the arguments of  Singapore  52 
Annex C -7 Integrated executive summary of the arguments of  Chinese Taipei  57 
 
 
 WT/DS543/R/Add.1  
 
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  ANNEX  A 
WORKING PROCEDURES OF THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
 
 WT/DS543/R/Add.1  
 
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  ANNEX  A-1 
WORKING PROCEDURES OF THE PANEL  
 
Adopted on 21 June 2019  
General  
 
1. (1) In this proceeding, the Panel shall follow the relevant provisions of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In addition, the 
following Working Procedures apply.  
(2) The Panel reserves the right to modify these procedures as necessary, after consultation 
with th e parties.  
Confidentiality  
2. (1) The deliberations of the Panel and the documents submitted to it shall be kept 
confidential. Members shall treat as confidential information that is submitted to the Panel 
which the submitting Member has designated as conf idential.  
(2) In accordance with the DSU, nothing in these Working Procedures shall preclude a party 
or third party from disclosing statements of its own positions to the public.  
(3) If a party submits a confidential version of its written submissions to  the Panel, it shall 
also provide a non -confidential summary of the information contained in its submissions that 
could be disclosed to the public. Non -confidential summaries shall be submitted no later than 
ten days after the written submission in questio n is presented to the Panel, unless a different 
due date is established by the Panel upon written request of a party showing good cause.  
(4) Upon request, the Panel may adopt appropriate additional procedures for the treatment 
and handling of confidential  information after consultation with the parties.  
Submissions  
 
3. (1) Before the first substantive meeting of the Panel with the parties, each party shall 
submit a written submission in which it presents the facts of the case and its arguments, in 
accorda nce with the timetable adopted by the Panel.  
(2) Each party shall also submit to the Panel, before the second substantive meeting of the 
Panel, a written rebuttal, in accordance with the timetable adopted by the Panel.  
(3) Each third party that chooses t o make a written submission before the first substantive 
meeting of the Panel with the parties shall do so in accordance with the timetable adopted by 
the Panel.  
(4) The Panel may invite the parties or third parties to make  additional submissions during 
the proceeding, including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.  
Preliminary rulings  
4. (1) If the United States considers that the Panel should make a ruling before the issuance 
of the Report that ce rtain measures or claims in the panel request or China's first written 
submission are not properly before the Panel, the following procedure applies. Exceptions to 
this procedure shall be granted upon a showing of good cause.    WT/DS543/R/Add.1  
 
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  a. The United States shall submit any such request for a preliminary ruling at the earliest 
possible opportunity and in any event no later than in its first written submission to 
the Panel. China shall submit its response to the request before the first substantive 
meeting of the Pa nel, at a time to be determined by the Panel in light of the request.  
 
b. The Panel may issue a preliminary ruling on the issues raised in such a preliminary 
ruling request before, during or after the first substantive meeting, or the Panel may 
defer a ruling  on the issues raised by a preliminary ruling request until it issues its 
Report to the parties.  
 
c. If the Panel finds it appropriate to issue a preliminary ruling before the issuance of its 
Report, the Panel may provide reasons for the ruling at the time t hat the ruling is 
made, or subsequently in its Report.   
 
d. Any request for such a preliminary ruling by the United States before the first meeting, 
and any subsequent submissions of the parties in relation thereto before the first 
meeting, shall be served o n all third parties. The Panel may provide all third parties 
with an opportunity to provide comments on any such request, either in their 
submissions as provided for in the timetable or separately. Any preliminary ruling 
issued by the Panel before the firs t substantive meeting on whether certain measures 
or claims are properly before the Panel shall be shared with all third parties.  
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary or procedural rulings dur ing the proceeding, and to the procedures that the Panel 
may follow with respect to such requests.  
Evidence  
5. (1) Each party shall submit all evidence to the Panel no later than during the first 
substantive meeting, except evidence necessary for purposes of rebuttal, or evidence 
necessary for answers to questions or comments on answers provided by the other party. 
Additional exceptions may be granted upon a showing of good cause.  
(2) If any new evidence has been admitted upon a showing of good cause, the Panel shall 
accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) If the original language of an exhibit or portion thereof is not a WTO working language, 
the submitting party or third party shall simultaneou sly submit a translation of the exhibit or 
relevant portion into the WTO working language of the submission. The Panel may grant 
reasonable extensions of time for the translation of exhibits upon a showing of good cause.  
(2) Any objection as to the accura cy of a translation should be raised promptly in writing, 
preferably no later than the next submission or meeting (whichever occurs earlier) following 
the submission which contains the translation in question. Any objection shall be accompanied 
by an expla nation of the grounds for the objection and an alternative translation.  The Panel 
may grant reasonable extensions of time for the submission of an alternative translation upon 
a showing of good cause.  
7. (1) To facilitate the maintenance of the record of  the dispute and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the 
course of the dispute, indicating the submitting Member and the number of each exhibit on its 
cover page. Exhibits submit ted by China should be numbered CHN -1, CHN -2, etc. Exhibits 
submitted by the United States should be numbered USA -1, USA -2, etc. If the last exhibit in 
connection with the first submission was numbered CHN -5, the first exhibit in connection with 
the next s ubmission thus would be numbered CHN -6.  
(2) Each party shall provide an updated list of exhibits (in Word or Excel format) together 
with each of its submissions, oral statements, and responses to questions.  WT/DS543/R/Add.1  
 
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  (3) If a party submits a document that has alrea dy been submitted as an exhibit by the 
other party, it should explain why it is submitting that document again.  
(4) If a party includes a hyperlink to the content of a website in a submission, and intends 
that the cited content form part of the official re cord, the cited content of the website shall be 
provided in the form of an exhibit.  
Editorial Guide  
8. In order to facilitate the work of the Panel, each party and third party is invited to make its 
submissions in accordance with the WTO Editorial Guide fo r Panel Submissions (electronic copy 
provided).  
Questions  
 
9. The Panel may pose questions to the parties and third parties at any time, including:  
(1) Before any meeting, the Panel will send written questions, or a list of topics it intends 
to pursue in questioning orally during a meeting. The Panel may ask different or additional 
questions at the meeting.   
(2) The Panel may put questions to the parties  and third parties orally during a meeting, 
and in writing following the meeting, as provided for in paragraphs 15 and 21 below.  
Substantive meetings  
 
10. The Panel shall meet in closed session.  
11. The parties shall be present at the meetings only when  invited by the Panel to appear before 
it.  
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each party shall have the responsibility for all members of its delegation and shall 
ensure th at each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties and third parties.  
13. Each party shall provide to the Pane l the list of members of its delegation no later than 
5.00 p.m. (Geneva time) three working days before the first day of each meeting with the Panel.  
14. A request for interpretation by any party should be made to the Panel as early as possible, 
preferabl y at the organizational stage, to allow sufficient time to ensure availability of interpreters.  
15. The first substantive meeting of the Panel with the parties shall be conducted as follows:  
(1) The Panel shall invite China to make an opening statement to present its case first. 
Subsequently, the Panel shall invite the United States to present its point of view. Before each 
party takes the floor, it shall provide the Panel and other participants at the meeting with a 
provisional written version of its state ment. If interpretation is needed, each party shall 
provide additional copies for the interpreters.  
(2) Each party should avoid lengthy repetition of the arguments in its submissions. Each 
party is invited to limit the duration of its opening statement to  not more than 60 minutes. If 
either party considers that it requires more time for its opening statement, it should inform 
the Panel and the other party at least 3 days prior to the meeting, together with an estimate 
of the expected duration of its statem ent. The Panel will accord equal time to the other party . 
(3) After the conclusion of the opening statements, the Panel shall give each party the 
opportunity to make comments or ask the other party questions.  WT/DS543/R/Add.1  
 
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  (4) The Panel may subsequently pose questions to the parties.  
(5) Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with China presenting its statement first. Before each party 
takes the  floor, it shall provide the Panel and other participants at the meeting with a 
provisional written version of its closing statement, if available.  
(6) Following the meeting:  
a. Each party shall submit a final written version of its opening statement no later 
than 5.00  p.m. (Geneva time) on the first working day following the meeting. At 
the same time, each party should also submit a final written version of any 
prepared closing s tatement that it delivered at the meeting.  
 
b. Each party shall send in writing, within the timeframe established by the Panel 
before the end of the meeting, any questions to the other party to which it wishes 
to receive a response in writing.  
 
c. The Panel sh all send in writing, within the timeframe established by the Panel 
before the end of the meeting, any questions to the parties to which it wishes to 
receive a response in writing.  
 
d. Each party shall respond in writing to the questions from the Panel, and t o any 
questions posed by the other party, within the time -frame established by the Panel 
before the end of the meeting.  
16. The second substantive meeting of the Panel with the parties shall be conducted in the same 
manner as the first substantive meeting with the Panel, except that the United States shall be given 
the opportunity to present its oral statement first. If the United States chooses not to avail itself of 
that right, it shall inform the Panel and the other party no later than 5.00pm (Geneva tim e) three 
working days day before the meeting. In that case, China shall present its opening statement first, 
followed by the United States. The party that presented its opening statement first shall present its 
closing statement first. The Panel may also a sk the parties to comment on each other's responses 
to written questions posed by the Panel following the second substantive meeting.  
Third party session  
 
17. Each third party may present its views orally during a session of the first substantive meeting 
with the parties set aside for that purpose.  
18. Each third party shall indicate to the Panel whether it intends to make an oral statement during 
the third -party session, along with the list of members of its delegation, in advance of this session 
and no later than 5.00  p.m. (Geneva time) three working days before the third -party session of the 
meeting with the Panel.  
19. (1) Each third party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each third party  shall have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties and third parties.  
20. A request for interpretation by any third party should be made to the Panel as early as 
possible, preferably upon receiving the working procedures and timetable for the proceeding, to 
allow sufficient time to  ensure availability of interpreters.  
21. The third -party session shall be conducted as follows:  
(1) All parties and third parties may be present during the entirety of this session.  WT/DS543/R/Add.1  
 
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  (2) The Panel shall first hear the oral statements of the third parties,  who shall speak in 
alphabetical order. Each third party making an oral statement at the third -party session 
shall provide the Panel and other participants with a provisional written version of its 
statement before it takes the floor. If interpretation of a third party's oral statement is 
needed, that third party shall provide additional copies for the interpreters.  
(3) Each third party should limit the duration of its statement to 10 minutes, and avoid 
repetition of the arguments already made in its submission. If a third party considers that 
it requires more time for its opening statement, it should inform the Panel and  the parties 
at least three days before the meeting, together with an estimate of the expected duration 
of its statement. The Panel will accord equal time to all third parties for their statements.   
(4) After the third parties have made their statements, the parties shall be given the 
opportunity to pose questions to any third party for clarification on any matter raised in 
that third party's submission or statement.  
(5) The Panel may subsequently pose questions to any third party.  
(6) Following the thir d-party session:  
a. Each third party shall submit the final written version of its oral statement, no later 
than 5.00  p.m. (Geneva time) on the first working day following the meeting.  
b. Each party may send in writing, within the timeframe to be establis hed by the Panel 
before the end of the meeting, any questions to a third party or parties to which it 
wishes to receive a response in writing.  
c. The Panel may send in writing, within the timeframe to be established by the Panel 
before the end of the meet ing, any questions to a third party or parties to which it 
wishes to receive a response in writing.  
d. Each third party choosing to do so shall respond in writing to written questions from 
the Panel or a party, within a timeframe established by the Panel before the end of the 
meeting.  
Descriptive part and executive summaries  
 
22. The description of the arguments of the parties and third parties in the descriptive part of the 
Panel report shall consist of executive summaries provided by the parties and thir d parties, which 
shall be annexed as addenda to the report. These executive summaries shall not in any way serve 
as a substitute for the submissions of the parties and third parties in the Panel's examination of the 
case.  
23. Each party shall submit an in tegrated executive summary. The integrated executive summary 
shall summarize the facts and arguments as presented to the Panel in the party's first and second 
written submissions, its oral statements, and if possible, its responses to questions following t he 
substantive meeting and its responses to the second set of questions and comments thereon 
following the second substantive meeting. The timing of the submission of the integrated executive 
summary shall be indicated in the timetable adopted by the Panel .  
24. The integrated executive summary shall be limited to no more than 30 pages.  
25. The Panel may request the parties and third parties to provide executive summaries of facts 
and arguments presented in any other submissions to the Panel for which a de adline may not be 
specified in the timetable.  
26. Each third party shall submit an integrated executive summary of its arguments as presented 
in its written submission and statement in accordance with the timetable adopted by the Panel. This 
integrated exe cutive summary may also include a summary of responses to questions, if relevant. 
The executive summary to be provided by each third party shall not exceed 6  pages. If a third -party WT/DS543/R/Add.1  
 
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  submission and/or oral statement does not exceed 6 pages in total, this ma y serve as the executive 
summary of that third party's arguments.  
Interim review  
 
27. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the P anel, in accordance 
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no 
later than at the time the written request for review is submitted.  
28. If no further meeting with the Panel is requested, each party ma y submit written comments 
on the other party's written request for review, in accordance with the timetable adopted by the 
Panel. Such comments shall be limited to commenting on the other party's written request for 
review.  
Interim and Final Report  
29. The interim report, as well as the final report before its official circulation, shall be kept strictly 
confidential and shall not be disclosed.  
Service of documents  
 
30. The following procedures regarding service of documents apply to all documents submitte d by 
parties and third parties during the proceeding:  
(1) Each party and third party shall submit all documents to the Panel by submitting them 
with the DS  Registry.  
(2) Each party and third party shall submit documents to the Panel in Microsoft Word format 
or in PDF format as an e -mail attachment, or if impract ical, on a CD -ROM or a DVD, by 
5.00 p.m. (Geneva time) on the due dates established by the Panel. Should there be any 
discrepancy between the Microsoft Word format and PDF format of the documents, the 
Word format shall constitute the final version of the p arty's submission. The electronic 
version of documents shall constitute the official version for the purposes of submission 
deadlines and the record of the dispute. Email of a document shall constitute electronic 
service on the Panel, the other party, and the third parties.  
(3) All emails to the Panel shall be addressed to DSRegistry@wto.org, and copied to other 
WTO Secretariat staff whose email addresses have been provided to the parties in the 
proceedings. If a CD -ROM/DVD is provided, it shall be filed wi th the DS Registry (office 
No. 2047) by 5:00 p.m. (Geneva time) on the due dates established by the Panel.  
(4) By 5:00 p.m. (Geneva time) on the next working day following the electronic submission, 
each party and third party shall submit one  (1) paper cop y of all documents it submits to 
the Panel, including the exhibits, with the DS  Registry (office No. 2047). If any documents 
are in a format that is impractical to submit as a paper copy, the party shall inform the 
Panel and the other party (and third part ies if appropriate) accordingly.  
(4) In addition, each party and third party is invited to submit all documents through the 
Digital Dispute Settlement Registry (DDSR) within 24 hours following the deadline for the 
submission of the electronic versions. If the parties or third parties have any questions or 
technical difficulties relating to the DDSR, they are invited to consult the DDSR User Guide 
(electronic copy provided) or contact the DS Registry at DSRegistry@wto.org.  
(5) Each party shall serve any docu ment submitted to the Panel directly on the other party. 
Each party shall, in addition, serve any submissions in advance of the first substantive 
meeting with the Panel directly on the third parties. A party or third party may serve its 
documents on anothe r party or third party by email or on a CD -ROM or DVD. Each party 
and third party shall confirm that copies have been served on the parties or third parties, 
as appropriate, at the time it provides each document to the Panel.  WT/DS543/R/Add.1  
 
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  (6) Each party and third party  shall submit its documents with the DS Registry and serve 
copies on the other party (and third parties if appropriate) by 5.00  p.m. (Geneva time) on 
the due dates established by the Panel.  
(7) As a general rule, all communications from the Panel to the p arties and third parties will 
be via email. In addition to transmitting them to the parties by email, the Panel shall 
provide the parties with a paper copy of the Interim Report and the Final Report.  
Correction of clerical errors in submissions  
31. The Pa nel may grant leave to a party or third party to correct clerical errors in any of its 
submissions (including paragraph numbering and typographical mistakes). Any such request should 
identify the nature of the errors to be corrected, and should be made pro mptly following the filing 
of the submission in question.  
 
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  ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of China  12 
Annex  B-2 Integrated executive summary of the arguments of the United States  20 
 
 WT/DS543/R/Add.1  
 
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  ANNEX  B-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF  CHINA  
I.             Measures at Issue and Claims  
1. The measures at issue in this dispute are the unilateral tariff measures taken by the United 
States against products imported from China:   
• the 25 percent additional duty imposed on approx imately $34 billion of imports (List 1) 
from China published by the Office of the United States Trade Representative (USTR) on 
20 June 2018 and entered into effect on 6 July 2018;  
• the 25 percent additional duty imposed on approximately $200 billion of imports (List 2) 
from China, initially applied at a rate of 10 percent which entered into effect on 
24 September 2018 and subsequently increased to 25 percent on 10 May 2019.  
2. China challenges these unilateral actions taken by the United States because they are in 
violation of Article II:1(a) and (b) and Article I:1 of the GATT 1994.  
II. The United States' Measures at Issue are Inconsistent with its Obligations under 
Article  II:1(a) and (b) of the GATT 1994  
3.  Article II:1(a) of the GATT 1994 obligates Members to extend to all other Members "treatment 
no less favourable" than that to which a Member bound itself in its Schedule of Concessions as 
annexed to the GATT 1994.  The levying of ordinary customs duties (OCDs) or other duties or char ges 
(ODCs) that are in excess of those set forth in a Member's Schedule is a violation of Article II:1(b) 
and results in "less favourable" treatment being extended to the imports on which that OCD or ODC 
is levied, violating Articles II:1(a) and (b) of the  GATT 1994.  
4. Although the GATT 1994 does not define "ordinary customs duties, " an evaluation of the 
ordinary meaning of its component terms suggests that OCDs are duties that are "normal " and not 
"unusual, " and that, as the Appellate Body found in China  — Auto Parts , accrue to the importer of 
goods exported from one Member to another "at the moment and by virtue " of importation.  Because 
the additional import duties imposed on List 1 and List 2 products are additional ad valorem  rates of 
duty collected b y U.S. Customs and Border Protection in the same manner as it collects OCDs, it is 
clear that the additional import duties are OCDs.  
5. In this case, even if the Panel were to conclude that the additional import duties are not OCDs, 
the additional import d uties would be "other duties or charges " that would need to be recorded in 
the United States' Schedule to the GATT 1994 (Schedule).  As the Appellate Body stated in India — 
Additional Import Duties , Article II:1(b) also prescribes the imposition of "all other duties or charges 
of any kind imposed on or in connection with importation " that would result in duties in excess of 
"the amounts imposed on the date of entry into force of the GATT 1994 .  . . as recorded and bound 
in the Schedules of Concessions annex ed to the GATT 1994. "1   
6. As demonstrated by Exhibit CHN -17,2 the United States' additional import duties are clearly 
"in excess of " the duties to which the United States bound itself in its Schedule, resulting in "less 
favourable " treatment than provi ded for in its Schedule, they violate Article II:1(a) and (b).  
7. Throughout this proceeding, the United States did not offer any substantive rebuttal to China's 
showing that the measures at issue are inconsistent with Article II:1(a) and (b) of the GATT  1994.   
 
1 Appellate Body Report, India – Additional Import Duties , para. 151.  
2 Exhibit CHN -17 shows clearly the bound rate, MFN rate, and rate after additional tariffs imposed by 
the U.S. for List 1 and List 2 products.  WT/DS543/R/Add.1  
 
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  III. The United States' Measures at Issue are Inconsistent with its Obligations under 
Article  I:1 of the GATT 1994  
8. Article I:1 of the GATT 1994 establishes most -favoured -nation treatment underlying the WTO 
Agreements, which obligates Members to e xtend any advantage, favour, privilege or immunity 
granted to a product of one Member to like products of all other Members.  Thus, a Member imposing 
additional duties on products from a single other Member, and not also applying the same duties to 
like pr oducts from all other Members, violates Article I:1 of the GATT 1994.  
9. The Appellate Body recognized in Canada – Periodicals  that where the only distinction between 
two products is the country of origin of the products, they are presumed to be like produ cts.  
Moreover, the Appellate Body has recognized that, in such circumstances, the traditional multi -
criteria analysis for determining "likeness " is unnecessary.  As a result, where two products are 
identical but -for their countries of origin, and only one  is subject to additional duties by a third 
Member, then that third Member would be violating the most -favoured -nation treatment by 
conferring an advantage to only one of the two products, and, therefore, would be violating 
Article  I:1 of the GATT 1994.  
10. Each Chinese product subject to the additional import duties is a "like" product from other 
Members not subject to those additional duties within the meaning of Article I:1 of the GATT 1994.  
By not imposing these additional duties on any Member other th an China, the United States has 
advantaged each like product of those Members.  In such circumstances, because the additional 
import duties grant an advantage within the meaning of Article I:1 of the GATT 1994 to all other 
Members other than China, the den ial of that same advantage immediately and unconditionally to 
China plainly violates Article I:1.  
11. Throughout this proceeding, the United States did not offer any substantive rebuttal to China's 
showing that the measures at issue are inconsistent with A rticle I:1 of the GATT 1994.   
IV. The United States has Failed to Demonstrate that a "Solution" has been Reached 
by the Parties within the Meaning of Article  12.7 of the DSU  
12. In an attempt to avoid dealing with its violations of Article I:1 and Article  II:1(a) and (b) of 
the GATT 1994, the United States instead unilaterally declares, without China's agreement, that the 
parties have resolved this dispute.   
13. Article 12.7 of the DSU directs the Panel to submit its findings unless the parties have 
devel oped a solution that is "mutually satisfactory."  China has repeatedly confirmed, however, that 
no "mutually satisfactory solution" to this dispute within the meaning of Article  12.7 has been 
reached.  The language of Article  12.7 expressly contemplates the parties  having reached a 
"solution" to, or having found a "settlement" of, the matter before the Panel, rather than one party 
making this determination unilaterally over the objections of another.  The U.S. interpretation 
ignores the term "mutually sat isfactory " in the first sentence of Article 12.7.  Also, notably, neither 
Article  12.7 nor Article  11 of the DSU authorizes the Panel to determine that a solution has been 
reached without the consent of both parties.  The "matter" before the Panel is defin ed by the claims 
set forth in China's Panel Request.  Whether the parties develop a mutually satisfactory solution to 
the dispute is distinct from the "matter" before the Panel.  
14. Furthermore, as China has explained, no "mutually agreed solution[]" has b een notified by 
the parties to the Dispute Settlement Body pursuant to Article  3.6 of the DSU, which is the sole 
means by which a panel may ascertain whether a "solution" within the meaning of Article  12.7 has 
been found.  The fact that the parties have no t submitted any notification pursuant to Article  3.6 is 
further evidence that no "solution" to this dispute within the meaning of Article  12.7 has been 
reached.    
15. China also does not agree that the Phase One Economic and Trade Agreement3 (Phase One 
Agreement) resolves the present dispute.  It has no legal relevance to the task before this Panel 
because the Phase One Agreement itself does not address the measures at issue, i.e. the additional 
 
3 Economic and Trade Agreement between the Government of the United States of America and the 
Government of the People's Republic of China, signed January 15, 2020, entered into force o n February 14, 
2020 (Exhibit US –33). WT/DS543/R/Add.1  
 
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  import duties in dispute, before this Panel.  Moreover, the additional import duties subject to this 
dispute remain in effect and remain a violation of Articles I:1 and II:1(a) and (b) of the GATT 1994.  
16. Therefore, China confirms that there is no mutually satisfactory solution to the dispute at issue 
agreed by t he parties, and the present dispute remains unresolved.  The Panel should reject the 
United States' flawed interpretation and proceed to issue the necessary findings to fully resolve this 
dispute.  
V. The United States has Failed to Rebut China's Showing that the 25  Percent Tariff 
Measure for List 2 Products is within the Panel's Terms of Reference    
17. The United States also argues that the 25 percent tariff measure for List 2 products is not 
within the terms of reference of the Panel because tha t measure was issued and took effect after 
the date the Panel was established.  This contention is meritless.  
18. China clearly stated in its Panel Request that the request "also concerns any modification, 
replacement or amendment to the measures identifi ed above, and any closely connected, 
subsequent measures."  Notably, the Notice issued by the USTR in which it increased the additional 
duties from 10 to 25 percent for List 2 products highlights that the nature of the 25 percent  tariff 
measure was to "modify the September 2018 action. "4  
19. In addition, in  its Panel Request, China specifically identified the increase of additional import 
duties from 10 to 25 percent ad valorem .  The 25 percent tariff measure thus falls squarely within 
the Panel's terms o f reference.  China's Panel Request provided the United States with precisely the 
information it needed to respond to China's case, including its contention of the subsequent increase 
to 25 percent on the products previously subject to the 10 percent tarif f.   
20. In contrast, China would be denied due process if the Panel finds the 25 percent tariff measure 
to be outside of the Panel's terms of reference because it would require China "to adjust its pleadings 
throughout dispute settlement proceedings in or der to deal with a disputed measure as a 'moving 
target.' "  The Appellate Body observed in Chile — Price Band System that a modification to a measure 
that does not change its "essence " falls within a panel's terms of reference.  In the present case, 
the "e ssence of the measure" did not change as the duties were imposed on the same tranche of 
tariffs targeting approximately $200 billion worth of goods.  The only change to the measure at issue 
is the level of duties, and the United States itself labelled the increase in additional import duties as 
a modification .  
21. Therefore, the Panel should conclude that the 25 percent tariff measure is within the Panel's 
terms of reference.  
VI. The United States has Failed to Establish a Prima Facie Case that the Measure s at 
Issue are Justified under Article  XX(a) of the GATT 1994  
22. Instead of attempting to directly rebut China's arguments, the United States makes a post 
hoc argument that its violations of Article II:1(a) and (b) and Article I:1 of the GATT 1994 are 
justified under Article XX(a) because they are "necessary to protect public morals."  But it is clear 
that these tariff measures are purely for economic objectives and irrelevant to public morals.  The 
United States has failed to establish a prima facie case for its justification under Article XX(a).  
Specifically, the United States has not shown:  (1) that the measure is "designed" to protect public 
morals; (2) that the measure is "necessary" to protect such public morals; and (3) that the measure 
is not appl ied in a manner that constitutes "arbitrary or unjustifiable discrimination" or a "disguised 
restriction on international trade."  
 
4 Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices Related to Technology 
Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 20,459 (9 May 2019) (Exhibit CHN -4). WT/DS543/R/Add.1  
 
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  A. The United States has Failed to Demonstrate that the Measures at Issue are 
Provisionally Justified under Article XX(a) of the GATT 1994  
1. The United States has Failed to Establish the Existence of a Valid Public 
Morals Objective  
23. Public morals were never mentioned when the tariff measures were imposed — this is a mere 
post hoc  declaration.  To the contrary, it was often s tated that the tariff measures were for economic 
objectives.  For example, on 7 April 2018, the day after the USTR published the proposed tariff 
measures on $50 billion worth of goods, the President reiterated the true purpose of the United 
States:  " The U nited States hasn't had a Trade Surplus with China in 40 years . . . .  The U.S. is 
losing $500 Billion a year, and has been losing Billions of Dollars for decades. Cannot continue !"5   
24. The United States reaffirmed the economic motivation behind the me asures in determining 
the scale and items to be included and excluded.  On 3 April 2018, the USTR stated that "the total 
value of imports subject to the tariff increase is commensurate with an economic analysis of the 
harm . . . to the economy. "  The key c onsideration in designing the product list subject to the tariff 
measures was not to protect "public morals " in the U.S., but to reduce the "likely impact on U.S. 
consumers, based on available trade data involving alternative country sources for each product. "6   
25. The United States seeks to persuade the Panel that it should not scrutinize whether the United 
States has put forward sufficient evidence of the existence of a "public morals" objective.  Instead, 
the United States considers that the Pane l should simply presume that the various criminal, civil, 
tort, and contract laws to which it cites "reflect[]" U.S. public morals.  The United States has not 
demonstrated that each of those laws embody alleged "public morals" that are implicated by the 
practices at issue.  The Panel should firmly reject this effort by the United States to circumvent its 
burden of proof.  Moreover, the United States' alleged "public morals" objective is nothing but a post 
hoc attempt to justify a purely economic objective, as evidenced by the multiple contemporaneous 
statements of U.S. officials regarding the economic objectives of the measures at issue.7 
26. The United States also seeks to persuade the Panel that a diverse range of entirely unproven 
"trade acts, policies, and practices" that it deems "unfair" are within the scope of Article  XX(a).  
However, as noted in US — Gasoline , Article XX "enumerates the various categories of government 
acts, laws or regulations which WTO Members may carry out or promulgate in pursuit  of differing 
legitimate state policies or interests outside the realm of trade liberalization. "  Notably, interpreting 
the term "public morals" in Article  XX(a) to encompass "unfair trade" would allow Members to 
circumvent the disciplines that Members hav e negotiated and agreed with respect to this particular 
concern, and would undermine the disciplines set forth in these agreements and potentially render 
them superfluous.  Thus, properly interpreted, the term "public morals" in Article  XX(a) must be 
under stood to exclude  economic concerns, including, but not limited to, economic concerns that 
implicate the trade -related disciplines of the covered agreements.  The Panel should therefore reject 
the U.S. defence under Article  XX(a) without engaging in further  examination of whether the U.S. 
measures are designed "to protect" public morals.  
27. In its second written submission, the United States admits that its measures were designed 
to pressure China into making various economic policy changes that allegedly w ill allow for "free and 
unfettered competition as the rule of trade" in China.8  The United States asserts that certain 
economic policies of China are contrary to U.S. economic policies and norms on unfair competition, 
as articulated in the Sherman Act and the Federal Trade Commission Act, which is consistent with 
the United States' contemporaneous statements regarding its economic objectives when the tariffs 
were imposed.  The implications of this admission are that the U.S. measures at issue were designed 
to advance economic interests, not to protect public morals.  
 
5 Donald Tru mp (@realDonaldTrump), Twitter (7 April 2018, 2:03 PM), 
https://twitter.com/realDonaldTrump/status/982680387116781568 (emphasis added).    
6 Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products, Office of the United 
States Trade Representative (3 April 2018) (Exhibit CHN -9). 
7 China's oral statement at the First Substantive Meeting, paras. 23 -29. 
8 United States' second written submission, para. 31.  WT/DS543/R/Add.1  
 
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  28. The United S tates has failed to provide factual evidence to fulfill its burden of proof for the 
identification of a valid public morals objective.  The U.S. alleged "public morals" objective is nothing 
but a post hoc  attempt to justify a purely economic objective.  
2. The United States has Failed to Establish that the Measures at Issue are Designed 
"to Protect" Public Morals  
29. Even if the Panel were to conclude incorrectly that the United States has demonstrated the 
existence of a valid "public morals" objective, the  U.S. measures are not designed "to protect" any 
such objective.   
30. The United States argues that "[a] measure may be necessary to protect public morals without 
being limited to a product that itself offends public morals ," i.e., that a Member may targe t any 
products in order to protect the claimed "public morals" objective, regardless of whether those 
products bear any relationship to that objective.  The U.S. interpretation of Article  XX(a) as 
encompassing measures that are not limited to products that  themselves offend public morals is 
incorrect as a matter of treaty interpretation, unsupported by the relevant jurisprudence concerning 
Article XX, and would set a dangerous precedent.  The plain meaning of "to protect" in Article XX(a) 
requires that the claimed public morals measure be designed to "guard against," "shield," "defend," 
etc. the "public morals" of the Member from some danger or source of offence.  A measure designed 
to restrict or deter the entry of specific products regardless  of whether th e products themselves 
offend public morals is not designed to shield the invoking Member's public morals from offence. The 
United States' argument is irreconcilable with the Appellate Body's observation in US — Shrimp  that 
"each of the exceptions in paragr aphs (a) to (j) of Article XX is a limited and conditional exception 
from the substantive obligations contained in the other provisions of the GATT 1994."  If any products  
can be embargoed to advance the alleged "public morals" objective, as the United Sta tes suggests, 
it would impermissibly expand Article XX(a) to encompass measures that have no nexus with public 
morals, defeat the specific objective pursued by that exception.  
31. The U.S. argument is also irreconcilable with the object and purpose of the  GATT 1994, 
pursuant to which Members made binding commitments to provide access to their markets to other 
Members on specified terms.  No Member would have entered into such commitments if it believed 
that another Member could restrict access to its marke t for any imported product, at any time, solely 
because it believed that in doing so, it could coerce a change in the exporting Member's domestic 
policies.  In this regard, China agrees with the European Union's assessment that:  
The obligations on market a ccess imposed by fundamental provisions of the GATT 
1994, such as Article XI or Article III could be eviscerated if a Member was allowed 
to invoke Article XX(a) in order to restrict imports of any products of its choice in 
order to induce compliance with a ny public moral standard, regardless of the 
connection between them.9 
32. The reason the United States has advanced this untenable interpretation of Article XX(a) is 
clear.  It is evident on the face of the U.S. measures that they are not designed to targ et products 
that embody conduct offensive to "public morals" concerns within the meaning of Article  XX(a), i.e. 
non-economic concerns.  Even accepting, arguendo , that the term "public morals" could encompass 
economic concerns, including the alleged "unfair " trade acts, policies, and practices, it is similarly 
evident that the U.S. measures are not designed to target products on the grounds that they contain 
content or embody conduct offensive to such alleged concerns.   
33. It is clear that the U.S. measure s are underpinned by economic concerns, not moral concerns.  
This is also clear from the USTR's approach in evaluating exclusions, which are granted in 
circumstances in which the "imposition of additional duties on the particular product would cause 
severe  economic harm " and the covered product can be sourced from a U.S. producer or third 
countries.  Together, the criteria for selecting products and evaluating requests for exclusions 
establishes that the U.S. measures are designed to punish China for allege d harm to the U.S. 
economy while avoiding causing economic harm to the U.S. consumers.  The United States has thus 
 
9 China second written submission, para. 41, quoting the European Union's response  to Panel question 
No. 5, para. 29.  WT/DS543/R/Add.1  
 
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  failed to establish that its measures target products embodying conduct offensive to "public morals" 
within the meaning of Article  XX(a).  
34. The United States' alternative argument, that there is a "clear nexus" between the products 
covered by the initial round of tariffs and the allegedly "unfair  trade" acts , policies and practices  that 
the measures are designed to combat, must be rejected as  factually unsupported and legally 
deficient.  First, the alleged "industrial policies and practices" do not constitute the morally offensive 
conduct within the meaning of Article XX(a), which is limited to non -economic concerns.10  Second, 
even if the Pa nel were to conclude otherwise, the United States offers no evidence to demonstrate 
that the products selected by the USTR "benefit from" any such policies or practices, other than 
some general statements by the USTR.  Third, even if the Panel were to find  that the United States 
had demonstrated, as a matter of fact, that certain covered products embody the " unfair trade " 
conduct that could  fall within the scope of Article XX(a), which China does not concede, that would 
be a function of the over -breadth of the U.S. measures.  As tariffs were imposed on virtually all 
imported products from China, it is possible that certain products theoretica lly may have benefited 
from the alleged "industrial policies and practices."  The overwhelming evidence demonstrates that 
it was the level of the tariffs and their economic effect, not the products selected, which drove the 
design of the measures.    
35. Significantly, the United States does not claim any nexus between the products targeted in 
the subsequent measure — the 10 percent duties that subsequently were increased to 25 percent 
on an additional $200 billion worth of imports  — and the asserted public  morals.  Because the 
measure is not directed at particular goods containing alleged morally offensive content, it is 
obviously not designed to protect any alleged "public morals" under Article XX(a).  
3. The United States has Failed to Establish that the M easures at Issue are 
"Necessary" to Protect Public Morals  
36. Regarding the "necessary" requirement, China first observes that the core U.S. argument for 
why its measures are "necessary" in fact has nothing to do with the necessity analysis conducted 
under  Article  XX(a).  Under the U.S. interpretation of "necessary," a Member can ratchet up duties 
on any product to any level for any length of time that the Member deems appropriate, regardless 
of whether the products contain or embody morally offensive conte nt or conduct .  This interpretation 
of "necessary" would render the necessity analysis meaningless.  
37. Properly conducted, the necessity analysis "involves a process of 'weighing and balancing' a 
series of factors, including the importance of the societa l interest or value at stake, the contribution 
of the measure to the objective it pursues, and the trade -restrictiveness of the measure."  A measure 
may contribute to a public morals objective where there is "a genuine  relationship of ends and means 
betwee n the objective pursued and the measure at issue."  The U.S. measures do not contribute to 
any "public morals" objective within the meaning of Article  XX(a), and are instead applied on the 
basis of the United States' economic objectives.  No "genuine relat ionship of ends and means" 
therefore exists between the U.S. measures and any valid "public morals" objective.  
38. Even if the Panel were to conclude, incorrectly, that a measure adopted to address "unfair " 
trade could theoretically be "necessary " under A rticle XX(a), the U.S. measures would still not be 
"necessary " for that purpose as there would again be no evidence of contribution.  The United States 
has merely asserted that it found certain products to "benefit from" policies that it alleges relate to 
"unfair" trade policies.  There is no evidence that USTR determined that the covered products 
embody any particular act, policy, or practice, including those that the United States alleges to be 
"unfair."  To the contrary, there is ample evidence that USTR  selected products on other grounds, 
including purported estimated harm to the U.S. economy, likely impact on U.S. consumers, and its 
view that China had "made clear that it would not take any steps to address the U.S. concerns."11     
39. In any event, w hatever marginal degree of contribution the Panel might find in relation to any 
theoretically valid "public morals" objective is outweighed by the trade restrictiveness of the U.S. 
measures.   The U.S. has imposed an additional 25 percent duties on products  covering over 6,800 
tariff subheadings worth an estimated $234 billion of Chinese imports.  The increases in duties have 
reduced the ability of Chinese imports to compete in the U.S. market by increasing their price relative 
 
10 Exhibit CHN -10, China's second written submission, paras. 45 -46. 
11 United States' response to Panel question No. 14, para. 61.  WT/DS543/R/Add.1  
 
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  to domestically –produced produ cts and imports from third countries not subject to the additional 
tariffs.  The U.S. measures are therefore severely trade -restrictive.  
40. The Appellate Body has recognized that there may be cases in which it is not necessary for a 
Member to propose alt ernative measures.  In US – Gambling , the Appellate Body emphasized that 
before turning to the question of an alternative measure, the question was whether the United States 
had made a prima facie  case that its measures were necessary.12  Both EC – Seal Products  and US 
– Tuna II  (Mexico)  observe in the context of the "necessity test" that there are circumstances in 
which "a weighing and balancing exercise would not require that a panel proceed to evaluate 
alternative measures."13  In US – Tuna II (M exico) , the Appellate Body stated in the context of 
Article  2.2 of the TBT (necessity test) that alternative measures may not be required when the 
challenged "measure is trade restrictive and makes no contribution to the achievement of the 
legitimate objec tive."14  
41. China maintains that due to the unique facts of this dispute, there is no requirement for China 
to present or the Panel to examine alternative measures.  As discussed repeatedly in this proceeding, 
the U.S. measures do not contribute to any "public morals objective" within the meaning of Article 
XX(a) because the United States imposed extremely restrictive measures on products chosen on the 
basis of the economic objectives unrelated to whether those products contain morally offensive 
content or embody morally offensive conduct.  The total absence of contribution to the public moral 
objective, combined with the overwhelming trade -restrictiveness of the measure, which extends to 
almost all imports from China, makes consideration of alternative m easures unnecessary.  
B. The United States has Failed to Demonstrate that the Measures at Issue are 
Justified under the Chapeau  of Article  XX of the GATT 1994  
42. In imposing the additional import duties only on Chinese products on grounds unrelated to 
whether those products contain morally offensive content or embody morally offensive conduct, the 
U.S. measures are inherently coercive, arbitrary, unjustifiable, and constitute a disguised restriction 
on trade.   
1. The United States has Failed to Demonstrate that the Measures at Issue do not 
Constitute a "Means of Arbitrary or Unjustifiable Discrimination"  
43. Pursuant to the chapeau  of Article  XX, a measure may not be applied in a manner that 
constitutes "arbitrary or unjustifiable discrimination between countries where the same conditions 
prevail."  Furthermore, a Member invoking Article  XX(a) must demonstrate that a "rational 
connection" exists between its measures and an objective falling within the scope of Article XX(a).  
Such a demonstration ensures that the Member is acting in good faith rather than engaging in "the 
abusive exercise" of the limited exceptions set forth in Article  XX. 
44. The United States has not established that the additional import duties are limited to Chinese 
products de monstrated to embody any particular conduct, let alone morally offensive  conduct within 
the meaning of Article  XX(a), therefore, their imposition is fundamentally arbitrary and unjustifiable.   
45. The lack of a rational connection between the U.S. measure s and the purported public morals 
objective reflects the true, coercive intent of the U.S. measures.  Despite the efforts of the Appellate 
Body in US — Shrimp  to emphasize the limitations imposed by the chapeau  on unilateral actions by 
a Member, the United  States continues to assert that nothing in the text of Article XX prohibits 
Members from using its measures to "induc[e] policy changes."15  China strongly disagrees.   
46. In US — Shrimp , the Appellate Body objected to the U.S. measure on the grounds th at it 
exerted a coercive effect on the policy decisions of foreign governments.  As the Appellate Body 
observed in evaluating the U.S. measure at issue in the US-Shrimp  dispute, "[p]erhaps the most 
conspicuous flaw in this measure's application relates to its intended and actual coercive effect on 
 
12 Appellate Body Report, US – Gambling , para. 310.  
13 Appellate Body Report, EC – Seal P roducts , fn. 1299 and para. 5.169; Appellate Body Report, US – 
Tuna II (Mexico), fn. 647.   
14 Appellate Body Report, US – Tuna II (Mexico) , fn. 647.   
15 United States' second written submission, paras. 64 -65. WT/DS543/R/Add.1  
 
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  the specific policy decisions  made by foreign governments, Members of the WTO."16 The coercive 
intent here is more obvious than in US — Shrimp .  The United States has expressly confirmed that 
the additional impor t duties are concerned with effectively "influencing China" to take "specific policy 
decisions."17  Moreover, the lack of a relationship between the U.S. measures, purported public 
morals objective, and the covered products confirms the true, coercive int ent of the U.S. measures.   
47. According to the United States' own post hoc  rationalization, it has applied its measures in 
order to coerce China into eliminating various alleged policies, not to prevent morally offensive 
products from entering the United  States.  The application of the United States' measures in this 
manner confirms that they are applied in a manner that results in unjustifiable discrimination.  None 
of the arguments presented by the United States under the chapeau  address these fundament al 
flaws.  
2. The United States has Failed to Demonstrate that the Measures at Issue do not 
Constitute a "Disguised Restriction on International Trade"  
48. Should the Panel proceed to examine whether the U.S. measures constitute a disguised 
restriction on international trade, China submits that the U.S. measures also violate the chapeau  on 
this basis.  The U.S. measures restrict international trade under the guise of a public morals measure.  
This is apparent from the fact that the measures do not restrict Chinese imports on the basis of their 
morally offensive content or morally offensive conduct.  Furthermore, the United States has 
repeatedly admitted that it has implemented the additional import duties for reasons that have 
nothing to do with the protecti on public morals, but rather to restrict trade with China in order to 
obtain the elimination of China's alleged "unfair" trade policies.  In this respect, the U.S. measures 
hardly qualify as "disguised" – the restrictions that have been imposed on essentia lly all Chinese 
products are blatantly motivated by economic objectives, which has been admitted publicly and 
repeatedly.  
49. The United States argues that because it adopted its measures in a "deliberate" manner 
following efforts to address China's so -called "unfair trade acts, policies, and practices" through other 
means, those measures are not arbitrary.  But the fact that the United States deliberately imposed 
restrictions on non -morally offensive products only confirms that the United States' measures  are 
applied in a manner inconsistent with the chapeau .  Making a deliberate choice to discriminate in an 
arbitrary manner does not render the resulting discrimination somehow not arbitrary.   
50. The Panel should therefore reject the United States' argume nt that its measures do not result 
in arbitrary or unjustifiable discrimination or a disguised restriction on international trade.  
VII. Conclusion  
51. The United States has taken unilateral action s against imports from China valued at $234 
billion in viola tion of Article I.1 and Article II.1(a) and (b) of the GATT 1994.  Throughout this 
proceeding, the United States did not offer any substantive rebuttal to China's showing that the 
measures at issue are inconsistent with the above rules.  Rather, the United  States unilaterally 
declared, without China's agreement, that the parties have resolved this dispute.  As China has 
repeatedly confirmed, no "mutually satisfactory solution" to this dispute within the meaning of 
Article  12.7 of the DSU has been agreed and  the present dispute remains unresolved.  Article 12.7 
of the DSU directs the Panel to issue the necessary findings to fully resolve this dispute.  The United 
States has resorted to a transparently post hoc  justification that its unilateral actions were ju stified 
under Article XX(a)  of the GATT 1994 .  For the reasons discussed at length before this Panel, the 
United States' argument fails to meet the requirements of Article XX(a) and the chapeau  of Article  XX 
of the GATT 1994 in all respects.  China therefo re respectfully requests that the Panel find that the 
United States' measures at issue are inconsistent with its obligations under the GATT 1994.  
 
 
 
16 Appellate Body Report, US – Shrimp , para. 161. 
17 United States' second written submission, para. 66.  WT/DS543/R/Add.1  
 
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  ANNEX B -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF U.S. F IRST WRITTEN SUBMISSION  
I.  INTRODUCTION  
The matters related to this dispute are currently subject to bilateral discussions between the 
Governments of China and the United States.  The parties are holding these discussions at multiple 
levels, including between the leaders of the two disputing parties.  It is those bilateral discussions, 
and not any possible findings to be adopted by the Dispute Settlement Body ("DSB"), that will res olve 
the important issues arising from China's unfair and harmful technology transfer policies, from the 
U.S. response to those policies, and from China's unilateral retaliation.   
Under these circumstances, the outcome of a dispute settlement proceedin g would be 
pointless, and, worse – a misuse by China of the dispute settlement system by trying to have the 
WTO side with China in support of its fundamentally unfair technology transfer policies.  As noted, 
China has already taken the unilateral decision that the U.S. measures cannot be justified under 
WTO rules, and on that basis, already imposed tariff measures on most U.S. goods.  Accordingly, 
addressing China's legal claims would not "secure a positive solution to [this] dispute," as China has 
already adopted the response that China unilaterally has determined is appropriate.   
Fundamentally, both the United States and China have recognized that this matter is not a 
WTO issue:  China has taken the unilateral decision to adopt aggressive industrial po licy measures 
to steal or otherwise unfairly acquire the technology of its trading partners; the United States has 
adopted tariff measures to try to obtain the elimination of China's unfair and distortive technology -
transfer policies; and China has chosen to respond – not by addressing the legitimate concerns of 
the United States – but by adopting its own tariff measures in an attempt to pressure the United 
States to abandon its concerns, and thus in an effort to maintain its unfair policies indefinitely.   
By taking actions in their own sovereign interests, both parties have recognized that this 
matter does not involve the WTO and have settled the matter themselves.  Accordingly, there in fact 
is no live dispute involving WTO rights and obligations.  Therefore, in light of each party's action 
settling the matter, the report of the Panel should "be confined" to a  brief description reporting that 
the parties have reached their own resolution, as provided for in Article 12.7 of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes  ("DSU").   
Even aside from the fact that the parties have settled the matter through their actions, were 
the Panel to examine China's contentions, the Panel would find that the U.S. measures at issue 
would be justified under WTO rules.   
The United States adopted the measures at issue in this dispute to combat China's 
longstanding policy and practice of using government interventions, coercion, and subterfuge to 
steal or otherwise improperly acquire intellectual property, trade secrets, technology, and 
confidential  business information from U.S. companies with the aim of advantaging Chinese 
companies and advancing China's industrial policy goals.  Although China's conduct is not addressed 
by current WTO rules, it is unfair and contrary to basic moral standards.  No WTO Member endorses 
forced technology transfer policies and practices such as those employed by China.   
Finally, the United States notes that one of the U.S. measures that China is challenging in this 
dispute is not within the Panel's terms of referenc e because it was issued and took effect after China 
requested the establishment of a panel.  Accordingly, for this additional reason, there is no legal 
basis for the Panel to examine or make any findings with respect to that measure.  WT/DS543/R/Add.1  
 
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  II.  FACTUAL BACKGROU ND 
In March 2018, the United States released a comprehensive report ("Section 301 Report") on 
China's policies relating to technology transfer, intellectual property, and other unfair trade acts.  
The Section 301 Report is over 200 pages in length, and is based on public testimony, public 
submissions, and other evidence.  The United States encourages the Panel to read the Report 
(provided as Exhibit US -1) in its entirety.  The Report supported the following conclusions.  
First, China uses foreign owne rship restrictions, such as joint venture requirements and 
foreign equity limitations, and various administrative review and licensing processes, to require or 
pressure technology transfer from foreign companies.   
Second , China's regime of technology regulations forces foreign companies seeking to license 
technologies to Chinese entities to do so on non -market -based terms that favor Chinese recipients.  
These rules do not apply to technology transfers occurring between two domestic Chinese 
companies.   
Third, China directs and unfairly facilitates the systematic investment in, and acquisition of, 
foreign companies and assets by Chinese companies to obtain cutting -edge technologies and 
intellectual property and generate the transfer of technology to Chinese companies.   
Fourth , China conducts and supports unauthorized intrusions into, and theft from, the 
computer networks of foreign companies to access their sensitive commercial information and trade 
secrets.   
In November 2018, the United Sta tes issued a 50 -page supplemental report.  The 
supplemental report explains that China has not fundamentally altered its unfair, unreasonable, and 
market -distorting practices that were the subject of the March 2018 report.  Indeed, certain 
practices, such as cyber -enabled theft of intellectual property, appear to have grown worse.  
A.  China's Retaliatory Measures on U.S. Goods  
Instead of taking steps to address the unfair acts and policies documented in the Section 301 
Report, China has imposed retaliat ory tariffs on approximately $110 billion in U.S. goods and 
reportedly taken other retaliatory actions against U.S. companies.  
First, on June 16, 2018, China issued State Council Customs Tariff Commission Public Notice 
on Additionally Imposing Tariffs  on $50 Billion of Imported Products Originating from the United 
States.   
Second , on August 8, 2018, China issued State Council Customs Tariff Commission Public 
Notice on Additionally Imposing Tariffs on $16 Billion of Imported Products Originating fr om the 
United States.   
Third, on September 19, 2018, China issued State Council Customs Tariff Commission Public 
Notice on Additionally Imposing Tariffs on Approximately $60 Billion of Products Originating from 
the United States.    
Fourth , on Augu st 23, 2019, China announced that would impose tariffs of 5 to 10 percent on 
U.S. goods with a trade value of $75 billion.   
In sum, instead of addressing its unfair trade acts, policies, and practices, China has increased 
tariffs on U.S. goods with an  annual trade value of approximately $110 billion and threatened 
additional retaliation to further protect the unreasonable acts, policies, and practices identified in 
the Section 301 Report.  China has openly stated that its retaliation was adopted in res ponse to the 
same increased tariffs that China purports to challenge in this WTO dispute.   
III. MEASURES AT ISSUE  
The measures that China raises in its request for panel establishment are additional duties 
that the United States implemented with respect to certain products from China on July 6, 2018, WT/DS543/R/Add.1  
 
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  and September 17, 2018.  In addition, China's First Written Submissi on purports to raise claims with 
respect to a third measure. This third measure (i.e., "Measure 3") was not included in China's request 
for panel establishment, and is not within the Panel's terms of reference.   
IV.  CHINA'S ATTEMPT TO OBTAIN DSB FINDINGS WHILE SIMULTANEOUSLY 
RETALIATING AGAINST MOST U.S. EXPORTS IS A MISUSE OF THE DISPUTE 
SETTLEMENT SYSTEM, AND THE PANEL'S REPORT SHOULD NOTE ONLY THAT THE 
PARTIES HAVE REACHED THEIR OWN SOLUTION   
Various provisio ns of the DSU describe the function, purpose, or aim of WTO dispute 
settlement.  China's request for this panel to issue findings on the U.S. tariff measures is inconsistent 
with the principles reflected in these provisions.  
There is no role for WTO di spute settlement where, as here, the parties to a dispute have 
reached their own solution.   This principle is reflected in the DSU, including in Article 12.7, which 
provides in relevant part that "[w]here a settlement of the matter among the parties to the  dispute 
has been found, the report of the panel shall be confined to a brief description of the case and to 
reporting that a solution has been reached."    
Article 3.2 of the DSU, second sentence, provides in part that "Members recognize that [the 
WTO dispute settlement system] serves to preserve the rights and obligations of Members under 
the covered agreements."   As the unfair trade acts, policies, and practices of China are not covered 
by existing "rights and obligations… under the covered agreement s", there are no such "rights and 
obligations" to be preserved through the dispute settlement process.  And with respect to the U.S. 
tariff measures, China has already taken the countermeasures that it itself has chosen; in these 
circumstances.  
Article 3.3 of the DSU provides that the "prompt settlement of disputes… is essential to the 
effective functioning of the WTO…"  Given that China has already taken every retaliatory measure 
that China sees fit to adopt, China's pursuit of DSB findings does nothi ng in terms of leading to a 
"prompt settlement".  
Article 3.4 of the DSU provides that "[r]recommendations or rulings made by the DSB shall 
be aimed at achieving a satisfactory settlement of the matter in accordance with the rights and 
obligations unde r this Understanding and under the covered agreements."  The United States has 
transparently explained that it has adopted the tariff measures to address unfair technology transfer 
policies of China that cannot be addressed under current WTO rules, and Chi na has openly retaliated 
by placing tariffs on most U.S. exports, and has taken other retaliatory measures as well.  In these 
circumstances, DSB findings on the U.S. tariff measures would not promote a satisfactory settlement 
of the matter. At most, DSB fi ndings would provide China with a rhetorical point in support of its 
efforts to maintain its unfair trade acts, policies, and practices, and would thus inhibit, rather than 
promote, a satisfactory settlement.  
Article 3.5 of the DSU states that solutio ns should not "impede the attainment of any 
objective" of the covered agreements.  At most, China might see any DSB findings against the U.S. 
measures as encouragement to prolong this dispute by maintaining its aggressive and trade 
distorting policies for as long as possible.  This result would be inconsistent with the fundamental 
objectives of the WTO Agreement and the GATT 1994, and thus – contrary to DSU 3.5 – would 
impede the attainment of the objectives of the covered agreements.   
Article 3.7 of t he DSU provides that, "[b]efore bringing a case, a Member shall exercise its 
judgement as to whether action under these procedures would be fruitful" and that "[t]he aim of the 
dispute settlement mechanism is to secure a positive solution to a dispute."  H ere, the facts and 
circumstances strongly indicate that China – in deciding to bring this dispute – did not fulfil its 
obligation to "exercise its judgement" that the procedures "would be fruitful" in terms of "securing 
a positive solution."  To the contra ry, China is well aware that this DSB proceeding will not contribute 
to the resolution of the issues arising from China's unfair trade acts, policies, and practices.   
Article 3.2 of the DSU provides, in part, that "[t]he dispute settlement system of t he WTO is 
a central element in providing security and predictability to the multilateral trading system."  The 
findings sought by China would not enhance the "security and predictability" of the multilateral WT/DS543/R/Add.1  
 
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  trading system but would rather undermine it by having the WTO side with China in support of its 
fundamentally unfair technology transfer policies.   
Article 3.7 of the DSU provides that the suspension of concessions or other obligations is a 
"last resort," and "subject to the authorization by the D SB of such measures."  China's first resort 
was to apply additional duties on goods of the United States "on a discriminatory basis vis -à-vis" the 
United States well before any request for panel establishment.  Furthermore, China has adopted 
these tariff m easures without any "authorization by the DSB of such measures."  
Article 3.10 of the DSU provides, in part, that "if a dispute arises, all Members will engage in 
these procedures in good faith in an effort to resolve the dispute."  China's hypocritica l invocation 
of WTO dispute settlement procedures can only be viewed as a cynical attempt to misuse the WTO 
system to try to obtain some rhetorical support for maintenance of its unfair, trade distorting 
measures not involving WTO disciplines. China is wel l aware that its request for a WTO panel to 
issue findings regarding the U.S. response to China's unfair policies will in no way advance a 
resolution of the dispute.   
In sum:  China already has taken self -help in the form of tariff measures, and other  retaliatory 
measures, affecting most U.S. exports.  At most, DSB findings on the U.S. tariff measures would 
provide China with a public relations point that China presumably would employ in an effort to 
maintain unfair and harmful technology transfer poli cies that are coercive to the viability of the 
multilateral trading system.  China's pursuit of this dispute cannot be seen as anything other than 
an attempted misuse of the system.   
Therefore, the Panel should follow the guidance provided in the last  sentence of Article 12.7 
of the DSU.  It provides: "Where a settlement of the matter among the parties to the dispute has 
been found, the report of the panel shall be confined to a brief description of the case and to reporting 
that a solution has been re ached."  Given this situation, the Panel should decline China's request 
that the WTO dispute settlement system insert itself into the ongoing interactions and discussions 
between the United States and China regarding China's unfair technology transfer poli cies by issuing 
a panel report with findings on the allegedly WTO -inconsistent U.S. tariff measures.  Instead, in 
accordance with the last sentence of Article 12.7 of the DSU, the Panel should issue a report that is 
"confined to a brief description of the case and to reporting that a solution has been reached."   
V. EVEN ASIDE FROM THE RESOLUTION FOUND BY THE PARTIES, WERE THE PANEL TO 
EXAMINE CHINA'S CONTENTIONS, IT WOULD FIND THE MEASURES AT ISSUE ARE 
JUSTIFIED UNDER ARTICLE XX(A) OF THE GATT 1994  
Were the Panel to examine China's contentions, it would find that the measures at issue are 
legally justified because they are "necessary to protect public morals" within the meaning of Article 
XX(a) of the GATT 1994.  
As explained below, the challenged me asures "protect public morals" within the meaning of 
Article XX(a) because (1) China's unfair trade acts, policies, and practices violate standards of right 
and wrong and; (2) the United States adopted the measures to address those unfair acts, policies, 
and practices.    
The measures at issue in this dispute "protect public morals" with the meaning of Article XX(a) 
because the United States adopted the measures to "obtain the elimination" of conduct that violates 
U.S. standards of rights and wrong, nam ely China's unfair trade acts, policies, and practices.  As 
noted, each WTO Member may seek to protect the public morals of its society.  
China – as a matter of state policy and practice – uses coercion and subterfuge to steal or 
otherwise improperly acquire  intellectual property, trade secrets, technology, and confidential 
business information from U.S companies with the aim of advantaging Chinese companies and 
achieving China's industrial policy goals.  China's policy and practice of state -sanctioned theft 
implicates "public morals" within the meaning of Article XX(a) because it violates prevailing U.S. 
"standards of right and wrong" as ref lected in the state and federal laws of the United States, under 
which the act of "theft" is universally deemed a criminal offense.   WT/DS543/R/Add.1  
 
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In sum, the unfair trade acts, policies, and practices detailed in the Section 301 Report clearly 
violate prevailing U .S. standards of right and wrong and thus implicate U.S. "public morals" within 
the meaning of Article XX(a) of the GATT 1994.  And, because the United States adopted the 
measures at issue to address ( i.e., "obtain the elimination of") such unfair trade acts, policies, and 
practices, the measures at issue "protect public morals" within the meaning of Article XX(a).  
China employs the unfair trade acts, policies, and practices detailed in the Section 301 Report 
to advance its "industrial policy" goals an d broader "economic objectives."  Therefore, it is reasonable 
to conclude that China will continue to pursue its unfair trade acts, policies, and practices while it is 
advantageous to China to do so, for example, until the economic costs of doing so begin to approach 
or outweigh the economic benefits.    
To protect U.S. interests in moral (right or wrong) economic behaviour, it is necessary for the 
United States to adopt measures that are capable of changing China's economic cost -benefit 
analysis. The m easures at issue in this dispute do just that by imposing significant tariff increases 
on Chinese products until China takes steps to eliminate the unfair trade acts, polices, and practices 
detailed in the Section 301 Report.  
Moreover, the United Stat es adopted the measures at issue after nearly a decade of trying to 
address China's unfair trade acts, policies, and practices.  That none of these efforts have proven to 
be durably effective further confirms the necessity of the measures at issue in this dispute.  
For the foregoing reasons, the Panel should find that the measures are issue are "necessary 
to protect public morals" within the meaning of Article XX(a) of the GATT 1994.  
The United States has not applied the measures at issue in a mann er inconsistent with the 
chapeau of Article XX because no other government is engaging in forced technology transfer policies 
and practices of the type or to the extent that China is, causing tens of billions of dollars of annual 
harm to the United States.  
Given the deliberate nature in which the United States proceeded before  adopting the 
measures at issue in this dispute, there is no credible basis to conclude that the United States has 
applied the measures in a " capricious, unpredictable, [or] inconsistent" (i.e., "arbitrary") manner.    
As noted, the United States adopt ed the measures at issue following nearly a decade  of trying 
to address China's unfair trade, acts, and policies through other means, including dialogue, 
admonishment, multilateral forums, bilateral mechanisms, and the pursuit of criminal charges 
against i ndividuals and entities affiliated with the Chinese government.  Then, the United States 
conducted a comprehensive eighth month investigation, resulting in the production of the 200 -page 
report that exhaustively documented China's unfair trade acts, polici es, and practices.  Even after 
the report was released in March 22, 2018, the United States continued to constructively engage 
China concerning the unfair trade acts, policies, and practices included in the investigation.  It was 
only after these engagemen ts with China failed, that the United States ultimately decided to adopt 
the measures at issue on July 6, 2018, and August 23, 2018, respectively.   
The measures at issue are not being applied in a manner that that constitutes a "disguised 
restriction o n international trade" because the United States has taken no steps to conceal the 
reasons for adopting the measures at issue.  
In sum, the Panel should find that the measures at issue are legally justified because they are  
(1) "necessary to protect p ublic morals" within the meaning of Article XX(a) of the GATT 1994; 
and(2) not being applied in manner inconsistent with the chapeau of Article XX of the GATT 1994.  
VI. MEASURE 3 IS NOT WITHIN THE SCOPE OF THIS DISPUTE   
The United States also explains in this Section that the Panel is legally precluded from 
examining and making findings on one of the measures at issue in this dispute – Measure 3.  Because 
that measure was  issued and took effect after the date this Panel was established,  the mea sure falls 
outside the Panel's terms of reference as set by the DSB.      WT/DS543/R/Add.1  
 
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China advances several arguments to support the view that Measure 3 falls within the Panel's 
terms of reference, notwithstanding that Measures 3 was issued and took effect after t he Panel was 
established.  All of China's arguments are without merit.   
China argues that Measure 3 is within the Panel's terms of reference because it modifies a 
measure identified in China's panel request, and because the panel request itself refers  to "any 
modification" of the measures identified therein.  Simply put, the DSU provides no support for the 
view that a measure not identified in a panel request can fall within a panel's terms of reference 
because it modifies a measure that is identified in a panel request.   
Contrary to China's argument, the Appellate Body's report in Chile – Price Band System does 
not support – much less confirm – the view that that a measure issued after the date of panel 
establishment can fall within a panel's term s of reference.  
The text of the DSU does not support China's suggestion that the inclusion of Measure 3 in 
the Panel's terms of reference is necessary "to secure a positive solution to the dispute."    
For the forgoing reasons, to the extent the Pa nel makes findings on the alleged WTO -
inconsistency of the U.S. tariff measures, the United States the Panel should find that Measure 3 
falls outside its terms of reference.  
VII. CONCLUSION  
For the foregoing reasons, the United States respectfully req uests that the Panel reject China's 
request for findings under Articles I and II of the GATT 1994 with respect to the allegedly WTO -
inconsistent tariff measures.  The United States instead requests that the Panel issue a report with 
a "brief description" o f the pertinent facts of the dispute and "reporting that a solution has been 
reached" by the parties, as prescribed by Article 12.7 of the DSU.  Were the Panel to examine China's 
contentions, the Panel should find that the U.S. measures are justified under  Article XX(a) of the 
GATT 1994, and that Measure 3 falls outside the Panel's terms of reference.   
 
EXECUTIVE SUMMARY OF THE U.S. OPENING STATEMENT AT THE FIRST SUBSTANTIVE 
MEETING OF THE PANEL  
As explained in our first written submission, China has a lready taken retaliatory tariff actions 
in response to the U.S. measures at issue in this dispute.  Therefore, it is clear that China has no 
serious intention or expectation of resolving the matter at issue through the WTO dispute settlement 
process.  The Panel in this dispute should not tolerate China's cynical misuse of the dispute 
settlement process.  
There is no legal basis for the Panel to issue any of the findings or recommendations requested 
by China because the Parties have already reached a "set tlement of the matter" under Article 12.7 
of the DSU.   
Second, even if the Panel were to entertain China's legal claims, it would find the U.S. tariff 
measures at issue are legally justified because they are "necessary to protect public morals" within  
the meaning of Article XX(a) of the GATT 1994.  
I. CHINA'S UNFAIR TRADE ACTS, POLICIES, AND PRACTICES  
On March 2018, the United States released a comprehensive report ("Section 301 Report") on 
China's policies relating to technology transfer, intellect ual property, and other unfair trade acts.  
The Report supported the following conclusions.  
First, China uses foreign ownership restrictions, such as joint venture requirements and 
foreign equity limitations, and various administrative review and lice nsing processes, to require or 
pressure technology transfer from foreign companies.  For example, China has uses such foreign 
ownership restrictions and related policies to compel foreign automakers to transfer technology and 
intellectual property to Chine se companies.   WT/DS543/R/Add.1  
 
- 26 - 
 
  
Second,  China's regime of technology regulations forces foreign companies seeking to license 
technologies to Chinese entities to do so on non -market -based terms that favor Chinese recipients.   
Third, China directs and unfairly facilitates the systematic inve stment in, and acquisition of, 
foreign companies and assets by Chinese companies to obtain cutting -edge technologies and 
intellectual property and generate the transfer of technology to Chinese companies.  For example, 
China's has used its outbound investm ent strategy to facilitate the acquisition of foreign integrated 
circuit (IC) and semiconductor technology by Chinese companies in support of China's industrial 
policy goals.   
Fourth , China conducts and supports unauthorized intrusions into, and theft  from, the 
computer networks of foreign companies to access their sensitive commercial information and trade 
secrets.  China has used cyber -enabled theft and cyber intrusions to serve its industrial policy 
objectives.  
As noted in the Update to the Section 301 Report, companies in Australia, Japan, the Europe 
Union, and South Korea have also been the subject of cyber -intrusions that appear traceable to the 
Chinese government.    
II. CHINA'S RETALIATORY MEASURES ON U.S. G OODS  
Instead of taking steps to address the unfair acts and policies documented in the Section 301 
Report and its Update, China has imposed retaliatory tariffs on approximately $110 billion in U.S. 
goods and reportedly taken other retaliatory actions a gainst U.S. companies.  
First, on June 16, 2018, China issued State Council Customs Tariff Commission Public Notice 
on Additionally Imposing Tariffs on $50 Billion of Imported Products Originating from the United 
States.   
Second , on August 8, 2018,  China issued State Council Customs Tariff Commission Public 
Notice on Additionally Imposing Tariffs on $16 Billion of Imported Products Originating from the 
United States.   
Third, on September 19, 2018, China issued State Council Customs Tariff Commi ssion Public 
Notice on Additionally Imposing Tariffs on Approximately $60 Billion of Products Originating from 
the United States.    
Fourth , on August 23, 2019, China announced that would impose tariffs of 5 to 10 percent on 
U.S. goods with a trade valu e of $75 billion.   
In sum, instead of addressing its unfair trade acts, policies, and practices, China has increased 
tariffs on U.S. goods with an annual trade value of approximately $110 billion and taken or 
threatened additional retaliation to furth er protect the unreasonable acts, policies, and practices 
identified in the Section 301 Report.  
China has openly stated that its unilateral retaliation was adopted in response to the same 
U.S. measures that China purports to challenge in this WTO disp ute.  China – of course – did not 
obtain DSB authorization before adopting these measures, as required under the DSU.   
III. THE PANEL SHOULD NOT ISSUE FINDINGS ON CHINA'S LEGAL CLAIMS BECAUSE 
THE PARTIES HAVE REACHED "A SETTLEMENT OF THE MATTER" WITHIN TH E 
MEANING OF ARTICLE 12.7 OF THE DSU  
The Panel should not make findings or recommendations on China's legal claims.  Through 
their actions, it is apparent that both Parties agree that these matters should be resolved outside of 
the WTO dispute settleme nt process.   
As noted, China suspended WTO concessions to the United States for the explicit purpose of 
retaliating against the US measures at issue. China did so without first obtaining authorization from 
the DSB to impose such countermeasures, as re quired under the DSU.    WT/DS543/R/Add.1  
 
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Furthermore, China and the United States have entered into high -level negotiations to resolve 
U.S concerns with China's technology transfer policies and China's concerns with the U.S. response.  
Most recently, the United States  reached Phase 1 of an agreement to resolve these matters.   
In sum, both parties agree that the matter involving U.S. concerns with China's technology 
transfer policies, and with China's concerns with the U.S. response, are to be addressed outside of 
the WTO system.  Applying the terms of Article 12.7 of the DSU, the parties are in mutual agreement 
that in terms of WTO rules and procedures, the solution is to take the matter outside of the WTO 
system.  In these circumstances, Article 12.7 provides that  "that report of the panel shall be confined 
brief description of the case and to reporting that a solution has been reached."  
Accordingly, the report of the Panel in this dispute should be confined to reporting that the 
Parties have reached their own  solution and should not include any examination of the China's legal 
claims.   
From a systemic point of view, a decision by this Panel to accede to China's request for legal 
findings would undermine dispute settlement mechanism by signaling that WTO m embers can ignore 
DSU procedures – by pre -emptively suspending WTO concessions whenever they feel that their WTO 
rights have been infringed – and still obtain DSB findings after the fact.    
IV. THE MEASURES AT ISSUE ARE JUSTIFIED UNDER ARTICLE XX(A) OF TH E 
GATT  1994  
The United States has shown that the measures at issue are legally justified because they are 
"necessary to protect public morals" within the meaning of Article XX(a) of the GATT 1994. As 
explained in the U.S. first written submission , the measures at iss ue in this dispute "protect public 
morals" with the meaning of Article XX(a) because the United States adopted them to "obtain the 
elimination" of conduct that violates U.S. standards of rights and wrong, namely various unfair trade 
acts, policies, and pra ctices engaged in by China.   
China's policy and practice of state -sanctioned theft and coercive trade practices implicate 
"public morals" within the meaning of Article XX(a) because it violates prevailing U.S. "standards of 
right and wrong" as reflect ed in the state and federal laws of the United States, under which the act 
of "theft" is universally deemed a criminal offense.   
The measures at issue aim to "protect" U.S. "public morals" in at least two ways.  
First, the measures protect U.S. pu blic morals by combatting conduct that is considered 
immoral under prevailing U.S. standards of right and wrong.   
Second , the measures also protect U.S. morals by seeking to prevent China's conduct from 
undermining U.S. moral standards, such as norms against theft and coercion.   If China is permitted 
to carry out its various unfair trade acts, policies, and practices without restraint, actors in the United 
States may come to believe that such conduct is "normal" and conclude that they have no choice 
but to emulate  such conduct to compete in the market, or succumb  to such conduct as pre -condition 
of accessing China's market.  
As the United States has explained, the U.S. tariffs measures at issue play a "necessary" role 
toward the goal of eliminating  China's unfair trade acts, policies, and practices by raising the cost of 
such practices and thereby reducing China's incentive to continue engaging in such conduct going 
forward.  
The Chinese products subject to additional tariffs under the July 6, 20 18 U.S. measure were 
selected precisely because those products benefit from the unfair trade policies documented in the 
Section 301 Report.    
The measures at issue are clearly "necessary" when evaluated under the factor -based test 
that the Appellate B ody has often applied to assess a measure's necessity for purposes of Article XX 
of the GATT 1994.  Such factors include (1) the relative importance the objective pursued by the 
measure; (2) the contribution of the measure to that objective; and (3) the tr ade-restrictiveness of 
the measure.  WT/DS543/R/Add.1  
 
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First, the measures at issue pursue the vitally important objective of upholding U.S. norms 
against theft and coercion that are threatened by China's unfair trade acts, policies, and practices.   
Second , the measures at issue make a substantial contribution to the objective or protecting 
U.S. public morals by raising the cost of such practices and reducing China's incentive to continue 
engaging in such conduct going forward.  The U.S. measures also targe t Chinese goods that benefit 
from these policies.  
The measure at issue further contribute to the objective of protecting public morals by 
signaling to U.S. citizens that China's trading conduct is so unacceptable and contrary to basic norms 
of fairness  that the United States government was compelled to take action by lowering trade in the 
Chinese products that may benefit from China's unfair trade policies.   
Third, the measures are not overly trade restrictive.  The tariffs are at moderate levels, and 
are calibrated to obtain the elimination of the unfair technology transfer policies.  
EXECUTIVE SUMMARY OF U.S. SECOND Written Submission  
I. INTRODUCTION  
As the United States has explained in its written and oral submissions, there is no legal basis  
for the Panel to issue the findings or recommendations requested by China because the Parties have 
reached a "settlement of the matter" within the meaning of Article 12.7 of the DSU.  And, even if 
the Panel were to examine the measures at issue, it would conclude that they are "necessary to 
protect public morals" and therefore legally justified under Article XX(a) of the GATT 1994.    
First, that a "settlement of the matter" has been reached is confirmed by objective facts on 
the record.  China asserts  that the Panel is "not permitted" to consider the objective evidence that 
a settlement has been reached.  China's position finds no support in the DSU and is affirmatively 
contradicted by Article 11 of the DSU.  Nor is there any support in the DSU for Chi na's assertion that 
a "settlement" within the meaning of Article 12.7 must be memorialized in the form of a "mutually 
agreed solution."  
Second , China does not even attempt to rebut the U.S. argument that the measures at issue 
are "necessary" within th e meaning of Article XX(a).  At any rate, the measures at issue in this 
dispute clearly satisfy the "designed to" and other "necessity" tests applied in previous panel and 
Appellate Body reports.   
Third, China does nothing to substantiate its new assertion that the conclusions set out in the 
Section 301 Report are "factually baseless."   
II. THE UNITED STATES HAS ESTABLISHED THAT THE PARTIES HAVE ARRIVED AT A 
"SETTLEMENT OF THE MATTER" WITHIN THE MEANING OF ARTICLE 12.7 OF THE 
DSU 
As the Unite d States has explained, the parties' agreement to settle this matter outside the 
WTO system is confirmed by objective facts on the record.  
First, China has already applied tariff measures to imports from the United States in excess 
of its WTO commitmen ts for the explicit purpose of retaliating against the measures for which it now 
seeks legal findings.  China, of course, did so without first obtaining the authorization from the DSB 
pursuant to the DSU.  China does not dispute the fact that it has alread y imposed retaliatory tariff 
measures in response to the U.S. measures at issue.  Nor does China dispute that these retaliatory 
measures remain in effect.  
Second,  instead of challenging China's retaliatory actions at the WTO, the United States has 
entered into high -level negotiations with China with the aim of resolving U.S. concerns with Chinese 
conduct documented in the Section 301 Report and China's concerns with the U.S. response ( i.e., 
the U.S. measures at issue).  WT/DS543/R/Add.1  
 
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Third, China's decision to pu rsue this dispute has been a pointless waste of WTO resources, 
given that China has already unilaterally imposed the only remedy that the DSB could potentially 
authorize: the suspension of the WTO concessions.   
In sum, the actions (and omissions) of b oth parties show that – as an objective matter – the 
parties have agreed to settle the matter at issue outside of the WTO system.  In these circumstances, 
Article 12.7 of the DSU commands that "the report of the panel shall be confined to a brief descripti on 
of the case and to reporting that a solution has been reached."  Accordingly, the Panel's report in 
this dispute must be limited in the manner prescribed in Article 12.7 of the DSU.  China's arguments 
to the contrary are without merit.   
China asser ts that the Panel is not "permitted" to objectively assess whether there is a 
"settlement" between the parties within the meaning of Article 12.7 of the DSU.  This assertion finds 
no support in the DSU.  
First, the argument that the Panel is precluded from making such an objective assessment is 
contradicted by the clear terms of the DSU.  Specifically, Article 11 of the DSU states that "a panel 
should  make an objective assessment of the matter before it, including an objective assessment of 
the facts of  the case and the applicability of and conformity with the relevant covered agreements."    
Second , nothing in the text of Article 12.7 of the DSU itself suggests that panels are not 
permitted to objectively assess whether the parties to a dispute have  settled the matter at issue.  
Article 12.7 simply refers to a circumstances where a "settlement of the matter among the parties 
to the dispute has been found."   
Third, Article 7.1 of the DSU does not support China's view that a panel may not objecti vely 
assess whether a "settlement" exists within the meaning of Article 12.7 of the DSU.  Indeed, 
Article  7.1 is concerned with a wholly different issue – namely, the scope of the "matter referred to 
the DSB."  China's reliance on Article 7.1 is therefore misplaced.  
China argues that the parties have not settled the matter within the meaning of Article 12.7 
(last sentence) because the parties have not concluded a "mutually agreed solution" within the 
meaning of Article 3.6 of the DSU, or notified such  a solution to the DSB.   This argument is without 
merit.   
While a "settlement among the parties" could be memorialized in the form of a "mutually 
agreed solution" and notified under Article 3.6, nothing in the text of Article 12.7 of the DSU 
mandate s that such a notification is a precondition for the operation of Article 12.7.  Accordingly, 
there is no legal support for China's suggestion that Article 12.7 of the DSU (last sentence) does not 
apply absent a "mutually agreed solution" and a notificatio n thereof under Article 3.6 of the DSU.   
For the foregoing reasons, the Panel should make an objective assessment of whether a 
"settlement has been found" within the meaning of Article 12.7 of the DSU.   
III. THE UNITED STATES HAS ESTABLISHED THAT TH E MEASURES AT ISSUE ARE 
JUSTIFIED UNDER ARTICLE XX(A) OF THE GATT 1994  
China's view that the measures at issue cannot qualify for coverage under Article XX(a) 
because they (1) do not target morally offensive products per se and (2) are aimed at induci ng China 
to adopt certain policy changes, finds no support in the text of Article XX(a) or the reports cited by 
China.  In addition, China makes no attempt to substantiate its assertion that the allegations set out 
in the Section 301 Report are "factually baseless."  To the contrary, the hundreds of sources on 
which the Section 301 Report's findings are based are highly credible.        
As the United States has explained, the measures at issue in this dispute "protect public 
morals" within the meaning of Article XX(a) because the United States adopted the measures to 
"obtain the elimination" of conduct that violates U.S. standards of right and wrong, namely China's 
unfair trade acts, policies, and practices as documented in the Section 301 Report.   
China's policies and practices in this regard can be summarized as state -sanctioned theft and 
misappropriation of U.S. technology, intellectual property, and commercial secrets.  China's conduct WT/DS543/R/Add.1  
 
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  implicates "public morals" within the meaning of Article  XX(a) because it violates prevailing U.S. 
"standards of right and wrong" as reflected in the state and federal laws of the United States, under 
which the act of "theft" is universally deemed a criminal offense.   
China's outbound investment policies result in conduct inconsistent with U.S. norms on unfair 
competition, as reflected in U.S. laws against anti -competitive behaviour, such as the Sherman Act 
and the Federal Trade Commission Act.   
The United States does not simply view unfair competiti ve practices as merely a detriment to 
business and innovation.  Ultimately, these practices are viewed as a threat to the "preservation of 
our democratic political and social institutions".  Accordingly, certain violations of these laws, such 
as monopoliza tion, are even criminalized.   
In other words, the United States imposes constraints on behavior based on national concepts 
of right and wrong to ensure market -oriented outcomes.  U.S. law specifically does not permit 
unreasonable anti -competitive beh avior to determine winners and losers in the marketplace.  The 
Chinese government, however, undermines U.S. public morals relating to fair competition through 
its outbound investment policies.  
The U.S. market is based on fundamental concepts of fair competition and fair play, which are 
reflected in U.S. unfair competition and antitrust laws.  China's government -backed investment 
strategies and market share goals undermine those notions of fair competition and fair play.  As 
such, they are inconsistent  with U.S. public morals within the meaning of Article XX(a).  For the 
United States not to take action against China's unfair policies and practices would mean the United 
States is abandoning the "free and unfettered competition as the rule of trade" stan dard that 
underpins the U.S. economy and, ultimately, our "democratic political and social institutions".    
The Chinese practices described in the Section 301 Report threaten to undermine U.S. moral 
standards and norms against theft, misappropriation , and unfair competitive practices.  If China is 
permitted to carry out its various unfair trade acts, policies, and practices without restraint, U.S. 
citizens, businesses, and other entities may come to believe that such conduct is "normal" and 
conclude t hat they have no choice but to emulate such conduct to compete in the U.S. market, or 
succumb to such conduct as a pre -condition of accessing China's market.   
Further, there is clear nexus between the product coverage of the U.S. measures at issue an d 
the objective of protecting public morals by persuading China to abandon the unfair trade acts, 
policies, and practices documented in the Section 301 Report.  The Chinese products subject to 
additional duties under the measure that took effect on July 6,  2018 (i.e., Measure 1) were found to 
benefit from the trade policies documented in the Section 301 Report, including "Made in China 
2025."   This linkage is also evident with respect to U.S. tariff measures that took effect on 
September 24, 2018 (i.e., Me asure 2).  The United States adopted the additional duty measures 
that took effect on September 24, 2018, after China "made clear —both in public statements and in 
government -to-government communications —that it [would] not change its policies" and instead  
"responded …by increasing duties on U.S. exports to China."   
The measures at issue are "necessary" because, absent such measures, China would have 
little incentive to abandon the unfair trade acts, policies, and practices detailed in the Section 301  
Report.  This reality is borne out by the economic objectives that China seeks to achieve by engaging 
in the conduct documented in the Section 301 Report and other aspects of China's behaviour over 
the last decade.  
First, as explained, China engages  in the conduct described in the Section 301 Report to 
advance its "industrial policy" goals and broader "economic objectives."  Therefore, it is reasonable 
to conclude that China will continue to pursue its unfair trade acts, policies, and practices while it is 
advantageous to China to do so – that is, until the economic costs of doing so b egin to approach or 
outweigh the economic benefits.   
Second , the necessity of the measures at issue is further confirmed by the United States' prior 
efforts – over more than a decade – to address China's unfair trade acts and policies through other 
means, without success.  That none of these efforts have proven to be durably effective further 
confirms the necessity of the measures at issue in this dispute.  WT/DS543/R/Add.1  
 
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Third, it was only after the United States adopted the measures at issue that China agreed  to 
enter into negotiations with the United States to address the concerns documented in the Section 
301 Report.  While China has yet to address the entirety of U.S. concerns, such negotiations are 
reasonably viewed as predicate ( i.e., "necessary") step to  the actions that China may eventually 
take to address U.S. concerns in earnest.  
In view of the United States, the arguments above suffice to support a prime facie  case that 
the measures at issue are justified under Article XX(a).  The measures also satisfy the various tests 
that the Appellate Body and some panels have applied to assess the "necessity" of a measure for 
purposes of Article XX.  
The measures at issue are "designed to" protect public morals for purposes 
of Article XX(a)  
In some p rior disputes, the Appellate Body and panels have examined whether a measure is 
designed  to protect public morals before proceeding to an analysis of whether the measure is 
"necessary" to do so within the meaning of Article XX(a).  To the extent that the P anel opts to 
analyse whether the U.S. measures are "designed to" protect public morals as part of its 
Article  XX(a) analysis, it would find that the measures at issue in this dispute are clearly "designed 
to" protect public morals based on the reasoning us ed in prior reports.    
In  Colombia –Textiles  the Appellate Body described the evaluation of whether a measure is 
designed protect public morals as "not…particularly demanding" and reasoned that a measure meets 
this threshold so long as the measure's  "design reveals that [it] is not incapable" of protecting public 
morals.  Further, the Appellate Body reasoned that a measure is demonstrably "incapable" of 
protecting public morals if there is "no relationship between the measure and protection of public  
morals."   
There is no credible basis to conclude that the U.S. measures at issue in this dispute are 
"incapable" of protecting public morals given the clear "relationship" between those measures and 
the United States objective protecting public mora ls, i.e. by persuading China to abandon the unfair 
trade acts, policies, and practices detailed in the Section 301 Report.   
First, as noted, the United States adopted the measures at issue with the explicit goal of 
eliminating  the unfair trade acts, policies, and practices documented in the Section 301 Report.   
Second , as explained, the tariff measures at issue are structured so as to target particular 
types of goods that benefit from the conduct detailed in the Section 301 Report  
Third, the tariff measures raise the economic cost that China will incur so long as it maintains 
the unfair trade acts, policies, and practices documented in the Section 301 Report,  and thus gives 
China an incentive to abandon the unfair trade acts, policies, and  practices documented in the 
Section 301 Report.   
For the reasons explained above, there is a clear relationship between the U.S. measures at 
issue and the objective of protecting public morals, and thus no basis to conclude the measures at 
issue are "incapable" of achieving this objective.  Accordingly, the measures at issue meet the 
threshold test of being "designed to" protect public morals for purposes of Article XX(a).  
The measures are issue are "necessary" when evaluated under the 
"holistic" test that the Appellate Body and other Panels have used  to assess 
a measure's necessity for purposes of Article XX  
Further, the measures at issue are clearly "necessary" when evaluated under the factor -based 
test certain past reports have applied to assess a measure's necessity for purposes of Article XX of 
the GATT 1994.   
First, the measures at issue pursue the vitally important objective of upholding U.S. norms 
against theft and coercion that are threatened by China's unfair trade acts, policies, and practices.  
Such values are of tremendous importance to U.S. society and the functioning of the U.S. economy.   WT/DS543/R/Add.1  
 
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Second , the measures at issue make a substantial contribution to the objective of protecting 
U.S. public morals.  As explained, the U.S. tariff measures at issue play a "necessary" role toward 
the goal of eliminating China's unfair trade acts, policies , and practices by raising the cost of such 
practices and reducing China's incentive to continue engaging in such conduct going forward.   
Third, the measures are not overly trade restrictive.  The measures at issue do not impose a 
ban on the import o f any Chinese products.  The tariffs are at moderate levels, and are calibrated 
to obtain the elimination of the conduct documented in the Section 301 Report.   
Fourth , the United States has long since exhausted reasonably available alternatives to th e 
measures at issue.  As noted, the United States adopted the measures at issue after a decade  of 
trying to address China's conduct though other means.  That none of these prior efforts have proven 
durably effective further demonstrates the necessity of th e measures at issue.   
IV. CHINA HAS FAILED TO REBUT THE UNITED STATES' PRIMA FACIE SHOWING THAT 
THE MEASURES AT ISSUE ARE JUSTIFIED UNDER ARTICLE XX(A)  
China argues that the measures at issue fall outside the scope of Article XX(a) because they 
(1) do not target morally offensive products per se  and (2) are aimed at inducing China to adopt 
certain policy changes.  China's arguments find no support in the text of Article XX(a) or the reports 
cited by China.  China makes no attempt to substantiate its a ssertion that the findings in the 
Section  301 Report are "factually baseless.   
As a legal matter, there is no foundation to China's assertion that a measure cannot fall within 
the scope of Article XX(a) unless the measure applies to products that emb ody "morally offensive 
content or conduct."   And, at any rate, the U.S. measures at issue do target products that benefit 
from the morally problematic conduct detailed in the Section 301 Report.  
First, by its terms, Article XX(a) refers to measures that are "necessary to protect public 
morals," not measures necessary to protect public morals from morally offensive products.  Nothing 
in the text of Article XX(a) indicates that a measure justified under that provision "must" apply to 
any particular pro duct, much less products that are themselves inherently morally offensive.   
Further, the United States' argument that the measures are "necessary" is not contingent on 
the application of those measures to any particular class of morally offensive products.  Rather, the 
measures are necessary because it is reasonable to conclude th at China will continue to pursue its 
unfair trade acts, policies, and practices while it is advantageous to China to do so.   
Second , as a factual matter, the measures at issue do – in fact – apply to products that 
embody morally offensive conduct.  A s the United States has explained, the Chinese products subject 
to additional duties under the measure that took effect on July 6, 2018 ( i.e., Measure 1) benefit 
from the trade policies documented in the Section 301 Report, including "Made in China 2025."     
China's argument that Article XX(a) cannot justify measures that seek to encourage changes 
in another Member's policies is without merit.  
First, nothing in the text of Article XX(a) supports the view that Article XX(a) excludes 
measures aime d at inducing policy changes in other WTO Members.  B XX(a) provides that "nothing 
in the GATT 1994 shall be construed to prevent the application of any measure necessary to protect 
public morals."  Therefore, so long as a Member can establish that a measu re that aims to influence 
the policies or practices of another Member are "necessary to protect public morals," such a measure 
can be justified under Article XX(a).   
Second , the argument advanced by China has been considered and rejected in past repo rts.  
As the US – Shrimp (AB)  report observed, measures that seek to promote policy changes in another 
WTO Member can be justified under the subparagraphs of Article XX.  Therefore, China's contention 
that the measures at issue are categorically unjustifie d under Article XX(a) because they are aimed 
at "influencing China" to take "specific policy decisions" does not comport with the understanding of 
Article XX reflected in past reports .  WT/DS543/R/Add.1  
 
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Third, China's attempt to analogize between the measures at issue  in US – Shrimp  and the 
measures at issue in this dispute fails.  In US – Shrimp , the Appellate Body found that the measures 
at issue constituted "unjustifiable" and "arbitrary discrimination" within the meaning of the chapeau 
of Article XX because they co mpelled other WTO Members to adopt a "specific" and "comprehensive" 
regulatory regime as prescribed by the United States, without  allowing for any "comparable" 
regulatory schemes that would also achieve the United States' legitimate resource conservation 
objectives.  
In contrast, the measures at issue in this dispute are not aimed at encouraging China to adopt 
any particular regulatory regime, much less a regulatory regime or model prescribed by the United 
States.  Rather, the United States adopted the  measures at issue to obtain the elimination of specific 
policies and practices affecting the United States as documented in the Section 301 Report, including 
forced technology transfer and cyber -enabled theft of U.S. technologies.  Nothing in the 
U.S. measures at issue ( contra the measures at issue in US – Shrimp ) prescribe any particular 
regulatory regime that China must implement to address U.S. concerns.   
China's contention that the findings in the Section 301 Report are "factually baseless" is 
ridiculous on its face.  As explained, the United States issued the Section 301 Report following a 
comprehensive eighth month investigation, resulting in the production of the 200 -page document 
that exhaustively detailed China's unfair trade acts, policies, and practices.  The evidence collected 
during the investigation includes public media reports, journal articles, over 70 written submissions, 
and witness testimony from representatives of U.S. companies, workers, trade and professional 
associations, think tanks, as well as law firms and representatives of trade and professional 
associations headquartered in China.  That China may contest some or all of the Report's findings is 
not remarkable.  But the suggestion that its findings are "factually baseless" is  patently absurd.   
V. CONCLUSION  
The United States respectfully reiterates its request that the Panel reject China's request for 
findings respect to the allegedly WTO -inconsistent tariff measures.  The United States instead 
requests that the Panel is sue a report with a "brief description" of the pertinent facts of the dispute 
and "reporting that a solution has been reached" by the parties, as prescribed by Article 12.7 of the 
DSU.  And, were the Panel to examine China's contentions, the Panel should f ind that the U.S. 
measures are justified under Article XX(a) of the GATT 1994.  
EXECUTIVE SUMMARY OF THR U.S. OPENING STATEMENT AT THE SECOND SUBSTANTIVE 
MEETING OF THE PANEL  
I. INTRODUCTION  
This dispute is best viewed as an attack by China on the legitimacy and relevance of the WTO 
itself in the current, real -world trading order.  Fortunately the text of the WTO Agreement contains 
two alternative routes for the Panel to avoid this harm to the  WTO.  Were the Panel to take either 
of these approaches, the WTO system would be safeguarded, and the parties would remain in a 
posture of offsetting actions that are undoubtedly contributing to a deeper and more intensive 
dialogue of the conditions and a ctions needed for fair trading conditions.  
The irrelevance of this dispute in terms of real world of economics and trade is further 
confirmed by developments in the last few weeks.  On January 15, 2020, the United States and 
China signed an historic and enforceable Phase One economic and trade agreement.  Covering all 
commitments, the agreement establishes a strong dispute resolution system that ensures prompt 
and effective implementation and enforcement.  In connection with reaching this agreement, t he 
United States agreed to modify its Section 301 tariff actions in a significant way.  Those tariff 
reductions took effect on February 14, which as noted was the day of entry into force of the 
agreement.   
This Phase One Agreement, as well as upcomin g negotiations on a Phase Two Agreement, 
represents the real world status of the U.S. -China economic and trade relationship, including the 
role that additional duties imposed by either party play in that relationship.  And what does the 
Phase One Agreement  say about this dispute, or the U.S. additional duties that China challenges in 
this dispute?  Nothing.  And why is that?  Because, as the United States has explained throughout WT/DS543/R/Add.1  
 
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  this dispute, both parties have decided to handle the additional duties impose d by the other side on 
a bilateral basis, adjusting them in accordance with the status of the bilateral negotiations.   
Moreover, if as China requests, the Panel were to reject the valid U.S. Article XX(a) defense, 
the result would go beyond making th e WTO appear irrelevant.  Such findings would make the WTO 
appear counterproductive and even harmful to furthering a fair and sustainable system of world 
trade.  It is essentially undisputed that China has adopted the unfair and harmful practices identifie d 
in the U.S. Section 301 report, and that these practices damage not just the United States, but every 
Member that relies on technology for its competitiveness.  It is also undisputed that these practices 
cannot be addressed through challenges under exist ing WTO rules.  And it is no answer to say that 
the WTO also has a negotiating function, and new rules could be developed.  This answer is untenable 
– seeking new rules does nothing to address the harms felt today, and new rules must be adopted 
by consensu s.   
In addition to confirming that the parties have reached their own bilateral solution regarding 
each Party's additional duties, the Phase One Agreement also confirms the validity of the U.S. 
invocation of Article XX(a).   
First, it confirms the relatio nship between the U.S. tariff measures and the technology transfer 
issues addressed by those measures.  The Phase One agreement covers some of the U.S. technology 
transfer concerns, and the United States hopes to cover its remaining concerns in a Phase Two  
agreement.   
Second, the Agreement confirms the necessity of the U.S. tariff measures in addressing the 
unfair technology transfer issues identified in the Section 301 report.  The tariff measures led to the 
negotiations, and it cannot reasonably be questioned that those tariff measures were the only 
available tool that would have enabled the parties to reach this successful outcome.   
Third, the Phase One agreement confirms that forbidding forced technology transfer is a 
fundamental norm.  The f irst sentence of the technology transfer chapter states that "The Parties 
affirm the importance of ensuring that the transfer of technology occurs on voluntary, market -based 
terms and recognize that forced technology transfer is a significant concern."  
There is no legal basis for the Panel to issue the findings or recommendations requested by 
China because the Parties have reached a "settlement of the matter" within the meaning of 
Article  12.7 of the DSU.  And, even if the Panel were to examine the me asures at issue, it should 
conclude that they are "necessary to protect public morals" and therefore legally justified under 
Article XX(a) of the GATT 1994.   
First, that a "settlement of the matter" has been reached is confirmed by objective facts on  
the record.  China has failed to adduce any evidence to rebut these objective facts.  Instead, China 
continues to assert that the Panel is not authorized to consider the objective evidence that a 
settlement has been reached.  China's position, of course, finds no support in the DSU and is 
affirmatively contradicted by Article 11 of the DSU.  Nor is there any support in the DSU for China's 
continued assertion that there cannot be "settlement" within the meaning of Article 12.7 unless and 
until the parties n otify a "mutually agreed solution" to the Dispute Settlement Body.  
Second, China does not make any serious attempt to rebut the U.S. argument that the 
measures at issue are "necessary" within the meaning of Article XX(a).  Instead, China continues to 
argue that the measures at issue cannot be justified under Article XX(a) because they apply to 
products that are not themselves morally offensive.  This view finds no support in the text of 
Article  XX(a) or the prior reports cited by China.  China's new ar gument that "economic concerns" 
are categorically outside the scope of Article XX(a) is without legal foundation and, as we shall 
explain, is contrary to commonsense.  
II. CHINA HAS FAILED TO REBUT THAT THE PARTIES HAVE ARRIVED AT A 
"SETTLEMENT OF THE MATT ER" WITHIN THE MEANING OF ARTICLE 12.7 OF THE 
DSU 
The parties have settled the matter within the meaning of Article 12.7 of the DSU.  Accordingly, 
as required by Article 12.7, the Panel should reject China's request for legal findings on the measures WT/DS543/R/Add.1  
 
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  at issue and confine its report to a brief statement of the facts and a notation that a settlement has 
been reached.      
The parties' agreement to settle this matter outside the WTO system is confirmed by objective 
facts on the record, including:   
(1) China's decision to decision to unilaterally impose WTO -inconsistent measures on U.S. 
goods for the explicit purpose of retaliating against the measures for which it now seeks legal 
findings, and without first obtaining the authorization from the DSB pu rsuant to the DSU;  
(2) the U.S. decision to, nonetheless, refrain from challenging China's retaliatory actions at 
the WTO; and  
(3) the decision of both parties to enter into high -level negotiations with the aim of resolving 
U.S. concerns with Chinese cond uct documented in the Section 301 Report and China's 
concerns with the U.S. response ( i.e., the U.S. measures at issue).  
(4)  the Phase One Economic and Trade Agreement, which explicitly provides that each Party 
may apply additional duties in order to enfo rce the agreement, and that the other Party may 
not challenge those duties in the WTO.   
In other words, the actions of both parties show that – as an objective matter – the parties 
have agreed to settle the matter at issue outside of the WTO system.  In these circumstances, 
Article  12.7 of the DSU commands that "the report of the panel shall be confined to a brief description 
of the case and to reporting that a solution has been reached."   
China continues to argue that the Panel must accept at f ace value China's assertion that the 
parties have not arrived at a settlement within the meaning of Article 12.7 of the DSU.  However, 
Article 11 of the DSU, provides that "a panel should make an objective assessment of the matter 
before it, including an o bjective assessment of the facts of the case and the applicability of and 
conformity with the relevant covered agreements."    Accordingly, the Panel in this dispute should 
objectively assess whether the facts on the record support a finding that the parti es have settled 
the matter within the meaning of Article 12.7 of the DSU.  Certainly, nothing in the text of Article  11 
supports the view that the Panel is not "permitted" to make such an objective assessment, as China 
argues.  
Article 11 explicitly p rovides that "a panel should make an objective assessment of the matter 
before it, including an objective assessment of the facts of the case and the applicability of and 
conformity with the relevant covered agreements."  Accordingly, there be no serious q uestion that 
the Panel in this dispute has the authority to assess whether Article 12.7 of the DSU applies to the 
matter before it.   
Nothing in the DSU supports the view that panels are precluded from objectively assessing 
whether there is a settleme nt of the matter within the meaning of Article 12.7 of the DSU.  Indeed, 
if anything, panels have an affirmative obligation to make such an objective assessment, and 
certainly in cases where one or both parties submits that a settlement has in fact been re ached.  
Second, a practical matter, the question of whether the parties have reached a "settlement of the 
matter" is a fundamental aspect of the "matter" before a panel.  
The text of the DSU does not support China's assertion that Article 3.7 of the D SU is the "sole 
means by which a panel can ascertain" whether the parties have arrived a settlement within the 
meaning of Article 12.7 of the DSU.  Article 12.7 of the DSU (last sentence) becomes operative 
"[w]here a settlement among the parties to the dis pute has been found."  Nothing in the text of 
Article 12.7 of the DSU mandates that such a notification is a precondition for the operation of 
Article  12.7.  The text of the DSU simply does not support China's contention that the absence of a 
notification under Article 3.7 would somehow preclude a finding that the parties have in fact reached 
a "settlement" within the meaning of Article 12.7 where objective facts on the record support such 
finding.  WT/DS543/R/Add.1  
 
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  III. CHINA HAS STILL FAILED TO REBUT THE UNITED STATES' CA SE THAT THE 
MEASURES AT ISSUE ARE JUSTIFIED UNDER ARTICLE XX(A) OF THE GATT 1994  
China's assertion that some impermeable bright line exists between "economic" concerns, on 
the one hand, and "moral" concerns, on the other, finds no support in the text of Article XX.  Nor, 
frankly does such a view comport with simple common sense.     
First, nothing in the text of Article XX(a) itself suggests that "public morals" cannot (or must 
not) relate to issues of economic concern.  China's attempt to place "economic" concerns outside 
the scope of Article XX(a) should be rejected as legally basel ess.    
Second, the context provided by other paragraphs of Article XX affirmatively rebuts the view 
that the phrase "public morals" could be read to exclude any concerns that are "economic" in nature.  
Specifically, unlike certain other paragraphs of  Article XX, Article XX(a) does not include a proviso 
that could be understood to narrow the scope of the core operative text.  The fact that Article XX(a) 
is unaccompanied by any such analogous limiting or conditional language further supports the view 
that "public morals" cannot be read to a priori exclude "economic concerns" as a definitive matter.   
Third, other paragraphs of Article XX disprove China's assertion that there can be no overlap 
between "economic" concerns and "moral" concerns.  For ex ample, Article  XX(d) covers measures 
"necessary to secure compliance with laws or regulations" inter alia  "relating to the prevention of 
deceptive practices."  No one could reasonably dispute that the prevention of deceptive practices is 
motivated both by moral and economic concerns.  Another example is Article XX(e), which covers 
measures "relating to the pr oducts of prison labor."  Members may adopt such measures for reasons 
of morality or to protect economic actors from unfair competition with goods produced with little or 
no cost of labor.  Thus, there simply exists no bright line in Article XX between "mo ral" concerns and 
"economic" concerns.   
Fourth, the idea that "economic" and "moral" concerns are definitely distinct goes against 
simple common sense.  As the United States has argued, some types of conduct or behavior would 
appear to be immoral pre cisely because of the economic harms that result from such conduct.  For 
example, when someone steals money from a bank, we would all agree the bank and its customers 
suffer a harm that is "economic" in nature.  We would also agree that act that brought ab out this 
economic harm – namely the act of theft – is immoral, because it is contrary to standards of wrong.  
In this sense, the United States posits that most people would find it somewhat odd – if not 
nonsensical – to say that the act of stealing money f rom a bank does not implicate "moral" concerns 
because it imposes harms that are economic in nature.   
For the foregoing reasons, China's arguments that the "the term 'public morals' in 
Article  XX(a) must be understood to exclude economic concerns" is  without any legal or practical 
foundation.   
China continues to argue that a measure cannot be justified under Article XX(a) unless the 
measure applies to products that "embody [] morally offensive content or conduct."  As the United 
States has expla ined, however, China's assertions on this score finds no support in the text of 
Article  XX(a).    
By its terms, Article XX(a) refers to measures that are "necessary to protect public morals," 
not measures necessary to protect public morals from morall y offensive products.  Nothing in the 
text of Article XX(a) indicates that a measure justified under that provision "must" apply to any 
particular product, much less products that are inherently morally offensive.  Certainly, it may be 
the case that the pr oduct subject to a measure is also a product that offends public morals.  But the 
text of Article XX(a) does not require any such a relationship.  A measure may therefore be necessary 
to protect public morals without being applied only to products that are  inherently morally offensive.   
In its second written submission, China advances several new arguments to support its view 
that cover of Article XX(a) is limited to measures that apply to morally offensive products per se.  
None of China's new argume nts find support in Article XX(a) or prior reports.     
There is no merit to the argument that the inclusion of the word "protect" in Article XX(a) 
means that measures justified under that provision may only target products that are themselves WT/DS543/R/Add.1  
 
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  morally  offensive.  Article XX(a) refers to measures "necessary to protect public morals" – full stop 
– not measures necessary to protect public morals from morally offensive products .  And, that 
Article  XX(a) does not specify any particular threat (or source of offence) to "public morals" suggests 
that the drafters recognized that threats to "public morals" could emanate from a variety of sources 
or circumstances, not just morally offensive products per se.  Accordingly, the argument that word 
"protect" implies p rotection against morally offensive products should be rejected as contrary to the 
clear text of Article XX(a) and thus meritless.  
Contrary to what China suggests, nothing about the limited and conditional nature of 
Article  XX(a) supports the legal c onclusion that measures justified under Article XX(a) must target 
products that are inherently morally offensive.  Indeed, apart from the criteria set out in the chapeau 
and lettered paragraphs of Article  XX, there are no other limits or conditions that go vern the general 
exceptions under Article XX.  The only cross -cutting limit or condition that pertains to the exceptions 
under Article XX is the "requirement" that a measure is "not applied in a manner which would 
constitute a means of arbitrary or unjusti fiable discrimination ... or a disguised restriction on 
international trade."  Accordingly, if a measure meets the criteria specified in a paragraph at (a) 
through (j) of Article XX and satisfies the requirement of the chapeau of Article XX, the measure 
necessarily falls within the relevant conditions or limitations that govern the invocation of general 
exceptions under Article XX.  
China's argument that interpreting Article XX(a) in light of the object and purpose of the 
GATT  1994 supports the view th at measures justified under Article XX(a) must target morally 
offensive products relies on a fundamental misunderstanding of the customary rules of treaty 
interpretation.  Customary rules of treaty interpretation preclude a panel from adopting an 
interpret ation that is not supported by a plain reading of the text of an agreement.  And, under no 
circumstances would it be correct to adopt an interpretation that is contrary to the clear text of an 
agreement based the subjective view that doing so would advance  the "object and purpose" of the 
agreement.  But this is precisely what China asks the panel to do – that is, to adopt a non -textual 
limitation on Article XX(a) simply because China believes it would somehow advance the object and 
purpose of the GATT 1994.   As such, China's argument must be rejected.   
Furthermore, China has not explained, nor can it explain, why its proposed limitation would 
comport with "object and purpose" of the treaty.    
China asserts that "all" of the prior panel and Appell ate Body reports that have addressed 
Article XX(a) have concerned measures that targeted products considered to be morally offensive.  
This is not correct, and would be irrelevant at any rate.   First, contrary to China's characterization, 
in Colombia – Textiles , Colombia did not seek to justify its "compound tariff" measure under 
Article  XX(a) by arguing that the textile, apparel, and footwear products at issue were themselves 
products that were morally problematic or offensive.  And, in Brazil – Taxation , Brazil made no 
argument that the digital television equipment or other products at issue were inherently morally 
offensive.  Second, even if it were the case that past disputes involving Article XX(a) had involved 
measures that targeted products that were  morally offensive per se, this would not stand for the 
proposition that Article XX(a) is so limited in scope.     
China argues that the United States took into account certain "economic concerns" in the 
course of adopting and implementing the measure s at issue, and that this somehow undermines the 
"public morals" objective of the measures.  This argument is without merit.  
First, as the United States has explained, the argument that that "moral" and "economic" 
concerns are mutually exclusive finds  no support in the text of Article XX(a) and does not comport 
with simple common sense.   
Second, throughout the open and transparent process of selecting the products of China 
subject to additional duties, the United States has made clear that it wou ld seek to avoid 
disproportionate economic harm to U.S. interests, while at the same time maintaining strong 
measures so as not to undermine the objective of obtaining the elimination of conduct documented 
in the Section 301 Report.  That the United States  would take steps mitigate the economic harms 
associated with adopting the measures at issue is  not at all inconsistent with pursuing a "public 
morals" objective.    WT/DS543/R/Add.1  
 
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China argues that a finding that the measures at issue are justified under Article X X(a) would 
"set a dangerous precedent" and signal that Members can adopt GATT -consistent measures 
"whenever" they consider that the policies of another Member are "immoral" or "unfair."  This is 
nothing more than a "slippery slope" argument – which is usua lly one of the weakest types of 
arguments.  And is particularly weak here, given the unique facts and circumstances.    
First, an invocation of Article XX(a) that is as demonstrably specious and convenient as China 
suggests is unlikely to satisfy the requirements of the chapeau of Article XX, which provides that a 
measure cannot be "applied in a manner which would constitute a means of arbitrary or unjustifiable 
discrimination between countries where the same conditions prevail, or a disguised restrict ion on 
international trade."  Therefore, the language of the chapeau serves as backstop that prevents the 
sort of dangerous precedents to which China alludes.   
Second, a finding that the measures at issue are justified under Article XX(a) is not prac tically 
or legally capable of setting the dangerous precedent that China warns of, because any such finding 
would be squarely grounded in the unique facts of this dispute.  
In this regard, the United States would like to, once again, remind the Panel o f the historical 
background against which the United States adopted the measures at issue in this dispute.  As noted, 
the United States adopted the measures at issue following nearly a decade of trying to address 
China's unfair trade, acts, and policies th rough other means, including dialogue, admonishment, 
multilateral forums, bilateral mechanisms, and the pursuit of criminal charges against individuals 
and entities affiliated with the Chinese government.  Accordingly, the notion that a finding for the 
United States would open the door to Member successfully invoking Article XX(a) "whenever" they 
want and to justify "whatever"  GATT -inconsistent measures they want, is utterly unfounded.  
EXECUTIVE SUMMARY OF THE UNITED STATES' RESPONSES TO QUESTIONS FROM TH E 
PANEL  
21. Please explain the relationship between the Section 301 Report and the 
additional duties imposed on List 1 Products and List 2 Products.  
Response:  
There is a clear and direct relationship  between the "List 1 Products" and the unfair technology 
transfer policies, and practices described in the Section 301 Report.  In particular, the Chinese 
products subject to additional duties under the measure that took effect on July 6, 2018 ( i.e., List 
1) were found to benefit from the unfair policies, and practices documented in the Section 301 
Report.  This is clearly shown by the record evidence in this dispute, including the U.S. legal 
instruments ( i.e., Federal Register Notices) through which the Un ited States implemented the 
measures at issue and the Section 301 Report itself.  
The Section 301 Report found that China adopted the aforementioned unfair trade acts, 
policies, and practices to advance China's industrial policy objectives, in particular the goals and 
objectives reflected in Made in China 2025 , "China's ten -year plan fo r targeting ten strategic 
advanced technology manufacturing industries for promotion and development.   
Accordingly, the legal instruments through which the United States adopted and implemented 
the measures at issue place significant emphasis on Made  in China 2025  and the Chinese industries 
that benefit from that initiative.  For example, in the April 6, 2018 Federal Register Notice (Exhibit 
CHN – 10) that summarized the findings of the Section 301 Report and proposed certain actions in 
response, USTR  stated the following with respect to the products to be targeted by the measures at 
issue:  
The list of products [ i.e., List 1] covered by the proposed action was 
developed using the following methodology: Trade analysts from 
several U.S. Government agenc ies identified products that benefit 
from Chinese industrial policies, including Made in China 2025.  The 
list was refined by removing specific products identified by analysts 
as likely to cause disruptions to the U.S. economy, and tariff lines 
that are su bject to legal or administrative constraints.  The WT/DS543/R/Add.1  
 
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  remaining products were ranked according to the likely impact on 
U.S. consumers, based on available trade data involving alternative 
country sources for each product.  The proposed list was then 
compiled b y selecting products from the ranked list with lowest 
consumer impact.  
The United States adopted the measures at issue pertaining to "List 1" products following a 
notice and comment period on the tariff action proposed in the April 6 Notice.  As state d in the 
June 20, 2018 Notice (Exhibit CHN – 2) through which the "List 1" measures were implemented:  
USTR and the Section 301 Committee have carefully reviewed the 
public comments and the testimony from the three -day public 
hearing.  In addition, and cons istent with the Presidential directive, 
USTR and the interagency Section 301 Committee have carefully 
reviewed the extent to which the tariff subheadings in the April 6, 
2018 notice include products containing industrially significant 
technology, including  technologies and products related to the 
"Made in China 2025" program.  Based on this review process, the 
Trade Representative has determined to narrow the proposed list in 
the April 6, 2018 notice to 818 tariff subheadings, with an 
approximate annual tra de value of $34 billion.  
 In short, the record evidence demonstrates that (1) China adopted the unfair trade acts, 
policies, and practices documented in the Section 301 Report to support the industrial policy goals 
reflected in Made in China 2025 ; (2) the "List 1" products benefit from the Made in China 2025  
initiative; and (3) the United States adopted the "List 1" measures because the so -listed products 
were found to benefit from Made in China 2025 .  
EXECUTIVE SUMMARY OF THE UNITED STATES' COMMENTS O N CHINA'S RESPONSES TO 
THE PANEL'S SECOND SET OF QUESTIONS  
To China  
18. In your view, what is the legal value / relevance of the Economic and Trade 
Agreement between the United States and China (Phase One Economic and 
Trade Agreement) for the present dispu te?  
U.S. Comment on China's Response to Panel Question 18:  
China's response completely fails to rebut that the Phase One Agreement confirms that the 
Parties have settled, within the meaning of Article 12.7 of the DSU, any WTO issues regarding 
additio nal duties; and that the U.S. measures at issues are justified under Article XX(a) of the 
GATT  1994.   
In sum, the actual conduct of the parties demonstrates as an objective matter that the parties 
have reached their own mechanisms for addressing each  party's additional duties, outside of any 
WTO framework.  This is explicitly reinforced in the Phase One Agreement, where, in prescribed 
circumstances, either party may impose additional duties on goods of the other Party.  In these 
circumstances, any WTO  findings would do nothing to promote core objectives of the DSU, such as 
achieving a "satisfactory settlement of the matter" or a "positive solution to the dispute."   
China has no answer to these fundamental realities.  Instead, China presents the c ursory 
statement that:  
The Phase One Agreement reached through bilateral negotiations is not 
legally relevant to the Panel's resolution of this current dispute, which 
involves a fundamental question of whether the unilateral imposition of 
discriminatory du ties on imports from China by the United States is a 
violation of the United States' obligations under the WTO.  WT/DS543/R/Add.1  
 
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This statement does nothing to support China's position.  It conflates two separate issues:  
the real -world dispute between the parties, and a legal issue regarding the application of the WTO 
Agreement to certain measures.  What Article 12.7 of the DSU sta tes is that where the parties have 
settled their real -world dispute, then the Panel must not issue a report containing legal findings on 
the legal issues that the DSB referred to the Panel.  China in pointing out that the Panel's terms of 
reference include  a legal issue does nothing to rebut that the parties, as an objective matter, have 
settled outside of the WTO system any WTO issues regarding their respective additional duties.   
China's argument here is simply that the parties have not reached agre ement on the merits 
of China's legal claims.  As explained, however, agreement on the merits of legal claims is not 
required for a mutually agreed solution.  Accordingly, China has failed to rebut the importance of 
the Phase One Agreement in confirming the  existence of an agreement between the parties regarding 
their respective additional duties.   China also fails to rebut that the Phase One Agreement confirms 
that the U.S. measures at issue are justified under Article XX(a) of the GATT 1994.  At the secon d 
substantive meeting, the United States explained that conclusion of the Phase One Agreement 
further validates the United States' invocation of Article XX(a) in the following ways.  
First, it confirms the relationship between the U.S. tariff measures  and the technology transfer 
issues addressed by those measures.  The Phase One Agreement covers some of the U.S. technology 
transfer concerns, and the United States hopes to cover its remaining concerns in a Phase Two 
agreement.  Second , the Phase One Agr eement confirms the necessity of the U.S. tariff measures 
in addressing the unfair technology transfer issues identified in the Section 301 Report.  The tariff 
measures led to the negotiations, and were the only available tool that would have enabled the 
parties to reach this successful outcome.  Third, the Phase One Agreement confirms that forbidding 
forced technology transfer is a fundamental norm.  The first sentence of the technology transfer 
chapter states that "The Parties affirm the importance of ens uring that the transfer of technology 
occurs on voluntary, market -based terms and recognize that forced technology transfer is a 
significant concern."  
China's response to Question 18 is cursory in the extreme, presenting a single conclusory 
sentence c ontaining two arguments: "… yet there has been no evidence to support this [i] post hoc  
rationalization and [ii] no demonstrated relationship between the measures imposed, the imported 
products, and the 'public morals' alleged to be protected."  Neither of  these arguments have validity.  
On the second argument the United States has explained at length (and without any rebuttal by 
China) both that Article XX(a) requires no particular relationship, and that the record shows a direct 
tie between China's immora l policies and the products subject to additional duties, especially with 
respect to Measure  
As a factual matter, the United States adopted the measures at issue following a months -long, 
public investigation.  The United States provided public notice of the issues under investigation, and 
conducted a full notice and comment procedure, including a public hearing at which many Chinese 
witnesses testified.  The fact -finding phase of the investigation concluded with the issuance of an 
extensive, wel l-documented report, precisely explaining the U.S. concerns with China's technology 
transfer policies.  And the notice imposing the measures clearly states that the tariff measures were 
adopted to obtain the elimination of the unfair policies identified in  the report.  Thus, the justification 
for the U.S. measures was anything but " post hoc ". 
To the extent that China is presenting a legal argument that the United States in this dispute 
is not entitled to explain how its measures fall within the scope o f an Article XX exception, China is 
wrong.  As China itself acknowledges, the party asserting an Article XX justification has the burden 
of establishing that defense.  The way any party meets its burden is through the presentation of 
factual and legal argu mentation, as the United States has done in this dispute.  Contrary to China's 
implication, there is simply no rule or concept that such argumentation is somehow " post hoc " and 
inadmissible.  If this were the case, no Member could meet a burden of establis hing a justification 
under any Article XX exception.   
The United States notes that the record in prior disputes shows that the Member asserting an 
Article XX defense presents evidence and arguments in support of its justification, and this has not 
been (and could not be) rejected as " post hoc ." 
_______________  WT/DS543/R/Add.1  
 
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  ANNEX  C 
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the argume nts of Australia  42 
Annex  C-2 Integrated executive summary of the arguments of  Brazil  44 
Annex  C-3 Integrated executive summary of the arguments of  the European Union  46 
Annex C -4 Integrated executive summary of the arguments of Japan  49 
Annex C -5 Integrated executive summary of the arguments of  New Zealand  51 
Annex C -6 Integrated executive summary of the arguments of  Singapore  52 
Annex C -7 Integrated executive summary of the arguments of  Chinese Taipei  57 
 
 
 WT/DS543/R/Add.1  
 
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  ANNEX  C-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF AUSTRALIA  
I. INTRODUCTION  
1. Australia presents its views on certain systemic issues raised by these proceedings.  Australia 
does not take a view on the particular facts at issue. First, we provide some gene ral observations 
on the importance of multilateral trade rules; second, we consider the requirements for a panel's 
report; third, we examine the legal interpretation of Article XX(a) of the GATT 1994; and finally, we 
provide views on measures within a pane l's terms of reference.  
II. THE IMPORTANCE OF MULTILATERAL TRADE RULES  
2. Australia would like to begin with some general comments on the importance of multilateral 
trade rules, especially for a country like Australia where one in five Australian jobs depe nds on 
trade.    
3. Australia supports an open global economy underpinned by enforceable rules.  The rules 
embodied in the multilateral trading system established under the WTO are of fundamental 
importance.  These rules serve to limit unilateral or retaliatory trade actions th at damage trade and 
global growth.   Respect for multilateral trading rules ensures stability in the trading environment, 
supports global prosperity, and provides an even playing field for all WTO Members.    
4. Australia recognises the US has had longstandi ng concerns with certain of China's policies 
regarding forced technology transfer and the protection of IP rights more broadly.   Australia urges 
the US and China to find a resolution to this dispute that is WTO -consistent and reinforces our open 
and inclus ive global trading system.    
III. THE REQUIREMENTS FOR A PANEL'S REPORT  
5. Turning now to some of the systemic legal issues in these proceedings. The US argues that 
the report of the Panel should be "confined to a brief description of the case and to repor ting that a 
solution has been reached" in accordance with the last sentence of Article  12.7 of the DSU.1     
6. In this provision, the use of the verb "shall" imposes a requirement on a panel to curtail the 
content of its report, but this requirement only  arises "where a settlement of the matter among the 
parties to the dispute has been found". This makes sense in the context of the WTO dispute 
settlement system, whose object and purpose is the prompt settlement of disputes .2 Panel reports 
should be limit ed where the parties have already reached a resolution.   
7. In Australia's view, notification of a mutually agreed solution in accordance with Article 3.6 of 
the DSU is clear evidence that "settlement of the matter among the parties to the dispute has bee n 
found". This view is supported by the past practice of panels.3   
8. Australia submits that, for the purpose of the last sentence of Article 12.7, at a minimum, use 
of the phrase "among the parties" requires there to be evidence of a shared  view by both the 
 
1 The last sentence of Article 12.7 of the DSU provides : "Where a settlement of the matter among the 
parties to the dispute has been found, the report of the panel shall be confined to a brief description of the 
case and to reporting that a solution has been reached. " 
2 Article 3.3 of the DSU provides: " The prompt settlement of situations in which a Member considers 
that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by 
measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of 
a proper balance between the rights and obligations of Members. " 
3 Cases where panels have issued a 'brief report'  following the notification of a mutually agreed solution 
include Panel Reports, EC – Scallops ; EC – Butter ; US – DRAMS  (Article 21.5 – Korea); and Japan – Quotas on 
Laver .   WT/DS543/R/Add.1  
 
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  complainant and respondent  that the dispute has been settled.  In practice, Australia further submits 
that this shared  view may be expressed individually (by each party) or jointly.   
IV. Justification of measures under Article XX(a) of the GATT 1994  
9. The US argues that the measures challenged by China are legally justified under Article XX(a) 
of the GATT 1994, which permits measures "necessary to protect public morals".4    
10. Article XX provides a list of general exceptions to breaches of GATT ob ligations. To rely on 
these, a Member must first establish a sufficient connection to one of the subject -specific exceptions. 
The Member must also comply with the 'chapeau' of Article XX by establishing that the measure is 
not applied in a manner that cons titutes a means of arbitrary or unjustifiable discrimination between 
countries where the same conditions prevail, and does not create a disguised restriction on 
international trade.5 
11. Australia agrees with the US that a Member seeking to justify a meas ure under Article XX(a) 
must show:  
[t]hat the measure (1) protects public morals; (2) is "necessary" to achieve that 
objective; and (3) is not being applied in a manner that constitutes an "arbitrary or 
unjustifiable discrimination" or a "disguised restric tion on international trade" within the 
meaning of the chapeau of Article XX.6 
12. Australia recognises the importance of the exceptions in Article XX to enable Members the 
policy flexibility to regulate on issues of importance to them.  Australia further recognises that, in 
the case of measures to protect public morals, a Member has the right to determine the level of 
protection it considers appropriate.7 The content of what constitutes public morals may therefore 
differ between Members,  but it is not without some limitations.  Australia submits that exceptions to 
address legitimate public morals concerns are fundamental and their integrity should be upheld.  In 
our view, the legal tests for justification of an exception under Article XX( a) are sufficiently robust 
to ensure only measures that are necessary are permitted.  
V. MEASURES WITHIN A PANEL'S TERMS OF REFERENCE  
13. The US argues that one of the measures identified by China is not within the scope of this 
dispute because it is not in  the panel request, and it was introduced after the Panel was established.8    
14. The scope of the jurisdiction of a panel is determined by its terms of reference, based on the 
complainant's panel request.  That panel request must include "the specific m easures at issue" in 
accordance with Article 6.2 of the DSU.   
15. As a consequence, this means measures must be listed in the panel request. This is important 
as a matter of due process, to allow the respondent notice to adequately defend its case.  Howev er, 
it is equally important to avoid an overly formalistic approach. The WTO dispute settlement system 
is set up to deal with the 'matter' at hand and provide a resolution between the parties. Litigation is 
lengthy and resource -intensive. During the litiga tion process, laws and regulations may expire, or 
be renewed, or enacted in a different form.  This is why the Appellate Body has recognised that 
panels may consider laws or regulations that are not identified in the panel request if, for example, 
they ame nd a measure that is identified in the panel request and the amendment does not change 
the "essence" of the identified measure.9 
  
 
4 US First Written Submission, paras. 63 -91. 
5 Panel report, US – Gasoline , para. 6.20; reasoning followed by the Appellate Body Report in Brazil – 
Tyres , para. 210.   
6 US First Written Submission, para. 65 (footnotes omitted).  
7 Appellate Body Report EC – Seal Products , para. 5.199.  
8 US First Written Submission, paras. 92 -112. 
9 Appellate Body Report, EC- Selected Customs Matters , para. 184.  WT/DS543/R/Add.1  
 
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  ANNEX C -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF BRAZIL  
I. Introduction  
1. Brazil.  provides the following executive summary of its participation during the panel 
proceedings in this dispute.  
II. Article 12.7 of the Dispute Settlement Understanding  
2. During these proceedings, in addition to claiming that the measures challenged by China are 
justified  under Article XX(a) of the GATT (the public morals exception), the United States has argued 
that the Panel should limit itself to noting that the disputing parties have reached their own solution1, 
in accordance with Article 12.7, third (and last) senten ce.  
3. On this subject, Brazil noted that Article 3.6 of the Understanding on rules and procedures 
governing the settlement of disputes (DSU) mandates the parties to notify the Dispute Settlement 
Body (DSB) of any mutually agreed solution to matters forma lly raised under the consultations and 
dispute settlement provisions of the covered agreement. In the absence of such notification, the 
first, not the last, sentence of Article 12.7 of the DSU applies. In such a scenario, the Panel has a 
duty to produce a written report setting out "the findings of fact, the applicability of relevant 
provisions and the basic rationale behind any findings and recommendations that it makes"2. 
III. The proper  interpretation of Article XX(a) of the GATT .  
4. Brazil did not comment on whether the United States measures are justified under Article  XX 
of the GATT and, instead, presented its views regarding the proper interpretation and application of 
this article.    
5. Brazil agreed with the United States when it affirmed that:  
"A Member seeking to establish that a measure is justified under 
Article  XX(a) of the GATT 1994 must demonstrate that the measure (1) 
protects public morals; (2) is "necessary" to achieve th at objective; and 
(3) is not being applied in a manner that constitutes "arbitrary or 
unjustifiable discrimination" or a "disguised restriction on international 
trade" within the meaning of the chapeau of Article XX."3 
6. Brazil further noted that the App ellate Body and several panels have made it clear that a GATT 
Article XX claim involves a two -tier test. In US – Gasoline , the Appellate Body clarified:  
"In order that the justifying protection of Article XX may be extended to it, 
the measure at issue must  not only come under one or another of the 
particular exceptions – paragraphs (a) to (j) - listed under Article XX; it 
must also satisfy the requirements imposed by the opening clauses of 
Article XX. The  analysis is, in other words, two -tiered: first, prov isional 
justification by reason of characterization of the measure under XX(g); 
second, further appraisal of the same measure under the introductory 
clauses of Article  XX."6 
7. In Brazil's view, an analysis of a claim under Article XX of the GATT should be gin at the 
subparagraph level and, in the case of an Article XX(a) claim, involve, first, an examination of 
whether a measure is "necessary to protect public morals". This, in turn, can also be achieved by a 
two-step process, through which a panel first ex amines whether a measure is designed to protect 
public morals, and then follows that up with an examination of whether that measure found to be 
 
1 United States FWS, paras. 35, 36, 59 -62. 
2 DSU, Article 12.7, first sentence.  
3 United States, FWS, para. 65, footnotes omitted.  WT/DS543/R/Add.1  
 
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  designed to protect public morals also clears the higher threshold of being necessary to that 
objective.  
8. In its first written submission, and in response to questions by the Panel, Brazil clarified its 
views regarding the legal standard for the examination of each of these steps. Regarding the first 
one, Brazil's position, in line with prior guidance by the Appe llate Body in Colombia – Textiles4, is 
that the mere fact that a measure expressly refers to a public morals objective is not sufficient to 
satisfy the "design step" of the analysis. Rather, it is the existence of a relationship between the 
measure and th e protection of public morals that must be assessed, through an investigation of the 
measure's design, including its content, structure and expected operation. The Panel's task, in 
Brazil's view, is to determine, through such an investigation of the measur e's design, including its 
content, structure and expected operation, whether the measure "is not incapable" of protecting 
public morals.  
9.  Brazil also explained, in response to a question by the Panel, that, for Brazil, determining 
whether a relationship  exists does not require necessarily a determination that such a relationship 
meets any minimum degree or threshold. Brazil does not read that requirement in the Appellate 
Body report in Colombia – Textiles, nor in the text of Article  XX(a).  
10. In relation to the second step of an analysis of subparagraph (a) of Article XX, Brazil noted 
that when it comes to the "necessity test", not only Article XX(a), but also Articles  XX(b) and XX(d) 
of the GATT contain the expression "necessary". Past Appellate Body Reports have interpreted that 
expression consistently in all of these provisions. This resulted in the development of a "necessity 
test", which, in Brazil's view, represents the legal standard that must be cleared for a successful 
recourse to Article XX(a) of the GATT.  
11. The "necessity test" under Article XX of the GATT entails an analysis of three factors: (i) the 
importance of the interests or values at stake; (ii) the extent of the contribution made by the 
measures to the objectives they seek to p rotect; and (iii) the level of trade restrictiveness they 
generate. The interplay of these factors will enable a panel to assess whether a measure is 
necessary. Any preliminary conclusions resulting from this exercise must then be compared with 
possible al ternative measures in order to gauge whether the same results could be achieved with 
less trade restrictive measures, which would mean that the original measure was not, in fact, 
necessary.  
12. Only after assessing whether a measure is "necessary" to "pro tect public morals" in 
accordance with the "necessity test" described above, would a panel move on to the next tier of the 
analysis. At this second tier, the Panel's task is to assess whether the measure, provisionally justified 
under subparagraph "a" of A rticle XX of the GATT, also complies with the conditions of the chapeau. 
This, in turn, involves an examination of whether the measure is being applied in a manner that 
constitutes "arbitrary or unjustifiable discrimination"; or a "disguised restriction on  international 
trade".  
  
 
4 Appellate Body Report, Colombia – Textiles , paras. 5.67 -5.70.  WT/DS543/R/Add.1  
 
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  ANNEX C -3 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION  
1. INTRODUCTION  
1. The United States has explained that the tariff measures in dispute have been adopted in 
response to certain of China's unfair trade acts, policies, and practices addressed by the US 
authorities in a Section 301 investigation.  
2. The European Union shares both the concerns expressed by the United States and the 
description of the problem regarding China's technology transfer polic ies. Foreign ownership 
restrictions, opaque administrative procedures, vague and unclear rules that leave discretionary 
leeway to the administration, discriminatory laws and practices, lack of transparency and 
consistency, are all elements that create the conditions for the Chinese government and State -
influenced actors to pressure foreign companies to transfer their technology to Chinese entities. 
Moreover, cyber -theft and cyber -hacking are activities which the European Union condemns as much 
as the Unites  States does.  
3. However, the legitimate concerns expressed by the United States should be addressed by 
resorting to action under the WTO Agreement, including dispute settlement under the DSU whenever 
possible. In so far as some of those Chinese measures f all outside the scope of the covered 
agreements, they should be addressed by resorting to other available actions that are not 
inconsistent with the WTO Agreement.    
4. The European Union reaffirms once again its strong attachment to the multilateral rule s-based 
trade system embodied by the WTO Agreement. All the WTO Members are bound by, and must abide 
by, those rules in the interest of security and predictability for international trade and of economic 
development and growth and common prosperity. A WTO Member cannot waive unilaterally its own 
WTO obligations whenever it considers that another Member is acting "unfairly" and that the WTO 
Agreement does not provide adequate remedies. Such unilateral responses to perceived unfair acts 
of another Member are themselves both unfair and illicit under the WTO Agreement.  
2. THE PANEL IS REQUIRED UNDER THE DSU  TO RULE ON THE CLAIMS SUBMITTED BY CHINA 
5. The European Union considers that the Panel is required under the DSU to rule on the claims 
brought by China in this dispute.  
6. First, China's claims concern tariff measures adopted by the United States and are based on 
provisions of the GATT 1994. Therefore, it is plain that the "matter" before the Panel does "involve 
the WTO".  
7. Second , the last sentence of Ar ticle 12.7 of the DSU applies where the parties to a dispute 
have reached a mutually agreed solution and relieves the panel from the duty to make substantive 
findings. There is no evidence that, in the present case, the Parties have reached such a mutually  
agreed solution, let alone a mutually agreed solution that complies with the requirements of 
Articles  3.5 and 3.6 of the DSU. Therefore, the last sentence of Article 12.7 of the DSU is manifestly 
inapplicable.  
8. Third, Members enjoy considerable discreti on in deciding whether to bring a case. A Member 
is precluded from exercising its right to initiate a dispute only in very exceptional circumstances 
where, by doing so, it would fail to act in good faith. The United States has not established that, in 
bringing this dispute, China has failed to act in good faith. In particular, neither Article 3.10 of the 
DSU nor any other provision of the DSU provides for a "clean hands" defence. To the contrary, the 
last sentence of Article 3.10 of the DSU clarifies that " it is understood that complaints and counter -
complaints in regard to distinct matters should not be linked".  
9. Lastly , by ruling on the claims brought by China in this dispute, the Panel would not be 
"supporting" or "encouraging" the Chinese measures iden tified by the United States. Those measures 
are not part of the "matter" before the Panel. Whatever findings are made by the Panel with regard WT/DS543/R/Add.1  
 
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  to the "matter" of this dispute, the United States will remain free to challenge the Chinese measures 
it takes is sue with, either before another WTO panel or in any other WTO consistent manner which 
the United States deems appropriate. Moreover, the Panel's findings with regard to the US measures 
in dispute will not prejudge in any manner either the consistency of th e Chinese measures identified 
by the United States with the WTO Agreement, or with any other applicable international legal 
instruments, or their "fairness".  
3. THE MEASURES DO NOT APPEAR TO BE JUSTIFIED UNDER ARTICLE XX( A) OF THE GATT  1994  
10. The Europea n Union does not take a position on whether the standards of conduct invoked by 
the United States may, in the abstract, qualify as "public morals" within the meaning of Article XX(a) 
of the GATT 1994. Nevertheless, on the basis of the arguments and evidenc e submitted so far by 
the United States, the European Union considers that the measures at issue do not seem to be 
"designed" to protect those public moral standards.  
11. The measures at issue appear to operate very differently from the measures that have  been 
found provisionally justified under Article XX(a) of the GATT 1994 (or under Article  XIV of the GATS) 
in previous cases. Those measures involved, in essence, a prohibition on the importation or 
marketing of goods, or on the supply of services which, because of their content, or of the way in 
which they had been obtained or produced, were regarded as morally offensive by the responding 
Member. In contrast, the measures at issue in this case appear to provide for tariff increases on a 
very broad categor y of products, regardless, if the European Union understands the facts correctly, 
of whether the imports of the products concerned pose, by themselves, any threat to the public 
morals invoked by the United States. If the US measures were to target specific ally those imports 
of Chinese products whose production in China has benefitted from the practices which the US is 
objecting to, such measures could be evaluated differently.   
12. Article XX(a) seeks to preserve the autonomy of each Member to uphold its o wn public moral 
standards within its own territory by restricting, if necessary, trade in goods from other Members 
where the presence of those goods in its territory would offend those public moral standards. The 
US measures at issue ado not appear to be d esigned to protect the US public morals in the manner 
described. Instead, they seem to primarily seek to induce a change in China's policies and practices.  
13. Moreover, given the broad deference accorded to each Member in view of defining its own 
public moral standards, if measures such as those at issue could be justified under Article  XX(a), it 
would become all -too-easy for a Member to restrict imports of any product from any other Member 
merely by invoking that the latter Member acts in a manner that t he first Member considers to be 
"unfair", according to its own public moral standards, regardless of whether there is any relationship 
between the perceived unfair actions and the goods affected by the import restrictions.  
14. In particular, if the US mea sures were deemed justified under Article XX(a), what would 
prevent China from considering, in turn, that those US measures are "unfair" and incompatible with 
China's public morals, which would justify under Article XX(a) China's own retaliatory tariff 
measures? Thus, the US interpretation of Article XX(a), if accepted, could trigger an endless spiral 
of measures, countermeasures, counter -countermeasures, etc., all of them justified under Article 
XX(a), which would threaten to unravel the benefits accrued t o Members under the GATT 1994 and 
the value of a rules -based multilateral trading system.  
4. THE PANEL SHOULD ASCERTAIN WHETHER THE SO -CALLED "MEASURE 3" MODIFIES THE ESSENCE OF 
THE MEASURES IDENTIFIED IN THE PANEL REQUEST  
15. In accordance with well -established case -law of the Appellate Body, the question of whether 
Measure 3 falls within the Panel's terms of reference must be decided by ascertaining whether 
Measure 3 "changes the essence" of Measure 2, an issue on which the Eu ropean Union does not 
express any views.   
16. The United States has not advanced any "persuasive", let alone "cogent" reasons in support 
of its request that the Panel departs from a previous, well -established, Appellate Body's 
interpretation.  WT/DS543/R/Add.1  
 
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  17. First, contrary to the US allegations, the wording of Article 6.2 of the DSU is by no means 
dispositive. It refers to "specific measures", rather than to specific "legal instruments". Where an 
amending legal instrument does not "change the essence" of the amended legal instrument, the 
measure remains essentially the same and, therefore, within the panel's terms of reference.  
18. Second , the Appellate Body's interpretation is consistent with the object and purpose of the 
DSU, as expressed in Article 3.7 of the DSU, which is to "secure a positive solution to the dispute". 
At the same time, that interpretation takes duly into account the demands of due process. As noted 
by the Appellate Body, "a complaining party should not have to adjust its pleadings throughout 
dispu te settlement proceedings in order to deal with a disputed measure as a 'moving target'". The 
Appellate Body's interpretation prevents this result by holding that any amendment which "changes 
the essence" of a measure falls outside the panel's terms of ref erence.  
19. In contrast, the United States' own formalistic interpretation would open the door to abusive 
practices that would undermine the object and purpose of the DSU. Indeed, according to that 
interpretation, the defendant could evade the review of a  measure simply by replacing from time to 
time the legal instrument that provides for that measure with another legal instrument with the 
same or a slightly modified content, which does not change the essence of the measure. The United 
States argues that t he complainant may exercise all pertinent rights with regard to an amended 
measure, for example by challenging it in compliance proceedings. However, this is not persuasive, 
since it would require the launching of compliance proceedings, which would create  delays and 
prolong unnecessarily the existence of the WTO -inconsistent measure.  
20. Lastly , the European Union disagrees with the US reading of the Appellate Body report in Chile 
– Price Band System . The United States contends that the amendment in Chile – Price Band System  
only formed "interpretative context" for the legislation identified in Argentina's panel request, while 
the amendment itself was not within the panel's terms of reference. However , the amendment was 
not a clarification in the sense of mere "interpretative context", as maintained by the United States. 
The amendment established a price cap for the price band system at issue where there had been no 
cap before, i.e. it amended the orig inal measure in substance. The amendment therefore "clarified" 
the legislation, as would e.g. a change in product scope, eligible applicants or effective date. 
However, such amendments cannot be properly qualified as mere "interpretative context".  
  WT/DS543/R/Add.1  
 
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  ANNEX C-4 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I. GENERAL REMARKS  
1. Japan notes that this dispute arose in a broader international economic context. Japan is of 
the view that no country should require or pressure technology transfer from forei gn companies to 
domestic companies, including, for example, through the use of joint venture requirements, foreign 
equity limitations, administrative review and licensing processes, or other means.1 Neither should 
any government support unauthorized intru sion into, or theft from, computer networks of foreign 
companies to access sensitive commercial information and trade secrets for commercial gain. Such 
policies and practices create unfair competitive conditions for workers and businesses, hinder the 
devel opment and use of innovative technologies, and undermine the proper functioning of 
international trade.2 While there may be policies and practices that are not subject to the current 
WTO rules, the multilateral trading system is not meant to encourage or to support the adoption or 
maintenance of such unfair policies and practice.  
II. ARTICLE XX( A) OF THE GATT  1994  
2．Japan turns now to the interpretation of Article XX(a) of the GATT 1994, the analysis of which, 
according to the jurisprudence of past panels and the Appellate Body, involves four issues: First, 
does the value being protected qualify as a "public moral"? Second , is the measure at issue "designed 
to protect public morals"? Third, is the measure at issue "necessary" to protect public morals? And 
fourth , is the measure applied consistently with the chapeau of Article XX? The defending party has 
the burden of p roof to present and explain evidence with respect to all four issues. Japan wishes to 
present its views regarding aspects of this analysis.  
A. "Public morals " 
3. Past panel and Appellate Body reports interpreting Article XX(a) have properly declined to 
impose a global WTO standard of public morals and have left it to each Member to define its own 
"public morals" for itself. To quote past reports: "public morals" for the purpose of Article XX(a) "can 
vary in time and space, depending upon a range of factors,  including prevailing social, cultural, 
ethical and religious values"; "it is up to each Member to determine what level of protection is 
appropriate in a given situation"; and Members "should be given some scope to define and apply for 
themselves" such con cepts "according to their own systems and scales of values".3 The Appellate 
Body in EC – Seal Products agreed that Members have the right to determine the level of protection 
that they consider appropriate, and added that "Members may set different levels  of protection even 
when responding to similar interests of moral concern."4 
4. The United States has argued that the tariff measures at issue protect "public morals", because 
the Chinese government engages in acts, policies and practices that the United States refers to as 
"morally wrong".5 The United States describes that these acts, policies and practices engaged in 
within China and on the Internet violate "prevailing US standards of right and wrong".6 The United 
States refers to its domestic criminal law as evidence of its own norms of "morally wrong behaviour".7 
 
1 "Joint Statement on Trilateral Meeting of the Trade Ministers of the United States, Japan and the 
European Union", agreed on 31 May 2018, text available at 
https://www.met i.go.jp/press/2018/05/20180531009/20180531009 -2.pdf; and "Joint Statement on Trilateral 
Meeting of the Trade Ministers of the United States, Japan and the European Union", agreed on 25 September 
2018, text available at https://www.meti.go.jp/press/2018/09/ 20180925004/20180925004 -2.pdf.   
2 "Joint Statement on Technology Transfer Policies and Practices", attached to 31 May 2018 Joint 
Statement, id.  
3 Panel Report, China – Publications and Audiovisual Products , para. 7.759 (quoting Panel Report, US – 
Gambling , para. 6.461) and para. 7.819.  
4 Appellate Body Report, EC — Seal Products , para. 5.200.  
5 US FWS, para. 76.  
6 US FWS, para. 74.  
7 Id., para. 74-76. WT/DS543/R/Add.1  
 
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  Japan agrees that a Member's domestic criminal law provides relevant evidence for evaluating what 
might constitute a "public moral" in that Member.  
B. "Designed to protect public morals"   
5. When a panel analyzes a measure's "design" in relation to Article XX(a), it must examine 
whether there is a relationship between an otherwise GATT -inconsistent measure and the protection 
of public morals:  that is, whether a relationship exists between the measure and public morals, such 
that the measure is "not incapable of protecting public morals". In Japan's view, for a measure to 
be provisionally justified under Article XX(a) of the GATT 1994, it must be designed to meet the 
policy objective that it pursues.8 
6. To ascertain whether such a relationship exists, "a panel must examine evidence regarding 
the design of the measure at issue, including its content, structure, and expected operation."9 The 
evidence and evaluation regarding this relationship  is what matters, not whether the measure refers 
by name to one of the usual "public moral" concerns10 nor the subjective intention of the government 
of the Member taking the measure.  
C. Chapeau  
7. If the P anel determines that the US tariff surcharges at issue are "necessary to protect public 
morals", then it should also carefully evaluate whether the application of these surcharges satisfies 
the requirements of the chapeau  of Article XX: that is, whether th ese surcharges are applied in a 
manner that would constitute a means of arbitrary or unjustifiable discrimination between countries 
where the same conditions prevail, or a disguised restriction on international trade. Not every 
difference in treatment cons titutes such "arbitrary or unjustifiable discrimination".  
8. Japan notes the discussion in US – Shrimp listing three elements relevant to analyzing 
compliance with the chapeau.11 The Appellate Body has also found that when a panel analyzes 
whether discrim ination is arbitrary or unjustifiable, it "should focus on the cause of the 
discrimination, or the rationale put forward to explain its existence"12; this analysis "'should be made 
in the light of the objective of the measure', and … discrimination will b e arbitrary or unjustifiable 
when the reasons given for the discrimination 'bear no rational connection to the objective' or 'would 
go against that objective'".13 Thus, "'[o]ne  of the most important factors' in the assessment of 
arbitrary or unjustifiable discrimination is the question of whether the discrimination can be 
reconciled with, or is rationally related to, the policy objective with respect to which the measure 
has bee n provisionally justified under one of the subparagraphs of Article XX."14 
 
 
 
  
 
8 See Appellate Body Report, Colombia — Textiles , para. 5.68, and Appellate Body Reports, EC — Seal 
Products , para. 5.169: in both cases the Appellate Body found that to justify a measure under Article XX(a) the 
measure must be designed to protect public morals, as well as necessary to protect public mo rals. 
9 Appellate Body Report, Colombia – Textiles , para. 5.69.  
10 Id. 
11 Appellate Body Report, US – Shrimp , para. 150.  
12 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – US/Mexico II) , para. 6.271 (quoting 
Appellate Body Report, Brazil – Retreaded Tyres , para. 226).  
13 Id. (quoting Appellate Body Report, Brazil – Retreaded Tyres , para. 227).  
14 Id. (quoting Appellate Body Reports, EC – Seal Products , para. 5.306).  WT/DS543/R/Add.1  
 
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  ANNEX C -5 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF NEW ZEALAND  
I INTRODUCTION  
1. New Zealand's participation in the current dispute reflects its systemic interest in the issues 
raised. New Zealand has a significant interest in the preservation of the multilateral rules -based 
global trading system, and in maintaining the important role played by the WTO.   
II THE MULTILATERAL RULES BASED TRADING SYSTEM  
2. The multilateral rules -based trading system regulates and fosters international trade.  The 
WTO covered agreements sit at the heart of this system. They ensure that all Members, regardl ess 
of their size or trading capacity, are subject to the same baseline rights and obligations and, 
accordingly, have equal opportunity to participate in the global market.  
3. By prescribing what Members can and cannot do, the multilateral rules -based tra ding 
system provides the predictability necessary to ensure efficient and stable trade.  A predictable and 
stable trade environment encourages trade expansion by reducing the degree of risk that traders 
must assume. This fosters growth and, in turn, enhanc ed economic welfare.  
4. This system is currently under threat by unilateral trade action, taken by multiple Members, 
in order to influence other Members' trade practices.  
III UNILATERAL ACTION  
5. Unilateral action, taken outside of the covered agreements a nd directed at disrupting the 
trade of another Member, is antithetical to a stable and predictable trading system. It undermines 
the rights and obligations that form the foundation of the system, and the fundamental principle 
that these rights and obligati ons apply to all Members, equally.    
6. The multilateral rules -based trading system is built on the principal of trade liberalisation. 
This is facilitated through the mutual acceptance of limitations on what Members can do. The benefits 
conferred by the c overed agreements can only be effectively enjoyed if all Members comply with 
them. If one Member expressly steps away from these commitments, this will undermine the stability 
and certainty on which the system rests, and could reduce the incentive for othe r Members to 
comply. Depending on the scale, nature and duration, unilateral action of this kind can threaten the 
system as a whole.   
IV CONCLUSION  
7. New Zealand is committed to the preservation and maintenance of the multilateral rules -
based trading sys tem. The system is not perfect. These imperfections cannot, however, be used to 
justify actions that will distort trade and destabilise the system as a whole. If the system is 
undermined, all Members will suffer. Its preservation and strengthening should b e an imperative for 
all Members.  
  WT/DS543/R/Add.1  
 
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  ANNEX C -6 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF SINGAPORE  
I. EXECUTIVE SUMMARY OF SINGAPORE'S THIRD PARTY ORAL STATEMENT  
 
A. Introduction  
 
1. Singapore is concerned with the importance of maintaining a rules -based multilateral trading 
system – one that sees a disciplined application of the covered agreements, underpinned by a robust 
dispute settlement system to lend predictability and security to the multilateral system.  
 
2. Singapore is participating in these  proceedings because it has a systemic interest in the 
interpretation of the language relating to the "public morals" exception found in the covered 
agreements, including the General Agreement on Tariffs and Trade 1994 ("GATT  1994").  
 
3. In this regard, Singapore's comments are strictly limited to providing itsviews on the proper 
interpretation of Article XX(a) of the GATT 1994. Accordingly, Singapore does not seek to comment 
on the substantive merits of the case. In summary, our key point s are as follows:  
 
a. To begin with, in determining whether the objective of a measure in question is a 
"public morals" objective, Members must be afforded a certain degree of domestic 
policy space to determine their public morals objectives, having regard  to their 
specific cultural, religious and other social contexts.    
 
b. However, this discretion is not unlimited. First, there must be a relationship between 
the measure and the protection of public morals, in the sense that the measure must 
not be incap able of protecting public morals. Second, it must meet the necessity 
test, which involves weighing and balancing between a series of factors, including: 
the importance of the objective; the contribution of the measure to that objective; 
and the trade -restrictiveness of the measure.   
 
c. Finally, the measure must meet the chapeau requirements of Article XX, in that it 
must not be applied in a manner that constitutes "arbitrary or unjustifiable 
discrimination" or a "disguised restriction on international trad e".  
 
B. GATT Article XX – Two-tier analysis  
 
4. In line with the consistent jurisprudence of the Appellate Body ("AB") and several panels,1 and 
as most recently re -affirmed by the AB in Indonesia – Import Licensing Regimes ,2 an assessment of 
whether a measure is justified under Article XX of the GATT  1994 involves a two -tier sequential 
analysis of:  
 
a. first, whether the measure at issue is provisionally justified under one of the 
paragraphs of Article XX; and  
 
b. second, whe ther it also meets the requirements of the chapeau of Article  XX. 
 
5. With respect to the first tier, provisional justification requires that a challenged measure 
"address the particular interest specified in that paragraph", and that "there be a sufficien t nexus 
between the measure and the interest protected."3  In particular, where Article XX(a) is concerned, 
the AB in Colombia – Textiles  has essentially boiled this down to mean that the measure must, 
firstly, be "designed" to protect public morals, and secondly, be "necessary" to protect such public 
morals.4  
 
 
1  Appellate Body Report, Colombia – Textiles , para. 5.67 (citing a list of oth er cases).  
2  Appellate Body Report, Indonesia – Import Licensing Regimes, para. 6.7.  
3  Appellate Body Report, Colombia – Textiles , para. 5.67; Appellate Body Report, EC – Seal Products , 
para. 5.169 (quoting Appellate Body Report, US – Gambling , para. 292 ) 
4  Supra, fn.1.  WT/DS543/R/Add.1  
 
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  C. Scope of "Public Morals"  
 
6. Before assessing whether a measure is "designed" or "necessary" to protect public morals, we 
need to first cross the threshold of what constitutes "public morals" to begin with.  In this regard, 
previous WTO panels5 have taken a relatively broad approach in defining the concept of "public 
morals". This term "public morals" has been interpreted as denoting "standards of right and wrong 
conduct maintained by or on behalf of a community or nation". Panels have also noted that its 
content "can vary in time and space, depending upon a range of factors, including prevailing social, 
cultural, ethical and religious values."  In particular, the panels in Colombia – Textiles  and EC – Seal 
Products  noted that Members should be given some scope to define and apply for themselves the 
concept of "public morals" in their respective territories, according to "various values prevailing in 
their societies at a given time".6   
 
7. Singapore generally agrees with this analysis. In Singapore's view, this element recognises 
the reality that Members must be afforded a certain degree of domestic policy space to define their 
own public morals objectives, having regard to their specif ic cultural, religious and other social 
contexts.  
 
8. At the same time, this discretion is not without its limits, insofar as the measure must, as 
earlier mentioned, firstly, be "designed" to protect the stated public morals objective, and secondly, 
satisfy the "necessity" analysis.   
 
D. Design of measure  
 
9. As emphasised by the AB in Colombia – Textiles , the analysis of the "design" of a measure 
requires an examination as to whether there is a relationship between the measure and the 
protection of publi c morals. This is in the sense that the measure must not be incapable of protecting 
public morals.7 Such a determination requires examination of the "evidence regarding the design of 
the measure at issue, including its content, structure, and expected ope ration."8   
 
10. In this regard, we note that the determination should not focus on mere labels. The AB has 
clarified that an express reference to "public morals" is not per se  definitive that the measure was 
indeed designed for that purpose. On the other  hand, neither is the absence of such an explicit 
reference fatal if the evidence pertaining to the content, structure and other aspects of a measure, 
nonetheless objectively demonstrates that it was in fact designed to protect public morals.  
 
E. Necessity  of measure  
 
11. Turning next to the "necessity" analysis, this was summarised by the AB in EC – Seal Products  
as involving a process of "weighing and balancing" a series of factors, including:  the importance of 
the objective; the contribution of the meas ure to that objective;  and the trade -restrictiveness of 
the measure.9    
 
12. This is a highly fact -specific assessment that a panel will need to undertake on a holistic basis, 
which can comprise both qualitative and quantitative analyses. We note, amongst other things, the 
AB's indication that:  
 
a. the more vital the values that a re reflected in the measure's objectives, the easier 
it would be to accept the measure as "necessary";   
 
b. the greater the contribution a measure makes to the objective pursued, the more 
likely it is to be characterised as "necessary"; and  
 
c. a measure  with a relatively slight impact … might be more easily considered as 
"necessary" than a measure with intense or broader restrictive effects,  
 
5  Panel Report, US – Gambling , paras. 6.465 and 6.461; Panel Report, China – Publications and 
Audiovisual Products , para 7.759; Panel Report, EC – Seal Products , paras. 7.380 and 7.409.  
6  Panel Report, Colombia – Textiles , paras. 7.301 (citing Panel Report, EC – Seal Products , paras. 
7.380 -7.381 and 7.409).  
7  Appellate Body Report, Colombia – Textiles , para. 5.68.  
8  Appellate Body Report, Colombia – Textiles , para. 5.69.  
9  Appellate Body Report, EC – Seal Products , para . 5.169   WT/DS543/R/Add.1  
 
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and furthermore, that a panel must then compare the challenged measure against possible 
alternative measures whic h could achieve the same level of protection while being less trade 
restrictive10.  
 
F. Chapeau requirements  
 
13. Finally, in the event that a measure is found to be provisionally justified under paragraph (a) 
of Article XX, it thereafter still needs to c omply with the conditions of the chapeau of Article XX.  
This, in turn, involves an examination of whether the measure is being applied in a manner that 
constitutes "arbitrary or unjustifiable discrimination" or a "disguised restriction on international 
trade".   
 
14. However, Singapore does not consider it necessary to add any further views as regards the 
chapeau of Article XX, in light of the already considerable body of jurisprudence and guidance 
available on this element, and which was helpfully articul ated by the distinguished delegation of 
Japan in its third party oral statement.  
 
 
II. EXECUTIVE SUMMARY OF SINGAPORE'S RESPONSES TO PANEL QUESTIONS TO 
THIRD PARTIES  
 
A. Response to Question  1 (para. 12 of Japan's statement)  
 
15. Singapore's oral statement, paras. 9 -10, noted that:  
 
"9. As emphasised by the AB in Colombia – Textiles , the analysis of the "design" of a 
measure requires an examination as to whether there is a relationship betwee n the 
measure and the protection of public morals. This is in the sense that the measure 
must not be incapable of protecting public morals.  Such a determination requires 
examination of the "evidence regarding the design of the measure at issue, including 
its content, structure, and expected operation."    
 
10. In this regard, we note that the determination should not focus on mere labels.  The 
AB has clarified that an express reference to "public morals" is not per se  definitive 
that the measure was indeed  designed for that purpose. On the other hand, neither is 
the absence of such an explicit reference fatal if the evidence pertaining to the content, 
structure and other aspects of a measure, nonetheless objectively demonstrates that 
it was in fact designed  to protect public morals."  
 
16. In Singapore's view, the determination of whether a measure is "designed" to protect a stated 
public morals objective should focus on "evidence regarding the design of the measure at issue, 
including its content, structure,  and expected operation", rather than mere labels.  As clarified by 
the AB in Colombia – Textiles , the existence or absence of an express reference to the public morals 
objective in question should not be treated as determinative.  
 
17. In light of the AB' s statement that the Panel "must examine evidence …", and arrive at a 
conclusion following "an assessment  of the design", Singapore understands this to be an objective 
determination to be undertaken by the Panel based on the evidence and facts before it, while 
recognising the observation that the "design" step  is not a particularly demanding step of the 
Article XX(a) analysis. This is also a separate question from, and does not erode, the broad discretion 
and latitude given to Members to define and apply for themselves the concept of "public morals" in 
their respective territories.   
 
B. Response to Question 2  (para. 10 of Singapore's statement)  
 
18. Singapore's response to Question 1 above applies to this Question also.  
 
 
10 Appellate Body Report, Colombia – Textiles, paras 5.71 -5.75.  WT/DS543/R/Add.1  
 
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  C. Response to Question 3 (para. 13 of EU's statement)  
 
19. Singapore understands para. 13 of the EU's oral statement, when read with para. 4 4 of the 
EU's written submission, to be making the point that there needs to be a reasonably direct nexus 
between a measure at issue and the public morals objective being invoked, in order to demonstrate 
the existence of a relationship between the objectiv e and the measure. Singapore notes the EU's 
comment that there has to be a "genuine" relationship, in order to cross the threshold for the 
"design" step, but also recognises the AB's observation that the examination of a measure's "design" 
is not a particu larly demanding step of the Article XX(a) analysis.11  
 
20. In Singapore's view, the suggestion that "[i ]f the US measures were to target specifically 
those imports … whose production has benefitted from the practices which the US is objecting to, 
such measures could be evaluated differently", could also lend itself to the "necessity" analysis, 
particularly as one of its key elements is to assess the level of trade -restrictiveness of a measure.  
This would thus likely impact on the evaluation of its provisional justification under Article XX(a) of 
the GATT.  
 
21. In addition, we note that the chapeau of Artic le XX also requires an analysis of whether a 
measure constitutes a " disguised restriction on international trade ". In this regard, the degree and 
genuineness of relationship that a measure has with the stated objective which it seeks to pursue, 
could be a relevant factor in determining if a measure is "disguised".  
 
D. Response to Question 4 (para. 2 of Chinese Taipei's statement)  
 
22. As noted in paras. 6 -8 of Singapore's statement, Singapore agrees that Members should be 
given some scope to define and apply for themselves the concept of "public morals" in their 
respective territories, according to "various values prevailing in their societies at a given time".12  At 
the same time, this discretion is not without its limits, insofar as the measure must, firstly, be 
"designed" to protect the stated public morals objective, and secondly, satisfy the "necessity" 
analysis.   
 
E. Response to Question 5 (justifiability, or otherwise, of a measure's coercive effect 
on another Member's policies)  
 
23. Drawing from  the guidance of the AB in US – Shrimp , Singapore recognises that a measure 
which requires an exporting country to adopt or comply with certain policies prescribed by the 
importing country, does not necessarily render it a priori  incapable of justification  under Article XX.13 
Instead, certain factors should be taken into account to determine whether the effect of an applied 
measure constitutes an "unjustifiable discrimination" within the meaning of the chapeau of Article 
XX. 
 
24. The first is to consider w hether the measure, when applied, is in effect an "economic embargo" 
which requires the exporting Member(s) to adopt not merely a comparable, but rather essentially 
the same, policy as that applied within the importing Member.14 In this regard, the AB fur ther 
considered that it would be unacceptable to establish a "rigid and unbending" standard regulating 
market access to the importing Member, in which any other specific policies or measures adopted 
by exporting Member(s) to achieve a similar objective are  not taken into account.15 
 
25. A second factor is to consider that, in international trade relations, it would be unacceptable 
for one Member to use an economic embargo to require other Members to adopt essentially the 
same regulatory programme to achiev e a certain policy goal within the importing Member, without 
taking into consideration "different conditions which may occur in the territories of those other 
Members".16 In this regard, the AB elaborated that discrimination results not only when countrie s in 
which the same conditions prevail are differently treated, but also when the application of a measure 
 
11 Appellate Body Report, Colombia – Textiles , para. 5.70.   
12  Panel Report, Colombia – Textiles , paras. 7.301 (citing Panel Report, EC – Seal Products , paras. 
7.380 -7.381 and 7.40 9). 
13 Appellate Body Report, US – Shrimp , para. 121.  
14 Appellate Body Report, US – Shrimp , para. 161 read with para. 163.  
15 Appellate Body Report, US – Shrimp , para. 163.  
16 Appellate Body Report, US – Shrimp , para. 164.  WT/DS543/R/Add.1  
 
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  at issue does not allow for any inquiry into the appropriateness of the regulatory programme for the 
conditions prevailing in those exporting countri es.17 
 
26. A third factor is whether the importing Member had adequately engaged and negotiated with 
the exporting Member(s) in an effort to pursue its underlying policy objective, before applying the 
measure in question.18 
  
 
17 Appellate Body Report, US – Shrimp , para. 165.  
18 Appellate Body Report, US – Shrimp , para. 166.  WT/DS543/R/Add.1  
 
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  ANNEX C -7 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CHINESE TAIPEI* 
Mr. Chairman, Members of the Panel,  
1. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu thanks the Panel for 
the opportunity to make a statement in this dispute. In our statement, we would like to address two 
points: first, the interpretation of Article XX(a) of the GATT 1994, and second, the importance of the 
issues raised in this dispute to our economy, trade and competitiveness, and the far -reaching impact 
they wil l have on the world economy and the multilateral trading system as a whole.  
2. Firstly, regarding the interpretation of Article XX(a) of the GATT 1994, in our view,  the impact 
on trade from practices violating public morals are not limited to any particula r industry or sector, 
but rather affects society as a whole. Accordingly, the Panel should be careful not to use an overly 
restrictive interpretive approach when reviewing a Member's invocation of Article XX(a).  
3. Secondly, i ntellectual property protectio n is crucial to safeguarding and advancing 
international trade. Members and their businesses rely on adequate and sound intellectual property 
protections to ensure their competitiveness in the global marketplace, and it is these protections 
that encourage further innovation as well as the spread of knowledge . 
4. This dispute involves the practices of certain Members, which include foreign ownership 
restrictions, forced technology transfers, theft of trade secrets, among others. These practices may 
cause har m to Members, their businesses, and the credibility and  normal -functioning of the WTO. 
For this reason, we share the same concerns as the  United States, and believe it is important for 
these issues to be taken into account  by the Panel.  
5. This concludes o ur statement today. We thank the panel again for this opportunity.  
 
____________  
 
 
 
 
 
 
 
 
* Chinese Taipei request ed that its oral statement serves  as its  executive summary.