WT/DS568/1, G/L/1263  
G/SG/D62/1, G/LIC/D/53  
G/AG/GEN/146  
22 October 2018  
(18-6571) Page: 1/8 
  Original: English  
 
CHINA - CERTAIN MEAS URES CONCERNING IMPO RTS OF SUGAR  
REQUEST FOR CONSULTA TIONS BY BRAZIL  
The following communication, dated 16 October 2018 , from the delegation of Brazil  to the delegation 
of China , is circulated to the Dispute Settlement Body in accordance with Article  4.4 of the DSU.  
 
_______________  
 
 
My authorities have instructed me to request consultations with the Government of the People 's 
Republic of China ( "China ") pursuant to Articles 1 and 4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU"), Article XXII:1 of the General Agreement 
on Tariffs and Trade 1994  ("GATT 1994 "), Article 14 of the Agreement on Safeguards , Article 6 of 
the Agreement on Import Licensing Procedures , and Article 19 of the Agree ment on Agriculture  
concerning:  
 
1. China 's 22 May 2017 safeguard measure on imported sugar;  
2. China 's administration of its tariff -rate quota ( "TRQ") for sugar; and  
3. China 's so-called "automatic import licensing " system ( "AIL System ") for out -of-quota 
sugar.  
These measures are further identified and described below. An indication of the legal basis for the 
complaint is equally provided.  
I. China 's safeguard measure  
A. Identification of the measure  
On 22 September 2016, the Ministry of Commerce of the People 's Repub lic of China ( "MOFCOM ") 
initiated a safeguard investigation into imports of sugar.  This investigation was notified to the WTO 
Committee on Safeguards (the "Committee ") on the same day.1 The investigation covered both raw 
and refined sugar.2 
On 26 April 20 17, China notified the Committee of "findings of serious injury or threat thereof caused 
by increased imports " of sugar.3 
                                                
1 Notification under Article 12.1(a) of the Agreement on Safeguards on Initiation of an Investigation and 
the Reasons for it. China (Sugar). G/SG/N/6/CHN/2, circulated on 26 September 2016.  
2 According to China’s notification to the Committee on Safeguards, “This product is classified under the 
following code of the Customs Import and Export Tariff of the People's Republic of China : 17011200 , 
17011300, 17011400 , 17019100 , 17019910 , 17019920 , 17019990 (among which code 17011300 and 
17011400 is classified under code 17011100 in the 2011 version of the Customs Import and Export Tariff of 
the People's Republic of China )”. G/SG/N/6/CHN/2.  
3 Notification under Article 12.1(b) of the Agree ment on Safeguards on Finding a Serious Injury or 
Threat Thereof Caused by Increased Imports. China (Sugar). G/SG/N/8/CHN/2, circulated on 27 April 2017.  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 2 - 
 
  On 22 May 2017, MOFCOM adopted and applied a safeguard measure by publishing its determination 
to apply a safeguard measure with respe ct to imports of sugar (the "Determination ")4. On the same 
day, China notified the safeguard measure, as laid out in the Determination, to the Committee.5    
China 's safeguard measure on sugar takes the form of an additional ad valorem  duty of 45% for the 
first year, followed by 40% in the second year and 35% in the third year of its implementation.  
The safeguard duty applies to imports outside the existing TRQ for sugar. When China acceded to 
the WTO in 2001, it established a TRQ  of 1,945,000 tons for sugar, covering raw and refined sugar.6 
The in -quota rate for this sugar is 15%. The out -of-quota rate had been 50%, but with the imposition 
of the sugar safeguard, the out -of-quota rate was significantly increased.  The three -year s afeguard 
thus applies as follows:  
Duration  Additional ad valorem   
safeguard duty  
 Total duties on out -of-quota 
sugar  
May 22, 2017 – 
May 21, 2018  45% 95% 
May 22, 2018 – 
May 21, 2019  40% 90% 
May 22, 2019 – 
May 21, 2020  35% 85% 
 
China 's notification to the Committee also included an extensive list of developing countries that 
were exempt from the safeguard measure, as the "import shares of these countries (regions) 
collectively are about  2.48% ".7 
On 17 July 2018, China notified the Comm ittee that the "list of developing countries (regions) 
exempted from the safeguard measure should be revoked " and that the safeguard measure "will 
apply to the imports of sugar from all developing countries (regions) as from 1 August 2018 ".8  
This part of the consultations request concerns China 's safeguard measure on sugar, including all 
decisions and notifications of China mentioned above; any related or implementing measures; and 
amendments, successor or replacement measures taken by the authorities in r elation to this 
investigation and/or the imposition of the safeguard.  The measures at issue are referred to below 
as "China 's safeguard measure ". 
 
B. Legal basis for the complaint  
China 's safeguard measure appears to be inconsistent with China 's obligations  under the GATT 1994 
and the Agreement on Safeguards, including but not limited to the provisions listed below.  In 
particular, China appears to have acted inconsistently with:  
(a) Article  XIX:1(a) of the GATT  1994 because China failed to make a determination 
consistent with that provision with respect to the existence of alleged unforeseen 
developments, and how those alleged unforeseen developments resulted in 
increased imports of the sugar products covered by China 's safeguard measure.  
                                                
4 Announcement No.26 [2017] of the Ministry of Commerce — Announcement on the Application of 
Safeguard  Measures against Imported Sugar . The Ministry of Commerce of the People’s Republic of China, 22 
May 2017.  
5 Notification under Article 12.1(b) of the Agreement on Safeguards on Finding a Serious Injury or 
Threat Thereof Caused by Increased Imports. Notifi cation Pursuant to Article 12.1(c) of the Agreement on 
Safeguards. Notification Pursuant to Article 9, Footnote 2 of the Agreement On Safeguards. China (Sugar). 
G/SG/N/8/CHN/2/Suppl.1; G/SG/N/10/CHN/2; G/SG/N/11/CHN/2, circulated on 23 May 2017.  
6 Trade Po licy Review Body, Report by the Secretariat: China . WT/TPR/S/342, 15 June 2016, Table 4.2.  
See also Trade Policy Review Body, Report by the Secretariat: China . WT/TPR/S/375, 6 June 2018, Table 4.4.  
7 G/SG/N/8/CHN/2/Suppl.1; G/SG/N/10/CHN/2; G/SG/N/11/CHN/ 2; circulated on 23 May 2017.  
8 Notification under Article 12.1(b) of the Agreement on Safeguards  on Finding a Serious Injury or Threat 
Thereof Caused by Increased Imports. Notification Pursuant to Article 12.1(c) of the Agreement on Safeguards. 
Notificati on Pursuant to Article 9, Footnote 2 of the Agreement on Safeguards. China (Sugar). Supplement. 
G/SG/N/8/CHN/2/Suppl.2; G/SG/N/10/CHN/2/Suppl.1; G/SG/N/11/CHN/2/Suppl.1, circulated on 18 July 2018.  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 3 - 
 
  (b) Article  XIX:1(a) of the  GATT  1994 because China failed to make a determination 
consistent with that provision with respect to the effect of obligations incurred by 
China under the GATT 1994, and how that effect resulted in the alleged increase in 
imports of the sugar products un der investigation.  
(c) Articles  2.1, 3.1 and 4.2(a) of the Agreement on Safeguards and Article  XIX:1(a) of 
the GATT  1994 because China failed to make a determination  consistent with those 
provisions with respect to alleged increase in imports of the sugar products under 
investigation.  
(d) Articles  2.1, 4.1(a), 4.1(c), 4.2(a), and 4.2(b) of the Agreement on Safeguards and 
Article  XIX:1(a) of the GATT  1994 because China fai led to define the domestic 
industry in accordance with those provisions, among other reasons by excluding 
producers of the like or directly competitive products, and by failing to ensure that 
the domestic industry is limited only to those producers of prod ucts that are like or 
directly competitive with the subject imports, thus  also failing to make a proper 
determination as to whether the alleged increased imports caused serious injury to 
the relevant domestic industry.  
(e) Articles 2.1, 4.1(a), 4.1(c), 4.2(a)  and 4.2(b) of the Agreement on Safeguards and 
Article XIX:1(a) of the GATT 1994 because China failed to make a determination 
consistent with those provisions with respect to the existence of an alleged serious 
injury to the domestic industry.  
(f) Articles  2.1, 4.2(a), and 4.2(b) of the Agreement on Safeguards and Article  XIX:1(a) 
of the GATT 1994 because China failed to establish the existence of a causal link 
between the alleged increased imports and the alleged serious injury to the domestic 
industry, and f ailed to determine that the alleged serious injury caused by factors 
other than the increased imports was not attributed to increased imports.  
(g) Articles 5.1 and 7.1 of the Agreement on Safeguards and Article  XIX:1(a) of the 
GATT  1994 because China 's safegua rd measure was not imposed only to the extent 
necessary to prevent or remedy the alleged serious injury and to facilitate 
adjustment.  
(h) Articles  3.1 and 4.2(c) of the Agreement on Safeguards and Article  XIX:1(a) of the 
GATT  1994 because China failed to set forth adequate findings and reasoned 
conclusions reached on all pertinent issues of fact and law and to provide a detailed 
analysis of the case under investigation, as well as a demonstration of the relevance 
of the factors examined.  
(i) Article 8.1 of the Agr eement on Safeguards because China did not endeavour to 
maintain a substantially equivalent level of concessions and other obligations to that 
existing under the GATT  1994 between it and Brazil.  
(j) Article 12.3 of the Agreement on Safeguards because China fai led to provide 
adequate opportunity for prior consultations with Brazil, which has a substantial 
interest as one of the main exporters of sugar to China prior to the safeguard 
measure.  
(k) Article 11.1(a) of the Agreement on Safeguards because China imposed th e 
safeguard measure in violation of Articles 2.1, 3.1, 4.1(a), 4.1(c), 4.2(a), 4.2(b), 
4.2(c), 5.1, 7.1, 8.1 and 12.3 of the Agreement on Safeguards as well as Article 
XIX:1(a) of the GATT 1994.  
(l) Article II:1(a) and (b) of the GATT 1994 because in applying its safeguard measure, 
China failed to accord treatment no less favourable to sugar products from Brazil 
than that provided for in the appropriate part of China 's Schedule.  
China 's safeguard measure therefore nullifies or impairs benefits accruing to Brazil directly or 
indirectly under the Agreement on Safeguards and the GATT 1994.  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 4 - 
 
  II. China's administration of its tariff rate quota for sugar  
A. Identification of the measure  
China 's Schedule of Concessions and Commitments on Goods  provides for a TRQ to permit  the 
importation of specified volumes of sugar at lower in -quota duty rates.9  However, China appears to 
administer the TRQ for sugar  inconsistently with its WTO obligations. In particular, China 's 
administration of its TRQ for sugar appears to be inconsis tent with its commitments specified in 
paragraph 1.2 of Part I of the Protocol on the Accession of the People 's Republic of China  (WT/L/432)  
("Accession Protocol ") which incorporates the commitments in paragraph 116 of the Report of the 
Working Party on the Accession of China  (WT/MIN(01)/3) ( "Working Party Report "), as well as with 
Articles X:3(a), XI:1, XIII:2 and XIII:3(b) of the GATT 1994.  
 
The legal instruments through which China has established its TRQ for sugar include, but are not 
limited to, the  following, operating separately or collectively:  
 
• Foreign Trade Law of the People 's Republic of China (Adopted at the 7th Session of Standing 
Committee of the Eighth National People's Congress on May 12, 1994; revised at the 8th 
Session of the Standing C ommittee of the Tenth National People's Congress on April 6, 2004; 
and amended in accordance with the Decision on Amending Twelve Laws Including the 
Foreign Trade Law of the People's Republic of China adopted at the 24th Session of the 
Standing Committee o f the Twelfth National People's Congress on November 7, 2016);  
 
• Customs Law of the People 's Republic of China (adopted at the 19th Meeting of the Standing 
Committee of the Sixth National People's Congress on 22 January 1987, amended at the 
30th Meeting of the Standing Committee of the Twelfth National People 's Congress on 4  
November  2017);  
 
• Regulation of the People 's Republic of China on the Administration of the Import and Export 
of Goods (Decree of the State Council No. 332, adopted at the 46th executive meeting of 
the State Council on 31 October 2001, effective 1 January 2002); and  
 
• Regulation of the People 's Republic of China on Import and Export Duties  (Decree of the 
State Council No. 392, adopted at the 26th executive meeting of the State Council on 29  
October 2003, amended 1 March  2017, in Decree No. 6 76). 
 
The legal instruments through which China administers its TRQ for sugar include, but are not limited 
to, the following, operating separately or collectively:  
 
• Directory of State -Trading Importing En terprises  (published by the Ministry of Commerce on 
17 January 2003);  
 
• Provisional Measures on the Administration of Import Tariff -Rate Quotas  for Agricultural 
Products  (Decree of the Ministry of Commerce and the National Development and Reform 
Commission [2003] No. 4, 27 September 2003, effective 27 September 2003);  
 
• Public Notice on Authorized Agencies for Agricultural Product Import Tariff -Rate Quotas  
(Announcement of the Ministry of Commerce and the National Development and Reform 
Commission, [2003] No.  54, 15 October 2003);  
 
• Detailed Rules on the Application and Allocation of Sugar Import Tariff -rate Quotas in 2018  
(Announcement of the Ministry of Commerce [2017] No. 59, 30 September 2017);  
 
                                                
9 China’s most recent notification of tariff rate quotas t o the WTO Committee on Agriculture, dated 
2 February 2016 (G/AG/N/CHN/30), states that the TRQ for sugar applies to these products:  
• Raw cane sugar, in solid form 17011300 17011400  
• Raw beet sugar, in solid form 17011200  
• Cane or beet sugar, chemically pure sucrose, containing added flavouring or colouring 17019100  
• Granulated sugar 17019910  
• Superfine sugar 17019920  
• Other cane or beet sugar, chemically pure sucrose, in solid form, n.e.s. 17019990  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 5 - 
 
  • Notice on the Publication of Applicant Enterprises for Import Tariff-Rate Quotas for Sugar in 
2018, (published by the Ministry of Commerce on 29 November 2017); and  
 
• Public Notice on the Reallocation of Import Tariff -Rate Quotas for Agricultural Products in 
2018 (Announcement of the Ministry of Commerce and the Natio nal Development and 
Reform Commission [2018] No. 9, 8 August 201 8). 
 
This part of the consultations request concerns China 's administration of its TRQ  for sugar, including 
all measures, decisions and notifications of China mentioned above; any related or implementing 
measures; and amendments, successor or replacement measures taken by the authorities in relation 
to China 's administration of its sugar TR Q. 
 
B. Legal basis for the complaint  
China 's administration of its TRQ for sugar appears to be inconsistent with China 's obligations under 
the Accession Protocol and the GATT 1994, including but not limited to the provisions listed below.  
In particular, Chin a appears to have acted inconsistently with:  
(a) Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the 
commitments in paragraph 116 of the Working Party Report10, because:  
• China has failed to ensure that it administers its sugar TRQ on a tr ansparent, 
predictable, uniform, fair and non -discriminatory basis.  
• China has failed to ensure that it administers its sugar TRQ using clearly specified 
timeframes, administrative procedures and requirements that would provide 
effective import opportunitie s and reflect consumer preferences and end -user 
demand.  
• China has failed to ensure that it administers its sugar TRQ using administrative 
procedures and requirements that would not inhibit the filling of the TRQ.  
• China has failed to apply its sugar TRQ in  full accordance with WTO rules and 
principles and with the provisions set out in China's Schedule of Concessions and 
Commitments on Goods.   
(b) Article  X:3(a) of the GATT  1994, because China has failed to administer its sugar 
TRQ in a uniform, impartial and reasonable manner.  
(c) Article XI:1 of the GATT 1994, because China institutes or maintains restrictions on 
importation of sugar, including those made effective through quotas.  
(d) Article  XIII:2 of the GATT  1994, because China has failed to aim at a distribution of 
trade in sugar app roaching as closely as possible  the shares which the various WTO 
Members might be expected to obtain in the absence of such restrictions.  
(e) Article XIII:3(b) of the GATT 1994, because China has failed to give public notice of 
the total quantity or value of sugar which will be permitted to be imported during a 
specified future period and of any change in such quantity or value.   
China 's administration of its sugar TRQ therefore nullifies or impairs benefits accruing to Brazil 
directly or  indirectly under the Accession Protocol and the GATT 1994.  
 
III. China 's Automatic Import Licensing System for Sugar (the "AIL System ") 
A. Identification of the measure  
With respect to imports of sugar not covered by the TRQ, MOFCOM  requires that importers and 
refiners obtain an import license, which China labels as an "automatic " import license. However, 
before such requests for import licenses are made, MOFCOM provides verbal instructions to 
importers and refiners, informing each o f them of the maximum amount of sugar that they will be 
                                                
10 As specified in China 's Accession Protocol, Part I, paragraph 1.2 (incorporating commitments 
referenced in paragraph 342 of China's Working Party Report, including paragraph 116).  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 6 - 
 
  permitted to import outside of the TRQ. Importers and refiners make their import requests based 
on such instructions, and they refrain from requesting authorization to import sugar above the 
pre-determined amounts.   
 
Despite its name, the AIL System is thus not an "automatic " licensing system. Approval is granted 
only up to the maximum level approved by MOFCOM. China makes this restriction effective through 
import licenses, which are granted only if t he request presented by the importer does not exceed 
the amount set by MOFCOM. Furthermore, under the AIL System, if imports increase too rapidly, 
MOFCOM can reduce or stop the issuance of licenses to import sugar at any time.  China is thus 
restricting th e importation of out -of-quota sugar.  
 
The measure being challenged consists of the AIL System and the requirements imposed by China 
in the context of its AIL System that limit the amount of sugar for which importers and refiners may 
request an import lice nse. The relevant legal provisions include those identified in Section II.A of 
this request, plus those that implement the AIL System:  
 
• Administrative Licensing Law  (adopted at the 4th Meeting of the Standing Committee of the 
Tenth National People 's Congre ss on 27 August 2003, effective 1 July 2004);  
 
• Administrative Measures for Automatic Import License of Goods  (Decree of the Ministry of 
Commerce and the General Administration of Customs [2004] No. 26, 10 November 2004, 
effective 1 January 2005);  
 
• Measure s for the Administration of Issuing Authorities of Import and Export Commodity 
Licenses  (Decree of the Ministry of Commerce [2010] No. 3, 12 September 2010, effective 
12 September 2010);  
 
• Measures on the Administration of the Certificates of Import and Export  Licenses  (Decree of 
the Ministry of Commerce [2012] No. 1, 4 February 2012, effective 5 March 2012);  
 
• Public Notice on the Inclusion of Sugar in the Catalogue for Commodities Subject to 
Automatic Import Licenses (Announcement of the Ministry of Comm erce and the General 
Administration of Customs and Commerce Ministry [2014] No. 71, 13 October 2014, 
effective 1 November 2014);  
 
• Detailed Rules on the Administration of Automatic Import Licenses of the Foreign -Invested 
Enterprises  (Decree of the Ministry of Foreign Trade and Economic Cooperation and the 
General Administration of Customs, [2002] No. 4, 8 February 2002, amended by Decree of 
the Ministry of Commerce [2015] No. 2, 28 October 2015, effective 28 October 2015);  
 
• Catalogue for Commodities Subject to Automatic Import Licenses in 2018  (Announcement 
of the Ministry of Commerce, the General Administration of Customs, and the General 
Administration of Quality Supervision, Inspection and Quarantine, [2017] No. 87, 10 
December 2017, effective 1 January 20 18); and  
 
• Tariff Adjustment Program for 2018 (Notice of the Customs Tariff Committee of the State 
Council [2017] No. 27, 12 December 2017, effective 1 January 2018).  
 
as well as any amendments, or successor, replacement or implementing measures.  
 
B. Legal basis for the complaint  
China 's AIL System, a non -automatic import licensing system as described above, appears to be 
inconsistent with China 's obligations under the GATT 1994, the Agreement on Import Licensing 
Procedures, the Agreement on Agriculture and the Accession Protocol. In particular, China appears 
to have acted inconsistently with:  
 
(a) Article X:1 of the GATT  1994, because China has failed to publish this measure 
promptly in such a manner as to enable governments and traders to become 
acquainted with  it. WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 7 - 
 
  (b) Article X:2 of the GATT 1994, because China has enforced this measure prior to 
publication.  
(c) Article  X:3(a) of the GATT  1994, because China has failed to administer this measure 
in a uniform, impartial and reasonable manner.  
(d) Article XI:1 of the GATT 1 994, because China institutes or maintains restrictions on 
the importation of sugar, including those made effective through import licenses.  
(e) Article XIII:2 of the GATT  1994, because China has failed to  aim at a distribution of 
trade in sugar approaching a s closely as possible to the shares which the various 
WTO Members might be expected to obtain in the absence of such restrictions.  
(f) Article XIII:3(a) of the GATT 1994, because in issuing import licences in connection 
with import restrictions, China has fail ed to provide all relevant information 
concerning the administration of the restrictions.  
(g) Article 1.2 of the Agreement on Import Licensing Procedures, because China has 
failed to ensure that the administrative procedures used to implement this import 
licensing regime are in conformity with the relevant provisions of GATT  1994.  
(h) Article 1.3 of the Agreement on Import Licensing Procedures, because China has 
failed to ensure that the rules for these import licensing procedures are neutral in 
application and administered in a fair and equitable manner.  
(i) Article 2.2(a) of the Agreemen t on Import Licensing Procedures, because China has 
failed to ensure that that automatic licensing procedures are not administered in 
such a manner as to have restricting effects on imports subject to automatic 
licensing, should the AIL System be considere d a form of automatic import licensing.  
(j) Article 3.2 of the Agreement on Import Licensing Procedures, because China has 
failed to ensure that non -automatic licensing does not have trade -restrictive or 
trade -distortive effects on imports additional to those caused by the imposition of 
the restriction.  
(k) Article 3.3 of the Agreement on Import Licensing Procedures, because China has 
failed to ensure that in the case of licensing requirements for purposes other than 
the implementation of quantitative restrictions,  it has published sufficient 
information for other Members and traders to know the basis for granting and/or 
allocating licences.  
(l) Article 4.2 and footnote 1 of the Agreement on Agriculture, because China has failed 
to ensure that it does not maintain, reso rt to, or revert to certain measures of the 
kind which have been required to be converted into ordinary customs duties, 
including quantitative import restrictions and discretionary import licensing.  
(m) Paragraph 1.2 of Part I of the Accession Protocol, becaus e China has failed to ensure 
that it has complied with the commitments in paragraphs 120, 122, 127 and 136  of 
the Working Party Report11, as well as paragraphs 2(C)(1) and 8(1)(a) of the 
Accession Protocol.  
The AIL System System therefore nullifies or impai rs benefits accruing to Brazil directly or indirectly 
under the GATT 1994, the Agreement on Import Licensing Procedures, the Agreement on Agriculture 
and the Accession Protocol.  
For all of the measures identified in all parts of this request, Brazil reserv es the right to raise 
additional claims and measures and address additional legal and factual issues under other 
                                                
11 As specified in China 's Accession Protocol, Part I, paragraph 1.2 (incorporating commitments 
referenced in paragraph 342 of China's Working Party Report, including paragraph 116).  WT/DS568/1 • G/L/1263 • G/SG/D62/1 • G/LIC/D/53 • G/AG/GEN/146  
 
- 8 - 
 
  provisions of the covered agreements during the course of the consultations and in any future 
request for panel proceedings.  
 
Brazil looks forw ard to receiving China 's reply to this request and to determining a mutually 
convenient date for consultations.  
 
 
 
__________