WORLD TRADE  
ORGANIZATION  WT/DS363/5 
11 October 2007 
 
 (07-4406) 
 Original:   English 
  
 
CHINA – MEASURES AFFECTING TRADING RIGHTS AND 
DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS 
AND AUDIOVISUAL ENTERTAINMENT PRODUCTS 
 
Request for the Establishment of  a Panel by the United States
 
 
  The following communication, dated 10 Octobe r 2007, from the delegation of the United 
States to the Chairman of the Dispute Settlement Bo dy, is circulated pursuant to Article 6.2 of the 
DSU. 
 
_______________ 
 
On 10 April 2007, the United States requested co nsultations 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 of the General Agreement 
on Tariffs and Trade 1994  ("GATT 1994"), and Article XXII of the General Agreement on Trade in 
Services  ("GATS") with respect to (1) certain measures that restrict trading rights with respect to 
imported films for theatrical release, a udiovisual home entertainment products ( e.g., video cassettes 
and DVDs), sound recordings, and publications ( e.g., books, magazines, newspapers, and electronic 
publications), and (2) certain measures that restrict market access for, or discriminate against, foreign 
suppliers of distribution services for publications, fo reign suppliers of audiovisual services (including 
distribution services) for audiovisual home entertai nment products, and fore ign suppliers of sound 
recording distribution services.
1  On 10 July 2007, the United States requested supplemental 
consultations with China pursuant to Articles 1 and 4 of the DSU, Article XXII of the GATT 1994, 
and Article XXII of the GATS with respect to certain market access concerns related to the 
distribution of imported films for theatrical release and the distribution of imported sound recordings, 
as well as sound recording distribution services.  Specifi cally, the US concerns related to (1) certain 
measures that provide less favorable distribution opportunities for imported films for theatrical release than for like domestic films, and (2) certain me asures that provide less favorable opportunities for 
foreign suppliers of sound recording distribution services and for the distribution of imported sound recordings than are provided to like service suppliers and like products.
2  
 
The United States held consultations with Chin a on 5-6 June, 2007, and 31 July 2007.  Those 
consultations provided some helpful clarifications but unfortunately did not resolve the dispute.   
 
                                                      
1 WT/DS363/1. 
2 WT/DS363/1/Add.1. WT/DS363/5 
Page 2  
 
  I. Trading Rights  
 
The United States considers that China is acting inconsistently with its  obligations under its 
protocol of accession to the World Trade Organization
3 ("WTO") and under the GATT 1994 by not 
allowing all Chinese enterprises and all foreign enterp rises and individuals to have the right to import 
into the customs territory of China the following pr oducts (collectively, the "Products"):  films for 
theatrical release, publications ( e.g., books, magazines, newspapers, and electronic publications), 
audiovisual home entertainment products ( e.g., video cassettes and DVDs), and sound recordings.  
 
In the Accession Protocol, China committed to fully open the right to trade, with some limited 
exceptions not applicable here, within three years after accession.  Despite those commitments, China 
reserves to certain Chinese state-designated and who lly or partially state-owned enterprises the right 
to import the Products.  It also appears that Ch ina accords treatment less favorable to foreign 
individuals and enterprises, including those not invested or registered in  China, than that accorded to 
enterprises in China with r espect to the right to trade (and in part icular, with respect to the right to 
import the Products into China). 
 
In this connection, the measures at issue involve: 
 (1) the Regulations on Administration of the Films Industry
4; 
 
(2) the Provisional Rules on the Entry Criteria for Operating Film Enterprises5; 
 (3) the Administrative Regulation on Publishing
6; 
 (4) the Administrative Regulations on Audiovisual Products
7; 
 
(5) the Catalogue for Guidance of Foreign Investment Industries8; 
 (6) the Several Opinions of the Ministry of Culture, State Administration of Radio, Film and 
Television, General Administration of Press and Publication, National Development and 
Reform Commission and the Ministry of Commerce on Introducing Foreign Investment into 
the Cultural Sector
9; 
 7) the Measures for the Administration of Import of Audio and Video Products
10; 
 
                                                      
3 Protocol on the Accession of the People’s Republic of China , WT/L/432, 23 November 2001  (the 
"Accession Protocol"). 
4 State Council Order No. 342, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
5 Decree No. 43, jointly issued by the State Administration of Radio, Film and Television and the 
Ministry of Commerce, promulgated on 10 October 2004 and effective as of 10 November 2004. 
6 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
7 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
8 Order [2004] No. 24, jointly issued by the National Development and Reform Commission and the 
Ministry of Commerce (30 November 2004). 
9 Wen Ban Fa [2005] No. 19, jointly issued by the Ministry of Culture, the State Administration of 
Radio, Film and Television, the General Administration of Press and Publication, the National Development and 
Reform Commission, and the Ministry of Commerce (6 July 2005). 
10 Decree No. 23 of the Ministry of Culture and the General Administration of Customs 
(17 April 2002).  WT/DS363/5 
 Page 3 
 
 
  (8) the Measures for Administration of Chinese Foreign Contractual Distribution Ventures of 
Audiovisual Products11; 
 (9) the Administrative Regulations on Electronic Publications
12; and 
 
(10) the Procedure for Examination and Approva l of Establishment of Publication Importation 
Entities13; 
 
as well as any amendments, related measures, or implementing measures.  
China's measures thus appear to be inconsiste nt with China's obligations under the provisions 
of paragraphs 5.1 and 5.2 of Pa rt I of the Accession Protocol,
14 as well as China's obligations under 
the provisions of paragraph 1.2 of Part I of the Accession Protocol (to the extent that it incorporates commitments in paragraphs 83 and 84 of the Report of the Working Party on the Accession of 
China
15).  The Accession Protocol forms part of the terms of accession agreed between China and the 
WTO and is an integral part of the Marrakesh Agreement Establishing the World Trade Organization . 
 Furthermore, to the extent that the measures at  issue impose prohibitions or restrictions other 
than duties, taxes or other charges on the impor tation into China of the Products, these measures 
appear to be inconsistent with China's obliga tions under Article XI:1 of the GATT 1994.   
 
II. Distribution Services for Publications, A udiovisual Home Entertainment Products, and 
Sound Recordings  
 
In the Accession Protocol, China made market access and national treatment commitments in 
the distribution services and audiovisual services sectors of its Schedule of Specific Commitments on 
Services (the "Schedule").
16  The United States considers that, despite those commitments, China is 
imposing market access restrictions and discrim inatory limitations on foreign service providers 
seeking to engage in the distribution of publicati ons, audiovisual home entertainment products, and 
sound recordings inconsistently with China's obligations under the GATS.  Certain of these 
restrictions and limitations also appear to be inconsistent with China's obligations under the 
GATT 1994. 
 
In this connection, China maintains these rest rictions and limitations through measures that 
include:  (1) the Administrative Regulation on Publishing
17; 
 
(2) the Administrative Regulations on Audiovisual Products18; 
 
                                                      
11 Promulgated by the Ministry of Culture and Ministry of Commerce on 9 February 2004 (superceding 
the measures notified by  China in S/C/N/219). 
12 Order No. 11 of  the General Administration of Pre ss and Publication (30 December 1997). 
13General Administration of Press and Publication (27 December  2005) (available at:  
www.gapp.gov.cn/GalaxyPortal/inner/zsww/zongsu3.j sp?articleid=4923&boardpid=1450&boardid1=11501010
11150c) (visited on 9 October 2007). 
14 The Products are not listed in Annex 2A or Annex 2B of the Accession Protocol. 
15 WT/MIN(01)/3 (the "Working Party Report"). 
16 WT/L/432, Annex 9, and WT/MIN(01)/3/Add.2. 
17 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
18 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. WT/DS363/5 
Page 4  
 
  (3) the Provisions on Guiding the Orientation of Foreign Investment
19; 
 (4) the Catalogue for Guidance of Foreign Investment Industries
20; 
 (5) the Several Opinions of the Ministry of Cultu re, the State Administration of Radio, Film and 
Television, the General Administration of Pr ess and Publication, the National Development 
and Reform Commission and the Ministry of  Commerce on Introducing Foreign Investment 
into the Cultural Sector
21; 
 (6) the Administrative Regulations on Management  of Foreign-Invested Book, Magazine and 
Newspaper Distribution Enterprises
22; 
 (7) the Administrative Regulations on the Publication Market (revised)
23; 
 (8) the Administrative Regulations on Electronic Publications
24; 
 
(9) the Administrative Measures on Subscription of Imported Publications25; 
 (10) the Procedure for Examina tion and Approval of Establishment of Chinese-Foreign Entities, 
Cooperative Joint Ventures, and Wholly Foreign Owned Publication Distribution Enterprises
26; 
 
(11) the Measures for Administration of Chinese Foreign Contractual Distribution Ventures of 
Audiovisual Products27; 
 (12) Interim Regulations on Internet Culture Administration
28;  
 
(13) the Circular of the Ministry of Culture on Relevant Issues of Implementation of the Interim 
Regulations on Internet Culture Administration29; and 
 
(14) the Several Opinions on the Develo pment and Regulation of Network Music30; 
 
                                                      
19 State Council Order No. 346, promulgated on 11 February 2002. 
20 Order [2004] No. 24, jointly issued by the National Development and Reform Commission and the 
Ministry of Commerce (30 November 2004). 
21 Wen Ban Fa [2005] No. 19, jointly issued by the Ministry of Culture, the State Administration of 
Radio, Film and Television, the General Administration of Press and Publication, the National Development and 
Reform Commission, and the Ministry of Commerce (6 July 2005). 
22 Order No. 18 of the General Administration of Press and Publication and the Ministry of Foreign 
Trade and Economic Cooperation (17 March 2003). 
23 Promulgated by the General Administration of Press and Publication on 16 July 2003, revised on 
16 June 2004. 
24 Order No. 11 of  the General Administration of Pre ss and Publication (30 December 1997). 
25 Order No. 27 of the General Administration of Press and Publication (adopted at the fourth 
conference of the General Administration of Press and Publication on 9 September 2004 and published on 
31 December 2004). 
26 General Administration of Press and Publication (27 December 2005). 
27 Promulgated by the Ministry of Culture and Ministry of Commerce on 9 February 2004 (superceding 
the measures notified by  China in S/C/N/219). 
28 Promulgated in Order No. 27 of the Ministry of Culture (10 May 2003), amended by Order No. 32 of 
the Ministry of Culture (1 July 2004). 
29 Wen Shi Fa [2003] No. 27, issued by the Ministry of Culture (4 July 2003). 
30Ministry of Culture (20 November 2006); available at: 
http://www.ccnt.gov.cn/xwzx/w hbzhxw/t20061211_32440.htm (visited on 9 October 2007).  WT/DS363/5 
 Page 5 
 
 
  as well as any amendments, related measures, or implementing measures. 
 
A. Publications (e.g ., books, newspapers, periodicals, and electronic publications)  
 
In Sectors 4A-4E of its Schedule, China unde rtook market access and national treatment 
commitments with respect to the supply through co mmercial presence in China by service suppliers of 
other Members of, inter alia , distribution services for publications.   
 
The measures at issue, however, appear to  prohibit foreign service suppliers (including 
wholly or partially foreign-owned or foreign-invest ed enterprises) from engaging at least in types of 
distribution described in these measures as the "mast er distribution" or "master wholesaling" of 
publications.  The measures at issue also appear to prohibit foreign service  suppliers (including 
wholly or partially foreign-owned or foreign-invested enterprises) from engaging in the distribution of 
"electronic publications" (a term that refers to a subset of publications) generally, whether at the 
"master wholesale" level, the "wholesale" level, or otherwise. 
 
Furthermore, to the extent that some foreign service suppliers are allowed to engage in some 
aspects of the distribution of publications, there app ear to be discriminatory requirements concerning 
such suppliers' registered capital and such supp liers' operating term, as well as discriminatory 
limitations ( e.g., limitations by type, content, or origin of publication) on the publications that such 
suppliers may distribute. 
 
The measures at issue therefore appear to acco rd to foreign suppliers of distribution services 
for publications treatment less favorable than th at accorded to Chinese suppliers of distribution 
services for publications.  Moreover, the measures at issue do not appear to fall within the terms, 
limitations, conditions, or  qualifications on market access or national treatment that China has 
specified in its Schedule for the distribution of p ublications through commerc ial presence in China by 
service suppliers of other Members.  Accordingly, the measures at issue appear to be inconsistent with 
China's obligations under Article XVII of the GATS.  
In addition, the measures at issu e also appear to establish diffe rent distributio n opportunities 
for imported and domestically produced books, ne wspapers and periodicals.  Imported books, 
newspapers and periodicals are restricted in their distribution opportunities.  Certain foreign service 
suppliers that are allowed to di stribute books, newspapers and periodicals are not allowed to distribute 
imported books, newspapers  and periodicals.  By contrast, domestically produced books, newspapers 
and periodicals are not restricted in this way. Acco rdingly, the measures at issue also appear to be 
inconsistent with China's oblig ations under Article III:4 of th e GATT 1994 and the provisions of 
paragraph 5.1 of Part I of the Accession Protocol  as well as China's obligations under the provisions 
of paragraph 1.2 of Part I of th e Accession Protocol (to the extent that it incorporates commitments in 
paragraph 22 of the Working Party Report).  
 
B. Audiovisual Home Entertainment Products  
 
In Sector 2D of its Schedule, China unde rtook market access and national treatment 
commitments with respect to the supply through co mmercial presence in China by service suppliers of 
other Members of distribution services for a range of products including, inter alia , audiovisual home 
entertainment products, such as video cassettes and DVDs.  
The measures at issue, however, appear to  prohibit foreign service suppliers (including 
wholly or partially foreign-owned or foreign-i nvested enterprises) from engaging in a type of 
distribution described in these measures as the "mast er distribution" or "master wholesaling" of 
audiovisual home entertainment products.  In addition,  to the extent that foreign services suppliers are 
permitted to engage in any distribution of those products, the measures at issue appear to impose WT/DS363/5 
Page 6  
 
  requirements that the service be supplied through a fo rm of entity that Chinese persons control, or in 
which Chinese persons have a dominant position, or for which there are limitations concerning the 
participation of foreign capital.  The measures at issue also appear to impose discriminatory 
limitations on foreign service suppliers' operating term  in China; such limitations do not appear to be 
applied to Chinese suppliers of distribution ser vices for audiovisual home entertainment products. 
 
The measures at issue therefore appear to impo se restrictions on the market access of foreign 
service suppliers of audiovisual distribution servi ces for audiovisual home entertainment products.  
The measures at issue also appear to accord to foreign suppliers of audiovisual distribution services 
for audiovisual home entertainment products treatment that is less favorable than that accorded to 
Chinese suppliers of audiovisual distribution services for audiovisual home entertainment products.  
Moreover, the measures at issue do not appear to fall within the terms, limitations, conditions, or 
qualifications on market access or national treatment that China has specified in its Schedule for the 
distribution of such products through commercial pr esence in China by service suppliers of other 
Members.  The measures at issue th erefore appear to be inconsiste nt with China's obligations under 
Articles XVI and XVII of the GATS.  
 
C. Sound Recordings  
 
In Sector 2D of its Schedule, China unde rtook market access and national treatment 
commitments with respect to the supply of sound recording distribution services through cross-border 
supply and through commercial presence in China by service suppliers of other Members. 
 The measures at issue, however, appear to pl ace market access restrictions and discriminatory 
requirements on foreign service suppliers seeking to engage in the digital distribution of sound 
recordings.  For example, the Interim Regulations on Internet Culture Administration (the "Interim 
Regulations") define "internet cultural activiti es" as including activities such as wholesaling and 
retailing of "internet cultural products" on the intern et (including to mobile telephones).  The Interim 
Regulations further define "internet cultural pr oducts" as including various kinds of "network 
audiovisual products," including both audiovisual products that have been produced specifically for transmission over the internet and products that are the result of the transformation of an audiovisual 
product existing in physical form into a format that can be transmitted over the internet.  It appears, 
therefore, that the definition of "internet cultura l products" extends to digital sound recordings, and 
that the definition of "internet cultural activities" ex tends to the digital distribution of such products. 
 
The Interim Regulations and the other measures at  issue appear to prohibit any foreign-owned 
or foreign-invested entity from obtaining the licen ses necessary to engage in "internet cultural 
activities."  As a result, the measures at issue a ppear to prohibit any foreign-owned or foreign-
invested entities from digital distribution of "interne t cultural products," incl uding sound recordings in 
digital form. 
 
In addition, even if foreign-invested entiti es can engage in the distribution of sound 
recordings in digital form, the measures at issue a ppear to accord foreign suppliers of sound recording 
distribution services less favorable treatment than  that accorded to Chinese suppliers of sound 
recording distribution services.  The measures at is sue provide that any "imported" music (which 
appears to include music in which certain rights, su ch as the rights described in the first sentence of 
Article 41 of the Copyright Law of the People's Repub lic of China, are held by a foreign-owned or 
foreign-invested enterprise) is subject to conten t review by the Chinese Government before digital 
distribution.  However, music in  which such rights are held by Chinese enterprises without foreign 
investment is not subject to such content review  before digital distribution within China.   
 
Consequently, it appears that foreign-owned and foreign-invested sound recording 
distribution enterprises in China, as well as ente rprises that supply cross-border sound recording  WT/DS363/5 
 Page 7 
 
 
  distribution services, are treated less favorably than  like sound recording distribution enterprises that 
are wholly Chinese-owned.  Moreover, the measures at issue do not appear to fall within the terms, 
limitations, conditions, or  qualifications on market access or national treatment that China has 
specified in its Schedule with respect to the supply of these services.  The measures at issue therefore 
appear to be inconsistent with China's obligations under Article XVII of the GATS. 
  
III. Distribution of Films for Theatrical Release  
 
The United States also considers that China is acting inconsistently w ith its obligations under 
the GATT 1994 and the Accession Protocol by providing distribution opportunities for imported films 
for theatrical release that are less favorable than  the distribution opportunities for domestically 
produced films for theatrical release.  
China appears to establish a dual distribution sy stem for imported and domestically produced 
films for theatrical release.  Imported films can be distributed within China only by two entities, each 
of which operates on a nationwide basis.  By contr ast, domestically produced films can be distributed 
not only by those same two entities, but also by many other entities, including entities that operate on a local, provincial or other subnational basis.    
In this connection, the measures at issue involve: 
 
(1) the Regulations on the Administration of the Films Industry
31; 
 (2) the Provisional Rules on the Entry Criteria for Operating Film Enterprises
32; and 
 (3) the Provisional Specific Implementing Ru les for Reforming Film Distribution and 
Exhibition
33;  
 as well as any amendments, related measures, or implementing measures.  
Accordingly, the measures at issue appear to be inconsistent with China's obligations under 
Article III:4 of the GATT 1994 and the provisions of pa ragraph 5.1 of Part I of the Accession Protocol 
as well as China's obligations under the provisions of paragraph 1.2 of Part I of the Accession 
Protocol (to the extent that it incorporates commitments in paragraph 22 of the Working Party Report).   
IV. Distribution of Sound Recordings  
 
The United States considers that China is acting inconsistently with its obligations under the 
GATT 1994 and the Accession Protocol by providing di stribution opportunities for sound recordings 
imported into China in physical form that are le ss favorable than the distribution opportunities for 
sound recordings produced in China.   
China appears to require that sound recordings imported into China in physical form but 
intended for digital distribution must undergo cont ent review by the Chinese Government prior to 
such distribution within China.  However, domestic ally produced sound recordings appear not to be 
                                                     
 
31 State Council Order No. 342, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
32 Decree No. 43, jointly issued by the State Administration of Radio, Film and Television and the 
Ministry of Commerce, promulgated on 10 October 2004 and effective as of 10 November 2004. 
33 Guang Fa Ban Zi [2001] No. 1519, jointly issued by the State Administration of Radio, Film and 
Television and the Ministry of Culture (18 December 2001). WT/DS363/5 
Page 8  
 
  subject to this requirement, but can instead be digita lly distributed immediately.  It thus appears that 
sound recordings imported into Ch ina in physical form are treated less favorably than sound 
recordings produced in China in physical form.    
In this connection, the measures at issue involve: 
 
(1) the Interim Regulations on Internet Culture Administration
34; 
 (2) the Circular of the Ministry of Culture on Relevant Issues of Implementation of the Interim 
Regulations on Internet Culture Administration
35; 
 
(3) the Catalogue for Guidance of Foreign Investment Industries36; 
 (4) the Several Opinions of the Ministry of Cultu re, the State Administration of Radio, Film and 
Television, the General Administration of Pr ess and Publication, the National Development 
and Reform Commission and the Ministry of  Commerce on Introducing Foreign Investment 
into the Cultural Sector
37; and 
 (5) the Several Opinions on the Develo pment and Regulation of Network Music
38; 
 as well as any amendments, related measures, or implementing measures. 
 
The measures at issue therefore appear to be inconsistent with China's obligations under 
Article III:4 of the GATT 1994 and the provisions of  paragraph 5.1 of Part I of the Accession 
Protocol, as well as China's obligations under the pr ovisions of paragraph 1.2 of Part I of the 
Accession Protocol (to the extent that it incorpor ates commitments in paragraph 22 of the Working 
Party Report).  
 
* * * * * 
 
Accordingly, the United States respectfully request s, pursuant to Article 6 of the DSU, that 
the Dispute Settlement Body establish a panel to ex amine these matters, with the standard terms of 
reference set out in Article 7.1 of the DSU.      
 
__________ 
  
 
  
                                                     
 
34 Promulgated in Order No. 27 of the Ministry of Culture (10 May 2003), amended by Order No. 32 of 
the Ministry of Culture (1 July 2004). 
35 Wen Shi Fa [2003] No. 27, issued by the Ministry of Culture (4 July 2003). 
36 Order [2004] No. 24, jointly issued by the National Development and Reform Commission and the 
Ministry of Commerce (30 November 2004). 
37 Wen Ban Fa [2005] No. 19, jointly issued by the Ministry of Culture, the State Administration of 
Radio, Film and Television, the General Administration of Press and Publication, the National Development and 
Reform Commission, and the Ministry of Commerce (6 July 2005). 
38 Ministry of Culture (20 November 2006); available at: 
http://www.ccnt.gov.cn/xwzx/w hbzhxw/t20061211_32440.htm (visited on 9 October 2007).