WORLD TRADE  
ORGANIZATION  WT/DS339/8 
18 September 2006 
 
 (06-4461) 
 Original:   English 
  
 
CHINA – MEASURES AFFECTING IMPORTS OF AUTOMOBILE PARTS 
 
Request for the Establishment of a Panel by the European Communities
 
  
 The following communication, dated 15 Sept ember 2006, from the delegation of the 
European Communities to the Chairman of the Dis pute Settlement Body, is circulated pursuant to 
Article 6.2 of the DSU.  
_______________ 
 
  The European Communities hereby requests the establishment of a panel pursuant to 
Articles 4.7 and 6 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  ("DSU") and Article XXIII of the General Agreement on Tariffs and Trade 1994  
("GATT 1994") Article 8 of the Agreement on Trade-Related Investment Measures  
("TRIMs Agreement") and Articles 4 and 30 of the Agreement on Subsidies and Countervailing 
Measures ("SCM Agreement").   
  This request concerns the People's Republic of  China's (hereinafter "China") imposition of 
measures that adversely affect exports of autom obile parts from the European Communities to the 
Chinese market. Specifically, this request concerns: 
 – Policy on Development on Automotive Industry (Order No. 8 of the National Development 
and Reform Commission, 21 May 2004); 
 – China's Measures for the Administration of Importation of Automotive Parts and Components 
for Complete Vehicles  (Decree No. 125), which entered into force on 1 April 2005; 
 – China's Rules for Determining Whether Impor ted Automotive Parts and Components 
Constitute Complete Vehicles (General Administration of Customs Public Announcement 
No. 4), which entered into force on 1 April 2005. 
 
 For each of the measures referred to above, this request also covers any amendments, replacements, extensions, implementing measures or other related measures.     These measures nullify or impair the European Communities benefits in respect of the People 
Republic of China's obligations under the GATT 1994, the TRIMs Agreement, the SCM Agreement 
and the Protocol on the Accession of the People's Republic of China.  In particular:    – China has acted inconsistently with Article  II:1(a) and (b) of the GATT 1994 by failing to 
accord to the commerce of another Member treat ment no less favourable than that provided 
for in the appropriate Part of the Schedule annexed to the GATT 1994.  China has failed to 
exempt products, which are the products of  territories of another Member, on their 
importation into China's territory, from ordinary  customs duties in excess of those set forth WT/DS339/8 
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  and provided in China's Schedule.  China has failed to exempt such products from all other 
duties or charges of any kind imposed on or in  connection with the importation in excess of 
those imposed on the date of this Agreement or those directly and mandatorily required to be 
imposed thereafter by legislation in force in the importing territory on that date. 
 
– China has acted inconsistently with Article  III:2 of the GATT 1994 by subjecting the products 
of the territory of other Members imported into the territory of China, directly or indirectly, to 
internal taxes or other internal charges of an y kind in excess of those applied, directly or 
indirectly, to like domestic products.  China has al so applied internal taxes or other internal 
charges to imported or domestic products in a manner contrary to the principles set forth in 
paragraph 1 of Article III; 
 – China has acted inconsistently with Article III:4 of the GATT 1994 by imposing specified 
thresholds for imported parts in an assemble d vehicle above which an additional charge 
applies on each imported part included in the ve hicle. In addition, as part of the measures, 
China also imposes additional administrative requirements on importers and manufacturers 
that may not meet the required threshold for domestic content. Thereby, China has failed to 
accord, to products of the territory of the Eur opean Communities imported into the territory of 
China, treatment no less favourable than that accord ed to like products of national origin in 
respect of all laws, regulations and requirements affecting their internal sale, offering for sale, 
purchase, transportation, distribution or use;   
 
– China has acted inconsistently with Ar ticle III:5 of the GATT 1994 by establishing and 
maintaining internal quantitative regulations re lating to the mixture, processing or use of 
products in specified amounts or proportions whic h requires, directly or indirectly, that any 
specified amount or proportion of any product which is the subject of the regulation must be 
supplied from domestic sources.  Moreover,  China has applied internal quantitative 
regulations in a manner contrary to the princi ples set forth in paragraph 1 of Article III; 
 – China has acted inconsistently with Article 2.1 and Article 2.2 of the TRIMs Agreement in 
conjunction with paragraph 1(a) of the Illust rative List annexed to the TRIMs Agreement by 
applying investment measures related to trad e in goods that are inconsistent with the 
provisions of Article III or Article XI of GATT 1994 and by applyi ng investment measures 
related to trade in goods, compliance with wh ich is necessary to obtain an advantage, and 
which require the purchase or use by an enterpri se of products of domestic origin or from any 
domestic source, whether specified in terms of  particular products, in terms of volume or 
value of products, or in terms of a proportion of volume or value of its local production.  
Further, China has acted inconsistently with Article 2.1 and 2.2 of the TRIMs Agreement in 
conjunction with paragraph 2(a) of the Illustra tive List annexed to the TRIMs Agreement, by 
applying investment measures related to trad e in goods that are inconsistent with the 
provisions of Article III or Article XI of GATT 1994 and by applyi ng investment measures 
related to trade in goods, compliance with wh ich is necessary to obtain an advantage, and 
which restricts the importation by an enterprise of  products used in or related to its local 
production, generally or to an amount related to the volume or value of local production that it 
exports;  
 – China has acted inconsistently with Artic le 3 of the SCM Agreement by granting or 
maintaining subsidies contingent, in law or in fact, whether solely or as one of several other 
conditions, upon export performance and by gr anting or maintaining subsidies contingent, 
whether solely or as one of several other c onditions, upon the use of domestic over imported 
goods. 
  WT/DS339/8 
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  – China has acted inconsistently with its  obligations under the Marrakesh Agreement 
Establishing the World Trade Organization, as set  out in the Protocol on the Accession of the 
People's Republic of China to the WTO, in partic ular Part I paragraph 7.3 of the Protocol of 
Accession of China, and in paragraph 203 of the Working Party Report on the Accession of 
China in conjunction with Part I, paragraph 1. 2 of the Protocol of Accession of China, and 
paragraph 342 of the Worki ng Party Report on the Accession of China by failing, upon 
accession, to comply fully with the TRIMs Agreem ent, without recourse to Article 5 thereof, 
and to eliminate local content requirements and to not enforce the terms of contracts containing such requirements.  Further, China has made the allocation, permission or rights 
for importation and investment conditional upon performance requirements set by national or 
sub-national authorities, or subject to secondary  conditions covering, for example, the use of 
local inputs.   
 – China has acted inconsistently with its  obligations under the Marrakesh Agreement 
Establishing the World Trade Organization, as set  out in the Protocol on the Accession of the 
People's Republic of China to the WTO, in partic ular Part I paragraph 7.2 of the Protocol of 
Accession of China, by introducing measures that  are inconsistent with the provisions of 
GATT 1994, in particular Article III. 
 – China has nullified or impaired the benef its accruing to the European Communities under 
Article XXIII:1(b) GATT 1994 in conjunction with the Protocol on the Accession of the 
People's Republic of China to the WTO, in particular paragraph 93 of the Working Party 
Report on the Accession of China, in conjunction wi th Part I, paragraph 1.2 of the Protocol of 
Accession of China and paragraph 342 of th e Working Party Report on the Accession of 
China, by applying tariffs exceeding 10% on completely knocked- down and semi knocked-
down kits for motor vehicles.   
 
 On 30 March 2006, the European Communities re quested consultations with China with a 
view to reaching a mutually satisfactory solution of the matter.  The request was circulated in 
document WT/DS339/1 dated 3 April 2006.  The cons ultations were held on 11 and 12 May 2006 in 
Geneva on the above-mentioned and other measures.  Th ey have not led to a satisfactory resolution of 
the matter.   
 
 Therefore, the European Communities respectfully  requests that a panel be established, with 
standard terms of reference under Ar ticle 7 paragraph 1 of the DSU, to consider the above complaint 
with a view to finding that China's measures nullify or  impair the EC's benefits in respect of China's 
obligations under Articles II:1(a)  and (b), III:2, III:4, III:5 GATT 1994, Articles 2.1 and 2.2 in 
conjunction with paragraphs 1(a) and 2(a) of the Il lustrative List of the TRIMs Agreement, Article 3 
of the SCM Agreement, Part I, paragraph 7.3 of the Protocol on the Accession of the People's 
Republic of China to the WTO and paragraph 20 3 and 93 of the Working Party Report on the 
Accession of China in conjunction with Part I, para graph 1.2 of the Protocol of Accession of China, 
and paragraph 342 of the Working Party Report on th e Accession of China and Part I, paragraph 7.2 
of the Protocol on the Accession of the People's Republic of China to the WTO. 
 
 The European Communities asks that this request  be placed on the agenda for the meeting of 
the Dispute Settlement Body to be held on 28 September 2006.  
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