WORLD TRADE  
ORGANIZATION  WT/DS339/12 
WT/DS340/12 
WT/DS342/12 
22 September 2008 
 (08-4387) 
 Original:   English 
  
CHINA – MEASURES AFFECTING IMPORTS OF 
AUTOMOBILE PARTS 
 
Notification of an Appeal by the People's Republic of China
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
   The following notification, dated 15 Septembe r 2008, from the Delegation of the People's 
Republic of China, is being circulated to Members. 
 
_______________ 
 
 
 Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate 
Review,  China hereby notifies its decision to appeal to the Appellate Body certain issues of law 
covered in the Panel Reports in China – Measures Affecting Imports of Automobile Parts  
(WT/DS339/R, WT/DS340/R, WT/DS342/R, and Add. 1 & 2), and certain legal interpretations 
developed by the Panel in those Reports.
1 
 
1. China seeks review by the Appellate Body of  the following errors of law and legal 
interpretation contained in Panel Report: 
a. The Panel incorrectly interpreted and applied the term "ordinary customs 
duties" in Article II:1(b), first sentence, of the General Agreement on Tariffs 
and Trade 1994  ("GATT 1994").  The Panel's errors principally arise from its 
failure to take into account the context provided by the Harmonized 
Commodity Description and Coding System  ("Harmonized System") as the 
basis upon which national customs author ities identify the "product" that is 
subject to the assessment of ordinary customs duties.2 
b. As a consequence of its erroneous inte rpretation and application of the term 
"ordinary customs duty" in Article II:1(b) of the GATT 1994, the Panel erred 
in its finding that the charge imposed under the measures challenged in this 
dispute is an "internal tax or other in ternal charge" within the meaning of 
Article III:2 of the GATT 1994, and in its finding that the measures affect 
"the internal sale, offering for sale, purchase, transportation, distribution or 
                                                      
1 The Panel presented its findings as separate Reports contained in a single document, with separate 
sections on the Panel's conclusions and recommendations for each complaining party.  For ease of reference, 
China hereafter refers to these Reports as the “Panel Report”. 
2 See, e.g.,  Panel Report, paras. 7.166, 7.184 – 7.188, 7.192, 7.204 – 7.207, 7.209 – 7.210.   WT/DS339/12 
WT/DS340/12 WT/DS342/12 
Page 2 
  
use" of imported products within th e meaning of Article III:4 of the 
GATT 1994.
3 
c. In its "alternative" findings set forth in  Section VII.D of the Panel Report, the 
Panel erred in its interpre tation and application of th e term "motor vehicles" 
in China's Schedule of Concessions.  The Panel's errors principally arise from 
(i) its misinterpretation of General Inte rpretative Rule 2(a) of the Harmonized 
System ("GIR 2(a)"), which provides context for the interpretation of the 
term "motor vehicles" in China's Schedule of Concessions; (ii) its 
misinterpretation of a prior decision of the Harmonized System Committee of the World Customs Organization ("WCO" ) concerning the interpretation of 
GIR 2(a); and (iii) its failure to take into account the specific guidance 
provided by the WCO in response to questions from the Panel.
4 
d. In its "alternative" findings set forth in  Section VII.D of the Panel Report, the 
Panel acted inconsistently with Artic le 3.2 and Article 11 of the DSU by 
purporting to resolve a known question of interpretation within the Harmonized System, a non-covered ag reement, and by adopting an 
interpretation of Harmonized System that is contrary to the interpretation 
held by the WCO, the internati onal organization responsible for 
administering and interpreting the Harmonized System.
5   
e. The Panel erred in its interpretation that the challenged measures apply to 
importers who import completely kno cked-down ("CKD") or semi-knocked 
down ("SKD") kits of motor vehicles under China's regular customs 
procedures, and who pay duties under China's regular procedures for the 
payment of customs duties.  On the basi s of this erroneous interpretation of 
the challenged measures, the Panel erred in its conclusion that the challenged 
measures violate paragraph 93 of the Report of the Working Party on the 
Accession of China  (WT/ACC/CHN/49) ("Working Party Report"), as 
incorporated into the WTO Agreement  through the Protocol on the Accession 
of the People's Republic of China  (WT/L/432).6 
f. The Panel acted inconsistently with Article 11 of the DSU by making certain 
findings and conclusions concerning th e inconsistency of the challenged 
measures with paragraph 93 of the Working Party Report , in the absence of 
evidence or legal arguments presented by the complainants to support a 
prima facie case that the challenged measures apply to importers who import 
CKD or SKD kits of motor vehicles under China's regular customs 
                                                      
3 See, e.g., Panel Report, paras. 7.204 – 7.212, 7.256 – 7.258.   
4 See, e.g.,  Panel Report, paras. 7.412 – 7.415, 7.435 – 7.436, 7.439 – 7.441, 7.445 – 7.446.  China does 
not raise specific claims of error in respect of the Pane l's findings, set forth in Section VII.D.3 of the Report, 
concerning the “essential character” test under General Interpretative Rule 2(a) of the Harmonized System.  
However, in the event that the Appellate Body affirms the Panel's finding that the charge imposed under the 
challenged measures is an internal tax or charge subj ect to Article III of the GATT 1994, China requests that the 
Appellate Body find all of the Panel's “alternative” findings in Section VII.D of the Report, and the related 
conclusions and recommendations of the Panel, to be moot and of no legal effect. 
5 See, e.g.,  Panel Report, paras. 7.412 – 7.415, 7.435 – 7.436, 7.439 – 7.441, 7.445 – 7.446.   
6 See, e.g.,  Panel Report, paras. 7.75 – 7.78, 7.636, 7.648, 7.688, 7.737, 7.754, 7.757 – 7.758.    WT/DS339/12 
 WT/DS340/12 
 WT/DS342/12 
 Page 3 
  
procedures, and who pay duties under China's regular procedures for the payment of customs duties.
7 
2. Conditionally, in the event that the Appellate B ody does not sustain either of China's claims 
of error set forth in paragraphs 1(d) and 1(e) a bove, China seeks review by the Appellate Body of the 
following additional errors of law and lega l interpretation contained in Panel Report: 
a. The Panel erred in finding that the challenged measures "de facto" create 
"tariff lines" for CKD or SKD kits of motor vehicles with rates of duty in 
excess of 10 per cent.  The Panel's erro r of legal interpretation principally 
relates to the inconsistency of this fi nding with the ordinary meaning of the 
term "tariff lines", as identified by the Panel itself.  China further considers 
that, by purporting to modify the condition under which the commitment that 
China made in paragraph 93 of the Working Party Report  would arise, the 
Panel acted inconsistently with Article 3.2 of the DSU.8 
b. The Panel erred in finding that certain ten-digit statistical annotations for 
CKD/SKD kits found in China's custom s nomenclature constitute "tariff 
lines" within the meaning of paragraph 93 of the Working Party Report .  The 
Panel's errors of legal interpretation prin cipally relate to (i) the inconsistency 
of this finding with the Panel's interp retation of the term "tariff lines" in 
paragraph 93 of the Working Party Report ; and (ii) the Panel's failure to 
interpret the term "tariff lines" in the context of the Working Party Report .9  
China considers that the Panel's errors could also be considered a failure to 
make an objective assessment of the fact s, in contravention of Article 11 of 
the DSU. 
c. The Panel acted inconsistently with Arti cle 6.2, Article 7.1, and Article 11 of 
the DSU by finding that China violated paragraph 93 of the Working Party 
Report  through the creation of ten-digit statistical annotations for CKD/SKD 
kits in its customs nomenclature, when neither the statistical annotations nor 
the tariff rates associated with these pu tative "tariff lines" were within the 
terms of reference of these disputes.10 
__________ 
 
                                                      
7 See, e.g.,  Panel Report, paras. 7.75 – 7.78, 7.636, 7.648, 7.688, 7.737, 7.754, 7.757 – 7.758. 
8 See, e.g.,  Panel Report, paras. 7.754 – 7.758. 
9 See, e.g.,  Panel Report, paras. 7.749 – 7.752, 7.757 – 7.758.   
10 See, e.g.,  Panel Report, paras. 7.749 – 7.752, 7.757 – 7.758.