CHINA – TARIFF RATE QUOTAS FOR CERTAIN AGRICULTURAL PRODUCTS REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 18 April 2019
Document codes: WT/DS517/R
Complainant: U.S.
Respondent: China
Third parties: Australia, Brazil, Canada, Ecuador, EU, Guatemala, India, Indonesia, Japan, Kazakhstan, South Korea, Norway, Russia, Singapore, Taiwan, Ukraine, Vietnam
Dispute stage: Panel
Agreements cited: Part I, para. 1.2  Protocol of AccessionArt. X:3(a), XI:1, XIII:3(b)  GATT 1994

CHINA – TARIFF RATE QUOTAS
FOR CERTAIN AGRICULTURAL PRODUCTS
REPORT OF THE PANEL

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 the United States 12
Annex B-2 Integrated executive summary of the arguments of China 32
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Australia 51
Annex C-2 Integrated executive summary of the arguments of Brazil 54
Annex C-3 Integrated executive summary of the arguments of Canada 56
Annex C-4 Integrated executive summary of the arguments of Ecuador 60
Annex C-5 Integrated executive summary of the arguments of the European Union 63
Annex C-6 Integrated executive summary of the arguments of Japan 65
Annex C-7 Integrated executive summary of the arguments of Ukraine 67

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Financial
Services
Panel Report, Argentina – Measures Relating to Trade in Goods and Services,
 and Add.1, adopted 9 May 2016, as modified by Appellate Body
Report , DSR 2016:II, p. 599
Argentina – Hides and
Leather
Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and
the Import of Finished Leather, and Corr.1, adopted 16 February
2001, DSR 2001:V, p. 1779
Argentina – Import
Measures
Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, / / , adopted 26
January 2015, DSR 2015:II, p. 579
Brazil – Taxation

Panel Reports, Brazil – Certain Measures Concerning Taxation and Charges,
, Add.1 and Corr.1 / , Add.1 and Corr.1, adopted 11
January 2019, as modified by Appellate Body Reports WT/DS472/AB/R /

Canada – Wheat Exports
and Grain Imports
Appellate Body Report, Canada – Measures Relating to Exports of Wheat and
Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004,
DSR 2004:VI, p. 2739
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile
Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12
January 2009, DSR 2009:I, p. 3
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/R, Add.1 and Add.2 / WT/DS340/R, Add.1 and Add.2 /
WT/DS342/R, Add.1 and Add.2, adopted 12 January 2009, upheld
(WT/DS339/R) and as modified (WT/DS340/R / WT/DS342/R) by Appellate
Body Reports WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, DSR
2009:I, p. 119
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R /
WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare Earths,
Tungsten, and Molybdenum, WT/DS431/R and Add.1 / WT/DS432/R and Add.1
/ WT/DS433/R and Add.1, adopted 29 August 2014, upheld by Appellate Body
Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV,
p. 1127
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various
Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted
22 February 2012, DSR 2012:VII, p. 3295
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw
Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and Corr.1 /
WT/DS398/R, Add.1 and Corr.1, adopted 22 February 2012, as modified by
Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R,
DSR 2012:VII, p. 3501
Dominican Republic –
Import and Sale of
Cigarettes
Panel Report, Dominican Republic – Measures Affecting the Importation and
Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified by
Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation,
Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997,
DSR 1997:II, p. 591
EC – Bananas III Panel Reports, European Communities – Regime for the Importation, Sale and
Distribution of Bananas, WT/DS27/R/ECU (Ecuador) / WT/DS27/R/GTM,
WT/DS27/R/HND (Guatemala and Honduras) / WT/DS27/R/MEX (Mexico) /
WT/DS27/R/USA (US), adopted 25 September 1997, as modified by Appellate
Body Report WT/DS27/AB/R, DSR 1997:II, p. 695 to DSR 1997:III, p. 1085
EC – Bananas III
(Article 21.5 – Ecuador II) /
EC – Bananas III
(Article 21.5 – US)
Appellate Body Reports, European Communities – Regime for the Importation,
Sale and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU
by Ecuador, WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 /
European Communities – Regime for the Importation, Sale and Distribution of
Bananas – Recourse to Article 21.5 of the DSU by the United States,
WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008, DSR
2008:XVIII, p. 7165

Short Title Full Case Title and Citation
EC – Hormones Appellate Body Report, European Communities – Measures Concerning Meat
and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13
February 1998, DSR 1998:I, p. 135
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998,
DSR 1998:V, p. 2031
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines,
WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3359
EC – Selected Customs
Matters
Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EU – Poultry Meat (China) Panel Report, European Union – Measures Affecting Tariff Concessions on
Certain Poultry Meat Products, WT/DS492/R and Add.1, adopted 19 April 2017,
DSR 2017:III, p. 1067
India – Agricultural Products Panel Report, India – Measures Concerning the Importation of Certain
Agricultural Products, WT/DS430/R and Add.1, adopted 19 June 2015, as
modified by Appellate Body Report WT/DS430/AB/R, DSR 2015:V, p. 2663
India – Autos Panel Report, India – Measures Affecting the Automotive Sector, WT/DS146/R,
WT/DS175/R, and Corr.1, adopted 5 April 2002, DSR 2002:V, p. 1827
India – Quantitative
Restrictions
Panel Report, India – Quantitative Restrictions on Imports of Agricultural,
Textile and Industrial Products, WT/DS90/R, adopted 22 September 1999,
upheld by Appellate Body Report WT/DS90/AB/R, DSR 1999:V, p. 1799
India – Solar Cells Panel Report, India – Certain Measures Relating to Solar Cells and Solar
Modules, WT/DS456/R and Add.1, adopted 14 October 2016, as modified by
Appellate Body Report WT/DS456/AB/R, DSR 2016:IV, p. 1941
Indonesia – Import
Licensing Regimes
Panel Report, Indonesia – Importation of Horticultural Products, Animals and
Animal Products, WT/DS477/R, WT/DS478/R, Add.1 and Corr.1, adopted 22
November 2017, as modified by Appellate Body Report WT/DS477/AB/R,
WT/DS478/AB/R, DSR 2017:VII, p. 3131
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access
Memories from Korea, WT/DS336/R, adopted 17 December 2007, as modified
by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805
Japan – Semi-Conductors GATT Panel Report, Japan – Trade in Semi-Conductors, L/6309, adopted 4 May
1988, BISD 35S/116
Russia – Pigs (EU) Panel Report, Russian Federation – Measures on the Importation of Live Pigs,
Pork and Other Pig Products from the European Union, WT/DS475/R and Add.1,
adopted 21 March 2017, as modified by Appellate Body Report
WT/DS475/AB/R, DSR 2017:II, p. 361
Thailand – Cigarettes
(Philippines)
Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the
Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body
Report WT/DS371/AB/R, DSR 2011:IV, p. 2299
Turkey – Textiles Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products,
WT/DS34/R, adopted 19 November 1999, as modified by Appellate Body Report
WT/DS34/AB/R, DSR 1999:VI, p. 2363
US – Anti-Dumping
Methodologies (China)
Panel Report, United States – Certain Methodologies and Their Application to
Anti-Dumping Proceedings Involving China, WT/DS471/R and Add.1, adopted
22 May 2017, as modified by Appellate Body Report WT/DS471/AB/R, DSR
2017:IV, p. 1589
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain Hot-
Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted 19
December 2014, DSR 2014:V, p. 1727
US – COOL (Article 21.5 –
Canada and Mexico)
Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements – Recourse to Article 21.5 of the DSU by Canada and Mexico,
WT/DS384/RW and Add.1 / WT/DS386/RW and Add.1, adopted 29 May 2015,
as modified by Appellate Body Reports WT/DS384/AB/RW / WT/DS386/AB/RW,
DSR 2015:IV, p.2019
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border
Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April
2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)
US – Hot-Rolled Steel Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled
Steel Products from Japan, WT/DS184/R, adopted 23 August 2001 modified by
Appellate Body Report WT/DS184/AB/R, DSR 2001:X, p. 4769

Short Title Full Case Title and Citation
US – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry
from China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909
US – Shrimp (Ecuador) Panel Report, United States – Anti-Dumping Measure on Shrimp from Ecuador,
WT/DS335/R, adopted on 20 February 2007, DSR 2007:II, p. 425
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand,
WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report
WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, p. 2539
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination
with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R,
adopted 17 February 2004, DSR 2004:II, p. 571
US – Stainless Steel (Korea) Panel Report, United States – Anti-Dumping Measures on Stainless Steel Plate
in Coils and Stainless Steel Sheet and Strip from Korea, WT/DS179/R, adopted
1 February 2001, DSR 2001:IV, p. 1295
US – Tuna II (Mexico)
(Article 21.5 – Mexico)
Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the
DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3 December 2015, DSR
2015:X, p. 5133
US – Tuna II (Mexico)
(Article 21.5 – US) /
US – Tuna II (Mexico)
(Article 21.5 – Mexico II)
Panel Reports, United States – Measures Concerning the Importation, Marketing
and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the DSU by
the United States, WT/DS381/RW/USA and Add.1 / United States – Measures
Concerning the Importation, Marketing and Sale of Tuna and Tuna Products –
Second Recourse to Article 21.5 of the DSU by Mexico, WT/DS381/RW2 and
Add.1, adopted 11 January 2019, as upheld by Appellate Body Report
WT/DS381/AB/RW/USA / WT/DS381/AB/RW2
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and
Corr.1, DSR 1997:I, p. 323
US – Zeroing (EC) (Article
21.5 – EC)
Panel Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU
by the European Communities, WT/DS294/RW, adopted 11 June 2009, as
modified by Appellate Body Report WT/DS294/AB/RW, DSR 2009:VII, p. 3117

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short Title
(if applicable)
Description/Long Title
USA-1 Working Party Report Report on the Working Party on the Accession of China
WT/ACC/CHN/49 (October 1, 2001)
USA-2 Accession Protocol Protocol on the Accession of the People's Republic of China
WT/L/432 (November 23, 2001)
USA-11 2003 Provisional
Measures
Provisional Measures on the Administration of Import Tariff-Rate
Quotas for Agricultural Products (Ministry of Commerce and
National Development and Reform Commission 2003 Order No.
4, issued 27 September 2003)
USA-13 2003 List of NDRC
Authorized Agencies
Public Notice on Authorized Agencies for Agricultural Product
Import Tariff-Rate Quotas (Ministry of Commerce and National
Development and Reform Commission, Public Notice No. 54,
issued 15 October 2003)
USA-14 Catalogue of Import
State Trading
Enterprises
Catalogue of Import State Trading Enterprises (Ministry of
Foreign Trade and Economic Cooperation 2001 Announcement
No. 28, published 11 December 2001)
USA-15 2017 Allocation Notice Allocation Notice and Attached Application Criteria and
Allocation Principles for Import Tariff-Rate Quotas for Grains in
2017 (National Development and Reform Commission 2016
Public Notice No. 23, issued 10 October 2016)
USA-16 2016 Allocation Notice Allocation Notice and Attached Application Criteria and
Allocation Principles for Import Tariff-Rate Quotas for Grains in
2016 (National Development and Reform Commission 2015
Public Notice No. 22, issued 29 September 2015)
USA-17 2017 Reallocation Notice Reallocation Notice for Import Tariff-Rate Quotas for Agricultural
Products in 2017 (National Development and Reform
Commission and Ministry of Commerce 2017 Public Notice No.
11, issued 11 August 2017)
USA-19 2017 Announcement of
Applicant Enterprise
Data
Announcement of Applicant Enterprise Data for Import Tariff -
Rate Quotas for Grains in 2017 (National Development and
Reform Commission, issued 1 December 2016)
USA-20 2016 Announcement of
Enterprise Data
Announcement of Applicant Enterprise Data for Import Tariff-
Rate Quotas for Grains in 2016 (National Development and
Reform Commission, issued 4 December 2015)
USA-23 China's Schedule CLII,
Part I, Section I (B)
Schedule CLII – People's Republic of China, Part I – Most-
Favoured-Nation Tariff: Section I (B) – Tariff Quotas
CHN-15 TRQ Guidelines Guideline on the Examination and Approval of Grain Import
TRQs (National Development and Reform Commission,
published 27 May 2017)

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Accession Protocol Protocol on the Accession of the People's Republic of China to the WTO
COFCO China National Cereals, Oils and Foodstuffs Import and Export Corporation
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
MOFCOM Ministry of Commerce of China
NDRC National Development and Reform Commission of China
Non-STE Non-state trading enterprises
Schedule CLII China's Schedule of Concessions and Commitments on Goods
STEs State trading enterprises
TRQ Tariff rate quota
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155
UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 INTRODUCTION
1.1 Complaint by the United States
1.1. On 15 December 2016 , the United States requested consultations with China pursuant to
Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU) and Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) with respect
to the measures and claims set out below.1
1.2. Consultations were held on 9 February 2017.
1.2 Panel establishment and composition
1.3. On 18 August 2017 , the United States requested the establishment of a panel pursuant to
Article 6 of the DSU with standard terms of reference. 2 At its meeting on 22 September 2017, the
Dispute Settlement Body (DSB) established a panel pursuant to the request of the United States in
document WT/DS517/6, in accordance with Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by the United States in
document WT/DS517/6 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 1 February 2018 , the United States requested the Director -General to determine the
composition of the Panel, pursuant to Article 8.7 of the DSU . On 12 February 2018 , the
Director-General composed the Panel as follows:
Chairperson: Mr Mateo Diego-Fernández

Members: Mr Stefán H. Jóhannesson
 Mr Esteban B. Conejos, Jr

1.6. Australia, Brazil, Canada, Ecuador, t he European Union, Guatemala, India, Indonesia, Japan,
Kazakhstan, the Republic of Korea, Norway, the Russian Federation , Singapore, Chinese Taipei,
Ukraine, and Viet Nam notified their interest in participating in the Panel proceedings as third parties.
1.3 Panel proceedings
1.7. On 5 March 2018, after consultation with the parties, the Panel adopted its Working Procedures5
and timetable.
1.8. In accordance with the timetable, o n 3 April and 15 May 2018, the United States and China
respectively submitted their first written submissions . On 29 May 2018, the Panel received
third-party submissions from Australia, Brazil, Canada, Ecuador, and the European Union.
1.9. On 9 and 10 July 2018, the Panel held its first substantive meeting with the parties. A session
with the third parties took place on 10 July 2018, during which Brazil, Ecuador, the European Union,
Japan, and Ukraine made oral statements . Prior to the substantive meeting, on 2 July 2018, the
Panel sent the parties a list of questions for oral responses at the meeting . Following the meeting,
on 13 July 2018, the Panel sent written questions to the parties and third parties. On the same date,
the United States sent written questions to China. Responses to these questions were received by
the Panel on 3 August 2018.

1 See WT/DS517/1.
2 WT/DS517/6.
3 See WT/DSB/M/401, item 2.
4 WT/DS517/7/Rev.1.
5 See the Panel's Working Procedures in Annex A-1.

1.10. On 24 August 2018, the parties filed their second written submissions to the Panel.
1.11. On 16 October 2018, the Panel held its second substantive meeting with the parties. Prior to
the substantive meeting, on 8 October 2018, the Panel sent the parties a list of questions for oral
responses at the m eeting. Following the meeting, on 19 October 2018, the Panel sent written
questions to the parties. Responses to those questions were received by the Panel on
2 November 2018. The Panel gave the parties an opportunity to comment on each other's responses.
These comments were received by the Panel on 16 November 2018.
1.12. On 30 November 2018, the Panel issued the descriptive part of its Report to the parties. On
14 December 2018, the Parties provided their comments on the descriptive part of the report. On
15 February 2019, the Panel issued its Interim Report to the parties. On 6 March 2019, the parties
individually requested a review of parts of the Interim Report. The Panel gave the parties an
opportunity to comment on each other's request for review. These comments were received by the
Panel on 20 March 2019. Following the interim review process, on 3 April 2019, the Panel issued its
Final Report to the parties.
2 FACTUAL ASPECTS
2.1 Measure at issue
2.1. In its panel request, the United States challenges China's administration of its tariff rate quotas
(TRQs) for wheat, rice, and corn as follows:
The United States considers that China administers TRQs for wheat, short- and medium-
grain rice, long grain rice, and corn inconsistently with its WTO obligations. In particular,
China administers each of its TRQs for wheat, short- and medium- grain rice, long grain
rice, and corn inconsistently with its commitments specified in paragraph 1.2 of Part I
of the Protocol on the Accession o f 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, and XIII:3(b) of the GATT 1994.
The legal instruments through which China has established its TRQs for wheat, short -
and medium- grain rice, long grain rice, and corn include, but are not limited to, the
following, operating separately or collectively:
• 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 28 December 2013, in Order No. 8)
• Regulation of the People's Republic of China on the Administration of the Import
and Export of Goods (Order of the State Council No. 332, adopted at the 46th
executive meeting of the State Council on 31 October 2001, effective 1 January
2002)
• Regulation of the People's Republic of China on Import and Export Duties (State
Council, Order No. 392, adopted at the 26th executive meeting of the State
Council on 29 October 2003, amended 6 February 2016, in Order No. 666)
• Foreign Trade Law of the People's Republic of China (adopted at the 8th Session
of the Standing Committee of the Tenth National People's Congress on 6 April
2004, effective 1 July 2004)
as well as any amendments, or successor, replacement, or implementing measures.
The legal instruments through which China administers ea ch of its TRQs for wheat,
short- and medium- grain rice, long grain rice, and corn include, but are not limited to,
the following, operating separately or collectively:

• Provisional Measures on the Administration of Import Tariff -Rate Quotas for
Agricultural Products (Ministry of Commerce and National Development and
Reform Commission 2003 Order No. 4, issued 27 September 2003)
• Public Notice on Authorized Agencies for Agricultural Product Import Tariff-Rate
Quotas (Ministry of Commerce and National Developme nt and Reform
Commission, Public Notice No. 54, issued 15 October 2003)
• Application Criteria and Allocation Principles for Import Tariff -Rate Quotas for
Grains in 2017 (National Development and Reform Commission 2016 Public
Notice No. 23, issued 10 October 2016)
• Announcement of Applicant Enterprise Data for Import Tariff -Rate Quotas for
Grains in 2017 (National Development and Reform Commission, issued
1 December 2016)
• Public Notice on the Reallocation of Import Tariff -Rate Quotas for Agricultural
Products in 2017 (National Development and Reform Commission and Ministry
of Commerce 2017 Public Notice No. 11, issued 11 August 2017)
• Application Criteria and Allocation Principles for Import Tariff -Rate Quotas for
Grains in 2016 (National Development and Reform Commission 2015 Public
Notice No. 22, issued 29 September 2015)
• Announcement of Applicant Enterprise Data for Import Tariff -Rate Quotas for
Grains in 2016 (National Development and Reform Commission, issued 4
December 2015)
• Public Notice on the Reallocation of Import Tariff-Rate Quotas for Agricultural
Products in 2016 (National Development and Reform Commission and Ministry
of Commerce 2016 Public Notice No. 19, issued 17 August 2016).
as well as any amendments, or successor, replacement, or implementing measures.6
2.2 China's system of TRQ administration for wheat, rice, and corn7
2.2. China's TRQ administration operates on an annual basis. TRQ certificates for wheat, rice, and
corn are valid and must be used from 1 January to 31 December every year.8
2.3. Applicants must apply for TRQ allocations from 15 to 30 October of the year preceding that for
which TRQ certificates will be issued by the National Development and Reform Commission of China
(NDRC).9 TRQ amounts are allocated and TRQ certificates are issued before 1 January of the year in
which they have to be used .10 If applicants that receive TRQ allocations are unable to contract for

6 WT/DS517/6, pp. 1-2.
7 During these proceedings, the two parties submitted several exhibits containing the same legal
instruments or documents, as well as English translations thereof. The legal instruments or documents which
we cite in this Report and the exhibits in which they have been submitted by the parties are as follows:
2003 Provisional Measures (USA-11, CHN-5); 2003 List of NDRC Authorized Agencies (USA-13, CHN-6);
Catalogue of Import State Trading Enterprises (USA-14, CHN-13); 2017 Allocation Notice (USA-15, CHN-7);
2016 Allocation Notice (USA-16, CHN-10); 2017 Reallocation Notice (USA-17, CHN-9); 2017 Announcement of
Applicant Enterprise Data (USA-19, CHN-8); and 2016 Announcement of Enterprise Data (USA-20, CHN-11).
There are certain differences in the translations contained in some of those exhibits. In response to questions
from the Panel in this regard (e.g. Panel question Nos. 12, 18, and 46), the parties provided clarification on
certain translated terms, where relevant. Paragraph 6.2 of the Panel's Working Procedures states that "[a]ny
objection as to the accuracy 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". Neither party has raised any such objection. In the interest of brevity and simplicity, and since
the United States submitted the listed exhibits before China, in our citations in this Report, we refer only to the
exhibits submitted by the United States.
8 2003 Provisional Measures, (Exhibit USA-11), Article 15.
9 2003 Provisional Measures, (Exhibit USA-11), Article 10.
10 2003 Provisional Measures, (Exhibit USA-11), Article 14.

importation, or have contracted but are unable to complete importation , under their allocated TRQ
amounts, they must return such unused TRQ amounts by 15 September of that year.11 Returned
TRQ amounts are made available for reallocation. Applicants must apply for TRQ reallocations from
1 to 15 September12 and the NDRC makes the reallocations before 30 September.13
2.4. Below, the various stages and aspects of China's TRQ administration are described in further
detail.
2.2.1 Initial allocation of TRQ amounts
2.5. The NDRC, in conjunction with the Ministry of Commerce of China (MOFCOM), is the authority
responsible for allocating TRQ amounts for wheat, rice, and corn.14 The application period is from 15
to 30 October of the year preceding that for which TRQ certificates will be issued.15
2.6. In accordance with the 2003 Provisional Measures, the NDRC issues annual allocation notices
one month before th e application period for TRQs in the International Business Daily, the China
Economic Herald, and on MOFCOM's and the NDRC's website s.16 The annual a llocation notices
generally have similar content and follow the same structure. 17 They set out, among other things,
total TRQ amounts available for each type of grain and the portions thereof reserved for importation
through state trading enterprises (STEs) , application criteria, application period, allocation
principles, and other requirements. Below, we describe the process of allocation of TRQ amounts by
the NDRC.
2.2.1.1 Announcement of TRQ amounts available for allocation
2.7. The annual allocation notices set out the total TRQ amounts that are available for allocation in
any given year, as well as the portions thereof reserved for importation through STEs. For instance,
the TRQ amounts available for allocation in 2017 were as follows:
The 2017 grain import tariff-rate quota quantities are: wheat – 9.636 million tons, with
a state trading proportion of 90 %; corn – 7.20 million tons, with a state trading
proportion of 60%; [] rice – 5.32 million tons (of which: 2.66 million tons of long-grain
rice and 2.66 million tons of medium - and short -grain rice), with a state trading
proportion of 50%.18
2.2.1.2 Application criteria
2.8. Applicants must meet the application criteria set out in the annual allocation notices to be
eligible to receive TRQ allocations. The annual allocation notices divide these criteria into two: basic
eligibility criteria and grain-specific eligibility criteria. Possession of the basic eligibility criteria is "a
prerequisite" for eligibility. 19 Applicants must also meet one of the grain-specific eligibility criteria
corresponding to the type of grain in respect of which they applied for a TRQ allocation.20

11 2003 Provisional Measures, (Exhibit USA-11), Article 23; and 2017 Reallocation Notice,
(Exhibit USA-17), para. 1.
12 2003 Provisional Measures, (Exhibit USA-11), Article 24.
13 2003 Provisional Measures, (Exhibit USA-11), Article 26.
14 2003 Provisional Measures, (Exhibit USA-11), Article 7.
15 2003 Provisional Measures, (Exhibit USA-11), Article 10.
16 2003 Provisional Measures, (Exhibit USA-11), Article 10.
17 Although some differences exist in the texts of the various allocation notices issued each year, the
2017 Allocation Notice was the instrument in force at the time of the Panel's establishment and both parties
use the 2017 Allocation Notice as a basis for their arguments. We therefore also refer to this Notice in our
description of China's TRQ administration system and in our assessment of the parties' claims and arguments.
18 2017 Allocation Notice, (Exhibit USA-15), Article I. The English translation of China's legal instruments
provided by the United States refers to "white rice". However, in response to questioning from the Panel, both
parties agreed that this refers to "rice" in general. (United States' response to Panel question No. 18(a),
para. 48; and China's response to Panel question No. 18(a), para. 58). We therefore use the term "rice"
throughout the remainder of this Report.
19 2017 Allocation Notice, (Exhibit USA-15), Article II.
20 2017 Allocation Notice, (Exhibit USA-15), Article II.

2.9. In the 2017 Allocation Notice, the basic eligibility criteria were set out as follows:
Having registered with the industry and commerce administrative departments prior to
October 1, 2016; possessing a good financial condition, [good] taxpayer record, and a
[good] integrity situation; as of 2015, no record of violating regulations with respect to
customs, industry and commerce, taxation, credit and loans, inspection and quarantine,
grain distribution, environmental protection, and other areas; not havin g been placed
on a "Credit China" website blacklist [of entities] receiving punishment; having fulfilled
social responsibilities associated with [their] operations; having no conduct in violation
of the Provisional Measures for the Administration of Import Tariff -Rate Quotas for
Agricultural Products.21
2.10. China states that, in practice, the NDRC does not conduct an individual assessment of each
of these basic eligibility criteria. Rather, the uniform social credit code that is provided by each
applicant in its application form is used to ge nerate a credit report through Credit China. 22 Credit
China is managed by the NDRC, and is connected to databases of dozens of government agencies.23
China adds that, while the credit report is generated using all of the information available through
Credit China, the NDRC only uses Credit China's "blacklist" of entities with a record of violation to
determine applicants' eligibility.24 Although entities are placed on Credit China's blacklist for having
a record of violation in a range of areas, China states that only records of violations of "industry and
commerce registration, tax payments, customs, and [] court judgements"25 within the previous two
years26 will render applicants ineligible to receive TRQ allocations.
2.11. China further states that the NDRC determines an applicant's eligibility to receive TRQ
allocations not only by checking Credit China's blacklist, but also by checking (i) whether the
applicant has a ttested to the acc uracy of the information submitted in its application ; and
(ii) whether the applicant has prior violations of the 2003 Provisional Measures.27
2.12. In the 2017 Allocation Notice, the grain-specific eligibility criteria were as follows:
(1) Wheat
1. State trading enterprise;
2. Enterprise with actual import performance (not including imports through agents) in
2016;
3. Flour production enterprise with wheat usage of more than 100,000 tons in 2015 or
2016;
4. Food production enterprise with flour usage of mo re than 50,000 tons in 2015 or
2016;
5. Enterprise without actual import performance in 2016 but which possesses
import-export operating rights and certification of its 2016 annual processing trade
enterprise operating conditions and production capacity, i ssued by the department of
commerce at its location, and which engages in processing trade using wheat or flour
as the raw material.
(2) Corn
1. State trading enterprise;
2. Enterprise with actual import performance (not including imports through agents) in
2016;

21 2017 Allocation Notice, (Exhibit USA-15), Article II. (emphasis original)
22 China's first written submission, para. 14.
23 China's first written submission, para. 14.
24 China's responses to Panel question No. 8(c), para. 24, and No. 47, para. 8.
25 China's response to Panel question No. 48, para. 9.
26 China's response to Panel question No. 49, para. 11.
27 China's response to Panel question No. 47, para. 8. See also China's first written submission,
para. 35.

3. Feed production enterprise with corn usage of more than 50,000 tons in 2015 or
2016;
4. Other production enterprise with corn usage of more than 150,000 tons in 2015 or
2016;
5. Enterprise without actual import performance in 2016 but w hich possesses import-
export operating rights and certification of its 2016 annual processing trade enterprise
operating conditions and production capacity, issued by the department of commerce
at its location, and which engages in processing trade using corn as the raw material.
(3) [] rice (separate applications are required for long -grain rice and medium - and
short-grain rice)
1. State trading enterprise;
2. Enterprise with actual import performance (not including imports through agents) in
2016;
3. Grain enterprise possessing grain wholesale and retail qualifications, with a [] rice
sales value of more than CNY 100 million in 2015 or 2016;
4. Food production enterprise with [] rice usage of more than 50,000 tons in 2015 or
2016;
5. Enterprise without act ual import performance in 2016 but which possesses import -
export operating rights and certification of its 2016 annual processing trade enterprise
operating conditions and production capacity, issued by the department of commerce
at its location, and which engages in processing trade using [] rice as the raw material.28
2.2.1.3 Application process
2.13. The application period for wheat, rice, and corn TRQs is from 15 to 30 October of the year
preceding that for which TRQ certificates will be issued.29
2.14. The annual allocation notices include, as annexes, an application form that requires applicants
to provide information regarding, among other things, the nature of the ownership of the enterprise,
registered capital, tax payments, asset-liability ratio, and import and sales performance as well as
production and operation capacity for the first or second year preceding the one for which the
application is made.30
2.15. The application form also requires an applicant to commit to:
Guarantee its conformity wi th the grain impo rt tariff -rate quota application criteria
stipulated by the government, guarantee ing the authenticity, accuracy, and
completeness of the application form; having obtained the grain import tariff -rate
quota, guarantee that grain import business activities w ill be carried out according to
relevant government laws, regulations, and provisions.31
2.16. Group enterprises applying for wheat or corn TRQ allocations must "independently apply … in
the name of each processing plant ".32 Group enterprises applying for rice TRQ allocations "may
choose to apply in the name of the group headquarters or a subsidiary enterprise, but the
headquarters and the subsidiary enterprise must not apply at the same time".33

28 2017 Allocation Notice, (Exhibit USA-15), Article II.
29 2003 Provisional Measures, (Exhibit USA-11), Article 10.
30 2017 Allocation Notice, (Exhibit USA-15), Annex: 2017 Grain Import Tariff-Rate Quota Application
Form.
31 2017 Allocation Notice, (Exhibit USA-15), Annex: 2017 Grain Import Tariff-Rate Quota Application
Form.
32 2017 Allocation Notice, (Exhibit USA-15), Article II.
33 2017 Allocation Notice, (Exhibit USA-15), Article II.

2.17. Applications for TRQ allocations for wheat, rice, and corn are submitt ed to agencies duly
authorized by the NDRC.34 The NDRC has authorized 37 local agencies to accept applications from
enterprises within their territories.35 These local agencies are responsible for the following tasks:
(1) To accept applicants' applications and forward them to the Ministry of Commerce or
NDRC;
(2) To accept inquiries and convey them to the Ministry of Commerce or NDRC;
(3) To inform applicants of any part of their applications that do not meet the
requirements, and remind them of their revisions; [and]
(4) To issue an Agricultural Product Import Tariff -Rate Quota Certificate to approved
applicants.36
2.18. The NDRC's local agencies "in accordance with the criteria announced, accept the applications
and related materials submitted by the applicants for wheat, corn, [] rice, and cotton, and transmit
the applications to NDRC for approval prior to November 30, concurrently submitting a copy to the
Ministry of Commerce".37
2.2.1.4 Allocation principles
2.19. The TRQ amounts allocated to eligible applicants are determined by the NDRC. The 2003
Provisional Measures provide for two methods for determining the TRQ allocation amounts, namely,
allocation " in accordance with the applicants' number of applications, past actua l import
performance, production capacity, and other relevant commercial standards ", or allocation "based
on a first-come first-served method".38 The initial allocation of TRQ amounts is made solely on the
basis of the former method , also referred to as "al location principles" in the annual allocation
notices.39
2.20. The 2017 Allocation Notice sets out the allocation principles as follows:
The aforementioned grain import tariff-rate quotas will be allocated in accordance with
applicants' actual production and operating capacities (including historical production
and processing, actual import performance, and operating situation, etc.) and other
relevant commercial standards.40
2.21. China states that, in practice, applicants' actual import perfo rmance under previously
allocated TRQ amounts is "the factor given the most weight in NDRC's allocation analysis "41, and
that "[n]ew applicants are only considered in the event that the entire non-STE portion of the TRQs
is not fully allocated to applicants with historic import performance", in which case "information
concerning production capacity is a key factor".42
2.2.1.5 Public comment process
2.22. After receiving the applications from the NDRC's local agencies by 30 November, the NDRC
publishes on its website a so-called announcement of applicant enterprise data, which includes a list

34 2003 Provisional Measures, (Exhibit USA-11), Article 11; 2017 Allocation Notice, (Exhibit USA-15),
Article III.
35 2003 List of NDRC Authorized Agencies, (Exhibit USA-13).
36 2003 Provisional Measures, (Exhibit USA-11), Article 8. (emphasis original)
37 2003 Provisional Measures, (Exhibit USA-11), Article 12. See also 2017 Allocation Notice,
(Exhibit USA-15), Article III.
38 2003 Provisional Measures, (Exhibit USA-11), Article 13.
39 China's response to Panel question No. 52(a), para. 14. See also United States' first written
submission, para. 28; and China's first written submission, para. 16 (referring to 2017 Allocation Notice,
(Exhibit USA-15), Article IV).
40 2017 Allocation Notice, (Exhibit USA-15), Article IV.
41 China's first written submission, para. 49. See also China's response to Panel question No. 52,
para. 13.
42 China's first written submission, para. 50.

of TRQ applicants together with relevant data submitted by each applicant.43 The period during which
the list of applicants and applicants' data will be available online is specified on the NDRC's website.44
2.23. Within that period, the public is invited to provide "feedback with relevant opinions" if they
are "in disagreement with the data reported by the enterprises" .45 The public comments are taken
into account by the NDRC in d etermining applicants' eligibility to receive TRQ allocations and in
determining the TRQ amounts allocated to individual applicants.46
2.24. China states that the NDRC, in practice, verifies comme nts received from the pu blic and
provides applicants an opportunity to rebut any such comments.47 China also states that NDRC will
only take into account verified public comments relating to "the violation records of an applicant in
the areas of industry and commerce registration, tax payments, customs, compliance with cou rt
judgements, and compliance with the 2003 Provisional Measures" and "data concerning the actual
import performance and the historical processing capacity of the applicant".48
2.2.2 Rules and requirements for allocated TRQ amounts
2.25. Once the application process is complete, the NDRC, through its local agencies, informs
applicants of the results of their applications and issues the TRQ certificates.49
2.26. Applicants that receive TRQ allocations are called end-users50 and must comply with several
rules and requirements when importing grains under TRQs allocated to them and when using grains
imported under their TRQ allocations . The rules and requirements vary depending on the type of
TRQ, grain, and enterprise involved and are described in further detail below.
2.2.2.1 STE and non-STE portions of TRQs
2.27. Article 4 of the 2003 Provisional Measures divides TRQs into STE and non-STE portions51, and
requires STE portions to be indicated in TRQ certificates.52 STE portions of TRQs must be imported
through STEs, and non-STE portions of TRQs must be imported through enterprises that have trading
rights or, if the end-user has trading rights, by the end-user itself.53
2.28. Article 38 of the 2003 Provisional Measures defines STEs as:
[E]nterprises conferred by the government with privileges in the exclusive import
business of certain products. The list of state trading enterprises is verified, determined,
and announced by the Ministry of Commerce.54

43 2017 Allocation Notice, (Exhibit USA-15), Article III; and 2017 Announcement of Applicant Enterprise
Data, (Exhibit USA-19).
44 In the allocation process for 2017, this period was from 1 December to 14 December. (2017
Announcement of Applicant Enterprise Data, (Exhibit USA-19)).
45 2017 Announcement of Applicant Enterprise Data, (Exhibit USA-19).
46 United States' first written submission, paras. 93-95; and China's responses to Panel question
47 China's first written submission, para. 114; and response to Panel question No. 9(c), para. 30.
48 China's response to Panel question No. 55(a), para. 23. (emphasis omitted)
49 2003 Provisional Measures, (Exhibit USA-11), Article 14.
50 Article 39 of the 2003 Provisional Measures defines "end-users" as follows:
[M]anufacturing enterprises, traders, wholesalers, retailers, etc. that directly apply for and obtain
agricultural product import tariff-rate quotas. (2003 Provisional Measures, (Exhibit USA-11),
Article 39).
For ease of reference, throughout this Report, we use the term "recipient" in referring to end-users
within the meaning of this provision.
51 2003 Provisional Measures, Article 4 (Exhibit USA-11). See also 2017 Allocation Notice, (Exhibit USA-
15), Article I.
52 2003 Provisional Measures, (Exhibit USA-11), Article 14.
53 2003 Provisional Measures, (Exhibit USA-11), Article 4. Although this was not the case when the
2003 Provisional Measures were adopted, China explains that all enterprises in China now have trading rights,
which are granted automatically upon registration. (China's response to Panel question No. 1(e), para. 6). We
therefore do not address or refer to "trading rights" in this Report.
54 2003 Provisional Measures, (Exhibit USA-11), Article 38.

The National Cereals, Oils and Foodstuffs Im port and Export Corporation ( COFCO) is the only STE
for grains designated by the Ministry of Commerce.55
2.29. According to Article 22 of the 2003 Provisional Measures, if an end-user that receives an STE
portion of a TRQ is unable to sign a contract through an S TE (i.e. COFCO) prior to 15 August, the
end-user may, "upon seeking appr oval" from MOFCOM or the NDRC, entrust any enterprises to
import or import by itself.56
2.30. China states that while the NDRC is not legally prevented from allocating STE portions of TRQs
to non-STE applicants, in practice, it allocates the entire STE portions of wheat, rice, and corn TRQs
to COFCO.57 China further states that the entire STE portion of each TRQ is allocated to COFCO
without applying the basic eligibility criteria and allocat ion principles described in sections 2.2.1.2
and 2.2.1.4 above58, and that the obligation to re turn unused TRQ amounts and the penalties for
their non-use, described in section 2.2.2.3 below, also do not apply to COFCO.59
2.2.2.2 Usage requirements for wheat, rice, and corn imported under TRQ allocations
2.31. TRQ amounts allocated to a n enterprise must be "self-used", and imported goods must be
"operated for processing" by the enterprise itself.60 The 2017 Allocation Notice specifies that:
Among these [goods], imported wheat and corn are required to be processed and used
in [the enterprise's] own plant; imported [] rice is required to be organized for sale in
the name of the enterprise itself.61
2.32. As noted in paragraph 2.16 above, group enterprises that own multiple processing plants
must independently apply for wheat and corn TRQ allocations in the name of each processing plant,
and independently process wheat and corn imported under TRQ allocations in each processing
plant.62 Group enterprises applying for rice TRQ allocations may choose to apply in the name of the
group headquarters or a subsidiary enterprise, but the headquarters and the subsidiary enterprises
must not apply at the same time63, and the rice must be organized for sale in the name of the entity
that files the application.64
2.33. China states that, while the processing requirements for wheat and corn imported under TRQ
allocations apply in all circumstances, the NDRC does not "monitor whether recipients comply with
the processing requirement on a daily basis" and that the NDRC, in the event it "were to become
aware of a situation in which a recipient had transferred its [unprocessed] grains to another entity",
would "evaluate, on a case -by-case basis, whether the recipient should be subject to a penalty in
the form of a reduced allocation in the following year ".65 If the recipient is found to have been
"unable to process its full allocation for unexpected reasons", the NDRC would, according to China,
not subject that recipient to a penalty. 66 China further points out that the NDRC has "not yet"
encountered a situation where a TRQ recipient has transferred unprocessed wheat or corn to other
entities.67
2.2.2.3 Return of unused TRQ amounts and penalties for their non-use
2.34. TRQ certificates for wheat, rice, and corn are valid and must be used from 1 January to
31 December of the year for which they are issued.68 An end-user must return unused TRQ amounts

55 Catalogue of Import State Trading Enterprises, (Exhibit USA-14). See also China's first written
56 2003 Provisional Measures (Exhibit USA-11), Article 22.
57 China's first written submission, para. 9.
58 China's responses to Panel question No. 6, para. 19, and No. 63, para. 44.
59 China's response to Panel question No. 6, para. 20.
60 2017 Allocation Notice, (Exhibit USA-15), Article V(2).
61 2017 Allocation Notice, (Exhibit USA-15), Article V(2).
62 2017 Allocation Notice, (Exhibit USA-15), Article II.
63 2017 Allocation Notice, (Exhibit USA-15), Article II.
64 China's response to Panel question No. 59(c), para. 39.
65 China's response to Panel question No. 57(a), para. 29.
66 China's response to Panel question No. 57(a), para. 29.
67 China's response to Panel question No. 57, para. 29.
68 2003 Provisional Measures, (Exhibit USA-11), Article 15.

to the original certificate-issuing agency by 15 September of that year. In this regard , the 2003
Provisional Measures state that:
In the event that an end-user holding an agricultural product import tariff-rate quota is
unable to sign import contracts for, or ha s already signed import contracts for but is
unable to complete, the entire quota quantity already applied for and obtained for the
current year, [the end-user] must return the quota quantity it was unable to complete
to the original certificate-issuing agency prior to September 15.69
2.35. Article 30 of the 2003 Provisional Measures imposes penalties in the form of deductions to
the TRQ allocations in the following year for end-users that fail to return unused TRQ amounts by
15 September. More particularly, it states that:
In the event that an end -user, in violation of the provisions in Article 23 of these
Measures, fails to complete imports for the entire agricultural import tariff -rate quota
quantity allocated during the current year, and also fails to return to the original
certificate-issuing agency by September 15 the quota quantity it failed to import during
the current year, there will be a corresponding deduction to its tariff-rate quota quantity
allocated in the following year, according to the proportion not completed.70
2.36. Article 31 imposes penalties in the form of deductions to the TRQ allocations in the following
year for end-users that are unable to complete importation under TRQs for two consecutive years
even if they comply with the obligation to return unused amounts. More particularly, it states that:
In the event that an end-user fails to complete imports for the entire agricultural import
tariff-rate quota quantity allocated for two consecutive years, but has returned to the
original certificate-issuing agency by September 15 the quota quantity that it failed to
utilize during the current year, there will be a corresponding deduction to its tariff-rate
quota quantity allocated in the following year, according to its proportion not completed
in the most recent year.71
2.2.3 Reallocation of returned TRQ amounts
2.37. As described in section 2.2.2.3 above, an end-user must return unused TRQ amounts by
15 September of the year for which they are issued, in which case they are reallocated by the NDRC
in conjunction with MOFCOM. The application period for TRQs available for reallocation is from 1 to
15 September of the same year.72 End-users that have fully utilized their TRQ allocations prior to
the end of August, as well as new users that meet the application criteria in the allocation notice but
did not apply during the original allocation process, are eligible to apply for reallocation.73
2.38. One month before the application period for reallocation, the NDRC issues a reallocation notice
in the International Business Daily, the China Economic Herald, and on MOFCOM's and the NDRC's
websites, which sets out the application criteria for reallocation.74
2.39. The 2003 Provisional Measures and the annual reallocation notices set out the method for
reallocating returned TRQ amounts. The 2003 Provisional Measures state, in relevant part:
Tariff-rate quota reallocated quantities are allocated in accordance with the application
criteria promulgated and according to the first-come-first-served method. The minimum
quota quantity is determined using the commercially viable shipping quantities for each
type of agricultural product.75

69 2003 Provisional Measures, (Exhibit USA-11), Article 23. See also 2017 Reallocation Notice, (Exhibit
USA-17), para. 1.
70 2003 Provisional Measures, (Exhibit USA-11), Article 30. (emphasis omitted)
71 2003 Provisional Measures, (Exhibit USA-11), Article 31.
72 2003 Provisional Measures, (Exhibit USA-11), Article 24.
73 2003 Provisional Measures, (Exhibit USA-11), Article 25. See also 2017 Reallocation Notice, (Exhibit
USA-17), para. 2.
74 2003 Provisional Measures, (Exhibit USA-11), Article 24.
75 2003 Provisional Measures, (Exhibit USA-11), Article 26.

2.40. The 2017 Reallocation Notice states that:
The National Development and Reform Commission and the Ministry of Commerce will
carry out re allocation of quotas returned by users according to the order in which
applications were submitted online. Before October 1, the tariff-rate quota reallocation
results will be notified to the end-users.
When the number of applications that meet the criteri a, in total, is smaller than the
reallocated tariff -rate quota quantity, every applicant 's application can be satisfied;
when the number of applications that meet the criteria, in total, is larger than the
reallocated tariff-rate quota quantity, reallocati on will be carried out according to the
Allocation Principles and the Allocation Rules.76
2.41. China states that the NDRC, in practice, reallocates returned TRQ amounts based on the first-
come, first-served method, and that the allocation principles used during the initial allocation process
do not apply to the reallocation process.77
2.42. Reallocation notices include, as annexes, an application form, which is similar to that used for
the initial allocation process.78 Applications for reallocat ion of returned TRQ amounts may be
submitted to the NDRC's local agencies.79
2.43. According to the 2017 Reallocation Notice, from 1 September of each year, the NDRC's local
agencies "carry out reporting of the applications that meet the criteria via an agricultural product
import tariff-rate quota computerized management system". This Notice also states that, before
20 September, the local agencies "report these up in writing" to the NDRC.80
2.44. The 2003 Provisional Measures direct the NDRC to reallocate returned TRQ amounts before
30 September.81 They also state that applicants that receive a reallocation may import by
themselves or through other enterprises.82
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. The United States requests that the Panel find that China's administration of its wheat, rice,
and corn TRQs is inconsistent with China's obligations under Paragraph 116 of the Report of the
Working Party on the Accession of China (WT/MIN(01)/3) ( China's Working Party Report), as well
as with Articles X:3(a), XI:1, and XIII:3(b) of the GATT 1994. The United States further requests,
pursuant to Article 19.1 of the DSU, that the Panel recommend that China bring its measure into
conformity with its WTO obligations.83
3.2. China requests that the Panel reject the United States' claims.84
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the Panel
in accordance with paragraph 22 of the Working Procedures adopted by the Panel (see Annexes B-1
and B-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Australia, Brazil, Canada, Ecuador, the European Union, Japan, and Ukraine
are reflected in their executive summaries, provided in accordance with paragraph 25 of the Working

76 2017 Reallocation Notice, (Exhibit USA-17), para. 5. (emphasis omitted)
77 China's response to Panel question No. 52(b), para. 15.
78 2017 Reallocation Notice, (Exhibit USA-17), Annex 1: 2017 Grain Import Tariff-Rate Quota
Reallocation Application Form.
79 2003 Provisional Measures (Exhibit USA-11), Article 24.
81 2003 Provisional Measures, (Exhibit USA-11), Article 26.
82 2003 Provisional Measures, (Exhibit USA-11), Article 26.
83 See WT/DS517/6; and United States' first written submission, para. 309.
84 See China's first written submission, para. 157.

Procedures adopted by the Panel (see Annexes C-1, C-2, C-3, C-4, C-5, C-6, and C-7). Guatemala,
India, Indonesia, Kazakhstan, the Republic of Korea, Norway, the Russian Federation, Singapore,
Chinese Taipei, and Viet Nam did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
6.1. On 15 February 2019, the Panel issued its Interim Report to the parties. On 6 March 2019,
China and the United States each submitted written requests for the Panel to review aspects of the
Interim Report. On 20 March 2019, both parties submitted comments o n the other's requests for
review. Neither party requested an interim review meeting.
6.2. In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's
response to the parties' requests made at the interim review stage. The numbering of some of the
footnotes in the Final Report has changed from the numbering in the Interim Report. The discussion
below refers to the numbering in the Final Report and, where it differs, includes the corresponding
numbering in the Interim Report.
6.3. The parties' requests for substantive modifications are discussed below. In addition to the
requests discussed below, corrections were made for typographical and other non-substantive errors
in the Report, including those identified by the parties.
6.1 Factual aspects
6.4. The United States requests that we modify our description of the application form annexed to
the 2017 Allocation Notice in paragraph 2.14. First, the United States requests that we clarify that
the form requires information regarding the "nature" rather than the "ownership" of the applicant .
Second, the United States requests that we clarify that an applicant can submit information for the
first or second year preceding the one for which the application is made.85 The United States submits
the same two requests in relation to paragraphs 7.32 and 7.36.86 China does not oppose either
request but asks that we disregard certain parts of the reasoning provided by the United States in
support of it s first request. More particularly, China asks that we disregard the United States'
argument that information regarding the "nature" of the applicant "requires an indication of whether
the enterprise is a state asset or private enterprise" .87 In light of th e text of the application form,
and the views expressed by both parties, we have modified paragraphs 2.14, 7.32, and 7.36 by
referring to the "nature of the ownership" rather than the "ownership" of the applicant and by
clarifying that applicants can submit information for the first or second year preceding the one for
which the application is made.
6.2 Claims under Paragraph 116 of China's Working Party Report
6.5. The United States requests that the term "challenged measure" be replaced with "challenged
measures" in paragraph 7.1 because the United States included several legal instruments in its
panel request, and China's TRQ administration comprise s numerous aspects.88 The United States
submits the same or similar requests in relation to paragraphs 7.11, 7.12, 7.13, 7.14, 7.15, and
7.162.89 China opposes t he United States' request, arguing that the United States' panel request
identified "a singular 'measure' consisting of China's administration of its TRQs" and distinguished
this from "the 'legal instruments through which China has established its TRQs for wheat, short- and
medium- grain rice, long grain rice, and corn' ".90 We agree that the challenged measure is China's
administration of its wheat, rice, and corn TRQs which , as we explain below, covers the legal
instruments and acts of the relevant authorities that implement, or put into practical effect, China's
TRQs.91 Our understanding of China's administration of its wheat, rice, and corn TRQs therefore
covers all the legal instruments identified in the United States' panel request. We therefore do not

85 United States' request for review of the Interim Report, para. 13.
86 United States' request for review of the Interim Report, para. 13.
87 China's comments on the United States' request for review of the Interim Report, para. 8 (quoting the
United States' request for review of the Interim Report, para. 13).
88 United States' request for review of the Interim Report, para. 3.
89 United States' request for review of the Interim Report, paras. 6, 7, 9, 10, 11, 12, and 21.
90 China's comments on the United States' request for review of the Interim Report, para. 1 (quoting
WT/DS517/6). (emphasis added by China) See also ibid. paras. 2, 3, 4, 5, 6, 7, and 12.
91 See para. 7.7 below.

consider it accurate or appropriate to refer to "challenged measures" in the plural, and thus reject
the United States' request. We have, however, made textual modifications to certain paragraphs ,
including those identified by the United States, in order to clarify that the challenged measure is
China's administration of its wheat, rice, and corn TRQs.
6.6. The United States requests that we refer to "the customary rules of interpretation of public
international law" reflected in Articles 31 through 33 of the Vienna Convention on the Law of Treaties
in paragraph 7.5 rather than to the provisions of the Convention themselves. In the United States'
view, this would better reflect the fact that the United States is not a party to th e Convention.92
China has not commented on this request. We consider the United States' proposed modifi cation
useful and have adjusted the text of paragraph 7.5 accordingly.
6.7. The United States requests that we refer to the 1993 version, rather than the 2007 version, of
the Shorter Oxford English Dictionary in setting out our understanding of the ordinary meaning of
certain terms in Paragraph 116 of China's Working Party Report, and asks that we modify
footnotes 135 through 140 to paragraph 7.9 (footnotes 96 through 101 to paragraph 7.9 of the
Interim Report) accordingly.93 China has not commented on this request. We note that both versions
of the Shorter Oxford English Dictionary contain identical definitions for the terms at issue. We
therefore do not consider it useful to make the requested modifications, and reject the United States'
request.
6.8. The United States requests that we modify our description of the structure of China's
arguments, in paragraph 7.12, in order to reflect the fact that China did not address all of the
United States' claims in its first written submission. 94 China opposes the United States' request,
arguing that it addressed all of the United States' claims at the Panel's first meeting with the parties
and in its subsequent submissions.95 We have slightly modified the text of paragraph 7.12 in order
to accommodate both parties' arguments.
6.9. The United States requests that we remove the characterization , in the first sentence of
paragraph 7.13, of its claims under Paragraph 116 of China's Working Party Report as
"intertwined", and rather indicate that "the United States in certain instances offers the same
evidence in support of separate claims ".96 China has not commented on this request. In our view,
the characterization of the United States' c laims as intertwined is accurate, regardless of whether
this intertwined nature stems from the United States' reliance on "the same evidence in support of
separate claims". We do not consider it necessary or useful to modify t he text of paragraph 7.13,
and thus reject the United States' request.
6.10. The United States requests that we modify the fifth sentence of paragraph 7.13, which
describes the Panel's approach in analysing the United States' claims under Paragraph 116 of China's
Working Party Report , in order to indicate that the obligations under Paragraph 116 are legally
independent. More particularly, the United States request s that we not describe our holistic
assessment of the compatibility of China's TR Q administration as "synthesizing our intermediate
analyses" regarding the individual aspects of the measure , but rather as being "in addition to our
analyses" regarding the individual aspects of the measure. 97 The United States submits the same
request in relation to the fifth sentence of paragraph 7.162.98 China has not commented on this
request. We agree that our analyses of the individual aspects of China's TRQ administration should
not be viewed as intermediate. We have therefore removed this term from paragraphs 7.13 and
7.162, but have not found it necessary or useful to make further modifications.
6.11. China requests that we modify the description in paragraph 7.4499 of the NDRC's practice in
determining an applicant's eligibility to receive TR Q allocations, in order to better reflect China's
explanation that the NDRC, in practice, generates an applicant's credit report through Credit China

92 United States' request for review of the Interim Report, para. 4.
93 United States' request for review of the Interim Report, para. 5.
94 United States' request for review of the Interim Report, para. 7.
95 China's comments on the United States' request for review of the Interim Report, para. 3.
96 United States' request for review of the Interim Report, para. 8.
97 United States' request for review of the Interim Report, para. 10.
98 United States' request for review of the Interim Report, para. 21.
99 In its request for review of the Interim Report, China refers to paragraph 7.4 rather than
paragraph 7.44 (China's request for review of the Interim Report, p. 2). This appears to be a typographical
error, and we have not made any modifications to paragraph 7.4 of our Report.

by using the applicant's uniform social credit code. 100 The United States does not oppose China's
request but asks that we clarify that this description is based on China's explanation of the NDRC's
practice.101 We consider China's suggested modification, and the United States' suggested
clarification, accurate and useful, and have adjusted the text of paragraph 7.44 accordingly.
6.12. The United States requests that we revise our finding in paragraph 7.61 that it is sufficient
for China to list the factors that the NDRC will take into account in allocating TRQ amounts and that
Paragraph 116 of China's Working Party Report does not require China to specify how the NDRC will
evaluate these factors and what weight it will accord to them. In the United States' view, this finding
is inconsistent with the Panel's understanding of the meaning and nature of the obligations under
Paragraph 116, as well as with the Panel's findings in paragraphs 7.69 and 7.84 on certain other
aspects of China's TRQ administration.102 China opposes the United States' request, arguing that the
Panel "properly … concluded that the United States' proposed standard was overly stringent" and
that there are no inconsistencies in the Panel's findings. 103 We note that interim review provides
parties an opportunity to request the Panel "to review precise aspects of the interim report" 104 and
is not an appropriate stage for the parties to raise new arguments or to re -argue their case on the
basis of arguments already put before the Panel.105 Further, we do not consider that our finding in
paragraph 7.61 is inconsistent with any other finding in our Rep ort. We therefore reject the
United States' request that we revise our finding in paragraph 7.61. We have nonetheless modified
paragraphs 7.69, 7.82, and 7.84, in order to clarify that there are no inconsistencies in our findings
on different aspects of China's TRQ administration.
6.13. China requests that we modify the description in paragraph 7.77 of the public comment
process, by clarifying that the NDRC only publishes "certain" information submitted by applicants in
their TRQ applications.106 The United States does not oppose China's request but asks us to add that
this description is based on China's explanation. 107 We find China's suggestion useful, but consider
it more accurate to use the term "relevant" as this is the term used in China's legal instrument, the
2017 Announcement of Applicant Enterprise Data.108 We have adjusted the text of paragraph 7.77
accordingly. Since the description of the public comment process is based on a legal instrument, the
2017 A nnouncement of Applicant Enterprise Data, rather than China's explanation, we do not
consider it accurate to include the United States' proposed addition.
6.14. The United States requests that we "avoid confusion" by adding a direct reference to Article 30
of the 2003 Provisional Measures in footnote 281 to paragraph 7.105 (footnote 241 to
paragraph 7.105 of the Interim Report), which sets out the legal basis for the requirement to return
unused TRQ amounts.109 China has not commented on this request. We note that footnote 281, first,
provides a direct reference to Article 23 of the 2003 Provisional Measures, which is the legal basis
for the requirement to return unused TRQ amounts. Footnote 281, then, explains that Article 30 of
the 2003 Provisional Measures imposes penalties for failure to comply with the requirement to return
unused TRQ amounts, and quotes the text of this provision. Thus, in our view, footnote 281 provides
all the necessary information and does not cause confusion. We therefore reject the United States'
request.
6.15. The United States requests that we add the phrase "with trading rights" to our description in
paragraph 7.114 of the procedure for non-STE recipients to import under STE portions of TRQs, in
order to accurately reflect Articles 4 and 22 of the 2003 Provisional Measure s, and to specify that
non-STE recipients of STE portions of TRQs may only seek approval to import through enterprises
"with trading rights".110 China opposes th e United States' request on the basis that trading rights

100 China's request for review of the Interim Report, p. 2.
101 United States' comments on China's request for review of the Interim Report, para. 3.
102 United States' request for review of the Interim Report, paras. 15-17.
103 China's comments on the United States' request for review of the Interim Report, para. 9.
104 Article 15.2 of the DSU.
105 Appellate Body Reports, EC – Sardines, para. 301; and EC – Selected Customs Matters, para. 259.
See also Panel Reports, Japan – DRAMs (Korea), para. 6.2; US – Poultry (China), para. 6.32; India –
Agricultural Products, para. 6.5; India – Solar Cells, para. 6.24; Russia – Pigs, paras. 6.6-6.7; US – Zeroing
106 China's request for review of the Interim Report, p. 2.
107 United States' comments on China's request for review of the Interim Report, para. 4.
108 2017 Announcement of Applicant Enterprise Data, (Exhibit USA-19).
109 United States' request for review of the Interim Report, para. 18.
110 United States' request for review of the Interim Report, para. 19.

are no longer relevant to China's TRQ administration.111 We note that the term "trading rights"
appears several times in the 2003 Provisional Measures. As clarified in our factual description of
China's TRQ administration above, we, however, do not refer t o this term in our Report because
China explains that all enterprises in China have trading rights, which are granted automatically
upon registration.112 The United States has not contested China's explanation or otherwise suggested
that trading rights are relevant. In light of this, we do not find it useful to refer to trading rights in
describing the procedure for non-STE recipients to import under STE portions of TRQs, or elsewhere,
and therefore reject the United States' request.
6.16. The United States requests that we revise our finding in paragraph 7.132 that China's failure
to give public notice of the outcomes of the NDRC's allocation and reallocation processes would not
inhibit the filling of each TRQ by preventing grain importers and exporters from entering into
commercial arrangements for the importation of wheat, rice, and corn , because nothing prevents
TRQ recipients from publ ishing their own outcomes or contacting grains exporters. In the
United States' view, this finding "does not include, however, circumstances where a TRQ holder (the
STE, COFCO, for example) may not wish to enter into commercial arrangements for the importation
of grains ".113 China opposes the United States' request, arguing that it is based on "a purely
speculative hypothetical" and "only serves to confirm that [the United States] lack s any valid basis
for arguing that the information currently published by C hina is insufficient". 114 We reiterate that
interim review is not an appropriate stage for the parties to raise new arguments or re -argue their
case on the basis of arguments already put before the Panel. 115 Furthermore, consideration of
"circumstances where a TRQ holder (the STE, COFCO, for example) may not wish to enter into
commercial arrangements for the importation of grains" would, in our view, not alter the finding that
China's failure to give public notice of the outcomes of the NDRC's allocation and re allocation
processes would not inhibit the filling of each TRQ . More particularly, if TRQ recipients do not wish
to enter into commercial arrangements with gra in exporters, they will presumably not do so
regardless of whether China provides public notice of the allocation and reallocation outcomes. We
therefore reject the United States' request that we revise our finding in paragraph 7.132.
6.17. China requests that we modify paragraph 7.145 and footnote 337 thereto (footnote 297
of the Interim Report) by deleting references to Articles 30 and 31 of the 2003 Provisional Measures
since these provisions impose penalties for non-use of TRQ allocations, rather than penalties for
failure to comply with the usage requirements for wheat and corn imported under TRQ allocations.116
China requests that we instead refer to China's explanation "that in cases where NDRC imposes
penalties on recipients f or not having met the usage requirements for imported wheat and corn
under the TRQs, such penalties would take the form of deductions in TRQ allocations in the coming
year".117 The United States opposes the deletion of references to Articles 30 and 31 of the 2003
Provisional Measures, arguing that a TRQ recipient who " knows it can not or may not be able to
process the full amount of its wheat or corn allocation in its own plant … may not apply for or import
as much grain, and in the latter scenario would be subject to the TRQ utilization penalty referenced
in Articles 30 and 31 ".118 However, the United States does not object to China's request that an
additional reference be provided to China's explanation of the penalties for failure to comply with
the usage requirements for wheat and corn. 119 We note that while the penalties in Articles 30 and
31 of the 2003 Provisional Measures are not directly applicable to failure to comply with the usage
requirements for wheat and corn, the operation of the usage requirements , in conjunction with the
penalties for non-use of TRQ allocations, has an effect on the filling of the TRQs. It is this effect that
forms the basis for the United States' claim and our finding under Paragraph 116 of China's Working
Party Report. We theref ore reject China's request for the deletion of the references to Articles 30
and 31 of the 2003 Provisional Measures in paragraph 7.145 and footnote 337 thereto. However,

111 China's comments on the United States' request for review of the Interim Report, para. 10.
112 See fn 53 above (referring to China's response to Panel question No. 1(e), para. 6).
113 United States' request for review of the Interim Report, para. 20.
114 China's comments on the United States' request for review of the Interim Report, para. 11.
115 Appellate Body Reports, EC – Sardines, para. 301; and EC – Selected Customs Matters, para. 259.
See also Panel Reports, Japan – DRAMs (Korea), para. 6.2; US – Poultry (China), para. 6.32; India –
Agricultural Products, para. 6.5; India – Solar Cells, para. 6.24; Russia – Pigs, paras. 6.6-6.7; US – Zeroing
116 China's request for review of the Interim Report, pp. 3-4.
117 China's request for review of the Interim Report, p. 4 (referring to China's response to Panel question
No. 58(a), para. 33).
118 United States' comments on China's request for review of the Interim Report, para. 6.
119 United States' comments on China's request for review of the Interim Report, para. 11.

we have made certain modifications to paragraph 7.145 to clarify the relevance of the penalties for
non-use of TRQ allocations in Articles 30 and 31 of the 2003 Provisional Measures, for the usage
requirements for wheat and corn. Further, we consider that China's explanation that penalties similar
to those in Articles 30 and 31 of the 2003 Provisional Measures apply to failure to comply with the
usage requirements for wheat and corn support s our finding in paragraph 7.145, and we therefore
agree with both parties that an additional reference to this explanation in footnote 337 is appropriate
and useful.
6.3 Claim under Article XIII:3(b) of the GATT 1994
6.18. The United States requests that the term "contracting party" be replaced by the term
"Member" in paragraph 7.187.120 China has not commented on this request. We note that the term
"contracting party" appears as part of a quote from Article XIII:3(a) of the GATT 1994.
Paragraph 2(a) of the Explanatory Note to the GATT 1994, provides that "references to 'contracting
party' in the provisions of GATT 1994 shall be deemed to read 'Member'". We therefore do not
consider it necessary to modify the quote in paragraph 7.187, and reject the United States' request.
6.19. The United States requests a "clarification, for accuracy and for consistency" in
paragraph 7.190. More particularly, the United States requests that we explain that a TRQ gives
applicants permission or opportunity to import goods at the in -quota rate "up to the total TRQ
amounts allocated" rather than "up to the total TRQ amounts available for allocation" .121 China
opposes the United States' request, arguing that the proposed "clarification" would be inconsistent
with the Panel's finding that Article XIII:3(b) of the GATT 1994 requires public notice of the total
TRQ amounts available for allocation, not the total TRQ amounts actually allocated.122 We agree with
China that the United States' requested modification is not a "clarification, for accuracy and for
consistency" but rather a substantive modification that would not be consistent with our
interpretation of Article XIII:3(b) and our finding that this provision requires public notice of the
total TRQ amounts of available for allocation, not the total TRQ amounts actually allocated. We
therefore reject the United States' request.
6.4 Claim under Article X:3(a) of the GATT 1994
6.20. The United States requests that the reference to a "well-established principle in WTO case
law" in paragraph 7.212 be deleted, since it could be "misunderstood as indicating that prior panel
and appellate reports have precedential value" and since the DSU provides more direct support for
the relevant finding.123 The United States suggests further modifications to paragraph 7.212 and
footnote 404 thereto (footnote 364 of the Interim Report) to clarify that the finding is based on
the provisions of the DSU. China has not commented on this request . While we have not found it
necessary to introduce all of the United States' suggested modifications, we have deleted the
reference to a "well -established principle in WTO case law" and have made certain other textual
modifications to paragraph 7.212 and footnote 404 thereto in order to address the concern identified
by the United States. Although not specifically requested by the United States, we have also made
the same modifications in paragraph 7.238 and footnote 446 thereto (footnote 406 of the Interim
Report) concerning the claim under Article XI:1 of the GATT 1994.
7 FINDINGS
7.1 Claims under Paragraph 116 of China's Working Party Report
7.1.1 Introduction
7.1. The United States raises several claims under Paragraph 116 of China's Working Party Report,
namely that China violates the obligations to administer its wheat , rice , and corn TRQs on a
transparent, predictable , and fair basis, using clearly specified administrative procedures and
requirements that would not inhibit the filling of each TRQ. 124 Each claim takes issue with specific
aspects of China's administration of its wheat, rice, and corn TRQs. Such aspects include the basic

120 United States' request for review of the Interim Report, para. 22.
121 United States' request for review of the Interim Report, para. 23.
122 China's comments on the United States' request for review of the Interim Report, para. 13.
123 United States' request for review of the Interim Report, para. 24.
124 United States' first written submission, paras. 64 and 309.

eligibility criteria to receive TRQs (basic eligibility criteria); the principles for allocating the TRQ
amounts (allocation principles) and the procedures for reallocating the amounts of returned TRQs
(reallocation procedures); the use of a public comment process; the administration of STE and non-
STE portions of TRQs; the extent of the public notice provide d in connection with allocation, return
and reallocation of TRQs; and the usage requirements imposed on wheat, rice , and corn imported
under TRQ allocations (usage requirements).125
7.2. While acknowledging that certain aspects of its TRQ administration could be better reflected in
its legal instruments 126, China gene rally rejects all of the United States' claims under
Paragraph 116.127
7.1.2 Legal provision
7.3. Paragraph 116 of China's Working Party Report states in relevant part:
The representative of China stated that upon accession, China would ensure that TRQs
were administered on a transparent, predictable, uniform, fair and non -discriminatory
basis using clearly specified timeframes, administrative procedures and requirements
that would provide effective import opportunit ies; that would reflect consumer
preferences and end-user demand; and that would not inhibit the filling of each TRQ.128
7.4. Previous WTO panels have not yet addressed Paragraph 116. We therefore find it useful to set
out our understanding of the meaning and nature of the legal obligations laid down in this provision,
before proceeding to our assessment of the claims.
7.5. As a threshold matter, we note that Paragraph 1.2 of China's Accession Protocol stipulates that
"[t]his Protocol, which shall include the commitmen ts referred to in paragraph 342 of [China's]
Working Party Report, shall be an integral part of the WTO Agreement."129 Paragraph 342 of China's
Working Party Report, in turn, refers to the commitments contained in a number of its paragraphs,
including Paragr aph 11 6.130 In light of this, we consider that China's commitments under
Paragraph 116 are enforceable under the DSU, and we will interpret these obligations in accordance
with the customary rules of interpretation of public international law reflected in the relevant
provisions of the Vienna Convention on the Law of Treaties.131
7.6. Paragraph 116 contains multiple obligations, which may be grouped into three categories. The
first category concerns the basis of China's TRQ administration, and requires this basis to be
transparent, predictable, uniform, fair , and non-discriminatory. The second category concerns the
timeframes, administrative procedures and requirements China uses in its TRQ administration, and
requires these timeframes, administrative procedures and requirements to be clearly specified. The
third category concerns the effects of the aforementioned time -frames, administrative procedures
and requirements, and requires that they provide effective import opportunities, reflect consumer
preferences and end-user demand, and not inhibit the filling of each TRQ.
7.7. All obligations set forth in Paragraph 116 apply only to China's administration of its TRQs, as
opposed to the TRQs themselves. In this regard, we consider that China's administration of its TRQs
covers the legal instruments and acts of the relevant authorities that implement the TRQs or put
them into practical effect.132

125 United States' first written submission, paras. 65, 70, 113, 152, 165, 180, and 190-192; and
response to Panel question No. 19(b), paras. 53-55.
126 China's opening statement at the first meeting of the Panel, para. 14; and response to Panel
question No. 26, para. 73.
127 China's first written submission, para. 157; responses to Panel question No. 24(b), paras. 71-72 and
No. 26, para. 73; and second written submission, paras. 57-61.
128 China's Working Party Report, (Exhibit USA-1), Paragraph 116.
129 China's Accession Protocol, (Exhibit USA-2), Paragraph 1.2.
130 China's Working Party Report, (Exhibit USA-1), para. 342.
131 For a similar approach, see e.g. Appellate Body Reports, China – Raw Materials, para. 278; and
China – Rare Earths, para. 5.19; and Panel Reports, China – Auto Parts, paras. 7.740-7.741; China – Raw
Materials, paras. 7.112-7.114; and China – Rare Earths, para. 7.40.
132 For a similar approach under Article X:3(a) of the GATT 1994 concerning the administration of trade
regulations, see e.g. Appellate Body Reports, EC – Bananas III, para. 200; EC – Selected Customs Matters,

7.8. Paragraph 116 lists the multiple obligations contained therein using the conjunction "and",
which, as both parties agree133, suggests that these are legally independent obligations. Therefore,
a breach of any of these obligations would lead to a violation of Paragraph 116.134 In our assessment,
we focus only on the six obligations the United States has invoked in challenging China 's TRQ
administration under Paragraph 116, namely the obligations to (a) administer TRQs on a transparent
basis; (b) administer TRQs on a predictable basis; (c) administer TRQs on a fair basis; (d) administer
TRQs using clearly specified administrative procedures; (e) administer TRQs using clearly specified
requirements; and (f) administer TRQs using timeframes, administrative procedures and
requirements that would not inhibit the filling of each TRQ.
7.9. Since the obligations set forth in Paragraph 116 are leg ally independent, we consider it
important to set out our understanding of the meaning and nature of each obligation the
United States has invoked in the case before us. T he first three obligations concern the "basis" for
China's TRQ administration, in other words, the underlying set of rules or principles according to
which China administers its TRQs.135 In our view, these obligations require China t o administer its
TRQs through an underlying set of rules or principles that are easily understood or discerned by
applicants and other interested parties ( administer TRQs on a transparent basis)136; that allows
applicants and other interested parties to easily anticipate how decisions regarding TRQ
administration are made ( administer TRQs on a predictable basis)137; a nd that is impartial and
equitable, requiring the relevant authorities to administer TRQs in accordance with the applicable
rules and standards ( administer TRQs on a fair basis).138 With respect to the fourth and fifth
obligations, we consider that they require China to use administrative procedures and requirements
that are set out in plain or obvious detail (use clearly specified administrative procedures and
requirements).139 The sixth obligation, concerning the effects of China's TRQ administration, requires
China to employ timeframes, administrative procedures and requirements that would not restrain or
prevent the filling of each TRQ (administer TRQs in a manner that would not inhibit the filling of each
TRQ).140 Although this obligation concerns the effects of China's TRQ administration on the filling of
each TRQ, we do not believe that the United States is required to quantify such effects in order to
prevail under this claim. Rather, the United States can substantiate this claim with reference to the
design, architecture and structure of China's TRQ administration, in its relevant context.141

paras. 199-201 and 224; and EC – Poultry, para. 115; and Panel Report, Thailand – Cigarettes (Philippines),
paras. 7.869-7.870.
133 United States' first written submission, para. 63; and response to Panel question No. 24(a), para.
77; and China's response to panel question No. 24(b), para. 71. Some third parties have also expressed the
same view. (See Brazil's third-party statement, para. 3; and response to Panel question No. 1(b); Canada's
response to Panel question No. 1(b), para. 6; European Union's response to Panel question No. 1(b),
paras. 39-41; and Japan's response to Panel question No. 1(b)).
134 For a similar approach under Article X:3(a) of the GATT 1994 requiring uniform, impartial and
reasonable administration of trade regulations, see e.g. Panel Reports, Dominican Republic – Import and Sale
135 The Shorter Oxford Dictionary defines "basis" as "[a] thing on which anything is constructed and by
which its constitution or operation is determined; a footing (of a specified kind); a determining principle; a set
of underlying or agreed principles". (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford
University Press, 2007), Vol. 1, p. 188).
136 The Shorter Oxford Dictionary defines "transparent" as "[e]asily seen through or understood; easily
discerned; evident, obvious". (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford
University Press, 2007), Vol. 2, p. 3373).
137 The Shorter Oxford Dictionary defines "predictable" as "[a]ble to be predicted. Also (of a person),
acting in a way that is easy to predict". (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.)
(Oxford University Press, 2007), Vol. 2, p. 2329).
138 The Shorter Oxford Dictionary defines "fair" as " [o]f a person, action, argument, etc.: just,
unbiased, equitable, impartial; legitimate, in accordance with the rules or standards". (Shorter Oxford English
Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, p. 907).
139 The Shorter Oxford Dictionary defines "clearly" as, " [d]istinctly; plainly; manifestly, obviously" and
"specify" as "… [s]peak or treat of a matter etc. in detail; give details or particulars". (Shorter Oxford English
Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vols. 1 and 2, pp. 415 and 2973).
140 The Shorter Oxford Dictionary defines "inhibit" as " [r]estrain, prevent" and "filling" as " [s]omething
which fills or is used to fill a space or hole, stop up a gap, etc". (Shorter Oxford English Dictionary, 6th edn, A.
Stevenson (ed.) (Oxford University Press, 2007), Vol. 1, pp. 949 and 1369).
141 For a similar approach under Article XI:1 of the GATT 1994 concerning quantitative restrictions on
importation and exportation, see e.g. Appellate Body Reports, Argentina – Import Measures, para. 5.217; and
Panel Report, Indonesia – Import Licensing Regimes, para. 7.45.

7.1.3 Horizontal issues
7.10. In this section, we address certain horizontal issues arising from the United States' c laims
under Paragraph 116 of China's Working Party Report, before proceeding to our assessment of the
individual claims.
7.11. First, we explain how we have structured our assessment of the United States' claims under
Paragraph 116. The United States challenges several aspects of China's administration of its wheat,
rice, and corn TRQs under several obligations set forth in Paragraph 116. More particularly, and as
explained above, the United States claims that China's TRQ administration violates six obligations
under Paragraph 116 , namely the obligations to (a) administer TRQs on a transparent basis; (b)
administer TRQs on a predictable basis; (c) administer TRQs on a fair basis; (d) use clearly specified
administrative procedures; (e) use clearly specified requ irements; and (f) administer TRQs in a
manner that would not inhibit the filling of each TRQ. In substantiating these claims, the United
States challenges several specific aspects of China 's TRQ administration, namely those relating to
(i) the basic eligibility criteria; (ii) the allocation principles and the reallocation procedures; (iii) the
use of a public comment process; (iv) the administration of STE and non -STE portions of TRQs;
(v) the extent of the public notice provided in connection with allocation, return and reallocation of
TRQs; and (vi) the usage requirements.142 The United States combines different aspects of China's
administration of its wheat, rice, and corn TRQs in arguing that it violates a particular obligation
under Paragraph 116.
7.12. A panel has discretion to decide the order of its analysis and, in doing so, it may take into
account how the parties have presented their claims and arguments. 143 In the case before us, the
United States has presented its claims on the basis of alleged violations of the obligations laid down
in Paragraph 116, and has addressed, under separate subheadings, which aspects of China's TRQ
administration violate a particular obligation.144 China, in turn, has presented its arguments on the
basis of the aspects of its TRQ administration, and has addressed, cumulatively, the claims presented
by the United States about an aspect of China's TRQ administration.145
7.13. Both approaches have their own logic, and they both give rise to a certain amount of repetition
because of the intertwined nature of the United States' claims. For ease of explanation, and to avoid
unnecessary repetition, we have decided to assess the claims on the basis of the aspects of China's
administration of its wheat, rice, and corn TRQs . That is, we will a nalyse all claims raised by the
United States about an aspect of China's TRQ administration, and then proceed to the next aspect.
In considering whether each aspect of China's TRQ administration is consistent with the relevant
legal obligations, we will no t undertake an "isolated consideration of each element" 146, and will ,
where appropriate, take into consideration the interlinkages between different aspects of China's
TRQ administration. Next, we will conduct a holistic assessment of the compatibility of China's TRQ
administration with the obligations set forth in Paragraph 116, by synthesizing our analyses
regarding the individual aspects of China's TRQ administration.147
7.14. Second, w e recall that the obligations set forth in Paragraph 116 apply to China's TRQ
administration148, and that Article 11 of the DSU requires us to examine the applicability of the
obligations set forth in Paragraph 116 to the measure before us. Hence, as pointed out in
paragraph 7.7 above, we have to satisfy ourselves that the aspects the United States challenges

142 United States' first written submission, paras. 65, 70, 113, 152, 165, 180, and 190-192; and
response to Panel question No. 19(b), paras. 53-55.
143 See, e.g. Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 126; and Panel
Reports, Argentina – Financial Services, para. 7.67; and EU – Poultry Meat (China), para. 7.12.
144 United States' first written submission, paras. 70-222.
145 China's first written submission, paras. 45-55, 61-76, 93-100, 110, 112-115, and 124-134.
146 Panel Report, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico) (Article 21.5 –
Mexico II), para. 7.530 (quoting Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico),
para. 7.21.)
147 For a similar approach, see e.g. Panel Report, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna
II (Mexico) (Article 21.5 – Mexico II), paras. 7.529. In responding to the United States' claims, China points to
the importance of assessing the compatibility with the obligations laid down in Paragraph 116 of its TRQ
administration "as a whole". (See China's second written submission, paras. 57-61; and opening statement at
the second meeting of the Panel, paras. 20-25). By taking into account the interlinkages between individual
aspects of China's TRQ administration and by conducting a holistic assessment of the compatibility of China's
TRQ administration with the obligations laid down in Paragraph 116, we do exactly that.
148 See para. 7.7 above.

form part of China's TRQ administration, as opposed to the TRQs themselves. In this regard, we
recall that a TRQ is essentially a two -level tariff measure, consisting of a lower tariff rate imposed
on imports within the quota volume and a higher tariff rate imposed on imports outs ide the quota
volume. TRQ administration, on the other hand, consists of the legal instruments and acts of the
relevant authorities that implement TRQs or put them into practical effect.149
7.15. None of the aspects that the United States challenges determines the level of the within-quota
or outside -quota tariff rates, nor the quota volumes. Therefore, they cannot be considered as
forming part of China's TRQs. Rather, the challenged aspects serve to implement China's TRQs or to
put them into practical effect in th at they determine who is eligible to receive a TRQ allocation or
reallocation, the amount of the TRQ allocation or reallocation, how allocated TRQ amounts are to be
utilized, how products imported under TRQs are to be used, and the consequences of not util izing
allocated TRQ amounts. We therefore consider that all the challenged aspects form part of China's
TRQ administration, as opposed to forming part of the TRQs themselves.
7.16. China argues that the usage requirements for wheat, rice, and corn imported under TRQs and
the penalties for non -use of TRQ allocations, form part of the TRQs themselves and therefore fall
outside the scope of Paragraph 116.150 Specifically, China submits that the usage requirements are
"substantive rules" that "condition access to the TRQ" and therefore form part of the TRQ.151 China
also submits that the usage requirements "define the parameters of the quota itself" because "if
imports will not be used for the specified purpose, they will not be accessible for importation
regardless of whether the applicant submits an application or complies with any other administrative
procedural requirement".152 We disagree with these arguments. China has not explained, and it is
not clear to us, in what sense the usage requirements define the parameters of the quota itself or
constitute substantive rules that condition access to the TRQ. The usage requirements do not define
the types or volumes of wheat, rice, and corn covered by China's TRQs, nor do they affect the
within-quota or outside -quota tariff ra tes. Rather, they are requirements that recipients of TRQ
allocations must comply with when using the wheat, rice, or corn imported under their TRQ
allocations.153
7.17. We also do not agree with China that the usage requirements and the penalties for non -use
of TRQ allocations are included in its Schedule of Concessions and Commitments on Goods (Schedule
CLII) in such a way as to suggest that these requirements and penalties form part of China's TRQs.154
With respect to the penalties for non -use of TRQ allocations, we note that they are not included in
the parts of China's Schedule that set out the description and tariff item number of the covered
products, the quota quantities, and within -quota tariff rates. Rather, they are set out in the parts
that describe how Ch ina is to implement and apply its TRQs. 155 With respect to the usage
requirements, we note that they are not mentioned in China's Schedule CLII. China argues that the
usage requirements are "contemplated" in its Schedule because the Schedule allows China to take
into account applicants' production capacity in allocating TRQ amounts during the first year. 156 As
explained in detail in paragraphs 7.148 and 7.149 below, we do not consider that the reference
made to the consideration of production capacity in connec tion with the allocation of TRQ amounts
implies that China's Schedule allows it to impos e usage requirements. In any case, as with the
penalties for non-use of TRQ allocations, the reference to production capacity is not included in the
parts of China's Schedule that set out the description and tariff item number of the covered products,

149 Ibid.
150 China's responses to Panel question No. 31, para. 85, and No. 38(a), paras. 94-95 and 101; and
second written submission, paras. 49 and 70-79. The European Union and Japan submit similar views.
(European Union's third-party submission, para. 144; and Japan's response to Panel question No. 2).
151 China's second written submission, para. 75. See also China's response to Panel question No. 38(a),
paras. 94-95.
152 China's second written submission, para. 78. See also China's response to Panel question No. 38(a),
para. 95.
153 See section 2.2.2.2 above.
154 China's response to Panel question No. 38(a), para. 101; and second written submission, para. 79.
155 China's Schedule CLII, Part I, Section IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff
156 China's response to Panel question No. 27, paras. 78-79.

the quota quantities, and within-quota tariff rates, but rather in the parts that describe how China
is to implement and apply its TRQs.157
7.18. For these reasons, we find that Paragraph 116 applies to all aspects challenged by the
United States, including the usage requirements and penalties for non-use of TRQ allocations.
7.19. Having addressed these horizontal issues, we now assess the United States' claims concerning
the individual aspects of China's TRQ administration, followed by our holistic assessment of the
compatibility of that administration with the obligations invoked by the United States under
Paragraph 116.
7.1.4 Assessment of the individual aspects of China's TRQ administration challenged
under Paragraph 116
7.1.4.1 Basic eligibility criteria
7.1.4.1.1 Introduction
7.20. The United States claims that four of the basic criteria for eligibility to receive wheat, rice,
and corn TRQs are inconsistent with four obligations set forth in Paragraph 116, namely, the
obligations to administer TRQs on a transparent, predictable, and fair basis, and t o use clearly
specified requirements.
7.21. China does not contest the United States' claims about the basic eligibility criteria, but
maintains that "while China acknowledges that the Basic Criteria need to be updated, this does not
mean that China's system of TRQ administration is inconsistent with Paragraph 116".158 While taking
note of China's acknowledgement of the need to update the basic eligibility criteria, we consider that
our obligation under Article 11 of the DSU to conduct an objective assessment of the matter before
us requires us nevertheless to examine the consistency of those criteria with Paragraph 116.159
7.22. Below, we describe the basic eligibility criteria at issue and summarize the parties' main
arguments. We then assess whether the basic eligibility criteria are inconsistent with the four
obligations the United States has invoked, taking into account our understanding of the meaning
and nature of each of the relevant obligations laid out in paragraph 7.9 above.
7.1.4.1.2 Basic eligibility criteria at issue
7.23. The basic criteria for eligibility to receive wheat, rice , and corn TRQs are published in the
NDRC's annual allocation notices. 160 The 2017 Allocation Notice contains e ight such criteria. The
United States takes issue with the following four:
- Possessing "a good financial condition";
- Possessing "[a good] integrity situation";
- Possessing "no record of violating regulations with respect to customs, industry and
commerce, taxation, credit and loans, inspection and quarantine, grain distribution,
environmental protection, and other areas"; and

157 China's Schedule CLII, Part I, Section IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff
158 China's response to Panel question No. 26, para. 73. See also China's response to Panel question No.
24(b), paras. 71-72; and second written submission, paras. 57-61.
159 For a similar approach, see, e.g. Panel Reports, US – Shrimp (Ecuador), paras. 7.9-7.12, US –
Poultry (China), paras. 7.445-7.446; and US – Shrimp (Thailand), paras. 7.20-7.21 (referring to Appellate
Body Reports, EC – Hormones, para. 109; and US – Gambling, paras. 139-141).
160 The 2016 and 2017 Allocation Notices both list the basic eligibility criteria in their Articles II entitled
"Application Criteria". Although there are some differences between the texts of these Articles in the two
Allocation Notices, the main criteria remain the same.

- "having fulfilled social responsibilities associated with [their] operations".161
7.24. The second paragraph of Article II of the 2017 Allocation Notice states that the possession of
the basic eligibility criteria is a "prerequisite" for obtaining a TRQ allocation.162
7.1.4.1.3 Main arguments of the parties
7.25. The United States argues that the terms used in the four challenged eligibility criteria a re
inherently vague and that the 2017 Allocation Notice fails to define them in a way that is easily
understandable to potential applicants. In the United States' view, this runs counter to the
obligations to administer TRQs on a transparent 163 and predictab le basis 164, and to use clearly
specified requirements.165 The United States also argues that the vagueness in these criteria may
cause different applicants to interpret them differently and submit different information to the NDRC
to demonstrate their eligibility to receive TRQ allocations, and the latter may therefore use different
information in assessing the eligibility of different applicants. In the United States' view, this runs
counter to the obligation to administer TRQs on a fair basis.166
7.26. China generally points out that the NDRC "[i]n practice … does not conduct an individual
assessment of each of the Basic Criteria" but rather uses the government website Credit China's
"blacklist" of enterprises with "records of non-compliance with industry and commerce registration,
tax payments, customs, and [non-]compliance with court judgments" to determine applicants'
eligibility.167 Thus, the NDRC does not take into account all of the basic eligibility criteria set forth in
the annual allocation notices, and, instea d, bases its assessment on whether an applicant appears
in Credit China's blacklist.
7.27. In response to this statement by China, the United States submits that China has not
substantiated its assertions regarding the practice of the NDRC 168 and that, in any even t, the
discrepancy between China's legal instruments and the stated practice of the NDRC further supports
its claims of inconsistency of the basic eligibility criteria with the obligations to administer TRQs on
a transparent, predictable, and fair basis, and to use clearly specified requirements.169
7.1.4.1.4 Analysis by the Panel
7.28. Below, we first assess the United States' claims in respect of each of the four basic eligibility
criteria at issue. Thereafter, we examine the implications of China's statement that, in practice, the
NDRC bases its eligibility assessment on whether an applicant appears in Credit China's blacklist.
7.29. The United States claims that the four basic eligibility criteria at issue violate the obligations
to administer TRQs on a transparent, predictable, and fair basis, and to use clearly specified
requirements.
7.30. Starting with the criteria that applicants must possess a good integrity situation and have
fulfilled social responsibilities associated with their operations, we agree with the United States that
the terms "integrity situation" and "social responsibilities" are inherently vague. Both of these terms
can be interpreted as having many different meanings. Looking at the context in which they appear
in China's legal instruments , we note tha t these vague terms are not defined , nor is there any
guidance as to the kinds of information that the NDRC will consider in assessing compliance with

161 2017 Allocation Notice, (Exhibit USA-15), Article II; and United States' first written submission,
paras. 78-84, 119-125, 157, and 180-185.
162 2017 Allocation Notice, (Exhibit USA-15), Article II.
163 United States' first written submission, paras. 78-84; and opening statement at the first meeting of
the Panel, para. 9.
164 United States' first written submission, paras. 119-125; and opening statement at the first meeting
of the Panel, para. 11.
165 United States' first written submission, paras. 180-188; and opening statement at the first meeting
of the Panel, para. 15.
166 United States' first written submission, para. 159.
167 China's first written submission, para. 14. See also China's first written submission, paras. 35-38;
and responses to Panel question No. 8(c), para. 24, and No. 8(g), para. 28.
168 United States' opening statement at the second meeting of the Panel, paras. 3 and 16.
169 United States' opening statement at the first meeting of the Panel, paras. 11, 26-27, and 38;
response to Panel question No. 19(b), para. 55; and second written submission, paras. 84-94.

these requirements. In our view, lack of such guidance leaves potential applicants in the dark.
Without further clarification as to their meaning in the context of China's TRQ administration, the
terms "integrity situation" and "social responsibilities" may be interpreted in different ways.
7.31. For these reasons, we find these two criteria to be inconsistent with the obligation to
administer TRQs on a transparent basis because they are not easily understood or discerned by
applicants and other interested parties. Similarly, we find them to be inconsistent with the obligation
to administer TRQs on a predictable basis because they do not allow applicants and other interested
parties to easily anticipate how the NDRC determines applicants ' integrity situation and their
fulfilment of social responsibilities, and thus their eligibility to receive TRQ allocations. We also find
these criteria to be inconsistent with the obligation to administer TRQs using clearly specified
requirements because the requirements that these two criteria entail are not set out in plain or
obvious detail.
7.32. The United States argues that the vagueness in these two criteria also leads to a violation of
the obligation to administer TRQs on a fair basis. As explained above, fairness requires that China's
TRQ administration be impartial and equitable, and that the relevant authorities administer TRQs in
accordance with the applicable rules and standards.170 We have found the two criteria at issue to be
vague, and concluded, on that basis, that China does not administer its TRQs on a transparent and
predictable basis, using clearly specified administrative requirements. However, we are not
convinced that the vagueness in these criteria, in and of itself, is sufficient to demonstrate that China
does not administer its TRQs on a fair basis. The United States' claim concerning the fairness of the
basic eligibility criteria is premised on the argument that the vagueness in these criteria may cause
applicants to submit different information which would, in turn, cause the NDRC to assess different
applicants' eligibility on the basis of different types of informat ion.171 In our view, however, the
United States has not substantiated this argument. In particular, we note that the application form
attached to the 2017 Allocation Notice requires applicants to submit a list of specific information and
to "[g]uarantee its conformity with the grain import tariff -rate quota application criteria". 172 More
particularly, the form requires information on the nature of the ownership of the enterprise,
registered capital, tax payments, asset-liability ratio, and import and sales perf ormance as well as
production and operation capacity for the first or second year preceding the one for which the
application is made. 173 The form does not provide applicants with the possibility to submit additional
information, including information they may believe is relevant to determine compliance with the
basic eligibility criteria. The United States argues that "the application is not necessarily just the
form … but may also include 'related materials submitted by the applicant'". 174 In making this
argument, the United States refers to Article 12 of the 2003 Provisional Measures, which states:
Agencies authorized by NDRC, in accordance with the criteria announced, accept the
applications and related materials submitted by the applicants for wheat, corn, [] rice,
and cotton, and transmit the applications to NDRC for approval prior to November 30,
concurrently submitting a copy to the Ministry of Commerce.175
7.33. While this provision indicates that applicants have the possibility to submit mate rials along
with their applications, the text also suggests that these will be materials related to the applications.
Therefore, it does not alter the fact that the application form requires the same types of information
from all applicants. We are not con vinced by the argument that applicants would, on their own
motion, submit unsolicited information simply because they may believe such information to be
relevant to determine compliance with the basic eligibility criteria. Therefore, regardless of the
vagueness in the criteria, the United States has not demonstrated that there is a risk of different
applicants submitting different types of information to the NDRC and the latter making its eligibility
assessment based on those different types of information.

170 See para. 7.9 above.
171 United States' first written submission, paras. 157-159.
172 2017 Allocation Notice, (Exhibit USA-15), Annex: 2017 Grain Import Tariff-Rate Quota Application
Form.
173 2017 Allocation Notice, (Exhibit USA-15), Annex: 2017 Grain Import Tariff-Rate Quota Application
Form.
174 United States' response to Panel question No. 65(a), para. 24 (quoting 2003 Provisional Measures,
(Exhibit USA-11), Article 12).
175 2003 Provisional Measures, (Exhibit USA-11), Article 12. (emphasis added)

7.34. The United States also submits that "[p]otential applicants may choose not to apply at all
because they are unable to understand the Basic Criteria or because they perceive the criteria in a
way that they conclude in error they are not eligible" .176 We cons ider it unlikely that potential
applicants would forego the possibility of applying for TRQ allocations – which are, as pointed out by
the United States177, a commercial advantage – merely due to the vagueness in certain eligibility
criteria.
7.35. We therefore do not consider that the United States has made a prima facie case that the
vagueness in the two criteria at issue leads to a violation of the obligation to administer TRQs on a
fair basis.
7.36. Turning to the criterion that applicants must possess a good financial condition, we consider
that this is less vague than the two criteria examined above. We note that some guidance could
arguably be found in the application form attached to the annual allocation notices, which requires
applicants to submit data on the nature of the ownership of the enterprise, registered capital, tax
payments, asset-liability ratio, and import and sales performance as well as production and operation
capacity for the first or second year preceding the one for which the application is made.178 China's
legal instruments, however, do not clarify whether this information is relevant to the criterion of
having a good financial condition, nor do they clarify what other information may be relevant.
Without further clarity in China's legal instruments, it does not seem possible for potential applicants
and other interested parties to know what is meant by possessing a good financial condition.
7.37. For these reasons, we find this criterion to be inconsistent with the obligation to administer
TRQs on a transparent basis because it is not easily understood or discerned by applicants and other
interested parties. Similarly, we find this criterion to be inconsistent with the obligation to administer
TRQs on a predictable basis because it does not allow applica nts and other interested parties to
easily anticipate how the NDRC determines the state of applicants' financial condition, and thus their
eligibility to receive TRQ allocations. We also find this criterion to be inconsistent with the obligation
to administer TRQs using clearly specified requirements because the requirements that this criterion
entails are not set out in plain or obvious detail.
7.38. The United States argues that the vagueness in the criterion of possessing a good financial
condition also leads to a violation of the obligation to administer TRQs on a fair basis. In this regard,
the United States submits the same arguments as those concerning the criteria of possessing a good
integrity situation and having fulfilled social responsibilities associated with their operations.179 For
the reasons explained in paragraphs 7.32 through 7.35 above, we disagree with these arguments,
and consider that the United States has not made a prima facie case that China has violated this
obligation.
7.39. Turning now to the criterion that applicants must have no record of violation, we recall that
this criterion is set out in Article II of the 2017 Allocation Notice as "no record of violating regulations
with respect to customs, industry and commerce, taxat ion, credit and loans, inspection and
quarantine, grain distribution, environmental protection, and other areas". The United States takes
issue with two elements of this criterion, namely, the lack of explanation of what constitutes a
"violation" and the lack of identification of the areas of regulation with which applicants must comply,
in particular due to the residual category "other areas".180
7.40. We disagree with the United States' argument that this criterion lacks clarity because of the
term "violation". We consider this term to be self-explanatory. In our view, potential applicants and
other interested parties would reasonably understand that "violation" of a rule in one of the listed
areas of regulation entails breaking, or not complying with, that rule. Proceeding to the areas of
regulation with which applicants must comply, the United States argues that the 2017 Allocation
Notice "fails to further define any of the named areas or to identify which regulations the applicant

176 United States' response to Panel question No. 65(a), para. 25.
177 United States' opening statement at the first meeting of the Panel, para. 46; and response to Panel
question No. 28, para. 105.
178 2017 Allocation Notice, (Exhibit USA-15), Annex: 2017 Grain Import Tariff-Rate Quota Application
Form.
179 United States' first written submission, paras. 157-159.
180 United States' first written submission, para. 82.

must demonstrate compliance with in order to have fulfilled these criteria" 181, but does not explain
why it considers that the named areas lack clarity. We are not convinced that the reference to
customs, industry and commerce, taxation, credit and loans, inspection and quarantine, grain
distribution, and environmental protection lacks clarity. Nor are we convinced that it is necessary to
identify each and every specific regulation with which applicants must comply. However, we agree
with the United States that the reference to "other areas" is vague, and also note that China's legal
instruments contain no guidance regarding the scope of such "other areas". The inclusion of this
open-ended category could lead to applicants being disqualified for having a record of violation in
any area of regulation, even those unrelated to China's wheat, rice, and corn TRQs.
7.41. Due to the vagueness in the reference to "other areas", we find the criterion of having no
record of violation to be inconsistent with the obligation to administer TRQs on a transparent basis
because this particular element is not easily understood or discerned by applicants and other
interested parties. Similarly, we find this criterion to be inconsistent with the obligation to administer
TRQs on a predictable basis because it does not allow applicants and other interested parties to
easily anticipate how the NDRC determines applicants' record of violation in "other areas", and thus
their eligibility to receive TRQ allocations . Finally, we also find this criterion to be inconsistent with
the obligation to administer TRQs using clearly specified requirements because, insofar as the
vagueness of the term "other areas" is concerned, the requirements that this criterion entails are
not set out in plain or obvious detail.
7.42. The United States argues that the vagueness in this criterion also leads to a violation of the
obligation to administer TRQs on a fair basis. In this regard, the United States submits the same
arguments as those concerning the criteria of possessing a good integrity situation and having
fulfilled social responsibilities associated with their operations .182 For the reasons explained in
paragraphs 7.32 through 7.35 above, we disagree with these arguments, and consider that the
United States has not made a prima facie case that China has violated this obligation.
7.43. Having concluded our assessment of the United States' claims regarding the four basic
eligibility criteria at issue, we now turn to China's statement regarding the NDRC's practice in the
assessment of applica nts' eligibility to receive TRQ allocations . The United States claims that this
stated practice violates the obligations to administer TRQs on a transparent, predictable, and fair
basis, and to use clearly specified requirements.
7.44. At the outset, we recall that the 2017 Allocation Notice contains eight basic eligibility criteria,
one of which is "not having been placed on a 'Credit China' website blacklist [of entities] receiving
punishment".183 China explains that the NDRC , in practice, does not conduct an individual
assessment of each of these criteria but rather generates an applicant's credit report through
Credit China by using the uniform social credit code that is provided by each applicant in its
application. China explains that the credit report contains a multitude of information such as "general
registration information of the ent erprise; the administrative licen ses acquired by the enterprise;
the administrative punishments received by the enterprise; and whether the enterprise is on the
Good Credit List, Watch List, or Black List". China also states that only the blacklist is considered in
determining an applicant's eligibility.184 The blacklist is a list of enterprises with a record of
non-compliance in a range of areas, but China explains that only records of violations with industry
and commerce registration, tax payments, customs, or court judgments within the previous two
years will render an applicant ineligible to receive TRQ allocations. 185 China also explains that any
instance of non-compliance disqualifies an applicant from being eligible to receive TRQs.186

182 United States' first written submission, paras. 157-159.
183 2017 Allocation Notice, (Exhibit USA-15), Article II.
184 China's response to Panel question No. 8(c), para. 24.
185 China's first written submission, para. 14; and response to Panel question No. 48, para. 9 and
No. 49, para. 11.
186 China's response to Panel question No. 8(d), para. 25. China further explains that the NDRC
determines applicants' eligibility to receive TRQ allocations not only by checking Credit China's blacklist, but
also by checking (i) whether the applicant has attested to the accuracy of the information submitted in its
application; and (ii) whether the applicant has prior violations of the 2003 Provisional Measures. (China's
response to Panel question No. 47, para. 8. See also China's first written submission, para. 35). However,
these two additional steps are not relevant to the resolution of the present claims that concern the obligations
to administer TRQs on a transparent, predictable, and fair basis, and to use clearly specified requirements.

7.45. In other words, according to China, the NDRC, in practice, bases its eligibility assessment on
whether an applicant appears in Credit China's blacklist and does not examine whether the applicant
meets the other basic eligibility criteria set out in the 2017 Allocation Notice. In response to a
question, China points out that this practice is "confirmed by NDRC officials".187 However, China has
not submitted evidence showing that applicants and other interested parties are made aware of this
practice. We thus agree with the United States that this practice is not easily understood or discerned
by applicants and other interested parties. Accordingly, we find it shows that China fails to administer
its TRQs on a transparent basis. Similarly, we do not consider that applicants and oth er interested
parties can easily anticipate that the NDRC, in practice, determines applicants' eligibility to receive
TRQ allocations based on whether they appear in Credit China's black list and not based on an
assessment of the remaining basic eligibilit y criteria. Accordingly, we find that the NDRC's stated
practice shows that China fails to administer its TRQs on a predictable basis. We also do not consider
that this practice is set out, in China's legal instruments or elsewhere, in plain or obvious detail.
Accordingly, this practice shows that China fails to administer its TRQs using clearly specified
requirements.
7.46. We also consider that this practice renders China's TRQ administration inconsistent with the
obligation to administe r TRQs on a fair basis. As noted in paragraph 7.9 above, this obligation
requires that China administers its TRQs through a system that is impartial and equitable, and that
the relevant authorities administer TRQs in accordance with the applicable rules and standards .
Above, we have found unconvincing the United States' argument that vagueness in the four eligibility
criteria at issue renders China's TRQ administration inconsistent with the fairness obligation set forth
in Paragraph 116. However, the disparity between what is written in China's legal instruments and
what the NDRC does in practice with regard to the basic eligibility criteria does not represent
administration in accordance with the applicable rules and standards. On this basis, we find that
China fails to administer its TRQs on a fair basis.
7.1.4.1.5 Conclusion
7.47. For the reasons set out above, and taking into account China's acknowledgement that the
basic eligibility criteria need to be updated, we find that the four basic eligibility criteria challenged
by the United States are inconsistent with the obligations, set forth in Paragraph 116 of China's
Working Party Report, to administer TRQs on a transparent, predi ctable, and fair basis, and to use
clearly specified requirements.
7.1.4.2 Allocation principles and reallocation procedures
7.1.4.2.1 Introduction
7.48. The United States c laims that the allocation principles are inconsistent with four obligations
set forth in Paragraph 116, namely, the obligations to administer TRQs on a transparent, predictable,
and fair basis, and to use clearly specified administrative procedures. The United States also claims
that the reallocation procedures are inconsistent with the obligation to administer TRQs using clearly
specified administrative procedures. China rejects the entirety of the United States' claims.
7.49. Below, we describe the allocation principles and reallocation procedures at issue and
summarize the parties' main arguments. We then proceed to assess whether the allocation principles
and reallocation procedures are inconsistent with the obligations the United States has invoked,
taking into account our understanding of the meaning and nature of each of the relevant obligations
laid out in paragraph 7.9 above.
7.1.4.2.2 Allocation principles and reallocation procedures at issue
7.50. Once the NDRC has determined which applica nts are eligible to receive TRQ allocations , it
allocates the TRQ amounts among the eligible applicants in accordance with the allocation principles,
set out in the annual allocation notices published by the NDRC. The 2017 Allocation Notice prescribes
that the TRQ amounts will be allocated:

187 China's response to Panel question No. 8(a), para. 22.

[I]n accordance with applicants' actual production and operating capacities (including
historical production and processing, actual import performance, and operati ng
situation, etc.) and other relevant commercial standards.188
7.51. For the reallocation of unused TRQs amounts that are returned by recipients before
15 September, the NDRC follows the reallocation procedures. These are set out in different parts of
China's legal instruments. Article 26 of the 2003 Provisional Measures provides that "[t]ariff -rate
quota reallocated quantities are allocated in accordance with the application criteria promulgated
and according to the first -come-first-served method".189 The 2017 Reallocation Notice states, in
relevant parts:
The National Development and Reform Commission and the Ministry of Commerce will
carry out reallocation of quotas returned by users according to the order in which
applications were submitted online. …
When the number of applications that meet the criteria, in total, is smaller than the
reallocated tariff -rate quota quantity, every applicant 's application can be satisfied;
when the number of applications that meet the criteria, in total, is larger than the
reallocated tariff-rate quota quantity, reallocation will be carried out according to the
Allocation Principles and the Allocation Rules.190
7.1.4.2.3 Main arguments of the parties
7.52. With respect to the allocation principles, the United States points to the lack of explanation of
two elements , namely, the NDRC's evaluation of applicants' "actual production and operating
capacities (including historical production and processing, actual import performance, and
operations)"191, and the meaning of the term "other re levant commercial standards" as well as the
factors covered by this term.192 With respect to the first element , the United States maintains that
China's legal instruments do not clear ly explain how the NDRC evaluates applicants' actual
production and operating capacities and weighs the listed factors .193 With respect to the second
element, the United States submits that th e term "other relevant commercial standards" suggests
that the NDRC, in making allocations, takes into account factors other than those that are clearly
cited in China's legal instruments, without any clarification of the factors and types of information
the NDRC may take into account.194 For these reasons, the United States contends that the allocation
principles are inconsistent with the obligations, set forth in Paragraph 116, to administer TRQs on a
transparent, predictable, and fair basis, and to use clearly specified administrative procedures.195
7.53. China states that, in practice, "'actual import performance' is the factor given the most weight
in NDRC's allocation analysis" 196 and that "[n]ew applicants are only considered in the event that
the entire non -STE portion of the TRQs is not fully allocated to applicants with historic import
performance", in which case "information concerning production capacity is a key factor". 197 In
China's view, these principles are sufficiently clear since Paragraph 116 does not r equire China to
eliminate any element of discretion from its TRQ allocation process. 198 China further argues that
allocation in accordance with "other relevant commercial standards" is consistent with
Paragraph 116 since China's Schedule CLII explicitly refers to allocation of TRQ amounts on this

188 2017 Allocation Notice, (Exhibit USA-15), Article IV.
189 2003 Provisional Measures, (Exhibit USA-11), Article 26.
190 2017 Reallocation Notice, (Exhibit USA-17), para. 5. (emphasis original)
191 United States' first written submission, para. 87.
192 United States' first written submission, para. 88.
193 United States' first written submission, para. 87; and second written submission, para. 17.
194 United States' first written submission, para. 88; and second written submission, para. 18.
195 United States' first written submission, paras. 96, 126-129, 133, 155-156, 170-171, and 174.
196 China's first written submission, para. 49. See also China's first written submission, para. 17.
197 China's first written submission, para. 50. See also China's first written submission, para. 17.
198 China's first written submission, para. 51. See also China's first written submission, para. 17.

basis.199 Finally, China argues that Paragraph 116 does not require it "to make applicants aware of
how NDRC evaluates individual applications, including the weight assigned to particular factors".200
7.54. In response, the United States submits that China has not substantiated its assertions
regarding the NDRC 's practice201, and that, in any event, the discrepancy between China's legal
instruments and the stated practice of the NDRC further supports its claim of inconsistency of the
allocation principles with the obligations to administer TRQs on a transparent, predictable, and fair
basis.202
7.55. With respect to the reallocation procedures , the United States points out that the annual
reallocation notices state that th e NDRC will reallocate returned TRQ amounts "according to the
order in which applications were submitted online" and that "[w]hen the total sum of qualified
application amounts is greater than the tariff quota reallocation amount, the reallocation will be
carried out according to the Allocation Principles".203 The United States argues that, since reallocation
is based on the allocation principles and these are not defined or explained in China's legal
instruments, the procedures for reallocation are also not clearly specified.204
7.56. China argues that this claim has no basis because the allocation principles are not used by
the NDRC during the reallocation process and that reallocation is done on a first -come, first-served
basis.205
7.57. In response, the United States mai ntains that the 2017 Reallocation Notice references both
the first-come, first-served method and reallocation according to the allocation principles, and that
therefore China's administrative procedure s for reallocation are not clearly specified in its leg al
instruments.206
7.1.4.2.4 Analysis by the Panel
7.58. The United States claims that the allocation principles are inconsistent with four obligations
set forth in Paragraph 116, namely the obligations to administer TRQs on a transparent, predictable,
and fair basis, and to use clearly specified administrative procedures. The United States also claims
that the reallocation procedures are inconsistent with the obligation to administer TRQs using clearly
specified administrative procedures. We first assess the claims concerning the allocation principles,
followed by the claim concerning the reallocation procedures.
7.1.4.2.4.1 Allocation principles
7.59. In this section, we first assess the United States' claims in respect of the allocation principles
set out in China's legal instruments. Thereafter, we examine the implications of China's statement
regarding how the NDRC conducts the allocation process in practice.
7.60. The United States claims that the allocation principles in China's legal instruments violate the
obligations to administer TRQs on a transparent, predictable, and fair basis, and to use clearly
specified administrative procedures . In support of these claims, the United States focuses on two
elements in the allocation principles.
7.61. First, the United States points to the reference to "actual production and operating capacities
(including historical production and processing, actual import performance, and operations)". While
the United States does not take issue with the factors themselves, it submits that Paragraph 11 6

199 China's first written submission, para. 53 (quoting China's Schedule CLII, Part I, Section IB (Most-
Favoured-Nation Tariff, Agricultural Products, Tariff Rate Quotas), (Exhibit USA-23), para. 6.[C]).
200 China's response to Panel question No. 10(b), para. 37. See also China's response to Panel question
No. 24(a), para. 68.
201 United States' opening statement at the second meeting of the Panel, paras. 3 and 16. See also
United States' response to Panel question No. 45, paras. 1-2.
202 United States' opening statement at the first meeting of the Panel, paras. 11 and 29; and response
to Panel question No. 19(b), para. 55. See also United States' response to Panel question No. 45, para. 3.
203 United States' first written submission, para. 168 (quoting 2017 Reallocation Notice, (Exhibit USA-
17).
204 United States' first written submission, para. 169.
205 China's response to Panel question No. 52(b), para. 15.
206 United States' response to Panel question No. 64, para. 20.

requires China to not only list the relevant factors for allocation but also to specify how each of these
factors is evaluated.207 We find the United States' interpretation of Paragraph 116 too stringent
insofar as it would prevent China from having in pla ce a system of TRQ allocation where the
authorities take into account all factors listed in their legal instruments and decide how much weight
to accord to them in light of the relevant circumstances.
7.62. The United States has not explained why the listing in China's legal instruments of the factors
that the NDRC takes into account in the allocation process does not allow applicants and other
interested parties to easily understand or discern the basis for that process, and why the legal
instruments should also specify how each factor is to be evaluated and what weight each factor will
be accorded. Thus, we do not consider that the United States has demonstrated that this element
of the allocation principles violates the obligation to administer TRQs on a trans parent basis.
Similarly, the United States has not explained why the listing of the relevant factors in China's legal
instruments does not allow applicants and other interested parties to easily anticipate how the NDRC
will allocate TRQ amounts. Thus, we d o not consider that the United States has demonstrated that
this element of the allocation principles violates the obligation to administer TRQs on a predictable
basis. Finally, the United States has not established that the allocation principles are not set out in
plain or obvious detail in China's legal instruments. Thus, we do not consider that the United States
has demonstrated that this element of the allocation principles violates the obligation to administer
TRQs using clearly specified administrative procedures.
7.63. Second, the United States argues that China's legal instruments do not explain what "other
relevant commercial standards" entail, and that therefore applicants cannot discern how fulfilment
of such standards may be demonstrated. 208 We agree wit h the United States' view that this is a
vague and open-ended term that could cover a multitude of factors, which are unknown to applicants
and other interested parties. In response to the United States' argument, China points out that this
term also appears in China's Schedule CLII209, which reads, in relevant parts:
In the first year, allocations to end users by the SDPC of the tariff -quotas … shall be
based on a first -come, first-served system or the requests of the applicants and their
historical import performance, production capacity, or other relevant commercial criteria
subject to specific conditions to be published one month in advance of the opening of
the application period so as to ensure an equitable distribution and complete tariff-quota
utilization.210
7.64. This part of China's Schedule CLII concerns the allocation of TRQ amounts in the first year.
We agree with the United States that the inclusion of the term " other relevant commercial criteria"
in China's Schedule CLII does not "shield" China from co mplying with the obligation s under
Paragraph 116 to administer its TRQs on a transparent and predictable basis and to use clearly
specified administrative procedures. 211 Nor does it diminish th ese obligations. A harmonious
interpretation of China's obligations in its Schedule CLII a nd those in Paragraph 116 suggests that
the former sets out different permitted methods for China's allocation of TRQ amounts and that the
latter imposes obligation s on China to administer its chosen method of TRQ allocati on on a
transparent and predictable basis and to use clearly specified administrative procedures. As pointed
out by the United States, this view is supported by the language of China's Schedule CLII, which
adds that China's chosen method of TRQ allocation is "subject to specific conditions to be published
one month in advance of the opening of the application period so as to ensure an equitable
distribution and complete tariff-quota utilization".212
7.65. China also submits that the inclusion of the residual catego ry "other relevant commercial
standards" provides the NDRC with the discretion it needs to adapt its allocation decisions to
particular factual circumstances, and that this is common practice among WT O Members, including
the United States.213 We note that the present claim has been brought under China's Working Party

207 United States' first written submission, para. 87; and second written submission, paras. 16-17.
208 United States' first written submission, para. 88; and second written submission, para. 18.
210 China's Schedule CLII, Part I, Section IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff
Rate Quotas), (Exhibit USA-23), paras. 6.B and 6.C. (emphasis added)
211 United States' second written submission, para. 18.
212 United States' response to Panel question No. 24(a), paras. 94-96; and second written submission,
para. 18.
213 China's first written submission, paras. 54-55.

Report, which contains specific obligations undertaken by China with regard to its TRQ
administration. We agree with China that we should not read Paragraph 116 so as to preclude the
relevant authorities from having any discretion in administering TRQs. Indeed, it is for this reason
that we have found that China is not required to set out, in its legal instruments, the precise manner
in which its authorities evaluate relevant factors in allocating the TRQ amounts. This does not,
however, provide China's relevant authorities with unfettered discretion. In allocating TRQ amounts,
the NDRC is bound by the obligations set forth in Paragraph 116. The inclusion of the vague notion
"other commercial standards" runs counter to those obligations because it may potentially entail a
range of factors that cannot easily be understood or discerned by ap plicants and other interested
parties. In our view, this violates China's obligation to administer its TRQs on a transparent basis.
For the same reasons, we are of the view that applicants and other interested parties cannot easily
anticipate what information the NDRC will take into account in allocating TRQ amounts, and that
therefore China also fails to administer its TRQs on a predictable basis. Similarly, we find th at the
vagueness of this notion shows that China fails to administer its TRQs using clearly specified
administrative procedures because the procedures concerning the allocation of TRQs are not set out
in plain or obvious detail in China's legal instruments.
7.66. The United States argues that the vagueness in the allocation principles also leads to a
violation of the obligation to administer TRQs on a fair basis. As explained above, we consider this
obligation to require that China administer its TRQs in an impartial and equitable manner, and that
the Chinese authorities act in accordance with the applicable rules and standards.214 While we have
found that the reference to "other commercial standards" in the all ocation principles is vague and
therefore in violation of China's obligations to administer its TRQs on a transparent and predictable
basis, and to use clearly specified administrative procedures, we do not believe that this vagueness,
in and of itself, is sufficient to demonstrate that China does not administer its TRQs on a fair basis.
The United States' claim concerning the fairness of the allocation principles is premised on the
argument that the vagueness in these principles may cause applicants to submit different
information which, in turn, would cause the NDRC to allocate TRQ amounts to different applicants
based on different types of information. 215 As we discussed in addressing the fairness of the basic
eligibility criteria 216, the application form attached to the 2017 Allocation Notice requires all
applicants to submit a list of specific information, and does not provide applicants with the possibility
of submitting additional information, including informat ion they may believe is relevant to TRQ
allocation. Once again, we do not consider plausible the United States' argument that applicants
may nonetheless submit "different information in support of the listed principles", or that applicants
may allow the vagueness in the term "other commercial standards" to influence their decisions on
whether to apply for TRQs and what TRQ amounts to apply for.217 We therefore consider that the
United States has not made a prima facie case that the vagueness in allocation principles laid down
in China's legal instruments leads to a violation of China's obligation to administer its TRQs on a fair
basis.
7.67. Having concluded our assessment of the United States' claim s regarding the allocation
principles in China's legal instruments, we now turn to China's statement regarding how the NDRC
conducts its allocation process in practice. The United States claims that this stated practice violates
the obligations to administer TRQs on a transparent, predictable, and fair basis.
7.68. China states that, in practice, the NDRC gives the most weight to actual import performance,
and that new applicants are only considered in the event that the entire non -STE portions of the
TRQs are not fully allocated to applicants with historic import performance, in which case information
concerning production capacity is a key factor. 218 In response to a question, China points out that
the existence of this practice is "confirmed by NDRC officials".219 However, China has not submitted
evidence showing that applicants and other interested parties are made aware of this practice. The
United States submits that the NDRC's stated practice regarding the allocation principles further
supports its claims that China has violated its obligations to administer TRQs on a transpare nt,
predictable, and fair basis.220

214 See para. 7.9 above.
215 United States' first written submission, paras. 155-156.
216 See paras. 7.32-7.35 above.
217 See United States' response to Panel question No. 65(b), paras. 29-30.
218 China's first written submission, paras. 17 and 49-50.
219 China's response to Panel question No. 10(a), para. 36.
220 See United States' response to Panel question No. 19(b), para. 55.

7.69. Above, we have found that it is permissible for China to have in place a system of TRQ
allocation where all relevant factors are listed in the legal instruments and the authorities take into
account all listed factors and decide how much weight to accord to them in light of the relevant
circumstances.221 China's explanation of the NDRC's practice, however, suggests that the NDRC, in
making allocation decisions, does not take into account all the factors listed in the annual allocation
notices, and that actual import performance supersedes all the other factors. China explains that,
under this practice, an applicant without actual import performance does not receive a TRQ allocation
at all regardless of its actual production and operating capacities, except where the TRQ amounts
are not fully allocated to applicants with actual import performance. 222 Applicants and other
interested parties are, however, not put on notice of this practice. We thus agree with the United
States that this practice is not easily understo od or discerned by applicants and other interested
parties. Accordingly, we find it shows that China fails to administer its TRQs on a transparent basis.
Similarly, we do not consider that applicants and other interested parties can easily anticipate that,
in practice, actual import performance supersedes all other factors . Nor can they easily anticipate
that applicants without actual import performance would not receive TRQ allocations unless the
entire non -STE portion s are not fully allocated to applicants with actual import performance.
Accordingly, we find that the NDRC's stated practice shows that China fails to administer its TRQs
on a predictable basis.
7.70. We also consider that this practice renders China's TRQ administration inconsistent with its
obligation to administer TRQs on a fair basis. As noted in paragraph 7.9 above, this obligation
requires that China administers its TRQs through a system that is impartial and equitable, and that
the relevant authorities administer TRQs in accordance with the applicable rules and standards.
Above, we have found unconvincing the United States' argument that the vagueness in the allocation
principles renders China's TRQ administration inconsistent with the fairness obligation in
Paragraph 116. However, the disparity between what is written in China's legal instruments and
what China states that the NDRC does in practice in allocating TRQ amounts does not represent
administration in accordance with the applicable rules and standards. On this bas is, we find that
China fails to administer its TRQs on a fair basis.
7.1.4.2.4.2 Reallocation procedures
7.71. The United States claims that the reallocation procedures in China's legal instruments violate
the obligation to administer TRQs using clearly specified administra tive procedures. In this regard,
the United States points to the 2017 Reallocation Notice, arguing that this instrument suggests that
"reallocation will be carried out according to the Allocation Principles and the Allocation Rules".223
Following China's explanation that the NDRC, as set out in the 2003 Provisional Measures, reallocates
returned TRQ amounts based on the first -come, first -served method, rather than the allocation
principles224, the United States argues that the reference to two different methods in the
2017 Reallocation Notice and the NDRC's alleged practice of using only the first -come, first-served
method demonstrate China's violation of the obligation in Paragraph 116 to administer TRQs using
clearly specified administrative procedures.225
7.72. While the 2003 Provisional Measures, reproduced in paragraph 7.51 above, clearly set out the
first-come, first-served method as the sole reallocation method, the 2017 Reallocation Notice, also
reproduced in paragraph 7.51 above, is less clear. It first states that the NDRC "will carry out
reallocation of quotas returned by users according to the order in which applications were submitted
online", which, as suggested by both parties 226, could be viewed as a reference to the first -come,
first-served method. It, however, goes on to state that "when the number of applications that meet
the criteria, in total, is larger than the reallocated tariff -rate quota quantity, reallocation will be
carried out according to the Allocation Principles and the Allocation Rules", which the United States

221 See para. 7.61 above.
222 China's first written submission, para. 50. See also China's first written submission, para. 17.
223 United States' first written submission, paras. 168-169 (quoting 2017 Reallocation Notice, (Exhibit
USA-17)). (emphasis original)
224 China's responses to Panel question No. 11, para. 41; and No. 52(b), para. 15.
225 United States' response to Panel question No. 64, paras. 20-21; and comments on China's response
to Panel question 52, para. 10.
226 United States' response to Panel question No. 64, para. 20; and China's response to Panel question
No. 11, para. 41).

understands to be a reference to the allocation principles, set out in Article IV of the 2017 Allocation
Notice.227
7.73. The United States presents claims against China's TRQ administration as spelled out in the
various legal instruments adopted by China as well as the practice of the relevant Chinese
authorities. Therefore, we base our assessment of these claims on the entirety of the various
elements making up China's TRQ administration. With respect to the reallocation procedures, while
the use of the first-come, first-served method is clearly specified in the 2003 Provisional Measures228,
the clarity of this aspect of China's TRQ administration is, in our view, diminished by the vagueness
in the 2017 Reallocation Notice. The latter contains only an indirect reference to the first -come,
first-served method but an explicit reference to the allocation principles. 229 An assessment of t he
ensemble of China's legal instruments therefore shows that the reallocation procedures are not set
out in plain or obvious detail, in violation of the obligation to administer TRQs using clearly specified
administrative procedures.
7.1.4.2.5 Conclusion
7.74. For the reasons set out above, we find that the allocation principles are inconsistent with the
obligations, set forth in Paragraph 116 of China's Working Party Report , to adminis ter TRQs on a
transparent, predictable, and fair basis, and to use clearly specified administrative procedures. We
also find that the reallocation procedures are inconsistent with the obl igation, set forth in
Paragraph 116, to administer TRQs using clearly specified administrative procedures.
7.1.4.3 Public comment process
7.1.4.3.1 Introduction
7.75. The United States claims that the public comment process is inconsistent with four obligations
set forth in Paragraph 116, namely the obligations to administer TRQs on a transparent, predictable,
and fair basis, and to use clearly specified administrative procedures. China reject s the entirety of
the United States' claims.
7.76. Below, we describe the public comment process at issue and summarize the parties' main
arguments. We then assess whether the public comment process is inconsistent with the four
obligations the United States has invoked, taking into account our understanding of the meaning
and nature of each of the relevant obligations as laid out in paragraph 7.9 above.
7.1.4.3.2 Public comment process at issue
7.77. The public comment process is mentioned only in the announcement of applicant enterprise
data, which the NDRC publishes on its website after the receipt of TRQ applications in a given year.
It includes a list of TRQ applicants as well as the relevant information they have submitted to
the NDRC in their applications.230 The announcement indicates that the public is invited to provide
"feedback with relevant opinions" if they disagree with the data applicants have submitted.231 Neither
the announcements of applicant enterprise data nor any other of the relevant legal instruments
provide further information on the public comment process.

227 United States' response to Panel question No. 64, para. 20.
228 China's comments on the United States' response to Panel question No. 64, para. 47.
229 The 2017 Reallocation Notice contains the following definition: "the Application Criteria and Allocation
Principles for Import Tariff-Rate Quotas for Cotton in 2017 (National Development and Reform Commission
2016 Public Notice No. 23, hereinafter referred to as the 'Allocation Principles')". (2017 Reallocation Notice,
(Exhibits USA-17)). (emphasis original)
230 2017 Announcement of Applicant Enterprise Data, (Exhibit USA-19). See also 2016 Announcement of
Applicant Enterprise Data, (Exhibit USA-20).
231 2017 Announcement of Applicant Enterprise Data, (Exhibit USA-19). See also 2016 Announcement of
Applicant Enterprise Data, (Exhibit USA-20).

7.1.4.3.3 Main arguments of the parties
7.78. The United States argues that the public comment process runs counter to the obligations to
administer TRQs on a transparent 232 and predictable 233 basis and to use clearly specified
administrative procedures 234 because China's legal instruments do not clarify how the NDRC
evaluates the informatio n received from the public, whether the NDRC informs applicants of any
comments, and whether applicants have an opportunity to rebut such comments. The United States
also argues that China fails to administer TRQs on a fair basis because, given the lack of clarity on
how the NDRC treats information received from the public and whether applicants have an
opportunity to rebut it, that information "could introduce bias or inequity due to the potential
motivations of a submitter or the inability of NDRC or the applicant to verify or refute the information
provided".235
7.79. China rejects the United States' claims and argues that Paragraph 116 does not require that
all the procedures that are part of the public comment process be spelled out in the legal
instruments.236 According to China, the public comment process serves as "an additional means for
NDRC to verify the data that it receives from applicants".237 China asserts that, in practice, applicants
are informed of the public's comments and provided with an opportunity to rebut such comments,
and that comments that are not relevant to the applicants' eligibility will not be taken into account.238
China also submits that "[t]he existence of the public comment process is clear on the face of the
measures" and that the Unit ed States has not presented evidence showing that there has been
actual confusion on the part of applicants about the public comment process or that an applicant
sought clarification concerning this process, which was not provided.239
7.1.4.3.4 Analysis by the Panel
7.80. The United States claims that the public comment process violates the obligations to
administer TRQs on a transparent, predictable and fair basis, and to use clearly specified
administrative procedures. The United States contends that the public comment pro cess does not
allow applicants to know whether the NDRC has received comments from the public about their
applications, and if so, whether they will have an opportunity to rebut any such comments.
7.81. China's legal instruments do not provide any clarity on the se aspects of the public comment
process. China asserts that, in practice, applicants are informed of the public's comments received,
and are provided with an opportunity to rebut such comments.240 However, China has not submitted
evidence of the existence of this alleged practice, except stating that "[t]he existence of this practice
has been confirmed by NDRC officials".241 We do not consider this statement, alone, to be sufficient
to substantiate China's assertion about the exi stence of a mechanism whereby a pplicants are
informed of the public's comments on their applications and have an opportunity to rebut such
comments. In any case, the thrust of the United States' claim is the lack of clarity in the public
comment process, and the fact that applicants and other interested parties do not know whether
China's TRQ administration requires the NDRC to verify the public's comments and to provide
applicants the opportunity to rebut such comments. We now turn to the United States' specific claims
about the public comment process.
7.82. Starting with the obligation to administer TRQs on a transparent basis, we note that the
annual announcements of applicant enterprise data explicitly set out the possibility for the public to
provide comments, but contain no language on any potential subsequent verification process and
whether the NDRC allows applicants the opportunity to rebut such comments. The absence of this

232 United States' first written submission, paras. 93-96.
233 United States' first written submission, paras. 122 and 128.
234 United States' first written submission, para. 173; and second written submission, paras. 97-98.
235 United States' first written submission, para. 160.
236 China's first written submission, para. 115.
237 China's first written submission, para. 113.
238 China's first written submission, paras. 113-114 and 117.
239 China's first written submission, paras. 114-115.
240 China's first written submission, para. 113.
241 China's response to Panel question No. 9(a), para. 29. We asked China how this confirmation was
communicated, and whether there was official record of it. In response, China pointed out that the
confirmation was communicated orally to MOFCOM officials during in-person meetings with NDRC officials.
(China's response to Panel question No. 43, paras. 3-5.)

important information leaves applicants and other interested parties unable to easily understand or
discern the rules and principles through which the NDRC evaluates comments from the public ,
including whether applicants will have a chance to rebut such comments. As explained by China, the
public's comments are relevant to the NDRC's assessment of applicants' eligibility to receive TRQ
allocations and to the NDRC's allocation of TRQ amounts. 242 We consider that the lack of clarity
regarding the public comment process is particularly problematic in light of the vagueness or open-
endedness of certain ba sic eligibility criteria and allocation principles that we have found to be
inconsistent with China's various obligations set forth in Paragraph 116. We therefore consider that
the public comment process is inconsistent with China's obligation to administe r TRQs on a
transparent basis. Similarly, since applicants and other interested parties cannot easily anticipate
whether the NDRC will verify comments from the public and whether it will allow applicants an
opportunity to rebut such comments, China violate s the obligation to administer its TRQs on a
predictable basis. We also find that, since the procedure for public comments is not set out in plain
or obvious detail in China's legal instruments, this violates China's obligation to administer its TRQs
using clearly specified administrative procedures.
7.83. China argues that the obligations set forth in Paragraph 116 do not require that China's legal
instruments specify all the procedures for evaluating public comments243, that the United States has
not provided evidence of actual confusion among applicants 244, and that applicants can submit an
inquiry for further information concerning the public comment process. 245 We do not agree with
these arguments. In our view, Paragraph 116 imposes positive obligations for China to administer
its TRQs on a transparent and predictable basis and to use clearly specified administrative
procedures. We do not consider that China complies with these obligations simply because applicants
and other interested parties may be able to discov er the content and functioning of the public
comment process by seeking out such information on their own initiative. We also do not believe
that the United States is necessarily required to substantiate its claims under these obligations by
providing evidence of actual confusion among applicants and other interested parties. Rather, the
United States may, and in our view , has, substantiated its claims through the design, architecture
and structure of China's TRQ administration.
7.84. With respect to the obligation to administer TRQs on a fair basis, we recall that this obligation
requires China's administration of TRQs to be impartial and equitable, and that the Chinese
authorities act in accordance with the applicable rules and standards.246 As we have already found,
China's legal instruments do not specify whether the public's comments will be verified and whether
applicants will be given an opportunity to rebut such comments. Further, as China acknowledges,
any member of the public, including competing applicants and other entities or people with an
interest in impairing an applicant's opportunity to receive a TRQ allocation, may submit comments.247
A system that allows entities with conflicting interests to comment on the information provided by
applicants but does not clarify whether those applicants or other interested parties have an
opportunity to learn about such comments and to rebut them, cannot, in our view, be considered
impartial and equitable. Thus, we find that the public comment process violates China's obligation
to administer its TRQs on a fair basis.
7.1.4.3.5 Conclusion
7.85. For the reasons set out above , we find that the public comment process is inconsistent with
the obligations, set forth in Paragraph 116 of China's Working Party Report, to a dminister TRQs on
a transparent, predictable, and fair basis, and to use clearly specified administrative procedures.

242 China's first written submission, para. 15; and response to Panel question No. 55(e), para. 27.
243 China's first written submission, para. 115.
244 China's first written submission, para. 114; and opening statement at the first meeting of the Panel,
paras. 16 and 19.
245 China's second written submission, para. 59.
246 See para. 7.9 above.
247 China's response to Panel question No. 9(d), para. 31

7.1.4.4 STE and non-STE portions of TRQs
7.1.4.4.1 Introduction
7.86. The United States claims that China's administration of STE and non-STE portions of its wheat,
rice, and corn TRQs violates five obligations under Paragraph 116, namely the obligations to
administer TRQs on a transparent, predictable, and fair basis, to use clearly specified administrative
procedures, and to administer TRQs in a manner that would not inhibit the filling of each TRQ. China
rejects the entirety of the United States' claims.
7.87. Below, we describe the relevant provisions of China's legal instruments concerning STE and
non-STE portions of TRQs and summarize the parties' main arguments. We then assess whether
China's administration of STE and non-STE portions of TRQs is inconsistent with the five obligations
the United States invokes, taking into account our understanding of the meaning and nature of each
of the relevant obligations laid out in paragraph 7.9 above.
7.1.4.4.2 Provisions at issue concerning STE and non-STE portions of TRQs
7.88. Article 4 of the 2003 Provisional Measures divides China's wheat, rice, and corn TRQs into STE
and non-STE portions and the annual allocation notices set out the portions of TRQs reserved for
importation through STEs in any given year. In the 2017 Allocation Notice, the STE portions of TRQs
are set out as follows:
The 2017 grain import tariff-rate quota quantities are: wheat – 9.636 million tons, with
a state trading proportion of 90%; corn – 7.20 million tons, with a sta te trading
proportion of 60%; [] rice – 5.32 million tons (of which: 2.66 million tons of long-grain
rice and 2.66 million tons of medium - and short -grain rice), with a state trading
proportion of 50%.248
Neither the 2003 Provisional Measures nor the 2017 Al location Notice contains further provisions
concerning the allocation of STE and non-STE portions of TRQs.
7.89. Article 4 of the 2003 Provisions Measures sets out the following procedures for importation of
goods under STE and non-STE portions of TRQs:
State trading quotas must be imported through state trading enterprises; non -state
trading quotas are imported through enterprises that have trading rights, and end-users
that have trading rights may also import by themselves.249
It is undisputed that COFCO is the only designated STE for grains.250
7.90. Article 22 of the 2003 Provisional Measures sets out the following procedure for recipients of
STE portions of TRQs that have not signed a contract for importation with an STE prior to 15 August:
With respect to state trading agricultural product import tariff -rate quota quantities
allocated to end -users, in the event that a contract has not been signed prior to
August 15 of the current year, upon seeking approval from the Ministry of Commerce
or N DRC according to the administrative jurisdiction set forth in Article 7 of these
Measures, the end-user is permitted to entrust any enterprises that have trading rights
to import; end-users that have trading rights may also import by themselves.251
7.1.4.4.3 Main arguments of the parties
7.91. First, the United States points to China's use of a "single application process" for allocating
STE and non-STE portions of TRQs. Since applicants are n either able to request one or the other

248 2017 Allocation Notice, (Exhibit USA-15), Article I.
249 2003 Provisional Measures, (Exhibit USA-11), Article 4.
250 Catalogue of Import State Trading Enterprises, (Exhibit USA-14). See also China's first written
251 2003 Provisional Measures, (Exhibit USA-11), Article 22. (emphasis original)

portion, nor provided any information conc erning how the NDRC alloc ates these portions, the
United States argues that China violates its obligations to administer its TRQs on a transparent 252
and predictable basis253 and to use clearly specified administrative procedures.254 The United States
also argues that the single application process inhibits the filling of each TRQ, since "[e]ach type of
importation process has its own costs, time constraints, and administrative burdens" and "the
uncertainty inherent in China's process" could cause applicants not to apply for TRQs or to apply for
smaller amounts.255
7.92. Second, the United States points to the procedure for non-STE recipients of STE portions of
TRQs to import under such TRQs, in particular , that non-STE recipients must initially attempt to
contract with COFCO and, if unsuccessful by 15 August, seek approval from the NDRC to import by
themselves or through another enterprise. In the United States' view, China violates the obligations
to administer its TRQs on a predictable basis and not to inhibit the filling of each TRQ, since COFCO
is not required to contract with non-STE recipients of STE portions of TRQs and the NDRC's approval
to import without COFCO is not automatic. Non -STE recipients therefore cannot predict if they will
be able to import under STE portions allocated to them256, and may ultimately be unable to do so.257
Non-STE recipients that are unable to import under STE portions of their TRQ allocations will not be
eligible to apply for reallocation and may face penalties for non-use of TRQ allocations in the form
of deductions to their allocations in the following year, adding to the lack of predictability 258 and to
the inhibiting effect of China's TRQ administration.259 The United States further argues that the lack
of clarification in China's legal instruments regarding the procedure for seeking the NDRC's approval
to import also violates China's obligation to administer its TRQs using clearly specified administrative
procedures.260
7.93. China submits that all of the United States' arguments are inapposite because the NDRC, in
practice, allocates the entire STE portions of TRQs to COFCO and does not require COFCO to return
unused TRQ amounts.261 Since non-STE applicants, in practice, receive only no n-STE portions of
TRQs, China considers it unnecessary to provide these applicants with information regarding the
allocation of STE portions of TRQs. 262 Similarly, China considers that the United States' concerns
about non -STE recipients' ability to use STE portions of TRQs are "hypothetical" since non -STE
applicants, in practice, do not receive STE portions of TRQs.263
7.94. In response, t he United States maintains that China has not substantiated its assertions
regarding the NDRC's practice, and that, in any event, such practice further demonstrates China's
violation of its obligations under Paragraph 116.264 More particularly, the alleged practice further
demonstrates that China does not administer its TRQs on a transparent and predictable basis, using
clearly specified administrative procedures, since it "departs" from what is stated in China's legal
instruments.265 It also demonstrates that China does not administer its TRQs on a fair basis, since
the NDRC does not apply the basic eligibility criteria and allocation principles set out in China's legal
instruments in allocating the entire STE portions of TRQs to COFCO, and does not subject COFCO to
the requirement to return unused TRQ amounts. 266 Lastly, the alleged practice also demonstrates
that China's TRQ administration inhibits the filling of each TRQ, since the NDRC "excludes" COFCO's
unused TRQ amounts from reallocation and thereby "prevents imports that would otherwise be
completed by non-STE applicants".267 In response, China argues that nothing in China's Schedule

252 United States' first written submission, paras. 89-92.
253 United States' first written submission, paras. 130-132 and 146.
254 United States' first written submission, para. 172.
255 United States' first written submission, paras. 198-199, 201, and 205-206.
256 United States' first written submission, para. 147.
257 United States' first written submission, paras. 201-202.
258 United States' first written submission, paras. 147-148.
259 United States' first written submission, paras. 202-204.
260 United States' first written submission, paras. 174-175.
261 China's first written submission, para. 92.
262 China's first written submission, paras. 94-95 and 99.
263 China's first written submission, paras. 96-97.
264 United States' second written submission, paras. 59-60; and response to Panel question No. 45(a),
paras. 1-3.
265 United States' opening statement at the first meeting of the Panel, para. 56; and second written
submission, paras. 69-75.
266 United States' second written submission, paras. 76-78.
267 United States' second written submission, paras. 82-83.

CLII or its legal instruments precludes the NDRC from allocating the entire STE portions of TRQs to
COFCO and not requiring COFCO to return unused TRQ amounts.268
7.1.4.4.4 Analysis by the Panel
7.95. Below, we assess, first, the United States' claims regarding the allocation of STE and non-STE
portions of the TRQs including the implications of China's statement concerning the NDRC's practice
in this regard. We then address the United States ' claims regarding the procedure for non-STE
recipients of STE portions of TRQs to import under those portions.
7.1.4.4.4.1 Allocation of STE and non-STE portions of the TRQs
7.96. We begin by assessing the parts of China's legal instruments that pertain to the allocation of
STE and non-STE portions of TRQs and the United States' claims concerning the so-called "single
application process" for these two portions. We then assess the implications of China's statement
that the NDRC, in practice, allocates the entire STE portions of TRQs to COFCO and does not require
COFCO to return unused TRQ amounts.
7.97. The United States claims that the lack of clarity in China's legal instruments and the use of a
so-called "single application pr ocess" violate the obligations to administer TRQs on a transparent
and predictable basis, to use clearly specified administrative procedures, and to administer TRQs in
a manner that would not inhibit the filling of each TRQ.
7.98. At the outset, we note that China's legal instruments explicitly distinguish between STE and
non-STE portions of TRQs. More particularly, Article 4 of the 2003 Provisional Measures states that
TRQs are "divided into state trading quotas and non -state trading quotas" 269 and the annual
allocation notices indicate specific STE portions of available TRQ amounts. 270 Despite this, neither
China's legal instruments nor any other document explains to applicants and other interested parties
how the NDRC allocates these two portions of TRQs, nor are a pplicants provided the possibility to
apply specifically for one portion or the other. We therefore consider that applicants and other
interested parties are unable to easily understand or discern the set of rules or principles through
which the NDRC allocates STE and non-STE portions of TRQs, in violation of China's obligation to
administer its TRQs on a transparent basis. Similarly, we consider that applicants and other
interested parties cannot easily antici pate how the NDRC allocates STE and non -STE portions of
TRQs, in violation of China's obligation to administer its TRQs on a predictable basis. We also consider
that the NDRC's process for allocating STE and non -STE portions of TRQs is not set out in plain or
obvious detail, in violation of China's obl igation to administer its TRQs using clearly specified
administrative procedures.
7.99. The United States also claims that the uncertainty in the NDRC's allocation of STE and non-STE
portions of TRQs inhibits the filling of each TRQ. As argued by the United States271, the procedures
for importing under STE and non-STE portions of TRQs differ. More particularly, recipients of non -
STE portions may import by themselves or through another enterprise, whereas recipients of ST E
portions must import through the designated STE COFCO or, if unsuccessful by 15 August, seek the
NDRC's approval to import by themselves or through another enterprise.272 Above we found that the
uncertainty in the NDRC's allocation of STE and non -STE portions of TRQs renders China's TRQ
administration inconsistent with the obligations to administer TRQs on a transparent and predictable
basis, and to use clearly specified administrative procedures. However, we do not believe that the
mere existence of such uncertainty is sufficient to demonstrate that China administers its TRQs in a
manner that would inhibit the filling of each TRQ. As noted by the United States273, the receipt of a
TRQ is a benefit or commercial advantage since it allows for importation of products at a reduced
in-quota rate. The United States has not established that the uncertainty in the NDRC's allocation of

268 China's second written submission, paras. 29-30.
269 2003 Provisional Measures, (Exhibit USA-11), Article 4.
270 2017 Allocation Notice, (Exhibit USA-15), Article I.
271 See United States' first written submission, paras. 200-203.
272 2003 Provisional Measures, (Exhibit USA-11), Articles 4 and 22.
273 United States' opening statement at the first meeting of the Panel, para. 46; and response to Panel
question No. 28, para. 105.

STE and non -STE portions of TRQs , in and of itself, would cause applicants to forego such an
advantage by not applying for TRQs or applying for smaller amounts.
7.100. Having assessed the United States' claims concerning China's legal instruments, w e now
turn to consider the implications of China's statement that the NDRC, in practice, allocates the entire
STE portions of TRQs to COFCO and does not require COFCO to return unused TRQ amounts. The
United States claims that this stated practice violates the obligations to administer TRQs on a
transparent, predictable, and fair basis, to use clearly specified administrative procedures, and to
administer TRQs in a manner that would not inhibit the filling of each TRQ.
7.101. With respect to the NDRC's stated practice of allocating the entire STE portions of TRQs to
COFCO, we agree with the United States that a number of provisions in China's legal instruments
suggest that STE portions of TRQs could be allocated to STE as well as non-STE applicants.274 First,
Article 4 of the 2003 Provisional Measures states that "[s]tate trading quotas must be imported
through state trading enterprises", and that "non -state trading quotas are imported through
enterprises that have trading rights, and end -users that have trading rights may also import by
themselves".275 The statement that STE portions must be imported through STEs would, in our view,
be redundant if non-STE applicants could not receive allocations o f STE portions of TRQs. Instead,
this provision suggests that non-STE applicants can receive non-STE or STE portions of TRQs, or a
mix of the two. The different portions would simply have to be used in accordance with the relevant
procedures in Article 4.
7.102. Second, Article 14 of the 2003 Provisional Measures requires STE portions to be indicated in
the TRQ certificate and, accordingly, the annexed TRQ certificate requires an indication of
"7. Arranged Quantity" and "8. of which State Trading".276 Again, it would, in our view, be redundant
to require that STE portions of allocated TRQ amounts be indicated in individual recipients' TRQ
certificates if non-STE applicants could only receive non -STE portions. Instead, this suggests that
any applicant, including a non-STE applicant, can receive both non-STE and STE portions of TRQs.
7.103. Third, Article 22 of the 2003 Provisional Measures sets out a procedure for recipients that
have been allocated STE portions of TRQs and have not signed a contract by August 15, to seek
approval to entrust any enterprise to import or to import by themselves.277 Again, in our view, this
procedure would be redundant if non-STE applicants could not receive STE portions of TRQs. Instead,
this provision suggests that non -STE applicants can receive STE portions and therefore use the
procedure in Article 22 in cases where they fail to contract with COFCO for importation under
allocated STE portions of TRQs by 15 August.
7.104. Based on our reading of these provisions, we consider that China's legal instruments set out
STE and non -STE portions of TRQs as being available for allocation to both STE and non -STE
applicants, in accordance with the eligibility criteria and allocation principles laid down in the annual
allocation notices. Indeed, China itself states that nothing in its legal instruments prevents the NDRC
from allocating STE portions of TRQs to non-STE applicants.278 We see nothing, in China's legal
instruments or elsewhere, that would alert applicants and other interested parties to the N DRC's
stated practice of allocating the entire STE portions of TRQs only to COFCO. While China states that
"[a]pplicants become aware of this practice through their participation in the TRQ administration",
this assertion does not, in our view, suffice.279
7.105. With respect to the NDRC's stated practice of not requiring COFCO to return unused TRQ
amounts, we agree with the United States that the requirement to return unused TRQ amounts is
set out in China's legal instruments as generally applicable to all recipien ts of TRQ allocations. 280
Article 23 of the 2003 Provisional Measures, which contains this requirement, states in relevant part:

274 See United States' second written submission, para. 62.
275 2003 Provisional Measures, (Exhibit USA-11), Article 4.
276 2003 Provisional Measures, (Exhibit USA-11), Article 14.
277 2003 Provisional Measures, (Exhibit USA-11), Article 22.
278 China's second written submission, para. 29. See also China's responses to Panel question No. 5(c),
279 China's response to Panel question No. 5(b), para. 13.
280 See United States' second written submission, paras. 64-66.

In the event that an end-user holding an agricultural product import tariff-rate quota is
unable to sign import contracts for, o r has already signed import contracts for but is
unable to complete, the entire quota quantity already applied for and obtained for the
current year, [the end-user] must return the quota quantity it was unable to complete
to the original certificate-issuing agency prior to September 15.281
7.106. The requirement to return unused TRQ amounts thus applies to "end -users", which are
defined in Article 39 of the 2003 Provisional Measures as follows:
"End-users" as mentioned in these Measures refer to manufacturing enterp rises,
traders, wholesalers, retailers, etc. that directly apply for and obtain agricultural product
import tariff-rate quotas.282
7.107. Thus, as China also confirms 283, end-users are enterprises that apply for and receive TRQ
allocations. This definition suggests that any enterprise that applies for and receives TRQ allocations
is considered an end -user and is therefore subject to the requirement to return unuse d TRQ
amounts. We find unconvincing China's argument that the 2003 Provisional Measures "provide for
two m utually exclusive categories of applicants, STEs and 'end users'". 284 STEs are defined in
Article 38 of the 2003 Provisional Measures as:
"State trading enterprises" as mentioned in these Measures refer to enterprises
conferred by the government with privileges in the exclusive import business of certain
products. The list of state trading enterprises is verified, determined, and announced
by the Ministry of Commerce.285
7.108. We see nothing in this definition, or elsewhere in China's legal instruments, to suggest that
an STE such as COFCO should not be considered an end -user and therefore should not be subject
to the requirement to return unused TRQ amounts, insofar as that STE applies for and receives a
TRQ allocation, including an allocation of STE portions of a TRQ.
7.109. As explained above, China's legal instruments suggest that both STE and non-STE applicants
can receive STE portions of TRQs, and that the requirement to return unused TRQ amounts applies
to both STE and non-STE recipients of TRQ allocations. As also explained above, there is no indication
in China's legal instruments or elsewhere that COFCO receives the entire STE portions of TRQs and
is not required to return unused TRQ amounts. China's statement therefore demonstrates that the
NDRC's practice differs from what is set out in China's legal instruments. In our view, the disparity
between what is set out in China's legal instruments and the NRDC's stated practice demonstrates
that applicants and other interested parties cannot easily understand or discern the set of rules or
principles through which the NDRC, in practice, administers STE and non-STE portions of TRQs. It
therefore further supports our finding of inconsistency with the obligation to administer TRQs on a
transparent basis. Similarly, this disparity demonstrates that applicants and other interested parties
cannot easily anticipate how the N DRC, in practice, allocates STE and non -STE portions of TRQs,
further supporting our finding of inconsistency with the obligation to adm inister TRQs on a
predictable basis. This disparity also shows that the NDRC, in practice, allocates STE and non-STE
portions of TRQs in a manner that is not set out in plain or obvious detail , further supporting our

281 2003 Provisional Measures, (Exhibit USA-11), Article 23. See also 2017 Reallocation Notice, (Exhibit
USA-17), para. 1. Article 30 of the 2003 Provisional Measures imposes penalties in the form of deductions to
the TRQ allocations in the following years, for failure to comply with the obligation to return unused TRQ
amounts. More particularly, it states:
In the event that an end-user, in violation of the provisions in Article 23 of these Measures, fails to
complete imports for the entire agricultural import tariff-rate quota quantity allocated during the current year,
and also fails to return to the original certificate issuing agency by September 15 the quota quantity it failed to
import during the current year, there will be a corresponding deduction to its tariff-rate quota quantity
allocated in the following year, according to the proportion not completed. (2003 Provisional Measures, (Exhibit
USA-11), Article 30.)
282 2003 Provisional Measures, (Exhibit USA-11), Article 39.
283 China's first written submission, para. 19; and response to Panel question No. 1(a), para. 1.
284 China's second written submission, para. 30. See also China's response to Panel question No. 1(b),
para. 2.
285 2003 Provisional Measures, (Exhibit USA-11), Article 38.

finding of inconsistency with the obligation to administer TRQs using clearly specified administrative
procedures.
7.110. In addition, the disparity between what is set out in China's legal instruments and the NRDC's
stated practice demonstrates that the NDRC does not use the otherwise applic able rule s when
administering STE and non-STE portions of TRQs. More particularly, China acknowledges that the
NDRC does not apply the basic eligibility criteria and allocation principles in allocating the entire STE
portions of TRQs to COFCO 286, and does not subject COFCO to the requirement to return unused
TRQ amounts.287 We have explained above that fairness requires that China's TRQ administration
be impartial and equitable, and that the Chinese authorities act in accordance with the applicable
rules and standards.288 In our view, China's statement that the NDRC, in practice, does not follow
the otherwise applicable rules regarding the basic eligibility criteria, allocation principles, and the
requirement to return unused TRQ amounts therefore demonstrates that China v iolates the
obligation to administer its TRQs on a fair basis.
7.111. We note China's argument that nothing in China's Schedule CLII or its legal instruments
precludes the NDRC from allocating the entire STE portions of TRQs to COFCO and not requiring
COFCO to return unused TRQ amounts. 289 We wish to emphasiz e that our findings above concern
solely the consistency of China's TRQ administration with the obligations in Paragraph 116. Whether
the NDRC's stated practice is consistent with China's Schedule CLII is not a matter before us. Nor is
it our task to consider China's compliance with its own domestic legislation.290
7.112. With respect to the implications of the NDRC's stated practice on the filling of China's wheat,
rice, and corn TRQs, we agree with the United States that this practice would result in the exclusion
of certain TRQ amounts that would otherwise be available to non -STE applicants. 291 More
particularly, China's statement that the NDRC, in practice, allocates the entire STE portions of TRQs
to COFCO and does not require COFCO to return unused TRQ amounts demonstrates that the NDRC
precludes non-STE applicants from applying for and receiving COFCO's unused TRQ amounts during
the reallocation process. In our view, China's statement concerning the NDRC's practice therefore
demonstrates that China's TRQ administration restrains the filling of its TRQs , in violation of the
obligation to administer its TRQs in a manner that would not inhibit the filling of each TRQ.
7.1.4.4.4.2 Procedure for non-STE recipients to import under STE portions of TRQs
7.113. The United States claims that the procedure for non -STE recipients to import under STE
portions of TRQs violates the obligations to administ er TRQs on a predictable basis, to use clearly
specified administrative procedures, and to administer TRQs in a manner that would not inhibit the
filling of each TRQ. China argues that the United States' claims are "hypothetical" in light of the
NDRC's stated practice of allocating the entire STE portions of TRQs to COFCO. However, we consider
it appropriate to address these claims because the procedure concerning non-STE recipients' use of
STE portions of TRQs appear s in China's legal instruments , and China acknowledges that its legal
instruments do not prevent the NDRC from allocating STE portions to non -STE applicants, in which
case this procedure would be relevant.292
7.114. We recall that non-STE recipients of STE portions of TRQs must import through a designated
STE or, if unsuccessful by 15 August, seek approval from the NDRC to import on their own or through
any other enterprise.293 It is undisputed that COFCO is the only designated STE for grains, and that
there is no requirement in China's legal instruments for COFCO to agree to contract with non -STE
recipients of STE portions of TRQs. It is also undisputed that there is no clarification, in China's legal
instruments or elsewhere, of the procedure to be followed by non -STE recipients of STE portions
when seeking approval to import without COFCO following 15 August.294 In light of this, we consider
that applicants and other interested parties cannot easily anticipate how non-STE recipients are to

286 China's responses to Panel question No. 6, para. 19, and No. 63, para. 44.
287 China's response to Panel question No. 6, para. 20.
288 See para. 7.9 above.
289 China's second written submission, paras. 29-30.
290 See Panel Reports, US – Hot-Rolled Steel, para. 7.267; and US – Stainless Steel (Korea), para. 6.50.
291 See United States' second written submission, para. 83.
second written submission, para. 29.
293 2003 Provisional Measures, (Exhibit USA-11), Articles 4 and 22.
294 See China's response to Panel question No. 5(d), para. 15.

import wheat, rice, and corn under STE portions of TRQs, in violation of China's obligation to
administer its TRQs on a predictable basis . Similarly, we consider that the procedure for seeking
approval to import without COFCO is not set out in plain or obvious detail, in violation of China's
obligation to administer its TRQs using clearly specified administrative procedures.
7.115. Turning to the effects of this procedure on the filling of China's TRQs, we note that non-STE
recipients are prevented from utilizing STE portions of their TRQ allocations if they do not succeed
in contracting with COFCO or obtaining approval from the NDRC to import without COFCO. 295 We
also agree with the United States that the effects go beyond the possibilities for non-STE recipients
to utilize STE portions of their TRQs allocations. Under China's legal regime, non-STE recipients that
are prevented from utilizing STE portions of their TRQs allocations would not be eligible to apply for
reallocation. Furthermore, they may face penalties for non -use of TRQ allocations in the form of
deductions in the TRQ amounts allocated to them in the following year.296 In our view, the restrictions
imposed on the possibilities for non-STE recipients to utilize STE portions of their TRQ allocations,
and the implications on their ability to participate in reallocation and to receive the full amount of
TRQ allocations in future years, violate China's obligation to administer its TRQs in a manner that
would not inhibit the filling of each TRQ.
7.1.4.4.5 Conclusion
7.116. For the reasons set out above, we find that the administration of STE and non-STE portions
of the TRQs is inconsistent with the obligations, set forth in Paragraph 116 of China's Working Party
Report, to administer TRQs on a transparent, predictable , and fair basis, to use clearly specified
administrative procedures, and to administer TRQs in a manner that would not inhibit the filling of
each TRQ.
7.1.4.5 Public notice
7.1.4.5.1 Introduction
7.117. The United States claims that the extent of the public notice provided in connection with the
allocation, return and reallocation of C hina's wheat, rice, and corn TRQs violates three obligations
under Paragraph 116, namely the obligations to administer TRQs on a transparent and predictable
basis, and in a manner that would not inhibit the filling of each TRQ. China rej ects the entirety o f
the United States' claims.
7.118. Below, we describe the extent of the public notice provided by China and summarize the
parties' main arguments. We then assess whether the extent of the public notice provided in
connection with the allocation, return, and reallocation of China's TRQs is inconsistent with the three
obligations the United States has invoked, taking into account our understanding of the meaning
and nature of each of the relevant obligations laid out in paragraph 7.9 above.
7.1.4.5.2 Extent of the public notice at issue
7.119. The annual allocation notices set out the total TRQ amounts available for allocation in any
given year. In the 2017 Allocation Notice, the total TRQ amounts available for allocation were as
follows:

295 2003 Provisional Measures (Exhibits USA-11), Articles 4 and 22. Non-STE recipients may also face
obstacles in utilizing STE portions of their TRQ allocations where the NDRC grants approval but the timeline for
the approval process does not permit the non-STE recipients sufficient time to arrange for importation by
themselves or through other enterprises. As pointed out by the United States, non-STE recipients of STE
portions cannot apply for approval to import by themselves or through other enterprises until 15 August and
are required to return unused TRQ amounts a month hereafter, on 15 September, in order to avoid facing
penalties for non-use. Since Article 22 of the 2003 Provisional Measures does not set out a deadline for the
NDRC to reach a decision, non-STE recipients of STE portions could potentially have insufficient time to import,
even where approval is granted.
296 More particularly, and as described in paras. 2.34-2.36 above, a recipient receives corresponding
deductions to its TRQ allocation in the following year, if it fails to return unused TRQ amounts by 15 September
or if it fails to use the full TRQ amounts allocated to it in two consecutive years. (2003 Provisional Measures,
(exhibit USA-11), Articles 30 and 31).

The 2017 grain import tariff-rate quota quantities are: wheat – 9.636 million tons, with
a state trading proportion of 90%; corn – 7.20 million tons, with a state trading
proportion of 60%; [] rice – 5.32 million tons (of which: 2.66 million tons of long-grain
rice and 2.66 million tons of medium - and short -grain rice), with a state trading
proportion of 50%.297
It is undisputed that China does not provide public notice of the TRQ amounts that are actually
allocated, returned, or reallocated, in respect of individual applicants or in the aggregate.
7.1.4.5.3 Main arguments of the parties
7.120. First, the United States contends that China violates the obligation to administer its TRQs on
a transparent basis by failing to provide public notice of (i) the total amounts of allocated TRQs and
the ratio of STE and non-STE portions thereof, (ii) the total amounts of returned TRQs, (iii) the total
TRQ amounts available for reallocation, (iv) the total amounts of reallocated TRQs , (v) the names
of individual enterprises that receive TRQ allocations or reallocations, (vi) the TRQ amounts allocated
to each individual recipient, and (vii) the TRQ amounts reallocated to each individual recipient.298 In
the United States' view, an applicant c annot understand the reasons for his own outcome or how
the NDRC allocates and reallocates returned TRQ amounts without public notice of the outcomes of
the allocation and reallocation processes, i.e. items (i) and (iv) through (vii).299 Further, the United
States argues that applicants cannot know whether reallocation will or did take place in any given
year, without public notice of the TRQ amounts returned and made available for reallocation, i.e.
items (ii) and (iii).300
7.121. Second, the United States contends that China violates the obligation to administer its TRQs
on a predictable basis by failing to provide public notice of (i) the total amounts of returned TRQs ,
(ii) the total TRQ amounts available for reallocation, (iii ) the total amounts of reallocated TRQ s,
(iv) the names of individual enterprises that receive TRQ reallocations , and (v) the TRQ amounts
reallocated to each individual recipient .301 Similar to its arguments concerning transparency, the
United States argues that an applicant cannot predict ho w the NDRC will reallocate returned TRQ
amounts without public notice of the outcomes of the reallocation process, i.e. items (iii) through
(v).302 Further, the United States argues that applicants cannot know whether reallocation will take
place, and if so in what amount, without public notice of the TRQ amounts returned and made
available for reallocation, i.e. items (i) and (ii).303
7.122. Third, the United States contends that China violates the obligation to administer its TRQs
in a manner that would not inhibit the filling of each TRQ, by failing to provide public notice of (i) the
total amounts of allocated TRQs and the ratio of STE and non -STE portions thereof, (ii) the total
amounts of returned TRQs and the ratio of STE and non -STE portions thereof, (iii) the total TRQ
amounts available for reallocation and the ratio of STE and non-STE portions thereof, (iv) the total
amounts of reallocated TRQs and the ratio of STE and non -STE portions thereof, (v) the names of
individual enterprises that receive TRQ allocations or reallocations, (vi) the TRQ amounts allocated
to each individual recipient, and (vii) the TRQ amounts reallocated to each individual recipient.304 In
the United States' view, traders lack the "necessary commercial information to engage in
importation" under the TRQs without public notice of the outcomes of the allocation and reallocation
processes, i.e. items (i) and (iv) through (vii). 305 Further, the United States argues that potential
applicants are less likely to apply for reallocation or more likely to apply for smaller amounts without

297 2017 Allocation Notice, (Exhibit USA-15), Article I.
298 United States' first written submission, paras. 97-112. See also United States' response to Panel
question No. 20(b), para. 57.
299 United States' first written submission, paras. 99 and 111.
300 United States' first written submission, para. 106.
301 United States' first written submission, paras. 135-144. See also United States' response to Panel
question No. 20(b), para. 58.
302 United States' first written submission, para. 142.
303 United States' first written submission, para. 138.
304 United States' first written submission, paras. 207-213. See also United States' response to Panel
question No. 20(b), para. 59.
305 United States' first written submission, paras. 207-211; and opening statement at the first meeting
of the Panel, para. 18.

public notice of the total TRQ amounts returned and made available for reallocation, i.e. items (ii)
and (iii).306
7.123. China generally argues that the United States' arguments regarding the scope of public
notice go too far, maintaining that "the additional information requested by the United States is not
supported by a reasonable definition of transparency".307 China submits that applicants that desire
further clarification on the NDRC's allocation and reallocation of TRQ amounts can submit an inquiry
for further information.308 China also argues that the information required by the United States is
not of the kind that would contribute to the filling of the TRQs, since the names of all applicants are
published in the annual announcements of applicant enterprise data, and exporters can use this
information to contact applicants to inquire whether they have received TRQ allocations and whether
they wish to enter into commercial arrangements for the importation of wheat, rice, and corn under
such TRQ allocations.309 Furthermore, China argues that grain importers who receive TRQ allocations
or reallocations can initiate commercial arrangements with exporters , and that the United States'
argument is " based on a theoretical marketplace where only grain -exporting entities have
agency".310
7.124. Lastly, China submits that it is not possible, under the timeline contained in its leg al
instruments and its Schedule CLII, to provide public notice of the amounts of returned TRQ amounts
available for reallocation prior to the deadline for submitting applications for reallocation. 311 In
China's view, it is "pure speculation" for the United States to assert that this lack of information
renders applicants less likely to apply for reallocation or more likely to apply for smaller amounts.312
7.1.4.5.4 Analysis by the Panel
7.125. Below, we assess the United States' claims under the obl igations to administer TRQs on a
transparent and predictable basis, and in a manner that would not inhibit the filling of each TRQ, in
turn.
7.126. With respect to the United States' claim that China violates the obligation to administer its
TRQs on a transparent basis, the United States argues that Paragraph 116 requires China to give
public notice of (i) the total amounts of allocated TRQs and the ratio of STE and non -STE portions
thereof, (ii) the total amounts of returned TRQs, (iii) the total TRQ amounts available for reallocation,
(iv) the total amounts of reallocated TRQs, (v) the names of individual enterprises that receive TRQ
allocations or reallocations, (vi) the TRQ amounts allocated to each individual recipient, and (vii) the
TRQ amounts reallocated to each individual recipient.
7.127. At the outset, we note that the obligation to administer TRQs on a transparent basis is a
general obligation that does not specifically require public notice of information, let alone public
notice of the detailed types of information identified by the United States. This stands in contrast to
many other provisions of the covered agreements that require publication or notification of specific
types of information.313 Notably, Article XIII:3 of the GATT 1994, which we address in section 7.2

306 United States' first written submission, para. 212.
307 China's first written submission, para. 63. For information concerning individual applicants,
specifically, China argues that this constitutes business confidential information, which China should not be
required to publish. (China's first written submission, para. 66; response to Panel question No. 28,
paras. 82-83; and second written submission, paras. 37-41 (referring to Article XIII of the GATT 1994 and
Article 1(11) of the Agreement on Import Licensing Procedures)). The European Union presents a similar view.
(European Union's third-party submission, paras. 97-107).
308 China's first written submission, para. 65.
309 China's first written submission, para. 68.
310 China's first written submission, para. 69.
311 China's first written submission, paras. 72-73. More particularly, since China's legal instruments and
its Schedule CLII call for unused TRQ amounts to be returned by 15 September and require applications for
reallocation to be submitted between 1 and 15 September, China maintains that it is not possible to publish the
total amounts of returned TRQs that are available for reallocation prior to the deadline for submitting
applications for reallocations.
312 China's first written submission, para. 75.
313 See, e.g. Article X:1 of the GATT 1994 (concerning publication of trade regulations); Articles 1.4(a),
3.3, 3.5(b) and 3.5(c) of the Agreement on Import Licensing Procedures (concerning publication of aspects
related to administrative procedures for import licensing, licensing requirements, and the use of quotas);
Article 12 of the Anti-Dumping Agreement and Article 22 of the Agreement on Subsidies and Countervailing

below, sets out specific publication or notification obligations in relation to the use of TRQs. We are
therefore not convinced that the reference to "transparent" in Paragraph 116 , in and of itself,
requires China to publish the types of information identified by the United States . In our view, the
United States has not de monstrated that China's failure to give public notice of such information
entails that the basis for its TRQ administration is not transparent.
7.128. More particularly, and as mentioned in paragraph 7.9 above, the obligation to administer
TRQs on a transparent basis requires China to administer its TRQs through an underlying set of rules
or principles that are easily understood or discerned by applicants and other interest ed parties.
Above, we have made several findings requiring China to further clarify, in its legal instruments, the
various rules and principles through which the NDRC administers TRQs. However, w e are not
convinced that knowledge of the outcomes of the NDR C's allocation and reallocation processes –
including the identities of individual TRQ recipients and the TRQ amounts allocated and reallocated
to them as well as the cumulative amounts of TRQ allocations and reallocations and their STE and
non-STE ratios – is necessary for applicants and other interested parties to easily understand or
discern the underlying set of rules or principles through which the NDRC administers TRQs.
7.129. We are also not convinced that knowledge of the total amounts of returned TRQs ma de
available for reallocation is necessary for applicants and other interested parties to easily understand
or discern the underlying set of rules or principles through which the NDRC admi nisters TRQs. The
2017 Reallocation Notice states that unused TRQ amounts must be returned by 15 September and
that the NDRC and the Ministry of Commerce "will carry out reallocation of the quotas that are
returned".314 In other words, applicants and other interested parties know that reallocation will take
place if allocated TRQ amounts are returned, and that any such amounts of returned TRQs will be
available for reallocation. The United States has not explained why this information does not suffice
to allow applicants and other interested parties to easily understand or discern the underlying rules
or principles through which the NDRC reallocates returned TRQ amounts. As further support for this
conclusion, we note that the timeline for reallocation, set forth in China's legal instruments and in
its Schedule CLII, requires applications for reallocation to be filed between 1 and 15 September and
requires unused TRQ amounts to be returned by 15 September.315 Thus, we agree with China that
this timeline would not allow the NDRC to provide public notice of the total amounts of returned
TRQs that are available for reallocation prior to the deadline for applying for reallocation of such TRQ
amounts. In response to this argument, the United States maintains that China should publish the
total amounts of returned TRQs that were made available for reallocation following the deadline for
applicants to apply for reallocation, "to confirm amounts were returned and reall ocated".316
Alternatively, the United States argues that China should publish "daily or weekly updates reporting
amounts returned" during the reallocation application period.317 However, the United States has not
explained how this type of subsequent public notice or weekly or daily updates would be necessary
for applicants and other interested parties to easily understand or discern the underlying set of rules
or principles through which the NDRC reallocates returned TRQ amounts.
7.130. With respect to the United Sta tes' claim that China violates the obligation to administer its
TRQs on a predictable basis, the United States argues that Paragraph 116 requires China to give
public notice of (i) the total amounts of returned TRQs , (ii) the total TRQ amounts available for
reallocation, (iii) the total amounts of reallocated TRQs, (iv) the names of individual enterprises that
receive TRQ reallocations , and (v) the TRQ amounts reallocated to each individual recipient. We
reject the United States' arguments for essentially t he same reasons as those explained in relation
to the obligation to administer TRQs on a transparent basis. More particularly, we do not consider
that knowledge of the listed information is necessary to render China's TRQ administration
predictable, in other words to enable applicants and other interested parties to easily anticipate how
the NDRC reallocates returned TRQ amounts.
7.131. With respect to the United States' claim that China violates the obligation to administer its
TRQs in a manner that would not inh ibit the filling of each TRQ, the United States argues that

Measures (concerning public notice of the initiation of investigations, preliminary or final determinations,
imposition of provisional measures, and conclusion, suspension or termination of investigations).
315 2003 Provisional Measures (Exhibit USA-11), Articles 23 and 24; and China's Schedule CLII, Part I,
Section IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff Rate Quotas), (Exhibit USA-23),
Paragraphs 8.A and 8.B).
316 United States' opening statement at the first meeting of the Panel, para. 48.
317 United States' response to Panel question No. 27(b), para. 101.

Paragraph 116 requires China to give public notice of (i) the total amount s of allocated TRQs and
the ratio of STE and non-STE portions thereof, (ii) the total amounts of returned TRQs and the ratio
of STE and non-STE portions thereof, (iii) the total TRQ amounts available for reallocation and the
ratio of STE and non-STE portions thereof, (iv) the total amounts of reallocated TRQs and the ratio
of STE and non -STE portions thereof, (v) the names of individual enterprises that receive TRQ
allocations or reallocations, (vi) the TRQ amounts allocated to each individual recipient, and (vii) the
TRQ amounts reallocated to each individual recipient.
7.132. In our view, the United States has not demonstrated that China's failure to give public notice
of the information listed by the United States violates China's obligation to administer its TRQs in a
manner that would not i nhibit the filling of each TRQ. More particularly, the United States' call for
public notice of the outcomes of the NDRC's allocation and reallocation processes – including the
identities of individual TRQ recipients and the TRQ amounts allocated and reallocated to them as
well as the cumul ative amounts of TRQ allocations and reallocations and their STE and non -STE
ratios – is premised on the argument that this information is necessary for grain importers and
exporters to enter into commercial arrangements for the importation of wheat, rice, and corn under
the allocated or reallocated TRQ amounts. However, nothing in China's legal instruments prevents
TRQ recipients from publishing their allocation or reallocation outcome s or from contacting grains
exporters, should they wish to enter into co mmercial arrangements for the importation of grains
under their allocated or reallocated TRQ amounts.
7.133. We are also not convinced by the United States' argument that the lack of public notice of
the total TRQ amounts returned and made available for reallocation would make applicants less likely
to apply for reallocation or more likely to apply for smaller amounts, in a manner that would inhibit
the filling of each TRQ. As pointed out by the United States , the receipt of a TRQ reallocation is a
commercial benefit.318 Applicants know that the NDRC will reallocate any returned TRQ amounts.
The United States has not demonstrated why applicants would forego the possibility of receiving
such a commercial benefit solely because they do not know the exact amount s of returned TRQs
made available for reallocation in an y given year. As mentioned above, we find further support for
this conclusion in the timeline for reallocation, set forth in China's legal instruments and in its
Schedule CLII, which would not allow the NDRC to provide public notice of the total amounts of
returned TRQs that are available for reallocation prior to the deadline for applying for reallocation of
such TRQ amounts.
7.1.4.5.5 Conclusion
7.134. For the reasons set out above, we find that the United States has not mad e a prima facie
case that the extent of the public notice provided in connection with the allocation, return, and
reallocation of China's wheat, rice, and corn TRQs is inconsistent with the obli gations, set forth in
Paragraph 116, to administer TRQs on a transparent and predictable basis , and in a manner that
would not inhibit the filling of each TRQ.
7.1.4.6 Usage requirements for wheat, rice, and corn imported under TRQ allocations
7.1.4.6.1 Introduction
7.135. The United States claims that China's imposition of usage requirements in respect of wheat,
rice, and corn importe d under TRQ allocations violates the obligation under Paragraph 116 to
administer TRQs in a manner that would not inhibit the filling of each TRQ. Further, the United States
argues that the NDRC's stated practi ce on enforcing the usage requirements for wheat and corn
demonstrates a violation of the obligations under Paragraph 116 to administer TRQs in a predictable
manner and to use clearly specified administrative procedures. China rejects the entirety of the
United States' claims.
7.136. Below, we describe the usage requirements at issue and summarize the parties' main
arguments. We then assess whether the usage requirements are inconsistent with the obligations
the United States has invoked, taking into account our understanding of the meaning and nature of
each of the relevant obligations laid out in paragraph 7.9 above.

318 United States' opening statement at the first meeting of the Panel, para. 46.

7.1.4.6.2 Usage requirements at issue
7.137. The 2017 Allocation Notice s ets out the following usage requirements for wh eat and corn
imported under TRQ allocations:
The aforementioned grain import tariff -rate quotas obtained by an applicant must be
self-used, and the imported goods are required to be operated for processing by the
enterprise itself. Among these [goods], imported wheat and corn are required to be
processed and used in its own plant;319
Group enterprises that own multiple processing plants must independently apply for and
independently use import tariff-rate quotas in the name of each processing plant.320
7.138. For rice imported under TRQs, the 2017 Allocation Notice sets out the following usage
requirements:
The aforementioned grain import tariff -rate quotas obtained by an applicant must be
self-used, and the imported good s are required to be operated for processing by the
enterprise itself. Among these [goods], … imported [] rice is required to be organized
for sale in the name of the enterprise itself.321
Trade-type enterprises applying for [] rice import tariff-rate quotas may choose to apply
in the name of the group headquarters or a subsidiary enterprise, but the headquarters
and the subsidiary enterprise must not apply at the same time.322
7.1.4.6.3 Main arguments of the parties
7.139. With respect to wheat and corn imported under TRQ allocations, the United States points to
the usage requirements in the 2017 Annual Allocation Notice that such wheat and corn must be
"processed and used" in the TRQ recipient's own plant and that group enterprises with multiple
plants must individually apply for TRQ allocations in the name of each plant and individually process
wheat and corn imported under TRQ allocations in each plant.323 The United States argues that the
inability of a recipient to sell imported wheat and corn that has not been processed in its own plant
and the inability of group enterprises with multiple plants to process wheat and corn in their other
plants "in the event [their] business needs or plans change" raise uncertainty and increase costs.324
With res pect to rice imported under TR Q allocations , the United States points to the usage
requirement in the 2017 Annual Allocation Notice that such rice must be "organized for sale in the
name of" the recipient and that group enterprises "may choose to apply [for rice TRQ allocations] in
the name of the group headquarters or a subsidiary enterprise, but the headquarters and the
subsidiary enterprise must not apply at the same time".325 Since recipients face penalties for non-use
of TRQ allocations in the form of deductions to the TRQ amounts allocated in the following year, the
United States argues that the usage requirements for wheat, rice, and corn will incentivize applicants
to request "a smaller TRQ amount than it may otherwise wish to receive for commercial purposes".326
In the United States' view, the combination of the usage requirements and the penalties for non -
use of TRQ allocations "would tend to limit importation under the TRQs and therefore inhibit the
filling of the TRQs" in violation of Paragraph 116.327
7.140. With respect to wheat and corn imported under TRQ allocations, China argues that the usage
requirement and penalties for non-use are necessary for the filling of TRQs, since applicants would
otherwise be able to apply for a larger allocation of wheat and corn TRQs "solely to reduce the

319 2017 Allocation Notice, (Exhibit USA-15), Article V(2).
320 2017 Allocation Notice, (Exhibit USA-15), Article II.
321 2017 Allocation Notice, (Exhibit USA-15), Article V(2).
322 2017 Allocation Notice, (Exhibit USA-15), Article II.
323 United States' first written submission, paras. 215 and 217.
324 United States' first written submission, paras. 216-218; and opening statement at the first meeting
of the Panel, para. 19.
325 United States' first written submission, paras. 215 and 217.
326 United States' first written submission, para. 216. (emphasis original)
327 United States' first written submission, para. 221.

amounts available to [their] competitors".328 Further, China argues that its Schedule CLII "requires"
or "contemplates" the usage requirements for wheat and corn and the penalties for non-use of TRQ
allocations, indicating that these are consisten t with Paragraph 116. 329 China also states that the
NDRC, in practice, does not "monitor whether recipients comply with the processing requirement on
a daily basis" and would not subject a recipient to penalties if it is found to be "unable to process its
full allocation for unexpected reasons".330 In China's view, this renders the United States' argument
"unfounded".331 With respect to rice imported under TRQs, China argues that there is no processing
requirement332, and that such rice is only required to be sold by the recipient itself. 333 In China's
view, this requirement "alerts applicants that they will be accountable for utilizing their allocations,
thereby incentivizing efficient use of allocations and deterring unlawful sales of TRQ Certificates".334
7.141. The United States responds that China has not provided evidence demonstrating the
existence of the NDRC's stated practice of not enforcing the usage requirements for wheat and corn
if a recipient does not have sufficient processing capacity for unexpected reasons. In any event,
since the annual allocation notices give applicants the impression that they must process wheat and
corn in their own plants "regardless of China's actual practice, the inhibiting effect of this requirement
remains".335 In the United States' view, the NDRC's stated practice demonstrates that China violates
the obligations to administer its TRQs on a predictable basis and to use clearly specified
administrative procedures, since China's legal instruments do not support China's argument on the
"varied application" of the usage requirements, nor indicate how the NDRC determines an applicant's
processing capacity for purposes of the usage requirements.336
7.1.4.6.4 Analysis by the Panel
7.142. Below, we assess, first, the United States' claims concerning the usage requirements for
wheat and corn set out in China's legal instruments, as well as China's statement concerning the
NDRC's practice on enforcing these requirements. We then address the United States ' claim
pertaining to the usage requirement for rice imported under TRQs.
7.1.4.6.4.1 Usage requirements for wheat and corn imported under TRQ allocations
7.143. The usage requirements for wh eat and corn imported under TRQ allocations are set out in
the 2017 Allocation Notice and quoted in paragraph 7.137 above. According to these, a recipient of
a wheat or corn TRQ allocation is required to process the imported wheat or corn in its own plant.
For group enterprises, the imported wheat or corn must be processed separately in each processing
plant that has applied for and received wheat or corn TRQ allocations. The United States claims that
these usage requirements violate the obligation to administer TRQs in a manner that w ould not
inhibit the filling of each TRQ.
7.144. We agree with the United States that these requirements restrain recipients' ability to use
wheat or corn imported under their TRQ allocations in the most efficient or commercially preferable
manner. In our view, c ircumstances in the market may sometimes make it more efficient or
commercially preferable for a TRQ recipient to contract with another enterprise for the processing of
its imported wheat or corn, or to sell that wheat or corn without processing. Similarly, there may be
circumstances where it would be more efficient or commercially preferable for a group enterprise to
have its imported wheat or corn processed in a plant different than that which applied for a TRQ
allocation. The usage requirements for wheat and corn set out in China's legal instruments would
prevent TRQ recipients from pursuing these business options.
7.145. The operation of the usage requirements for wheat and corn is such that a pplicants know
that they must process wheat and corn imported under TRQ allocations in their own plant and will
therefore import the amounts of wheat and corn that they can process in their own plant . The

328 China's first written submission, para. 126.
329 China's response to Panel question No. 27(c), paras. 77-79; and second written submission,
paras. 51-52.
330 China's response to Panel question No. 57, para. 29.
331 China's first written submission, para. 125.
332 China's first written submission, para. 121.
333 China's response to Panel question No. 59(a), para. 37, and No. 59(b), para. 38.
334 China's second written submission, para. 56.
335 United States' opening statement at the first meeting of the Panel, para. 54.
336 United States' second written submission, para. 111.

operation of the penalties for non-use of TRQ allocations is such that applicants know that they will
face deductions to their TRQ allocations in the following year if they do not import the full amounts
of wheat or corn under their TRQ allocations.337 Therefore, the operation of the usage requirements
for wheat and corn, in conjunction with the penalties for non -use of TRQ a llocations, is such that
applicants will apply for TRQ amounts that they know they can process in their own plant. In our
view, this would cause applicants to be overly cautious in deciding the TRQ amounts that they will
apply for. We find convincing the a rgument that, in the absence of such requirements, applicants
would apply for larger TRQ amounts. Consequently, we consider that the usage requirements
restrain the filling of China's wheat and corn TRQs, and therefore violate the obligation to administer
TRQs in a manner that would not inhibit the filling of each TRQ.
7.146. China argues that its Schedule CLII "indicates that imposing end -use requirements and
penalties is consistent with Paragraph 116". 338 With respect to penalties for non -use of TRQ
allocations, China points to the following part of its Schedule:
For all methods of allocation, a quota-holder that does not import its full allocation under
a tariff-quota will receive a proportional reduction in the tariff -quota allocation in the
subsequent year unless the quantity is returned to the SDPC prior to 15 September. A
quota holder that has failed to import its full allocation in two consecutive years and has
returned that unused portion by 15 September shall have its quota allocated in the
following year on the basis of its fill rate in the most recent year, and will not benefit
from any additional reallocations until and unless there are no other applications. The
means of calculating the penalty will be included in the TRQ regulation in force and
publicly available, and will be applied in a consistent and equitable manner.339
7.147. We recall that the United States does not challenge China's imposition of such penalties per
se.340 Rather, the United States' arguments and our findings concern the issue of whether the usage
requirements, including how these operate in conjunction with the penalties for non-use, inhibit the
filling of TRQs. Hence, we do not consider the reference, in China's Schedule CLII, to penalties for
non-use of TRQ allocations to be relevant to the claim at hand.
7.148. With regard to the usage requirements, China points to the following part of its Schedule:
In the first year, allocations to end users by the SDPC of the tariff -quota … shall be
based on a first -come, first-served system or the requests of the applicants and their
historical import performance, production capacity , or other relevant commercial
criteria, subject to specific conditions to be published one month in advance of the
opening of the application period so as to ensure an equitable distribution and complete
tariff-quota utilization.341
7.149. As the United States pointed out, production capacity is referenced in China's Schedule as a
factor China may take into account in allocating t he TRQ amounts during the first year. The cited
part of the Schedule contains no direct reference to processing or other types of usage requirements
for wheat and corn imported under TRQ allocations . We understand China to argue that applicants

337 More particularly, and as described in paragraphs 2.34-2.36 above, a TRQ recipient receives a
corresponding deduction to its TRQ allocation in the following year, if it fails to return unused TRQ amounts by
15 September or if it fails to use the full TRQ amounts allocated to it during two consecutive years. (2003
Provisional Measures, (exhibit USA-11), Articles 30 and 31). While China's legal instruments do not provide for
a penalty for failure to comply with the usage requirements for wheat and corn, China explains that a TRQ
recipient receives the same type of penalty if it does not comply with the usage requirements for wheat and
corn. (China's response to Panel question No. 58(a), para. 33). This explanation further supports our finding
that the usage requirements for wheat and corn would inhibit the filling of China's TRQs.
338 China's second written submission, para. 51.
339 China's response to Panel question No. 27, para. 77 (quoting China's Schedule CLII, Part I, Section
IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff Rate Quotas), (Exhibit USA-23), para. 6.D). See
also China's second written submission, para. 51. (emphasis added by China)
340 See, e.g. United States' second written submission, para. 54, stating "China's response focuses on a
different aspect of its measures – the penalties for failure to import and use a TRQ allocation – not the
restrictions on the use of the imported product". (emphasis original)
341 China's response to Panel question No. 27, para. 78 (quoting China's Schedule CLII, Part I, Section
IB (Most-Favoured-Nation Tariff, Agricultural Products, Tariff Rate Quotas), (Exhibit USA-23), paras. 6.B
(concerning STE portions of TRQs) and 6.C (concerning non-STE portions of TRQs)). (emphasis added by
China) See also China's second written submission, para. 52.

should infer the usage requirements from the reference in the Schedule to processing capacity as a
factor for allocating the TRQ amounts. More particularly, China argues that "[t]aking an enterprise's
capacity to produce processed grains into account is only logical if enterprises are required to process
grains in their own facilities" and that "[a]bsent this end-use requirement, there would be no purpose
for collecting and considering production capacity data". 342 We do not necessarily disagree that
production capacity and the usage requirements are related to a certain extent: if production
capacity is taken into account in allocating the TRQ amounts, TRQ recipients may well have capacity
to process wheat and corn imported under their TRQ allocations.343 This, however, is not pertinent
to the present claim which concerns the inhibiting effect of the usage requirements on the filling of
China's TRQs. As noted above, our finding that the usage requirements would inhibit the filling of
China's wheat and corn TRQs is based on their restraining effect on the ability of recipients to dispose
of wheat and corn imported under their TRQ allocations in the most efficient and commercially
preferable manner. Our finding of inconsistency of the usage requirements with the obligation to
administer TRQs in a manner that would not inhibit the filling of each TRQ, therefore, stands
regardless of whether China takes processing capacity into account in the allocation of TRQ amounts.
7.150. China also maintains that the processing requirements for wheat and corn are necessary to
"encourage the filling of each TRQ".344 More specifically, China submits that "if a TRQ applicant could
apply for an allocation with no concern for being held accountable for processing that allocation, an
applicant could apply for a larger allocation solely to reduce the amounts available to its
competitors".345 However, this argument disregards the fact that such applicants would, under
China's legal instruments, face penalties for non -use of their TRQ allocations. Specifically, if an
applicant applies for "a larger allocation solely to reduce the amounts available to its competitors",
that applicant must return any unused TRQ amounts and would face penalties for non -use of TRQ
allocations.346 As we understand the operation of China's TRQ administration, and as pointed out by
China itself 347, it is the penalties for non -use of TRQ allocations that serve to encourage TRQ
recipients to fully use TRQ amounts allocated to them. The usage requirements do not serve that
purpose, but rather restrict the TRQ recipients' ability to dispose of the imported wheat and corn as
their commercial needs require. We therefore do not find this argument convincing.
7.151. Lastly, China submits that usage requirements are "common components" of TRQ
administration, imposed by several Members, including the United States.348 In this regard, we note
that the present claim has been brought under China's Working Party Report, which contains specific
obligations undertaken by China with regard to its TRQ administration.
7.152. Having assessed the usage requirements for wheat and corn set out in China's legal
instruments, we now turn to consider the implications of China's statement concerning the NDRC's
practice on enforcing these requirements. China's statement is that the NDRC, in practice, does not
"monitor whether recipients comply with the processing requirement on a daily basis" and would not
subject a recipient to penalties if it is "unable to process its full allocation for unexpected reasons".349
The United States claims tha t this stated practice violates the obligations to administer TRQs on a
predictable basis and to use clearly specified administrative procedures.

342 China's second written submission, para. 52.
343 We note that processing capacity is only one among multiple factors listed in the 2017 Allocation
Notice as factors to be taken into account in allocating the TRQ amounts, and China itself states that, in
practice, applicants' actual import performance under previously allocated TRQs is "the factor given the most
weight in NDRC's allocation analysis" and that it is only for "new" applicants that "information concerning
production capacity is a key factor". (China's first written submission, paras. 49-50). Thus, regardless of
processing capacity being a factor in the NDRC's allocation of TRQ amounts, recipients may not necessarily
have capacity to process wheat and corn imported under TRQ amounts allocated to them.
344 China's first written submission, para. 127.
345 China's first written submission, para. 126.
346 More particularly, and as described in paragraphs 2.34-2.36 above, a recipient receives
corresponding deductions to its TRQ allocation in the following year, if it fails to return unused TRQ amounts by
15 September or if it fails to use the full TRQ amounts allocated to it in two consecutive years. (2003
Provisional Measures, (exhibit USA-11), Articles 30 and 31).
347 China's first written submission, para. 126.
348 China's first written submission, paras. 128-133.
349 China's response to Panel question No. 57, para. 29.

7.153. First, we note that, as pointed out by the United States350, China has provided no evidence
of the NDRC's practi ce, let alone evidence that applicants are made aware of such practice. 351 We
agree with the United States that applicants will apply for TRQs, and process wheat and corn
imported under their TRQ allocations, taking into consideration the usage requirements announced
to the public through China's legal instruments, and not on the basis of any unknown practice of the
NDRC.352 Second, we note that China itself maintains that the usage requirements for wheat and
corn apply in all circumstances and that the NDRC's stated practice only concerns the monitoring of
TRQ recipients' compliance with these and the consequences in situati ons where recipients are
unable to process wheat and corn for unexpected reasons. 353 Our finding that the usage
requirements for wheat and corn would inhibit the filling of China's TRQs is based on their restraining
effect on the ability of recipients to eff iciently dispose of wheat and corn in all circumstances, not
only in situations where they are unable to process wheat and corn for unexpected reasons.
Therefore, China's statement concerning the NDRC's practice does not alter our finding that the
usage requirements for wheat and corn inhibit the filling of TRQs.
7.154. We also agree with the United States' claims that China's statement concerning the NDRC's
practice serves to demonstrate inconsistencies with the obligations under Paragraph 116 to
administer TRQs on a predictable basis and to use clearly specified administrative procedures.
China's legal instruments set out the usage requirements for wheat and corn as generally applicable
in all circumstances. As mentioned in the preceding paragraph, China has pres ented no evidence
that applicants and other interested parties are made aware of the NDRC's stated practice of not
enforcing the usage requirements and imposing penalties if a recipient is found to be "unable to
process its full allocation for unexpected reasons". China's statement concerning the NDRC's practice
therefore demonstrates that applicants and other interested parties cannot easily anticipate how the
NDRC, in practice, enforces the usage requirements for wheat and corn, in violation of the obligation
to administer TRQs on a predictable basis. Similarly, China's statement demonstrates that the NDRC,
in practice, enforces the usage requirements in a manner that is not set out in plain or obvious
detail, in violation of the obligation to administer T RQs using clearly specified administrative
procedures.
7.1.4.6.4.2 Usage requirement for rice imported under TRQ allocations
7.155. The usage requirem ent for rice imported under TRQ allocations is set out in the 2017
Allocation Notice and quoted above in paragraph 7.138. According to this requirement, a recipient
of a rice TRQ allocation must organize the sale of the imported rice in its own name. Group
enterprises may only submit a s ingle application and must apply for rice TRQ allocations either in
the name of the headquarters or a subsidiary enterprise. For group enterprises, imported rice must
be organized for sale in the name of the enterprise that ap plied for the rice TRQ allocation, be that
the headquarters or a subsidiary enterprise. 354 The United States claims that these requirements
violate the obligation to administer TRQs in a manner that would not inhibit the filling of each TRQ.
7.156. In its first written submission, the United St ates quotes the text of the usage requirement
for rice, set out in the 2017 Allocation Notice, and argues that this requirement, like the usage
requirements for wheat and corn, "raises uncertainty and therefore increases costs for a TRQ
Certificate holder" and "incentivizes applicants to request a smaller TRQ amount than it may
otherwise wish to receive for commercial purposes". 355 When asked for further elaboration, the
United States argues that the requirement for rice "constrains the TRQ holder's ability to respond as

350 See United States' openings statement at the first meeting of the Panel, para. 54; and second
written submission, paras. 57-58.
351 We note China's statement that:
As China has explained, NDRC does not monitor compliance with the processing requirement on a daily
basis, nor does NDRC operate any kind of application and approval process for recipients that need to transfer
grains due to an unexpected lack of processing capacity. Applicants are therefore aware of the possibility of not
complying in those circumstances where they are "unable to process [their] full allocation for unexpected
reasons" because NDRC would not enforce the processing requirement in those circumstances. (China's
response to Panel question No. 57(d), para. 32). While China asserts that applicants are aware of the NDRC's
stated practice, we find nothing in the record of these proceedings to substantiate this assertion.
352 United States' second written submission, paras. 57-58.
353 China's response to Panel question No. 58, para. 33.
354 China's response to Panel question No. 59(c), para. 39. The United States does not take issue with
this explanation.
355 United States' first written submission, para. 216. (emphasis original)

business needs or plans change, fosters uncertainty, and therefore increases costs for a TRQ
Certificate holder"356 and that it is "a restriction on normal business practices and therefore make[s]
it more burdensome to import rice".357
7.157. Taking into account the entirety of the United States' arguments concerning the usage
requirement for rice, it is still not clear to us how this requirement " constrains the TRQ holder's
ability to respond as business needs or plans change" or in what way it poses "a restriction on normal
business practices and therefore make[s] it more burdensome to import rice".
7.158. At times, the United States appears to argue that the usage requirement for rice would
inhibit the filling of China's TRQs in the same manner as the usage requirements for wheat and
corn.358 Yet the usage requirements for wheat and corn require that imported wheat and corn be
processed in the recipient's own plant. The United States does not specifically argue that such a
processing requirement applies to rice imported under TRQ allocations . At other times, the United
States argues that it "understands Article V(2) to require … that the rice should be bagged and
marketed to downstream consumers by that entity itself, under its own name". 359 China, however,
rejects this interpretation, arguing that the usage requirement for rice " only requires a recipient to
sell the rice imported under the TRQ itself, without imposing any other restrictions such as the types
of buyers, the appearance of the seller's names on the bag, etc".360 In response, the United States
argues that China "does not clarify whether [recipients] must self-process the rice in the production
of some downstream product"361 and points to China having "conceded that the term 'organize for
sale' is confusing".362
7.159. The United States has challenged the usage requirement for rice only under the obligation
to administer TRQs in a manner that would not inhibit the filling of each TRQ. In our view, this
requires the United States to demonstrate not only that the usage requirement for rice is confusing
or lacks clarity, but also that it has a restraining effect on the filling of China's rice TRQ. In this
regard, we recall that "[a] complaining party may not simply submit evidence and expect the panel
to divine from it a claim of WTO-inconsistency".363 Therefore, we find that the United States has not
made a prima facie case that the usage requirement for rice violates China's obligation to administer
TRQs in a manner that would not inhibit the filling of each TRQ.
7.160. The United States also submits that the requirement for group enterprises applying for a rice
TRQ allocation would inhibit the filling of China's TRQs, arguing that "an enterprise with subsidiaries
must not apply in the same TRQ year as its subsidiar y" and that "[t]he requirement therefore has
the effect of inhibiting the filling of the TRQs ".364 Again, the United States fails to explain how the
requirement for group enterprises would inhibit the filling of China's rice TRQ . Therefore, this
argument by the United States also falls short of making a prima facie case that China violates the
obligation to administer TRQs in a manner that would not inhibit the filling of each TRQ.
7.1.4.6.5 Conclusion
7.161. For the reasons set out above, we find that the usage requirements for wheat and corn are
inconsistent with the obligations, set forth in Paragraph 116 of China's Working Party Report, to
administer TRQs on a predictable basis, to use clearly specified administrative procedures, and to
administer TRQs in a manner that would not inhibit the filling of each TRQ. We further find that the
United States has not made a prima facie case that the usage requirement for rice is inconsistent
with the obligation, set forth in Paragraph 116, to administer TRQs in a manner that would not inhibit
the filling of each TRQ.

356 United States' response to Panel question No. 32, para. 117.
357 United States' response to Panel question No. 32, para. 119.
358 See, e.g. United States' response to Panel question No. 72, para. 48.
359 United States' response to Panel question No. 18(b), para. 50.
360 China's response to Panel question No. 59(a), para. 37. See also China's response to Panel question
No. 59(b), para. 38.
361 United States' response to Panel question No. 72, para. 49.
362 United States' response to Panel question No. 72, para. 50.
363 Appellate Body Report, US – Gambling, para. 140.
364 United States' response to Panel question No. 32, para. 118.

7.1.5 Overall assessment of China's TRQ administration under Paragraph 116
7.162. The United States challenges China's administration of its wheat, rice, and corn TRQs under
six of the obligations set forth in Paragraph 116 of China's Working Party Report. Each of the alleged
violations of these six obligations challenges specific aspects of China's TRQ administration. In the
preceding sections, we have assessed the United States' claims against those specific aspects of
China's TRQ administration. In so doing, we have also highlighted, where relevant, the interlinkages
between some of the specific aspects. As indicated in paragraph 7.13 above, we will, in this section,
provide a holistic assessment of the compatibility of China's TRQ administration with the obligations
set forth in Paragraph 116, by synthesizing our analyses regarding the individual aspects of China's
TRQ administration.
7.163. The measure at issue, namely, China's administration of its wheat, rice , and corn TRQs,
consists of relevant legal instruments adopted by China, such as the 2003 Provisional Measures and
the annual allocation and reallocation notices, as well as the practice of the relevant government
agencies, in this case the NDRC. Essentially, China's TRQ administration comprises rules and
practices that regulate the TRQ application process; the NDRC's eval uation of the applications to
determine whether applicants are eligible to receive TRQs and what TRQ amounts to allocate,
including through seeking comments from the public; the granting of TRQ certificates; the process
for importation under allocated TRQ amounts; the use of wheat, rice, and corn imported under TRQs;
the return of unused TRQ amounts; and the reallocation of returned TRQ amounts. The United States
has brought claims with respect to all of these aspects, arguing violations of various obligations set
forth in Paragraph 116.
7.164. The first stage in China's TRQ administration is the initial allocation proces s. This process
starts with applicants submitting their applications and related materials to the NDRC's local
agencies. At this stage, applicants must show their compliance with the basic eligibility criteria, set
out in the annual allocation notices . Above, we have found the four basic eligibility criteria the
United States challenges to be vague, and therefore inconsistent with the obligations to administer
TRQs on a transparent and predictable basis, and to use clearly specified requirements. We have
also found the NDRC's stated practice of assessing eligibility on the basis of whether an applicant
appears on Credit China's blacklist, and disregarding the remaining basic eligibility criteria set out in
the annual allocation notices, to be inconsistent with the obligations to administer TRQs on a
transparent, predictable, and fair basis, and to use clearly specified requirements. Given that the
basic eligibility criteria determine which applicants will receive TRQs, our findings about these criteria
indicate that the very foundation of China's TRQ administration is flawed. Indeed, China also
acknowledges this flaw in stating that its legal instrumen ts should be updated to better reflect the
NDRC's practice.
7.165. Once the NDRC has decided which applicants are eligible to receive TRQ allocations, it
determines the TRQ amounts that will be allocated to the eligible applicants. The interlinkage
between the basic eligibility criteria and allocation principles is obvious: the NDRC o nly considers
eligible applicants in the allocation of TRQ amounts. Allocation decisions are made by applying the
allocation principles, set out in the annual allocation notices. Above, we have found elements of the
allocation principles to be vague, and therefore inconsistent with the obligations to administer TRQs
on a transparent and predictabl e basis, and to use clearly specified administrative procedures. We
have also found the NDRC's stated practice of giving the most weight to actual import performance,
rather than taking into account all allocation principles set out in the annual allocation notices, to be
inconsistent with the obligations to administer TRQs on a transparent, predictable , and fair basis.
Our findings about the allocation principles show that, like the NDRC's determination of applicants'
eligibility to receive TRQs, the NDRC's determination of what TRQ amounts to allocate is also based
on unclear rules and principles.
7.166. Before allocating TRQs to eligible applicants, the NDRC conducts a public comment process.
While the evidence on the record shows that the NDRC seeks the public's comments on the enterprise
data contained in the received TRQ application forms , China's legal instruments do not explain the
details of this process, including, importantly, whether applicants are informed of comments about
their applications and have an opportunity to rebut any such comments. We have found this to be
inconsistent with the obligations to administer TRQs on a transparent, predictable , and fair basis,
and to use clearly specified administrative procedures. The public's comments are relevant to the
NDRC's assessment of applicants' eligibility and the allocation of TRQ amounts to eligible applicants.
The ambiguity in the public comment process therefore carries over, and adds to, the vagueness in

the basic eligibility criteria and the allocat ion principles. Just as applicants are not aware, at the
outset, of the criteria and principles for assessing their applications, they are also not aware, at the
public comment stage, whether the public has commented on their applications, and if so, whether
they would have a chance to rebut any such comments. Taken together, our findings on the basic
eligibility criteria, the allocation principles, and the public comment process show that the actors in
the market are not able to know on what basis the ND RC decides who will receive TRQ allocations
and in what amounts.
7.167. One important aspect of China's TRQ administration is the distinction between the STE and
non-STE portions of TRQs. This distinction is important because, as we observed above, the
procedure for the importation of wheat, rice , and corn under an STE portion involves additional
requirements compared to the procedure for importation under a non-STE portion. Above, we made
findings of violation about the administration of STE and non-STE portions of TRQs in three regards.
7.168. First, we have found that whereas China's legal instruments suggest that non-STE applicants
can receive STE as well as non-STE portions of TRQs, those instruments do not explain the basis on
which the NDRC allocates these two different portions, and whether applicants can apply for one or
the other of these portions. We have found this to be inconsistent with the obligations to administer
TRQs on a transparent and predictable basis, and to use clearly specified administrative procedures.
7.169. Second, we have found the NDRC's stated practice of allocating the entire STE portions of
TRQs to China's designated STE COFCO and not requiring COF CO to return unused TRQ amounts,
without regard for the rules and principles set out in its legal instruments, to be inconsistent with
the obligations to administer TRQs on a transparent, predictable , and fair basis, and to use clearly
specified administrative procedures. This stated practice, we have found, also inhibits the filling of
China's TRQs by precluding non -STE applicants from applying for reallocation of COFCO's unused
TRQ amounts.
7.170. Third, we have found that the additional requirements in the procedure for importation under
STE portions of TRQs, as well as the lack of clarity as to how it operates, is inconsistent with the
obligations to administer TRQs on a predictable basis and to use clearly specified administrative
procedures. We have also found that this could prevent non -STE recipients from being able to use
allocated STE portions of TRQs prior to the 15 September deadline for returning unused TRQ
amounts. This would not only preclude TRQ recipients from importing grains under their allocated
STE portions of TRQs but would also prevent them from applying for reallocation of returned TRQ
amounts and prejudice their chances of receiving TRQ allocation s in the future, in a manner that
would inhibit the filling of each TRQ. We recall that China's TRQ administration comprises two types
of penalties for non-use of TRQ allocations. First, recipients that are unable to fully use their allocated
TRQ amounts and fail to return unused amounts to the NDRC by 15 September will see their future
TRQ allocation s deducted proportionate to the amount that they have failed to return. Second,
recipients that fail to fully use their allocated TRQ amounts during two consecutive years are subject
to the same deductions to their TRQ allocations in the following year, ev en if they return unused
amounts by 15 September.
7.171. After importing grains under their TRQ allocations, recipients are subject to the usage
requirements set out in the annual allocation notices. As noted above, a recipient of a wheat or corn
TRQ allocation must process the wheat or corn imported under its TRQ allocation in its own plant.
Above, we have found that the usage requirements for wheat and corn inhibit the filling of China's
TRQs because they restrict recipients' ability to process and sell wheat a nd corn imported under
their TRQ allocations in the most efficient or commercially preferable manner. Since non-use of TRQ
allocations results in penalties in the form of deductions in TRQ allocations in the following year,
applicants may tend to apply for smaller TRQ amounts than they would have in the absence of the
usage requirements. We have also found the NDRC's stated practice of not imposing penalties on
recipients that are unable to process their imported wheat and corn for unexpected reasons to be
inconsistent with the obligations to adminis ter TRQs on a predictable basis and to use clearly
specified administrative procedures. The usage requirements are an important component of China's
TRQ administration because they prescribe how TRQ recipients should dispose of the wheat and corn
that they import under their TRQ allocations. The inconsistencies we have found in these
requirements indicate that China's TRQ administration contains flaws on how TRQ recipie nts are
required to use the grains imported under their TRQ allocations.

7.172. The final stage of China's TRQ administration , which we have discussed above , is the
reallocation stage. Unused TRQ amounts must be returned, by 15 September, to the NDRC for
reallocation. Above, we have found that China's legal instruments contain diverging provisions with
respect to the basis on which the NDRC reallocates returned TRQ amounts, and concluded that this
is inconsistent with the obligation to administer TRQs using clearly specified administrative
procedures. This finding shows that there continues to be ambiguity in China's TRQ administration
throughout the process.
7.173. These findings demonstrate that China's TRQ administration contains legal flaws from the
beginning through to the completion of the process. On this basis, we conclude that China's TRQ
administration, as a whole , is inconsistent wi th the obligations, set forth in Paragraph 116, to
administer TRQs on a transparent, predictable, and fair basis, using clearly specified administrative
procedures and requirements that would not inhibit the filling of each TRQ.
7.2 Claim under Article XIII:3(b) of the GATT 1994
7.2.1 Introduction
7.174. The United States claims that China violates Article XIII:3(b) of the GATT 1994 by not
providing public notice of the total TRQ amounts that are actually allocated at the initial allocation
stage, and the changes to that am ount, which occur at the time unused TRQ s are returned and
reallocated.365 China rejects the entirety of the United States' claim.
7.2.2 Legal provision
7.175. Article XIII of the GATT 1994 is entitled "Non-discriminatory Administration of Quantitative
Restrictions". Its paragraph 3(b) states as follows:
In the case of import restrictions involving the fixing of quotas, the contracting party
applying the restrictions shall give public notice of the total quantity or value of the
product or products which will be permitted to be imported during a specified future
period and of any change in such quantity or value. Any supplies of the product in
question which were en route at the time at which public notice was given shall not be
excluded from entry; Provided that they may be counted so far as practicable, against
the quantity permitted to be imported in the period in question, and also, where
necessary, against the quantities permitted to be imported in the next following period
or periods; and Provided further that if any contracting party customarily exempts from
such restrictions products entered for consumption or withdrawn from warehouse for
consumption during a period of thirty days after the day of such public notice, such
practice shall be considered full compliance with this subparagraph. (Emphasis original)
7.176. This provision has not yet been addressed in WTO dispute settlement.
7.177. Article XIII:5 clarifies that Article XIII applies to TRQs:
The provisions of this Article shall apply to any tariff quota instituted or maintained by
any contracting party, and, in so far as applicable, the principles of this Article shall also
extend to export restrictions.
7.2.3 Main arguments of the parties
7.178. The United States argues that China violates the obligation set forth in Article XIII:3(b) of
the GATT 1994 to "give public notice of the total quantity or value of the product or products which
will be permitted to be imported during a specified future pe riod" by not providing public notice of
the TRQ amounts that are actually allocated at the initial allocation stage. In the United States' view,
public notice of the total TRQ amounts that are available for allocation does not suffice to meet this
obligation.366 The United States further argues that China violates the obligation in Article XIII:3(b)
to "give public notice of … any change" in the total quantity or value of the product or products which

365 United States' first written submission, para. 272.
366 United States' first written submission, paras. 276-277.

will be permitted to be imported by not providing public n otice of changes to the total amounts of
TRQs actually allocated. In the United States' view, this part of the provision requires public notice
of the total amount of returned TRQs and the total amount of reallocated TRQs.367
7.179. China submits that Article XIII:3(b) requires public notice of the total quantity or value of
the products that are "initially" fixed, that is the total amounts of TRQs that are initially made
available, and not the amounts of TRQs actually allocated, as the United States argues. 368 In other
words, this provision requires "only the publication of the total TRQ quantities for wheat, rice, and
corn, as provided in China's Schedule CLII". 369 China also submits that the changes i n the total
quantity or value for which public notice should be given, are the changes to the total TRQ amounts
that are initially fixed or made available for allocation.370
7.2.4 Analysis by the Panel
7.180. Factually, it is undisputed that China gives public notice of the total TRQ amounts available
for allocation each year. Thus far, these amounts have always corresponded to the total TRQ
amounts fixed in China's Schedule CLII.371 It is also undisputed that China does not give public notice
of the TRQ amounts that are actually allocated, returned and reallocated.
7.181. Thus, the only issues for us to consider are ones of legal interpretation. Initially, we have to
examine whether the obligation under Article XIII:3(b) of the GATT 1994 to "give public notice o f
the total quantity or value of the product or products which will be permitted to be imported during
a specified future period" refers to the total TRQ amounts available for the initial allocation or to the
total TRQ amounts that are actually allocated at the initial stage. We must also consider the meaning
of the obligation to " give public notice of … any change in such quantity or value". As both parties
acknowledge, the second part of Article XIII:3(b) requires public notice of any changes to what i s
considered to be the object of the initial public notice obligation. Hence, the critical question for us
is what is the object of the initial public notice obligation under Article XIII:3(b).
7.182. We find it useful to start our interpretation of paragraph 3(b) o f Article XIII by examining
the structure of Article XIII, and clarifying the place of paragraph 3(b) in that structure. Article XIII
contains five paragraphs. The first paragraph sets out the basic principle of non -discrimination in
the administration of import restrictions.372 The second paragraph sets forth rules concerning the
methods for applying import restrictions and the distribution of trade whereas the third paragraph
requires different types of public notice, depending on the kind of method used. F inally, the fourth
paragraph explains the details of the process in situations where a quota is allocated among
supplying countries.
7.183. In our view, the most relevant parts of Article XIII for the interpretative issues before us are
paragraph 2 and the other subparagraphs of paragraph 3.
7.184. Paragraph 2 of Article XIII explains how trade should be distributed by Members applying
import restrictions. The chapeau of this paragraph sets out the main principle that import restrictions
should be administered in such a way that the distribution of trade approaches "as closely as possible
the shares that various Members may be expected to obtain" in the absence of the restrictions. 373
This paragraph then goes on to list, in its subparagraphs (a) throu gh (d), "specific instances of
authorized forms of allocation".374 Subparagraph (a) stipulates that, "wherever practicable, quotas
representing the total amount of permitted imports (whether allocated among supplying countries
or not) shall be fixed, and not ice given of their amount in accordance with paragraph 3( b) of this
Article". Subparagraph (b) states that "in cases in which quotas are not practicable, the restrictions
may be applied by means of import licences or permits without a quota". Hence, these two

367 United States' first written submission, paras. 278-281.
368 China's first written submission, para. 85.
369 China's first written submission, para. 83. See also ibid. paras. 84-86.
370 China's first written submission, para. 87.
371 For instance, the Allocation Notices for 2016 and 2017 refer to such total amounts. See 2016
Allocation Notice, (Exhibit USA-16), Article I and the 2017 Allocation Notice, (Exhibit USA-15), Article I.
372 Panel Reports, EC – Bananas III, para. 7.69.
373 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338.
374 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338.

subparagraphs express a preference for the use of quotas over the use of import licences or permits.
Subparagraph (c) states that, except where quotas are allocated among supplying countries as
provided for in subparagraph (d), Members shall not requir e that import licences or permits be
utilized for importation from a particular country or source. Subparagraph (d) explains how
allocations will be calculated in cases where the importing country allocates a quota among different
supplying countries.
7.185. Hence, paragraph 2 identifies two ways of "applying import restrictions", namely (i) by fixing
the total amount of a quota and (ii) by using import licences or permits. It also sets forth obligations
to be observed in cases where a quota is allocated among different supplying countries.
7.186. Paragraph 3 of Article XIII lays down two sets of rules concerning publication or notification
in the administration of TRQs, each corresponding to one of the two ways of applying TRQs described
in its paragraph 2. Thus, subpar agraph (a) of paragraph 3 explains the notification requirements
"[i]n cases in which import licences are issued in connection with imp ort restrictions".
Subparagraph (b) addresses the notification requirements "[i]n the case of import restrictions
involving the fixing of quotas". Subpara graph (c) sets out the notification requirements "[i]n the
case of quotas allocated among supplying countries".
7.187. We find it important to note that each of the subparagraphs of paragraph 3 requires notice
of different types o f information, under different circumstances. For example, subparagraph (a)
requires the importing Member to provide "upon request of any contracting party having an interest
in the trade in the product concerned, all relevant information concerning the ad ministration of the
restrictions, the import licences granted over a recent period and the distribution of such licences
among supplying countries". Subparagraph (b), the provision at issue in this dispute, requires the
importing Member to "give public not ice of the total quantity or value of the product or products
which will be permitted to be imported during a specified future period and of any change in such
quantity or value". Subparagraph (c) requires the importing Member to "promptly inform all other
contracting parties having an interest in supplying the product concerned of the shares in the quota
currently allocated, by quantity or value, to the various supplying countries and shall give public
notice thereof".
7.188. This overview of the obligations in Article XIII shows that the drafters designed this provision
in such a way that an importing Member is subject to a particular publication or notification obligation
depending on how it administers quantitative restrictions and TRQs. In this case, China's T RQs are
administered by fixing their total amounts. The United States has brought a claim under
paragraph 3(b), which is the provision that describes the public notice obligations in cases involving
the fixing of quotas or TRQs. As noted above, the issue before us is what is the object of the initial
public notice obligation to "give public notice of the total quantity or value of the product or products
which will be permitted to be imported during a specified future period" under Article XIII:3(b). Is it
the total TRQ amounts that are available for allocation or the total amounts of TRQs that are actually
allocated?
7.189. The United States notes that the dictionary meaning of "permit", which appears in the text
of Article XIII:3(b), is to "[a]llow the doing or occurrence of; give permission or opportunity for", or
"[a]llow or give consent to (a person or a thing) to do or experience something", and argues that,
therefore, the obligation under Article XIII:3(b) "refers to those amounts for which consent is given
for actual importation during a specified period".375 Therefore, the United States argues that, at the
initial stage of TRQ distribution, Article XIII:3(b) requires China to give public notice of "the total
amounts authorized on the TRQ Certificates issued to selected applicants".376
7.190. As argued by the United St ates, the dictionary meaning of "permit" refers, among other
things, to "[a]llow the doing or occurrence of; give permission or opportunity for", or "[a]llow or
give consent to (a person or a thing) to do or experience something". However, it is not clear to us
how the United States infers from this dictionary definition that, at the in itial allocation stage,
Article XIII:3(b) requires public notice of the total TRQ amounts actually allocated to TRQ applicants,
as opposed to the total TRQ amounts available for allocation. In our view, given the nature of a TRQ,
which fixes the total amount of products that may be imported at a reduced in -quota rate, "give
permission or opportunity for" would be better interpreted as referring to the total quantity or value

375 United States' first written submission, para. 270.
376 United States' first written submission, para. 276.

of the TRQ, and not to the amount of actual allocations made by the NDRC. By definition, a TRQ is
available for allocation among applicants provided they meet certain conditions laid down in the
importing Member's laws and regulations. In other words, appli cants are given permission or
opportunity to import goods at the in-quota rate, up to the total TRQ amounts available for allocation.
This suggests that the obligation in Article XIII:3(b) to "give public notice of the total quantity or
value of the produc t or products which will be permitted to be imported during a specified future
period" should be interpreted as requiring public notice of the total TRQ amounts available for
allocation to all applicants.
7.191. In our view, our interpretation accords with the ov erall structure of Article XIII, outlined
above, and the forward-looking nature of the public notice obligation set forth in paragraph 3(b).
7.192. We recall that "[i]n cases in which import licences are issued in connection with import
restrictions", paragraph 3(a) of Article XIII requires the importing Member to provide "all relevant
information concerning the administration of the restrictions, the import licences granted over a
recent period and the distribution of such licences amount supplying countries". This obligation thus
requires the provision o f information regarding the administration of restrictions and the licences
granted over a past period. In contrast, paragraph 3(b) sets out a forward -looking public notice
obligation "[i]n the case of import restrictions involving the fixing of quotas", requiring public notice
of "the total quantity or value of the product or products which will be permitted to be imported
during a specified future period and of any change in such quantity or value". In our view, whereas
the obligation in paragraph 3(a) re quires the importing Member to provide information concerning
its administration and the import licences actually granted by it over a recent period, the forward -
looking obligation in paragraph 3(b) requires public notice of the total TRQ amounts that are
available for allocation during a specified future period.
7.193. This view also finds support in the negotiating history of the GATT.
The Report of the Sub-Committee on Quantitative Restrictions and Exchange Control, dated
21 November 1946, states in relevant part:
It was generally agreed that Members should undertake to supply adequate information
about the administration of their import restrictions. In cases in which import licences
were used, information should be supplied at the request of any Member having a
substantial interest in the trade about the administration of the licenses and about the
licenses granted, but there should be no obligation to reveal the names of importing or
supplying firms. Where quotas were fixed, public notice should be given in advance of
the size of the quota; and where the quota is allocated among supplying countries all
Members having an interest in supplying the product should be given prompt notice of
the shares of the various countries in the quotas.377
7.194. This document demonstrates that the drafters' intended, in cases where import restrictions
are administered through the fixing of a quota, that public notice should be given "in advance of the
size of the quota".378 In our view, the use of the term "in advance" reinforces the view that, where
a quota or a TRQ is fixed, public notice of the total amount of the quota or the TRQ should be
provided before traders decide to engage in the importation of the relevant product . To us, prior
public notice means public notice of the total amount of fixed quotas or TRQs available for allocation.
Public notice of the total amounts of quotas or TRQs actually allocated would, in our view, be ex post.
7.195. We note the United States' argument that "China's pro forma announcement each year of
the total TRQ quantities that it has committed to provide in its Schedule is not sufficient". 379 In the
same vein, the European Union , a third party, argues that China's int erpretation would render
paragraph 3(b) inutile because the total amount of initially -fixed TRQs is already indicated in
China's Schedule CLII.380 We disagree with this argument, for two reasons. First, not all TRQs are

377 United Nations - Economic and Social Council - Preparatory Committee of the International
Conference on Trade and Employment - Committee II - Report of the Sub-Committee on Quantitative
Restrictions and Exchange Control, p. 17. (emphasis added)
378 United Nations - Economic and Social Council - Preparatory Committee of the International
Conference on Trade and Employment - Committee II - Report of the Sub-Committee on Quantitative
Restrictions and Exchange Control, p. 17.
379 United States' first written submission, para. 277.
380 European Union's response to Panel question No. 3, para. 57.

found in the Schedules of Members main taining such TRQs. There are autonomous TRQs that
Members adopt without an international obligation to do so. Article XIII:3(b) applies to such TRQs,
and allows WTO Members and their exporters to know the total quantity or value of imports that will
be permitted under such TRQs during a specified future period. Second, Article XIII:3(b) would also
require public notice in cases where a Member decides to increase the quantity or value of its TRQ
beyond the quantity or value set forth in its Schedule.
7.196. These c onsiderations all suggest that the object of the initial notice requirement under
Article XIII:3(b) is the total TRQ amounts that are available for allocation. It follows from this that
the obligation under Article XIII:3(b) to provide public notice of "any change in such quantity or
value" refers to changes in the total amounts of TRQs available for allocation.
7.2.5 Conclusion
7.197. For the reasons set out above, we conclude that Article XIII:3(b) of the GATT 1994 requires
public notice of the total TRQ amounts that are available for allocation , and any changes thereto,
and not the total TRQ amounts that are actually allocated, and changes hereto. We therefore reject
the United States' claim that China violates Article XIII:3(b) by publishing only the TRQ amounts
available for allocation, and any changes thereto.
7.3 Claim under Article X:3(a) of the GATT 1994
7.3.1 Introduction
7.198. The United States claims that China fails to administer its TRQs in a reasonable manner, in
violation of Article X:3(a) of the GATT 1994. Under thi s claim, the United States takes issue with
several specific aspects of China's TRQ administration, namely (a) the basic eligibility criteria,
(b) the allocation principles, (c) the use of numerous local agencies, (d) the use of a public comment
process, (e) the administration of STE and non-STE portions of TRQs, and (f) the extent of the public
notice provided in connection with allocation, return and reallocation of TRQs. China rejects the
entirety of the United States' claim.
7.3.2 Legal provision
7.199. Article X:3(a) of the GATT 1994 reads as follows:
Each contracting party shall administer in a uniform, impartial and reasonable manner
all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of
this Article.
7.200. Article X:1 of the GATT 1994 reads as follows:
Laws, regulations, judicial decisions and administrative rulings of general application,
made effective by any contracting party, pertaining to the classification or the valuation
of products for customs purposes, or to rates of duty, tax es or other charges, or to
requirements, restrictions or prohibitions on imports or exports or on the transfer of
payments therefor, or affecting their sale, distribution, transportation, insurance,
warehousing inspection, exhibition, processing, mixing or other use, shall be published
promptly in such a manner as to enable governments and traders to become acquainted
with them. Agreements affecting international trade policy which are in force between
the government or a governmental agency of any contracting party and the government
or governmental agency of any other contracting party shall also be published. The
provisions of this paragraph shall not require any contracting party to disclose
confidential information which would impede law enforcement or otherwise be contrary
to the public interest or would prejudice the legitimate commercial interests of particular
enterprises, public or private.
7.201. Paragraph 3(a) of Article X stipulates that laws, regulations, decisions and rulings of the kind
described in paragraph 1 have to be administered in a uniform, impartial and reasonable manner.
Paragraph 1, in turn, provides a comprehensive list encompassing laws, regulations, judicial

decisions and administrative rulings of general application, concerning, among other things, rates of
duty, taxes or other charges, on imports.
7.202. There have been a number of disputes involving the interpretation of Article X:3(a).
Generally speaking, Article X:3 is considered to establish minimum standards for transparency and
procedural fairness in the administration of trade regulations. 381 A threshold issue is to distinguish
the substance of the challenged measure from its administration since it is only the administration
that can be challenged under Article X:3(a).382 Article X:3(a) applies not only to the administration
of the relevant laws or regulations in particular cases, but also to legal instruments that govern such
administration.383 Uniformity, impartiality and reasonableness, within the meaning of Article X:3(a),
are legally independent obligations, thus an inconsistency with any of these three obligations will
lead to a violation of this provision.384
7.3.3 Main arguments of the parties
7.203. The United States argues that China fails to administer its wheat, rice, and corn TRQs in a
reasonable manner in respect of several specific aspects of its administration. First, the United States
argues that the basic eligibility criteria and the allocation principles are vague and undefined, which
"undermines the ability of applicants to reasonably comply" with them 385 and "hamper[s] TRQ
applicants who are rejected from understanding the reasons for their denial" and from "correcting
or improving applications in the future".386 Second, the United States contends that numerous local
agencies are authorized to interpret the basic eligibility criteria, which may lead to inequitable
application of such. 387 Third, the United States argues that the use of a public comment process
without guidance on how such comments are "vetted or considered", "exa cerbates" the
unreasonable nature of China's TRQ administration as it could "introduce bias or inequity due to the
potential motivations of a submitter".388 Fourth, the United States argues that the allocation of STE
and non-STE portions of TRQs through a si ngle application process prevents applicants from being
able to choose or anticipate which type of TRQ they may receive and therefore limits applicants'
ability to "anticipate and commercially plan" for the type of TRQ allocation they receive. 389 Fifth,
the United States argues that the Chinese authorities do not publish information regarding the
allocation, return and reallocation of TRQs, which deprives applicants and other market participants
of information necessary to understand the allocation process an d to connect buyers and sellers in
the grains market.390
7.204. China rejects the United States' assertion that China's administration of its TRQs is not
reasonable within the meaning of Article X:3(a), generally arguing that the United States has to
show that the challenged legal instruments "necessarily lead[]" to a lack of reasonable
administration.391
7.205. With respect to the basic eligibility criteria and the allocation principles, China reiterates its
view of how the NDRC, in practice, determines applicants' eligibility and the amounts of TRQs to be
allocated.392 While China acknowledges that the basic eligibility criteria should be updated to better
reflect the NDRC's practice, it does not consider that the United States has demonstrated that these
criteria necessarily lead to unreasonable administration or cause any negative impact on
applicants.393 China similarly argues that the United States has failed to show that the allocation

381 Panel Reports, China – Raw Materials, para. 7.685.
382 Appellate Body Report, EC – Bananas III, para. 200.
383 Panel Report, Thailand – Cigarettes (Philippines), para. 7.873.
384 Panel Reports, Argentina – Hides and Leather, para. 11.86; China – Raw Materials, para. 7.685;
Thailand – Cigarettes (Philippines), para. 7.867; and Dominican Republic – Import and Sale of Cigarettes,
para. 7.383.
385 United States' first written submission, para. 232.
386 United States' first written submission, para. 238. See also United States' first written submission,
para. 244.
387 United States' first written submission, paras. 230 and 249.
388 United States' first written submission, paras. 230 and 253.
389 United States' first written submission, paras. 230 and 257-260.
390 United States' first written submission, paras. 230 and 262-266; and response to Panel question
No. 20, para. 60.
391 China's first written submission, paras. 30-31.
392 China's first written submission, paras. 35-38 and 49-50.
393 China's opening statement at the first meeting of the Panel, para. 14 and response to Panel question
No. 8(f), para. 27.

principles necessarily lead to unreasonable administration. 394 As for the use of numerous l ocal
agencies, China contends that the United States' argument is without merit since the local agencies
are not authorized to conduct a substantive review of applications, and that their role is limited to
receiving the applications, making sure they are complete, and then forwarding them to the NDRC
for the substantive assessment.395 Concerning the public comment process, China submits that the
United States' concerns are unfounded since the NDRC , in practice, verifies information received
from the public, provides applicants an opportunity to rebut any such comments, and only takes into
account comments that have been verified. 396 With respect to the STE and non -STE portions of
TRQs, China maintains that, in practice, non -STE applicants do not receive STE por tions of TRQs,
which are allocated entirely to COFCO, and that therefore this argument has no basis.397 As regards
public notice, China contends that the United States does not present sufficient evidence to support
its allegation that the lack of public not ice of the TRQ amounts that have been allocated, returned
and reallocated prevents traders from entering into arrangements to utilize TRQs.398 In China's view,
the information that China publishes does allow participants to enter into commercial
arrangements.399
7.206. In response to China's assertions regarding the NDRC's practice concerning the basic
eligibility criteria as well as the STE and non -STE portions of TRQs, the United States submits that
China has not substantiated i ts assertions and that the stat ed prac tice, in any event, further
demonstrates China's violation of Article X:3(a).400
7.3.4 Analysis by the Panel
7.207. In examining the United States' claim under Article X:3(a) of the GATT 1994, we make the
following observations.
7.208. The United States has also challenged Chin a's administration of its wheat, rice, and corn
TRQs under Paragraph 116 of China's Working Party Report, including under China's obligations to
administer its TRQs on a transparent, predictable, and fair basis. In paragraphs 7.47, 7.74, 7.85,
7.116, and 7.161 above, we have found a violation of these specific obligations under Paragraphs
116 in respect of China's TRQ administration.
7.209. We also note that the obligations laid down in Paragraph 116 of China's Working Party Report
are more specific to the measure at issue in these proceedings for two reasons. First, the obligations
in Paragraph 116 are specific to China's adm inistration of its TRQs, compared to the obligation set
forth in Article X:3(a) requiring reasonable administration of all trade laws, regulations, judicial
decisions and administrative rulings of general application. Second, the obligations in Paragraph 116
are part of China's Working Party Report and apply exclusively to China. The obligation in
Article X:3(a) is of a more general nature that covers administration of a much broader range of
measures, and applies to all WTO Members.
7.210. While Paragraph 116, u nlike Article X:3(a), does not directly refer to "reasonable"
administration, we recall that "the fact that two provisions have a different 'scope and content' does
not, in and of itself, imply that a panel must address each and every claim under those provisions".401
We also recall that, in support of its claim under Article X:3(a), the United States largely repeats the
arguments presented in connection with the relevant parts of its claims under Paragraph 116. As
already mentioned, we have addressed these arguments in the context of the United States' claims
under Paragraph 116 and have found violations of China's obligations to administer its TRQs on a
transparent, predictable, and fair basis. More particularly, we have found that China does not
administer its wheat, rice, and corn TRQs on a transparent, predictable, and fair basis , nor use

394 China's first written submission, paras. 57-59.
395 China's first written submission, paras. 39-40.
396 China's first written submission, paras. 113-114 and 117.
397 China's first written submission, paras. 94 and 101-102.
398 China's first written submission, paras. 80-82.
399 China's first written submission, para. 79.
400 United States' second written submission, paras. 138-141.
401 Appellate Body Reports, Argentina – Import Measures, para. 5.194.

clearly specified requirements, in respect of the basic eligibility criteria, the allocation principles, the
use of a public comment process, and the administration of STE and non-STE portions of TRQs.402
7.211. The United States formulates an additional argument in support of its claim under
Article X:3(a), namely that the alleged interpretation and application of the "vague and undefined"
eligibility criteria by 37 local agencies renders the manner in which China administers its TRQs
unreasonable.403 Given that we have already found that the basic eligibility criteria used in China's
TRQ administration violate its obligations to administer TRQs on a transparent, predictable, and fair
basis and to use clearly specified requirements, we do not believe that it is necessary or useful for
us to also consider whether the alleged interpretation and application of these inconsistent basic
eligibility criteria by 37 local agencies is WTO-inconsistent.
7.212. Finally, we recall that panels are not required to examine all legal claims made by the
complaining party, and need only examine those claims that must be addressed to resolve the matter
at issue in the dispute.404
7.213. In light of the foregoing, we consider that it is not necessary for us to make a finding under
Article X:3(a) of the GATT 1994 to secure a positive solution to this dispute.
7.214. At the same time, we note that panels have discretion to make additional findings beyond
those strictly necessary to resolve a dispute.405 Such additional findings could include, for example,
alternative factual findings that could serve to assist the Appellate Body in completing the analysis,
should it disagree with the panel's findings. 406 In this regard, we are of the view that, should our
report b e appealed and the Appellate Body need to complete the analysis with regard to
the United States' claim under Article X:3(a), the factual findings that we have made under
Paragraph 116 in relation to four of the United States ' arguments presented under Art icle X:3(a)
would assist the Appellate Body. With regard to the United States' remaining argument concerning
the alleged involvement of the local agencies in the substantive assessment of TRQ applications, we
make the following factual findings that would assist the Appellate Body in completing the analysis.
7.215. The United States' argument is premised on the factual contention that the local agencies of
the NDRC participate in the substantive review of TRQ applications.407 China denies that the NDRC's
local agencies are involved in the substantive review of TRQ applications. According to China, these
agencies are simply in charge of receiving applications, making sure that the applicants submitted
all the required information, and sending the applications to the N DRC for a substantive review. It
follows that the local agencies do not independently interpret the basic eligibility criteria.408
7.216. The United States' view is based on its reading of certain provisions in China's legal
instruments on TRQ administration. Speci fically, the United States refers to Articles 8 and 12 of
the 2003 Provisional Measures, and contends that, together, these provisions indicate that the local
agencies are involved in the substantive review of applications.409
7.217. Article 8 of the 2003 Provisional Measures reads:

402 We note that, in addressing the claims under Paragraph 116 regarding the obligations to administer
TRQs on a transparent, predictable, and fair basis, we have rejected some of the United States' arguments, for
instance those pertaining to China's lack of public notice. See paras. 7.125-7.134 above. We do not consider
that addressing these arguments again under Article X:3(a) would have led to a different outcome and
contributed to the resolution of this dispute.
403 United States' first written submission, para. 249.
404 Appellate Body Report, US – Wool Shirts and Blouses, pp. 18-20, DSR 1997:I, p. 323, at pp. 339-
341 (referring to Articles 3.2, 3.4, 3.7, 3.9, and 11 of the DSU).
405 Appellate Body Reports, US – Softwood Lumber IV, para. 118; US – Gambling, para. 344; US –
406 See, e.g. Appellate Body Reports, US – Softwood Lumber IV, para. 118; Canada – Wheat Exports
Carbon Steel (India), para. 4.274. See also Panel Reports, US – COOL (Article 21.5 – Canada and Mexico),
407 United States' first written submission, para. 247.
408 China's first written submission, para. 40.
409 United States' response to Panel question No.3(a), para. 19.

Article 8. The Ministry of Commerce and NDRC separately entrust their respective
authorized agencies to be responsible for the items listed below:
(1) To accept applicants' applications and forward them to the Ministry of Commerce or
NDRC;
(2) To accept inquiries and convey them to the Ministry of Commerce or NDRC;
(3) To inform applicants of any part of their applications that do not meet the
requirements, and remind them of their revisions;
(4) To issue an Agricultural Product Import Tariff -Rate Quota Certificate to approved
Applicants.410
The tasks described in paragraphs (1), (2) and (4) are of a logistical nature and thus support China's
argument that the local agencies are not involved in the substantive r eview of applications.
Regarding the nature of the requirement laid down in paragraph (3), China states, in response to a
question, that the word "requirements" refers to two formal requirements, namely, to submit a
complete application form containing all the necessary information requested by the NDRC and to
sign the application form. 411 Seen in light of the logistical tasks listed in the remaining three
paragraphs of Article 8, we find convincing China's explanation that paragraph (3) entrusts the local
agencies with checking the completeness of and signature o n application forms. Therefore, we
consider that the text of Article 8 does not support the view that the NDRC's local agencies are
involved in the substantive review of TRQ applications.
7.218. Paragraph 2 of Article 12 of the 2003 Provisional Measures reads:
Agencies authorized by NDRC, in accordance with the criteria announced, accept the
applications and related materials submitted by the applicants for wheat, corn, white
rice, and cotton, and transmit th e applications to NDRC for approval prior to
November 30, concurrently submitting a copy to the Ministry of Commerce.412
7.219. The United States maintains that the phrase "in accordance with the criteria announced"
supports the view that the agencies are involved in the substantive review of the applications. 413
However, this provision indicates that the main function of the agencies is to "accept" the
applications, and "transmit" them to the NDRC. We do not read the phrase "in accordance with the
criteria announced " as describing the kind of review, if any, that such agencies will conduct.
Therefore, we consider that this provision does not support the United States' assertion either.
7.220. In support of its view, the United States also refers to certain parts of the texts of allocation
and reallocation notices that read " deliver the enterprise application forms that meet the publicly
announced criteria" or "carry out reporting of the applications that meet the criteria ".414 However,
such textual elements, without more, fall short of proving that the local agencies are involved in the
substantive review of TRQ applications.
7.221. Finally, we note that the "Guideline of the Examination and Approval of Grain Import TRQs"
also seems to support China's position. The Guideline reads, in relevant part:
XIII. General Procedures
1. The applicant prepares all the application materials and submit [sic] them to the local
authorized agencies according to the requirements of this Guidance. The local
authorized agencies accept and collect the application materials, compile them into
forward documents and log into the online NDRC Service Hall to register.

410 2003 Provisional Measures, (Exhibit USA-11), Article 8.
411 China's response to Panel question No. 3(b), para. 8.
412 2003 Provisional Measures, (Exhibit USA-11), Article 12, paragraph 2.
413 United States' second written submission, para. 128.
414 United States' response to Panel question No. 3(a), para. 20.

2. After the online registration, the authorized agencies can choose to mail the
application materials to the NDRC Service Hall, or go to the Service Hall to submit the
materials.
3. Once received the application materials, officials in the Service Hall will examine the form
of the materials, and will accept those that meet the formal requirements.415
7.222. In our view, this pas sage from the Guideline supports China's position that the NDRC's
agencies are not involved in the substantive review of TRQ applications. For instance, the Guideline
clarifies that the agency will "accept and collect the application materials". The Guidel ine also
suggests that after the agency receives and compiles the application materials, it will forward them
to the NDRC and that the officials of the NDRC will examine the materials and accept those that
meet the relevant requirements.
7.223. Based on the foregoing, we conclude that the United States has not proven its assertion that
the NDRC's local agencies are involved in the substantive review of TRQ applications.
7.4 Claim under Article XI:1 of the GATT 1994
7.4.1 Introduction
7.224. The United States claims that China's administration of its wheat, rice, and corn TRQs is
inconsistent with Article XI:1 of the GATT 1994 because it imposes impermissible restrictions on the
importation of these goods. Specifically, the United States contends that two aspects of China's
administration of its TRQs violate Article XI:1, namely (a) the administration of STE and non -STE
portions of TRQs; and (b) the usage requirements for wheat, rice, and corn imported under TRQ
allocations.416 China rejects the entirety of the United States' claim.
7.4.2 Legal provision
7.225. Article XI:1 of the GATT 1994 reads as follows:
No prohibitions or restrictions other than duties, taxes or other charges, whether made
effective through quotas, import or export licences or other measures, shall be instituted
or maintained by any contracting party on the importation of any product of the territory
of any other contracting party or on the exportation or sale for export of any product
destined for the territory of any other contracting party.
7.226. Article XI:1 generally proscribes prohibitions or restrictions other than duties or other
charges on the importation or exportation of goods. The prohibition against quantitative restrictions
envisaged by Article XI:1 has been interpreted to reflect t hat "tariffs are GATT's border protection
'of choice'".417
7.227. In terms of its scope, Article XI:1 proscribes restrictions on importation "other than duties,
taxes and other charges". Thus, restrictions that take the form of duties, taxes or other charges fall
outside the scope of Article XI:1.418 Article XI:1 is comprehensive in terms of the form that measures
that are proscribed therein can take, as evidenced by the phrase "whether made effective through
quotas, import or export licences or other measures".419
7.4.3 Main arguments of the parties
7.228. With regard to the administration of STE and non -STE portions of TRQs, the United States
notes that different requirements and commercial considerations apply to these portions.420 China's

415 TRQ FAQs, (Exhibit CHN-15), section XIII. (emphasis added)
416 United States' first written submission, paras. 284 and 291.
418 Appellate Body Reports, Argentina – Import Measures, para. 5.219.
419 Panel Reports, India – Autos, paras. 7.246-7.247 (referring to GATT Panel Report, Japan - Semi-
420 United States' first written submission, para. 297.

use of a single application process, in the United States' view, increases uncertainty as applicants
cannot choose which type of TRQ to apply for or predict which type they may receive. 421 This
"discourage[s] applicants from applying for allocations of wheat, rice or corn TRQ at all, or may lead
them to apply for a smaller allocation", in violation of Article XI:1 of the GATT 1994. 422
The United States further points out that non-STE recipients of STE portions of TRQs must contract
with COFCO for importation and that COFCO is not obliged to enter into such contracts. Recipients
of STE portions of TRQs cannot seek approval from the NDRC to import themselves or through
another enterprise until 15 August, and approval is not automatic. Therefore, the United States
argues, recipients of STE portions may not be able, or have sufficient time, to import under some or
all of their TRQ allocations.423 This would prevent such recipients from applying for additional TRQ
amounts during the reallocation process and may lead to penalties for non-use of TRQ allocations in
the form of deductions to their TRQ allocations in the following year. In the United States' view, this
constitutes a "substantial limitation on [ a recipient's] ability to successfully import ed [sic] grains
according to their commercial interests".424
7.229. At th e outset, China refers to the Appellate Body's finding that a TRQ is a tariff -based
measure that falls outside the scope of Article XI:1, and argues that measures necessary for the
administration of TRQs similarly cannot be subject to a challenge under this provision.425 Assuming
for the sake of argument that Article XI:1 is applicable, China contends that no uncertainty is
introduced in its administration of STE and non-STE portions of TRQs because the NDRC, in practice,
allocates the entire STE por tions of TRQs to COFCO, which is not required to return any unused
portions thereof. Since non -STE applicants receive non -STE portions of TRQs only 426, there is, in
China's view, no limiting effect on imports of wheat, rice, and corn under the TRQs.
7.230. In response, the United States points out that it is not challenging China's use of TRQs but
rather its administration of these TRQs. In the United States' view, such administration falls within
the scope of Article XI:1 and its "association with, connection to, o r proximity to 'duties, taxes or
other charges'" does not "shield" it from scrutiny under this provision.427 With respect to the NDRC's
stated practice, the United States submits that China has not substantiated its assertions and that
this, in any event, further demonstrates China's violation of Article XI:1.428 More particularly, if the
entire STE portions of TRQs are allocated to COFCO and the latter is not required to return unused
amounts for reallocation, "this volume is unavailable to non -STE users, who would likely be willing
and able to import some or all of this amount", resulting in "a significant limitation on imports".429
7.231. With regard to the usage requirements , the United States notes that wheat and corn
imported under TRQ allocations have to be proce ssed and used in the recipient's own plant while
imported rice has to be organized for sale in the name of the recipient itself.430 According to the
United States, these requirements restrict TRQ recipients from selling or transferring imported
wheat, rice, and corn and thereby "creates waste and increase s unnecessarily the cost of using
imported products in their production process es".431 The United States further asserts that "failure
to utilize all imported grain covered by a TRQ Certificate may lead t o reduction in the next year's
allocation", referring to the penalties for non -use of TRQ allocations.432 In the United States' view,
the usage requirements and penalties for non-use therefore discourage importers from applying for
allocations or from requesting TRQ allocations in the amounts they would otherwise have requested,
in violation of Article XI:1.433
7.232. At the outset, China argues that the usage requirements constitute "substantive conditions"
for access to its wheat, rice, and corn TRQs and thus form part of these TRQs. In China's view, these

421 United States' first written submission, paras. 294-296.
422 United States' first written submission, para. 301.
423 United States' first written submission, paras. 297-299.
424 United States' first written submission, para. 301.
425 China's first written submission, paras. 106 and 135-136 (quoting Appellate Body Report, EC –
Bananas (Article 21.5 – Ecuador), para. 335).
426 China's first written submission, para. 107.
427 United States' second written submission, para. 150.
428 United States' second written submission, para. 158.
429 United States' second written submission, paras. 158 and 160.
430 United States' first written submission, para. 303.
431 United States' first written submission, para. 306.
432 United States' first written submission, para. 306.
433 United States' first written submission, para. 308.

usage requirements, like the TRQs themselves, fall outside the scope of Article XI:1. 434 Again,
assuming that Article XI:1 is applicable, China argues that there is no processing requirement for
rice435 and that the NDRC, in practice, does not monitor the processing requirements for wheat and
corn on a daily basis and does not impose penalties if a recipient is found to have been "unable to
process its full allocation for unexpected reasons".436 In China's view, there is thus no limiting effect
on imports of wheat, rice, and corn. 437 On the contrary, China argues that the imposition of usage
requirements and penalties for non-use of TRQ allocations is necessary to prevent TRQ licences from
being "misused" and to ensure efficient allocation and use of imported grains.438
7.233. In response, the United States argues that the usage requirements do not serve to define
the scope of the TRQs or the goods that may be imported under them, and thus do not form part of
the TRQs.439 Along with the other aspects the United States challenges in this dispute, they constitute
a "series of steps, or events, that are taken or occur in the carrying out of China's TRQ[s]"440 which,
according to the United States, fall within the scope of Article XI:1. With respect to the NDRC's
stated practice, the United States submits that China has not substantiated its assertio ns, nor
provided any evidence that WTO Members, applicants, or other interested entities are aware of this
alleged practice.441
7.4.4 Analysis by the Panel
7.234. In examining the United States' claim under Article XI:1 of the GATT 1994, we make the
following observations.
7.235. The same aspects of China's TRQ administration challenged under Article XI:1 are also
challenged under Paragraph 116 of China's Working Party Report, including under China's obligation
to administer TRQs in a manner that would not inhibit the filling of each TRQ. In sections 7.1.4.4
and 7.1.4.6 above, we have found a violation of this specific obligation under Paragraph 116 in
respect of the aspects of China's TRQ administration that are also challenged under Article XI:1.
7.236. While they are not identical, the legal obligations laid down in Article XI:1 and the relevant
part of Paragraph 116 both address situations where a measure has a limiting effect on imports.
However, we consid er that, compared to Article XI:1, the way Paragraph 116 addresses this
obligation is much more specific to the measure at issue in these proceedings, for two reasons. First,
the obligation in Paragraph 116 is specific to the administration of TRQs, as opposed to other
measures. It specifically addresses situations where the administration of TRQs has a limiting effect
on imports, such that it would inhibit the filling of those TRQs. Second, the obligation in
Paragraph 116 is part of China's Working Part y Report, and therefore applies exclusively to China,
as opposed to other WTO Members. The obligation in Article XI:1, on the other hand, is of a more
general nature, in that it covers a much broader range of measures and applies to all WTO Members.
7.237. We also note that, in support of its claim under Article XI:1, the United States essentially
repeats the arguments presented in support of its claim regarding the obligation to administer TRQs
in a manner that would not inhibit the filling of each TRQ, under Paragraph 116. Notably, under
Article XI:1, the United States argues that China's TRQ administration restricts imports of wheat,
rice, and corn solely at the in-quota rates under the TRQs.442 Thus, both claims take issue with the
alleged restricting or inhibiti ng effect China's TRQ administration has on the quantity of imports
made under the TRQs. The United States does not suggest that China's TRQ administration restricts
imports of wheat, rice, and corn outside the TRQs. 443 As already mentioned, we have found a
violation of the specific obligation under Paragraph 116, addressing the same concern as

434 China's first written submission, paras. 135-138; and response to Panel question No. 38(a), paras.
93 and 95.
435 China's first written submission, para. 148.
436 China's response to Panel question No. 57, para. 29.
437 China's first written submission, paras. 139 and 143.
438 China's first written submission, para. 154.
439 United States' second written submission, para. 153; and opening statement at the second meeting
of the Panel, para. 46.
440 United States' response to Panel question No. 38(a), para. 131; and second written submission,
para. 150.
441 United States' second written submission, para. 157.
442 United States' response to Panel question No. 38(c), para. 144.
443 United States' response to Panel question No. 38(c), paras. 142-144.

Article XI:1. More particularly, we have found that China's administration of its wheat, rice, and corn
TRQs inhibits the filling of these TRQs. 444 We have therefore resolved the issue of whether China's
TRQ administration restricts imports at the in-quota rates under the TRQs.445
7.238. Finally, we recall that panels are not required to examine all legal claims made by the
complaining party, and need only examine those claims that must be addressed to resolve the matter
at issue in the dispute.446
7.239. In the light of the foregoing, we consider that it is not necessary for us to make a finding
under Article XI:1 of the GATT 1994 to secure a positive solution to this dispute. We are also of the
view that, should our Report be appealed and the Appellate Body consider it necessary to complete
the analysis with regard to the United States' claim under Article XI:1, the factual findings we made
in sections 7.1.4.4 and 7.1.4.6 above, would assist the Appellate Body.
7.240. We therefore do not make a finding on the United States' claim under Article XI:1 of the
GATT 1994.
8 CONCLUSIONS AND RECOMMENDATIONS
8.1. For the reasons set forth in this Report, we conclude as follows:
a. With respect to the United States' claims under Paragraph 116 of China's Working Party
Report, as incorporated into the WTO Agreement pursuant to Paragraph 1.2 of China's
Accession Protocol:
i. The basic eligibility criteria used in China's administration of its TRQs for wheat, rice,
and corn are inconsistent with the obligation s to administer TRQs on a transparent ,
predictable, and fair basis, and to administer TRQs using clearly specified
requirements;
ii. The allocation principles used in China's administration of its wheat, rice, and corn
TRQs are inconsistent with the obligation s to administer TRQs on a transparent ,
predictable, and fair basis, and to administer TRQs using clearly specified
administrative procedures;
iii. The reallocation procedures used in China's administration of its wheat, rice, and corn
TRQs are inconsistent with the obligation to administer TRQs using clearly sp ecified
administrative procedures;
iv. The public comment process used in China's administration of its wheat, rice, and corn
TRQs is inconsistent with the obligation s to administer TRQs on a transparent ,
predictable, and fair basis, and to administer TRQs usi ng clearly specified
administrative procedures;
v. The administration of STE and non-STE portions of China's wheat, rice, and corn TRQs
is inconsistent with the obligations to administer TRQs on a transparent, predictable ,
and fair basis, to administer TRQs u sing clearly specified administrative procedures,
and to administer TRQs in a manner that would not inhibit the filling of each TRQ;
vi. The United States has not demonstrated that the extent of the public notice provided
in connection with the allocation, ret urn, and reallocation of China's wheat, rice, and
corn TRQs is inconsistent with the obligations to administer TRQs on a transparent and

444 See section 7.1.5 above.
445 We note that, in addressing the claim under Paragraph 116 regarding the obligation not to inhibit the
filling of each TRQ, we rejected some of the United States' arguments, for instance the one concerning the
usage requirement for rice. We do not consider that addressing these arguments again under Article XI:1
would have led to a different outcome and contributed to the resolution of this dispute.
446 Appellate Body Report, US – Wool Shirts and Blouses, pp. 18-20, DSR 1997:I, p. 323, at pp. 339-
341 (referring to Articles 3.2, 3.4, 3.7, 3.9 and 11 of the DSU).

predictable basis, and to administer TRQs in a manner that would not inhibit the filling
of each TRQ;
vii. The usage requirements for imported wheat and corn used in China's administration
of its TRQ for wheat and corn are inconsistent with the obligations to administer TRQs
on a predictable basis, to administer TRQs using clearly specified administrative
procedures, and to adm inister TRQs in a manner that would not inhibit the filling of
each TRQ;
viii. The United States has not demonstrated that the usage requirement for imported rice
used in China's administration of its TRQ for rice is inconsistent with the obligation to
administer TRQs in a manner that would not inhibit the filling of each TRQ;
And, therefore, China's administration of its wheat, rice, and corn TRQs is, as a whole,
inconsistent with the obligations to administer TRQs on a transparent, predictable, and fair
basis, to administer TRQs using clearly specified requirements and administrative
procedures, and to administer TRQs in a manner that would not inhibit the filling of each
TRQ;
b. With respect to the United States' claim under Article XIII:3(b) of the GATT 1994, th e
United States has not demonstrated that China's administration of its wheat, rice, and
corn TRQs is inconsistent with this provision;
c. With respect to the United States' claim under Articles X:3(a) and XI:1 of the
GATT 1994, we consider that it is not nec essary for us to make finding s under these
provisions to secure a positive solution to this dispute.
8.2. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that the measure at issue is inconsistent
with China's obligations under Paragraph 116 of its Working Party Report, as incorporated into the
WTO Agreement pursuant to Paragraph 1.2 of China's Accession Protocol, it has nullified or impaired
benefits accruing to the United States under that Working Party Report.
8.3. Pursuant to Article 19.1 of the DSU, we recommend that that the DSB request China to bring
its measure into conformity with its obligations under Paragraph 116 of China's Working Party
Report, as incorporated into the WTO Agreement pursuant to Paragraph 1.2 of China's Accession
Protocol.