CHINA – MEASURES AFFECTING TRADING RIGHTS AND DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS AND AUDIOVISUAL ENTERTAINMENT PRODUCTS
Document: Request for Consultations by the United States
Date: 16 April 2007
Document codes: WT/DS363/1; G/L/820; S/L/287
Complainant: U.S.
Respondent: China
Third parties: Australia, EU, Japan, South Korea, Taiwan
Dispute stage: Appellate Body
Agreements cited: Part I, para. 5.2  Protocol of AccessionArt. XI:1, III:4  GATT 1994Art. XVII, XVI  Services (GATS)Part I, para. 1.2, Part I, para. 5.1  Protocol of Accession

CHINA – MEASURES AFFECTING TRADING RIGHTS AND
DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS
AND AUDIOVISUAL ENTERTAINMENT PRODUCTS

Request for Consultations by the United States

 The following communication, dated 10 April 2007, from the delegation of the United States
to the delegation of China and to the Chairman of the Dispute Settlement Body, is circulated in
accordance with Article 4.4 of the DSU.

 My authorities have instructed me to request consultations with the Government of the
People's Republic of China ("China") pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU"), Article XXII of the General Agreement
on Tariffs and Trade 1994 ("GATT 1994"), and Article XXII of the General Agreement on Trade in
Services ("GATS") with respect to (1) certain measures that restrict trading rights with respect to
imported films for theatrical release, a udiovisual home entertainment products ( e.g., video cassettes
and DVDs), sound recordings, and publications ( e.g., books, magazines, newspapers, and electronic
publications), and (2) certain measures that restrict market access for, or discriminate against, foreign
suppliers of distribution services for publications and foreign suppliers of audiovisual services
(including distribution services) for audiovisual home entertainment products.

I. Trading rights

In its protocol of accession to the ("WTO"),
1 China committed to
fully open the right to trade ( i.e., the right to import goods into China and to export goods from
China), with some limited exceptions not applicable here, within three years after accession. Despite
this, various measures of China reserve to certain Chinese state-designated and wholly or partially
state-owned enterprises the right to import films for theatrical release, audiovisual home entertainment
products ( e.g., video cassettes and DVDs), sound recordings, and publications ( e.g., books,
magazines, newspapers, and electronic publications) (collectively, the "Products").

In this connection, the measures at issue include the following:

(1) the Regulations on Administration of the Films Industry 2;

1 Protocol on the Accession of the People's Republic of China , WT/L/432, 23 November 2001 (the
"Accession Protocol").
2 State Council Order No. 342, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.

(2) the Provisional Rules on the Entry Criteria for Operating Film Enterprises
3;

(3) the Administrative Regulation on Publishing
4;

(4) the Administrative Regulations on Audiovisual Products 5;

(5) the Catalogue for Guidance of Foreign Investment Industries
6;

(6) the Several Opinions of the Ministry of Culture, State Administration of Radio, Film and
Television, General Administration of Press and Publication, National Development and
Reform Commission and the Ministry of Commerce on Introducing Foreign Investment into
the Cultural Sector
7;

(7) the Measures for the Administration of Import of Audio and Video Products 8;

(8) the Measures for Administration of Chinese Foreign Contractual Distribution Ventures of
Audiovisual Products
9;

(9) the Administrative Regulations on Electronic Publications
10; and

(10) the Procedure for Examination and Approva l of Establishment of Publication Importation
Entities11;

as well as any amendments, related measures, or implementing measures.

The measures at issue appear not to allow all Chinese enterprises and all foreign enterprises
and individuals to have the right to import the Produc ts into the customs territo ry of China. It also
appears that foreign individuals and enterprises, incl uding those not invested or registered in China,
are accorded treatment less favourab le than that accorded to enterpri ses in China with respect to the
right to trade. Accordingly, the measures at issue appear to be inconsistent with China's obligations
under the provisions of paragraphs 5.1 and 5.2 of Part I of the Accession Protocol,
12 as well as China's
obligations under the provisions of paragraph 1.2 of Part I of the Accession Protocol (to the extent
that it incorporates commitments in paragraphs 83 a nd 84 of the Report of the Working Party on the

3 Decree No. 43 of the State Administration of Radio, Film and Television and the Ministry of
Commerce (10 October 2004).
4 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
5 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
6 Order [2004] No. 24 of the State Development and Reform Commission, the Ministry of Commerce
of the People's Republic of China (30 November 2004).
7 Order [2005] No. 19 of the Ministry of Culture (6 July 2005).
8 Decree No. 23 of the Ministry of Culture and the General Administration of Customs (17 April 2002).
9 Promulgated by the Ministry of Culture and Ministry of Commerce on 9 February 2004 (superseding
the measures notified by China in S/C/N/219).
10 Order No. 11 of the General Administration of Press and Publication (30 December 1997).
11 General Administration of Press and Publication (27 December 2005) (available at:
www.gapp.gov.cn/GalaxyPortal/inner/zsww/zongsu3.jsp?articleid=4923&boardpid=1450&boardid1=11501010
11150c) (visited on 9 April 2007).
12 The Products are not listed in Annex 2A or Annex 2B of the Accession Protocol.

Accession of China
13). The Accession Protocol forms part of the terms of accession agreed between
China and the WTO and is an integral part of the Marrakesh Agreement Establishing the World Trade
Organization.

Furthermore, to the extent that the measures at issue impose prohibitions or restrictions other
than duties, taxes or other charges, on the impor tation into China of the Products, these measures
appear to be inconsistent with China's obligations under Article XI:1 of the GATT 1994.

II. Distribution services

In the Accession Protocol, China made market access and national treatment commitments in
the distribution services and audiovisual services sectors of its Schedule of Specific Commitments on
Services (the "Schedule").
14 Despite those commitments, various measures of China impose market
access restrictions or discriminatory limitations on fo reign service providers seeking to engage in the
distribution of publications and certain audiovisual home entertainment products.

In this connection, the measures at issue include:

(1) the Administrative Regulation on Publishing
15;

(2) the Administrative Regulations on Audiovisual Products 16;

(3) the Provisions on Guiding the Orientation of Foreign Investment
17;

(4) the Catalogue for Guidance of Foreign Investment Industries 18;

(5) the Several Opinions of the Ministry of Culture, State Administration of Radio, Film and
Television, General Administration of Press and Publication, National Development and
Reform Commission and the Ministry of Commerce on Introducing Foreign Investment into
the Cultural Sector
19;

(6) the Administrative Regulations on Management of Foreign-Invested Book, Magazine and
Newspaper Distribution Enterprises20;

(7) the Administrative Regulations on the Publication Market (revised)
21;

13 WT/MIN(01)/3.
14 WT/L/432, Annex 9, and WT/MIN(01)/3/Add.2.
15 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
16 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
17 Decree [2002] No. 346 of the State Council (11 February 2002).
18 Order [2004] No. 24 of the State Development and Reform Commission, the Ministry of Commerce
of the People's Republic of China (30 November 2004).
19 Order [2005] No. 19 of the Ministry of Culture (6 July 2005).
20 The General Administration of Press and Publication and the Ministry of Foreign Trade and
Economic Cooperation (17 March 2003).
21 Promulgated by the General Administration of Press and Publication on 16 July 2003, revised on
16 June 2004.

(8) the Administrative Regulations on Electronic Publications
22;

(9) the Administrative Measures on Subscription of Imported Publications
23;

(10) the Procedure for Examina tion and Approval of Establishment of Chinese-Foreign Entities,
Cooperative Joint Ventures, and Wholly Foreign Owned Publication Distribution
Enterprises
24; and

(11) the Measures for Administration of Chinese Foreign Contractual Distribution Ventures of
Audiovisual Products25;

as well as any amendments, related measures, or implementing measures.

A. Publications (e.g., books, newspapers, periodicals, and electronic publications)

The measures at issue appear to prohibit fo reign service suppliers (including wholly or
partially foreign-owned or foreign-invested en terprises) from engaging at least in a type of
distribution described in these measures as the "master distribution" of publications. The measures at
issue also appear to prohibit foreign service suppliers (including wholly or pa rtially foreign-owned or
foreign-invested enterprises) from engaging at least in the wholesaling of "electronic publications" (a
term that refers to a subset of publications). Moreover, the measures at issue may extend this
prohibition more broadly to all distribution of all p ublications (whether at the "master distribution"
level or otherwise). Furthermore, to the extent that some foreign service suppliers are allowed to
engage in some aspects of the distribution of p ublications, there appear to be discriminatory
requirements concerning such suppliers' registered capital, such suppliers ' operating term, and the
particular publications that such suppliers may distribute.

The measures at issue therefore appear to accord treatment to foreign suppliers of distribution
services for publications treatment less favourable than that accorded to Chinese suppliers of
distribution services for publications. In Sector s 4A-4E of its Schedule, China undertook market
access and national treatment commitments with r espect to the supply through commercial presence
in China by service suppliers of other Members of, inter alia, distribution services for publications.
Moreover, the measures at issue do not appear to fall within the terms, limitations, conditions, or
qualifications on market access or national treatment that China has specified in its Schedule for the
distribution of publications through commercial presence in China by service suppliers of other
Members. Accordingly, the measures at issue app ear to be inconsistent with China's obligations
under Articles XVI and XVII of the GATS.

B. Audiovisual home entertainment products

The measures at issue appear to prohibit fo reign service suppliers (including wholly or
partially foreign-owned or foreign-invested en terprises) from engaging at least in a type of
distribution described in these measures as the "master distribution" of audiovisual home

22 Order No. 11 of the General Administration of Press and Publication (30 December 1997).
23 Order No. 27 of the General Administration of Press and Publication (adopted at the fourth
conference of the General Administration of Press and Publication on 9 September 2004 and published on
31 December 2004).
24 General Administration of Press and Publication (27 December 2005).
25 Promulgated by the Ministry of Culture and Ministry of Commerce on 9 February 2004 (superseding
the measures notified by China in S/C/N/219).

entertainment products such as video cassette s and DVDs ("audiovisual home entertainment
products"). Moreover, to the extent that foreig n services suppliers are permitted to engage in any
distribution of those products (whether at the "master distribution" level or otherwise), the measures at
issue appear to impose requirements that the service be supplied through a form of entity that Chinese
persons control, or in which Chinese persons ha ve a dominant position, or for which there is a
limitation on the participation of foreign capital.

The measures at issue therefore appear to accord treatment to foreign suppliers of audiovisual
distribution services for audiovisual home entertainm ent products treatment less favourable than that
accorded to Chinese suppliers of audiovisual distri bution services for audiovisual home entertainment
products, and to impose restrictions on market ac cess on foreign service suppliers of audiovisual
distribution services for audiovisual home entertainm ent products. In Sector 2D of its Schedule,
China undertook market access and national treatment commitments with respect to the supply
through commercial presence in China by service supp liers of other Members of distribution services
for a range of products including, inter alia, audiovisual home entertainment products. Moreover, the
measures at issue do not appear to fall within the terms, limitations, conditi ons, or qualifications on
market access or national treatment that China ha s specified in its Schedule for the distribution of
such products through commercial presence in China by service suppliers of other Members. The
measures at issue therefore appear to be inconsiste nt with China's obligations under Articles XVI and
XVII of the GATS.

The measures cited in this request for consulta tions also appear to nullify or impair the
benefits accruing to the United States directly or indirectly under the cited agreements.

We look forward to receiving your reply to the present request and to fixing a mutually
convenient date for consultations.