CHINA – MEASURES AFFECTING IMPORTS OF AUTOMOBILE PARTS
Document: Notification of an Appeal by the People's Republic of China under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
Date: 22 September 2008
Document codes: WT/DS339/12; WT/DS340/12; WT/DS342/12
Complainant: Canada
Respondent: China
Third parties: Argentina, Australia, Brazil, Japan, Mexico, Taiwan, Thailand
Dispute stage: Appellate Body
Agreements cited: Part I, para. 1.2, Part I, para. 7.2, Part I, para. 7.3  Protocol of AccessionArt. III:2, III:4, III:5, III:1, II:1, X:1, X:3  GATT 1994Art. 2.1  Trade-Related Investment Measures (TRIMs)Art. 3.1(b), 3.2  Subsidies and Countervailing Measures (SCM)

CHINA – MEASURES AFFECTING IMPORTS OF
AUTOMOBILE PARTS

Notification of an Appeal by the People's Republic of China

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 15 Septembe r 2008, from the Delegation of the People's
Republic of China, is being circulated to Members.

 Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate
Review, China hereby notifies its decision to appeal to the Appellate Body certain issues of law
covered in the Panel Reports in
(, , , and Add. 1 & 2), and certain legal interpretations
developed by the Panel in those Reports.
1

1. China seeks review by the Appellate Body of the following errors of law and legal
interpretation contained in Panel Report:
a. The Panel incorrectly interpreted and applied the term "ordinary customs
duties" in Article II:1(b), first sentence, of the General Agreement on Tariffs
and Trade 1994 ("GATT 1994"). The Panel's errors principally arise from its
failure to take into account the context provided by the Harmonized
Commodity Description and Coding System ("Harmonized System") as the
basis upon which national customs author ities identify the "product" that is
subject to the assessment of ordinary customs duties.2
b. As a consequence of its erroneous inte rpretation and application of the term
"ordinary customs duty" in Article II:1(b) of the GATT 1994, the Panel erred
in its finding that the charge imposed under the measures challenged in this
dispute is an "internal tax or other in ternal charge" within the meaning of
Article III:2 of the GATT 1994, and in its finding that the measures affect
"the internal sale, offering for sale, purchase, transportation, distribution or

1 The Panel presented its findings as separate Reports contained in a single document, with separate
sections on the Panel's conclusions and recommendations for each complaining party. For ease of reference,
China hereafter refers to these Reports as the “Panel Report”.
2 See, e.g., Panel Report, paras. 7.166, 7.184 – 7.188, 7.192, 7.204 – 7.207, 7.209 – 7.210.

use" of imported products within th e meaning of Article III:4 of the
GATT 1994.
3
c. In its "alternative" findings set forth in Section VII.D of the Panel Report, the
Panel erred in its interpre tation and application of th e term "motor vehicles"
in China's Schedule of Concessions. The Panel's errors principally arise from
(i) its misinterpretation of General Interpretative Rule 2(a) of the Harmonized
System ("GIR 2(a)"), which provides context for the interpretation of the
term "motor vehicles" in China's Schedule of Concessions; (ii) its
misinterpretation of a prior decision of the Harmonized System Committee of
the World Customs Organization ("WCO" ) concerning the interpretation of
GIR 2(a); and (iii) its failure to take into account the specific guidance
provided by the WCO in response to questions from the Panel.
4
d. In its "alternative" findings set forth in Section VII.D of the Panel Report, the
Panel acted inconsistently with Artic le 3.2 and Article 11 of the DSU by
purporting to resolve a known question of interpretation within the
Harmonized System, a non-covered ag reement, and by adopting an
interpretation of Harmonized System that is contrary to the interpretation
held by the WCO, the internati onal organization responsible for
administering and interpreting the Harmonized System.
5
e. The Panel erred in its interpretation that the challenged measures apply to
importers who import completely kno cked-down ("CKD") or semi-knocked
down ("SKD") kits of motor vehicles under China's regular customs
procedures, and who pay duties under China's regular procedures for the
payment of customs duties. On the basi s of this erroneous interpretation of
the challenged measures, the Panel erred in its conclusion that the challenged
measures violate paragraph 93 of the Report of the Working Party on the
Accession of China (WT/ACC/CHN/49) ("Working Party Report"), as
incorporated into the WTO Agreement through the Protocol on the Accession
of the People's Republic of China (WT/L/432).6
f. The Panel acted inconsistently with Article 11 of the DSU by making certain
findings and conclusions concerning th e inconsistency of the challenged
measures with paragraph 93 of the Working Party Report , in the absence of
evidence or legal arguments presented by the complainants to support a
prima facie case that the challenged measures apply to importers who import
CKD or SKD kits of motor vehicles under China's regular customs

3 See, e.g., Panel Report, paras. 7.204 – 7.212, 7.256 – 7.258.
4 See, e.g., Panel Report, paras. 7.412 – 7.415, 7.435 – 7.436, 7.439 – 7.441, 7.445 – 7.446. China does
not raise specific claims of error in respect of the Pane l's findings, set forth in Section VII.D.3 of the Report,
concerning the “essential character” test under General Interpretative Rule 2(a) of the Harmonized System.
However, in the event that the Appellate Body affirms the Panel's finding that the charge imposed under the
challenged measures is an internal tax or charge subject to Article III of the GATT 1994, China requests that the
Appellate Body find all of the Panel's “alternative” findings in Section VII.D of the Report, and the related
conclusions and recommendations of the Panel, to be moot and of no legal effect.
5 See, e.g., Panel Report, paras. 7.412 – 7.415, 7.435 – 7.436, 7.439 – 7.441, 7.445 – 7.446.
6 See, e.g., Panel Report, paras. 7.75 – 7.78, 7.636, 7.648, 7.688, 7.737, 7.754, 7.757 – 7.758.

procedures, and who pay duties under China's regular procedures for the
payment of customs duties.
7
2. Conditionally, in the event that the Appellate B ody does not sustain either of China's claims
of error set forth in paragraphs 1(d) and 1(e) a bove, China seeks review by the Appellate Body of the
following additional errors of law and legal interpretation contained in Panel Report:
a. The Panel erred in finding that the challenged measures "de facto" create
"tariff lines" for CKD or SKD kits of motor vehicles with rates of duty in
excess of 10 per cent. The Panel's erro r of legal interpretation principally
relates to the inconsistency of this fi nding with the ordinary meaning of the
term "tariff lines", as identified by the Panel itself. China further considers
that, by purporting to modify the condition under which the commitment that
China made in paragraph 93 of the Working Party Report would arise, the
Panel acted inconsistently with Article 3.2 of the DSU.8
b. The Panel erred in finding that certain ten-digit statistical annotations for
CKD/SKD kits found in China's custom s nomenclature constitute "tariff
lines" within the meaning of paragraph 93 of the Working Party Report. The
Panel's errors of legal interpretation prin cipally relate to (i) the inconsistency
of this finding with the Panel's interp retation of the term "tariff lines" in
paragraph 93 of the Working Party Report ; and (ii) the Panel's failure to
interpret the term "tariff lines" in the context of the Working Party Report .9
China considers that the Panel's errors could also be considered a failure to
make an objective assessment of the fact s, in contravention of Article 11 of
the DSU.
c. The Panel acted inconsistently with Arti cle 6.2, Article 7.1, and Article 11 of
the DSU by finding that China violated paragraph 93 of the Working Party
Report through the creation of ten-digit statistical annotations for CKD/SKD
kits in its customs nomenclature, when neither the statistical annotations nor
the tariff rates associated with these pu tative "tariff lines" were within the
terms of reference of these disputes.10