CHINA – MEASURES RELATED TO THE EXPORTATION OF VARIOUS RAW MATERIALS
Document: Reports of the Panel
Date: 5 July 2011
Document codes: WT/DS394/R; WT/DS395/R; WT/DS398/R
Complainant: Mexico
Respondent: China
Third parties: Argentina, Brazil, Canada, Chile, Colombia, Ecuador, EU, India, Japan, South Korea, Norway, Taiwan, Turkey, Saudi Arabia, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. VIII:1, VIII:4, X:1, X:3, XI:1  GATT 1994Part I, para. 1.2, Part I, para. 5.1, Part I, para. 5.2, , Part I, para. 8.2  Protocol of Accession

CHINA – MEASURES RELATED TO THE EXPORTATION
OF VARIOUS RAW MATERIALS

Reports of the Panel

I. INTRODUCTION
A. C
OMPLAINTS OF THE UNITED STATES, THE EUROPEAN UNION AND MEXICO
1.1 On 23 June 2009, the United States and the European Communities 2 and on 21 August 2009,
Mexico, each requested consultations with the People's Republic of China ("China") 3, pursuant to
Article 1 and Article 4 of the Understanding on Rules and Proce dures Governing the Settlement of
Disputes ("DSU") and Article XXII of the General Agreement on Tariffs and Trade 1994
("GATT 1994") with respect to China's restraints on the export from China of various forms of
bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus,
and zinc.
1.2 On 4 November 2009, the United States, the European Communities and Mexico requested
the Dispute Settlement Body ("DSB") to establish a panel pursuant to Article 6 of the DSU.
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL
1.3 At its meeting of 21 December 2009, the DS B established a single panel pursuant to the
requests of the United States in document WT/D S394/7, the European Communities in document
 and Mexico in document , in accordance with Article 9.1 of the DSU. At
that meeting, the parties agreed that the Panel shoul d have standard terms of reference. The terms of
reference are, therefore, 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 , the European Communities in document and
Mexico in document , and to make such findings as will assist the DSB
in making the recommendations or in giving the rulings provided for in those
agreements."
1.4 On 19 March 2010, the United States, the European Union and Mexico requested the
Director-General to determine the composition of the panel, pursuant to Article 8.7 of the DSU.
1.5 On 29 March 2010, the Director-General accordingly composed the Panel as follows:
 Chairman: Mr Elbio Rosselli

 Members: Ms Dell Higgie
 Mr Nugroho Wisnumurti

1.6 Argentina, Brazil, Canada, Chile, Colombia, Ec uador, the European Union (with respect to
WT/DS394 and WT/DS398), India, Japan, Korea, Mexico (with respect to WT/DS394 and
WT/DS395), Norway, Chinese Taipei, Turkey, the Ki ngdom of Saudi Arabia and the United States
(with respect to WT/DS395 and WT/DS398) reserv ed their rights to participate in the Panel
proceedings as third parties.

2 On 1 December 2009, the Treaty of Lisbon amendi ng the Treaty on European Union and the Treaty
establishing the European Commun ity (done at Lisbon, 13 December 2007) entered into force. On
29 November 2009, the WTO received a Verbal Note (WT/L/779) from the Council of the European Union and
the Commission of the European Communities stating that, by virtue of the Treaty of Lisbon, as of
1 December 2009, the European Union replaces and succeeds the European Community.
3 WT/DS394/1, WT/DS395/1 and WT/DS398/1.

1.7 Following the first substantive meeting with th e parties, Japan on 17 September 2010, and
Canada on 20 September 2010, requested the Panel to grant them enhanced third-party rights in order
to participate in the second substantive meeting of the Panel with the parties. In a letter dated 24
September 2010, the Panel informed Japan and Cana da that it had declined to accept their requests.
The Panel informed these third parties that, inter alia, granting enhanced third-party rights at this
stage of the proceedings would lead to delays an d would have an important impact on the Panel's
timetable.
1.8 The Panel met with the parties on 31 August and 2 September 2010 and 22 to
23 November 2010. It met with the third parties on 1 September 2010.
1.9 The Panel issued the descriptive part of its repor ts to parties and third parties on 20 December
2010. The Panel issued the interim panel reports to the parties on 18 February 2011. The Panel
submitted its final reports to the parties on 1 April 2011. The Panel Reports were circulated to WTO
Members on [ ].
C.
PROCESS FOR THE PRELIMINARY RULING ON THE PANEL'S TERMS OF REFERENCE WITH
RESPECT TO THE MEASURES AND PRODUCTS AT ISSUE
1.10 At the DSB meeting of 21 December 2009, China informed the DSB of its intention to seek a
preliminary ruling on the adequacy of the complain ants' requests for the establishment of a panel and
their consistency with the requirements of Article 6.2 of the DSU.4
1.11 On 30 March 2010, China filed a request for a preliminary ruling. 5 The complainants
submitted a joint response to China's request. 6 The parties were invited to comment on each others'
written argumentation; China commented on the comp lainants' submission on 23 April 2010. The
Panel invited the third parties to comment on China' s request and on the complainants' joint response.
On 23 April 2010, Korea and Japan submitted written submissions on the preliminary ruling request.
On 29 April 2010, the Panel held a hearing with the parties, as well as a separate session with the third
parties on China's request. During this session with th e third parties, Japan and Korea delivered oral
statements. On the same date, the Panel sent written questions to the parties. 7 The parties responded
to the Panel's questions on 3 May 2010 8 and submitted comments on each other's responses on
5 May 2010.9
1.12 The Panel issued its preliminary ruling to the parties on 7 May 2010. 10 In its communication
to the parties, the Panel informed the parties of its intention to rule on China's request in two phases.
The Panel addressed, in a first phase, those issues th at it considered were relevant to the Panel's
jurisdiction that could not be clarified by the par ties' subsequent first written submissions or at any
other stage during this panel process.

4 WT/DSB/M/277, para. 74.
5 Communication from China to the Panel: China's request for a preliminary ruling pursuant to
Article 6.2 of the DSU, 30 March 2010.
6 Joint Communication from the United States, European Union, and Mexico to the Request for a
Preliminary Ruling submitted by China, 21 April 2010.
7 Communication from the Panel to the parties: 29 April 2010. The Panel informed the parties during
the hearing of its intention to provide written questions. The parties did not object.
8 Communication from China to the Panel and Joint Communication from the United States,
European Union, and Mexico to the Panel: 3 May 2010.
9 Communication from China to the Panel and Joint Communication from the United States,
European Union, and Mexico to the Panel: 5 May 2010.
10 Communication from the Panel to the parties and third parties: 7 May 2010.

1.13 The first phase of the preliminary ruling, which was circulated as WTO document
WT/DS394/9, WT/DS395/9 and WT/DS398/9, is attached to these reports as an annex (see List of
Annexes, pages ix and x). The Panel issued the second phase of its preliminary ruling to the parties
on 1 October 2010. This second phase was not initially circulated at the request of the United States
and Mexico.
11 Following consultation with the parties, the second phase of the preliminary ruling was
circulated only to the third parties. The second phase of the Panel's preliminary ruling is attached to
these reports as an annex (see List of Annexes, pages ix and x).
II. FACTUAL ASPECTS
A. BACKGROUND
2.1 This dispute concerns China's use of certain export restraints on the exportation of certain
forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow
phosphorus and zinc (the "raw materials").12 The complainants identify the following as four types of
restraints that China imposes on the exportation of these raw materials: (1) export duties; (2) export
quotas; (3) export licensing; and (4) minimum export price requirements. The complainants challenge
the existence of these restraints as well as aspect s of the allocation and administration of export
quotas, export licences and minimum export pri ces, and the alleged non-publication of certain
measures.
B. PRODUCTS AT ISSUE
2.2 The various forms of the nine raw materials at issue either occur naturally or have undergone
initial processing. The following chart identifies the particular raw materials at issue in this dispute
by category, product name, product name short form, 2009 Chinese HS Number 13, and 2009 Chinese
Commodity Codes. 14 This chart takes into account the par ties' submissions, responses to questions
and the Panel's preliminary ruling (discussed in paragraphs 1.10 to 1.13 above).
Raw Material
Category Product Name Product Name
Short Form
Chinese
HS No.
Chinese
Customs
Commodity
Code
Bauxite Refractory-grade clay Refractory-grade
clay
2508.3000 2508.30.00.00
Aluminium ores and concentrates Aluminium ores
and concentrates

2606.0000
2606.00.00.00
Ash and residues primarily containing
aluminium
Aluminium ash
and residues
2620.4000 N/A
Coke Coke and semi-coke made from coal
whether or not agglomerated
Coke 2704.0010 2704.00.10.00
Fluorspar Fluorspar containing, by weight 
97% calcium fluoride
Met-spar 2529.2100 2529.21.00.00
Fluorspar containing, by weight >
97% calcium fluoride
Acid-spar 2529.2200 2529.22.00.00

11 Communication from the United States, dated 12 October 2010; Communication from Mexico, dated
21 October 2010. See also Communications from China, dated 13 October 2010 and 15 October 2010 opposing
this request.
12 These raw materials are discussed in further detail in paragraph 2.2 below. See also Exhibit JE-4.
13 See 2009 Tariff Implementation Program, Table 7 (Exhibit JE-21).
14 See 2009 Export Licensing List Notice, Appendix (Exhibit JE-22).

Raw Material
Category Product Name Product Name
Short Form
Chinese
HS No.
Chinese
Customs
Commodity
Code
Magnesium Magnesium containing, by weight, at
least 99.8% magnesium
Magnesium
metal
8104.1100 N/A
Other unwrought magnesium Unwrought
magnesium
8104.1900 N/A
Magnesium waste and scrap Magnesium
waste and scrap
8104.2000 N/A
Manganese Manganese ores and concentrates,
including ferromanganese ores and
concentrates containing more than
20% manganese by dry weight
Manganese ores
and concentrates
2602.0000 N/A
Unwrought manganese; manganese
waste and scrap; powder
Manganese metal 8111.0010 8111.00.10.10
(unwrought
waste & scrap)
 8111.00.10.90
(unwrought;
powder)
Silicon Carbide Silicon carbide Silicon carbide N/A 2849.20.00.00
Crude silicon carbide (of which the
silicon carbide content is greater than
15% by weight)
Crude silicon
carbide
N/A 3824.90.99.10
Silicon Metal Silicon containing by weight less than
99.99% silicon
Silicon metal 2804.6900 N/A
Yellow
Phosphorus
Yellow phosphorus (white
phosphorus)
Yellow
phosphorus
2804.7010 N/A
Zinc Zinc ores and concentrates (excluding
gray feed zinc oxide containing more
than 80% zinc oxide)
Zinc ores and
concentrates
excluding gray
feed grade zinc
oxide
2608.0000
ex
2608.00.00.90
Gray feed zinc oxide containing more
than 80% zinc oxide
Gray feed grade
zinc oxide
2608.0000
ex
2608.00.00.01
Unwrought zinc containing by weight
99.995% or more zinc
Unwrought 
99.995% zinc
7901.1110 7901.11.10.00
Unwrought zinc containing by weight
99.99% or more but less than
99.995% zinc
Unwrought
99.99% < zinc
content
99.995% zinc
7901.1190 7901.11.90.00
Unwrought zinc containing by weight
less than 99.99% zinc
Unwrought <
99.99% zinc
7901.1200 7901.12.00.00
Unwrought zinc alloys Unwrought zinc
alloys
7901.2000 7901.20.00.00
Zinc waste and scrap Zinc waste and
scrap
7902.0000 N/A
Hard zinc ash and residues Hard zinc spelter 2620.1100 N/A
Other zinc ash and residues Other zinc ash
and residues
2620.1900 N/A

C. M
EASURES AT ISSUE
2.3 The United States, the European Union and Mexico collectively identified 40 specific
measures in their Panel Requests 15 in connection with their claims concerning export duties, export
quotas, export licensing requirements and minimum export price requirements. These include
measures concerning the imposition of these restraints, as well as aspects of the allocation,
administration and the alleged non-publication of cer tain measures. In response to questions from the
Panel following the first and second substantive m eetings, the complainants narrowed down the
measures for which they request rulings and recommendations.
16
2.4 The complainants identify the fo llowing measures in their requ ests for establishment of the
Panel:17
(a) The imposition of export duties:
 Customs Law
 Regulations on Import and Export Duties
 2009 Tariff Implementation Program
 Foreign Trade Law
 Regulations on Import and Export Duties
 2008 Export License Administration Measures
 Export Quota Bidding Measures
 Export Quota Bidding Implementation Rules
 2009 Export Quota Amounts
 2009 Export Licensing Catalogue
 2009 First Round Export Quota Bidding Announcement
 2009 Second Round Export Quota Bidding Announcement
 Circular on Distribution of Export Quota Bidding Implementation Rules
 2009 First Round Fluorspar Bidding Procedures
 2009 First Round Bauxite Bidding Procedures
 2009 First Round Silicon Carbide Bidding Procedures
 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide
 2009 Second Round Silicon Carbide Bidding Procedures
 2010 Export Quota Amounts
(b) The imposition of export quotas:

15 WT/DS394/7, WT/DS395/7, WT/DS398/6.
16 See complainants' responses to Panel question No. 1 following the first substantive meeting and
complainants' responses to Panel question No. 2, following the second substantive meeting.
17 The full titles of the measures referred to below can be found on pages xxi-xxxi. The Panel's terms of
reference were subsequently modified either at the request of the parties or as a result of the Panel's rulings and
findings.

 Foreign Trade Law
 Regulation on Import and Export Administration
 2008 Export License Administration Measures
 Export Quota Administration Measures
 Export Quota Bidding Measures
 Measures for Administration of Licensing Entities
 Export Quota Bidding Implementation Rules
 2008 Export Licensing Working Rules
 Rules on the Administration of License Certificates
 2009 Export Quota Amounts
 2009 First Batch Coke Export Quotas
 2009 Coke Export Quota Application Procedure
 2009 Export Licensing Catalogue
 2009 Graded Export Licensing Entities Catalogue
 Announcement on Printing Working Rules on Issuing Export Licenses
 2009 First Round Export Quota Bidding Announcement
 2009 Second Round Export Quota Bidding Announcement
 Circular on Distribution of Export Quota Bidding Implementation Rules
 2009 First Round Fluorspar Bidding Procedures
 2009 First Round Bauxite Bidding Procedures
 2009 First Round Silicon Carbide Bidding Procedures
 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide
 2009 Second Round Silicon Carbide Bidding Procedures
 2009 Second Batch Coke Export Quotas for FIEs
 2010 Export Quota Amounts
(c) Additional restraints imposed on exportation:
 Foreign Trade Law
 Regulations on Import and Export Duties
 2008 Export License Administration Measures
 Export Quota Administration Measures
 Export Quota Bidding Measures
 Measures for Administration of Licensing Entities
 2008 Export Licensing Working Rules Division
 Rules on the Administration of License Certificates

 Export Quota Bidding Implementation Rules
 2009 Export Quota Amounts
 2009 First Batch Coke Export Quotas
 2009 Coke Export Quota Application Procedure
 2009 Export Licensing Catalogue
 Licensing Entities Catalogue
 Announcement on Printing Working Rules on Issuing Export Licenses
 2009 First Round Export Quota Bidding Announcement
 2009 Second Round Export Quota Bidding Announcement
 Circular on Distribution of Export Quota Bidding Implementation Rules
 2009 First Round Fluorspar Bidding Procedures
 2009 First Round Bauxite Bidding Procedures
 2009 First Round Silicon Carbide Bidding Procedures
 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide
 2009 Second Round Silicon Carbide Bidding Procedures
 2009 Second Batch Coke Export Quota for FIEs
 2010 Export Quota Amounts
 1994 CCCMC Charter
 2001 CCCMC Charter
 Charter of the China Coking Industry Association
 Measures for Administration of Trade Social Organizations
 Regulations for Personnel Management of Chambers of Commerce
 Export Price Penalties Regulations
 CCCMC PVC Rules
 Online PVC Instructions
 Rules for Coordination of Customs Price Review
 Rules on Price Review of Export Products
 Various Provisions on the Strengthening of Export Product Coordination and
Management
 State Council Decision on Reform of the Foreign Trade System
D. ADDITIONAL LEGAL INSTRUMENTS IDENTIFIED BY CHINA18
2.5 China has identified various measures that it considers relevant to the Panel's assessment.

18 The full title of the measures referred to below can be found on pages xxi–xxxi.

(a) The imposition of export duties:
 2010 Tariff Implementation Plan
(b) The imposition of export quotas:
 2010 Catalogue
 2010 Export Quota Amounts for Agricultural and Industrial Products
 Application of Export Quota Administration to Bauxite in 2010
 2010 First-Batch Export Quota Bidding of Bauxite
 Qualifications and Review for the 2010 Second- Batch Bidding for Export
Quotas
 Qualifications for the 2010 First-Batch Bidding for Export Quotas of
Industrial Products
 2010 Application Qualifications and Procedures for Export Quota of Coke
 2010 First-Batch Export Quota of Coke
 2010 Catalogue of Goods Subject to Export Licensing Administration
 2010 First-Batch Export Quotas of In dustrial Products for Foreign Invested
Enterprises
 Public Notice on 2010 First-Batch Export Quota Bidding of Silicon Carbide
(c) The administration and allocation of export quotas:
 2010 Catalogue
 2010 Export Quota Amounts for Agricultural and Industrial Products
 2010 First-Batch Export Quota Bidding of Bauxite
 Qualifications and Review for the 2010 Second- Batch Bidding for Export
Quotas
 Qualifications for the 2010 First-Batch Bidding for Export Quotas of
Industrial Products
 2010 CCCMC Charter
 2010 Application Qualifications and Procedures for Export Quota of Coke
 2010 First-Batch Export Quota of Coke
 2010 Catalogue of Goods Subject to Export Licensing Administration
 2010 First-Batch Export Quotas of In dustrial Products for Foreign Invested
Enterprises
 Public Notice on 2010 First-Batch Export Quota Bidding of Silicon Carbide
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1
 The parties' requests for findings and recommendations as set out below, take into account the
parties' first written submissions as well their resp onses to Panel question No.1 following the second
substantive meeting.

A. C
OMPLAINANTS
1. The United States and Mexico
3.2 The United States and Mexico request that the Panel make findings and recommendations
with respect to the following measures:

The United States' and Mexico's claims Measures i.e., Legal Instruments
Export Duties19
The application of temporary export duties to
bauxite, coke, fluorspar, magnesium,
manganese, silicon metal, and zinc, is
inconsistent with Paragraph 11.3 of China's
Accession Protocol.
The application of speci al export duties to
yellow phosphorus, is inconsistent with
Paragraph 11.3 of China's Accession Protocol.
Customs Law (Articles 2, 9, 23)
Export Quota Administration Measures (Articles 2, 4, 9,
11)
2009 Tariff Implementation Program

Export Quotas20
The application of export quotas to bauxite,
coke, fluorspar and silicon carbide and the
application of an export prohibition on zinc is
inconsistent with Article XI:1 of the
GATT 1994, and with Paragraph 1.2 of China's
Accession Protocol and Paragraphs 162 and 165
of China's Working Party Report.

Foreign Trade Law (Articles 2, 14-19, 34, 61, 63, 64)
Regulation on Import and Export Administration
(Articles 4, 35-41, 43, 44, 64-66)
2008 Export Licence Administration Measures
2008 Export Licensing Working Rules
Export Quota Administration Measures
Export Quota Bidding Measures
Export Quota Bidding Implementation Rules
2009 Export Quota Amounts
2009 First Batch Coke Export Quotas
2009 Second Batch Coke Export Quota
2009 First Batch Coke Export Quotas for FIEs
2009 Coke Export Quota Application Procedure
2009 Export Licensing Catalogue
2009 Graded Export Licensing Entities Catalogue
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement
2009 First Round Fluorspar Bidding Procedures
2009 First Round Bauxite Bidding Procedures
2009 First Round Silicon Carbide Bidding Procedures
2009 Announcement of Second Bidding Round for Talc
and Silicon Carbide
2009 Second Round Silicon Carbide Bidding Procedures
2009 Second Batch Coke Export Quotas for FIEs

19 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-5.
20 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6.

The United States' and Mexico's claims Measures i.e., Legal Instruments
Export Quotas: Application Conditions21
The requirements to demonstrate minimum
export performance and fulfil a minimum
capital requirement to obtain a coke quota, are
inconsistent with Paragraphs 1.2 and 5.1 of
China's Accession Protocol and Paragraphs 83
and 84 of China's Working Party Report.

The requirements to demonstrate prior export
performance and minimum export capital
requirements to obtain a quota for exportation
of bauxite, fluorspar and silicon carbide are
inconsistent with Paragraphs 1.2 and 5.1 of
China's Accession Protocol and Paragraphs 83
and 84 of China's Working Party Report.

Foreign Trade Law (Articles 2, 14-19, 34, 61, 63, 64)
Regulation on Import and Export Administration
(Articles 4, 35-41, 43, 44, 64-66)
2009 Export Quota Amounts
Export Quota Administration Measures
2009 Export Licensing Catalogue
2009 Graded Export Licensing Entities Catalogue
2008 Export Licence Administration Measures
2008 Export Licensing Working Rules
2009 Coke Export Quota Application Procedure
2009 First Batch Coke Export Quotas
2009 Second Batch Coke Export Quota
2009 First Batch Coke Export Quotas for FIEs
2009 Second Batch Coke Export Quotas for FIEs
 Export Quota Bidding Measures
Export Quota Bidding Implementation Rules
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement
2009 First Round Fluorspar Bidding Procedures
2009 First Round Bauxite Bidding Procedures
2009 First Round Silicon Carbide Bidding Procedures
2009 Announcement of Second Bidding Round for Talc
and Silicon Carbide
2009 Second Round Silicon Carbide Bidding Procedures
1994 CCCMC Charter
2001 CCCMC Charter
Export Quotas: Administration22
The involvement of the CCCMC in determining
whether an applicant satisfies the requisite
conditions for the bauxite, coke, fluorspar and
silicon carbide export quotas constitutes partial
and unreasonable administration in
contravention of Article X:3(a) of the
GATT 1994.
Foreign Trade Law (Articles 2, 14-19, 34, 61, 63, 64)
Regulation on Import and Export Administration
(Articles 4, 35-41, 43, 44, 64-66)
2008 Export Licence Administration Measures
2008 Export Licensing Working Rules
2009 Export Licensing Catalogue
2009 Graded Export Licensing Entities Catalogue
2009 Export Quota Amounts
2009 Coke Export Quota Application Procedure
2009 First Batch Coke Export Quotas
2009 Second Batch Coke Export Quota
2009 First Batch Coke Export Quotas for FIEs
2009 Second Batch Coke Export Quotas for FIEs
2009 Coke Export Quota Application Procedure

21 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6.
22 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6.

The United States' and Mexico's claims Measures i.e., Legal Instruments
1994 CCCMC Charter
2001 CCCMC Charter
 Export Quota Bidding Measures
Export Quota Bidding Implementation Rules
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement
2009 First Round Fluorspar Bidding Procedures
2009 First Round Bauxite Bidding Procedures
2009 First Round Silicon Carbide Bidding Procedures
2009 Announcement of Second Bidding Round for Talc
and Silicon Carbide
2009 Second Round Silicon Carbide Bidding Procedures
Export Quota Bid Winning Fee23
The requirement for an exporter applicant to
pay a bid-winning price for the right to export
bauxite, fluorspar and silicon carbide is
inconsistent with Article VIII:1(a) of the
GATT 1994 and with Paragraph 11.3 of China's
Accession Protocol.

Foreign Trade Law (Articles 2, 14-19, 34, 61, 63, 64)
Regulation on Import and Export Administration
(Articles 4, 35-41, 43, 44, 64-66)
2008 Export Licence Administration Measures
2008 Export Licensing Working Rules
Export Quota Bidding Measures
Export Quota Bidding Implementation Rules
2009 Export Quota Amounts
2009 Export Licensing Catalogue
2009 Graded Export Licensing Entities Catalogue
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement
2009 First Round Fluorspar Bidding Procedures
2009 First Round Bauxite Bidding Procedures
2009 First Round Silicon Carbide Bidding Procedures
2009 Announcement of Second Bidding Round for Talc
and Silicon Carbide
2009 Second Round Silicon Carbide Bidding Procedures
1994 CCCMC Charter
2001 CCCMC Charter

23 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6.

The United States' and Mexico's claims Measures i.e., Legal Instruments
Export Licensing
The authorization granted to MOFCOM to
impose various conditions on the exportation of
bauxite, coke, fluorspar, manganese, silicon
carbide and zinc including the quantities of the
products that can be exported, the price of
products that can be exported, qualifications
that exporters must possess in order to export,
or any other conditions is inconsistent with
Article XI:1 of the GATT 1994, and with
Paragraph 1.2 of China's Accession Protocol
and Paragraphs 162 and 165 of China's Working
Party Report.
Foreign Trade Law (Articles 2, 14-19, 34, 61, 63, 64)
Regulation on Import and Export Administration
(Articles 4, 35-41, 43, 44, 64-66)
2008 Export Licence Administration Measures
Measures for Administration of Licensing Entities
2008 Export Licensing Working Rules
2009 Graded Export Licensing Entities Catalogue
2009 Export Licensing Catalogue
Minimum Export Pricing24: Imposition of an MEP Requirement
The imposition of a minimum export price
requirement on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow
phosphorus and zinc is inconsistent with
Article XI:1 of the GATT 1994.
Measures for Administration of Trade Social
Organizations (Articles 2,8, 14, 16, 21)
Regulations for Personnel Management of Chambers of
Commerce (Articles 4, 8, 13, 17)
1994 CCCMC Charter
2001 CCCMC Charter
Export Price Penalties Regulations
Measures for Administration of Licensing Entities
Rules for Coordination of Customs Price Review
Customs Export Price Review Rules
Provisional Rules on Export PVC
CCCMC PVC Rules
Online PVC Instructions
CCCMC Export Coordination Measures
CCCMC Bauxite Branch Coordination Measures
Bauxite Branch Charter
"System of self-discipline"
Minimum Export Pricing: Administration of the MEP Requirement
The use of the Price Verification and Chop
procedure to administer yellow phosphorus
exports by the CCCMC is inconsistent with
Article X:3(a) of the GATT 1994.
Measures for Administration of Trade Social
Organizations
Regulations for Personnel Management of Chambers of
Commerce
1994 CCCMC Charter
2001 CCCMC Charter
Customs Export Price Review Rules
Customs Export Price Review Coordinating Rules
Provisional Rules on Export PVC
Online PVC Instructions
Minimum Export Pricing: Publication of the MEP requirement
The failure to publish certain measures
providing rules and details on how the CCCMC
coordinates export prices is inconsistent with
Article X:1 of the GATT 1994.
CCCMC PVC Rules
CCCMC Branch-Specific Coordination Measures
Customs Export Price Review Rules

24 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-7.

The United States' and Mexico's claims Measures i.e., Legal Instruments
 Customs Export Price Review Coordinating Rules
Provisional Rules on Export PVC

2. The European Union
3.3 The European Union requests that the Panel make the following findings:

The European Union's claim Measures i.e., Legal Instruments
Export Duties25
The application of temporary export duties to
bauxite, coke, fluorspar, magnesium,
manganese, silicon metal, and zinc is
inconsistent with Paragraph 11.3 of China's
Accession Protocol.
The application of speci al export duties to
yellow phosphorus is inconsistent with
Paragraph 11.3 of China's Accession Protocol.
Customs Law (Articles 2, 3, 53, 55, 60)

Export Quota Administration Measures (Articles 4, 9,
11, 36, 37)
2009 Tariff Implementation Program
Export Quotas26
The application of export quotas to bauxite,
coke, fluorspar and silicon carbide and the
application of an export prohibition on zinc is
inconsistent with Article XI:1 of the
GATT 1994, and with Paragraph 1.2 of China's
Accession Protocol and Paragraphs 162 and
165 of China's Working Party Report.

The failure to publish the total amount and
procedure for the allocation of a zinc export
quota is inconsistent with Article X:1 of the
GATT 1994.
Foreign Trade Law (Articles 19, 61)
Regulation on Import and Export Administration
(Articles 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 64, 65,
66, 67, 70)
Export Quota Administration Measures (Articles 4, 9,
11, 17, 18, 19, 20, 21, 22, 23, 25, 26, 31)
Export Quota Bidding Measures (Articles 3, 8, 9, 10,
11, 13, 14, 16)
Export Quota Bidding Implementation Rules (Articles 2,
3, 4, 5, 6)
2009 Export Licensing Catalogue
2009 Coke Export Quota Application Procedure
2010 First Batch Coke Export Quota for FIEs
2009 First Batch Coke Export Quotas
2009 Second Batch Coke Export Quota
2009 First Batch Coke Export Quotas for FIEs
2009 Second Batch Coke Export Quotas for FIEs
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement
2009 Export Quota Amounts
2009 First Round Bauxite Bidding Procedures
2009 Announcement of Second Bidding Round for Talc
and Silicon Carbide
2009 First Round Silicon Carbide Bidding Procedures
2009 Second Round Silicon Carbide Bidding

25 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-5.
26 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6.

The European Union's claim Measures i.e., Legal Instruments
Procedures
2009 First Round Fluorspar Bidding Procedures
Export Quotas: Allocation27
The requirement that exporter applicants
demonstrate "certain levels of volumes
exported or supplied for export" in order to
have the right to participate in coke quota
allocation procedures is inconsistent with
Paragraph 1.2 of China's Accession Protocol, in
combination with Paragraph 83(a) of China's
Working Party Report, as well as paragraphs
5.1 and 1.2 of China's Accession Protocol, in
combination with Paragraph 83(d) of China's
Working Party Report.

The requirement that fo reign enterprises and
individual exporter applicants demonstrate
"certain levels of volumes exported or supplied
for export" in order to have the right to
participate in coke quota allocation procedures,
is inconsistent with Paragraph 5.2 of China's
Accession Protocol, and Paragraph 1.2 of
China's Accession Protocol, in combination
with Paragraphs 84(a) and 84(b) of China's
Working Party Report.

The requirement that exporter applicants
demonstrate certain minimum capital
requirement in order to have the right to export
coke is inconsistent with Paragraphs 5.1 and 1.2
of China's Accession Protocol, in combination
with Paragraphs 83(b), 83(d) and 84(a) of
China's Working Party Report.
2009 Coke Export Quota Application Procedure
The requirement that exporter applicants
demonstrate "certain levels of volumes
exported or supplied for export" in order to
have the right to participate in bauxite, silicon
carbide and fluorspar quota bidding procedures
is inconsistent with Paragraph 1.2 of China's
Accession Protocol, in combination with
Paragraph 83(a) of China's Working Party
Report, as well as Paragraphs 5.1 and 1.2 of
China's Accession Protocol, in combination
with Paragraph 83(d) of China's Working Party
Report.

The requirement that fo reign enterprises and
individual exporter applicants demonstrate
"certain levels of volumes exported or supplied
for export" in order to have the right to
participate in bauxite, silicon carbide and
Export Quota Bidding Measures (Article 11)
Export Quota Bidding Implementation Rules (Article 6)
2009 First Round Export Quota Bidding Announcement
2009 Second Round Export Quota Bidding
Announcement

27 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6.

The European Union's claim Measures i.e., Legal Instruments
fluorspar quota bidding procedures is
inconsistent with Paragraph 5.2 of China's
Accession Protocol and Paragraph 1.2 of
China's Accession Protocol, in combination
with Paragraphs 84(a) and 84(b) of China's
Working Party Report.

The requirement that exporter applicants
demonstrate certain minimum capital
requirement in order to have the right to export
bauxite, silicon carbide and fluorspar is
inconsistent with Paragraphs 5.1 and 1.2 of
China's Accession Protocol, in combination
with Paragraphs 83(b), 83(d) and 84(a) of
China's Working Party Report.
Export Quotas: Administration of export quota direct allocation system
The requirement to consider, inter alia , an
applicant's "business management/operation
capacity" in determining whether to allocate
"directly" export quotas to a particular exporter
applicant, and the amount to be allocated to that
exporter applicant is inconsistent with
Article X:3(a) of the GATT 1994.
Export Quota Administration Measures (Article 19)
Export Quotas: Publication of Export Quotas
Failure to publish the export quota for zinc ores
and concentrates.
Export Quota Administration Measures (Article 9, 11)
Export Licensing: Non-Automatic Export Licences28
China's non-automatic export licences on
bauxite, coke, fluorspar, manganese, silicon
carbide are inconsistent with Article XI:1 of the
GATT and with Paragraph 1.2 of China's
Accession Protocol, in combination with
Paragraphs 162 and 165 of China's Working
Party Report.
Foreign Trade Law (Articles 19, 61)
Regulation on Import and Export Administration
(Articles 33, 35, 43)
2008 Export License Administration Measures (Articles
3, 4, 5, 9, 10, 11, 19, 20, 21, 22, 28, 30, 31)
2008 Export Licensing Working Rules (Articles 5, 6, 8,
9, 10, 17, 18, 19)
Measures for Administration of Licensing Entities
(Article 4)
2009 Graded Export Licensing Entities Catalogue
2009 Export Licensing Catalogue
China's non-automatic export licences on
bauxite, coke, fluorspar, manganese, silicon
carbide Inconsistent with Paragraph 5.1 and
Paragraph 1.2 of China's Accession Protocol in
combination with Paragraphs 83 and 84 of
China's Working Party Report.
Foreign Trade Law (Articles 19, 61)
Regulation on Import and Export Administration
(Articles 33, 35, 43)
2008 Export License Administration Measures (Articles
3, 4, 5, 9, 10, 11, 19, 20, 21, 22, 28, 30, 31)
2008 Export Licensing Working Rules (Articles 5, 6, 8,
9, 10, 17, 18, 19)
Measures for Administration of Licensing Entities
(Article 4)
2009 Graded Export Licensing Entities Catalogue
2009 Export Licensing Catalogue

28 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6.

The European Union's claim Measures i.e., Legal Instruments
Export Licensing: Publication of Export Licensing Requirements
Alternatively to the claim under Paragraph 5.1
and Paragraph 1.2 of China's Accession
Protocol, in combination with Paragraphs
83(d), 84(a) and 84(b) of China's Working
Party Report, the failure to publish the
definition and list of "other materials required
by China's Ministry of Commerce", or
"documents of approval issued by the Ministry
of Commerce", or the failure to publish the
definition and method of verification of the
"business qualifications" that applicants must
have in order to be allocated an export licence
for certain forms of bauxite, coke, fluorspar,
manganese, silicon carbide and zinc, or to
determine the amount to be exported, is
inconsistent with Article X:1 of the
GATT 1994.
Measures for the Administration of Export Licences
(Article 5)
Working Rules on Issuing Export Licenses (Articles 5
and 8)
Export Licensing: Administration of Export Licensing Requirements
Alternatively, to the claim under Paragraph 5.1
and Paragraph 1.2 of China's Accession
Protocol, in combination with Paragraphs
83(d), 84(a) and 84(b) of China's Working
Party Report the absence of a definition and list
of "other materials required by China's
Ministry of Commerce" or limit on the
discretion to require such materials, as well as
the absence of a definition of "documents of
approval issued by the Ministry of Commerce"
or limit on the discretion to issue such
additional "documents of approval" is
inconsistent with the requirements of uniform,
impartial and reasonable administration within
the meaning of Article X:3(a) of the
GATT 1994.
Measures for the Administration of Export Licences
Working Rules on Issuing Export Licenses
Minimum Export Pricing: 29 Imposition of an MEP Requirement
The imposition of a minimum export price
requirement on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow
phosphorus and zinc is inconsistent with
Article XI:1 of the GATT 1994
Measures for Administration of Trade Social
Organizations (Articles 2,8, 14, 16, 21)
Regulations for Personnel Management of Chambers of
Commerce (Articles 4, 8, 13, 17)
1994 CCCMC Charter
2001 CCCMC Charter
Export Price Penalties Regulations
Measures for Administration of Licensing Entities
Rules for Coordination of Customs Price Review
Rules on Price Reviews of Export Products
Provisional Rules on Export PVC
CCCMC PVC Rules

29 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-7.

The European Union's claim Measures i.e., Legal Instruments
Online PVC Instructions
CCCMC Export Coordination Measures
CCCMC Bauxite Branch Coordination Measures
Bauxite Branch Charter
"System of self-discipline"
Minimum Export Pricing: Administration of the MEP Requirement
The use of the Price Verification and Chop
procedure to administer yellow phosphorus
exports by the CCCMC is inconsistent with
Article X:3(a) of the GATT 1994.
Measures for Administration of Trade Social
Organizations
Regulations for Personnel Management of Chambers of
Commerce
1994 CCCMC Charter
2001 CCCMC Charter
Customs Export Price Review Rules
Customs Export Price Review Coordinating Rules
Provisional Rules on Export PVC
Online PVC Instructions
Minimum Export Pricing: Publication of the MEP Requirement
The failure to publish certain measures
providing rules and details on how the CCCMC
coordinates export prices is inconsistent with
Article X:1 of the GATT 1994.

CCCMC PVC Rules
CCCMC Branch-Specific Coordination Measures
Customs Export Price Review Rules
Customs Export Price Review Coordinating Rules
Provisional Rules on Export PVC

3.4 The European Union requests, pursuant to Article 19.1 of the DSU, the Panel to recommend
that China bring its measures into conformity with the GATT 1994 and China's Accession Protocol.
B. CHINA
3.5 China requests that the Panel reject certain of the complainants' claims listed in Section III of
the complainants' Panel Requests, to the extent they are properly included with in the Panel's terms of
reference and to find that:30
(a) The application of temporary export duties a pplied to fluorspar are justified pursuant
to Article XX(g) of the GATT 1994; and the application of temporary export duties to
non-ferrous metal scrap of zinc, magnesium metal, and manganese metal, and to
coke, magnesium metal and manganese metal are justified pursuant to Article XX(b)
of the GATT 1994.
(b) That the export quota applied to refractor y-grade bauxite is justified pursuant to
Article XI:2(a) of the GATT 1994, or is ot herwise justified pursuant to Article XX(g)
of the GATT 1994.
(c) The export quotas applied to coke and s ilicon carbide are justified pursuant to
Article XX(b) of the GATT 1994.

30 China's first written submission, para. 873.

IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the United States, the European Union, Mexico and China as set out in the
executive summaries of their submissions provided to the Panel are attached to these Reports as an
addendum (see List of Annexes, pages ix and x).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 Argentina, Brazil, Canada, Chile, Colombia, Ec uador, India, Japan, Korea, Norway, Chinese
Taipei, Turkey and Saudi Arabia reserved their third- party's rights to participate in the three disputes.
The European Union (with respect to WT/DS394 and WT/DS398), Mexico (with respect to
WT/DS394 and WT/DS395), and the United States (with respect to WT/DS395 and WT/DS398)
reserved their third-party rights to participate in the indicated Panel proceedings.
5.2 Chile, India and Ecuador did not present written submissions, and Argentina, and Turkey did
not submit oral statements to the Panel. The ar guments of Brazil, Canada, Colombia, Japan, Korea,
and Saudi Arabia are set out in their written subm issions and oral statements. Finally, Norway,
Chinese Taipei, the European Un ion (with respect to WT/DS394 and WT/DS398), Mexico (with
respect to WT/DS394 and WT/DS395), and the Un ited States (with respect to WT/DS395 and
WT/DS398), did not present either written submissi ons or oral statements to the Panel. The
arguments of the third parties, as set out in th eir submissions, or executive summaries thereof,
provided to the Panel, are attached to these Reports as an addendum.
VI. INTERIM REVIEW
6.1 On 18 February 2011, the Panel issued its Inte rim Reports to the parties. On 4 March 2011,
the United States, the European Union, Mexico, an d China submitted written requests for review of
precise aspects of the Interim Reports pursuant to Article 15.2 of the DSU. On 18 March 2011, the
United States, the European Union, Mexico, a nd China submitted written comments on each other's
requests for interim review. No party requested an additional meeting with the Panel.
6.2 The numbering of paragraphs and footnotes in the Final Reports has changed from the Interim
Reports. The text below refers to the paragra ph and footnote numbers in the Interim Reports
regarding which the parties requested review. The parties submitted several editorial revisions as well
as other linguistic changes, which were not contested by the other parties; the Panel also made minor
editorial and non-substantive consequential changes as a result of other adjustments. Such editorial,
minor and non-substantial changes we re made to paragraphs 7.2, 7. 4, 7.60, 7.63, 7.68, 7.79, 7.80,
7.82, 7.83, 7.85, 7.86, 7.88, 7.89, 7.90, 7.91, 7.96, 7.97, 7.102, 7.124, 7.151, 7.195, 7.221, 7.224,
7.227, 7.229, 7.231, 7.232, 7.233, 7.234, 7.246, 7.327 7.345, 7.352, 7.375, 7.376, 7.383, 7.389, 7.394,
7.404, 7.407, 7.415, 7.455, 7.456, 7.457, 7.459, 7.463, 7.464, 7.468, 7.469, 7.471, 7.495, 7.504, 7.505,
7.508, 7.512, 7.516, 7.518, 7.585, 7.588, 7.594, 7.599, 7.616, 7.623, 7.754, 7.781, 7.783, 7.860, 7.878,
7.879, 7.880, 7.965, and 7.1011; and footnotes 54, 524, 525, 526, 527, 546, 680, 1091, 1206, 1232,
1233 and 1234 . The Panel has also corrected typographical and other non-substantive errors
throughout the Report, including those identified by the parties, which are not referred to specifically
below. In order to facilitate understanding of the interim review comments and changes made, the
following section is structured to follow the organization of the Reports themselves.
A. T
HE DESCRIPTIVE PART OF THE REPORT
6.3 China requested minor changes to the Descriptiv e Part. The Panel adjusted paragraphs 1.9,
1.13 and footnotes 11, 2.2 and 3.5 accordingly.

B. I
SSUES RELATING TO THE PANEL'S TERMS OF REFERENCE
6.4 Regarding paragraphs 7.6, 7.21, 7.24, 7.53, and 7.228 , China argues that the Interim Reports
reflect an "inaccurate" description of China's pos ition in the dispute regarding the appropriate
treatment of 2009 measures. According to China, a "proper description" of China's argument would
reflect its position that "while the Panel could ma ke findings regarding the 2009 measures, it was not
entitled to make recommendations." China suggests inter alia that the Panel substitute the language
used in the paragraphs at issue with: "[a]lthough China accepted that the Panel could make findings
regarding the 2009 measures, it defended that the Pa nel could not formulate recommendations". The
United States and Mexico disagree with China's re quest and submit that the Panel's description of
China's position is generally correct. The European Un ion also submits that the Panel's description of
its position on the 2009-2010 measures issue is inaccu rate as it never requested the Panel to exclude
from its terms of reference "amendment or replace ment" of the 2009 measures. China disagrees with
the European Union's request and submits that th e Panel's description of the European Union's
position is generally correct. Finally, the parties also disagree on how the Panel should characterize
the situation of China with respect to its 2009 an d 2010 measures including in paragraphs 7:26, 7.32,
7.74.
6.5 To ensure the most comprehensive description of the parties' arguments on this issue, the
Panel has adjusted the relevant paragraphs of its Panel Reports acco rdingly and expanded its
references to the parties' submissions, including in paragraphs 7.5, 7.6, 7.7, 7.21, 7.24, 7.26, 7.30,
7.31, 7.32, 7.33, 7.53, 7.56, 7.74 and 7.228.
C. EXPORT DUTIES
6.6 Regarding paragraphs 7.70, 7.71, 7.79, 8.2(d), 8.9(d) and 8.16(d), China and the complainants
disagree as to the conclusion the Panel should reac h with respect to China's measure imposing an
export duty on yellow phosphorus.
6.7 The Panel has therefore adjusted its language to make clear that the relevant Chinese measure
imposing an export tariff on yellow phosphorus at the time of the Panel's establishment did not
include the special duty, which was removed by the Adjustment of Export Tariffs Circular. Thus, at
the time of the Panel's establishment, yellow phosph orous was subject to the regular export duty of
20%, which is consistent with the maximum rate lis ted in Annex 6 of China's Accession Protocol and
therefore consistent with China's WTO obligations . The Panel makes no findings with respect to
China's 2009 Tariff Implementation Program measure, (that is challenged by the complainants) which
applied a special duty rate on yellow phosphorus but which was removed before the Panel's
establishment.
6.8 The United States and Mexico request the Panel to refer to yellow phosphorus "special duty"
in paragraph 7.63, to state "as of 21 December" instead of "on 21 December" in paragraphs. 7.79,
7.82, 7.85, 7.88, 7.93, and 7.96, and to add that th e Panel's conclusions in pa ragraphs 7.80, 7.83, 7.86
and 7.97 on export duties claims for which China invokes an Article XX justification could only be
"provisional". These requests were not contested. The Panel adjusted these paragraphs accordingly.
6.9 Finally, China suggests changes to paragraph 7.73 where the Panel states that China had
removed its export duties on bauxite as of 1 January; the United States disagreed in part. The Panel
adjusted the paragraph to meet the concerns raised by both parties.

D. A
PPLICABILITY OF GATT ARTICLE XX TO VIOLATION OF PARAGRAPH 11.3 OF CHINA'S
ACCESSION PROTOCOL
6.10 Regarding paragraph 7.120, China requested clarification of the manner in which its argument
is presented with respect to the applicability of GATT Article XX to violations of its Accession
Protocol. The complainants also requested minor clarif ications with respect to the text in paragraphs
7.141, 7.142, 7.144 and 7.147, which China did not oppose. The Panel adjusted those paragraphs
accordingly and made conseque ntial changes to paragraphs 7.106, 7.107, 7.109, 7.110, 7.111, 7.112,
7.113, 7.121, 7.122, 7.125 and 7.126 to meet the concerns raised by both parties.
6.11 The European Union, regarding paragraph 7. 136, and all the complainants regarding
paragraph 7.140 , and the United States and Mexico, with respect to paragraphs 7.150, 7.153 and
7.158, requested certain deletions and clarifica tions and suggested changes that were opposed by
China. With a view to ensuring clarity in the Pa nel's explanation that the exceptions contained in
GATT Article XX are not available to export duties commitments included in China's Accession
Protocol, a number of consequential changes were introduced into paragraphs 7.139 to 7.152.
6.12 Regarding paragraph 7.160, the complainants requested that the Panel refrain from any
comment on the nature and extent of China's ac cession commitments. Chin a opposed this request.
The Panel revised slightly the text of this paragraph.
E. E
XPORT QUOTAS
6.13 China requested a series of minor modifications and clarifications to the Panel's description of
its export quota regime, including in paragraphs 7. 172, 7.174, 7.179, 7.183, 7.185, 7.192 and footnote
265, 7.195, 7.200,7.214, 7.219 to 7.223, 7.227 and 7.764. The complainants did not oppose those
requests, so the Panel adjusted its description accordingly.
6.14 Regarding paragraph 7.175, China requests th e Panel to clarify that, under Chinese law,
administrative authorities such as MOFCOM may only impose administrative sanctions, but not
criminal sanctions, for unlawful exportation of goods s ubject to restriction, or for forging or altering
import or export licences, quota certificates, or other documents. The United States and Mexico
request the Panel not to revise this paragraph to re fer only to administrative sanctions, but instead, to
replace the term "MOFCOM" with "China". The Panel adjusted this paragraph accordingly.
6.15 Regarding paragraph 7.180, China requests the Panel to clarify that China does not require
enterprises that seek to receive a zinc quota share for the first ti me to meet a prescribed quota
utilization rate or return unused annual quotas. The European Union objects to China's request. The
Panel has modified the paragraph.
6.16 Regarding paragraph 7.189 and footnote 258, China requests the Panel to refer to the group of
relevant administrative provisions governing export licences, and not to an undefined "regulations on
administration of export licenses". The United States and Mexico object to China's request.
Consequently, the Panel has updated the relevant paragraph to refer to the appropriate measures (the
2008 Export License Administration Measures) , and the footnote to refer to the 2001 Export License
Administration Provisions , the 2004 Export License Administration Measures , and the 2008 Export
License Administration Measures.
6.17 Regarding paragraphs 7.219 to 7.223, China re quests the Panel to remove the reference on
export quotas in respect of provisions that, in its view, do not "confer" or "relate to" "the authority to
impose an export quota on the products at issue". The complainants object to China's request and
submit that the measures identified by the Panel ope rate together to establish China's export quota for

each identified product, including measures im posing an export licensing framework and quota
administration measures, such as those relating to the operation of the quota bidding process. As
stated in paragraph 7.218 of the Interim Reports, the Panel considers that findings on such measures
are necessary so that annually renewed measures do not evade WTO dispute settlement review merely
through their expiration during the Panel proceedings. In light of this view, the Panel declines to
make the changes proposed by China. The Panel has modified the text of paragraph 7.218 of the
Interim Reports to clarify its position concerning the measures discussed above.
F. C
HINA'S DEFENCES TO THE APPLICATION OF EXPORT RESTRICTIONS
6.18 Regarding paragraph 7.244, China requests the Panel to modify and expand its reference to
China's submissions when describi ng the chemical and physical characteristics of refractory-grade
bauxite. China contends that the complainants ha ve also defined the product in the same manner.
The European Union submits that it never defined or described refractory grade bauxite in the context
of this dispute, but has only take n note of China's definition and d escription, and therefore objects to
China's request to indicate that the European Union defined the product in the same manner. In
addition, the European Union requests the Panel not attribute to the European Union the content of
Exhibit CHN-126, entitled "Report of the Ad-hoc Working Group on Defining Critical Raw
Materials". The United States and Mexico did not comment on China's proposed change.
6.19 The Panel has taken into account China's requ est. The Panel has also taken note of the
European Union's concern with attributing statem ents made in Exhibit CHN-126 to the European
Union. Finally, the Panel has reflected China's request to expand reference to its submissions.
6.20 Regarding paragraph 7.247, the European Union requests th e Panel to delete the last sentence
that reads: "In any event, Article XI:2(a) by its terms must be viewed through the prism of the
Member applying the restriction". The European Uni on states that the meaning of this sentence is not
clear. China objects to the European Union's re quest. The United States and Mexico did not
comment. The Panel considers that the statement referred to by the European Union is clear.
Accordingly, the Panel retains this language.
6.21 Regarding paragraph 7.271, China requests the Panel to include a description of the
complainants' objection to the use of Article XXXVI of the GATT 1994 as relevant context for
interpreting Article XI:2(a). China requests in partic ular that the Panel refer to comments made in the
United States' response to Panel questions and closing statement at the first substantive meeting. The
European Union submits that it has never argue d that Article XXXVI of the GATT 1994 does not
apply to China and the United States and Mexico di d not comment. The Panel adjusted the relevant
language.
6.22 Regarding paragraph 7.276, the European Union requests the Panel to remove the discussion
of Article XXI of the GATT 1994, stating that Article XXI is not at issue in the present dispute, nor
has it been discussed by the parties to the dispute. China objects to the European Union's request.
Accordingly, the Panel retains the language.
6.23 Regarding footnote 452, the European Union requests the Panel to rephrase its discussion to
reflect the European Union's argument made in connection with Article XX(i) of the GATT 1994.
The European Union argues that it referred to this pr ovision to show that China's interpretation of the
term "essential product" was too broad, but did not argue that inputs can never be "essential products"
under Article XX(i). China objects to the European Un ion's request. The Panel has modified the text
of the footnote to paraphrase more closely the Euro pean Union's argument in paragraph 192 of its
second written submission, without modifying the Panel's conclusion.

6.24 Regarding paragraph 7.280, the European Uni on requests the Panel to remove the last
sentence of the paragraph, arguing that this sentence places emphasis on the notion of "critical
shortage", while the remainder of the paragra ph addresses the notion of "essential products". China
submits that the request can better be addressed by modifying rather than deleting the sentence
through removal of the reference to "shortages". The Panel considers the modification proposed by
China clarifies the sentence in re lation to the rest of the paragr aph, and accordingly modified the
relevant language.
6.25 Regarding paragraph 7.281, the European Union requests the Panel to modify the text to
indicate that no agreement was reached on the conditi ons that should be met in order to determine
whether a good is "essential" within the meaning of Article XI:2(a), including products for use by a
downstream industry. The European Union request s the Panel to conclude that the discussion on
merino sheep does not meet the conditions for the application of Article 31(2)(a) of the Vienna
Convention in relation to the de finition of the terms "essential products". China objects to the
European Union's request to modify the final tw o sentences of the discussion. The Panel considers
that paragraph 7.281 as formulated correctly reflects the Panel's view on the relevance to its
interpretation of the discussions. Nevertheless, the Panel has incorporated a footnote to clarify its
views.
6.26 Regarding paragraph 7.344, China requests the Panel to add an additional element to its
assessment of the complexity of determining a subs titute for refractory-grade bauxite by referring not
only to the complexity in switching from one material to the next, but also in switching from one
supplier to the next. The European Union objects to China's proposed change, submitting that Exhibit
CHN-126 does not express the view of the European Union or the arguments in this dispute. The
European Union further submits that there is no evidence on record to support the conclusion that
changing the type of material used for refractory applications would necessarily entail a change in
supplier.
6.27 The Panel notes that China's proposed modifica tion is based on a statement it made in the
second substantive meeting of the Panel in light of Exhibit CHN-511, not Exhibit CHN-126 as raised
by the European Union when commenting on China' s requested change. Unlike Exhibit CHN-126,
Exhibit CHN-511 does not include any disclaimer that the report does not represent the views of the
Commission. Exhibit CHN-511, however, calls attention to the time and costs involved with
switching suppliers. Accordingly, the Panel consider s it appropriate to reflect the requested change.
In doing so, the Panel does not consider that Chin a's proposal requires reaching the conclusion that
changing the type of material used would necessarily entail a change in supplier. For clarity, the
Panel has included the statement "and potentially, from one supplier to the next" and relevant citation.
6.28 Regarding paragraph 7.351, the European Union requests the Panel to remove the last two
sentences of paragraph 7.351 addressing the remaini ng life span of the good at issue and capacity or
reserve that may be developed. The European Union argues that these sentences address the factual
situation of whether there is currently a "shortage" in the availability of the good, and not the question
of whether China faces a "critical shortage" within the meaning of Article XI:2(a) of the GATT 1994.
China objects to deleting the final two sentences of the paragraph. In addition, China requests the
Panel to reflect its response to the complainan ts' assertion that refractory-grade bauxite has a
remaining lifespan of 91 years, instead of 16 years. China also requests the Panel to provide a citation
to its argument that lifespan reserve estimates coul d not change due to advances in reserve detection
or extraction techniques. The complainants do not object to China's request to add references.
6.29 The Panel declines to make the change requested by the European Union. In the absence of
objection, the Panel refers to China's response in its second oral statement.

6.30 Regarding paragraph 7.352, China requests the Pa nel to explain its statement that China has
not provided specific evidence that there are "new" barriers to investment that have disrupted the
availability of refractory-grade bauxite. The Europ ean Union submits that the word "new" should be
replaced with "now". The Panel revised the sentence by removing the word "new".
6.31 All parties make comments on the Panel's use of the terms "ba uxite" and "refractory bauxite"
and high-alumina clay. The Panel understands that China's export restriction applies to bauxite while
China's justifications pursuant to GATT Article XI.2(a) and GATT Article XX(g) are limited to
refractory-grade bauxite (referred to interchang eably as high-alumina clay), which comprises some
75% of Customs Commodity Code 2508.3000.00. Therefore the Panel adjusted language in
paragraphs 7.238, 7.239, 7.323, 7.324, 7.416 and its footnote 625, and 7.612, accordingly.
6.32 With respect to paragraphs 7.375, 7.376 and 7.383, the complainants challenge the Panel's use
of the Appellate Body jurisprudence under GATT Artic le XX(b) when referring to a "comprehensive
policy comprising a multiplicity of interacting m easures", for justifications made pursuant to
paragraph (g) of Article XX. The complainants' re quest was contested by China. The Panel made
minor changes to the relevant paragraphs in order to ensure clarity.
6.33 In paragraph 7.381 and its footnote 588, China wants the Panel to add references to its
arguments that WTO Members' actions over their natural resource-based products must in no case
interfere with their sovereignty ove r natural resources. It asks the Panel to emphasize the need for
developing countries to make optimum use of their resources for their development, as they deem
appropriate, including the processing of their raw ma terials. China also asks the Panel to introduce
references to Mexico's prior statement to that e ffect. The complainants oppose all these requests by
China. With a view to ensuring that China's arguments are fully reflected, the Panel adjusted
paragraph 7.356, 7.381 and footnote 588.
6.34 The United States and Mexico request clarificat ion of the Panels' definition of the term
"conservation" in paragraph 7.372 and its footnote 575. China in part contests this request. The Panel
adjusted the language. On that occasion the Panel has also clarify the term "restricton" in paragraph
7.394 on restriction.
6.35 With respect to paragraphs 7.389, 7.390 and 7.459 , China requests the Panel to modify the
description of its arguments and that of the Eur opean Union with respect to the even-handedness
requirement of paragraph (g) of Article XX. The European Unon contests. The Panel revised slightly
the description of both parties's arguments.
6.36 With respect to paragraph 7.429, China requests de letion of this paragraph, which refers to an
author who has argued that export restrictions can ha ve the same effect as a subsidy. The European
Union opposes any such change and the United States and Mexico suggest adding a precision. The
Panel modified the language accordingly and added a footnote to clarify that it was not referring to a
subsidy within the meaning of the SCM Agreement.
6.37 The United States and Mexico request for consiste ncy considerations that the Panel refer to
"WTO-consistent" alternatives and not to "less-trad e restrictive" alternatives. China opposes this
change. The Panel notes that the Appellate Body uses both expressions interchangeably.
Nonetheless, the Panel adjusted pa ragraph 7.491, 7.563, 7.588 and the titles before paragraphs 7.488,
7.559, 7.563. and 7.609.
6.38 With respect to paragraphs 7.457 and 7.465, the complainants raise objections to the Panel's
characterization of the nature of the new mechanis ms ("caps") put in place by China in 2010 as well

as to the Panel's comments on the new efforts by Ch ina and reflected in some of China's new 2010
measures. China opposes such changes. The Panel introduced minor linguistic changes.
6.39 The European Union requests various revisions of paragraphs that refer to the Panel's
assessment of the evidence put forw ard by the parties in the context of China's defence under GATT
Article XX(b). With respect to paragraph 7.51 2, the European Union requests deletion of this
paragraph whereas China opposes any deletion. With respect to paragraphs 7.537 on the evidence
submitted for EPRs, and to 7.514 (and the related paragraph 7.525) dealing with the impact of the use
of export restrictions on growth and pollution, the European Union requests deletion or rephrasing of
certain phrases. China opposes this request. This is also the case w ith regard to paragraphs 7.518,
7.528 and 7.537.
6.40 With respect to paragraph 7.600 , the United States and Mexico request the Panel to include a
reference to their argument that secondary productio n of manganese metal is not feasible and did not
occur. China contests this and requests a reference be inserted to its evidence in this regard. The
Panel adjusted all of these paragraphs.
G. E
XPORT QUOTA ALLOCATION AND ADMINISTRATION
6.41 Regarding paragraph 7.632, China requests the Panel to modify its description of China's
defence regarding claims under Article X:1 with respect to publication of the zinc quota. The
European Union comments that the current text acc urately reflects the arguments advanced by the
European Union and China and that there is no need for modification. The Panel notes that paragraph
7.632 is in the nature of a brief outline of the complainants' export quota allocation and administration
claims and, consequently, will not include all the parties' arguments. However, the Panel agrees to
make additions to the text as proposed by China.
6.42 Regarding paragraph 7.769, China states that the first sentence of paragraph 7.769 may
suggest that the translation of the Chinese term in to "operation capacity" is disputed by the European
Union. The European Union considers that the cu rrent text does not need to be amended. The
European Union continues that the preceding para graph introduces the European Union's claim and
the use of the term "business management cap acity" and that paragraph 7.679 presents China's
response and its use of the alternative term "operation capacity".
6.43 The Panel considers that when read together with paragraph 7.678, paragraph 7.679 makes
clear that China disputes the translation of this phr ase by the European Union. The Panel also refers
to footnote 1047 to paragraph 7.717 wherein it described th e use of this term by the parties. As this is
the first substantive discussion by the Panel of the operation capacity criterion, this seems the most
appropriate place for the footnote referred to above. The Panel agrees with China that there was no
dispute as to the correct translation, but declines to make the modification requested by China for the
stated reason.
6.44 Regarding paragraph 7.701, the European Union suggests that the Panel's description of the
panel report in Argentina – Hides and Leather may be confusing. It proposes a description of that
report which refers to the panel in that case finding a violation of Article X:3(a) on the basis that the
disputed administration "caused prejudice to traders" . China asks the Panel to reject the European
Union's request, explaining that China has not been able to identify a passag e in the report reflecting
the standard asserted by the European Union.
6.45 The Panel has decided to maintain th e description of the panel report in Argentina – Hides
and Leather in light of the fact that it has been unable to find a reference in Argentina – Hides and
Leather to the description proposed by the European Union.

6.46 Regarding paragraph 7.727, China asks the Pane l to amend this paragraph to reflect its
argument that a complainant must show that a measure "necessarily leads to" WTO-inconsistent
administration. The European Union considers that Ch ina's suggestion is not justified, stating that the
Panel has already considered China's interpretation of the phrase "necessarily leads to" and rejected it.
The European Union notes that in paragraph 7.72 7, the Panel discusses other aspects of China's
arguments and that there is no need to make any re ference to the issue of "necessarily leads to" as this
has already been resolved.
6.47 The Panel agrees to modify the final sentence of paragraph 7.727 so as to reflect the aspect of
its arguments requested by China, but it does so without deleting the phrase proposed by China.
6.48 Regarding paragraph 7.770, China asks the Panel to amend the list of measures as relevant to
the administration of China's export quotas, in particular, the CCCMC's involvement. The United
States and Mexico submit that the measures identif ied operate together to establish China's export
quota regime, including the administration of quotas, and argue that China's contentions are not
supported by the record in the dispute. The Panel has modified paragraph 7.770 and made
consequential changes to paragraphs 7.771 and 7.77 2 to reflect that the measures listed in paragraph
7.770 have been submitted by the United States and Mexico.
6.49 Regarding paragraphs 7.816 to 7. 838 and 7.845, China requests the Panel to insert text to
distinguish between what it describes as the "scope" and the "content" of application of
Article VIII:1(a). Specifically, China asks the pa nel to include the phrase "imposed on or in
connection with importation or exportation" in certain locations (in paragraphs 7.829, 7.830, 7.831,
7.838, and 7.845) as ell as additional text. China cont ends that the Panel means that Article VIII:1(a)
applies solely to fees and charges imposed on or in connection with importation or exportation, and
prohibits such fees and charge only insofar as they are not limited to the approximate costs of services
rendered. The complainants do not object to this change. The Panel has included China's requested
changes to paragraphs 7.829, 7.830, 7.831, 7.838, and 7.845 to clarify its analysis.
6.50 Regarding paragraph 7.856, China requests the Panel to both revise the structure of the
paragraph and provide greater detail concerning its me thod of interpretation and the application of its
interpretation to conclude that the bid-winning pri ce is not a "charge applied to exporters" within the
meaning of Paragraph 11.3 of China's Accession Pr otocol. China requests the Panel to address the
interpretation of Paragraph 11.3 and application of this interpretation separately, and to expand upon
analysis and application of its interpretation. Th e United States and Mexico object to China's request
for the Panel to provide further detail regarding its interpretation of Paragr aph 11.3 and consequent
assessment of the complainants' claim.
6.51 The Panel explained that it would interpret Pa ragraph 11.3 of China's Accession Protocol in
accordance with the general rule of treaty interpretation as codified in Article 31 of the Vienna
Convention, and therefore sees no reason to furt her expand upon its approach. The Panel has
included a cross-reference to its consideration of the term "charge" in paragraph 7.819.
H. E
XPORT LICENSING
6.52 Regarding paragraph 7.860, the United States requests the Panel to distinguish between
products that are subject to export quota administra tion and those that are subject only to licensing
requirements. China does not object to this change . The Panel has incorporated the United States'
requested change.
6.53 Regarding paragraphs 7.884 a nd 7.927, China requests the Panel to include a description of
the 2008 Export Licensing Working Rules at paragraph 7.884, instead of 7.927. In addition, China

asks the Panel to include the additional description that the 2008 Export Licensing Working Rules are
"an internal guide for the personnel of the license-is suing authorities on how to apply the applicable
laws and regulations", with citation.
6.54 The United States and Mexico submit that the final sentence of paragraph 7.927 sets out
China's arguments on the role and function of the 2008 Export Licensing Working Rules and should
not be relocated. They submit that paragraph 7.884 sets forth undisputed facts relating to the
operation of China's export licensing system. The United States and Mexico do not however object to
China's request to amend the text of this sentence.
6.55 The Panel has included additional description of the 2008 Working Rules on Issuing Export
Licenses, but considers it inappropriate to move the description to paragraph 7.884.
6.56 Regarding paragraph 7.906, the United States requests the Panel to state that export
restrictions under Articles XI, XIII, XVIII, XIX, XX and XXI could be implemented through a
licensing regime, as opposed necessarily being impl emented through such regime. China does not
object to the change, but requests that the second sente nce of this paragraph be revised to substitute
"may" for "would necessarily", and to refer to a licen sing regime as an example. Accordingly, the
Panel has reflected the parties' requests.
6.57 Regarding paragraph 7.907, China requests the Panel to include an additional sentence
referring to its argument that "there is no reason to assume that" the drafters intended to exclude
contextual guidance from the Import Licensing Agreement for the purposes of interpreting
Article XI:1. The European Unio n requests the Panel to reject Ch ina's proposed changes, submitting
that the current paragraph accurately represents th e relevant views. The Panel considers China's
views on the relevance of the Import Licensing Agreement as context for interpretation of Article XI:1
are adequately reflected in the first sentence of paragraph 7.907, and therefore declines China's
request to modify the text. The Panel has include d the additional reference proposed by China at the
end of the first sentence to paragraph 7.907.
6.58 Regarding footnote 1290, the European Union requests the Panel to refer to Exhibit JE-73, the
Regulation on Import and Export Administration . China does not object to this change, but asks the
Panel to also refer to Exhibit CHN-152 and its translation of the Regulation on Import and Export
Administration in footnotes 1290, 1291 and 1292. The Panel has incorporated the requested changes.
6.59 Regarding paragraph 7.927, China requests the Panel to clarify the phrase "goods subject to
quota licence administration" either by replacing it with the phrase "goods subject to quotas directly
allocated", or by adding a footnote to clarify th e meaning of the phrase. The complainants do not
object to this change. The Panel has incorporated the requested change.
6.60 Regarding paragraph 7.928 and footnote 1309, China requests the Panel to revise the first and
second sentences to reflect that Article 11(7) of the Measures for the Administration of Licenses for
the Export of Goods applies solely to goods that are not subject to a quota, and that the 2010 Export
Licensing Catalogue includes a notation that export licences for unwrought zinc and manganese will
be "applied for and granted" upon presenta tion of an export contract in the 2010
Catalogue, which
constitutes an "approval" by MOFCOM under Article 11(7).
6.61 The European Union submits that the current paragraph accurately presents China's view, and
therefore objects to the change. The European Un ion further submits that it is not clear how the 2010
Export Licensing Catalogue can be understood as an "approval within the meaning of Article 11(7)".

6.62 The Panel has incorporated the changes to the paragraph given that the requested modification
reflects China's arguments as presented to the Panel. In addition, the Panel has clarified references to
aspects of the complainants ' claims concerning goods that are not subject to a quota in paragraphs
7.883, 7.884, 7.925, 7.929, 7.941, 7.944, 7.948 and 7.950.
6.63 Regarding paragraph 7.930, the European Union requests the Panel to harmonize its reference
to the Measures for the Administration of Export Licenses. China does not object to this change. The
Panel has incorporated the requested change.
6.64 Regarding paragraph 7.934, China requests the Panel to delete the paragraph or otherwise
modify what China describes as an "incomplet e and inaccurate" characterization of China's
notification to the Market Access Committee of au tomatic and non-automatic licensing rules. China
submits that statements made on licensing requireme nts in place amount to an "inference" made by
the complainants. In addition, China argues there is no basis to conclude that any measure notified to
the Committee and characterized as "quantitative rest rictions" was in reference to the "licensing
requirement" as opposed to the export quota itself. Fi nally, China submits that the notification to the
Market Access Committee does not constitute an independent assessment of whether the measures are
inconsistent with Article XI:1. The European Union agrees with China's proposed deletion. The
United States and Mexico did not comment.
6.65 The Panel has removed the second sentence of paragraph 7.934 given that the Panel's
discussion does not depend on China's 2008 notificati on to the Committee on Market Access. The
Panel has retained the first sentence of paragraph 7.934 and merged it with the subsequent paragraph.
6.66 Regarding paragraph 7.936, the European Uni on requests the Panel to remove the language
"including for numerous reasons similar to tho se sets out in GATT Articles XX and XXI", arguing
that these provisions as reflected in Chinese law are not at issue in the present dispute. China objects
to the suggest change. The Panel has retained its reference to this provision.
6.67 Regarding paragraph 7.967, the European Union requests the Panel to modify the text to
conclude that none of the underlying measures impl emented through the export licences at issue is
justified by any provision of the GATT, and ther efore the export licences are inconsistent with
Paragraph 1.2 of China's Accession Protocol and Pa ragraph 162 of China's Working Party Report.
The European Union submits that, pursuant to these provisions, China cannot impose a requirement to
obtain an export licences unless there is justificat ion for imposing the export licence under some
provision of the GATT 1994. The European Union c ontends that China has not argued that there is
some GATT provision that justifies the imposition of its export licences. Therefore, the European
Union considers China's export licences are also in consistent with Paragraph 162 of the Working
Party Report.
6.68 China submits that the European Union did not argue that Paragraph 162 requires the repeal
of "all" export licences unless they can be justified un til its final submission, and that this is a new
position and fundamentally changes the nature of the European Union's claim. China objects to this
change on due process grounds. In the event the Pa nel were to forgo the exercise of judicial
economy, as requested by the European Union, Chin a requests the Panel to find that the European
Union has failed to make a prima facie case of inconsistency.
6.69
 In light of the European Union's request, the Panel has added language explaining the
complainants' claims under Paragraphs 162 and 165 as concerns China's export licensing requirements
at issue. The Panel does not agree with the request of the European Union to reverse its decision in
respect of certain aspects of the complainants' clai ms and considers that such a request goes beyond
the scope of Article 15.2 of the DSU.

I. M
INIMUM EXPORT PRICES
6.70 Regarding paragraph 7.1020, the European Uni on requests the Panel to delete the words "at
least until 28 July 2010" and requests the Panel to refer to the date of establishment of the Panel.
6.71 China objects to the European Union's request. China submits that the Panel reached its
finding that China had the authority to coordinate export prices until the formal repeal of measures in
28 July 2010. China submits that this finding in paragraph 7.1030 addresses the separate question of
whether China enforces an MEP requirement thr ough penalties imposed on exporters and licensing
entities, and does not justify making the change.
6.72 The Panel declines to make the change request ed by the European Union. The Panel's
reference to 28 July 2010 reflects evidence provide d by China of the formal repeal of measures
authorizing the coordination of export prices in 2010 (the CCCMC Resolution on Abolition of
Coordination and Administration of Export Commodities). The Panel's acknowledgement of this date
does not affect the Panel's conclusion that China ha d in place a system to coordinate export prices at
the time of the Panel's establishment. For consistency, the Panel has also amended paragraphs 7.1030
and 7.1045 to refer to the date 12 Septembe r 2010, when China formally repealed the Export Price
Penalties Regulations and Article 40(3) of the Measures for Administration of Licensing Entities by
Order No. 2 of 2010 of MOFCOM. These changes do not affect the Panel's conclusion that China had
in place a system to impose penalties on exporters a nd licensing entities at the time of the Panel's
establishment.
6.73 Regarding paragraph 7.1038, which discusses the repeal by resolution of the CCCMC Bauxite
Branch Coordination Measures on 28 July 2010 and China's argument that the measure was declared
inapplicable on 9 January 2008, the United States requ ests the Panel to cross refer to its explanation
that the CCCMC Bauxite Branch Coordination Measures remained "on the books" at the time of the
Panel's establishment. China does not object to th is change. The Panel has included a footnote to
indicate its earlier discussion on the status of CCCMC Bauxite Branch Coordination Measures.
J. CONCLUSIONS AND RECOMMENDATIONS
6.74 Regarding paragraph 8.1, the United States a nd Mexico request the Panel to format its
conclusions and recommendations such that conclu sions and recommendations for each dispute are
set out on separate pages, with each page bearing only the report symbol relating to that dispute. The
Panel has incorporated the requested change.
VII. FINDINGS
A. ISSUES RELATING TO THE PANEL'S TERMS OF REFERENCE
1. Preliminary rulings
7.1 This dispute raises several issues affecting the competence and the terms of reference of the
Panel. The Panel recalls that it issued two sets of preliminary rulings concerned, inter alia, with
aspects of its terms of reference. As noted, the fi rst phase of the preliminary ruling was issued to the
parties on 7 May 2010 and circulated on 18 May. The Panel issued the second phase of its preliminary
ruling to the parties on 1 October 2010. At the request of the United States and Mexico, this second
phase was circulated only to the third-par ties but not to the entire WTO Membership.
31 These

31 Communication from the United States, dated 12 October 2010; Communication from Mexico, dated
21 October 2010. See also Communications from China, dated 13 October 2010 and 15 October 2010.

preliminary rulings are an integral part of the present findings and are attached to the Panel Reports as
an annex (see List of Annexes, pages ii and iii).
7.2 The Panel made the following rulings in the first phase of its preliminary ruling dated
7 May 2010:
(a) The Panel's terms of reference are limited to those measures explicitly identified by
bullet points in each of the three sections of the complainants' Panel Requests.
(b) Of these measures, the term "related measures" referred to in the last bullet point in
each of the listed measures is too broad and unspecific a term and therefore falls
outside the Panel's terms of reference.
(c) The Panel's terms of reference are not limited to those products falling under the tariff
lines described in footnotes one to nine of the Panel Requests; rather, these tariff lines
are only indicative of the broad scope of the challenge.
(d) The Panel Requests include the two corrected tariff lines regarding zinc.
(e) The complainants' claims under paragraph 34 2 of the Report of the Working Party on
the Accession of China fall outside the Panel's terms of reference.
(f) The Panel will not consider the preliminary ruling submitted by the complainants in a
separate, ongoing panel proceeding.
(g) Until it has examined the Complainants' firs t written submissions and in order to
preserve fully China's ability to defend itself, the Panel decides to reserve its decision
on:
(i) Whether the Complainants' Panel Request s sufficiently identify the measures
at issue and the products possibly affected by such measures.
(ii) Whether the Complainants' Panel Requests provide for a summary of the
legal basis of the complaint sufficient to present the problem clearly.
7.3 The Panel made the following additional rulings in the second phase of its preliminary ruling
dated 1 October 2010, after assessing the first written submissions of the complainants:
(a) Sections I, II and III of the complainan ts' Panel Requests sufficiently identify the
products concerned by the challenged measures.
(b) The complainants' Panel Requests, as clar ified by their first submissions, provide
sufficient connection between the measures listed in Section III and the listed claims
of violations, with the exception of the European Union's publication claim
concerning coke quotas.
(c) The Panel's terms of reference with respect to claims relating to China's alleged
coordination of minimum export prices are limited to assessing the WTO
compatibility of the following six measures th at were identified in the complainants'
Panel Requests: (i) Measures for Administration of Trade Social Organizations
32;

32 Exhibits CHN-313, JE-101.

(ii) Regulations for Personnel Manageme nt of Chambers of Commerce
33; (iii) 1994
CCCMC Charter 34; (iv) 2001 CCCMC Charter 35; (v) Export Price Penalties
Regulations36; and (vi) Measures for Administration of Licensing Entities.37
7.4 Other issues relating to the Panel's terms of re ference are addressed by the Panel throughout
the Panel Reports. When necessary, the Panel ruled on such matters in the relevant section of the
finings of its Panel Reports.
2. Additional legislative instruments enacted by China during the Panel process
7.5 During this Panel process  that is, between the date of the Panel's establishment on
21 December 2009 and the date parties submitted co mments on parties' responses to questions posed
by the Panel on 15 December 2010  China enacted 109 legislative instruments in areas relevant to
this dispute. Several of the measures challenge d by the complainants expired during the Panel
process and some of the 2009 measures were replaced in 2010 with different provisions. The parties
disagree as to whether the Panel should consider the 2010 measures. Several of the 2010 laws and
regulations that were put in place, according to Ch ina, in the context of its economic, development,
environment and health policies, are discussed in the section of our Reports dealing with China's
defence under Articles XX(b) and XX(g).
7.6 China makes a general point in respect of all claims that the Panel should not consider the
2009 measures invoked by the complainants in sup port of their claims where those measures have
been replaced by 2010 measures. Several of the measures challenged by the complainants are annual
measures. China submits that it would serve no purpo se for the Panel to rule on annual measures that
have ceased to exist since they no longer violate WTO obligations or nullify or impair benefits. 38
Although China also noted that panels can ma ke findings regarding an expired measure39, the overall
thrust of China's arguments throughout the proceed ings was that the Panel should not review or
examine the 2009 measures. China presented no defen ce or justification for the export restraints
imposed by the 2009 annual measures that were not imposed by the 2010 annual measures. In its first
submission China explicitly stated, "China's submission addresses the new [2010] measures, and not
the expired [2009] measures."
40 This is the case, for example, with the Notice Regarding the 2009
Tariff Implementation Program , which was replaced by the 2010 Notice Regarding the Tariff
Implementation Program . For China, the Panel should base its consideration of the complainants'
claims against certain export duties on the 2010 Notice and should not consider the 2009 Notice.41

33 Exhibits CHN-315, JE-102.
34 Exhibit JE-86.
35 Exhibits CHN-16, JE-87.
36 Exhibits CHN-350, JE-113.
37 Exhibits CHN-358, JE-75.
38 See for instance China's first wr itten submission paras 49-51, 56, 62, 64 and 67; see also China's
second written submission, section II entitled "Panel Sh ould Rule on the 2010 Measures To resolve the
Disputes, and Should Not Rule on the 2009 Measure" and para. 12, "In sum, the prompt and positive resolution
of this dispute calls for the Panel to address the 2010 measures, and not the 2009 measures."
39 See China's first written submission, para. 52.
40 China's first written submission, para 70. See Chin a's response to Panel question No.2 following the
second substantive meeting, para. 9 ("For this reason, China makes arguments and defences regarding the 2010
export duties and export quotas").
41 This is the case for export duties on bauxite, fo r example. The complainan ts claim that in 2009,
when this Panel was established, China maintained expo rt duties on bauxite. China's contention is that as of
1 January 2010, it no longer maintains export duties on bauxite and hence China does not seek to justify the
export duties that it imposed on bauxite during 2009, or on 21 December 2009 – the date of establishment of

7.7 For the complainants, the Pane l's competence should be derived from the legal situation
prevailing on the date of the establishment of the Pa nel, namely 21 December 2009. They maintain
that the Panel is obliged to make findings a nd recommendations on the invoked 2009 measures, even
if they have ceased to exist during the panel pro cess. They also argue that the Panel should not
consider the claims as addressing the 2010 measures. According to the comp lainants, the measures
invoked in the context of China's defence under GATT Article XX form part of China's evidence and
should be evaluated as evidence, but not as measures per se.
7.8 The Panel will consider first whether its WT O consistency assessments and related findings
and recommendations should be based on the meas ures in force at the time of the Panel's
establishment or rather on replacement measures enacted during this Panel process. This analysis will
be carried out bearing in mind that after 21 December 2009 and during this Panel process, some of the
2009 annual measures ceased to exis t and were replaced by 2010 a nnual measures that remained in
force until 15 December 2010 when the parties filed their last submissions with the Panel.
7.9 The Panel recalls that it was established on 21 December 2009.
 42 This is the date the DSB
mandated the Panel to examine the claims of th e United States, the European Union and Mexico
relating to a series of measures taken by China and identified in the complainants' Panel Requests.
7.10 Article 7 of the DSU provides that panels sha ll have standard terms of reference unless the
parties agree otherwise. These standard terms of refe rence are to examine in the light of the relevant
provisions the matter referred to the DSB by the co mplainant in the request for establishment and to
make such findings as will assist the DSB in making recommendations. This Panel has been
established with standard terms of reference. 43 A panel's terms of reference are important because
they set the parameters of the panel's jurisdicti on and define which specific measures must be the
object of findings and recommendations pursuant to Articles 11, 12.7 and 19 of the DSU. Article 7 of
the DSU provides that a panel's terms of reference are based on the complainant's panel Request.
7.11 A panel request must comply with Article 6 of the DSU, which sets out conditions for
establishment of panels. WTO panels and the Appe llate Body have clarified the requirements of
Article 6.2 of the DSU, stating that the require ment that a panel request identify the "specific
measures at issue", implies that "the measures included in a panel's terms of reference must be
measures that are in existence at the time of the establishment of the panel".
44
7.12 Some panel requests, such as those of the compla inants in this dispute, include a phrase that
broadens a panel's terms of re ference by adding to measures specifically listed the following
measures: "any amendments or extensions; related measures; replacement measures; renewal
measures; and implementing measures". This phrase h as been interpreted as authorising a panel to
consider within its terms of reference measures enacted after the panel's establishment.
7.13 In Chile – Price Band System , for instance, where the panel's terms of reference included a
similar phrase, the Appellate Body concluded that th e panel in that case had the authority to examine
a legal instrument enacted after the establishment of the panel because that particular instrument
amended a measure identified in the Panel Request but the amendment did not change the "essence"

this Panel. China asserts that since 2010, it has not imposed a tariff duty on any of the three forms of bauxite at
issue: refractory-grade bauxite (2508.3000), aluminium ores and concentrates (2606.0000) and aluminium ash
and residues (2620.4000), and that the Panel should make findings and recommendations on China's 2010
measure only. (China's first written submission, para. 84).
42 WT/DSB/M/277 (Minutes of the Dispute Settlement Body).
43 WT/DSB/M/277 (Minutes of the Dispute Settlement Body).
44 Appellate Boy Reports, EC – Chicken Cuts, para.156 and EC – Selected Customs Matters, para. 184.

of the identified measure.
45 The Appellate Body explained th at it did not "condone a practice of
amending measures during dispute settlement proceedings if such changes are made with a view to
shielding a measure from scrutiny by a panel or by [the Appellate Body]". 46 It observed that "the
demands of due process are such that a complaining party should not have to adjust its pleadings
throughout dispute settlement proceedings in orde r to deal with a disputed measure as a 'moving
target'. If the terms of reference in a dispute ar e broad enough to include amendments to a measure –
as they are in this case – and if it is necessary to consider an amendment in order to secure a positive
solution to the dispute – as it is here – then it is appropriate to consider the measure as amended in
coming to a decision in a dispute."47 The Appellate Body did not consider that including the amended
measure within the panel's terms of reference raised due process issues in that case.48
7.14 The recent panel in EC – IT Products addressed the issue of measures updated annually; in
that dispute, the Panel Request referred to cer tain measures as well as to amendments thereto. 49 One
of the measures had been updated on at least one occasion during the panel proceedings. Specifically,
the panel considered an annex to a 1987 regulati on, which had been amende d annually to update the
European Union's domestic tariff nomenclature. Th e panel considered its terms of reference were
broad enough to address not only the version in force at the time of the panel's establishment, but also
subsequent versions of the regulation, as amended. Under the particular facts of that case, the panel
determined that the subsequent versions did not change the essence of the original measure. 50 The
panel in EC – IT Products thus applied the approach taken in the Chile – Price Band System dispute,
where the Appellate Body concluded that the measur e at issue should include the amendment at issue
"because that law amends [the original measure] without changing its essence." 51 That panel also
reasoned that to include such measures within the panel's terms of reference would prevent changing
measures from evading review.52
7.15 The Panel observes that the complainants' Panel Re quests in this dispute refer, in addition to
the measures specifically identified, to "any amendments or extensions; related measures; replacement
measures; renewal measures; and implementing measures". Thus, a priori this Panel has the
authority53 to consider within its terms of referenc e amendments and replacement measures adopted
after the Panel's establishment. In other words, th e Panel is entitled to examine measures that existed

45 Appellate Body Report, Chile – Price Band System , para. 139; see also para. 135: "First of all, we
note that Argentina's request for the es tablishment of a panel refers to the measure in issue as the price band
system "under Law 18.525, as amended by Law 18.591 and subsequently by Law 19.546, as well as the
regulations and complementary provisions and/or amendments" (emphasis added). Such amendments, in our
view, include Law 19.772. The broad scope of the Panel Request suggests that Argentina intended the request
to cover the measure even as amended. Thus, we conclude that Law 19.772 falls within the Panel's terms of
reference."
46 Appellate Body Report, Chile – Price Band System, para. 144.
47 Appellate Body Report, Chile – Price Band System, para. 144.
48 Panel report, India – Additional Import Duties , para. 7.63, the panel determined that the two
measures examined (CN 32/2003 and CN 82/2007) had oppo site legal effect. While the first measure specified
the tax rates of additional duties applicable to certain products, the second one exempted those same products
from such duty rates. Thus, the panel observed that both the legal and practical effects resulting from the old
measure and the new one were substantially different, thus of a different essence. Under the circumstances, the
panel considered that ruling on the old measure could contribute to securing a positive solution to the dispute,
whereas ruling on the new measure (that modified importantly the original one) would not do so.
49 WT/DS375/R, WT/DS376/R, WT/DS377/R
50 Panel Report, EC – IT Products, paras. 7.141, 7.142, and 7.146.
51 Appellate Body Report, Chile-Price Band System, paras. 136-139.
52 Panel Report, EC – IT Products, paras. 7.141, 7.142, and 7.146.
53 The Panel recalls that the complainants requested the Panel only to consider the original 2009
measures and should abstain from making any findings on the WTO consistency of the 2010 measures.

at the time of its establishment as well as measures that came into effect after that date if they are of
the same essence as the original ones that formed the basis of the Panel's terms of reference.
54
7.16 In the Panel's view, this approach original ly developed in connection with amendments
enacted after a panel's establishment should also ap ply to replacement measures that are of the same
essence as original measures specifically identified in the Panel Request. The Appellate Body's
rationale for including amendments of the same e ssence applies equally to replacement measures so
that replacement measures of the same essence should also be assessed by a panel in order to secure a
positive solution to a dispute.
7.17 The Panel turns now to consider the issue in this case concerning annual and replacement
measures. China's legislative system for the imposition of duties comprises a basic framework
legislation, an implementation re gulation and annual measures that set the level of duty for specific
products.55 For quotas, there is also a basic framework legislation and an impl ementation regulation,
then a set of regulations applicable to the rele vant allocation system – direct allocation or quota
bidding – and finally a set of measures (of varying duration, from a few months to a year or
indefinite) that determine the level of quotas for specific products. 56 The question before us is
whether, if a new annual measure corrects the WTO inconsistency of the measure it replaces, the new
measure can be said to be of the same essence and he nce, fall within our terms of reference. In our
view, the WTO consistency of a measure is necessarily relevant to its "essence", at the very least in
the context of WTO dispute settlement procedures. If a new measure appears to be WTO consistent,
while the original was not, the ne w measure takes on a different character in the context of WTO
dispute settlement and cannot be said to be of the "s ame essence". In such a situation, enlarging the
Panel's terms of reference to include replacement measures having a different essence would run
counter to DSU Articles 6.2 and 7, which circumscribe the task of a panel in a particular case, and to
the tenets of due process referred to above.
7.18 Applying this conclusion to the case before us , to include within our terms of reference
measures that are not of the same essence as the re lated 2009 measures would, in our view, not be
legally justifiable. Moreover, a respondent would not know from one day to the next what the case is
that it has to meet. This is particularly important where, as in this dispute, numerous measures came
into existence during the course of a panel proceeding.
7.19 In sum, the date of a panel's establishment is critical in deciding which measures may be
included in a panel's terms of reference. As noted earlier, a panel's terms of reference prescribe which
specific measures will be the object of findings and recommendations by the panel. Generally,
therefore, a panel will make findings and recomme ndations on existing measures specially listed in
the complainant's Panel Request. In some circ umstances, a panel's jurisdiction may extend to
measures adopted after the panel's establishment, pr ovided the request for establishment of the panel
refers to amendments or replacement measures and such measures are of the same essence.

54 The panels in EC – Bananas III and Japan – Film explained that the inclusion of such a phrase in a
panel request can serve to adequately identify measures for the purposes of Ar ticle 6.2, even if a measure is not
explicitly listed in the panel request (Panel Report, EC – Bananas III, paras. 7.22-7.27 and Panel Report, Japan-
Film, paras. 10.8-10.9). The Appellate Body also ruled that broad terms of reference could include replacement
or amended measures so long as they were sufficiently linked and discernable in the complainants' panel request
and fall within the "gist" of what is at issue (Appellate Body Report, Chile - Price Band System , para. 139 and
US – Continued Zeroing, paras. 235 and 236).
55 The complainants' Panel Requests identified meas ures comprising China' s system for applying
export duties, see para 3.2 and 3.3 above, and this system is further described in paras. 7.59-7.63 below.
56 The complainants' Panel Requests identified meas ures comprising China' s system for applying
export quotas, see paras. 3.2 and 3.3 above, and this system is further described in paras. 7.172-7.201 below.

7.20 The enquiry into our terms of reference does not end here, however, because the situation
before us involves an additional factor. Our te rms of reference do include "any amendments or
extensions; replacement measures; renewal measures; and implementing measures". Indeed in the
first stage of our preliminary ruling, we decided that we would consider all measures listed in the
complainants' Panel Requests as well as measu res covered by the phrase "any amendments or
extensions; replacement measures; renewal measures; and implementing measures".
57 Consequently,
it is clear that the Panel has the authority to include within its te rms of reference amendments or
replacement measures of the 2009 measures challenged by the complainants.
7.21 Following the issuance of our preliminary ruling, parties submitted their second written
submissions responding to each other's first written submissions. In their responses to China's first
submission in which China requested the Panel to rule only on the 2010 measures and not on the 2009
measures
58, the complainants asked the Panel to make findings only on the 2009 original measures.
The complainants specifically requested the Pane l not to make findings or recommendations on the
legal instruments taking effect on 1 January 2010. 59 According to the United States and Mexico,
China's 2010 measures "changed the essence" of the legal instruments that were in effect at the time
of the Panel's establishment60, and examining them creates a "moving target" that would permit China
to shield its measures from review. 61 The European Union expressly stated that "it agrees with the
views expressed by the United States and Mexico in their opening statement". 62 When referring to the
restrictions on bauxite, it stated that the 2009 measur e on bauxite is the measure that was in force at
the time of the Panel's establishment and that should be examined by the Panel. 63 Furthermore, the
Panel requested the complainants to list clearly all measures relevant to this dispute for which they are
seeking "recommendations" from the Panel within the meaning of Article 19.1 of the DSU. 64 In their
responses to this question, Mexico and the United States requested the Panel to make findings and
recommendations only with respect to measures in force during 2009. 65 The European Union
answered similarly66, with the exception of only one measure in force in 2010.67
7.22 In the Panel's view, the complainants when requesting the Panel not to make any findings
and recommendations on any of the 2010 measures invoked by China, are in fact narrowing the
Panel's terms of reference during the course of these proceedings.

57 See para. 20 of the first phase of the Panel's preliminary ruling dated 7 May 2010 (Annex J).
58 China's first written submission, para. 50-52, 63-7 0; China's closing oral statement at the first
substantive meeting, paras 14, 15, 18, and 19: China's second written submission, paras 7, 16, and 18; China's
opening oral statement at the second substantive meeting, para. 3.
59 United States' second written submission, paras. 3 35-340; United States' opening oral statement at
the first substantive meeting, paras. 38-52; Mexico's second written submission, paras. 340-345.
60 United States' second written submission, para. 338; Mexico's second written submission, para. 343.
61 United States' second written submission, para s. 341-343: Mexico's second written submission,
paras. 346- 348.
62 European Union's opening oral statement at the sec ond substantive meeting, para.2 together with the
United States' opening oral statement at the second su bstantive meeting, para 109; Mexico's opening oral
statement at the second substantive meeting, para.2.
63 European Union's second written submissions paras 18-21.
64 Panel question No. 2 following the first substantive meeting; Panel question No. 1 following the
second substantive meeting.
65 United States' response to Panel question No. 2 following the first substantive meeting, United
States' response to Panel question No. 1 following the second substantive meeting; Mexico's response to Panel
question No. 2 following the first substantive meeting, Mexico's response to Panel question No. 1 following the
second substantive meeting.
66 European Union's response to Panel question No. 2 following the first substantive meeting, European
Union's response to Panel question No. 1 following the second substantive meeting.
67 2010 First Batch Coke Export Quota for FIEs (JE-129) para. 7.165.

7.23 As noted above, a complainant's Panel Request determines the scope of a panel's terms of
reference. It is for complainants to decide what cl aims they present to a panel. By the same logic, a
complainant can unilaterally withdraw a claim, or the complaint in its entirety, or seek to settle a
particular dispute. On numerous occasions, pa nels have not examined claims abandoned by
complainants in the course of panel proceedings. Indeed this Panel in its preliminary ruling noted that
the complainants had abandoned their claims con cerning Paragraph 342 of China's Working Party
report and ruled that it would not examine such claims.
68
7.24 As noted earlier, several of the measures relating to export duties and export quotas are
annual measures that are replaced at least once a year. In light of the fact that the complainants have
withdrawn the Panel's authority to consider claims related to those replacement measures, the Panel is
not able to agree with China's request to ma ke findings only on the 2010 replacement measures and
not on the expired 2009 measures. 69 China is seeking to defend a different set of claims than the
complainants have authorised the Panel to consider. China's arguments seek to turn the principle of
due process on its head; although a defendant should not have to defend a "moving target" of claims,
there is nothing unfair in a complainant reducing, as opposed to enlarging, the case the defendant has
to meet. The Panel will, therefore, make findi ngs only on the 2009 measures that fall within the
Panel's original terms of reference.
7.25 That is not to say that the Panel will not have regard to the 2010 measures at all. As noted
above, these measures have been discussed in the context of China's defence under GATT
Article XX. The Panel will consider these measur es in as far as they form part of the evidence
submitted by China.70
7.26 The Panel turns now to decide whether it will make recommendations on the 2009 measures.
Panels and the Appellate Body have declined to make "recommendations" 71 on measures that have
ceased to exist at the time the recommendations are made.
7.27 In US – Certain EC Products , the panel made a recommendation on an expired measure. The
Appellate Body, in reviewing that decision, noted that a panel's mandate to make recommendations is
found in Article 19.1 of the DSU, which foresees onl y one type of recommendation, namely, that a
Member bring its measure into conformity with a covered agreement. The Appellate Body concluded
that measures cannot be brought into conformity if they have ceased to exist.72 It is worth noting that,
in that dispute, the measure at issue had expired before the Panel was established.
7.28 Several panels have declined to make recommendations on e xpired measures. For instance,
the panel in US – Stainless Steel (Mexico) established that when a party has already abandoned the
WTO-inconsistent practice (zeroing), a panel should refrain from making recommendations, even if it
finds the measure to be inconsistent with a party's WTO obligations. 73 I n EC – Trademarks and
Geographic Indications, the panel noted that it could not make recommendations on measures that no

68 First phase of the preliminary ruling WT/DS394/9, WT/DS395/9 and WT/DS398/9.
69 See for instance China's first wr itten submission paras. 49-51, 56, 62, 64, and 67; see also China's
second written submission, section II entitled "Panel Sh ould Rule on the 2010 Measures To resolve the
Disputes, and Should Not Rule on the 2009 Measure" and para. 12, "In sum, the prompt and positive resolution
of this dispute calls for the Panel to address the 2010 measures, and not the 2009 measures."
70 China – Publications and Audiovisual Products , para. 177; China - Auto Parts , para. 225; US -
Section 211 Appropriations Act, para. 105; India - Patents (US), paras. 65.
71 Pursuant to Article 19 of the DSU, when a pane l concludes that a measure is inconsistent with a
covered agreement, it shall recommend that the Member bring its measure into conformity with that agreement.
72 Appellate Body Report, US – Certain EC Products, para. 81.
73 Panel Report on US – Stainless Steel (Mexico), para. 7.50.

longer existed.
74 In US – Poultry (China), the panel considered it appropriate to make findings on an
expired measure, but recognized that it would not be appropriate to make recommendations pursuant
to Article 19 of the DSU with respect to a WTO-inconsistent measure that had been repealed and that
had ceased to have legal effect.75
7.29 Nonetheless, as the panel in US – Stainless Steel (Mexico) correctly noted, there is no specific
provision in the DSU that addresses whether a WTO panel may or may not make findings or
recommendations on a measure that has expired afte r the panel's establishment. It noted that in
previous cases panels have made such determinations on a case-by-case basis.76
7.30 More recently, in US – Continued Zeroing, the Appellate Body determined that measures that
are "alleged to be ongoing, with prospective app lication and a life potentially stretching into the
future"77 can be subject to WTO dispute settlement. In that case, the European Union sought a
remedy related to measures that had not come into e ffect at the time of the panel's establishment. The
panel found that the particular measure fell outside its terms of reference, reasoning that it could not
make findings on events that may occur in the futu re. The Appellate Body disagreed with the panel
on that matter. Although the measure in the zeroing dispute was different from the measures at issue
in the present dispute, this Panel sees some relevance in the Appellate Body's ruling in that case. This
Panel must decide how to address the WTO consiste ncy of annual measures, i.e., measures that will
expire within a year, although "prospective appli cation" remains likely through annual replacement
measures. The Panel bears in mind that it must opera te to ensure that the dispute settlement system
functions efficiently in resolving disputes.78
7.31 In light of the above, the Panel has concluded that it has some discretion to decide how to take
into account a measure covered by its terms of refe rence that has ceased to exist at the end of the
panel proceedings.79 The Panel must of course bear in mind that the complainants have requested the
Panel not to make findings on any of the 2010 measures - even those of the same essence as the
original 2009 measures – notwithstanding the fact that the Panel's original terms of reference included
amendments and replacement measures. Nevertheless, the Panel does not consider that it can entirely
set aside the 2010 measures from consideration. As noted above, they have been discussed, inter alia,
in the context of China's defences under GATT Article XX and we will have regard to them in that
context. Moreover, we will necessarily need to examine them to consider whether the expired
measures have a prospective application in the form of annually renewed measures.

74 Panel Report, EC – Trademarks and Geographic Indications, para. 7.14.
75 Panel Report, US – Poultry , para. 7.56, citing the following cases: Appellate Body Report, US –
Certain EC Products , para. 81; Appellate Body Report, US – Upland Cotton , para. 272; and Appellate Body
Report, EC – Bananas III (Article 21.5 – Ecuador II), para. 271.
76 Panel Report, US-Stainless Steel (Mexico ), para. 7.48, citing the fo llowing cases: Panel Report,
Indonesia – Autos, para. 14.9; Panel Report, India – Autos, paras. 7.26- 7.29; Panel Report, Dominican Republic
– Import and Sale of Cigarettes , paras. 7.340-7.344; Panel Report, EC – Approval and Marketing of Biotech
Products, paras. 7.1303-7.1312.
77 Appellate Body Report, US – Continued Suspension , paras. 170-171. Panel Report, US – Poultry
(China) where the Panel declined to issue recommendations to the United States not to repeat the measure found
to be inconsistent.
78 For instance, in its second written submission China argues that the prompt and positive resolution of
this dispute calls for the Panel to address the 2010 measures, and not the 2009 measures. China insisted that the
measures that are the source of the di spute today are the 2010 measures a nd the Panel would fail to resolve the
dispute if it ruled only on the 2009 measures. The comp lainants argued that the logi c of China's approach, if
accepted, would still fail to resolve th e dispute because the Panel's findi ngs and recommendations would likely
not be adopted until sometime in 2011 when the 2010 m easures are no longer in effect (complainants' joint
opening oral statement at the first substantive meeting, para. 45).
79 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II), para. 270. This line of
reasoning was also followed in the Panel Report, China – Publications and Audiovisual Products, para. 7.452.

7.32 The Panel recalls that several measures on whic h the complainants' claims are based have
expired, ceased to exist, or were amended after the Panel's establishment on 21 December 2009. As
noted earlier, China enacted more than 100 legislativ e instruments in areas relevant to this dispute
during the course of these proceedings. As further discussed in these findings, some of the new 2010
measures would appear not to be WTO-inconsiste nt, although the equivalent 2009 measures were
inconsistent.
7.33 In light of our analysis and conclusions above, the Panel has determined that its approach will
be the following:
(a) The Panel will make findings on the WTO consistency of original measures included
in its terms of reference. In light of the request by the complainants that the Panel not
make any findings on any amendments or replacement measures, the Panel will only
make findings on 2009 measures and the Panel will not make findings on 2010
measures.
(b) In situations where a 2010 replacement measure appears to correct the WTO
inconsistency of the original 2009 measure – in whole or in part (and therefore is
considered not to have the same essence, in whole or in part, as the expired measure)
– the Panel will decline to make findings or recommendations on the 2010 measure,
as it falls outside its terms of reference. However, in order to make a determination
on whether the new measure is of the same essence as the expired measure, and hence
imbues the expired measure with ongoing effect or prospective application, the Panel
will necessarily have to determine (without making a formal finding) whether the
WTO inconsistency is no longer present in the new measure.
80
(c) Nonetheless, with a view to ensuring th at annually renewed measures do not evade
review by virtue of their annual nature – an d relying on the Appellate Body ruling in
US-Continued Zeroing where the Appellate Body recognized the possibility for a
panel to make a ruling on measures that ha ve a "prospective application and a life
potentially stretching into the future" – the Panel will make findings with respect to
the series of measures comprised of the relevant framework legislation, the
implementing regulation(s), other applicable laws and the specific measure imposing
export duties or export quotas in force at the date of the Panel's establishment.
(d) With respect to recommendations, generally the Panel will not make
recommendations on any original measure or on any measure no longer in existence
(or part thereof) on 15 December 2010, unless there is clear evidence that the measure
has ongoing effect.
(e) In situations where the claim is based on an annual measure, as is the case with
measures imposing export duties and with so me of the measures relating to export
quotas, the Panel will make recommendations with respect to the series of measures
comprised of the relevant framework legi slation, the implementing regulation(s),
other applicable laws and the specific measure imposing export duties or export
quotas in force at the date of the Panel's establishment.

80 This determination could be relevant in the context of an eventual panel process reviewing China's
implementation of the recommendations of this Panel on such a measure(s).

3. Whether the European Union's claims under Article X:1 and Article X:3(a) of the
GATT 1994 regarding China's administration of its export licensing system fall outside
the Panel's terms of reference because they we re not identified in the European Union's
Panel Request
7.34 The European Union claims that China's administration of its export licensing system is
inconsistent with Article X:1 and Article X:3(a) of the GATT 1994. These are alternative claims to
the European Union's claim that China's export licen ces are inconsistent with Article XI of the GATT
and with Paragraphs 5.1 and 1.2 of China's Accessi on Protocol, in combina tion with Paragraphs 83,
84, 162 and 165 of the Working Party Report.
81 Specifically, the European Union considers that
China's failure to publish sufficient definitions and explanations on the interpretation of certain terms
i.e "other documents", "management qualifications" a nd "documents of approval" is inconsistent with
GATT Article X:1.82 The European Union also considers that the administration of China's licensing
system is based on a "nexus of [of] vague and opaque provisions and requirements [which] fails to
satisfy the conditions of 'uniform, impartial and r easonable', within the meaning of Article X(3)a of
the GATT."83
7.35 China responds that to the extent that the Eur opean Union considers that the requirements for
export licence applicants to provide documents an d furnish evidence of their qualification to do
business are in and of themselves non-uniform, partial, and unreasonable, it has not stated a claim
concerning the administration of China's export licensing regime that is cognizable under
Article X:3(a).
84 China further submits that even were the Panel to consider that the European
Union's claim against China's export licensing syst em involves a claim against an "administrative
process"85 leading to an administrative decision concer ning the allocation of direct quotas, the claim
fails for lack of evidence.86
7.36 In its comments on the complainants' responses to the questions posed by the Panel following
the first substantive meeting, China requests the Pa nel to find that the European Union's claims under
Articles X:1 and X:3(a) regarding export licensing fall outside the Panel's terms of reference, because
the European Union failed to include these claim in its Panel Request.
87
7.37 In response to a question from the Panel concerning this request, the European Union asks the
Panel to reject China's request a nd to find that its Panel Request: (i) identifies the measures at issue;
and (ii) provides a brief summary of the legal basi s of the complaint sufficient to present the problem
clearly, as required by Article 6.2 of the DSU.88
7.38 Section III of the request addresses concerns regarding additional restraints imposed on
exportation. Narrative paragraph one of Section III describes in general terms the additional restraints
that the European Union alleges that China imposes:
"China imposes other restraints on the exportation of the materials, administers its
measures in a manner that is not unifor m, impartial, and reasonable, imposes

81 European Union's first written submission, para. 21.
82 European Union's first written submission, paras. 341, and 347-349.
83 European Union's first written submission, para. 351.
84 China's first written submission, para. 826.
85 See the discussion on administrative processes in para. 7.689.
86 China's first written submission, para. 828.
87 China's comments on the complainants' responses to Panel question No. 2 following the first
substantive meeting, paras. 42-46.
88 European Union's response to Panel question No. 56 following the second substantive meeting,
para. 76.

excessive fees and formalities on exportation, and does not publish certain measures
pertaining to requirements, restrictions, or prohibitions on exports"
7.39 The subsequent paragraphs of Section III provi de specific information on the details of the
European Union's request.
7.40 Narrative paragraphs two, three, and six of Sec tion III state that China's administration of its
quota and alleged MEP regimes are "not uniform, impartial and reasonabl e", thereby advancing
claims of inconsistent administration under GATT Article X:3(a).
7.41 In narrative paragraph 4, the European Union claims that China "does not publish the amount
for the export quota for zinc or any conditions or procedures for applying entities to qualify to export
zinc", thereby presenting a claim concerning non-pub lication under Article X:1. A similar statement
appears in narrative paragraph 6, thus stating a cl aim of alleged non-publication under Article X:1 in
relation to an alleged MEP requirement.
7.42 The fifth narrative paragraph, which relates to the European Union's concerns regarding
China's export licensing regime, reads, in its entirety:
"In addition, China restricts the exportation of bauxite, coke, fluorspar, manganese,
silicon carbide, and zinc by subjecting these materials to non-automatic licensing.
China imposes the non-automatic export licensing for bauxite, coke, fluorspar, silicon
carbide, and zinc in connection with the administration of the export quotas discussed
in Section I, as an additional restraint on the exportation of those materials."
7.43 Following the list of legal instruments that the European Union alleges the disputed Chinese
measures are reflected in, Section III concludes with the following statement:
"The European Communities considers that these measures are inconsistent with
Article VIII:1 and VIII:4, Article X:1 and X:3(a), and Article XI:1 of the GATT 1994
and paragraphs 2(A)2, 5.1, 5.2 and 8.2 of Part I of the Accession Protocol, as well as
China's obligations under the provisions of paragraph 1.2 of Part I of the Accession
Protocol, which incorporates commitments in paragraphs 83, 84, 162, and 165 of the
Working Party Report."
7.44 Narrative paragraphs 2, 3, 4 and 6 do not, on their face, indicate that the European Union
intended to make claims concerning WTO-inconsis tent publication or administration of China's
export licensing regime under Articles X:1 and X:3(a). Nor, on its face, does narrative paragraph 5
indicate that the EU is making a claim of non-uni form, unreasonable or partial administration of
China's export licensing system. Similarly there is no indication that the European Union is intending
to pursue a claim relating to the non-publication of definitions and explanations on the interpretation
of certain terms. However, the European Union asserts that its claims relating to China's export
licences are found through the combined reading of th ree sub-paragraphs: the first, the fifth and the
last of Section III, together with the list of the rele vant legal instruments. It states, "Such combined
reading shows that the European Union has satisfi ed the conditions of Article 6.2 of the DSU in
relation to its export licenses' claims."
89
7.45 The question for the Panel is whether a combin ed reading of these paragraphs is indeed
sufficient to satisfy the conditions of Article 6.2 of the DSU as the European Union claims.

89 European Union's response to Panel question No. 56 following the second substantive meeting,
para. 78.

7.46 The Panel first recalls its preliminary ruling wherein it considered the European Union's claim
under Article X:1 of the GATT 1994 concerning non-publi cation of the coke quota. In its ruling, the
Panel took note of the "specific language" used by the European Union in narrative paragraph 4 of
Section III.
90 The Panel then continued that the inclusi on by the European Union of the reference to
the zinc quota in the Panel Request demonstrated th at "the European Union was aware of, as well as
capable of identifying the measures which had no t been published". The Panel continued that
"considering the omission of the coke quota from th e text of the Panel Request as a whole, it was
reasonable for China to infer that the exclusion of the coke quota from Section III of the Panel
Request was deliberate".91
7.47 The Panel continues to bear in mind this findi ng in considering the Eu ropean Union's claims
regarding the licensing system under Article X:1 and Article X.3(a).
7.48 In the Panel's view, the European Union used specific language in narrative paragraphs 4 and
6 concerning a failure to publish the zinc quota and certain alleged MEP -related requirements.
However, the European Union excluded any reference to a failure to publish from narrative paragraph
5 of Section III concerning export licensing measures. Likewise, the Europ ean Union used specific
language in narrative paragr aphs 2, 3, and 6 referring to "uni form", "impartial" and "reasonable".
However the European Union excluded such reference from narrative paragraph 5.
7.49 The principle of expressio unius est exclusio alterius referred to by the Panel in rejecting the
European Union's claim regarding non-publication of the coke quota would seem highly relevant in
this situation. Consequently, the European Union' s decision to include "specific language" in relation
to Articles X:1and X:3(a) in narrative paragraphs 2, 3, 4 and 6, concerning quota measures and
alleged MEP-related requirements, as opposed to its decision to exclude that "specific language" from
paragraph 5, concerning export licen sing-related measures, should be given its proper meaning. To
recall, the Panel agrees with the panel on China – Publications and Audiovisual Products that "to
express or include one thing implies the exclusion of the other".
7.50 The European Union asserts that its claims are found through a "combined reading" of the
first, the fifth and the last narrative paragraphs toge ther with the list of the relevant legal instruments
in its Panel Request. The Panel disagrees with th is assertion. The first narrative paragraph is a
general introductory paragraph and the last paragra ph is in the way of a concluding paragraph listing
the provisions with which the measures are allegedly in consistent. It is the other narrative paragraphs
that served to inform China of the nature of the case it had to defend. These other narrative
paragraphs, specifically narrative pa ragraph 5, did not inform China that the European Union would
be claiming that China's licensing system was inconsis tent with Article X:1 and Article X:3(a) of the
GATT 1994.
7.51 Given the specific language of the European Un ion's Panel Request, the Panel finds that the
European Union has not brought its claims con cerning China's licensing sy stem under Articles X:1
and X:3(a) of the GATT 1994.

90 Preliminary Ruling of 1 October 2010, para. 74 (annex F).
91 Preliminary Ruling of 1 October 2010, para. 75 (annex F). See also footnote 10 of para. 75 wherein
the Panel noted that the "panel on China – Publications and Audiovisual Products referred to the general legal
canon of construction expressio unius est exclusio alterius in assessing the decision by the complainant to
exclude a particular provision from the text of its panel request. That panel noted that the canon of construction
holds that to express or include one thing implies the exclusion of the other or of the alternative (see Panel
Report on China – Publications and Audiovisual Products, para. 7.60, referring to Black's Law Dictionary, 8th
ed., B.A. Garner (ed) (West Group 2004), p. 620); also Ian Brownlie, Principles of Public International Law, 6th
ed. (2003) p. 602, 604. The Panel finds this principle re levant to its assessment of the European Union's failure
to reference the coke quota in its Panel Request in this dispute."

B. E
XPORT DUTIES
7.52 The complainants claim that China imposes duties on bauxite, coke, fluorspar, magnesium,
manganese, silicon metal, ye llow phosphorous, and zinc 92 at the time of the Panel's establishment on
21 December 2009 that are inconsistent with Chin a's obligations in Paragraph 11.3 of China's
Accession Protocol and its Annex 6. The complain ants allege that these export duties are imposed
pursuant to China's Customs Law 93, Regulations on Import and Export Duties 94, and 2009 Tariff
Implementation Program.95
7.53 China invokes general and specific defences against the export duties claims. As noted earlier,
China's general argument is that the Panel shoul d not consider the 2009 measures invoked by the
complainants in support of their claims when t hose measures have been re placed by 2010 measures.96
China acknowledges the existence of certain export duties in place in 2009 but argues that the Panel
should consider only the 2010 measures. 97 As noted earlier, the complainants explicitly narrowed
down the Panel's terms of reference to a considera tion of the WTO consistency of the 2009 measures.
Therefore, we will make findings only on the 2009 measures.
7.54 For one specific product identified as yellow phosphorous, China argues that contrary to the
complainants' assertion, the export duty in force as of 21 December 2009 was not in excess of the rate
allowed in Annex 6 of its Protocol of Accession, and thus was WTO consistent.
7.55 With respect to some of the products, Chin a acknowledges the existence of certain export
duties imposed pursuant to 2010 measures, as well as their inconsistency with China's Protocol of
Accession, and does not offer any justification for them. 98 China requests the Panel to consider only
2010 measures, even those for which it offers no justification.99
7.56 In the previous section of these Panel Reports , the Panel reached the conclusion that, as a
general matter, its terms of reference are limited to measures that were in force on 21 December 2009
– the date of the establishment of this Panel. The Panel also determined that upon the request of the
complainants, the Panel will not assess the WTO consis tency of any 2010 replacement measure even
if they are of the same essence as the measures in force on 21 December 2009. We shall be guided by
this principle when examining the export duties claims for each of the products concerned.
7.57 For certain of the raw materials not included in Annex 6 of its Protocol of Accession, China
does not attempt to justify the imposition of expo rt duties. In those cases, the duties result in a
violation of Article 11.3 of China's Protocol of Accession, which establishes the obligation to
eliminate all taxes and charges applied to exports of products not listed in Annex 6 of its Protocol, nor

92 The specific forms of the raw materials subject to the complainants' claims are identified in Exhibit
JE-5 and para. 2.2 of the Descriptive Part to these Reports.
93 Customs Law, (Exhibits CHN-14, JE-68).
94 Regulations on Import and Export Duties, (Exhibit CHN-13, JE-67).
95 2009 Tariff Implementation Program, (Exhibit JE-21).
96 See for instance China's first wr itten submission paras 49-51, 56, 62, 64 and 67; see also China's
second written submission, section II entitled "Panel Sh ould Rule on the 2010 Measures To resolve the
Disputes, and Should Not Rule on the 2009 Measure" and para. 12, "In sum, the prompt and positive resolution
of this dispute calls for the Panel to address the 2010 measures, and not the 2009 measures."
97 See China's first written submission, para. 49-5 1, 56, 62, 64 and 67; China's second written
submission, Section II entitiled "The Panel should rule on the 2010 Measures To resolve the Disputes, and
Should not Rule on the 2009 Measures"; and para. 12 "In sum, the prompt and positive resolution of this disute
call the Panel to address the 2010 measures and not the 209 measures."
98 See China's response to Panel question No. 4 following the first substantive meeting, para. 26.
99 See China, first written submission, paras. 69, 70, and second written submission, paras. 6-18.

applied in conformity with the provisions of Ar ticle VIII of the GATT 1994. For certain other raw
materials, China raises a defence under Article XX(b) or XX(g) of the GATT 1994.
7.58 The Panel will consider the complainants' claims below. Before doing so, however, the Panel
considers it helpful to set out the operation of Ch ina's export duty system for the raw materials at
issue.
1. China's application of export duties
7.59 In 2009, China imposed export duties on various forms of bauxite, coke, fluorspar,
magnesium, manganese, silicon metal, yellow phos phorous, and zinc. China's legal framework
regarding the imposition of export duties is described below.
7.60 China maintains basic framework legislation authorizing the imposition of export duties. This
comprises the following measures: (i) Customs Law
100, and (ii) Regulations on Import and Export
Duties.101 In addition, China publish es a specific annual measure setting out an export duty with
respect to certain products. In December 2008, China published the 2009 Tariff Implementation
Program which took effect on 1 January 2009.
7.61 According to China's basic legal framework on export duties, Customs is responsible for
supervision and control over departures from the Customs territory, as well as for collecting customs
duties on articles permitted to leave the territory. 102 The Tariff Commission is responsible for making
adjustments to tariff items, and tariff rates. 103 The Customs Law and the Regulations on Import and
Export Duties provide that the declaration and payment of tariffs on exports may be completed by the
exporters104 within a specific time-period; in case of late payment, several penalties and sanctions
would apply.105
7.62 The 2009 Tariff Implementation Program sets out specific export duty rates applicable to
certain products during a given year. During 20 09, China imposed export duties on bauxite, coke,
fluorspar, magnesium, manganese, silicon metal, yellow phosphorous, and zinc pursuant to the 2009
Tariff Implementation Program .106 From 1 January 2010, China imposed export duties pursuant to
the 2010 Tariff Implementation Program.107
7.63 There is also a fourth measure, relevant to the complainants' claim on export duties. The
Adjustment of Export Tariffs Circular 108 removed the special export duty on yellow phosphorous,
from 1 July 2009.

100 Customs Law (Exhibit CHN-14, JE-68).
101 Regulations on Import and Export Duties (Exhibit CHN-13, JE-67).
102 Article 2, and 53 of the Customs Law, and Article 2 of the Regulations on Import and Export Duties
(Exhibit JE-67, CHN-13).
103 Article 4 of the Regulations on Import and Export Duties (Exhibit JE-67, CHN-13).
104 Article 9 of the Customs Law (Exhibit JE-68, CHN-14).
105 Article 60 of the Customs Law (Exhibit JE-68, CHN-14), Articles 9, and 37 of the Regulations on
Import and Export Duties (Exhibit JE-67, CHN-13).
106 2009 Tariff Implementation Program (Exhibit JE-21).
107 2010 Tariff Implementation Plan (CHN-5).
108 Adjustment of Export Tariffs Circular (CHN-1).

2. Whether export duties on bauxite, coke, fluorspar, magnesium, manganese, silicon
metal, zinc and yellow phosphorus are incons istent with Paragraph 11.3 of China's
Accession Protocol
7.64 The second sentence of Paragraph 1.2 of China's Accession Protocol states that provisions of
the Protocol are "an integral part of the WTO Agreement". Thus, the provisions of the Accession
Protocol are enforceable in WTO dispute settlement proceedings pursuant to Article 1.1 of the DSU.
This is consistent with the approach taken by panels and the Appellate Body.
109
7.65 Paragraph 11.3 of China's Accession Protocol 110 contains specific obligations with respect to
export duties and provides that:
"China shall eliminate all taxes and char ges applied to exports unless specifically
provided for in Annex 6 of this Protocol or applied in conformity with the provisions
of Article VIII of the GATT 1994."
7.66 Annex 6 of China's Accession Protocol111, entitled "Products Subject to Export Duty", lists 84
different products, each identified by an eight-digit HS (Harmonized System) number, and product
description. The Note to Annex 6 states that:
"China confirmed that the tariff levels in cluded in this Annex are maximum levels
which will not be exceeded. China confirmed furthermore that it would not increase
the presently applied rates, except unde r exceptional circumstances. If such
circumstances occurred, China would cons ult with affected members prior to
increasing applied tariffs with a view to finding a mutually acceptable solution."
7.67 Generally, the complainants claim that the e xport duties imposed by China on the exportation
of the relevant raw materials cannot be justifie d by either of the exceptions mentioned in
Paragraph 11.3 quoted above. They submit that, except for yellow phosphorus, the relevant raw
materials at issue are not included in Annex 6 of China's Accession Protocol. The complainants add
that such duties are not covered by Article VIII of the GATT 1994 which, in any case, is not invoked
by China to justify such export duties.
112
7.68 The Panel considers that an analysis of the WTO consistency of the 2009 Tariff
Implementation Program must also involve an analysis of the Customs Law and the Regulations on
Import and Export Duties . This is not to say that individually each of those measures would
necessarily be WTO-inconsistent; rather, when they operate in concert to result in WTO-inconsistent
duties, it is then that they would become prima facie WTO-inconsistent. It is only by examining these
three measures as they work in concert that th e Panel can reach a final determination on the
complainants' export duty claims. The Panel consid ers that findings on the measures acting in concert
is necessary so that annually renewed measures do not evade WTO dispute settlement review merely
through their expiration during the Panel proceedings.

109 See Panel and Appellate Body reports, China – Auto Parts and China – Publications and
Audiovisual Products.
110 China's Accession Protocol to the WTO, WT/L/432 (Exhibit JE-2).
111 China's Accession Protocol to the WTO WT/L/432, p. 93 (Exhibit JE-2).
112 The United States and Mexico clai m that China's export du ties are inconsistent with Article VIII of
the GATT 1994; the Panel considers those claims in Section VII.B of these Panel Reports.

(a) Export duties on "yellow phosphorous" (HS 2804.7010)
7.69 The complainants challenge the export duty imposed on yellow phosphorus (HS 2804.7010).
They submit that China committed, pursuant to Ar ticle 11.3 and Annex 6 of its Accession Protocol,
not to exceed an export duty rate maximum level of 20% on yellow phosphorous. According to the
complainants, China imposes a "regular" ad valorem export duty rate of 20% on yellow phosphorus.
From 1 January 2009, in addition to this regular export duty, they argue that China imposed a
"special" export duty rate of 50% on yellow phosphorus pursuant to the 2009 Tariff Implementation
Program.
113
7.70 China claims that the Adjustment of Export Tariffs Circular terminated the special export duty
rate of 50% from 1 July 2009 – before the date of establishment of this Panel. Therefore, according to
China, at the time of the Panel's establishment, China maintained a total export duty of 20% on yellow
phosphorous, consistent with its obligat ion under the Protocol of Accession. 114 China requests the
Panel to make no findings on the 2009 Tariff Implementation Program 115, in respect of yellow
phosphorus.116
7.71 The Panel agrees with China that the Adjustment of Export Tariffs removed the special export
duty rate as of 1 July 2009, before the date of est ablishment of this Panel. Furthermore, the Panel
notes that this measure was duly published. 117 Therefore, on 21 December 2009, yellow phosphorous
was subject to the regular export duty of 20%, wh ich does not exceed the maximum rate listed in
Annex 6 of China's Accession Protocol and is ther efore consistent with China's WTO obligations. 118
Accordingly, the Panel concludes that the provision of the 2009 Tariff Implementation Program 119
applicable to yellow phosphorus that was in force at the time of the Panel's establishment is not
inconsistent with China's WTO obligations. The Pa nel makes no findings with respect to previous
measure – actually challenged by the complainants – that removed the special duty of 50% imposed
on yellow phosphorus before the Panel's establishment.120
(b) Export duties on bauxite, including "refractor y clay" (HS 2508.3000), "aluminium ores and
concentrates" (HS 2606.0000) and "aluminium ash residues" (HS 2620.4000)
7.72 The complainants claim that from 1 January 200 9, China imposed an export duty rate at the
level of 15% on refractory clay (HS 2508.3000) 121 and on "aluminium ores and concentrates "(HS
2606.0000)122, and an export duty at the level of 10% on "aluminium ash residues" (HS
2620.4000).123 The complainants add that none of the three categories of bauxite referred to above are
listed in Annex 6 of China's WTO Accession Protocol and that the duties cannot be justified under
Article VIII of the GATT 1994.

113 2009 Tariff Implementation Program (Exhibit JE-21).
114 See China's first written submission, para. 56.
115 2009 Tariff Implementation Program (Exhibit JE-21).
116 The Panel notes that the Adjustment of Export Tariffs Circular (CHN-1) removed the special duty of
50% imposed on yellow phosphorus.
117 See China's response to Panel question No. 8 following the second substantive meeting, para. 27.
118 See China's response to Panel question No. 4 following the second substantive meeting, para. 25.
119 2009 Tariff Implementation Program (Exhibit JE-21).
120 The Adjustment of Export Tariffs Circular (CHN-1) removed the special duty of 50% imposed on
yellow phosphorus.
121 2009 Tariff Implementation Program (Exhibit JE-21), Section II(2).
122 2009 Tariff Implementation Program (Exhibit JE-21), Section II(2).
123 2009 Tariff Implementation Program (Exhibit JE-21).

7.73 China asserts that the 2010 Tariff Implementation Program
124 removed the duties as of 1
January 2010.125 China argues that the Panel should consider only the 2010 measure on bauxite and
hence the Panel should conclude that China does not maintain WTO-inconsistent export duties on the
three categories of bauxite at issue.
7.74 The Panel recalls its earlier decision that its terms of reference are limited to measures in
force at the time of its establishment on 21 D ecember 2009 and that, at the request of the
complainants, it will not make findings on any 2 010. The Panel notes, however, that China's 2010
Tariff Implementation Program does not maintain an export duty on any category of bauxite.
7.75 The three categories of bauxite at issue are not listed in Annex 6 of China's Accession
Protocol. Moreover, China does not invoke Article VIII to justify any of the export duties challenged
by the complainants. China does not contest that it imposed such export duties on bauxite on 21
December 2009.
7.76 The Panel finds that the series of measures, made up of the Customs Law
126, Regulations on
Import and Export Duties 127, and 2009 Tariff Implementation Program 128 when operating in concert,
results in the imposition of export duties on different forms of bauxite, which is inconsistent with
Paragraph 11.3 of China's Accessi on Protocol. This is not to sa y that individually each of those
measures is necessarily WTO-inconsistent; rather, wh en they operate in concert to result in WTO-
inconsistent duties, it is then that they become prima facie WTO-inconsistent. The Panel recalls
WTO jurisprudence that "a prima facie case is one which, in the absence of effective refutation by the
defending party, requires a panel, as a matter of law, to rule in favour of the complaining party".129
7.77 The Panel finds, therefore, that, with respect to its export duty on bauxite, China has acted
inconsistently with its WTO obligations.
(c) Export duties on "coke" (HS 2704.0010)
7.78 The complainants claim that China imposed a temporary export duty at the level of 40% on
coke and semi-coke (HS 2704.0 010) from 1 January 2009. 130 They add that "coke" is not listed in
Annex 6 of China's Accession Protocol and that the duties cannot be justified by Article VIII of the
GATT 1994.
7.79 China does not contest that it imposed this duty on 21 December 2009. China does not
invoke Article VIII and reiterates its position with respect to the 2010 measures. In addition, China
claims that its export duties as applied to coke are justified pursuant to Article XX(b) of the
GATT 1994.131
7.80 The Panel notes that coke is not listed in Anne x 6 of China's Accession Protocol. The Panel
finds that the series of measures, made up of the Customs Law 132, Regulations on Import and Export
Duties133, and 2009 Tariff Implementation Program 134 when operating in concert, result in the

124 2010 Tariff Implementation Plan (Exhibit CHN-5).
125 China's first written submission, para. 84.
126 Customs Law (Exhibit CHN-14, JE-68).
127 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
128 2009 Tariff Implementation Program, (Exhibit JE-21).
129 Appellate Body Report, EC – Hormones, para. 104.
130 2009 Tariff Implementation Program, (Exhibit JE-21).
131 China's first written submission, paras. 197, 199.
132 Customs Law (Exhibit CHN-14, JE-68).
133 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).

imposition of export duties on coke wh ich is inconsistent with Para graph 11.3 of China's Accession
Protocol. This is not to say that individually each of those measures is necessarily WTO-inconsistent;
rather, when they operate in concert to result in WT O-inconsistent duties, it is then that they become
prima facie WTO-inconsistent.
7.81 The Panel provisionally finds, therefore, that China has acted inconsistently with its WTO
obligations. The Panel will consider below China's defence that the application of export duties to
coke is justified pursuant to GATT Article XX(b).
(d) Export duties on fluorspar, including "met-spar" (HS 2529.2100) and "acid-spar"
(HS 2529.2200)
7.82 The complainants claim that China imposed a temporary export duty at the level of 15% on
"met-spar" (HS 2529.2100), and on "acid-spar" (HS 2529.2200) as from the January 1, 2009.
135 They
add that these forms of fluorspar are not listed in Annex 6 of China's Accession Protocol and the
duties cannot be justified by Article VIII of the GATT 1994.
7.83 China does not contest that it imposed these du ties as of 21 December 2009. China does not
invoke Article VIII and reiterates its position with respect to the 2010 measures. In addition, China
claims that its export duties are justified pursuant to Article XX(g) of the GATT 1994.
7.84 The Panel notes that these forms of fluorspar ar e not listed in Annex 6 of China's Accession
Protocol. The Panel finds that the series of measures, made up of the Customs Law
136, Regulations
on Import and Export Duties 137, and 2009 Tariff Implementation Program 138 when operating in
concert, result in the imposition of export duti es on fluorspar which is inconsistent with
Paragraph 11.3 of China's Accession Protocol. This is not to say that individually each of those
measures is necessarily WTO-inconsistent; rather, wh en they operate in concert to result in WTO-
inconsistent duties, it is then that they become prima facie WTO-inconsistent.
7.85 The Panel provisionally finds, therefore, that China has acted inconsistently with its WTO
obligations. The Panel will consider below China's defence that the application of export duties to
fluorspar is justified pursuant to GATT Article XX(g).
(e) Export duties on magnesium, including "ma gnesium metal" (HS 8104.1100), "unwrought
magnesium" (HS 8104.1900), and "magnesium waste and scrap" (HS 8104.2000)
7.86 The complainants claim that China imposed a temporary export duty at the level of 10% on
"magnesium metal" (HS 8104.1100), "unwroug ht magnesium" (HS 8104.1900) and "magnesium
waste and scrap" (HS 8104.2000) from 1 January 2009. 139 They add that these forms of magnesium
are not listed in Annex 6 of China's Accession Prot ocol and that the duty cannot be justified by
Article VIII of the GATT 1994.
7.87 China does not contest that it imposed these du ties as of 21 December 2009. China does not
invoke Article VIII and reiterates its position with re spect to the 2010 measures. In addition, China it
claims that its export duties as applied to these forms of magnesium are justified pursuant to
Article XX(b) of the GATT 1994.

134 2009 Tariff Implementation Program, (Exhibit JE-21).
135 2009 Tariff Implementation Program, (Exhibit JE-21).
136 Customs Law (Exhibit CHN-14, JE-68).
137 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
138 2009 Tariff Implementation Program, (Exhibit JE-21).
139 2009 Tariff Implementation Program, (Exhibit JE-21).

7.88 The Panel notes that these forms of magnesium are not listed in Annex 6 of China's Accession
Protocol. The Panel finds that the series of measures, made up of the Customs Law
140, Regulations
on Import and Export Duties 141, and 2009 Tariff Implementation Program 142 when operating in
concert, result in the imposition of export duti es on magnesium which is inconsistent with
Paragraph 11.3 of China's Accessi on Protocol. This is not to sa y that individually each of those
measures is necessarily WTO-inconsistent; rather, wh en they operate in concert to result in WTO-
inconsistent duties, it is then that they become prima facie WTO-inconsistent.
7.89 The Panel provisionally finds, therefore, that China has acted inconsistently with its WTO
obligations. The Panel will consider below China's defence that the application of export duties to
magnesium is justified pursuant to GATT Article XX(b).
(f) Export duties on manganese, including "manga nese ores and concentrates" (HS 2602.0000)
and "unwrought manganese waste and scrap" (HS 8111.00.10) and "unwrought manganese
powder" (HS 8111.0010)
7.90 The complainants claim that China imposed a temporary export duty at the level of 15% on
"manganese ores and concentrates" (HS No. 2602.0000) and a temporary export duty at the level of
20% on "unwrought manganese waste and scrap " (HS 8111.00.10) and "unwrought manganese
powder" (HS 8111.0010) from 1 January 2009.
143 They add that these materials are not listed in
Annex 6 of China's Accession Protocol and that the duties cannot be justified by Article VIII of the
GATT 1994.
7.91 China does not contest that it imposed such duty as of 21 December 2009. China does not
invoke Article VIII with respect to manganese and reiterates its position with respect to the 2010
measures. In addition, China claims that its e xport duties as applied to unwrought manganese waste
and scrap and unwrought manganese powder are justified pursuant to Article XX(b) of the
GATT 1994.144
7.92 The Panel notes that these forms of manganese are not listed in Annex 6 of China's Accession
Protocol. The Panel finds that the series of measures, made up of the Customs Law 145, Regulations
on Import and Export Duties 146, and 2009 Tariff Implementation Program 147 when operating in
concert, result in the imposition of export on tho se forms of manganese which is inconsistent with
Paragraph 11.3 of China's Accessi on Protocol. This is not to sa y that individually each of those
measures is necessarily WTO-inconsistent; rather, wh en they operate in concert to result in WTO-
inconsistent duties, it is then that they become prima facie WTO-inconsistent.
7.93 With respect to unwrought manganese wast e and scrap and unwrought manganese powder,
the Panel finds, provisionally, that China has acted inconsistently with its WTO obligations and will
consider below China's defence that the applica tion of export duties is justified pursuant to GATT
Article XX(b).

140 Customs Law (Exhibit CHN-14, JE-68).
141 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
142 2009 Tariff Implementation Program, (Exhibit JE-21).
143 2009 Tariff Implementation Program, (Exhibit JE-21).
144 China's response to Panel question No. 4 following the first substantive meeting.
145 Customs Law (Exhibit CHN-14, JE-68).
146 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
147 2009 Tariff Implementation Program, (Exhibit JE-21).

7.94 With respect duties on manganese ores and concen trates the Panel recalls WTO jurisprudence
that "a prima facie case is one which, in the absence of eff ective refutation by the defending party,
requires a panel, as a matter of law, to rule in favour of the complaining party".
148
(g) Export duties on "silicon metal" (HS 2804.6900)
7.95 The complainants claim that China imposed a temporary export duty at the level of 15% on
silicon metal (HS 2804.6900) from 1 January 2009. 149 They add that "silicon metal" is not listed in
Annex 6 of China's Accession Protocol and that the duties cannot be justified under Article VIII of the
GATT 1994.
7.96 China does not contest that it imposed this duty as of 21 December 2009. China does not
invoke Article VIII and reiterates its position with respect to the 2010 measures. China does not
attempt to justify the export duty rate that it imposed on silicon metal during 2009.
150
7.97 The Panel notes that silicon metal is not one of the products listed in Annex 6 of China's
Accession Protocol. The Panel finds that the series of measures, made up of the Customs Law 151,
Regulations on Import and Export Duties 152, and 2009 Tariff Implementation Program 153 when
operating in concert, result in the imposition of ex port duties on silicon metal which is inconsistent
with Paragraph 11.3 of China's Accession Protocol. This is not to say that individually each of those
measures is necessarily WTO-inconsistent; rather, wh en they operate in concert to result in WTO-
inconsistent duties, it is then that they become prima facie WTO-inconsistent.
7.98 The Panel finds, therefore, that China has acted inconsistently with its WTO obligations. The
Panel recalls WTO jurisprudence that "a prima facie case is one which, in the absence of effective
refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the
complaining party".154
(h) Export duties on zinc, including "zinc waste a nd scrap" (HS 7902.0000), "hard zinc spelter"
(HS 2620.1100), and "other zinc ash and residues" (HS 2620.1900)
7.99 The complainants claim that from 1 January 20 09, China imposed temporary export duties at
a rate of 10% on "zinc waste and scrap" (HS 7902.0000) 155, "hard zinc spelter" (HS 2620.1100) 156 ,
and "other zinc ash and residues" (HS 2620.1900). 157 They add that the three forms of zinc are not
listed in Annex 6 of China's Accession Protocol and th at the duties cannot be justified by Article VIII
of the GATT 1994.
7.100 China does not contest that it imposed these du ties as of 21 December 2009. China does not
invoke Article VIII and reiterates its position on the 2010 measures. In addition, China claims that its
export duties applied to these forms of zinc are justified pursuant to Article XX(b) of the GATT 1994.

148 Appellate Body Report, EC – Hormones, para. 104.
149 2009 Tariff Implementation Program, (Exhibit JE-21).
150 See China's response to Panel question No. 4 following the first substantive meeting.
151 Customs Law (Exhibit CHN-14, JE-68).
152 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
153 2009 Tariff Implementation Program, (Exhibit JE-21).
154 Appellate Body Report, EC – Hormones, para. 104.
155 2009 Tariff Implementation Program, (Exhibit JE-21).
156 2009 Tariff Implementation Program, (Exhibit JE-21), Section II(2).
157 2009 Tariff Implementation Program, (Exhibit JE-21), Section II(2).

7.101 The Panel notes that these forms of zinc are not listed in Annex 6 of China's Accession
Protocol. The Panel finds that the series of measures, made up of the Customs Law
158, Regulations
on Import and Export Duties 159, and 2009 Tariff Implementation Program 160 when operating in
concert, result in the imposition of export duties on zinc which is inconsistent with Paragraph 11.3 of
China's Accession Protocol. This is not to say that individually each of those measures is necessarily
WTO-inconsistent; rather, when they operate in c oncert to result in WTO-inconsistent duties, it is
then that they become prima facie WTO-inconsistent. The Panel provi sionally finds, therefore, that
China has acted inconsistently with its WTO oblig ations. The Panel will consider below China's
defence that the application of export duties to zinc is justified pursuant to GATT Article XX(b).
3. Whether China failed to consult pursuant to the Note to Annex 6 to China's Accession
Protocol
7.102 In its first written submission, the European Union claims 161 that China has violated the
obligation under Annex 6 to Chin a's Accession Protocol to consult "with other affected WTO
Members prior to the imposition of the export duties imposed on bauxite, coke, fluorspar, magnesium,
manganese, silicon metal and zinc. 162 China acknowledges that it failed to consult pursuant to the
Note to Annex 6.163
7.103 The Panel recalls that the Note to Annex 6 of China's Accession Protocol states:
"China confirmed that the tariff levels in cluded in this Annex are maximum levels
which will not be exceeded. China confirmed furthermore that it would not increase
the presently applied rates, except under exceptional circumstances. If such
circumstances occurred, China would cons ult with affected members prior to
increasing applied tariffs with a view to finding a mutually acceptable solution."
7.104 Pursuant to this requirement, and in light of China's admission, the Panel concludes that
China has in fact failed to consult with other a ffected WTO Members prior to the imposition of the
export duties imposed on bauxite, coke, fluorspar, magnesium, manganese, silicon metal and zinc, in
violation of its obligations under Annex 6 to China's Accession Protocol.
4. Summary
7.105 For each of these products (bauxite, coke, fl uorspar, magnesium, manganese, silicon metal
and zinc164), the series of measures operating in concert has resulted in the imposition of export duties
that are inconsistent with China's obligations unde r Paragraph 11.3 of China's Accession Protocol. It
is only by examining these three measures as they wo rk in concert that the Panel concluded that it
could reach a final determination on the complain ants' export duty claims. The Panel did not reach
the conclusion that individually each of those measures is necessarily WTO-inconsistent; rather, when
they operate in concert to result in WTO-incons istent duties, it is then that they become prima facie

158 Customs Law (Exhibit CHN-14, JE-68).
159 Regulations on Import and Export Duties (Exhibits CHN-13, JE-67).
160 2009 Tariff Implementation Program, (Exhibit JE-21).
161 European Union's first written submission, paras. 254, 258, 262, 266, 270, 274, 278, 286, 290, 294,
298, 302, 306 and 310.
162 The specific forms of the bauxite, coke, fluorspar, magnesium, manganese, silicon metal and zinc
subject to the European Union's claims are identified in Exhibit JE-5 and para. 2.2 of the Descriptive Part to
these Reports.
163 China's first written submission, para. 92.
164 The specific forms of the raw materials subject to the complainants' claims are identified in Exhibit
JE-5 and para. 2.2 of the Descriptive Part to these Reports.

WTO-inconsistent. The Panel recalls its view th at findings on the measures acting in concert is
necessary so that annually renewed measures do not evade WTO dispute settlement review merely
through their expiration during the Panel proceedi ngs. The Panel does not make any findings on the
complainants' claims relating to yellow phos phorus for the reasons mentioned above.
165 The Panel
further concludes that China did not consult wi th other affected WTO Members prior to the
imposition of the export duties imposed on bauxite , coke, fluorspar, magnesium, manganese, silicon
metal and zinc, contrary to its obligations under Annex 6 to China's Accession Protocol.
7.106 The Panel will consider below China's defence that its export duty applied to fluorspar may be
justified pursuant to Article XX(g) of the GATT 1994. The Panel will also consider China's defence
that its export duties applied to coke, magnesium, zinc and certain forms of manganese (unwrought
manganese waste and scrap and unwrought manga nese powder) may be justified pursuant to
Article XX(b) of the GATT 1994.
5. Whether export duties on bauxite, coke, fluorspar, magnesium, manganese, silicon
carbide, and zinc are justified pursuant to Article XX of the GATT 1994
7.107 The Panel determined above that the applica tion of temporary export duties to non-ferrous
metal scrap of zinc, magnesium metal, and ma nganese metal; to coke, magnesium metal and
manganese metal; and to fluorspar, is inconsistent with Paragraph 11.3 of China's Accession Protocol.
7.108 China argues that temporary export duties a pplied to non-ferrous metal scrap of zinc,
magnesium metal, and manganese metal; and to co ke, magnesium metal and manganese metal, are
justified pursuant to Article XX(b). In addition, China argues that temporary duties applied to
fluorspar are justified pursuant to Article XX(g). As a threshold matter, the complainants argue that
China is not entitled to resort to the defences of Article XX to justify export duties that are
inconsistent with Paragraph 11.3 of China's Access ion Protocol. Accordingly, they argue that China
cannot justify the application of such duties to these raw materials. The complainants further argue
that were the Panel to conclude that Article XX may be invoked as a defence to violations of
Paragraph 11.3 of China's Accession Protocol, China failed to demonstrate that the application of
duties to these raw materials is justified pursuant to Article XX(b) or Article XX(g).
7.109 The Panel will first assess whether China is en titled to invoke the defences provided for in
Article XX for violations of Paragraph 11.3 of its Accession Protocol. If the provisions of Article XX
are available to China, the Panel will then cons ider whether China has demonstrated that the
application of duties to these raw materials is justified pursuant to Article XX(b) or Article XX(g).
(a) Whether Article XX of the GATT 1994 is available as a defence to a claim under
Paragraph 11.3 of China's Accession Protocol
7.110 China argues that Paragraph 11.3 of its Acces sion Protocol and the reference to exceptional
circumstances in Annex 6 support China's rights to i nvoke the defences of Article XX. For China,
Article XX may be used to justify the application of export duties to non-ferrous metal scrap of zinc,
magnesium metal, and manganese metal; to coke , magnesium metal and manganese metal; and to
fluorspar. For China, the wording of Paragraph 11. 3 of the Accession Protoc ol and of Paragraph 170
of the Working Party Report support the interpreta tion that China's Accession Protocol as a whole,
together with the covered agreements forming the WTO Single Undertaking 166, provide China with

165 See para. 7.71.
166 China's second written submission, para. 155.

the right to invoke GATT Article XX justificati ons for its export duties inconsistent with its
Accession Protocol.
167
7.111 The complainants argue that China is not entitle d to resort to the defences of Article XX to
justify export duties inconsistent with Paragra ph 11.3 of China's Accession Protocol. For the
complainants, this is clear from the wording of Paragraph 11.3 of the A ccession Protocol and the
related provisions of the Working Party Report. They argue that the defences of Article XX are
available only for GATT violations, or when Article XX justifications have been incorporated by
reference into the relevant pa rt of another WTO agreement. 168 WTO Members' Accession Protocols
are integral parts of the WTO Agreement
(i) WTO Members' Accession Protocols are integral parts of the WTO Agreement
7.112 Accession to the WTO is achieved through nego tiation with other WTO Members. Pursuant
to Article XII of the Marrakesh Agreement, accessions take place "on terms to be agreed" between the
acceding Member and the WTO membership. Mo st accession processes take several years to
complete and lead to detailed negotiated provision s. The terms of each WTO Member's accession are
set out in its Accession Protocol and accompanying Working Party Report. The negotiated agreement
between the WTO membership and the acceding Memb er results in a delicate balance of rights and
obligations, which are reflected in the specifi c wording of each commitment set out in these
documents. Ultimately, the acceding Member and the WTO membership recognize that the
intensively negotiated content of an accession package is the "entry fee" to the WTO system.
7.113 WTO Members' accession protocols are considered to form integral parts of the WTO
Agreement. For example, Paragraph 1.2 of Part I of China's Accession Protocol provides:
"The WTO Agreement to which China acced es shall be the WTO Agreement as
rectified, amended or otherwise modified by such legal instruments as may have
entered into force before the date of accessi on. This Protocol, which shall include the
commitments referred to in paragra ph 342 of the Working Party Report, shall be an
integral part of the WTO Agreement." (italics added)
7.114 In this dispute, as with previous disputes concerned with China's Accession Protocol, all
parties agree that China's Accession Protocol form s an integral part of the WTO Agreement.
Moreover, all parties agree that WTO Members can initiate WTO dispute settlement proceedings on
the basis of a claim of violation of China's Accession Protocol. 169 Finally, all parties agree that
commitments included in the related Working Part y Report, and incorporated into the Accession
Protocol by cross-reference, are binding a nd enforceable through WTO dispute settlement
proceedings.

167 China's second written submission, para. 166.
168 European Union's second written submission, para s. 219, and 220; United States' first written
submission, para. 13; Mexico's first written submission, para 16. The European Union suggests that the fact that
GATT Article XX cannot serve as a justification for violations outside GATT has most recently been confirmed
by the Panel in US – Poultry (China), European Union's second written submission, para. 226.
169 This was recognized in China – Auto Parts , adopted on 15 December 2008 and in China –
Publications and Audiovisual Products , adopted on 19 January 2010 when both panels and Appellate Body
assessed claims based on China's Accession Protocol.

7.115 Accordingly, the Panel will interpret the provisions of China's Accession Protocol – like those
of the WTO covered agreements – in accordance with the customary rules of interpretation of public
international law, including those codified in Articles 31, 32 and 33 of the Vienna Convention.
170
(ii) The availability of Article XX of the GATT 1994 for violations of Paragraph 11.3 of China's
Accession Protocol
7.116 The availability of the defences provided for in Article XX of the GATT 1994 raises
questions on the legal status of accession protocols within the WTO Agreement, and the relationship
between different instruments within the WTO legal a nd institutional system, and in particular in this
dispute, between Paragraph 11.3 of China's Accession Protocol and the other components of the WTO
Agreement.
7.117 The Appellate Body has interpreted China's Accession Protocol on two previous occasions 171,
once dealing with the availability of Article XX as a defence to justify a violation of China's
Accession Protocol.172 In China – Publications and Audiovisual Products , China invoked Article XX
of the GATT 1994 to justify a violation of Paragr aph 5.1 of its Accession Protocol dealing with
trading rights. In its assessment, the Appellate Body did not discuss the systemic relationship
between provisions of China's Accession Protocol and those of the GATT 1994, within the WTO
Agreement. The Appellate Body instead focussed on the text of the relevant provisions of the
Protocol, including an examination of the meaning of the particular terms at issue, as well as the
surrounding context and overall structure of the Accession Protocol.173
7.118 Paragraph 5.1 of China's Accession Protocol provides:
"Without prejudice to China's right to regulate trade in a manner consistent with the
WTO Agreement, China shall progressively liberalize the availability and scope of
the right to trade, so that, within three years after accession, all enterprises in China
shall have the right to trade in all goods throughout the customs territory of China,
except for those goods listed in Annex 2A which continue to be subject to state
trading in accordance with this Protocol..."
7.119 The Appellate Body interpreted the language contained in the introductory clause of
Paragraph 5.1 of China's Accession Protocol – "without prejudice to China's right to regulate trade in
a manner consistent with the WTO Agreement" – to mean that the justifications of Article XX of the
GATT 1994 were incorporated, by way of reference, into the Protocol and this formed a constituent
part of this specific accession commitment. Conse quently, China could rely on this incorporation to
invoke Article XX as a defence for a violation of Article 5.1 of its Accession Protocol. 174 Ultimately,
the Appellate Body rejected China's Article XX de fence because the conditions set out in Article XX,
as incorporated into this specific accession commitment, had not been met.175
7.120 In the present dispute, the Panel is not d ealing with Paragraph 5.1 of China's Accession
Protocol; rather the Panel must interpret the alt ogether different language f ound in Paragraph 11.3 of

170 The Vienna Convention on the Law of Treaties , done at Vienna, 23 May 1969, 1155 UNTS 331;
8 International Legal Materials 679.
171 Appellate Body Reports, China – Publications and Audiovisual Products, and China – Auto Parts.
172 Appellate Body Report on China – Publications and Audiovisual Products ; Panel Report on China
– Publications and Audiovisual Products.
173 Appellate Body Report on China – Publications and Audiovisual Products, para. 217.
174 Appellate Body Report on China – Publications and Audiovisual Products, para. 230.
175 Ibid., para. 337.

China's Accession Protocol in order to determine whether GATT Article XX defences are available to
justify violations of Paragraph 11.3 of China's Accession Protocol.
Interpretation of Paragraph 11.3 of China's Accession Protocol
Ordinary meaning
7.121 Paragraph 11.3 of China's Accession Protocol provides:
"China shall eliminate all taxes and char ges applied to exports unless specifically
provided for in Annex 6 of this Protocol or applied in conformity with the provisions
of Article VIII of the GATT 1994."
7.122 For the Panel, the ordinary meaning of the terms "s hall eliminate" is that China, at the time of
the conclusion of its Accession Protocol, was mainta ining export duties. The complainants report that
at the time of its accession to the WTO, Ch ina maintained export duties on 58 products. 176 Annex 6
of China's Accession Protocol lists 84 products on wh ich some export duties were possible. At the
time of China's accession to the WTO, WTO Memb ers and China agreed that China would not
maintain any export tariff taxes and charges, ex cept on those 84 products and within the maximum
levels provided in Annex 6, or if such charges could be justified under GATT Article VIII.
7.123 In Annex 6, at the end of this list of 84 pr oducts for which maximum duty rates are provided,
the following paragraph appears:
"China confirmed that the tariff levels in cluded in this Annex are maximum levels
which will not be exceeded. China confirmed furthermore that it would not increase
the presently applied rates, except under exceptional circumstances. If such
circumstances occurred, China would cons ult with affected members prior to
increasing applied tariffs with a view to finding a mutually acceptable solution."
7.124 The Panel notes that Paragraph 11.3 of Chin a's Accession Protocol does not include any
express reference to Article XX of the GATT 1994, or to provisions of the GATT 1994 more
generally. Moreover, Paragraph 11. 3 does not include an introductory clause such as that found in
Paragraph 5.1, which refers gene rally to "without prejudice to China's rights to regulate trade in a
manner consistent with the WTO Ag reement". As noted above, in China – Publications and
Audiovisual Products , the Appellate Body interpreted this introductory clause to mean that the
provisions of Article XX are available, by way of incorporation, as a defence to violations of
Paragraph 5.1 of China's Accession Protocol.
7.125 China argues that Paragraph 11.3 and the reference to "exceptional circumstances" in Annex 6
support China's right to invoke the defences of GATT Article XX. The complainants argue that the
wording of Paragraph 11.3 is clear and does not include any reference to GATT Article XX.
7.126 The Panel notes that Paragraph 11.3 of China's Accession Protocol refers to a specific set of
exceptions: those covered by Annex 6 and those covered by GATT Article VIII. Paragraph 11.3
generally prohibits the use of export duties unless those duties are applied to products expressly set
out in Annex 6. Annex 6 provides maximum export duty rates for listed products and states that:

176 The United States and Mexico submit that at the time of China's accession, China maintained export
duties on 58 products while, at the time these panel proceedings were initiated, China was maintaining export
duties on 350 products. This allegation is not contested by China. United States' first written submission,
paras. 1-3 and Mexico's first written submission, paras. 1-2.

"China confirmed that the tariff levels in cluded in this Annex are maximum levels
which will not be exceeded. China confirmed furthermore that it would not increase
presently applied rates except under exceptional circumstances."
177
It then contains a list of 84 products for which maximum export duty rates are stated.
7.127 In the Panel's view, the ordinary meaning of these two sentences of Annex 6 is very clear.
The use of the term "maximum levels" sets a de finitive ceiling in excess of which China may not
impose export duties. Furthermore, the second sente nce makes clear that any increase in the export
duty rates applied at the time of the conclusion of China's Accession Protocol could be effected only
in exceptional circumstances following consultations with affected Members.
7.128 The second exception in Paragraph 11.3 refers to "taxes and charges . . . applied in conformity
with the provisions of Article VIII of the GATT 1994". In the Panel's view, this phrase makes it clear
that China and the WTO Members decided that Chin a would not maintain any export duties, taxes or
charges (additional to those provided for in Annex 6) unless they were imposed consistently with
Article VIII.
7.129 The Panel recalls that Article VIII allows WTO Members to impose, at the border, a variety
of fees or charges provided that they are limite d in amount to the approximate costs of services
rendered and that they are imposed on or in conn ection with importation or exportation. As such,
Article VIII is clearly intended to govern fees and charges imposed in particular circumstances. The
Panel can find no general exception in the language of Paragraph 11.3 that would authorize China to
maintain export duties other than in circumstances described in Annex 6 or in Article VIII of the
GATT 1994. Notably, the language in Paragraph 11.3 expressly refers to Article VIII, but leaves out
reference to other provisions of the GATT 1994, such as Article XX.
178 In contrast to the language of
Paragraph 5.1 of the Accession Protoc ol before the Appellate Body in China – Publications and
Audiovisual Products , there is no general reference to the WTO Agreement or even to the
GATT 1994. While it would have been possible to include a reference to the GATT 1994 or to
Article XX, WTO Members evidently decided not to do so. The deliberate choice of language
providing for exceptions in Paragraph 11.3, together with the omission of general references to the
WTO Agreement or to the GATT 1994, suggest to us that the WTO Members and China did not
intend to incorporate into Paragraph 11.3 the defences set out in Article XX of the GATT 1994.
Context provided by other provisions of China's Working Party Report
7.130 China argues that its position that Paragraph 11.3 of its Accession Protocol allows it to invoke
the justifications of Article XX is confirmed by th e provisions of Paragraph 170 of its Working Party
Report, which it regards as context.179 The complainants disagree.
7.131 Paragraph 170 falls under the Section D of Ch ina's Working Party Report, which is entitled
"Internal Policies Affecting Foreign Trade in G oods", subsection (1) is entitled "Taxes and Charges
Levied on Imports and Exports". Paragraph 170 provides:
"[U]pon accession, China would ensure that its laws and regulati ons relating to all
fees, charges or taxes levied on imports and exports would be in full conformity with
its WTO obligations, including Articles I, III:2 and 4, and XI:1 of the GATT 1994..."

177 Exhibit JE-2).
178 The Panel recalls the doctrine expressio unius est exclusio alterius see footnote 91 above.
179 China's second written submission, paras. 165 and 166.

7.132 According to China, the use of the term "inc luding" makes clear that the list of provisions
cited in Paragraph 170 is not e xhaustive – it refers to all goods-related obligations assumed under the
WTO covered agreements, including the rights and obligations of GATT Article XX.
180
7.133 China submits that the language in Paragraph 5.1 of its Accession Protocol – which authorizes
recourse to Article XX – "is very sim ilar to the language in Paragraph 170". 181 China notes the
finding by the Appellate Body in China – Publications and Audiovisual Products that "[t]he reference
in the introductory clause to 'consistent with the WT O Agreement' constrains the exercise of [China's]
regulatory power such that Ch ina's regulatory measures must be shown to conform to WTO
disciplines".182 For China, "the Appellate Body's unwitti ng phrasing shows that the relevant language
in Paragraph 5.1 and Paragraph 170 is synonymous and not, as the complainants allege, fundamentally
different."183 Therefore, China suggests, if Paragraph 5.1 includes the flexibilities of Article XX, so
does Paragraph 170 of the Working Party Report.
7.134 In addition, China argues that the DSU provides contextual support for the view that, under
Paragraph 170, an export duty is "in full conform ity with WTO obligations" when it complies with
Article XX of the GATT 1994. Pointing to the la nguage in Paragraph 170, China notes that it is
universally accepted that, under the DSU, a Member may bring its measures fully into conformity
with its WTO obligations by taking action to ensure that its measures comply with GATT Article XX.
Thus, a measure that complies with the obligations in Article XX must be regarded as being "in full
conformity with WTO obligations", as required by Paragraph 170.184
7.135 The complainants argue that the explicit language of Paragraph 11.3 of the Accession
Protocol and the parallel provisions of Paragraphs 155 and 156 of China's Working Party Report that
prohibit the use of export duties except in accord ance with Annex 6 and Article VIII, belie this
interpretation.
7.136 Before considering the provisions of China's Wo rking Party Report invoked by the parties,
the Panel considers it useful to recall first the word ing of the sub-paragraphs 11.1 and 11.2 of China's
Accession Protocol, which provide:
"1. China shall ensure that customs fees or charges applied or administered by
national or sub-national authorities shall be in conformity with the GATT 1994.
2. China shall ensure that internal taxes and charges, including value-added
taxes, applied or administered by nationa l or sub-national authorities shall be in
conformity with the GATT 1994."
7.137 As noted above, China emphasizes the phrase "in full conformity with its WTO obligations"
contained in Paragraph 170 of the Working Party Report. For China, this phrase, which is similar to
the introductory phrase of paragraph 5.1 of Chin a's Accession Protocol, incorporates the flexibilities
of GATT Article XX.
7.138 The Panel observes that the phrase "in conform ity with the GATT 1994" does not appear in
Paragraph 11.3. Nor do the words "[w]ithout prejudice to China's right to regulate trade in a manner
consistent with the WTO Agreement" appear in that paragraph. However, it does appear in

180 China's second written submission, para. 166.
181 China's opening oral statement at the second substantive meeting, para. 176.
182 Appellate Body Report, China – Publications and Audiovisual Products, para. 222.
183 China's opening oral statement at the second substantive meeting, para. 177.
184 China's opening oral statement at the second substantive meeting, paras. 177, and 178.

Paragraphs 11.1 and 11.2, quoted above. In the Pa nel's view, this differenc e in wording between the
three sequential sub-paragraphs is evidence of a deliberate choice made by China and the WTO
Members in setting out China's rights and obligations and it must be given effect and respected. In
addition, the fact that Paragraph 11.3 does not include the language "in conformity with WTO
obligations" (which appears in Paragraphs 11.1 and 11.2) can only be understood to reflect agreement
at the time of China's accession th at since China's export duties co mmitments arose exclusively from
China's Accession Protocol, Article XX would not apply to such commitments.
7.139 Moreover, the Panel does not see how the language of Paragraph 5.1 of China's Accession
Protocol can be equated with the language of Para graph 11.3 of the Accession Protocol or with the
wording of Paragraph 170 of China's Working Party Report. To use China's expression, the Panel is
of the view that the language of Paragraph 5.1 is not "synonymous" or even similar to that of
Paragraph 11.3 of the Accession Protocol or Paragraph 170 of the Working Party Report.
7.140 If China and WTO Members wanted the defences of GATT Article XX to be available to
violations of China's export duty commitments, they could have said so in Paragraph 11.3 or
elsewhere in China's Accession Protocol.
185 In addition, China and the WTO Members could have
agreed that China's export duty commitments were an integral part of China's commitments under the
GATT 1994. For instance, WTO Members could have done this by incorporating China's export
duties commitments into China's GATT 1994 Schedul e. If China's export duties commitments were
part of China's GATT 1994 Schedule, the genera l defences of Article XX of the GATT 1994 would
be available to justify potential violations. However, this is not what China and WTO Members chose
to do.
7.141 The Panel notes, in particular, that Para graph 170 does not refer to China's specific
obligations on export duties; it refers to "cha rges and taxes levied on imports and exports".
Paragraph 170 is permissible and authorises China to use such charges or taxes so long as they respect
Articles I, III:2 and III:4 and XI:1 of GATT 199 4. Thus Paragraph 170 essentially repeats the
commitments existing under certain GATT rules. The ma tter at issue in this dispute, and governed by
Paragraph 11.3, is different; it is concerned with duties and taxes that are imposed only on exports,
and that are specifically prohibited under Paragraph 11.3 of the Accession Protocol 186 and not
regulated by the GATT 1994. In the Panel's view, Paragraph 170 of the Working Party Report neither
explicitly nor implicitly refers to any exceptions or GATT 1994 flexibilities in relation to the
prohibition on China to use export duties as prescribed by Paragraph 11.3 of the Accession Protocol.
7.142 Paragraph 342 of China's Working Party Repor t takes note of commitments undertaken by
China that are reproduced in Paragraph 170 of the Working Party Report. 187 Thus the provisions of
Paragraph 170 of the Working Party Report, like tho se of Paragraph 11.3 of the Protocol, are binding
on China but impose different obligations: Paragr aph 170 deals with domestic taxes imposed on
imports and exports and that must respect the specif ic rules of the GATT, wh ile Paragraph 11.3 deals
with an obligation that does not otherwise exist in the GATT 1994: namely the prohibition on the use
of export duties.

185 As discussed, the WTO Members and China did ma ke such a reference to the availability of GATT
Article XX to justify export quotas.
186 The Panel notes that five other WTO Members have commitments in their Accession Protocols and
Working Party Reports regarding export duties: Croatia , Kingdom of Saudi Arabia Latvia, Mongolia, Ukraine,
Vietnam.
187 Paragraphs 155 and 156 are not listed in Paragraph 342 of the Working Party Report, which is itself
explicitly mentioned in Article 1.2 of China's Accession Protocol.

7.143 This interpretation is confirmed by Paragraphs 155 and 156 of China's Working Party Report,
which deal explicitly with the specific commitments undertaken by China with respect to the
elimination of export duties. The Panel recalls that Paragraphs 155 and 1 56 fall under Section C of
China's Working Party Report, entitled "Export Regul ations". Subsection C(1), under which these
two provisions fall, is entitled "Customs Tariffs, Fees and Charges for Services Rendered, Application
of Internal Taxes to Exports".
7.144 The Panel recalls, first, the importance of the provisions of the Working Party Report have in
shedding light on the interpretation to be given to related provisions of the Working Party Report or
China's Accession Protocol.
7.145 Paragraph 155 of China's Working Party Report has the same content as Paragraph 11.3 of
China's Accession Protocol, providing that "taxes and charges should be eliminated unless applied in
conformity with GATT Article VIII or listed in A nnex 6 to the Draft Protocol". Paragraph 156
provides: "China noted that the majority of prod ucts were free of export duty, although 84 items,
including tungsten ore, ferrosilicon and some alum inium products, were subj ect to export duties".
There is no reference, explicit or implicit, to th e availability of Article XX defences for such
commitments. Although they do not form part of the explicit commitme nts covered by China's
Accession Protocol, the provisions of Paragraphs 155 and 156 of China's Working Party Report are
part of the legal context of Paragraph 11.3 of China's Accession Protocol and articulate clearly the
concerns of WTO Members at the time with respect to China's use of export duties.
7.146 When those prohibitions on the use of export duties were negotiated, the WTO Members and
China could have made reference to the defences of GATT Article XX - the way they did, for
instance, concerning the use of quantitative rest rictions in Paragraphs 164 and 165 of China's
Working Party Report - but the WTO Members and China evidently decided not to do so.
7.147 The Panel fails to see how Paragraph 170 of Ch ina's Working Party Report can be interpreted
to mean that the defences of Article XX are avai lable for China to justify violations of specific
commitments on export duties. This view is reinfo rced by the fact that China and the WTO Members
did make explicit reference to exceptions when they intended to incorporate them. For the Panel, the
clear meaning of Paragraph 11.3, which deals explici tly with export taxes and charges, is not altered
by Paragraph 170 of China's Working Party Report or by any other provisions of China's Accession
Protocol.
7.148 In sum, the Panel does not find in China's Wo rking Party Report any explicit or implicit
provision that would allow China to invoke the general exceptions of Article XX of the GATT 1994
to justify violations of Paragraph 11.3 of its Accession Protocol.
Context provided by other provisions of the WTO Agreement
7.149 The Panel has also considered whether ot her provisions of the GATT 1994 could support
China's proposition that Article XX of the GATT 1994 should be available as a defence to the
application of export duties in excess of commitme nts undertaken in Paragraph 11.3 (and Annex 6) of
its Accession Protocol.

7.150 The Panel observes that there are no gene ral umbrella exception in the Marrakesh
Agreement.
188 Each WTO agreement provides its own set of exceptions or flexibilities applicable to
the specific obligations found in each covered agreement.
7.151 Other provisions of the GATT 1994 may be releva nt to export duties, but none of them
contains disciplines applicable to export duties similar to those include d in Paragraph 11.3 of China's
Accession Protocol and none of them refer to GATT Article XX.
7.152 This brings us to the issue of whether Artic le XX of the GATT 1994 can be invoked to justify
a violation of a provision falling outside the GATT 1994.
7.153 The Panel notes that Article XX provides that "nothing in this Agreement should be construed
to prevent the adoption or enforc ement ... of [certain] measures...:" A priori , the reference to this
"Agreement" suggests that the exceptions therein relate only to the GATT 1994, and not to other
agreements. On occasion, WTO Members have incor porated, by cross-reference, the provisions of
Article XX of the GATT 1994 into other covered agre ements. This was done, for example, with the
TRIMs Agreement, which explicitly incorporates the ri ght to invoke the justifications of Article XX
of the GATT 1994. In the Panel's view, the legal basis for applying Article XX exceptions to TRIMs
obligations is the text of the incorporation of the TRIMs Agreement, not the text of Article XX of the
GATT 1994. Other WTO agreements include their ow n exceptions. For example, general exceptions
are provided for in Article XIV of the GATS for GATS violations. Other covered agreements, like
TRIPS, the TBT or the SPS agreements, include their own flexibilities and exceptions.
7.154 In the Panel's view, it is reasonable under th ese circumstances to assume that, were GATT
Article XX intended to apply to Paragraph 11.3 of China's Accession Protocol, language would have
been inserted to suggest this relationship. Ho wever, as noted above, no such language is found in
Paragraph 11.3 of China's Accession Protocol.
7.155 According to China, its right to apply expor t duties is found in the text of the covered
agreements read as a whole . For China, the covered agreements affirm the inherent and sovereign
right of every WTO Member to regulate trade, described by the Appellate Body in China –
Publications and Audiovisual Products as "an inherent power enjoyed by a Member government",
rather than a "right bestowed by international treaties such as the WTO Agreement".189 According to
China, the text of Paragraph 11.3 of its Accession Protocol shows that WTO Members, in imposing an
obligation on China to forego export duties in certain circumstances, did not exclude the inherent right
to regulate trade.190
7.156 The Panel agrees with China that WTO Members have an inherent a nd sovereign right to
regulate trade.191 WTO Members and China have exercised this right, inter alia, in negotiating and
ratifying the WTO Agreement. Chin a has exercised its inherent and sovereign right to regulate trade
in negotiating, among other actions, the terms of its accession into the WTO.
7.157 To the Panel, the implication of China's argumen t is that because it has an inherent right to
regulate trade, this right prevails over WTO rules inte nded to govern the exercise of that right. In the
Panel's view, it is China's sovereign right to regulat e trade that enabled it to negotiate and agree with
the provisions of Paragraph 11.3 of its Accession Prot ocol. Thus, there is no contradiction between

188 For instance the Marrakesh Agreement contains voting rules that are applicable to all WTO
agreements but there is no "general exception" applicable to all WTO agreements.
189 China's second written submission, para. 162.
190 China's second written submission, para. 164.
191 China's second written submission, para. 162.

China's sovereign right to regulate trade, the rights acquired, and the commitments undertaken by
China that are contained in its Accession Protocol, in cluding in its Paragraph 11.3. On the contrary,
China's Accession Protocol and its various rights and obligations, are the ultimate expression of
China's sovereignty.
(iii) Conclusions
7.158 For the Panel, the wording and the context of Paragraph 11.3 precludes the possibility for
China to invoke the defence of Article XX of the GATT 1994 for violations of the obligations
contained in Paragraph 11.3 of China's Accession Protocol.
7.159 For the foregoing reasons, the Panel concludes that there is no basis in China's Accession
Protocol to allow the application of Article XX of the GATT 1994 to China's obligations in
Paragraph 11.3 of the Accession Protocol. To allow such exceptions to justify a violation when no
exception was apparently envisaged or provided for, would change the conten t and alter the careful
balance achieved in the negotiation of China's Ac cession Protocol. It would thus undermine the
predictability and legal security of the international trading system.
7.160 The Panel is mindful that excluding the applicability of Article XX justifications from the
obligations contained in Paragraph 11.3 means that China is in a position unlike that of most other
WTO Members who are not prohibited from using e xport duties, either via the terms of their
respective accession protocols or their membership to the WTO at the time of its inception.
However, based on the text before us, the Panel ca n only assume that this was the intention of China
and the WTO Members when negotiating China's Acce ssion Protocol. The situation created by this
provision taken in isolation ma y be perceived as imbalanced
192, but the Panel can find no legal basis
in the Protocol or otherwise to interpret Para graph 11.3 of China's Accession Protocol as permitting
resort to Article XX of the GATT 1994.
C. EXPORT QUOTAS
7.161 The complainants allege that China's export quotas as applied to bauxite, coke, fluorspar,
silicon carbide and zinc are inconsistent with Article XI:1 of the GATT 1994. 193 F o r z i n c , i n
particular, the complainants claim that China did not publish a 2009 quota level or any application
procedures for interested enterprises, which effectively amounts to a ban, or zero quota, on zinc. The
complainants submit that these export quotas are also inconsistent with Paragraph 1.2 of China's
Accession Protocol and Paragraphs 162 and 165 of China's Working Party Report. The European
Union further claims that China's e xport quota maintained on coke under the 2010 First Batch Coke
Export Quota for FIEs (foreign-invested enterprises) is inconsistent with China's obligations.
194
7.162 China requests the Panel to reject the complain ants' claims. First, China submits that the
Panel should reject the European Union's claim because the European Union did not sufficiently
identify the measures in its submissions. In any event, China requests the Panel to reject the
complainants' claims for failing to demonstrate that Article XI:1 applies to the export quotas. China
also submits that in order to demonstrate inconsis tency with Article XI:1, the complainants have the
burden to demonstrate that the conditions of Article XI:2(a) are not met. Finally, China argues that the

192 Another panel was also asked to interpret China's Accession Protocol and reached a similar
conclusion, i.e. that it was not for it to "recalibrate what WTO Members has agreed to in the negotiation that led
to the accession of China to the WTO": Panel Report, US – Tyres (China), para. 7.10.
193 The specific forms of the raw materials subject to complainants' claims are identified in Exhibit
JE-6 and in para. 2.2 of the Descriptive Part of these Reports.
194 2010 First Batch Coke Export Quota for FIEs (Exhibit JE-129).

Panel should only consider the complainants' claims in respect of measures in place in 2010. China
argues that the 2010 measures replaced those identifie d by the complainants in their Panel Requests
and submissions and that they should form the focus of the Panel's analysis. Under the 2010 measures,
China submits that fluorspar is not subject to an export quota.
7.163 To the extent the Panel were to find the expor t quotas to be inconsistent with Article XI:1,
China submits that the export quota applied to refr actory-grade bauxite is not inconsistent with
Article XI:1 because the export quota is temporarily a pplied to prevent or relieve critical shortages of
refractory-grade bauxite within the meaning of Article XI:2(a). In the alternative, China submits that
the export quota applied to refractory-grade bauxite is justified pursuant to Article XX(g) of the
GATT 1994. China also argues that export quotas app lied to coke and silicon carbide are justified
pursuant to Article XX(b) of the GATT 1994.
7.164 If the Panel were to find the export quotas to be inconsistent with Article XI:1 and not
justified pursuant to Article XX(g) or XX(b), Chin a requests the Panel to exercise judicial economy
with respect to the complainan ts' claims under Paragraphs 162 and 165 of China's Working Party
Report. China argues these provisions contain obligations that are "duplicative of" those under
Article XI:1.
7.165 As a preliminary matter, the Panel recalls its fi nding in paragraph 7.33 a bove that, in general,
measures that were in force when the Panel was established on 21 December 2009 form the basis of
its terms of reference.
195 The Panel notes the European Union's identification of the 2010 First Batch
Coke Export Quota for FIEs 196. Because the 2010 First Batch Coke Export Quota for FIEs was not
yet in force on 21 December 2009, the Panel considers th at it is outside its terms of reference. In
addition, China submits that the Panel should not consider the complainants ' claim in respect of
fluorspar because the 2010 measures do not impose a quot a. At the request of the complainants, the
Panel will only assess the WTO consistency of the 2009 measures while taking note that the 2010
measures do not set a quota for fluorspar.197
7.166 Before proceeding to consider the complain ants' claims, the Panel will assess whether the
European Union failed to identify the measures subject to its claims. Thereafter, the Panel sets out the
operation of China's measures as they pertain to export quotas. In the event the measures are
determined to be inconsistent with China's obliga tions, the Panel will consider China's defences as
applicable to bauxite, coke and silicon carbide.
1. Whether the European Union properly identified the measures subject to its
Article XI:1 and Working Party Report claims on bauxite, fluorspar, silicon carbide and
zinc
7.167 In its first written submission, China argues th at the European Union fails to identify the
Chinese measures at issue in devel oping arguments asserting that export quotas are inconsistent with
GATT Article XI:1. It argues that the identifica tion of twenty measures does not suffice to provide
the necessary "degree of specificity required to enable the Panel to make sufficiently specific
findings" and make recommendations pursuant to Article 19.1 of the DSU.198

195 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
196 2010 First Batch Coke Export Quota for FIEs (Exhibit JE-129).
197 See section VII.A above.
198 China's second written submission, para. 27.

7.168 China submits that the European Union solely identifies China's Foreign Trade Law
199 and
Regulation on Import and Export Administration 200, neither of which subjects any of the Raw
Materials at issue to an export quota. China observes that the Europ ean Union identifies the 2009
Export Licensing Catalogue201 in relation to its claim on the allocation of the export quota applied to
coke, but not in respect of its Article XI:1 or Working Party Report claims concerning the imposition
of quotas. Accordingly, it argues that the European Union has not established its claims in respect of
the raw materials at issue , and asks the Panel to reject those claims.202
7.169 The European Union argues that the challenged measures are "the export quotas on the
relevant Raw Materials".203 The European Union submits that th e relevant measures are identified in
paragraphs 197 and 199 of its firs t written submission and that the measures are discussed in the
footnotes of its first written submission, in particular footnotes in the Facts section of its first written
submission, and in the subsections for each raw material subject to an export quota.204 In addition, the
European Union submits Table 1 in response to a question from the Panel, which identifies 20
measures that relate to its quota-related claims. Through these measures, the European Union submits
that the Panel can make precise recommendations.
7.170 The Panel notes that the Facts section of th e European Union's first written submission
contains references to particular provisi ons of Chinese measures, including China's Foreign Trade
Law,205 China's Regulation on Import and Export Administration 206, Export Quota Administration
Measures207, Export Quota Bidding Measures 208, various Notices on export quotas for coke and zinc,
and various announcements concer ning quota bidding for bauxite, silic on carbide and fluorspar. The
European Union has specified the precise amounts fo r quotas in 2009, whether allocated directly or
through bidding, for the raw materials at issue. 209 The European Union also included the above
measures in its response to questions from the Panel in the context of the first and second substantive
meetings.210
7.171 As discussed in further detail below, the Pane l considers the European Union's identification
of these provisions sufficient to enable the Panel to make specific findings and recommendations
pursuant to Article 19.1 of the DSU. Accordingly, the Panel will consider the European Union's
claims below, as well as those of the United States and Mexico.

199 Exhibits CHN-151, JE-72.
200 Exhibits CHN-152, JE-73.
201 Exhibits CHN-6, JE-22.
202 China's first written submission, paras. 346-348.
203 European Union's comments on China's response to Panel question No. 7 following the first
substantive meeting, para. 7.
204 European Union's opening oral statement at the first substantive meeting, paras. 26-28; European
Union's second written submission, paras. 35-38.
205 Exhibits CHN-151, JE-72.
206 Exhibits CHN-152, JE-73.
207 Exhibits CHN-312, JE-76.
208 Exhibits CHN-304, JE-77.
209 European Union's first written submission, paras. 70, 87-88, 105-108, 109-112, and 113-115.
210 European Union's response to Panel question No. 2 following the first substantive meeting;
European Union's response to Panel's question No. 2 following the second substantive meeting.

2. China's export quota regime
7.172 China's Foreign Trade Law confers the authority to restrict or prohibit the exportation of
goods through export quotas
211 and subjects those goods to an export quota administration. 212 China
may restrict or prohibit exportation in pursuance of certain specific objectives, such as protecting
human life or health, or forbidding the export of resources that are exhaustible.213
7.173 Under China's Foreign Trade Law , MOFCOM is responsible for the centralized
administration of all export quotas for China. 214 MOFCOM, in collaboration with Customs, is
responsible for "formulating, adjusting, and pub lishing" the catalogue listing all goods subject to
export quotas.215 MOFCOM also determines and announces the total amount of the annual export
quota for each product covered by the relevant measure by 31 October of the previous year.216
7.174 Applications to receive an allocation of an export quota must be submitted between 1 and 15
November.217 China allocates quotas either directly or through a quota bidding system. 218 A decision
on allocation must be issued within 30 days from the date of submission of the application and no
later than 15 December of the year of application.219 Enterprises that are approved to export under the
quotas are issued a certificate of quota. After obtai ning a certificate of quota, the exporter applies for
the export licence, which must be issued by the re levant authority within three working days of
receiving the application.220 The exporter then seeks export clearance from Customs by presenting the
export quota licence to Customs for declaration and examination.221
7.175 China may also impose administrative or crimin al sanctions for the unlawful exportation of
goods subject to restriction, or for forging or altering import or export licences, quota certificates, or
other documents.222 Under China's Regulation on Import and Export Administration 223, the holder of
an export quota may be subject to administrative sanction for failure to return the unused quotas by 31
October of the year for which th e export quotas have been issued 224; or for exporting without
permission, exceeding the quantitative limitations, or buying or selling quota certificates or other

211 Foreign Trade Law, Articles 2, 14, 16-17, 19 (Exhibits CHN-151, JE-72); Regulation on Import and
Export Administration, Article 4 (Exhibits CHN-152, JE-73).
212 Regulation on Import and Export Administration , Article 36 (Exhibits CHN-152, JE-73); Export
Quota Administration Measures, Article 1 (Exhibits CHN-312, JE-76).
213 Foreign Trade Law, Articles 16, and 17 (Exhibits CHN-151, JE-72).
214 Foreign Trade Law, Article 19 (Exhibits CHN-151, JE-72).
215 Foreign Trade Law , Article 18 (Exhibits CHN-151, JE-72), Regulation on Import and Export
Administration, Article 37-39 (Exhibits CHN-152, JE-73).
216 Regulation on Import and Export Administration , Article 38 (Exhibits CHN-152, JE-73); Export
Quota Administration Measures, Articles 9-11 (Exhibits CHN-312, JE-76).
217 Regulation on Import and Export Administration, Article 38 (Exhibits CHN-152 JE-73).
218 Regulation on Import and Export Administration, Article 39 (Exhibits CHN-152, JE-73).
219 Regulation on Import and Export Administration, Article 40 (Exhibits CHN-152, JE-73).
220 Measures for the Administration of License for the Export of Goods, Article 19 (Exhibit CHN-342);
Working Rules on Issuing Export Licenses, Article 10 (Exhibit CHN-344); Regulations of the People's Republic
of China on the Administration of the Import and Export of Goods (Exhibit CHN-152); Statement on Relevant
Matters Regarding the Issuance of Export License , by the Quota and License Administrative Bureau of
MOFCOM (20 July 2010) (Exhibit CHN-345).
221 Measures for the Administration of Export Commodities Quotas, Article 25 (Exhibit CHN-312).
222 Foreign Trade Law , Articles 34, 61, 63, 64 (Exhibit JE-72); Regulation on Import and Export
Administration, Articles 64, 65 (Exhibit JE-73); Export Quota Measures, Article 26 (Exhibit JE-76).
223 Exhibits CHN-152, JE-73.
224 Regulation on Import and Export Administration, Article 42 (Exhibits JE-73, and CHN-152).

documents without approval.
225 Sanctions include revocation of th e business licence for foreign trade
or reduction in allocation of quotas and possible criminal punishment. 226 Quota administering
authorities that distribute quotas exceeding their authority may also be subject to sanction.227
7.176 On 10 December 2008, MOFCOM and Customs published the 2009 Export Licensing
Catalogue228 announcing those goods subject to restriction for 2009. This 2009 Export Licensing
Catalogue identifies bauxite, coke, fluorspar, silicon car bide, and zinc among those goods subject to
restriction. Export quotas on coke and zinc are to be allocated directly 229, while export quotas on
bauxite, fluorspar, and silicon carbide are to be allocated through a bidding system.230
(a) Quotas allocated directly for coke and zinc
7.177 Under China's Export Quota Administration Measures , MOFCOM determines the total quota
amount for quotas allocated directly quota based on: (i) the needs of guaranteeing the safety of the
national economy; (ii) the needs of protecting the limited domestic resources; (iii) development
planning, objectives and policies of the State on the relevant industries; and (iv) demands on the
international and domestic markets, and the production and sales status. 231 China's Export Quota
Administration Measures apply to the direct allocation of zinc, but expressly exclude from its scope of
application the quota on coke. 232 China's Export Quota Administration Measures do not apply to
foreign-invested enterprises interested in applying for an allocation of the zinc quota.233
7.178 Only enterprises that have the "license or qualification for import and export management and
whose economic activities did not violate laws and re gulations in the most recent three years" may
apply for a quota. 234 Enterprises are required to submit their applications for export quotas to
MOFCOM directly, or to the relevant local authorities, for review. 235 MOFCOM then distributes the
quotas to enterprises directly or distributes quotas to local administrative authorities, which further
distribute the quotas to the enterprises. 236 In directly allocating quotas, MOFCOM and the local
administrative authorities are directed to take into consideration: (i) the export performance of the
particular good; (ii) the utilization rate of the export quota; (iii) the business management/operation
capacity of the applicant; and (iv) the "produc tion scale and resources status of the applicant
enterprise or area" during the previous three years.237
7.179 The export quotas allocated to enterprises may be adjusted by MOFCOM under the following
circumstances: (i) major changes in the international market; (ii) major changes in domestic resources;

225 Regulation on Import and Export Administration , Articles 64, 65, 66, 67 and 70 (Exhibit JE-73,
CHN-152).
226 Regulation on Import and Export Administration , Articles 64, 65, 66, 67 and 70 (Exhibit JE-73,
CHN-152).
227 Export Quota Administration Measures , Article 29 (Exhibit JE-76); Export Quota Bidding
Measures, Article 36 (Exhibit JE-77); Export Quota Bidding Implementation Rules, Article 32 (Exhibit JE-78).
228 Exhibits CHN-6, JE-22.
229 2009 Export Licensing Catalogue, Article I(1) (Exhibits CHN-6, JE-22).
230 2009 Export Licensing Catalogue, Article I(2) (Exhibits CHN-6, JE-22).
231 Export Quota Measures , Article 10 (Exhibit CHN-151, JE-76). MOFCOM may also adjust the
annual quota amount by September 30 of the preceding year.
232 Export Quota Administration Measures , Article 4 (Exhibits CHN-312, JE-76). Article 4 indicates
that the Export Quota Administration Measures do not apply to the commodities listed in its appendix. Products
listed in the appendix include coke.
233 Export Quota Administration Measures, Article 31 (Exhibits CHN-312, JE-76).
234 Export Quota Administration Measures, Article 13 (Exhibits CHN-312, JE-76).
235 Export Quota Administration Measures, Article 14 (Exhibits CHN-312, JE-76).
236 Export Quota Administration Measures, Article 17 (Exhibits CHN-312, JE-76).
237 Export Quota Administration Measures, Article 19 (Exhibits CHN-312 JE-76).

or (iii) "obvious imbalances in the quot a-use-pace" between enterprises or areas.
238 To that end, the
Export Quota Administration Measures direct the local administra tive authorities to inspect the
utilization rate of export quotas and, where prescrib ed utilization rate requirements are not met, to
redistribute quota amounts.239
(i) 2009 zinc export quota allocation
7.180 Enterprises that have received a zinc quota share must meet a prescribed quota utilization rate
or return unused annual quotas, which are reallocated the following year. 240 MOFCOM and local
administrative authorities may rea llocate the unused and returned e xport quotas to other enterprises
within their respective areas. 241 If the local administrative authorities fail either to return or use the
quotas by the end of the year, MOFTEC may deduct a corresponding amount from their quotas for the
following year.
242 Successful enterprises that have been awarded a quota certificate must apply to the
relevant licence-issuing authority and satisfy app licable procedures for inspection and release with
Customs.243 MOFCOM did not publish a quota amount in relation to zinc in 2009.
(ii) 2009 coke export quota allocation
7.181 China requires enterprises to apply in October of the preceding year to receive a coke quota
allocation. China requires enterprises to satisfy certain criteria in order to be eligible to receive an
allocation under the quota. MOFCOM has differe nt application processes for Chinese enterprises and
for foreign-invested enterprises.244
Application requirements for Chinese and foreign-invested enterprises
7.182 The 2009 Coke Export Quota Application Procedure 245 requires that Chinese production
enterprises satisfy certain criteria to be eligible to receive an allo cation under the quota. An applicant
must be registered pursuant to national legisl ation on economic, industria l and trade management
administration, qualify for import and export operations or proceed with the registration as a foreign
trade operator, and qualify as an independent legal pe rson. An applicant must have supplied at least
250,000 metric tonnes of coke for export in 2008 in accordance with certain relevant standards, or
have exported an average yearly volume of at l east 200,000 metric tonnes of coke during the period
2005-07. In addition, an applicant must comply with national standards in force and possess ISO
9000 certification, comply with national and local governments' relevant re gulations including those
relating to employment and enviro nmental standards, and demonstr ate a record of no legal or
regulatory infringements. 246 In addition to the requirements applicable to Chinese production
companies, Chinese trading companie s must also demonstrate that they have supplied an average
volume of at least 400,000 metric tonnes of coke for export during the period 2005-07. Trading
companies are also required to have a registered capital of at least RMB 50 million.247

238 Export Quota Administration Measures, Article 20 (Exhibits CHN-312, JE-76).
239 Export Quota Administration Measures, Article 21 (Exhibits CHN-312, JE-76).
240 Export Quota Administration Measures, Article 21 (Exhibits CHN-312, JE-76).
241 Export Quota Administration Measures, Article 22 (Exhibits CHN-312, JE-76).
242 Export Quota Administration Measures, Article 23 (Exhibits CHN-312, JE-76,).
243 Export Quota Administration Measures, Article 25 (Exhibits CHN-312, JE-76).
244 See opening paragraph of 2009 Coke Export Quota Application Procedure (Exhibits CHN-308,
JE-85).
245 Exhibits CHN-308, JE-85.
246 2009 Coke Export Quota Application Procedures, Section I(1) (Exhibits CHN-308, JE-85).
247 2009 Coke Export Quota Application Procedures, Section I(1) (Exhibits CHN-308, JE-85).

7.183 Chinese enterprises applying to export coke under the quota must submit the following
documents: (i) business licence, registered Foreign Trade Operator Registration Form or the PRC
Import and Export Enterprise Qualification Certif icate and the Customs number and Identification
number; (ii) ISO 9000 quality management system ce rtificate; and (iii) supporting documents issued
by the labour and social insurance administration c onfirming the enterprise's participation in certain
social programs. New Chinese en terprises that apply for a coke export quota are required to submit
the aforementioned documents covering the previ ous three years, while enterprises that have
previously been allocated a portion of a coke export quota must submit documents covering only the
preceding year.
248
7.184 Foreign-invested enterprises seeking to expor t coke are required to satisfy the above
application and eligibility criteria as well as meet additional requirements. 249 The 2009 First Batch
Coke Export Quotas for FIEs , and the 2009 Second Batch Coke Export Quotas for FIEs state that if
necessary, the local authorities and MOFCOM shoul d re-examine the "export scale" of foreign-
invested enterprises as set fo rth in their applications. 250 The application procedures do not appear to
have been published for 2009. However, Chin a has published coke export quota application
procedures for foreign-invested enterprises in 2010. The 2010 measures make reference to China's
authorities examining the applicants prior exports for foreign-invested enterprises.251
7.185 Chinese enterprises applying to export coke must submit their applications to MOFCOM and
the CCCMC, either directly, or through local authorities that in turn submit applications to MOFCOM
and the CCCMC. 252 T h e 2009 Coke Export Quota Application Procedures specifically direct the
CCCMC to review and evaluate the applications of enterprises seeking to export under the quota. 253
The CCCMC is a membership organization whose me mbers must be legally listed and registered
entities engaged in the import and export, or other trade-related activities, of metals, minerals, and
chemicals in China. 254 After receiving applications, the CCCMC in conjunction with the China
Coking Industry Association, formulates and se nds its opinion to MOFCOM regarding whether
applicant enterprises have satisfied the requisite eligibility criteria. 255 MOFCOM then decides which
companies are qualified for coke export quotas and publishes the list of all companies.256
2009 Coke quota amounts
7.186 MOFCOM did not publish an export quota amount for coke in advance in 2009, but instead
announced that certain "batches" of the coke e xport quota were allocated throughout the year to
specific Chinese and foreign-invested enterprises.257 On 26 December 2008, China allocated an initial

248 2009 Coke Export Quota Application Procedures, Article III (Exhibits CHN-308, JE-85).
249 2009 Coke Export Quota Application Procedures (Exhibits CHN-308, JE-85).
250 2009 First Batch Coke Export Quota for FIEs (Exhibit JE-82); 2009 Second Batch Coke Export
Quota for FIEs (Exhibit JE-83).
251 Allocation of 2010 First Batch Coke Export Quotas for FIEs (Exhibits CHN-552, JE-128); First
Batch of 2010 Coke Export Quotas for FIEs (Exhibit JE-129); Allocation of 2010 First Batch Coke Export
Quotas for FIEs (Exhibits CHN-552, JE-128).
252 2009 Coke Export Quota Application Procedure, Article II (Exhibit CHN-308, JE-85).
253 2009 Coke Export Quota Application Procedure, Article II (Exhibit CHN-308, JE-85).
254 2001 CCCMC Charter , Article 8 (Exhibits CHN-16, JE-87). For additional details regarding the
CCCMC, see Section III.G.
255 2009 Coke Export Quota Application Procedures, Article II (Exhibits CHN-308, JE-85).
256 2009 Coke Export Quota Application Procedures, Article II (Exhibits CHN-308, JE-85).
257 2009 First Batch Coke Export Quotas (Exhibit JE-80); 2009 Second Batch Coke Export Quota
(Exhibit CHN-338, JE-81); 2009 First Batch Coke Export Quotas for FIEs (Exhibit JE-82); 2009 Second Batch
Coke Export Quotas for FIEs (Exhibit JE-83); 2009 Coke Export Quota Application Procedure (Exhibits CHN-
308, JE-85).

5,780,000 metric tonnes of the coke e xport quota to specific Chinese enterprises
258, and on 29 June
2009, China allocated an additio nal 6,130,000 metric tonnes. 259 On 9 January 2009, China allocated
an initial 591,000 metric tonnes to foreign-invested enterprises 260, and on 8 September 2009, China
allocated an additional 591,000 metric tonnes. 261 The total amount of coke allocated to Chinese and
foreign-invested enterprises for export in 2009 was 13,092,000 metric tonnes.
(b) Bauxite, fluorspar and silicon carbide quotas allocated through bidding
7.187 China's Regulation on Import and Export Administration provides that export "quotas may be
allocated ... through bidding" 262 and that "the administrative departments of export quotas ... shall, on
the basis of the provisions of the present Regulation, formulate specific measures of administration to
lay out clear instructions on the qualifications of the applicants ...". 263 The rules and procedures
governing the quota bidding process are set out in the Export Quota Bidding Measures 264, in
conjunction with the Export Quota Bidding Implementation Rules.265
7.188 The Export Quota Bidding Measures define quota bidding as the procedure through which
"an export enterprise may obtain with certain compensation the quotas", through "voluntary
bidding."266 The Export Quota Bidding Measures further provide that goods can be subject to quota
bidding where: (i) they are "non-renewable, staple-resource-type" goods; (ii) they are "well-positioned
on the international market and upon the export volume of which the impact of price fluctuation is
relatively little"; (iii) they are in "oversupply, supplie d in a relatively decentralized way and liable to
be dumped at low price, thereby giving rise to anti-dumping prosecution in foreign countries"; or (iv)
they must be the subject of an export quota on the basis of international treaties with other countries
that "have imposed relevant restrictions."267
7.189 Article 32 of the Export Quota Bidding Measures provides that after being awarded any
quota, "an enterprise shall apply to the designated li censing authority for an export licence within the
quota's validity period." 268 The issuance of licen ces is subject to China's 2008 Export License
Administration Measures.269
7.190 MOFCOM is responsible for the centralized administration of export quota bidding, for
determining the types of goods that are subject to export quota bidding, and for determining the total
quantity of export quotas to be allocated through bidding.270

258 2009 First Batch Coke Export Quotas (Exhibit JE-80).
259 2009 Second Batch Coke Export Quota (Exhibit CHN-338, JE-81).
260 2009 First Batch Coke Export Quotas for FIEs (Exhibit JE-82).
261 2009 Second Batch Coke Export Quotas for FIEs (Exhibit JE-83).
262 Regulation on Import and Export Administration, Article 39 (Exhibit CHN-152, JE-73).
263 Regulation on Import and Export Administration, Article 44 (Exhibit CHN-152, JE-73).
264 Export Quota Bidding Measures (Exhibits CHN-304, JE-77).
265 Export Quota Bidding Implementation Rules (Exhibits CHN-305, JE-78).
266 Export Quota Bidding Measures, Article 2 (Exhibits CHN-304, JE-77).
267 Export Quota Bidding Measures, Article 6 (Exhibits CHN-304, JE-77).
268 Export Quota Bidding Measures , Article 32 (Exhibits CHN-304, JE-77); See also Export Quota
Bidding Implementation Rules, Article 29 (Exhibits CHN-305, JE-78).
269 Export Quota Bidding Measures, Chapter VII, Article 33 (CHN-304, Exhibit JE-77), 2001 Export
License Administration Provisions (Exhibit CHN-359); 2004 Export License Administration Measures (Exhibit
CHN-360); See also Export Quota Bidding Implementation Rules , Articles 29-30 (Exhibits CHN-305, JE-78);
2009 Graded Export Licensing Entities Catalogue, Articles 1(2), 5) (Exhibit JE-96).
270 Export Quota Bidding Measures, Article 3 (Exhibits CHN-304, JE-77).

7.191 The Export Quota Bidding Measures provide that MOFCOM is responsible for leading and
supervising the work of bidding invitati on through the Export Quota Bidding Committee.
271 Under
the Export Quota Bidding Measures , the Bidding Committee "shall, according to the types of
commodities subject to bidding, establish the corresponding offices of quota bidding for export
commodities under the relevant chambers of commerce for import and export," known as Bidding
Offices.
272 The Bidding Offices are composed of representatives of the CCCMC, the China
Association of Enterprises with Foreign Inv estment and the "authority responsible for the
coordination of the relevant industry." The head of the CCCMC also serves as the director of the
Bidding Offices. 273 The Bidding Committee sets a base or minimum bid price and invalidates bid
prices that are "excessively high and obviously deviate from the law of price". 274 The Bidding
Committee is authorized to set a maximum and minimum quantity that each enterprise may bid.275
(i) The quota-bidding application process
7.192 The Bidding Committee handle various responsibilities concerning the application process
and other bidding-related matters. These include: (i) determining the quantity of the export quotas, the
bidding mode adopted for each bidding, the number of biddings and the quantity to be distributed
under each bidding mode; (ii) determining the plan of quota bidding for each good, take charge of
opening and evaluating the bids a nd approving the outcome of the bi dding procedure; (iii) publishing
all necessary notices and announcements; (iv) accep ting the filings submitted by local bidding offices
on unused quotas that are returned to the Mini stry of Commerce, or quotas that the winning
companies may assign and transfer to other comp anies; (v) inspecting the collection of security
deposits and bid-winning prices; and (vi) and determining the qualifica tions that bidders should have,
verifying the existence of these qualifications and a pproving the list of companies that have the right
to participate in the bidding procedure in accordance with these qualifications.
276
7.193 The relevant regional, municipal, or provi ncial office of MOFCOM is directed to
preliminarily examine the qualifications of lo cal bidding enterprises and provide the relevant
materials to the relevant Bidding Office. The Bi dding Office is then directed to re-examine the
qualifications of bidding enterprises within the speci fied period and report the outcome of such re-
examination to the Bidding Committee for examination and approval.277
7.194 The Export Quota Bidding Measures 278, in conjunction with the Export Quota Bidding
Implementation Rules 279, set forth certain general eligibility criteria that bidders must satisfy. In
general, in order to participate in the bidding process, both Chinese and foreign-invested enterprises

271 Export Quota Bidding Measures , Article 7 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Article 2 (Exhibits CHN-305, JE-78).
272 Export Quota Bidding Measures, Article 9 (Exhibits CHN-304, JE-77).
273 Export Quota Bidding Measures , Article 9 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Article 4 (Exhibits CHN-305, JE-78).
274 Export Quota Bidding Measures , Article 16 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Article 7 (Exhibits CHN-305, JE-78).
275 Export Quota Bidding Measures , Article 17 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules Article 8 (Exhibits CHN-305 JE-78).
276 Export Quota Bidding Measures , Articles 8 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Articles 3 (Exhibits CHN-305, JE-78).
277 Export Quota Bidding Measures , Article 12 (Exhibits CHN-304, JE-77); See also Export Quota
Bidding Implementation Rules, Article 15 (Exhibits CHN-305, JE-78); 2009 First Round Export Quota Bidding
Announcement, Article V(I)1 (Exhibits CHN-309, JE-90); 2009 Second Round Export Quota Bidding
Announcement, Article IV(2) (Exhibits CHN-310, JE-91).
278 Exhibits CHN-304, JE-77.
279 Exhibits CHN-305, JE-78.

must be: (i) qualified for engaging in export; (ii) re gistered with the business administration authority;
(iii) members of the relevant chamber of commerce for import and export (in case of foreign-invested
enterprises, members of the China Association of En terprises with Foreign Investment); and (iv) have
exported or supplied for export volum es of the relevant commodity that "reach[] a certain level."
280
The Export Quota Bidding Implementation Rules further require that a bidder must "have reached
certain levels in terms of registered capital".
281 They also provide that "o ther enterprises that satisfy
the relevant government requirements and have been approved by MOFCOM may participate in
public biddings."282
7.195 MOFCOM sets forth additional criteria that ente rprises were required to satisfy in order to
qualify to participate in bidding for specific rounds of bidding for bauxite, fluorspar and silicon
carbide in 2009. 283 Article III(I)i of the 2009 First Round Export Quota Bidding Announcement
provides that a bidding enterprise must have b een registered with the appropriate government
department, be qualified for importing and exporting, and "be an independent legal person".284 Where
a bidder is a distribution enterprise, the goods procured by it must be supplied by a manufacturing
enterprise that has satisfied all necessary requirements. Finally, a bidder may not have been involved
in any violations of "relevan t national laws and regulations" during the preceding three years. 285 The
following additional specific requirements apply:
(a) In order to participate for the right to export bauxite in 2009, a bidding enterprise
must: (i) have a registered capital of RMB 5 million; (ii) where the bidder is a trading
company, have exported an average annual volume of 1,200 metric tonnes in the
period 2006-2007; and (iii) where the bidder is a manufacturing enterprise, have
exported an average annual volume of 500 metric tonnes during the period 2006-07
or an average annual volume of supply fo r export of 20,000 metric tonnes during
period 2006-07.
(b) In order to participate for the right to export fluorspar in 2009, a bidding enterprise
must: (i) have a registered capital of RM B 5 million; and (ii) have achieved an
average annual volume of export of 4,000 metric tonnes during the period 2005-07 or
have an average annual volume of supply for export of 10,000 metric tonnes during
the period 2005-07.
286
(c) In order to participate for the right to export silicon carbide in 2009, a bidding
enterprise must: (i) have a minimum registered capital of RMB 4 million; (ii) where
the bidder is a trading company, have achieved an annual average volume of export
of 600 metric tonnes during the period 2005-07; (iii) where the bidder is a
manufacturing enterprise, have exported an average annual volume of 300 metric
tonnes during the period 2005-07 or have supplied for export an average annual
volume of 1,200 metric tonnes during the period 2005-07; and (iv) where the bidder
is an export enterprise, the average unit e xport price of such commodity must exceed
$1,300 per metric tonne.

280 Export Quota Bidding Measures, Article 11, (Exhibits CHN-304, JE-77).
281 Export Quota Bidding Implementation Rules, Article 6 (I), (Exhibits CHN-305, JE-78).
282 Export Quota Bidding Implementation Rules, Article 6 (I), (Exhibits CHN-305, JE-78).
283 2009 First Round Export Quota Bidding Announcement (Exhibits CHN-309, JE-90); 2009 Second
Round Export Quota Bidding Announcement (Exhibits CHN-310, JE-91).
284 2009 First Round Export Quota Bidding Announcement , Article III(I)(i) (Exhibits CHN-309,
JE-90).
285 2009 First Round Export Quota Bidding Announcement, Article III (Exhibits CHN-309, JE-90).
286 2009 First Round Bidding Invitation, Article III(II)3 (Exhibits CHN-309, JE-90).

7.196 The 2009 First Round Export Quota Bidding Announcement
287 also provides a list of
documents that must be submitted and reviewed by the relevant authority in order to determine
whether an applicant can participat e in the bidding process. In particular, applicants must submit a
Statement of Enterprise Applying for Participation in Bidding, as well as the Statistics of
Qualifications of Bidding Enterprises.288 Additionally, applicants are required to submit: (i) a balance
sheet and income statement for the most recently co mpleted financial year, together with an audit
certificate issued by a certified public accounting firm ; (ii) certificates issued by the competent labour
and social security departments confirming the ti mely and full payment of all relevant fees and
premiums to the social security and workers' rights funds; and (iii) for companies producing the raw
materials, certificates and environmental monitori ng reports confirming their compliance with the
Chinese environmental and pollution control rules and regulations.289
7.197 The 2009 Second Round Export Quota Bidding Announcement states that the eligibility
criteria for Chinese enterprises can be found in the 2009 First Round Bidding Invitation.290 However,
the export experience requirements that must be satisfied for the second round of bidding are based on
only one year of exports. 291 For bauxite, a bidding enterprise's export volume in 2008 must have
reached 500 metric tonnes or the volume of supply fo r export in 2008 must have reached 20,000
metric tonnes.292 For fluorspar, a bidding enterprise's expor t volume in 2008 must have reached 1,000
metric tonnes or the volume of supply for expor t in 2008 must have reached 10,000 metric tonnes. 293
For silicon carbide, a bidding enterprise's expor t volume in 2008 must have reached 200 metric
tonnes, or the volume of supply for export must have reached 1,200 metric tonnes.294
(ii) Determining the bid-winners for bauxite, fluorspar and silicon carbide
7.198 In addition to satisfying the eligibility cr iteria set out above and being approved by
MOFCOM to participate in export quota bidding, an enterprise must also be awarded a portion of the
export quota as part of the bidding process in order to export. Any enterprise that wishes to export
these raw materials must submit a bidding price a nd bidding quantity to China's Bidding Office and
must apply for an export licence. 295 The bidding price represents the amount per metric tonne that a
bidding enterprise is willing to pay for the right to export. The bidding quantity is the amount of the
relevant material the enterprise seeks to export. The bidding price and quantity, multiplied together,
are used to determine the bid-winning price.
296
7.199 China's Bidding Office then determines based on th e applicable rules the enterprises that will
receive an allocation (or share) of the export quota based on the submitted bidding price and bidding

287 Exhibits CHN-309, JE-90.
288 2009 First Round Export Quota Bidding Announcement, Article V(I)3 (Exhibits CHN-309, JE-90).
289 2009 First Round Export Quota Bidding Announcement , Article V(I)3 (2) (Exhibits CHN-309,
JE-90). See also 2009 Second Round Export Quota Bidding Announcement , Article IV.1(3)(2) (Exhibits
CHN-310, JE-91).
290 2009 Second Round Export Quota Bidding Announcement, Article III (Exhibits CHN-310, JE-91).
291 2009 Second Round Export Quota Bidding Announcement, Article III (Exhibits CHN-310, JE-91).
292 2009 Second Round Export Quota Bidding Announcement , Article III(6) (Exhibits CHN-310,
JE-91).
293 2009 Second Round Export Quota Bidding Announcement , Article III(3) (Exhibits CHN-310,
JE-91).
294 2009 Second Round Export Quota Bidding Announcement , Article III(5) (Exhibits CHN-310,
JE-91).
295 Export Quota Bidding Measures , Article 14 (Exhibit CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Articles 20 and 21 (Exhibit CHN-305, JE-78).
296 Export Quota Bidding Measures , Article 20 (Exhibit CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Article 14 (Exhibit CHN-305, JE-78).

quantity. China's Bidding Office ranks all bids fro m enterprises in descending order, based on the
bidding prices that are submitted.
297 The Bidding Office then adds up the bid quantities proposed by
the bidding enterprises in this descending list until the total quantity bid is equal to the total quantity
of quota available. Those enterprises whose bid quantities are included in the total quantity of quota
available are the winning bidders. 298 The winning bidders are thus determined based on the highest
bid prices.299
7.200 Enterprises that are awarded a portion of the quota must pay the balance of the bid-winning
price and a security deposit before applying for an export licence. 300 The security deposit may not
exceed 20% of the total award price. 301 An enterprise may pay the fu ll award price where it wishes to
export the full allocation or a proportionate amount where it wishes to export less than the full
allocation. The Bidding Office will refund the corres ponding bid price that has been paid, although it
will not refund the security deposit. 302 An enterprise that is allocated a quota through bidding must
present a certificate of quota issued by China's Bidding Office when applying for an export licence. 303
Exporting enterprises must present the export licence to China's Customs authorities for declaration
and examination.304
(iii) 2009 quota amounts for bauxite, fluorspar and silicon carbide
7.201 MOFCOM published the 2009 export quota amount s for bauxite as 930,000 metric tonnes,
fluorspar as 550,000 metric tonnes, and silicon carbide as 216,000 metric tonnes. 305 M O F C O M
determined minimum and maximum bid quantities fo r bauxite, fluorspar and silicon carbide during a
first round of public bidding for the 2009 export quota, held in December 2008. 306 A second
invitation for public bidding for silicon carbide was held in September 2009.307
3. Whether export quotas applied to bauxite, co ke, fluorspar, silicon carbide, and zinc are
inconsistent with Article XI:1 of the GATT 1994
7.202 The complainants allege that China's export quotas as applied to bauxite, coke, fluorspar,
silicon carbide, and zinc are inconsistent with GATT Article XI:1.
7.203 China has indicated that its Foreign Trade Law is a "legislative act that delegates (through the
State Council) to MOFCOM, an executive br anch agency, implementing authority, inter alia (1) to
specify the products subject to export quota and ex port licensing requirements, and (2) to adopt

297 Export Quota Bidding Implementation Rules, Article 5 (Exhibit CHN-305, JE-78).
298 Export Quota Bidding Measures , Article 26 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules , Article 21 (Exhibit CHN-305, JE-78). 2010 First-Batch Export Quota Bidding of
Bauxite, Article VII (Exhibit CHN-284); Export Quota Bidding Measures (Exhibit CHN-304, JE-77).
299 Export Quota Bidding Measures , Article 19 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules, Article 19 (Exhibit CHN-305, JE-78).
300 Export Quota Bidding Measures , Article 25, 25(2), and 26 (Exhibits CHN-304, JE-77). Export
Quota Bidding Implementation Rules, Article 20, 20(II), and 21 (Exhibit CHN-305, JE-78).
301 Export Quota Bidding Implementation Rules , Article 20 (Exhibits CHN-305, JE-78); Export Quota
Bidding Measures, Article 25 (Exhibit CHN-304, JE-77).
302 Export Quota Bidding Implementation Rules, Articles 21, and 23 (Exhibit CHN-305, JE-78).
303 Export Quota Bidding Measures, Articles 32-33 (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules (Exhibit CHN-305, JE-78).
304 Regulation on Import and Export Administration, Article 41 (Exhibits CHN-153, JE-73).
305 2009 Export Quota Amounts (Exhibit JE-79).
306 2009 First Round Bauxite Bidding Procedures (Exhibits JE-94); 2009 First Round Fluorspar
Bidding Procedures (Exhibit JE-93); 2009 First Round Silicon Carbide Bidding Procedures (Exhibit JE-95).
307 2009 Second Round Silicon Carbide Bidding Procedures (Exhibits JE-131); 2009 Announcement of
Second Bidding Round for Talc and Silicon Carbide (Exhibit JE-132).

implementing rules concerning the grant of export licenses".
308 The Appellate Body confirmed that
"any act or omission attributable to a WTO Member can be a measure of that Member for purposes of
dispute settlement proceedings."
309 In light of China's explanation, and in the absence of any assertion
that the measures discussed above are not attribut able to China, the Panel will consider these
measures to be measures of China for purposes of its analysis below.
7.204 Article XI:1, entitled "General Elimination of Quantitative Restrictions", provides that:
"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 [Member] or on the exportation or sale for export of any
product destined for the territory of any other [Member]."
7.205 In short, Article XI:1 forbids import and export restrictions or prohibitions, including those
"made effective through ... quotas ... on the exportation ... of any product."
7.206 The Appellate Body has not yet been required to consider the meaning of "restrictions" in
Article XI:1. Some panels, however, have done so. In Colombia – Ports of Entry , after reviewing
several GATT and WTO cases, the panel concluded th at "restrictions" in the sense contemplated by
Article XI:1 refers to measures that create uncertain ties and affect investment plans, restrict market
access for imports, or make importation prohibitively costly. 310 The panel in India – Quantitative
Restrictions concluded that the scope of the term "restricti on" is "broad" and, in terms of its ordinary
meaning, is "a limitation on action, a limiting condition or regulation." 311 The panel in India – Autos
similarly endorsed a broad interpretation of the term "restriction", concluding that Article XI:1 applies
to conditions that are "limiting" or have a "limiting effect ... on importation itself". 312 Quotas have
been found to be inconsistent with Article XI:1 on a number of occasions.313
7.207 The Panel thus understands the obligation imposed in Article XI:1 is to explicitly forbid
Members from maintaining a restriction made effective through a prohibition or quota on the
exportation of any product. Export quotas are incons istent with Members' obligations by virtue of
Article XI:1 because they have a restrictive or limiting effect on exportation.
7.208 It is on this basis that the complainants request the Panel to conclude that China subjects the
exportation of bauxite, coke, fluorspar, silicon carbide , and zinc to quotas under the measures at issue
inconsistently with Article XI:1.
7.209 China does not contest that any of these pr oducts are subject to quotas under the 2009
measures. However, China considers that the comp lainants have failed to establish a violation under
Article XI:1 of the GATT 1994 because they faile d "to establish China's non-compliance with the

308 China's response to European Union question No. 2, following the first substantive meeting,
para. 279.
309 Appellate Body Report, US – Corrosion Resistant Steel Sunset Reviews, para. 81.
310 Panel Report, Colombia – Ports of Entry, para. 7.240.
311 Panel Report, India – Quantitative Restrictions, para. 5.128.
312 Panel Report, India – Autos , para. 7.270. Several WTO panels have cited with approval this
interpretation of the term "restrictions" in Article XI:1: see Panel Report, Colombia – Ports of Entry ,
paras. 7.233-7.234; Panel Report, Brazil – Retreaded Tyres , para. 7.371; Panel Report, Dominican Republic –
Import and Sale of Cigarettes, paras. 7.252 and 7.258.
313 See, e.g., GATT Panel Report, France – Import Restrictions ; GATT Panel Report, Japan –
Agricultural Products I; GATT Panel Report US – Sugar; GATT Panel Report, US – Sugar Waiver.

terms of Article XI:2(a) with respect to the export quotas on all of the products at issue."
314 China
argues that the chapeau to Article XI:2 "links the scope of application of the obligation in Article XI:1
to the further requirements in Article XI:2(a)-(c)" by providing that Articles XI:1 shall "not extend to"
the types of export restriction described in Article XI:2. 315 Accordingly, it requests the Panel to reject
the complainants' claims on the b asis that they failed to demonstrate that the quotas at issue do not
"fall[] within Articles XI:2(a), (b), or (c)" a nd thereby demonstrate that a violation should apply. 316
China finds support for this in what it asserts wa s the Appellate Body's treatment in similar
provisions, namely Article 27.2 of the SCM Agreem ent and GATT Articles II:1(a) and II:1(b) of the
GATT 1994 in India – Additional Import Duties.317
7.210 The complainants reject this view, arguing that the Appellate Body made clear in US – Wool
Shirts and Blouses that the provisions under Article XI:2 are "affirmative defences" and that the
burden is therefore on the respondent – and not the co mplainant – to demonstrate that Article XI:2 is
somehow applicable.318 China characterizes the Appellate Body 's statement as "obiter" and no longer
applicable in light of an evolving "taxonomy" adopted by the Appellate Body.319
7.211 The Panel finds itself at odds with China's view that the Appellate Body statement in US –
Wools Shirts and Blouses regarding Article XI:2 is not app licable to the matter at hand. The
Appellate Body was clear in its statement on the operation of Article XI:2(c)(i), stating:
"Articles XX and XI:(2)(c)(i) are limited exceptions from obligations under certain
other provisions of the GATT 1994, not pos itive rules establishing obligations in
themselves. They are in the nature of affi rmative defences. It is only reasonable that
the burden of establishing such a defence should rest on the party asserting it".320
7.212 The Panel sees no basis to conclude that the logi c applicable to Article XI:2(c)(i) would not
apply as well to the separate subparagraph, Article XI:2(a), which falls under the same chapeau
paragraph. In addition, as the European Union al so points out, China's interpretation would suggest
that a complainant might need to demonstrate that other GATT provisions, such as GATT Articles
XII, XVIII, XX or XXI, are also inapplicable.321

314 China's first written submission, para. 350; China's second written submission, para. 36.
315 China's first written submission, para. 353.
316 China's first written submission, para. 353; China's second written submission, para. 29.
317 China's first written submission, paras. 354-357 . China refers to Article 27.2 of the SCM
Agreement, which provides that "[t]he prohibition of paragraph 1(a) of Article 3 shall not apply to … other
developing country Members … subject to compliance with the provisions in paragraph 4". The Appellate
Body concluded that the "prohibition of Article 3.1(a)" would only "apply" if the complainant demonstrates
non-compliance with Article 27.4. See Appellate Body Report, Brazil - Aircraft, para. 141. China's first written
submission, paras. 358-359; referring to Appellate Body Report, India – Additional Import Duties , paras. 153
and 190.
318 Complainants' joint opening oral statement at the first substantive meeting, para. 128. United States'
second written submission, para. 205; European Union' s second written submission, paras. 42-46; European
Union's opening oral statement at the second substantive meeting; Mexico's second written submission,
para. 210.
319 China's second written submission, paras. 31-36.
320 Appellate Body Report, US – Wool Shirts and Blouses , p. 16, DSR 1997:I, 323, at p. 337; see also
GATT Panel Report, EEC – Dessert Apples, para. 12.3; GATT Panel Report, Canada – Ice Cream and Yoghurt,
para. 59.
321 See European Union's second written submission, para. 12. In addition, the Panel considers the
nature of Article XI:2 is distinct from the positive obligations contained in Article 27 of the SCM Agreement, or
the special relationship that exists between GATT Articles II and III in respect of duties and charges as border
measures and internal charges. Like the European Union, the Panel agrees that the particular interpretation of

7.213 Accordingly, the Panel concludes that the burden is on the respondent (China in this case) to
demonstrate that the conditions of Article XI:2 (a) are met in order to demonstrate that no
inconsistency arises under Article XI:1. With this in mind, the Panel will consider below the
complainants' claims that China subjects the exportation of ba uxite, coke, fluorspar, silicon carbide
and zinc to quotas inconsistently with its obligations under Article XI:1.
7.214 As discussed in Section VII.C.2 above, Ch ina maintains measures that when operating
together give effect to export quotas. Article 19 of China's Foreign Trade Law, for instance, provides
that "[China] applies quota and licensing system to the management of goods subject to ... export
restrictions ...".
322 Article 36 of the Regulation on Import and Export Administration provides that
"[g]oods restricted from exportation that are subject to quantitative restrictions by the state are subject
to the administration of quotas."
323 The Export Quota Administration Measures provide that
MOFCOM "applies export quota administration with respect to the commodities restricted from
export by the State." 324 Goods that are subject to restriction pursuant to Article 19 may be subject to
licensing as "goods restricted from exportation."325 An enterprise must present the quota certificate to
export licensing authorities to obtain the export licen ce and present such export licence to Customs in
order to export. 326 Administrative and criminal sanctions may be imposed, for instance, for the
unlawful exportation of goods subject to restricti on without approval, for exceeding quota allocations,
for failure to return unused quotas, or for buying or selling quota certificates without approval.327
7.215 As discussed in paragraph 7.176 above, Ch ina's MOFCOM in conjunction with Customs
identifies in a list published annually the goods subject to export quotas. 328 China allocates export
quotas either through direct allocation or a quota bidding system.329 In 2009, MOFCOM and Customs
published the 2009 Export Licensing Catalogue330, which identifies coke and zinc as products subject
to export quotas that are allocated directly, and identifies bauxite, fluorspar and silicon carbide as
products subject to export quotas that are allocated through bidding. 331 China's Export Quota
Administration Measures 332 direct MOFCOM to allocate quotas for zinc based on prior export
performance, quota utilization rate, operation/busine ss management capacity, and the production of
applicants over prior years, or based on other market factors. 333 China's MOFCOM allocates coke

Article was influenced in India – Additional Import Duties by the "strong link" between Article II:2(a) and
Article III:2. A challenge under Article III:2 should not be allowed to avoid the burden to show that the
conditions of that provision are met by instead presenting its claim under Article II:1(b), and then requiring the
respondent to prove that the charge is actually consistent with Article III:2 (and ther efore with the exception in
Article II:2(a)) (See European Union's second written submission, para. 19).
322 Export Quota Administration Measures (Exhibits CHN-312, JE-76).
323 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
324 Export Quota Administration Measures (Exhibits CHN-312, JE-76).
325 2008 Export Licence Administration Measures, Article 2 (Exhibits CHN-342, JE-74).
326 Regulation on Import and Export Administration , Articles 41, 43 (Exhibits CHN-152, JE-73);
Export Quota Administration Measures, Article 25 (Exhibits CHN-312, JE-76).
327 Foreign Trade Law, Articles 61, 63 (Exhibits CHN-151, JE-72).
328 Foreign Trade Law , Article 18 (Exhibits CHN-151, JE-72); Regulations on Import and Export
Administration, Article 35, 38, 40, 42, 64, 65, 66, 67, 70 (Exhibits CHN-152, JE-73); Export Quota
Administration Measures, Article 7 (Exhibits CHN-312, JE-76).
329 Regulation on Import and Export Administration, Article 39 (Exhibits CHN-152, JE-73).
330 Exhibits CHN-6, JE-22.
331 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22); Regulation on Import and Export
Administration, Article 35-36 (Exhibits CHN-152, JE-73); Ex port Quota Administration Measures (Exhibits
CHN-312, JE-76).
332 Exhibits CHN-312, JE-76.
333 Export Quota Administration Measures , Articles 9, 11, 14, 17, 18, 19, 20, 21, 22, 23, 25, 26
(Exhibits CHN-312, JE-76).

quotas in batches during the course of the year.
334 Enterprises must comply with the 2009 Coke
Export Application Procedures in order to be considered for an allocation. 335 China's MOFCOM
administers the allocation of quotas on bauxite, fluorspar and silicon carbide through a bidding
system.336
7.216 In October 2008, MOFCOM published the total 2009 export quota amounts for bauxite,
fluorspar, and silicon carbide. 337 As discussed in paragraph 7.201 above, China imposed an export
quota of 930,000 tonnes on bauxite, an export quota of 550,000 metric tonnes on fluorspar, and an
export quota of 216,000 tonnes on silicon carbide. China did not publish an amount for coke in
October 2008. As discussed in paragraph 7.18 6, China published various announcements in 2009
indicating that the export quota on coke would be distributed to specific enterprises. 338 In total, China
allocated 13,092,000 metric tonnes of coke pursuant to these announcements.
7.217 Finally, as discussed in paragraph 7.180 ab ove, China did not publish any quota for the
exportation of zinc in 2009, nor did it publish in advance procedures for enterprises to apply to be
allocated a portion of any zinc quota. Nor were there announcements listing enterprises that had been
allocated any quantity of zinc for export pursuant to an export quota. The complainants submit that
this failure to publish amounts to an effective prohibition on exportation. 339 China explained that
when MOFCOM does not "make effect ive" an export quota on zinc, then no zinc can be exported for
that year.340 In addition, China acknowledged that MOFCOM did not authorize any quota for zinc in
2010. China does not assert any defence in connec tion with this failure to set the quota amount.
Because China did not set a zinc quota for 2009, the Pa nel concludes that China maintained a ban, or
zero quota, on the exportation of zinc in 2009.
7.218 The Panel therefore concludes that China, th rough the following series of measures, when
operating in concert, establishes export quotas on ba uxite, coke, fluorspar, silicon carbide and zinc
that results in a restriction or prohibition on th e exportation of these produc ts. The Panel considers
that findings on the measures acting in concert  including measures imposing an export licensing
framework and quota administration measures, such as those relating to the operation of the quota

334 2009 First Batch Coke Export Quotas (Exhibit JE-80); 2009 Second Batch Coke Export Quota
(Exhibit CHN-338, JE-81); 2009 First Batch Coke Export Quotas for FIEs (Exhibit JE-82); 2009 Second Batch
Coke Export Quotas for FIEs (Exhibit JE-83); 2009 Coke Export Quota Application Procedure (Exhibits CHN-
308, JE-85).
335 2009 Coke Export Quota Application Procedure , Sections I and II (Exhibits CHN-308, JE-85); see
also 2010 First Batch Coke Export Quota for FIEs (Exhibit JE-129).
336 Export Quota Bidding Measures , Article 3, 8, 9, 10, 12, 14, 16, 19, 20, 25, 26 (Exhibits CHN-304,
JE-77); Regulation on Import and Export Administration , Articles 39, 41 44 (Exhibit CHN-152, JE-73); Export
Quota Bidding Implementation Rules , Article 2, 3, 4, 5, 6, 20, 21, 23 (Exhibits CHN-305, JE-78); 2009 First
Round Export Quota Bidding Announcement (Exhibits CHN-309, JE-90); 2009 Second Round Export Quota
Bidding Announcement (Exhibits CHN-310, JE-91); 2009 First Round Export Quota Bidding Announcement
(Exhibit CHN-309, JE-90); 2009 Second Round Export Quota Bidding Announcement (Exhibits CHN-310,
JE-91).
337 2009 Export Quota Amounts (Exhibit JE-79); Regulation on Import and Export Administration ,
Article 38 (Exhibit CHN-152, JE-73); Export Quota Administration Measures , Articles 9-11 (Exhibits CHN-
312, JE-76).
338 2009 First Batch Coke Export Quotas (Exhibit JE-80); 2009 Second Batch Coke Export Quota
(Exhibits CHN-338, JE-81); 2009 First Batch Coke Export Quotas for FIEs (Exhibit JE-82); 2009 Second Batch
Coke Export Quotas for FIEs (Exhibit JE-83).
339 United States' first written submission, para. 249; European Union's first written submission,
340 China's first written submission, paras. 559, 740; China's response to question No. 8 from the
European Union following the first substantive meeting para. 37.

bidding process  are necessary so that annually renewed measures do not evade WTO dispute
settlement review merely through their expiration during the Panel proceedings.
(a) Export quotas on bauxite, including "refractory clay" (HS No. 2508.3000) and "aluminium
ores and concentrates" (HS No. 2606.0000)
7.219 China imposed an export quota to these fo rms of bauxite in 2009, pursuant to: Foreign Trade
Law
341, Articles 2, 14-19, 34, 61 63, 64; Regulation on Import and Export Administration 342, Articles
4, 35-44, 64, 66; 67 and 70; Export Quota Bidding Measures 343, Articles 3, 8, 9, 10, 11, 13, 14, 16;
2008 Export Licence Administration Measures 344, Article 25; 2009 Graded Export Licensing Entities
Catalogue345, Articles 1(2), 5, Attachment; 2008 Export Licensing Working Rules 346; Export Quota
Bidding Implementation Rules 347, Articles 2-6; 2009 Export Quota Amounts 348; 2009 Announcement
of Second Bidding Round for Talc and Silicon Carbide 349; 2009 Export Licensing Catalogue 350; 2009
First Round Export Quota Bidding Announcement 351; 2009 Second Round Export Quota Bidding
Announcement352; and 2009 First Round Bauxite Bidding Procedures.353
(b) Export quotas on fluorspar, including "met-spar" (HS 2529.2100), and "acid-spar"
(HS 2529.2200)
7.220 China imposed an export quota to these forms of fluorspar in 2009 pursuant to: Foreign Trade
Law354, Articles 2, 14-19, 34, 61 63, 64; Regulation on Import and Export Administration 355, Articles
4, 35-44, 64, 66; 67 and 70; Export Quota Bidding Measures 356, Articles 3, 8, 9, 10, 11, 13, 14, 16;
2008 Export Licence Administration Measures 357, Article 25; 2009 Graded Export Licensing Entities
Catalogue358, Articles 1(2), 5, Attachment; 2008 Export Licensing Working Rules 359; Export Quota
Bidding Implementation Rules 360, Articles 2-6; 2009 Export Quota Amounts 361; 2009 Announcement
of Second Bidding Round for Talc and Silicon Carbide 362; 2009 Export Licensing Catalogue 363; 2009
First Round Export Quota Bidding Announcement 364; 2009 Second Round Export Quota Bidding

341 Foreign Trade Law (Exhibits CHN-151, JE-72).
342 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
343 Export Quota Bidding Measures (Exhibits CHN-304, JE-77).
344 2008 Export Licence Administration Measures (Exhibits CHN-342, JE-74).
345 2009 Graded Export Licensing Entities Catalogue (Exhibit JE-96).
346 2008 Export Licensing Working Rules (Exhibits CHN-344, JE-97).
347 Export Quota Bidding Implementation Rules (Exhibits CHN-305, JE-78).
348 2009 Export Quota Amounts (Exhibit JE-79).
349 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide (Exhibit JE-132).
350 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
351 2009 First Round Export Quota Bidding Announcement (Exhibits CHN-309, JE-90).
352 2009 Second Round Export Quota Bidding Announcement (Exhibits CHN-310, JE-91).
353 2009 First Round Bauxite Bidding Procedures (Exhibit JE-94).
354 Foreign Trade Law (Exhibits CHN-151, JE-72).
355 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
356 Export Quota Bidding Measures (Exhibits CHN-304, JE-77).
357 2008 Export Licence Administration Measures (Exhibits CHN-342, JE-74).
358 2009 Graded Export Licensing Entities Catalogue (Exhibit JE-96).
359 2008 Export Licensing Working Rules (Exhibits CHN-344, JE-97).
360 Export Quota Bidding Implementation Rules (Exhibits CHN-305, JE-78).
361 2009 Export Quota Amounts (Exhibit JE-79).
362 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide (Exhibit JE-132).
363 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
364 2009 First Round Export Quota Bidding Announcement (Exhibits CHN-309, JE-90).

Announcement
365; and 2009 First Round Fluorspar Bidding Procedures .366 The Panel notes that in
2010 China no longer had in place an export quota for fluorspar.
(c) Export quotas on silicon carbide, including silicon carbide and crude silicon carbide
7.221 China imposed an export quota to these forms of silicon carbide in 2009, pursuant to:
Foreign Trade Law 367, Articles 2, 14-19, 34, 61 63, 64; Regulation on Import and Export
Administration 368, Articles 4, 35-44, 64, 66; 67 and 70; Export Quota Bidding Measures 369, Articles
3, 8, 9, 10, 11, 13, 14, 16; 2008 Export Licence Administration Measures370, Article 25; 2009 Graded
Export Licensing Entities Catalogue371, Articles 1(2), 5, Attachment; 2008 Export Licensing Working
Rules372; Export Quota Bidding Implementation Rules373, Articles 2-6; 2009 Export Quota Amounts374;
2009 Export Licensing Catalogue375; 2009 First Round Export Quota Bidding Announcement376; 2009
Second Round Export Quota Bidding Announcement 377; 2009 Second Round Silicon Carbide Bidding
Procedures378; 2009 First Round Silicon Carbide Bidding Procedures 379; and 2009 Announcement of
Second Bidding Round for Talc and Silicon Carbide.380
(d) Export quotas on coke (HS 2704.0010)
7.222 China imposed an export quota to coke in 2009, pursuant to: Foreign Trade Law381, Articles:
2, 14-19, 34, 61 63, 64; Regulation on Import and Export Administration 382, Articles 4, 35-44, 64, 66;
67 and 70; 2008 Export Licence Administration Measures 383, Article 25; 2009 Graded Export
Licensing Entities Catalogue 384, Articles 1(2), Attachment; 2008 Export Licensing Working Rules 385;
2009 Export Licensing Catalogue 386; 2009 First Batch Coke Export Quotas 387; 2009 Second Batch
Coke Export Quota 388; 2009 First Batch Coke Export Quotas for FIEs 389; 2009 Second Batch Coke
Export Quotas for FIEs390; and 2009 Coke Export Quota Application Procedure.391

365 2009 Second Round Export Quota Bidding Announcement (Exhibits CHN-310, JE-91).
366 2009 First Round Fluorspar Bidding Procedures (Exhibit JE-93).
367 Foreign Trade Law (Exhibits CHN-151, JE-72).
368 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
369 Export Quota Bidding Measures (Exhibits CHN-304, JE-77).
370 2008 Export Licence Administration Measures Exhibit (Exhibit CHN-342, JE-74).
371 2009 Graded Export Licensing Entities Catalogue (Exhibit JE-96).
372 2008 Export Licensing Working Rules (Exhibits CHN-344, JE-97).
373 Export Quota Bidding Implementation Rules (Exhibits CHN-305, JE-78).
374 2009 Export Quota Amounts (Exhibit JE-79).
375 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
376 2009 First Round Export Quota Bidding Announcement (Exhibits CHN-309, JE-90).
377 2009 Second Round Export Quota Bidding Announcement (Exhibits CHN-310, JE-91).
378 2009 Second Round Silicon Carbide Bidding Procedures (Exhibit JE-131).
379 2009 First Round Silicon Carbide Bidding Procedures (Exhibit JE-95).
380 2009 Announcement of Second Bidding Round for Talc and Silicon Carbide (Exhibit JE-132).
381 Foreign Trade Law (Exhibit CHN-151, JE-72).
382 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
383 2008 Export Licence Administration Measures (Exhibits CHN-342, JE-74).
384 2009 Graded Export Licensing Entities Catalogue (Exhibit JE-96).
385 2008 Export Licensing Working Rules (Exhibits CHN-344, JE-97).
386 2009 Export Licensing Catalogue (Exhibit CHN-6, JE-22).
387 2009 First Batch Coke Export Quotas (Exhibit JE-80).
388 2009 Second Batch Coke Export Quota (Exhibit CHN-338, JE-81).
389 2009 First Batch Coke Export Quotas for FIEs (Exhibit JE-82).
390 2009 Second Batch Coke Export Quotas for FIEs (Exhibit JE-83).
391 2009 Coke Export Quota Application Procedure (Exhibits CHN-308, JE-85).

(e) Export quotas on zinc, including "zinc ores and concentrates excluding gray feed grade zinc
oxide" (HS 2608.0000 ex) and "gray feed grade zinc oxide" (HS 2608.0000 ex)
7.223 China imposed an export prohibition to th ese forms of zinc in 2009, pursuant to: Foreign
Trade Law
392, Articles 2, 14-19, 34, 61 63, 64; Regulation on Import and Export Administration 393,
Articles 4, 35-44, 64, 66; 67 and 70; 2008 Export Licence Administration Measures 394, Article 25;
2009 Graded Export Licensing Entities Catalogue 395, Articles 1(2), Attachment; 2008 Export
Licensing Working Rules 396; Export Quota Administration Measures 397, Articles 4, 9, 11, 17-23, 25,
26, 31; and 2009 Export Licensing Catalogue.398
4. Summary
7.224 For each of these products (bauxite, coke, fluorspar, silicon carbide and zinc 399), the series of
measures operating in concert has resulted in the imposition of a restriction or prohibition on their
exportation that are inconsistent with China's obligations un der Article XI:1 of the GATT 1994. This
is not to say that individually each of those measur es is WTO-inconsistent; rather, when they operate
collectively to result in WTO-inconsistent quotas that is not otherwise justified, it is then that they
become prima facie WTO-inconsistent. The Panel recalls its view that findings on the measures
acting in concert is necessary so that annua lly renewed measures do not evade WTO dispute
settlement review merely through their expiration during the Panel proceedings.
7.225 The Panel will consider below whether the export quota applied to refractory-grade bauxite is
justified within the meaning of Article XI:2(a). In the alternative, the Panel will consider whether
China's export quota applied to refractory-grade bauxite is justified pursuant to Article XX(g) of the
GATT 1994. Finally, the Panel will consider wh ether export quotas applie d to coke and silicon
carbide are justified pursuant to Article XX(b) of the GATT 1994.
D. CHINA'S DEFENCES TO THE APPLICATION OF EXPORT RESTRICTIONS
7.226 The Panel has concluded above that, on 21 D ecember 2009, China maintained export duties
on certain forms of bauxite, coke, fluorspar, magnesium, manganese, silicon metal and zinc 400 that are
inconsistent with Paragraph 11.3 of China's Accession Protocol. 401 The Panel also concluded, that on
21 December 2009 China maintained certain e xport quotas or a prohibition on bauxite, coke,
fluorspar, silicon carbide and zinc402 that are inconsistent with Article XI:1 of the GATT 1994.403

392 Foreign Trade Law (Exhibits CHN-151, JE-72).
393 Regulation on Import and Export Administration (Exhibits CHN-152, JE-73).
394 2008 Export Licence Administration Measures (Exhibits CHN-342, JE-74).
395 2009 Graded Export Licensing Entities Catalogue (Exhibit JE-96).
396 2008 Export Licensing Working Rules (Exhibits CHN-344, JE-97).
397 Export Quota Administration Measures (Exhibits CHN-312, JE-76).
398 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
399 The specific forms of the raw materials subject to complainants' claims are identified in Exhibit
JE-6 and in paragraph 2.2of the Descriptive Part of these Reports.
400 The specific forms of the raw materials subject to the complainants' claims are identified in Exhibit
JE-5 and para. 2.2 of the Descriptive Part to these Reports.
401 See para. 7.105 above.
402 The specific forms of the raw materials subject to complainants' claims are identified in Exhibit
JE-6 and in para. 2.2 of the Descriptive Part of these Reports.
403 See para. 7.224 above.

7.227 China seeks to justify the application of export duties to particular forms of coke, magnesium,
manganese (excluding manganese ores and concentrates), and zinc
404 under Article XX(b), and the
application of export duties to the particular form s of fluorspar pursuant to Article XX(g). China
seeks to justify the application of export quotas on refractory-grade bauxite 405 under Article XI:2(a) of
the GATT 1994, or in the alternative, under Artic le XX(g); and its export quotas on coke and silicon
carbide under Article XX(b). China does not seek to justify export duties imposed on bauxite,
manganese ores and concentrates, or silicon metal, nor does it seek to justify export quotas applied to
fluorspar or zinc.
7.228 China reiterates its position that the Pane l should not consider any 2009 measures 406,
including those imposing export duties and export quotas in 2009. 407 China stated its defences
concern 2010 measures only.408 The Panel decided 409 that it will only make findings on China's 2009
measures and not on any of China's 2010 measures. Since the 2010 measures for which China offers
defences are similar to its 2009 measures, in the inter est of a prompt resolution of disputes, the Panel
considers it appropriate to examine China's defen ces in the context of its assessment of China's 2009
measures.
410 In doing so, the Panel recognises China's argument that it terminated its quota on
fluorspar in 2010, and only seeks to justify the app lication of export duties on fluorspar in 2010. The
Panel will examine China's defence under Article XX(g) in respect of the application of export duties
applied to fluorspar in 2009 only.
7.229 The Panel has reached the conclusion, in paragraph 7.158, that China cannot invoke
Article XX of the GATT 1994 to justify export duties inconsistent with its Accession Protocol.
However, the complainants have submitted exte nsive argumentation and evidence suggesting that,
even assuming arguendo that Article XX were available, China has not demonstrated that its export
duties can be justified pursuant to Article XX(b) or (g) of the GATT 1994. Therefore, in their oral
and written submissions, all parties have extensively debated the in terpretation and application of
Articles XX(b) and (g) with respect to the above-mentioned WTO-inconsistent export duties.
7.230 The Panel recalls that it determined that it is useful to pursue an arguendo analysis in order
not to undermine the parties' right to prompt settleme nt of the dispute. Hence, the Panel will analyse
and determine, arguendo, whether Article XX(b) could justif y China's WTO-inconsistent export
duties on various forms of coke, magnesium, manga nese, and zinc; and whether GATT Article XX(g)
could justify China's WTO-inconsistent export duties on fluorspar.

404 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-5 and para. 2.2 of the Descriptive Part to these Reports.
405 See Section VII.D.
406 See China's first written submission, para. 49-5 1, 56, 62, 64 and 67; China's second written
submission, Section II entitiled "The Panel should rule on the 2010 Measures To resolve the Disputes, and
Should not Rule on the 2009 Measures"; and para. 12 "In sum, the prompt and positive resolution of this disute
call the Panel to address the 2010 measures and not the 209 measures."
407 See for instance in China's first written submission, para. 70 "China's submission addresses the new
[2010] measures, and not the expired [2009] measures". See China's response to Panel question No.2 following
the second substantive meeting, para. 9. ("For this reason, China makes arguments and defences regarding the
2010 export duties and export quotas").
408 China's response to Panel question No.2 followi ng the second substantiv e meeting: See China's
response to Panel question No.2 following the second substantive meeting, para. 9 ("For this reason, China
makes arguments and defences regarding the 2010 export duties and export quotas").
409 See para. 7.33 above.
410 As noted, China offers no defence to the applica tion of a quota on fluorspar in 2009. Accordingly,
the Panel will not consider China's defence in respect of this quota, but only duties applied in 2009.

7.231 The Panel has also decided to follow China's approach in defending collectively its export
duties and export quotas in the context of its Article XX defence. In this cont ext, China submits that
an export duty and an export quota are "functionally equivalent measures" that "have similar effect on
the volume of export and, hence, international and domestic supply (...). Thus, the restrictive effect of
an export duty may be equal to that of an export quota, and vice-versa".
411
7.232 With respect to the order of the Panel's anal ysis, the Panel will follow China's approach in
making its defence, grouping some arguments under Article XX(g) and others under Article XX(b).
7.233 In its first written submission, China de fends its export duties on fluorspar under
Article XX(g) separately from its defence to its export quota on refractory-grade bauxite under
Article XX(g). In its second written submission, Chin a defends its export restrictions on fluorspar
(duties) and refractory-grade bauxite (quota) under Article XX(g) together. The Panel will therefore
address China's defence under Article XX(g) in combin ation, as China did in its second submission.
The Panel recalls that it will only analyse China's defence to its WTO-inconsistent export duties on
fluorspar on an arguendo basis.
7.234 When making its Article XX(b) defence in its second submission, China addresses, first, its
export restrictions (both in the form of duties and quotas) on what China labels certain "energy-
intensive, highly polluting, resource-based products " ("EPR products"). These include export duties
on coke, manganese metal, magnesium metals and its export quotas on coke and silicon carbide.
Second, China addresses its export restrictions in th e form of export duties on scrap forms of zinc,
manganese and magnesium which it calls the "non-fe rrous metal scrap products" (hereafter called
"scrap products"). The Panel will consider China's defences under GATT Article XX(b) in that same
order, recalling that it will analyse China's defence to its WTO-inconsistent export duties on EPRs and
on scrap products on an arguendo basis.
7.235 In sum, the Panel's order of analysis will be as follows: the Panel will begin with China's
Article XI:2(a) defence concerning refractory-grade bauxite, and then turn to China's invocation of
Article XX(g) to justify its export quota on refractor y-grade bauxite and its export duties on fluorspar.
Finally, the Panel will consider China's invocati ons of Article XX(b), first with respect to EPR
products, and secondly, with respect to scrap products.
7.236 Finally, China argues that all of its export rest rictions also satisfy the requirements of the
"chapeau" of Article XX. The Panel will only c onsider China's invocation of the chapeau of
Article XX, to the extent that the application of an export restriction is justified pursuant to the
relevant subparagraph of Article XX, whether (b) or (g).
7.237 The Panel's understanding of China's measur es of 2009 for which it invokes its defences
pursuant to Articles XI:2(a), XX(b) and (g) of the GATT 1994 are represented in the chart below.

411 China's response to Panel question No. 19 following the second substantive meeting.

Raw Material
Relevant
Chin. HS
Number
Relevant
Chin.
Comm.
Code
Product Name Short Form Export Duties Export Quotas
Bauxite 2508.3000 2508300000 "Refractory clay"
No defence
For refractory-grade
bauxite/high alumina clay:
Articles XI:2(a)and XX(g). For
other categories: No defence
 2606.0000 2606000000 "Aluminium ores and concentrates" No defence
 2602.4000 "Aluminium ash and residues" No export quota claim
Coke 2704.0010 2704001000 "Coke" Article XX (b) Article XX (b)
Fluorspar 2529.2100 2529210000 "Met-spar" Article XX (g) No defence
 2529.2200 2529220000 "Acid-spar" Article XX (g) No defence
Magnesium 8104.1100 "Magnesium metal" Article XX (b)
No export quota claim 8104.1900 "Unwrought magnesium" Article XX (b)
 8104.2000 "Magnesium waste and scrap" Article XX (b)
Manganese 2602.0000 "Manganese ores and concentrates" No defence
No export quota claim 8111.0010 8111001010 "Unwrought manganese waste and scrap" Article XX (b)
 8111001090 Unwrought manganese; powder Article XX (b)
Silicon
Carbide 2849200000 "Silicon carbide" No export duty
claim
Article XX (b)
 3824909910 "Crude Silicon Carbide" Article XX (b)
Silicon Metal 2804.6900 "Silicon Metal" No defence
No export quota claim Yellow
Phosphorous 2804.7010 "Yellow phosphorous"
China claims that
since July 2009 is
WTO-consistent
Zinc 2608.0000 ex 2608000090 "Zinc ores and concentrates excluding gray feed
grade zinc oxide"
No export duty
claim
No defence
 2608.0000 ex 2608000001 "Gray feed grade zinc oxide" No defence
 7901.1110 7901111000 "Unwrought ≥ 99.995 zinc"
No export quota claim
 7901.1190 7901119000 "Unwrought 99.99 but < zinc content ≤ 99.9995%
zinc"
 7901.1200 7901120000 "Unwrought < 99.99% zinc"
 7901.2000 7901200000 Unwrought zinc alloys
 7902.0000 "Zinc waste and scrap" Article XX (b)
 2620.1100 "Hard zinc spelter" Article XX (b)
 2620.1900 "Other zinc ash and residues" Article XX (b)

1. Whether the export quota applied to refract ory-grade bauxite is justified pursuant to
Article XI:2(a) of the GATT 1994
7.238 The Panel recalls its conclusion above that China's export quotas of 930,000 metric tonnes
applied to bauxite in 2009, is inconsistent with GATT Article XI:1.
7.239 China argues that, if the Panel were to conclude that the complainants have stated a prima
facie claim under Article XI:1 with respect to the export quota on bauxite, the application of an export
quota to a subset of bauxite products subject to the export quota is justified because the quota is
"temporarily applied to prevent or relieve critical shortages of ... other products essential to" China, in
accordance with Article XI:2(a) of the GATT 1994.
412 The subset of bauxite products subject to
export quota for which China asserts a defence under Article XI:2(a) of the GATT 1994 is referred to
by China as "refractory bauxite" or "refractory grad e bauxite" and referred to by the complainants as
"high alumina clay." The Panel uses these terms interchangeably to indicate the same subset of
bauxite classifiable under Customs Commodity Code 2508.3000.00 that is used to produce
refractories.
7.240 Article XI:2(a) states: "The provisions of para graph 1 of this Article shall not extend to ...
[e]xport prohibitions or restrictions temporarily a pplied to prevent or relieve critical shortages of
foodstuffs or other products essential to the expor ting contracting party". Article XI:2(a) of the
GATT 1994 has not been interpreted previously by a WTO panel or the Appellate Body.
7.241 China argues that its export quota is justified because the supply of refractory-grade bauxite
is, or has the potential to be, restricted by virtue of strong foreign demand, physical exhaustibility,
and/or domestic regulatory limits on access.
7.242 China submits that the complainants themselves have recognized that refractory-grade bauxite
is "essential", "necessary" and "critical" to their economies. 413 In addition, China argues that the
complainants have themselves applied prohibitions and restrictions on products that they deem
essential for downstream domestic industries, in some cases for periods exceeding 30 - 40 years.414
7.243 The complainants argue that China has failed to provide a correct or "narrow"415 interpretation
of the meaning of Article XI:2 and, therefore, it has failed to demonstrate that its export quota on
refractory grade bauxite is justified pursuant to Artic le XI:2(a). The complainants argue that China's
quota is not temporarily applied, that refractory-grad e bauxite is not a product that is essential to
China, and that the quota is not applied to prevent or relieve a critical shortage of refractory-grade
bauxite.416 In addition, the complainants argue that examples of restrictions or prohibitions applied by
other WTO Members should not form part of the Panel's analysis.417

412 China's first written submission, para. 342.
413 See, e.g., China's first written submission, paras. 361-363.
414 China's first written submission, para. 368. In par ticular, China refers to "a 43-year-old restriction
and prohibition on the export of unprocessed timber harv ested from U.S. Federal lands", and the European
Union's "37-year prohibition and restriction on the expor t of various types of ferrous and non-ferrous metal
waste and scrap" (China's first written submission, para s. 405-406). China argues that these examples of
application of prohibitions or restrictions for lengthy periods of time represent "views concerning the proper
interpretation of Articles XI:1 and XI:2(a) expressed outside the context of this litigation", and are "compelling"
in this dispute as "statements against interest" (China's first written submission, para. 404, emphasis original).
415 European Union's second written submission, para. 191.
416 Complainants' joint opening oral statement at the first substantive meeting, paras. 130-131.
417 Complainants' joint opening oral statement at the first substantive meeting, para. 132.

7.244 The Panel notes first that China seeks to justify its export quota on a subset of bauxite, which,
in the words of China, "is the predominant pr oduct exported under [Chinese HS number] 2508.3000",
constituting "approximately 75% of exports" under that code.
418 China describes this product as
having certain chemical and physical characteristi cs (such as "stringent physical and chemical
specifications"419) that distinguish it from other products classified in this same heading. The
complainants have taken note of the distin ction between different types of "bauxite". 420 China
describes this product as follows:
"Chemically, the product has a high aluminium oxide ("Al 2O3") content normally in
excess of 80%, a low iron oxide ("Fe 2O3") content of less than 2.5%, and few other
impurities ... Amongst the most important phys ical characteristics of the product is
high density, at or higher than 3.25 g/cm3 ...."421
7.245 In light of this description, the Panel will cons ider China's arguments that the application of
an export quota is justified pursuant to Article XI:2(a ) in respect of this product only. As such, any
conclusions under Article XI:2(a) would extend only to this product as described.
7.246 The Panel additionally recalls that Article 3.2 of the DSU directs panels to clarify the existing
provisions of the covered agreements "in accordance with customary rules of interpretation of public
international law"; these rules include the prin ciples codified in Articles 31, 32 and 33 of the Vienna
Convention.422 Article 31 of the Vienna Convention states in particular that "[a] treaty shall be
interpreted in good faith in accordance with the or dinary meaning to be given to the terms of the
treaty in their context and in the light of its object and purpose.
7.247 Before proceeding, the Panel wishes to a ddress China's reference to restrictions or
prohibitions applied by other WTO Members. Rega rdless of their duration, the products to which
they apply, the importance of that product to domest ic downstream users or the degree of shortage of
that product, the Panel does not consider that m easures applied by other WTO Members are relevant
to its analysis. Those measures are not in the Panel' s terms of reference, and are not subject to this
dispute. Moreover, these measures were not raised in response to the circumstances before this Panel,
nor is it clear to the Panel that these restrictions we re put into place with Article XI:2(a) in mind or
that these restrictions themselves comply with the re quirements of Article XI:2(a). Even if Members
considered these measures to be justified pursuant to Article XI:2(a), their application does not
demonstrate agreement on the meaning of Article XI:2(a). 423 In any event, Article XI:2(a) by its
terms must be viewed through the prism of the Member applying the restriction.

418 China's opening oral statement at the second substantive meeting, para. 92; Exhibit CHN-513.
419 China's opening oral statement at the second substantive meeting, para. 92.
420 See, e.g., United States' second written submi ssion, paras. 188-200. China submits, through
reference to "Critical Raw Materials for the EU: Report of the Ad-hoc working Group on Defining Critical Raw
Materials" (Exhibit CHN-126), that the European Union defines "the product refractory bauxite in the same
manner" (see China's Comments on the Interim Reports of the Panel, pare. 104). The European Union submits
that this document does not express the views of the European Union (see European Union's Comments dated
18 March 2011, p. 2).
421 China's response to Panel question No. 8 following the first substantive meeting, paras. 34-35;
China's first written submission, paras. 432-434; China' s second written submission, para. 130; China's opening
oral statement at the second substantive meeting, paras. 113, 136 and 137; see also Report by China on
Refractory Bauxite, pp 6-8 (Exhibit CHN-10).
422 Appellate Body Report, US – Gasoline, p. 17, DSR 1996:I, 3, at pp. 15-16; Appellate Body Report,
India – Patents (US), para. 45; and Appellate Body Report, US – Shrimp, para. 114.
423 Under Article 31(3)b of the Vienna Convention , a treaty interpreter ma y take into account the
subsequent practice in the application of the treaty wh enever such practice estab lishes the agreement of the

7.248 The Panel now turns to consider the terms of Article XI:2(a) on the basis of relevant
jurisprudence.
(a) The ordinary meaning of Article XI:2(a) of the GATT 1994
7.249 The Panel will review briefly the arguments of the parties when considering the meaning of
Article XI:2(a) and will then turn to its own anal ysis of the provisions. As a preliminary matter,
however, the Panel wishes to address China's argument that the phrase "prohibitions or restrictions" in
Article XI:2(a) of the GATT 1994 has the same mean ing as the identical phrase used in Article XI:1;
that is, it covers any "prohibitions or restrictions" that are covered by Article XI:1.
424
7.250 The Panel agrees with China in this regard a nd observes that the complainants do not dispute
China's view on this point. The Panel will now c onsider the remaining principal terms at issue,
notably the meaning of "temporarily applied", "essential products" and "critical shortage".
(i) Prohibitions or restrictions "temporarily applied" under Article XI:2(a)
7.251 China argues that the term "temporarily" view ed in the immediate context of the term
"applied", means that the application of an expor t prohibition or restriction must be limited in time
and linked to the prevention or relief of a critical shortage of a produc t essential to the exporting
Member.425 China submits that this determination must be made on a case-by-case basis, but may
permit the application of a restriction or prohib ition for an extended period of time, provided the
measure is regularly reviewed.426 China submits that the time period will be defined in relation to the
time required to prevent or relieve the critical shortage.427
7.252 China finds support for its interpretation in a ban that was maintained on merino sheep in
Australia for over 80 years from 1929 until 2010, including for a stretch of 18 years preceding the
GATT 1947 negotiations. China argues that assurances were given to Australia that its ban on merino
sheep would be covered by Article XI:2(a) and this is important in understanding the scope of
Article XI:2(a).
428

parties regarding its interpretation. In Japan – Alcoholic Beverages II , the Appellate Body explained that
"subsequent practice" within the meaning of Article 31 (3)(b) entails a "...'concordant, common and consistent'
sequence of acts or pronouncements which is sufficient to establish a discernible pattern implying the agreement
of the parties [to a treaty] regarding its interpretation" (Appellate Body Report, Japan – Alcoholic Beverages II,
p. 13, DSR 1996:I, 97, at p. 106).
424 China's first written submission, para. 371.
425 China's first written submission, para. 373.
426 China's first written submission, paras. 374-376; Ch ina's second written submission, para. 112. In
this latter respect, China refers to the European Union's position that export quotas on copper, aluminium, and
lead waste, scrap, ash and resi dues were "reviewed annually": see GATT Multilateral Trade Negotiations,
Inventory of Non-Tariff Measures – Addendum MTN/3B/1-5/Add.9 (23 August 1977), 406.1, p. 3 (Exhibit
CHN-161).
427 China's second written submission, para. 112.
428 China's opening oral statement at the first substantive meeting, para 59, referring to U.N. Economic
and Social Council, Second Session of the Preparator y Committee of the United Nations Conference on Trade
and Employment, Verbatim Report, Fortieth Meeting of Commission "A" (1) (Articles 25 & 27, 26, 28 & 29),
Held on Friday 15 August 1947 at 10.30 a.m. in the Palais des Nations, Geneva, E/PC/T/A/PV/40(1) (15 August
1947), pp. 4-9 (Exhibit CHN-181) and N. Economic and Social Council, Third Committee: Commercial Policy,
Summary Record of the Thirty-Seventh Meeting, Held on Monday, 16 February 1948 at 3.30 p.m.,
Consideration of the Report of Sub-Committee E (Articles 20 and 22), E/CONF.2/C.3/SR.37 (16 February
1948), pp. 1 to 3 ( (Exhibit CHN-184).

7.253 The complainants reject the view that an export restriction may be applied under
Article XI:2(a) to situations involving finite r eserves of a particular product or natural resource.
429 In
their view, the finite availability of a product is in sufficient to constitute a critical shortage. Given
that the availability of such a g ood would keep decreasing until the exhaustion of the good's reserves,
they argue that such a shortage would not be te mporary because after the exhaustion of the reserves
the shortage of the good would become permanent. Th ey consider this type of shortage would not be
apt to be remedied or prevented through measures of limited time duration.430
7.254 Third parties Brazil and Canada agree with the complainants' view that a temporary measure
must have an expiry date, or have as its purpose th e prevention or the relief of a need whose existence
is limited in time. Brazil argues that the term "tem porarily applied" is defined as "lasting or meant to
last for a limited time only; not permanent; made or arranged to supply a passing need". 431 Brazil
considers that situations where the shortage of products could not be ove rcome, but only managed
over time, are better addressed under Article XX(g). 432 Canada submits that measures may not be
applied under Article XI:2(a) for an indefinite period, but may only be applied for a fixed time. It
notes that, while Article XI:2 is subject to the pa rticular requirements set out in each paragraph,
Article XX is subject to additional requirements, specifically, those contained in the chapeau to
Article XX.433
7.255 The Panel observes that the ordinary meaning of "temporarily" is "for a time (only)" and
"during a limited time". 434 The term "limited time" means "a ppointed, fixed" and "circumscribed
within definite limits, bounded, restricted". 435 These definitions suggest a fixed time-limit for the
application of a measure. Thus, on its face, Article XI:2(a) would appear to justify measures that are
applied for a limited timeframe to address "criti cal shortages" of "foods tuffs or other products
essential to the exporting contracting party".
7.256 As noted above, Article 31 of the Vienna Convention requires a treaty to be interpreted in
good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose. The Appellate Body has stressed the importance of
"read[ing] all applicable provisions of a treaty in a way that gives meaning to all of them,

429 United States' response to Panel question No. 16 following the first substantive meeting; United
States' second written submission, para. 232; European Union's second writte n submission, para. 214; Mexico's
second written submission, para. 237.
430 United States' response to Panel question No. 16 following the first substantive meeting, para. 26;
United States' second written submission, para. 232; European Union's second written submission, para. 214;
Mexico's second written submission, para. 237.
431 Brazil's third party oral statement, para. 6, 9; Shorter Oxford English Dictionary , 5th edn., L.
Brown (ed.) (Oxford University Press, 2002), Vol. 2, p. 3207.
432 Brazil's third party oral statement, para. 9.
433 Canada's third party oral submission, para. 17.
434 Oxford English Dictionary Online, temporarily, adv. (Exhibit CHN-156). China notes that the term
de la langue française online, temporairement (Exhibit CHN-158)); the term " momentanément" means " d'une
manière momentanée" and " provisoirement" (le Grand Robert de la langue française online, momentanément
(Exhibit CHN-159)), or "of temporary nature" and "pr ovisionally". China notes that the Spanish adverb
"temporalmente" is defined as " por algún tiempo ", meaning "for some time" (Diccionario de la Lengua
Española, Real Academia Española, Vigésima Segunda Edición, 2001, " temporalmente", meaning 2. The full
definition reads: adv. m. En el orden de lo temporal y terreno. 2. adv. t. Por algún tiempo . This translates as:
"Adverb of mode: In the sphere of the temporal and terrestrial. 2. Adverb of time: For some time." (Exhibit
CHN-160)).
435 Oxford English Dictionary Online, limited, ppl., a. (Exhibit CHN-157).

harmoniously."
436 Thus, Article XI:2(a) should be inte rpreted taking into consideration other
provisions.
7.257 In the Panel's view, an interpretation that Artic le XI:2(a) permits the application of a measure
for a limited time under limited circumstances would be in harmony with the pr otection that may be
available to a Member under Article XX(g), which addresses the conservation of exhaustible natural
resources. To conclude otherwise would allow Members to resort indistinguishably to either
Article XI:2(a) or XX(g) to address the problem of an exhaustible natural resource.
7.258 As mentioned above, Article XX(g) incorporat es additional protections in its chapeau to
ensure that the application of a measure does not r esult in arbitrary or unjus tifiable discrimination or
amount to a disguised restriction on internationa l trade. Article XI:2(a) does not impose similar
limitations on Members' actions. In the Panel's view, the absence of such safeguards in
Article XI:2(a) lends support to our view that a r estriction or ban applied un der Article XI:2(a) must
be of a limited duration and not indefinite.
7.259 China makes reference to Australia's applica tion of an export ban on merino sheep for an
extended period of time in support of its view that measures may be applied under Article XI:2(a) for
extended periods. As China notes, Australia's ban on livestock was discussed at the time of
negotiating the GATT 1947. Under Article 32 of the Vienna Convention , a treaty interpreter may
resort to supplementary means of interpretation, in cluding the preparatory work of the treaty and the
circumstances of its conclusion, to confirm the meaning of the provision resulting from the
application of Article 31 of the Vienna Convention, or to determine the meaning of a provision when
interpretation leaves the meaning ambiguous or obscure or leads to an absurd or unreasonable result.
7.260 The Panel does not consider that the meaning of the term "temporarily" ascribed pursuant to
an interpretative analysis under Article 31, is ambi guous or obscure and hence, we do not see a need
to resort to Article 32.
437 Accordingly, the Panel concludes pre liminarily that Article XI:2(a) permits
the application of restrictions or prohibitions for a limited time to address "critical shortages" of
"essential products". The Panel turns next to th e meaning of "essential" products and will thereafter
examine the term "critical shortages".
(ii) "Essential" products under GATT Article XI:2(a)
7.261 China argues that Article XI:2(a) permits an exporting Member to determine those products
that are "essential" to it when applying restrictions to prevent or relieve critical shortages. It argues
that Article XI:2(a) neither precludes nor prescrib es consideration of any particular criterion to
determine whether a product is "essential for th e exporting [Member]", but will depend on the
particular circumstances at hand. 438 China argues that the term "other products essential to the

436 See Appellate Body Report, Argentina – Footwear (EC) , para. 81 (original emphasis); see also
Appellate Body Reports: Korea – Dairy , para. 81; US – Gasoline , p. 23, DSR 1996:I, 3, at p. 21; Japan –
Alcoholic Beverages II, p. 12, DSR 1996:I, 97, at p. 106; India – Patents (US), para. 45.
437 In any event, the Panel does not consider the ban on Australian merino sheep to be particularly
helpful in our interpretation for purposes of the case before us. The negotiating parties' discussion of this ban
appears to have centred on whether Article XI:2(a) could be used to address questions of shortages in times of
drought, which is not instructive with respect to the fact s before us. Moreover, the fact that Australia may have
kept the measure in place for 80 years (up to today) does not support the conclusion that the negotiating parties
foresaw then and therefore agreed that the continued application for such duration would be justified under
Article XI:2(a).
438 China's second written submission, paras. 41-47.

exporting [Member]" may include "m inerals, metals, and other basic commodities, as well as initial
processed downstream products thereof."
439
7.262 China submits that Article XI:2(a) does not limit the types of "other products" that may be
subject to restrictions, except that the products mu st be "essential" to the exporting Member. China
submits that the distinction made between "foods tuffs" and "other products" demonstrates that a
product need not contribute to ensuring food secur ity in order to be essential under Article XI:2. 440
China argues further that the modifier "to the expo rting [Member]" means that the importance of any
product should be judged in relation to the particular Member concerned, not necessarily in relation to
all Members.441 China considers that for a product to be ess ential, it must be "material, important or
requisite for the exporting Member".442
7.263 China argues that one may assess th e "essentialness" of a product to a particular Member by
assessing the quantitative contribution of the product th rough its entire value chain, e.g. by assessing
the contribution of a product to a Member's gros s domestic product, or to education, healthcare,
infrastructure, technological progress, or scientific research.443 China also posits that the Preamble of
the WTO Agreement provides relevant context to interpret the meaning of an "essential" product,
additionally confirming that a product may be essential to an exporting Member due to its
contribution to improved education, healthcare, in frastructure, technological progress, or scientific
research.
7.264 China finds further support for its interpreta tion of the term "essential products" in the
Understanding on the Balance-of-Payments Provisi ons of the General Agreement on Tariffs and
Trade 1994 ("BOP Understanding") and Article XXXV I:5 of the GATT 1994 and its Ad Note. China
submits that the use of the term "essential produc ts" in Article 4 of the BOP Understanding confirms
that a broad range of products can be considered "essential", wh ether serving "basic consumption"
needs, or meeting economic needs, such as "inputs needed for production".444
7.265 China argues that Article XXXVI:5 and its Ad Note support the view that Article XI:2(a) may
be applied to address a product that is important to domestic processing industries. China submits that
Article XXXVI:5 shows that the essential nature of a "primary product" for a developing country may
derive from the product's role in securing economi c diversification through the development of
domestic processing industries. According to Chin a, the customary norm in international law of
sovereignty over natural resources was developed in recognition of the "essential" role that natural
resources play in the progress and development of states that possess those resources. 445 C h i n a
considers that Article XXXVI:5 applies to China in the same manner as it applies to other Members,

439 China's first written submission, para. 379, fn. 536, referring to Exhibits CHN-16; CHN-52; CHN-
161; CHN-166; CHN-167; CHN-168; CHN-169, CHN-170; CHN-171; CHN-172.
440 China's second written submission, para. 52.
441 China's first written submission, para. 383, re ferring to U.N. Economic and Social Council, Second
Session of the Preparatory Committee of the United Nations Conference on Trade and Employment.
Commission A: Report of Sub-Committee on Articles 25 and 27 E/PC/T/141 (1 August 1947), p. 2 (Exhibit
CHN-176); China's opening oral statement at the first substantive meeting, para. 34.
442 China's second written submission, para. 50.
443 China's second written submission, para. 51.
444 China's first written submission, para. 388; China' s opening oral statement at the first substantive
meeting, para. 35; Article 4 of the BOP Understanding provides:
"The term 'essential products' shall be understood to mean products which meet basic consumption
needs or which contribute to the Member's effort to improve its balance-of-payments situation, such as
capital goods or inputs needed for production."
445 China's opening oral statement at the first substan tive meeting, paras. 36-37; China's second written
submission, paras. 58-59, 72-78.

and that China did not forgo – either through its Accession Protocol or Working Party Report – any
particular treatment that may accrue to it under this provision as a developing country.
446
7.266 Finally, China submits that the negotiators' position on Australia's export restrictions on
merino wool sheep offers context to inform what features can legitimately make an "other product"
essential, including the value derived from downstream production. 447 China submits that the value
sheep provided to the downstream domestic users in Australia at the time of negotiations is confirmed
by the Official Yearbook of the Commonwealth of Australia for the years 1946-1947.448 China argues
that Australia would not have agreed to the draft text of Article XI:2(a) without assurances that it
could maintain export restrictions on sheep whenever affected by drought conditions.
7.267 The complainants argue that China's reliance on a broad definition of the term "product" as
covering a raw material ignores the fact that th e term "essential" serves to limit the scope of
"products".449 Reading the phrase "other products essential to the exporting Member", the
complainants argue that the type of products cove red under Article XI:2(a) are "products, other than
foodstuffs, that are indispensable to or pertaini ng to the essence of the exporting Member". The
complainants argue that the inclusion of "foodstuff s" in the scope of the provision is relevant to
convey the "level of importance of the product" that is contemplated by the provision.450
7.268 The European Union submits that a broad inte rpretation of the term "essential products" in
Article XI:2(a) would render othe r provisions of the GATT redundant, specifically Article XX(i).
The European Union argues that this provision allows export restrictions on domestic materials
necessary to ensure essential quan tities of such materials to a domestic processing industry, during
periods when the domestic price of such material s is held below the world price as part of a
governmental stabilization plan. Allowing a broad interpretation of Article XI:2(a) would lead
Members to impose an export restriction even if not covered by Article XX(i).451
7.269 The complainants criticize China's reliance on Australia's restriction on merino sheep as a
basis to inform the interpretation of "essential products". They argue that negotiators in that
discussion did not address the meaning of the term "essential", whether merino sheep were essential
because of their value to downstream industry, on whether the particular circumstances would satisfy
the meaning of "essential". The United States subm its that China based its conclusions that the
"essentialness" of merino sheep derives from thei r value to the downstream industry on a 2009

446 China's second written submission, paras. 66-67.
447 China's first written submission, paras. 385-387, referring to: U.N. Economic and Social Council,
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment,
Verbatim Report, Fortieth Meeting of Commission "A" (1) (Articles 25 & 27, 26, 28 & 29), Held on Friday 15
August 1947 at 10.30 a.m. in the Palais des Nations, Geneva , E/PC/T/A/PV/40(1) (15 August 1947), pp. 4-9
(Exhibit CHN-181); Australian Associ ation of Stud Merino Breeders, "Evolution of the Australian Merino"
(Exhibit CHN-182); U.N. Economic and Social Council, Second Session of the Preparatory Committee of the
United Nations Conference on Trade and Employment, Corrigendum to Verbatim Report of Fortieth Meeting of
Commission "A" , E/PC/T/A/PV/40(1)Corr.3 (19 August 1947) (Exhibit CHN-183); N. Economic and Social
Council, Third Committee: Commercial Po licy, Summary Record of the Th irty-Seventh Meeting, Held on
Monday, 16 February 1948 at 3.30 p.m., Consideration of the Report of Sub-Committee E (Articles 20 and 22) ,
E/CONF.2/C.3/SR.37 (16 February 1948), pp. 1 to 3 (Exhibit CHN-184).
448 Chapter XIX Pastoral Production, 1946-1947 Official Yearbook of the Commonwealth of Australia
pp. 853, 866, 871, 873, 882 (Exhibit CHN-465).
449 China's opening oral statement at the first substantive meeting, para. 135.
450 China's opening oral statement at the first substantive meeting, para. 136; United States' second
451 European Union's second written submission, para. 192.

industry association document.
452 The United States argues that such a statement made outside of the
framework of the GATT is not relevant.453
7.270 The complainants argue that the notion of "essential products" in Article 4 of the BOP
Understanding does not mean that simply any "input needed for production" may satisfy the definition
of "essential products". 454 The European Union submits that Articles XII:3(b) and XVIII:10 of the
GATT 1994 read together with the BOP Understanding allow Members to remove restrictions to
prioritize the free importation of more essential products, thereby allowing the importation of goods
that otherwise would have been subject to an import restriction. 455 In contrast, it argues,
Article XI:2(a) is an exception from the general prohibition of quantitative restrictions, and thus
allows restrictions on exports; it is not related to the issue of MFN treatment of other WTO Members.
Thus, the European Union argues that differences between the scope of the BOP Understanding and
the scope of Article XI:2(a) indicate that a comm on definition of essential products "would lead to an
incoherent application of the GATT."456
7.271 Finally, the complainants argue that Artic le XXXVI:5 of the GATT 1994 does not support
China's view of the term "essential products" or th at the term may have a different meaning for
developing country Members as opposed to other WTO Members. The United States and Mexico
submit that, by virtue of China's Working Party Report, Article XXXVI of the GATT 1994 is not
relevant to an assessment of whether China' s measures under discussion are WTO-inconsistent.
457 In
any event, the complainants maintain that noth ing in Article XXXVI:5 indicates that Article XI
should be interpreted differently for developing countri es and that such an approach would lead to an
incoherent interpretation of Article XI, grantin g different rights and obligations to developing
countries under Article XI.458 The European Union submits that the text of Article XXXVI:5 focuses
on market access under favourable conditions for go ods as opposed to the imposition of quantitative
restrictions.459 The European Union submits further that a GATT Secretariat background note
circulated during the Uruguay Round Negotiations in 1989 does not support China's argument that
Article XXXVI:5 can be used as context to interpret Article XI. The United States argues that China's
reference to Article XXXVI:5 confirms that China's application of an export quota on refractory-grade
bauxite relates to efforts to foster development of the domestic industry and not to conservation.460

452 United States' response to Panel question No. 17, following the first substantive meeting, para. 32.
453 United States' second written submission, para. 220; Mexico's second written submission, para. 225.
454 United States' response to Panel question No. 17 following the first substantive meeting, para. 29;
European Union's second written submission, para. 194; United States' second written submission, para. 218;
Mexico's second written submission, para. 223.
455 European Union's opening oral statement at the second substantive meeting, para. 23.
456 European Union's second written submission, para. 194; European Union's opening oral statement at
457 United States' response to Panel question No. 17 following the first substantive meeting of the
Panel, footnote 58; Mexico's response to Panel question No. 17 following the first substantive meeting of the
Panel; United States' closing oral statement at the second substantive meeting of the Panel, paras. 7 and 8;
Mexico's closing oral statement at th e second substantive meeting of the Panel. The European Union does not
express a view on whether China qualifies is a developing country or whether China could rely on provisions of
Part IV of the GATT, including Article XXXVI:5 of the GATT 1994 (European Union's opening oral statement
at the second substantive meeting, para. 26).
458 European Union's opening oral statement at the second substantive meeting, para. 27.
459 European Union's opening oral statement at the second substantive meeting, para. 32.
460 United States' response to Panel question No. 17, fn. 58 following the first substantive meeting.

7.272 Third party Japan notes that "shortage of crops, etc. in cases such as famine"
461 was
contemplated at the time of negotiating the original language of Article XI:2 (a), and that nothing in
any amendments to the text altered the meaning of that language.462
7.273 The Panel turns now to examine the meaning of Article XI:2(a). Under the text of
Article XI:2(a), products may be "foodstuffs" or "other products". The term "other products" is
qualified by the term "essential to the exporting" Member.
7.274 The term "product" is defined as "a thing genera ted or produced by, or as if by, nature or a
natural process"; "that which results from the operati on of a cause, or is produced by a particular set
of circumstances"; "an object produced by a partic ular action or process"; and, "an article or
substance that is manufactured or refined for sale".463
7.275 The phrase "essential to" is defined as "affecting the essence of anything; 'material',
important" "constituting, or forming part of, th e essence of anything", and "absolutely necessary,
indispensably requisite".464 The phrase "to the exporting" Member appears to have been added to the
initial draft of Article XI:2(a) to clarify that "t he importance of any prod uct should be judged in
relation to the particular country concerned". 465 Thus, a product may fall within the meaning of
Article XI:2(a) when it is "important" or "necessary" or "indispensable" to a particular Member.
7.276 The Panel does not consider that the terms of Article XI:2, nor the statement made in the
context of negotiating the text of Article XI:2 th at the importance of a pr oduct "should be judged in
relation to the particular country concerned", mean s that a WTO Member may, on its own, determine
whether a product is essential to it. If this were th e case, Article XI:2 could have been drafted in a
way such as Article XXI(b) of the GATT 1994, whic h states: "Nothing in this Agreement shall be
construed ... to prevent any contr acting party from taking any action which it considers necessary for
the protection of its essential security interests" (emphasis added). In the Panel's view, the
determination of whether a product is "essential" to that Member should take into consideration the

461 EPCT/C.II/36 (30 Oct. 1946) ("Fifth Preparatory Committee Meeting of 30 Oct"), p. 9.
462 Japan's third party oral statement, para. 14, referring to EPCT/C.II/QR/PV/4 (15 Nov. 1946)
("Fourth Sub-Committee Meeting of Nov.15"), page. 5.
463 Oxford English Dictionary Online, product, n. (Exhibit CHN-162). China also provides definitions
of terms that appear in the other WTO language versions of Article XI:2(a). It argues that the definition of the
French term " produit" and the Spanish term " producto" reveal that an "essentia l" "product" may be a raw
material, such as a mineral, or a manufactured, processed material (le Grand Robert de la langue française
online, produit, n.m.; Exhibit CHN-164: Diccionario de la Lengua Española, Real Academia Española,
Vigésima Segunda Edición, 2001, "producir", meanings 1, 2, 5, and 7 (Exhibit CHN-163)).
464 le Grand Robert de la Langue Française, essentiel (Exhibit CHN-174). Se e, also Complainants'
joint opening oral statement at the first substantive meeting, para. 136, referring to New Shorter Oxford English
Dictionary, p. 852 (defining "essential" as "[o]f or pertaining to a thing's essence"; "absolutely indispensable or
necessary"; "constituting or forming part of a thing's essen ce.") China notes that the French text uses the term
"essentiels", an adjective defined as either "qui est absolument nécessaire", being a synonym for "indispensable,
nécessaire, vital, obligatoire", or "Qui est le plus important", synonym for "principal, fondamental, primordial.
Tres important – incontournable, important" (Oxford English Dictionary Online , essential, a. and n. (Exhibit
CHN-173)). China notes that the Spanish text of Article XI:2(a) uses the term " esenciales", which is defined as
"Perteneciente o relativo a la esencia . [...] 2. Sustancial, principal, notable " (Diccionario de la Lengua
Española, Real Academia Española, Vigésima Segunda Edición, 2001, " esencial", meanings 1 and 2 (Exhibit
CHN-175)). China submit that this definition is translated as "Pertaining or relating to the essence. […] 2.
Substantive, principal, noteworthy".
465 U.N. Economic and Social Council, Second Session of the Preparatory Committee of the United
Nations Conference on Trade and Employment. Commission A: Report of Sub-Committee on Articles 25 and 27
E/PC/T/141 (1 August 1947), p. 2 (Exhibit CHN-176).

particular circumstances faced by that Member at the time when a Member applies a restriction or
prohibition under Article XI:2(a).
7.277 It is not clear from the terms of Article XI:2(a) whether the essentialness of a product should,
as China suggests, be measured in terms of the significance of a product to a Member's gross domestic
product, employment, welfare or any other particular variable. Nor is it clear from its terms that
Article XI:2(a) excludes products that may be an "input" to an important product or industry.
466
7.278 The parties have debated the use of the term "essential product" in the BOP Understanding.
That instrument addresses a particular set of circ umstances, namely the use of restrictive import
measures taken to control the general level of imports when "necessary" to address a "Balance-of-
Payments situation". Article 4 of the BOP Unde rstanding states: "The term 'essential products' shall
be understood to mean products which meet basic consumption needs or which contribute to the
Member's effort to improve its Balance-of-Payment s situation, such as capital goods or inputs needed
for production." The BOP Understanding allows Memb ers imposing the restrictions to prioritize the
free importation of products meeting basic needs as well as those which permit the Member to address
a balance of payments matter. We see little assi stance here in determining the meaning of
Article XI:2(a).
7.279 The Panel recognizes that parallels may exist between the need to ensure imports for
consumption needs or to protect the needs of domes tic industry in a balance-of-payments situation,
and the need to temporarily restrict exports of certa in goods to prevent or relie ve critical shortages of
foodstuffs or other essential products to domestic industry, for instance. Nevertheless, Article XI:2(a)
by its terms is not confined to addressing a balance-of-payments issue. Its reach includes a potentially
broad range of situations that may justify the app lication of a restrictive measure. An assessment of
whether a product is "essential" under Article XI:2(a ) would, it seems to the Panel, call for a case-by-
case analysis. Thus, reliance on the notion of "essential product" as it appears under the BOP
Understanding to inform an interpretation of "essentia l" in Article XI:2(a) is, in the Panel's view
inapposite.
7.280 For the same reason, the Panel considers that GATT Article XXXVI:5 and its Ad Note does
not assist the Panel in its interpretation of the me aning of "essential products" in Article XI:2(a).
Regardless of the particular status of China's development, as the complainants note, neither
Article XI nor Article XXXVI:5 provide that Article XI should hold a different meaning or be applied
differently for developing countries. In other words, it is not clear that a panel should view foodstuffs
or other products to be more or less "essential" by taking into considera tion the development of a
given WTO Member.
7.281 Nor does the Panel find much assistance in the negotiators' agreement that Article XI:2(a)
would cover Australia's ban on the export on live me rino sheep. China posits that this demonstrates
that a product may be essential to a Member because of its importance for domestic processing
industries. Even if the Panel were to agree that the drafters' agreement cons titutes context within the
meaning of Article 31(2)(a) of the Vienna Convention as an "agreement relating to the treaty which

466 The Panel does not agree with the European Union that if a WTO Member could impose export
restrictions on any product that it would deem "essential" for itself under Article XI:2(a), including an input to
domestic industry or otherwise, would reduce GATT Article XX(i) to redundancy. The Panel recalls that
Article XI:2(a) applies where there is a "critical shortage" of an "essential" product to a given WTO Member.
Article XX(i) applies in cases where "domestic materi als necessary to ensure essential quantities of such
materials to a domestic processing industry" in in stances where a government "as part of a government
stabilization plan" hold the price belo w a benchmark world price. In the Panel's view, the circumstances under
which each of these provisions apply are very different and hence there meanings are distinct.

was made between all parties in connec tion with the conclusion of the treaty"
467, the Panel does not
consider China's identification of Australia's restriction on merino sheep particularly useful to the
Panel's interpretative exercise. 468 In the documents submitted to the Panel, Australia sought
clarification on whether Article XI:2 would permit it to apply a ban on sheep exports if a drought
were to threaten its flocks. There does not appear to be any objection to applying Article XI:2(a) in
such situation. It appears beyond debate that Aust ralia considered then (and maintains today) that
merino sheep are "essential" products. However, there is no evidence before the Panel that the
drafters expressly discussed the notion of produc ts for use by the downstream industry, or the
meaning of "essential" products, when addressing Australia's concern with the potential application of
a ban on the export of merino sheep.
7.282 Accordingly, the Panel concludes that a produc t may be "essential" within the meaning of
Article XI:2(a) when it is "important" or "necessary" or "indispensable" to a particular Member. This
may include a product that is an "input" to an important product or industry. However, the
determination of whether a particul ar product is "essential" to a Memb er must take into consideration
the particular circumstances faced by that Member at the time that a Member applied the restriction.
(iii) Export prohibitions or restric tions applied to "prevent or relieve a critical shortage" of
essential products
7.283 China argues that Article XI:2(a) covers measures adopted "to avoid or prevent the
occurrence of a critical shortage of essential produc ts", and those adopted "to ease and mitigate the
negative consequences resulting from a critical shorta ge of essential products, once that shortage has
occurred".469 China submits that Article XI:2(a) neither precludes nor prescribes consideration of any
particular criterion to determine whether a "critical shortage exists", but will depend on the particular
circumstances at hand.470
7.284 China argues that the term "critical" indicates the degree of "shortage" required. It argues that
shortage refers to a deficiency in quantity. Th e notion of critical refers to something "decisive",
"crucial" or "grave", that is associated w ith "uncertainty" or "risk" or a "crisis". 471 Thus, China
concludes that a "critical shortage" refers to "a defi ciency in quantity that rises to the level of decisive
importance or crisis, or that raises uncertainty or risk of the same". 472 In addition, China submits that
the French text of Article XI:2(a), which uses th e phrase "une situation critique due a une penurie",
translated as "a serious or grave situation due to a shortage", informs an inte rpreter's consideration as
to "whether the intensity of consequences resulting from a shortage of an essential product rises to the
level of decisive importance or crisis".473
7.285 China argues that the verbs "to prevent" and "to re lieve" further inform this interpretation. It
suggests that the terms "to prevent" and "to relieve " indicate that "the occurrence or degree of the
shortage is uncertain and/or poses a risk of severity ", and confirm that Article XI:2(a) is intended to
provide "pre-emptive action to reduce or avoid altogether the manifestation of the risk". 474 T h u s ,
China considers Article XI:2 may apply where a cr itical shortage is foreseen and not simply in cases

467 China's second written submission, paras. 83-84.
468 The Panel finds it difficult to regard this discussion amongst negotiators concerning live merino
sheep as an "agreement relating to the treaty which was made between all parties in connection with the
conclusion of the treaty" pursuant to Article 31.2(a) of the VCLT.
469 China's first written submission, para. 399.
470 China's second written submission, paras. 86.
471 China's first written submission, paras. 390, 392.
472 China's second written submission, para. 89.
473 China's second written submission, para. 90.
474 China's first written submission, para. 400.

of an exogenous shock.
475 In its view, the degree of shortage need not be so extreme that it can only
be relieved through an export ban.476
7.286 China considers that a Member's tolerance for risk in the face of a shortage or potential
shortage is one relevant criterion in assessing whether a "critical shortage" exists within the meaning
of Article XI:2. It submits that Members may respond differently to identical levels of risk, but that
the language of Article XI:2(a) allows for these different risk levels. In this respect, China argues that
Article XI:2(a) operates like the SPS Agreement, l eaving Members with a "margin of appreciation to
determine their own appropriate level of protection and level of risk tolerance".477
7.287 China submits that the textual relationship between the phrase "products essential for the
exporting [Member]" and "critical shortage" provides re levant context, and means that preventative or
remedial action is allowed to address a critical s hortage of a highly essential product, before such
action would be allowed to address a similarly critical shortage of a moderately essential product.478
7.288 China argues that the negotiating history supports the conclusion that Article XI:2(a) foresees
preventive action, and allows a WTO Member to restrict or prohibit exports even if a critical shortage
has not yet occurred. 479 In this respect, China argues that th e drafters decided at a later point to
include the terms "to prevent", to allow Members to take such preventative action to avoid critical
shortages.480
7.289 The complainants argue that China conflat es the "essentialness" and "critical shortage"
questions, the effect of which is to read "critical shortage" out of Article XI:2(a). The complainants
accept China's definition of "shortage" as referring to "a deficiency in quantity", but add that the term
"critical" means "in the nature of or constituting a cris is or of decisive importance". They read these
terms together to mean "a deficiency in quantity that is in the nature of or constituting a crisis or of
decisive importance".481 Hence they argue that, for a shortage to be "critical", it must rise to "a level
beyond mere 'relative scarcity'", and that the existence of "supply constr aints", or the exhaustibility of
a resource, would not suffice to establish the existence of a "critical shortage" under Article XI:2(a).482
7.290 The European Union argues that th e words "critical shortage" must be read within the context
of the entire provision of Article XI:2(a), such th at a restriction must be "temporarily applied", and
must be "relieving" the critical shortage, or "pre venting" its occurrence. In other words, for a
"shortage" to be "critical" in the sense of Article XI:2(a), the shortage must be, inter alia, temporary,
i.e., limited in duration. In this sense, it argues, there should be a point in time when the critical
shortage would cease to exist and the availability of the good would return to normal. If there is no
possibility for the shortage ever to cease to exist, the European Union submits that it would not be
possible to "relieve or prevent" it through an expo rt restriction applied only for a limited period of
time.483
7.291 The European Union offers examples of what it considers might result in a critical shortage,
such as an extended drought or wildfires that sev erely decrease the crops of grain or cereal in a

475 China's second written submission, para. 95.
476 China's second written submission, para. 91.
477 China's second written submission, para. 100.
478 China's second written submission, paras. 105.
479 China's first written submission, paras. 401-402.
480 China's first written submission, paras. 403.
481 Complainants' joint opening oral statement at the first substantive meeting, para. 140.
482 Complainants' joint opening oral statement at the first substantive meeting, para. 141, 143; United
483 European Union's second written submission, paras. 201-202.

particular country, or a mining accident. The European Union compares these examples to Australia's
export restriction on live merino sheep, where the a lleged shortage was "the devastating impact of a
drought on the stock of Merino sheep" in Australia.
484
7.292 The complainants argue that statements by negotiators support the view that export
restrictions could be "temporarily applied to cope with the consequences of a natural disaster, or to
maintain year to year domestic stocks sufficient to avoid critical shortages of products ... which are
subject to alternate annual shortages and surpluses". 485 The complainants point to a statement by a
representative of the United Kingdom that, "if you take out the word 'critical', almost any product that
is essential will be alleged to have a degree of shor tage and could be brought w ithin the scope of this
approach".486
7.293 Finally, the European Union submits, under Ch ina's interpretation, the protections of
Article XX(g) are made redundant. In its view, Article XX(g) provides for stricter conditions (such as
caps on domestic production or consumption) that must be met in order to allow derogations from the
GATT obligations, including Article XI:1. These der ogations are permitted to protect the reserves of
exhaustible natural resources, whic h have a limited life span. If China's interpretation of "critical
shortage" were accepted, according to the European Union, Article XI:2(a) would allow a Member to
impose export restrictions even in the absence of caps on domestic production or consumption. This
result, reasons the European Union, would pre-empt the application of Article XX(g) in the field of
export restrictions, and would not be consistent w ith the customary rules of interpretation of public
international law.487
7.294 The Panel notes that Article XI:2(a) covers expor t prohibitions or restrictions that either
"prevent" or "relieve" critical shortages of produc ts essential to the exporting Member. The verb "to
prevent" means "to anticipate in action; to act in advance of", "to act in anticipation of, or in
preparation for", and also "to preclude the occurrenc e of …; to render … impracticable or impossible
by anticipatory action". 488 The verb "to relieve" means "to ease or mitigate (pain, distress, or
difficulty); to make (a condition) less burdensome", and "to raise out of some trouble, difficulty, or
danger; to bring or provide aid or assistance to; to deliver from something troublesome or
oppressive".
489

484 European Union's second written submission, fn. 145.
485 Complainants' joint opening oral statement at the first substantive meeting, para. 141, referring to
Exhibit CHN-180, para. 19.
486 Complainants' joint opening oral statement at the first substantive meeting, para. 143, referring to
Exhibit CHN-181; United States' second written submissi on, para. 231; Mexico's second written submission,
para. 236.
487 European Union's second written submission, para. 206.
488 Oxford English Dictionary Online , prevent, v. (Exhibit CHN-193). China notes that the French
term "prévenir" means "empêcher par ses précautions … d'arriver, de nuire" and "éviter" (le Grand Robert de
la langue française online, prévenir (Exhibit CHN-194)), or "prevent through precautions [something] from
happening, damaging" and "avoid". It notes that the Spanish term " prevenir" means "prevacer, evitar, estorbar
o impeder algo ", meaning "to take precautions against, avoid, pose obstacles to, or impede something"
(Diccionario de la Lengua Española, Real Academia Española, Vigésima Segunda Edición, 2001, " prevenir",
meaning 3 (Exhibit CHN-195)).
489 Oxford English Dictionary Online, relieve, v. (Exhibit CHN-196). China notes that the French text
uses the term "remédier", which is defined as " porter remède à …" and " attenuer ou supprimer les effet néfastes
de" (le Grand Robert de la langue française online, remédier, v. (Exhibit CHN-197)), or "helps to cure …" and
"attenuates or suppresses harmful effects of". China notes that the Spanish term " remediar" is defined as
"Poner remedio al daño. 2. Corregir o enmendar algo. 3. Socorrer una necesidad o urgencia. [...] 5. Evitar
que suceda algo de que pueda derivarse algún daño o molestia " (Diccionario de la Lengua Española, Real
Academia Española, Vigésima Segunda Edición, 2001, "remediar", meanings 1, 2, 3, and 5. Grammatical notes

7.295 The noun "shortage" means "deficiency in quantity; the amount by which a sum of money, a
supply of goods, or the like, is deficient".
490 The adjective "critical" is defined as "of the nature of, or
constituting, a crisis", "involving suspense or grave fear as to the issue; attended with uncertainty or
risk", "of decisive importance in relation to the issu e", and "tending to determine or decide; decisive,
crucial".491 In turn, the term "crisis" is defined as "a turning-point, a vitally important or decisive
stage; a time of trouble, danger or suspense in politics, commerce, etc.".492
7.296 The meaning of "shortage" as a deficiency in the quantity of goods appears to be common
ground with the parties and the Panel also considers this to be its meaning as used in Article XI:2(a).
In the Panel's view, the term "critical" indicates that a shortage must be of "decisive importance" or
"grave", or even rising to the level of a "crisis" or catastrophe. Article XI:2(a) states that measures in
the form of restrictions or bans may be used on a temporary basis to either outright "prevent" or
otherwise "relieve" such a shortage.
7.297 The Panel is persuaded by the complainants' ar gument that the requirement that measures be
applied "temporarily" contextually informs the notion of "critical shortage". In this sense, as noted by
the European Union, if there is no possibility for an existing shortage ever to cease to exist, it will not
be possible to "relieve or prevent" it through an export restriction applied on a temporary basis. If a
measure were imposed to address a limited reserve of an exhaustible natural resource, such measure
would be imposed until the point when the resource is fully depleted. This temporal focus seems
consistent with the notion of "critical", defined as "of the nature of, or constituting, a crisis".
7.298 In the Panel's view, China's interpretation cannot be correct, for it would have Article XI:2(a)
duplicate Article XX(g), a result that a proper interp retation of these two provisions would not allow.
As we have pointed out previously, the WTO Agreement must be interpreted in a harmonious way. If
Article XI:2(a) were interpreted to permit the long-term application of measures in the nature of
China's export restrictions on refractory grade baux ite, the import of Article XX(g) would be very
much undermined, if not rendered redundant. Thus it is important that effect be given to the
differences between Article XX(g) and Article XI:2(a).

omitted (Exhibit CHN-198)). China argues that this tran slates as "to remedy the da mage. 2. To correct or
rectify something. 3. To bring relie f to a need or urgency. 5. To a void the taking place of something from
which some harm or nuisance might derive".
490 Oxford English Dictionary Online, shortage (Exhibit CHN-186). China notes the French term " une
pénurie" is defined as " manque de ce qui est nécessaire ", or "short of what is necessary", and is considered
synonymous with "défaut, faute, manque" (le Grand Robert de la langue française online, pénurie, n.f. (Exhibit
CHN-187)). It notes that the Spanish term " escasez" is defined as "2. Poquedad, mengua de algo. Escasez de
trigo, de agua ." (Diccionario de la Lengua Española, Real Academia Española, Vigésima Segunda Edición,
2001, "escasez", meanings 2 and 3 (Exhibit CHN-188)), that means "Scarcity, scantness of something".
491 Oxford English Dictionary Online , critical, adj. (Exhibit CHN-189). China notes that the Spanish
adjective "agudo" is defined as "Puntiagudo, punzante, afilado. [...] 4. Dicho de un dolor : Vivo y penetrante.
5. Dicho de una enfermedad : Grave y de no larga duración " (Diccionario de la Lengua Española, Real
Academia Española, Vigésima Segunda Edición, 2001, " agudo, da ", meanings 1, 4, 5, and 9 (Exhibit CHN-
190)), which can be translated as "that has a narrow poin t, pungent, sharp. [...] 4. Of pain: intense and
penetrating. 5. Of an illness: serious and not long-lasting.". China notes further that the French text uses a
different phrase, namely "une situation critique due à une pénurie". The adjective "critique" means "dangereux,
difficile, grave" (le Grand Robert de la langue française online, critique (Exhibit CHN-191)). The definition of
française online, pénurie (Exhibit CHN-184)). On the basis of these French dictionary definitions, China argues
that the phrase "une situation critique due à une pénurie" can be translated to mean "a serious or grave situation
arising due to a shortage". The French text, thus, sugges ts that the circumstances or situation arising from the
shortage should be critical.
492 (Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 557.

7.299 It is clear that Article XI:2(a) is intended to address a different situation from that addressed
by Article XX(g). Article XX of the GATT 1994 sets out several "general exceptions" to the
obligations contained in other provisions of the GA TT (including Article XI:1). One such exception
is set out in paragraph (g), which allows Member s to put in place measures contrary to other GATT
obligations when they relate to the conservation of exhaustible natural resour ces. This right is not
open-ended, however; the measures must be "made effective in conjunction with restrictions on
domestic production or consumption. " In addition, the chapeau to Article XX requires that such
measures are not applied in a manner which would c onstitute a means of arbitrary or unjustifiable
discrimination between countries where the same cond itions prevail, or a disguised restriction on
international trade.
7.300 Article XI:2(a) authorizes derogation from th e prohibition on export and import restrictions
under Article XI:1 in order to prevent or relieve cr itical shortages of products essential to the Member
taking action. Thus like Article XX(g), Article XI:2(a) operates as an exception, but only with respect
to the obligations contained in Article XI:1, and not with respect to GATT obligations more broadly.
This suggests to us that the reach of Article XI:2 (a) would not be the same as that of Article XX(g);
they are intended to address different situations and thus must mean different things.
7.301 As with Article XX(g), the right to invoke Article XI:2(a) is circumscribed, but in a much
different way. The Panel considers that this differe nce, too, is important in interpreting the scope of
Article XI:2(a). Article XI:2(a) is not conf ined to conservation measures and any exceptional
measures must be "temporarily applied" to addr ess "critical" shortages. Conservation measures
tempered by the chapeau of Article XX, which ta kes into account conditions outside the Member
taking action, and by operating toge ther with domestic restrictions, will necessarily be different from
temporary measures seeking to address a domestic cr isis or a matter involving "suspense or grave
fear" in the Member taking action.
7.302 For the Panel, conflating Article XI:2(a) and Article XX(g) as China appears to do would
undermine the rights and obligations of Members unde r both provisions. The benefits and strictures
of Article XX(g) must not be transposed to Article XI:2(a), or vice versa.
7.303 We observe, however, that both measures are exceptions and hence we find instructive the
words of the Appellate Body in describing the task of interpreting and applying the limitation in the
chapeau of Article XX. The Appellate Body said that it is a:
"... delicate one of locating and marking out a line of equilibrium between the right of
a Member to invoke an exception under Article XX and the rights of the other
Members under varying substantive provisions (e.g., Article XI) of the GATT 1994,
so that neither of the competing rights will cancel out the other and thereby distort
and nullify or impair the balance of ri ghts and obligations constructed by the
Members themselves in that Agreement."
493
7.304 So, too, must the interpreter mark out a balan ce between the right of a Member to invoke the
exception under Article XI:2(a) and the rights of other Members under Article XI:1 so as not to
disturb the balance Members constructed between th e two provisions. The interpreter will be guided
in marking out the line of equilibrium by the requirement that exceptional measures be "applied
temporarily" to address "critical" shortages under Article XI.2(a).
7.305 This is not to say that a Member may never ta ke anticipatory measures within the bounds of
Article XI:2(a) to "prevent" a "critical shortage" before it occurs. However, as discussed above, the

493 Appellate Body Report, US – Shrimp, para. 159.

Panel disagrees that Article XI:2(a) would permit long-term measures to be imposed to address an
inevitable depletion of a finite resource.
(iv) Preliminary conclusions on interpretation of Article XI:2(a)
7.306 The Panel has concluded above that Article XI:2(a ) permits the application of restrictions or
prohibitions on a limited basis to address "critical shortages" of "essential products". The Panel
further concluded that a product may be "essential" within the meaning of Article XI:2(a) when it is
"important" or "necessary" or "indispensable" to a particular Member. This may include a product
that is an "input" to an important product or i ndustry. However, the determination of whether a
particular product is "essential" to a Member must take into consideration the particular circumstances
faced by that Member at the time a Member applies a restriction or prohibition under Article XI:2(a).
Finally, the Panel concluded that the term "critic al shortage" in Article XI:2(a) refers to those
situations or events that may be relieved or prevented through the application of measures on a
temporary, and not indefinite or permanent, basis.
7.307 With these conclusions in mind, the Panel w ill consider whether China's export quota on
refractory-grade bauxite is applied in a manner consistent with Article XI:2(a).
(b) Whether China's export quota on refractory-grade ba uxite is temporarily applied to prevent or
relieve a critical shortage of an essential product
7.308 China argues that the export quota that it appli es to refractory-grade bauxite is temporarily
applied to prevent or relieve a critical shortage of an essential product to it, and accordingly, its export
quota is justified pursuant to Article XI:2(a).
7.309 The Panel recalls that Article XI:2(a) permits the application of temporary restrictions or
prohibitions on a limited basis to address "critical shortages" of "essential products". The Panel found
that a product may be "essential" within the meanin g of Article XI:2(a) when it is "important" or
"necessary" or "indispensable" to a particular Member . This may include a product that is an "input"
to an important product or industry, taking into c onsideration the particular circumstances faced by
that Member. In addition, the Panel found that the te rm "critical shortage" in Article XI:2(a) refers to
those situations or events that are "important" or "grave", or rise to the level of a "crisis" or
catastrophe, and which may be relieved or preven ted through the application of measures on a
temporary, but not indefinite or permanent, basi s. The Panel will assess below whether the export
quota applied to refractory-grade bauxite meets these requirements.
(i) The parties' views on the applicability of Article XI:2(a) to the circumstances in China
Whether refractory-grade bauxite is an "essential" product to China
7.310 China offers a number of reasons and evidence in support of its view that refractory-grade
bauxite is "essential" to China. Ch ina argues that "[t]he contribution of the product, its 'essentialness'
or its importance of use, is defined by referen ce to a range of quantitative and qualitative factors,
including geological, technical, environmental, social, economic, and political factors."494
7.311 China submits that methodology provided by criticality assessments of the United States and
the European Union, including an evaluation of th e "importance of use and availability" of a given
product and review of "the net benefits customers receive from using a product" inform what makes a

494 China's first written submission, para. 436.

product essential.
495 China cites a study by the United States National Resource Council, for instance,
that concludes that bauxite among other materials is "essential, but not critical". 496 In addition, China
refers to a study by the European Union that c onsiders bauxite to be an economically important
product.497
7.312 China also submits a study that concludes th at the relative scarcity of refractory-grade
bauxite, the conservation-related restrictions placed on extraction of the pr oduct in China, other
supply constraints, and the importance of the pr oduct's use to the Chinese economy, make the product
essential to China, and the shortage of the product critical. 498 China's study assesses the contribution
of refractory-grade bauxite in terms of: the annual sales value of refractory-grade bauxite; the annual
production value of intermediate products such as ir on, steel and cement, the production of which is
facilitated by refractory-grade bauxite; and the value-added contribution to the Chinese economy from
manufacturing and construction activities that depend on iron, steel, and cement.499
7.313 China argues that refractory-grade bauxite is furt her demonstrated to be essential by the fact
that it is indispensable for the production of iron and steel, as well as of other products such as glass,
ceramics, and cement. 500 China submits that approximately 70% of China's refractory-grade bauxite
is consumed by its iron and steel industry (as part of the steel manufacturing process), which produces
over three times that of the next largest steel producing country, and accounts for over one-third of
global steel production.501 China argues that it has a "more pressi ng" need for steel-making materials,
like refractory-grade bauxite, than other countries.502

495 China's first written submission, paras. 435-436, re ferring to U.S. NRC Critical Materials Study, p.
32 (Exhibit CHN-77).
496 China's first written submission, paras. 437-439, fn. 639, referring to U.S. NRC Critical Materials
Study, p. 11 (Exhibit CHN-77).
497 China's first written submission, para. 440-441, referring to European Commission, DG Enterprise
and Industry, Report of the Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010), p. 7
(Exhibit CHN-126); see also European Commission, DG Enterprise and Industry, Report of the Ad-Hoc
Working Group on Defining Critical Raw Materials (June 2010), p. 24 (Exhibit CHN-126).
498 China's first written submission, paras. 443-446 , referring to Report by China on Refractory
Bauxite, p. 37 (Exhibit CHN-10). China argues that the its Report on Refractory Bauxite is modelled on the
methodology used in criticality assessments undertaken by the United States and European Union: China's
second written submission, para. 123.
499 Report by China on Refractory Bauxite, p. 20, based on data provided by MIIT and the China Non-
Metallic Minerals Industry Association (Exhibit CHN-10).
500 China's first written submission, paras. 431-4 34. China argues that the unique refractory
characteristics of refractory-grade bauxite "enable it to maintain performance at extremely high temperatures – a
property deriving from its purity level and alumina co ntent", thus making it "particularly suited to make
refractory bricks, blocks, and tiles for use in blast furn aces, troughs, and ladles used to produce and handle
molten iron". Report by China on Refractory Bauxite, pp. 6 and 7, Table 2 (Exhibit CHN-10); see also China's
second written submission, para. 132.
501 China's first written submission, para. 447, referr ing to Report by China on Refractory Bauxite, p.
21, Table 5 (Exhibit CHN-10). In 2008, domestic consumption of crude steel was 500 million metric tonnes, or
38% of global steel output. 2009 Blueprint for the Adjustment and Revitalization of the Steel Industry, Section
I (Exhibit CHN-258); see Exhibit JE-30, p. 13; C.E. Semler, "Refractories", p. 1471 (Exhibit CHN-257); see
also China's second written submission, para. 133.
502 China's first written submission, para. 449-450, referring to the Report by China on Refractory
Bauxite, p. 22 (Exhibit CHN-10). China notes the compla inants' description of steel as "essential to everyday
life", "an indispensable material in almost every product we use today", "a universal building material", "an
ideal material to help meet [the] growing need" for new housing units in developing countries, "critical in the
energy sector", and "a vital material for transport syst ems". China's first written submission, para. 450, referring
to Exhibit JE-30, pp. 15 to 17; Report by China on Refractory Bauxite, p. 24, table 5 (Exhibit CHN-10). See
also World Bank, Global Economic Prospects: Commodities at the Crossroads 2009, p. 69 (Exhibit CHN-260);

7.314 In addition, China argues that refractory-grade ba uxite is essential due to the fact that its use
in the steel industry contributes to the developmen t of China and "contributes to the creation of
considerable economic activity in the manufacturing and construction sectors."
503 China argues that
its effective development requires a stable supply of the basic raw materials, including refractory-
grade bauxite, needed to ensure produc tion. Development gains, it argues 504, are due in part to the
conscious choice to develop value-added trade, diversify production and exports, and promote a
higher value-added domestic industry. 505 China submits that its iron and steel industry itself now
employs over 3 million people 506 and the total contribution of refractory-grade bauxite to the value
chain encompassing the immediate sales value of th e product represents "half of China's [gross
domestic product]". 507 China further highlights the contribution of refractory-grade bauxite to
education, healthcare, infrastructure, technological progress, and scientific research in China.508
7.315 Finally, China argues that refractory-grade baux ite should be considered essential due to its
"unique chemical and physical properties"509, and due to the fact that cost-effective substitutes are not
"readily available". 510 China refers to a report by the Eur opean Commission, stating "[r]efractory
[b]auxite cannot be substituted, as the mineral composition creates specific properties which cannot
be reached with other raw materials". 511 In addition, China argues th at its bauxite reserves "are
principally of high quality refractory-grade bauxite", wh ile the majority of deposits in the rest of the
world are "metallurgical-grade" (containing "insufficient amounts of aluminium oxide ('Al 2O3'), along
with unacceptably high leve ls of iron oxide ('Fe 2O3')"). China argues that this form of bauxite is
insufficient for use as a refractory-grade product, and thus is not a substitute. 512 China considers the
fact that demand for refractory-grade bauxite has been so strong in international markets over the
previous 10 years supports the conclusion that viable substitutes are not realistically available.513
7.316 The complainants argue that China has not explained why, in order to establish that
refractory-grade bauxite is essential to a Member, that it is sufficient to demonstrate that the material

2009 Blueprint for the Adjustment and Revitalization of the Steel Industry, Section I (Exhibit CHN-258);
Exhibits JE-19, JE-20, JE-30, and JE-35. Sinosteel Corporation, 2008 Sustainability Report, p. 27 (Exhibit
CHN-261); Charity work of Bosai Group (Exhibit C HN-262); Ansteel – Sustainability (Exhibit CHN-263);
Baosteel Group Corporation, 2008 Corporate Social Responsibility Report, pp. 14, 19 to 22 (Exhibit CHN-381);
Exhibit JE-30, p. 12; Exhibit JE-30, pp. 12, 13.
503 China's second written submission, para. 134.
504 China's first written submission, para. 456-459, referring to the Guidelines of th e Eleventh Five-
Year Plan for National Econo mic and Social Development, p. 6 (Exhibit CHN-144); Exhibit JE-8, p. 13; Table
9.35; China Statistical Yearbook 2009 (Exhibit CHN-265).
505 Exhibit CHN-144: Guidelines of the Eleventh Five- Year Plan for National Economic and Social
Development, p. 41; Exhibit JE-8, p. 17.
506 China's first written submission, para. 456, referring to Exhibit CHN-264: Table 13.2 China
Statistical Yearbook 2009.
507 China's second written submission, para. 134.
508 China's second written submission, para. 136.
509 China's second written submission, para. 130.
510 China's second written submission, para. 131.
511 China's first written submission, para. 448, referr ing to Report by China on Refractory Bauxite, p.
22 (Exhibit CHN-10); European Commission, DG Enterprise and Industry, Report of the Ad-Hoc Working
Group on Defining Critical Raw Materials (June 2010), p. 20 (Exhibit CHN-126).
512 China's first written submission, para. 432, referring to Report by China on Refractory Bauxite, pp.
3-9, 32-33 (Exhibit CHN-10); description of the essential features of different forms of bauxite in Industrial
Minerals & Rocks, p. 227 (Exhibit JE-23); European Commission, DG Enterprise and Industry, Report of the
Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010), Annex V, pp. 19 (Exhibit CHN-126);
Exhibit JE-28, p. 10.8 (Table 7).
513 China's opening oral statement at the second substantive meeting, para. 96; referring to Exhibit
JE-165.

is indispensable for the production of iron and steel, or other products. They argue that this line of
reasoning would appear to suggest that "any input into large-scale industrial operations would qualify
as an essential product under Article XI:2(a)". They argue that China similarly does not explain why
the "need to ensure a 'stable supply' of the basic inputs for manufacturing" would determine whether a
product is essential to the exporting Member. Under th is view, they argue, any country "seeking to
grow a particular industry" could deem an input for that product to be an "essential product".
514
7.317 The United States and Mexico additionally asser t that refractory-grade bauxite is not
"essential" to China due to the availability of "a number of substitutes for [refractory-grade bauxite] in
the production of refractories for steel production", as set out in Exhibit JE-165.515
7.318 Finally, the complainants reject the methodology employed by the "criticality" assessments of
the United States and the European Union as relevant to address the requirements of
Article XI:2(a).
516
Whether a "critical shortage" of refractory-grade bauxite exists in China
7.319 China maintains that its export quota on refract ory-grade bauxite forms part of a conservation
plan aimed at extending the reserves of refractory-grade bauxite, but argues that the temporary
application of those export restrictions is designed also to prevent and relieve the elements of the
critical shortage caused by factors other than the products' availability.
517 China submits that the
application of the export quota serves to relieve th e critical shortage by reserving sufficient supply to
satisfy domestic demand, and avoids a more pronounced critical shortage. Through determination of a
quota fixed at approximately 40% of domestic pro duction, China submits that its export quota on
refractory-grade bauxite is "structured" to prevent or relieve the shortage.518
7.320 China argues that a "critical shortage" is demons trated in light of the importance in use of a
particular product in light of its future suppl y, based on geological and physical availability,
conservation and regulatory measures that affect extraction and processing, the development and use
of technology, the availability of affordable s ubstitutes, and domestic and international demand for
refractory-grade bauxite.
7.321 China argues that the criticality assessments (see paragraph 7.311 above) are useful in
assessing the criticality of a mineral, or a shortage. The more essential or important in use a product,
China argues, and the greater the supply constraints, the more likely it is that a shortage will have
critical implications for an economy. 519 China argues that studies by the United States National
Resource Council and the European Union compare the importance in use and impact of supply
restriction with the availability and supply risk, and take into account several factors, including
geological, technical, environmental, social, economic, and political availability. 520 China argues that

514 Complainants' joint opening oral statement at the first substantive meeting, para. 134.
515 United States' second written subm ission, paras. 221-228; Mexi co's second written submission,
paras. 226-233.
516 Complainants' joint opening oral statement at the first substantive meeting, para. 132.
517 China's second written submission, para. 141.
518 China's second written submission, paras. 145-147.
519 China's first written submission, paras. 462-463.
520 China's first written submission, para. 465; referr ing to U.S. NRC Critical Materials Study, pp. 6,
32, 33 (Exhibit CHN-77); China's fi rst written submission, paras. 466; referring to European Commission, DG
Enterprise and Industry, Report of the Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010),
pp. 14 to 21, 24 to 31 (Exhibit CHN-126).

its study (see paragraph 7.312 above) relies on similar factors in an assessment of the criticality of
refractory-grade bauxite.
521
7.322 China maintains that refractory- grade bauxite is an exhaustible natural resource, the limited
geological availability of which functi ons as a significant supply constraint. 522 It posits that its
reserves of refractory-grade bauxite in 2009 were estimated at 38.8 million metric tonnes, but that that
number "has displayed a declining trend in recent years". 523 China submits that production of
refractory-grade bauxite in China in 2009 was 2.4 million metric tonnes 524, which at current reserve
and production rates, suggests a 16-year reser ve life for China's refractory-grade bauxite. 525 I n i t s
view, the very short remaining life span of this essential and exhaus tible natural resource
demonstrates the occurrence or risk of a critical shortage.526
7.323 Moreover, China argues that refractory-grade bauxite cannot be substituted. 527 China argues
that a refractory product is selected "because of th e specific combination of physical, chemical and
thermal properties:" 528 These include the capacity of refractory-grade bauxite to tolerate high
temperatures, its acidic chemical makeup, its high resistance to abrasion, and high reheat expansion.529
China dismisses substitutes identified by the compla inants, including brown-fused alumina, Bayer
route calcined alumina, white fused alumina, gr aphite, silicon carbide, and zirconoium, as either
"considerably more expensive" than refractory-grade bauxite 530, or produced from material similarly
subject to resource constraints. 531 China also submits that there is an associated cost involved with
changing suppliers in the event of substituting a material.532
7.324 Apart from the risk of a physical shortage, China argues that other constraints disrupt the flow
of refractory-grade bauxite through the value chain, and are relevant to the conclusion that a critical
shortage of refractory-grade bauxite exists. 533 China refers to conservation measures that China
adopted to manage its raw materials in a sustainable manner, including extraction and production caps

521 China's first written submission, para. 467; China's opening oral statement at the second substantive
meeting, para. 151.
522 China's first written submission, para. 469; referring to Exhibit JE-23, p. 242. See also Exhibit JE-
23, p. 227: "premium-grade bauxite ores suitable for us e in these special niche markets have, over time, been
limited to a few principal sources, such as China a nd Guyana"; European Commission, DG Enterprise and
Industry, Report of the Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010), pp. 19 and 20
("The major production of refractory grade bauxite takes place in China w ith a large number of producers.")
(Exhibit CHN-126).
523 China's first written submission, para. 472; Repor t by China on Refractory Bauxite, p. 34 (Exhibit
CHN-10).
524 Analysis and Recommendation Report on the 2010 Controlling Quota of Total Extraction Quantity
of High-Alumina Bauxite and Fluorspar (Exhibit CHN-86); see also Report by China on Refractory Bauxite, p.
34 (Exhibit CHN-10).
525 Report by China on Refractory Bauxite, p. 34, (Exhibit CHN-10).
526 Exhibit CHN-79: China's Policy on Mineral Resources, p. 4.
527 China's first written submission, para. 471, refe rring to European Commission, DG Enterprise and
Industry, Report of the Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010), p. 20 (Exhibit
CHN-126). See also Exhibit JE-136.
528 China's opening oral statement at the second substantive meeting, para. 134, Report by China on
Refractory Bauxite, pp. 8, 30 (Exhibit CHN-10).
529 China's opening oral statement at the second substantive meeting, paras. 135-140.
530 China's opening oral statement at the second substantive meeting, paras. 143-144, 146.
531 China's opening oral statement at the second substantive meeting, para. 143.
532 China's opening oral statement at the second substantive meeting, para. 148.
533 China's first written submission, para. 475, referring to D. Shields and S. S ǒlar, "Debating the
concept of resource scarcity: physical versus socioeconomic" (Exhibit CHN-274); Report by China on
Refractory Bauxite, pp. 35 and 36 (Exhibit CHN-10).

for refractory-grade bauxite, that affect availability.
534 For instance, China asserts that the total
amount of refractory-grade bauxite that can be ex tracted in 2010 is limited to 4.5 million metric
tonnes.535
7.325 China contends that it imposes a "stringent set of requirements" on mines wishing to extract
refractory-grade bauxite, and on industries that pro cess it, which have resulted in a critical shortage.
These include the following: a licence requirement; waste and pollution controls; labour, health and
safety requirements; entrance requirements relating to "scale, technology, energy conservation,
reducing consumption and environmental protection, and eliminating backward production capacity";
environmental impact assessment; a mining rights user fee, a mineral resources tax; a compensation
fee, and pollutant discharge fees.536 China states that it is in the process of closing unsafe or polluting
mines, and encouraging consolidation in the industry.
7.326 China argues that significant barriers exist that have created a critical shortage of refractory-
grade bauxite. China alleges that barriers include the availability and maintenance of infrastructure;
considerable investments that are needed to enter the mineral extractive and processing sector 537; and
local or regional communities' acceptance of mining activity.538
7.327 Finally, China submits that export restrictions on ferrous scrap 539, high domestic demand 540
and international demand for refractory-grade bauxite 541, and the lack of available refractory-grade
bauxite with refractory characteristics outside China, contribute to a critical shortage of bauxite.542

534 China's first written submissi on, para. 475, referring to China's Policy on Mineral Resources
(Exhibit CHN-79) Program of Action for Sustainable Development in China (Exhibit CHN-82); 2010 Quota on
Extraction of High-alumina Bauxite Ores and Fluorspar Ores (Exhibit CHN-97); 2010 Quota of High-alumina
refractory-grade bauxite and fluorspar, Preamble (Exhibit CHN-98).
535 Exhibit CHN-97: 2010 Quota on Extraction of High-alumina Bauxite Ores and Fluorspar Ores ,
Article I; 2010 Quota of High-alumina refractory-grade bauxite and fluorspar, Article I (Exhibit CHN-98).
536 China's first written submission, paras. 480-482 , fns. 713-723; Exhibits CHN-93; CHN-78; CHN-
258; CHN-275; CHN-96; CHN-87; CHN-276; CHN-277; CHN-89; CHN-92; CHN-91; CHN-278; CHN-279;
CHN-95.
537 China's first written submission, para. 483, referr ing to Report by China on Refractory Bauxite, p.
36 (Exhibit CHN-10); A. Burke, 'Battle of the bauxite s' Industrial Minerals (July 2005), p. 32 (Exhibit
CHN-280).
538 China's first written submission, para. 484, refe rring to World Bank and International Financial
Corporation, Large Mines and Local Communities: Forging Partnerships, Building Sustainability (2002), pp. iv
and v (Exhibit CHN-281); Report by China on Refractory Bauxite, p. 31 (Exhibit CHN-10).
539 China's first written submission, para. 485,; China's response to Panel question No. 10 following the
first substantive meeting, para. 50; China's second wr itten submission, para. 141; European Commission, DG
Enterprise and Industry, Report of the Ad-Hoc Working Group on Defining Critical Raw Materials (June 2010),
including Annexes (Exhibit CHN-126); GATT, Multilater al Trade Negotiations, Inventory of Non-Tariff
Measures – Addendum MTN/3B/1-5/Add.7 (18 May 1977), pp. 442.1, 525.1, 537.1, 537.2, 548.1, 614.1, 615.1,
615.2, 616.2, 616.7, and 618.1 (p. 2) (emphasi s added) (Exhibit CHN-168); GATT Multilateral Trade
Negotiations, Inventory of Non-Tariff Measures – Addendum MTN/3B/1-5/Add.9 (23 August 1977), pp. 406.1
(p. 2), 537.1, 549.1, 615.001, and 616.411 (Exhibit CHN-161); see also China's opening oral statement at the
second substantive meeting, paras. 75, 99-109.
540 China's first written submission, para. 491; China' s response to Panel question No. 10 following the
first substantive meeting, para. 51; China's second written submission, para. 140; Report by China on Refractory
Bauxite, p. 33 (Exhibit CHN-10); World Bank and International Financial Corporation, Large Mines and Local
Communities: Forging Partnerships, Building Sustainability (2002) (Exhibit CHN-281); Assessment on
Relevant Issues Regarding Continued Application of Export Quota Administration to Bauxite in 2010 (Exhibit
CHN-283); see also China's opening oral statement at the second substantive meeting, paras. 75, 99-109.
541 China's first written submission, para. 485; China's response to Panel question No. 10 following the
first substantive meeting, paras. 53, 109; China's s econd written submission, para. 140; Report by China on

7.328 The complainants argue that China has not established the existence of a "critical shortage" of
refractory-grade bauxite in China. The United Stat es argues that China does not provide evidence of
how these alleged supply constraints in fact limit the supply of refractory-grade bauxite. The United
States argues that evidence, including production of refractory materials and steel and expansion of
exports of these materials, suggests that supply constr aints are not a factor and that a critical shortage
does not exist.
543
7.329 The United States additionally contests China's arguments that substitutes do not exist for
refractory-grade bauxite. The United States argues that a wide variety of raw materials can be used as
refractories in steel production; for instance, it id entifies metallurgical-grade bauxite that undergoes
the Bayer process; non-metallurgical grade bauxite; magnesia-carbon; alumina-graphite; and zirconia-
graphite. The United States submit s that these may even have longe r useful lives than refractories
made directly from refractory-grade bauxite, an d offer a 0.45 per cent increase in the cost of
producing steel.544
7.330 In addition, the United States argues that China's estimates of worldwide reserves of
refractory-grade bauxite are "significantly unders tated". Based on production in 2003, the United
States argues that reserves are actually 218 milli on tonnes, and not 39 million, as estimated by
China.545 The United States argues that China's pr oduction capacity for non-metallurgical-grade
bauxite suggests a much higher ratio of non-metall urgical-grade bauxite reserves to total bauxite
reserves, suggesting that China's reserves of non- metallurgical-grade bauxite are set to last 91
years.546
7.331 The European Union argues that the limited lif e span of the reserves of a good does not, by
itself, support a finding of "critical shortage" in the sense of Article XI:2(a). As noted above, it argues
that the exhaustion of the natural reserves of a good is not a temporary shortage that can be relieved or
prevented with temporal measures.
7.332 In addition, the European Union argues that production caps imposed by China to address the
limited life span of the reserves of refractory grade bauxite cannot set off a temporal shortage that can
be relieved or prevented with temporal measures, as required by Article XI:2(a). Instead, it argues,
production caps are part of the broader problem created by the exhaustibility of a good.547

Refractory Bauxite, pp. 5 (Exhibit CHN-10); Analysis and Recommendation Report on the 2010 Controlling
Quota of Total Extraction Quantity of High-Alumina Bauxite and Fluorspar, issued by the Department of
Minerals Exploitation Administration of the Ministry of Land and Resources on 24 March 2010 (Exhibit CHN-
86); GATT Multilateral Trade Negotiations, Inventor y of Non-Tariff Measures – Addendum MTN/3B/1-
5/Add.9 (23 August 1977) (Exhibit CHN-161);GATT, Multilateral Trade Negotiations, Inventory of Non-Tariff
Measures – Addendum MTN/3B/1-5/Add.7 (18 May 1977) (Exhibit CHN-168); Assessment on Relevant Issues
Regarding Continued Application of Export Quota Administration to Bauxite in 2010 (Exhibit CHN-283); see
also China's opening oral statement at the second substantive meeting, paras. 75, 99-109.
542 China's first written submission, para. 486; China' s response to Panel question No. 10 following the
first substantive meeting, para. 109; China's second written submission, para. 140; Report by China on
Refractory Bauxite, p. 10 (Exhibit CHN-10 ). A. Burke, 'Battle of the bauxites' Industrial Minerals (July 2005),
p. 32 (Exhibit CHN-280); Industrial Minerals, 'Guyana's bauxite boost' Industrial Minerals (21 September
1999) (Exhibit CHN-482); see also China's opening oral statement at the second substantive meeting, paras. 75,
99-109.
543 United States' second written submission, para. 239, referring to Exhibit JE-165, p. 26, figure 12.
544 United States' second written subm ission, paras. 221-228, referrin g to Bauxite Report, pp. 3-31
(Exhibit JE-165).
545 Exhibit JE-165, p. 23.
546 United States' second written submission, paras. 235, 237, Exhibit JE-165, p. 23.
547 European Union's second written submission, paras. 208-209.

7.333 Finally, the European Union argues that potential technological and social risks and
environmental and other regulations referred to by China do not show that China lacks the technology
to produce refractory-grade bauxite, or that there ha s been social unrest as alleged by China that has
reduced the production of the good. Nor does the Eur opean Union consider there is evidence that any
type of shortage results from the Chinese mining companies' compliance with China's regulatory
framework.
548
7.334 For the above reasons, the complainants argue th at China has failed to establish the existence
of a critical shortage of refractory-grade bauxite su ch that it is entitled to take measures pursuant to
Article XI:2(a). The complainants also argue th at China's reliance on "criticality assessments" by the
United States and the European Union does not addr ess the specific requirements of Article XI:2(a),
but "analyze certain products and their role in th e economies of the United States and the European
Union". They argue that China provides no evidence that these assessments set out "standard criteria"
for whether a product is "essential" within the meaning of Article XI:2(a).549
Whether the export quota applied to bauxite is applied on a temporary basis
7.335 China argues that the export quota applied to refractory-grade bauxite is applied on a
temporary basis. As demonstrated by the fact that MOFCOM determines the quota on an annual basis
through publication of the Export License Catalogue, and because China publishes biannually notices
announcing the specific bidding rules for each batch of bauxite. 550 China considers that the
application of an export quota on an annual basis en sures that the period of application is "firmly
bounded", and enables the exporting Member to se t out the reasons that "warrant the renewed
application of the export restriction".551
7.336 In addition, China submits a methodology paper by MOFCOM (Exhibit CHN-283)
explaining the factors informing the decision to impose an export quota in 2010, and the amount of
exports to be authorized under the quota (930,000 metric tonnes).
552 China considers therefore that its
measures are temporarily applied for the durati on needed to achieve the goals set out in
Article XI:2(a). China claims to find support for th is approach in examples of the application of
prohibitions and restrictions maintained by the United States and the European Union.553
7.337 The complainants maintain that China has fa iled to demonstrate that its export quota on
refractory-grade bauxite is "temporarily applied". The United States notes that there is no evidence
that the export quota is applied only so long as n ecessary to prevent or relieve a critical shortage.
Thus, the complainants consider the quota is not appropriately limited in time.
554

548 European Union's second written submission, para. 210.
549 Complainants' joint opening oral statement at the first substantive meeting, para. 137; United States'
550 China's first written submission , paras. 490-491, referring to 2010 Export Licensing Catalogue
(Exhibit CHN-7); 2010 Export Quota (Exhibit CHN-8); 2010 First-Batch Export Quota Bidding of Bauxite
(Exhibit CHN-284).
551 China's opening oral statement at the second substantive meeting, paras. 78-79.
552 China's first written submission, para. 491, referring to Assessment on Relevant Issues Regarding
Continued Application of Export Quota Administration to Bauxite in 2010 (Exhibit CHN-283).
553 China's first written submission, para. 492.
554 Complainants' joint opening oral statement at the first substantive meeting, para. 147; United States'

(ii) The Panel's assessment of the situation in China
7.338 China has identified a range of quantitative and qualitative factors, including what it describes
as "geological, technical, environmental, social, economic, and political factors", in seeking to
demonstrate that the export quota that it applies to refractory-grade bauxite is temporarily applied to
prevent or relieve a critical shortage of an essential product to China, and accordingly, its export quota
is justified pursuant to Article XI:2(a).
7.339 The Panel recalls that Article XI:2(a) permits the application of temporary restrictions or
prohibitions on a limited basis to address "critical shortages" of "essential products". The Panel found
that a product may be "essential" within the meanin g of Article XI:2(a) when it is "important" or
"necessary" or "indispensable" to a particular Member . This may include a product that is an "input"
to an important product or industry, taking into c onsideration the particular circumstances faced by
that Member. In addition, the Panel found that the te rm "critical shortage" in Article XI:2(a) refers to
those situations or events that are "of decisive importa nce" or "grave", or rise to the level of a "crisis"
or catastrophe that may be relieved or prevented through the application of measures on a temporary,
and not an indefinite or permanent, basis.
7.340 On the basis of evidence submitted by China, the Panel is persuaded that refractory-grade
bauxite is currently "essential" to China, as that term is used in Article XI:2(a). In particular, China
has presented evidence that demonstrates the importan ce of the use of refractory-grade bauxite as an
intermediate product in the production of iron and steel (in the sense that bauxite is used in the
manufacture of kilns, which are themselves u sed in the production of steel, for instance
555), as well as
other important products to Chin a's domestic and export markets. As China explains, and the
complainants do not dispute, China is the leadi ng producer of steel in the world by a significant
margin. China submits it produces more than th ree times that of the next largest steel producing
country, and represents more than one third of worldwide steel production; this is also not
contested.556 China's steel industry is a primary user of refractory-grade bauxite; in fact, the
complainants recognize that 70% of refractory-grad e bauxite is consumed by China's iron and steel
industries.557 In addition, it is not disputed that iron and steel are themselves important products in the
manufacturing and construction industr ies, two fundamental sectors that drive China's industry and
development. Moreover, China's steel industry represents a significant source of employment.558
7.341 In coming to this conclusion, the Panel was mindf ul of the parties' arguments on the question
of substitutability of refractory- grade bauxite. The complainants initially asserted that China's
allegations on the essentialness of refractory-grade ba uxite, and whether a "critical shortage" exists,
are undermined by the fact that readily availabl e and reasonably available substitutes exist. The
complainants identify several substitu tes. In response in its oral st atement at the second substantive
meeting of the parties, China explained that these materials should not be considered as substitutes,
either because of the cost to purchase them559, or due to constraints on their availability.560

555 See Report by China on Refractory Bauxite, pp. 6, 7 (Exhibit CHN-10).
556 Report by China on Refractory Bauxite, p. 21, Table 5 (Exhibit CHN-10); 2009 Blueprint for the
Adjustment and Revitalization of the Steel Industry, S ection I (Exhibit CHN-258); see Exhibit JE-30, p. 13;
C.E. Semler, "Refractories", p. 1471 (Exhibit CHN-257).
557 See Exhibit JE-165, p. 9.
558 China's first written submission, para. 456, referring to Exhibit CHN-264: Table 13.2 China
Statistical Yearbook 2009.
559 China's opening oral statement at the second substantive meeting, paras. 143-144, 146, discussing
Bayer-route calcined alumina, white fused alumina, graphite, silicon carbide and zirconium).
560 China's opening oral statement at the second substantive meeting, para. 143, discussing brown-fused
alumina.

7.342 The complainants did not respond to these points. However, in Exhibit JE-165, the
complainants acknowledged higher costs in choos ing alternatives to refractory-grade bauxite
561, albeit
at levels lower than those claimed by China. The complainants submit th at in any event increased
prices of alternative materials are offset by the increased lifespan or performance of those alternatives.
7.343 In the Panel's view, data submitted by both par ties demonstrate the complexity in determining
the availability of a substitute. Both parties agree that price would factor into a decision (including
the cost of switching to a substitute). The prope rties of the materials as well as the particular
application of that material would also factor into an assessment of substitutability.
7.344 Even assuming conditions arose that would redu ce the cost of substituting refractory-grade
bauxite for an alternative, this would not persuade the Panel to a lter its conclusion that refractory-
grade bauxite is an "essential" product to China. The inherent complexity in assessing substitutability
reveals that switching from one material to the next , and potentially, from one supplier to the next, is
not an easy decision. 562 Regardless, given the evidence of its significant use in various sectors, it is
foreseeable that refractory-grade bauxite would cont inue as an important intermediary product to the
production of steel and would continue to serve as an important driver for the Chinese economy.
7.345 Before proceeding, the Panel expresses its vi ew that the mere designation of a product as
essential or the imposition of conservation-related r estrictions imposed on extraction or processing
should not be relevant to the assessment of whet her a product is "essential" to a Member. A Member
exercises its own discretion on whether to impose cond itions that affect the availability of a product.
The conservation-related measures presumably are put in place because they are necessary to protect
an essential product; they should not in and of them selves support the conclusion that a product is in
fact essential. Therefore, the Panel considers that th ese factors should not be taken into consideration.
Moreover, the systemic implications of deciding " essentialness" based on either the presence or lack
of regulatory measures is problematic; it would a llow a Member to manufacture "essentialness" when
none exists. The Panel wishes to make clear that it is not in any way suggesting that this is the case
here.
7.346 The Panel does not consider China's application of the measure to be "temporarily applied"
within the meaning of Article XI:2(a) to justif y its imposition under that provision as a measure to
either prevent or relieve a "critical shortage".
7.347 The Panel recalls that a "shortage" refers to a deficiency in the quantity of goods. The
product's importance in use, though relevant in an assessment of whether a product is "essential" to a
Member, and perhaps indicative of future demand fo r a product, does not inform whether a shortage
currently exists. China argues that the "supply" of refractory-grade bauxite is affected by the
following: (i) the remaining reserve lifespan of refra ctory-grade bauxite; (ii) lack of availability of
refractory-grade bauxite in China and abroad; (iii) lack of cost-affordable substitutes for refractory-

561 In his "Report on Refractory Bauxite", Dr. Eugene Thiers states generally: "Some refractory
products have a higher costs, but offering [sic] superior performance and a longer useful life" (p.28). Dr. Thiers
specifically compares the cost of re fractory bauxite on 20 September 2010 (which he contends costs between
$405/metric tonne to $535/metric tonne) with the price of brown-fused alumina on that date (which he contends
to cost between $620/metric tonne and $630/metric tonne). He estimates, assuming the lowest price for
refractory bauxite and the highest price for brown fused alumina, that it would cost Chinese refractory producers
$270 million, or 0.0006% of China's gross domestic product. He estimates an increase in production cost to
Chinese steel producers of 0.45% (pp. 35-36). China's response to Dr Thiers' assertions are reflected in
paragraphs 143 to 147 of China's oral statement at the second substantive meeting of the Panel.
562 See China's opening statement at the second substantive meeting, para. 148, referring to European
Commission Directorate-General for Trade, Raw materials policy 2009 annual report , p. 11 (Exhibit CHN-
511).

grade bauxite; (iv) restriction arising from other barriers, including conservation, licence, health,
safety, environmental and other regul atory measures; (v) fees and taxes; (vi) investment barriers; and
(vii) resistance to mining activities at local and community levels.
7.348 China has had an export quota in place on expor ts of bauxite classifiable under HS No.
2508.3000 dating back to at least 2000.
563 China's estimation of a 16-year reserve for bauxite suggests
that China intends to maintain its measure in place until the exhaustion of remaining reserves (in
keeping with its contention that it needs to rest rain consumption), or until new technology or
conditions lessen demand for refractor y-grade bauxite. In line with th is, China has explained that its
export quota on refractory-grade bauxite forms part of a conservation plan aimed at extending the
reserves of refractory-grade bauxite, which is app lied temporarily to relieve the critical shortage
caused by factors other than the product's availability.564
7.349 The Panel explained above that if Article XI:2 (a) were interpreted to permit the long-term
application of conservation measures, Article XX(g ) would lose its meaning. Moreover, the Panel
observed that the permissibility of the menti on of imposing long-term measures related to
conservation purposes under Article XX(g) is tempered by the requirement to impose measures in
conjunction with restrictions on domestic consumpti on or production, and the additional requirements
of the chapeau to Article XX. Article XI:2(a), by contrast, does not require a balancing between
domestic interests and that of other Members. Article XI:2(a) instead imposes different restraints: that
measures be applied "temporarily" when addressing a domestic crisis or critical matter.
7.350 The Panel does not consider that China's rest riction on exports of refractory-grade bauxite,
which has already been in place fo r at least a decade with no indica tion of when it will be withdrawn
and every indication that it will remain in place un til the reserves have been depleted, can by any
definition be considered to be "temporarily applied" to address a critical shortage within the meaning
of Article XI:2(a). On this basis, the Panel concludes that China cannot justify its export quota
pursuant to Article XI:2(a).
7.351 The Panel cannot agree with China that it curre ntly faces a "critical shortage" of refractory-
grade bauxite in the sense of Article XI:2(a). Even if the Panel were to accept China's claim of a 16-
year remaining reserve lifespan for refractory-grad e bauxite, in the Panel's view, this would not
demonstrate a situation "of decisive importance" or one that is "grave", rising to the level of a "crisis".
As noted above, measures under Article XI:2(a) are to be "temporarily applied" to address a "critical
shortage"; a measure destined to be in place permanently – i.e., for the full 16 years until its object has
disappeared – seems to suggest it is addressing something other than a "critical shortage", as that term
is used in Article XI:2(a). Moreover, while Ch ina has submitted evidence of the vital nature of
bauxite to its economy, it is not clear to the Panel that lifespan reserve estimates could not change due
to advances in reserve detection or extraction tec hniques, or that additional capacity could not come
online within the ensuing 16-years that would a lleviate or eliminate China's concerns about
availability of refractory-grade bauxite over the long term. Moreover, the complainants dispute the
accuracy of China's estimate, instead alleging that refractory-grade bauxite has a remaining lifespan of
91 years.
565 China contests the complainants' estimation of a 91-year remaining lifespan.566

563 China provided evidence of an export quota on Customs Commodity Code 2508.3000, containing
refractory-grade bauxite, in place sin ce 2006: see China's res ponse to Panel question No. 5 following the first
substantive meeting, para 27; Exhibit CHN-440. The complainants submit evidence of an export quota in place
of products in this Customs Commodity Code since 2000: see Exhibit JE-165, referring to The Economics of
Bauxite & Alumina, p. 359 (8th ed. 2008).
564 China's second written submission, para. 141.
565 United States' second written submission, paras. 235, 237, Exhibit JE-165, p. 23.
566 China's opening oral statement at the second substantive meeting, paras. 116-124.

7.352 The Panel rejects the argument that regulat ory environmental or conservation-related
restrictions imposed by China on the extraction or processing of a product in China should be taken
into consideration when assessing whether a "critical shortage" of a product exists. These include the
imposition of production caps, or licence, health , safety, environmental and other regulatory
measures, and fees and taxes. As discussed in para graph 7.345 above in respect of the essentialness
of a product, accepting this view would be probl ematic, as it would allow a Member to claim the
existence of a critical shortage when objectively no ne exists. In addition, China has not provided
specific evidence that there are barriers to inv estment or that local or regional communities'
disapproval has disrupted the availability of refractory-grade bauxite.
567
7.353 For the foregoing reasons, the Panel concludes that China has failed to demonstrate that the
export quota applied to refractory-grade bauxite is justified pursuant to Article XI:2(a) of the
GATT 1994.
(c) Summary
7.354 Article XI:2(a) permits the application of restri ctions or prohibitions "temporarily" to address
"critical shortages" of "essential products". The Panel concluded that a product may be "essential"
within the meaning of Article XI:2(a) when it is "important" or "necessary" or "indispensable" to a
particular Member. This may include a product that is an input to an important product or industry.
The determination of whether a particular product is "essential" to a Member must take into
consideration the particular circumstances faced by that Member at the time in which a Member seeks
to justify a restriction or prohibition under Article XI:2(a). The Panel concluded that the term "critical
shortage" in Article XI:2(a) refers to situations or events that are grave or provoking crises and which
can be relieved or prevented through the appli cation of measures on a "temporary", and not an
indefinite or permanent, basis.
7.355 Bearing these conclusions in mind, the Panel concludes that refractory-grade bauxite is
"essential" to China. However, the Panel finds that China has not demonstrated that its export quota
on refractory-grade bauxite is "temporarily applied" within the meaning of Article XI:2(a) to either
prevent or relieve a "critical shortage".
2. Whether the export duties and export quota s applied to refractory-grade bauxite and
fluorspar are justified pursuant to Article XX(g) of the GATT 1994
7.356 China's defence of its export restrictions on re fractory-grade bauxite and fluorspar is based on
Article XX(g). China's argument is that refractory- grade bauxite and fluorspar are exhaustible natural
resources; they are scarce, are not easily substitutable, and thus need to be managed and protected.
China also insisted that nothing should interfere with their sovereignty over such natural resources.
568

567 China has referred generally to investments that are needed to operate a mineral extractive and
processing center, and resistance to mining that may arise at the local, regional or national levels; however, the
evidence is general in nature: see China's first wr itten submission, paras. 483-484; Report by China on
Refractory Bauxite, p. 36 (Exhibit CHN-10); World Bank and International Financial Corporation, Large Mines
and Local Communities: Forging Partnerships, Building Sustainability (2002), pp. iv and v (Exhibit CHN-281).
568 China's first written submission, para. 126. See also GATT Multilateral Trade Negotiations, Group
"Framework", Statement by the Delegation of India MTN/FR/W/23 (6 April 1979). Other WTO Members, such
as Mexico and the European Union, have also stressed the importance of the principle of permanent sovereignty
over natural resources. Also Exhibit CHN-50: GATT Trade Negotiations Committee, Proceedings of the
Session Held in the International Labour Office, Geneva, 11 and 12 April 1979 MTN/P/5 (9 July 1979), pp. 83-
84; Exhibit CHN-53: Protocol for the Accession of Mexico to the General Agreement on Tariffs and Trade
L/6036 (14 August 1986); Exhibit CHN-54: GATT, Negotiating Group on Natural Resource-Based Products,
Communication from the European Communities MTN.GNG/NG.3/W/11 (12 February 1988), para. 7. Exhibit

Further, China referred to the need for developing countries to make optimum use of their resources
for their development, as they deem appropriate, in cluding the processing of their raw material. The
complainants argue that the objective and operation of China's export regime cannot benefit from the
flexibilities of Article XX and, moreover, that Chin a cannot invoke Article XX(g) to justify export
duties contrary to its Accession Protocol.
569
7.357 As explained above, the Panel will now exam ine China's defence following the order of
analysis used by China in its rebuttal. The Pane l will discuss China's arguments and evidence relating
to its export quota on refractory-grade bauxite and, when relevant and appropriate, it will also make
reference to fluorspar.
7.358 The Panel will, first, discuss generally the in terpretation of Article XX(g). The Panel will
then turn to analyse whether the challenged expo rt restrictions on refractory-grade bauxite and
fluorspar may be justified under Article XX(g). In other words, the Panel will examine whether
China's export restrictions on these two products relate to the conservation of an exhaustible natural
resource and whether China's export measures are made effective in conjunction with domestic
restrictions on production or consumption.
(a) Interpretation of Article XX(g) of the GATT 1994
7.359 A measure that is inconsistent with oblig ations in the GATT 1994 may nevertheless be
justified under Article XX. As th e Appellate Body stated in US – Gasoline and confirmed in Brazil –
Retreaded Tyres, in order to be justified under Article XX, "… the measure at issue must not only
come under one or another of the particular ex ceptions – paragraphs (a) to (j) – listed under
Article XX; it must also satisfy the requirements imposed by the opening clauses of Article XX. The
analysis is, in other words, two tiered: first, provi sional justification by reason of characterization of
the measure under [the sub-paragraph]; second, further appraisal of the same measure under the
introductory clauses of Article XX".570
7.360 The various sub-paragraphs of Article XX la y out the manner in which a Member may adopt
measures pursuing "legitimate state policies or interests".571 Article XX(g) reads as follows:
"Subject to [requirements regarding non-discrimination and disguised restriction on
trade] nothing in this Agreement shall be construed to prevent the adoption or
enforcement by any contracting party of measures:
(g) relating to the conservation of exhaus tible natural resources if such measures
are made effective in conjunction with restrictions on domestic production or
consumption".
7.361 Therefore, in order for a measure to be jus tified under Article XX(g), the measure at issue
must: (i) "relate to the conservation of an exhaustible natural resource", and (ii) be "made effective in
conjunction with restrictions on domestic production or consump tion". The Panel turns now to
consider the ordinary meaning of the words used in paragraph (g) in their context.

CHN-51: GATT Consultative Group of Eighteen, Thirteenth Meeting, Export Restrictions and Charges – Note
by the Secretariat CG/18/W/43 (10 October 1980), p. 2.
569 See China's First written submission, paras 123- 126; China's opening oral statement at the first
substantive meeting, paras. 26-29.
570 Appellate Body Report, US – Gasoline, p. 22, DSR 1996:I, 3, at p. 20.
571 Appellate Body Report, US – Gasoline, p. 17, DSR 1996:I, 3, at p. 16.

(i) "Relating to the conservation of exhaustible natural resources"
7.362 The first legal benchmark for the consistency of a measure with Article XX(g) is that the
measure "relates to the conservation of exhaustible natural resources".
7.363 In China's view, Article XX(g) includes within its scope the protection of living and non-
living exhaustible natural resources, such as "raw materials".
572 This is not contested by the
complainants. China contends further that the term "conservation" should be interpreted as the act of
preserving and maintaining the existing state or number of something, in this case "natural resources"
covered by Article XX(g).
573 China argues that Article XX(g) protects its sovereign right to adopt a
comprehensive and sustainable mineral conservati on policy, taking into account China's social and
economic development needs.574
7.364 For China, Article XX(g) must be interprete d in a manner that recognizes a WTO Member's
"sovereign rights over their own natural resources." China claims that these rights must be exercised
in the interests of a Member's own social and economic development 575, as well as in light of the
objective of sustainable development as stated in the Preamble to the WTO Agreement. China posits
that sustainable development requires that ec onomic development and conservation be aligned
through the effective management of scarce reso urces, as the term "conservation" refers to the
management of a limited supply of exhaustible natural resources over time. China considers that its
export restraints "relate to conservation" because th ey are part and parcel of China's measures that
manage the limited supply of refractory-grade baux ite and fluorspar, which are exhaustible natural
resources.576
7.365 The complainants argue that China presents as "context" for the meaning of the term
"conservation" issues that have absolutely no relevance to the corr ect interpretation of
Article XX(g).577 According to the complainants, the WTO Preamble cannot be used to exempt a
WTO Member from complying with the terms of Artic le XX(g) so as to be able to discriminate in
favour of its own domestic users of raw material s against users in any other WTO Member. The
European Union recalls that the WTO Preamble calls for the optimal use of the world's resources, and
expresses the desire of WTO Members to contribut e to the objectives of the WTO by entering into
reciprocal and mutually advantageous arrangements di rected at the substantial reduction of tariffs and
other barriers to trade.578
7.366 The United States and Mexico argue that China is incorrect to argue that context confers on
the word "conservation" the meaning that a Member 's sovereign rights over its natural resources can
be exercised in the interests of a Member's ow n social and economic development. Article XX(g)
does not permit WTO Members to deviate from WTO ru les in order to promote and realize their own
self-interested economic goals.579
7.367 The complainants also dispute China's interpretation of the principle of sovereignty over
natural resources. They argue that this principle is not at issue in this dispute. In their opinion,

572 China's first written submission, para. 101.
573 China's first written submission, para. 107.
574 China's first written submission, para. 97.
575 China's first written submission, paras. 120-130.
576 China's second written submission, paras. 184-194.
577 European Union's second written submission, para. 240.
578 European Union's second written submission, para. 241; United States' opening oral statement at the
second substantive meeting, para 72.
579 United States' second written subm ission, paras. 117-118; Mexi co's second written submission,
paras. 121-122.

Article XX(g) does not call into question this sovereign right of all WTO Members. Under
Article XX(g), what is at issue is whether a Member has satisfied the conditions of that provision
when it maintains an otherwise GATT-inconsistent measure affecting trade in its natural resources.
580
7.368 Finally, the United States and Mexico submit that China's attempt to incorporate into the term
"conservation" the notion of exercising rights over natural resources "in the interests of a Member's
own social and economic development" seeks to cha nge Article XX(g) into an exception based on a
WTO Member's desire to create opportunities for gr owth for its downstream processing industries.
For these complainants, to the extent that the interests of a Member's downstream industry might form
the basis for an exception to the GATT 1994 prohibition on export restraints imposed on industrial
input materials, Article XX (i) could be invoke d so long as certain conditions were respected.
581
However, China does not invoke Article XX (i) as a justification for its trade-restrictive measures.582
7.369 In sum, the Panel observes that although the pa rties agree that the products (raw materials)
covered by the present dispute are exhaustible natu ral resources, they disagree as to whether the
challenged export restrictions "relate" to a "conservation" programme. The Panel will move now to an
interpretation of those terms.
"Relate to conservation"
7.370 The Appellate Body in US – Gasoline ruled that a measure was "relate[d] to" conservation if
there was a substantial relationship between th e export measures and conservation, and "that a
measure must be 'primarily aimed at' the conservation of exhaustible natural resources in order to fall
within the scope of Article XX(g)". 583 It further added that a measure that is "merely incidentally or
inadvertently" aimed at conservation cannot meet th e requirement of "relating to" in Article XX(g). 584
It noted that the phrase "primarily aimed at" was "not designed as a simple litmus test for inclusion or
exclusion from Article XX(g)". 585 In US – Shrimp , the Appellate Body accepted that sub-paragraph
(g) referred to measures "primarily aimed at" conservation; 586 it also described this relationship as "a
close and genuine relationship of ends and means" 587 that requires an examination of the relationship
between the general structure and design of a measure and the policy goal it purports to serve. 588 The
Appellate Body has explained that:
"Article XX (g) requires that the measur e sought to be justified be one which
"relat[es] to" the conservation of exhaus tible natural resources. In making this
determination, the treaty interpreter essentially looks into the relationship between the
measure at stake and the legitimate polic y of conserving exhaustible natural
resources".589
7.371 The Panel will, therefore, examine and analy se the relationship between, on the one hand, the
930,000 metric tonnes quota on refractory-grade baux ite, and, on the other hand, 15% export duty on

580 European Union's second written submission, paras. 242, 245; United States' second written
581 United States' second written submission, para. 121; Mexico's second written submission, para. 125.
582 United States' second written submission, para. 125; Mexico's second written submission, para. 129.
583 Appellate Body Report, US – Gasoline, p. 18, DSR 1996:I, 3, at p. 17 (emphasis added).
584 Appellate Body Report, US – Gasoline, p. 19, DSR 1996:I, 3, at p. 18.
585 Appellate Body Report, US – Gasoline, p. 19, DSR 1996:I, 3, at p. 17.
586 Appellate Body Report, US – Shrimp, para. 136.
587 Appellate Body Report, US – Shrimp, para. 136.
588 Appellate Body Report, US – Shrimp, para. 137.
589 Appellate Body Report, US – Shrimp, para. 135.

fluorspar and the goal on which China claims its measures are based – the conservation of refractory-
grade bauxite and fluorspar.
"Conservation"
7.372 The dictionary definition of the noun "conser vation" is "the action of keeping from harm,
decay, loss or waste; careful preservation. The preservation of existing conditions.... The preservation
of the environment, esp. of natural resources".
590 The verb "conserve" is defined as "Keep from harm,
decay, or loss esp. with view to later use; preserve with care. Maintain (energy etc.) unchanged in
total quantity according to a conservation law". 591 The noun "preservation" is defined as "The action
or an act of preserving or protecting something; the fact of being preserved". 592 To "preserve", is to
"Keep from harm, injury; take care of, protect...keep from decay; maintain (a state of things)". 593 In
sum, these dictionary definitions define "conserva tion" as the act of preserving and maintaining the
existing state of something, in this case "natural resources" covered by Article XX(g).594
7.373 Having considered the ordinary meaning of the relevant terms of Article XX(g), we turn to
their context. Pursuant to Article 31(2) of the Vienna Convention, which makes clear that the context
of a treaty includes its "text, including its pr eamble and annexes", the Preamble to the WTO
Agreement forms part of the contex t of Article XX(g). The Preamble's role as relevant context for
interpreting Article XX(g) was c onfirmed by the Appellate Body in US – Shrimp, where it stated that
the Preamble gives "colour, texture, and shading to [the] interpretation of the agreements annexed to
the WTO Agreement, in this case, the GATT 1994".595
7.374 The Preamble recognizes that WTO Members' trade relations should:
"… [allow] for the optimal use of the wo rld's resources in accordance with the
objective of sustainable development , seeking both to protect and preserve the
environment and to enhance the means for doi ng so in a manner consistent with their
respective needs and concerns at different levels of economic development".596

590 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 492.
591 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 493.
592 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2333.
593 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2333.
594 Other definitions of the term "conservation" are reflected in international agreements and
conventions which tend to define the term "conservation" in light of the scope of the agreement or in relation to
other obligations, meaning the act of preserving and maintaining the existing state of something in this case
"natural resources". For instance, the Convention on Biological Diversity defines the "conservation of
biological diversity" as "the in situ conservation of ecosystems and natural habitats and the maintenance and
recovery of viable populations of species in their natural surroundings…". The Preamble to the 1940 Western
Hemisphere Convention expressed an intention "to protec t representatives of all species and genera of their
native flora and fauna…over areas exte nsive enough to assure them from b ecoming extinct through any agency
within man's control". Further, the parties to the Asso ciation of South East Asian Nations (ASEAN) Agreement
aimed to "ensur[e] the survival and promoting the conservation of all species under their jurisdiction and
control". The 1979 Bonn Convention defines "conservation status" as "the sum of influences acting on the
migratory species that may affect its long term distribution and abundance".
595 Appellate Body Report, US – Shrimp, para. 153.
596 WTO Agreement, Preamble (emphasis added).

7.375 Thus, a proper reading of Article XX(g) in the context of the GATT 1994 should take into
account the challenge of using and managing resources in a sustainable manner that ensures the
protection and conservation of the environment while promoting economic development. As the
Appellate Body explained, to do so may require "a comprehensive policy comprising a multiplicity of
interacting measures".
597
7.376 Pursuing multi-faceted objectives, usually invo lves making policy choices and prioritization;
the chosen policy depends on, inter alia , the choice of particular economic policy objectives ( e.g.,
employment; income; tax etc.); social policy objectives ( e.g., education; health; etc.); and,
environmental policy objectives (e.g ., conservation; pollution re duction; waste management;
recycling; biodiversity preservation). These different policy objectives cannot be viewed in isolation;
they are related facets of an integrated whole. Moreover, the "interacting measures" 598 chosen by a
Member will reflect and integrate these related policy goals. In choosing appropriate conservation
measures, "WTO Members have a large measure of autonomy to determine their own policies",
provided that they respect the requirements of, inter alia, Article XX(g).599
7.377 In our view, the Panel must take into account in interpreting Article XX(g) principles of
general international law applicable to WTO Members. 600 Article 31(3)(c) of the Vienna Convention
provides that in interpreting a treaty, there shall be taken into account together with the context "any
relevant rules of international law applicable in the relations between the parties".
7.378 One of the fundamental principles of international law is the principle of state sovereignty,
denoting the equality of all states in competen ce and independence over their own territories and
encompassing the right to make laws applicable within their own territories without intrusion from
other sovereign states. Independent decisions can be taken with regard to matters including the choice
of political, economic and social systems. The principle of state sovereignty is also exercised
whenever states choose to enter into an international agreement with other sovereign states.
7.379 This was first established by the Permanent Court of International Justice (PCIJ) in the case of
the S.S Wimbledon (1923), where it confirmed that "the right of entering into international
engagements is an attribute of State sovereignty".
601 This principle was further elaborated in the
PCIJ's advisory opinion on the Exchange of Greek and Turkish Populations (1925).602 We find
especially instructive for our purposes the PCIJ's consideration of the principle in the case on
Jurisdiction of the European Danube Commission between Galatz and Braila (1927), where the Court
stated that "restrictions on the exercise of sovere ign rights accepted by treaty by the State concerned
cannot be considered as an infringement of sovereignty".603
7.380 An important element of the principle of state sovereignty is the principle of sovereignty over
natural resources, recognized as a principle of international law 604, and allowing states to "freely use
and exploit their natural wealth and resources wher ever deemed desirable by them for their own

597 Appellate Body Report, Brazil – Retreaded Tyres, para.151.
598 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
599 Appellate Body Report, US – Gasoline, p. 30, DSR 1996:I, 3, at p. 28.
600 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.67.
601 PCIJ, S.S Wimbledon, p.25.
602 [1925]Publ. PCIJ, Series B, no 10, p. 21.
603 Jurisdiction of the European Danube Commission between Galatz and Braila , [1927] Publ. PCIJ,
Series B, no 14, p. 36.
604 Resolution 1803 (XVII), Permanent Sovereignty Over Natural Resources (14 December 1962)
(adopted by 87 votes to 2, 12 abstentions).

progress and economic development".
605 The principle of sovereignty over natural resources is
embodied in a number of international agre ements, including in the Preamble of the Convention on
Biological Diversity , which "[reaffirms] that States have sovereign rights over their biological
resources".606
7.381 In the Panel's view, consistently with Article 31(3)(c) of the Vienna Convention , our
interpretation of Article XX(g) should "take into account" the principle of sovereignty over natural
resources. The principle of sovereignty over natural resources affords Members the opportunity to use
their natural resources to promote their own develo pment while regulating the use of these resources
to ensure sustainable development. Conserva tion and economic development are not necessarily
mutually exclusive policy goals; they can operate in harmony. So too can such policy goals operate in
harmony with WTO obligations, for Members must exercise their sovereignty over natural resources
consistently with their WTO obligations. In the Pa nel's view, Article XX(g) has been interpreted and
applied in a manner that respects WTO Members' sovereign rights over their own natural resources.607
7.382 The Panel observes that the ability to enter into international agreements  such as the WTO
Agreement  is a quintessential example of the exercise of sovereignty. In joining the WTO, China

605 U.N. G.A. Resolution 626 (VII), Right to Exploit Freely Natural Wealth and Resources (21
December 1952).
606 The Convention on Biological Diversity , done at Rio de Janeiro, 5 June 1992, 1760 UNTS 79; 31
International Legal Materials.
607 Recall for instance, that during the Toky o Round discussions on the adoption of the Understanding
Regarding Export Restrictions and Charges , GATT contracting parties discussed the importance of the
sovereignty of States over their natural reso urces. See GATT Multilateral Trade Negotiations, Group
"Framework", MTN/FR/W/23. The GATT and the WTO dispute settlement systems have dealt with several
disputes concerned with natural resources; see for instance; US – Shrimp (Viet Nam)(DS404); US – Tuna II
(Mexico) (DS381); US – Customs Bond Directive (DS345 and DS343 ); EC – Salmon (Norway)(DS337); US –
Shrimp (Ecuador)(DS335); Japan – Quotas on Laver(DS323); US – Softwood Lumber VI (DS277); US –
Softwood Lumber V (DS264); US – Softwood Lumber IV (DS257); EC – Tariff Preferences (DS246); US –
Softwood Lumber III (DS236); EC – Sardines (DS231); Chile – Swordfish (DS193); Argentina –Hides and
Leather (DS155); EC – Asbestos (DS135); US – Shrimp (DS58); Brazil – Desiccated Coconut (DS22);
Australia – Salmon (DS18); EC – Scallops (Peru and Chile) (DS12 and 14); EC – Scallops (Canada) (DS7); US
– Gasoline (DS2 and 4); non-established panels, EC — Measures Prohibiting the Importation and Marketing of
Seal Products (Norway)(DS401); EC — Measures Prohibiting the Importation and Marketing of Seal Products
(Canada) (DS400); EC — Certain Measures Prohibiting the Importation and Marketing of Seal Products
(Canada) (DS369); EC — Definitive Safeguard Measure on Salmon (Norway) (DS328); EC — Definitive
Safeguard Measure on Salmon (Chile) (DS326); US — Provisional Anti-Dumping Measures on Shrimp from
Thailand (Thailand) (DS324); Indi a — Anti-Dumping Measures on Cert ain Products from the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu (DS318); US — Reviews of Countervailing Duty on
Softwood Lumber from Ca nada (DS311); Mexico — Certain Pric ing Measures for Cu stoms Valuation and
Other Purposes (DS298); India — Import Restrictions Maintained Under the Export and Import Policy 2002-
2007(DS279); US— Provisional Anti-Dumping Measure on Imports of Certain Softwood Lumber from Canada
(DS247); EC — Generalized System of Preferences (D S242); US— Anti-Dumping Duties on Silicon Metal from
Brazil (DS239); EC — Measures Affecting Soluble Coffee (DS209); Egypt — Import Prohibition on Canned
Tuna with Soybean Oil (DS205); Nicaragua — Measures Affecting Imports from Honduras and Colombia
(DS201); Brazil — Measures on Minimum Import Prices (DS197); EC — Measures Affecting Differential and
Favourable Treatment of Coffee (DS154); India — Measures Affecting Customs Duties (DS150); EC —
Measures Affecting Imports of Wood of Conifers from Canada (DS137); India — Measures Affecting Export of
Certain Commodities (DS120); Pakistan — Export Measures Affecting Hides and Skins (DS107); Pakistan —
Export Measures Affecting Hides and Skins (DS107); US— Countervailing Duty Investigation of Imports of
Salmon from Chile (DS97); US— Import Prohibition of Certain Shrimp and Shrimp Products (DS61); Korea —
Measures concerning Bottled Water (DS20); Malaysia — Prohibition of Imports of Polyethylene and
Polypropylene (DS1).

obtained significant commercial and institutional be nefits, including with respect to its natural
resources. It also committed to abide by WTO rights and obligations.
7.383 Exercising its sovereignty over its own natural resources while respecting the requirements of
Article XX(g) that China committed to respect, is an efficient way for China to pursue its own social
and economic development. These c onsiderations support the view that "a comprehensive policy
comprising a multiplicity of interacting measures" is an appropriate policy to conserve natural
resources.
608
7.384 The Panel refers now, as part of the immediate context of Article XX(g), to the provisions of
paragraph (i) of Article XX, which deal with situations where the exports of domestic materials can be
restricted to assist the affected domestic industr y. Even in such a situation where a Member is
explicitly protecting its downstream industry, Article XX(i) ensures consideration of the interests of
foreign producers.
7.385 Article XX(i) provides an exception for measures:
"involving restrictions on expor ts of domestic materials ne cessary to ensure essential
quantities of such materials to a domestic processing industry during periods when
the domestic price of such materials is held below the world price as part of a
governmental stabilization plan; Provided that such restrictions shall not operate to
increase the exports of or the protection affo rded to such domestic industry, and shall
not depart from the provisions of this Agreement relating to non-discrimination".
7.386 Article XX(i) provides explicitly that any expor t restrictions on domestic materials cannot be
imposed to increase the protection of the domestic i ndustry. Hence the restrictions remain subject to
the core GATT principles of non-discrimination. In the Panel's view, Article XX(g), which provides
an exception with respect to "conservation", cannot be interpreted in such a way as to contradict the
provisions of Article XX(i), i.e., to allow a Member , with respect to raw materials, to do indirectly
what paragraph (i) prohibits directly. In other words, WTO Members cannot rely on Article XX(g) to
excuse export restrictions adopted in aid of ec onomic development if they operate to increase
protection of the domestic industry.
(ii) "if such measures are made effective in c onjunction with restrictions on domestic production
or consumption"
7.387 Having reviewed how the requirements of Artic le XX(g) can be interpreted harmoniously
with the international law principle of State sovereignty over its natural resources, the Panel continues
its interpretation of the terms of Article XX(g), i.e., that such challenged measures are "made effective
in conjunction with restrictions on domestic production or consumption".
7.388 China acknowledges that Article XX(g) requi res that the challenged measures be "made
effective in conjunction with restrictions on domest ic production or consumption". China recalls that
the jurisprudence has established that this phrase implies a degree of " even-handedness", but this does
not mean that actions must affect foreigners and domestic actors in an identical manner.
609 China
claims that pursuant to the principle of sove reignty over natural resources, resource-endowed
countries, including developing countries, can manage the supply and use of those resources through
conservation-related measures that foster the sustainable development of their domestic populations.

608 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
609 China's first written submission, paras. 149-150.

7.389 According to China, provided that restrictions are imposed on domestic supply, Article XX(g)
does not oblige resource-endowed countries to ensure that the economic development of other user-
countries benefits equally or identically from the exploitation of the resources of resource-endowed
countries.
610 For China, all parties understand the phrase "made effective in conjunction with domestic
restrictions on production or consumption" to mean that identical treatment of foreign and domestic
actors is not required. It adds that (i) the Appellate Body has recognized that no particular distribution
of the burden is required; and (ii) Article XXXVI:5 and its Ad Note confirm that the burden on
domestic and foreign supply need not be identical because developing countries may pursue economic
diversification through development of domestic industries to process primary products. China
fundamentally disagrees with any suggestion by the Eu ropean Union that Article XX(g) implies that a
conservation scheme cannot impose a lesser burden on domestic users than on foreign users. After
all, says China, the WTO Agreement is not a commodity-sharing agreement.611
7.390 The European Union agrees that Article XX(g) does not necessarily require that domestic and
foreign users of Chinese raw materials are to be tr eated in an identical manner, but it does require
them to be treated in an even -handed or an equitable manner. 612 The European Union believes that
Article XX(j) of the GATT 1994 provides useful context for interpreting the " even-handedness"
requirement of Article XX(g). 613 Article XX(j) affirms the principle of equitable access that is
reflected in the requirement in Article XX(g) that a measure that relates to conservation must be
"made effective in conjunction with restrictions on domestic production or consumption".614
7.391 Likewise, the United States and Mexico mainta in that under Article XX(g), "made effective
in conjunction with restrictions on domestic producti on or consumption" requires that the challenged
measure at issue be operative, in force or effectiv e in combination with operative, in force, or
effective actions or facts that confine or fix defin itely the permitted extent, amount, duration, etc. of
domestic production or consumption. 615 Furthermore, the United States and Mexico argue that the
interpretation of " even-handedness" advanced by China is incorrect. They contend that the Appellate
Body's ruling in US – Gasoline , which referred to the boundaries of the even-handed requirement,
held that a measure would not meet the requirements of the " even-handedness" if it were at the end of
the spectrum where only foreign interests were being negatively affected and domestic interests
suffered no negative impact.
616
7.392 The complainants insist that the Appellate Body's reasoning in US – Gasoline does not stand
for the proposition that China suggests, i.e., th at Article XX(g) permits a Member to impose a
measure that puts at an advantage its own domestic in terests at the expense of the interests of other
Members, as long as the measure imposes some level of restriction on domestic supply that is greater
than nothing.617
Restrictions on domestic production or consumption
7.393 The Panel recalls that a WTO-inconsistent measure may be justified pursuant to
Article XX(g) if the respondent whose measure is being challenged can demonstrate that its measure
is made effective in conjunction with restrictions on domestic production or consumption.

610 China's first written submission, para. 153.
611 China's second written submission, paras. 195-219.
612 European Union's second written submission, para. 252.
613 European Union's second written submission, para. 253.
614 European Union's second written submission, para. 254.
615 United States' second written submission, para. 131; Mexico's second written submission, para. 135.
616 United States' second written subm ission, paras. 134-136; Mexi co's second written submission,
paras. 138- 140.
617 United States' second written submission, para. 137; Mexico's second written submission, para. 141.

7.394 The term "restriction" is defined as: "A th ing which restricts someone or something, a
limitation on action, a limiting condition or regulati on" and as "[t]he action or fact of limiting or
restricting someone or something," specifically "[d]eliberate limitation of industrial output
618 the
action or fact of confining or binding the extent, amount, duration, etc. of permitted 619 - in the case of
Article XX(g) - domestic production or consumption. 620 The Panel considers that the ordinary
meaning of "restriction" is that which has a limiting effect.
Effective in conjunction with
7.395 The GATT Panel in Canada – Herring and Salmon interpreted the meaning of the term
"effective in conjunction with":
"The Panel, similarly, considered that the term 'in conjunction with' in Article XX (g)
had to be interpreted in a way that ensures that the scope of possible actions under
that provision corresponds to the purpose for which it was included in the General
Agreement. A trade measure could therefore in the view of the Panel only be
considered to be made effective 'in conjunction with' production restrictions if it was
primarily aimed at rendering effective these restrictions".
621
7.396 The ordinary meaning of the term "made effective" was clarified in US – Gasoline where the
Appellate Body said the phrase means that the challe nged measure is "operative", "in force", or has
"come into effect". 622 In the same appeal, the Appellate Body addressed the meaning of the entire
clause:
"Put in a slightly different manner, we be lieve that the clause 'if such measures are
made effective in conjunction with restricti ons on domestic products or consumption'
is appropriately read as a requireme nt that the measures concerned impose
restrictions, not just in respect of impor ted [products], but also with respect to
domestic [products]".623
7.397 Therefore, in our view, restrictions on domes tic production or consumption must not only be
applied jointly with the challenged export restricti ons but, in addition, the purpose of those export
restrictions must be to ensure the effectiveness of those domestic restrictions.624
7.398 In the Panel's view, Article XX(g), in requiring th e domestic restrictions to be made effective
in conjunction with the (challenged) export restricti on, is requiring that both the export restrictions
and the related domestic restrictions operate at the sa me time. This view is supported by the ordinary
meaning of the term in conjunction with, which is "the act or an instance of conjoining: the state of
being conjoined; occurrence together in time or space". 625 The requirement that export and domestic
restrictions occur together is consistent with the requirement that the export restriction be primarily

618 Shorter Oxford English Dictionary , 1st edn., L. Brown (ed.) (Oxford University Press, 1993),
Vol. 2, p. 2569.
619 Shorter Oxford English Dictionary , 1st edn., L. Brown (ed.) (Oxford University Press, 1993),
Vol. 2, p. 2569.
620 The Panel also referred to the definition of "restr iction" in its determination of GATT Article XI to
mean " ...'limiting' or have a 'limiting effect' ... ". See, e.g., para. 7.206 above.
621 GATT Panel Report, Canada – Herring and Salmon, para. 4.6.
622 Appellate Body Report, US – Gasoline, p. 20, DSR 1996:I, 3, at p. 19.
623 Appellate Body Report, US – Gasoline, p. 20, DSR 1996:I, 3, at p. 19.
624 GATT Panel Report, Canada – Herring and Salmon, para. 4.6.
625 Webster's New Encyclopaedic Dictionary.

aimed at rendering effective the domestic restriction.
626 Thus it is important for us to have regard to
the timeframe for China's restrictions on domestic production or consumption.
7.399 China argues that the provisions of Article XXXVI:5 of the GATT 1994 can be used as legal
context in the interpretation of Article XX(g). Fo r China GATT Article XXXVI:5 confirms that it is
entitled to use and conserve its natural resources for itself with a view to diversifying its own
economy.627 Supporting its steel industry will help China to diversify because the growth of the steel
industry will stimulate the development of the infrast ructure sector, which, in turn, will spur China's
overall economic development, industrialization and diversification.628 The goal would mean that the
export restrictions would be WTO-legitimate under GATT Article XX(g).
7.400 The Panel has a certain difficulty in seeing how a reference to the right to diversification set
out in Article XXXVI:5 can assist it in its interpre tation of Article XX(g). Even assuming that China
has properly identified an interpretative ambiguity in Article XX(g), and that Article XXXVI:5
includes a right to economic diversification – whic h we are not suggesting it does – we cannot agree
with China that such a right could undermine or even contradict the terms of paragraph (g) that
require even-handed domestic restrictions on production or consumption, as discussed below.
7.401 In any event, the Panel is of the view that Ch ina's claim that its incentives to the steel industry
will foster China's diversification through the deve lopment of its infrastructure is not substantiated
with evidence. The Panel notes that export restri ctions on refractory-grade bauxite and fluorspar
support mainly the aluminium and steel industries. The Panel finds it hard to see how China will
improve diversification by supporting further develo pment of these sectors, where China is already a
global leader.629 Moreover, if, as China claims, better in frastructure would enhance diversification,
the Panel is left wondering how supporting the steel and aluminium industry (already well developed)
will improve the quality of China's infrastructure.
Requirement of even-handedness
7.402 The Appellate Body emphasized that the term "if such measures are made effective in
conjunction with restrictions on domestic production or consumption" imposes "a requirement of
even-handedness in the imposition of restrictions ... up on the production or consumption of
exhaustible natural resources":630
"There is, of course, no textual basis for requiring identical treatment of domestic and
imported products. Indeed, where there is id entity of treatment - constituting real, not

626 GATT Panel Report, Canada – Herring and Salmon, para. 4.6.
627 China's first opening oral statement, para. 24.
628 China's response to Panel question No. 34 followi ng the second substantive meeting, paras. 157-
159.
629 The Report on Refractory Bauxite at p. 21 (Exhibit CHN-10) indicates that "China in 2009 produced
568 million tonnes of steel […] [which amounts to] six and a half times more steel than the world's second
largest steel producer (Japan)". The same Report, at p. 22, shows that in the la st decade "China's steel
production grew at an average rate of 19% a year. By comparison, production in the rest of the world did not
grow at all over the period, with the result that by 2009 China was producing almost half of the world's steel".
The Report on Fluorspar at p. 18 (Exhibit CHN-9) indicates that "China in 2009 produced 12.85 million tonnes
of aluminium […] [which amounts to] four times more than the world's second largest aluminium producer
(Russia)". The same Report, at p. 19, shows that in th e last decade "China's alumin ium production grew at an
average rate of 20% a year. By co mparison, production in the rest of the world grew at 2% a year". See also
United States' comments on China's responses to the Panel questions after the second substantive meeting,
paras.120 and 121.
630 Appellate Body Report, US – Gasoline, p. 20-21, DSR 1996:I, 3, at p. 19.

merely formal, equality of treatment - it is difficult to see how inconsistency…would
have arisen in the first place. On the other hand, if no restrictions on domestically
produced like products are imposed at all, and all limitations are placed upon
imported products alone, the measure cannot be accep ted as primarily or even
substantially designed for implementing c onservationist goals. The measure would
simply be naked discrimination for protecting locally-produced goods".
631 [emphasis
added]
7.403 China argues that "Article XXXVI:5 and its Ad Note confirm that Article XX(g) does not
require identity between the restrictions on dom estic and foreign supply of natural resources" 632 and
"recognizes[s] the objective of achieving economic di versification of developing country economies
through the development of industr ies to process primary products". 633 In particular, China argues
that export restrictions are needed to support its econo my and to enable it to diversify. In other words,
a proportionately higher burden on foreigners is justified.
7.404 The Panel agrees with China that , in interpreting and applying Article XX(g) in relation to
non-renewable resources, the treaty interpreter may take into account the international law principle
of sovereignty over natural resources, to the extent relevant to the case at hand. The Panel also agrees
that resource-endowed countries are entitled to manage the supply and use of those resources through
conservation-related measures that foster the su stainable development of their domestic economies
consistently with general intern ational law and WTO law. As long as even-handed restrictions are
imposed on domestic supply, Article XX(g) does not oblige resource-endowed countries to ensure
that the economic development of other user-countries benefits identically from the exploitation of the
resources of the endowed countries.
7.405 The Panel is of the view that China's right to economic development and its sovereignty over
its natural resources are not in conflict with Chin a's rights and obligations as a WTO Member. When
China chose to join the WTO in full exercise of its sovereignty, China made the concurrent decision
that its sovereign rights over its natural resources would thereafter be exercised within the parameters
of the WTO provisions, including those of Article XX(g ). At that time, China was aware of the terms
of Article XX, as interpreted by the Appellate Body in its Gasoline and Shrimp reports, in particular
with respect to the requirement that restrictions fo r which Article XX(g) is in voked could be justified
only if they are made effective in conjunctio n with restrictions on domestic production or
consumption. China's Accession Protocol does not re veal any contrary understanding on the part of
China or any WTO Members.
7.406 This is, in fact, the very essence of the conserva tion objective set forth in Article XX(g): if a
WTO Member is not taking steps to manage the supply of natural resources domestically, it is not
entitled to seek the cover of Article XX(g) for th e measures it claims are helping to conserve the
resource for future generations.
7.407 Finally, the Panel recalls the findings in Canada – Herring and Salmon 634 which related to a
prohibition of exports of unprocessed herring and salmon by Canada. In US – Gasoline, the Appellate
Body referred to an earlier GATT dispute and captured the essence of paragraph (g) of Article XX:
"This prohibition effectively constituted a ban on purchases of certain unprocessed
fish by foreign processors and consum ers while imposing no corresponding ban on

631 Appellate Body Report, US – Gasoline, p. 21, DSR 1996:I, 3, at p. 19.
632 China's second written submission, para. 203.
633 China's second written submission, para. 203.
634 GATT Panel Report, Canada – Herring and Salmon, para. 5.1.

purchase of unprocessed fish by domestic processors and consumers. The
prohibitions appeared to be designed to pr otect domestic processors by giving them
exclusive access to fresh fish and at the sa me time denying such raw material to
foreign processors . The Panel concluded that th ese export prohibitions were not
justified by Article XX(g)".
635
7.408 In sum, paragraph (g) of Article XX can jus tify GATT-inconsistent trade measures if such
measures along with parallel domestic restrictions aimed at the conservation of natural resources and
are primarily aimed at rendering effective parallel domestic restrictions operating for the conservation
of natural resources. A contrario, Article XX(g) cannot be invoked for GATT-inconsistent measures
whose goal or effects is to insulate domestic producers from foreign competition in the name of
conservation.
7.409 Having addressed the interpretation of Article XX (g), the Panel will now proceed to examine
China's export restrictions on refractory-grade bauxite and fluorspar to determine whether they can be
justified pursuant to Article XX(g).
7.410 Before examining the relevant evidence and ar gumentation of the parties with respect to
refractory-grade bauxite and fluorspar, the Panel recalls that it is the Member invoking Article XX
that bears the burden of proof.
636 Finally, examining a justification under Article XX, as in this
dispute, requires the Panel to assess much evidence (i ncluding expert evidence). In that context, the
Panel enjoys a broad margin of discretion - as the trier of the facts - in assessing the value of the
evidence and the weight to be ascribed to that evidence. 637 At the same time, the Panel must respect
the standard of review set out in Article 11 of the DSU.
(b) Whether export quotas applied to refractory-gr ade bauxite and export duties applied to
fluorspar (met-spar and acid-spar) are justified pursuant to Article XX(g) of the GATT 1994
7.411 China's defence to justify its export restricti ons on refractory-grade bauxite and fluorspar is
based on the argument that these raw materials are exhaustible natural resources that need to be
managed and conserved. For China, refractory-gr ade bauxite and fluorspar are essential for its
sustainable development, as they are a key input in the production of steel and aluminium. Given that
China's reserves of these resources are limited (at the 2009 rate of extraction, China estimates a
lifespan of 4.5 years for its fluorspar reserves, and 16 years for its refractory-grade bauxite
reserves)
638, China has adopted a variety of measures in order to manage the supply and use of
refractory-grade bauxite and fluorspar over time. These measures ensure that these resources provide
social and economic benefits over a longer period th an would otherwise be the case. China contends
that export restrictions on these raw materials are an integral part of China's conservation strategy.

635 Appellate Body Report, US – Gasoline, footnote 42.
636 Appellate Body Report, US – Gasoline, pp. 22-23, DSR 1996:I, 3, at p. 21.
637 Appellate Body Report, US – Wheat Gluten , para. 151. If it is clear that panels have exclusive
jurisdiction over the evaluation of factual and expert evid ence, "precisely how much and precisely what kind of
evidence will be required to establish such a presumpt ion will necessarily vary from measure to measure,
provision to provision, and case to case" (Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR
1997:I, 323, at p. 335) as "[the Appellate Body] cannot second-guess the Panel in appreciating either the
evidentiary value of … studies or the consequences, if an y, of alleged defects in [the evidence]". (Appellate
Body Report, Korea – Alcoholic Beverages , supra, footnote 58, para. 161). There are, however, no criteria or
specific standards concerning the credibility and weight that the Panel should ascribe to the different elements of
evidence. Criteria such as "balance of probabilities" or "preponderance of evidence" were rejected in favour of
panels' discretion, a discretion that must nonetheless respect the provisions of Article 11 of the DSU for an
"objective" assessment of the facts and the law.
638 Exhibits CHN-86, JE-166.

Without these measures, China argues, the burden of China's supply limitations would be borne
unduly by China's domestic users, which would undermine China's development.
639
7.412 According to the complainants, the export restrictions on refractory-grade bauxite and
fluorspar cannot be justified under Article XX(g). Fi rst, the complainants maintain that there is a
"complete lack of any relationship" between the e xport restrictions on the materials and the goal of
their conservation. Rather, they claim there is a close and genuine relati onship between the export
restrictions and China's economic goals.640 In support of this claim, the complainants adduce evidence
that while restricting exports of the raw materials, China does not restrict exports of the downstream
products produced using the raw materials as inputs. 641 For the complainants this is clear evidence
that China's concern is not conservation.
7.413 Second, the complainants mainta in that China has not satisfied its burden of proving that the
export restrictions on refractory-grade bauxite and fluorspar are made effective in conjunction with
restrictions on domestic production or consumption. They point out that most of the domestic
measures China refers to in the course of arguing that it respects the requirements of Article XX(g)
have been introduced during the course of these proceedings, and they do not actually limit domestic
production or consumption of the materials at issue.
7.414 Third, even if China has proved its measures ar e made effective in conjunction with domestic
restrictions, albeit put in place during the Panel process, China would still not have shown that it
satisfies the requirement of even-handedness necessary pursuant to Article XX(g). This is because, in
the complainants view, "[i]n order for its measur e to be even-handed […] it seems as though China
would need to counter-balance the impact of the export duty on foreign users with some measures that
similarly affect domestic users of fluorspar w ithout imposing a 'double' burden on foreign users". 642
Finally, the complainants assert that China's export duty on fluorspar does not satisfy the requirements
of the chapeau of Article XX.
7.415 In order for the Panel to determine whether China can justify its export quota on refractory-
grade bauxite and its export duties on fluorspar pursu ant to GATT Article XX(g), the Panel will need
to analyse, first, whether export restrictions on refractory-grade bauxite and fluorspar "relate to the
conservation" of an exhaustible natural resource. Secondly, we must consider whether China's export
measures "are made effective in conjunction with domestic restrictions on production or
consumption".
(i) Whether China's its export quota on refracto ry-grade bauxite and export duty on fluorspar
relate to the conservation of an exhaustible natural resource
7.416 To begin, the Panel must determine whether China's export quota on refractory-grade bauxite
and export duty on fluorspar "relate to conservation". Thus we must establish "whether there is a close
and genuine relationship of ends and means" between the goal of conservation of refractory-grade
bauxite and fluorspar, and the means presented by the applicable export duty and export quota.
643

639 China's first written submission, para. 188.
640 United States' second written submission, paras. 141 and 251; Mexico's second written submission,
paras. 145 and 256.
641 United States' second written submission, para. 142 and 253; Mexico's second written submission,
paras. 146 and 258. See also Exhibits JE-164, pp.11-13 (for fluorspar) and JE-165, pp. 24-27 (for refractory
grade bauxite).
642 United States' second written submission, para. 161; Mexico's second written submission, para. 165.
643 Appellate Body Report, US – Shrimp, para. 135.

7.417 Specifically, the export restrictions that China seeks to justify pursuant to GATT
Article XX(g) are:
(a) the portion
644 of an export quota of 930,000 metric tonnes on Bauxite in its
subcategories of "Aluminium ores and c oncentrates" (HS 2606.0000) and Refractory
Clay (HS 2508.3000) that applies to "refractory grade bauxite" or "high alumina clay"
which represents a sub-category of refractory Clay (HS 2508.3000)645; and
(b) a temporary export duty of 15% on different categories of Fluorspar, including:
fluorspar containing by weight ≤ 97% calcium fluoride, also referred to as "Met-spar"
(HS 2529.2100), and fluorspar containing, by weight > 97% calcium fluoride, also
referred to as "Acid-spar" (HS 2529.2200).
7.418 To determine whether a challenged export restri ction relates to conservation, a panel should
examine the text of the measure itself, its design a nd architecture, and its context. First, the Panel
observes that the measure imposing the export dut y on fluorspar does not refer to the goal of
conservation646; the measure imposing an export quota on re fractory-grade bauxite does not refer to
the relationship between the export quota and the goal of conservation.647
7.419 In its first written submission, with a view to s upporting its claim that its export restrictions
on refractory-grade bauxite and fluorspar are justified pursuant to Article XX(g), China submits that it
has adopted a "comprehensive set of measur es relating to the conservation of fluorspar" 648 and a
"comprehensive set of measures rela ting to the conservation of bauxite ".649 It continues by referring
to its 2001 " Mineral Resources Policy ".650 In a document entitled " China's Policy on Mineral
Resources Information Office of the State Council of December 2003 " which refers to fluorspar
explicitly, China inter alia commits to "formulate a unified policy on the import and export of mineral
products in accordance with the WTO rules and [China's] commitments in its accession to the
WTO".651 We note, however, that this policy document re fers for the most part to the economic and
development gains that China can make through th e exploitation of its mineral resources. The Panel
cannot find, nor has China pointed to, measures relating to the conservation of refractory-grade
bauxite and fluorspar in the evidence China submitted relating to what it terms its "mineral policy".

7.420 To support its claim that the export quota on refr actory-grade bauxite is justified pursuant to
Article XX(g), China lists 13 measures which, acco rding to China, are relevant for its conservation
programme on refractory-grade bauxite. There are equivalent measures in most cases relating to
fluorspar. Nine of those measures were enacted befo re 2009, and the others in 2010, i.e. after the

644 China submits that such portion (or refractory bauxite) represents approximately 75% of bauxite
exports under code 2508.3999. China's opening oral statem ent at the second substantiv e meeting, para. 92. See
also exhibits CHN-513: table customs data refractory grade bauxite, and calculations.
645 The specific Chinese measure which sets the 2009 export quotas for bauxite is the " Ministry of
Commerce Announcement Regarding 2009 Agricultural and Industrial Products Export Quota Amounts
(Announcement No. 83 of 2008) " (Exhibit JE-79). (Exhibit JE-181). Chin a refers to this subset of bauxite as
"referactry bauxite" and submits that complainants ha ve also used this term (Exhibits CHN-10; CHN-96;
China's responses of 13 September 2001, paras 32 to 36; China's second written submission, paras 84-93;
China’s opening oral statement at the second substantive meeting, paras. 84 to 93); see also discussion in
paras. 7.244 and 7.245 above.
646 Exhibit JE-21.
647 Exhibit JE-79.
648 China's first written submission, para. 156.
649 China's first written submission, para. 526.
650 China's first written submission, para. 157-158.
651 Exhibit CHN-79, p.11; see also Exhibit CHN-80.

Panel's establishment. China asserts that all those measures confirm that its export restrictions on
refractory-grade bauxite and fluorspar are an integr al part of its conservation programmes within the
meaning of Article XX(g).
7.421 The pre-2009 measures invoked by China for refr actory-grade bauxite and fluorspar are the
same, they are the following:
(a) Mineral Resources Law
652 of 1986;
(b) Environmental Protection Law653 of 1989;
(c) Provisional Regulations on Resource Tax 654 of 1994 and Detailed Rules for the
Implementation of the Provisional Regulations on Resource Tax655 of 1994;
(d) Administration of Collection of the Mineral Resources Compensation Fees656 of 1997;
(e) Administration of Registration of Mining of Mineral Resources657 of 1998 ;
(f) National Mineral Resources Plan658 of 2001;
(g) Notice of Opinions of Authorities on the Integration of Exploitation of Mineral
Resources659 of 2006; and
(h) National Mineral Resources Plan (2008-2015).660
7.422 The National Mineral Resources Plan (2008-2015) (item (h) above) describes China's
conservation policy in the area of minerals including fluorspar: one of the policy tools mentioned is
the restriction of extraction: "Restrict the extracti on of such minerals as ba rite, fluorspar, graphite,
magnesite, talc and rich phosphorite".
661 However, there is no discussion of a specific "conservation
policy" for fluorspar or refractory-grade bauxite. Moreover, although the National Mineral Resources
Plan (2008-2015) makes reference to fluorspar 662, and explicitly refers to the objectives of extraction
restrictions of this mineral, it is a programmatic doc ument that speaks of future restrictions, but does
not refer to current restrictions. It makes no reference at all to refractory-grade bauxite.
7.423 The Notice of Opinions of Authorities on the Integration of Exploitation of Mineral Resources
(item (g) above) does not specifically refer refract ory-grade bauxite or to fluorspar; essentially it
provides guidelines to promote the restructuring of the mining sector, with the goal of promoting the
efficiency of resource extraction.663

652 Exhibit CHN-78.
653 Exhibit CHN-88.
654 Exhibit CHN-89.
655 Exhibit CHN-91.
656 Exhibit CHN-92.
657 Exhibit CHN-93.
658 Exhibits CHN-94, JE-17.
659 Exhibit CHN-95.
660 Exhibit CHN-80.
661 Exhibit CHN-80.
662 Exhibit CHN-80, pp. 7-8.
663 Exhibit CHN-95.

7.424 The Administration of Registration of Mining of Mineral Resources (item (e) above) provides
for monitoring and enforcement of compliance with licensing requirements by mining enterprises and
does not refer specifically to refractory-grade bauxite or fluorspar.
664 The National Mineral Resources
Plan of 2001 (item (f) above) sets forth China's policy objectives for the use of mineral resources
(emphasizing the importance of efficient use of resources), but, as the Mineral Resources Law of 1986
(item (a) above), does not refer to refractory-gra de bauxite or fluorspar conservation programmes. 665
The Environmental Protection Law (item (b) above) provides guidelines to foster environmental
protection and to introduce environmental standards.666
7.425 In its first written submission, China submits excerpts from the 2009 Further Adjust of Import
and Export Tariffs667, which China describes as evidence that China's export restrictions on refractory-
grade bauxite and fluorspar were always linked to the goal of conservation. The United States and
Mexico take issue with the excerpts and cite the document more expansively:
"In order to effectively bring into play the tariff policy's economic leverage , promote
the adjustment of economic structure and the change of economic development mode ,
further increase the import of advanced t echnologies, equipments and key parts and
components, fulfil the need of domestic economic and social development , promote
resource saving and environmental protection , and to improve people's standard of
living, the State will implement relatively low interim import tariff rates on over 670
types of commodities next year . . .".
668
7.426 The first part of the text identifies economic and development considerations, while the latter
part refers to sustainable development consider ations. The document also discusses more generally
the lowering of import duty rates on products such as coal, fuel oil, epoxide resin, chassis of heavy
wreckers, and automatic bobbin winders, with a view to "effectively bring into play the tariff policy's
economic leverage, promote the adjustment of economic structure and the change of economic
development mode". The Panel has not been able to see how this document confirms that China's
export quota on refractory-grade bauxite and export duti es on fluorspar were put in place as part of a
comprehensive conservation prog ramme relevant specifically to refractory-grade bauxite and
fluorspar.
7.427 China also argues that export restrictions contribute to its stated objective of conservation of
the natural resources at issue because by reducing foreign demand for the resource, they will reduce
domestic production and, hence, the extraction of the resource. 669 Furthermore, the use of export
restrictions is said to be required because the u se of domestic restrictions on production without
export restraints would undermine China's sustainable development.670
7.428 The Panel has some difficulties with China's design ed position. It seems to us that a policy of
restricting extraction would be more in line with a policy to achieve conservation than one confined to
restricting exports. For the purpose of conservation of a resource, it is not relevant whether the
resource is consumed domestically or abroad; what matters is its pace of extraction.

664 Exhibit CHN-93.
665 Exhibit CHN-94, JE-17.
666 Regarding the measures introducing the resources tax and the compensation fee, see paras. 7.442-
7.447 below. For the 2010 measures, see paras. 7.448-7.458 below.
667 Exhibit CHN-100.
669 China's first written submission, paras. 156, 164 and 187.
670 China's first written submission, paras. 187-188 and 520-521.

7.429 In light of the evidence submitted to the Panel, it is clear that there is a substantial increase in
the domestic consumption of fluorspar and refractor y-grade bauxite, while exports do not appear to
have grown at the same pace. For example, "[f] rom 2000 to 2009, Chinese consumption of fluorspar
reflected growth of approximately 124%".
671 Starting from 2007, China's annual refractory-grade
bauxite (ores) and fluorspar extraction steadily incr eases, with fluorspar's extraction registering an
increment of 60% from 2008 to 2009.672 Moreover, for example "[i]n 2008, although far less fluorspar
was exported from China in its raw material form th an in 2000, more fluorspar in total was exported
from China than in 2000 due to the substantial incr ease in exports of downstream products containing
fluorspar".673 For the Panel, this evidence does not su pport China's claim that it has put in place a
comprehensive plan to conserve refractory-grade ba uxite and fluorspar given that domestic extraction
has in fact increased.
7.430 The Panel is also concerned with the possibility that export restrictions may have long-term
negative effects on conservation due to the increased demand from the downstream sector. An export
restriction on an exhaustible natural resource, by reducing the domestic price of the materials, works
in effect as a subsidy 674 to the downstream sector 675, with the likely result th at the downstream sector
will demand over time more of these resources than it would have absent the export restriction. This
could offset the reduction in extraction determined by the export restriction.
7.431 China argues that the extraction and production cap s that it has in place impede this effect.
However, given that these caps are set at levels above the current level of extraction and production of
these materials, the Panel has difficulty with this proposition.676
7.432 The Panel also observes that there is no clear link between the way the duty and the quota are
set and any conservation objective. China does not provide any evidence or argument to justify the
use of an export duty on fluorspar, as opposed to a quota on refractory-grade bauxite. To justify the
use of an export quota in the case of refractory- grade bauxite, China argues that a quota serves to
ensure constraint in case of a sudden increase of foreign demand. However, China has not provided
any evidence to suggest anything other than a stable demand for re fractory-grade bauxite. China also
claims that "[a]t the 2009 rate of extraction, only four and a half years of China's [fluorspar] reserves
remain".677 However, in its response to the Panel's ques tions, China could not provide an explanation

671 Market Research on Fluorspar and Selected Fluorochemicals, October 2010, p. 9 and p. 34 (Exhibit
JE-164).
672 Exhibits CHN-83 (for fluorspar ores extraction data) and CHN-369 (for bauxite ores extraction
data).
673 United States' second written subm ission, paras. 142-143; Mexi co's second written submission,
paras. 146-147. The United States and Mexico identify a similar trend in the downstream sector's exports of
refractory grade bauxite (United States' second written submission, paras. 252 and 254; Mexico's second written
submission, paras. 257 and 259).
674 The use of the term "subsidy" herewith does not implicate a legal conclusion under the WTO
Agreement on Subsidies and Countervailing Duties.
675 Piermartini, R. (2004). 'The Role of Export Taxes in the Field of Primary Commodities'. World
Trade Organization, Geneva, Switzerland. See also Gomez-Sabaini JC (1990) "The role of export taxes" in
Tanzi, Vito, Ed (1990) Fiscal policy in Open developing economies. International Monetary Fund, Washington
DC.Devarajan, S, Go D., Schiff M, and Suthiwart-Narueput S., "The Whys and the Why nots of Export taxation,
World Bank Policy Research Working papers No 1684 (1996).
676 United States' second written submission, para. 172; Mexico's second written submission, para. 176;
United States' opening oral statement at the second substa ntive meeting, paras. 79-82; United States' responses
to Panel question Nos. 20 and 31 following the second substantive meeting, paras. 14-44 (question No. 20) and
para. 76 (question No. 31).
677 China's first written submission, para. 165 (emphasis in original).

as to what impact a 15% duty on fluorspar will have on its lifespan. Nor could China explain how this
extended lifespan for fluorspar would address its sustainable development concerns.
678
7.433 Moreover, the Panel notes that China does not make the argument that the 15% export duty
on fluorspar has the effect of extending in any meani ngful way the lifespan of fluorspar reserves. In
fact, China argues that it is the caps on mining and production that restrict the supply of fluorspar,
while the export restraints only "manag[e] the re sulting supply" of refractory-grade bauxite and
fluorspar.
679 According to China itself, if it maintain ed only extraction and processing caps without
export restraints, it would be "compelled to share [i ts] resources according to nothing more than the
demands of foreign markets". 680 In other words, China acknowledg es that it prefers not to use only
extraction and processing caps; rather it imposes an export restriction.
7.434 For the Panel, measures that increase the cost s of refractory-grade bauxite and fluorspar to
foreign consumers but decrease their costs to domestic users are difficult to reconcile with the goal of
conserving refractory-grade bauxite and fluorspar.
7.435 In light of the above, the Panel concludes that China has not met its burden of proving that its
export quota on refractory-grade bauxite and its export duty on fluorspar "relate to the conservation"
of refractory-grade bauxite and fluorspar. The Pane l will nevertheless continue its examination of the
challenged measures to determine whether the export quota on refractory-grade bauxite and the export
duty on fluorspar "are made eff ective in conjunction with restric tions on domestic production or
consumption".681
(ii) Whether China's quota on refractory-grade bauxite and its export duty on fluorspar are made
effective in conjunction with restrictions on domestic production or consumption
7.436 In reviewing the parties' arguments whether Ch ina's export restrictions on refractory-grade
bauxite and fluorspar satisfy the Article XX(g) requirement that they are made effective in
conjunction with restrictions on dom estic production or consumption, the Panel will consider, first,
the 2009 export measures. Notwithstanding its deci sion to limit its terms of reference to the 2009
measures, the Panel will nonetheless examine the dom estic measures applied in 2010 and referred to
by China as evidence that domestic restrictions on consumption and production are being introduced.
Are the domestic measures invoked by China restrictive on domestic production or
consumption?
7.437 As noted earlier, China invokes and refers the Panel to 13 measures that, according to China,
"restrict[] or burden[] the current exploitation, pr oduction, and use of its own fluorspar [refractory
grade bauxite]".682 The Panel acknowledges that to the exte nt these measures increase the costs of
production, they have the potential to reduce extrac tion. However, the Panel must examine whether
those measures actually restrict or limit domestic production or consumption.
7.438 The pre-2009 measures referred to by China to justify its export quota on refractory-grade
bauxite, are the following:

678 China's responses to Panel question Nos. 17-18 following the second substantive meeting,
paras. 47-56.
679 China's responses to Panel question Nos. 17-18 fo llowing the second substantive meeting, para. 48.
China makes a similar argument with respect to refr actory grade bauxite (China's first written submission,
para. 520).
680 China's responses to Panel question Nos. 17-18 following the second substantive meeting, para. 49.
681 The Panel does so in order to ensure prompt settlement of the dispute.
682 China's first written submission para. 168 (for fluorspar) and 502 (for refractory grade bauxite).

(a) Mineral Resources Law
683 of 1986;
(b) Environmental Protection Law684 of 1989;
(c) Provisional Regulations on Resource Tax 685 of 1994 and Detailed Rules for
Implementation of the Provisional Regulations on Resource Tax686 of 1994;
(d) Administration of Collection of the Mineral Resources Compensation Fees687 of 1997;
(e) Administration of Registration of Mining of Mineral Resources688 of 1998;
(f) National Mineral Resources Plan 689 of 2001;
(g) Notice of Opinions of Authorities on the Integration of Exploitation of Mineral
Resource690 of 2006;
(h) National Mineral Resources Plan (2008-2015).691
7.439 For fluorspar, the pre-2009 measures invoked by China are the same as those listed above.
7.440 China claims that "these meas ures […] restrict[…] or burden[…] the current exploitation,
production and use of its own refract ory-grade bauxite and fluorspar". 692 However, five of these
measures do not specifically refer to refractory-gr ade bauxite or fluorspar. Among the above listed
measures, there are no specific provisions actuall y setting restrictions on domestic production or
consumption of refractory-grade bauxite or fluorspar. As previously observed 693, the Administration
of Registration of Mining of Mineral Resources (item (e) above) provides for monitoring and
enforcement of compliance with licensing requirements by mining enterprises. There is no reference
to "restrictions" or other forms of "limitations" in the National Mineral Resources Plan of 2001 (item
(f) above). The National Mineral Resources Plan (2008-2015) (item (h) above) refers explicitly to
refractory-grade bauxite and fluorspar
694 and to the objective of setting extraction restrictions on these
minerals, but speaks only of eventual or future restri ctions, and does not refer to restrictions that are
currently in effect.
7.441 The Environmental Protection Law (item (b) above) provides guidelines to foster
environmental protection and to introduce environmental standards; but here again, China has not
been able to direct the Panel to any provision rela ting to domestic restrictions and export restrictions
primarily aimed at rendering effective these [domestic] restrictions.695

683 Exhibit CHN-78.
684 Exhibit CHN-88.
685 Exhibit CHN-89.
686 Exhibit CHN-91.
687 Exhibit CHN-92.
688 Exhibit CHN-93.
689 Exhibits CHN-94, JE-17.
690 Exhibit CHN-95.
691 Exhibit CHN-80.
692 China's first written submission, para. 168 (for fluorspar) and 502 (for refractory grade bauxite).
693 See para. 7.424.
694 Exhibit CHN-80, pp. 7-8.
695 GATT Panel Report, Canada Herring and Salmon, para. 4.6.

7.442 Two of the eight measures do address aspects relating specifically to the production of
refractory-grade bauxite or fluorspar.
7.443 China appears to impose a resource tax on en tities exploiting mineral products through the
Provisional Regulations on Resource Tax
696 and the Rules for the Implementation of Regulations on
Resource Tax.697
7.444 According to China, "[t]he objective of the mineral resources tax […] is to increase extraction
costs and, hence, prices of the mineral". 698 The Panel observes that the in itial level of the tax appears
to be very low; in 2009 and through the first ha lf of 2010, the tax on refractory-grade bauxite or
fluorspar was set at 3 RMB per metric t on (approximately 0.45 USD per metric ton) 699, or about 0.1%
of refractory-grade bauxite or fluorspa r prices in China in the same period. 700 As of 1 June 2010, for
both refractory-grade bauxite and fluorspar701, the tax was raised to 1% of their respective prices.702
7.445 China has not demonstrated that its 1% tax rate operates as an effective restriction on
extraction.
7.446 China also subjects the extraction of refractory-grade bauxite or fluorspar ores to a
compensation fee, which was introduced by the Administration of Collection of the Mineral
Resources Compensation Fees (as amended in 1997). 703 The Compensation Fee is calculated as
follows:
Compensation Fee = sales income × compensation rate × coefficient of mining recovery rate.

7.447 The compensation rate for refractory-grade bauxite and fluorspar is set at 2%. However, the
coefficient of mining recovery rate, calculated as the ratio of the approved mining recovery rate
(specified in the mining licence issued by th e competent State department) over actual mining
recovery rate (determined by the extraction effi ciency of the mining company), can be a number
below or above 1. For example, if the approved mining recovery rate is set at 0.9 and the actual
mining recovery rate is 0.95, the coefficient of mining recovery rate is equal to 0.947. In this example,
the incidence of the compensation fee (that is, the ra te at which sales income is taxed) is 1.894%
(which results from the multiplication of the 2% compensation rate by 0.947, the coefficient of mining
recovery).704 In other words, mining companies may redu ce the incidence of the fee below the 2%
compensation rate by increasing their actual mining recovery rate. The Panel understands that China
did not set any range of values for the coefficient of mining recovery rate. Therefore, the Panel is of

696 Exhibit CHN-89.
697 Exhibit CHN-91.
698 China's first written submissions, para. 172.
699 Exhibit CHN-91, Appendix 1.
700 In the first half of 2010, China's export price of fluorspar amounted to about 340 USD per metric
tonne (Exhibit JE-180). The Panel does not have before it evidence on the 2009 domestic price of fluorspar,
although it has the 2009 acid-grade fluorspar export price, which amounted to 460 USD per metric tonne
(Exhibit JE-164, p. 39). In 2009 and in the first half of 2010, the domestic price of refractory grade bauxite
ranged from 470 to 535 USD per metric tonne (Exhibits JE-165, p. 20 and JE-180, p.1).
701 Exhibit CHN-90.
702 The increased tax amounts to 20 RMB per metric tonne (about 3 USD per metric tonne), which in
the second half of 2010 represents about 1% of China's price for fluorspar (amounting to about 360 USD per
metric tonne) and about 1% of its price for refractory-grade bauxite, (ranging from 495 to 535 USD per metric
tonne). See Exhibit JE-180 for prices of fluorspar and refractory-grade bauxite in 2010.
703 Exhibit CHN-92.
704 The Panel used the values considered by China in its response to Panel question No. 32 following
the second substantive meeting.

the view that potentially, the inci dence of the compensation fee may b ecome so low that it is unlikely
to limit mineral production. In general, we beli eve that China has not demonstrated that the
compensation fee operates as an effective restriction on extraction or production.
7.448 In 2010, China introduced the following measures for refractory-grade bauxite:
(a) 2010 Measures to Control the Extracti on and Production of Refractory-grade
Bauxite and Fluorspar
705;
(b) 2010 Public Notice on Refractory-Grade B auxite (High Alumina Bauxite) Industry
Entrance Standards706;
(c) 2010 Circular on Passing Down the 2010 Controlling Quota on Total Extraction
Quantity of High-alumina Bauxite Ores and Fluorspar Ores707;
(d) 2010 Circular on Passing Down the Controlling Quota of the 2010 Total Production
Quantity of High-Alumina Refractory-Grade Bauxite and Fluorspar708;
(e) 2010 Catalogue of Goods Subject to Export Licensing Administration 709, and Notice
on Announcement of the 2010 Export Quota Amounts for Agricultural and Industrial
Products.710
7.449 China invokes the same 2010 measures with resp ect to fluorspar, except for the following
changes: the 2010 Export Licensing Catalogue 711 and the 2010 Export Quota Amounts 712 are not
invoked for fluorspar, for which instead the 2010 Tariff Implementation Plan713 is invoked. Moreover,
in the case of fluorspar, the 2010 Public Notice on Refractory-Grade Bauxite Standards 714 is replaced
by the 2010 Public Notice on Fluorspar Standards.715
7.450 The Panel has reviewed the 2010 measures and has concluded that they are not effective in
restricting production or consumption of refractory-grade bauxite or fluorspar. In fact, the 2010 Public
Notice on Refractory-Grade Bauxite Standards 716 (and its equivalent for fluorspar) sets forth entrance
requirements but does not refer to restrictions of extraction or production of the raw materials at issue.
7.451 The 2010 Measures to Control the Extraction and Production of Refractory-grade Bauxite
and Fluorspar717 refers to extraction and production caps introduced on the raw and processed forms
of both refractory-grade bauxite or fluorspar but does not appear to be effective in restricting
production, as explained in the following paragraphs.

705 Exhibits CHN-87, JE-167.
706 Exhibit CHN-96.
707 Exhibits CHN-97, JE-168.
708 Exhibits CHN-98, JE-169.
709 Exhibit CHN-7.
710 Exhibit CHN-8.
711 Exhibit CHN-7.
712 Exhibit CHN-8.
713 Exhibit CHN-5.
714 Exhibit CHN-275.
715 Exhibit CHN-96.
716 Exhibit CHN-275.
717 Exhibits, CHN-87, JE-167.

7.452 The Panel observes that the extraction cap of 11 million metric tonnes of fluorspar ores
imposed by the 2010 Quota on Extraction of High-alum ina Bauxite Ores and Fluorspar Ores
718
exceeds the total 2009 extraction of 9.4 million metric tonnes of fluorspar ores. 719 This mining cap is
also well above the pre-2009 fluorspar extraction levels, which never exceeded 5.89 million metric
tonnes.720 The Panel also takes note that China's 2010 extraction cap on high alumina clay of 4.5
million metric tonnes is above the 2009 actual extraction of high alumina clay, amounting to 2.4
million metric tonnes.
721
7.453 Similarly, the 2010 Quota of High-alumina refract ory-Grade Bauxite and Fluorspar 722 set a
production cap of 4.71 million metric tonnes for fluor spar blocks (metallurgical grade fluorspar) and
2.44 million metric tonnes for fluorspar powder (aci d grade fluorspar). Data on fluorspar production
for the years 2008 and 2009 suggest that these caps ar e not likely to limit production. In fact, in 2008
and 2009 China produced 1.3 and 1.2 million metr ic tonnes of metallurgical grade fluorspar,
respectively, and both figures are well below the 2010 cap of 4.71 million metric tonnes. Similarly, in
2008 and 2009 China produced 1.9 and 1.8 million metric tonnes of acid grade fluorspar, respectively,
both figures again well below the 2.44 million metric tonnes cap. 723 The 2010 Circular cited above
also sets a production cap for calcined high alumina clay amounting to 4 million metric tonnes. China
did not provide data on actual 2009 production of this material. However, the United States calculated
an approximate 2009 production amount, based on certa in data and assumptions, and concludes that
the production caps are not effective in limiting production of calcined alumina clay. 724 China did not
contest the United States' figures.
7.454 When challenged on the effectiveness of those 2010 restrictions, China argues that it was not
China's intent to reduce the level of perm itted extraction with the 2010 target numbers. 725 Rather, the
"Ministry of Land and Resources decided to grant a transition period" and "[i]t is foreseen that the
level of permitted extraction w ill be reduced year by year". 726 Thus according to China, the
"restrictions on domestic production" are not intended to effect restrictions currently, but only in the
future.727 For the complainants, China's assertion that th e affect of its domestic restrictions will not
occur now but only in the future is a clear indication that these are not measures taken "in
conjunction" with the export quotas currently imposed by China on refractory-grade bauxite.

718 Exhibits CHN-97, JE-168.
719 Exhibits CHN-86, JE-166.
720 China's response to Panel question No. 20 followi ng the second substantive meeting, para. 71;
United States' comments on China's response to Panel question No. 20 following the second substantive
meeting, para. 68.
721 Exhibits CHN-86, JE-166.
722 Exhibits CHN-98, JE-169.
723 Exhibits CHN-9 (figure 4) for 2008 data, and JE-164 (Table 7, p. 34) for 2009 data. See also the
United States' response to Panel question No. 20 following the second substantive meeting, para 31.
724 In particular, assuming that in 2009 2.4 million metric tonnes of alumina clay ores were actually
mined in China (Exhibits CHN-86, JE-166) and that it takes between 2 and 1.5 metric tonnes of alumina clay
ores to produce 1 metric tonne of calcined alumina clay (Exhibits JE-177 p.4 and CHN-10, pp.5-6), the United
States estimates that China's 2009 actual production of calcined high alumina clay ranged from 1.2 to 1.6
million metric tonnes, which is well below the 2010 pro duction cap of 4 million metric tonnes (United States'
response to Panel question No. 20 following the second substantive meeting, paras. 32-34).
725 As China states at paras. 245-246 of its opening or al statement at the second substantive meeting:
"Mexico and the United States also allege that the extr action caps for fluorspar and refractory bauxite are 'not
set with the intention of binding or limiting the amount of' production of fluorspar and refractory bauxite, based
on a comparison of the level of the 2010 cap with the qua ntity extracted in 2009. This mischaracterizes China's
intent."
726 China's opening oral statement at the second substantive meeting, para. 246 (emphasis added).
727 China's opening oral statement at the second substantive meeting, para. 247.

7.455 As noted earlier, the Panel is of the view that Article XX(g) requires that domestic restrictions
be operated concurrently with the trade measures at issue (export duty or quota). It is also necessary
to ensure that export restrictions be primarily aimed at rendering effective these [domestic]
restrictions. To benefit from the justification permitted under paragraph (g), a Member cannot seek to
rely on a future or potential domestic restricti on; nor will measures enacted concurrently but which
only have effect or are foreseen to have effect only in the future respect the Article XX(g) criteria, for
they must not only exist concurrently; they must operate concurrently.
7.456 The Panel notes that China has maintained export restrictions on refractory-grade bauxite and
fluorspar for many years. 728 In 2009 the complainants initiated WTO dispute settlement proceedings
against a number of China's export restrictions. In the context of these proceedings, China sought to
defend its export restrictions citing conservation objectives. During this period, China increased its
export restrictions and at the same time introd uced caps on production, which provide domestic
producers and consumers with a "transition period" be fore eventual measures are applied to effect
restrictions in the future. So, even if the Panel were to extend its review to include relevant 2010
measures, the domestic restrictions set by those 2010 measures are still set above the actual
production rates and are thus not effective in lim iting production or extraction. The Panel is not
persuaded that these facts support China's claim that its export restrictions are part of a comprehensive
conservation programme and is thereby entitled to justify its export restrictions under Article XX(g).
7.457 The Panel recalls that China introduced "trans itional" caps on domestic production only in its
2010 Measures to Control the Extraction and Production of Refractory-grade Bauxite and
Fluorspar.729 The Preamble of the State Council Circular: "In recent years, some enterprises have
been over-exploiting, producing and processing refract ory-grade bauxite and fluorspar, leading to the
rapid reduction in the reserve of resources and severe environmental pollution". Hence China had
recognized the absence of control over its domest ic production "in the recent years". Yet China
introduced domestic restrictions only in 2010, deciding "to offer […] mining enterprises, refractory
materials industry and the related downstream industries an appropria te transitional period, and to
ensure stable adjustment and transition of the downstream industries during this process". 730 China
also asserts that "the level of permitted extractions will be reduced year by year". 731 The Panel
understands that, as a result of the 2010 measures, China's domestic supply is not actually being
restricted, but will only potentially be restricted in the future. 732 It is difficult for the Panel to conclude
on this basis that China's export policy at issue is primarily aimed at conservation.
7.458 In the Panel's view, China has not demonstrated that its export restrictions on refractory-grade
bauxite and fluorspar are made effective in conjunc tion with restrictions on domestic production or
consumption because the restrictions in place on 21 December 2009 are not intended to be - nor are
they - enforcing a reduction on domestic production or consumption. The introduction in 2010 of caps
on mining and production might in the future permit China's challenged measures to be justified under
Article XX(g). For now, however, China has not sa tisfied its burden of proving that its export
restrictions were made effective in conjunction with restrictions on domestic production or
consumption.

728 Exhibits JE-164 p.7 for fluorspar, and JE-165 p.14 for refractory-grade bauxite.
729 Exhibits CHN-87, JE-167.
730 Exhibits CHN-86, pp.3-4, JE-166. See also China's opening oral statement at the second substantive
meeting, para 246.
731 China's opening oral statement at the second substantive meeting, para. 246.
732 United States' comments on China's response to Panel question No. 20 following the second
substantive meeting, para. 75.

7.459 The Panel will nevertheless continue its examination of the ch allenged measures to determine
whether those domestic restrictions are "even-ha nded" with export restrictions, as required by
Article XX(g).
Are the export restrictions even-handed?
7.460 The complainants argue that even if one, or some, of the domestic measures that China has
put in place could be considered to limit (at least potentially) the amount of minerals produced, China
would still not have demonstrated that it is en titled to justify its measures under Article XX(g)
because the domestic measures are not "even-handed" with export restrictions. This is so, they argue,
because the export quota on refractory-grade bauxite and the export duty on fluorspar only affect
users located outside of China, while the domest ic regulations and taxe s apply to domestic and
foreigners. They argue that the export duties a nd export quotas are thus an added burden on the
foreign users. Specifically, China imposes on forei gn producers a burden that is not even-handed
because it is not imposed on Chinese domestic users of refractory-grade bauxite or fluorspar.733
7.461 China submits that "even-handed" does not mean "identical" and that paragraph (g) should be
interpreted to allow China to pursue its goal of economic development. China also claims that
"[w]ithout China's export restrictions, the burden of China's supply limitations would be borne unduly
by China's domestic users, which would undermine China's development".734
7.462 The Panel recalls the Appellate Body's explanation in US – Gasoline that "[t]he clause
[Article XX(g)] is a requirement of even-handedness in the imposition of restrictions, in the name of
conservation, upon the production or consum ption of exhaustible natural resources". 735 The Appellate
Body did not address what relative treatment of dom estic and foreign interests was required in order
to qualify as "even-handed". But it did say that if there is no restriction on domestic production or
consumption, the export restrictions cannot be said to be even-handed.736
7.463 China submits, in particular, that its "expor t restrictions on refractory-grade bauxite and
fluorspar, in conjunction with its production rest rictions, burden domestic consumption as well as
foreign trade".737 China has not persuaded the Panel that th is is the case. Assuming that a production
cap limits the production of fluorspar to 100 units annually, and there is an export quota of 40 units
for that product, China asserts that the combinati on of these two policies limits the quantity that can
be consumed domestically to 60 units annually. 738 However, in order to understand whether a
production restriction effectively limits domestic cons umption, we need to compare domestic demand
with the available quantity of the product in the domestic economy. The availability of the raw
material in the domestic economy depends on whethe r the export quota is fully used. The amount not
used by the export quota will go to domestic consumption.
7.464 Therefore, domestic consumption is limite d by a production cap only when the domestic
demand is greater than the quantity available to th e domestic economy through the application of the
production and the export caps. The Panel has no inform ation that the China's cap system ensures that
this is always the case. Therefore, the mere existence of a production restriction does not
automatically imply even-handedness between the export restriction and the domestic restriction.

733 See United States' second written submission, para s 146-162 and 258-275; Mexico's second written
submission paras. 150-166 and 263- 280; European Unions' second writte n submission para s. 290-298 and
326-341.
734 China's first written submission, para. 188.
735 Appellate Body Report, US – Gasoline, p. 21, DSR 1996:I, 3, at p. 19.
736 Appellate Body Report, US – Gasoline, p. 21, DSR 1996:I, 3, at p. 19.
737 China's second written submission, para. 200.
738 China's second written submission, para. 202.

7.465 Since a domestic restriction on production aff ects both domestic and foreign users of the
resources, the Panel is of the view that China has not demonstrated that its regime for refractory-grade
bauxite and fluorspar will not lead to an uneve n-handed imposition on foreigners. Although there is
no textual basis requiring identical treatment under Article XX(g), it is difficult to see how - if no
similar or parallel restrictions are imposed at all on domestic users or on domestic consumption and
all limitations are placed upon the foreign consumers alone - the export restrictions can be considered
even-handed.
739 Nor would they appear to be primarily aimed at or even substantially designed for
implementing conservationist goals; on the cont rary "the measure would simply be naked
discrimination locally [interests]". 740 In order to show even-handedness, China would need to show
that the impact of the export duty or export quot a on foreign users is somehow balanced with some
measure imposing restrictions on domestic users and consumers. In our view China has not met this
burden.
7.466 In sum, the Panel is of the view that China has not demonstrated that its 2009 export
restrictions were made effective or have since been made effective in conjunction with domestic
restrictions designed to limit produc tion or consumption in the present. Furthermore, the Panel is of
the view that China has not demonstrated that its domestic measures aimed at restricting production or
consumption impose at present an even-handed bur den on foreign and domestic consumers. Finally,
although our conclusions are with respect to the 2009 measures only, the Pa nel noted that the 2010
measures establish a framework for the imposition of restrictions on domestic consumption or
production. However, they do not effectively c onstrain the current leve ls of consumption or
production. While it appears that substantive progre ss is being made with regard to the introduction
of restrictions on domestic production or consumption, it is not yet sufficient to meet the requirements
of Article XX(g).
(c) Summary
7.467 The Panel finds that China's export quota on re fractory-grade bauxite is inconsistent with
Article XI of the GATT 1994 and China has not de monstrated that its export quota on refractory-
grade bauxite is justified pursuant to Article XX(g) of the GATT 1994.
7.468 The Panel finds that China's export duties on fluor spar are inconsistent with Article 11.3 of
China's Accession Protocol and cannot be justifie d by Article XX of the GATT 1994; the Panel finds
arguendo that even assuming that Article XX of the GATT 1994 was available to justify export duties
in violation of China's Accession Protocol, Chin a has not demonstrated that its export duties on
fluorspar are justified pursuant to Article XX(g) of the GATT 1994.
7.469 As we have now reviewed China's export r estrictions on refractory-grade bauxite and
fluorspar and concluded that they cannot be jus tified under Article XX(g) of the GATT 1994, we do
not need to examine whether their application is c onsistent with the provisions of the chapeau of
Article XX of the GATT 1994. This is because when a measure does not meet the requirements of any
sub-paragraph of Article XX, it cannot be justified pursuant to Article XX of the GATT 1994.

739 Appellate Body Report, US – Gasoline, p. 21, DSR 1996:I, 3, at p. 19.
740 Appellate Body Report, US – Gasoline, p. 21, DSR 1996:I, 3, at p. 19.

3. Whether the export duties and export quota s applied to "scrap" products (magnesium
scrap, manganese scrap and zinc scrap) and on EPRs (coke, magnesium metal,
manganese metal and silicon carbide) are ju stified pursuant to Article XX(b) of the
GATT 1994
7.470 China invokes Article XX(b) of the GATT 1994 to justify certain export duties and export
quotas it maintains on certain raw materials. China a sserts that these export restrictions are necessary
to protect the health of its domestic population, since they reduce the pollution emitted when the raw
materials are extracted or produced.
741 China divides the products for which it asserts an
Article XX(b) defence into two categories and argues a separate defence under Article XX(b) for each
category. In its first written submission, China be gins by defending its export duties on so-called
"scrap" products (magnesium scrap, manganese scrap , and zinc scrap) – i.e., inputs for secondary
production/recycled materials – pursuant to Article XX(b). It then proceeds to justify its export duties
on so-called "metals" or "energy-intensive, highly polluting, resource-based products" ("EPR
products"), which for the purposes of this dispute are coke, magnesium metal, manganese metal -i.e.,
primary production. China deals finally with its export quotas on other EPRs (coke and silicon
carbide) and also defend them under Article XX(b) of the GATT 1994.
7.471 In essence, China argues that the production of magnesium metal, manganese metal, and zinc
from scrap (i.e., secondary production) is less envi ronmentally harmful than the production of the
EPRs (i.e., primary production). According to China, the export duties on scrap products are
necessary to ensure a steady supply of scrap products to the recycling industry, thereby facilitating a
shift from primary production (polluting) to secondary production (much less polluting). 742 As for the
export duties on EPR products, China contends that they will lead to a reduction in the production of
these raw materials, thus reducing the pollution they cause. Finally, China defends its export quotas
on silicon carbide and coke (also EPRs) under Article XX(b). Overall, China argues that all the export
restrictions are part of a comprehensive environmental framework of measures put in place to reduce
pollution to protect the health of the Chinese populat ion. According to China, Article XX(b) allows
for the types of export duties and export quotas that it imposes in respect of these products.743
7.472 In its second written submission, China reform ats the way it presents its defences and
addresses its restrictions on EPRs first before deali ng with its restrictions on scrap products. In its
argumentation, China groups together its responses to claims against its export duties and export
quotas insofar as they relate to EPR products: these include export duties on coke, manganese metal,
and magnesium metals and export quotas on coke and silicon carbide. Thereafter, China addresses its
export restrictions on scrap products: these include export duties on forms of zinc, manganese and
magnesium, which China calls the "non-ferrous metal scrap products" (hereafter called "scrap
products"). The Panel will consider China's defences under Article XX(b) in that order, recalling that
it is only analysing arguendo China's defence with respect to its export duties on EPRs and on scrap
products.
7.473 The Panel will discuss first the legal interpretation of Article XX(b). Second, we will consider
the export restrictions mentioned above and determine whether they are "necessary" to protect the
health of the Chinese people. In that context, the Panel will assess the qualitative and quantitative
argumentation and evidence put forward by China to justify its export restrictions on EPR and on
scrap products, taking into account the complainants' claims and arguments.

741 China's first written submissi on, paras. 200, 285 and Chin a's second written submission,
paras. 233.253.
742 China's first written submission, paras. 316-17.
743 China's first written submission, paras. 197-201.

(a) Interpretation of Article XX(b) of the GATT 1994
7.474 According to China, Article XX(b) enshrines th e inherent right of WTO Members to regulate
for the purpose of protecting human, animal or plan t life or health. In particular, Article XX(b)
requires that the respondent's measure be "necessary" to achieve the stated objective. China posits that
assessing the "necessity" of a measure requires a panel to engage in a process of weighing and
balancing a series of factors concerning, in particular: (i) the (relative) importance of the interests or
values at stake; (ii) the extent of the contribution of the measure to the achievement of its objective;
and, (iii) the trade restrictiveness of the measure.
744
7.475 For China, a measure can contribute to the stated objective in two different ways. The
measure can: (i) bring about a material contribution to the achievement of its objective; and, (ii) be apt
to produce a material contribution to the objective pursued, even if the contribution is not
"immediately observable". China cit es the Appellate Body Report in Brazil – Retreaded Tyres
745
where the Appellate Body stated that a panel may consider that certain complex public health or
environmental problems may be tackled only with a comprehensive policy comprising a multiplicity
of interacting measures. With respect to such complex problems, a "necessary" measure could
contribute, in the short or long term, to one of th e objectives protected under Article XX(b) as part of
a policy framework comprising different measures, resulting in possible synergies between those
measures.746
7.476 According to the complainants, to establis h a defence under Article XX(b), China must
demonstrate that the export duties at issue are "n ecessary to protect human, animal or plant life or
health." To show that a measure is for the "protection of" health, the responding party must show that
(i) there is a risk to human, animal, or plant lif e or health; and (ii) the underlying objective of the
measure is to reduce the risk. 747 Furthermore, the complainants ar gue that in order to satisfy the
meaning of "necessary" by showing that a measure is "apt to produce a material contribution to the
achievement of its objective," the responding Memb er must provide evidence of the relationship
between the policy tool and the objective. 748
7.477 The complainants add that it is not sufficient to simply assert that the measure at issue will
bring about a particular result in the future. In stead, there must be evid ence that the measure can
bring about a material contribution to the Member's stated objective. 749 A Panel should also assess
whether or not the contribution that a measure makes, or that a measure is apt to make, is a "material"
one. The Appellate Body has defined a material cont ribution as one which is "not merely marginal or
insignificant". This means that a measure needs to contribute in a significant (or non-marginal) way
to the achievement of its objective, which in the case of Article XX(b) is the "protection of human,
animal, or plant life or health". Finally, the compla inants suggest that in line with the Appellate Body
Report in Brazil – Retreaded Tyres, a panel should take into acc ount WTO-consistent, reasonably

744 China's first written submission, paras. 203 and 209.
745 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
746 China's first written submission, paras. 215 and 220.
747 European Union's second written submission, pa ra. 344; United States second written submission,
748 European Union's second written submission, paras. 353, and 354; United States' second written
749 European Union's second written submission para. 355; United States' second written submission,

available alternative measures in deciding whethe r Article XX(b) is available to justify a WTO-
inconsistent measure.
750
(i) Whether the measure falls within the range of policies designed to protect human, animal or
plant life or health
7.478 For a measure to be justified under Article XX( b), the measure must be "necessary to protect
human, animal or plant life or health" and also must comply with the chapeau of Article XX.
7.479 Thus a panel must, first, determine whether th e challenged measure falls within the range of
policies designed to protect human, animal or plant life or health. 751 Panels and the Appellate Body
have examined both the design and structure of a challenged measure to decide whether its objective
is the protection of life and health, generally s howing a degree of deference to Members' policies
designed to "protect human, animal or plant life or health". A broad range of policies have been
recognized as protecting human, animal, and plant lif e or health, such as the reduction of air pollution
resulting from the consumption of gasoline 752; and the reduction of the risks arising from the
accumulation of waste tyres.753 Panels and the Appellate Body are, however, not entitled to question a
Members' chosen level of protection. 754 WTO Members enjoy "the right to determine the level of
protection of health that they consider appropriate in a given situation".755
7.480 A panel must thereafter ensure that a meas ure is "necessary" to fulfil the invoked policy
objective. Article XX(b) requires that a Member's measure is "necessary" to achieve the objective it
pursues. The degree of necessity envisioned was examined by the Appellate Body in Korea – Various
Measures on Beef , where it concluded that a "necessary" measure is, in a continuum, located
significantly closer to the pole of "indispensable" than to the opposite pole of simply "making a
contribution to".
756 The Appellate Body further elaborated that an assessment of necessity involves "a
process of weighing and balancing a series of fact ors which prominently include the contribution
made by the compliance measure to the enforcement of the law or regulation at issue, the importance
of the common interests or values protected by that law or regulation, and the accompanying impact
of the law or regulation on imports or exports."757
7.481 More recently in Brazil – Retreaded Tyres , the Appellate Body reitera ted its view that "[i]n
order to determine whether a measure is 'necessar y' within the meaning of Article XX(b) of the
GATT 1994, a panel must consider the relevant factors, particularly the importance of the interests or

750 European Union's second written submission, para. 356 United States' second written submission,
751 For instance the Panel in EC – Tariff Preferences also clearly set out the requirements of Article XX
(b) of the GATT. "Following this jurisprudence, the Pa nel considers that, in order to determine whether the
Drug Arrangements are justified und er Article XX(b), the Panel needs to examine: (i) whether the policy
reflected in the measure falls within the range of policies designed to achieve the objective of or, put differently,
whether the policy objective is for the purpose of, 'protect[ing] human … life or health'. In other words, whether
the measure is one designed to achieve that health policy objective;....". Panel Report, EC – Tariff Preferences,
para. 7.199.
753 Panel Report, Brazil – Retreaded Tyres, paras. 7.108 and 7.115.
754 Appellate Body Report, EC – Asbestos , para. 168; Appellate Body Report, Brazil – Retreaded
Tyres, para. 140.
755 Appellate Body Report, Brazil – Retreaded Tyres , paras. 140 and 210; see also Appellate Body
Report, EC – Asbestos, para. 168; Appellate Body Report, US – Gasoline, p. 30, DSR 1996:I, 3, at p. 28.
756 Appellate Body Report, Korea – Various Measures on Beef, para. 161.
757 Appellate Body Report, Korea – Various Measures on Beef, para. 164; see also, e.g., Panel Report,
EC – Tariff Preferences , paras. 7.209 and 7.213; Appellate Body Report, Brazil – Retreaded Tyre s, para. 141;
Appellate Body Report, China – Publications and Audiovisual Products, para. 239.

values at stake, the extent of the contribution to the achievement of the measure's objective, and its
trade restrictiveness."
758 It concluded that a measure contributes to the achievement of the objective
"when there is a genuine relationship of ends and means between the objective pursued and the
measure at issue"759 and that a measure is necessary if it is "apt to make a material contribution to the
achievement of its objective".760
(ii) The importance of the interests or values at issue
7.482 The Appellate Body recognized that "[t]he more vital or important [the] common interests or
values" behind the policies pursued, "the easier it would be to accept as 'necessary' a measure
designed as an enforcement instrument". 761 Applied to Article XX(b), the Appellate Body has stated
that "few interests are more 'vital' and 'important' than protecting human beings from health risks, and
that protecting the environment is no less important".762
7.483 The Panel recalls that China invokes Article XX( b) in order to justify measures it says are
necessary to protect the environment and the hea lth of the Chinese population. The complainants
contest China's contention as to the objective of its ex port restrictions. For the complainants, the real
objectives of the measures, many of which have been in place for years, is economic: to provide
inexpensive raw materials for its downstream industry.
(iii) The contribution of the measure to the objective pursued
7.484 The Appellate Body Report in Brazil – Retreaded Tyres distinguished between two types of
contributions: the measure that "brings about" a ma terial contribution to the achievement of its
objective; and the measure that "is apt to produce" a material contribution to the objective pursued.
763
In China – Audiovisual Products, the Appellate Body emphasized again that "the greater the
contribution a measure makes to the objective pursued , the more likely it is to be characterized as
'necessary'".764
7.485 It is also accepted that a measure could be c onsidered "necessary" even if the contribution of
the measure "is not immediately observable". 765 As noted above the Appellate Body observed that
"certain complex public health or environmental problems may be tackled only with a comprehensive
policy comprising a multiplicity of interacting measures". 766 As noted by the Appellate Body, with
respect to such complex problems, the Appellate Body does not preclude the possibility that a
"necessary" measure could contribute to one of the objectives protected under Article XX(b) as part of
a policy framework comprising different measures, resulting in possible synergies between those
measures.767 The Appellate Body in Brazil – Retreaded Tyres confirmed that "in the short-term, it
may prove difficult to isolate the contribution to public health or environmental objectives of one

758 Appellate Body Report, Brazil – Retreaded Tyres, para 178.
759 Appellate Body Report, Brazil – Retreaded Tyres, para. 145.
760 Appellate Body Report, Brazil – Retreated Tyres, para 150, 151.
761 Appellate Body Report, Korea – Various Measures on Beef , para. 162; Appellate Body Report, EC
– Asbestos, para. 172.
762 Appellate Body Report, Brazil – Retreaded Tyres, paras. 144 and 179.
763 Appellate Body Report, Brazil – Retreated Tyres, para. 151.
764 Appellate Body Report, China – Publications and Audiovisual Products, para. 251; Appellate Body
Report, Korea – Various Measures on Beef, para. 163.
765 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
766 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
767 See Appellate Body Report, Brazil – Retreaded Tyres, para. 172.

specific measure from those attributable to the other measures that are part of the same comprehensive
policy".
768
7.486 Finally, it is important also to remember that the contribution of the measure can be
demonstrated quantitatively and/or qualitatively:
"Such a demonstration can of c ourse be made by resorting to evidence or data,
pertaining to the past or the present , that establish that the import ban at issue makes
a material contribution to the protection of public h ealth or environmental objectives
pursued. This is not, however, the only type of demonstration that could establish
such a contribution… …[A] demonstration could consist of quantitative projections
in the future, or qualitative reasoning based on a set of hypotheses that are tested and
supported by sufficient evidence."769 (emphasis added)
(iv) The trade restrictiveness of the measure
7.487 In examining the trade restrictiveness of a measure, the Appellate Body in Korea - Various
Measures on Beef considered the measure's effect "on international commerce". 770 Essentially, "[t]he
less restrictive the effects of the measure, the more likely it is to be characterized as 'necessary'".771 In
the event of a very restrictive measure, the respondent Member must demonstrate that:
"[t]he measure is carefully designed so th at the other elements to be taken into
account in weighing and balancing the fact ors relevant to an assessment of the
"necessity" of the measure will "outweigh" such restrictive effect."772
7.488 This is consistent with the understanding that an inquiry into the necessity of a measure is a
holistic process.
(v) Availability of WTO-consistent or less trade restrictive alternative measures
7.489 Finally, if the analysis described above yields a preliminary conclusion that the measure is
necessary, this result must be confirmed by comparing the challenged measure with possible
alternatives suggested by the complainants. 773 T h e US – Gambling and Brazil – Retreaded Tyres
reports established how the burden of proof would be allocated in establishing whether a reasonably
available alternative exists. As the Appellate Body indicated in US – Gambling 774, while the
responding Member must show that a measure is n ecessary, it does not have to "show, in the first
instance, that there are no reasonably available alternatives to achieve its objectives."
7.490 Alternative measures must be WTO-consistent while providing an equivalent contribution to
the achievement of the objective pursued through the challenged measure. 775 Nevertheless, the mere
existence of an alternative measure is not suffici ent to prove that the disputed measure is not
"necessary". Citing US – Gasoline, the Appellate Body in Brazil – Retreaded Tyres confirmed that a
proposed alternative must preserve "for the responding Member its right to achieve its desired level of

768 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
769 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.
770 Appellate Body Report, Korea – Various Measures on Beef, para. 163, footnote 105.
771 Appellate Body Report, China – Publications and Audiovisual Products, para. 310.
772 Appellate Body Report, China – Publications and Audiovisual Products, para. 310.
773 Appellate Body Reports, US – Gambling, para. 311.
774 Appellate Body Reports, US – Gambling, para. 309 and Brazil – Retreaded Tyres, para. 156.
775 Appellate Body Report, Brazil – Retreaded Tyres , para. 156; Appellate Body Report, US –
Gambling, para. 307; Appellate Body Report, Korea – Various Measures on Beef, para. 166.

protection with respect to the objective pursued".
776 Moreover, such alternative cannot be "merely
theoretical in nature, for instance, where the respondi ng Member is not capable of taking it, or where
the measure imposes an undue burden on that Memb er, such as prohibitive costs or substantial
technical difficulties".777 If the complaining Member has put fo rward a possible alternative measure,
the responding Member may seek to show that the proposed measure does not allow it to achieve the
level of protection it has chosen and, therefore, is not a genuine alternative that is, in fact, "reasonably
available".778
7.491 Also relevant in a panel's assessment of available alternatives is the capacity of the challenged
Member "to implement remedial measures that w ould be particularly costly, or would require
advanced technologies".779
7.492 In sum, we understand that a panel cannot rej ect an environmental protection measure, or a
public health measure, by pointing to a WTO-consistent or less trade-restrictive alternative, unless
that alternative is both practica lly and financially feasible for the Member seeking to justify a WTO-
inconsistent measure under Article XX(b) and provides an equivalent contribution to the achievement
of the objective pursued.780
7.493 Having reviewed the panel and Appellate Body case law on the interpretation of
Article XX(b), we now proceed to determine whet her China's export restrictions on EPRs can be
justified pursuant to GATT Article XX(b).
(b) Export restrictions on EPRs781
7.494 As noted earlier, China divides the products for which it asserts an Article XX(b) defence into
two categories and asserts separate but related defences for each category. 782 China contends that its
export duties and quotas on magnesium metal and ma nganese metal, coke and silicon carbide are
justified under Article XX(b) on the grounds that production of these EPRs (i.e., primary production)
is environmentally harmful. The export restrictions on these products, according to China, will lead to
a reduction of production of these metals (because of the reduced demand for them outside China) and
therefore a reduction of the pollution associated with their production. 783 China also argues that its
export duties on magnesium scrap, manganese scrap, and zinc scrap (used as inputs in secondary
production/recycling) are justified under Article XX(b) and that secondary production should be
favoured over EPRs because it is more environmen tally friendly than the highly polluting production
of EPRs. The export duties on scrap are necessary to ensure a steady supply of scrap and thereby
facilitate a shift from primary production to sec ondary production.784 According to China, its system
will reduce the production of EPRs and stimulate the production of the more environmentally friendly
products.

776 Appellate Body Report, US – Gambling, para. 308.
777 Appellate Body Report, US – Gambling, para. 308.
778 Appellate Body Reports, Brazil – Retreaded Tyres, para. 156 and US – Gambling, para. 311.
779 Appellate Body Reports, Brazil – Retreaded Tyres, para. 171 citing, at the end of the quotation, US
– Gambling, para. 308.
780 Appellate Body Reports, Brazil – Retreaded Tyres , para. 156. The Pane l notes that even the
Appellate Body has referred to less-trade restrictive and WTO-consistent alternatives interchangeably in its
discussions of the appropriate type of alternatives to be considered in th e context of an Article XX necessity
test.
781 Export duties on manganese metal, magnesium metal and coke and export quotas on coke and
silicon carbide.
782 China's first written submission, para. 197.
783 China's first written submission, paras. 257-59.
784 China's first written submission, paras. 316-17.

7.495 In undertaking our Article XX(b) analysis, we must, examine whether the policy reflected in
the measures at issue falls within the range of po licies designed to achieve the objective of protecting
human life or health, or, put differently, whet her the policy objective is for the purpose of
"protect[ing] human … life or health."
7.496 However, before the Panel examines the measure s imposing the export restrictions at issue,
we wish to make two points. First, we note that China maintains several export restrictions for which
it chose not to invoke any justification.
785 When the Panel asked China to explain why it was invoking
the Article XX justification for some export restrictions but not for other similar restrictions on similar
products, China responded it "offered justifications for its export quotas and export duties where it
believes that its arguments and evidence demonstr ate that the measures satisfy the terms of the
particular provisions". It added that "China is not required to justify each measure alleged to be WTO-
inconsistent".786 China did not explain the relationship betw een the invocation of its broad societal
environmental and health concerns and other export restrictions for wh ich it is not attempting to offer
any (environmental-health) justification.
7.497 The second point is that, although we have divided our findings along the argumentation
followed by China in its second written submission- that is, we deal with restrictions, first, on EPRs,
and second, on scrap products - we note that several of those restrictions (export duties or export
quotas on different products) are found together in a single measure. We propose to review those
"compound" measures only once and thereby avoid repe titive findings. Thus, in the following section
we review all measures imposing export restrictions on EPRs and on scrap products. We will follow a
similar approach for our analysis of measures propo sed as alternatives to China's export restrictions.
Indeed, given that China asserts that its measures on scrap and EPRs are part of a comprehensive
environmental framework whose goal is to replace EPR s by an increased use of scrap alternatives,
examining the measures together seems highly appropriate.
(i) Whether the objectives of the measures are the protection of health and the environment
7.498 China claims that its export restrictions on EPRs are justified as they will reduce pollution
caused by the production of the restricted exports and lead to better health for the Chinese population.
China points to a number of laws and regulations as well as policy statements that it says provide
evidence that those export restrictions are part of a comprehensive environmental protection
framework whose objectives are pollution reduction for the protection of health of the Chinese
population, energy conservation, and transfor mation into a "circular economy" or "recycle
economy".
787
7.499 The complainants challenge China's declared goal; they submit that China's export restrictions
are not designed to address the health risks associ ated with environmental pollution. Rather, they
argue, China's invocation of environmenta l and health concerns is merely a post hoc rationalization
developed solely for purposes of this dispute. For the complainants, China's export restrictions are
designed to promote increased production of high va lue-added downstream products that use the raw
materials at issue in this disput e as inputs. The export restrictions serve to lower the price for these
inputs in China and thereby facilitate the production of downstream products. For them, this fact is
confirmed by the dramatic growth in China's exports of steel and aluminium.788 They argue that China

785 See para. 7.237 above.
786 China's response to the Panel question No. 12 following the second substantive meeting, para. 35.
787 China's first written submission, paras. 224-227.
788 United States' second written submission para. 36. Mexico's second written submission, para. 39.

cannot present any environmental justification fo r discriminating against industrial users located
outside of China in favour of industrial users within China.
789
7.500 The Panel recalls that when assessing a measur e pursuant to Article XX(b), its first enquiry
should be whether China's export restrictions fall within the range of policies designed to protect
human, animal or plant life or health. This determ ination should be done in light of the design and
nature of the challenged measures. The Panel tu rns now to review the measures imposing the
restrictions at issue, as well as all laws and regulations submitted by China as evidence that the goal of
those export restrictions is, and has always been, the reduction of pollution and the protection of the
health of its population.
7.501 The Panel observes, first, that the measures impos ing the export restrictions at issue in this
dispute790 do not make any mention of environmental or health concerns.
7.502 In its first written submission, China claims th at "[t]he export duties on the EPR products are
an integral part of China's comprehensive envir onmental policy aimed at reducing the health risks
related to the production of these products". 791 It then states that they "are taken in implementation of
the Eleventh Five-Year Plan for Environmental Protection (2006-2010). 792 The Panel reviewed this
Eleventh Five-Year Plan for Environmental Prot ection (2006-2010) and found no reference to the
measures challenged in this dispute. There is no mention that export duties or export quotas on raw
materials would or could have the objective of reducing pollution caused by their production with a
view to improving the health of China's population. Nor does the Plan refer to export restrictions
more generally. The only passage that mentions the objective of environmental protection and
resources is the following:
"Environmental protection requirements will be taken into account when introducing
or reforming resource tax, consumption tax and import & export tax. China will
explore the establishment of environmental taxation system and employ tax lever to
facilitate the development of a resource saving and environment-friendly society". 793
7.503 In our view, there appears to be no connec tion between the challenged measures and the
Eleventh Five-Year Plan for Envi ronmental Protection (2006-2010) , and it is not clear from the
evidence before us that they were taken "in implementation of" that Plan.
7.504 In its second written submission, China adds refe rences to what it considers contemporaneous
evidence (laws adopted between 2005 and 2010) s howing that China has always, and explicitly,
linked its export restrictions to the objective of controlling pollution and of reducing the risk to
human, animal, and plant life and health occurring in connection with the production of the EPR
products at issue. It maintains that its expor t measures play a key role in its comprehensive
environmental framework to reduce pollution.794 China refers the Panel to a Circular on the Measures
to Control the Export of EPR products explaining th e environmental problems said to be created and
exacerbated by the high level of exports of EPR products.795 The Circular states:

789 Complainants' joint opening oral statement at the first substantive meeting, paras. 11-13, 97-98.
790 See para. 2.4 above.
791 China's first written submission, para. 308.
792 Eleventh Five-Year Plan fo r Environmental Protection (2006-2010) (Exhibit CHN-123). China's
first written submission, para. 312.
793 Ibid.
794 China's second written submission, para. 233.
795 China's second written submission, para. 234.

"The massive export of high-energy-consumption, high-pollution and resource based
products overloaded upon the exterior conditi ons as energy, resources, environment,
and transport, and had side effect upon the sound and steady operation of our
national economy ... [The] control of the export of high-energy-consumption, high-
pollution and resource-based products was utterly necessary for the […] reduction of
environmental pollution, freeing the econom ic development from the limitation by
resource and alleviating the tense relations among coal, electricity and oil".
796
7.505 The Panel notes in this context the Circular on the Measures to Control the Export of EPR
products. In its first written submission China indicates that export quotas on coke and silicon carbide
were initially imposed in the context of anti-dum ping measures taken by the United States and the
European Union on these two products. 797 China does not contest this fact but contends that the
continued application of export quotas on th e two products was deemed necessary as the
environmental situation increasingly worsened. 798 In the excerpts quoted above, reference is made to
the environment, but it also refers to energy, tr ansport, the economy and economic development. In
this sense, this evidence can be said to support th e complainants' position that the objective of the
measures is economic development, not environmental and health prot ection. There is no reference to
the need, or a plan, to put in place export quotas or export duties on any of the products concerned in
this dispute. Secondly, the Panel observes that Articles I and II of the Circular on the Measures to
Control the Export of EPR products state that the export of high-energy-consumption, high-pollution
and resource-based products have burdened the environment, but no explicit link is made between the
export measures and the objective of reduc ing pollution resulting from the production of EPR
products. China has not demonstrated through this Circular on the Measures to Control the Export of
EPR products that the export measures placed on EPR or scrap products relate to or otherwise form
part of a plan whose objective is to contribute to the reduction of pollution caused by the production
of these products.
7.506 China further contends that an explicit link betw een the application of export restrictions and
environmental objectives was made in the 2006 and 2007 announcements of the application of export
tariffs to EPR products 799, and reaffirmed in 2008 in the context of announcing the 2009 Further
Adjust of Import and Export Tariffs .800 In these announcements, China clarifies that these export
duties "are targeted at high energy-consump tion commodities, high-pollution commodities and
resource-based commodities" 801, without referring to the effect levying export duties will have in
achieving a reduction in pollution during productio n of EPR products. For us, the link between
applying export restrictions and achieving environm ental objectives is far from explicit. Moreover, it
is unclear how the measures at issue significantly li mit the production of EPR goods, and, therefore,
achieve the environmental objective. It is also unclear how the export measures at issue serve to
conserve commodities.
7.507 China also submits, as support for its contention that the export restrictions form part of a
comprehensive environmental policy, both the Eleventh Five-Year Plan for Environmental Protection
(2006-2010), which states "environmental protection requirements will be taken into account when

796 Exhibit CHN-444: Circular on the Measures to Control the Export of EPR products, Article I and II
(emphasis added) and CHN-366 EU Anti-Dumping Orders.
797 Exhibit CHN-366: EU Anti-dumping Orders.
798 China's second written submission, p.77, footnote 300.
799 China's second written submission, paras 236-238, pp. 77-78. See, Exhibit CHN-452: 2006 Adjust of
Interim Tariff Rates of Certain Import and Export Commodities.
800 Exhibit CHN-100: 2009 Further Adjust of Import and Export Tariffs.
801 China's second written submission, para. 236, pp. 77-78.

introducing or reforming… export tax,"
802 and the Guidelines of the Eleventh Five-Year Plan for
National Economic and Social Development , mandating a "[strict] [execution]… [of] environmental
protection standards and control [of] high-en ergy consumption, high pollution and resource
products".803 This principle is further reaffirmed in the 2007 Plan for Energy Conservation and
Pollutant Discharge Reduction804 and the 2008 and 2009 Work Arrangement for Energy Conservation
and Pollutant Discharge Reduction. 805 The Panel does not dispute that these statements, like other
evidence discussed above reflect China's concern with regard to pollution caused by EPR products.
However, the Panel still needs persuasive evidence of a connection between environmental protection
standards and export restrictions. Nor is there evidence that export restrictions are to be put in place as
part of a comprehensive programme or at least a stated objective to ensure "environmental
protection".
7.508 China submits additional measures to seek to illust rate its claim that the export restrictions
form part of a comprehensive environmenta l framework addressing the overall environmental
objective of reducing pollution resulting from the production of EPR products and the consequent
risks to human, animal, and plant life and health.
806 China identifies the Energy Conservation Law
and the 2007 Plan for Energy Conservation an d Pollutant Discharge Reduction as two documents
which outline the environmental purpose of Chin a's export measures. The Panel notes that the Energy
Conservation Law states that "the State uses tax and other policies to…control the export of highly
energy-consuming and serious-pollution products".807 This does not shed light on any environmental
purpose of the measures in question; rather we learn that exports will be controlled. The reference to
serious pollution is descriptive of the products affected by the restrictions, but there is no explanation
of how such measures operate toge ther with export restriction policies on raw materials to reduce
pollution caused by their production.
7.509 China also submits a number of other measures, including the Law on the Prevention and
Control of Water Pollution 808, which the Panel does not find directly related to its assessment of the
contribution of the specific export measures at issue to the objective of reducing pollution and
protecting the environment for the health of the Chinese population.
809

802 Exhibit CHN-123: Eleventh Five-Year Plan for Envi ronmental Protection (2006-2010) , Section
V(IV), Article 2, paras. 1-2, pp. 19-20.
803 Exhibit CHN-144: Guidelines of the Eleventh Five-Year Plan for National Economic and Social
Development, Part 9, Chapter 35, Section I, p.41.
804 Exhibit CHN-145: 2007 Plan for Energy Conservation and Pollutant Discharge Reduction.
805 Exhibit: CHN-287: 2008 Arrangement for Energy Conservation and Pollutant Discharge Reduction
and Exhibit CHN-288: 2009 Arrangement for Energy Conservation and Pollutant Discharge Reduction.
806 China's second written submission, para. 242.
807 Exhibit CHN-272: Energy Conservation Law, Article 36.
808 Exhibit CHN-269.
809 The Panel also notes Ch ina's argument that the Circular of the State Council on Approving and
Forwarding Implementation Plans and Measures for Statistic, Monitoring and Examination on Energy
Conservation and Pollutant Discharge Reduction "[includes] measures to improve enforcement of, and
compliance with, environmental regulations…" (China's second written submission, para 245, p.80). However,
in the Panel's opinion this Circular does not explain the co ntribution of the export restrictions to the objective of
protecting the environment. Energy-intensive industries can be monitored for the purpose of applying various
other measures not limited to export restrictions. The Panel applies the same reasoning to the Circular of the
Ministry of Environmental Protec tion on Further Strengthening the Checks on Clean Production of Key
Enterprises which subjects polluting industries to compulsory clean production examinations by the
government; and to the Law of the PRC on Environm ental Impact Assessments, the Circular of the Ministry of
Environmental Protection on Further Strengthening the Checks on Clean Production of Key Enterprises and the
Law of the PRC on Promoting Clean Production . These various laws can be applied independent of applying
export restrictions.

7.510 The Panel also takes note of the revised Coking Industry Entrance Rules
810, the Law on the
Promotion of Recycle Economy 811, the Policies and Actions for Addressing Climate Change 812, the
2008 Arrangement for Energy Conservati on and Pollutant Discharge Reduction 813, the Adjustment
and Revitalization Plan for Non- Ferrous Industry814, the Guidance for Enhancing the Management of
Raw Materials Industries 815, the Law on Renewable Energies 816, and the 2009 Arrangement for
Energy Conservation and Pollutant Discharge Reduction 817, all of which contain language stressing
the importance of controlling the export of "highl y energy-consuming, highly polluting and resource-
intensive" products without indicating whether and how controlling the exports will contribute to a
decrease in pollution as part of a comprehensive e nvironmental framework. China further submits the
Announcement of Publishing the Catalogue of High- Energy Consumption Electromechanical
Equipment818 and the Circular on Strengthening the Elimination of Outdated Capacity819 to encourage
the reduction of pollution in energy-intensive industries. 820 The first one, for example, provides that
China will speed up elimination of outdated production capacity and outdated high-energy-
consumption equipment.
7.511 In the Panel's view, all of these measures are evidence of China's considerable efforts to
regulate in the interest of protecting the environment. The breadth of China's measures touching on
environmental (and other) matters is impressive. However, commendable as China's efforts might be,
we do not discern in this array of measures a comprehensive framework aimed at addressing
environmental protection and health. More importa ntly, we do not find evidence that the export
measures at issue in this dispute form part of an y such framework. This is not to say that Members
can only succeed in justifying their measures u nder Article XX(b) by producing one or more
instruments stating explicitly that a challenged measure has been put in place because it is necessary
to protect human, animal or plant life or health, or that such instrument details the manner in which its
objective will be achieved. However, in our view, a Member must do more than simply produce a list
of measures referring, inter alia, to environmental protection and pollu ting products. It must be able
to show how these instruments fulfil the objective it claims to address.
7.512 Thus the Panel concludes that neither the m easures implementing the export restrictions, nor
the contemporaneous laws and regul ations, convey in their texts that the export restrictions are
contributing to, or form part of, a comprehens ive programme for the fulfilment of its stated
environmental objective. The documents submitted by Ch ina, either on their own or taken together do
not sufficiently indicate that the export restri ctions seek to reduce pollution resulting from the
production of EPR products.
7.513 As we have mentioned, the Panel finds that numerous measures brought forth show the extent
of China's concern for the need to promote energy conservation. The multiple measures submitted by

810 Exhibit CHN-192.
811 Exhibit CHN-101.
812 Exhibit CHN-420.
813 Exhibit CHN-287.
814 Exhibits JE-13, CHN-99.
815 Exhibit JE-10.
816 Exhibit CHN-273.
817 Exhibit CHN-288.
818 Exhibit CHN-478.
819 Exhibit CHN-479.
820 In this regard, the Panel also takes note of the Law on the Prevention and Control of Environmental
Pollution by Solid Wastes (Exhibit CHN-270), the Regulations on the Administration of the Charging and Use
of Pollutant Discharge Fee (Exhibit CHN-279), the Measures for the Administration of the Rates for Pollutant
Discharge Fees (Exhibit CHN-278), the Environmental Protection Law of the PRC, the Law of the PRC on the
Prevention and Control of Atmospheric Pollution (CHN-268) and the Mineral Resources Law (CHN-78).

China reaffirm China's insistence on using export restri ctions to limit the export of what it calls in this
dispute the "EPR products". However, this collec tion of documents only seems to constitute a policy-
goal declaration, but does not set out how such environmental goals might be implemented. And
finally, it makes no mention of specific domestic measures on production or conservation, and how
these might figure in attaining the policy objectives.
7.514 Some of the evidence submitted by the compla inants seems to indicate that, contrary to
China's assertions, the export duties at issue bear a direct relationship to the economic goal of moving
the products in question up the value chain.
821 For instance, in response to a Panel question, which
asks why China prefers export restraints over produ ction restrictions for purposes of environmental
protection, China states:
"[T]he imposition of export restrictions w ill allow China to develop its economy in
the future . . . The reason for this is that export restraints encourage the domestic
consumption of these basic materials in th e domestic economy. Consumption of the
basic materials at issue by downstream indus tries (such as the steel, aluminium, and
chemical industries, and those industries further processing steel, aluminium and
chemicals into), and the consequent additional production and export of higher value-
added products, will help the entire Chinese economy grow faster and, in the longer
run, move towards a more sophisticated production bundle, away from heavy reliance
on natural resource, labor-intensive, highly polluting manufacturing. This move
towards higher-tech, low-polluting, high valu e-added industries, in turn, will increase
growth opportunities for the Chinese econom y, generating positive spillovers beyond
those to firms directly participating in these markets".
822
7.515 The Panel wishes to note its concern at the syst emic implications of China's arguments under
Article XX(b), as this provision could then be interpreted to allow the use of export restrictions on any
polluting products on the ground that export restri ctions reduce the production of these products and
thus pollution. Furthermore, Chin a's argument, if accepted, could then be interpreted to allow such
restrictions on any raw materials simply because they help increase growth, and, in turn, eventually
reduce pollution. Hence, the requirement is cr ucial under Article XX that only those export
restrictions that bring about a material contributi on to the environmental policy goal are accepted as
WTO-consistent.
7.516 The Panel finds, therefore, that China was unabl e to substantiate its claim that its export
restrictions on EPRs or scrap products are part of a comprehensive programme maintained in order to
reduce pollution resulting from the production of EPRs.
7.517 The Panel will proceed now to examine whether th e imposition of export restrictions is apt to
materially contribute to the reduction of pollution cau sed by the extraction of those raw materials and
consequently the improvement of the health of the Chinese population, within the meaning of
Article XX(b).

821 Exhibit JE-158, p.5. The United States and Mexico also suggest that "The export duties serve to
lower the price for these inputs in China and thereby facilitate the production of downstream products.
Numerous statements in high-level Chinese documents and statements made in the course of this dispute
confirm this fact. This fact is also confirmed by the dramatic growth in China's exports of steel and aluminium"
and they refer to Magnesium Key Facts at Tables 20 and 21, p. 19-20 (Exhibit JE-152). The complainants also
argue that the term EPRs is not used in any of the do cuments submitted by China, suggesting that it was created
for the purpose of this dispute, but was not considered in the context of China's environmental policies.
822 China's comments on the complainants' response to the Panel's question No. 43 following the first

(ii) Whether the measures contribute materially to the goal of protecting the health of the Chinese
population
7.518 The Panel's understanding of the Appellate Body's decision in Brazil – Retreaded Tyres is that
whether or not the export restrictions on EPRs can be considered necessary for the protection of the
health of the Chinese people depends on whether such measures are apt to contribute materially to the
realization of China's declared objective of reducing pollution caused by the production of EPRs.
China interprets the Appellate Body's ruling in Brazil – Retreaded Tyres as suggesting that the
"contribution" of trade restrictions for the purposes of Article XX(b) should be assessed both
currently and in the future.
7.519 China asserts that the export restrictions at issue are currently making a material contribution
to the objective of reducing the health risks associated with the pollution generated by the production
of coke, magnesium metal, manganese metal a nd silicon carbide. This is because, under normal
economic conditions, export restrictions reduce the demand for exports and, in turn, this decreases
domestic production. In suppor t of this claim, China adduces two empirical studies.
823 One study
estimates the effect of an export duty on mangane se metal and magnesium metal and of an export
quota on silicon carbide, using a simu lation model of demand and supply. 824 The other study uses a
regression analysis model to estimate the effects of the imposition by China of an export duty and a
quota on coke.
825 The results of the simulations indicate that the elimination of the export duty of 10%
on magnesium metal would result in an average increase in domestic production by 1.65%;
elimination of the export duty of 20% on mangane se metal would imply an increase in production by
4.28%; and elimination of the export quota of 0. 216 million metric tonnes on silicon carbide would
increase production by 3.55%.826
7.520 The results of the regression analysis on coke indicate that eliminating the 40% export duty
on coke would increase domestic production of coke by 2.2%. 827 China asserts that the export duty is
the actual "biting" constraint on the exports of coke;828 in these circumstances, the effect of the export
quota is to limit exports only in the event of a large increase in the foreign demand for coke.829

823 Exhibits CHN-124 and CHN-147.
824 In Exhibit CHN-124, the impact of an export tax on quantities produced (consumed) is determined
using the domestic supply (demand) price elasticities. The domestic supply (demand) elasticity is defined as the
percentage change in production (consumption) associated with a 1% change in China's domestic prices (prices
Chinese producers receive when they sell at home). Therefore the percentage change in production
(consumption) following the elimination of the duty is obtained by multiplying China's supply (demand)
elasticity by the percentage change in the prices. To determine the impact of an export quota on the quantity
produced (consumed) domestically, the 'export tax equivalent' of the quota (i.e., the tax that would result in the
same level of exports as determined by the quota) is calculated as the price differential between domestic and
export prices. Then, the impact of the export quota on the quantities produced (consumed) domestically is
estimated using the simulation model just described for the tax.
825 Exhibit CHN-147. Regression analysis is performed by associating (observational) data to a
statistical relationship, which expresses a certain dependent variable as a function of other (independent)
variables, plus an error term. This relationship can be specified in many different ways. We refer to different
specifications with the expression "regression models". The aim of estimating a regression model is to
understand the effect of the change of a certain independent variable on the dependent one, while the other
independent variables (included in the right hand side of the model) are held fixed.
826 China's first written submission, para. 319 (f or magnesium metal and manganese metal) and
para. 550 (for silicon carbide).
827 Initially, China reported effects of 6.6% of dom estic production (Exhibit CHN-147). This estimate
was subsequently corrected by China in Exhibit CHN-519, para. 106.
828 As previously explained (see paras 7.226-7.228). China imposes both an export duty and an export
quota on coke. In a situation like the one of China where two export restrictions are imposed, only one

7.521 China also asserts that export restrictions on EPR products are apt to contribute to its stated
health objective in the medium and long term . In the medium term, China argues, export duties on
EPRs will reinforce domestic environmental rules and regulations through their selection effect, that
is, by forcing small-scale inefficient firms out of th e market to the advantage of large-scale, efficient
and less-polluting producers.
830 In the long term, posits China, export restrictions will help the
Chinese economy shift its production towards more sophisticated, higher value added goods, and
away from low-value added basic materials. This, in turn, will lead to incr eased growth. Increased
growth will lead to higher income per capita, whic h, in turn, will increase Chinese preferences for a
cleaner environment and demand for higher environmen tal regulations. This will "creat[e] a virtuous
circle of development and environmental protection".831
7.522 However, the complainants claim that China's real goal for maintaining the export restrictions
at issue is not the reduction of pollution caused by th e extraction of EPRs, but to ensure that domestic
users have preferential access to the raw mate rials compared to their foreign counterparts. 832 The
complainants also contend that export duties ar e not an efficient policy response to achieve an
environmental goal and there are less trade-distor ting measures that can be used as alternatives. 833
They further argue that China's estimates of the effects of export restrictions on EPR production are
not reliable and that China's claimed short-, medium- and long-term positive effects of the measures at
issue on the environment are not supported by evidence. Moreover, the complainants maintain that the
various components of the architecture of Ch ina's (declared) policies on EPRs (and scrap) are
inherently contradictory and incoherent, and, as such, have not and will not contribute to China's
declared objective of reducing pollution resulting from the production of EPRs. 834 Therefore, the
complainants ask the Panel to determine that Chin a has not satisfied its burden to prove that export
restrictions on EPR products contribute to China's stated environmental objective.
7.523 The Panel recalls that China bears the burde n to prove that its export restrictions bring about
or are apt to contribute to the realisation of the policy goal permitted by Article XX(b) and that
"[t]his demonstration could consis t of quantitative projections in the future, or qualitative reasoning
based on a set of hypotheses that are test ed and supported by sufficient evidence". 835 China has put
forward both a quantitative and qualitative argument ation to support its claim that its export
restrictions (export duties and export quotas) are apt to contribute to its goal of reducing pollution
resulting from the extraction of various raw material s with a view to improving the health of the
Chinese population. We turn now to consider the qualitative and quantitative elements of the evidence
submitted to the Panel.
7.524 Although we will proceed to examine be low China's measures on EPRs, the Panel
understands that China's measures on EPRs are not to be considered in "isolation"; this is clear from
China's qualitative and quantitative argumentation. Chin a claims to have a comprehensive policy that

restriction will actually "bite", i.e. will be effectively active in limiting exports. Which of the two restrictions has
an actual effect on production (consumption) is a purely empirical question.
829 China estimates an impact of 5.07% from the export quota on the production of coke had the quota
on coke been the effective limitation ("biting constraint") to coke production (Annex 1 Exhibit CHN-147).
830 China's first written submission, paras. 329-336. See also China's response to Panel question No. 30
following the second substantive meeting, para. 142.
831 China's response to Panel question No 39 followi ng the second substantive meeting, para. 264 and
China's second written submission, para 252.
832 United States' first written submission, paras. 29-31; Mexico's first written submission, paras. 29-34.
Complainants' joint opening oral statement at the first substantive meeting, paras.11-13, 97-98.
833 Exhibit JE-158, pp.3-6.
834 United States' second written subm ission, paras. 62-64; Mexico 's second written submission,
paras. 65-67. See also Exhibit JE-158, pp. 7-9.
835 Appellate Body Report, Brazil – Retreaded Tyres, para. 151.

includes measures on EPRs and measures on scrap whic h operate together and at the same time.
Indeed, in the context of its argumentation on EP Rs, China also refers to its measures on scrap
products. China argues that the use of scrap products (recycled) is much less energy-intensive and
polluting than the use of EPRs. All parties also seem to agree with this statement in principle (and
indeed China cites European Commission documents on the benefits of the recycling industry
836), but
the complainants, as discussed below, submit that, c ontrary to its allegation, China is not pursuing
seriously enough the development of its recycling sectors. The complainants are of the view that
China's measures are not fundamentally about the re duction of pollution and the protection of health;
rather, their main purpose is to generate redu ced-price raw materials for its downstream steel
industry.
837
Whether China has discharged its burden of proof that export restrictions on EPR products are
currently making a material contribution to the stated objective
7.525 China's defence under Article XX(b) is based on its contention that export restrictions on
coke, manganese and magnesium metal, and silicon car bide are making a material contribution to a
reduction in health risks associated with primar y production of these metals. They argue that export
restrictions will result in decreased levels of pr oduction of these products. China submits that there is
a serious health risk related to the production of EPRs, and that reducing their production would
reduce pollution, which would lead to a reduction in the related health-risks. 838 China argues that the
export restrictions on EPRs will limit the production of such polluting EPRs.
7.526 The Panel recognizes that China's qualitative argument relies on the standard economic theory
of the effects of an export restriction: an export restriction on polluting raw materials, by reducing
foreign demand for the good on which it is imposed, sh ifts supply of the good to the domestic market,
thus putting downward pressure on the domestic price of the product. The re duction of the domestic
price of the good will decrease production and this , in turn, will lower pollution. The Panel also
observes that parties agree on the general principle th at when analysed in "isolation" (that is, for a
single market and a single policy measure), standard economics predicts that an export restriction will
reduce domestic production. However, as discussed belo w, the Panel has reservations on the validity
of conducting an analysis of the effects of an e xport restriction on a product in a specific sector in
"isolation". It is important to consider the export restrictions imposed on pr oducts in other related
sectors at the same time.
7.527 Moreover, the Panel has concerns regarding China's estimations of the size of the effects. As
noted earlier, China has used two alternative method ologies to assess the impact of export restrictions
on EPR products on their production. Specifically, to determine the impact of its export restrictions on
manganese metal, magnesium metal, and silicon carbide, China uses a simulation model, whereas for
its export restrictions on coke, it uses an econom etric regression model. The Panel understands that
simulations provide estimates as to what the effects of the removal of a duty would be on the basis of
a demand and supply model of the market at issue, whereas regressions measure what the effect of a
trade policy measure (in place for a certain time period) has been.
7.528 Although we are satisfied with the methodologies used by China in making its case, the Panel
has a number of concerns with respect to the relia bility of the results of the studies put forward by
China.

836 China's first written submission para. 250.
837 United States' second written subm ission, paras. 82-83; Mexico 's second written submission,
paras. 86-87; European Union's second written submission, paras. 398-408.
838 China's first written submission, paras. 285, 316, and 317.

7.529 First, the Panel is concerned about the quality of the data used for the analysis of the impact
of export restrictions on manganese metal, magnesium metal and silicon carbide. China's estimates of
the effects of an export duty on manganese and ma gnesium metal and of an export quota on silicon
carbide assume that the domestic supply and demand elasticities (that measure the degree of
responsiveness of supply and demand to price chang es, respectively) for these products are the same
as those it estimates for coke.
839 Logic suggests that demand elasticities usually would be different for
different products. Moreover, the Panel understa nds that standard economic theory provides that
supply and demand elasticities are generally specifi c to the product at issue in that they are
determined by production technologies and by the de gree of substitutability of the raw material for
other inputs. China has not established that productio n technologies for the raw materials at issue and
the degree with which firms in the downstream sect or can substitute these raw materials with other
inputs are the same across products. For this reason, we are not persuaded that we can use estimates
for coke also when considering the markets of other raw materials.
7.530 The Panel is aware that China ju stifies the use of coke elasticities for the other materials by
providing evidence that, when considering imports from all sources , average import demand
elasticities for the raw materials at issue in this dispute do not significantly differ across products. 840
However, the Panel notes that data on import demand elasticities for imports from China appear to
change significantly across products - ranging from -2.14 for magnesium metal to -6.19 for
manganese metal and -10.01 for magnesium scrap.
841 In light of this evidence, the Panel questions the
use of coke elasticities to proxy elasticities of other raw materials.
7.531 The Panel understands that any quantitative estimation of the comparative effects of an export
restriction on the EPRs at issue is highly speculative given the lack of adequate data. Estimates based
on incorrect data or incorrect estimation procedures are of course not reliable.
7.532 Turning to the regression estimates of the impact of export restrictions on coke, the Panel is
struck here by a number of methodological issues. In particular, the Panel notes that China's results
could be inaccurate because they are obtaine d estimating a regression model which includes
inappropriate control variables. 842 The Panel also observes that Ch ina's estimates are produced using
periodic data. In order to be correctly estimat ed, a model using periodic data requires specific

839 Exhibit CHN-124.
840 Using estimates from Kee, Nicita and Olarreaga (2008)'s study, China calculated the average import
demand elasticities across all importers and averages across non-producing countries (Exhibit CHN-519,
Table 3.1).
841 Exhibit CHN-519, table 3.2.
842 In order to determine the impact that the export restrictions on coke have on domestic production,
China uses the "Ordinary Least Square" technique, whereby production is explained by the level of the tax, the
quota, and a "control variable". The importance of introducing a "control variable" in the regression is to avoid
attributing to the export duty (or quota) effects that have been caused by changes in other variables (the effect
this attribution would have is referred to by economists as the "omitted variable bias"). For a control variable to
be apposite, it must be something that is independent of the matter being analysed – in this case the export
restrictions. The variables China uses, though, could well be affected by the very export restraints being
examined. Indeed, in the production equation China uses the following control variables: consumption in
Exhibit CHN-147; and dummy variable s for each year as well as a vari able indicating the production of
metallurgic coal in Exhibit CHN-519. Both consumption of coke and production of metallurgic coal (a key input
in coke production) are likely to be affected by the export restraints, and therefore, in the view of the Panel, are
not proper control variables.

methodologies, which, however, have not been considered by China.
843 The Panel has a further
concern with regard to the specification of the estimated regression model.844
7.533 Second, even assuming that the evidence submitted by China to support its statement that its
export restrictions on EPR products are currently making a material contribution was reliable, the
Panel is unconvinced that China has satisfied its burde n of proof that the export restrictions in place
make a "material" contribution because China's analysis does not account for important upstream-
downstream interactions. In particul ar, given the vertical structure of the metals industries at issue,
one would expect that China's analysis of the e ffects of export restrictions on pollution would account
for the pollution that may be generated by additio nal production in the downstream sector (following
the imposition of the export duties and quotas on the EPR products). It is the understanding of the
Panel that economic analysis indicates that, under normal conditions, an export restriction imposed
upstream acts as an incentive to downstream production. In the case at issue, therefore, an export duty
(or quota) on raw materials reduces the price of key inputs, and therefore should be expected to
provide an incentive to production by the downstream sector. China's evidence does not take this into
account.
7.534 China asserts that it has not included in its calculations additional downstream pollution
because it believes that to be relatively minor compar ed to what is caused by upstream production of
the raw materials. China supports this claim with an expert statement that the upstream production of
EPR goods is the most polluting stage of the pr oduction process and that the pollution generated by
the downstream sector is minor.
845 China has also presented data on the level of pollution generated
per metric tonne by the production of the raw mate rials at issue and by steel and iron production. 846
The evidence provided by China supports the claim that the pollution generated per metric tonne of
the different materials is significantly higher for EP R products than for steel and iron. However, the
information is not sufficiently helpful to us, becau se we do not know how many metric tonnes of iron
or steel are produced using one metric tonne of a certain EPR product. The Panel notes that an export
restriction not only reduces the production of EPR, but it also makes available additional units of EPR
as consumption by the domestic downstream industry. Therefore, in order to assess whether the
export restrictions on EPRs reduce pollution, the Panel would need information not only on the
reduction of pollution generated by the lower level of EPR production (which China provides in its
first written submission), but also on the increased po llution generated by the amount of steel and iron
that are produced using the additional units of EPR available as domestic consumption. However, the
latter piece of information is not available to us.
7.535 China also argues that increased domestic supply of manganese and magnesium metal will
not increase the quantity, but merely change the quality of the aluminium and steel that is produced

843 The data used for the analysis are monthly data . An issue frequently associated with using such
periodic data is that the regression's errors are serially correlated, i.e. regression "error terms" from different
time periods are correlated. If serial correlation is not taken into account in the estimation, results could be
misleading. China's estimations do not correct for serial correlation of the error terms.
844 When both an export quota and an export duty are imposed, it will be only one of the two that
reduces exports and has an impact on domestic production (the duty will be the biting constraint when it is
sufficiently restrictive in relation to the quota, so that the quota does not "bite"). In other words, a change in the
duty has an impact on production only if the duty is the biting constraint. In depicting the effect of the duty or
the quota, therefore, a function should be used which allows the restrictiv e effect of either the duty or the quota
to go from a positive value to zero when the other instrument becomes biting. In Exhibit CHN-519, however,
China does not use this approach.
845 Exhibit CHN-481.
846 China's response to the Panel question No. 26 following the second substantive meeting,
paras. 120-126.

from it. Therefore, one cannot assu me an increase in pollution gene rated by the downstream sector.
847
However, China has not provided evidence in support of this argument. China claims that, because of
the increased availability of manganese and magnesium, producers of aluminium and steel will use
relatively more manganese and magnesium than other inputs in the production of the alloy. However,
it seems to us that substitution across inputs does not exclude the possibility of an increase in quantity.
Indeed, it has to be expected that when the price of one of the production inputs changes, firms (in
downstream sectors) may substitute away from the relatively more expensive inputs toward the
cheaper ones. By so doing, firms reduce their prod uction costs and may, in turn, increase production,
leading to greater pollution.
7.536 Proceeding with our analysis of China's evidence on material c ontribution, the Panel believes
that in industries where vertical linkages are important , such as the metals industries at issue, the test
for material contribution to the stated objective must account for those policies that may offset the
alleged effect of the policy in place. In the absence of this requirement, it would be possible for the
combination of two or several policies to nullify each other's effect on pollution, while serving only
the achievement of other objectives (such as the development of the downstream sector). In the
specific case at issue, China does not contest it imposes export restrictions on manganese ore (used as
input in the primary production of manganese metal).
848 In principle, such a measure reduces the
domestic price of ores in China, and therefore repr esent an incentive to produce EPR metals. As such,
the export restrictions on ores may potentially o ffset the production-reducing effects of export
restrictions on metals (EPRs), and, consequently , their alleged positive effects on the environment.
China acknowledges that its analysis omits this o ffset consideration. However, China argues to be
mainly an importer, as opposed to an exporter, of ores. On the basis of this argument, China concludes
that, as a practical matter, the price of ores is not affected by its export measures on ores, which
means no offset will occur. However, we do not find the evidence sufficient to support this
conclusion.849
7.537 China also argues that a quantification of the eff ects of an export restriction on a raw material
that takes into account upstream and downstream linkages as well as policies adopted at the various
stages of the production chain would make the analysis of such effects more complex. 850 T h i s i s
probably true. However, if a government is concer ned with the reduction of pollution arising from an
industry with an important vertical structure, it se ems to us that it would need to take downstream-
upstream linkages into account in order to evaluate the effectiveness of its policy. Furthermore, the
Panel recognizes that it may be impossible to take th e effects of all policies applied to each stage of
production into account, but an analysis of the materi al contribution to a stated objective should take
into account at least those policies whose effects ma y counter in some respects the stated objective
(such as export duties on ores in the case at issue).
7.538 In sum, the Panel is not persuaded by the evidence provided by China in support of its claim
that its export restrictions on EPR products currently make a material contribution to the objective
pursued. The quality of the data used for the analys is and the shortcomings of the estimation methods,
as we have explained, give us pause. Furtherm ore, even assuming that th e quantitative analysis is
reliable, the Panel is of the view that given the importance of the vertical structure of the metals
industry, China's economic analysis should have take n into account the effects that export restrictions

847 China's second written submission, para. 298.
848 China's response to Panel question No. 28 following the second substantive meeting,
paras. 133-134.
849 The data on the import to export ratio are not sufficient to prove that export restrictions do not affect
the domestic price of ores. This is because the low volume of exports of ore could be due to the export
restrictions in place.
850 China's second written submission, paras. 294-303.

have on pollution through the upstream and downstream sectoral linkages, and the impact of measures
that counter that of the export restrictions. It may be that it is possible to prove a material contribution
with additional or different evidence, but what we have before us does not provide enough for us to
conclude that the export restrictions currently provide a material contribution.
Whether China has discharged its burden of pr oving that export restrictions on EPRs are apt
to make a material contribution to the stated objective in the future
7.539 China argues that there are additional medium te rm gains due to the "selection effect". The
"selection effect" is said to occur in a situation wh ere lower prices reduce profit margins, thus forcing
producers to make efforts to become more cost efficient. Since "more efficient producers are likely to
be those producers that employ enviro nmentally friendlier production methods" 851, such as energy-
saving technologies, China asserts that medium-ter m pollution, on average, will tend to decrease. In
support of this claim, China submits empirical studi es that find a correlation between firms' efficiency
and the intensity of pollution generation.852
7.540 The Panel has not been persuaded by these arguments about alleged medium-term gains
resulting from export restrictions on EPRs. A sta ndard economic assumption is that firms minimize
costs at all levels of prices. In contrast, the "selection" argument relies on the existence of
inefficiencies (so called x-inefficiencies). As pointed out by the complainants, "the idea does not form
part of the corpus of modern economic thought about firm behaviour".
853
7.541 China also argues that export r estrictions are apt to make a material contribution in the long
run because export restrictions on EPR products "will help China, as a developing country, to reach its
long-term environmental goals by facilitating Chin a's economic growth which, in turn, leads to
substantial environmental protection". China's lin e of argument is founde d on two interdependent
assumptions: (i) export restrictions on upstream meta l products and raw materials will promote faster
growth in China; and (ii) greater national income will be associated with environmental gains.
7.542 The Panel considers these arguments next.
Whether export restrictions on raw materials necessarily promote higher growth
7.543 China claims that there is a strong link betw een export restrictions and economic growth.
China's line of argument is that its export restricti ons on raw materials help China to move away from
an economy based on raw materials toward an economy based on higher value-added, more
sophisticated sectors, and that this, in turn, will promote growth of the Chinese economy. China
supports this claim on the basis of a study concludi ng in favour of the existence of so-called "export
sophistication externalities".
854 This evidence suggests that "if count ries consume, rather than export,
raw and basic materials and make efforts to pr oduce and export 'sophisticated' bundles of goods, they
can achieve higher growth".855

851 China's first written submission, para 334.
852 Exhibit CHN-442.
853 United States' comments on China's response to Panel question No. 30 following the second
substantive meeting (Exhibit JE-185, p. 3).
854 Exhibit CHN-266: Hausmann, R., Hwang, J., and Rodrik, D. (2007). "What you export matters",
Journal of Economic Growth 12: 1-25.
855 China's comments on the complainants' response to Panel question No. 22 following the second
substantive meeting, para 87.

7.544 According to China, its export restrictions on raw materials, together with its export
restrictions on steel and aluminium (the immediate downstream sector), provide it with the means to
exploit the externalities required to foster growth.
856
7.545 Setting aside any consideration of whether th e findings of the study submitted as evidence by
China actually reflect a causal link from "export sophistication" to economic growth 857, the Panel
agrees with all parties that the correct policy impli cation of the considered study is that any policy
should be designed so as to benefit entrepreneurs who engage in new activ ities and not to benefit
followers.858 However, China's export restrictions on raw materials do not distinguish between
innovators and emulators. Therefore, China's export restrictions do not conform to the type of good
policies suggested by the study it submitted and thus cannot find support in that analysis.
7.546 China defends the imposition of export restric tions as a "less burdensome alternative to
'discovery' subsidies" 859 on the grounds that: (i) it would be legally difficult to define the terms
innovator and emulator; (ii) the costs related to di sbursements in connection with a discovery subsidy
would be excessively high, especially for a developi ng country; (iii) it is politically easier to remove
export restrictions than terminate a subsidy; and (iv) export restrictions allow countries to address
simultaneously environmental and consumption exte rnalities. In this context, China argues that
temporary export restrictions may help target innova tors rather than emulators, as the export
restrictions could be removed af ter innovators have entered the market. However, China's export
measures do not appear to be set according to this approach.
7.547 Moreover, we believe that even assuming that ex port restrictions could help generate the
required discovery externalities and ge nerate growth in the metal industries, this does not prove that
there is a link between export restrictions in raw materials and aggregate growth in China, which is
required according to China's theory to improve environmental protection. While, as acknowledged
by China860, the finding that "what you export matters" may not rise to the level of a general economic
"principle", a generally accepted concept is that support to one sector shifts resources away from other
sectors; whether this shift increases or reduces aggr egate growth depends on the growth potential of
the various sectors.
7.548 In any event, the argument that moving away from exporting unsophisticated products toward
exporting high value-added products increases gr owth supports the provision of incentives to
innovators generally, and not only to those in the EPR sectors. Indeed, the fact that EPR products are
important inputs in industries that are central to the Chinese economy does not imply that the
consumption of these goods necessarily generates pos itive side effects, nor that China's aggregate
growth would necessarily increase by supporting these sectors.

856 Exhibit No. CHN-519, paras. 45-52.
857 The Panel acknowledges that the complainants contest the validity of Hausmann et al. (2007)
conclusion that what you export matters and argue th at the authors of the study ascribe causation to a
correlation. The complainants argue that the correlation may be spurious, as there might be other factors such as
the quality of institutions that may affect simultaneously the composition of a country's export basket and its
prospects for fast growth (Exhibit JE-178, p. 4). However, the complainants do not provide evidence in support
of this position. We observe that study submitted by China is published in a peer reviewed journal and a number
of subsequent studies have supported the causal interpretation of this study.
858 Exhibit JE-178, p.5.
859 China's comments on the complainants response to Panel question No. 22 following the second
substantive meeting, para 97.
860 China's comments on the complainants' response to Panel question No. 22 following the second
substantive meeting, para. 91.

7.549 The Panel understands that, as a matter of economic theory, export restrictions on EPR
products will shift resources into the downstream industries that produce metal alloys and away from
other sectors in China. China does not address the well-recognized possibility
861 that the sectors from
which resources are shifted away may be characteri zed by higher information spillovers and higher
technology transfers than the metal industry, and may thereby contribute to aggregate growth more
than would a larger metal industry. In this situ ation, an incentive for consumption of EPR products
may actually slow down aggregate economic grow th, compared to a situation, absent any
intervention, where relatively more resources fl ow to sectors with a higher growth potential.
Furthermore, these other sectors may even be less polluting than the metal industry.
7.550 Given the above, the Panel finds that China's claim that export restrictions on the EPRs at
issue will necessarily foster China's economic growth is not substantiated by sufficient evidence.
Whether the EKC holds for China and the products at issue
7.551 We now turn to analyse the second step in Ch ina's argument about the long-term benefits of
export restrictions on EPR products, namely that th ere is a strong link between higher growth and
environmental benefits. China argues that "[e] conomic growth, if supported by the adequate
regulatory framework, can then be translated into long-term environmental protection".
862 China
argues that this relationship is supported by the empirical evidence of the so-called "Environmental
Kuznets Curve" (EKC). 863 This is an empirical correlation between income per capita and
environmental degradation whereby, while at rela tively low levels of income pollution increases with
income, beyond a certain income level, pollution declines. Reasons for this relationship are
hypothesized to include income-driven chang es in: (i) the composition of production and/or
consumption that moves away from natural resour ces goods; (ii) the prefer ence for environmental
quality; (iii) the development of institutions in troducing the proper regulatory measures to address
environmental problems; and/or (iv) the arising economies of scale associated with pollution
abatement technologies.
7.552 Parties agree that in general the EKC does not imply a causal relationship from economic
growth to environmental quality. 864 A higher level of wealth can strengthen public demand for a
cleaner environment, but unless the government re sponds with policies that enhance environmental
protection, the improvements are unlikely to come. 865 China argues that, even if this is not done
automatically, higher levels of income ma ke the link between economic development and
environmental protection more likely, and China cont ends that it has provided evidence of an EKC in
China for some of the pollutants at issue in this dispute.866
7.553 For the Panel, even if growth makes environmen tal protection statistically more likely, this
does not prove that export restrictions are necessar y for environmental gains. For example, to the
extent that a higher income per capita generate s citizens' preferences for a better quality of

861 See Grossman, G.M. and Helpman (1991), Innovation and Growth in the Global Economy, MIT
Press.
862 China's comments on the complainants' response to Panel question No. 22 following the second
substantive meeting, para. 87.
863 Exhibit CHN-442.
864 Exhibit JE-158, and China's comments to the United States' response to the Panel question No. 22
following the second substantive meeting, para. 62.
865 Grossman, Gene M. and Kruger, A.K. (1995). "Economic Growth and the Environment", Quarterly
Journal of Economics, pp. 353-377.
866 China's comments on the complainants' response to Panel question No. question 22 following the
second substantive meeting, paras. 62-66.

environment, income redistribution policies may serve the environmental objective just as well as it is
claimed that export restrictions do.
7.554 Finally, the Panel is mindful of the poten tial systemic consequences of accepting China's
argument about the long-term benefits of any export restrictions as instruments to promote
sophisticated exports thereby favouring environmental protectio n. If accepted as justifying WTO-
inconsistent measures, this would support the use of export restrictions under Article XX(b) for any
raw material. The Panel is not aware of any support for such an interpretation of Article XX(b).
(iii) Trade restrictiveness of the measure
7.555 Finally, in the balancing exercise that we must perform to assess whether the challenged
export restrictions are "necessary" under Article XX (b), we are called upon to take into account the
restrictiveness of the challenged measure, keeping in mind that "[t]he less restrictive the effects of the
measure, the more likely it is to be characterized as 'necessary'".
867
7.556 The complainants assert that China's export me asures "severely distort the conditions of
competition in the global market place".868
7.557 China responds that the complainants do not provi de any evidence in support of their claim,
except to rely on the assumption that Ch ina's actions affect the world price of the products at issue. In
particular, China bases its defence on the following poin ts. First, "the raw materials needed to make
EPR products are some of the most abundant in the world" 869 and this is inconsistent with the
complainants' argument that China controls and manipulates world market supply and world prices
for EPR products. Second, there are factors other th an the Chinese export restrictions that can explain
the fall in Chinese exports of these products. Th ese include high anti-dumping duties imposed by the
complainants on some of these products, the gene ral commodity price increase that the world has
experienced in the period between 2005 and 2008 , and the stringent environmental regulations
imposed by the United States and the European Union on the domestic production of the EPR
products at issue. Third, the impact of China's expor t restrictions is much softer than a ban on such
exports. Finally, even assuming, arguendo, that China's export restraints have an impact on prices,
one should expect that, in the long run, the effect on trade will vanish. This is because the higher
world prices induced by China's export restric tions will lead worldwide investments into new
production of EPR products. Eventually, as more players enter the market, world prices will go down.
7.558 The Panel acknowledges that the measures in pl ace (export quotas and export duties) are less
restrictive than full "bans" would be (except for zinc). However, th e Panel is also of the view that
China's arguments do not confirm that the measures are not restrictive. First, the impact of an export
restriction on the world market does not depend on th e global availability of the raw natural resources
to manufacture EPR products, but on a country's e xport market share in th e EPR market. In this
respect, the evidence before the Panel appears to show that China's share of global exports in some of
these products is quite significant (43.5% for coke, 74.2% for magnesium containing ≥99.8% by
weight of magnesium, 57.9% for magnesium containing <99.8% by weight of magnesium, and 74.2%
of manganese).
870 Thus China's export restrictions, even if modest, can have an important impact
worldwide.

867 Appellate Body Report, China – Publications and Audiovisual Products, para. 310.
869 China's second written submission, para. 258.
870 European Union's responses to Panel question No. 46 following the first substantive meeting,
para. 51.

7.559 Second, China's argument that the impact of its export restrictions is much lower than the
effect of the United States' and the European Union's anti-dumping duties on some of these products
is based on a mere comparison between export tax rates and anti-dumping duty rates.
7.560 The Panel understands that from an economic perspective this comparison does not provide
much guidance on the actual effects on domestic prices and on trade of the respective measures. A
static comparison of the effects of an import tax and an export quota under the standard assumption of
perfect competition suggests the following. First, anti-dumping duties are firm-specific. Therefore,
their effect depends on the amount of trade effected by the firms in question. Second, the impact of
anti-dumping duties on domestic pr ices depends on whether the importing country is "small" or
"large".
871 If it is a large importer, domestic prices will in crease by less than the duty rate. In contrast,
the impact of an export restriction on global export prices depends on the size of the exporting
country. Export restrictions will influence world ex port prices only if the country imposing them sells
a large share of the world's exports of the material on which the restrictions are imposed. Third, the
impact of an import restriction on trade depe nds on the importing country's domestic demand and
supply conditions. The impact of an export restri ction on trade depends on the exporting country's
domestic demand and supply conditio ns. Thus a simple comparison of anti-dumping duty rates and
export duty rates is not sufficient to guarantee that the measures in place are not highly restrictive.
7.561 As far as the long-term effects of export restric tions are concerned, China's argument is that
these measures are not too trade restrictive in the lo ng term because the high world market prices will
provide an incentive to new producers to enter the market. As a consequence of this entry, China
argues, world prices will return to their initial level.872
7.562 Although this is theoretically possible, given that higher world prices could make it profitable
to start EPR production, it is important to ta ke into account that long-term effects do not
counterbalance short-term effects. In other words, the fact that in the long run the trade-restrictive
effects of a measure may vanish does not imply that the short-term costs associated with the measure
are not highly restrictive.
7.563 The Panel recalls that, except for zinc, China does not maintain any full bans on exports. We
also observe that, in absolute terms, the level of the export duties is relatively low and the quotas are
also relatively open (with some of them not having been filled in 2009). But, as noted, the impact of
an export restriction depends on the size of the exporting country. In that context, the Panel recalls
that the assessment under Article XX(b) is a holistic one.873 This takes the Panel to the last step of the
test under GATT Article XX(b).
(iv) Availability of WTO-consistent or less trade-restrictive alternative measures
7.564 Following the direction from the Appellate Body in Brazil – Retreaded Tyres , if an analysis
under Article XX(b) yields a preliminary conclusion that the measures at i ssue are necessary, "this
result must be confirmed by comparing the cha llenged measures with their possible alternatives,
which may be less trade restrictive while providing an equivalent contribution to the achievement of
the objective pursued".874

871 In economics a country is "small" in the market of a certain product if it cannot affect the world
price of that product. It is "large", if it can.
872 China's second written submission, paras. 269-276.
873 Appellate Body Report Brazil – Retreaded Tyres, para. 182.
874 Appellate Body Report, Brazil – Retreaded Tyr , para. 156.

7.565 We have not yet reached a decision whether the export restrictions at issue are necessary
within the meaning of Article XX(b). Nevertheless, the Panel finds it useful to review the arguments
and evidence submitted by the parties with regard to the availability of WTO-consistent alternatives;
therefore we will proceed to examine the allegations arguendo. The complainants put forward a list of
possible WTO-consistent alterna tives to China's WTO-inconsistent export restrictions. China
responded that all such alternatives are already in pl ace in China in the context of its comprehensive
environmental framework. The Panel will determin e whether those measures are available to China
and whether they would allow China to maintain the same level of protection it argues its export
restrictions provide.
875
7.566 The complainants submit six types of altern ative measures which, they argue, are WTO-
consistent and more efficient to ensure the re duction of pollution as well as the protection of the
health of the Chinese people. The complainants poi nt to (i) investment in more environmentally
friendly technologies; (ii) further encouragemen t and promotion of recycling of consumer goods 876;
(iii) increasing environmental standards 877; (iv) investing in "infrastructure necessary to facilitate
recycling scrap"878; (v) stimulating greater local demand for scrap material without discouraging local
supply879; and (vi) introducing production restrictions or pollution controls on primary production.880
7.567 In response to the alternatives put forth by the complainants, China argues that all the
alternative measures suggested by the complainants are already in pl ace in China. It contends that its
export restrictions complement a number of existing measures whic h form part of a comprehensive
environmental framework aimed at minimizing environmental and health effects created in the
production of EPR products and through the recycling of relevant scrap produc ts. In its Annex 39-1,
China groups these non-export restriction related meas ures according to the six categories of less
trade-restrictive alternatives proposed by the compla inants with a view to illustrating that it has
already implemented these (alternative) measures. China further submits Annex 39-2 outlining the
manner through which it alleges a number of these measures contribute to controlling pollution
generation related to the production of EPR products. It further subm its Annex 39-3, which it argues
includes evidence of the implementation and effec tiveness of the various measures. Finally, China
submits Annex 14-1 detailing a number of measures that apply to steel and aluminium producers.
7.568 The Panel notes, first, that if China argu es that alternative measures suggested by the
complainants are already in place in China, China would seem to have conceded that such alternatives
are (already) "available". In fact, what China s eems to argue is that if it maintains its export
restrictions together with (alternative) domestic regul ations of the type suggested by the complainants
(which according to China are already operati ng) China would achieve more environmental
protection. The Panel will come back to this point after reviewing the parties' arguments on suggested
alternatives. Our order of analysis will follow the ap proach used by the parties, organised in terms of
the six categories of proposed alternative measures. As mentioned earlier, the Panel will address
proposed alternative measures to both restrictions on EPRs and on scrap products.

875 WTO Appellate Body Report, Brazil – Retreaded Tyres, para. 171 citing, at the end of the quotation,
US – Gambling, para. 308.
876 European Union's second written submission, para. 396.
877 European Union's second written submission, para. 400.
878 United States' second written submission, para. 68. Mexico's second written submission, para. 71.
879 Exhibit JE-158, p. 6.
880 United States' second written submission, para. 37.Mexico's second written submission, para. 40.

Investment in more environmentally friendly technologies
7.569 China submits a number of measures with a view to demonstrating that it has already put in
place measures to encourage investment in enviro nmentally friendly technologies, and hence such
measures could not serve as an alternative to restrictions on EPRs. 881 The Panel has studied the
measures submitted and concludes that they do not pr ovide proof that China has in fact implemented
measures encouraging investment in environmentally friendly technologies. The Law on the
Prevention and Control of Atmospheric Pollution 882 states in Article 8: "[the] State adopts economic
and technological policies…", and in Article 26: "[the] State adopts economic and technical
policies…". Article 9 of the same measure stat es that "[the] State encourages and supports the
scientific and technological research into the preven tion and control of atmospheric pollution…". The
same language is reiterated in the Law on Promoting Clean Production 883, the Law on the Prevention
and Control of Environmental Pollution by Solid Wastes 884, and the Law on the Prevention and
Control of Water Pollution .885 While these measures include general statements about adopting
general policies and encouraging research, we coul d not find, nor did China point to, how such
measures would encourage or effect investment in environmentally friendly technologies. In addition,
China does not provide any evidence that it is currently applying domestic measures of this type.
7.570 Moreover, it is not clear whether the domestic measures invoked by China are even
obligatory. In the Law on Promoting Clean Production886, China identifies Article 33 as evidence that
various activities relating to research, demonstrati on and training projects of clean production will be
incorporated under special funds for technological progress. Nevertheless, according to Article 29,
"...enterprises may…enter into agreements with the competent administrative departments ... for
further saving resources and reducing the emission of pollutants." 887 The language is clearly
permissive and conveys no sense that there is an obligation to do anything in particular. The Law on
the Prevention and Control of Envir onmental Pollution by Solid Wastes 888 includes equally
aspirational language such as, "Enterprises and public institutions shall rationally select and use raw
materials, energies and other resources, and adopt advanced production techniques and equipments, so
as to reduce the discharge and harm of industrial solid wastes" 889 and "[a] mining enterprise shall
adopt scientific mining methods…". 890 The same language is reiterated in the Law on the Promotion
of Recycle Economy .891 China does not put forward any eviden ce of domestic measures that enforce
recycling, nor does it suggest whether and wh y existing processes could not be improved or
intensified to serve as an alternative to its export restrictions.
7.571 China further submits Opinions of the State Council on Further Accelerating the Recycle
Economy892 and the 2007 Plan for Energy Conservation and Pollutant Discharge Reduction 893, which

881 The Panel notes a number of similar laws submitted by China: Law on the Prevention and Control
of Atmospheric Pollution (Exhibit CHN-268t), the Law on Promoting Clean Production (Exhibit CHN-271), the
Law on the Prevention and Control of En vironmental Pollutio n by Solid Wastes (Exhibit CHN-270) , and
Opinions of the State Council on Further Accelerating the Recycle Economy (CHN-523).
882 Exhibit CHN-268.
883 Exhibit CHN-271, Arts. 6 and 14.
884 Exhibit CHN-270, Art. 6
885 Exhibit CHN-269, Art. 6.
886 Exhibit CHN-271.
887 Exhibit CHN-271, Art. 29.
888 Exhibit CHN-270.
889 Exhibit CHN-270, Art. 31.
890 Exhibit CHN-270, Art 36.
891 Exhibit CHN-101, Arts. 42 and 44.
892 Exhibit CHN-523.
893 Exhibit CHN-145.

outline a number of goals without specifying measures taken to implement them. In the Opinions of
the State Council on Further Accelerating the Recycle Economy it is stated that, "We shall make
efforts to establish…"
894, while the 2007 Plan for Energy Conservation and Pollutant Discharge
Reduction lists a number of goals including "Accelerate Research and Development of
Technologies…" 895 and "Accelerate Industrialization Demonstration…". 896 Similar goals also form
part of the 2008 Arrangement for Energy Conservati on and Pollutant Discharge Reduction 897, which
also lacks evidence of specific standards or policies to implement these goals.
7.572 The Panel does not understand how the invocation of the measures referred to above confirms
that China cannot implement, as an alternative to its export restrictions, measures using improved
technology to reduce the level of pollution caused by the extraction of EPRs. On this evidence, China
appears to be advocating broad policies and actions in that regard, but with no specificities.
Recycling of consumer goods
7.573 China identifies a number of measures already in place that it claims target recycling of
consumer goods.898 The Panel agrees that recycling polic ies and measures are in place in China and
are thus "available". As with the measures exam ined above, the Panel finds these measures equally
vague with regard to specific policies having been implemented and applied as well as their impact in
achieving their stated purpose. Moreover, the Pane l has not been provided with evidence that China
does not have additional recycling capacity, or that any unused recycling capacity could not be used in
lieu of export restrictions. The 2007 Plan for Energy Conserva tion and Pollutant Discharge
Reduction, similar to the previous measures, only lists goals without complementary binding policies.
The 2007 Plan for Energy Conservation and Pollutant Discharge Reduction uses language such as
"...organize to prepare circular economy promotion plans…" 899; it also mandates cities to "establish
and improve the garbage collection system…" 900 without citing any mandatory provisions to require
the establishment of these systems. The same language is also used in the 2008 Arrangement for
Energy Conservation and Pollutant Discharge Reduction 901 which, like the 2007 Plan for Energy
Conservation and Pollutant Discharge Reduction, does not indicate whether any of these plans have
actually been enforced or applied. The 2009 Arrangement for Energy Conservation and Pollutant
Discharge Reduction also contains unquantifiable language such as "Forcefully develop circular
economy" and "Work well on implementation of the Circular Economy Promotion Law…" 902,
without mentioning whether the Law is actually in force or operational. China does not submit any
evidence or argument as to why such regulatory potential could not be used instead of export
restrictions.
7.574 China also submits the Law on the Promotion of Recycle Economy , which sets out the
procedures that must be followed in recycling w aste electric apparatuses and a variety of electronic
products.903 We observe first that these products fall outs ide the scope of the dispute. Moreover, for
the Panel this proves that China h as expertise in areas of recycling that could be further utilised to
replace the use of export restrictions.

894 Exhibit CHN-523,Art. 1(3).
895 Exhibit CHN-145, Section V(17).
896 Exhibit CHN-145, Section V(18). See also Section V (19) and (21).
897 Exhibit CHN-287, Section VI.
898 China's response to Panel question No. 19 following the second substantive meeting, Annex 19-1.
899 Exhibit CHN-145, Section IV(12).
900 Exhibit CHN-145, Section IV(15). See also Section IV(28).
901 Exhibit CHN-287, Section VII.
902 Exhibit CHN-288, Section VI.
903 Exhibit CHN-101, Arts. 38-41.

Increasing environmental standards
7.575 China submits that it has also already im plemented a number of measures to increase
environmental standards. The Law on Environmental Impact Assessments sets out the procedural
aspects of conducting impact assessments. 904 However the environmental standards against which
these assessments are conducted are not mentioned, nor whether producers of the EPR products have
in fact been subject to any of these standards. The Circular on Strengthening and Regulating the
Administration of New Projects 905 provides requirements applicable to new projects, but otherwise
does not include any environmental standards. Further, the Environmental Protection Law 906
indicates that "the environmental protection admi nistrative department of the State Council shall
formulate national environment quality standards…" 907, without providing evidence whether these
standards have in fact been formulated.908
7.576 The Panel takes note of the Coking Industry Entrance Rules, which apply only to new coking
facilities but do not address environmental standards in existing facilities. Furthermore, no link is
made between the application of the Entrance Rules and reducing the environmental impact of the
EPR products in this dispute. China also submits the Law of the People's Republic of China on
Promoting Clean Production but does not provide any evidence or arguments on whether the measure
has been implemented. China does not argue with r espect to any of the legal instruments cited above
why their use could not be expanded or improved so as to reduce pollution caused by the extraction of
EPRs, thereby obviating the need to continue imposing export restrictions.
7.577 China further submits a number of measur es through which it argues its environmental
standards have been enforced, includi ng (i) charging pollutant discharge fees 909; (ii) monitoring
systems and on-site inspection powers of local governments 910; (iii) implementing financial
penalties911; (iv) ordering the suspension or shutting down of an operation 912; and (v) sanctioning by

904 Exhibit CHN-276, Arts. 2, 17, 22 and 25-28.
905 Exhibit CHN-469.
906 Exhibit CHN-88.
907 Exhibit CHN-88, Arts. 9 and 10.
908 The same reasoning applies to the Law on the Prevention and Control of Atmospheric Pollution
(Exhibit CHN-268, Arts. 7, 13, 15); the Law on the Prevention and Control of Environmental Pollution by Solid
Wastes (Exhibit CHN-270, Art.11); the Law on the Prevention and Control of Water Pollution (Exhibit CHN-
269, Arts. 11-13).
909 Exhibit CHN-484, Pollutant Discharge Standards ; Exhibit CHN-279, Regulations for the
Administration of the Pollutant Discharge Fees , Arts. 2, 6, 7; and Exhibit CHN-278, Measures for the
Administration of the Rates for Pollutant Discharge Fees, Art. 3 (1)-(3) and Appendix.
910 Exhibit CHN-268, Law on the Prevention and Control of Atmospheric Pollution , Art. 21; Exhibit
CHN-271, Law on Promoting Clean Production, Arts. 12 and 15; Exhibit CHN-467, Circular on
Implementation Plans and Measures regarding Energy Conservation and Pollutant Discharge Reduction, Arts.
1 and 8; Exhibit CHN – 269, Law on the Prevention and Cont rol of Water Pollution , Arts. 23 and 25-27; and
Exhibit CHN-475 , Circular on Further Strengthening the Checks on Clean Production of Key Enterprises ,
Arts.1 and 3.
911 Exhibit CHN-268, Law on the Prevention and Control of Atmospheric Pollution , Arts. 47, 48 and
52; Exhibit CHN-271, Law on Promoting Clean Production, Art.40; Exhibit CHN-279, Regulations for the
Administration of the Pollutant Discharge Fees, Art. 21; Exhibit CHN-270, Law on the Prevention and Control
of Environmental Pollution by Solid Wastes, Arts. 68-70; Exhibit CHN-269 Law on the Prevention and Control
of Water Pollution, Arts. 70-74.
912 Exhibit CHN-268, Law on the Prevention and Contro l of Atmospheric Pollution, Arts. 47 and 51;
Exhibit CHN-279, Regulations for the Administration of the Pollutant Discharge Fees, Art. 21; and Exhibit
CHN-467, Circular on Implementation Plans and Measures regarding Energy Conservation and Pollutant
Discharge Reduction.

public disclosure.
913 China submitted evidence of the impact of a number of its environmental
regulations on the production of EPR products and associated pollution levels. 914 The new articles
presented as evidence, however, do not establish a c onclusive link between the enacted measures and
the desired outcome, especially since the majority of these measures were only recently enacted. It is
difficult for the Panel to assess the potential effectiv eness of a number of these measures in achieving
the desired objectives, for the majority of them ar e so new as to remain untested. They do not include,
for example, applicable standards, fee assessme nts, or enforcement procedures, evidence and
consequences of inspections, or evidence of the establishment of the necessary environmental
pollution control systems. The Panel also finds that a number of the measures have no relationship to
the products at issue in this dispute. More impor tantly, as with other proposed alternative measures,
China does not submit any explanation why its exis ting environmental standards could not be made
more stringent or otherwise adapted to address adequately the pollution problem caused by the
production of EPRs.
Investing in infrastructure necessary to facilitate recycling of scrap
7.578 China refers to a number of measures it claims are aimed at investing in infrastructure
necessary to facilitate recycling of scrap. 915 However, similar to other measures analysed above, there
is no evidence before us confirming that these measur es have been applied or of the consequences of
such application. Moreover, China does not subm it any evidence or argumentation as to whether its
scrap recycling capacity is used to its full potential or whether it c ould be further expanded so as to
replace the use of EPRs.
Stimulating greater local demand for scrap without discouraging local supply
7.579 China submits one measure seeking to demonstr ate that it has stimulated local demand for
scrap, namely the 2008 Law on the Promotion of Recycle Economy , which includes provisions
indicating that "the State shall offer tax preference s to industrial activities promoting the development
of recycle economy…" 916 and that "…the State…shall bring the independent innovation research…of
the key scientific and technological task force projec ts of recycle economy into the …scientific and
technological development plans…and allocate financial resources to support implementation
thereof…". 917 First, the Panel notes that China does not submit any evidence that this measure has
been implemented and if it has, with what results. Second, the existence of this measure suggests that
not only is this type of alternativ e available to China, but also that China is putting in place incentives
for industrial recycling that can replace the use of export restrictions.
Introduction of production restrictions or pollution controls
7.580 China further submits a number of measures seeki ng to demonstrate that it has already put in
place measures to restrict production and control pollution. 918 In addition to the Energy Conservation

913 Exhibit CHN-475 , Circular on Further Strengthening the Checks on Clean Production of Key
Enterprises, Art. 5 (2).
914 Annex 39-3.
915 Exhibit CHN-101, Law on the Promotion of Recycle Economy , Art. 46; Exhibit CHN-525, Guiding
Opinions on Strengthening the R ecycling for Regenerated Resources, Arts. I(I), I(II) II(II) and II(III); Exhibit
CHN-526, Circular on Trial Works on the Construction of Recycling System for Regenerated Resources , Arts.
III(II) and (III); Exhibit CHN-527, Circular of Second Batch of Trial Works on the Construction of Recycling
System for Regenerated Resources, Art. II; and Exhibit CHN-478, Announcement of Publishing the Catalogue
of High- Energy Consumption Electromechanical Equipment, Arts. 1 and 2.
916 Exhibit CHN-101, Law on the Promotion of Recycle Economy, Art. 44.
917 Exhibit CHN-101, Law on the Promotion of Recycle Economy, Art. 43. See also Art. 46.
918 See Annex 14 to China's response to Panel question following the second substantive meeting.

Law
919, which does not include any specifics on how the relevant provisions are implemented or
enforced, China also subm its evidence of Energy Consumption caps on coke 920, magnesium921, zinc
smelting922, and ferro-alloys 923, which also do not shed light on the direct impact of implementing
these caps on the reduction of EPR-related pollution. Moreover, China does not submit any evidence
that such measures, or their improved versions, could not replace export restrictions in reducing
pollution caused by EPRs.
7.581 China also submits Annex 39-2 as evidence that China's domestic environmental measures
extend to the EPR products at issue. 924 The Panel does not dispute that the scope of a number of these
measures includes the products at issue in this di spute. However, the Panel cannot discern how, as
applied, these measures affect the pollution created in relation to production of EPR products. We
observe that a number of these measures are merely "guidelines" or "plans"; there is no evidence of
specific mandatory policies. The lack of environmental standards coupled with the lack of evidence of
implementation procedures and outcomes, creates an inco mplete picture of the extent of the impact of
China's domestic environmental measures on the EP R products at issue. Moreover, China does not
submit any evidence as to why such environmental measures could not be as effective as China claims
its export restrictions are.
7.582 China further submits Annex 14-1, which includes an overview of a number of environmental
measures that apply to the steel and aluminium industries. 925 China argues that in connection with the

919 Exhibit CHN-272, Energy Conservation Law, Art. 16.
920 Exhibit CHN-470, Energy Consumption Caps and Coke.
921 Exhibit CHN-471, Energy Consumption Caps on Magnesium.
922 Exhibit CHN-472, Energy Consumption Caps on Zinc-smelting.
923 Exhibit CHN-473, Energy Consumption Caps on Ferro- alloys.
924 China's response to Panel question No. 39 following the second substantive meeting. Exhibit CHN-
268, Law on the Prevention and Cont rol of Atmospheric Pollution, Arts. 1, 5, 6 and 13; Exhibit CHN-271, Law
on Promoting Clean Production , Arts. 1 and 3; Exhibit CHN-276, Law on Environmental Impact Assessments,
Arts. 1, 3 and 16; Exhibit CHN-278, Measures for the Administration of the Rates for Pollutant Discharge Fees
Art. 2, Exhibit CHN-279, Regulations for the Administration of the Pollutant Discharge Fees, Art.2; Exhibit
CHN-270, Law on the Prevention and Control of Environmental Pollution by Solid Wastes , Arts. 1, 5 and 11;
Exhibit CHN-523, Opinions of the State Council on Fu rther Accelerating the Recycle Economy, Arts. II.5 and
II.6; Exhibit CHN-525, Guiding Opinions on Strengthening the Recycling for Regenerated Resources , Art. I(I);
Exhibit CHN-526, Circular on Trial Works on the Constructio n of Recycling System for Regenerated
Resources, Para.2 of Introduction and Arts. II. I and II.2; Exhibit CHN-145, 2007 Plan for Energy Conservation
and Pollutant Discharge Reduction , Art. II (3); Exhibit CHN-272, Energy Conservation Law , Art.52; Exhibit
CHN-467, Circular on Implementation Plans and Measures regarding Energy Conservation and Pollutant
Discharge Reduction, Article I.2 of the Implementation Plan for Statistical Indicator System of Energy
Consumption caps per Unit of GDP; Exhibit CHN-469, Circular on Strengthening and Regulating the
Administration of New Projects; Exhibit CHN-472, Energy Consumption Caps Zinc Smelting, Arts. 4.1 and 4.2;
Exhibits CHN-470/CHN-471/CHN-473, Energy Consumption Caps on Coke / Magnesium / Ferro-alloys CHN-
470, Arts. 4.1 and 4.2; CHN-471, Arts. 4.1 and 4.2; and CHN-472, Arts. 4.1 and 4.2; Exhibit CHN-101, Law on
the Promotion of Recycle Economy, Arts. 29 to 41; Exhibit CHN-192, Coking Industry Entrance Rules, General
Introduction; Exhibit CHN-269, Law on the Prevention and Control of Water Pollution, Arts. 1, 2, 10, 12 and
13; Exhibit CHN-287, 2008 Arrangement for Energy Conservation and Pollutant Discharge Reduction, Arts. II,
III, V, VII and VIII; Exhibit CHN-475, Circular on Further Strengthening the Checks on Clean Production of
Key Enterprises , para. 1.3; Exhibit CHN-484, Pollutant Discharge Standards ; Exhibit CHN-288, 2009
Arrangement for Energy Conservation and Pollutant Discharge Reduction, Arts. IV, VI and VIII; Exhibit CHN-
527, Circular of Second Batch of Trial Works on th e Construction of Recycling System for Regenerated
Resources, Arts. I and II; Exhibit CHN-528, Circular on the Application fo r the Construction of Recycling
System, Arts. I(I) and II(I); Exhibit CHN-446 , 2010 List of Enterprises Subject to Elimination of Outdated
Capacity in Industry Sector and Exhibit CHN-479, Circular on Strengthening the Elimination of Outdated
Capacity, Art. II.2.
925 China's response to Panel question No. 19 following the second substantive meeting.

four EPR products for which it invokes a defenc e under Article XX (b) (coke, unwrought magnesium,
unwrought manganese, and silicon carbide), it has put in place an array of environmental measures
regulating the steel and aluminium industries with th e aim of setting emission levels; air, water and
solid waste pollution standards; energy conservation measures, including energy quotas; measures to
control the expansion of the steel and aluminium industries; policies to eliminate outdated capacities
and production technologies; measur es to promote recycling and the development of a "recycling
economy"; measures to promote green technologies and investment; as well as trade instruments.
926
7.583 The Panel is impressed by the breadth and the depth of China's environmental actions and the
regulatory potential in the light of the various stated policy goals. For the Panel, this confirms the
complainants' contention that China has the regulatory framewo rk that puts in place high
environmental standards (which, as noted by China at the beginning of the dispute, the United States
and the European Communities did a few years ago) th at could be used to obviate the need for export
restrictions. The Panel is not informed of any specific operational standards that these measures 927 put
in place, nor of any specific procedural requirements and implementation processes. A number of the
measures also do not concern or do not specifically me ntion the EPR or scrap products at issue in this
dispute, while others only express the intention to ap ply export restrictions on certain products. In the
Panel's view, these are additional examples of me asures that have the potential to serve as an
alternative to China's export restrictions on EPRs. Finally, the Panel has before it a number of other

926 China's response to Panel question No. 14 following the second substantive meeting.
927 Exhibit CHN-268, Law on the Prevention and Control of Atmospheric Pollution , Art.5; Exhibit
CHN-271: Law on Promoting Clean Production , Art.3; Exhibit CHN-276: Law on Environmental Impact
Assessments, Arts. 3 and 7-9; Exhibit CHN-278, Measures for the Administration of the Rates for Pollutant
Discharge Fees, Art.2; Exhibit CHN-279: Regulations for the Administration of the Pollutant Discharge Fees ,
Art.2; Exhibit CHN-270, Law on the Prevention and Control of Environmental Pollution by Solid Wastes, Art.5;
Exhibit CHN-444, Circular on the Measures to Cont rol the Export of EPR products , Arts. I, II(II), III(IV);
Exhibit JE-18, Development Policies for th e Iron and Steel Industry , Art. 30, para.3; Exhibit CHN-523,
Opinions of the State Council on Fu rther Accelerating the Recycle Economy , Art. II (6); Exhibit CHN-525,
Guiding Opinions on Strengthening the Recycling for Regenerated Resources , Art. I(II); Exhibit CHN-123,
Eleventh Five-Year Plan fo r Environmental Protection (2006-2010), Arts. III(I), para. 1; III(III), para.3; IV(II),
para.2; V(II) and V(II), para.1; Exhibit CHN-144, Guidelines of the Eleventh Five-Year Plan for National
Economic and Social Development, Chapter 13, Section 1; Chapter 19, Section 2; Chapter 22, Section 1 (special
column 10); Section 5, Chapter 24; Section 2 and Chapter 22, Section 5 (special column 11); Exhibit CHN-452,
2006 Adjust of Interim Tariff Rates of Certain Import and Export Commodities , para. 3; Exhibit CHN-526,
Circular on Trial Works on the Construction of Recycling System for Regenerated Resources , Arts. II(2) and
II(3); Exhibit CHN-145, 2007 Plan for Energy Conservation and Pollutant Discharge Reduction , Arts. I,
Adjust of Import and Export Tariffs of 2008, para.3; Exhibit CHN-272, Energy Conservation Law, Arts. 7, 9, 30,
52 and 66; Exhibit CHN-467, Circular on Implementation Plans and Measures regarding Energy Conservation
and Pollutant Discharge Reduction , Arts. I.2 and II.2 of the Implementation Plan for Statistical Indicator
System of Energy Consumption caps per Unit of GDP , pp. 2 and 4; Exhibit CHN-453, 2007 Adjust of Tariff
Rates from June 1 to Control the Export of High-Energy Consumption Products , para.1; Exhibit CHN-469,
Circular on Strengthening and Regulating the Administration of New Projects , Art. I; Exhibit CHN-100, 2009
Further Adjust of Import and Export Tariffs , para.3; Exhibit CHN-101, Law on the Promotion of Recycle
Economy, Art. 16; Exhibit CHN-192: Coking Industry Entrance Rules , Arts. I, para.2 and II, para.1; Exhibit
CHN-269, Law on the Prevention and C ontrol of Water Pollution , Art. 10; Exhibit CHN-287, 2008
Arrangement for Energy Conservation and Pollutant Discharge Reduction , Arts. III, V, VII, XI; Exhibit CHN-
420, Policies and Actions for Addressing Climate Change, Art. IV and pp. 8-10; Exhibit CHN-475, Circular on
Further Strengthening the Checks on Clean Production of Key Enterprises , Art 1.3; Exhibit CHN-99,
Adjustment and Revitalization Plan for Non- Ferrous Industry , Arts. 1, 2.3.3 and 3.2; Exhibit CHN-288, 2009
Arrangement for Energy Conservation and Pollutant Discharge Reduction , Arts. III and VII; Exhibit JE-10,
Guidance for Enhancing the Management of Raw Materials Industries , para.6; Exhibit CHN-446, 2010 List of
Enterprises Subject to Elimination of Outdated Capacity in Industry Sector , and Exhibit CHN-479, Circular on
Strengthening the Elimination of Outdated Capacity, Art. II.2.

documents that simply identify goals rather than specific standards and that do not provide evidence
as to whether any policies were implemented to seek to achieve these goals. The Panel finds it
difficult to assess to what extent these measures have affected the steel and aluminium producers, and
whether and how they have contributed to the reduc tion of EPR pollution. Nor is there evidence why
these standards could not be used to replace the use of export restrictions.
7.584 China seems, therefore, to have a regulator y framework to put in place the alternative
measures suggested by the complainants. China clai ms, however, that export restrictions are "also"
necessary, and seeks to justify its use of a combin ation of export restrictions and other domestic
measures on the basis that export restrictions provide additional benefits compared to those resulting
from reliance on environmental regulations alone . In other words, according to China, export
restraints complement the alternative measures identified by the complainants.
928
7.585 China asserts that these additional benefits provide d by the combined use of export restraints
and other domestic measures include short, medium, and long term positive effects. Regarding the
short term benefits, China claims that its export restraints on EP Rs effect an immediate pollution
reduction, and that this is important because the environmental measures in place cannot fully address
the environmental damage caused by EPR production. 929 In this regard, China points out that without
export restrictions EPR export prices would be too low with respect to the social cost of production of
EPRs (as they would not take into account the envi ronmental costs). Since e nvironmental regulations
alone are not sufficient to fully eliminate the environmental damage from EPR production, export
restrictions are necessary. Thus by increasing th e world price for EPRs, China encourages producers
to internalize the environmental costs associated with EPR production.930
7.586 The difficulty with China's contention is that export restrictions gene rally do not internalize
the social environmental costs 931 of EPRs' production in the domestic economy. This is because
export restrictions reduce the domestic price of EPRs and therefore they stimulate, instead of
reducing, further consumpti on of polluting EPR products. 932 Indeed, the Panel understands that all
parties agree that, in general, export restrictions are not an efficient policy to address environmental
externalities when these derive from domestic producti on rather than exports or imports. This is
because generally the pollution generated by the pr oduction of the goods cons umed domestically is
not less than that of the goods consumed abroad. So the issue is the production itself and not the fact
that it is traded.933

928 China's response to Panel question No. 39, following the second substantive meeting, paras 43-62.
929 With respect to the medium and long-term comple mentary effects of export restrictions invoked by
China, the Panel notes that China made the same ar guments in the context of its demonstration of the
contribution of its export restrictions to its environmental goals. The Panel refers to paras. 7.539-7.554 above.
930 China's response to Panel question No. 39 following the second substantive meeting, para. 252.
931 The social environmental costs are the costs of polluting the environment while producing EPRs.
932 See also United States' comments on China's res ponse to Panel questions No. 39 following the
second substantive meeting, para. 144.
933 China argues that there are positive spillovers associ ated with the consumption of EPRs, and that in
the presence of such consumption spillovers, export restraints are " also part of the most efficient policy set".
The Panel understands that this means that a policy-make r can decide to couple an export restriction with
another domestic policy tool (a production tax or a consumption subsidy) in order to achieve the optimal export,
production and consumption quantities. The rationale for choosing this option, according to China, is that export
measures are cost effective compared to other policies (China's comments on the complainants' response to
Panel question No. 22 following the second substantive meeting, para. 77). However, the Panel is of the view
that China did not provide sufficient evidence that the adoption of policies that tax pollution at the source is too
costly for China.

7.587 Finally, the Panel notes that China's overall argument seems to be that the use of WTO-
inconsistent export restrictions on EPRs (notwithstanding that several regulations of the type
suggested by the complainants as alternatives are already operating in China) provides benefits
additional to those which WTO-consistent alternatives alone can offer.
7.588 In the Panel's view, China's interpreta tion of Article XX(b) would seem to expand
substantially the scope of the exception provision , so as to allow quantitative export restrictions.
However, the Panel is not asked to discuss the a ppropriateness of the WTO rules at issue in the
present dispute. We are mandated to determine whether China has demonstrated that its WTO-
inconsistent export restrictions can be justified as an exceptional measure necessary for the reduction
of pollution and for the protection of the health of the Chinese population. It will only be able to do so
if it can establish that available WTO-consistent alternatives cannot provide the level of protection
that it chooses to employ. This it has not done.
7.589 Finally, the Panel returns to the complainants' suggestion that "[s]ince China's stated concerns
with life and health relate to the pollution associat ed with primary production, […] [it could adopt]
more stringent pollution controls on the primary production of the metals".
934 China has declined to do
so, arguing that "the presence of administrative, monitoring, and enforcement costs renders impossible
[…] [the adoption of policies] that tax activities at the pollution source […]". 935 In the Panel's view,
this does not constitute an adequate explanation as to why WTO-consistent production caps or taxes
are not reasonably available to China to replace the use of its WTO-inconsistent export restrictions.
7.590 The Panel concludes that China has not been ab le to justify why less trade restrictive and
WTO-consistent alternatives available, as identifie d by the complainants and acknowledged to exist
by China, cannot be used in lieu of applying export restrictions. It is not a question of imposing more
"onerous production-limiting environmental measures" 936, but of enhancing and implementing
existing environmental measures, as well as establi shing new ones where none exists, that have a
direct impact on pollution relating to the production of EPR products.
(v) Conclusions on the necessity of the measure for EPRs
7.591 For the reasons discussed above, the Panel finds that China has not demonstrated that its
export restrictions on EPRs, in particular its export duties on manganese metal, magnesium metal and
coke, and its export quotas on coke and on silicon carbide, are justified pursuant to Article XX(b).
(c) Whether export duties applied to zinc scrap, magnesium scrap and manganese scrap are
justified pursuant to Article XX(b) of the GATT 1994
7.592 China seeks to justify its export restrictions on scrap on the basis of their alleged contribution
to the objective of protecting human, animal or plant life or health. According to China, the
production from crude ores (i.e. primary production) of magnesi um, manganese and zinc presents
important health risks 937 due to high levels of pollution and energy intensity connected with that
production. In contrast, the production of these metals using recycled scrap, or so-called "secondary
production", is significantly less polluting and more ener gy efficient, thereby reducing risks related to
non-ferrous metal production using crude ores. 938 Export duties on scrap are necessary to bring about

934 European Union's second written submission, pa ra. 395. See also: United States' second written
935 China's comments on the complainants' response to Panel question No. 22, following the second
substantive meeting, para. 83 (emphasis added). See also Exhibit CHN-519, paras. 34-40.
936 China's response to Panel question No. 39, following the second substantive meeting, para. 265.
937 Identified in Annex B of China's first written submission.
938 China's first written submission, paras. 230, and 248.

a shift from primary production to secondary production, because they guarantee a stable supply of
scrap which is necessary for the development of the secondary industry.
7.593 As with export restrictions on EPRs, the compla inants argue that China's goal is not health-
related but its economic development.
7.594 As with the export restrictions on EPRs, the Pa nel needs to assess whether China has met its
burden of proving that these export restrictions are "necessary" to protect the health of the Chinese
people. As discussed earlier, the necessity test calls for a balancing of the importance of (i) the value
at issue, (ii) the choice of the measure and (iii) its contribution to the realization of the policy goal
versus the restrictiveness of such an export restric tion in the light of the availability of effective
alternative measures.
7.595 The Panel is of the view that it does not need to review the stated goals of the export
restrictions on scrap products; we have already review ed them in the context of our consideration of
export restrictions on EPRs. Nor do we need to discuss the importance of the values invoked by China
in order to seek to justify its WTO-inconsistent ex port restrictions. As with export restrictions on
EPRs, China invokes values of the highest importance: the reduction of pollution and the protection of
health. All parties agree that these values are import ant, but the complainants' fundamental point is
that the real objective of China's export restricti ons on scrap is not the reduction of pollution caused
by the use of EPRs, but rather the provision of low price raw material to its downstream industry to
further stimulate its economic development. As we sai d above, this is not a justification factored into
Article XX(b).
7.596 We examine, hereafter, China's argument th at its export restrictions on scrap products
contribute to the realization of China's goal to reduce pollution created by the use of EPRs.
(i) Contribution of the measure
7.597 China asserts that the non-ferrous metal scrap products currently make a material
contribution, and are apt to contribute to the reduc tion of health risks rela ted to metal production by
(i) in the short-term, reducing the level of polluti on and energy intensity involved in the production
from crude ores of magnesium metal, manganese metal, and zinc; and, (ii) in the medium- to long-
term, contributing to the development and use of r ecycling technologies, and thus, a more sustainable
secondary production of non-ferrous metals.
939
Whether China has discharged its burden of proof that export duties are currently making a
material contribution to the stated objective
7.598 China's main premise is that an "X" level of export duties on scrap will lead to a "Y" level of
pollution saved. This is because export restrictions reduce the price for secondary production relative
to primary production of the metal, thus fosteri ng the consumption of secondary production. Since
according to China secondary production is less polluting than primary production, for a given
amount of downstream production there will be a reduced level of pollution.940
7.599 In support of its claim that export restrictions on non-ferrous metal scrap currently make a
material contribution to the reduction of pollution, China submits the results of a simulation study
based on a model of demand and supply. On the basis of this model, China first estimates the impact
of an export restriction on the consumption of scrap . In particular, China estimates that the export

939 China's first written submission, paras. 263- 282.
940 China's first written submission, paras. 263- 282.

duty of 10% on magnesium scrap increases domestic c onsumption of scrap by 1.92%; the export duty
of 20% on manganese scrap increases its domestic c onsumption by 5.07%; and the 10% export duty
on zinc scrap increases domestic consumption by 0.63%.
941 China estimates the impact of this
increased availability of scrap on the reduction of pollution, relying on the following assumptions: (i)
all scrap is recycled (that is, a 100% scrap recovery rate, or equivalently 1 tonne of scrap of each scrap
product produces roughly 1 tonne of the secondary metal); (ii) secondary production is a perfect
substitute for primary production, so that 1 tonne of secondary production can be used in place of 1 of
tonne primary production; and that (iii) scrap cons umption in 2009 is 10% of primary production (or
equivalently that secondary production is 10% of primary production).942
7.600 The Panel has not been convinced by the an alysis submitted by China for a number of
reasons. First, China's quantitative analysis of the current effect of export duties on scrap on their
consumption suffers from a number of technical we aknesses. The model used by China to estimate
the effects of export restrictions on domestic consum ption of scrap is the same as the one China uses
for estimating the impact of restrictions on the pr oduction of EPR products. Therefore, many of the
issues discussed above with respect to metals also apply to scrap. Most importantly, the Panel recalls
its view that the quality of the data used for the analysis seriously undermines the reliability of the
results. In this regard, the Panel recalls that th e sensitivity analysis submitted by the complainants
(whose results are reported in Table A, Exhibit JE-185 ) shows that the estimated size of the effects of
export restraints depends crucially on the numerical values of the parameters.
943
7.601 Second, the assumptions China made in calculating the pollution savings resulting from
increased consumption of scrap (namely, 10% rate of secondary production and 100% scrap recovery
rate) are not supported by evidence. In particul ar, China presents no evidence on the magnitude of
secondary production in China. In the case of manga nese, the evidence before the Panel supports the
view that secondary production of manganese metal from manganese scrap is very limited at best (and
thus the assumption that all scrap goes into secondary production of the metal appears incorrect).
Indeed as noted by China's expert, "manganese scrap is almost always used and reused in alloy form;
it is rarely recovered as manganese metal". 944 Therefore, the Panel is unable to place much store in
the results of these calculations.
7.602 Third, China addresses the issue of the pollution associated with the production of EPRs in
isolation and does not take into account the pollu tion that would result from increased downstream
production. The economic study put forward with a view to justifying export duties on scrap 945 does
not consider the upstream-downstream linkages a nd the interaction between export duties on scrap
and on metals. To the extent that an export rest riction on scrap may foster the development of
downstream sectors, China's estimations of polluti on reduction do not take into account the additional
pollution generated by the downstream industries. Ch ina claims that the pollution generated by the
downstream sector is minor compared to the redu ced pollution that will result from the substitution

941 China's first written submission, para. 269.
942 Exhibits CHN-124 and CHN-147.
943 This is particularly true for scraps where the share of domestic production that is domestically
consumed is based on data for primary metal rather than scraps.
944 See Exhibit CHN-11, footnote 25, p.5. The complainants provided argumentation and evidence
aiming to show that secondary production of manganese metal is not feasible and did not occur in United States'
opening oral statement at the first substantive meeting, para.106; United States' second written submission,
para. 55; United States' opening oral statement at the second substantive meeting, paras. 55-56; United States
comments on China's response to Panel question No 27 following the second substantive meeting. China
provided argumentation and evidence aiming to rebut the United States' claim in Chin a's response to the Panel
question No. 27 following the second substantive meeting, paras. 131 and 132; China's second written
submission, paras. 340 and 341; Exhibit CHN-481 p.5; Exhibit CHN- 486.
945 Exhibit CHN-124.

between primary and secondary production of the meta ls at issue. However, as discussed above for
export restrictions on EPR products
946, the Panel finds that the ev idence submitted by China that
shows the pollution by metric tonne of various pr oducts does not permit an evaluation of the pollution
generated by the amount of downs tream production using the additional units of scrap available for
domestic consumption as a result of the export du ties on these materials. Consequently, it is not
possible to reach a determination on the net effects on pollution of export duties on scrap.
7.603 Fourth, the Panel believes that the assessment of the contribution that a measure currently
makes to the stated objective should not be done in isolation. We consider that the imposition of an
export restriction on manganese ores, by providing an incentive to primary production, may
potentially counterbalance the alleged effect of export restrictions on secondary production (from
scrap products), thus undermining China's objective. The Panel is aware of China's claim that, in
practice, export restrictions on manganese ores and zinc ores do not affect their domestic price
because these products are largely imported, as opposed to exported, by China.
947 However, the Panel
notes that on this basis one should also not expect any effect of export restrictions on two categories
of zinc scrap (zinc waste and scrap, "7902.0000" an d zinc ash and residues "2620.1900"), as the data
provided in Exhibit CHN-289 show with respect to these two products significantly higher figures for
imports than for exports. Yet, Chin a claims that the domes tic price of these zinc scrap products has
been affected by the imposition of export restrictions on those products. Furthermore, as discussed
above, the low export to import ratio may simply be the outcome of the export restrictions themselves.
7.604 In light of the above, the Panel is of the vi ew that China has not proved that the export
measures it has in place on scrap are currently making a material contribution to the pollution
reducing objective. Indeed China even asserts that at present the effect of export duties on scrap
products is at best modest.
948 Such contribution, if any, cannot be material, at least, in the present.
Whether China has discharged its burden of proof that export duties are apt to make a
material contribution in the future to the stated objective
7.605 China argues that its export duties on metal scr ap products are "apt to" make a material
contribution in the future to the objective r ecognized under Article XX(b) as these measures are
necessary for the development of the recycling indust ry. In particular, China asserts that "to achieve
its objective of successful substitution of secondary production for primary production, it must control
and manage its limited scrap resources". 949 "The export duties will safeguard stable and predictable
markets for scrap"950, thus allowing the development of China's recycling industry.
7.606 To justify the use of export restrictions on scrap, China identifies high foreign demand for
scrap and the unstable foreign supply thereof as two factors that frustrate China's long-term objective
of substituting secondary for primary production. However, there is no evidence before the Panel that
supports China's claim that forei gn demand for scrap is a cause of the low level of development in
China of the recycling industry for magnesium, ma nganese and zinc metals. Furthermore, China does
not explain how, given its low level of exports of scrap, the imposition of an export restriction would
help guarantee a critical mass of scrap resources and help develop the recycling industry.951

946 See para. 7.534 above.
947 China's response to Panel question No. 49 following the first substantive meeting, para. 247.
948 China's response to Panel question No. 36 following the second substantive meeting, para. 164.
949 China's first written submission, para. 265.
950 China's first written submission, para. 282.
951 United States' comments on China's response to Panel question No. 36 following the second
substantive meeting , paras.127-130.

7.607 With respect to the supposed international supply constraints on the supply of scrap, the Panel
also stresses the negative effect that a reduction of the domestic price for scrap may have on the
incentive to collect scrap. China argues that various other measures that it has in place to foster the
development of domestic scrap s upply channels "countervail any downward pressure on metal scrap
prices".
952 However, China does not substantiate this claim with any evidence.
7.608 Another effect of export restrictions on scrap is that by reducing the domestic price of
secondary production they will help to develop the dow nstream sector. This has two implications for
the case at issue. First, as discussed above953, China does not take into account the pollution generated
by the downstream sector. Second, to the extent that export duties favour the expansion of the
downstream sector, the demand for raw materials increases, including more polluting primary
production. China's calculations of the effects of an export duty on scrap on pollution do not take
these indirect effects into account.
7.609 Given the above, the Panel considers that the ev idence provided by China is not sufficient to
demonstrate that its export restrictions on scrap are apt to contribute to the stated objective.
(ii) Availability of WTO-consistent or les trade restrictive alternative measures
7.610 The Panel understands that there are a number of measures that could promote more
effectively the supply of scrap and the developm ent of secondary production. For example, China
itself recognises the role that measures such as the introduction of a labelling requirement, incentive
schemes, research grants, and low import tariffs for secondary inputs, have had in developed countries
on the development of a secondary industry.
954 We have reviewed in pa ragraphs 7.564-7.590 above
China's arguments and evidence regarding alternativ e measures suggested by the complainants, many
of which concern the recycling industry and the ongoing change in China's economy towards a more
recycle-friendly economy. Importantly, China recognizes that a major impediment to the development
of the recycling sector in China is the lack of r ecycling infrastructure; but the recycling sector is
expected to be transforming rapidly or at least China states that it has put in place measures aimed at
promoting "the rapid growth of domestic recycling and reprocessing industries".
955 From the evidence
put forward and the arguments of the parties, the Panel is of the view that there are recycling
infrastructure measures that China is in the process of setting up to facilitate the development of scrap
supply.956
7.611 The Panel finds that China has not demonstr ated that its export duties on manganese,
magnesium and zinc scrap products are justified pursuant to Article XX(b).
(d) Conclusions on the necessity of the measure pursuant to Article XX(b) of the GATT 1994
7.612 For the reasons mentioned above, the Panel finds that even assuming arguendo that it could
invoke Article XX(b) of the GATT 1994 to justify its export duties contrary to its Accession Protocol,
China has not demonstrated that its export duti es on zinc scrap, magnesium scrap and manganese
scrap are justified pursuant to Article XX(b).

952 China's response to Panel question No. 37 following the second substantive meeting, para. 192.
953 See para. 7.602 above.
954 China's first written submission, para. 278.
955 China's response to Panel question No. 36 following the second substantive meeting, para. 164.
956 United States' second written submission, para 68; Mexico's second written submission, para 71.

4. Summary of the Panel's findings on China's invocation of Articles XI:2(a), XX(b) and
XX(g) of the GATT 1994
7.613 The Panel recalls that China's export quota on bauxite is inconsistent with Article XI:1 of the
GATT 1994. the Panel finds that China has not demonstrated that its export quota applicable to
refractory-grade bauxite is temporarily applied within the meaning of Article XI:2(a) to either prevent
or relieve a critical shortage. The Panel further fi nds that China has not demonstrated that its export
quota applicable on refractory-grade bauxite relat es to the conservation of exhaustible natural
resources and was made effective in conjunctio n with restrictions on domestic production or
consumption pursuant to Article XX(g) of the GATT 1994.
7.614 The Panel recalls that China's export duties on fl uorspar is inconsistent with Paragraph 11.3
of China's Accession Protocol. The Panel finds arguendo that even assuming that Article XX(g) of
the GATT 1994 were available to justify export dut ies in violation of China's Accession Protocol,
China has not demonstrated that its export duties on fluorspar relate to the conservation of exhaustible
natural resources and were made effective in conj unction with restrictions on domestic production or
consumption pursuant to Article XX(g) of the GATT 1994.
7.615 The Panel recalls that China's export quotas on coke, silicon carbide are inconsistent with
Article XI:1 of the GATT 1994 and China has not de monstrated that they are necessary within the
meaning of Article XX(b) of the GATT 1994.
7.616 The Panel recalls that China's export duties on EPRs and scrap products are inconsistent with
Paragraph 11.3 of China's Accession Protocol. The Panel finds arguendo that even assuming that
Article XX(b) of the GATT 1994 were available to justify export duties in violation of China's
Accession Protocol, China has not demonstrated that its export duties on EPRs and scrap products are
necessary within the meaning of Article XX(b) of the GATT 1994.
7.617 In light of these findings under Articles XX(g) a nd XX(b), the Panel concludes that it is not
necessary to examine whether the application of the export quotas and export duties is consistent with
the provisions of the chapeau of Article XX. This is because when a measure does not meet the
requirements of any sub-paragraphs of Article XX of the GATT 1994, it cannot be justified pursuant
to Article XX of the GATT 1994.
5. Whether China's export quotas on certain form s of bauxite, coke, fluorspar, silicon
carbide and zinc are inconsistent with Par agraph 1.2 of China's Accession Protocol and
Paragraphs 162 and 165 of China's Working Party Report
7.618 The complainants argue that since China's export quotas on bauxite, coke, fluorspar,
manganese, silicon carbide are inconsistent with GATT Article XI, the same quotas are necessarily
inconsistent with paragraph 1.2 of China's Accessi on Protocol and Paragraphs 162 and 165 of China's
Working Party Report. The complainants therefore request the Panel to find that China quotas are
also inconsistent with China's obligations under its Accession Protocol.
7.619 To the extent the Panel finds China's export quot as are inconsistent with Article XI:1, China
requests that the Panel exercise judicial economy with respect to claims under Paragraphs 162 and
165 of its Working Party Report. China considers the complainants' claims under these provisions are
duplicative to those under Article XI:1. It theref ore requests the Panel to exercise judicial economy
with respect to these claims.957

957 China's first written submission, para. 344.

7.620 The Panel notes that Paragraph 1.2 of China's Accession Protocol provides:
"The WTO Agreement to which China acced es shall be the WTO Agreement as
rectified, amended or otherwise modified by such legal instruments as may have
entered into force before the date of accession. This Protocol, which shall include the
commitments referred to in paragraph 342 of the Working Party Report, shall be an
integral part of the WTO Agreement."
7.621 Thus, China's Accession Protocol is an "integra l part of the WTO Agreement" and therefore
contains enforceable commitments including those "com mitments referred to in paragraph 342 of the
Working Party Report".
958 Therefore, China must comply w ith the commitments undertaken in the
Working Party Report and listed in paragraph 342 of the Working Party Report. Paragraph 342 of the
Working Party Report includes the "commitments gi ven by China in relation to certain specific
matters which are reproduced" in paragraphs 162 and 165 of the Working Party Report.
7.622 Paragraph 162 of the Working Party Report provides that:
"...China confirmed that China would abide by WTO rules in respect of non-
automatic export licensing and export restri ctions. The Foreign Trade Law would
also be brought into conformity with GATT requirements. Moreover, export
restrictions and licensing would only be app lied, after the date of accession, in those
cases where this was justified by GATT provisions..."
7.623 Paragraph 165 of the Working Party Report provides that:
"...China confirmed that upon accession, remaining non-automatic restrictions on
exports would be notified to the WTO annua lly and would be eliminated unless they
could be justified under the WTO Agreement or the Draft Protocol..."
7.624 The Panel concluded in paragraph 7.224 a bove that China's export quotas on bauxite,
fluorspar, silicon carbide, coke and zinc are inconsistent with these commitments. China did not offer
any justification for its 2009 quotas on fluorspar and on zinc. The Panel further concluded that export
quotas on coke and silicon carbide are not justified pursuant to Article XX(b) of the GATT 1994, and
the export quota on bauxite is not justified pursu ant to Article XI:2(a) or Article XX(g) of the
GATT 1994. In light of these findings, China has not eliminated the export quotas on those raw
materials "upon accession" to the WTO.
7.625 The Panel recalls that China requested the Panel to exercise judicial economy in respect of the
complainants' additional claims under Paragraphs 162 and 165 of China's Working Party Report. The
Appellate Body has stated that panels are not oblig ed to address all legal claims raised by parties,
explaining that "[n]othing in [Article 11 of the DSU]
959 or in previous GATT practice requires a panel
to examine all legal claims made by the complaining party." 960 The Appellate Body later explained
that "a panel has to address those claims on which a finding is necessary in order to enable the DSB to

958 China's Accession Protocol (Exhibit JE-2).
959 Article 11 of the DSU provides, in relevant part: "...a panel should make an objective assessment of
the matter before it, including an objective assessment of the facts of the case and the applicability of and
conformity with the relevant covered agreements, and make such other findings as will assist the DSB in
making the recommendations or in giving the rulings provided for in the covered agreements."
960 Appellate Body Report, US – Wool Shirts and Blouses , p. 18, DSR 1997:I, 323, at p. 339;, DSR
1997:I, at pages 339-340 citing inter alia, EEC – Import Restrictions, BISD 30S/129, para. 33; Canada – FIRA,
BISD 30S/140, para. 5.16; US – Sugar Quota , BISD 31S/67, paras. 4.5-4.6; Japan - Semi-Conductors , BISD

make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a
Member with those recommendations and rulings "i n order to ensure effective resolution of the
disputes to the benefits of Members."
961
7.626 The Panel does not consider that making finding s in relation to this claim would assist the
DSB in making recommendations. Paragraph 162 pr ovides that China will abide by the WTO rules
with respect to export restrictions and will only impose export restrictions when justified by
GATT provisions. Since the Panel reached the conc lusion above that the same export restrictions
were inconsistent with GATT Ar ticle XI and not justified pursuant to GATT Article XI:2(a) or
Article XX(b) or XX(g), the Panel considers that further findings under China's Accession Protocol
and Working Party Report on this matter would not be necessary to resolve the dispute. Therefore,
the Panel does not make findings in this regard.
E. EXPORT QUOTA ALLOCATION AND ADMINISTRATION
7.627 In addition to their claims concerning th e imposition of export quotas to bauxite, coke,
fluorspar, silicon carbide and zinc 962, the complainants further challenge particular aspects of China's
allocation and administration of export quotas.
7.628 The complainants submit that requirements to demonstrate prior export performance and fulfil
a minimum capital requirement to obtain a quota a llocation for bauxite, coke, fluorspar and silicon
carbide are inconsistent with China's Accession Protocol and China's Working Party Report in various
respects. The United States and Mexico argue that these requirements are inconsistent with
Paragraphs 1.2 and 5.1 of China's Accession Protoc ol, in combination with Paragraphs 83 and 84 of
China's Working Party Report. The European Unio n argues that these requirements are inconsistent
with Paragraphs 1.2 and 5.1 of China's Accession Protocol, read in combination with Paragraph 83(a),
83(b), 83(d) and 84(a) of China's Working Party Repo rt. Separately, the European Union argues that
this prior export performance requirement "is more likely to result in the exclusion of foreign
enterprises and individuals from the right to export" a nd is therefore also inconsistent with paragraph
5.2 of China's Accession Protocol, in combinatio n with Paragraphs 84(a) and 84(b) of China's
Working Party Report.
7.629 In addition, the complainants submit that Ch ina's administration of its export quotas is
inconsistent with Article X:3(a) of the GATT 1994. Under this provision, the United States and
Mexico argue that China's administration of its export quotas through the involvment of the CCCMC
is inconsistent with Article X:3(a). The Eur opean Union challenge China's allocation of quotas
directly through the assessment of quota applicants' operation/business management capacity.
7.630 In addition, the European Union argues that China's failure to publish the total amount and
procedure for the allocation of zinc export quotas in 2009 and 2010 is inconsistent with Article X:1 of
the GATT 1994.
7.631 Finally, the United States and Mexico argue that China's allocation of quotas on bauxite,
fluorspar and silicon carbide based on the bid-winning pr ice is inconsistent with Article VIII:1(a) of
the GATT 1994 and Paragraph 11.3 of China's Accession Protocol.
7.632 Should the Panel find that the quota measures ar e inconsistent with the covered agreements,
and not justified by Articles XX(g) or XX(b) of the GATT 1994, China requests the Panel to exercise

961 Appellate Body Report, Australia – Salmon, para. 223.
962 The specific forms of the raw materials subject to complainants' claims are identified in Exhibit JE-
6 and in para. 2.2 of the Descriptive Part of these Reports.

judicial economy with respect to claims regardi ng quota administration,. China submits that findings
in these circumstances would serve no additional pur pose to find that the quota administration rules,
including those relating to allocation through bidding, are WTO-inconsistent.
963
7.633 In the event the Panel were to consider these cl aims, China requests the Panel to reject them.
China argues that requirements to demonstrate prio r export performance and fulfil a minimum capital
requirement are permitted under the GATT 1994 and do not improperly restrict the trading rights of
enterprises, which would result in any inconsiste ncy in respect of its Accession Protocol or
Paragraphs 83 or 84 of its Working Party Report. In respect of the claim of the United States and
Mexico under Article X:3(a), China argues that no conflict exists in the involvement of the CCCMC
that would amount to partial administration of its export quotas. In respect of the European Union's
claim, China asserts that the Europ ean Union has failed to provide any evidence that the requirement
to demonstrate operation/business management cap acity runs afoul of the requirements of
Article X:3(a). In respect of the European Union's claim under GATT Article X:1, China
acknowledges that it did not set a quota amount for zinc in 2009 and therefore asserts no need to have
published a quota amount, in its defence. Moreover, China argues that it had complied with
Article X:1 by publishing that "zinc could only be exported if China decided to decided to open a
quota amount".
964 Finally, China argues that the bid-winning price is not a fee or charge "on or in
connection with exportation" within the meaning of Article VIII:1(a), nor is it a tax or charge "applied
to exports" within the meaning of Paragraph 11.3 of China's Accession Protocol.
7.634 The Panel recalls that it determined above 965 that China's export quotas imposed on bauxite,
coke, fluorspar and silicon carbide, and a prohibition on the export of zinc in 2009 are inconsistent
with Article XI:1 of the GATT 1994, and quotas on bauxite, fluorspar, silic on carbide and coke are
not justified pursuant to Articles XX(b) or XX(g) of the GATT 1994.
7.635 The Panel additionally recalls that panels are not obliged to address all legal claims raised by
parties.966 As noted, the Appellate Body explained that "a panel has to address those claims on which
a finding is necessary in order to enable the DS B to make sufficiently precise recommendations and
rulings so as to allow for prompt compliance by a Member with those recommendations and rulings
"in order to ensure effective resolution of the disputes to the benefits of Members."967
7.636 The Panel bears in mind its statement in para graph 7.664 that "the obligations relating to
allocations of quotas (Article[] X ...) are distinct from and additional to those relating to Article XI
and GATT possible justifications. Even in situ ations where a quota is justified pursuant to
Article XX, the allocation and administration of a quota must comply with Article[] X ... ".
Consequently, the Panel considers that in the even t that China were in any instance to impose a quota
that was justified pursuant to Article XX, it would be relevant for the parties to know whether the
aspects of China's system of quota administration at issue in this dispute comply with the relevant
provisions of GATT Article X.

963 China's first written submission, paras. 568-569.
964 China's response to Panel questio n No. 8, following the first substantive meeting para. 37; China's
opening oral statement at the second substantive meeting, para. 298.
965 See Sections VII.C and VII.D above.
966 See para. 7.625 above; see also Appellate Body Report, US – Wool Shirts and Blouses , pp. 18-19,
DSR 1997:I, 323, at pp. 339-340 citing inter alia, EEC – Import Restrictions, BISD 30S/129, para. 33; Canada
– FIRA, BISD 30S/140, para. 5.16; US – Sugar Quota, BISD 31S/67, paras. 4.5-4.6; Japan – Semi-Conductors,
967 Appellate Body Report, Australia – Salmon, para. 223.

7.637 Accordingly, the Panel will consider the co mplainants' claims under China's Accession
Protocol and Working Party Report, and under Artic les VIII:1(a), X:1 and X:3(a) of the GATT 1994
below.
1. Whether requirements to demonstrate pr ior export performance and a minimum
capital requirement to obtain a quota allocation contravenes Paragraphs 1.2, 5.1 and 5.2
of China's Accession Protocol, read in combination with Paragraphs 83 and 84 of
China's Working Party Report
7.638 The complainants submit that requirements to demonstrate prior export performance and fulfil
a minimum capital requirement to obtain a quota a llocation for bauxite, coke, fluorspar and silicon
carbide are inconsistent with China's Accession Protocol and China's Working Party Report in various
respects. The complainants submit that Chin a expressly undertook in its Accession Protocol and
Working Party Report to eliminate these specific requirements.
7.639 The United States and Mexico argue that these re quirements as they pertain to bauxite, coke,
fluorspar and silicon carbide are inconsistent with Paragraphs 1.2 and 5.1 of China's Accession
Protocol, in combination with Paragraphs 83 and 84 of China's Working Party Report.
968
7.640 The European Union argues that China's prior ex port performance requirement is inconsistent
with Paragraphs 1.2 and 5.1 of China's Accession Pr otocol, read in combination with Paragraph 83(a)
and 83(d) of China's Working Party Report. Separa tely, the European Union argues that this prior
export performance requirement "is more likely to result in the exclusion of foreign enterprises and
individuals from the right to export" and is therefor e also inconsistent with paragraph 5.2 of China's
Accession Protocol, in combination with Paragra phs 84(a) and 84(b) of China's Working Party
Report. The European Union argues that China's ce rtain minimum capital requirement for the right to
export coke, bauxite, silicon carbide and fluorspar is inconsistent w ith Paragraphs 1.2 and 5.1 of
China's Accession Protocol, in combination with Paragraphs 83(b), 83(d) and 84(a) of China's
Working Party Report.
7.641 China requests the Panel to reject the compla inants' claims, including for failure by the
complainants to "present the problem clearly" with respect to claims under China's Accession
Protocol and Working Party Report. 969 China also criticizes the Eu ropean Union's identification of
the relevant measures at issue in respect of its claims. 970 Lastly, China notes that measures identified
by the complainants in respect of their claims have expired. China submits that the 2009 Coke Export
Quota Application Procedures has been replaced by a 2010 version, which contains similar
requirements.971 In addition, China submits that the 2001 Export Quota Bidding Measures 972 and
Export Quota Bidding Implementation Rules973 have now expired, and have been replaced by the 2010
Second-Batch Bidding Qualifications and Review for Export Quotas .974 China submits that, the 2009
Second Round Export Quota Bidding Announcement 975 was replaced by the 2010 First-Batch Bidding

968 United States' first written submission, paras. 283, 289; Mexico's first written submission paras. 286
and 292.
969 China's first written submission, para. 613.
970 China's first written submission, paras. 614, 618.
971 China's first written submission, paras. 615, 620.
972 Exhibits JE-77, CHN-304.
973 Exhibits JE-78, CHN-305.
974 Exhibit CHN- 307; China's first written submission, para. 616.
975 Exhibits CHN-310, JE-91.

Qualifications for Export Q uotas of Industrial Products
976, which was in turn replaced by the 2010
Second-Batch Bidding Qualifications and Review for Export Quotas.977
7.642 The Panel recalls its finding from its 1 October 2010 ruling 978 that the complainants' Panel
Requests (in their "Section III") set out sufficient connections between the challenged measures and
certain violations attributed to such measures. Th e Panel believes that differences in the scope of the
claims presented by the United States, Mexico and the European Union do not necessarily affect the
connection between the identified measures and the clai med violations. The Panel also recalls that in
paragraph 7.33 above it decided – in light of the complainants' decision to narrow down their claim so
as to exclude any challenge of any 2010 measure – that it would make findings only in respect of
China's 2009 measures. Finally, contrary to China' s claim, the Panel was able to identify measures
referred to by the European Union in its first writte n submission, with respect to its trading rights
claims.979
7.643 Therefore, the Panel will consider the complainan ts' claims together below where relevant, or
otherwise, separately. The Panel begins with the relevant provisions of China's Accession Protocol.
(a) China's "trading rights" commitments
7.644 Paragraph 5.1 of China's Accession Protocol provides:
"Without prejudice to China's right to regulate trade in a manner consistent with the
WTO Agreement…within three years after accession all enterprises in China shall
have the right to trade in all goods…Such right to trade shall be the right to…export
goods…"
7.645 Paragraph 5.2 of China's Accession Protocol:
"Except as otherwise provided for in the Protocol, all foreign individuals and
enterprises, including those not invested or registered in China, shall be accorded
treatment no less favourable than that accorded to enterprises in China with respect to
the right to trade."
7.646 Paragraph 1.2 of China's Accession Protocol provides:
"The WTO Agreement to which China acced es shall be the WTO Agreement as
rectified, amended or otherwise modified by such legal instruments as may have
entered into force before the date of accession. This Protocol, which shall include the
commitments referred to in paragraph 342 of the Working Party Report, shall be an
integral part of the WTO Agreement."
7.647 Therefore, China must comply with the commitm ents undertaken in its Working Party Report
and listed in paragraph 342 of its Working Party Report. Paragraph 342 of China's Working Party
Report includes the "commitments given by China in relation to certain specific matters which are
reproduced" in paragraphs 83 and 84 of China's Working Party Report.
7.648 Paragraph 83(a) of the Working Party Report provides:

976 Exhibit CHN-311.
977 Exhibit CHN- 307. See: China's first written submission, para. 616.
978 See paragraphs 1.10 to 1.13 above; Annex F to these Reports.
979 See, in particular footnotes 224-228, 229-231 of the European Union's first written submission.

"… upon accession, China would eliminate for both Chinese and foreign-invested
enterprises any export performance…and prio r experience requirements such as
in…exporting, as criteria for obtaining or maintaining the right to … export."
7.649 Paragraph 83(b) of the Working Party Report provides:
"In order to accelerate this approval process and increase the availability of trading
rights, the representative of China confir med that China would reduce the minimum
registered capital requirement (which applied only to wholly Chinese-invested
enterprises) to obtain trading rights to RMB 5,000,000 for year one, RMB
3,000,000 for year two, RMB 1,000,000 for year three and would eliminate the
examination and approval system at the end of the phase-in period for trading rights."
7.650 Paragraph 83(d) of the Working Party Report provides:
… within three years after accession, all en terprises in China would be granted the
right to trade …
7.651 Paragraph 84(a) of the Working Party Report provides:
"… China would eliminate its system of examination and approval of trading rights
within three years from accession. At that time, China would permit all enterprises in
China and foreign enterprises and individuals…of other WTO Members to
export…all goods (except for the share of pr oducts listed in Annex 2a to the Draft
Protocol reserved for importation and exportation by state trading enterprises) …"
7.652 Paragraph 84(b) of the Working Party Report provides:
"With respect to the grant of trading right s to foreign enterprises and individuals ...
China confirmed that such rights would be granted in a non-discriminatory and non-
discretionary way ... [A]ny requirements for obtaining trading rights would be for
customs and fiscal purposes only and would not constitute a barrier to trade ..."
7.653 In China – Publications and Audiovisual Products , the Appellate Body addressed the
meaning of China's right to regulate trade under Article 5.1 of China's Accession Protocol. The
Appellate Body described the "right to regulate" as "an inherent power enjoyed by a Member's
government, rather than a right bestowed by in ternational treaties such as the WTO Agreement".
980
The Appellate Body explained further that the phras e "right to regulate trade in a manner consistent
with the WTO Agreement" referred both to "right s that the covered agreements affirmatively
recognize as accruing to WTO Members, namely, the power of Members to take specific types of
regulatory measures in respect of trade in goods when those measures satisfy prescribed WTO
disciplines and meet specified criteria", as well as "certain rights to take regulatory action that
derogates from obligations under the WTO Agre ement—that is, to relevant exceptions".
981 Finally,
the Appellate Body explained that the "obligations assumed by China in respect of trading rights,
which relate to traders" is "closely intertwined" with "obligations imposed on all WTO Members in
respect of their regulation of trade in goods", including those under Article XI of the GATT 1994.982

980 Appellate Body Report, China – Publications and Audiovisual Products, para. 222.
981 Appellate Body Report, China – Publications and Audiovisual Products, para. 223.
982 Appellate Body Report, China – Publications and Audiovisual Products, para. 226.

7.654 The Appellate Body in China – Publications and Audiovisual Products also took note of the
Panel's findings in that dispute that paragraphs 83(d) and 84(a) of China's Working Party Report
"confirm China's obligation to grant the right to tr ade", and paragraph 84(b) of China's Working Party
Report "contains an obligation to grant in a nondiscr etionary manner the right to trade to foreign
enterprises and individuals."
983
7.655 Paragraphs 83(a) and 83(b) of China's Work ing Party Report provide additional specific
restrictions on China's right to regulate trade. In particular, Paragraph 83(a) directs China to eliminate
prior import and export performance requirements for both Chinese and foreign-invested enterprises.
Paragraph 83(b) directs China to eliminate any "e xamination and approval system" within three years
of accession, including specifically the elimination of minimum registered capital requirements.
7.656 Finally, the Panel notes that the transition period following China's accession ended on 11
December 2004. None of the raw materials at issue in this dispute are included in Annex 2A or 2B.984
Thus, the commitments undertaken in these provisions ar e applicable to all materials in this dispute.
The Panel will now consider the complainants' clai ms relating to coke, which China allocates quotas
directly, and, bauxite, fluorspa r and silicon carbide, which China allocates quotas through a bidding
system.
(b) Whether China's prior export performance and minimum registered capital requirements are
inconsistent with Paragraphs 1.2 and 5.1 of China's Accession Protocol, read in combination
with Paragraphs 83 and 84 of China's Working Party Report.
7.657 The complainants submit that China requires exporters to satisfy certain prior export
performance and minimum registered capital criteria in order to receive an allocation of a quota for
bauxite, coke, fluorspar and silicon carbi de in order to be able to expor t under the quota. By virtue of
the fact that enterprises that fail to meet th ese requirements are not permitted to export, the
complainants claim that exporters are not granted th e trading right to export these raw materials, in
contravention of commitments undertaken in China's Accession Protocol.
7.658 The complainants submit that, under the 2009 Coke Export Quota Application Procedure 985,
Chinese enterprises must demonstrate that they have exported the requisite amount ("certain level of
volumes" or "export scale") of coke in the previous three-year period.986 In addition, the complainants
submit that trading companies must have a registered capital of at least RMB 50 million under the
2009 Second Batch Coke Export Quota
987 or be prohibited to export under the quota for that year. 988
The complainants submit that these requirements are also applicable to foreign-invested companies
under the 2009 First Batch Coke Export Quotas for FIEs 989 and 2009 Second Batch Coke Export
Quotas for FIEs 990, allocating the coke export quota to such companies.991

983 Appellate Body Report, China – Publications and Audiovisual Products , para.167; see also Panel
Report, China – Publications and Audiovisual Products , paras. 7.249-7.252, 7.260-7.266, 7.285-7.299, 7.313-
314, 7.318-324.
984 China's Accession Protocol, WT/L/432, Annex 2A2, 2B, pp. 20, 30 (Exhibit JE-2).
985 Exhibits CHN-308, JE-85.
986 United States' first written submission, para. 279; European Union's first written submission,
Mexico's second written submission, para. 349.
987 Exhibits CHN-338, JE-81.
988 United States' first written submission, para. 279-280; European Union's first written submission,
989 Exhibit JE-82.
990 Exhibit JE-83.

7.659 The complainants additionally submit that, through the Export Quota Bidding Measures
992
and Export Quota Bidding Implementation Rules993, China requires exporters of bauxite, fluorspar and
silicon carbide to satisfy certain prior export perform ance and minimum registered capital in order to
receive an allocation of a quota through bidding. 994 They argue that foreign-invested companies are
also subject to prior export "experience" requi rements and minimum capital requirements under the
2009 First Round Export Quota Bidding Announcement 995 and 2009 Second Round Export Quota
Bidding Announcement.996
7.660 The European Union argues that the prior expor t performance requirement also has the effect
of denying new applicants the possibility to export.997
7.661 The United States and Mexico consider that China's prior export performance and minimum
registered capital requirements are inconsistent with Paragraphs 1.2 and 5.1 of China's Accession
Protocol, read in combination with Paragraphs 83 and 84 of China's Working Party Report. The
European Union considers China's prior export pe rformance requirements are inconsistent with
Paragraph 5.1 of China's Accession Protocol, read in combination with Paragraphs 83(a) and (d) of
China's Working Party Report. 998 The European Union considers China's minimum capital
requirement is inconsistent with Paragraphs 5.1 and 1.2 of China's Accession Protocol and Paragraphs
83(b), 83(d) and 84(a) of China's Working Party Report.
7.662 China acknowledges that enterprises seeking to qua lify to receive a share of the coke quota,
or participate in the allocation of the quota through bidding must satisfy minimum export performance
and minimum capital requirements.999 However, it submits that these requirements do not improperly
restrict the trading rights of enterprises. Ch ina argues that Paragraph 5.1 of China's Accession
Protocol and Paragraphs 83 and 84 of China's Working Party Report "confirm[] that 'China's
obligation to grant the right to trade cannot impa ir China's power to impose WTO-consistent import
licensing, TBT and SPS measures'" 1000 It submits that these provisions "recognize China's inherent
power to adopt measures to regulate trade in a WT O-consistent manner." In other words, China
argues that these provisions "recognize China's right to impose a WTO-consistent quota ... and to
administer that quota consistently with the WTO covered agreements."
1001
7.663 China contends that it has demonstrated its quotas to be WTO-consistent. China argues
generally that quotas may be WTO-consistent so long as they are administered consistent with
Articles X:3(a) and XIII of the GATT 1994. 1002 China contends that a Member has authority to rely
upon past trading performance in allocating export quot as, referring to Article 3.5(j) of the Import

991 United States' first written submission, para. 281; Mexico's first written submission, para. 284.
992 Export Quota Bidding Measures, CHN-304, Exhibit JE-77.
993 Articles 11, 6(I) (CHN-305, Exhibit JE-78).
994 United States' first written submission, paras. 28 5-286; European Union's first written submission,
para. 221; Mexico's first written submission, paras. 288-289; United States' second written submission,
995 Article III(II)iii, III(II)v, III(II)vi (Exhibits JE-90, CHN-309).
996 Article III.2(3), III.2(6) (Exhibits JE-91, CHN-310).United States' first written submission,
para. 286; European Union's first written submission, paras. 222, 236; Mexico's first written submission
para. 289.
997 European Union's first written submission, paras. 224-225.
998 European Union's first written submission, paras. 226-227.
999 China's first written submission, para. 622.
1000 China's first written submission, para. 624.
1001 China's first written submission, para. 625; see also China's second written submission,
paras. 404-405.
1002 China's first written submission, paras. 627-628.

Licensing Agreement in support of this position.
1003 China submits that the export performance and
minimum capital requirements under challenge are su ch "eligibility criteria" for the WTO-consistent
allocation of export quotas. Therefore, in China' s view, it has not acted inconsistently with its
obligations under its Accession Protocol as informed by its Working Party Report. To the extent the
Panel finds that China's export quotas on bauxite , coke, fluorspar and silicon carbide are WTO-
consistent, China requests the Panel to reject the complainants' claims.
7.664 The obligations relating to allocation and admi nistration of quotas (Articles X and XIII) are
distinct from and additional to those relating to Artic le XI and GATT possible justifications. Even in
situations where a quota is justified pursuant to Article XX, the allocation and administration of a
quota must comply with Articles X and XIII and, in the case of quotas on importation, with the WTO
Import Licensing Agreement.
7.665 Regardless, as explained above
1004, Paragraphs 83 and 84 of China's Working Party Report
includes further commitments granted by China. Pursuant to Paragraph 5.1 of China's Accession
Protocol and Paragraphs 83 and 84 of China's Wo rking Party Report, all enterprises in China –
Chinese and foreign enterprises alike – are to be granted the right to export almost all products 1005
from China, following a transition period that c oncluded on 11 December 2004. Paragraph 1.2 also
states that China's Accession Protocol, includi ng Paragraphs 83 and 84 of China's Working Party
Report, shall be an "integral part of the WTO Ag reement." In the Panel's view, the regulation of
"rights that the covered agreements affirmativel y recognize as accruing to WTO Members" must be
understood in light of the obligations as defined through China's Accession Protocol (and relevant
provisions of its Working Party Report). Ch ina expressly committed through these provisions to
eliminate any "examination and approval system" following 11 December 2004, including eliminating
"export performance" and "prior experience re quirements" and minimum registered capital
requirements.
7.666 Specifically, Paragraph 83(a) directs China to eliminate any "export performance" and "prior
experience requirements". Paragraph 83(b) direct s China to reduce the mi nimum registered capital
requirements gradually, eliminating its "examination and approval system" at the end of 11 December
2004. Paragraph 83(d) confirms that enterpri ses would be granted the "right to trade".
Paragraph 84(a) requires China to permit "all en terprises in China and foreign enterprises and
individuals…of other WTO Members to export…all goods ". In addition, Paragraph 84(b) "confirms"
that these rights would be granted in a non-discriminatory and non-discretionary way.
7.667 Therefore, the Panel is unable to agree with China that the "prior export performance"
requirement and "minimum registered capital" requirements, challenged by the complainants, are
automatically WTO-consistent in the case of Chin a's allocation of export quotas, because China's
exports allegedly respect the provisions of GA TT Articles X:3(a), XIII of the GATT 1994 or any
provision of the Import Licensing Agreement. Such a conclusion would run contrary to the particular
requirements set forth at the time of China's accession.
7.668 As discussed in detail in paragraphs 7.182-7. 195 above, the relevant measures identified by
the complainants, require on their face that expor ting companies (including either "production" or
"trading" companies) for coke, bauxite, fluorspar and silicon carbide, supp lied an amount for export

1003 China's first written submission, para. 630; China's second written submission, para. 406.
1004 See paragraphs 7.653-7.655 above.
1005 As noted above, goods in Annex 2a of China's Accession Protocol are exempted from the
commitments of Paragraph 5.1. However, none of the raw materials at issue in this dispute fall under Annex 2a.

or exported an average annual volume to qualify for a 2009 export quota.
1006 In addition, the relevant
measures identified by the complainants impose particular minimum registered capital requirements
on applicants to export.
1007 The Panel understands these require ments to amount to a form of
examination and approval based on prior export performance and minimum registered capital
requirements that China committed to eliminate in Paragraphs 83(a), 83(b) and 83(d) of China's
Working Party Report. The elimination of these requirements are further required by Paragraphs
84(a) and 84(b).
7.669 For the foregoing reasons, the Panel conclud es that China's prior export performance and
minimum registered capital requirements imposed on coke pursuant to the 2009 Coke Export Quota
Application Procedure
1008, 2009 Second Batch Coke Export Quota 1009, 2009 First Batch Coke Export
Quotas for FIEs 1010, and 2009 Second Batch Coke Export Quotas for FIEs 1011 are inconsistent with
Paragraphs 1.2 and 5.1 of China's Accession Protoc ol, read in combination with Paragraphs 83(a),
83(b) and 83(d); and Paragraphs 84(a) and 84(b) of China's Working Party Report.
7.670 In addition, the Panel concludes that Ch ina's prior export performance and minimum
registered capital requirements imposed on bauxite , fluorspar and silicon carbide pursuant to the
Export Quota Bidding Measures 1012, Export Quota Bidding Implementation Rules 2009 First Round
Export Quota Bidding Announcement 1013, and 2009 Second Round Export Quota Bidding
Announcement 1014 are inconsistent with Paragraphs 1.2 and 5.1 of China's Accession Protocol, read in
combination with Paragraphs 83(a), 83(b) and 83( d); and Paragraphs 84(a) and 84(b) of China's
Working Party Report.
(c) Whether China's prior export performance requireme nt is inconsistent w ith paragraph 5.2 of
China's Accession Protocol and Paragraphs 84(a) and 84(b) of China's Working Party Report
7.671 The European Union further argues that Ch ina's prior export performance requirement
discussed in paragraph 7.640 above is inconsistent with paragraph 5.2 of China's Accession Protocol
and Paragraphs 84(a) and 84(b) of China's Working Party Report. The European Union submits that
this requirement is "more likely to result in the exclusion of foreign enterprises and individuals from
the right to export the relevant raw materials ... b ecause foreign enterprises are more likely to be new
applicants for export quotas than Chinese compani es producing, or traditionally exporting, the [r]aw

1006 2009 Coke Export Quota Application Procedure , Articles I(1)2 and I(2)2 (Exhibit JE-85, CHN-
308); 2009 Second Batch Coke Export Quota , p. 1 (Exhibit JE-81, CHN-338); 2009 First Batch Coke Export
Quotas for FIEs (Exhibit JE-82); 2009 Second Batch Coke Export Quotas for FIEs (Exhibit JE-83); Export
Quota Bidding Measures , Articles 12, 13 (Exhibits JE-77, CHN-304); Export Quota Bidding Implementation
Rules, Articles 15-18 (Exhibits JE-78, CHN-305); 2009 First Round Export Quota Bidding Announcement ,
Articles III(II)iii, III(II)v, III(II)v i (Exhibits JE-90, CHN-309); 2009 S econd Round Export Quota Bidding
Announcement, Articles III.3, III.5, III.6 (Exhibits JE-91, CHN-310).
1007 2009 Coke Export Quota Application Procedure , I(2)2 (Exhibits JE-85, CHN-308); Export Quota
Bidding Measures, Articles 12, 13 (Exhibits JE-77, CHN-304); Export Quota Bidding Implementation Rules ,
Articles 15-18 (Exhibits JE-78, CHN-305); 2009 First Round Export Quota Bidding Announcement , Articles
III(II)iii, III(II)v , III(II)vi (Exhibits JE-90, CHN-309); 2009 Second Round Export Quota Bidding
Announcement, Articles III.3, III.5, III.6 (Exhibits JE-91, CHN-310).
1008 Articles I(1)2 and I(2)2 (Exhibit JE-85, CHN-308).
1009 Exhibits JE-81, CHN-338 p. 1.
1010 Exhibit JE-82.
1011 Exhibit JE-83.
1012 Articles 12, 13 (Exhibits JE-77, CHN-304).
1013 Articles III(II)iii, III(II)v, III(II)vi (Exhibit JE-90, CHN-309).
1014 Articles III.3, III.5, III.6 (Exhibit JE-91, CHN-310).

[m]aterials."
1015 Because of this, the European Union argues that the prior export performance
requirement "operates in a discretionary and pot entially discriminatory way" against foreign
enterprises that is contrary to obligations in Paragraph 5.2 of Chin a's Accession Protocol and
Paragraphs 84(a) and 84(b) of China's Working Party Report.
7.672 China argues that the European Union's h as not presented "any evidence supporting its
allegation of discrimination" or "any explanation of how the ... measures connected to the claim made
under the provisions at issue".1016
7.673 The obligation in Paragraph 5.2 of China's Accession Protocol that "all foreign individuals
and enterprises ... shall be accorded treatment no less favourable than that acco rded to enterprises in
China with respect to the right to trade." As explained above 1017, Paragraph 84 of China's Working
Party Report includes further commitments granted by China. Paragraph 84(a) requires China to
permit "all enterprises in China and foreign ente rprises and individuals…of other WTO Members to
export…all goods", except for those listed in Annex 2A . In addition, Paragraph 84(b) "confirms" that
these rights would be granted in a non-discriminatory and non-discretionary way.
7.674 As discussed in detail in Section VII.C.2(a)(ii) and VII.C.2(b)(i) above, the relevant measures
identified by the European Union require on thei r face that exporting companies (including either
"production" or "trading" companies) for coke, bauxite, fluorspar and silicon carbide, supplied an
amount for export or exported an average annual volume to qualify for a 2009 export quota.1018
7.675 In the Panel's view, the measures do not expressly "operate[] to the detriment and exclusion of
foreign enterprises from quota allocation." 1019 Instead the past export performance requirement
applies similarly to both Chinese enterprises and fore ign ones. Accordingly, there is no basis on the
face of the measures alone to operate in a discrimin atory way against foreigners. In addition, the
European Union asserts that the measures in practice operate in a discriminatory way to deny foreign
enterprises participation in export quota allocation, stating that "foreign enterprises can never meet the
conditions for participation to ex port quota allocation procedures." 1020 However, as China notes, the
European Union has not submitted evidence beyond mere assertion that foreign enterprises have not
been allocated export quotas in the past.1021
7.676 In the absence of evidence that foreign ente rprises have not been allocated export quotas in
the past, and thus would be excluded from receiving export quotas in the future, the Panel concludes
that it has not basis to find the measures operate in a discriminatory manner. Under the measures,

1015 European Union's first written submission, para. 231; see also European Union's second written
submission, para. 146.
1016 China's first written submission, para. 634; China's second written submission, para. 409.
1017 See paragraphs 7.646-7.647 above.
1018 2009 Coke Export Quota Application Procedure , Articles I(1)2 and I(2)2 (Exhibits JE-85,
CHN-308); 2009 Second Batch Coke Export Quota , at p. 1 (Exhibits JE-81, CHN-338); 2009 First Batch Coke
Export Quotas for FIEs (Exhibit JE-82); 2009 Second Batch Coke Export Quotas for FIEs (Exhibit JE-83, No
Chinese Exhibit); Export Quota Bidding Measures , Articles 12, 13 (Exhibit JE-77, CHN-304); Export Quota
Bidding Implementation Rules , Articles 15-18 (Exhibit JE-78, CHN-305); 2009 First Round Export Quota
Bidding Announcement, Articles III(II)iii, III( II)v, III(II)vi (Exhibits JE-90, CHN-309); 2009 Second Round
Export Quota Bidding Announcement, Articles III.3, III.5, III.6 (Exhibits JE-91, CHN-310).
1019 European Union's second written submission, para. 146.
1020 European Union's second written submission, para. 147.
1021 In this respect, the European Union requests China to provide a "list with the foreign enterprises
that have been allocated a raw material export quota, before the initiation of the current dispute settlement
proceedings". European Union's second written submission, para. 148.

both Chinese and foreign enterprises that did not export in prior years would appear to be treated the
same.
7.677 Accordingly, the Panel concludes that China' s prior export performance requirement imposed
on coke pursuant to the 2009 Coke Export Quota Application Procedure
1022, 2009 Second Batch Coke
Export Quota 1023 2009 First Batch Coke Export Quotas for FIEs 1024, and 2009 Second Batch Coke
Export Quotas for FIEs 1025 is not necessarily discriminatory and t hus not inconsistent with paragraph
5.2 of China's Accession Protocol and Paragraphs 84( a) and 84(b) of China's Working Party Report.
Similarly, the Panel concludes that China's prior export performance requirement imposed on bauxite,
fluorspar and silicon carbide pursuant to the Export Quota Bidding Measures 1026, Export Quota
Bidding Implementation Rules 1027, 2009 First Round Export Quota Bidding Announcement 1028, and
2009 Second Round Export Quota Bidding Announcement 1029 is not necessarily discriminatory and
thus is not inconsistent with pa ragraph 5.2 of China's Accession Pr otocol and Paragraphs 84(a) and
84(b) of China's Working Party Report.
(d) Summary
7.678 The Panel concluded above that China's prio r export performance and minimum registered
capital requirements are inconsistent with Paragraphs 1.2 and 5.1 of China's Accession Protocol, read
in combination with Paragraphs 83(a), 83(b) and 83 (d); and Paragraphs 84(a) and 84(b) of China's
Working Party Report. The Panel concluded, however, that China's prior export performance
requirement is not inconsistent with paragraph 5.2 of China's Accession Protocol, read in combination
with Paragraphs 84(a) and 84(b) of China's Working Party Report.
2. Whether China's administration of its expo rt quotas allocated directly through the
assessment of quota applicants' operation/bus iness management capacity is inconsistent
with Article X:3(a) of the GATT 1994
7.679 According to the European Uni on, China's authorities have the power to refuse the grant of
export quotas to enterprises which, in the Ch inese authorities' view, do not possess "business
management capacity". There is no definition of "business management capacity" in Chinese
legislation. The European Union submits that th is condition is vague and opaque and allows China's
authorities discretion on whether to accept or refuse a pplications for export quotas. The European
Union considers that this allows China to admini ster its export quota allocation system in a manner
that is non-uniform, partial and unreasonable and hence inconsistent with Article X:3(a).
7.680 China states that the condition is properly translated as the "operation capacity" of the
applicant and refers to the operational ability of the applicant to carry out the mechanics of an export
transaction. There is nothing non-uniform, partial, or unreasonable about considering, among other
objective factors, an applicant's ability to execute exports before allocating it part of the quota. Such a
criterion ensures quota fill and avoids wasting the quota on applicants who cannot manage to export
it.

1022 Articles I(1)2 and I(2)2 (Exhibits JE-85, CHN-308).
1023 Exhibits JE-81, CHN-338 p. 1.
1024 Exhibit JE-82
1025 Exhibit JE-83.
1026 Articles 12, 13 (Exhibits JE-77, CHN-304)
1027 Articles 15-18 (Exhibits JE-78, CHN-305).
1028 Articles III(II)iii, III(II)v, III(II)vi (Exhibits JE-90, CHN-309)
1029 Articles III.3, III.5, III.6 (Exhibits JE-91, CHN-310).

7.681 China further submits that the European Union has failed to provide any evidence
demonstrating that either the alleged absence of a definition of "operation capacity" or the criterion
itself inherently leads to administration that is cont rary to Article X:3(a). Asserting that a Member
might take action that could potentially be WTO-in consistent, depending on the specific but as-yet-
unknown character of that action, is not sufficient to establish a violation. According to China, the
Appellate Body in EC – Selected Customs Matters requires that a complainant challenging a measure
under Article X:3(a) must demonstrate that the particular criterion will, if applied, " necessarily lead
to" WTO-inconsistent administration.
7.682 In support of its position, the European Union refers to the panel report on Argentina – Hides
and Leather. This panel found that what is required under Ar ticle X:3(a) is a showing that there is an
inherent possibility, or an inherent danger that a certain prejudice to the interests of some category of
traders, could result from the challenged measures. The European Union also asserts that the
Appellate Body in EC – Selected Customs Matters does not require a complainant challenging a
measure under Article X:3(a) to show that the elem ents of the defending party's "administration of
laws" and regulations must " necessarily lead to" an administration which is non-uniform, partial or
unreasonable, in order to establish a violation of Article X:3(a).
(a) The requirements of Article X:3(a)
7.683 The Panel will first explain its interpretation of the terms of Article X:3(a) taking into account
the relevant jurisprudence.
7.684 Article X:3(a) states:
"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."
1030
7.685 The Appellate Body has stated that Article X:3 establishes certain minimum standards for
transparency and procedural fairness in the administration of trade regulations. 1031 The panel in
Argentina – Hides and Leather noted that the obligations of uniformity, impartiality and
reasonableness are legally independent and WTO Me mbers are obliged to comply with all three
requirements.1032 We agree. Consequently, should we find a violation of any of the three obligations,
this would constitute a violation of the obligations under Article X:3(a).
7.686 The Panel will first consider the meaning of the term "administer" in the phrase "administer in
a uniform, impartial and reasonable manner". It is important to define the scope of the term
"administer" as this word is related to the t ype of claim that a complainant can bring under
Article X:3(a) (for example whether a complainant can bring an "as applied" challenge concerning the
application of laws, regulations, decisions and ruli ngs in a particular case). Interpreting the meaning
of the term "administer" also clarifies whether, for example, a challenge can be made in respect of the
system of administration itself or whether a challe nge can be made in respect of the substance of
measures (an "as such" challenge).

1030 Article X:1 states: "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, taxes or other charges, or to requirements, restrictions or prohibitions
on imports or exports ..."
1031 Appellate Body Report, US – Shrimp, para. 83.
1032 Panel Report, Argentina – Hides and Leather, para. 11.86.

(i) The meaning of "administer" in Article X:3(a)
7.687 Panels and the Appellate Body have establishe d that the obligations under Article X:3(a)
apply to the administration of the laws, regulations, decisions and rulings of the kind falling within the
scope of Article X:1, but not to the substantive content of those laws and regulations.
1033
7.688 Subsequently, in EC – Selected Customs Matters , the Appellate Body clarified that a
government's act of administration that is subject to the provisions of Article X:3(a) includes not only
acts of administering the laws and regulations of the kind in Article X:1, but also legal instruments
that regulate the application or implem entation of such laws and regulations.
1034 This confirms the
earlier finding of the panel in Argentina – Hides and Leather that "the relevant question [in
challenging a measure under Article X] is whet her the substance of such a measure is administrative
in nature or, instead, involves substantive issues more pr operly dealt with under other provisions of
the GATT 1994".1035
7.689 In EC – Selected Customs Matters, the Appellate Body agreed with the panel in that case that
"'administer' may include administrative processes", and that an administrative process could be
viewed as "a series of steps, actions, or events that are taken or occur in relation to the making of an
administrative decision." The Appellate Body c oncluded that as the term "administer" in
Article X:3(a) refers to "putting into practical ef fect" or "applying" a legal instrument of the kind
described in Article X:1, it is the application of a legal instrument of the kind described in Article X:1
that is required to be uniform under Article X:3(a), but not the process leading to administrative
decisions, or the tools that might be used in the exercise of administration." Notwithstanding the
foregoing, the Appellate Body stated that the "feat ures of an administrative process" may nonetheless
be relevant in the assessment of whether the legal in strument at issue has been uniformly applied or
put into practical effect in a particular case. 1036
7.690 In the light of this, the Panel considers that th e same can be said for an administrative process
that consists of one step or one action or one event in relation to the taking of an administrative
decision. In other words, an administrativ e "process" is not necessarily confined to a series of steps,
actions or events. We find support for this view in the dictionary definition of the word "process":
"process, n: gen. The action or fact of going on or being carried on ... a course of action, a
procedure".1037
7.691 The Panel now turns to consider the meani ng of the terms "uniform", "impartial" and
"reasonable" as they appear in Article X:3(a).

1033 Appellate Body Reports on EC – Bananas III, para. 200; EC – Poultry, para. 115.
1034 Appellate Body Report, EC – Selected Customs Matters , para. 200. The Appellate Body states,
"[u]nder Article X:3(a), a distinction must be made between the legal instrument being administered and the
legal instrument that regulates the application or implementation of that instrument. While the substantive
content of the legal instrument being administered is not challengeable under Article X:3(a), we see no reason
why a legal instrument that regulates the application or implementation of that instrument cannot be examined
under Article X:3(a) if it is alleged to lead to a lack of uniform, impartial, or reasonable administration of that
legal instrument".
1035 Panel Report, Argentina – Hides and Leather, para. 11.70 (emphasis added).
1036 Appellate Body Report, EC – Selected Customs Matters, para. 224-225.
1037 (Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2354.

(ii) The meaning of "uniform", "impartial" and "reasonable"
7.692 In the context of defining the uniformity criterion, the panel in Argentina – Hides and Leather
held that uniform treatment means that "every exporte r should be able to expect treatment of the same
kind, in the same manner, both over time and in di fferent places and with respect to other persons…
Uniform administration requires that Members ensure that their laws are applied consistently and
predictably".1038
7.693 The Panel notes that, read in the context of Article X:3(a), the word "uniform" means "[o]f
one unchanging form, character, or kind; that is or stays the same in different places or circumstances,
or at different times ... of the same form, character or kind as another or others; conforming to one
standard, rule or pattern; alike similar." 1039 Applying this definition and the Hides and Leather
approach to the facts at hand, exporter applicants shou ld be able to expect treatment of the same kind,
in the same manner, both over time and in different places in terms of how the operation capacity
criterion is applied.
7.694 As concerns the impartiality requirement, read in the context of Article X:3(a), the word
"impartial", means "not partial; not favouring one party or side more than another; unprejudiced,
unbiased, fair".1040 Consequently, impartial administration would appear to mean the application or
implementation of the relevant laws and regulations in a fair, unbiased and unprejudiced manner.
7.695 The impartiality requirement was also considered in Argentina – Hides and Leather. The
issue in dispute concerned the presence of a private party with conflicting commercial interests in the
customs process. The panel in that case considered that the requirement of impartial administration
was not merely a matter of the presence of a private party with conflicting commercial interests;
rather, it was of the view that the consistency of the customs process with the impartiality requirement
of Article X:3(a) would depend on what that private party is permitted to do.
1041 That panel found that
the answer to this question was related directly to the question of access to information as part of the
product classification process. The panel held that whenever a party with a contrary commercial
interest, but no relevant legal inter est, is allowed to participate in the customs process, there is an
inherent danger that the customs laws, regulations and rules will be applied in a partial manner so as
to permit persons with adverse commercial interests to obtain confidential information to which they
have no right.1042 The panel nevertheless considered that this situation could be remedied by adequate
safeguards to prevent an inappropriate flow of one private person's confidential information to another
as a result of the administration of the implemented customs law at issue.1043
7.696 The Panel considers that, read in the context of Article X:3(a), the ordinary meaning of the
word " reasonable", can be defined as "not irrational or absurd", "proportionate", "sensible", and
"within the limits of reason, not greatly less or more than might be thought likely or appropriate". 1044
Applying this definition to the facts, reasonabl e administration could be considered to be
administration that is equitable, appropriate for the circumstances and based on rationality.

1038 Panel Report, Argentina – Hides and Leather, para. 11.83.
1039 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 3444 (2002).
1040 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 1325.
1041 Panel Report, Argentina – Hides and Leather, para. 11.99.
1042 Panel Report, Argentina – Hides and Leather, para. 11.100.
1043 Panel Report, Argentina – Hides and Leather, para. 11.101.
1044 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2482 (2002).

7.697 The Panel will proceed with its analysis of Article X:3(a) bearing in mind these definitions of
the terms "uniform", "impartial" and "reasonable".
(b) The meaning of Article X:3(a)
7.698 The appropriate legal meaning that the Panel s hould ascribe to Article X:3(a) in the light of
the relevant jurisprudence has been the subject of extensive discussion between the parties, in
particular between China and the European Union. The parties referred in particular to two dispute
settlement reports in their submissions: the panel report in Argentina – Hides and Leather (which was
not appealed) and the Appellate Body Report in EC – Selected Customs Matters.
7.699 In Argentina – Hides and Leather , the panel concluded with re spect to the requirement of
reasonable administration that "a process aimed at assuring the proper classification of products, but
which inherently contains the possibility of re vealing confidential busin ess information, is ..
unreasonable" and therefore incons istent with Article X.3(a).
1045 As stated at paragraph 7.695 above,
the same panel held with regard to the impartiality requirement that the involvement of parties with
contrary commercial interests – in that case con cerning an export transaction – meant that there was
an "inherent danger that the Customs laws, regulations and rules will be applied in a partial manner so
as to permit persons with adverse commercial inter ests to obtain confidential information to which
they have no right".1046
7.700 In EC – Selected Customs Matters , the Appellate Body found that the features of an
administrative process may be relevant in the asse ssment of whether a legal instrument has been
applied uniformly, but that a complainant "will have to show how and why those features necessarily
lead to a lack of uniform, impartial, or reasonable administration of a legal instrument of the kind
described in Article X:1."
1047 The Appellate Body also cautioned that a simple recitation of the
characteristics of an administrative process would not suffice to sustain a claim. 1048
7.701 Although the parties seem to consider that the two reports present differing approaches
because one speaks of an "inherent danger" while th e other suggests a more definite requirement of
"necessarily leads to", the Panel consider s that the approach of the panel in Argentina – Hides and
Leather and that of the Appellate Body in EC – Selected Customs Matters are similar. One of the
dictionary definitions of inherently states "inherently: (adv) In an inherent manner; by inherence; in
the way of, or in relation to, an inherent quality or attribute; intrinsically." The definition of
necessarily in relevant part is as follows: "necessarily: Of necessity; in the nature of the case;
intrinsically, inherently, inevitably." 1049 As can be seen from these defi nitions, the difference in these
two words is not significant; there is a certain cross- over between them, with one of the definitions of
"necessarily" being "inherently".
7.702 The Panel now turns to consider the issue of wh ether the challenged administration must lead
to a particular result in order for a violation of one of the requirements of Article X:3(a) to be
established. In Argentina – Hides and Leather, the challenged administration did not necessarily
amount to a violation of Article X:3(a). 1050 In that dispute the measure at issue provided that
representatives of a private party could be present at customs clearance, but this was not mandatory.
Accordingly, the measure fell short of necessarily leading to a violation of Article X:3(a). The panel

1045 Panel Report, Argentina – Hides and Leather, para. 11.94.
1046 Panel Report, Argentina – Hides and Leather, para. 11.100.
1047 Appellate Body Report, EC – Selected Customs Matters, para. 226.
1048 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1049 Oxford English Dictionary, accessed online, 23 December 2010.
1050 China's response to Panel question No. 50, following the second substantive meeting, para. 301.

considered that the existence of the right to be present along with certain corollary factors resulted in
the inherent possibility, or an inherent danger, of administration inconsistent with Article X:3(a).
7.703 The panel's finding in Argentina – Hides and Leather does not suggest that the complaining
party must show that the disputed administration would certainly cause prejudice to the complaining
party. The Panel used the words "possibility" and "danger", which convey the notion that there is less
than absolute certainty of a particular event occurring.
7.704 The Panel also recalls the following statement of the panel in Argentina – Hides and Leather:
"Article X:3(a) requires an examination of the real effect that a measure might have
on traders operating in the commercial world. This, of course, does not require a
showing of trade damage, as that is generally not a requirement with respect to
violations of the GATT 1994. But it can involve an examination of whether there is a
possible impact on the competitive situ ation due to alleged partiality,
unreasonableness or lack of uniformity in the application of customs rules,
regulations, decisions, etc. "
1051 (emphasis added)
7.705 As noted above at paragraph 7.689 above, the Appellate Body found in EC – Selected
Customs Matters that the features or characteristics of an administrative process may constitute
evidence of inconsistent administration and opined that:
"[W]e could conceive of cases where a panel might attach much weight to differences
that exist at the level of the administ rative processes, because it considers these
differences to be so significant that they have caused, or are likely to cause, the non-
uniform application of the legal instrument at issue."1052 (emphasis added)
7.706 The Appellate Body concluded in the paragraph th at followed that in order to substantiate a
claim of violation based on an administrative process , "a complainant will also have to show how and
why the features of an administrative process necessar ily lead to a lack of uniform, impartial or
reasonable administration of a legal instrument of the kind described in Article X:1".1053
7.707 This Panel agrees with the panel in Thailand – Cigarettes (Philippines) that while the
Appellate Body's analysis regarding the features of an administrative process was made in the context
of the uniformity requirement, the subsequent conc luding statement about what must be proved to
substantiate a violation in respect of Article X: 3(a) more generally by the Appellate Body in
paragraph 226 tends to support the view that its analysis would also be applicable to the obligations of
reasonableness and impartiality.1054
7.708 In this light, the Panel conclud es that, in respect of a challenge to an administrative process,
the complaining party must show that the iden tified features of the challenged administration
necessarily lead to an inconsistency with Article X:3( a) with respect to the administration of laws and
regulations in a uniform, impartia l and reasonable manner. As we see it, if the complaining party
shows that the features of an administrative process pose a very real risk to the interests of the
relevant parties, then it will have met this burden. In this context, we agree with the panel in EC –
Selected Customs Matters when it stated that the aim of Article X:3(a) is to ensure that traders are
treated fairly and consistently when seeking to import from or export to a particular WTO

1051 Panel Report, Argentina – Hides and Leather, para. 11.77.
1052 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1053 Appellate Body Report, EC – Selected Customs Matters, para. 226.
1054 Panel Report, Thailand – Cigarettes (Philippines), para. 7.872.

Member.
1055 The Panel considers that an interpretation of Article X:3(a) that requires a complainant
to show that the features of the administrative process pose a very real risk of non-uniform, partial and
unreasonable administration best accords with the due process connotations of Article X.
(c) The nature of the European Union's challenge
7.709 The Panel concludes based on the submissions and responses to questions that the European
Union is challenging as such China's administration of its quota a llocation rules. As for the specific
type of as such challenge, the European Union states that it is challenging "the administration of the
system and not the specific provisions of a legislative instrument." 1056 Furthermore, in response to a
question from the Panel, the European Union states that it is not challenging the operation capacity
criterion itself but its administration. 1057 The Panel understands the European Union to be
challenging the features of an administrative process th at govern the application of a legal instrument
of the kind described in Article X:1. 1058 Specifically, the European Union challenges how the
operation capacity criterion is administered by the Local Departments in charge of Foreign Trade. The
European Union is claiming that China's aut horities' administration of this criterion will, as such, lead
to inconsistency with Article X:3(a).
7.710 The Panel observes that the European Union did not define precisely the nature of its claim
under Article X:3(a). More specific reference to the language used by the Appellate Body in EC –
Selected Customs Matters would have been helpful in unders tanding the precise nature of the
European Union's challenge. The Panel also notes that from its first submission, China queried the
nature of the European Union's claim in this regard.1059
7.711 However, notwithstanding this lack of clarity on the part of the European Union, the Panel
does not consider that China's ability to defend itsel f was in any way affected or prejudiced by the
European Union's lack of specificity. In this resp ect, the Panel notes that China has in the course of
its submissions referred to the administration of the operation capacity criterion. For example, China
asserts:
"The European Union has provided no evidence demonstrating that the 'operation
capacity' criterion for participation in direct quota allocation has been administered in
a WTO-inconsistent manner, or that it will 'necessarily lead to' WTO-inconsistent
administration. At most, the European Union has asserted that, if applied, the

1055 Panel Report, EC – Selected Customs Matters, para. 7.108.
1056 European Union's second written submission, para. 162.
1057 European Union's response to Panel question No. 46 following the second substantive meeting
para 51.
1058 The European Union has not directly referred to its challenge being in respect of an administrative
process. However the Panel has concluded that this is the nature of the European Union's challenge, given the
arguments the European Union advanced in these proceedings as well as the fact that the European Union itself
asserted that it was not challenging the operation capacity criterion per se.
1059 The European Union at times seems to have merg ed two of the available ways that inconsistent
administration can be challenged under Article X:3(a). In its opening oral statement at the second substantive
meeting, the European Union asserts that "China has confused the Appellate Body's treatment of 'administrative
processes' (i.e. the procedural structure) with the Appellate Body's treatment of a country's 'administration of
laws and regulations' (i.e. the application of the laws an d regulations)." In this statement, the European Union
correctly draws a distinction between these two types of challenge. However, later in the same statement the
European Union asserts that it "challenges China's 'administration' of its export quota allocation system and
export licensing system, i.e., the application by China of the relevant laws and regulations". In this statement the
European Union appears to co nflate an "as such" claim w ith an "as applied" claim. However, the European
Union provided no evidence on the WTO-inconsistent application by China of the operation capacity criterion.

'operation capacity' criterion might be administered in a manner inconsistent with
Article X:3(a)."1060
7.712 Having established the type of Article X:3(a) challenge made by the European Union as well
as what the complaining party must show to succeed in its claim, the Panel now turns to analyse the
specific claim made by the European Union.
(d) Whether the operation capacity criterion applies to any of the products at issue
7.713 The European Union argues that China administers the quotas allocated directly for coke and
zinc1061 in a non-uniform, partial, and unreasonable way because the relevant Chinese authorities
allocate export quotas based on the applicant's alleged "business management capacity".
7.714 China submits that the European Union's clai m is moot as the operation capacity requirement
is not applied to any of the export quotas on the products at issue in these disputes. 1062 China asserts
that by virtue of Article 4(3) and the Appendix to the Export Quota Administration Measures , the
direct allocation of the coke quota is not subject to these rules. Although China agrees that the quota
for zinc is subject to direct allocation, it states th at this quota has not been authorized in 2010.
Consequently, according to China, Article 19 of the Export Quota Administration Measures does not
apply.
7.715 The European Union notes first that the underlying legislation on which China's
administration is based, namely, the Export Quota Administration Measures, is still in place. Second,
it is very likely that China will again allocate export quotas for zinc, as it has done up to 2005 using
the same criteria. The European Union also states that the list of raw materials for which export
quotas are allocated directly has not been permanentl y defined. In that context, the European Union
puts forward a scenario whereby, in the event that China's bidding system were found to be
incompatible with the covered agreements, Ch ina could move raw materials from the category
allocated through bidding to the category allocated by direct allocation. In such a case, says the
European Union, the only way to achieve a positive so lution to the dispute is for the Panel to make
findings on whether China's administration of the sy stem for the direct allocation of export quotas is
consistent with the covered agreements.
7.716 In this context, China has in place a series of measures operating collectively that govern the
administration of export quotas. The Foreign Trade Law confers the authority to restrict or prohibit
the exportation of goods through export quotas 1063 and subjects those goods to an export quota

1060 China's response to Panel question No. 50 following the second substantive meeting, para. 303.
(Italics original, underlining added.). The Panel also notes that in its closing oral statement at the second
substantive meeting, China stated: "The European Union's Article X:3(a) claims against the 'operation capacity'
criterion in the context of quota admini stration, ... are of necessity [an] example[ ] of the second type of
challenge – for the simple reason that the European Union has offered no evidence concerning any instances in
which the 'operation capacity' criterion ... ha[a] been ap plied." Finally, in its first written submission, China
referred to the possibility of the Panel considering that the European Union's claim involved a claim against an
administrative process; see China's first written submission, paras. 649-651 and 661.
1061 The specific forms of the raw materials subject to the European Union's claims are identified by the
complainants in Exhibit JE-6. The particular form of zinc concerned by the complainant's claims under
Article X:1 and X:3(a) is zinc ores and concentrates.
1062 China's second written submission, para. 413.
1063 Foreign Trade Law , Articles 2, 14, 16-17, 19 (Exhibits CHN-151, JE-72); Regulation on Import
and Export Administration, Article 4 (Exhibits CHN-152, JE-73).

administration.
1064 The Regulation on Import and Export Administration regulates the administration
of the export of goods. 1065 The Export Quota Administration Measures are formulated in accordance
with1066 the relevant provisions in these two measures.
7.717 As noted earlier, China maintains two systems for the administration of its export quotas:
direct allocation or through a quota bidding system. 1067 The export quotas on coke and zinc are
allocated "directly". 1068 The export quotas on bauxite, fluorsp ar, and silicon carbide are allocated
through a bidding system.1069
7.718 The Export Quota Administration Measures govern the direct allocation of quotas. Article 19
of these measures is the source of the "operation capacity" criterion.1070 This provision states:
"When allocating the quotas, the MOFTEC a nd the Local Departments in charge of
Foreign Trade shall take into full cons ideration the export performance, the quota
utilization rate, the operation capacity, the production scale and the resources status,
etc. of that commodity in relation to the applying enterprises or the applying regions
in the past three (3) years."
7.719 The first issue for the Panel to determine is whether, as China alleges, the "operation
capacity" requirement is not applied to any of the export quotas on products at issue in these
disputes.1071 While acknowledging that the quota for zinc is subject to direct allocation, China states
that this quota has not been authorized in 2010. The Panel notes first that the European Union has
accepted that the direct allocation of coke is not subject to Article 19 of the Export Quota
Administration Measures .1072 The Panel also notes that the quot a for zinc has not been authorized
since 2006. However, pursuant to Article I(i) of the 2009 Export Licensing Catalogue (the measure
that was in force at the time of the Panel's estab lishment on 21 December 2009) , exports of zinc are
subject to a quota allocated directly. 1073 The Panel also notes that pursuant to the same provision in
the 2010 List, zinc is also subject to a quota allocated directly.1074
7.720 The Panel disagrees with China that the allo cation of the zinc quota and the manner of its
administration as provided in Article 19 of the Export Quota Administration Measures is moot. The
2009 (and 2010) List clearly lists zinc as one of th e products for which an export licence is required.
This fact suggests that China permits exports of zinc in principle. In addition, China has not given

1064 Regulation on Import and Export Administration , Article 36 (Exhibits CHN-152, JE-73); Export
Quota Administration Measures, Article 1 (Exhibits CHN-312, JE-76).
1065 Regulation on Import and Export Administration, Article 1.
1066 Export Quota Administration Measures, Article 1, (Exhibit CHN-312, JE-76).
1067 Regulation on Import and Export Administration, Article 39 (Exhibit JE-73, CHN-152).
1068 2009 Export Licensing Catalogue, Article I(1) (Exhibit CHN-6, JE-22), see also Section VII.C.2(b)
above.
1069 Ibid., Article I(2), see also VII.C.2(a) above.
1070 The European Union referred in its first written su bmission to 'business management capacity'. In
its first written submission, China asserted that a corr ect translation of this te rm was "operation capacity". 1070
Thereafter, in these proceedings, the European Union' s referred to the "operation capacity" criterion.
Consequently, in its analysis, the Panel will also refer to the "operation capacity" criterion. The Panel wishes to
make clear that its examination of the administration of this criterion would be the same irrespective of whether
the term is translated as "business management" or "ope ration capacity". This is because the Panel considers
that the matter does not turn on the exact translation of the provision but rather on other issues raised by the
European Union relevant to the administration of the criterion.
1071 China's second written submission, para. 413.
1072 European Union's second written submission, para. 150.
1073 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
1074 2010 Export Licensing Catalogue (CHN-7).

any indication in the course of these proceedings that Article 19 will be administered in a manner
different from how it is being administered now. Consequently, the Panel agrees with the European
Union that to secure a positive solu tion to the dispute, the Panel should make findings on whether
Article 19 of the Export Quota Administration Measures is consistent with Article X:3(a).
7.721 The Panel concludes that, by virtue of the pl ain language of Article 19 set out above, the
operation capacity criterion applies to the direct allocation of the export quota for zinc.
(i) Non-uniform, partial and unreasonable administration of the operation capacity criterion
7.722 The Panel understands the basis of the Eur opean Union's claim to be that, given the
"operation capacity" criterion set out in Article 19 of its Export Quota Administration Measures ,
China administers the system of direct allocation of export quotas in a manner that is not consistent
with Article X:3(a).
1075 Specifically, the European Union claims that because the administration of
China's export quota "direct" allocation system incl udes a vague and opaque eligibility criterion, it is
non-uniform, partial, and unreasonable and is, therefore, inconsistent with Article X:3(a).1076
7.723 The European Union makes three claims in re lation to the operation capacity criterion. With
regard to the requirement of uniformity, the Eu ropean Union asserts that no uniform rules exist
(i) defining the notion of operation capacity; (ii) setting the standard against which the operation
capacity of a particular applicant should be compar ed; or (iii) ensuring that this requirement is
applied consistently in the same manner toward s all applicants, all raw materials, all export
destinations and all periods of time.1077
7.724 In relation to the requirement of impartia lity, the European Union argues that China
administers the direct allocation of quotas in a manner that is partial due to a lack of safeguards
preventing China's authorities from using this opera tion capacity criterion to administer the export
quota allocation system to the disadvantage of certai n applicants, or export destinations, and to the
advantage of others.1078
7.725 The European Union argues with respect to the requirement of reasonable administration that
it is not reasonable to impose a requirement that "a llows China's authorities to administer the export
quota allocation system in an arbitrary, discretionary and potentially discriminatory manner".1079
7.726 China defends the operation capacity criterion by explaining that an applicant's "operation
capacity" is its capacity to undertake commodity exports, or in other words, it refers to the operational
ability of the applicant to carry out the mechanics of an export transaction. According to China, there
is nothing non-uniform, partial, or unreasonable a bout considering, among other objective factors, an
applicant's ability to execute exports before allocating to it part of the quota.1080
7.727 According to China, if a Member adopts a me asure that its authorities can administer in a
WTO-consistent manner, a panel cannot simply assume that the Member's authorities will administer
the measure in a WTO-inconsistent manner. Thus, a measure does not violate Article X:3(a) simply
because an authority has the discretion to interpret and/or apply the measure in a manner that might
violate Article X:3(a). China asserts that the me re possibility (or danger) that the measure might be

1075 Export Quota Administration Measures (Exhibits CHN-312, JE-76).
1076 European Union's first written submission, paras. 238 to 245.
1077 European Union's first written submission, para. 242.
1078 European Union's first written submission, para. 243.
1079 European Union's first written submission, para. 244.
1080 China's first written submission, para. 643; China's opening oral statement at the second substantive
meeting, para. 327.

administered in a manner that violates Article X:3( a) provides an insufficien t evidentiary basis to
conclude that the content of the ad ministrative norm is WTO-inconsistent.
1081 China also asserts that
it "should be deemed to have acted in good faith in the performance" of its obligations under
Article X:3(a).1082
7.728 China refers to the statement of the Appellate Body that a claim under Article X:3(a) "must be
supported by solid evidence", which "should reflect th e gravity of the accusations inherent in [the]
claims".1083 China submits that a claim of inconsiste nt administration requires solid evidence of
inconsistent administration, or in the least, a showing that an element of the administration is
inherently inconsistent or necessarily leads to inconsistent administration.1084
7.729 China also asserts that th e European Union's focus on one of a series of criteria in Article 19
used to determine whether to allo cate part of the quota to an enterprise is overly simplistic and does
not offer a picture of China's overall administration of the eligibility criteria.1085
7.730 To recall, Article X:3(a) states:
"Each [Member] shall administer in a uni form, impartial and reasonable manner all
its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this
Article."
7.731 The "laws, regulations, decisions and rulings" d escribed in paragraph 1 of Article X are as
follows:
"Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any [Member], pertaining to the classification or the
valuation of products for customs purposes, or to rates of duty, taxes 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."
7.732 In order to rule on the European Union's claim under Article X:3(a), the Panel must
determine: (a) whether the operation capacity criterion in Article 19 of the Export Quota
Administration Measures falls within the "laws, regulations , decisions and rulings of general
application" of the kind described in Article X:1 of the GATT; and, if so, (b) whether China has not
administered this provision in a uniform, impartial and reasonable manner.
7.733 With reference to the term "general applicati on", as it appears in Article X:1, the panel in EC
– Selected Customs Matters found that:

1081 China's response to Panel question No. 50, following the second substantive meeting, para. 297.
1082 China's first written submission, para. 663, referring to Panel Report, Canada – Continued
Suspension (Hormones), para. 7.317; see also Appellate Body Report, US – Oil Country Tubular Goods Sunset
Reviews, para. 173; Appellate Body Report, US – Shrimp, para. 158; Appellate Body Report, US – Section 211
Appropriations Act, para. 259; Appellate Body Report, EC – Sardines, para. 278; Appellate Body Report, US –
Offset Act (Byrd Amendment), paras. 298 and 299.
1083 China's first written submission, para. 663, referring to Appellate Body Report, US – OCTG Sunset
Reviews, para. 217.
1084 China's first written submission, paras. 650-652, 657, 658, 661-662, and 663; China's second
written submission, paras. 417-419, 424-427; China's opening oral statement at the second substantive meeting,
para. 332 and China's response to Panel question No. 50 following the second substantive meeting, paras. 302-
304.
1085 China's first written submission, para. 646.

"'[L]aws, regulations, judicial decisions and administrative rulings of general
application' described in Article X:1 of the GATT 1994 are laws, regulations, judicial
decisions and administrative rulings that apply to a range of situations or cases, rather
than being limited in their scope of application."
1086
7.734 In US – Underwear , the Appellate Body upheld the Panel's interpretation that an
administrative order was of "general application" "to the extent that the restraint affects an
unidentified number of economic operators, including domestic and foreign producers."1087
7.735 Turning to the present case, Article 1 of the Export Quota Administration Measures states that
the measures regulate the administration of expo rt commodity quotas and that they have been
formulated in accord ance with China's Foreign Trade Law and China's Regulation on Import and
Export Administration. Furthermore, the Foreign Trade Law delegates MOFCOM as the government
agency responsible for the administration of China's export quotas. 1088 Article 3 of the Export Quota
Administration Measures states that MOFTEC (currently MOFCOM) shall apply export quota
administration to certain commodities subject to ex port restrictions, these commodities include zinc.
Article 5 of the Measures provides that the measure s apply "to the export of commodities subject to
quota administration under all modes of trade."
7.736 The Panel concludes that the Export Quota Administration Measures including Article 19 fall
within the scope of Article X:1. These measures are (a) laws or regulations, (b) of general application
(c) made effective by China, and, (d) pertain to requirements on exports.
7.737 Article 19 of the Export Quota Administration Measures (quoted at paragraph 7.718 above)
governs the allocation of the zinc quota. China has not denied that an applicant can be refused an
allocation of the export quota for zinc solely on the basis of the operation capacity criterion.
Moreover, in its explanation of the "operation capac ity", China states that "i f an applicant does not
have the operational ability to engage in export trade, which implicates sophisticated financing
questions often not present in domestic trade, there is little point in allocating it part of the export
quota".1089 As noted in paragraph 7.729 above, China cl aims that the European Union's focus on this
one criterion is overly simplistic and observes that in EC – Selected Customs Matters , the Appellate
Body criticised the panel in that case for havi ng examined the operation of institutions and
mechanisms in isolation and for not having consider ed how they were involved in the administration
of European Communities' customs law. With that in mind, the Panel will examine how the operation
capacity criterion operates in China's overall administration of the eligibility criteria.
7.738 China acknowledges that the inability of an app licant to comply with the operation capacity
criterion can be a basis for that appli cant's failure to receive the zinc quota. 1090 In other words, this
criterion can trump all others. Therefore, this criteri on, in and of itself, can be determinative in the
allocation of export quotas and therefore is of some importance in China's system for the direct
allocation of export quotas. Also of note is that China has not denied that there is no official
definition of the term "operation capacity" or th at there is no standard against which China's
authorities will assess the operation capacity criterion. Certainly China has not chosen to proffer a
definition; nor has it denied the lack of a standard to assist the assessment of the criterion.

1086 Panel Report, EC- Selected Customs Matters, para. 7.116 (emphasis original).
1087 Appellate Body Report, US - Underwear, p. 21, DSR 1997:I, 11, at p. 29, Panel Report, US -
Underwear, DSR 1997:I, 31, para. 7.65.
1088 Foreign Trade Law, Article 18 (Exhibits CHN-151, JE-72).
1089 China's first written submission, para. 643.
1090 Ibid.

7.739 China claims that it is entitled to the presumption that it will fulfil its obligations in good
faith. We agree. Nonetheless, a WTO Member is free to challenge another Member's compliance
with its WTO obligations without being taken to call into question another Member's good faith. This
is reflected in Article 3.10 of the DSU which states that "the use of the dispute settlement procedures
should not be intended or consider ed as contentious acts ...". When a Member does raise a challenge,
it bears the burden of proof. Therefore, in this dispute, China's administration of Article 19 of the
Export Quota Administration Measures is presumed to be WTO consistent and the European Union
bears the burden of proving that China is ac ting inconsistently with its obligations under
Article X:3(a).
1091
7.740 As a preliminary matter, the Panel notes that ordinarily it would address the requirements of
"uniformity", "impartiality" and "reasonableness" in the order they appear in the text of the Article.
However, as the Panel has already observed, the th ree requirements are legally independent in that
China's laws regulations and rules must administered so as to satisfy each of the three standards. In
this case, the Panel considers that uniform admi nistration or otherwise of the operation capacity
criterion flows from a consideration of whether this criterion is reasonably administered.
Consequently, the Panel will examine first whet her China administers the quota for zinc in a
reasonable manner.1092
Reasonable administration
7.741 As stated above 1093, read in the context of Article X:3(a), the ordinary meaning of the word
"reasonable", can be defined as "not irrational or ab surd", "proportionate", "sensible", and "within the
limits of reason, not greatly less or more than might be thought likely or appropriate". 1094 Applying
this definition to the facts, reasonable administration of the operation capacity criterion by China's
authorities could be considered to be administ ration that is equitable, appropriate for the
circumstances and based on rationality.
7.742 The issue here is whether in the absence of an y definition or standard, the operation capacity
criterion will be implemented in a reasonable manner consistent with Article X:3(a).
7.743 In response to a question from the Panel, China indicated that there are 32 Local Departments
in charge of Foreign Trade. According to Ar ticle 19, these 32 Local Departments administer the
directly allocated zinc quota. These Local De partments are not provided with any guidelines or
standards to assist them in applying this operati on capacity criterion. Thus each Local Department
will necessarily have to interpret the operation capacity criterion as it sees fit. In the Panel's view, this
manner of administration of a determinative criterion for receipt of the zinc quota does not meet the
standard of reasonable administration of export quotas that are directly allocated. It is not "fair",
"equitable", "just", "legitimate" or "appropriate fo r the circumstances" that exporter applicants may
well be subject to different interpretations of whet her or not they have sufficient operation capacity to
qualify for the zinc quota depending on where they ar e located. The Panel believes there is a very real
risk that in the absence of any definition or st andardization of an unders tanding of what "operation
capacity" means that similar exporters in terms of size, experience, and other factors may be treated

1091 In US – Continued Suspension (para. 380) the Appellate Body held that: "[t]he European
Communities should be presumed to have acted in good faith when adopting the implementing measures;
however, this did not mean that the taking of such measure in itself establishes that the measure achieves
substantive compliance."
1092 In this context, the Panel notes that the Panel in Argentina – Hides and Leather also decided to
examine the requirement of reasonableness before the other requirements, see para. 11.86.
1093 See para. 7.696 above.
1094 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2482.

differently depending on which of 32 dispersed local office deals with their application. Under such
circumstances it could well be assumed that one exporter could well find its application rejected while
another exporter of equal description would succeed.
7.744 In the Panel's view, a system of quota allocation where an undefined and vaguely worded
criterion can trump all other criteria, yet is to be applied by 32 different regional offices constitutes
the type of evidence to which the Appellate Body in EC – Customs Matters was referring when it
stated "the features of an administrative process that govern the application of a legal instrument of
the kind described in Article X:1 may constitute relevant evidence for establishing ... [unreasonable]
administration of that legal instrument".
1095 In this case "the panel [has] attach[ed] much weight to
differences that exist at the level of the ad ministrative processes, because it considers these
differences to be so significant that they have caused, or are likely to cause, the [unreasonable]
application" of Article 19 of the Export Quota Administration Measure.1096
7.745 In sum, the Panel thus finds that the lack of any definition, guidelines or standards in how the
32 Local Departments in charge of Foreign Trad e should apply the potentially critical operation
capacity criterion constitutes relevant evidence in establishing unreasonable administration of the
operation capacity criterion. Moreover, the Panel is persuaded that the lack of any definition,
guidelines or standards pose a very real risk that this criterion will be administered differently
depending on which Local Department handles the quota application.
7.746 Consequently, the Panel concludes that the lack of any definition, guidelines or standards to
guide how the operation capacity crite rion should be applied poses a very real risk to the interests of
relevant parties such that this necessarily leads to unreasonable administration inconsistently with
Article X:3(a) of the GATT 1994.
Uniform administration
7.747 As noted above 1097, read in the context of Article X:3(a), the ordinary meaning of the word
"uniform" means "[o]f one unchanging form, character, or kind; that is or stays the same in different
places or circumstances, or at different times ... of the same form, character or kind as another or
others; conforming to one standard, rule or pattern; alike similar." 1098 Applying this definition to the
facts at hand, exporter applicants should be able to expect treatment of the same kind, in the same
manner, both over time and in different places, in how the operation capacity criterion is applied to
them. This interpretation of uniform treatment accords with that offered by the Panel in Argentina –
Hides and Leather.1099
7.748 The issue here is whether in the absence of an y definition or standard, the operation capacity
criterion will be implemented in a uniform manner consistent with Article X:3(a).
7.749 As discussed in paragraph 7.743 above, MOFC OM does not provide a definition, guidelines
or standard to assist the 32 Local Departments in charge of Foreign Trade to apply the operation
capacity criterion. Under these circumstances, it is likely that the criterion will be applied in many
different ways across China. It is clear that there is a very real risk that this criterion will not be

1095 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1096 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1097 See paras. 7.692-7.693 above.
1098 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 3488.
1099 See, for example, para. 11.83 in the Panel Report, Argentina – Hides and Leather.

applied consistently in the same manner, both over time and in different places, in respect of all
applicant exporters seeking the zinc quota.
7.750 The Panel considers that these features of th e administrative process constitute evidence of
administration that is not uniform. As was menti oned above in connection of its consideration of
what is unreasonable administration, the Panel consider s that this is the type of evidence to which the
Appellate Body in EC – Customs Matters was referring when it stated "the features of an
administrative process that govern the application of a legal instrument of the kind described in
Article X:1 may constitute relevant evidence for establishing ... non-uniform administration of that
legal instrument".
1100 In these circumstances "the panel [has] attach[ed] much weight to differences
that exist at the level of the administrative pr ocesses, because it considers th ese differences to be so
significant that they have caused, or are likely to cause, the non-uniform application" of Article 19 of
the Export Quota Administration Measure.1101
7.751 The Panel thus finds that the lack of any definition, guidelines or standards in how the
32 Local Departments in charge of Foreign Trad e should apply the potentially critical operation
capacity criterion constitutes relevant evidence in establishing non-uniform administration of the
operation capacity criterion. Moreover, the Panel is persuaded that the lack of any definition,
guidelines or standards pose a very real risk that this criterion will be administered differently
depending on which Local Department handles the quota application.
7.752 Consequently, the Panel concludes that the lack of any definition, guidelines or standards in
how the operation capacity criterion should be applie d poses a very real risk to the interests of
relevant parties such that this necessarily leads to non-uniform administration inconsistently with
Article X:3(a) of the GATT 1994.
Impartial administration
7.753 As mentioned at paragraph 7.695 above, read in the context of Article X:3(a), the ordinary
meaning of the word "impartial", means "not par tial; not favouring one party or side more than
another; unprejudiced, unbiased, fair".1102
7.754 The issue here is whether in the absence of an y definition or standard, the operation capacity
criterion will be applied in an impartial manner consistent with Article X:3(a).
7.755 The Panel has not been convinced that the lack of any definition, guidelines or standards in
how the 32 Local Departments should interpret the term "operation capacity" will pose a very real risk
such that partial administration will necessarily resu lt. While the Panel has found that the lack of
definition, guidelines or standards necessarily lead s to unreasonable and non-uniform administration,
the Panel does not consider that this lack means th at the Local Departments will apply the operation
capacity criterion to favour some exporter applicants over others. In other words the Panel does not
consider that this particular feature of the admi nistrative process – the lack of definition of any
guidelines, standards – "constitute[s] relevant evidence for establishing ... [partial] administration" 1103
of the operation capacity criterion.

1100 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1101 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1102 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 1325.
1103 Appellate Body Report, EC – Selected Customs Matters, para. 225.

(ii) Conclusion
7.756 The Panel concludes that the lack of any de finition, guidelines or standards in how the
operation capacity criterion should be applied poses a very real risk to the interests of relevant parties
such that this necessarily will result in unreasonable and non-uniform administration of this criterion
inconsistently with Article X:3(a) of the GATT 1994.
3. Whether China's administration of its ex port quotas through the involvment of the
CCCMC is inconsistent with Article X:3(a) of the GATT 1994
(a) The nature of the United States' and Mexico's challenges
7.757 Turning to consider the claims brought by the United States and Mexico, the Panel notes that
these complainants have categorized their Article X:3(a) claims as as such challenges.
1104 The United
States and Mexico assert that they challenge the administration of the export quotas. 1105 The question
is whether the United States and Mexico are challeng ing the substantive content of a legal instrument
that regulates the administration of a legal instrument of the kind described in Article X:1, or whether
they are claiming a violation of Article X:3(a) based on an administrative process. In their
submissions before the Panel, the United States a nd Mexico consistently challenged the involvement
of the CCCMC in quota administration and its access to sensitive commercial information of the
applicant enterprises. According to these complainants, this goes beyond what is necessary to confirm
an applicant enterprise's conformity with the quota qualification requirements.1106
7.758 The Panel concludes that the United States and Mexico are raising a substantive challenge –
an as such challenge – in respect of the features of the administrative processes that pertain to the
application of a legal instrument of the kind descr ibed in Article X:1. In other words, the United
States and Mexico claim that the administration of the export quotas will, as such , lead to
inconsistency with Article X:3(a).
(b) Partial and unreasonable administration
7.759 The United States and Mexico make two claims concerning the involvement of the CCCMC
in quota administration. First, according to these complainants, China empowers a private party – the
CCCMC – to have direct involvement in the admi nistration of the export quota on coke, which is
allocated directly. 1107 Second, they allege that the CCCMC is permitted direct involvement in the
administration of the export quotas on bauxite, fluo rspar, and silicon carbide, which are allocated
through the bidding system.
7.760 As explained in Section VII.C.2 above, the CCCMC evaluates enterprises' applications to
export under the quota and determines whether they satis fy the relevant eligibility criteria. According
to the United States and Mexico, in the course of that process, the CCCMC obtains access to sensitive
and confidential commercial information about th e enterprises. Moreover, the United States and
Mexico state that the information an exporter is re quired to share with the CCCMC in its application

1104 United States' response to Panel question No. 50 following the second substantive meeting,
para. 109; Mexico refers to the United States' response.
1105 United States' first written submission, paras. 278-290; Mexico's first written submission,
paras. 281-293.
1106 See, for example, United States' first written submission, para. 311; Mexico's first written
submission, para. 314.
1107 United States' first written submission, paras. 292-303; Mexico's first written submission;
paras. 295-306.

is not relevant to the stated objective fo r the CCCMC's involvement. According to these
complainants, this amounts to unreasonable administration in contravention of Article X:3(a).
1108
7.761 China requests the Panel to reject the United States' and Mexico's claims. First, China
contends that it no longer subjects exports of fl uorspar to a quota under 2010 export quota measures.
Accordingly, it requests the Panel not to reach findings on fluorspar. 1109 Second, China alleges that
the United States and Mexico have offered an impr oper legal characterization of the facts. China
states that MOFCOM delegates governmental author ity in the administrative process leading to quota
allocation, whether allocated directly or through bidding, to the CCCMC Secretariat, and not to the
CCCMC membership; consequently, the CCCMC S ecretariat, and not CCCMC members, are
involved in the administrative process leading to quot a allocation. China continues that no inherent
conflict "averse to the interest of the exporter at issue and foreign buyers" exists because competing
exporters and potential customers are not grante d access to confidential commercial information. 1110
China asserts that each type of required information/ documentation is pertinent to the verification of
whether the applicant satisfies the eligibility criteria. 1111 China also submits that even if the Panel
were to find that the involvement of the CCCMC Secret ariat presents an inherent risk of partial and
unreasonable administration, effective safeguards in the form of a confidentiality agreement as well as
sanctions are in place to prevent or remedy risks of conflict of interest described by the United States
and Mexico.1112
7.762 The United States and Mexico respond that the involvement of the CCCMC Secretariat does
not cure the inherent conflict of interest presented in the CCCMC's involvement in quota
administration because the CCCMC Secretariat conducts its work on behalf of an organization that
represents the interests of the competitors and pot ential customers of exporters seeking an allotment
under one of the export quotas at issue. Moreover, these complainants question the effectiveness of
the confidentiality agreement that China claims serves as a safeguard to prevent the inappropriate
flow of confidential and sensitive commercial info rmation from an exporter to an entity representing
interests adverse to that exporter.
7.763 As a preliminary matter, the Panel recalls its fi nding in paragraph 7.33 a bove that, in general,
measures that were in force when the Panel was established on 21 December 2009 form the basis of
its terms of reference.
1113 At the request of the complainants, the Panel will only assess the WTO
consistency of the 2009 measures while taking note that the 2010 measures do not set a quota for
fluorspar.
7.764 The Panel notes that the formal status of the CCCMC under Chinese law is that of a "foreign
trade and economic social organization". 1114 The CCCMC was established by charter that, inter alia,
describes the functions, membership, and organizati on of the CCCMC. The relevant charter for the
purposes of this dispute is the 2001 CCCMC Charter , as this was the charter in existence on
21 December 2009, the date of the Panel's establishment. 1115 The CCCMC's daily operations are

1108 United States' response to Panel question, para. 115 following the second substantive meeting,
Mexico refers to the United States' response.
1109 China's first written submission, para. 667.
1110 China's first written submission, para. 712.
1111 China's comments on the United States' and Mexico's responses to Panel question No. 55 following
the second substantive meeting, paras. 201-210.
1112 China's first written submission, paras. 715-724.
1113 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1114 Measures for Administration of Trade Social Entities , Articles 5 and 6 (Exhibits CHN-313, JE-
101).
1115 On the issue of the relevant charter, see paragraph 7.1017.

managed by a Secretariat, also called the Standing Administrative Organ of the CCCMC.
1116 There
are over 4,000 members of the CCCMC comprising, among others, foreign trade companies, trade
and manufacturing companies, joint venture compan ies, private enterprises and research institutes
operating businesses in ferrous metals, non-ferrous metals, non-metallic minerals and products.
7.765 With regard to the direct allocation of th e coke quota, China's Ministry of Commerce
delegates to the CCCMC and the China Coking Industry Association the examination of the
applicants' compliance with the requisite conditions . These conditions are set out in the 2009 Coke
Export Application Procedures. 1117 The CCCMC sends its recommendation on the complying
enterprises to the Ministry of Commerce. The Mi nistry of Commerce deci des which companies are
qualified for coke export quotas and publishes the lis t of those companies, on the basis of the
compliance recommendations given by the CCCMC.
7.766 For the allocation of quotas through bidding, Article 6(6) of the 2001 CCCMC Charter
provides the CCCMC with the authority to assist MOFCOM's Bidding Committee in the organization
of the quota bidding process. The Bidding Committee, the main administrative authority responsible
for organizing the bidding process 1118, is assisted by the Bidding Office, which in turn is responsible
for implementing individual auctions organized by the Bidding Committee. 1119 The Bidding Office
consists of three persons: the CCCMC Vice-C hairman, the CCCMC Director of the Bidding
Department, and the Vice-Director of the Coordi nation and Consulting Department of the China
Association of Foreign-Invested Enterprises. Th e CCCMC Director of the Bidding Department is a
member of the CCCMC Secretariat; the CCCMC Vice-Chairman is part of the management
personnel of CCCMC, and is selected from the administrative staff of the CCCMC Secretariat.1120
7.767 In respect of the United States' and Mexico's claims, there are two types of procedures
relevant for the allocation of quotas: direct allocation and allocation through bidding. As the
allegations of inconsistent administration by th e CCCMC are essentially the same for both types of
procedure, the Panel will consider jointly the involvement of the CCCMC in quota allocation, whether
through bidding or by direct allocation.
7.768 The Panel recalls that according to Article X:3(a), WTO Members are required to administer
laws of the kind that fall under Article X:1 in a uniform, impartial and reasonable manner.
Consequently, in order to analyse the United Stat es and Mexico's claims under Article X:3(a), the
Panel has to determine: (a) whether the measures establishing the export q uotas for coke, bauxite,
fluorspar, and silicon carbide are part of the "law s, regulations, decisions and rulings" of the kind
described in Article X:1 of the GATT; and, if so, (b) whether China has not administered these
measures in an impartial and reasonable manner, contrary to Article X:3(a).
7.769 We also recall our explanation of the term "g eneral application" discussed in paragraphs
7.733-7.734 above, which we continue to bear in mind as we analyse the United States' and Mexico's
claims.
7.770 As relevant to these claims, MOFCOM and Customs identified coke as a product subject to
export quotas that are allocated directly, and bauxite, fluorspar, and s ilicon carbide, as products

1116 In these Reports, for ease of use, the Panel will refer to the Standing Administrative Organ of the
CCCMC as the Secretariat. The Panel also notes that this was the term commonly used by the parties.
1117 2009 Coke Export Quota Application Procedures (Exhibits CHN-308, JE-85).
1118 Export Quota Bidding Implementation Rules (Exhibits CHN-305, JE-78), Articles 2 and 3.
1119 Export Quota Bidding Measures, Article 9, second para (Exhibits JE-77, CHN-304); Export Quota
Bidding Implementation Rules, Article 5(I), (Exhibits CHN-305, JE-78).
1120 Regulations for Personnel Management of Chambers of Commerce (Exhibit CHN-315, JE-102),
Article 14; 2001 CCCMC Charter Article 29, (Exhibits CHN-16, JE-87).

subject to export quotas allocated through a bidding system.
1121 China also maintains measures
setting out the quota amounts, and the general c onditions governing the export quotas. These
measures took effect on 1 January 2009 and were s till in effect on 21 December 2009, the date of the
Panel's establishment.
7.771 The United States submitted that the relevant measures are the following: Foreign Trade Law
(Articles 2, 14-19, 34, 61, 63, 64); Regulation on Import and Export Administration (Articles 4, 35-
41, 43, 44, 64-66); 2008 Export Licence Administration Measures; 2009 Export Licensing Catalogue;
2009 Graded Export Licensing Entities Catalogue ; 2008 Export Licensing Working Rules; 2009
Export Quota Amounts; 2009 Coke Export Quota Application Procedure; 2009 First Batch Coke
Export Quotas; 2009 Second Batch Coke Export Quot a; 2009 First Batch Coke Export Quotas for
FIEs; 2009 Second Batch Coke Export Quotas for FIEs; 2009 Coke Export Quota Application
Procedure; 1994 Export Quota Bidding Measures ; Export Quota Bidding Implementation Rules;
2009 First Round Export Quota Bidding Announcement ; 2009 Second Round Export Quota Bidding
Announcement; 2009 First Round Fluorspar Bidding Procedures; 2009 First Round Bauxite Bidding
Procedures; 2009 First Round Silicon Carbide Bidding Procedures; 2009 Announcement of Second
Bidding Round for Talc and Silicon Carbide; 2009 Second Round Silicon Carbide Bidding
Procedures; 1994 CCCMC Charter; 2001 CCCMC Charter.
7.772 These measures apply generally to the expor tation of goods subject to export quotas.
Moreover, the measures affect a ll enterprises wishing to export c oke, bauxite, fluorspar, and silicon
carbide under the quota. None of the measures at i ssue is limited to the tr eatment of particular
companies or particular shipments. Furthermore, the export quotas restrict the exportation of coke,
bauxite, fluorspar, and silicon carbide.
7.773 Thus, the Panel considers that these measur es allegedly establishing the coke, bauxite,
fluorspar, and silicon carbide export quotas are covere d by the description contained in Article X:1.
These measures are (a) laws or regulations, (b) of general application (c) made effective by China,
and, (d) pertain to requirements on exports.
(i) Impartial administration
7.774 The Panel understands the basis of the United States ' and Mexico's claims to be that there is
an inherent conflict of interest presented by the CCCMC's involvement in quota administration.
According to these complainants, this derives fro m the requirement that an individual exporter
applicant must share its confidential and sensitiv e commercial information with an entity that
represents the interests of its competitors and pot ential customers. The Panel takes note that the
United States and Mexico do not question China's asser tion that quota administration is handled by a
secretariat within the CCCMC, but they neverthel ess consider that that CCCMC Secretariat acts on
behalf of the CCCMC itself.
7.775 The United States and Mexico's claims are based on a challenge to "[t]he features of an
administrative process that govern the application of a legal instrument of the kind described in
Article X:1" as relevant evidence for establishi ng inconsistent administration of that legal
instrument.
1122 The Panel recalls that in respect of a challenge to an administrative process, the
complaining party must show that the identified f eatures of the challenged administration "necessarily
lead" to an inconsistency with Article X:3(a) with respect to the administration of laws and
regulations in a uniform, impartial and reasonable manner. The Panel recalls the Appellate Body's
guidance in this respect: "a panel might attach much we ight to differences that exist at the level of the

1121 2009 Export Licensing Catalogue (Exhibits CHN-6, JE-22).
1122 Appellate Body Report, EC – Selected Customs Matters, para. 225.

administrative processes, because it considers these di fferences to be so significant that they have
caused, or are likely to cause, [inconsistent] app lication of the legal instrument at issue".
1123 If the
complaining party shows that the features of an administrative process pose a very real risk to the
interests of the relevant parties, then it will have met its burden in proving a violation of
Article X:3(a), that is non-uniform, unreasonable or partial administration.
7.776 Consequently, the issue for the Panel is whethe r these complainants have demonstrated that
the features relating to the involvement of the CCCMC in the administration of export quotas pose a
very real risk to the interests of relevant par ties, such that this necessarily leads to partial
administration of the export quotas inconsistently with Article X:3(a) of the GATT 1994.
7.777 We agree with the panel in Argentina – Hides and Leather that the question of whether or not
an administrative process is partial or not is related, inter alia, to the question of access to confidential
information, as well as to what the person who receives the confidential information is permitted to do
with it. Applying this to the facts at hand, if a staff member of the CCCMC Secretariat who receives
an applicant exporter's confidential commercial inform ation is permitted to participate in, or in any
way influence, the quota allocation process, partial administration may result, provided that person is
also shown to have adverse commercial interests. Th e Panel also bears in mind that even if it were to
find that persons with adverse commercial interests we re allowed to participate in the quota allocation
process, this might be remedied by adequate saf eguards preventing the inappropriate flow of one
person's confidential information to another. In the light of this, the Panel will first consider whether
members of the CCCMC Secretariat do in fact partic ipate in deciding which applicant exporters are
awarded a part of the export quota. If the answer to this is in the affirmative, the Panel will then go on
to consider whether the members of the CCCMC S ecretariat are persons with adverse commercial
interests. If that is so, the Panel will then c onsider whether adequate safeguards are in place to
prevent the inappropriate flow of confidential information.
7.778 China maintains that the involvement of the CCCMC Secretariat in quota administration is
purely administrative. For the coke quota allocation process, China confirms that by virtue of
Article II of the 2010 Application Qualifica tions and Procedures for Export Quota of Coke, the
CCCMC may be asked to assist MOFCOM's Foreign Trade Department in verifying whether export
enterprises have submitted all required materials, and, based thereon, in offering general
recommendations on which enterprises submitted a ll materials and satisfy the qualification
requirements.
1124 According to China, within the CCCM C Secretariat, the Minerals & Metals
Department is the sole administrative divisi on charged with this verification competence. 1125
Applications for export quotas are provided solely to CCCMC's Minerals & Metals Department and
not to the membership of the CCCMC itself.1126
7.779 According to China, once the review and reco mmendation process has been completed by the
Minerals & Metals Department, it is MOFCOM th at conducts another final review, taking into
account the recommendation from the Department, and decides how to allocate quota to the
qualifying enterprises.1127 In response to a question posed by the Panel concerning the nature of the
recommendation to MOFCOM, China asserted that the CCCMC Secretariat's recommendations

1123 Appellate Body Report, EC – Selected Customs Matters, para. 225.
1124 2010 Application Qualifications and Procedures for Export Quota of Coke , Article II.
(Exhibit CHN-317). A similar requirement exists in the 2009 Coke Export Quota Application Procedures ,
Article II (Exhibit CHN-308, JE-85).
1125 China's first written submission, para. 691.
1126 China's first written submission, para. 693.
1127 2010 Application Qualifications and Procedures for Export Quota of Coke Article II
(Exhibit CHN-317). A similar requirement exists in the 2009 Coke Export Quota Application Procedures ,
Article II, (Exhibits CHN-308, JE-85).

include all companies that the CCCMC Secretariat has verified meet the criteria for participation in
the coke quota. China observed that the 2010 Application Qu alifications and Procedures for Export
Quota of Coke confirms this. The Panel observes th at the 2009 measure contains similar
requirements.
1128 China also submitted a letter confirming that the verification work is undertaken by
the CCCMC Minerals & Metals Department.1129
7.780 In the Panel's view, the evidence demonstrat es that the CCCMC Secretariat's Minerals &
Metals Department is not involved in allocating the coke quota itsel f; its involvement is limited to
assisting MOFCOM in verifying whether applicant exporting enterprises comply with the qualifying
criteria that have been defined in the relevant measures, and in verifying that enterprises have
properly complied with application requirements. Th e evidence on the record demonstrates that the
CCCMC Secretariat's Minerals & Metals Department's role is purely of an administrative nature.
7.781 As regards the quotas awarded through a bi dding process, the Panel notes that the Export
Quota Bidding Measures provide that the Bidding Office inter alia : (i) re-examines whether all
bidding enterprises comply with the qualification requirements for a particular bid; (ii) prints and
issues bid-winning certificates; (iii) verifies whether payment of the bid-winning deposit and the bid-
winning price has been received; (iv) publishes preliminary bid-winning results within a specific
timeline; (v) reports to the Bidding Committee the pr eliminary bid-winning results; (vi) reports to the
Bidding Committee the results of the collection of the bid-winning deposit within five working days
of the end of the period for collection; and (vii) monitors the use of quotas.
1130
7.782 Furthermore, the Panel also observes that successful bidding enterprises are determined
according to procedures set down in Article 19 of the Export Quota Bidding Measures 1131 and the
successful bid quantity is determined according to the procedures set out in Article 20(II) of the
Export Quota Bidding Measures. 1132 As regards the determination of the successful bid price,
Article 20(I) provides that in public bids, the successful bid price is the bidding price.1133
7.783 The Panel recalls that the specific claims of the United States and Mexico are based on the
assertion that an individual exporter applicant mu st share its confidential and sensitive business
information with an entity that represents the in terests of its competitors and potential customers. 1134
However, the Panel does not consider that the featur es of the administrative process in this case "have
caused, or are likely to cause" partial administration of the export quotas. 1135 Consequently, the
complainants have not been able to demonstrate to th e Panel's satisfaction that there is a very real risk
to the interests of relevant parties that the Bi dding Department, as a result of having access to an
applicant exporter's confidential information, will ne cessarily act in a partial manner to favour certain
applicants over others. The mere sharing of c onfidential information will not necessarily result in
partial administration. This would be the case onl y if those persons who receive the confidential
commercial information are able to use it in a manne r that is contrary to the interests of those
providing the information. The Panel is mindful of the involvement of certain personnel of the

1128 2009 Coke Export Quota Application Procedures, Article II, (Exhibits CHN-308, JE-85), third and
fourth paras.
1129 Letter from the CCCMC Secretariat, dated 10 November 2010 (Exhibit CHN-530).
1130 Export Quota Bidding Measures (Exhibits CHN-304, JE-77); Export Quota Bidding
Implementation Rules Article 5(VIII) (Exhibits CHN-305, JE-78).
1131 Exhibits CHN-304, JE-77.
1132 Exhibits CHN-304, JE-77.
1133 The Panel recalls from its description of the quota allocation system that bauxite, fluorspar, and
silicon carbide are subject to public bidding.
1134 United States' second written submission, para. 359; Mexico's second written submission,
para. 363.
1135 Appellate Body Report, EC – Selected Customs Matters, para. 225.

CCCMC in the management of the Bidding Office.
1136 However, in the light of the foregoing
description of the roles of the relevant departments of the CCCMC Secretariat in the administration of
the quota allocation process, the Panel is of the vi ew that the United States and Mexico have not
shown that there is a very real risk that either the Metals & Minerals Department or the Bidding
Department can exercise any discretion, partiality or bias in the administration of the coke, bauxite,
fluorspar and silicon carbide quotas in a way that would allow persons involved in quota
administration to favour one exporting company over another.
7.784 In fact the evidence shows that the discreti on, as well as the decision on how much a quota
applicant receives, falls to MOFCOM in the case of the coke quota, the government authority charged
with this task. In the case of quotas allocated through a bidding process, successful enterprises, the
successful bid quantities and the price are determin ed according to procedures set out in Articles 19
and 20 of the Export Quota Bidding Measures. 1137. The United States and Mexico have not
demonstrated that either the relevant departme nts of the CCCMC Secretariat, or the CCCMC itself,
are involved in the actual allocation of the export quotas, or that, in the case of the CCCMC
Secretariat, its role extends beyond the verification of qualifying criteria or certain clerical tasks in the
case of quotas allocated through bidding.
7.785 As the Panel has concluded that members of the CCCMC Secretariat do not participate in
deciding which applicant exporters are awarded a part of the export quota, the Panel does not need to
consider whether the members of the CCCMC Secr etariat are persons with adverse commercial
interests or whether adequate safeguards are in place to prevent the inappropriate flow of confidential
information.
7.786 The Panel is of the view that the United Stat es and Mexico have not demonstrated that the
features of the administrative process – namely th e involvement of the CCCMC in the administration
of export quotas – pose a very real risk to the inter ests of relevant parties such that this necessarily
results in partial administration of the export quotas contrary to Article X:3(a).
7.787 Consequently, the Panel concludes that the ad ministration of export quotas by the CCCMC,
whether allocated directly or by bidding, does not amount to partial administration in a manner
inconsistent with Article X:3(a) of the GATT 1994.
(ii) Reasonable administration
7.788 The Panel understands the United St ates' and Mexico's claims to be that the information an
exporter is required to share with the CCCMC in applyi ng to export under a q uota is not relevant to
the stated objective for sharing this information, that is administering allocations of the relevant
quotas.
1138 These complainants acknowledge that some of the information requested may be relevant
to determining whether the applicant enterprises have the requisite prior export experience and
registered capital requirements demanded of exporter a pplicants in certain of the measures at issue.
However, by virtue of obtaining access to document s containing this information, representatives of
the CCCMC would also gain access to other confiden tial information that bears no relevance to the

1136 See para. 7.766 above.
1137 Exhibits CHN-304, JE-77.
1138 United States' second written submission, para. 360; Mexico's second written submission,
para. 364.

administration of the application process for export quotas.
1139 Accordingly, having to provide this
information to the CCCMC is unreasonable and results in a contravention of Article X:3(a).
7.789 Here too, the United States' and Mexico's clai ms are based on a challenge in relation to an
administrative process. Consequently, the issue for the Panel here is whether these complainants have
demonstrated that the features relating to the in volvement of the CCCMC in the administration of
export quotas pose a very real risk to the interests of relevant parties such that this necessarily leads to
unreasonable administration of the export quotas inconsistently with Article X:3(a) of the
GATT 1994.
7.790 We recall the panel's finding in Argentina – Hides and Leather that "a process aimed at
assuring the proper classification of products, but wh ich inherently contains the possibility of
revealing confidential business information, is an unreasonable manner of administering the laws,
regulations and rules identified in Article X:1 and therefore is inconsistent with Article X:3(a)."1140
7.791 The United States' and Mexico's specific comp laints are that an exporter's past export
invoices, balance sheet and income statement, info rmation about its registered capital, sales revenue,
net profits, and past import and export data, mu st be shared with the CCCMC in order for the
CCCMC to process the exporter's application or to complete tasks related to maintaining the
functioning of the export quota and export quota bidding regimes.1141
7.792 Responding to each of these challenges, China e xplains with reference to its 2010 measure
why the specific information is required and the lega l basis for the requirement. However, the Panel
recalls that the measures that were in for ce on 21 December 2009 (the date of the Panel's
establishment) are the 2009 measures not the 2010 meas ures. Consequently, the Panel will refer to
the relevant 2009 measure in conducting its analysis . China explains that (2010) requirement for an
exporter to provide past export invoices, as s upporting documentation for the volume of export and
supply for export of coke1142, allows verification of whether the exporter satisfies the minimum export
performance requirement.1143 The Panel has verified that a similar requirement exists in the relevant
measure at issue, the 2009 Application Qualifications and Application Procedures for Export Quota
of Coke.1144 China asserts that the business licence must be submitted as supporting documentation1145,
showing that the coke quota applicant is lawfu lly registered and satisfies the business qualification
requirement.1146 The Panel has verified that a requirement similar to the 2010 requirement exists in

1139 United States' first written submission, paras. 298, 311, and 370 and United States' second written
submission, para. 363; Mexico's first written submissi on, para. 301, 314, and 373 and Mexico's second written
submission, para. 367.
1140 Panel Report, Argentina – Hides and Leather, para. 11.94.
1141 United States' first written submission, para. 364; Mexico's first written submission, para. 367.
1142 2010 Application Qualifications and Procedures for Export Quota of Coke , Article I(I)3 and I(II)2.
(Exhibit CHN-317).
1143 2010 Application Qualifications and Procedures for Export Quota of Coke , Article III(IV),
(Exhibit CHN-317).
1144 2009 Coke Export Quota Application Procedures, Article I(1)3 and Article I(2)2 and Article III(5),
(Exhibits CHN-308, JE-85).
1145 2010 Application Qualifications and Procedures for Export Quota of Coke , Article III(I) (Exhibit
 CHN-317).
1146 2010 Application Qualifications and Procedures for Export Quota of Coke, Articles I(1)1 and I(2)1
and Article III(1), (Exhibit CHN-317).

the relevant measure at issue, the 2009 Application Qualifications and Application Procedures for
Export Quota of Coke.
1147
7.793 China explains that an audited balance sheet must be submitted as supporting documentation
for the registered capital, paid-in capita l, and other capital-related information 1148 that must be
completed in the quota application form for baux ite and silicon carbide, allowing verification of
whether the exporter satisfies the mini mum registered capital requirement. 1149 The Panel has verified
that a requirement similar to the 2010 requirement ex ists in the relevant measure at issue, the 2009
Second Round Bidding Invitation.1150
7.794 Lastly, an income statement must be submitted as supporting documentation for the
information regarding the total value of exports to be completed in the application form for bauxite
and silicon carbide. 1151 Such information and documentation allows the authority to verify whether
the exporter satisfies the minimum export performance requirement. 1152 The Panel has verified that a
requirement similar to the 2010 requirement exists in the relevant measure at issue, the 2009 Second
Round Bidding Invitation.1153
7.795 In the light of these explanations by China, the Panel concludes that the required documents
are relevant to the discharge of the task delegated to the CCCMC Secretariat to verify the eligibility of
quota applicants. The United States and Mexico have not been able to rebut China's assertion that
they are so required. Moreover, China asserts th at it requires only information stipulated in the
relevant measure. This suggests that other inform ation in the document could be redacted should the
enterprise not wish to share it.
7.796 Thus, the United States and Mexico have not demonstrated that the features relating to the
involvement of the CCCMC in the administration of export quotas pose a very real risk to the interests
of relevant parties such that this necessarily results in unreasonable administration of the export
quotas inconsistently with Article X:3(a). Conseque ntly, the Panel finds that the administration of
export quotas by the CCCMC, whether allocated directly or by bidding, does not amount to
unreasonable administration in a manner inconsistent with Article X:3(a) of the GATT 1994.

1147 2009 Coke Export Quota Application Procedure , Articles I(1)1 and I(2 )1, (Exhibits CHN-308,
JE-85).
1148 2010 Second-Batch Bidding Qualifications and Review for Export Quotas , Articles IV(I)3(1) (incl.
Appendix 2) and IV(I)3(2)(A), (Exhibit CHN-307).
1149 2010 Second-Batch Bidding Qualifications and Review for Export Quotas , Articles III(II)3 and
III(II)4 (Exhibit CHN-307).
1150 2009 Second Round Export Quota Bidding Announcement , Article IV(I)3, (including Appendix 2
in Exhibit CHN-310, JE-91), read in conjunction with 2009 First Round Export Quota Bidding Announcement,
Article III(II) (Exhibits CHN-309, JE-90).
1151 2010 Second-Batch Bidding Qualifications and Review for Export Quotas , Articles IV(I)3(1) (incl.
Appendix 2) and IV(I)3(2)A, (Exhibit CHN-307).
1152 2010 Second-Batch Bidding Qualifications and Review for Export Quotas , Articles III(II)3 and
III(II)4, (Exhibit CHN-307).
1153 2009 Second Round Export Quota Bidding Announcement , Article (IV)(1)(3), (Exhibits CHN-310,
JE-91).

(iii) Conclusion
7.797 In light of the above, the Panel finds that the administration of export quotas by the CCCMC,
whether allocated directly or by bidding does not amount to partial or unreasonable administration in
a manner inconsistent with Article X:3(a) of the GATT 1994.
4. Whether China's failure to publish the total am ount and procedure for the allocation of
zinc export quotas is inconsistent with Article X:1 of the GATT 1994
7.798 The European Union claims th at China does not publish the total amount of export quota for
zinc that it will allocate for a specific year. It al so asserts that China does not publish any information
regarding the conditions that interested enterprises should satisfy in order to be allocated a zinc export
quota. The European Union continues that China does not publish any invitation for applications for
an export quota by interested enterprises, or a list of the enterprises that ha ve been allocated a zinc
export quota. As a result, neither interested enterprises, nor other WTO Members, know how much
zinc China will allow to be exported, when the a llocation of the export quotas will take place, how
and to whom applications are to be submitted, or which conditions applicants should satisfy.
1154
7.799 China responds that pursuant to Article I(i) of the 2010 Export Licensing Catalogue , exports
of zinc ores are subject to a quota allocated directly. 1155 China explained that MOFCOM has not
authorized a 2010 quota for zinc. 1156 In other words, China says that in 2010, MOFCOM did not
make effective the quota on zinc by setting a particular quota amount available for exports. As a
result, no zinc could be exported from China in 2010. Finally, China states that it "does not assert any
defence in connection with this failure to set th e quota amount for zinc ores in 2010". In 2009, there
also appears to have been a prohibition on the export of zinc from China.
1157
7.800 We recall that Article X:1 states in relevant part:
"Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any contr acting party, pertaining to ... requirements,
restrictions or prohibitions on ... exports sh all be published promptly in such manner
as to enable governments and traders to become acquainted with them…"
7.801 As set out above, WTO Members are required to publish promptly a ll laws, regulations,
judicial decisions and administrative rulings in su ch a way as to enable governments and traders to
become acquainted with them. The European Union is required to establish that China's failure to
authorize a zinc quota for 2009 is a measure within the terms of Article X:1 that had been made
effective, thereby requiring prompt publication so as to enable governments and traders to become
acquainted with it.
7.802 As the Appellate Body said in US – Corrosion-Resistant Steel Sunset Reviews , "any act or
omission attributable to a WTO Member can be a measure of that Member for purposes of dispute
settlement".
1158 The Panel considers that the decision by MOFCOM not to publish the zinc quota is a

1154 European Union's first written submission, para. 213.
1155 2010 Export Licensing Catalogue Article I(i), (Exhibit CHN-7).
1156 Following the first substantive meeting, the European Union asked whether China could provide
details of the legal instrument that announced that the zinc quota for 2009 and 2010 had been set at zero. In its
response to that question, China referred the European Un ion (and the Panel) to para. 37 of its responses to
questions. In this paragraph, China acknowledged that it had failed to set the quota amount for zinc for 2010.
The Panel deduces from this response that China also failed to set the quota amount for zinc in 2009.
1157 China's response to Panel question No. 8 following the first substantive meeting para 37.
1158 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Reviews, para. 81.

measure of China for the purposes of WTO dispute settlement. China's Foreign Trade Law delegates
MOFCOM as the government agency responsible fo r the administration of China's export quotas.
Furthermore, MOFCOM is directed to determine the total amount of the annual export quota for each
good subject to export quotas and to announce the total amount of the annual export quota for each
product by 31 October of the preceding year.
1159 Thus, this determination by MOFCOM of the quota
amounts, including determining the zinc quota, is an act or omission attributable to China. Moreover,
it is clear that the measure pertains to "requirements, restrictions, or prohibitions" on exports.
7.803 As to the requirement that it be a "law, regula tion, judicial decision [or] administrative ruling
of general application", the Panel notes the broad sc ope of this phrase and considers that it includes a
wide range of measures that have the potential to affect trade and traders.1160 Consequently, the Panel
concludes that the failure to set an export quota for zinc is a "law, regulation, judicial decision [or]
administrative ruling" falling within the ambit of Article X:1.
7.804 The Panel considers further that MOFCOM's failure to set a quota amount is a "law,
regulation, judicial decision [or] administrative ru ling" of general application. It affects any
enterprise wishing to export the zinc quota; hence it fulfils the "general application" criterion.
7.805 On the question of whether a measure had been made effective, the panel in EC – IT Products
held that "the term 'made effective' under Article X:1 of the GATT 1994 also covers measures that
were brought into effect, or made operative, in practice and is not limited to measures formally
promulgated or that have formally 'entered into force'."
1161 The Panel considers that the failure to set a
quota amount for zinc comes within the scope of this term. It is "law, regulation, judicial decision
[or] administrative ruling" that has been made operative in that there has been no export of zinc.
7.806 Concerning the requirement to publish promptly the relevant measures, in this case, the
omission to set a quota for zinc, the Panel observes th at China has not denied that it has not published
the quota, or lack thereof, for zinc. Additionally the failure to publish the quota has had a practical
result as interested exporters did not know that e ffectively, they were unable to export zinc. The
Panel considers that under its Artic le X:1 obligations, China should ha ve published its decision not to
make "effective the quota on zinc by setting a partic ular quota amount available for exports" in such a
manner as to enable governments and traders to become acquainted with that decision.1162
7.807 Consequently, the Panel concludes that the fa ilure by China to publish promptly MOFCOM's
decision not to authorize an export quota for zinc in such manner as to enable governments and
traders to become acquainted with it is inconsistent with Article X:1 of the GATT 1994.
5. Whether China's allocation of quotas on baux ite, fluorspar and silicon carbide based on
the bid-winning price is inconsistent with Article VIII:1(a) of the GATT 1994 and
Paragraph 11.3 of China's Accession Protocol
7.808 The United States and Mexico submit that China allocates export quotas on bauxite, fluorspar
and silicon carbide
1163 through a quota bidding process, under which enterprises seeking to export
must pay a bid-winning price, equal to the bid price multiplied by the bid quantity, for the right to
export under the quota. The United States and Mexico claim that the bid-winning price paid in

1159 Regulation on Import and Export Administration , Article 38 (Exhibits CHN-152, JE-73); Export
Quota Administration Measures, Articles 9-11 (Exhibits CHN-312, JE-76).
1160 Panel Report, EC – IT Products, para. 7.1026.
1161 Panel Report, EC – IT Products, para. 7.1048.
1162 China's response to Panel question No. 8 following the first substantive meeting para 37.
1163 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6 and para. 2.2 of the Descriptive Part to these Reports.

connection with such quota allocation constitutes a "f ee" or "charge" "imposed ... on or in connection
with ... exportation" that is not "limited in amount to the approximate cost of services rendered" and
as such is inconsistent with Article VIII:1(a) of the GATT 1994.
1164 In addition, the United States and
Mexico submit that the bid-winning price constitutes a "tax[]" or "charge[] applied to exports" within
the meaning of Paragraph 11.3 of China's Accession Protocol. Because bauxite, fluorspar and silicon
carbide are not listed in Annex 6 of China's Acce ssion Protocol, they submit that the bid-winning
price is also inconsistent with Paragraph 11.3 of China's Accession Protocol.
7.809 China requests the Panel to reject the complain ants' claims concerning the bid-winning price.
First, China contends that it no longer subjects exports of fluorspar to a quota under the 2010 Export
Licensing List Notice .1165 Accordingly, it requests the Panel not to reach findings on fluorspar.
Second, China alleges in its second written submi ssion that the United States and Mexico have
abandoned their claim under Paragraph 11.3 and Annex 6 of China's Accession Protocol by failing to
list this claim in response to a request by the Panel to identify all measures for which they are seeking
recommendations.1166
7.810 Notwithstanding these issues, China argues that th e bid-winning price is not a fee or charge
"on or in connection with exportation" within the meaning of Article VIII:1(a) 1167, nor is it a tax or
charge "applied to exports" within the meaning of Paragraph 11.3 of China's Accession Protocol.
China argues that the WTO covered agreements do not prohibit bidding, nor prescribe a particular
methodology for quota allocation, but only require that a Member administer its quota allocation
system consistently with Articles X and XIII. 1168 China submits that the bid-winning price reflects
what a bid winners is willing to pay for the right to export a particular quantity. 1169 In addition, China
submits that a bid-winning system is the least trade-distorting means of quota allocation.1170
7.811 As a preliminary matter, the Panel recalls its fi nding in paragraph 7.33 a bove that, in general,
measures that were in force when the Panel was established on 21 December 2009 form the basis of
its terms of reference. 1171 At the request of the complainants, the Panel will only assess the WTO
consistency of the 2009 measures while taking note that the 2010 measures do not set a quota for
fluorspar.
7.812 Second, as correctly pointed out by China, the United States and Mexico did not list their
claim under Paragraph 11.3 of China's Accession Protocol as concerns quota allocation when
responding to a request by the Panel to id entify measures for wh ich they are seeking
recommendations.1172 The United States and Mexico did, however, continue to argue their claim in
the context of their own rebuttal submissions, suggesting that the omission of this claim in response to

1164 United States' first written submission, paras. 315-330; Mexico's first written submission,
paras. 318-333.
1165 China's first written submission, para. 578.
1166 China's second written submission, paras. 397-399.
1167 China's first written submission, para. 577.
1168 China's first written submission, paras. 577, 594.
1169 China's first written submission, para. 598.
1170 China's first written submission, paras. 599-601; China's comments on the complainants' responses
to Panel question No. 6 following the first substantive meeting, para. 54; WTO, Special Study Series, Market
Access: Unifnished Business – Post Uruguay Round Inventory and Issues (Geneva, 2001), p. 55 (Exhibit CHN-
303); China's Statement on Export Quota Auctions as Optimal Allocation Mechanisms (July 2010) (Exhibit
CHN-306); US Department of Agriculture Publication, Economic Analysis of TRQ Administrative Methods
(TB-1893), p. iv (Exhibit CHN-462).
1171 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1172 Complainants' responses to Panel question No. 2 following the first substantive meeting.

a question from the Panel was an oversight. More over, the United States and Mexico identified the
relevant measures and provision in their Panel Requ ests, and subsequently confirmed that they had
not abandoned their claim in this regard.
1173 The Panel considers that the United States and Mexico
did not intend to abandon this particular claim, and will therefore consider it.
7.813 Accordingly, the Panel will first set out China's system of allocation for export quotas for
bauxite, fluorspar and silicon carbide through a quot a bidding process, and subsequently will assess
the complainants' claims under Article VIII:1(a) of the GATT 1994 and Paragraph 11.3 of China's
Accession Protocol.
(a) The allocation of export quotas through a quota bidding process
7.814 In 2009, China allocated quotas for fluorspar, bauxite and silicon carbide through a bidding
system.1174 The Panel recalls its description in Sectio n VII.C.2(b) above of how China awards a
portion of the export quota as part of the bidding process in order to export.
(b) Whether China's allocation of quotas on bauxite , fluorspar and silicon carbide based on the
bid-winning price is inconsistent with Article VIII:1(a) of the GATT 1994
Article VIII:1(a) of the GATT 1994 provides:

"All fees and charges of whatever characte r (other than import and export duties and
other than taxes within the purview of Article III) imposed by contracting parties on
or in connection with importation or expor tation shall be limited in amount to the
approximate cost of services rendered and shall not represent an indirect protection to
domestic products or a taxation of imports or exports for fiscal purposes."
7.815 Article VIII:1(a) thus prohibits "all fees and ch arges of whatever character" (other than
import and export duties, and taxes within the purview of Article III) that are "imposed on or in
connection with exportation" and that are not "limited in amount to the approximate cost of that
service rendered".
1175 The Panel will first consider generally the meaning of these terms before
considering whether the bid-winning price collected by China constitutes a "fee" or "charge" within
the meaning of Article VIII:1(a).
7.816 Article 3.2 of the DSU directs panels to cl arify the existing provisions of the covered
agreements "in accordance with customary rules of interpretation of pub lic international law".
Articles 31, 32 and 33 of the Vienna Convention codify these customary rules. 1176 Article 31 of the
Vienna Convention states in particular that "[a] tr eaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its
object and purpose." The Panel is bound to "give mean ing and effect to all terms of a treaty" and is

1173 Complainants' responses to Panel question No. 2 following the second substantive meeting.
1174 2009 First Round Fluorspar Bidding Procedures (Exhibit JE-93); 2009 First Round Bauxite
Bidding Procedures (Exhibit JE-94); 2009 First Round Silicon Carbide Bidding Procedures (Exhibit JE-95);
Quota Bidding Measures, Article 14 (Exhibit JE-77).
1175 See GATT Panel Report, US – Customs User Fee, para. 69.
1176 Appellate Body Report, US – Gasoline, p. 17, DSR 1996:I, 3, at pp. 15-16; Appellate Body Report,
India – Patents (US), para. 45; and Appellate Body Report, US – Shrimp, para. 114.

not "free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to
redundancy or inutility."
1177
(i) The ordinary meaning of the terms "fees" or "charges" in Article VIII:1(a)
7.817 The United States and Mexico submit that the scope of Article VIII:1(a) was "enlarged"
during negotiations.1178 The United States and Mexico argue that the language "in connection with"
supports the view that the notion of "fees" in Article VIII:1(a) is "broad". 1179 They further submit that
the meaning of "fees" is informed by Article VIII:4, which refers to "fees, charges, formalities, and
requirements imposed by governmental authorities in connection with ... exportation".1180
7.818 China argues that Article VIII:1(a) does not a pply a "residual general prohibition on all fees
and charges".1181 China considers that the text, broader context, negotiating history and surrounding
circumstances demonstrate that the provision relat es to fees and formalities in connection with the
processing of customs entries applied at the border. 1182 China argues that the phrase "of whatever
character" was added to clarify the distincti on between "fees and charges" and "duties". 1183 C h i n a
argues that Article VIII applies to "fees, charges, formalities and requirements" specifically related to
those items enumerated in Article VIII:4 that are "customs activities which the draftsmen meant when
they referred to 'services' rendered". 1184 China argues that this interpretation is supported by the
reference to customs-related activities in Article VIII:3. 1185 China finds further support for this
interpretation in more recent discussions on Article VIII.1186
The meaning of the terms "fees" and "charges"
7.819 The Appellate Body has indicated that dictionaries may provide a "useful starting point" for
the analysis of the "ordinary meaning" of a treaty term, although they are not necessarily
dispositive.1187
7.820 The Panel observes that the term "fee" is defi ned as "a fixed charge" or "a sum paid or
charged for a service" 1188, or "[a] recompense for an official or professional service or a charge or

1177 Appellate Body Report, US – Gasoline , p. 23 DSR 1996:I, 3, at p. 21. See also Appellate Body
Reports: Japan – Alcoholic Beverages II, p. 12, DSR 1996:I, 97, p. 106; Canada – Dairy, para. 133; and US –
Upland Cotton, para. 549.
1178 United States' response to Panel question No. 6 following the first substantive meeting, para. 12;
Mexico's response to Panel question No. 6 following the first substantive meeting.
1179 United States' response to Panel question No. 6 following the first substantive meeting, paras. 9-10;
Mexico's response to Panel question No. 6 following the first substantive meeting.
1180 United States' first written submission, para. 319; Mexico's first written submission, para. 322.
1181 China's first written submission, para. 579-580; China's second written submission, para. 386.
1182 China's first written submission , paras. 586-588, referring to International Convention Relating to
the Simplification of Customs Formalities , LNTS Volume 30 (1925), p. 372, done at Geneva on 3 November
1923, Preamble, (Exhibit CHN-291); Suggested Charter for an International Trade Organization of the United
Nations, Department of State (September 1946), Articles 13.1 and 13.4, (Exhibit CHN-292); GATT Negotiating
Group on Non-Tariff Measures, Fees, Duties and Other Import Charges – Background Note by the Secretariat
MTN.GNG/NG2/W/28 (1 May 1989), para. 3 (Exhibit CHN-293).
1183 China's second written submission, para. 386.
1184 China's first written submission, paras. 581-582, referring to GATT Panel Report, US – Customs
User Fee, para. 76.
1185 China's first written submission, para. 583.
1186 See China's first written submission, paras. 589-590 and fns. 877-879.
1187 Appellate Body Report, EC – Chicken Cuts , para. 175; Appellate Body Report, US – Softwood
Lumber IV, para. 59; Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 248; Appellate Body
Report, US – Gambling, para. 166.

emolument or compensation for a particular act or service".
1189 Definitions of "charge" include
"pecuniary burden, cost", "expense", or "[a] pri ce required or demanded for service rendered or goods
supplied".1190 These definitions in isolation do not provide the precise meaning of the terms as they
appear in Article VIII:1(a). Accordingly, the Pa nel will proceed with its analysis following the
approach codified in the Vienna Convention , considering the terms "fees" and "charges" in their
broader context and the object and purpose of the WTO Agreement.
The terms "fees" and "charges" in the context of other terms in Article VIII and the
WTO Agreement
7.821 The terms "fees" and "charges" are modified by the word "[a]ll", the phrase "of whatever
character (other than import and export duties and ot her than taxes within the purview of Article III)"
and by the phrase "imposed on or in connection with importation or exportation". It is clear that the
terms "all" and "of whatever character" suggest a broad scope of coverage for the terms "fees" and
"charges". The term "all" is defined as "the en tire number of ... without exception" in conjunction
with plural nouns.1191 The term "whatever" is defined as "[ a]nything that", and "[n]o matter what".1192
The term "character" is defined as "a feature, trait, characteristic" or nature, sort, style". 1193 T h e
parenthetical specific exception referring to "other than import and export duties" further suggests that
a broad scope should be attributed to "fees" and "c harges". In sum, Article VIII:1(a) refers to all fees
and charges of whatever character except duties or internal taxes of the kind under Article III of the
GATT 1994.
7.822 We note that Article VIII is entitled "Fees a nd Formalities connected with Importation and
Exportation." We also observe that the phrase "i mposed on or in connection with importation or
exportation" further informs the meaning of the term s "fees" and "charges". The term "impose" is
defined as "put, apply, or bestow", "lay or inflict (a tax, duty, charge, obligation, etc.) (on or upon),
esp. forcibly; compel compliance with". 1194 The term "on" is defined as "[d]uring, or at some time
during (a specified day or part of day); contemporane ously with (an occasion)", "in or at", "exactly at
or just coming up to (a specified time), just before or after in time", "on the occasion of (an
action)".1195 The term "connection" is defined inter alia as "[a] causal or logical relationship or
association"1196, and "connect" as a transitive verb is defined as "associate in occurrence or action".1197

1188 Merriam-Webster Online Dictionary.
1189 Black's Law Dictionary, (Special Deluxe Fifth Edition), p. 553.
1190 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 1, p. 382.
1191 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol 1, p. 54.
1192 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 3618.
1193 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol 1, p. 381.
1194 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol 1, p. 1331.
1195 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 1996.
1196 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol 1, p. 489.
1197 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol 1, p. 489.

7.823 These terms indicate that Article VIII:1 refers to those fees or charges that are applied at the
moment in time of exportation, or in association with exportation. The parties appear to agree that a
broad temporal view is supported by the language "on or in connection with".
1198
7.824 Beyond temporal connotations, the phrase "on or in connection with ... exportation" may also
mean that fees or charges that are associated with exportation, or that are linked or logically related to
exportation, would fall within the scope of Article VIII. China argues, however, that the "fee or
charge" must be "imposed" by the government.1199
7.825 The meaning of "imposed on or in connecti on with" or associated with importation or
exportation is further informed by the remaining text of Article VIII:1(a). In particular,
Article VIII:1(a) provides that those fees or charges that fall within the scope of Article VIII:1(a) must
be "limited in amount to the approximate cost of services rendered".
7.826 The term "service" is defined as "the action of serving, helping, or benefiting another;
behaviour conducive to the welfare or advantage of another", "assistance or benefit provided to
someone by a person or thing" or "the organized syst em of providing labour, equipment, etc., to meet
a public need such as health or communications." 1200 In the Panel's view, the term "service" and the
term "service rendered" do not in themselves provide guidance on the interpretation to be given "fees"
or "charges" as used in Article VIII:1(a).
7.827 The Panel will therefore consider other availa ble interpretative elements to inform its
interpretation. In particular, we observe that th e surrounding provisions (or context) in Article VIII
emphasize formal, documentary and procedural requi rements that may arise on or in connection with
exportation. In this respect, Article VIII:1(c) r eads: "[WTO Members] also recognize the need for
minimizing the incidence and complexity of im port and export formalities and for decreasing and
simplifying import and export documentation requ irements." Article VIII:3 reads: "No [WTO
Member] shall impose substantial penalties for minor breaches of customs regulations or procedural
requirements. In particular, no penalty in r espect of any omission or mistake in customs
documentation which is easily rectifiable and obvi ously made without fraudulent intent or gross
negligence shall be greater than necessary to serve merely as a warning."
7.828 In addition, Article VIII:4 provides:
"The provisions of this Article shall extend to fees, charges, formalities and
requirements imposed by governmental aut horities in connection with importation
and exportation, including those relating to:
(a) consular transactions, such as consular invoices and
certificates;

1198 For instance, referring to the Panel Report on China – Auto Parts , the complainants consider that
the phrase "imposed on or in conn ection with" indicates a broader tempor al scope than the exact moment of
border crossing (complainants' response to Panel question No. 6). In discussing the distinction between an
ordinary customs duty applied at the border and an internal charge, the panel in China – Auto Parts concluded
that a "broad scope" was intended for the phrase "on or in connection with ...", arguing that otherwise, different
GATT provisions would have only used the terms "on" or "on or in connection with ...", but not both phrases.
(Panel Report, China – Auto Parts , para. 7.177). The Appellate Body did not dispute this conclusion,
explaining that "the moment at which a charge is collected or paid is not determinative of whether it is an
ordinary customs duty or an internal charge." (Appellate Body Report, China – Auto Parts, para. 158).
1199 China's closing oral statement at the second substantive meeting, para. 9.
1200 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2768.

(b) quantitative restrictions;
(c) licensing;
(d) exchange control;
(e) statistical services;
(f) documents, documentation and certification;
(g) analysis and inspection; and
(h) quarantine, sanitation and fumigation."
7.829 Many of the activities listed in Article VIII:4 refer to customs-related activities that take place
at the border, such as fulfilment of documentary requirements, certification and inspection services, as
well as matters related to sanitary activities, statistical surveillance and exchange services.
7.830 The complainants put emphasis on the reference in Article VIII:4 to "quantitative restrictions"
and "licensing" in making their point that all fees or charges connected to export restraints or licence
fees are prohibited. We disagree. In the Panel's view, meaning must be given to the language "in
connection with ... exportation" and thus, not each and every fee, charge, formality and requirement
associated with quantitative restrictions or export li censing fall within the scope of Article VIII. By
the very terms of Article VIII:4, only "fees, charges, formalities or requirements imposed ... in
connection with ... exportation" are covered. The Pa nel observes that such fees or charges must be
collected in exchange for a "service rendered", and approximate the cost of that "service", to fall
within the scope of Article VIII:1(a). These conditi ons indicate that not all types of fees and charges
are prohibited. In particular, those fees or charges that are not imposed in connection with
importation or exportation, and, if they are imposed in connection with impor tation or exportation,
those that approximate the cost of a service rendered would, not fall within the scope of
Article VIII:1(a) regardless of their nature. In other words, "fees, charges, formalities and
requirements" that relate to quantitative restricti ons or licensing would not necessarily be prohibited.
Accordingly, some, but not all, fees, charges, fo rmalities or requirements that relate to quantitative
restrictions or licensing could fall within the scope of Article VIII. As such, the Panel considers that
its analysis must focus on whether a fee or charge is imposed on or in connection with exportation,
and, if so, whether it approximates the cost of a service rendered.
7.831 The Panel notes that a quantitative restriction (quota, ban, licence requirement or other type of
"restriction") may be WTO-inconsistent under Ar ticle XI:1 of the GATT 1994. Thus it seems
appropriate to construe Article VIII as regulati ng something different from that addressed by GATT
Article XI:1. The Panel understands Article VIII to address more narrowly those fees, charges,
formalities and requirements – such as those rela ting to quantitative restrictions or licensing
requirements – that are imposed on or in connection with importation or exportation.
7.832 Therefore, based on an assessment of the terms in Article VIII:1(a) and the context of
Article VIII:4, the Panel concludes preliminarily th at the meaning of "fees" or "charges" that fall
within the scope of Article VIII is broad, includi ng "all" fees or charges "of whatever character".
However, not all fees or charges are covered. In the Panel's view, Article VIII, including both
Article VIII:1(a) and Article VIII:4, is limited in a pplication to those types of fees or charges imposed
"on or in connection with importation or exportation" . These typically include specific fees, charges,
formalities or requirements, associated with cu stoms-related documentation, certification and
inspection, and statistical matters. This conclusion is consistent with that reached by the GATT panel

on US – Customs User Fee , namely that the drafters intended the term "services" to refer to
"government activities closely enough connected to the processes of customs entry".
1201
7.833 The Panel recalls that the provisions of a treaty sh ould be interpreted in light of the object and
purpose of the treaty being interpreted. The Pane l noted above that Article XI:1 of the GATT 1994
imposes express obligations on WTO Members pertaining to their use of quantitative restrictions or
restrictive import or export licensing requirements. In light of this general approach in Article XI:1,
and in the absence of any indication that Article VIII should be construe d differently from the
approach adopted by the Panel above , the Panel considers that its inte rpretation of Article VIII:1(a) is
consistent with the object and purpose of the WTO Agreement.
Other interpretative elements
7.834 Article 31(2) of the Vienna Convention indicates that context for the purpose of treaty
interpretation may include, in addition to the text of the treaty under interpretation, agreements or
instruments made in connection with the conclusion of the treaty. By virtue of Article 31(3), a treaty
interpreter may also consider any subsequent agreement between the parties regarding the
interpretation of the treaty, subsequent practice in the application of the treaty, or any relevant
applicable rules of international law applicable in the relations between the parties. Finally, under
Article 32 of the Vienna Convention, a treaty inte rpreter may resort to supplementary means of
interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, to
confirm the meaning of the provision resulting from th e application of Article 31, or to determine the
meaning of a provision when interpretation leaves th e meaning ambiguous or obscure or leads to an
absurd or unreasonable result.
7.835 The United States and Mexico submit that the la nguage of Article VIII was "enlarged" during
negotiations, and that the Panel's interpretation should reflect this "enlarged" scope.1202
7.836 China argues that certain documents precedi ng the conclusion of the GATT in 1947 confirm
that Article VIII was intended to address only customs -related matters. In particular, as did the Panel
in US – Customs User Fee 1203, China refers to the International Convention Relating to the
Simplification of Customs Formalities 1204 and the Suggested Charter for an International Trade
Organization of the United Nations 1205. China submits that, during negotiations for the GATT 1947,
the United States proposed to include a provision in Article VIII:1(a) of the GATT 1994 referring to
"fees, charges, formalities and requirements relating to all customs matters". 1206 In addition, China
refers to a 1989 background note of the GATT Negotiating Group on Non-Tariff Measures 1207 noting
examples of charges for services rendered that are imposed in connection with imports, including port

1201 GATT Panel Report, US – Customs User Fee , para. 77 ("It must be presumed, therefore, that the
drafters meant the term 'services' to be used in a more artful political sense, i.e., government activities closely
enough connected to the processes of customs entry that they might, with no more than the customary artistic
licence accorded to taxing authorities, be called a 'service' to the importer in question.").
1202 United States' response to Panel question No. 6 following the first substantive meeting, para. 12;
Mexico's response to Panel question No. 6 following the first substantive meeting.
1203 GATT Panel Report, US – Customs User Fee, paras. 71, 75.
1204 International Convention Relating to the Simplification of Customs Formalities , LNTS Volume 30
(1925), p. 372, done at Geneva on 3 November 1923, Preamble, (Exhibit CHN-291).
1205 Suggested Charter for an International Trade Organization of the United Nations , Department of
State (September 1946), Articles 13.1 and 13.4 (Exhibit CHN-292).
1206 Suggested Charter for an International Trade Organization of the United Nations , Department of
State (September 1946), Articles 13.1 and 13.4 (emphasis added) (Exhibit CHN-292).
1207 GATT Negotiating Group on Non-Tariff Measures, Fees, Duties and Other Import Charges –
Background Note by the Secretariat MTN.GNG/NG2/W/28 (1 May 1989), para. 3 (Exhibit CHN-293).

taxes, port improvement taxes, warehousing taxes, sanitary and phytosanitary taxes, customs user
fees, and statistical taxes.
7.837 The Panel does not consider an Article 32 analys is is required in light of its conclusions
above. However, even if it were, the 1923 International Convention Relating to the Simplification of
Customs Formalities had as one of its major purposes the reduction of the number and level of fees
imposed in connection with importation or exportation, as well as the simplification of customs-
related laws, regulations and formalities.
1208 No reference is made to systems or methods of quota or
licensing allocation, other than that such allocation must be equitable. 1209 As noted by China, the
Suggested Charter for an International Trade Organization of the United Nations designates fees,
charges, formalities and requirements "relating to all customs matters". The list of charges discussed
in the Background Note of the GATT Negotiating Group on Non-Tariff Measures refers to customs
user fees, but is not exhaustive.
7.838 In sum, these documents lead to a view that is consistent with the Panel's analysis above.
These documents reflect that customs-related activ ities were a concern of participants in these
discussions. The Panel sees no contradiction betw een these documents and the conclusions reached
through the preceding analysis under Article 31 of th e ordinary meaning of Article VIII:1(a), read in
its context and in light of the object and purpose of the WTO Agreement. Accordingly, the Panel
confirms its preliminary conclusion set out above.
Preliminary conclusions: The ordinary meaning of "fees" and "charges" in Article VIII:1(a) of
the GATT 1994
7.839 In accordance with its interpretation set out above , the Panel concludes that Article VIII:1(a)
applies to fees and charges imposed "on or in connection with importati on or exportation" and
requires that such fees and charges are solely app lied in exchange for a "service rendered". As such
fees, charges, formalities or requirements that ar e typically imposed when providing customs-related
documentation, certification and inspection, and statistical matters are covered. Having so concluded,
the Panel will next assess whether the bid-winning price collected by China in connection with quota
allocation constitutes a "fee or charge of whatever character ... imposed ... in connection with ...
exportation" within the meaning of Article VIII:1(a).
(ii) Whether the bid-winning price constitutes a fee or charge within the meaning of
Article VIII:1(a) of the GATT 1994
7.840 The Panel must next evaluate whether the bid- winning price collected by China in connection
with quota allocation constitutes a "fee or charge of whatever character ... imposed ... in connection
with ... exportation" within the meaning of Article VIII:1(a) as discussed above.
7.841 The United States and Mexico argue that in light of the explicit reference to "fees and
charges" relating to "quantitative restrictions" and "licensing" in Article VIII:4, the bid-winning price
is such a fee, because China's export quotas restrict the quantity of exports of bauxite, fluorspar and
silicon carbide, and because the payment of the bid-wi nning price is necessary in order to receive an
export licence.1210

1208 See, e.g., International Convention Relating to the Simplification of Customs Formalities , LNTS
Volume 30 (1925), p. 372, done at Geneva on 3 November 1923, Articles 10, 11(8) and 12 (Exhibit CHN-291).
1209 Article 3(e).
1210 United States' first written submission, para. 323; Mexico's first written submission, para. 326.

7.842 China argues that the bid-winning price is not "imposed" "in connection with" exportation.
First, it argues that the bid-winning price is also not a "fee or charge" "imposed" by the government.
The price reflects the value that a bidder has chosen to attach to the right to export.
1211 In addition,
China argues that the bidding process takes pla ce well before exporters have made binding
commitments to export and has a different purpose: that of allocating the limited right to export.
Therefore, China argues that the bid-winning fee is not connected with any of the customs-related
activities that would fall within the scope of Artic le VIII:1(a). Only after this bidding process, it
argues, can successful applicants enter sales contracts and make commitments to export and thereafter
present goods at the border for exportation. Chin a emphasizes that a winning bidder may ultimately
decide not to export the product.
1212
7.843 China additionally argues that auctions are one of the least trade-distorting means of quota
allocation, and do not affect the price of exports in the market. In add ition, China submits that
Article XIII:2 of the GATT 1994 "stipulates a principle regarding the distribution of the tariff quota in
the least trade-distorting manner". 1213 China therefore considers that Article VIII cannot be read in
such a manner to prohibit the allocation of quotas thr ough bidding. Finally, China contends that the
United States both authorizes the use of quota allocation through auctions 1214 and permits trading
partners to allocate quotas through auctions.1215
7.844 The Panel concluded above that the meaning of "fees" or "charges" that fall within the scope
of Article VIII is broad. Notwithstanding this vi ew, the Panel concluded further that only fees
imposed "on or in connection with importation or exportation" and collected in exchange for a
"service rendered" may be considered as falling with in the scope of Article VIII:1(a). The Panel
noted that typically such fees or charges woul d include payments provided for customs-related
documentary, certification and inspection, and statistical activities.
7.845 In the Panel's view, the bid-winning price co llected by China in connection with quota
allocation is not a fee or charge imposed on or in connection with exportation, or imposed in
exchange for a service rendered. Although payment of a bid-winning price is necessary to receive a
quota allocation for products subject to a quota bidding regime in China, this fact alone does not mean
that a bid-winning price is a fee or charge imposed in connection with exportation under Article VIII.
7.846 As explained above, a quantitative restriction or a licensing requirement of the kind at issue in
this case does not on its own amount to a fee or charge within the meaning of Article VIII:1(a). As
noted above, quantitative restrictions and licensi ng requirements are regu lated generally under
Article XI:1 of the GATT 1994. Under Article V III, fees or charges imposed in connection with
exportation must involve a service rendered, and must be limited in amount to the approximate cost of
services rendered. If one or more of these requirements are missing, Article VIII does not apply.
7.847 As pointed out by China, under the measures discussed in paragraphs 7.188 to 7.198 above,
the bid-winning price is initially a proposal submitted by an enterprise. The actual price is determined
and assigned to the applicant enterprise at a point well before the exporter enters into a binding
commitment to export the good subject to a quota. I ndeed, an enterprise that is awarded a portion of

1211 See, e.g., China's first written s ubmission, para. 591. China's closing oral statement at the second
substantive meeting, para. 9.
1212 China's first written submission, para. 591; China's closing oral statement at the second substantive
meeting, para. 7.
1213 China's closing oral statement at the second substantive meeting, para. 8, citing Appellate Body
Report, EC – Bananas III (21.5 – US), para. 338.
1214 China's second written submission, paras. 388-394.
1215 China's second written submission, para. 395.

the quota may decide to export less or none of the allocated quota, if it desires.
1216 The precise
moment when an enterprise will export under the assigne d quota allocation, or whether that enterprise
will export at all, is not known or contemplated at the time the bidding price is determined. In the
Panel's view, this type of arrangement does not amo unt to the imposition of a fee or charge on or in
connection with exportation.
7.848 In addition, the bidding process and collection of a bid-winning price is much different in
nature from a customs-related service supplied in exch ange for a particular fee or charge. The bid-
winning price reflects the value that a potential exporter attributes to the right to export the product at
some point in the future.
7.849 Thus, the bid-winning fee is a price offered in e xpectation of a future return. This is also
conceptually different from a tariff, fee, or char ge that affects the volume of trade or the export
price.1217 In contrast to a tariff, fee or charge that may have distortive effects on the price of exported
goods, a bid-winning price approach generally allows a more efficient allocation of quotas than would
be possible through quota allocation based on re quest, or based on historical quota allocation
proportions, or on some arbitrary basis. Where quotas are allocated through bidding, the most
efficient enterprises capable of earning a higher return per unit sold – the difference between the price
received from exporting the good and the cost to produce and export the good – are willing to pay a
higher price for the ability to export.
1218 The bidding process described above determines the
enterprises that will be permitted to export, but it doe s not affect the price ultimately received by the
seller for the goods. Rather it is the total volume permitted for export that generally will determine
the export price in the market.
7.850 Finally, it is clear that the assessed bid-winni ng price is not in any way related to the
approximate cost of a service rendered. This is because enterprises that choose to participate in a
particular bidding process have the right to submit any bid price or bid quantity they wish when
seeking to obtain an allocation of the export quot a for the raw materials under discussion. Receiving
the desired allocation does not depend directly on the bid price or quantity submitted; rather, it is
dependent on the bid prices and amounts submitted by ot her applicant enterprises. While a particular
bidding enterprise generally would not be willing to pay more than the full amount of economic rent it
is able to earn through exportation, it almost certai nly will be willing to pay less. In sum, the bid price
necessarily will vary, depending on the particular circumstances involved and therefore cannot be
related to any particular service that may be rendere d. By their very nature, prices submitted through
bidding are variable, which would always violate the requirement in Article VIII:1(a) that fees must
approximate the cost of a particular service rendered – in this case, the allocation of a quota.
(iii) Conclusions on the complainants' Article VIII:1(a) claim
7.851 For the foregoing reasons, the Panel concludes that the bid-winning price collected by China
in connection with quota allocation does not constitu te a "fee or charge of whatever character ...
imposed ... in connection with ... expor tation" within the meaning of Ar ticle VIII:1(a). In particular,
the Panel finds that the collection of the bid-winning prices does not amount to the imposition of a fee

1216 Implementation Rules on Export Quota Bidding of Industrial Products , Article 21 (Exhibit CHN-
305); Quota Bidding Implementation Rules, Article 23 (Exhibit JE-78).
1217 See China's first written submission, paras. 600-601.
1218 See China's Statement on Export Quota Auctions as Optimal Allocation Mechanisms (July 2010)
(Exhibit CHN-306); see also USDA, Economic Analysis of TRQ Administrative Methods (TB-1893) (Exhibit
CHN-463).

or charge on or in connection with exportation.
1219 Finally, we observe that a finding otherwise would
mean that all quota allocation through bidding or auctioning would be prohibited.
(c) Whether China's allocation of quotas on bauxite , fluorspar and silicon carbide based on the
bid-winning price is inconsistent with Para graph 11.3 and Annex 6 of China's Accession
Protocol
7.852 In addition to their claims under Article VIII: 1(a), the United States and Mexico argue that
the bid-winning price is a tax or charge applied to e xports that is inconsistent with Paragraph 11.3 and
Annex 6 of China's Accession Protocol. The Unite d States and Mexico submit that the bid-winning
price is a government set price, the payment of which is required in order to obtain a certificate for a
licence application. 1220 They argue that none of the products subject to export quota bidding
requirements is listed in Annex 6. Moreover, they assert, as above, that the bid-winning price is not in
conformity with Article VIII, thereby resulting in an express breach of the text of Paragraph 11.3.1221
7.853 China argues that the United States and Mexico ha ve failed to demonstrate that a bid-winning
price is a "tax" or "charge" that is "applied to e xports" within the meaning of Paragraph 11.3, namely
an export duty based on an ad valorem percentage. In contrast to the United States and Mexico,
China argues that the bid-winning price merely refl ects the bid-winning exporters' expectations about
the value of exports of a particular quantity of goo ds. In addition, China argues that the bid-winning
price is not "applied to exports" because liability is not incurred at the time of border crossing.1222
7.854 The scope and meaning of Paragraph 11.3 has been addressed above in VII.B.5 above in a
different context. Here, the Panel must consider whether the bid-winning price requirement discussed
above is inconsistent with Paragr aph 11.3, which explicitly allows Ch ina to maintain – independently
to the disciplines imposed on export duties – "charges " applied consistently wi th Annex 6 of China's
Accession Protocol and Article VIII of the GATT 1994.
7.855 To recall, Part I, Section 11 of China's Accession Protocol contains China's binding
commitments on taxes and charges levied on imports and exports. Part I, Paragraph 11.3 states:
"China shall eliminate all taxes and char ges applied to exports unless specifically
provided for in Annex 6 of this Protocol or applied in conformity with the provisions
of Article VIII of the GATT 1994."1223
7.856 Annex 6 of China's Accession Protocol is a list of 84 products, each listed sequentially by HS
number and accompanied by a description of the product and an export duty rate listed as an ad
valorem percentage.1224
7.857 As discussed above, the Panel will interpret the m eaning of this provision in accordance with
the customary rules of interpretation c odified in Articles 31 to 33 of the Vienna Convention . We
begin with the ordinary meaning to be given to the terms of the provision in their context and in the
light of the object and purpose of the treaty.

1219 The Panel notes that this method of allocation is economically desirable and is not otherwise
prohibited under the GATT 1994 or WTO Agreement.
1220 United States' second written submission, para. 373; Mexico's second written submission,
para. 378.
1221 United State's first written submission, para. 330; Mexico's first written submission, para. 333.
1222 China's first written submission, paras. 603-605.
1223 Exhibit JE-2.
1224 Exhibit JE-2.

7.858 The Panel recalls that from paragraph 7.820 above, that definitions of "charge" in isolation do
not provide a precise indication of the terms as they appear in Article VIII:1(a). As above, it is thus
necessary to consider the meaning of "charges" in its context and the object and purpose of the WTO
Agreement.
7.859 Despite differences in the text of Paragra ph 11.3 and Article VIII:1(a), the thrust of
Paragraph 11.3 appears to be the same as that in Article VIII:1(a). Specifically, Paragraph 11.3
prohibits any "charges applie d to exports" unless they are expressly allowed under Annex 6 or
otherwise in conformity with Article VIII of the GATT 1994. A bid-winning price is clearly not an
ad valorem duty that is applied to exports, and therefore may not be justified on the basis of Annex 6.
The Panel recalls its finding above that the collection of the bid-winning prices does not amount to the
imposition of a fee or charge on or in connec tion with exportation within the meaning of
Article VIII:1(a) of the GATT 1994. For purp oses of its assessment here, the Panel sees no
distinction that should be made be tween "charges applied to exports" and "fees or charges imposed ...
on or in connection with ... exportation". Moreov er, the express reference to Article VIII ("in
conformity with the provisions of Article VIII of the GATT 1994") confirms that Members and China
had in mind the type of charges referred to in Article VIII when drafting Paragraph 11.3.
7.860 In light of the wording of Paragraph 11.3 and the express reference to Article VIII, and the
Panel's findings on the bid-winning price in respect of the complainants' claim under Article VIII, the
Panel concludes that the bid-winning price is not a "c harge[] applied to exports" that falls within the
scope of Paragraph 11.3 of China's Accession Protocol.
(d) Summary
7.861 The Panel concludes that the bid-winning price collected by China in connection with quota
allocation does not constitute a "fee or charge of wh atever character ... imposed ... in connection with
... exportation" within the meaning of Article VIII:1(a) because the collection of the bid-winning price
does not amount to the imposition of a fee or charge on or in connection with exportation. Nor does
the bid-winning price approximate the cost of a servi ce rendered as required by Article VIII:1(a) The
Panel also concludes that a bid-winning price is not a "charge[] applied to exports" that falls within
the scope of Paragraph 11.3 of China's Accession Pr otocol. Therefore, the Panel concludes that
China's allocation of quotas on bauxite, fluorspar and silicon carbide based on the bid-winning price is
not inconsistent with Article VIII:1(a) of th e GATT 1994 or Paragraph 11.3 of China's Accession
Protocol.
F. E
XPORT LICENSING
7.862 The complainants have raised several cha llenges to China's export licensing framework
through which China administers exports of forms of manganese and zinc and through which China
administers exports quotas on forms of bauxite, coke , fluorspar, silicon carbide and certain forms of
zinc.1225
7.863 The complainants submit that China's export li censing requirement for these raw materials is
"non-automatic" and amounts to a restriction on expor tation additional to the restriction effected by
export quotas themselves. That additional restriction, they argue, is inconsistent with Article XI:1 of
the GATT 1994.

1225 The specific forms of the raw materials subject to the United States' and Mexico's claims are
identified in Exhibit JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.

7.864 The United States and Mexico submit that China restricts the exportation of the raw materials
at issue through an export licensing system that is "non-automatic" in "nature".
1226 They submit that
China has itself conceded that its export licensing system amounts to an export restriction under
GATT Article XI:1.1227 The European Union submits that China's export licensing system as set forth
in relevant measures is "non-automatic by law"1228 and is therefore inconsistent with Article XI:1.
7.865 The complainants submit that China's export licensing system is also inconsistent with
Article XI:1 because it provides China's export licensing agencies with discretion to restrict
exportation of the raw materials at issue.
7.866 The United States and Mexico assert that Chin a's export licensing system "provides China
with the authority, the ability and the discretion to control and restrict the exportation of the subject
products."1229 They argue that licensing agencies may exercise discretion to set the quantities of
goods that can be exported, the price at which produc ts can be exported, and the qualifications that
exporters must possess; moreover, they can impos e other conditions, such as requiring "undefined
'documents of approval' and 'other materials to be submitted' as bas es for issuance of export
licences".1230
7.867 The European Union argues that China's export licensing system "allows China's authorities a
very broad and unfettered discretion on whether to grant or refuse export licences to applicants".1231 It
submits that there is no limitation on the discretion on the part of the Ministry of Commerce to require
undefined "other documents"1232 or "documents of approval" 1233, which allows China's export licence
agencies to restrict, or altogether ban, exportation by certain companies.1234
7.868 In its first written submission, the European Union additionally argued that China's licence
issuing authorities could restrict or prohibit the expo rtation of the raw materials at issue by exercising
discretion to interpret undefined "managemen t qualifications" in a discriminatory fashion. 1235 In
response, China contested the Eur opean Union's translation of the term, arguing the term should be
translated as "business qualifications". 1236 In addition, China subm itted that its licence issuing
authorities have no discretion whatsoever in interpre ting the meaning of this term and explained that
applicants must simply submit one of the documen ts set out in Article 6 of the Working Rules on

1226 United States' first written submission, paras. 338-339, 342.
1227 United States' second written su bmission, para. 378 and Mexico's second written submission,
para. 383, referring to Committee on Market Access, Note by the Secretariat: No tifications of Quantitative
Restrictions G/MA/NTM/QR/1Add.11 (11 April 2008) (Exhibit JE-171) and Catalogue of Products Subject to
Export (Quota) License (2007 QRs of China final) (Exhibit JE-172).
1228 European Union's first written submission, para. 317.
1229 United States' oral statement at the second substa ntive meeting, para. 122; see also United States'
second written submission, para. 377; Mexico's second written submission, para. 382 (stating that "the licensing
system provides China with the authority and the ability to control and restrict, i.e., impose limiting conditions,
on products designated for export restriction").
1230 United States' first written submission, para. 34 0, fn. 415; Mexico's first written submission,
para. 343, fn. 415.
1231 European Union's first written submission, para. 319.
1232 European Union's first written submission, para. 319; 2008 Export License Administration
Measures, Article 11 (Exhibits CHN-342, JE-74); 2008 Export Licensing Working Rules (Exhibits CHN-344,
JE-97).
1233 European Union's first written submission, para. 321; 2008 Export License Administration
Measures, Article 11 (Exhibits CHN-342, JE-74).
1234 European Union's first written submission, paras. 319, 321.
1235 European Union's first written submission, para. 320, referring to 2008 Export Licensing Working
Rules, Article 8.
1236 China's first written submission, para. 786.

Issuing Export Licences once a year to show that the applicant is qualified and registered to do
business in China.
1237 Following China's explanation, the Eur opean Union indicated that it "accepts"
China's "official declaration" in Exhibit CHN-345 that the fulfilment of the "business qualifications"
condition simply requires "submission of the appli cants' Business Licence and the certificate showing
that the applicants are authorised to engage in import and export trade". 1238 (The European Union
maintains, however, that China h as acted inconsistently with GATT Article X:1 by failing to publish
the "method of verification of the 'business qualifications' criteria"1239). In light of further clarification
by the European Union of its Article XI:1 claim, and in light of the Panel's determination that the
European Union's Article X:1 claim in respect of export licensing is out side its terms of reference, the
Panel will not consider further the European Uni on's claim in connection with the requirement to
demonstrate "business qualifications" in Article 8 of the Working Rules on Issuing Export Licences.
7.869 In addition to their claims under GATT Artic le XI:1, the complainants submit that
requirements imposed under this export licensing sy stem are inconsistent with paragraphs 162 and
165 of China's Working Party Report. They argue that these paragraphs contain "enforceable
commitments"1240 and prohibit China's imposition of "non- automatic export licensing and export
restrictions" that are not justified.1241
7.870 The European Union further contends that Ch ina's export licensing system is inconsistent
with paragraphs 5.1 and 1.2 of China's Accession Protocol, read in combination with paragraphs 83
and 84 of China's Working Party Report. The Eu ropean Union submits that, under these provisions,
China is required to grant the right to export to a ll enterprises in China, including foreign ones, and to
eliminate its system of examination and approval of enterprises' rights to export. The European Union
submits that the discretion by China's licence issu ing authorities to refuse to grant export licences is
tantamount to a system of examination and approval of trading rights.1242
7.871 Finally, the European Union claims in the alte rnative that China failed to publish regulations
and rulings connected with the administration of its export licensing system in contravention of
GATT Article X:1, and that China administers its export licensing system in a manner inconsistent
with GATT Article X:3(a). The Panel determined , however, in Section VII.A.3 above, that the
European Union's alternative claims under Articles X:1 and X:3(a) are not in the Panel's terms of
reference.
7.872 China requests the Panel to reject the complain ants' claims. First, China argues that it no
longer subjects exports of fluorsp ar to an export quota under the 2010 Export Licensing Catalogue;
hence, it argues that the Panel should not consider the complainants' claims in respect of fluorspar.
1243
7.873 China also contends the its export licensing ag encies may not exercise discretion to refuse an
export licence application for forms of bauxite, coke, fluorspar, manganese, silicon carbide and zinc at
issue, when the requisite application and documents are submitted. China argues that in all cases
export licensing authorities "automatically" grant export licences within three days following

1237 China's first written submission, paras. 786-787.
1238 European Union's second written submission, para. 87; European Union's response to the Panel
question No. 59 following the second substantive meeting paras. 81-83.
1239 European Union's response to the Panel question No. 59, following the second substantive meeting
para 83.
1240 United States' first written submission, para. 343; Mexico's first written submission, para. 346.
1241 United States' first written submission, paras. 34 5-346; European Union's first written submission,
paras. 323-324; Mexico's first written submission, paras. 348-349.
1242 European Union's first written submission, paras. 334-336.
1243 China's first written submission, para. 67.

submission of a valid application and specified documents.
1244 Accordingly, China argues that its
export licensing system does not restrict exportation in a manner inconsistent with either Article XI:1
of the GATT 1994 or any obligations in paragraphs 5.1 and 1.2 of China's Accession Protocol, or with
paragraphs 83 and 84, or 162 and 165 of China's Working Party Report.
7.874 If the Panel were to find China's export licence requirement inconsistent with Article XI:1,
China requests that the Panel exercise judicial econo my with respect to the complainants' remaining
claims under its Accession Protocol and Working Part y Report. China considers that these claims are
"identical" to those under Article XI:1 and subm its that findings under these provisions "would add
nothing to the resolution of this dispute, nor would it aid in any potential implementation."1245
7.875 In addition, China asserts that the United States and Mexico have abandoned their claims that
China's export licence requirement is inconsistent with paragraphs 162 and 165 of its Working Party
Report by failing to identify these pr ovisions when asked by the Panel to list "all measures relevant to
this dispute for which they are seeking 'recommendations' from the Panel".1246
7.876 As a preliminary matter, the Panel recalls its fi nding in paragraph 7.33 a bove that, in general,
measures that were in force when the Panel was established on 21 December 2009 form the basis of
its terms of reference. 1247 At the request of the complainants, the Panel will only assess the WTO
consistency of the 2009 measures while taking note that the 2010 measures do not set a quota for
fluorspar.
7.877 Before turning to an analysis of the parties' claims, the Panel wishes to address first China's
contention that the United States and Mexico abandone d their claims with respect to paragraphs 162
and 165 of China's Working Party Report, mentioned above. The Panel observes that China is correct
in that the United States and Mexico did not list their claims under paragraphs 162 and 165 of China's
Working Party Report when identifying, in response to the Panel's request, the measures and claims
for which they are seeking recommendations. 1248 The United States and Mexico did, however,
identify these provisions in their Panel Requests. Th ey also addressed these claims in their first
written submissions. In addition, the United States submitted Exhibit US-1 during the second
substantive meeting of the parties, which refers to paragraphs 162 and 165 in connection with export
licensing. In our view, the United States and Mexi co have governed themselves in the course of these
proceedings as if these claims were very much active ones, and we do not consider them as
abandoned. The more appropriate conclusion is therefore, that the omission of these claims in
response to a question from the Panel was merely an oversight. The Panel accordingly concludes that
the United States and Mexico did not intend to aband on their claims with respect to Paragraphs 162
and 165 of China's Working Party Report, and accordingly will consider these claims below.
7.878 The Panel will first set out its understanding of the operation of China's export licensing
systems for the raw materials at issu e It will then analyze the claims of the parties. Finally the Panel
will address, as relevant, China's request that the Panel exercise judicial economy with respect to
claims under China's Accession Protocol and Working Party Report.

1244 China's first written submission, paras. 771, 776; China's second written submission, para. 499.
1245 China's first written submission, paras. 808, 881.
1246 China's second written submission, paras. 477-478.
1247 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1248 Complainants' responses to first set of Panel questions, question No. 2.

1. The operation of China's export licensing system
7.879 China's Import and Export Regulations define "export licences" as "the various kinds of
certificates and documents that are of export na ture as provided in laws and administrative
regulations".
1249 The exportation of goods from China is unrestricted unless otherwise provided for
by law or regulation. 1250 China's Foreign Trade Law distinguishes between goods that may be freely
exported (Article 15) and goods that may be restrict ed (Article 19). Goods that are freely exported
pursuant to Article 15 may be subject to automatic licensing for monitoring purposes. 1251 Goods that
are subject to restriction pursuant to Article 19 may be subject to licensing as "goods subject to ...
export restriction".1252
7.880 For those goods subject to export restriction, an exporter may proceed to export only after
obtaining an export licence for presentation to Ch ina's customs for declaration and examination. 1253
Export licences are generally valid for up to six mont hs and expire no later than 31 December each
year.1254 The period of validity may be extended if an export licence is not fully used. 1255 For those
goods that are simultaneously subject to export quotas, applications for licences must be made within
the period of validity of the quota.1256
7.881 China's MOFCOM, through its Bureau of Quota Li cence, is responsible for the application of
export licensing rules and for coordinating export licence issuing agencies that are organized in local
administrative authorities.
1257 MOFCOM is responsible for imposing penalties on enterprises that do
not comply with exportation licence requirements. Exportation of restricted goods without approval,
or exportation in excess of a designated quota, is subj ect to investigation leading to potential criminal
and administrative penalties. Penalties include inva lidation of applicable licences and suspension or
revocation of the right to engage in foreign trade for a period of up to three years. 1258 MOFCOM also
subjects licensing entities to penalties for issuing licences to exporters in excess of a quota, or in cases
where no quota is set. Penalties include warnings a nd suspension or termination of the right to issue
licences.1259 Individuals working in licensing entities who issue licences without approval may also
be subject to criminal and administrative pena lties, including removal from employment, warning,

1249 Regulation on Import and Export Administration, Article 43 (Exhibit JE-73).
1250 Foreign Trade Law, Article 14 (Exhibit JE-72); Regulation on Import and Export Administration ,
Article 4 (Exhibit JE-73).
1251 Foreign Trade Law, Articles 15, 16, 17 (Exhibit JE-72).
1252 Foreign Trade Law, Article 19 (Exhibit JE-72) ; Regulation on Import and Export Administration ,
Article 35 (Exhibit JE-73); 2008 Export Licence Administration Measures , Article 2 (Exhibits CHN-342, JE-
74).
1253 Regulation on Import and Export Administration , Article 43 (Exhibit JE-73); 2008 Export Licence
Administration Measures, Article 6 (Exhibits CHN-342, JE-74).
1254 2008 Export Licence Administration Measures , Article 30 (Exhibits CHN-342, JE-74). According
to this provision, the Ministry of Commerce may adjust the period of validity for certain goods based on
"specific circumstances."
1255 2008 Export Licence Administration Measures , Article 31 (Exhibits CHN-342, JE-74); 2008
Export Licensing Working Rules, Articles 17, 18, 19 (Exhibits CHN-344, JE-97).
1256 2008 Export Licence Administration Measures, Article 28 (Exhibits CHN-342, JE-74).
1257 2008 Export Licence Administration Measures, Articles 4, 5 (Exhibits CHN-342, JE-74); Measures
for Administration of Licensing Entities, Article 4 (Exhibits CHN-385, JE-75).
1258 Foreign Trade Law , Articles 61, 64 (Exhibit JE-72); Regulation on Import and Export
Administration, Articles 64, 65 (Exhibit JE-73).
1259 2008 Export Licence Administration Measures , Articles 21, 36, 38 (Exhibits CHN-342, JE-74);
Measures for Administration of Licensing Entities, Articles 40 (Exhibits CHN-358, JE-75).

demotion, and dismissal.
1260 MOFCOM may also punish the forging, altering without approval,
buying and selling of export licences.1261
7.882 MOFCOM together with China's General Admi nistration of Customs publishes the Catalogue
of Goods subject to the Administration of Export Licences,(Export Licensing Catalogue) which lists
all goods subject to export restriction. 1262 This catalogue is published annually at least 21 days before
the list takes effect, which is on 1 January of each year. 1263 MOFCOM approves exportation of goods
listed in this catalogue.1264
7.883 On 10 December 2008, MOFCOM published the 2009 Export Licensing Catalogue
announcing the catalogue of export-restricted goods for 2009. The list includes the specific forms of
bauxite, coke, fluorspar, manganese, silicon carbide and zinc that have been identified by the
complainants in Exhibit JE-6.1265
7.884 Under China's Export Licence Administration Measures , enterprises seeking a licence to
export materials listed in the 2009 Export Licensing Catalogue are required to submit certain
documents. All applicants must submit an application form 1266; relevant "export quota or other
applicable approval documents" 1267; and either of the Form for Archival Filing and Registration of a
Foreign Trade Operator which has been sealed by the archival filing and registration stamp, a
Qualification Certificate of Import and Export Ente rprises of the People's Republic of China, or a
Certificate of Approval for Enterprises with Foreign Investment.1268
7.885 In addition, Under Article 11(1) of China's Export Licence Administration Measures , for the
export of goods subject to the administration of quota licences, applicants must submit "quota-
granting documents issued by the Ministry of Comm erce or relevant depart ment, and a valid export
contract of the applicant. Under Article 11(2), fo r export goods subject to the administration of quota
bidding, applicants must submit "the list of bid-winning Operators", "the bid-winning quantity"; either
of the Certificate for the Application of an Export License of Goods subject to Quota Bidding, or the
Certificate for Transfer of Goods Subject to Quot a Bidding issued by the Ministry of Commerce; and

1260 2008 Export Licence Administration Measures , Article 42 (Exhibits CHN-342, JE-74) Measures
for Administration of Licensing Entities, Articles 40 and 41 (Exhibits CHN-358, JE-75).
1261 Foreign Trade Law , Articles 34, 63 (Exhibit JE-72); Regulation on Import and Export
Administration, Article 66 (Exhibit JE-73); 2008 Export Licence Administration Measures , Article 39 (Exhibits
CHN-342, JE-74); Measures for Administration of Licensing Entities , Articles 40, 41, 42 (Exhibits CHN-358,
JE-75).
1262 Foreign Trade Law, Article 18 (Exhibit JE-72); Regulation on Import and Export Administration ,
Article 35 (Exhibit JE-73), 2008 Export Licence Administration Measures , Article 3 (Exhibits CHN-342, JE-
74).
1263 Regulation on Import and Export Administration , Article 35 (Exhibit JE-73), 2008 Export Licence
Administration Measures, Article 3 (Exhibits CHN-342, JE-74).
1264 Foreign Trade Law, Article 19 (Exhibit JE-72).
1265 2009 Export Licensing Catalogue Notice (Exhibit JE-22); see United States' first written
submission, para. 98; European Union's first written submission, para. 168. MOFCOM published the 2010
Export Licensing Catalogue announcing the catalogue of export-restricted goods. The list includes the specific
forms of bauxite, coke, manganese, silicon carbide and zinc that have been identified by the complainants in
Exhibit JE-6, but does not identify fluorspar as subject to export restriction: see 2010 Graded Export Licensing
Entities Catalogue (Exhibit CHN-343). The Panel explained in paragraph 7.763 above that it considers the
essence of the 2010 Export Licensing Catalogue Notice to be different from that of the 2009 Export Licensing
Catalogue Notice with respect to fluorspar and, as a result, does not consider that this Notice falls within its
terms of reference.
1266 2008 Export Licence Administration Measures, Article 8 (Exhibits CHN-342, JE-74).
1267 2008 Export Licence Administration Measures, Article 9 (Exhibits CHN-342, JE-74).
1268 2008 Export Licence Administration Measures, Article 10 (Exhibits CHN-342, JE-74).

the export contract of the bid-winning Operator. Under Article 11(7), for goods subject to export
licensing administration only, applicants are dir ected to submit "approval documents from the
Ministry of Commerce" and a valid export contract.
7.886 Article 5 of 2008 Export Licensing Working Rules
 1269, additionally provides that applicants to
export goods subject to export licensing administ ration only shall submit an application form;
"approval documents on export issued by the competent authorities"; a valid export contract; an
agency agreement, where the exporter and the consignor are different; and "[o]ther materials that shall
be submitted as stipulated by the Ministry of Commerce".
7.887 Enterprises that are subject to export quotas must first be allocated such quotas before they
may apply for an export licence.
1270 Applicants that have been allo cated such a quota must submit to
the appropriate export licence issuing agency the re levant quota allocation certificate issued by the
Bidding Committee or Bidding Office, in addition to the documents mentioned in paragraph 7.884
above.1271
7.888 In general, an export licence must be issued w ithin three working days from the receipt of a
completed application. 1272 China uses three types of export licences. 1273 First, there is the "one
licence for one customs house" export licence, which is used to export goods from a specific customs
house. Second there is the "one batch, one li cense" export licence, which is used for customs
declaration only once within their period of validity. Third, there is the "non-one batch, one license"
export licence, which is used for customs declarat ion up to twelve times within their period of
validity. Customs houses are required to indicate the respective quantity of outbound cargo on the
customs release form when presented with an expor t licence. China issues "non-one batch, one
license" types to foreign enterprises 1274 as well as for goods in the Catalogue for Goods Subject to the
Administration of Export Licenses.1275
7.889 Article 8 of the 2008 Export Licensing Working Rules 1276 instructs export licensing agencies
to examine: (i) whether an operator has the "qualif ications" to operate the business; (ii) whether the
"export approval documents submitted by the operator are complete and valid"; (iii) whether the
applicant has submitted a complete and accurate "appli cation" that is "consistent with the relevant
provisions of the administration of export goods and licenses, the contents of the export approval
documents and the export contract"; and (iv) whethe r the "other materials that need to be submitted
are consistent with relevant provisions". The ex port licensing agency is directed to issue the
corresponding export licences if it is satisfied that these conditions are met.1277
7.890 China has indicated that its Foreign Trade Law is a "legislative act that delegates (through the
State Council) to MOFCOM, an executive br anch agency, implementing authority, inter alia (1) to
specify the products subject to export quota and ex port licensing requirements, and (2) to adopt
implementing rules concerning the grant of export licenses". 1278 The Appellate Body confirmed that
"any act or omission attributable to a WTO Member can be a measure of that Member for purposes of

1269 Exhibits CHN-344, JE-97.
1270 2008 Export Licence Administration Measures, Article 21 (Exhibits CHN-342, JE-74).
1271 2008 Export Licence Administration Measures, Article 9 (Exhibits CHN-342, JE-74).
1272 2008 Export Licence Administration Measures , Article 19 (Exhibits CHN-342, JE-74); 2008
Export Licensing Working Rules, Article 10 (Exhibits CHN-344, JE-97).
1273 2008 Export Licence Administration Measures, Article 22 (Exhibits CHN-342, JE-74).
1274 2009 Export Licensing Catalogue, Article VII (Exhibit JE-22).
1275 2008 Export Licence Administration Measures, Article 22 (Exhibits CHN-342, JE-74).
1276 Exhibits CHN-344, JE-97.
1277 2008 Export Licensing Working Rules, Article 9 (Exhibit CHN-344, JE-97).
1278 China's response to question No. 2 from the European Union, para. 279.

dispute settlement proceedings."
1279 In light of China's explana tion, and in the absence of any
assertion that the measures discussed above are not attributable to China, the Panel will consider these
measures to be measures of China for purposes of its analysis.
2. Whether China's export licensing system on certain forms of bauxite, coke, fluorspar,
manganese, silicon carbide and zinc is inconsistent with Article XI:1 of the GATT 1994
7.891 The complainants allege that China's export licensing system, as applied to bauxite, coke,
fluorspar, manganese, silicon carbide and zinc under the 2009 Export Licensing Catalogue , is both
"non-automatic" and "discretionary" and, therefore, is inconsistent with GATT Article XI:1.
7.892 Article XI of the GATT 1994 provides:
"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."
7.893 Thus, Article XI:1 forbids import and export r estrictions or prohibitions, including those
"made effective through ... export licences."
7.894 The Appellate Body has not yet been required to consider the meaning of "restrictions" in
Article XI:1. Some panels, however, have done so. In Colombia – Ports of Entry , after reviewing
several GATT and WTO cases, the panel concluded th at "restrictions" in the sense contemplated by
Article XI:1 refers to measures that create uncertain ties and affect investment plans, restrict market
access for imports, or make importation prohibitively costly.
1280 The panel in that dispute considered
Article XI:1 in the context of measures that rest ricted access to ports of entry for goods being
imported from Panama.
7.895 In the context of import licensing, the panel in India – Quantitative Restrictions concluded
that the scope of the term "restriction" is "broad" and, in terms of its ordinary meaning, is "a limitation
on action, a limiting condition or regulation." 1281 The panel thereafter concluded that "a discretionary
or non-automatic import licensing requirement is a restriction prohibited by Article XI:1." 1282 The
panel in India – Autos similarly endorsed a broad interpretation of the term "restriction", concluding
that Article XI:1 applies to conditions that are "l imiting' or have a "limiting effect ... on importation
itself".1283
7.896 While these reports shed light on the meaning of "restriction", the Panel considers it useful to
undertake a further review of Article XI:1 in or der to assess its applicability to export licensing,
including export licensing requirements that may be considered "non-automatic" or "discretionary".
Although the panel in India – Quantitative Restrictions opined that a "discretionary or non-automatic
import licensing requirement" is a restriction, the panel in India – Quantitative Restrictions did not
distinguish between "non-automatic" and "discr etionary" licensing systems or explain potential

1279 Appellate Body Report, US – Corrosion Resistant Steel Sunset Reviews, para. 81.
1280 Panel Report, Colombia – Ports of Entry, para. 7.240.
1281 Panel Report, India – Quantitative Restrictions, para. 5.128.
1282 Panel Report, India – Quantitative Restrictions, para. 5.129.
1283 Panel Report, India – Autos , para. 7.270. Several WTO panels have cited with approval this
interpretation of the term "restrictions" in Article XI:1: see Panel Report, Colombia – Ports of Entry ,
paras. 7.233-7.234; Panel Report, Brazil – Retreaded Tyres , para. 7.371; Panel Report, Dominican Republic –
Import and Sale of Cigarettes, paras. 7.252 and 7.258.

differences in the meanings of these terms.
1284 That panel ultimately found that the particular
licensing requirement at issue was a "discretionary import licensing system" where "licences are not
granted in all cases, but rather on unspecified merits".
1285 The Panel does not find in the reasoning
articulated by that panel a specific explanation of why "non-automatic" licensing systems are
prohibited under Article XI:1 that would assist us here.
7.897 The Panel will first consider this general i ssue and thereafter will consider China's export
licensing system in light of its determination on the scope of GATT Article XI:1.
(a) "Non-automatic" or "discretionary" export licensing under Article XI:1 of the GATT 1994
7.898 The complainants submit that Article XI:1 prohibits "non-automatic" export licensing
requirements. In other words, the complainants contend that export licensing requirements that
accord licensing authorities "discretionary" authorit y in determining whether to grant an export
licence to a particular applicant are prohibited under Article XI:1.
7.899 The United States and Mexico point out that Ar ticle XI:1 expressly identifies export licences
as a type of measure that can restrict exportation. 1286 The United States adds as well that Article XI:1
"qualifies its ban on restrictions" by explicitly excluding from its scope duties, taxes or other charges.
According to the United States, this demonstrates that the restrictions that fall within the scope of
Article XI:1 include other types of restrictions imposed on exportation. It notes further that GATT
and WTO panels have interpreted Ar ticle XI:1 to cover restrictions other than just "quantitative"
restrictions.1287 The United States and Mexico submit, in particular, that the panel in India –
Quantitative Restrictions concluded that a "discretionary or non-automatic import licensing
requirement" is a "restriction" that is prohibited by Article XI:1.1288
7.900 The European Union submits that "[i]t is generally accepted that an import or export licensing
requirement falls within the scope of Article XI when it is 'discretionary or non-automatic'". 1289 I t
argues that Article XI:1 has been found broadly to protect trading and competitive opportunities for
both Members and traders. 1290 The European Union contends that a discretionary export licensing
system "by its very nature limits such opportunities because certain exports may not be permitted".1291
7.901 China submits that Article XI:1 should not be construed broadly to prohibit all forms of
export licensing. China argues that Article XI:1 does not prohibit Members from imposing any and
all regulatory conditions on exportation; rather it prohibits the imposition of certain conditions,
namely those that have a "limiting effect" on the quantity of exports. 1292 China submits that a
complainant must prove that although a measure su ch as a licensing requirement does not contain any
express restriction on exportation, it functions to restrict exports.1293

1284 Panel Report, India – Quantitative Restrictions, para. 5.129, 5.137.
1285 Panel Report, India – Quantitative Restrictions, para. 5.130.
1286 United States' first written submission, paras. 332-333; Mexico's first written submission,
paras. 334-335.
1287 United States' opening oral statement at the second substantive meeting, para. 124.
1288 United States' first written submission, paras 341; Mexico's first written submission, paras 344,
referring to Panel Report, India – Quantitative Restrictions, para. 5.129.
1289 European Union's first written submission, para. 316.
1290 European Union's second written submission, paras. 90 and 103.
1291 European Union's second written submission, para. 90.
1292 China's first written submission, paras. 748-752; China's second written submission, paras. 482-
484.
1293 China's first written submission, para. 752.

7.902 China submits that not all types of licences have a "limiting effect" on the quantity of imports
or exports and therefore not all licences are incons istent with Article XI:1. For instance, China
contends that a licence that is issued "automatically" has no limiting effect and is therefore
permissible.
1294 Relying on the ordinary meaning of "aut omatic" and the definition of "automatic"
licensing in the Import Licensing Agreement, Chin a submits that licensing is "automatic" and
consequently should not be prohibited if the ex port licence is issued in all cases, where pre-
established conditions are met.1295
7.903 According to China, Article 1.1 of the Impor t Licensing Agreement confirms that the mere
requirement to submit a valid and complete app lication or other documentation as a condition to
receive a licence is not sufficient to render a licen sing requirement a restrict ion on the quantity of
exports and hence inconsistent with Article XI:1.1296
7.904 China submits that criteria set out in Articl e 2 of the Import Licensing Agreement support the
view that licensing may be "automatic" and thus permissible. According to China, automatic
licensing in this context includes situations where a licensing agency has no right to refuse issuance of
an export licence, upon submission of enumerated application documents; when licences are issued
"regularly" upon receipt of the relevant and co mpleted application; when a licence application
procedure is "accessible"; and when the time taken for issuance is not too long.1297
7.905 China argues that even when a licence may not be considered "automatic" based on these
factors, a licence should nevertheless not be presumed to restrict the quantity of exports per se in a
way that would violate Article XI:1. In this r espect, China submits that Article 3.2 of the Import
Licensing Agreement clarifies that licences that are not "automatic" within the meaning of Article 2 of
the Import Licensing Agreement should not be prohibited, so long as they are not more "trade-
restrictive" or "trade-distortive", or "burdensome" than necessary to administer the measure. These
licences would be considered "non-automatic" but ar e nevertheless WTO-permissible, in its view.
According to China, if a non-automatic licence does not "limit the quantity of imports or exports", it is
not WTO-inconsistent.
1298
7.906 More broadly, China argues that where a measu re does not expressly or necessarily provide
for WTO-inconsistent conduct, the discretion to a pply the rule in a WTO-inconsistent manner is
insufficient to render the measure WTO-inconsistent. China argues that it should be presumed to act
in good faith with its obligations. 1299 Thus, China argues, the absence of any explicit limitation on
this discretion does not render an export licence non-automatic in such a way as to have a limiting
effect on the quantity of exports.
(i) Import and export licensing under Article XI:1 of the GATT 1994
7.907 The Panel recalls, as set out above, that Article XI:1 of the GATT 1994 forbids "import and
export restrictions or prohibitions made effective through ... export licences". Duties, taxes or other
charges are explicitly excluded as types of "restrictions or "prohibitions" that fall within the scope of
Article XI:1.

1294 China's first written submission, para. 753.
1295 China's first written submission, paras. 754, 755.
1296 China's first written submission, paras. 75 8-759; China's second written submission,
paras. 488-489.
1297 China's first written submission, paras. 754, 756 referring to Import Licensing Agreement,
Article 2.2(a).
1298 China's second written submission, para. 487.
1299 China's first written submission, paras. 803-804.

7.908 It is useful to bear in mind that import or e xport prohibitions or restrictions may be permitted
or justified under other provisions, such as Artic les XI:2, XII, XVIII, XIX, XX and XXI of the
GATT 1994. Restrictions permitted under these provi sions may be implemented through, e.g., a
licensing regime. Article XIII of the GATT 1994 set s out rules for the administration of such
restrictions. In the context of import licensing, the Import Licensing Agreement clarifies rules for
import licensing procedures.
7.909 China, as well as the Kingdom of Saudi Arabia
1300, as a Third Party, submit that the Import
Licensing Agreement provides useful context to inform which licensing requirements may be
permitted under Article XI:1. 1301 In China's view, the Import Licensing Agreement makes clear that
licensing is permissible, regardless of a label assigned to it, "if the export license is issued in all cases,
provided pre-established conditions are met". 1302 Even if a licence falls into the residual category of
"non-automatic" licensing set out in Article 3.2 of the Import Licensing Agreement, according to
China, that license procedure is not WTO-inconsis tent, so long as it does not "limit the quantity of
imports or exports".1303
7.910 Saudi Arabia does not consider an export licen sing system to be "automatic" where its
application requirements include or enforc e export conditions, such as an export quota. 1304
Nevertheless, it agrees with China that the pr esence of an application process does not necessarily
render an export licensing system "non-automatic" or per se WTO-inconsistent.
7.911 We agree with China and Saudi Arabia that the Import Licensing Agreement informs the
meaning of the terms "automatic" and "non-auto matic" (as a residual ca tegory of "automatic"
licenses) in the context of import licensing system s. However, that Agreement does not address
export licensing systems. Nor for that matte r does it set out in precise terms which import licences
would be WTO-inconsistent, although it does provide that import licences should be in conformity
with all "relevant" provisions of the GATT 1994 "as interpreted by [the Import Licensing
Agreement]".1305 Hence, the Panel considers that the Import Licensing Agreement itself provides
only limited assistance in the task of interpreting Article XI:1.
7.912 The Appellate Body has indicated that the title of a provision may be useful in defining its
objective.1306 The Panel notes the title of Article XI:1 – "General Elimination of Quantitative
Restrictions" suggests that the provision is intende d to govern elimination of quantitative restrictions
generally. While relevant, the Pa nel's interpretative task does not of course end with the title. To
determine the scope and meaning of Article XI:1, the Panel needs to consider the particular terms of
the provision.
7.913 Article XI:1 by its terms prohibits restrictions or prohibitions that are made effective through
a variety of means not solely through a categor y of measures that may be considered formal
quantitative restrictions, such as a quota. Article XI :1 also prohibits restrictions effected through

1300 Third party written submission of Kingdom of Saudi Arabia, paras. 17-27.
1301 See, e.g., China's response to Panel question No. 66 following the second substantive meeting,
para. 337, fn. 392.
1302 China's first written submission, para. 754.
1303 China's second written submission, para. 487.
1304 Third party written submission of Kingdom of Saudi Arabia, para. 18.
1305 Article 1.2 of the Import Licensing Agreement provides: "Members shall ensure that the
administrative procedures used to implement import licensing regimes are in conformity with the relevant
provisions of GATT 1994 including its annexes and protocol s, as interpreted by this Agreement, with a view to
preventing trade distortions that may arise from an inappropriate operation of those procedures".
1306 Appellate Body Report, US – Softwood Lumber IV, para. 93; Appellate Body Report, US – Carbon
Steel, para. 67.

export licenses, as well as an unqualified category of "o ther measures". In the Panel's view, the fact
that the title uses the term "quantitative restrictions" does not change the fact that a broad category of
"other measures" falls within the scope of Article XI:1.
7.914 The Panel's view is consistent with findings of other GATT and WTO panels that types of
measures "other" than quotas, import or export licences, duties, taxes or charges that have a "limiting
effect" or impose a "limiting condition" are prohibited under Article XI:1.
1307 Panels have assessed
such measures by examining their design and structur e to determine whether they have a "limiting" or
"restrictive" effect.1308
7.915 The Panel will adopt a similar analytical approach. The Panel sees no merit in seeking to
determine whether or not a measure is permissible unde r Article XI:1 based solely on its label. In
other words, the Panel does not find useful for its analysis here whether a measure is categorized as an
"automatic" or "non-automatic" licence. Indeed, th e obligation set forth in Article XI:1 does not
distinguish between types of import or export licences that would be prohibited, be they automatic,
non-automatic or discretionary. Ra ther, it concerns "prohibitions or restrictions" including those
"made effective through ... import or export licenses" . Hence, our analysis will examine the design
and structure of the licence to determine if it has a "limiting" or "restrictive" effect.
7.916 Setting aside the use of a particular label or nomenclature for a licence, the Panel considers
that a licensing system that operates such that a licence to import or export is granted upon application
to each and every applicant would not run afoul of Article XI:1. This is because such a system does
not imply any restriction or limiting effect on im portation or exportation in connection with the
application and granting of the licence. An example of such a system is one that is designed to gather
statistical information or for monitoring purposes, but presents no impediment to obtaining the licence
as it is granted in every case.
7.917 The Panel also considers that requiring an app licant to satisfy a certain prerequisite before
being granted an import or export licence would not necessarily offend Article XI:1. The requirement
to satisfy a prerequisite would be prohibited under Ar ticle XI:1 only if the prerequisite itself created a
restriction or limiting effect on importation or exportation. For ex ample, if a licensing system is
maintained in order to administer an import quota that is authorized under the GATT 1994, requiring
the applicant to submit a particular document attesti ng to an applicant's right to import quota in order
to receive the licence is unlikely to constitute a violation of Article XI:1. This is because the
requirement to submit the document does not effect any restriction or impose a limiting effect on
importation; the restriction on importation is the quo ta itself. A different conclusion could obtain,
however, if the prerequisite were of a different nature.
7.918 Therefore, the Panel concludes that import and export licences, including those granted only
upon meeting a certain prerequisite, may be, but are not necessarily, permissible under Article XI:1;
the key is whether the licensing system is designed and operates such that by its nature it does not
have a restrictive or limiting effect on importation or exportation. If it meets this test, it will not
offend Article XI:1 of the GATT 1994.
(ii) Discretionary licensing requirements
7.919 Before turning to examine China's export li censing system, we should address discretionary
licensing requirements.

1307 See, e.g., discussion in paragraphs 7.205-7.206 above.
1308 Panel Report, India – Autos , paras. 7.266-7.268; Panel Report, Colombia – Ports of Entry ,
para. 7.252.

7.920 As noted above, the panel in India – Quantitative Restrictions found that the particular
licensing requirement at issue was a "discretionary import licensing system" where "licences are not
granted in all cases, but rather on unspecified merits", and was therefore WTO-inconsistent.
1309 The
panel in Turkey – Rice considered that whether a licensing prac tice is "discretionary" depends on the
freedom of the administering authority to grant or reject an import licence. 1310 The panel in China –
Publications and Audiovisual Products similarly found that a measure was "discretionary" because
the implementing authority had "the freedom to choose, based essentially on its own preference,
whether or not such rights are granted".1311
7.921 It seems to the Panel that if a licensing syst em is designed such that a licensing agency has
discretion to grant or deny a licence based on unspecified criteria, this would not meet the test we set
out above in order to be permissible under Article XI:1. The possibility to deny the licence would be
ever present; hence, the system by its very nature would always have a restrictive or limiting effect. It
makes no difference, in the Panel's view, that discretion may be applied in a particular case such that a
licence is authorized. The system offers no certainty that licences will be granted and hence it is not
permissible.
7.922 With this in mind, the Panel will next consid er whether China's export licensing system for
the forms of bauxite, coke, fluorspar, manganese, silic on carbide and zinc at issue is inconsistent with
Article XI:1. In doing so, the Panel recalls China's argument that, where a measure does not expressly
provide for WTO-inconsistent conduct, the discretion to apply the rule in a WTO-inconsistent manner
is insufficient to render the measure WTO-inconsistent.
1312 The Panel explained above that it will
examine the design and structure of the measure at issue it making its assessment.
(b) China's export licensing system for the forms of bauxite, coke, fluorspar, manganese, silicon
carbide and zinc
7.923 The complainants allege that China's export licensing system, as applied to the forms of
bauxite, coke, fluorspar, manganese, silicon carbide and zinc under the 2009 Export Licensing
Catalogue, is inconsistent with Article XI:1 because it is "non-automatic" and because it provides
China's export licensing agencies with discretion to restrict exportation of these materials.
7.924 The complainants argue that Article 19 of China's Foreign Trade Law imposes a "non-
automatic" licence requirement for specified goods that are "subject to export restriction". They
distinguish this alleged "non-autom atic" requirement from an "automa tic" licence requirement that is
implemented for "freely exported g oods" under Article 15 of China's Foreign Trade Law for
"monitoring purposes".
7.925 The United States and Mexico submit that re gulation of export licences under the provisions
of Article 19 is "non-automatic" by its nature. 1313 They argue that licen sing agencies may exercise
discretion and impose conditions on the granting of li cences to set the quantiti es of goods that can be
exported. Conditions include requiri ng "undefined 'documents of approva l' and 'other materials to be
submitted' as bases for issuance of export licenses". 1314 The United States and Mexico submit that
China has itself conceded that its export licensing system amounts to an export restriction under

1309 Panel Report, India – Quantitative Restrictions, para. 5.130.
1310 Panel Report, Turkey – Rice, paras. 7.128, 7.134.
1311 Panel Report, China – Publications and Audiovisual Products, para. 7.324.
1312 China's first written submission, paras. 803-804.
1313 United States' first written submission, paras. 338-339, 342.
1314 United States' first written submission, para. 34 0, fn. 415; Mexico's first written submission,
para. 343, fn. 415.

GATT Article XI:1 through its notification to the WTO Committee on Market Access in 2006 and
2007 that its licence requirements are a "quantitative r estriction" justified pursuant to Article XI and
XX of the GATT 1994.
1315
7.926 The European Union argues that a logical in terpretation of Articles 15 and 19 of China's
Foreign Trade Law leads to the conclusion that export licences imposed on goods subject to
restriction under Article 19 are not "automatic" by operation of law. 1316 The European Union cites
references in the Regulation on Import and Export Administration 1317 to goods "prohibited from
exportation" and goods "l imited in exportation" 1318, including those goods that are "subject to the
administration of licenses". 1319 It submits that these goods are subject to non-automatic export
licenses.1320 The European Union contends that Articles 16, 17 and 18 of China's Foreign Trade Law,
which set out conditions that must be met and pro cedures that must be followed in order for a good to
be declared as "restricted or forbidden from expor t", confirm that China mandates its authorities to
treat Article 19 export licences as non-automatic.1321
7.927 The European Union also argues that the non-auto matic nature of the licences is made clear
from the text of Notices that China publishes an nually announcing the "list of goods that are
submitted to export license management". 1322 In respect of goods subject to export licensing
administration only, the European Union additionally contends that China's export licensing system is
inconsistent with Article XI:1 because it "allows China's authorities a very broad and unfettered
discretion on whether to grant or refuse export licenses to applicants". 1323 Specifically, the European
Union argues that China's export licence agencies may require, under Article 5(5) of China's 2008
Export Licensing Working Rules , undefined "other documents" pr escribed by the Ministry of
Commerce for some applicants but not others, or to require documents during certain times but not
others.1324 The European Union argues that there is no proof of limitation of discretion to require
documents. If there were no discretion, it argues, the export licence would always be issued for the
entire quantity requested based on the export contract. In addition, the European Union submits that
China's export licensing agencies, under Article 11(7) of China's 2008 Export Licence Administration
Measures, have discretion to require undefined "doc uments of approval of the Ministry of
Commerce".1325 The European Union argues that the di scretion inherent in these criteria allows

1315 United States' second written su bmission, para. 378 and Mexico's second written submission,
para. 383, referring to Committee on Market Access, Note by the Secretariat: No tifications of Quantitative
Restrictions G/MA/NTM/QR/1Add.11 (11 April 2008) (Exhibit JE-171); Catalogue of Products Subject to
Export (Quota) License (2007 QRs of China final) (Exhibit JE-172)).
1316 European Union's opening oral statement at the first substantive meeting, para. 9.
1317 Regulation on Import and Export Administration (Exhibit CHN-152, Exhibit JE-73).
1318 Regulation on Import and Export Administration , Articles 33 and 35 (Exhibit CHN-152, Exhibit
JE-73).
1319 Regulation on Import and Export Administration, Article 43 (Exhibit CHN-152, Exhibit JE-73).
1320 European Union's first written submission, para. 317.
1321 European Union's second written submission, para. 64.
1322 European Union's first written submission, para. 317, referring to Notice 100/2008 (Exhibit JE-22).
1323 European Union's first written submission, para. 319.
1324 European Union's first written submission, para. 319; European Union's second written submission,
para. 69, referring to 2008 Export Licensing Working Rules , Article 5.5 (Exhibits CHN-344, JE-97). China
submits that the correct interpretation is "other materials th at shall be submitted as stipulated by the Ministry of
Commerce." China's second written submission, para. 509.
1325 European Union's first written submission, para. 321; Measures for Administration of Licensing
Entities, Article 11.7 (Exhibits CHN-358, JE-75).

China's export licence authorities to restrict, or alt ogether ban, exportation by certain companies or
individuals.
1326
7.928 China disputes the complainants' claims that its export licence regime is inconsistent with
GATT Article XI:1 due to references to the term "rest riction" in provisions of its law. It considers
that the label applied to its export licence system does not determine a violation of Article XI:1. 1327
China similarly rejects that e xport licence issuing agencies enjoy discretion in granting an export
licence, including discretion to determine the quantity that an applicant may export.1328 China submits
that requiring documentation as a condition for rece ipt of a licence does not convert an otherwise
valid licence requirement into a prohibited restriction on the quantity of exports.1329
7.929 Under applicable Chinese law, China cont ends that export licences for bauxite, coke,
manganese, silicon carbide and zinc are automatically granted in all cases, and within three days,
provided that a valid and complete set of doc uments is submitted with the application. 1330 I n t w o
official statements issued by the Quota & License Administrative Bureau of MOFCOM, dated 20 July
2010 and 11 November 2010 respectively (Exhibit CHN-345 and Exhibit CHN-529), China specifies
which documents are required to re ceive an export licence in the case of: (i) goods subject to quotas
directly allocated, (ii) goods subject to quota bidd ing, and (iii) manganese and unwrought zinc, which
are not subject to quotas but are subject to export licensing requirements. 1331 China argues that full
details on the required documents a nd steps to acquire a licence appear in Articles 8 to 10 of its 2008
Export Licence Administration Measures 1332, and Article 9 of the 2008 Export Licensing Working
Rules.1333 China submits that the 2008 Export Licensing Working Rules do not implement the
Measures for the Administration for the Export of Goods ; instead, they are an "internal guide for the
personnel of the licence-issuing authorities on the applicable rules governing the issuance of export
licences".1334
7.930 Article 11(7) of the Measures for the Administration of Licenses for the Export of Goods
applies to goods that are not subject to quotas but are subject to export licensing requirements. For

1326 European Union's first written submission, para s. 319, 321; European Union's second written
submission, para. 98.
1327 China's first written submission, para. 762, referring to Appellate Body Report, US – Corrosion-
Resistant Steel Sunset Review, para. 87, fn. 87; China's second written submission, para. 497.
1328 China's first written submission, para. 798.
1329 China's first written submission, paras. 758-759, 800.
1330 China's first written submission, paras. 771, 776; China's second written submission, para. 499.
1331 China's first written submission, paras. 773-774. For goods subject to quota licence administration,
China submits that an applicant must submit: (a) an ap plication form; (b) the Form for Archival Filing and
Registration of a Foreign Trade Operator or the Qualification Certificate of Import and Export Enterprises or the
Certificate of Approval for Foreign-Invested Enterprises; (c) the "quo ta-granting documents issued by relevant
authorities"; and (d) the export contract. For goods subject to quota bidding, China submits that an applicant
must submit: (a) an application form; (b) the Form for Archival Filing and Registration of a Foreign Trade
Operator or the Qualification Certificate of Import and Export Enterprises or the Certificate of Approval for
Foreign-Invested Enterprises; (c) the list of bid-winni ng operators and the bid-winning quantity announced; (d)
the Certificate for the Application of an Export License of Goods subject to Quota Bidding or the Certificate for
Transfer of Goods Subject to Quota Bidding; and (e) the export contract of the bid-winning operator. China
submits that applicants wishing to export manganese and unwrought zinc must submit: (a) an application form;
(b) Form for Archival Filing and Registration of a Forei gn Trade Operator or the Qualification Certificate of
Import and Export Enterprises or the Certificate of Approval for Foreign-Invested Enterprises; and (c) an export
contract. China argues this is confirmed under the 2010 Export Licensing Catalogue.
1332 China's first written submission, para. 775.
1333 China's first written submission, para. 777.
1334 China's opening oral statement at the second substantive meeting, para. 355; see also China's
response to Panel question Nos. 22 and 23 following the first substantive meeting paras 113-117.

those products at issue that are not subject to an export quota, unwrought zinc and manganese. China
submits that the 2010 Export Licensing Catalogue includes a notation in its Appendix 1 that export
licences for these products will be "applied for and granted" upon presentation of an export contract in
the 2010 Catalogue. China argues that, as a matter of Chinese law, this constitutes an "approval" by
MOFCOM within the meaning of Article 11.7.
1335 Finally, China submits that the European Union
has not provided any examples in which an appli cant was required to provide documents other than
those specified in the 2008 Export Licence Administration Measures . Accordingly, it requests the
Panel to reject the European Union's claim on these aspects.1336
7.931 In respect of goods subject to export licensing administration only, the European Union
submits that the Panel may wish to accept in good faith official statements issued in 2010 by the
Quota & License Administrative Bureau of MOFCOM (Exhibit CHN-345 and Exhibit CHN-529) that
export licensing agencies do not exercise discretion to grant export licences. 1337 It accepts that the
Panel may incorporate these statements in its final Reports to the DSB and attribute legal importance
to them to achieve a positive solution to the dispute. 1338 If it were to do so , the European Union
requests the Panel to state the consequen ce were China to repudiate these statements. 1339 The
European Union cautions as well that the Panel cannot accept such a statement where it would amount
to "an administrative promise to disregard the defe nding Member's own binding internal legislation,
i.e., by an administrative undertaking to act illegally".1340
7.932 The European Union, however, disputes that Article 11 of the 2008 Export Licence
Administration Measures determines the relevant documents, th ereby removing all discretion. The
European Union submits that Article 5 of the 2008 Working Rules on Export Licenses , as
implementing measures of the 2008 Export Licence Administration Measures , refers to documents
that are not mentioned in the 2008 Export Licence Administration Measures .1341 It submits that the
2008 Export Licensing Working Rules include undefined terms. 1342 The European Union also notes
that Article 9 of the 2008 Export Licensing Working Rules comes into play only after the authorities
have concluded that the "applications conform to the regulations".1343
7.933 Finally, the European Union disputes the relevance of the note in the appendix of the 2010
Export Licensing Catalogue and related official statement dated 11 November 2010 (Exhibit CHN-
529), which specifies that export licences are to be i ssued on the basis of export contracts alone for
goods not subject to an export quota, notably manganese and unwrought zinc. The European Union
submits that the 2010 Export Licensing Catalogue leaves MOFCOM with discretion to issue

1335 China's first written submission, para. 822, fo otnote 1166. See also China's first written
question No. 2 from the European Union following the first substantive meeting, para. 285; China's second
1336 In its opening oral statement at the second substantive meeting (paras. 362 and 363), China submits
that the European Union additionally claims that China's power to amend the list of documents required to
support an application is inconsistent with GATT Article XI:1. The European Union indicated it was not
making such a claim in response to Panel question No. 62 following the second substantive meeting paras. 85-
86. Accordingly, the Panel does not consider further this argument by China.
1337 European Union's second written submission, para. 55; European Union's opening oral statement at
1338 European Union's opening oral statement at the first substantive meeting, para. 6; European Union's
second written submission, para. 73.
1339 European Union's second written submission, para. 73.
1340 Panel Report, US – Section 301 Trade Act, para. 7.103.
1341 European Union's second written submission, para. 76.
1342 European Union's second written submission, para. 75.
1343 European Union's second written submission, para. 85.

documents of approval limiting the quantities of manganese and unwrought zinc that may be
exported. In addition, it argues that future versio ns of the annual Catalogue of Goods Subject to
Export Licensing Administration may not permit the granting of a licence on the basis of export
contracts alone.
1344 Absent modification or repeal of the Export Licensing Measures, the European
Union argues that China has not removed the discretion enjoyed under this provision.1345
7.934 The Panel first recalls its conclusion in paragraph 7.918 above that export licences are not per
se inconsistent with GATT Article XI:1. In partic ular, the Panel found that licensing conditions may
be imposed in licensing systems that are themselves justified pursuant to a provision of the WTO
Agreement, such as GATT Articles XI:2, XII, XVIII, XIX, XX and XXI provided they do not by their
nature have a restrictive or limiting effect.
7.935 Under the provisions in China's law identified by the complainants, certain goods are subject
to export restriction (under Article 19 of China's Foreign Trade Law ), while other goods are not
(under Article 15 of China's Foreign Trade Law ). In the Panel's view, the fact that goods subject to
export restriction are in turn subject to a licensing re quirement is not sufficient to establish that such a
requirement is impermissible under GATT Article XI:1. As stated, prerequisites may be imposed in
licensing systems that implement a permitted restricti on. Hence, the inquiry as to whether or not a
licence requirement is or is not permissible under Article XI:1 does not end at the text of the measure
imposing the licensing requirement. It is necessary to determine if there is a restrictive or limiting
effect.
7.936 It is possible that license requirements for certain goods eligible for export under Article 19 of
China's Foreign Trade Law may in fact be justified. There is also no evidence before us indicating
that the measures must necessarily be applied in su ch a way as to impose any restriction additional to
that arising from the underlying restriction. As explained in paragraph 7. 917 above, in the Panel's
view, the mere requirement to submit an appli cation or documentation as a condition to obtain a
licence to export does not on its own necessarily rise to the level of a restriction under Article XI:1.
7.937 Articles 16, 17 and 18 of China's Foreign Trade Law do not on their face indicate that a
particular licence requirement is to be imposed in such a way as to impose any additional limiting or
restrictive effect. Articles 16 and 17 set out reasons for which China may restrict or ban the export of
particular goods, including for numerous reasons similar to those set out in GATT Articles XX and
XXI. The measures do not indicate on their face, and the complainants have not submitted any
evidence to prove, that export licensing applied in conformity with the rationale in Articles 16 and 17
of China's Foreign Trade Law imposes additional rest rictions to that which may arise from the
underlying measure.
7.938 Accordingly, for the reasons set out above, th e Panel does not agree with the complainants
that China's export licensing requirement imposed on certain forms of bauxite, coke, fluorspar,
manganese, silicon carbide and zinc is inconsiste nt with Article XI:1 simply because a licence
requirement is applied to "goods subject to ... e xport restrictions". In the Panel's view, GATT
Article XI:1 does not support such a conclusion.
7.939 The Panel will next address the additional clai m that China's export licensing requirement is
inconsistent with Article XI:1 because China' s export licensing agencies exercise discretion in
deciding whether to grant export licences to applican ts to export bauxite, coke, fluorspar, manganese,
silicon carbide and zinc.

1344 European Union's second written submission, para. 93.
1345 European Union's second written submission, para. 95.

7.940 The Panel explained in paragraph 7.919 above th at an additional restriction sufficient to
violate Article XI:1 could arise where a licensing ag ency exercises discretion in its decision to grant
an export licence.
7.941 The arguments of the parties turn on whether there is a exhaustive list of the particular
documents that are required to receive an export licence. As discussed in paragraph 7.929 above,
China submits that there is an all- inclusive definitive list of material s that must be submitted, in the
case of goods subject to quota licence administration, goods subject to quota bidding, and lastly, those
goods subject to an export licensing requirement only, namely the forms of manganese and unwrought
zinc at issue in this dispute. China contends that for goods subject to quota licence administration, an
applicant must submit: (i) an application form; ( ii) a form demonstrating that the applicant is
registered and authorized to export
1346; (iii) evidence that the appli cant is one of the enterprises
granted a quota share; and (iv) an export contract.
7.942 For goods subject to quota bidding, an applicant must submit: (i) an application form; (ii) a
form demonstrating that the applicant is registered and authorized to export 1347; (iii) evidence that the
applicant is one of the export quota bid winners; (i v) a Certificate for the Application of an Export
License of Goods subject to Quota Bidding or a Certificate for Transfer of Goods Subject to Quota
Bidding; and (v) an export contract of the bid-winning operator.
7.943 In respect of manganese and unwrought zinc that are subject to export licensing
administration only, under the 2010 Export Licensing Catalogue , applicants seeking to export must
submit: (i) an application form; (ii) a form demo nstrating that the applicant is registered and
authorized to export
1348; and (iii) an export contract. Appendix 1 of the 2010 Export Licensing
Catalogue indicates that an applicant is only required to present an export contract to obtain an export
licence.1349 Effectively, as clarified in statements by the Quota & License Administrative Bureau of
MOFCOM1350, China has suspended the requirement for an applicant to submit any other documents
of approval in 2010 in order to obtain a licence to export either manganese or unwrought zinc.
7.944 The Panel does not question China's position as confirmed in statements by the Quota &
License Administrative Bureau of MOFCOM (Exhibits CHN-345 and CHN-529 ) that China does not
require materials in addition to these enumerated documents. However, the Panel observes that
Article 11(7) of 2008 Export Licence Administration Measures and Article 5(2) and 8(2) of China's
Working Rules on Export Licenses also refer to a requirement to submit undefined "other documents
of approval". In addition, Articles 5(5) and 8(4) of China's Working Rules on Export Licenses refer to
undefined "other materials" as required by the Ministry of Commerce.
7.945 The Panel accepts that the reference to "other documents of approval" in Article 9, and
"documents of approval for export" in Article 12 of China's 2008 Export Licence Administration
Measures refer to the documents enumerated in the subparagraphs of Article 11 of the 2008 Export
Licence Administration Measures . Further, the Panel understands the reference to "documents of

1346 To satisfy this requirement, an applicant must submit either the Form for Archival Filing and
Registration of a Foreign Trade Operator; the Qualification Certificate of Import and Export Enterprises; or the
Certificate of Approval for Foreign-Invested Enterprises.
1347 To satisfy this requirement, an applicant must submit either the Form for Archival Filing and
Registration of a Foreign Trade Operator; the Qualification Certificate of Import and Export Enterprises; or the
Certificate of Approval for Foreign-Invested Enterprises.
1348 To satisfy this requirement, an applicant must submit either the Form for Archival Filing and
Registration of a Foreign Trade Operator; the Qualification Certificate of Import and Export Enterprises; or the
Certificate of Approval for Foreign-Invested Enterprises.
1349 China's first written submission, para. 796, fn 1138.
1350 Exhibit CHN-345 and Exhibit CHN-529.

approval" in Articles 5(2) and 8( 2) of China's Working Rules on E xport Licenses to refer to these
same documents.
7.946 However, the Panel does not understand the re ference to "documents of approval" in
Article 11(7) of the 2008 Export Licence Administration Measures, as applicable to goods subject to
export licensing only, or the "other materials" in Articles 5(5) and 8(4) of the 2008 Export Licensing
Working Rules , applicable generally, to refer to any enumerated documents. As argued by the
complainants, this unspecific language leaves ope n the possibility of expanding or modifying the
documents or materials that may be required to r eceive an export licence. Thus, it is unclear whether
additional documents will be required from a particular applicant in order to satisfy the requirement to
submit a complete and accurate application in accordance with Article 12 of China's 2008 Export
Licence Administration Measures, or Article 10 of China's Working Rules on Export Licenses . In the
Panel's view, these undefined requirements operate so as to leave Chinese License Authorities with
open-ended discretion to restrict or prohibit the exportation of the subject raw materials.
1351
7.947 China considers that, where a measure does not expressly or necessarily provide for WTO-
inconsistent conduct, any discretion to apply the rule in a WTO-inconsistent manner is insufficient to
render the measure WTO-inconsistent. 1352 In view of that, China argues that the absence of any
explicit limitation on this discretion in these measu res does not render an export licence a licence that
restricts exportation and thus prohibited under Article XI:1.
7.948 In the Panel's view, in the context of a licensing requirement, the open-ended discretion
created by the unspecific and generalized require ment to submit an unqualified number of "other"
documents of approval in Article 11(7), as applicable to goods subject to export licensing only, or the
"other materials" in Articles 5(5) and 8(4) of China's 2008 Export Licensing Working Rules , creates
uncertainty as to an applicant's ability to obtain an export licence. The authority to deny the licence is
ever present because the conditions for granting it are subject to the demands of the particular
licensing authority. This uncertainty amounts to a r estriction on exportation that is inconsistent with
Article XI:1.
7.949 The Panel reaches these conclusions in light of the measures in its terms of reference,
including the 2009 Export Licensing Catalogue. In respect of goods subject to export licensing only,
China submits that Appendix 1 of the 2010 Export Licensing Catalogue removes any uncertainty by
suspending the requirement for an applicant to submit any other documents of approval in 2010 in
order to obtain a licence.
7.950 Setting aside the issue of whether the 2010 Catalogue falls within the Panel's mandate, the
Panel observes that the reference in Appendix 1 of the 2010 Catalogue does not modify or remove the
documentation requirements in Article 11(7) of China's 2008 Export Licence Administration
Measures or in China's 2008 Export Licensing Working Rules . Absent modification or repeal of 2008
Export Licence Administration Measures, the Panel considers that Appendix 1 of the 2010 Catalogue
does not remove the inconsistency of the probl ematic measures as pertains to manganese and
unwrought zinc that are subject to export licensing administration only.

1351 The Panel foresees the possibility that other evid ence or documents may be desirable or necessary,
in certain circumstances, to approve the authorization of an enterprise to export. For instance, Article 11(5) of
China's 2008 Export Licence Administration Measures provides that the export ation of chemicals under
supervision and control requires an applicant to submit documents of approval to the Office of State Leading
Group for the Performance of the Convention on Prohibition of Chemical Weapons. However, this would be a
specific requirement and thus different from an undefined requirement.
1352 China's first written submission, paras. 803-804.

7.951 The Panel lastly considers arguments of the United States and Mexico that China's export
licensing regime for the raw materials at issue is inconsistent with Article XI:1 because it allows
agencies discretion to determine th e quantities that can be exported
1353; impose minimum price
conditions1354; or reduce quotas, stop issuing licences, or withdraw export rights under Article 21 of
the CCCMC Coordination Measures.1355
7.952 The measures identified by the complainants do not expressly state that licensing agencies
may determine the quantities that can be exported. The Panel concluded above that China's export
licensing requirement is not inconsistent with Article XI:1 simply because a licence requirement is
imposed with respect to "goods subject to ... export restrictions", in particular under Article 19 of
China's Foreign Trade Law . The Panel explained that quantitati ve restrictions may be permitted on
certain occasions, and accordingly, Article 19 was not on its face inconsistent with GATT
Article XI:1. The Panel also concluded that certain provisions at issue allow export licensing
agencies a degree of discretion that may sometimes l ead to a decision not to grant an export licence.
For these reasons, the Panel does not consider it n ecessary to address the United States' and Mexico's
concern further.
7.953 The United States and Mexico additionally refer to Article 40(3) of China's Measures for the
Administration of Licensing Entities , which sets out the punishment that may be imposed on export
licensing agencies that issue licen ces without following coordinated export prices. The complainants
have also identified this provision, and the use of penalties and punishment as prescribed in other
provisions of Chinese law, in respect of their claim that China imposes a minimum export price
requirement that is inconsistent with GATT Article XI:1. The Panel considers this provision relates to
the alleged restrictive effect of a minimum export price requirement. The Panel will thus address the
WTO-consistency of these aspects in Section VII.G of these Reports.
7.954 Finally, Article 21 of the CCCMC Export Coordination Measures provides: "if more than half
of the voting member companies of the coordi nation organization agree, CCCMC can request the
competent authority to reduce [non-compliant companies'] quotas or stop issuing licences for the
commodities or even withdraw part or all of their export rights". China claims that this provision does
not grant the CCCMC the authority to impose conditi ons on the issuance of licences, but provides "an
internal framework for the CCCMC membership to vote on whether to request MOFCOM to take
action to sanction non-compliant firms".
1356
7.955 The Panel concluded above that licences may be used to implement an underlying restriction
that is justified pursuant to another provision of the WTO Agreement; however, such a licence may
not be applied in a manner that would impose an add itional limiting or restrictive effect. In addition,
the Panel explained that the discretion granted to export licensing agencies to refuse to grant an export
licence may amount to an additional restriction that is inconsistent with GATT Article XI:1 if the
refusal to grant such a licence does not relate to the underlying measure that is implemented through
the licensing requirement.

1353 United States' first written submission, para. 340; Mexico's first written submission, para. 342; see
2008 Export Licence Administration Measures , Article 6 (Exhibits CHN-342, JE-74); Export Quota Measures,
Article 25 (Exhibit JE-76).
1354 United States' first written submission, para. 340; United States' second written submission,
Measures for the Administration of Licensing Entities , Article 40(3) (Exhibits CHN-358, JE-75), Bauxite
Branch Coordination Measures, Article 7 (Exhibit JE-108).
1355 United States' second written submission, para. 377; Mexico's second written submission,
para. 382; see CCCMC Coordination Measures, Article 21 (Exhibit JE-107).
1356 China's opening oral statement at the second substantive meeting, para. 368.

7.956 On its face, Article 21 of the CCCMC Coordination Measures allows the CCCMC to request
a licensing agency to refuse issuance of licences solely on the basis that more than half of the voting
member companies of the coordination organization re quest such action. The Panel recalls from its 1
October 2010 preliminary ruling its finding that the CCCMC Coordination Measures , among other
measures, was outside the Panel's terms of reference. Therefore, the Panel will not make findings on
this measure.
(c) Summary
7.957 The Panel concludes above that licences that are granted without condition or those that
implement an underlying measure that is jus tified pursuant to another provision of the WTO
Agreement, such as GATT Article XI:2, XII, XVIII, XIX, XX or XXI, may be consistent with
Article XI:1, so long as the licence does not by its nature have a limiting or restrictive effect.
Conversely, a licence requirement that results in a restriction additional to that inherent in a
permissible measure would be inconsistent with GA TT Article XI:1. Such restriction may arise in
cases where licensing agencies have unfettered or undefined discretion to reject a licence application.
7.958 The Panel finds that China's export licensing regime is not per se inconsistent with
Article XI:1 on the basis that it permits export licensing agencies to require a licence for "goods
subject to ... export restrictions", as provided for in Article 19 of China's Foreign Trade Law . The
Panel finds, however, that the discretion that arises from the undefined and generalized requirement to
submit an unqualified number of "other" documents of approval in Article 11(7) of China's 2008
Export Licence Administration Measures , as applicable to goods subject to export licensing only, or
the "other materials" in Articles 5(5) and 8(4) of China's Working Rules on Export Licenses , amounts
to an additional restriction inconsistent with Article XI:1.
7.959 The Panel makes no findings as to whether the cl aims of the United States and Mexico that
40(3) of China's Measures for the Administration of Licensing Entities or Article 21 of the CCCMC
Coordination Measures are inconsistent with GATT Article XI:1, as these measures fall outside its
terms of reference. The Panel will consider in S ection VII.G below whether Article 40(3) of China's
Measures for the Administration of Licensing Entities is inconsistent with Article XI:1 of the
GATT 1994.
3. Whether China's export licensing system on certain forms of bauxite, coke, fluorspar,
manganese, silicon carbide and zinc is inconsistent with Paragraph 1.2 of China's
Accession Protocol and Paragraphs 162 and 165 of China's Working Party Report
7.960 In addition to their challenge under Article XI :1 of the GATT 1994, the complainants argue
that China's export licensing system applied to bauxite, coke, fluorspar, manganese, silicon carbide
and zinc is also inconsistent with China's obliga tions in Paragraph 1.2 of China's Accession Protocol
read in combination with Paragraphs 162 and 165 of China's Working Party Report.
1357 The
complainants argue that China committed to elim inate any non-automatic export licence requirements
and to remove export restrictions unless they could be justified.
7.961 To the extent the Panel finds China's export licence requirement to be inconsistent with
Article XI:1, China requests that the Panel exerci se judicial economy with respect to claims under
Paragraphs 162 and 165 of its Working Party Report. China considers the complainants' claims under
these provisions to be "identical" to those under Article XI:1, as assumed by all Members under
Article XI:1. It argues that making findings under these provisions "would add nothing to the

1357 United States' first written submission, paras. 34 3-347; European Union's first written submission,
paras. 323-324; Mexico's first written submission, paras. 345-349.

resolution of this dispute, nor would it aid in any potential implementation."
1358 R e g a r d l e s s , a s
discussed in the context of the complainants' Articl e XI:1 claim above, China submits that its export
licence requirement is automatic and therefore places no restriction or limit on the quantity of exports
of bauxite, coke, fluorspar, manganese, silicon carbide and zinc. China additionally considers that it
has "taken steps ... to ensure that it ... abides by WTO rules in respect of non-automatic licensing." 1359
For these reasons, China considers that it has not acted inconsistently with Paragraphs 162 and 165 of
its Working Party Report.
7.962 The Panel recalls that Article 1.2 of China's Ac cession Protocol is an "integral part of the
WTO Agreement" and therefore contains enforceab le commitments including those "commitments
referred to in paragraph 342 of the Working Party Report" 1360 Paragraph 342 of China's Working
Party Report additionally refers to commitments undertaken by China that are reproduced in
paragraphs 162 and 165 of the Working Party Report.
7.963 Paragraph 162 of China's Working Party Report provides:
"...China confirmed that China would abide by WTO rules in respect of non-
automatic export licensing and export restri ctions. The Foreign Trade Law would
also be brought into conformity with GATT requirements. Moreover, export
restrictions and licensing would only be app lied, after the date of accession, in those
cases where this was justified by GATT provisions..."
7.964 Paragraph 165 of China's Working Party Report provides:
"...China confirmed that upon accession, remaining non-automatic restrictions on
exports would be notified to the WTO annua lly and would be eliminated unless they
could be justified under the WTO Agreement or the Draft Protocol..."
7.965 Thus, Paragraph 162 requires that China's export licensing requirements, to the extent they are
"non-automatic", would be brought into conform ity with the GATT. Under the second sentence of
Paragraph 162, export licensing or restrictions may on ly be applied if justified under an provision of
the GATT.
7.966 The Panel concluded above that China's e xport licence system as imposed on bauxite,
fluorspar, silicon carbide, coke and zinc is not in consistent with GATT Article XI:1 because of the
mere fact that it applies to "goods subject to ... e xport restrictions". The Panel found, however, that
the discretion that arises from the undefined a nd generalized requirement to submit an unqualified
number of "other" documents of approval in Artic le 11(7) of China's Export Licensing Measures, as
applicable to goods subject to export licensing only, or the "other materials" in Articles 5(5) and 8(4)
of China's Working Rules on Export Licenses, amounts to an additional restriction inconsistent with
Article XI:1. China did not seek to justify an y aspect of its export licensing system under any
provision of the GATT 1994.
7.967 The Panel recalls that China requested the Panel to exercise judicial economy in respect of the
complainants' additional claims under Paragraphs 162 and 165 of China's Working Party Report. The
Appellate Body has stated that panels are not oblig ed to address all legal claims raised by parties,

1358 China's first written submission, para. 808, referring to Panel Report, EC – Salmon, para. 7.636.
1359 China's response to second set of Panel questions, question No. 66.
1360 China's Accession Protocol (Exhibit JE-2); see paras. 7.620 to 7.621 above.

explaining that "[n]othing in [Article 11 of the DSU]
1361 or in previous GATT practice requires a
panel to examine all legal claims made by the complaining party." 1362 The Appellate Body later
explained that "a panel has to address those claims on which a finding is necessary in order to enable
the DSB to make sufficiently precise recommenda tions and rulings so as to allow for prompt
compliance by a Member with those recommendati ons and rulings "in order to ensure effective
resolution of the disputes to the benefits of Members."1363
7.968 Paragraph 162 provides that export licensing may only be applied if justified under any
provision of the GATT. Paragraph 165 provides that "non-automatic restrictions" would be
eliminated unless they could be justified under the WTO Agreement or Draft Protocol. In the latter
respect, the term "non-automatic restrictions" is not defined, although Paragraph 162 notably refers to
"restrictions" and "licensing" separately.
7.969 It would seem that three outcomes may ari se in respect of China's export licensing
requirements at issue. First, the export licensing requirements at issue may be inconsistent with a
provision of the WTO Agreement and may not be justified. Second, the export licensing requirements
may be inconsistent with a particular provision, such as Article XI:1 of the GATT but may be justified
by a provision of the WTO Agreement. Third, as explained above, the export licensing requirements
may not be inconsistent with an y particular provision of the GATT. Under each circumstance, the
question arises whether the particular licensing requi rements would nevertheless be inconsistent with
China's Accession Protocol.
7.970 The Panel does not consider that findings under Paragraph 162 or Pa ragraph 165 would be
required to resolve the dispute in the first case, discussed in the preceding paragraph, i.e., where
export licensing requirements at issue may be inconsistent with a provision of the WTO Agreement
and may not be justified. The Panel recalls its conclusion that, if particular export requirements
operate such that by their nature they have a restrictive or limiting effect on exportation beyond the
restriction arising from the underlying permissible re striction itself, then such requirements would not
be permissible under Article XI:1 of the GATT 1994. In this dispute, for goods subject to export
licensing administration only, the Panel conclude d that the requirements of Article 11(7) of 2008
Export Licence Administration Measures and Articles 5(5) and 8(4) of 2008 Export Licensing
Working Rules are inconsistent with Article XI:1 for this reason. China has not sought to justify these
requirements under any provision of the WTO Agreemen t. In the Panel's view, no additional finding
of violation under Paragraph 162 or Paragraph 165 would add to resolving the matter.
7.971 The Panel further does not see how findings unde r Paragraph 162 or Paragraph 165 would be
required to resolve the dispute where export licensi ng requirements may be inconsistent but may be
justified by a provision of the WTO Agreement. If particular export licensing requirements are
inconsistent but somehow justified, then, by the terms of Paragraph 162 and Paragraph 165 of China's
Working Party Report, those requirements may be app lied. Again, no finding under Paragraph 162 or
Paragraph 165 would aid or in fact is needed to resolve the matter.

1361 Article 11 of the DSU provides, in relevant part:"...a panel should make an objective assessment of
the matter before it, including an objective assessment of the facts of the case and the applicability of and
conformity with the relevant covered agreements, and make such other findings as will assist the DSB in
making the recommendations or in giving the rulings provided for in the covered agreements."
1362 Appellate Body Report, US – Wool Shirts and Blouses , p. 18, DSR 1997:I, 323, at p. 339; DSR
1997:I, at p. 339-340 citing inter alia, EEC – Import Restrictions , BISD 30S/129, para. 33; Canada –FIRA,
BISD 30S/140, para. 5.16; US –Sugar Quota, BISD 31S/67, paras. 4.5-4.6; Japan – Semi-Conductors , BISD
1363 Appellate Body Report, Australia – Salmon, para. 223.

7.972 Finally, the question arises whether findings in respect of Paragraph 162 or Paragraph 165
would be required to resolve the dispute wher e an export licensing requirement may not be
inconsistent with any particular GATT provision . The Panel concluded above that the export
licensing requirement imposed under China's Foreign Trade Law applied to "goods subject to ...
export restrictions" is not per se inconsistent with Article XI:1. In this dispute, the complainants have
not submitted evidence beyond the text of certain provisions of China's Foreign Trade Law to
demonstrate that export licensing applied to the raw materials at issue imposes additional restrictions
to those which may arise from the underlying export quota. The Panel explained its view above that
the inquiry whether or not a licence requirement is or is not permissible under Article XI:1 does not
end at the text of the measure imposing the licensi ng requirement. In the absence of further evidence,
the Panel considers that additional findings under Paragraphs 162 and 165 of China's Working Party
Report would not aid in resolving the dispute.
1364 The Panel declines to consider the complainants'
claim while bearing in mind its findings that the und erlying export quotas at issue are not justified
pursuant to Article XI:2 or Article XX of the GATT 1994, and bearing in mind that China has not
sought to justify its export licensing regime pur suant to any provision of the GATT or the WTO
Agreement.
7.973 For the foregoing reasons, the Panel declines to make findings under Paragraphs 162 and 165
of China's Working Party Report.
4. Whether China's export licensing system on certain forms of bauxite, coke, fluorspar,
manganese, silicon carbide and zinc is inco nsistent with paragraph 1.2 and 5.1 of
China's Accession Protocol and paragraphs 83 and 84 of China's Working Party Report
7.974 In addition to its claims under Article XI:1 of the GATT 1994 and Paragraphs 162 and 165 of
China's Working Party Report, the European Union argues that China's export licensing system is
inconsistent with paragraphs 5.1 and 1.2 of China's Accession Protocol, in combination with
paragraphs 83 and 84 of China's Working Party Re port. The European Union argues that China's
licensing system amounts to an "examination and approval of trading rights" system in violation of
paragraph 84(a) of China's Working Party Report.
1365 By allowing licence issuing agencies discretion
to require undefined "other" documents, the European Union argues that China fails to grant to "all
enterprises" in China the right to tr ade the raw materials at issue in violation of Paragraphs 83(d) and
84(a) of China's Working Party Report. 1366 Finally, by granting "broad and unfettered discretion" to
export licensing agencies to either accept or refuse applications by foreign enterprises and individuals,
the European Union argues that Ch ina fails to grant foreign enterprises and individuals the right to

1364 The Panel additionally takes note, as raised by China in its 18 March comments to the Panel, that
the complainants have presented new argumentation, at a la te stage in the proceedings, in arguing that China's
export licensing requirements are inconsistent with Paragraphs 162 and 165 of China's Working Party Report.
See United States' response to Panel question Nos. 61 and 64 following the second substantive meeting;
European Union's response to Panel question No. 61 following the second substantive meeting; Mexico's
response to Panel question Nos. 61 and 64 following the second substantive meeting; United States' comments
on China's response to Panel question Nos. 61 and 66 following the second substantive meeting; European
Union's comments on China's response to Panel question Nos. 61 and 66 following the second substantive
meeting; Mexico's comments on China's response to Panel question Nos. 61 and 66 following the second
substantive meeting. The European Union argues in particular that that Paragraph 162 "introduces a specific
obligation for export licences in general, irrespective of whether they are 'automatic' or 'non-automatic'" –
namely, that such licenses "would only be applied ... where ... justified by GATT provisions". European Union's
comments on China's response to Panel question No. 66 following the second substantive meeting, paras. 85 and
86. China submits that this position fundamentally changes the nature of the European Union's claim and
compromises due process.
1365 European Union's first written submission, para. 334.
1366 European Union's first written submission, para. 335.

trade in a non-discriminatory manner, in violatio n of paragraph 84(b) of China's Working Party
Report.
1367
7.975 To the extent the Panel finds China's export licence requirements to be inconsistent with
Article XI:1, China requests that the Panel also exercise judicial economy with respect to the
complainants' claims. China considers these claims are "identical" to those under Article XI:1, and
that making findings under these provisions "'would add nothing to the resolution of this dispute, nor
would it aid in any potential implementation.'" 1368 Regardless, as discussed in the context of the
complainants' Article XI:1 claim above, China submits that its licensing system does not restrict or
limit on the quantity of exports of bauxite, coke, fluorspar, manganese, silicon carbide and zinc.
Thus, China requests the Panel to reject the European Union's claims.
7.976 The Panel recalls that Article 5.1 of China's Accession Protocol provides:
"Without prejudice to China's right to regulate trade in a manner consistent with the
WTO Agreement...within three years after accession, all enterprises in China shall
have the right to trade in all goods...except for those goods listed in Annex 2A... Such
right to trade shall be the right to im port and export goods...For those goods listed in
Annex 2B, China shall phase out limitation on the grant of trading rights pursuant to
the schedule in that Annex. China shall complete all necessary legislative procedures
to implement these provisions during the transition period."
7.977 As noted, Article 1.2 of China's Accession Protocol is an "integral part of the
WTO Agreement" and therefore contains enforceab le commitments including those "commitments
referred to in paragraph 342 of the Working Party Report"
1369 Paragraph 342 of China's Working
Party Report additionally refers to commitments undertaken by China that are reproduced in
paragraphs 83 and 84 of the Working Party Report.
7.978 Paragraph 83(d) of China's Working Party Report provides:
"...China also confirmed that within th ree years after accession, all enterprises in
China would be granted the right to trade."
7.979 Paragraph 84(a) of China's Working Party Report provides:
"...China reconfirmed that China would eliminate its system of examination and
approval of trading rights within three years after accession. At that time, China
would permit all enterprises in China a nd foreign enterprises and individuals...to
export...all goods..."
7.980 Paragraph 84(b) of China's Working Party Report provides:
"With respect to the grant of trading right s to foreign enterprises and individuals...
China confirmed that such rights would be granted in a non-discriminatory and non-
discretionary way....[A]ny requirements for obtaining trading rights would be for
customs and fiscal purposes only and would not constitute a barrier to trade..."

1367 European Union's first written submission, para. 336.
1368 China's first written submission, para. 811, referring to Panel Report, EC – Salmon, para. 7.636.
1369 China's Accession Protocol (Exhibit JE-2); see paras. 7.620 to 7.621 above.

7.981 As noted in paragraph 7.653 above, the Appellate Body in China – Audiovisual Products and
Services, addressed the meaning of China's right to regulate trade under Article 5.1 of China's
Accession Protocol. Of particular relevance to these claims of the complainants, the Appellate Body
explained that the "obligations assumed by China in r espect of trading rights, which relate to traders"
is "closely intertwined" with "obligations imposed on all WTO Members in respect of their regulation
of trade in goods", including those under Article XI of the GATT 1994.
1370
7.982 The Panel concluded in paragr aph 7.938 above that China's export license system as imposed
on bauxite, fluorspar, silicon carbide , coke and zinc is not incons istent with GATT Article XI:1
because of the mere fact that it applies to "goods subj ect to ... export restrictions". The Panel found,
however, that the discretion that arises from the unde fined and generalized requirement to submit an
unqualified number of "other" documents of approv al in Article 11(7) of China's Export Licensing
Measures, as applicable to goods subject to export lic ensing only, or the "other materials" in Articles
5(5) and 8(4) of China's Working Rules on Export Licenses, amounts to an additional restriction
inconsistent with Article XI:1. China did not seek to justify any aspect of its export licensing system
under any provision of the GATT 1994.
7.983 The Panel fails to see how further findings in respect of Paragraphs 83 and 84 of China's
Working Party Report would aid in resolving the disp ute. The Panel recalls that China requested the
Panel to exercise judicial economy in respect of the European Union's claims. As mentioned in
paragraph 7.967 above, the Appellate Body has clarif ied that "a panel has the discretion to determine
the claims it must address in order to resolve the dispute between the parties." 1371 I n l i g h t o f i t s
finding that the requirements of Article 11(7) of China's Export Licensing Measures and Articles 5(5)
and 8(4) of China's Working Rules on Export Licen ses are inconsistent with GATT Article XI:1, and
are not justified, the Panel considers that furthe r findings on this matter would not be necessary to
resolve the dispute. Therefore, the Panel does not make findings in this regard.
G. M
INIMUM EXPORT PRICES
7.984 The complainants claim that China imposes a minimum export price (MEP) requirement for
certain forms of bauxite coke, fluorspar, ma gnesium, silicon carbide, yellow phosphorus and zinc 1372
that constitutes a restriction on exportation that is inconsistent with Article XI:1 of the GATT 1994.
They submit that coordination of export prices con tinued to be enforced through application of the
Price Verification and Chop (PVC) export clearance pr ocess even after the apparent repeal of this
procedure in 26 May 2008. 1373 The complainants further claim that the manner in which China
administers the MEP requirement through the involvement of the CCCMC in the PVC export
clearance process is inconsistent with the obligati on to administer laws in a uniform, impartial and
reasonable manner under Article X:3(a) of the GATT 1994. 1374 Finally, the complainants claim that
China failed to publish certain measures providing rules and details on how the CCCMC coordinates
export prices in contravention of Article X:1 of the GATT 1994.1375

1370 Appellate Body Report, China – Publications and Audiovisual Products, para. 226.
1371 Appellate Body Report, India – Patents (US), para. 87.
1372 The specific forms of the raw materials subject to the United States' claims are identified in Exhibit
JE-7 and paragraph 2.2 of the Descriptive Part to these Reports.
1373 United States' first written submission, paras. 36 0-361; European Union's first written submission,
paras. 364-365; Mexico's first written submission, paras. 363-364.
1374 United States' first written submission, paras. 36 4-374; European Union's first written submission,
paras. 368-378; Mexico's first written submission, paras. 367-377.
1375 United States' first written submission, paras. 37 5-381; European Union's first written submission,
paras. 379-385; Mexico's first written submission, paras. 378-384.

7.985 China contends that it "abandoned" price coordination in 2008 before the Panel's
establishment
1376, and therefore requests the Panel not to make findings on measures identified in
connection with the complainants' MEP-related claims. In addition, China asserts that the
complainants have failed to establish that Ch ina continued to impose and enforce an MEP
requirement after the repeal of export price coordination in 2008 1377, or that an alleged MEP-
requirement restricts export in a manne r inconsistent with Article XI:1. 1378 Finally, China asserts that
the Panel should not make findings on the complain ants' claims under Articles X:1 and X:3(a) of the
GATT 1994. China submits that the Panel should not make findings on measures governing the
administration of the PVC system because such sy stem was repealed and the measures no longer
exist.1379 China further argues that the measures which are alleged not to have been published either
no longer apply or have been formally repealed , and therefore require no publication pursuant to
Article X:1 of the GATT 1994.1380
7.986 The Panel will address the complainants' claims under Articles XI:1, X:1 and X:3(a) of the
GATT 1994 separately below. Before doing so, the Panel will address measures within its terms of
reference. The Panel will then address China's claim that it effectively abandoned export price
coordination in 2008, prior to the Panel's estab lishment. Thereafter, we will consider the
complainants' assertion that China continued to en force export price coordination, even after the
repeal of the PVC procedure by the 2008 PVC Noti ce. In the event that China had in a place a
minimum price requirement at the time of the Panel's establishment, we will address whether this
requirement is inconsistent with Articles XI:1, X:1 and X:3(a).
1. MEP-related measures within the Panel's terms of reference
7.987 The Panel recalls from its 1 October 2010 preliminary ruling its finding that only six
measures referred to by the complainants in bot h their consultation requ ests and Panel Requests
would form part of the Panel's terms of reference. 1381 In its preliminary ruling request, China asked
the Panel to find, inter alia , that the complainants' Panel Requests failed to comply with the
requirements of Article 6.2 of the DSU because "Sec tion III" of the complainants' Panel Requests did
not identify clearly and specifically the measur es under challenge, including those concerning its
MEP-related claims, or provide a brief summary of the legal basis sufficient to present the problem
clearly.1382
7.988 To recall, in their Panel Requests, the complain ants identified nine measures that related to
their MEP-related claims. Three of these measures were not listed in the complainants' consultation
requests. In the first phase of its preliminary ruling, the Panel stated that it would reserve its decision
on whether "Section III" of the complainants' Pane l Requests identify clearly and specifically the
measures under challenge (including the complainan ts' MEP-related claims), and whether "Section
III" of their requests provides a brief summary of the legal basis sufficient to present the problem
clearly, until after it had received the complainants' first written submissions.
7.989 In their first written submissions, the complain ants referred to six additional MEP-related
measures that were not included in their consultatio n or Panel Requests. The complainants did not

1376 China's first written submission, para. 838; China's response to Panel question No. 1, para. 20.
1377 China's first written submission, paras. 842-853.
1378 China's first written submission, paras. 854-865.
1379 China's first written submission, para. 867.
1380 China's first written submission, paras. 868-872.
1381 See paragraphs 1.10 to 1.13 above; Annex F to these Reports.
1382 The text of the complainants' Panel Requests is identical.

indicate any particular basis for mentioning these additional measures in their first written
submissions.
7.990 Following receipt of the complainants' and Chin a's first written submissions, the Panel asked
the complainants to indicate which measures are properly before the Panel whether due to their
inclusion in the consultation and/or Panel Request , or as an amendment, extension, replacement
measure, renewal measure or implementing measure.
1383 The complainants indicated which measures
that they considered to be in the Panel's terms of reference.1384
7.991 On 1 October 2010, the Panel issued the second phase of its preliminary ruling. The Panel
concluded that the complainants' Panel Requests, as clarified by their first submissions, provide
sufficient connection between the measures listed in "Section III" and the listed claims of violations,
with the exception of the European Union's publi cation claim concerning coke quotas. In addition,
the Panel concluded that alleged measures referred to solely in the complainants' Panel Requests, but
not in their consultation requests, and those alleged measures referred to by the complainants in their
subsequent submissions, were not pr operly before the Panel as measures at issue. On this basis, the
Panel concluded that only six MEP-related measures remained in the Panel's terms of reference. These
are: (1) Measures for Administration of Trade Social Organizations 1385; (2) Regulations for Personnel
Management of Chambers of Commerce 1386; (3) 1994 CCCMC Charter 1387; (4) 2001 CCCMC
Charter1388; (5) Export Price Penalties Regulations 1389; and (6) Measures for Administration of
Licensing Entities.1390
7.992 The complainants submit that the Panel's fi ndings in the second phase of its preliminary
ruling that certain MEP-related measures are outside the Panel's terms of reference were not made in
response to a preliminary ruling request and cannot be part of a ruling. The United States argues that
the findings pertaining to MEP-related measures in the second phase of the Panel's preliminary ruling
were not made in response to a preliminary ruling under the Panel's Working Procedures. Moreover,
it argues that China's first written submission did not include a request for a preliminary ruling. Even
if China had made a second preliminary ruling requ est, the United States argues that the Panel did not
determine a time prior to the first substantive m eeting for the complainants to respond to China's
terms of reference arguments on the MEP-related measu res. Therefore, the complainants consider the
aspects of the Panel's preliminary ruling regarding these measures to be invalid and request the Panel
to re-examine de novo its decision on these measures.
1391 The United States submits further that,
under the DSU and Panel's Working Procedures, the co mplainants are permitted to make rebuttals –
including on the status of excluded MEP-related measures – until the second substantive meeting.1392
7.993 The Panel considers that it was permitted to address whether the particular MEP-related
measures that either were not listed in the complain ants' consultation requests, or were not included in
their Panel Requests, were within its terms of refe rence. The Appellate Body clarified that Panels
may address "issues which go to the root of their jurisdiction – that is, to their authority to deal with
and dispose of matters ... if necessary, on their own motion – in order to satisfy themselves that they

1383 Panel question No. 1(a) and (b).
1384 See complainants' response to Panel question No. 1 following the first substantive meeting; United
States' Attachment – Chart A re Question 1(a) & (b).
1385 Exhibits CHN-313, JE-101.
1386 Exhibits CHN-315, JE-102.
1387 Exhibit JE-86.
1388 Exhibits CHN-16, JE-87.
1389 Exhibits CHN-350, JE-113.
1390 Exhibits CHN-358, JE-75.
1391 United States' second written submission, paras. 408-414.
1392 United States' second written submission, para. 416.

have authority to proceed".
1393 The Panel sought to clarify the scope of its mandate concerning the
complainants' MEP-related claims.
7.994 With respect to three measures relating to the PVC procedure that were included in the Panel
Requests but not the consultations requests 1394, the Panel notes that all of the particular measures
sought to be included in the Panel's terms of re ference existed well in advance of the time of
consultations and the submission of the complainan ts' Panel Requests. These additional instruments
are not amendments to any of the measures listed in the consultation requests that came into existence
between the time of consultations and submission of the Panel Request s. The Panel fails to see any
basis for the complainants not to have included th ese measures, due to the fact that these measures
were available to the complainants. Moreover, these measures as presented to the Panel do not
identify any of the products at issue in this dispute.1395
7.995 Similarly, with respect to measures that are not included in either the consultation or Panel
Requests, but are alleged to be "implementing" meas ures, the Panel again notes that all of the alleged
additional "implementing measures" set out by th e complainants in their first written submissions 1396
existed well in advance of the time of consultati ons and the submission of the complainants' Panel
Requests. The Panel thus sees no reason why the co mplainants opted to delay or withhold identifying
these measures. It is evident from the complainants' submissions th at these measures were identified
in connection with statements made and eviden ce submitted in the context of various US court
proceedings concerning allegations of price-fixi ng and other anticompetitive activities, dating as far
back as 2006. 1397 In addition, the complainants failed to offer any elaboration as to how these
measures are "implementing measures" to basic fra mework laws until the conclusion of their second
written submissions.1398

1393 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 36.
1394 In particular, Notice of the Rules on Price Reviews of Export Products by the Customs (not
submitted); CCCMC PVC Rules (Exhibit JE-127); and Online PVC Instructions (Exhibit JE-123).
1395 The complainants consider that those instruments included in the Panel Requests but not the
consultations requests should be considered as measures at issue in this dispute because the measures are "all
part of the same PVC procedure of which the 2002 PVC Notice (Exhibit JE-122) and 2004 PVC Notice (Exhibit
JE-121), which were consulted on, form a part", and because these additional instruments "relate to the same
procedure and same product at issue under the 2002 PVC Notice and the 2004 PVC Notice". The complainants
argue that the inclusion of these m easures therefore does not "expand the scope of the dispute". (See, e.g.,
United States' second written submission, para. 440). The complainants consider that the Appellate Body
Report on US – Continued Zeroing is "apposite" to an assessment of whether the additional PVC measures
should be included in the Panel's terms of reference. We note, however, that the Appellate Body in that appeal
found that the measures subject to the complainant's challenge "encompass[ed] the anti-dumping duties resulting
from the proceedings identified in the consultations requ est" and "additional measures relate to the same duties
identified in the consultations request, and the legal basi s of the claims raised is the same". (Appellate Body
Report on US – Continued Zeroing , paras. 226, 228) As noted, the complainants have not provided cogent
reasons for the failure to raise these measures at th e time of consultations. Moreover, the complainants'
submitted versions of the 2002 and 2004 PVC Notices, which are alleged to form the basis for the later inclusion
of the Notice of the Rules on Price Reviews of Export Products by the Customs (not submitted); CCCMC PVC
Rules (Exhibit JE-127); and Online PVC Instructions (Exhibit JE-123) do not include reference to any of the
raw materials at issue in this dispute.
1396 In particular, CCCMC Export Coordination Measures (Exhibit JE-107); CCCMC Bauxite Branch
Coordination Measures (Exhibit JE-108); Bauxite Branch Charter (Exhibit JE-112); and "system of self
discipline" (see complainants' first written submission, paragraph 205).
1397 See United States' first written submission, para s. 207-208, fns. 284, 285, 288, 289, 209;
MOFCOM Statement in In re Vitamin C Antitrust Litigation, para. 3 (Exhibit JE-111).
1398 The complainants argue in their second written submissions that measures may be included in a
panel's terms of reference if the panel request refers to "implementing measures", and those measures can be

7.996 For the foregoing reasons, and in light of its preliminary ruling, the Panel will limit any
rulings on the complainants' MEP-related claims to the six measures that appear in the complainants'
Panel Requests. Notwithstanding this view, the Pa nel may consider other instruments and documents
referred to by the complainants – though outside its te rms of reference – in order to assess fully the
legal situation and operation of an MEP requirement in China.
1399 The Panel does not consider the
fact that certain measures are outside the Panel' s terms of reference to mean that such laws,
regulations or instruments did or do not exist, or should be completely excluded from the Panel's
assessment. The Panel will not, however, make findings or recommendations on any laws,
regulations or instruments that are excluded from its terms of reference.
2. Whether China enforced a coordinated MEP req uirement on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc at the time of the
Panel's establishment
7.997 The complainants argue that China imposes an MEP requirement for certain forms of bauxite
coke, fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc.1400 The complainants argue
that China coordinates export prices for the products at issue through a "system of self-discipline"
based on informal statements and oral agreements between traders and export regulators and where
the CCCMC directs commodity-specific branches or coordination groups. 1401 The complainants
submit price data for bauxite and yellow phosphorus, in particular, to show that China set coordinated
export prices for these two products. 1402 The complainants also alle ge that China enforces these
coordinated export prices through the applicati on of penalties imposed by MOFCOM against non-
conforming exporters as well as penalties imposed ag ainst licensing authorities that issue licences to
non-conforming exporters. 1403 Finally, the complainants alle ge that China enforces coordinated
prices, at least on yellow phosphor us through the use of the PVC procedure which permits customs
authorities to deny clearance to yellow phosphorus exports that do not conform to the minimum
coordinated price. 1404 The complainants submit evidence of price data and screenshots of online web
pages from 2008 and 2009 in arguing that the coordina tion of export prices continued to be enforced
through application of the PVC export clearance pr ocess even after the apparent repeal of this
procedure on 26 May 2008.1405

considered to "implement" measures th at are specifically identified in the panel request. See United States'
1399 Appellate Body Report, EC – Selected Customs Matters , para. 188 (stating that "[a] panel is not
precluded from assessing a piece of evidence for the me re reason that it pre dates or post-dates its
establishment").
1400 The specific forms of the raw materials subject to the United States' claims are identified in Exhibit
JE-7 and paragraph 2.2 of the Descriptive Part to these Reports.
1401 United States' first written submission, para. 349-351; European Communities' first written
submission, para. 353-355; Mexico's first written submission, para. 352-354; United States' comments on
China's response to Panel question No. 10; CCCMC website pages, 5-7 (Exhibit JE-88).
1402 See United States' first written submission, para. 226; European Union's first written submission,
paras. 230; Mexico's first written submission, para. 229; United States' second written submission, para. 391;
European Union's second written submission, para. 172; Mexico's first written submission, para. 394; Exhibit
JE-126.
1403 United States' first written submission, paras. 35 2-355; European Union's first written submission,
para. 356-359; Mexico's first written submission, para. 355-358; Complainants' response to Panel question No.
13.
1404 United States' first written submission, paras. 356-359; European Communities' first written
submission, paras. 360-363; Mexico's first written submi ssion, paras. 359-362; Complainants' response to Panel
question No. 11.
1405 United States' first written submission, paras. 357, 360; European Communities' first written
submission, paras. 361, 364; Mexico's first written subm ission, paras. 360, 363; United States' second written

7.998 China alleges that it abandoned price coordi nation in 2008 through measures submitted by
MOFCOM
1406, and requests the Panel not make findings in respect of the complainants' MEP-related
claims. Prior to 2008, China submits that it d esignated MOFCOM to coordinate export prices to
minimize the possibility of injurious dumpi ng of Chinese exports by individual exporters. 1407 China
argues that it repealed a number of measures that authorized the coordination of export prices, the
sanction of exporter licensing entities, and use of the PVC procedure. 1408 It considers that any
outstanding measures that were not formally repealed became effectively "inapplicable". 1409 C h i n a
considers that findings on these measures would ser ve no purpose because the measures do not have
legal effect such that they could violate WT O obligations or nullify or impair benefits. 1410 China
further submits that the complainants have not pr ovided evidence – either through reference to events
that occurred between 2001 and 2007 1411, screenshots taken from the CCCMC website after 2008 1412
or price data on yellow phosphorus and bauxite taken in May 2008 1413 – to support its allegations that
enterprises were required to coordinate export prices after 2008.
7.999 The Panel will address the various allegations by the complainants that China enforces an
MEP requirement on exporters of cer tain raw materials. The Panel explained above that it would not
make rulings or recommendations on any laws, regul ations or instruments that are excluded from its
terms of reference, but may consider them in asse ssing fully the legal situation and operation of an
MEP requirement in China.
7.1000 The Panel will first consider whether these measu res may form the basis of a WTO violation.
Then, the Panel will assess the ope ration of these measures and whet her these measures remain in
force or have been repealed as argued by China. Finally, the Panel will consider the complainants'
allegation that China continued to coordinate and enforce an MEP requirement even after the apparent
repeal of this procedure on 26 May 2008.
(a) Whether the measures at issue may be subject to WTO dispute settlement
7.1001 A first issue facing the Panel is whether the measures presented by the complainants can be
considered WTO measures under the DSU and WTO Dispute Settlement Mechanism for purposes of
the complainants' claims. The Panel recalls th at certain of the measures identified by the
complainants are not formal legislation but are ch arters and regulations of non-governmental bodies,
such as the CCCMC or CCCMC Bauxite Branch.
7.1002 The complainants argue that China's Cham bers of Commerce, including the CCCMC,
"function as entities under MOFCOM's direct and active supervision and, accordingly, play a central
role in regulating the trade of China's industries". 1414 Through its intervention in a 2006 US court

submission, paras. 448, 450; European Union's second written submission, para. 172; Mexico's first written
submission, paras. 365, 368.
1406 China's response to Panel question No. 1, para. 20.
1407 China's first written submission, paras. 838-847; China's second written submission, para. 565;
Normal Export Price Provisions, Article 5 (Exhibit CHN-50).
1408 China's first written submission, para. 838.
1409 China's second written submission, paras. 567-570; Exhibit CHN-438.
1410 China's first written submission, paras. 47, 52, 57-67.
1411 China's first written submission, paras. 842.
1412 China's first written submission, paras. 839, 843.
1413 China's first written submission, para. 851, Exhibits CHN-361, CHN-362, CHN-363.
1414 United State's first written submission, para. 207, referring to Brief of Amicus Curiae: MOFCOM.
In Re Vitamin C Antitrust Litigation (E.D. NY Jun. 26, 2006), at p. 5 (Exhibit JE-98).

proceeding
1415, the complainants submit that China referred to its authority over China's Chambers of
Commerce, including the CCCMC, as established th rough various provisions of the Measures for
Administration of Trade Social Organizations 1416 and the Regulations for Personnel Management of
Chambers of Commerce. 1417 The complainants submit that Ch ina described its authority over these
entities as "plenary" and described the Chamber of Commerce as "the instrumentality through which
[MOFCOM] oversees and regulates the business of im porting and exporting [] products in China". 1418
On this basis, the complainants consider th at the CCCMC's export-price related functions and
responsibilities are attributable to China.1419
7.1003 China has asserted that certain measure s are not "sources of Chinese law". 1420 China admits
that MOFCOM and the GAC delegated certain impl ementing authority to the CCCMC to coordinate
export prices 1421, but it explains that with the repeal of the PVC system in 2008, implementation
authority granted to CCCMC terminated.1422
7.1004 Article 3.3 of the DSU allows WTO Members to resort to the dispute settlement system of the
WTO in "situations in which a Member considers that any benefits accruing to it directly or indirectly
under the covered agreements are being impaired by measures taken by another Member". In US –
Corrosion Resistant Steel Sunset Reviews, the Appellate Body explained that "[i]n principle, any act
or omission attributable to a WTO Member can be a measure of that Member for purposes of dispute
settlement proceedings." 1423 Thus, governmental actions may clearly be challenged under dispute
settlement proceedings. Private actions have also been found to be "attributable" to a government,
and thus subject to challenge, where there is "s ome governmental connection to or endorsement of

1415 United States' first written submission, para. 208. In footnote 285, the United States notes the
statement by the US presid ing judge in the Opinion In re Vitamin C Antitrust Litigation that "The Chinese
government's appearance as amicus curiae is unprecedented. It has never … come before the United States as
amicus to present its views" See In re Vitamin C Antitrust Litigation , 584 F. Supp. 2d 546 (E.D. NY Nov. 6,
2008), at p. 546-55 (Exhibit JE-103).
1416 Exhibit JE-101, Article 14.
1417 Exhibit JE-102.
1418 United States' first written submission, para. 208, citing Brief of Amicus Curiae: MOFCOM at p. 9
(Exhibit JE-98); United States' response to Panel question 67 following the second substantive meeting
para. 133; European Union's response to Panel question 67 following the second substantive meeting; Mexico's
response to Panel question 67 following the second substantive meeting.
1419 In addition, the complainants claim that China's MOFCOM itself considers the CCCMC as an
"'instrumentality through which [MOFCOM] oversees and regulates the business of importing and exporting []
products in China.'" United States' first written submission, para. 208, fn. 290, citing Brief of Amicus Curiae:
MOFCOM. In Re Vitamin C Antitrust Litigation (E.D. NY Jun. 26, 2006), at p. 9 (Exhibit JE-98); see also
Memorandum in Support of Defendants' Joint Motion to Dismiss First Amended Complaint in Resco Products,
Inc. v. Bosai Minerals Group and CMP Tiajin Co. (Oct. 7, 2008) at p. 9 (Exhibit JE-105), Memorandum in
Support of Motion to Dismiss Plaintiffs' First Am ended Class Action Complaint by Defendants, China
Minmetals Corp. and China National Minerals Co. in Animal Science Products, Inc. v. China National Metals
and Minerals Import and Export Corp. (D. NJ Jun. 26, 2009) at p. 11 (Exhibit JE-106).
1420 China's response to Panel question No. 1, para. 14 following the first substantive meeting.
1421 China states that MOFCOM and the GAC, acting under the State Council, enjoy authority over the
administration of customs-related matters, foreign trade, investment, and economic cooperation in China. See
China's response to Panel question No. 1, para. 21 following the first substantive meeting.
1422 China's response to Panel question No. 1 following the first substantive meeting, para. 21; China
submits that the CCCMC affirmed that any document pertaining to the PVC system has not been applied since
2008. See Resolution of the Fifth Standing Committee of the CCCMC on Abolishing Certain Documents
Including Measures of the CCCMC on the Coordination and Administration of Export Commodities (Exhibit
CHN-4).
1423 Appellate Body Report, US – Corrosion Resistant Steel Sunset Reviews, para. 81 (emphasis added).

those actions".
1424 For instance, the panel in Japan – Film concluded, as the GATT panel on Japan-
Semi-conductors before it, that "administrative guidance" that "creates incentives or disincentives
largely dependent upon governmental action for private parties to act in a particular manner" may
constitute a governmental measure.1425
7.1005 China acknowledges that through MOFCOM and the GAC it delegated certain implementing
authority to the CCCMC to coordinate export prices. Evidence presented by the complainants in the
form of statements made by China's MOFCOM in th e context of US domestic court proceedings prior
to this dispute appear to confirm this fact. In th e Panel's view, this confirms that actions undertaken
by the CCCMC with respect to minimum export pr ice requirements at issue in this dispute are
attributable to China, and are thus "measures" that can be challenged under the WTO dispute
settlement proceedings. In addition, China does not dispute that it, through MOFCOM, regulates the
administration of licence issuance and, throug h China's Customs, regulates customs clearance
proceedings.
7.1006 Accordingly, the Panel is satisfied that the measu res at issue in this dispute that have been
identified by the complainants are measures "attributable" to China. The Panel will therefore consider
whether these measures remained in force at the time of the Panel' s establishment, and whether the
measures operate as a minimum export price requirement that is inconsistent with Article XI:1 of the
GATT 1994, as alleged by the complainants.
(b) Whether China requires exporters to coordinate minimum export prices on exports of bauxite,
coke, fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc
7.1007 The Panel will assess whether the measures identifie d by the complainants remained in force
at the time of the Panel's establishment, and wh ether these measures establish the existence of an
MEP requirement. First, the Panel will asses whet her China through the various CCCMC measures
directs exporters of the raw materials to coordi nate export prices. Second, the Panel will assess
whether China requires exporters to adhere to coordinated export prices through: (i) penalties imposed
on exporters that fail to set prices in accordance with the coordinated export prices; (ii) penalties
imposed on licensing entities that issue licences to non- complying exporters; and (iii) application of
the PVC export clearance process. The Panel will also assess the complainan ts' assertion that China
otherwise enforced coordinated minimum export pr ices after the Panel's establishment despite the
repeal of certain measures.
(i) Whether China through the CCCMC coordinates export prices
7.1008 The complainants argue that the (1) 1994 CCCMC Charter
1426; (2) 2001 CCCMC Charter1427;
(3) CCCMC Export Coordination Measures 1428; (4) CCCMC Brochure 1429 and CCCMC website
pages1430; (5) CCCMC Bauxite Branch C oordination Measures1431; and (6) CCCMC Bauxite Branch

1425 Panel Report, Japan – Film, para. 10.45. The GATT panel in Japan – Semi-conductors held that,
in cases where "sufficient in centives or disincentives existed for non-mandatory measures to take effect" and
"the operation of measures ... was essentially dependent on [g]overnment action or intervention", then "the
measures would be operating in a manner equivalent to mandatory requirements such that the difference
between the measures and mandatory requirements was only one of form and not of substance ..." GATT Panel
1426 Articles 3, 6, 14 (Exhibit JE-86).
1427 Articles 3, 6, 14 (Exhibits CHN-16, JE-87).
1428 Article 2, 4(3) and 18, 19, 20, 21 (Exhibit JE-107).
1429 Exhibit JE-89, p.14.
1430 Exhibit JE-88 pages 3-5.

Charter
1432 establish that China, through the CCCMC coordinates export prices. In particular, under
the 1994 and 2001 CCCMC Charters, CCCMC Export Coordination Measures and CCCMC Bauxite
Branch Charter , the complainants submit that the CCCMC directs commodity-specific branches or
coordination groups to coor dinate export prices for the relevant commodities. 1433 The complainants
refer to official statements by China's MOFCOM 1434 and documents submitted by exporters and
members of the CCCMC to support their allegation that the CCCMC coordinates export prices. 1435
Finally, the complainants submit price data for ba uxite and yellow phosphorus, in particular, to show
that China set coordinated export prices for these two products. 1436 Only the 1994 and 2001 CCCMC
Charters remain in the Panel's terms of reference.
7.1009 Article 6 of the 1994 CCCMC Charter indicates that the CCCMC should "coordinate[e] ... the
industry's import and export prices, markets and customers etc. in accordance with the National
Authorities' opinions or on the basis of the join t requests and industry agreements between the
member companies". Article 14 indicates that th e CCCMC may impose sanctions against exporters
that fail to comply with the Charter or coordination programs.
7.1010 Article 3 of the 2001 CCCMC Charter specifies that the CCCMC is to "coordinate and direct
import and export trade activities of Metals, Minera ls & Chemicals industries". Article 6 of the 2001
CCCMC Charter does not refer to export price coordination; however, Article 6(3) provides that the
CCCMC shall "promote the industry's self-disciplin e", including adopting "sanction measures against
breaching companies.1437
7.1011 Although the 1994 CCCMC Charter indicates that the CCCMC is responsible for
coordinating industry export prices, the 2001 CCCMC Charter does not clearly indicate that the
CCCMC retains such responsibilit y. China argues that the 2001 CCCMC Charter fully replaced the
1994 CCCMC Charter. The complainants disagree, and suggest there is evidence that exporters were
required to follow industry export prices even after 2001.1438

1431 Articles 1, 4, 7, 21 (Exhibit JE-108).
1432 Articles 8, 20(3), 45 (Exhibit JE-112).
1433 United States' first written submission, para. 350; European Union's first written submission,
para. 354; Mexico's first written submission, para. 353 ; United States' comments on China's response to Panel
question No. 10 following the first substantive meeting para 25; CCCMC website pages, 5-7 (Exhibit JE-88).
1434 See, e.g., MOFTEC Assistant Minister Liu Xiangdong's Speech to the Third Congress of the
CCCMC, paras. 10-11 (Exhibit JE-109); 1998 Price Coordination Circular , paras. 2 and 4 (Exhibit JE-110);
CCCMC Website Pages, para. 3 (Exhibit JE-88); CCCMC Brochure, para. 4 (Exhibit JE-89).
1435 United States' first written submission, para. 351; European Union's first written submission,
para. 355; Mexico's first written s ubmission, para. 354; Un ited States' response to Panel question No. 10
following the first substantive meeting, para 15; European Union's response to Panel question No. 10 following
the first substantive meeting; Mexico's response to Panel question No. 10 following the first substantive
meeting.
1436 See United States' first written submission, para. 226; European Union's first written submission,
paras. 230; Mexico's first written submission, para. 229; United States' second written submission, para. 391;
European Union's second written submission, para. 172; Mexico's first written submission, para. 394; Exhibit
JE-126.
1437 Article 6 of the 2001 CCCMC Charter instead refers to the need to "coordinate and direct import
and export trade activities", "promote the industry's self -discipline", and "[o]rganize members in responding to
allegations launched by foreign countries against China for dumping, subsidies and protective measures related
to metal, mineral and chemical products" (Exhibit JE-87).
1438 Evidence includes price data for bauxite and yellow phosphorus and screenshots of CCCMC
website pages. See United States' first written submission, para. 226; European Union's first written submission,
paras. 230; Mexico's first written submission, para. 229; United States' second written submission, para. 391;
European Union's second written submission, para. 172; Mexico's first written submission, para. 394; Exhibit

7.1012 China argues that the 2010 CCCMC Charter formally replaces both the 1994 and 2001
CCCMC Charters, and in no way authorizes the CCCMC to regulate industry price coordination.
1439
7.1013 In addition, China argues that it effectivel y abandoned price coordination on 9 January
20081440, which was later formalized on 26 May 2008 through issuance of the 2008 PVC Notice. 1441
Moreover, China argues that in a 2010 Resolution 1442 it abolished all aspects of the export
coordination system.
7.1014 The 2010 CCCMC Charter and CCCMC Resolution on Abolition of Coordination and
Administration of Export Commodities discussed above entered into force following the date of the
Panel's establishment. As explained in paragraph 7. 33 above, in general, only measures that were in
force when the Panel was established on 21 D ecember 2009 form the basis of its terms of
reference.1443 At the request of the complainants 1444, the Panel will only assess the WTO consistency
of the 2009 measures while taking note that the 2010 measures. 1445 Accordingly, the Panel will not
consider the 2010 CCCMC Charter or CCCMC Resolution on Abolition of Coordination and
Administration of Export Commodities in its assessment.
7.1015 A notice or resolution stating that China's Customs authorities will no longer enforce the PVC
procedure does not determine whether the CCCMC is nevertheless authorized to coordinate export
prices. The PVC procedure is limited to enforcing a coordinated price at the border. In addition, the
PVC procedure was only employed for one of the products at issue – yellow phosphorus. The Panel
will therefore evaluate whether the measures at issue authorized the CCCMC to coordinate export
prices, independently of whether the PVC procedure remained in operation.
7.1016 There is no evidence on the face of the 2001 CCCMC Charter to indicate that it would
replace in full the 1994 CCCMC Charter version. Notwithstanding, it is plausible that a subsequent
version of a Charter would replace or supersede a prior version in its entirety, unless a successive
version were to plainly indicate that were not the case. China submits that a resolution of 21 February
2001 confirms that the 2001 Charter replaced the 1994 one.
1446 In addition, Article 16 of the 2001
Charter indicates that the General Assembly of Member Representatives of the CCCMC may draw up
or amend the Organization's Charter. Each Ch arter is in its own right a complete document
containing general provisions, description of th e CCCMC's functions, members, organization,
branches, and finances. 1447 The Panel considers that the two Charters did not remain in force

JE-126l; CCCMC Export Coordination Measures , Articles 3, 5 (Exhibit JE-107); CCCMC Brochure, at 14
(Exhibit JE-89); CCCMC Website Pages, at 3-5 (Exhibit JE-188).
1439 China's second written submission, paras. 562, 574.
1440 2008 Notice Ceasing the Work of PVC for Export Contract of 9 Types of Commodities (Exhibit
CHN-352).
1441 2008 PVC Notice (Exhibits CHN-2, JE-125).
1442 CCCMC Resolution on Abolition of Coordination and Administration of Export Commodities
(Exhibit CHN-4).
1443 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1444 See United States' and Mexico's responses to Panel question No. 2 following the first substantive
meeting and to Panel question No. 1 following the second substantive meeting.
1445 In any event, the 2010 CCCMC Charter and CCCMC Resolution on Abolition of Coordination and
Administration of Export Commodities appear to have a different "essence" than the 2001 CCCMC Charter that
was in place at the time of the Panel's establishment be cause they appear to remove all authority from the
CCCMC to coordinate export prices.
1446 China's response to Panel question No. 69 following the second substantive meeting paras 341-343;
See Letter by the China CCCMC, 3 December 2010.
1447 Exhibit JE-86, JE-87.

simultaneously. Accordingly, the Panel concludes that the 2001 CCCMC Charter alone was in force
at the time of the Panel's establishment.
7.1017 Despite no express reference to export price coordination in the 2001 CCCMC Charter , the
reference to "coordinat[ion]" of "export trade activities" is broad enough to encompass price
coordination. In the Panel's view, evidence confirms that under the 2001 CCCMC Charter , the
CCCMC was indeed authorized to coordinate export prices, at least until 2010 when China issued a
Notice and MOFCOM orders to formally repeal the various elements of China's system of
coordinating export prices.
7.1018 Additional Chinese instruments identified by the complainants in their first written
submissions confirm that the CCCMC was directed to coordinate export prices through a system of
self-discipline. These measures ar e not within the Panel's terms of reference; however, the Panel
explained that it may nevertheless consider these instruments as evidence in assessing the operation of
China's alleged MEP requirement.
7.1019 Article 2 of the CCCMC Export Coordination Measures identifies "self discipline" as an
objective of "coordination". Article 4(3) speci fically indicates that the CCCMC's "coordination
content" shall include "export price". Article 18 indicates that "[c]oordination programs examined,
passed and recorded in democratic discussion are collective contracts, and all member companies
must fully implement them". Article 19 provid es that member companies must provide business
statistics or other materials in regard to their e xportation, in order "[t]o facilitate supervision and
guidance with the implementation of coordination programs". Article 20 states that "[c]oordination
organizations for a particular commodity shall regul arly inspect the implementation of the Particular
Commodity Coordination Management Measures and coordination programs mainly by self-
checking".
7.1020 Article 1 of the Bauxite Branch Coordination Measures states that "coordination" shall
contribute to "self-discipline". Article 4 specifies that the Branch "shall examine and determine the
industry coordinated export prices for bauxite expor ts", including "once every semester" generally, or
at other times "in case of relatively significant pri ce fluctuations on the international markets".
Article 7 indicates that industry coordinated export prices should be, inter alia "sent to the license
issuing bodies as a basis for license issuance". Article 10 provides that the coordinated export price is
"equivalent to a collective economic contract" and that "each and every company must implement it
strictly".
7.1021 Article 8 of the CCCMC Bauxite Branch Charter refers to the need to "promote the industry's
self-discipline". Article 20(3) provides for discip linary measures against members that "[f]ail to
implement industry coordination". Article 45 indica tes that the Bauxite Branch may levy fines to
"supervise the implementation of the industry's self-disciplined coordination".
7.1022 China indicates that the CCCMC Export Coordination Measures and CCCMC Bauxite
Branch Coordination Measures were "declared inapplicable" through a 9 January 2008 Notice
1448, but
states that these measures were repealed by resolution only on 28 July 2010.1449
7.1023 The complainants do not provide evidence of price coordination managed by other raw
material-specific branches; however, the CCCMC Export Coordination Measures and the CCCMC

1448 2008 Notice Ceasing the Work of PVC for Export Contract of 9 Types of Commodities (Exhibit
CHN-352).
1449 CCCMC Resolution on Abolition of Coordination and Administration of Export Commodities
(Exhibit CHN-4).

Brochure and identified CCCMC website pages confir m that commodity coordination branches exist
for the raw materials at issue.
1450
7.1024 In the Panel's view, the above CCCMC Export Coordination Measures and CCCMC Bauxite
Branch Coordination Measures , as well as CCCMC Brochure and identified CCCMC website,
confirm that the CCCMC was authorized to direct and coordinate industry export prices, including
during the period between 2001 until 2010. Thus, the Panel concludes that the broad language in the
2001 CCCMC Charter authorises such coordination for commodity branches overseen by the
CCCMC.
7.1025 In the Panel's view, China has not provided evidence to convince the Panel that the practice of
coordinating industry prices was formally removed "from the books" in 2008 or any other time before
the Panel's establishment on 21 December 2009. Th e Panel notes in particular China's distinction
between points in time in which measures were "dec lared inapplicable" in comparison to when those
measures were formally "repealed". The Panel notes however that China' s has only confirmed the
formal repeal of measures authorizing the coordina tion of export prices in 2010, via the 28 July 2010
Resolution discussed above.1451
7.1026 Accordingly, the Panel finds that, at least until 28 July 2010, the 2001 CCCMC Charter ,
when interpreted in light of available evidence, directed the CCCMC to set and coordinate export
prices for all branches under its authority, including fo r all the raw materials identified in connection
with the complainants' claims, namely bauxite, coke, fluorspar, magnesium, silicon carbide, yellow
phosphorus and zinc. In light of this finding, the Panel considers it unnecessary to consider price data
for bauxite and yellow phosphorus, in particular, to show that Chin a set coordinated export prices for
these two products.1452
(ii) Whether China enforces an MEP requirement th rough penalties imposed on exporters and
licensing entities and the use of the PVC procedure
7.1027 The complainants submit that China requires expor ters to adhere to c oordinated export prices
through: (i) penalties imposed on exporters that fa il to set prices in accordance with the coordinated
export prices; (ii) penalties imposed on licensing entities that issue licences to non-complying
exporters; and (iii) application of the PVC export cl earance process. The Panel considers these three
aspects below.
Penalties on exporters
7.1028 The complainants argue that the (1) Export Price Penalties Regulations 1453; (2) CCCMC
Export Coordination Measures 1454, (3) CCCMC Bauxite Branch Coordination Measures 1455; and
(4) statements by China's MOFCOM, including re ference to the existence of a "system of self-

1450 See CCCMC Export Coordination Measures , Articles 3, 5 (Exhibit JE-107); CCCMC Brochure,
p. 14 (Exhibit JE-89); CCCMC Website Pages 3-5 (Exhibit JE-188).
1451 CCCMC Resolution on Abolition of Coordination and Administration of Export Commodities
(Exhibit CHN-4).
1452 See United States' first written submission, para. 226; European Union's first written submission,
paras. 230; Mexico's first written submission, para. 229; United States' second written submission, para. 391;
European Union's second written submission, para. 172; Mexico's first written submission, para. 394; Exhibit
JE-126.
1453 Articles 3, 4, 6 and 9 (Exhibit JE-113).
1454 Article 4(3) (Exhibit JE-107).
1455 Articles 7, 8 and 10 (Exhibit JE-108).

discipline"
1456 and the existence of a "collective contract"1457 establish that China imposes penalties on
exporters that fail to set prices in accordance with the coordinated export pr ices. Alleged penalties
imposed on exporters include warnings, suspensi on of membership or expulsion from the CCCMC,
criticism, fines or revocation of exporting rights. 1458 Only the Export Price Penalties Regulations are
within the Panel's terms of reference.
7.1029 Article 4 of the Export Price Penalties Regulations indicates that "all export enterprises shall
... set export prices which are suitable in countries to which the goods are exported". Article 3
indicates that MOFTEC may punish the enterprises that export at "lower-than-normal price". Finally,
Article 6 identifies applicable penalties that include notices of criticism, fines of more than 60% of
income gained from lower-than-normal price expor ts, suspension or revocation of bidding or export
rights for the enterprise, and full "economic respons ibility". This measure was repealed by order on
12 September 2010.
1459 Article 9 authorizes MOFCOM or the re levant authority to investigate export
enterprises suspected of exporting at a lower-than-normal price.
7.1030 As explained in paragraphs 7.33 above, in general, only measures that were in force when the
Panel was established on 21 December 2009 form the basis of its terms of reference. 1460 A t t h e
request of the complainants1461, the Panel will only assess the WTO c onsistency of the 2009 measures
while taking note of 2010 measures. 1462 Thus, for purposes of its assessment of the complainants'
claims, the Panel will assess the effect of the Export Price Penalties Regulations before its repeal by
order on 12 September 2010.
7.1031 The language of the Export Price Penalties Regulations is unequivocal in providing a legal
basis to impose penalties against enterprises that do not conform to coordinated export prices. China
has not provided evidence to convince the Panel th at the practice of imposing penalties on exporters
that fail to set prices in accordance with the coor dinated export prices was formally removed "from
the books" before the Panel's establishment on 21 December 2009. China may in fact have ceased to
impose such penalties on exporters on 28 May 2008, at the time it asserts that the PVC procedure was
repealed. However, China has only provided evidence of the formal repeal of this provision in 2010
after the Panel's establishment.
7.1032 Additional instruments identified by the comp lainants – though rule d outside the Panel's
terms of reference – confirm that export enterp rises would be subject to penalties for failing to
conform to coordinated export prices. As explai ned, these instruments are not within the Panel's
terms of reference; however, the Panel explained that it may nevertheless consider these instruments
as evidence in assessing the operation of China's alleged MEP requirement.

1456 See, in particular, MOFCOM Statement In re Vitamin C Antitrust Litigation (August 31, 2009),
para. 3 (Exhibit JE-111).
1457 See CCCMC Export Coordination Measures, Article 21 (Exhibit JE-107).
1458 United States' first written submission, paras. 35 2-354; European Union's first written submission,
para. 356-358; Mexico's first written submission, paras. 355-357.
1459 Order No. 2 of 2010 of MOFCOM, 12 September 2010 (Exhibit CHN-448).
1460 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1461 See United States' and Mexico's responses to Panel question No. 2 following the first substantive
meeting and to Panel question No. 1 following the second substantive meeting.
1462 In any event, the repeal by order on 12 September 2010 appears to have a different "essence" than
the 1996 Export Price Penalties Regulations that was in place at the time of the Panel's establishment because it
removes the authority to impose penalties on exporters that fail to set prices in accordance with the coordinated
export prices.

7.1033 Article 21 of the CCCMC Export Coordi nation Measures indicates that enterprises that
follow "coordination programs" will be "honor[ed]" w ith requests to increase export quotas for that
company. In contrast, member companies that do not comply are to be "criticized, warned, ordered to
suspend or withdraw their membership, and econom ically punished according to the damage they
have caused", or have their quotas reduced, licence s declined, and export rights withdrawn. As
pertains to bauxite specifically, Article 8 of the CCCMC Bauxite Branch C oordination Measures
addresses sanctions imposed on enterprises in breach, including fines and cancellation of foreign trade
operating rights, bidding rights, tax refunds, and financial support. Article 10 of the CCCMC Bauxite
Branch Coordination Measures provides that coordination of prices is "equivalent to a collective
economic contract", and enterprises are "not allowed to act on the basis of [their] individual
initiative".
7.1034 As noted in paragraph 7.1022, China has not pr ovided evidence to convince the Panel that the
CCCMC Export Coordination Measures were formally "repealed" before the Panel's establishment on
21 December 2009. While the complainants do not provide evidence of price coordination managed
by other raw material-specific branches, as discussed in paragraph 7.1023, the CCCMC Export
Coordination Measures and the CCCMC Brochure and identif ied CCCMC website pages confirm
that commodity coordination branches exist for the raw materials at issue.
7.1035 In addition to these measures, the complainants have also referred to statements made by
China's MOFCOM in the context of antitrust litigation in the United States.
1463 These statements were
made in connection with events taking place prior to 2008, but nevertheless refer to the existence of a
"system of self-discipline" and reveal that further parties would be subject to penalties for failure to
participate in price coordination.
7.1036 For the foregoing reasons, the Panel concludes that, through the Export Price Penalties
Regulations, China had in place a system of penalties impo sed on exporters that failed to set prices in
accordance with the coordinated export prices at least until 12 September 2010.
Penalties on export licence issuing authorities
7.1037 The complainants argue that the Measures for Administration of Licensing Entities 1464 and
CCCMC Bauxite Branch Coordination Measures 1465 establish that China imposes penalties on
licensing entities that issue licences to non-complying exporters. Alleged penalties against licensing
entities include circulation of a notice of criticism, suspension of the licence-issuing authority, or
termination of this authority. 1466 Only the Measures for Administration of Licensing Entities are
within the Panel's terms of reference.
7.1038 Article 40(3) of the Measures for Administration of Licensing Entities indicates that
punishment shall be imposed on licensing authorities for "issuing licenses without following the
coordinated export prices". U nder Article 41, punishment includes public condemnation, and
suspension or cancellation of the right to issue licences.
7.1039 China submits that this m easure was repealed by the 2004 Export Licence Administration
Measures
1467, which was in turn repealed by the 2008 Measures for the Administration of License for

1463 See, in particular, Exhibit JE-111.
1464 Article 40(3), 41 (Exhibits CHN-358, JE-75).
1465 Articles 7, 8 and 10 (Exhibit JE-108).
1466 United States' first written submission, paras. 35 2-355; European Union's first written submission,
para. 356-359; Mexico's first written submission, para. 355-358; Complainants' response to Panel question No.
13 following the first substantive meeting.
1467 Exhibit CHN-360.

the Export of Goods.
1468 China submits that these latter two measures set out general rules on the
administration of export licences. For purposes of legal certainty, China submits that Article 40(3) of
the Measures for Administration of Licensing Entities was removed by a 12 September 2010 decision
of the Ministry of Commerce.
1469
7.1040 As explained in paragraphs 7.33 above, in general, only measures that were in force when the
Panel was established on 21 December 2009 form the basis of its terms of reference.. 1470 A t t h e
request of the complainants1471, the Panel will only assess the WTO c onsistency of the 2009 measures
while taking note that the 2010 measures. 1472 Thus, for purposes of its assessment of the
complainants' claims, the Panel will assess the effect of the Measures for Administration of Licensing
Entities, or any potential superseding measures, that were effective at the date of the Panel's
establishment on 21 December 2009, before the issuance of the 2010 Ministry of Commerce decision.
7.1041 In the Panel's assessment, the content of both the 2004 Export Licence Administration
Measures and 2008 Export Licence Administration Measures is not identical to that of the Measures
for Administration of Licensing Entities. 1473 Notably, as the complainants point out 1474, the 2004 and
2008 measures address the "Administration of Licenses" and contain rules and requirements
governing the issuance of export licences, wh ereas the 1999 measure at issue addresses the
"Administration of the Organs for Issuing the Licenses", concerning activities and conduct of China's
import and export licensing entities. It is thus unclear whether these latter measures are full
replacement measures for the 1999 measure at issue, th at is, whether they supersede all aspects of the
1999 measure at issue. Furthermore, there is no express reference on the face of the 2004 or 2008
measures to indicate that they supersede or replace the Measures for Administration of Licensing
Entities. This stands in contrast to the 2008 Measu res for the Administration of License for the
Export of Goods, which states that it amends the "M easures for the Administration of License for the
Export of Goods", the same title given to the 2004 version of that measure.
7.1042 Finally, China has stated that it "abandoned" price coordination on 26 May 2008. 1475 In a
2010 decision of the Ministry of Commerce, China removed specific language in Article 40(3) of the
1999 Measures for Administration of Licensing Entities.
7.1043 Accordingly, for the foregoing reasons, the Panel concludes that the 1999 Measures for
Administration of Licensing Entities were not replaced by either the 2004 Export Licence
Administration Measures or 2008 Export Licence Administration Measures . As a consequence, the
Panel has no evidence that the Measures for Administration of Licensing Entities was not valid at the
time of the Panel's establishment on 21 December 2009.

1468 Exhibit CHN-342.
1469 2010 Amendment of Measures for Administration of Licensing Entities (Exhibit CHN-449).
1470 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1471 See United States' and Mexico's responses to Panel question No. 2 following the first substantive
meeting and to Panel question No. 1 following the second substantive meeting.
1472 In any event, the 2010 Ministry of Commerce decision appears to have a different "essence" than
the Measures for Administration of Licensing Entities that was in place at the time of the Panel's establishment
because it removes the authority to impose penalties on licensing entities that issue licences to non-complying
exporters.
1473 It should be noted that the content of the 2004 Export Licence Administration Measures and 2008
Export Licence Administration Measures is highly similar.
1474 United States' second written submission, para. 463; European Union's second written submission,
1475 China's first written submission, para. 838; Chin a's response to Panel question No. 1 following the
first substantive meeting, para. 20.

7.1044 The complainants have also identified the CCCMC Bauxite Branch Coordination Measures
as relevant. As discussed above, China indicates that the CCCMC Bauxite Branch Coordination
Measures were repealed by resolution only on 28 July 2010.
1476 Prior to that date, China argues that
this measure was declared inapplicable" through a 9 January 2008 Notice. 1477 Accordingly, the Panel
considers this measure was "on the books" at the date of the Panel's establishment. 1478 As pertains to
bauxite specifically, Article 7 of the CCCMC Bauxite Branch Coordination Measures provides that
industry coordinated export prices shall be notifie d to licence issuing bodies "as a basis for license
issuance". Although this measure is outside the Panel' s terms of reference, this measure confirms that
the granting of an export licence is conditioned on conformity with industry coordinated export prices.
7.1045 The complainants do not provide evidence of price coordination managed by other raw
material-specific branches; however, the CCCMC Export Coordination Measures and the CCCMC
Brochure (discussed above) and identified CCCM C website pages confirm that commodity
coordination branches exist for the raw materials at issue.
7.1046 In light of the above, the Panel concludes that, at the time of establishment of the Panel on
21 December 2009 and at least until 12 September 2010, China, through the Measures for
Administration of Licensing Entities, had in place a system that imposed penalties on licensing entities
that issue licences to exporters that did not follow the coordinated export prices.
Application of the PVC export clearance process to exporters of yellow phosphorus
7.1047 The complainants argue that (1) China's Customs Law 1479; (2) the 2002 PVC Notice 1480; (3)
the 2004 PVC Notice 1481; (4) the 2008 PVC Notice 1482; (5) Online PVC Instructions 1483 ; (6) a
screenshot of the CCCMC online PVC interface, dated 28 May 2008 1484; (7) the CCCMC PVC
Rules1485; (8) Notice of the Rules on Price Reviews of Export Products by the Customs (Customs
Export Price Review Rules )1486; (9) Rules for Coordination with Respect to Customs Price Review of
Export Products (Customs Export Price Review Coordinating Rules )1487; and (10) Provisional Rules
on Export Price Verification and Chop fo r Key Products Subject to Price Review (Provisional Rules

1476 Resolution of the Fifth Standing Committee of the CCCMC on Abolishing Certain Documents
Including Measures of the CCCMC on the Coordination and Administration of Export Commodities , 28 July
2010 (Exhibit CHN-4).
1477 2008 Notice Ceasing the Work of PVC for Export Contract of 9 Types of Commodities (Exhibit
CHN-352).
1478 See the Panel's discussion in paragraphs 7.1022 to 7.1026 above.
1479 Articles 2, 9 and 23 (Exhibit JE-68).
1480 Exhibit JE-121, Article 4.
1481 Paras. 2, 4 (Exhibits CHN-364, JE-122).
1482 2008 PVC Notice (Exhibits CHN-2 JE-125).
1483 Exhibit JE-123, Sections 1, 4, 9(2).
1484 Exhibit JE-124, at pages 1-2 and 3-4.
1485 Exhibit JE-127, Annex 3.
1486 This measure was not submitted to the Panel. See United States' first written submission,
para. 222. China submits that the 1997 Customs Export Price Review Rules contains two annexes, which
include additional measures referred to by the complainants: the Customs Export Price Review Coordinating
Rules and Provisional Rules on Export PVC . China argues that 1997 Customs Export Price Review Rules was
superseded by the 2003 PVC Notice and formally repealed on 26 May 2008 when China "abandoned" export
price verification. See China's first written su bmission, para. 849. China submits that the 2010 Abolition of
Price Review of Export Commodities confirms this repeal. See Exhibit CHN-434.
1487 This measure was not submitted to the Panel. See United States' first written submission,
para. 222.

on Export PVC )
1488 establish that China requires exporters to conform to coordinated export prices
through application of the PVC export clearance process to exports of yellow phosphorus.1489
7.1048 Based on the Customs Export Price Review Rules , the Customs Export Price Review
Coordinating Rules , and the Provisional Rules on Export PVC , and references in the 2002 PVC
Notice and 2004 PVC Notice , the complainants submit that the exportation of yellow phosphorus is
subject to price review by China's Customs as part of the export clearance process.
7.1049 The CCCMC PVC Rules direct the CCCMC to verify the export price of an export contract
and affix a PVC chop (seal or stamp) to a PVC form and the contract where the price complies with
the coordinated export price. 1490 The exporter must then declare the export contract to Customs for
clearance.1491 Customs may deny any contract that does not bear the CCCMC PVC chop. 1492
Penalties may also be imposed agains t exporters that forge PVC chops. 1493 Exporters of yellow
phosphorus may submit contract inform ation electronically for verification. 1494 Online instructions
indicate that a contract will only pass "price-review" if "the contract price less the transportation fee is
greater or equal to the coordinated price".1495
7.1050 The complainants submit that the CCCMC PVC Rules , Online PVC Instructions , Customs
Export Price Review Rules , the Customs Export Price R eview Coordinating Rules , and the
Provisional Rules on Export PVC , in particular, continued to be available and effective after 26 May
2008, and thereby maintained in pl ace the PVC export clearance process. 1496 The complainants
submit that price data and screenshots of online web pages from 2008 confirm that China continued to
apply the PVC export clearance process to exporter s of yellow phosphorus, even after the apparent
repeal of the PVC procedure on 26 May 2008. 1497 The complainants submit that a computer screen
snapshot for an exporter submitting contract in formation for CCCMC verification and chop dated
2008 reveals an industry coordinated price of US$8000 per metric tonne FOB for yellow
phosphorus.1498 The complainants contend that a note on th is form indicates that the contract will be
approved in cases where the contract price is more than or equivalent to the coordinated price. 1499 In
addition, the complainants argue that a 15 Oc tober 2009 screenshot shows that CCCMC measures
implementing the PVC procedure, including the CCCMC PVC Rules , and Online Verifications and

1488 This measure was not submitted to the Panel. See United States' first written submission,
para. 222.
1489 The complainants do not allege that the PVC procedure is applicable to any of the other raw
materials identified by the complainants with respect to their MEP-related claims.
1490 Exhibit JE-127, Annex 3.
1494 See Online PVC Instructions (Exhibit JE-123), Sections 1, 4.
1495 Online PVC Instructions (Exhibit JE-123), Section 9(2).
1496 United States' first written submission, para. 361; European Union's first written submission,
paras. 365; Mexico's first written submission, para. 364.
1497 United States' first written submission, paras. 357, 360; European Union's first written submission,
paras. 361, 364; Mexico's first written submission, para s. 360, 363; United States' second written submission,
paras. 448, 450; European Union's second written submission, para. 172; Mexico's first written submission,
paras. 365, 368; CCCMC PVC Online Input Screen Shot s (May 2008), at pages 1-4 (Exhibit JE-124);
Screenshot capture, Exhibit JE-127.
1498 CCCMC PVC Online Input Screen Shots (May 2008), at pages 1-4 (Exhibit JE-124).
1499 United States' first written submission, para. 226; European Union's first written submission,
paras. 230; Mexico's first written submission, para. 229.

Certification Operating Steps, remained availabl e on the CCCMC website after the alleged repeal of
the PVC procedure.
1500
7.1051 China disputes that any measures were in effect after 26 May 2008 that authorized application
of the PVC export clearance. Chin a considers the fact that the CCCMC PVC Rules and the CCCMC
Online PVC Instructions may have been found on the CCCM C website on 28 May 2008 or 15
October 2009 does not establish that the PVC procedur e continued in use after the repeal of measures
establishing the PVC system. 1501 China argues that the lack of any requirement or reference to the
PVC procedure in the 2008-2010 Customs Handbo ok confirms that the PVC procedure was
discontinued.1502 Regardless, China argues that the PVC system in China was confirmed to be
repealed in its entirety by a 2010 Circular.1503
7.1052 Finally, China argues that price data submitte d by the complainants for yellow phosphorus
does not demonstrate that prices were coordinated to prevent or restrict exportation. Contrary to the
complainants' assertions that a coordinated pr ice of US$8000 per metric tonne FOB for yellow
phosphorus in May 2008, China submits that expor t prices were permitted below US$8000 per metric
tonne FOB in May 2008.1504
7.1053 The complainants dispute China's conclusion on price data for yellow phosphorus. The
complainants submit that the price of yellow phosph orus "uniformly surged" in the United States and
Europe, and stayed above the level of US$8000 per metric tonne FOB "beginning soon after the end
of May in June 2008" until November 2008. The co mplainants add that prices of yellow phosphorus
exports to the United States were "almost identical " to those to the European Union during that
timeframe.1505 Thus, the complainants argue that China's presentation of data showing that the prices
fell below US$8000 per metric tonne FOB in 2007 and early 2008, but not after May 2008, does not
rebut their allegation that China imposed an MEP requirement for yellow phosphorus. Moreover,
they submit that exports of yellow phosphorus be low US$8000 per metric tonne in early May 2008
accounted for 2.8% of exports for that month, and that overall, only 2.5% of yellow phosphorus
exports throughout 2008 fell below US$8000 per metric tonne FOB.
1506
7.1054 The Panel determined in its 1 October 2010 pr eliminary ruling that all of the measures
identified in connection with the PVC procedure we re outside the Panel's terms of reference.
Therefore the Panel will not reach findings on the se measures. To the extent the Panel were to
consider these measures in its analysis, those measures in place at the time of the Panel's
establishment would be relevant. As explained in paragraphs XX above, in general, only measures
that were in force when the Panel was established on 21 December 2009 form the basis of its terms of
reference.1507 T h e 2010 Circular 1508 retroactively confirms the repeal of the PVC procedure in 26

1500 United States' first written submission, para. 227; European Union's first written submission,
paras. 231; Mexico's first written submission, para. 230; Exhibit JE-127.
1501 China's first written submission, para. 839.
1502 China's first written submission, paras. 843.
1503 2010 Circular of the Ministry of Commerce and the General Administration of Customs on
Abolishing Two Documents Regarding Price Review of Export Commodities by Customs , 16 August 2010
(Exhibit CHN-434).
1504 China's first written submission, para. 851, Exhibits CHN-361, CHN-362.
1505 United States' second written submission, para. 391; European Union's second written submission,
1506 United States' second written submission, para. 394; European Union's second written submission,
1507 The Panel observes, however, that its decision to assess the complainants' claims here does not
foreclose the possibility of considering 2010 measures in other contexts.
1508 2010 Abolition of Price Review of Export Commodities (Exhibit CHN-434).

May 2008. However, the complainants have alle ged that China in fact imposed the PVC customs
clearance procedure between 26 May 2008 and issuance of the 2010 Circular.
7.1055 Articles 9 and 23 of China's Customs Law provide that all goods for exportation must be
approved by China's customs author ities. In this context, the 2002 PVC Notice and 2004 PVC Notice
confirm that 35 products, including yellow phosphorus are subject to the PVC procedure. Its second
and fourth paragraphs indicate that products may not be exported that do not bear the CCCMC "chop"
or seal. Appendix 2 of the 2004 PVC Notice confirms that exports will be rejected that do not
conform to MOFCOM and GAC rules. The CCCMC PVC Rules and Online Verification and
Certification Operating Steps in its step 9, further confirm the designation of commodity branches and
the use of coordinated export prices and a mineral and chemical commodity pre-verification and chop
system for certain products, including yellow phosphorus.
7.1056 The complainants acknowledge that the 2004 PVC Notice superseded the 2002 PVC Notice ,
and that the 2008 PVC Notice repealed the 2004 PVC Notice on 26 May 2008.
1509 However, the
complainants allege that the Customs Export Price Review Rules , Customs Export Price Review
Coordinating Rules and Provisional Rules on Export PVC continued to be effective after this date.1510
7.1057 The 2008 PVC Notice unequivocally repeals the 2004 PVC Notice on 26 May 2008. 1511 The
Panel has no evidence that the Customs Export Price Review Rules , Customs Export Price Review
Coordinating Rules and Provisional Rules on Export PVC continued to be in force after this date.
Accordingly, the Panel has no basis to conclude th at the PVC procedure continued in effect, as the
complainants allege, on the face of the Chinese instruments before the Panel.
7.1058 The complainants refer in particular to a webpage screenshot of the CCCMC online PVC
interface, dated 28 May 2008, and a screenshot of CCCMC PVC Rules and Online PVC instructions,
dated 15 October 2009, in arguing that the PVC pro cedure continued to be employed by China's
customs officials even after the apparent repeal of the PVC procedure on 26 May 2008.
7.1059 The Panel notes that the screenshot of th e CCCMC online PVC interface was taken two days
after the repeal of the 2004 PVC Notice. In additi on, the Panel is hesitant to conclude that the PVC
procedure continued in effect sole ly on the basis of screenshots of CCCMC PVC Rules and Online
PVC instructions taken on 15 October 2009. In the Panel's view, the failure to update a website, does
not on its own provide evidence to make conclusi ons contrary to the e xpress language of the 2008
PVC Notice that the PVC would no longer be applied to exports of subject goods, including yellow
phosphorus. In addition, as noted by China, the co mplainants have not even submitted a screenshot of
the CCCMC website closer to the date of the Panel's establishment on 21 December 2009 in support
of their argument that the PVC was effective at th e time of the Panel's establishment despite the
apparent formal repeal of the PVC procedure.1512
7.1060 Finally, the complainants submit that an analysis of price data for exports of yellow
phosphorus in May 2008 a nd beyond confirms that China had in place a coordinated price for yellow
phosphorus after the alleged formal repeal of the PV C procedure, and enforced this price at the time
of customs clearance through the PVC procedure. Evidence provided by the complainants 1513 and

1509 United States' first written submission, para. 360; Exhibit JE-125; Exhibit CHN-2.
1510 United States' first written submission, para. 361; European Union's first written submission,
1511 Exhibit CHN-125, stating "it is decided to repeal the MOFCOM and General Administration of
Customs Communication No. 36 of the year 2003 [the 2004 PVC Notice ]. The present communications takes
effect on the day it is published."
1512 China's first written submission, para. 60.
1513 Exhibit JE-173.

China
1514 shows an increase in the export price of yellow phosphorus beginning in May 2008, for
example, from prices below US$3 per kg during Ma y 2008 and prior months to prices above US$5
per kg from June 2008 until November 2008.1515 This appears to be confirmed by Exhibit JE-173.
7.1061 In the Panel's view, the mere submission of price data for yellow phosphorus alone is
insufficient to conclude the existence of a coordi nated price for yellow phosphorus, and by extension,
that a coordinated price was enforced through application of the PVC procedure. The Panel
concluded above that the PVC procedure was forma lly repealed on 26 May 2008, upon publication of
the 2008 PVC Notice . Price increases or conformity of export prices to the United States, European
Union and other destinations may result from a multit ude of market factors. The Panel cannot draw
the conclusion that an increase or trends in e xport prices alone support the conclusion that China
enforced an MEP requirement for yellow phosphorus through the PVC, in the face of evidence that
this procedure was repealed.
7.1062 Based on the foregoing reasons, it appears that China did not formally have in place or
otherwise maintain a PVC customs clearance procedure on exporters of yellow phosphorus at the time
of the Panel's establishment on 21 December 2009.
(c) Conclusions on whether China imposes an MEP requirement on exporters of bauxite coke,
fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc
7.1063 The Panel concludes above that the 2001 CCCMC Charter , interpreted in light of the
CCCMC Export Coordination Measures , CCCMC Bauxite Branch Coordination Measures , CCCMC
Brochure and identified CCCMC website pages, aut horized the CCCMC to set and coordinate export
prices for all branches under its authority, including fo r all the raw materials identified in connection
with the complainants' claims, namely bauxite, coke, fluorspar, magnesium, silicon carbide, yellow
phosphorus and zinc. The Panel further concludes th at, at the time of the Panel's establishment on
21 December 2009, China through the 1996 Export Price Penalties Regulations imposed penalties on
exporters that fail to set prices in accordance with the coordinated export prices. In addition, the
Panel concludes that, under the Measures for Administration of Licensing Entities , China imposed
penalties on licensing entities that issued licences to exporters that did not follow the coordinated
export prices.
7.1064 In light of these conclusions, the Panel additiona lly finds that the aut hority to coordinate
export prices and enforce these prices through the imposition of penalties on exporting enterprises, or
on export licensing entities that issue licences to expor ters that do not follow the coordinated export
prices, amounts to a requirement to coordinate export prices for the raw materials at issue. The
requirement derives from the fact that failure to comply with the coordinated price will result in
punishment that rises to a level to prevent an ente rprise from exporting altogether. In addition, under
the measures at issue, export licensing entities ma y be punished for failing to enforce a given
coordinated price. The measures do not permit exporting enterprises to deviate from coordinated
export prices, or otherwise grant discretion to ex port licensing agencies to make exceptions. Thus,
coordinated export prices must be adhered to whenever set by the CCCMC.
7.1065 Finally, the Panel concludes that the complainan ts failed to establish that China formally had
in place or otherwise maintained a PVC custom s clearance procedure on exporters of yellow
phosphorus at the time of the Panel's establis hment on 21 December 2009. The Panel does not
consider the absence of this final customs clear ance step sufficient to conclude that exporting

1514 Exhibits CHN-361 and CHN-362.
1515 Exhibit CHN-362.

enterprises are not otherwise required to adhere to coordinated export pr ices. In addition, only one of
the raw materials at issue – yellow phosphorus – was subject to the PVC clearance procedure.
7.1066 Accordingly, the Panel concludes that China, through the measures in the Panel's terms of
reference, imposed an MEP require ment on exporters of bauxite, c oke, fluorspar, magnesium, silicon
carbide, yellow phosphorus and zinc at the time of the Panel's establishment. Coordinated export
prices were enforced through the imposition of pe nalties on exporters and licensing entities that failed
to conform to coordinated export prices. The Panel finds that this system continued at least until the
issuance of a resolution on 28 July 2010.
1516 Having concluded so, th e Panel will consider the
complainants' claims under Article XI:1, X:1 and X:3(a) of the GATT 1994.
3. Whether a requirement to export at a coor dinated minimum export price constitutes a
restriction on exportation that is inconsistent with Article XI:1 of the GATT 1994
7.1067 The complainants argue that the requirement to export at a coordinated minimum export price
amounts to a restriction that is inconsistent with Article XI:1 of the GATT 1994 because such a
requirement prohibits exportation if the price of the export is lower than the floor established by the
minimum export price. In the complainants' view , this amounts to a "limiting condition" that is a
restriction within the meaning of Article XI:1 of the GATT 1994. 1517 They argue that China's system
has an impact on prices and distorts world market conditions for the raw materials at issue because of
China's alleged position as a leading producer of these materials.1518
7.1068 China argues that Article XI:1 does not broadly prohibit regulation, or any condition imposed
on exports or imports per se. Rather, China argues that Article XI:1 prohibits WTO Members from
imposing a condition on exportation or importa tion that has a "limiting effect" on the quantity of
exports or imports. China argues that in determin ing compliance of an MEP with Article XI:1, the
relevant feature of an MEP requirement to consid er is the benchmark price used to determine the
MEP and its relationship to the relevant world tradi ng price for a particular product. Such analysis
cannot assume that the MEP requirement is necessarily higher than the market price, such that it
would restrict exports; according to China, this must be proved.1519
7.1069 The complainants request the Panel to conclude that a requirement to export at a coordinated
minimum export price constitutes a restriction on exporta tion that is inconsistent with Article XI:1 of
the GATT 1994.
7.1070 The Panel concluded above that the operati on of the measures at issue amounts to a
requirement to coordinate export prices. In additi on, the Panel concluded that the measures at issue,
including those that delegate authority to the CCCMC, are attributable to China and may be subject to
WTO dispute settlement. The Panel will consider below whether requirement to export at a
coordinated minimum export price constitutes a measure that may be challenged under Article XI:1.
7.1071 Article XI of the GATT 1994 is entitled "General Elimination of Quantitative Restrictions".
Article XI:1 provides:

1516 CCCMC Resolution on Abolition of Coordination and Administration of Export Commodities
(Exhibit CHN-4).
1517 United States' second written submission, para. 396; European Union's second written submission,
1518 Complainants' joint opening oral statement at the first substantive meeting, para. 32.
1519 China's first written submission, para. 860.

"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."
7.1072 Thus, Article XI:1 requires the elimination of import and export restrictions or prohibitions
made effective through quotas, import or export licences or other measures.
7.1073 The GATT panel in Japan – Semi-Conductors found that "Article XI:1, unlike other
provisions of the General Agreement, did not refe r to laws or regulations but more broadly to
'measures'. This wording indicated clearly that any measure instituted or maintained by a contracting
party which restricted the exportation or sale for e xport of products was covered by this provision,
irrespective of the legal status of the measure."
1520 The panel in India – Quantitative Restrictions
found that the text of Article XI:1 of the GATT 199 4 is "broad" in scope, providing for a general ban
on import or export restrictions or prohibitions "other than duties, taxes or other charges".1521
7.1074 In line with these views, the Panel concludes th at the requirement to export at a coordinated
minimum export price, which is operated through a series of measures that are attributable to China, is
a type of measure that may be challenged under Article XI:1. 1522 Accordingly, the Panel will next
consider whether the alleged MEP requirement is a "prohibition or restriction" on exportation under
Article XI:1.
7.1075 The applicability of Article XI:1 to minimu m price requirements has been previously
addressed by two GATT panels. In EEC - Minimum Import Prices , a GATT panel examined a
requirement that importers of tomato concentrat es provide additional security to guarantee that the
free-at-frontier price plus the customs duty payable would equal or exceed a determined minimum
import price. The security would be forfeited in proportion to any quantities imported at a price lower
than the minimum price. Subject to an assessment of a possible exemption under Article XI:2(c)(i)

1520 GATT Panel Report, Japan – Semi-Conductors, para. 106.
1521 The panel in India – Quantitative Restrictions found:
"[T]he text of Article XI:1 is very broad in scope, providing for a general ban on import or
export restrictions or prohibitions 'other than duties, taxes or other charges'. As was noted by
the panel in Japan – Trade in Semi-conductors, the wording of Article XI:1 is comprehensive:
it applies 'to all measures instituted or maintained by a [Member] prohibiting or restricting the
importation, exportation, or sale for export of pr oducts other than measures that take the form
of duties, taxes or other charges.' The scope of the term 'restriction' is also broad, as seen in its
ordinary meaning, which is 'a limitation on action, a limiting condition or regulation'."
(original footnotes omitted).
Panel Report, India – Quantitative Restrictions , para. 5.128. See also Panel Report, EC – Poultry ,
1522 The Panel considers its conclusion is consistent with the view taken by the GATT panel on Japan –
Semi-Conductors. The panel in that dispute concluded that a "complex of measures", comprising "an
administrative structure" created by the Japanese government amounted to "a coherent system restricting the
sale for export of monitored semi-conductors at prices below specific company–specific costs to markets other
than the United States, inconsistent with Article XI:1." See GATT Panel Report on Japan – Semi-Conductors,
paras. 106, 117. The panel concluded that measures including repeated direct requests by the Japanese
government, statutory requirements, and price monitoring, among others, op erated to "facilitate strong peer
pressure to comply with requests by [the Japanese government]." Even in the absence of what it described as
"formal legally binding obligations", the panel concluded that the "complex of measures exhibited the rationale
as well as the essential elements of a formal system of export control". See para. 117.

and (ii), the panel found that the minimum import price system, as enforced by the additional security,
was a restriction "other than duties, taxes or other charges" within the meaning of Article XI:1.
1523
7.1076 In Japan – Semi-Conductors , a GATT panel examined whethe r measures applied to exports
of semi-conductors at prices below company-specific costs constituted a restriction under Article XI:1
of the GATT 1994. The panel expressly referred to the rationale applied in EEC - Minimum Import
Prices in concluding that a regulation preventing exportation below a minimum price level was a
restriction on exportation inconsistent with Article XI:1.1524
7.1077 The panel in India – Quantitative Restrictions concluded that the scope of the term
"restriction" is "broad", and, in terms of its or dinary meaning, is "a limitation on action, a limiting
condition or regulation." 1525 The panel in India – Autos also elaborated on the meaning of the term
"restriction":
"On a plain reading, it is clear that a 'restriction' need not be a blanket prohibition or a
precise numerical limit. Indeed, the term 'restriction' cannot mean merely
'prohibitions' on importation, since Article XI :1 expressly covers both 'prohibition or
restriction'. Furthermore, the Panel considers that the expression ' limiting condition '
used by the India – Quantitative Restrictions panel to define the term 'restriction' and
which this Panel endorses, is helpful in id entifying the scope of the notion in the
context of the facts before it. That phrase suggests the need to identify not merely a
condition placed on importation, but a cond ition that is limiting, i.e., that has a
limiting effect. In the context of Article XI, that limiting effect must be on
importation itself." 1526
7.1078 More recently, the panel in the Colombia – Ports of Entry, after reviewing several GATT and
WTO cases, concluded that "restrictions" in the sense contemplated by Article XI:1 refers to measures
that create uncertainties and affect investment plan s, restrict market access for imports or make
importation prohibitively costly. 1527 In making an assessment of whether a measure constitutes a
restriction, the panel considered it important to l ook at the design of the measure and its potential to
adversely affect importation.1528

1523 GATT Panel Report, EEC – Minimum Import Prices, para. 4.9.
1524 GATT Panel Report, Japan – Semi-Conductors, para. 106. The Panel concluded, that the "complex
of measures" amounted to "a coherent system restricting the sale for export of monitored semi-conductors at
prices below specific company–specifi c costs to markets other than the United States, inconsistent with
Article XI:1." GATT Panel Report, Japan – Semi-Conductors, para. 117.
1525 Panel Report, India – Quantitative Restrictions, para. 5.128.
1526 Panel Report, India – Autos, para. 7.270 (underlining and emphasis original). Several WTO panels
have cited with approval the interpretation that the term "restriction" in Article XI:1 refers to the imposition of a
"limiting condition": see Panel Report, Colombia – Ports of Entry , paras. 7.233-7.234; Panel Report, Brazil –
Retreaded Tyres, para. 7.371; Panel Report, Dominican Republic – Import and Sale of Cigarettes , paras. 7.252
and 7.258.
1527 Panel Report, Colombia – Ports of Entry, para. 7.240. The panel in Argentina – Hides and Leather
recalled that "Article XI:1, like Articles I, II and III of the GATT 1994, protects competitive opportunities of
imported products not trade flows". See Panel Report, Argentina – Hides and Leather, para. 11.20.
1528 Panel Report, Colombia – Ports of Entry, para. 7.240, see also Panel Report, US – Poultry (China),
para. 7.454.

7.1079 The term "restriction", as discussed by these three panels, aligns with the dictionary definition
of the term "restriction", which is "a thing whic h restricts someone or something, a limitation on
action, a limiting condition or regulation".
1529
7.1080 The Panel concluded above that, through a ser ies of measures at i ssue, China requires
exporting enterprises to export at set or coordi nated export prices or otherwise face penalties,
including the possibility of having one's exporting rights revoked.
7.1081 The Panel agrees with the approach set out in EEC - Minimum Import Prices (taken in the
case of importation) and followed in Japan – Semi-Conductors, that a measure preventing exportation
below a minimum price level inherently constitut es a "restriction" that is inconsistent with
Article XI:1. In the Panel's view, the authority to determine and require exporters to follow a
particular export price level and not deviate below it without facing what amounts to a strict penalty,
including revocation of the right to export altogether , has the potential to restrict trade. The restriction
or limitation on exportation arises from the possibility that a price is set at such a level that exporters
cannot find a potential buyer in order to sell their pr oduct. Products that would have otherwise been
exported would remain in the domestic mark et as a subsidiary effect of this. 1530 The Panel consider
the very potential to limit trade is sufficient to constitute a "restriction[] ... on the exportation or sale
for export of any product" within the meaning of Article XI:1 of the GATT 1994. 1531 The Panel
considers this view is consistent with the conclusion by the panel on Colombia – Ports of Entry that
any measure that creates uncertainty as to the ability to import/export, and otherwise "compete" in the
marketplace, violates Article XI:1.1532
7.1082 At the time of the Panel's establishment, the Panel concludes that, under the measures at issue,
China required exporting enterprises to export at set or coordinated export prices or otherwise face
penalties, including the possibility of having one's exporting rights revoked. The Panel concludes that
this requirement constitutes a "restriction[] ... on the exportation or sale for export of any product"
within the meaning of Article XI:1 of the GAT T 1994 because this requirement to export at a
coordinated minimum export price by its very nature has a limiting or restricting effect on trade.

1529 Shorter Oxford English Dictionary , 5th edn., L. Brown (ed.) (Oxford University Press, 2002),
Vol. 2, p. 2554.
1530 A requirement to set an export price above the price that would otherwise prevail under free trade
would have the effect of reducing export volumes. Unde r this scenario, exporters would be unable to export the
same volume of their product for sale at that higher price. Unsold exports would remain in the domestic market
that otherwise would have been sold abroad. The redu ction in exportation would amount to a limiting effect on
exportation with the additional effect of driving down the domestic price of the particular product due to
increased domestic supply. Such an outcome would appear to result regardless of whether a particular exporting
country has a relatively substantial shar e of production or a limited share. The only difference to note is the
following: if an exporting country controls a substantial or monopoly share of the world export market for a
particular product (due to its position as a leading or sole producer of that product), the world price would
increase as a result of the imposition of a minimum export price requirement that is set above the trading price
that would prevail under free trade. In this case, export volumes would decrease but would no t fall to zero. If
an exporting country were to control only a small share of the world export market for a particular product, the
world price would not be affected by the imposition of a minimum export requirement above the trading price
that would prevail under free trade. As a result, exports of that product would fall to zero.
1531 In other contexts, panels and the Appellate Body have concluded that the potential to violate a
provision was sufficient to result in inconsistency. Under Article III, for instance, the GATT panel on EEC –
Oilseeds I examined whether a purchase regulation which di d not necessarily discriminate against imported
products in all cases but was capable of doing so was inconsistent with Article III:4. That panel concluded that
the "exposure of a particular imported product to a risk of discrimination" constitutes a form of discrimination
sufficient to violate Article III:4. See GATT Panel Report, EEC – Oilseeds I, para. 141.
1532 Panel Report, Colombia – Ports of Entry, para. 7.240.

4. Whether China's administration of the mini mum export price requirement through the
PVC procedure as it applies to yellow pho sphorus is inconsistent with China's
obligations under Article X:3(a) of the GATT 1994
7.1083 The complainants additionally submit that China acts inconsistently with its obligations under
Article X:3(a) of the GATT 1994 by authorizi ng the CCCMC to participate in the PVC customs
clearance procedure in respect of yellow phosphorus . The complainants allege that the CCCMC's
involvement permits the flow of exporters' sens itive commercial information to representatives of
parties with interests that are in conflict with those of the exporters.
1533 In their view, this contravenes
China's obligation to administer its laws, regulations , decisions, and rulings pertaining to restrictions
on exports in an impartial and reasonable manner under Article X:3(a) of the GATT 1994.1534
7.1084 China submitted that it formally repealed the PVC procedure in May 2008 when it
"abandoned" price coordination, and therefore re quests the Panel to reject the complainants'
claims.1535 China argues that the Panel cannot make recommendations regarding the administration of
measures that have ceased to exist.1536
7.1085 The Panel recalls from it 1 October 2010 pre liminary ruling its finding that all of the
measures identified in connection with the PVC proce dure were outside the Panel's terms of reference
because the complainants' Panel Requests did not id entify clearly and specifically the measures under
challenge.1537 Accordingly, the Panel considers it is outside of its mandate to rule on the complainants
claims' that China's ad ministration of the minimum export price requirement through the PVC
procedure as it applies to yellow phosphorus is inconsistent with under Article X:3(a).
7.1086 Even if the Panel were to have concluded ot herwise, the Panel recalls its conclusion in
paragraph 7.1062 above that "China did not formally have in place or otherwise maintain a PVC
customs clearance procedure on exporters of yellow phosphorus at the time of the Panel's
establishment on 21 December 2009". Accordingly, for this further reason, the Panel considers it
would be inappropriate to consider the complainants' claim.
7.1087 Consequently, the Panel does not make findi ngs under Article X.3(a) of the GATT 1994 on
whether China is in breach of its obligations in respect of China's administration of the minimum
export price requirement through the PVC procedure as it applies to yellow phosphorus.
5. Whether China's has failed to publish meas ures through which China administers its
alleged minimum price requirement inconsis tently with China's obligations under
Article X:1 of the GATT 1994
7.1088 The complainants submit that China has breached its obligations under Article X:1 by failing
to publish promptly the: (i) 2001 CCCMC Charter ; (ii) CCCMC Branch-Specific Coordination
Measures; (iii) Rules for Coordination with Respect to Customs Price Review of Export Products ;
(iv) Notice of the Rules on Price Reviews of Export Products by the Customs ; and (v) Provisional
Rules on Export PVC.

1533 The PVC procedure requires exporters of yellow phosphorus to submit their export contracts and
special PVC forms to the CCCMC for verification.
1534 United States' first written submission, para. 364, European Union's first written submission,
1535 China's first written submission, para. 867.
1536 China's first written submission, para. 867.
1537 See paragraphs 1.10 to 1.13 above; Annex F to these Reports.

7.1089 The Panel recalls from it 1 October 2010 prelimin ary ruling its finding that only six measures
referred to by the complainants in both their consultation requests and Panel Requests would form
part of the Panel's terms of reference.
1538 Of the five measures identifie d in the preceding paragraph,
only the 2001 CCCMC Charter falls within the Panel's terms of reference. Accordingly, the Panel
will consider the complainants' claim in respect of this measure only.
7.1090 The complainants submit that the CCCMC Charter is the CCCMC's constitution setting forth
the mission, functions, authority, and rules and regulations of the CCCMC. In addition, the
complainants submit that China has described the Chamber of Co mmerce as "the instrumentality
through which [MOFCOM] oversees and regulat es the business of importing and exporting []
products in China".1539 They argue that the 2001 CCCMC Charter is therefore a law or regulation of
general application made effective by a WTO Member pertaining to restrictions on exports, and is
subject to the obligations of Article X:1 of the GATT 1994.1540
7.1091 China submits that the complainants have not adduced argument and evidence showing that,
in terms of Article X:1, the Charter is a "law[], regulation[], judicial decision[] and administration
ruling[] of general application", within the meaning of Article X:1. 1541 China asserts that such a
determination "must be based primarily on the c ontent and substance of the instrument, and not
merely on its form or nomenclature". 1542 China argues that the 2001 CCCMC Charter does not
contain either imperative or authoritative rules of conduct that would bring it within the scope of
Article X:1.1543 Even assuming Article X:1 would apply, China argues that the 2001 CCCMC Charter
was formally replaced by the 2010 CCCMC Charter . China argues that obliging it to publish an
expired measure serves no purpose.1544
7.1092 As noted in footnote 1445, the 2010 CCCMC Charter has a different "essence" than the 2001
Charter that was in place at the time of the Panel' s establishment because it appears to remove all
authority from the CCCMC to coordinate export prices. Many of the provisions of the 2010 CCCMC
Charter are similar to those in the 2001 CCCMC Charter , and in some cases identical. However, in
view of the at least one significant difference just noted between the two charters, with regard to the
role of the CCCMC, publication of the 2010 CCCMC Charter cannot constitute publication of the
former. Moreover, at the request of the complainants, the Panel will only assess the WTO consistency
of the measures in existence on 21 December 2009, in this case the 2001 CCCMC Charter , while
taking note that the 2010 CCCMC Charter no longer provides for the CCCMC to coordinate export
prices. Accordingly, the Panel will not consider the 2010 CCCMC Charter in addressing whether
China failed to publish the 2001 CCCMC Charter inconsistently with its obligations under
Article X:1 of the GATT 1994.
7.1093 Article X:1 of the GATT 1994 provides in relevant part:

1538 See paragraphs 1.10 to 1.13 above; Annex F to these Reports.
1539 United States' first written submission, para. 208 , citing Brief of Amicus Curiae: MOFCOM p. 9
(Exhibit JE-98); United States' response to Panel question No. 67 following the second substantive meeting,
para 133; The European Union and Mexico refer to the United States' response to Panel question No. 67
following the second substantive meeting.
1540 Complainants' response to Panel question No. 68 following the second substantive meeting,
para. 134.
1541 China's second written submission, para. 580.
1542 China's comments on the complainants' responses to Panel question No. 68 following the second
substantive meeting, referring to Panel Report, EC – IT Products, para. 7.1023.
1543 China's comments on the complainants' responses to Panel question No. 68 following the second
substantive meeting, referring to Panel Report, EC – IT Products, para. 7.1027.
1544 China's second written submission, para. 582.

"Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any contracti ng party, pertaining to … restrictions or
prohibitions on … exports … shall be published promptly in such a manner as to
enable governments and traders to become acquainted with them. …"
7.1094 The complainants in this dispute must thus estab lish that the relevant measure falls within the
scope of "laws, regulations, judicial decisions and administrative rulings of general application made
effective by" China that pertains to restrictions or prohibitions on exports; if so, China must promptly
publish the minimum export price requirement in such a manner as to enable governments and traders
to become acquainted with it.
7.1095 The panel on EC – Selected Customs Matters found that "laws, regulations, judicial decisions
and administrative rulings of general application" described in Article X:1 of the GATT 1994 are
those "laws, regulations, judicial decisions and administrative rulings that apply to a range of
situations or cases, rather than being limited in their scope of application".
1545 The Panel on EC – IT
Products concluded that the phrase "laws, regulations, j udicial decisions and administrative rulings"
"reflects an intention on the part of the drafters to include a wide range of measures that have the
potential to affect trade and traders." 1546 I n US – Underwear , the Panel explained that an
administrative order was of "general application" "to the extent that the restraint affects an
unidentified number of economic operators, including domestic and foreign producers." 1547 The term
"made effective" in the context of Article X:1 has so far only been addressed by the panel on EC – IT
Products. This panel held that the term "made effec tive" covers measures that were brought into
effect, or made operative, in practice and is not limited to measures formally promulgated or that have
formally entered into force.1548
7.1096 The Panel recalls its earlier conclusi on at paragraph 7.1006 above that the 2001 CCCMC
Charter is a measure attributable to China and thus is a measure that can be challenged under the
WTO dispute settlement proceedings. In reachi ng this conclusion, the Panel noted China's
acknowledgement that it delegate d certain implementing authority to the CCCMC to coordinate
export prices. This is reflected in statements made by China's MOFCOM in the context of US
domestic court proceedings prior to this dispute. For this reason, the Panel considered that actions
undertaken by the CCCMC with respect to minimum export price requirements at issue in this dispute
are attributable to China.
7.1097 Thus, the 2001 CCCMC Charter grants authority to the CCCMC and sets out the functions,
structure and operation of the CCCMC. In par ticular it directs the CCCMC to "provide[]
coordination, guidance and consu ltation services", including to "[d]isseminate and implement[] the
state's foreign trade laws, regulations, guidelines, and policies" and "coordinate and direct import and
export trade activities by business within the industries". 1549 The scope of authority is further
indicated in the description of the Charter's overall objectives, which include to "coordinate and direct
import and export trade activities of Metals, Minerals & Chemicals Industries".1550
7.1098 In the Panel's view, China's statement of the authority vested in the CCCMC, and the cited
provisions of the 2001 CCCMC Charter make clear that the 2001 CCCMC Charter is a measure that
has the potential to affect trade and traders, incl uding a wide array of domestic and foreign economic

1545 Panel Report, EC – Selected Customs Matters, para. 7.116.
1546 Panel Report, EC – IT Products, para. 7.1026.
1548 Panel Report, EC – IT Products, para. 7.1047.
1549 2001 CCCMC Charter, Article 6(1) (Exhibit JE-87).
1550 2001 CCCMC Charter, Article 3 (Exhibit JE-87).

operators, in particular, the "trade activities" of business within the broad metals, minerals and
chemicals industries. Accordingly, in line with the Appellate Body's view on "measures of general
application" and previous panels' views on the scope of Article X:1, we conclude that the 2001
CCCMC Charter is a law, regulation, judicial decision or administrative ruling of general application
within the meaning of Article X:1.
7.1099 China submits that a resolution of 21 February 2001 confirms that the 2001 CCCMC Charter
replaced the 1994 CCCMC Charter .
1551 Thus, from this statement it appears that the 2001 CCCMC
Charter became effective at a point in 2001.
7.1100 The Panel further recalls its finding in para graph 7.1017 above that the reference to
"coordinat[ion]" of "export trade activities" in Article 3 of the 2001 CCCMC Charter is broad enough
to encompass price coordination, and that the CCC MC was indeed authorized to coordinate export
prices under the 2001 CCCMC Charter .1552 The Panel concluded that the requirement to export at a
coordinated minimum export price by its very nature has a limiting or restricting effect on trade, and
therefore constitutes a restriction within the meaning of Article XI:1. Accordingly, for purposes of its
Article X:1 assessment, the Panel further concludes that the 2001 CCCMC Charter pertains to
restrictions or prohibitions on exports within the meaning of Article X:1.
7.1101 Finally, the complainants assert that the 2001 CCCMC Charter was not published on the
CCCMC website until well into 2009, after the request for consultations in this dispute had been
made, and therefore was not "published promptly" in a manner consistent with the requirements of
Article X:1. The concept of "prompt" is not a ddressed in Article X:1 or elsewhere in the WTO
Agreement. In the Panel's view, an analysis of whether a measure was published promptly requires a
reference point, some act or thing to act as a point of comparison so as to determine whether
publication was prompt.
1553 It would seem an appropriate reference point in this instance should
approximate the date when the 2001 CCCMC Charter became effective. The Panel noted China's
confirmation that that the 2001 CCCMC Charter replaced the preceding Charter on 21 February 2001.
Due to its publication in 2009, it therefore appears that 2001 CCCMC Charter was only published on
the CCCMC website eight years after the date that it had been made effective.
7.1102 Consequently, for the foregoing reasons, the Pane l finds that China failed to publish promptly
the 2001 CCCMC Charter in such a manner as to enable governments and traders to become
acquainted as is required under Article X:1 of the GATT 1994. Accordingly, the Panel concludes that
China has acted inconsistently with Article X:1.
6. Summary
7.1103 At the time of the Panel's establishment, the Panel concludes that, under the measures at issue,
China required exporting enterprises to export at set or coordinated export prices or otherwise face
penalties, including the possibility of having one's exporting rights revoked. The Panel concludes that
this requirement, which was formally in force in China at the time of the Panel's establishment,
constitutes a "restriction[] ... on the exportation or sal e for export of any prod uct" within the meaning
of Article XI:1 of the GATT 1994 because this re quirement to export at a coordinated minimum

1551 China's response to Panel question No. 69 followi ng the second substantive meeting, paras 341-
343; See Letter by the China CCCMC, 3 December 2010 (Exhibit CHN-541).
1552 The Panel recalls that Article 3 of the 2001 CCCMC Charter specifies that the CCCMC is to
"coordinate and direct import and export trade activities of Metals, Minerals & Chemicals industries".
Article 6(3) provides that the CCCMC shall "promote the industry's self-discipline", including adopting
"sanction measures against breaching companies.
1553 The panel in EC – IT Products stated that "the meaning of prompt is not an absolute concept, i.e. a
pre-set period of time applicable in all cases": see Panel report, EC – IT Products, para. 7.1074.

export price by its very nature has a limiting or rest ricting effect on trade. The Panel also concludes
that China failed to publish promptly the 2001 CCCMC Charter in such manner as to enable
governments and traders to become acquainted as is required under Article X:1 of the GATT 1994.
The Panel does not make findings under Article X: 3(a) of the GATT 1994 on whether China is in
breach of its obligations in respect of China's administration of the minimum export price requirement
through the PVC procedure as it applies to yellow phosphorus.
VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 The Panel issues its findings in the form of a single document containing three separate
Reports with common sections on the Panel's findings and separate sections on the Panel's
conclusions and recommendations for each complaini ng party. The Panel's findings incorporate the
conclusions of its preliminary rulings, attached to these Reports as Annex F.

A. C
OMPLAINT BY THE UNITED STATES (DS394)
1. Conclusions
8.2 In respect of claims concerning export duties:1554
(a) The Panel finds that the application of export duties to certain forms of bauxite, coke,
fluorspar, magnesium, manganese, silicon metal and zinc, by virtue of the series of
measures at issue 1555, is inconsistent with Paragr aph 11.3 of China's Accession
Protocol;
(b) The Panel finds that China may not seek to justify the application of export duties to
forms of fluorspar pursuant to Article XX(g) of the GATT 1994. Even assuming
arguendo that China could seek to justify the ap plication of export duties, the Panel
finds that China has not demonstrated that th e application of export duties to forms of
fluorspar is justified pursuant to Article XX(g) of the GATT 1994;
(c) The Panel finds that China may not seek to justify the application of export duties to
forms of magnesium, manganese and zinc pursuant to Article XX(b) of the
GATT 1994. Even assuming arguendo that China could seek to justify the
application of export duties, the Panel finds that China has not demonstrated that the
application of export duties to forms of magnesium, manganese and zinc is justified
pursuant to Article XX(b) of the GATT 1994; and
(d) The Panel concludes that the Adjustment of Export Tariffs Circular removed the
WTO-inconsistent special duty applicable to yellow phosphorus before the Panel's
establishment on 21 December 2009. Therefore, the Panel makes no findings on the
2009 Tariff Implementation Program that applied a special duty rate to yellow
phosphorus prior to 1 July 2009.
8.3 In respect of claims concerning export quotas:
1556
(a) The Panel finds that the application of export quotas to certain forms of bauxite, coke,
fluorspar and silicon carbide, by virtue of the series of measures at issue 1557, is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that the application of an export ban on certain forms of zinc, by
virtue of the series measures at issue 1558, is inconsistent with Article XI:1 of the
GATT 1994;
(c) The Panel finds that China has not demonstr ated that the application of an export
quota to refractory-grade bauxite, classifiable under HS No. 2508.3000, is justified
pursuant to Articles XI:2(a) or XX(g) of the GATT 1994;
(d) The Panel finds that China has not demonstr ated that the application of export quotas
to coke and silicon carbide is justified pu rsuant to Article XX(b) of the GATT 1994;
and

1554 The specific forms of the raw materials subject to the United States' cl aims are identified in
Exhibit JE-5 and paragraph 2.2 of the Descriptive Part to these Reports.
1555 See discussion in Section VII.B.2 above.
1556 The specific forms of the raw materials subject to the United States' cl aims are identified in
Exhibit JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.
1557 See discussion in Section VII.C.3 above.
1558 See discussion in Section VII.C.3 above.

(e) The Panel exercises judicial economy in r espect of whether the application of export
quotas to bauxite, coke, fluorspar and silicon carbide, or the application of an export
prohibition to zinc, are inconsistent with Paragraph 1.2 of China's Accession Protocol
and Paragraphs 162 and 165 of China's Working Party Report.
8.4 In respect of claims concerning export quota administration and allocation:1559
(a) The Panel finds that China's prior export experience or export performance
requirement, and minimum registered capital requirement, imposed on coke by virtue
of the measures at issue 1560, are inconsistent with Paragraphs 1.2 and 5.1 of China's
Accession Protocol, read in combination w ith Paragraphs 83(a), 83(b) and 83(d); and
Paragraphs 84(a) and 84(b) of China's Working Party Report;
(b) The Panel finds that China's prior export experience or export performance
requirements, and minimum registered capital requirement, imposed on bauxite,
fluorspar and silicon carbide by virtue of the measures at issue 1561, are inconsistent
with Paragraphs 1.2 and 5.1 of China's A ccession Protocol, read in combination with
Paragraphs 83(a), 83(b) and 83(d); and read in combination with Paragraphs 84(a)
and 84(b) of China's Working Party Report;
(c) The Panel finds that China's administration of its coke export quota through the
involvement of the CCCMC is not inconsistent with Article X:3(a) of the
GATT 1994;
(d) The Panel finds that China's administration of its export quota bidding system for
bauxite, fluorspar and silicon carbide through the involvement of the CCCMC is not
inconsistent with Article X:3(a) of the GATT 1994; and
(e) The Panel finds that the requirement for an exporter applicant to pay a bid-winning
price for the right to export bauxite, fluorspa r and silicon carbide is not inconsistent
with Article VIII:1(a) of the GATT 1994 or Paragraph 11.3 of China's Accession
Protocol.
8.5 In respect of claims concerning export licensing requirements:
1562
(a) The Panel finds that China's export licensing regime is not per se inconsistent with
Article XI:1 of the GATT 1994 solely on the basis that it permits export licensing
agencies to require a licence for goods subject to export restrictions;
(b) The Panel finds that Article 11(7) of 2008 Export License Administration Measures ,
and Articles 5(5) and 8(4) of the Working Rules on Export Licenses , as applicable to
export licences granted to applicants to export bauxite, coke, fluorspar, manganese,
silicon carbide and zinc, are inconsistent with Article XI:1 of the GATT 1994;
(c) The Panel does not make findings that Article 21 of the CCCMC Coordination
Measures is inconsistent with GATT Article XI:1 in respect of the United States'
claims concerning China's export licensing requirements because it is outside the
Panel's terms of reference;

1559 The specific forms of the raw materials subject to the United States' claims are identified in Exhibit
JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.
1560 See discussion in Section VII.E.1 above.
1561 See discussion in Section VII.E.1 above.
1562 The specific forms of the raw materials subject to the United States' claims are identified in Exhibit
JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.

(d) The Panel does not make findings that Article 40(3) of China's Measures for the
Administration of Licensing Entities is inconsistent with GATT Article XI:1 in
respect of the United States' claims concerning China's export licensing requirements;
and
(e) The Panel exercises judicial economy in r espect of whether China's export licensing
regime is inconsistent with Paragraph 1.2 of China's Accession Protocol, read in
combination with Paragraphs 162 and 165 of China's Working Party Report.
8.6 In respect of claims concerning a minimum export price requirement:
1563
(a) The Panel finds that China, through the 2001 CCCMC Charter , Export Price
Penalties Regulations , and Measures for Administration of Licensing Entities ,
imposed a minimum export price require ment on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc, that is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that China failed to publish promptly the 2001 CCCMC Charter in
such manner that is consistent with Article X:1 of the GATT 1994; and
(c) The Panel does not make findings on whether the administration of the price
verification and chop procedure to yellow phosphorus by the CCCMC is inconsistent
with Article X:3(a) of the GATT 1994 because it is outside the Panel's terms of
reference.
2. Nullification and impairment
8.7 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under that agreement. Acco rdingly, we conclude that where China has acted
inconsistently with Articles X:1, X:3(a), XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of
China's Accession Protocol; and Paragraphs 83 an d 84 of China's Working Party Report, it has
nullified or impaired benefits accruing to the United States under the WTO Agreement.
3. Recommendations
8.8 Pursuant to Article 19.1 of the DSU, having fo und that China has acted inconsistently with
Articles X:1, X:3(a) and XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of China's Accession
Protocol; and Paragraphs 83 and 84 of China's Wo rking Party Report, the Panel recommends that the
Dispute Settlement Body requests China to bring the existing measures at issue into conformity with
its obligations under the GATT 1994, China's Accessi on Protocol and China's Working Party Report.
The Panel makes no recommendation on expired measures, namely the 2009 measures at issue and
pre-2009 MEP-related measures. In respect of fi ndings concerning export duties and export quotas,
the Panel found that the series of measures operati ng collectively has resulted in the imposition of
export duties or export quotas that are inconsiste nt with China's WTO obligations. The Panel,
therefore, recommends that the Dispute Settlement Body requests China to bring its measures into
conformity with its WTO obligations such that th e "series of measures" does not operate to bring
about a WTO-inconsistent result.

1563 The specific forms of the raw materials subject to the United States' claims are identified in Exhibit
JE-7 and paragraph 2.2 of the Descriptive Part to these Reports.

B. COMPLAINT BY THE EUROPEAN UNION (DS395)
1. Conclusions
8.9 In respect of claims concerning export duties:1564
(a) The Panel finds that the application of export duties to certain forms of bauxite, coke,
fluorspar, magnesium, manganese, silicon metal and zinc, by virtue of the series of
measures at issue 1565, is inconsistent with Paragr aph 11.3 of China's Accession
Protocol;
(b) The Panel finds that China may not seek to justify the application of export duties to
forms of fluorspar pursuant to Article XX(g) of the GATT 1994. Even assuming
arguendo that China could seek to justify the ap plication of export duties, the Panel
finds that China has not demonstrated that th e application of export duties to forms of
fluorspar is justified pursuant to Article XX(g) of the GATT 1994;
(c) The Panel finds that China may not seek to justify the application of export duties to
forms of magnesium, manganese and zinc pursuant to Article XX(b) of the
GATT 1994. Even assuming arguendo that China could seek to justify the
application of export duties, the Panel finds that China has not demonstrated that the
application of export duties to forms of magnesium, manganese and zinc is justified
pursuant to Article XX(b) of the GATT 1994; and
(d) The Panel concludes that the Adjustment of Export Tariffs Circular removed the
WTO-inconsistent special duty applicable to yellow phosphorus before the Panel's
establishment on 21 December 2009. Therefore, the Panel makes no findings on the
2009 Tariff Implementation Program that applied a special duty rate to yellow
phosphorus prior to 1 July 2009.
8.10 In respect of claims concerning export quotas:
1566
(a) The Panel finds that the application of export quotas to certain forms of bauxite, coke,
fluorspar and silicon carbide, by virtue of the series of measures at issue 1567, is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that the application of an export ban on certain forms of zinc, by
virtue of the series measures at issue 1568, is inconsistent with Article XI:1 of the
GATT 1994;
(c) The Panel finds that China has not demonstr ated that the application of an export
quota to refractory-grade bauxite, classifiable under HS No. 2508.3000, is justified
pursuant to Articles XI:2(a) or XX(g) of the GATT 1994;
(d) The Panel finds that China has not demonstr ated that the application of export quotas
to coke and silicon carbide is justified pu rsuant to Article XX(b) of the GATT 1994;
and

1564 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-5 and paragraph 2.2 of the Descriptive Part to these Reports.
1565 See discussion in Section VII.B.2 above.
1566 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.
1567 See discussion in Section VII.C.3 above.
1568 See discussion in Section VII.C.3 above.

(e) The Panel exercises judicial economy in r espect of whether the application of export
quotas to bauxite, coke, fluorspar and silicon carbide, or the application of an export
prohibition to zinc, are inconsistent with Paragraph 1.2 of China's Accession Protocol
and Paragraphs 162 and 165 of China's Working Party Report.
8.11 In respect of claims concerning export quota administration and allocation:
1569
(a) The Panel finds that China's prior export experience or export performance
requirement, and minimum registered capital requirement, imposed on coke by virtue
of the measures at issue 1570, are inconsistent with Paragraphs 1.2 and 5.1 of China's
Accession Protocol, read in combination w ith Paragraphs 83(a), 83(b) and 83(d); and
Paragraphs 84(a) and 84(b) of China's Working Party Report;
(b) The Panel finds that China's prior export experience or export performance
requirement, imposed on coke is not incons istent with Paragraph 5.2 of China's
Accession Protocol read in combination with Paragraphs 84(a) and 84(b) of China's
Working Party Report;
(c) The Panel finds that China's prior export experience or export performance
requirements, and minimum registered capital requirement, imposed on bauxite,
fluorspar and silicon carbide by virtue the measures at issue 1571, are inconsistent with
Paragraphs 1.2 and 5.1 of China's Accessi on Protocol, read in combination with
Paragraphs 83(a), 83(b) and 83(d); and read in combination with Paragraphs 84(a)
and 84(b) of China's Working Party Report;
(d) The Panel finds that China's prior export experience or export performance
requirement imposed on bauxite, fluorspar and silicon carbide is not inconsistent with
Paragraph 5.2 of China's Accession Protocol read in combination with Paragraphs
84(a) and 84(b) of China's Working Party Report;
(e) The Panel finds that China's allocation of directly allocated export quotas through the
use of the operation capacity criterion, by virtue of the measures at issue 1572, is
inconsistent with Article X:3(a) of the GATT 1994;
(f) The Panel finds that China's did not publish promptly the total amount and procedure
for the allocation of a zinc export quota and thus acted in a manner inconsistent with
Article X:1 of the GATT 1994; and
(g) The Panel does not make findings that China did not publish promptly the total
amount of the coke export quota in such a manner that is inconsistent with
Article X:1 of the GATT 1994 because this claim is outside the Panel's terms of
reference.
8.12 In respect of claims concerning export licensing requirements:1573

1569 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.
1570 See discussion in Section VII.E.1 above.
1571 See discussion in Section VII.E.1 above.
1572 See discussion in Section VII.E.2 above.
1573 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-6 and paragraph 2.2 of the Descriptive Part to these Reports.

(a) The Panel finds that China's export licensing regime is not per se inconsistent with
Article XI:1 of the GATT 1994 solely on the basis that it permits export licensing
agencies to require a licence for goods subject to export restrictions;
(b) The Panel finds that Article 11(7) of 2008 Export License Administration Measures ,
and Articles 5(5) and 8(4) of the Working Rules on Export Licenses , as applicable to
export licences granted to applicants to export bauxite, coke, fluorspar, manganese,
silicon carbide and zinc, are inconsistent with Article XI:1 of the GATT 1994;
(c) The Panel finds that the European Union's claims under Articles X:1 and X:3(a)
concerning export licensing are outside the Panel's terms of reference;
(d) The Panel exercises judicial economy in r espect of whether China's export licensing
regime is inconsistent with Paragraph 1.2 of China's Accession Protocol, read in
combination with Paragraphs 162 and 165 of China's Working Party Report; and
(e) The Panel exercises judicial economy in r espect of whether China's export licensing
regime is inconsistent with Paragraphs 1.2 and 5.1 of China's Accession Protocol,
read in combination with Paragraphs 83 and 84 of China's Working Party Report.
8.13 In respect of claims concerning a minimum export price requirement:
1574
(a) The Panel finds that China, through the 2001 CCCMC Charter , Export Price
Penalties Regulations , and Measures for Administration of Licensing Entities ,
imposed a minimum export price require ment on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc, that is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that China failed to publish promptly the 2001 CCCMC Charter in
such manner that is consistent with Article X:1 of the GATT 1994; and
(c) The Panel does not make findings on whether the administration of the price
verification and chop procedure to yellow phosphorus by the CCCMC is inconsistent
with Article X:3(a) of the GATT 1994 because it is outside the Panel's terms of
reference.
2. Nullification and impairment
8.14 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under that agreement. Acco rdingly, we conclude that where China has acted
inconsistently with Articles X:1, X:3(a), XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of
China's Accession Protocol; and Paragraphs 83 an d 84 of China's Working Party Report, it has
nullified or impaired benefits accruing to the European Union under the WTO Agreement.
3. Recommendations
8.15 Pursuant to Article 19.1 of the DSU, having fo und that China has acted inconsistently with
Articles X:1, X:3(a) and XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of China's Accession
Protocol; and Paragraphs 83 and 84 of China's Wo rking Party Report, the Panel recommends that the
Dispute Settlement Body requests China to bring the existing measures at issue into conformity with

1574 The specific forms of the raw materials subject to the European Union's cl aims are identified in
Exhibit JE-7 and paragraph 2.2 of the Descriptive Part to these Reports.

its obligations under the GATT 1994, China's Accessi on Protocol and China's Working Party Report.
The Panel makes no recommendation on expired measures, namely the 2009 measures at issue and
pre-2009 MEP-related measures. In respect of fi ndings concerning export duties and export quotas,
the Panel found that the series of measures operati ng collectively has resulted in the imposition of
export duties or export quotas that are inconsiste nt with China's WTO obligations. The Panel,
therefore, recommends that the Dispute Settlement Body requests China to bring its measures into
conformity with its WTO obligations such that th e "series of measures" does not operate to bring
about a WTO-inconsistent result.

C. COMPLAINT BY MEXICO (DS398)
1. Conclusions
8.16 In respect of claims concerning export duties:1575
(a) The Panel finds that the application of export duties to certain forms of bauxite, coke,
fluorspar, magnesium, manganese, silicon metal and zinc, by virtue of the series of
measures at issue 1576, is inconsistent with Paragr aph 11.3 of China's Accession
Protocol;
(b) The Panel finds that China may not seek to justify the application of export duties to
forms of fluorspar pursuant to Article XX(g) of the GATT 1994. Even assuming
arguendo that China could seek to justify the ap plication of export duties, the Panel
finds that China has not demonstrated that th e application of export duties to forms of
fluorspar is justified pursuant to Article XX(g) of the GATT 1994;
(c) The Panel finds that China may not seek to justify the application of export duties to
forms of magnesium, manganese and zinc pursuant to Article XX(b) of the
GATT 1994. Even assuming arguendo that China could seek to justify the
application of export duties, the Panel finds that China has not demonstrated that the
application of export duties to forms of magnesium, manganese and zinc is justified
pursuant to Article XX(b) of the GATT 1994; and
(d) The Panel concludes that the Adjustment of Export Tariffs Circular removed the
WTO-inconsistent special duty applicable to yellow phosphorus before the Panel's
establishment on 21 December 2009. Therefore, the Panel makes no findings on the
2009 Tariff Implementation Program that applied a special duty rate to yellow
phosphorus prior to 1 July 2009.
8.17 In respect of claims concerning export quotas:
1577
(a) The Panel finds that the application of export quotas to certain forms of bauxite, coke,
fluorspar and silicon carbide, by virtue of the series of measures at issue 1578, is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that the application of an export ban on certain forms of zinc, by
virtue of the series measures at issue 1579, is inconsistent with Article XI:1 of the
GATT 1994;
(c) The Panel finds that China has not demonstr ated that the application of an export
quota to refractory-grade bauxite, classifiable under HS No. 2508.3000, is justified
pursuant to Articles XI:2(a) or XX(g) of the GATT 1994;
(d) The Panel finds that China has not demonstrated that the application of export quotas
to coke and silicon carbide is justified pu rsuant to Article XX(b) of the GATT 1994;
and

1575 The specific forms of the raw materials subject to Mexico's claims are identified in Exhibit JE-5
and paragraph 2.2 of the Descriptive Part to these Reports.
1576 See discussion in Section VII.B.2 above.
1577 The specific forms of the raw materials subject to Mexico's claims are identified in Exhibit JE-6
and paragraph 2.2 of the Descriptive Part to these Reports.
1578 See discussion in Section VII.C.3 above.
1579 See discussion in Section VII.C.3 above.

(e) The Panel exercises judicial economy in r espect of whether the application of export
quotas to bauxite, coke, fluorspar and silicon carbide, or the application of an export
prohibition to zinc, are inconsistent with Paragraph 1.2 of China's Accession Protocol
and Paragraphs 162 and 165 of China's Working Party Report.
8.18 In respect of claims concerning export quota administration and allocation:
1580
(a) The Panel finds that China's prior export experience or export performance
requirement, and minimum registered capital requirement, imposed on coke by virtue
of the measures at issue 1581, are inconsistent with Paragraphs 1.2 and 5.1 of China's
Accession Protocol, read in combination w ith Paragraphs 83(a), 83(b) and 83(d); and
Paragraphs 84(a) and 84(b) of China's Working Party Report;
(b) The Panel finds that China's prior export experience or export performance
requirements, and minimum registered capital requirement, imposed on bauxite,
fluorspar and silicon carbide by virtue the measures at issue 1582, are inconsistent with
Paragraphs 1.2 and 5.1 of China's Accessi on Protocol, read in combination with
Paragraphs 83(a), 83(b) and 83(d); and read in combination with Paragraphs 84(a)
and 84(b) of China's Working Party Report;
(c) The Panel finds that China's administration of its coke export quota through the
involvement of the CCCMC is not inconsistent with Article X:3(a) of the
GATT 1994;
(d) The Panel finds that China's administration of its export quota bidding system for
bauxite, fluorspar and silicon carbide through the involvement of the CCCMC is not
inconsistent with Article X:3(a) of the GATT 1994; and
(e) The Panel finds that the requirement for an exporter applicant to pay a bid-winning
price for the right to export bauxite, fluorspa r and silicon carbide is not inconsistent
with Article VIII:1(a) of the GATT 1994 or Paragraph 11.3 of China's Accession
Protocol.
8.19 In respect of claims concerning export licensing requirements:
1583
(a) The Panel finds that China's export licensing regime is not per se inconsistent with
Article XI:1 of the GATT 1994 solely on the basis that it permits export licensing
agencies to require a licence for goods subject to export restrictions;
(b) The Panel finds that Article 11(7) of 2008 Export License Administration Measures ,
and Articles 5(5) and 8(4) of the Working Rules on Export Licenses , as applicable to
export licences granted to applicants to export bauxite, coke, fluorspar, manganese,
silicon carbide and zinc, are inconsistent with Article XI:1 of the GATT 1994;
(c) The Panel does not make findings that Article 21 of the CCCMC Coordination
Measures or Article 40(3) of China's Measures for the Administration of Licensing
Entities is inconsistent with GATT Article XI:1 in respect of Mexico's claims
concerning China's export licensing requirements;

1580 The specific forms of the raw materials subject to Mexico's claims are identified in Exhibit JE-6
and paragraph 2.2 of the Descriptive Part to these Reports.
1581 See discussion in Section VII.E.1 above.
1582 See discussion in Section VII.E.1 above.
1583 The specific forms of the raw materials subject to Mexico's claims are identified in Exhibit JE-6
and paragraph 2.2 of the Descriptive Part to these Reports.

(d) The Panel exercises judicial economy in r espect of whether China's export licensing
regime is inconsistent with Paragraph 1.2 of China's Accession Protocol, read in
combination with Paragraphs 162 and 165 of China's Working Party Report.
8.20 In respect of claims concerning a minimum export price requirement:1584
(a) The Panel finds that China, through the 2001 CCCMC Charter , Export Price
Penalties Regulations , and Measures for Administration of Licensing Entities ,
imposed a minimum export price require ment on exporters of bauxite, coke,
fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc, that is
inconsistent with Article XI:1 of the GATT 1994;
(b) The Panel finds that China failed to publish promptly the 2001 CCCMC Charter in
such manner that is consistent with Article X:1 of the GATT 1994; and
(c) The Panel does not make findings on whether the administration of the price
verification and chop procedure to yellow phosphorus by the CCCMC is inconsistent
with Article X:3(a) of the GATT 1994 because it is outside the Panel's terms of
reference.
2. Nullification and impairment
8.21 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under that agreement. Acco rdingly, we conclude that where China has acted
inconsistently with Articles X:1, X:3(a), XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of
China's Accession Protocol; and Paragraphs 83 an d 84 of China's Working Party Report, it has
nullified or impaired benefits accruing to Mexico under the WTO Agreement.
3. Recommendations
8.22 Pursuant to Article 19.1 of the DSU, having fo und that China has acted inconsistently with
Articles X:1, X:3(a) and XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of China's Accession
Protocol; and Paragraphs 83 and 84 of China's Wo rking Party Report, the Panel recommends that the
Dispute Settlement Body requests China to bring the existing measures at issue into conformity with
its obligations under the GATT 1994, China's Accessi on Protocol and China's Working Party Report.
The Panel makes no recommendation on expired measures, namely the 2009 measures at issue and
pre-2009 MEP-related measures. In respect of fi ndings concerning export duties and export quotas,
the Panel found that the series of measures operati ng collectively has resulted in the imposition of
export duties or export quotas that are inconsiste nt with China's WTO obligations. The Panel,
therefore, recommends that the Dispute Settlement Body requests China to bring its measures into
conformity with its WTO obligations such that th e "series of measures" does not operate to bring
about a WTO-inconsistent result.

1584 The specific forms of the raw materials subject to the Mexico's claims are identified in Exhibit JE-7
and paragraph 2.2 of the Descriptive Part to these Reports.