China today suffered another defeat at the World Trade Organization when a dispute settlement panel ruled in favour of the US by pronouncing that Beijing violated core global trade rules, including the obligations it undertook to join the global trade body, in restricting foreign books, publications and audio-visual home entertainment products.
In a 469-page final ruling, a three-member WTO panel said several Chinese measures to restrict the flow of imported books, newspapers, periodicals, electronic publications, audio-visual home entertainment (AHVE) products and films for theatrical purposes violated China’s commitments under its Accession Protocol (AP).
The AP set out all the obligations and commitments that China had to implement after joining the WTO in 2001.
It also indicated the timeframe for implementation of each commitment as well as the liberal treatment that it would have to grant “trading rights”.
However, key industrialised countries led by the United States, the European Union and Canada among others raised several trade disputes alleging that China created numerous hurdles to deny them access to the Chinese market.
From auto parts to audio-visual films, the industrialised countries took China to task at the WTO for its alleged violation of global trading rules.
The US, for example, challenged the Chinese measures on a range of products that fall under the so-called cultural goods, like books, recorded audio tapes and films, saying Beijing also chose to treat domestic entities more favorably than foreign companies to provide these products.
China claimed that it had the right to regulate the flow of these cultural goods under what are called Article XX exceptions.
Beijing argued that it was well within its rights to adopt measures relating to foreign reading materials, sound recordings and audio-visual home entertainment products to protect public morals given their adverse impact on societal and individual morals.
The panel disagreed with the Chinese claim saying that Beijing’s justification under Article XX exceptions was not “necessary”, ruling that the Chinese measures were inconsistent with its WTO obligations
Since many of these items fell under both goods and services, the panel’s ruling has important implications, analysts said, suggesting that Beijing lost the dispute on various important grounds such as market access and national treatment principle.
China won on some issues in the dispute, but those are largely inconsequential.
In all probability, China will challenge the ruling before the Appellate Body, analysts said.
