WTO issued reports related to Chinese exportation of rare earth

On 26 March 2014, the WTO issued the dispute panel reports in the case “China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum” (WT/DS431/R, WT/DS432/R and WT/DS433/R). The summative conclusions are as follows.

1. In respect of claims concerning export duties:

a. The Panel finds that the export duties that China applies to various forms of rare earths, tungsten, and molybdenum by virtue of the series of measures at issue are inconsistent with Paragraph 11.3 of China’s Accession Protocol;
b. The Panel finds that China may not seek to justify the export duties it applies to various forms of rare earths, tungsten, and molybdenum pursuant to Article XX(b) of the GATT 1994. Even assuming arguendo that China could seek to justify the application of export duties under Article XX(b), the Panel finds that China has not demonstrated that the export duties it applies to various forms of rare earths, tungsten, and molybdenum are justified pursuant to subparagraph (b) of Article XX of the GATT 1994. In addition, the Panel finds that China has not demonstrated that the measures are applied in a manner that satisfies the chapeau of Article XX.
2. In respect of claims concerning export quotas:
a. The Panel finds that the export quotas that China applies to various forms of rare earths, tungsten, and molybdenum by virtue of the series of measures at issue are inconsistent with Article XI:1 of the GATT 1994;
b. The Panel finds that the export quotas that China applies to various forms of rare earths, tungsten, and molybdenum by virtue of the series of measures at issue are inconsistent with Paragraphs 162 and 165 of China’s Working Party Report as incorporated into China’s Accession Protocol by virtue of Paragraph 1.2;
c. The Panel finds that China has not demonstrated that the export quotas that China applies to various forms of rare earths, tungsten, and molybdenum are justified pursuant to subparagraph (g) of Article XX of the GATT 1994. In addition, the Panel finds that China has not demonstrated that the measures are applied in a manner that satisfies the chapeau of Article XX.
3. In respect of claims concerning export quota administration and allocation:
a. The Panel finds that the restrictions on the trading rights of enterprises exporting rare earths and molybdenum (i.e. the prior export experience requirement, the export performance requirement, and the minimum registered capital requirement) that China applies by virtue of the series of measures at issue are inconsistent with Paragraphs 83(a), 83(b), 83(d), 84(a), and 84(b) of China’s Working Party Report, as incorporated into China’s Accession Protocol by virtue of Paragraph 1.2;
b. The Panel finds that the restrictions on the trading rights of enterprises exporting rare earths and molybdenum (i.e. the prior export experience requirement, the export performance requirement, and the minimum registered capital requirement) that China applies by virtue of the series of measures at issue are inconsistent with Paragraph 5.1 of China’s Accession Protocol;
c. The Panel finds that China is entitled to seek to justify the restrictions on the trading rights of enterprises exporting rare earths and molybdenum referred to in paragraph 8.3 pursuant to Article XX(g) of the GATT 1994;
d. The Panel finds that China has failed to make a prima facie case that the violations of its trading rights commitments are justified pursuant to Article XX(g).
4. 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. Accordingly, we conclude that where China has acted inconsistently with Article XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of China’s Accession Protocol; and Paragraphs 83, 84, 162, and 165 of China’s Working Party Report as incorporated into its Accession Protocol by virtue of Paragraph 1.2, it has nullified or impaired benefits accruing to the United States under the WTO Agreement.
5. Pursuant to Article 19.1 of the DSU, having found that China has acted inconsistently with Article XI:1 of the GATT 1994; Paragraphs 1.2, 5.1 and 11.3 of China’s Accession Protocol; and Paragraphs 83, 84, 162 and 165 of China’s Working 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 Accession Protocol and China’s Working Party Report. In respect of findings concerning export duties and export quotas on various forms of rare earths, tungsten, and molybdenum, and restrictions on the trading rights of enterprises exporting rare earths and molybdenum, the Panel has found that the series of measures have operated to impose export duties and export quotas on various forms of rare earths, tungsten, and molybdenum, and restrictions on the trading rights of enterprises exporting rare earths and molybdenum (i.e. the prior export experience requirement, the export performance requirement, and the minimum registered capital requirement), that are inconsistent 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 the series of measures does not operate to bring about a WTO-inconsistent result.
Source: http://www.wto.org/english/tratop_e/dispu_e/431_432_433r_e.pdf

Advertisements

Leave a comment

Filed under Legal spotlight

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s