Whether the United States and Canada Failed to Establish a Prima Facie Case

Consistency of the Measures at Issue with Paragraph 93

1. 
   We turn to China's conditional appeal relating to China's Accession Working Party Report, paragraph 93 of which provides:
   

2. 
   As stated above, the Panel found that:
   

3. 
   The Panel found that China had violated this commitment based on two earlier findings that the Panel had made in the course of its analysis, namely, that "under the circumstances surrounding the measures at issue in this dispute, a tariff line for CKD and SKD kits can be deemed created through the measures since China effectively classifies such a kit under specific tariff lines and applies the tariff rates applicable under such tariff lines under the measures"⁴², and that "China ... created separate tariff lines for CKD and SKD kits in its tariff schedule at the ten-digit level and thus has met the condition under paragraph 93."⁴³
   
4. 
   China challenges both of these findings⁴⁴ in the event that we do not reverse the Panel's finding that the measures are inconsistent with paragraph 93 of China's Accession Working Party Report on the grounds that either: the Panel misconstrued Article 2(2) of Decree 125 and erred in finding that the measures at issue impose a duty on imports of CKD and SKD kits under that provision; or the Panel ruled on a claim for which Canada and the United States had failed to make out a prima facie case.
   
5. 
   We have reversed the Panel's finding with respect to paragraph 93 of China's Accession Working Party Report on the grounds that the Panel erred in construing Articles 2(2) and 21(1) of Decree 125 to mean that the measures at issue impose a charge on CKD and SKD kits imported under Article 2(2) of Decree 125. Thus, the condition on which China's substantive appeal of the Panel's findings under paragraph 93 is predicated is not satisfied, and we need not consider these alternative grounds of appeal. We note, in this regard, that at the oral hearing in this appeal, the United States and Canada agreed that, if we reversed the Panel's finding that Article 2(2) of Decree 125 exempts importers of CKD and SKD kits from the administrative procedures, but not from the charge, imposed under the measures at issue, we would also have to reverse the Panel's finding that, through the measures at issue, China has acted inconsistently with the commitment in paragraph 93 of its Accession Working Party Report.
   
6. 
   We nevertheless observe, as did the Panel, that the commitment made by China in the penultimate sentence of paragraph 93 is a conditional one, which becomes operative only "upon the creation of separate tariff lines for CKD and SKD kits, which did not exist at the time of China's accession to the WTO."⁴⁵ Given the way in which China has framed its appeal, we do not need to rule on the meaning of the condition set out in paragraph 93. We also need not decide whether a tariff line can be "deemed" created nor whether China created separate tariff lines for CKD and SKD kits at the ten-digit level.
   

9. Findings and Conclusions in the Appellate Body Report WT/DS339/AB/R (European Communities)

   1. 
      In the appeal of the Panel Report, China – Measures Affecting Imports of Automobile Parts (Complaint by the European Communities, WT/DS339/R) (the "EC Panel Report"), and with respect to Policy Order 8, Decree 125 and Announcement 4 (the "measures at issue"), for the reasons set forth in this Report, the Appellate Body:
      
      1. 
         upholds the Panel's finding, in paragraph 7.212 of the EC Panel Report, that the charge imposed under the measures at issue is an internal charge within the meaning of Article III:2 of the GATT 1994, and not an ordinary customs duty within the meaning of Article II:1(b);
         
      2. 
         upholds the Panel's finding, in paragraph 7.223 and Section VIII:A(a)(i) of the EC Panel Report, that, with respect to imported auto parts in general, the measures at issue are inconsistent with Article III:2, first sentence, of the GATT 1994 in that they subject imported auto parts to an internal charge that is not applied to like domestic auto parts;
         
      3. 
         upholds the Panel's finding, in paragraph 7.272 and Section VIII:A(a)(ii) of the EC Panel Report, that, with respect to imported auto parts in general, the measures at issue are inconsistent with Article III:4 of the GATT 1994 in that they accord imported auto parts less favourable treatment than like domestic auto parts; and
         
      4. 
         finds it unnecessary to rule on the Panel's "alternative" finding in Section VIII:A(b)(i) of the EC Panel Report, that, with respect to imported auto parts in general, the measures at issue are inconsistent with Article II:1(a) and (b) of the GATT 1994.
         
   2. 
      The Appellate Body recommends that the DSB request China to bring its measures, found in this Report, and in the EC Panel Report as upheld by this Report, to be inconsistent with the GATT 1994, into conformity with its obligations under that Agreement.
      

_________________________

Lilia Bautista

Presiding Member

_________________________ _________________________

Jennifer Hillman Giorgio Sacerdoti

Member Member