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AB Report in China – Raw Materials

The WTO published the AB Report in the high-profile dispute, China-Raw Materials (WT/DS394/AB/R, WT/DS395/AB/R and WT/DS398/AB/R) on January 30, 2012, brought forth by Mexico, the US and the EU as co-complainants. In the Report, the AB confirmed that China violated general WTO law and its Accession Protocol by restricting the exportation of nine raw materials.

The AB, presided by Mr. Ricardo Ramírez-Hernández, found that although the Panel erred in its findings in paragraph 8.4, 8.5 and 8.6, it did not err in its recommendation under paragraph 8.8 of the Report, which asks China to bring its measures into conformity with its WTO obligations. Furthermore, the AB upheld the Panel’s finding in paragraph 7.159 stating that there is no basis in China’s Accession Protocol to allow for a defense under Article XX of the GATT 1994. This is a significant development in the applicability of GATT Article XX to non-GATT claims.

The AB’s ruling on this dispute over access to natural resources seem to have broader implications, as it could be interpreted to mean that export restrictions could not be justified as resource conservation or environmental protection measures, or as a way to manage critical supply shortages.

The Panel and AB reports will go before the DSB for formal adoption within thirty days. China will then have to bring its measures into compliance within a reasonable period of time (RPT).