## Facts

- The United States, the European Union, and Mexico challenged China’s export restrictions on multiple raw materials used in downstream manufacturing, including bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus, and zinc.
- The challenged measures included export duties, export quotas, minimum export price requirements, export licensing, and eligibility criteria (including prior export performance, minimum capital requirements, and an “operating capacity” criterion).
- Complainants alleged that export duties breached Paragraph 11.3 of China’s Protocol of Accession (permitting export duties only if listed in Annex 6) and that quotas and related restrictions breached GATT 1994 Article XI:1 and related administration and formalities provisions (notably GATT Articles X and VIII).
- China argued that certain claims were outside the panel’s terms of reference and sought to justify export restrictions under GATT Article XI:2(a) (critical shortages) and GATT Article XX, including XX(b) (health) and XX(g) (conservation).
- A single WTO panel found multiple inconsistencies with WTO obligations; China appealed several legal interpretations, and the reports were adopted on February 22, 2012.

## Issues

1. Whether the panel requests satisfied DSU Article 6.2 such that claims (including those under Paragraph 11.3 of China’s Accession Protocol) were within the panel’s terms of reference.
2. Whether China could invoke GATT 1994 Article XX as a defense to breaches of Paragraph 11.3 of China’s Protocol of Accession governing export duties.
3. Whether China’s export quotas and related licensing/criteria constituted prohibited “restrictions” under GATT 1994 Article XI:1.
4. Whether China’s export quotas and related measures were justified under GATT 1994 Article XI:2(a) (temporary measures to prevent or relieve critical shortages).
5. Whether the export quotas and related measures were justified under GATT 1994 Article XX(b) or XX(g), and whether their administration complied with GATT 1994 Article X:3(a).

## Decision

- The Appellate Body upheld that the panel requests adequately identified the measures and legal bases under DSU Article 6.2, keeping the claims within the panel’s jurisdiction.
- The Appellate Body upheld findings that China’s export duties on the covered raw materials violated Paragraph 11.3 of China’s Protocol of Accession.
- The Appellate Body held that China could not use GATT 1994 Article XX to justify breaches of Paragraph 11.3 because that Protocol obligation did not incorporate Article XX defenses.
- The Appellate Body upheld findings that export quotas and related measures violated GATT 1994 Article XI:1 and were not justified under Article XI:2(a) or Article XX (including XX(b) and XX(g)).
- The Appellate Body upheld, with certain reasoning modifications, findings that elements of China’s export licensing and administration contributed to WTO-inconsistent export restrictions and, in relevant respects, raised concerns under GATT 1994 Article X:3(a).
- The DSB recommended that China bring its measures into conformity with its WTO obligations.

## Legal Principles

- Under DSU Article 6.2, a panel request must identify the specific measures at issue and provide a brief summary of the legal basis sufficient to present the problem clearly; properly pleaded claims fall within the panel’s terms of reference.
- Paragraph 11.3 of China’s Protocol of Accession operates as a binding, product-specific commitment to eliminate export duties except those expressly listed; absent textual incorporation, GATT Article XX defenses do not apply to that Protocol obligation.
- GATT 1994 Article XI:1 prohibits export restrictions imposed through quotas, export licensing, or other quantitative restraints; related licensing criteria can constitute or contribute to an Article XI:1 restriction when they limit exportation in operation.
- GATT 1994 Article XI:2(a) requires proof of a critical shortage of essential products and that restrictions are temporary and directed to preventing or relieving that shortage.
- For GATT 1994 Article XX(g), export restraints must relate to conservation and be made effective in conjunction with domestic restrictions on production or consumption; for Article XX(b), the respondent must show necessity, including material contribution and absence of reasonably available, less trade-restrictive alternatives.
- GATT 1994 Article X:3(a) requires uniform, impartial, and reasonable administration of trade regulations; opaque or uneven administration of export licensing rules can breach this obligation.

## Conclusion

The Appellate Body confirmed that China’s export duties and export quotas on various raw materials breached core WTO commitments and could not be excused by GATT exceptions where the relevant accession obligation did not incorporate them and where the quota regime failed the strict requirements of Articles XI:2(a), XX(b), and XX(g), leading to a recommendation that China conform its export regime to WTO law.


China—Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R (WTO Feb. 22, 2012)