China - Measures Affecting Imports of Automobile Parts

This paper reviews the WTO Appellate Body Report on China - Measures Affecting Imports of Automobile Parts (WT/DS342/AB/R, 15 December 2008). This dispute concerns a set of regulatory measures imposing a 25 % ʹchargeʹ on imported automobile parts used in the manufacture of motor vehicles in China. The main legal question in this case consisted of the nature of this charge as either a border charge subject to Chinaʹs tariff concessions or an internal charge, subject to the basic nondiscrimination requirement of GATT Article III. In our report, we examine the reasoning of the Appellate Body relating to the difference between these two types of charges. We discuss the role and relevance of this distinction in the GATT/WTO legal system in general, and for the purposes of resolving this dispute in particular. We also address the important systemic question relating to the review of a Memberʹs domestic laws for purposes of determining their GATT/WTO consistency. This was an important issue in this case, as China claimed that the Panel misunderstood the meaning of the relevant Decree and requested the Appellate Body to review the Panelʹs erroneous reading of this Decree. We discuss the Appellate Bodyʹs reasoning relating to the review of domestic laws by Panels and the Appellate Body and express concern over the distinction drawn by the Appellate Body between legal and factual elements of relevance in the interpretation of such laws.