   
  
WT/DS543/R  
 
15 September  2020 
(20-6169) Page: 1/66 
  Original: English  
 
  
UNITED  STATES  — TARIFF MEASURES ON CERTAIN GOODS FROM CHINA  
 
REPORT OF THE PANEL  
 
 
  WT/DS543/R  
 
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  TABLE OF CONTENTS  
1   INTRODUCTION  ................................ ................................ ................................ ........  11 
1.1   Complaint by China  ................................ ................................ ................................ ... 11 
1.2   Panel establishment and composition  ................................ ................................ ..........  11 
1.3   Panel proceedings  ................................ ................................ ................................ ..... 12 
2   FACTUAL ASPECTS AND MEASURES AT ISSUE  ................................ ...........................  13 
3   PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  ................................  14 
4   ARGUMENTS OF THE PARTIES  ................................ ................................ ...................  14 
5   ARGUMENTS OF THE THIRD PARTIES  ................................ ................................ ........  14 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 15 
7   FINDINGS  ................................ ................................ ................................ .................  16 
7.1   Preliminary issues  ................................ ................................ ................................ ..... 16 
7.1.1   Whether the parties have reached a solution within the meaning of Article  12.7  
of the DSU  ................................ ................................ ................................ ......................  16 
7.1.1.1    Parties' arguments  ................................ ................................ ..............................  16 
7.1.1.2    Panel's findings  ................................ ................................ ................................ ... 17 
7.1.2   The measures covered by the Panel's terms of reference in this dispute  .........................  20 
7.1.2.1    Introduction  ................................ ................................ ................................ ....... 20 
7.1.2.2    Overview of applicable principles  ................................ ................................ ...........  22 
7.1.2.3    The measures covered  by China's panel request  ................................ ......................  23 
7.1.2.4    Conclusion on the measures covered by the Panel's terms of reference  .......................  27 
7.1.3   China's request that the Panel reject Exhibit US -35 ................................ .....................  28 
7.2   Whether the measures at issue are inconsistent with Articles I:1 and II:1(a) and (b) of the 
GATT  1994 ................................ ................................ ................................ .....................  29 
7.2.1   Introduction  ................................ ................................ ................................ ..........  29 
7.2.2   Whether the measures at issue are inconsistent with Article  I:1 of  the GATT  1994...........  30 
7.2.3   Whether the measures at issue are inconsistent with Article  II:1(a) and (b) of the 
GATT  1994 ................................ ................................ ................................ .....................  32 
7.2.4   Conclusion  ................................ ................................ ................................ ............  33 
7.3   The United  States ' defence under Art icle XX of the GATT  1994 ................................ ........  34 
7.3.1   Introduction – the nature and purpose of Article  XX of the GATT  1994 ...........................  34 
7.3.2   Whether the measures are provisionally justified under Article  XX(a) of the GATT  1994 ... 35 
7.3.2.1    Introduction  ................................ ................................ ................................ ....... 35 
7.3.2.2    Whethe r the measures concern a public morals objective  within the meaning of 
Article  XX(a) of the GATT  1994 ................................ ................................ ..........................  36 
7.3.2.2.1    The concept of "public morals" under Article  XX(a)  ................................ ................  36 
7.3.2.2.2    Whether an explicit reference to public morals in the legal instruments implementing 
the measures is required  ................................ ................................ ................................ .. 38 
7.3.2.2.3    The public morals objective invoked by the United  States  ................................ ....... 39 
7.3.2.3    Whether the measures are designed to protect the public morals objective as invoked 
by the United  States ................................ ................................ ................................ .........  42 
7.3.2.4    Whether the measures are necessary  to protect the public morals objective as invoked 
by the United  States ................................ ................................ ................................ .........  45 WT/DS543/R  
 
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  7.3.2.4.1    Introduction – the nature and purpose of the necessity  requirement  ........................  45 
7.3.2.4.2    The Panel's assessment on whether the United  States  has demonstrated the necessity  
of the measures at issue  ................................ ................................ ................................ ... 47 
7.3.2.4.2.1    Importance of the pursued policy objective  ................................ .......................  48 
7.3.2.4.2.2    Restrictive impact of the challenged measures on trade  ................................ ....... 49 
7.3.2.4.2.3    Contribution of the measures to the pursued public morals objective as invoked by 
the United  States  ................................ ................................ ................................ .............  49 
Contribution of the imposition of additional duties on List 1 products to the pursued public 
morals objective as invoked by the United  States  ................................ ............................  52 
Products covered by List 1  ................................ ................................ .......................  52 
The initial narrowing of the range of products covered by List 1  ................................ ..... 55 
The exclusion of particular products from the scope of the  additional duties  ....................  57 
Contribution of the imposition of additional duties on List 2 products to the pursued public 
morals objective as invoked by the United  States  ................................ ............................  60 
7.3.2.4.2.4    Preliminary conclusion on necessity  after the initial "weighing and balanc ing" of 
three  factors  ................................ ................................ ................................ ...................  62 
7.3.2.4.2.5    Comparison with reasonably available alternative measures  ................................ . 63 
7.3.2.5    Conclusion on whether the measures are provisionally justified under subparagraph (a) 
of Article  XX of the GATT  1994 ................................ ................................ ...........................  63 
7.3.3   Whether the United  States  has demonstrated that the measures satisfy the requirements 
of the chapeau of Article  XX of the GATT  1994 ................................ ................................ ..... 64 
8   CONCLUSIONS AND RECOMMENDATION(S)  ................................ ..............................  65 
9   CONCLUDING COMMENTS  ................................ ................................ ..........................  65 
 
 WT/DS543/R  
 
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  LIST OF ANNEXES  
ANNEX A  
WORKING PROCEDURES OF THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of China  12 
Annex  B-2 Integrated executive summary of the arguments of the United  States  20 
ANNEX C  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Australia  42 
Annex  C-2 Integrated executive summary of the arguments of Brazil  44 
Annex  C-3 Integrated executive summary of the arguments of the European  Union  46 
Annex  C-4 Integrated executive summary of the arguments of Japan  49 
Annex  C-5 Integrated executive summary of the arguments of New Zealand  51 
Annex  C-6 Integrated executive summary of the arguments of Singapore  52 
Annex  C-7 Integrated executive summary of the arguments of Chinese Taipei  57 
 
 
  WT/DS543/R  
 
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  CASES CITED IN THIS REPORT  
Short Title  Full Case Title and Citation  
Argentina – Financial 
Services  Appellate  Body Report, Argentina – Measures Relating to Trade in Goods and 
Services , WT/DS453/AB/R  and Add.1,  adopted 9  May 2016, DSR 2016:II, 
p. 431 
Argentin a – Financial 
Services  Panel  Report , Argentina – Measures Relating to Trade in Goods and Services , 
WT/DS453/R  and Add.1, adopted 9  May 2016, as modified by Appellate  Body 
Repor t WT/DS453/AB/R, DSR 2016:II, p.  599 
Argentina – Footwear (EC)  Panel  Report , Argentina – Safeguard Measures on Imports of Footwear , 
WT/DS121/R , adopted 12  January  2000, as modified by Appellate  Body Report 
WT/DS121/AB/R, DSR 2000:II, p.  575 
Argentina – Textiles and 
Apparel  Appellate  Body Report, Argentina – Measures Affecting Imports of Footwear, 
Textiles, Apparel and Other Items , WT/DS56/AB/R  and Corr.1, adopted 
22 April 1998, DSR 1998:III, p.  1003 
Australia – Salmon  Appellate  Body Report, Australia – Measures Affectin g Importation of Salmon , 
WT/DS18/AB/R , adopted 6  November  1998, DSR 1998:V III, p.  3327 
Brazil – Desiccated Coconut  Appellate  Body Report, Brazil – Measures Affecting Desiccated Coconut , 
WT/DS22/AB/R , adopted 20  March  1997, DSR 1997:I, p.  167 
Brazil – Retreaded Tyres  Appellate  Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/AB/R , adopted 17  December  2007, DSR 2007:IV, p.  1527 
Brazil – Taxation  Panel  Report s, Brazil – Certain Measures Concerning Taxation and Charges , 
WT/DS472/R , Add.1 and Corr.1 / WT/DS497/R , Add.1 and Corr.1, adopted 
11 January  2019, as modified by Appella te Body Reports WT/DS472/AB/R / 
WT/DS497/AB/R  
Canada – Aircraft  Panel  Report , Canada – Measures Affecting the Export of Civilian Aircraft , 
WT/DS70/R , adopted 20  August  1999, upheld by Appellate  Body Report 
WT/DS70/AB/R, DSR 1999:IV, p.  1443 
Canada – Wheat Exports 
and Grain Imports  Panel  Report , Canada – Measures Relating to Expor ts of Wheat and Treatment 
of Imported Grain , WT/DS276/R , adopted 27  September  2004, upheld by 
Appellate  Body Report WT/DS27 6/AB/R, DSR 2004:VI, p.  2817 
Chile – Price Band System  Appellate  Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R , adopted 
23 October  2002, DSR 2002:VIII, p.  3045 (Corr.1, DSR 2006:XII, p.  5473)  
Chile – Price Band System 
(Article  21.5 – Argentina)  Appellate  Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse to Article  21.5 of the DSU 
by Argentina , WT/DS207/AB/RW , adopted 22  May 2007, DSR 2007:II, p.  513 
China – Publicat ions and 
Audiovisual Products  Appellate  Body Report, China – Measures Affecting Trading Rights and 
Distribution Services for Certain Publications and Audiovisual Entertainment 
Products , WT/DS363/AB/R , adopted 19  January  2010, DSR 2010:I, p.  3 
China – Publications and 
Audiovisual Products  Panel  Report , China – Measures Affectin g Trading Rights and Distribution 
Services for Certain Publications and Audiovisual Entertainment Products , 
WT/DS363/R  and Corr.1, adopted 19  January  2010, as modified by 
Appellate  Body Report WT/DS363/AB/R, DSR 2010:II, p.  261 
China – Raw Materials  Appellate  Body Reports, China – Measures Related to the Exportation of Various 
Raw Materials , WT/DS394/AB/R  / WT/DS395/AB/R  / WT/DS398/AB/R , adopted 
22 February  2012, DSR 2012:VII, p.  3295 
China – Raw Materials  Panel  Report s, China – Measures Related to the Exportation of Various R aw 
Materials , WT/DS394/R , Add.1 and Corr.1 / WT/DS395/R , Add.1 and Corr.1 / 
WT/DS398/R , Add.1 and Corr.1, adopted 22  February  2012, as modified by 
Appellate  Body Reports WT/DS394/AB/R / WT/DS395/AB /R / WT/DS398/AB/R, 
DSR 2012:VII, p.  3501 
China – Rare Earths  Appellate  Body Reports, China – Measures Related to the Exportation of Rare 
Earths, Tungsten, and Molybdenum , WT/DS431/AB/R  / WT/DS432/AB/R  / 
WT/DS433/AB/R , adopted 29  August  2014, DSR 2014:III, p.  805 
China – Rare Earths  Panel  Report s, China – Measures Related to the Exportation of Rare Earths, 
Tungsten, and Molybdenum , WT/DS431/R  and Add.1 / WT/DS432/R  and Add.1 
/ WT/DS433/R  and Add.1, adopted 29  August  2014, upheld by Appellate  Body 
Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, DSR  2014:IV, 
p. 1127 
Colombia – Ports of Entry  Panel  Report , Colombia – Indicative Prices and Restrictions on Ports of Entry , 
WT/DS366/R  and Corr.1, adopted 20  May 2009, DSR 2009:VI, p.  2535 
Colombia – Textiles  Appellate  Body Report, Colombia – Measures Relating to the Importation of 
Textiles, Apparel and Footwear , WT/DS461/AB/R  and Add.1, adopted 
22 June 2016, DSR 2016:III, p.  1131 
Colombia – Textiles  Panel  Report , Colombia – Measures Relating to the Importation of Textiles, 
Apparel and Footwear , WT/DS461/R  and Add.1, adopted 22  June 2016, as 
modified by Appellate  Body Report WT/DS461/AB/R, DSR 2016:III, p.  1227 WT/DS543/R  
 
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  Short Title  Full Case Title and Citation  
Dominican  Republic  – 
Import and Sale of 
Cigarettes  Appellate  Body Report, Dominican  Republic  – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R , adopted 
19 May 2005, DSR 2005:XV, p.  7367 
EC – Asbestos  Appellate  Body Report, European  Communities  – Measures Affecting Asbestos 
and Asbestos -Containing Products , WT/DS135/AB/R , adopted 5  April 2001, DSR 
2001:VII, p.  3243 
EC – Asbestos  Panel  Report , European  Communities  – Measures Affecting Asbestos and  
Asbestos -Containing Products , WT/DS135/R  and Add.1, adopted 5  April 2001, 
as modified by Appellate  Body Report WT/DS135/AB/R, DSR 2001:VIII, p.  3305 
EC – Bananas III  Appellate  Body Report, European  Communities  – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R , adopted 25  September  1997, 
DSR 1997:II, p.  591 
EC – Bananas III 
(Article  21.5 – Ecuador II) / 
EC – Bananas III 
(Article  21.5 – US) Appellate  Body Reports, European  Communities  – Regime for the Importation, 
Sale and Distribution of Bananas – Second Recourse to Article  21.5 of the DSU 
by Ecuador , WT/DS27/AB/RW2/ECU , adopted 11  December  2008, and Corr.1 / 
European  Communities  – Regime for the Importation, Sale and Distribution of 
Bananas – Recourse to A rticle 21.5 of the DSU by the United  States , 
WT/DS27/AB/RW/USA  and C orr.1, adopted 22  December  2008, DSR 
2008:XVIII, p.  7165 
EC – Bananas III 
(Guatemala and Honduras)  Panel  Report , European  Communities  – Regime for the Importation, Sale and 
Distribution of Bananas, Complaint by Guatemala and Honduras , 
WT/DS27/R/GTM , WT/DS27/R/HND , adopted 25  September  1997, as modified 
by Appellate  Body Report WT/DS27/AB/R, DSR 1997:II, p.  695 
EC – Bananas III (Ecuador) 
(Article  22.6 – EC) Decision by the Arbitrator, European  Communities  – Regime for the 
Importation, Sale and Distribution of Bananas – Recourse to Arbitration by the 
European  Communities  under Article  22.6 of the DSU , WT/DS27/ARB/ECU , 
24 March  2000, DSR 2000:V, p.  2237 
EC – Bananas III (US) 
(Article  22.6 – EC) Decision by the Arbitrator, European  Communities  – Regime for the 
Importation, Sale  and Distribution of Bananas – Recourse to Arbitration by the 
European  Communities  under Article  22.6 of the DSU , WT/DS27/ARB , 
9 April 1999, DSR 1999:II, p.  725 
EC – Chicken Cuts  Appellate  Body Report, European  Communities  – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R , WT/DS286/AB/R , adopted 
27 September  2005, and Corr.1, DSR 2005:XIX, p.  9157 
EC – Chicken Cuts  Panel  Report s, European  Communities  – Customs Classification of Frozen 
Boneless Chicken Cuts , WT/DS269/R  (Brazil)  / WT/DS286/R  (Thailand) , 
adopted 27  September  2005, as modified by Appellate  Body Report 
WT/DS269/AB/R, WT/DS286/AB/R, DSR 2005:XIX , p. 9295 / DSR 2005:XX, 
p. 9721 
EC – Hormones  Appellate  Body Report, European  Communities  – Measures Concerning Meat 
and Meat Products (Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 
13 February  1998, DSR 1998:I, p.  135 
EC – Hormones (Canada) 
(Article  22.6 – EC) Decision by the Arbitrator, European  Communities  – Measures Concerning Meat 
and Meat Products (Hormones), Original Complaint by Canada – Recourse to 
Arbitration by the European  Communities  under Article  22.6 of the DSU , 
WT/DS48/ARB , 12 July 1999, DSR 1999:III, p.  1135 
EC – IT Products  Panel  Report s, European  Communities  and its member States – Tariff 
Treatment of Certain Information Technology Products , WT/DS375/R  / 
WT/DS376/R  / WT/DS377/R , adopted 21  September  2010, DSR 2010:III, 
p. 933 
EC – Seal Products  Appellate  Body Reports, European  Communities  – Measures Prohibiting the 
Importation and Marketing of Seal Products , WT/DS400/AB/R  / 
WT/DS401/AB/R , adopted 18  June 2014, DSR 2014:I, p.  7 
EC – Seal Products  Panel  Report s, European  Communities  – Measures Prohibit ing the Importation 
and Marketing of Seal Products , WT/DS400/R  and Add.1 / WT/DS401/R  and 
Add.1, adopted 18  June 2014, as modified by App ellate  Body Reports 
WT/DS400/AB/R / WT/DS401/AB/R, DSR 2014:II, p.  365 
EC – Selected Customs 
Matters  Appellate  Body Report, European  Communities  – Selected Customs Matters , 
WT/DS315/AB/R , adopted 11  December  2006, DSR 2006:IX, p.  3791 
EC – Selecte d Customs 
Matters  Panel  Report , European  Communities  – Selected Customs Matters , 
WT/DS315/R , adopted 11  December  2006, as modified by Appellate  Body 
Report WT/ DS315/AB/R, DSR 2006:IX, p.  3915 
EU – Energy Package  Panel  Report , European  Union  and its member States – Certain Measures 
Relating to the Energy Sector , WT/DS476/R  and Add.1, circulated to WTO 
Members 10  August  2018  
EU – PET (Pa kistan)  Appellate  Body Report, European  Union  – Countervailing Measures on Certain 
Polyethylene Terephthalate  from Pakistan , WT/DS486/AB/R  and Add.1, adopted 
28 May 2018 WT/DS543/R  
 
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  Short Title  Full Case Title and Citation  
India – Additional Import 
Duties Panel  Report , India – Additional and Extra -Additional Duties on Imports from 
the United  States , WT/DS360/R , adopted 17  November  2008, as reversed by 
Appellate  Body Report WT/DS360/AB/R, DSR 2008:XX, p.  8317 
India – Autos  Panel  Report , India – Measures Affecting the Automotive Sector , WT/DS146/R , 
WT/DS175/R , and Corr.1, adopted 5  April 2002, DSR 2002:V, p.  1827 
India – Quantitative 
Restrictions  Appellate  Body Report, India – Quantitative Restrictions on Imports of 
Agricultural, Textile and Industrial Products , WT/DS90/AB/R , adopted 
22 September  1999, DSR 1999:IV, p.  1763 
India – Patents (US)  Appellate  Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R , adopted 16  January  1998, DSR 
1998:I, p.  9 
India – Solar Cells  Appellate  Body Report, India – Certain Measures Relating to Solar Cells and 
Solar Modules , WT/DS456/AB/R  and Add.1, adopted 14  October  2016, DSR 
2016:IV, p.  1827 
India – Solar Cells  Panel  Report , India – Certain Measures Relating to Solar Cells and Solar 
Modules , WT/DS456/R  and Add.1, adopted 14  October  2016, as modified by 
Appellate  Body Report WT/DS456/AB/R, DSR 2016:IV, p.  1941 
Indonesia – Import 
Licensing Regimes  Appellate  Body Report, Indonesia – Importation of Horticultural Products, 
Animals and Animal Products , WT/DS477/AB/R , WT/DS478/AB/R , and Add.1, 
adopted 22  November  2017, DSR 2017:VII, p.  3037 
Indonesia – Import 
Licensing Regimes  Panel  Report , Indon esia – Importation of Horticultural Products, Animals and 
Animal Products , WT/DS477/R , WT/DS478/R , Add.1 and Corr.1, adopted 
22 November  2017, as modified by Appellate  Body Report WT/DS477/AB/R, 
WT/DS478/AB/R , DSR 2017:VII, p.  3131 
Japan – Apples  Appellate  Body Report, Japan – Measures Affecting the Importation of Apples , 
WT/DS245/AB/R , adopted 10  December  2003, DSR 2003:IX, p.  4391 
Korea – Dairy  Appellate  Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R , adopted 12  January  2000, DSR 2000:I, 
p. 3 
Korea – Various Measures 
on Beef  Appellate  Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R , WT/DS169/AB/R , adopted 10  January  2001, 
DSR 2001:I, p.  5 
Mexico – Taxes on Soft 
Drinks  Appellate  Body Report, Mexico – Tax Measures on Soft Drinks and Other 
Beverages , WT/DS308/AB/R , adopted 24  March  2006, DSR 2006:I, p.  3 
Peru – Agricultural Products  Appellate  Body Report, Peru – Additional Duty on Imports of Certain 
Agricultural Products , WT/DS457/AB/R  and Add.1, adopted 31  July 2015, DSR 
2015:VI, p.  3403 
Russia – Pigs (EU)  Panel  Report , Russian Federation – Measures on the Importation of Live Pigs, 
Pork and Other Pig Products from the European  Union , WT/DS475/R  and Add.1, 
adopted 21  March  2017, as modified by Appellate  Body Report 
WT/DS475/AB/R , DSR 2017:II, p.  361 
Russia – Tariff Treatment  Panel  Report , Russia – Tariff Treatment of Certain Agricultural and 
Manufacturing Products , WT/DS485/R , Add.1, Corr.1, and Corr.2, adopted 
26 September  2016, DSR 2016:IV, p.  1547 
Thailand – Cigarettes 
(Philippines)  Appellate  Body Report, Thailand – Customs and Fiscal Measures on Cigarettes 
from the Philippines , WT/DS371/ AB/R, adopted 15  July 2011, DSR 2011:IV, 
p. 2203 
Thailand – Cigarettes 
(Philippines) (Article  21.5 – 
Philippines II)  Panel  Report , Thailand – Customs and Fiscal Measures on Cigarettes from the 
Philippines  – Second Recourse to Article  21.5 of the DSU by the Philippines , 
WT/DS37 1/RW2  and Add.1, circulated to WTO Members 12  July 2019  
Thailand – H-Beams  Appellate  Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and 
Sections of Iron or Non -Alloy Steel and H -Beams from Poland , WT/DS122/AB/R , 
adopted 5  April 2001, DSR 2001:VII, p.  2701 
US – 1916 Act ( EC) 
(Article  22.6 – US) Decision by the Arbitrator, United  States  – Anti-Dumping Act of 1916, Original 
Complaint by the European  Communities  – Recourse to Arbitration by the 
United  States  under Article  22.6 of the DSU , WT/DS136/ARB , 
24 February  2004, DSR 2004:IX, p.  4269 
US – FSC (Article  21.5 – 
EC) Appellate  Body Report, United  States  – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Article  21.5 of the DSU by the 
European  Communities , WT/DS108/AB/RW , adopted 29  January  2002, DSR 
2002:I, p.  55 
US – Gambling  Appellate  Body Report, United  States  – Measures Affecting the Cross -Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R , adopted 
20 April 2005, DSR 2005:XII, p.  5663 (and Corr.1, DSR 2006:XII, p.  5475)  
US – Gambling  Panel  Report , United  States  – Measures Affecting the Cross -Border Supply of 
Gambling and Betting Services , WT/DS285/R , adopted 20  April 2005, as 
modified by Appellate  Body Report WT/DS285/AB/R, DSR 2005:XII, p.  5797 
US – Gasoline  Appellate  Body Report, United  States  – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R , adopted 20  May 1996, DSR 1996:I, p.  3 WT/DS543/R  
 
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  Short Title  Full Case Title and Citation  
US – Offset Act (Byrd 
Amendment) (Brazil) 
(Article  22.6 – US) Decision by the Arbitrator, United  States  – Continued Dumping an d Subsidy 
Offset Act of 2000, Original Complaint by Brazil – Recourse to Arbitration by the 
United  States  under Article  22.6 of the DSU , WT/DS217/ARB/BRA , 
31 August  2004, DSR 2004:IX, p.  4341 
US – Poultry (China)  Panel  Report , United  States  – Certain Measures Affecting Imports of Poultry 
from China , WT/DS392/R , adopted 25  October  2010, DSR 2010:V, p.  1909 
US – Renewable Energy  Panel  Report , United  States  – Certain Measures Relating to the Renewable 
Energy Sector , WT/DS510/R  and Add.1, circulated to WTO Members 
27 June 2019  
US – Section 33 7 Tariff Act  GATT Panel  Report , United  States  Section 337 of the Tariff Act of 1930 , L/6439, 
adopted 7  November  1989, BISD  36S/345  
US – Shrimp (Ecuador)   Panel  Report , United  States  – Anti-Dumping Measure on Shrimp from Ecuador , 
WT/DS335/R , adopted on 20  February  2007, DSR 2007:II, p.  425 
US – Shrimp  Appellate  Body Report, United  States  – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R , adopted 6  November  1998, DSR 
1998:VII, p.  2755 
US – Wool Shir ts and 
Blouses  Appellate  Body Report, United  States  – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R , adopted 23  May 1997, and 
Corr.1, DSR 1997:I, p.  323 
US – Zeroing (EC)  Appellate  Body Report, United  States  – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R , adopted 
9 May 2006, and Corr.1, DSR 2006:II, p.  417 
US – Zeroing (Japan) 
(Article  21.5 – Japan)  
 
 Panel  Report , United  States  – Measures Relating to Zeroing and Sunset Reviews 
– Recourse to Article  21.5 of the DSU by Japan , WT/DS322/RW , adopted 
31 August  2009, upheld by Appellate  Body Report WT/DS322 /AB/RW, DSR 
2009:VIII, p.  3553 
US – Zeroing (Japan) 
(Article  21.5 – Japan)  Appellate  Body Report, United  States  – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article  21.5 of the DSU by Japan , 
WT/DS322/AB/RW , adopted 31  August  2009, DSR 2009:VIII, p.  3441 
US – Zeroing (Korea)  Panel  Report , United  States  – Use of Zeroing in Anti -Dumping Measures 
Involving Products from Korea , WT/DS402/R , adopted 24  February  2011, DSR 
2011:X, p.  5239 
 
 WT/DS543/R  
 
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  EXHIBITS REFERRED TO IN THIS REPORT  
Exhibit  Short title  
(if applicable)  Title 
CHN-1  United  States  Schedule of Concessions and Commitments  
CHN-2 Notice of 
20 June 2018 Notice of Action and Request for Public Comment Concerning 
Proposed Determination of Action Pursuant to Section 301: China 's 
Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation, Federal Register, Vol. 83, 
No. 119 (20  June 2018), p.  28710  
CHN-3 Notice of 
21 September  2018 Notice of Modification of Section 301 Action: China 's Acts, Policies, 
and Practices Related to Technology Transfer, Intellectual Property, 
and Innovation, Federal Register, Vol. 83, No. 184 
(21 Septemb er 2018), p.  47974  
CHN-4 Notice of 
9 May 2019 Notice of Modification of Section 301 Action: China 's Acts, Policies, 
and Practices Related to Technology Transfer, Intellectual Property, 
and Innovation, Federal Register, Vol. 84, No. 90 (9  May 2019), 
p. 20459  
CHN-10  Notice of Determination and Request for Public Comment Concerning 
Proposed Determination of Action Pursuant to Section 301: China 's 
Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation, Federal Re gister, vol. 83, 
No. 67 (6  April 2018), p.  14906  
CHN-13  Notice of Modification of Section 301 Action: China 's Acts, Policies, 
and Practices Related to Technology Transfer, Intellectual Property, 
and Innovation, Federal Register, Vol. 83, No. 243 
(19 December  2018), p.  65198  
CHN-14  Notice of Modification of Section 301 Action: China 's Acts, Policies, 
and Practices Related to Technology Transfer, Intellectual Property, 
and Innovation, Federal Register, Vol. 84, No. 43 (5  March  2019), 
p. 7966 
CHN-15  Harmonized Tariff Schedule of the United  States  
CHN-17  Current US Section 301 Tariff Lists  
CHN-20 Procedures for 
Exclusion  Procedures To Consider Requests for Exclusion of Particular Products 
From the Determination of Action Pursuant to Section 301: China 's 
Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation, Federal Register, vol. 83, 
No. 133 (11  July 2018), p.  32181  
CHN-21 Procedures for 
exclusion for List 2 
products  Procedures for Requests to Exclude Particular Products From the 
September 2018 Action Pursuant to Section 301, Federal Register, 
Vol. 84, No. 121 (24  June 2019), p.  29576  
US-1 Section 301 Report  Findings of the Investigation into China 's Acts, Policies, and Practices 
Related to Tec hnology Transfer, Intellectual Property, and Innovation 
under Section 301 of the Trade Act of 1974, 22  March  2018 
US-2 Update to Section 
301 Report  Update Concerning China 's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Proper ty, and Innovation under 
Section 301 of the Trade Act of 1974 , 20 November 20  
US-12  California Code, Penal Code § 484 (General Theft Statute)  
US-13  Texas Penal Code, Title 7, Chapter 31 (Offenses against Property – 
Theft)  
US-14  18 U.S. C. Chapter  31 (Embezzlement and Theft)  
US-16  Computer Fraud and Abuse Act (18 U.S.C. § 1030)  
US-17  Economic Espionage Act of 1996 (18 U.S.C . §§ 1831 -1832)  
US-18  Uniform Trade Secrets Act (1985)  
US-20  Federal Trade Commission Act 5 U.S.C § 45  
US-21  35 U.S.C. §200 (Patents Policy and objective)  
US-22  Restatement (Second) of Contracts, § 205  
US-30  18 U.S.C . Chapter 41  
US-31  Federal Trade Commission Act 5 U.S.C § 45 (Exhibit US –20) and 
Sherman Act, 15 U.S.C. § 1  
US-32  Northern Pacific Railway Co. v. United  States , 356 U.S. 1, 4 -5 (1958)  
US-33 Phase One 
Agreement  Economic and Trade Agreement Between the Government of the 
United  States  of America and the Government of the People 's 
Republic of China  
US-34  USTR, Letters RE: Product Exclusion Requests  
US-35  Notice of the Office of the People 's Government of Guangdong  
Province on the Issuance of  Certain Recommendations of Guangdong 
Province on Accelerating the Development of the  Semiconductor and 
Integrated Circuit Industries , 3 February  2020 
 WT/DS543/R  
 
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  ABBREVIATIONS USED IN THIS REPORT  
Abbreviation  Description  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
GATT  1994 General Agreement on Tariffs and Trade 1994  
USTR  United  States  Trade Representative  
WTO World Trade Organization  
WTO Agreement   Marrakesh Agreement Establishing the World Trade Organization  
 WT/DS543/R  
 
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  1  INTRODUCTION  
1.1.  This dispute concerns China's challenge to United  States ' measures , imposing additional 
ad valorem  duties on certain products imported from China,  pursuant to the findings of an 
investigation the United  States  Trade Representative (USTR) carried out into China's acts, policies, 
and practices related to technology transfe r, intellectual property, and innovation under Section 301 
of the Trade Act of 1974 (Section 301 Report)1, and the arguments raised by the United  States  in 
defence to China's claims.  
1.1  Complaint by China  
1.2.  On 4 April 2018, China requested consultations with the United  States  pursuant to Article  4 of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and 
Article  XXIII of the General Agreement on Tariffs and Trade 1994 (GATT  1994) with respect to the 
measures  and claims set out below.2 
1.3.  On 6 July 20183, 16 July 20184, and 18  September  20185, in addenda to its initial request for 
consultations, China requested further consultations with the United  States  on subsequent related 
legal instruments.  
1.4.  Consultations  were held on 28  August  2018 and 22  October  2018 but failed to resolve the 
dispute.  
1.2  Panel establishment and composition  
1.5.  On 6 December  2018, China requested the establishment of a panel pursuant to Articles 4.7 
and 6 of the DSU and Article  XXIII of the GATT  1994 with standard terms of reference.6 At its 
meeting on 28  January  2019, the Dispute Settlement Body (DSB) established a panel pursuant to 
the request of China in document WT/DS 543/7 , in accordance with Article  6 of the DSU.7 
1.6.  The Panel's terms of reference are the following:  
To examine, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by China in document 
WT/DS543/7 and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.8 
1.7.  On 24 May 2019, China requested the Director -General to determine the composition of the 
panel, pursuant to Article  8.7 of the DSU .9 On 3  June 2019, the Director -General accordingly 
composed the Panel as follows10: 
 
1 Findings of the Investigation into China 's Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974, 22  March  2018, 
(Exhibit  US-1) (Section 301 Report).  
2 WT/DS543/1 -G/L/1219 (China's consultations request).  
3 Addendum  to China's consultations request, WT/DS543/1 /Add.1 -G/L/1219 /Add.1. China specifies that 
"[t]his addendum supplements and does not replace China's request for consultations with the United  States  
dated 4  April 2018." (Ibid. p.  1) 
4 Second addendum  to China's consultations request, WT/DS543/1 /Add.2  – G/L/1219 /Add.2.  China 
specifies that "[t]his addendum supplements and does not replace China's request for consultations dated 
4 April 2018 and the supplemental request for consultations dated 6  July 2018." (Ibid. p.  1) 
5 Third addendum  to China's consultations request, WT/DS543/1 /Add.3  – G/L/1219 /Add.3. China 
specifies that "[t]his addendum supplements and does not replace China's request for consult ations dated 
4 April 2018,  the supplemental request for consultations dated 6  July 2018 and the supplemental request for 
consultations dated 16  July 2018." (Ibid. p.  1) 
6 Request for the establishment of a panel by China, WT/DS543/7 (China's panel request) .  
7 Dispute Settlement Body, Minutes of Meeting held on 28  January  2019, WT/DSB/M/425, para.  5.5. 
8 Constitution Note of the Panel, WT/DS543/8, para.  2.  
9 Constitution Note of the Panel, WT/DS543/8, para.  3.  
10 Constitution Note of the Panel, WT/DS543/8,  para. 4.  WT/DS543/R  
 
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  Chairperson:  Mr Alberto Juan Dumont  
 
Members:   Mr Álvaro Espinoza  
   Ms Claudia Uribe  
 
1.8.  Following the resignation of Ms Claudia Uribe on 25  September  2019, China  requested  the 
Director -General to appoint a replacement. The United  States  agreed to accept as a replacement 
panelist a person named by the Director -General "in the limited circumstances of this dispute ".11 On 
17 October  2019, the Director -General  appointed Ms Athaliah Lesiba Molokomme as a member o f 
the Panel. Accordingly, the composition of the Panel is as follows12: 
Chairperson:  Mr Alberto Juan Dumont  
 
Members:   Mr Álvaro Espinoza  
   Ms Athaliah Lesiba Molokomme  
 
1.9.  Australia, Brazil, Canada, the European  Union , India, Indonesia, Japan, Kazakhstan, t he 
Republic of Korea, New Zealand, Norway, the Russian Federation, Singapore, Chinese Taipei, Turkey, 
and Ukraine notified their interest in participating in the Panel proceedings as third parties.  
1.3  Panel proceedings  
1.10.  After consultation with the parties, the  Panel adopted its Working Procedures13 and timetable 
on 21  June 2019. On 18  October  2019, the day after the Director -General appointed Ms Athaliah 
Lesiba Molokomme to replace Ms Claudia Uribe as a member of the Panel, the United  States  
suggested a delay in the date for the first substantive meeting in order to allow Ms Molokomme to 
become acquainted with the matters at issue in advance of the first substantive meeting and to allow 
her to meaningfully participate in the preparation for t he first substantive meeting. The Panel 
modified the timetable so as not to issue advance questions to the Parties  on 17  October  2019,  but 
decided to maintain the scheduled date of the first substantive meeting.  Following a request from 
the United  States , and in light of China's comments thereon, the Panel revised its timetable on 
12 December 2019, to provide both parties with additional time to submit their second written 
submissions. The Panel further revised its timetable on 2  March  2020, following consu ltations with 
the parties, in order to specify the dates for the final stages of the proceedings.  
1.11.  China and the United  States  submitted their first written submissions on 23  July 2019 and 
27 August 2019, respectively. On 10  September  2019, the Panel receiv ed third -party submissions 
from Brazil and the European  Union .  
1.12.  The Panel held a first substantive meeting with the parties from 29-31 October  2019. A 
session with the third parties took place on 30  October  2019, during which Australia, the 
European  Union , New Zealand, Japan, Singapore and Chinese Taipei made oral statements. Prior to 
this meeting, on 28  October  2019, the Panel sent the parties a list of questions for preliminary oral 
responses at the meeting. After the first day of the meeting, on 30  Octob er 2019, the Panel sent the 
parties a list of additional questions for preliminary oral responses on the second day of the meeting. 
Following the meeting, on 1  November  2019, the Panel sent a revised and combined list of written 
questions to the parties. On the same date, the Panel also sent written questions to the third parties. 
The Panel received responses to these questions on 20  November 2019. The third parties submitted 
their integrated executive summaries on the same day.14   
1.13.  On 8 January  2020, the parties filed their second written submissions to the Panel.  
1.14.  The Panel held a second substantive meeting with the parties on 25 and 26  February  2020. 
Prior to this meeting, on 12  February  2020, the Panel sent the parties a list of questions for 
preliminary oral responses at the meeting. After the first day of the meeting, on 25  February  2020, 
 
11 United  States' comments on the draft descriptive part of the Panel  Report, para.  3.  
12 Addendum to the Constitution Note of the Panel, WT/DS543/8/Add.1.  
13 See the Panel's Working Procedures in Annex A -1. 
14 Specifically, the Panel received integrated executive summaries from Australia, Brazil, the 
European  Union , Japan, New Zealand,  and Singapore. Chinese Taipei informed the Panel that its third -party 
oral s tatement should serve as its executive summary.  WT/DS543/R  
 
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  the Panel sent the parties an additional question for preliminary oral response on the second day of 
the meeting. Following the meeting, on 28  February  2020,  the Panel sent a revised and combined 
list of written questions to the parties. The Panel received responses to these questions on 17  March 
2020. The Panel received parties' comments on each other's responses on 31  March  2020. The 
parties submitted their integrated executive summaries on 7  April 2020. On the same day, China 
requested the Panel to reject , as untimely filed,  Exhibit US -35, which the United  States  submitted 
with its comments on China's responses to the Panel's questions after the second subst antive 
meeting. The Panel invited the United  States  to comment on China's request. The Panel received 
the United  States ' comments on China's request on  9 April 2020.  
1.15.   On 15  April 2020, the Panel issued the descriptive part of its Report to the parties.  On 
29 April 2020, the Panel received the parties' comments on the descriptive part of its Report. The 
Panel issued its Interim Report to the parties on 19 May 2020. The parties submitted written 
requests for the Panel to review precise aspects of the Interim  Report on 2  June 2020. Neither party 
requested that an interim review meeting  be held . The Panel provided  the parties with an opportunity 
to comment on each other's requests for review. The parties submitted their comments on 
9 June 2020. The Panel issued its Final Report to the parties on 19  June 2020.  
2  FACTUAL ASPECTS AND MEASURES AT ISSUE  
2.1.  This section of the Report provides a descriptive overview of the factual aspects of the 
measures at issue in this dispute. The precise scope of the second measu re at issue in this dispute 
is subject to disagreement between the parties in the context of a discussion of the Panel's terms of 
reference. The Panel will, therefore, address the scope of the second measure in more detail as part 
of its findings in Sectio n 7 of this Report.  
2.2.  China challenges the following measures adopted by the United  States15: 
• Additional ad valorem duties of 25%, imposed on 20  June 2018 on a list of 818 tariff 
subheadings with an approximate annual trade value of USD 34 billion of product s imported 
from China, as of 6  July 2018 (List 1).16 
• Additional ad valorem duties, imposed on 21  September  2018 on a list of 5,745 tariff 
subheadings with an approximate annual trade value of USD 200 billion of products imported 
from China, as of 24  Septem ber 2018 (List 2).17 The Notice of 21  September  2018 set the 
rate of additional ad valorem duties at 10% until the end of the year, and announced that the 
rate of additional duties would increase to 25% on 1  January  2019.18 The increase in the rate 
 
15 China's panel request reads as follows:  
The measures at issue in this request include the actions taken by the United  States , based on 
the USTR's investigation into China's acts, policies, and practices re lated to technology transfer, 
intellectual property, and innovation under Section 301 of the Trade Act of 1974 and pursuant to 
sections 301(b), 301(c), and 304(a) of the Trade Act of 1974 and the direction made in the 
President's statement to impose an add itional ad valorem duty upon certain imported products of 
Chinese origin. The above -mentioned actions include:  
1. An additional 25% duty ad valorem on approximately $34 billion worth of imports from 
China announced by the USTR on 15  June 2018 and implement ed by the Federal Register notice 
of 20 June 2018 (Notice of Action and Request for Public Comment Concerning Proposed 
Determination of Action Pursuant to Section 301: China's Acts, Policies and Practices Related to 
Technology Transfer, Intellectual Proper ty and Innovation, (83 Fed. Reg. 28,710)); and  
2. An additional 10% duty ad valorem on approximately $200 billion worth of imports 
from China implemented on 24  September  2018, and the rate of additional duty will increase to 
25% ad valorem on 1  January  2019, according to the announcement by the USTR on 
21 September 2018 (Notice of Modification of Section 301 Action: China's Acts, Policies and 
Practices Related to Technology Transfer, Intellectual Property and Innovation, 
(83 Fed. Reg. 47,974)). (WT/DS543/7,  p. 2).  
16 Notice of Action and Request for Public Comment Concerning Proposed Determination of Action 
Pursuant to Section 301: China 's Acts, Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation, Federal Register, V ol. 83, No. 119 (20  June 2018), p.  28710 (Notice of 
20 June 2018) (Exhibit CHN -2). 
17 Notice of Modification of Section 301 Action: China 's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Property, and Innovation, Federal Register , Vol. 83, No. 184 
(21 September  2018), p.  47974, (Notice of 21  September  2018) (Exhibit CHN -3). 
18 Notice of 21  September  2018, (Exhibit CHN -3), p.  47975.  WT/DS543/R  
 
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  of additional duties  was postponed twice.19 On 9 May 2019, the United  States  increased the 
rate of additional duties on List 2 products from 10% to 25%, as of 10  May 2019.20 
2.3.  In its panel request, China lists 16 legal instruments t hrough which, inter alia , the measures 
at issue were adopted.21 
3  PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
3.1.   China requests that:  
• The Panel find that the United  States  has violated Article  I:1 of the GATT  1994 through its 
application of additional t ariffs that apply only to products originating from China; and  
• The Panel find that the United  States  has violated Articles II:1(a) and (b) of the GATT  1994 
through its application of additional tariffs in excess of those contained in its Schedule.22 
3.2.  China further requests that the Panel recommend that the United  States  bring its measures 
into conformity with its obligations under the GATT  1994.23 
3.3.  The United  States  requests that:  
• The Panel reject China's request for findings under Articles I and II of the GATT  1994 with 
respect to the allegedly WTO -inconsistent tariff measures, and, instead, issue a report with a 
"brief description" of the pertinent facts of t he dispute and "reporting that a solution has been 
reached" by the parties, as prescribed by Article  12.7 of the DSU. 24 
• If the Panel examines China's contentions : 
• The Panel find that the measures at issue are justified under Article  XX(a) of the 
GATT  1994; and  
• The Panel find that the increase of the additional duties on List 2 products from 10% to 
25% falls outside the Panel's terms of reference.25 
4  ARGUMENTS OF THE PARTIES  
4.1.  The arguments of the parties are reflected in their executive summaries, pr ovided to the Panel 
in accordance with paragraph 22 of the Working Procedures adopted by the Panel (see Annexes B -1 
and B -2). 
5  ARGUMENTS OF THE THIRD PARTIES  
5.1.  The arguments of Australia, Brazil, the European  Union , Japan, New Zealand, Singapore and 
Chinese T aipei are reflected in their executive summaries, provided in accordance with 
paragraphs  22 and 26 of the Working Procedures adopted by the Panel (see Annexes C -1, C-2, C-3, 
C-4, C-5, C-6, and C -7). 
 
19 Notice of Modification of Section 301 Action: China 's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Property, and Innovation, Federal Register, Vol. 83, No. 243 
(19 December  2018), p.  65198 (Exhibit CHN -13); and Notice of Modi fication of Section 301 Action: China 's 
Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, Federal 
Register, Vol. 84, No.  43 (5  March  2019), p.  7966 (Exhibit CHN -14). 
20 Notice of Modification of Section 301  Action: China 's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Property, and Innovation, Federal Register, Vol. 84, No. 90 (9  May 2019), 
p. 20459 (Notice of 9  May 2019)  (Exhibit CHN -4).  
21 China's panel request, pp.  2-4. 
22 China's first written submission, para.  79.  
23 China's first written submission, para.  6. 
24 United  States ' first written submission, para.  113.  
25 United  States ' first written submission, para.  114.  WT/DS543/R  
 
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  5.2.  Canada, India, Indonesia, Kazakhstan, the Republic of Kor ea, Norway, the Russian Federation, 
Turkey , and Ukraine did not submit written or oral arguments to the Panel.  
6  INTERIM REVIEW  
6.1.  On 19  May 2020, the Panel issued its Interim Report to the parties. On 2  June 2020, the parties 
submitted written requests for the  Panel to review precise aspects of the Interim Report. On 
9 June 2020, the parties submitted comments on each other's requests for review. Neither party 
requested an interim review meeting.  
6.2.  In accordance with Article  15.3 of the DSU, this section of the Panel  Report  describes the 
parties' requests for review at the interim review stage and the Panel's response to them. The 
numbering of some paragraphs and footnotes in the Final Report has changed from the numbering 
in the Interim Report. Unless otherwise specifically indicated, the references to paragraph numbers 
in this section refer to the paragraph  and footnote numbers in this Final Report, and not the 
numbering in the Interim Report. This section of the Panel's Report constitutes an integral part of 
the Panel's findings.   
6.3.  The Panel corrected typographical, stylistic and other non -substantive aspects of the Report, 
including those identified by the parties.  
6.4.  Both parties request ed that the Panel revise its depiction of the parties' and third parties' 
arguments in a number of paragraphs. In response to these requests, and on its own review of the 
Report, the Panel adjusted the following paragraphs : 7.4, 7.113 , 7.130 , 7.138 , 7.148 , 7.149 , 7.164 ; 
and footnotes : 33, 71, 72, 73, 75, 204, 219, 245, 247, 248, 250, 251, 269, 272, 278, 279, 315, 
363, and 379. The Panel inserted footnotes  34, 246, 270, 271, and 296. 
6.5.  The United  States  requested the Panel to amend the wording of paragraph 7.156  to reflect 
more accurately the Panel's functions with respect to t reaty interpretation. China encouraged the 
Panel to reject the proposed addition . The Panel has made textual modifications to this paragraph . 
6.6.  With respect to paragraphs 7.177, 7.178, 7.179, 7.180 , and 7.185 of the Interim Report,  the 
United  States  requested that the Panel further consider its conclusion s and further explain the 
underlying logic of its reasoning, in light of the United  States ' argument that "a measure does not 
have to only apply to products that are inherently morally offensive to b e justified under 
Article  XX(a)".26 The United  States  argues that the Panel "determined, contrary to the U.S. position, 
that a connection between the public morals objective and the products specifically affected by a 
measure is the only means of proving n ecessity under Article  XX(a) in this dispute".27 China oppose d 
the United  States ' request . 
6.7.  The Panel considers that the United  States ' request , as referred to  in the preceding paragraph , 
mischaracteri zes the Panel's approach in this area. The aim of the Panel 's enquiry was to locate an 
appropriate nexus between the measures the United  States  adopted  and the invoked public morals 
concerns in order to inform the examination of the question of whether and how the measure s could 
be shown or demonstrated to be "necessary" to protect public morals. The Panel, for its part, did 
not find it necessary to make any finding on the abstract issue of the extent to which Article  XX(a) 
may allow for the application of measures on prod ucts that did not embody morally offensive 
conduct . 
6.8.  The Panel observes that even assuming, arguendo , that a measure does not have to only apply 
to products that are considered to be inherently  morally offensive to be justified under Article  XX(a), 
it remained for the United  States  to explain how its chosen  measures were apt to contribute to its 
public morals objectives , and how it ensured that any WTO -inconsistent duties did not apply beyond 
what was necessary within the meaning of Article  XX(a) of the  GATT  1994. While the United  States  
asserted that any measures it adopted were necessary, the Panel considers that the United  States  
did not offer the requisite explanation that Article  XX envisages to substantiate and justify this 
assertion.  The Panel has , however, in response to the United  States ' request in this area, introduced 
some modifications and inconsequential changes to further clarify its reasoning in paragraphs  7.178 , 
 
26 United  States ' request for review of precise aspects of the Interim Report of the Panel, para.  13. 
27 United  States' request for review of precise aspects of the Interim Report of the Panel, para.  13.  WT/DS543/R  
 
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  7.179 , 7.180 , 7.185 , 7.191 , 7.193 , 7.206 , 7.222 , and 7.236  and in the heading of the first subsection 
of the section "Contribution of the imposition of additional duties on List 1 products to the pursued 
public morals objective as invoked by the United  States " in Section  7.3.2.4.2.3 . The Panel also added  
paragraph  7.214  and footnote 365. 
6.9.  With respect to paragraphs 7.231, 7.232 , 7.233 , and 7.234 of the Interim Report , the 
United  States  requested that the Panel "explain what other alternatives are available to t he 
United  States  to protect its public morals, and what effect China's failure to identify any other 
reasonably available alternative has on the Panel's necessity analysis".28 China opposed the 
United  States ' request . 
6.10.  The Panel notes  that it had reached the preliminary  conclusion that the United  States  had not 
met its burden of demonstrating that its measures were provisionally justified under Article  XX(a) . 
In particular, the United  States  had not met its burden of demonstrating how its restrictions 
contributed to protecting its public morals and did not extend beyond what was necessary . 
Consequently, the Panel was not required  to reach  any conclusion on the consequence s of China 's 
refusal to suggest less trade restrictive or WTO -consistent reasonably available alternative measure. 
The Panel has introduced some modifications to clarify its reasoning in paragraphs  7.232  and 7.235 . 
The Panel also added  footnotes  461 and 462. 
7  FINDINGS  
7.1.  In this dispute, China claims that the United  States  has violated Articles I:1, II:1(a) and II:1(b) 
of the GATT  1994. In response to China's challenge, the United  States  raises three sets of 
arguments: (i) that the parties have reached a solution within the meaning of the last sentence of 
Article  12.7 of the DSU and the Panel should confine its report to a brief statement of the facts and 
a notation that a settlement has been reached; (ii)  that the increase of t he rate of additional duties 
on List 2 products from 10% to 25% falls outside the Panel's terms of reference; and (iii)  that in 
any case, the measures at issue are justified under Article  XX(a) of the GATT  1994. 
7.2.  Accordingly, the Panel will begin by address ing the preliminary issues raised by the 
United  States ' first two series of arguments (i.e. whether the parties have reached a solution within 
the meaning of Article  12.7 of the DSU and whether the increase of th e additional duties on List 2 
products from 10% to 25% falls within the Panel's terms of reference), as well as  China's request 
that the Panel reject an exhibit submitted by the United  States . The Panel will then proceed to 
examine whether the measures at issue are inconsistent with Articles I:1 and II:1(a) and (b) of the 
GATT  1994, and then, following this, will examine whether any inconsistency of the challenged 
measures with these provisions is justified as necessary to protect the US public morals , pursuant 
to Article  XX(a) of the GATT  1994. 
7.1  Preliminary issues  
7.1.1   Whether the parties have reached a solution  within the meaning of Article  12.7 of 
the DSU  
7.1.1.1   Parties' arguments  
7.3.  The first set of arguments the United  States  raised relates to the legal implications of the 
ongoing bilateral negotiations between China and the United  States  to address several trade 
concerns – including some matters  covered by the current WTO dispute.  
7.4.  According to the United  States , "there is no legal basis for the Panel to issue the findings or 
recommendations requested by China because the Parties have reached a 'settlement of the matter' 
within the meaning of Article  12.7 of the DSU".29 Accordingly, the United  States  argues that, 
consistent with the requirements of Article  12.7 of the DSU, the Panel should reject China 's request 
for legal findings on the measures at issue and confine its report to a brief statement of the facts 
and a notation that a settlement has been reached.30 The United  States  recalls that "[w]here a 
 
28 United  States ' request for review of precise aspects of the Interim Report of the Panel, para.  16. 
29 United  States ' second written submission, para.  1.  
30 United  States ' second written submission, para.  5. WT/DS543/R  
 
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  settlement of the matter among the parties to the dispute has been found", Article  12.7 of the DSU 
requires that "the report of the panel shall be confined to a brief description of the case and to 
reporting that a solution has been reached".31 The United  States  asserts that the parties have agreed 
to "settle this matter outside the WTO system"32, noting that China has already "imposed retaliatory 
tariffs"  "without first obtaining the authorization from the DSB pursuant to the DSU" .33 However, t he 
Panel ob serves that the  Government of the  United  States  has not , up to the present time,  initiated 
action under the DSU with respect to these tariffs . Instead, the United  States  claims that the parties 
have undertaken a bilateral negotiation process that amounts t o a solution within the meaning of 
Article  12.7 of the DSU.34 
7.5.  In support of its argument, during  the Panel's second substantive meeting with the parties, the 
United  States  pointed to the Economic and Trade Agreement between the two countries (Phase One 
Agreement)35 as evidence that a bilateral negotiation process is ongoing and has been fruitful. 
According to the United  States , Article  12.7 of the DSU simply refers to circumstances where a 
"settlement of the matter among the parties to the dispute has been found" and does not specify or 
delimit the evidence that a panel may consult to discern the existence of a "settlement". The 
United  States  asserts that Article  12.7 of the DSU covers the present situation.  For these reasons, 
the United  States  consider s that the Panel should not issue any of the findings or recommendations 
China requested but should instead issue a brief report stating  that the parties have reached their 
own solution, in accordance with the third sentence of Article  12.7 of the DSU.  
7.6.  China raises a series of arguments on the scope of any mutually agreed solution and on the 
need to notify such a MAS to the DSB pursuant to Article  3.6 of the DSU. China insists that the 
parties have not developed a mutually satisfactory solution and that "th e matter set forth in China's 
Panel Request remains unresolved and subject to adjudication by the Panel."36 China expressly 
states that the Phase One Agreement is not legally relevant in the current dispute, because (i) it 
does not address the measures at issue, and (ii) the additional duties subject to this dispute remain 
in effect.37 Accordingly, China assert s that it has never agreed to any process or other solution that 
would constrain the Panel from issuing the findings and recommendations it has requested. China 
argues that the parties have not settled the matter within the meaning of Article  12.7 (last se ntence) 
of the DSU, because the parties have not found a " mutually  agreed solution" within the meaning of 
Article  3.6 of the DSU, or notified such a solution to the DSB.38 
7.1.1.2   Panel's findings  
7.7.  Under the DSU, a WTO Member has the right to initiate a WTO dispute  whenever it considers 
that any benefits accruing to it are being impaired by measures taken by another Member (Article  3.3 
of the DSU). In EC – Bananas III , the United  States  argued successfully that WTO  Members do not 
have to demonstrate their legal inte rest to initiate a WTO dispute, and have a broad discretion to 
 
31 Article  12.7 of the DSU reads as follows:  
Where the parties to the dispute have failed to develop a mutually satisfactory solution, the 
panel shal l submit its findings in the form of a written report to the DSB. In such cases, the 
report of a panel shall set out the findings of fact, the applicability of relevant provisions and the 
basic rationale behind any findings and recommendations that it make s. Where a settlement of 
the matter among the parties to the dispute has been found, the report of the panel shall be 
confined to a brief description of the case and to reporting that a solution has been reached.  
(emphasis added)  
32 United  States ' second wr itten submission, para.  6. 
33 United  States ' first written submission, para.  25; and second written submission, paras.  7-10.  
34 To the Panel, it appears that the United  States considers that an agreed bilateral negotiation process 
outside the WTO constitute s a "solution" within the meaning of Article  12.7 of the DSU, even if the bilateral 
negotiations do not yield any results, and even if the issues remain unresolved.  
35 Economic and Trade Agreement Between the Government of the United  States  of America and t he 
Government of the People 's Republic of China, signed on 15 January 2020, entered into force on 
14 February  2020 (Exhibit US -33). 
36 China 's response to Panel question  No. 9(a) , para.  11. See also  China's response to Panel question 
No. 18, para.  2. 
37 China's response to Panel question No. 18, paras.  1 and 3. China explains that since the Phase One 
Agreement "does not address the duties which are the basis for this dispute before the Panel", and "says 
nothing about resolving this pending dispute before  the Panel", the Phase One Agreement "does not support 
the United  States ' argument that it constitutes a 'mutually satisfactory solution' under Article  12.7 of the DSU" . 
(China's response to Panel question No. 18, para.  4) 
38 See China' s response to Panel question  No. 9(c),  para. 14; and China's second written submission, 
para. 11. (emphasis added)  WT/DS543/R  
 
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  decide whether to bring a case whenever they consider that such proceedings would be "fruitful" in 
terms of "securing a positive solution" to the dispute (Article  3.7 of the DSU).39 In addition, the WTO 
dispute settlement process is compulsory and automatic, so WTO Members are " entitled  to a ruling 
by a WTO panel".40 
7.8.  Therefore, the initiation of the WTO dispute settlement process should, in principle, result in a 
decision by an adjud icating body41, with findings on the claims raised, unless the complaining 
Member withdraws its complaint or requests a suspension of the proceedings that allows for the 
Panel's jurisdiction to lapse, or unless the parties reach a mutually agreed solution.  A panel is thus 
required to discharge its adjudicative responsibilities under the DSU, unless the parties relinquish 
their rights under DSU.  
7.9.  Previous panels and the Appellate  Body have traditionally adopted a high threshold when 
analysing whether WTO Memb ers have relinquished their rights under the DSU, including through 
mutually agreed solutions.42 The Appellate  Body has cautioned against assuming "lightly" any 
relinquishment of the rights granted by the DSU: "in order to ascertain whether a Member has 
relinquished, by virtue of a mutually agreed solution in a particular dispute, its right to have recourse 
to WTO dispute settlement in respect of that dispute, greater scrutiny by a panel or the 
Appellate  Body may be necessary."43 
7.10.  The United  States  argues th at the parties have reached "their own solution "44 consisting of 
an agreement to resolve their dispute outside of the WTO system. In its response to a Panel question, 
the United  States  clarified its argument by specifying that a solution  within the meaning  of 
Article  12.7 of the DSU could include a process of bilateral negotiations.45 
7.11.  The United  States ' argument raises the question whether an engagement to pursue a bilateral 
negotiations process aimed at resolving a disagreement between the parties can be c haracterized 
as a mutually satisfactory solution within the meaning of Article  12.7 of the DSU.  
7.12.  Following the United  States ' logic, a solution within the meaning of Article  12.7 of the DSU 
could exist even if the bilateral negotiations in which the parties  have engaged do not yield any 
results, and the issue remains unresolved. Yet, this situation would, to quote the opening words of 
Article  12.7 of the DSU, appear to be one in which the parties have "failed to develop a mutually 
satisfactory  solution" and as a result "the panel shall submit its findings in the form of a written 
report to the DSB". The Panel also notes that the United  States ' arguments appear to place stronger 
emphasis on the more general reference to "solution" in the last sentence of Artic le 12.7 of the DSU, 
rather than the more specific term "mutually satisfactory solution" in the first sentence of Article  12.7 
of the DSU. That said, read in the context of the paragraph as a whole, it seems that the "solution" 
referred to in the final sentence is intended to reflect the same concept as the term "mutually 
satisfactory solution" referred to in the first sentence. This reinforces the conclusion that for any 
"solution" to exist in terms of Article  12.7 of the DSU, it has to be a "mutually s atisfactory" one, 
rather than one based on one party 's unilateral assertion that may be satisfactory to it, but not to 
the other party. We also note that the term "solution" refers to "the act of solving a problem".46 
Logically, when a solution is found, t he problem is solved and does not exist anymore. As the panel 
 
39 Appellate  Body Report, EC – Bananas III , paras.  132 and 135.  
40 Appellate  Body Report, Mexico – Taxes on Soft Drinks , para.  52. (emphasis original)  
41 A panel re port, an Appellate  Body report (if the Appellate  Body is able to adjudicate the matter) , or an 
arbitration award.  
42 Since "the relinquishment of rights granted by the DSU cannot be lightly assumed", the 
Appellate  Body insists that "any such relinquishment must be made clearly ." (Appellate  Body Reports, 
EC – Bananas III (Article  21.5 – Ecuador II / Article  21.5 – US), para. 217; and Peru – Agricultural Products , 
para. 5.25)  
43 Appellate  Body Report, Peru – Agricultural Products , para.  5.19.  
44 United  States ' first written submission, para.  38. (emphasis added)  
45 United  States ' response to Panel question No. 8, para.  37. 
46 See Appellate  Body Reports, EC – Bananas III (Article  21.5 – Ecuador II) / EC – Bananas III 
(Article  21.5 – US), para.  212 and footnote 272 (quoting Shorter Oxford English Dictionary , 5th edn, 
W.R. Trumble, A.  Stevenson (eds) (Oxford University Press , 2002), Vol. 2, p.  2917).  WT/DS543/R  
 
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  in India – Autos noted, "agreed solutions are intended to reflect a settlement of the dispute in 
question, which both parties expect will bring a final conclusion to the relevant proceedings ".47 
7.13.  More importantly, and setting aside whether a mutually agreed solution could include a 
"process", panels have systematically put an emphasis on the parties' shared assessment that they 
have reached a solution. In that respect, panels have traditionally fo und relevant the parties' 
characterization of their shared views on the substantive matter before the panel as a "mutually 
agreed solution".48 
7.14.  China insists that it has never agreed to terminate the dispute, and that it has never agreed 
with the United  States that the matter has been, or should be, resolved outside the WTO . China also 
insists that " [t]he matter set forth in China's Panel Request remains unresolved and subject to 
adjudication by the Panel".49 In sum, one of the parties to this dispute (China ) clearly disagrees that 
the parties have reached a mutually satisfactory solution.  
7.15.  While the Panel recognizes that an ongoing process of bilateral negotiations is currently taking 
place, such bilateral negotiations seem to be parallel to the ongoing pane l proceedings and not 
intended, by China at least, to replace them.50 They cannot be understood to deprive China of its 
right to claim that the measures at issue are inconsistent with Articles I and II of the GATT  1994, 
nor of its entitlement to a ruling b y a WTO panel.  
7.16.  The Panel also notes that WTO Members often pursue bilateral negotiations – with or without 
informing the panel – in parallel with an ongoing panel proceeding. In such circumstances, if a 
complainant considers that ongoing negotiations with the respondent should lead to a suspension of 
the work of the panel, the complainant could also avail itself of its right to request the suspension 
of the proceedings under Article  12.12 of the DSU. China has not requested such a suspension, nor 
has it wit hdrawn its complaint.  
7.17.  We also note that the pursuit of negotiations between the parties in parallel to an initiated, 
or an ongoing dispute, is usually not an alternative to the dispute process, but rather an additional 
path towards solving the parties' dis agreement, encouraged by the DSU. Accordingly, it is important 
that this situation is not interpreted in a manner that results in denying the complainant's entitlement 
to findings by the panel.  
7.18.  That negotiations aimed at settlement can be pursued in parall el with panel proceedings is 
further underlined by Article  11 of the DSU which requires the Panel to "consult regularly with the 
parties to the dispute and give them adequate opportunity to develop a mutually satisfactory 
solution". Moreover, Article  5 of the DSU on "good offices, conciliation and mediation" refers 
specifically to a series of "soft" dispute settlement procedures that "may continue while the panel 
process proceeds" (Article  5.5 of the DSU).  
7.19.  In the Panel's view, China's responses to the United  States ' argument s confirm that China has 
not relinquished any of its rights under the DSU to pursue proceedings against the United  States  in 
the current dispute. China 's strong oppos ition to the existence of a mutually satisfactory solution 
within the meaning of Article  12.7 serves to further underline  that there is no mutually agreed  
resolution of the matter before the Panel .  
 
47 Panel  Report , India – Autos , para.  7.113 . (emphasis added)  This point is confirmed by the 
Appellate  Body's observation, albeit in a different context, that "consultations are by definition a process, the 
results of which are uncertain ." (Appellate  Body Report, US – Gambling , para.  317) 
48 Panel  Report s, US – Shrimp (Ecuador) , para.  7.1; and  US – Zeroing (Korea) , para.  7.14.  
49 China's response to Panel question No. 9(a), para.  11. Moreover, the Panel notes that the initial 
negotiations between the parties, materialized in the Phase One Agreement, do not appear to have brought a 
resolution to the issues that are before the Panel ( see United  States ' opening statement at the second 
substantive meeting of the Panel with the part ies, para.  6: "[…] what does the Phase One Agreement say about 
this dispute, or the U.S. additional duties that China challenges in this dispute? Nothing.") . 
50 The Panel also notes that at the initial stage of the ongoing bilateral negotiations, materializ ed in the 
Phase One Agreement, the parties made no specific reference to the current dispute. Moreover, the Phase One 
Agreement includes provisions that specifically provide for WTO rights and obligations to be preserved 
(Article  7.6, para.  1 of the Phase One Agreement: "The Parties affirm their existing rights and obligations with 
respect to each other under the WTO  Agreement  and other agreements to which the Parties are party.").  WT/DS543/R  
 
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  7.20.  Additionally, there is no written document that might otherwise serve as evidence of the 
existence of a mutually agr eed solution to the matters raised in this dispute, merely an assertion by 
the United  States  that the conduct of the parties in pursuing various bilateral discussions or dialogues 
on trade issues should be sufficient in this regard . 
7.21.  Without ruling on the i mplications of the absence of notifying the DSB of any such mutually 
agreed solution or settlement, we also note that no mutually agreed solution has been notified to 
the DSB under Article  3.6 of the DSU. 
7.22.  Against this background, the Panel concludes that t he parties have not reached a mutually 
agreed solution that would deprive China of its right to adjudication and entitlement to 
recommendations and rulings by the Panel.  
7.1.2   The measures covered by the Panel's terms of reference in this dispute  
7.1.2.1   Introduction  
7.23.  China's challenge concerns the United  States ' imposition of additional ad valorem duties 
(additional duties) on two sets of products:  
• List 1 products, on which the United  States  imposed additional duties of 25% on 
20 June 201851; and  
• List 2 products, on which the United  States  initially imposed additional duties of 10% on 
21 September 2018, announcing that the rate of additional duties would increase to 25% on 
1 January 2019.52 After two postponements53, the United  States  increased the rate o f 
additional duties on List 2 products from 10% to 25% on 9  May 2019.54 
7.24.  China requested the establishment of this Panel on 6  December  201855 and the Panel was 
established on 28  January  2019.56 The Panel was thus established after the imposition of addition al 
duties of 25% on List 1 products (20  June 2018) and the imposition of additional duties of 10% on 
List 2 products (21  September  2018), but before the increase of the rate of additional duties on 
List 2 products from 10% to 25% (9  May 2019).  
7.25.  The parties disagree on the scope of the Panel's terms of reference, specifically whether the 
Panel is entitled to and should make findings on the increase of the rate of additional duties on List  2 
products from 10% to 25% of 9  May 2019.  
7.26.  The United  States  asserts that the Panel's terms of reference are limited to two measures: 
the additional duties on List 1 products imposed on 20 June 2018; and the additional duties of 10% 
imposed on List 2 on 21  September  2018. For the United  States , the increase of the rate of additional 
duties on List 2 products from 10% to 25% of 9  May 2019 is a third and separate measure57, which 
is outside the Panel's terms of reference.58 The United  States  asserts that "there is no legal basis for 
the Panel to issue findings or reco mmendations" with respect to the Notice of 9  May 2019.59 The 
United  States  points to the fact that the increase of the rate of additional duties on List  2 products 
from 10% to 25% of 9  May 2019 "did not exist when the Panel was established"60 and was not 
 
51 Notice of 20  June 2018, (Exhibit CHN -2). 
52 Notice of 21  September  2018, (Exhibit CHN -3). 
53 Notice of 19  December  2018, (Exhibit CHN -13); and Notice of 5  March  2019, (Exhibit CHN -14). 
54 Notice of 9  May 2019, (Exhibit CHN -4).  
55 China's panel request, WT/DS543/7.  
56 Dispute Settlement Body, Minutes of Meeting held  on 28  January  2019, WT/DSB/M/425, para.  5.5. 
57 United  States ' first written submission, para.  33. See also United  States ' response to Panel question 
No. 1, para.  4. 
58 United  States ' first written submission, paras.  93-112. 
59 United  States ' first written s ubmission, para.  98. See also United  States ' first written submission, 
paras.  14 and 94.  
60 United  States ' first written submission, paras.  97-98. See also United  States ' response to Panel 
question No. 1, para.  4. WT/DS543/R  
 
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  among the "specific measures" identified in China's panel request.61 For the United  States  "measures 
enacted after the date of establishment […] are not within a panel's terms of reference".62 The 
United  States  argues that the DSU does not allow panels to assert jurisdiction over a measure that 
otherwise falls outside of their terms of reference.63 
7.27.  China asserts that the Panel's terms of reference cover two measures: the additional duties 
of 25% imposed on List 1 products on 20  June 2018; and the additional duties on List 2 products, 
imposed initially at a rate of 10% on 21  September  2018, which was increa sed to 25% on 
9 May 2019, as envisaged by the Notice of 21  September  2018.64 China argues that the increase of 
the additional duties on List 2 products from 10% to 25% of 9  May 2019 is "clearly a modification"65 
of the second measure and is covered by the Panel's terms of reference. In support of its argument, 
China notes that (i) the Notice of 21 September anticipated a planned increase of the rate of 
additional duties on List 2 products from 10% to 25%; (ii) the United  States  "labelled the increase 
in add itional import duties as a modification"66; (iii) China's panel request expressly referred to the 
anticipated modification of the second measure and specifically identified the planned increase of 
the rate of additional duties on List 2 products67; and (iv ) China's panel request referred to "any 
modification, replacement or amendment to the measures identified above".68 
7.28.  China also argues that if the Panel were to find the additional duties of 25% to be outside of 
its terms of reference, China would be denie d due process because it would be required to "adjust 
its pleadings throughout dispute settlement proceedings in order to deal with a disputed measure 
as a 'moving target'".69 Conversely, China considers that the United  States ' due process rights would  
not be denied if the Panel were to find the additional duties of 25% to be within its terms of reference, 
because China's panel request "provided the United  States  with precisely the information it needed 
to respond to China's case".70 
7.29.   Several third parties also express views on this point. Australia recalls that "measures must 
be listed in the panel request"71, but warns against an "overly formalistic approach"72, reminding 
that "[l]itigation is lengthy and resource -intensive" and "[d]uring the litig ation process, laws and 
regulations may expire, or be renewed, or enacted in a different form".73 The European  Union  relies 
on the Appellate  Body's finding in EC – Selected Customs Matters  that " a panel has the authority to 
examine a legal instrument enact ed after the establishment of the panel that amends a measure 
identified in the panel request, provided that the amendment does not change the essence of the 
identified measure"74, to invite the Panel to ascertain "whether [the increase of the duty] 'chang es 
the essence' of Measure 2".75 
 
61 United  States ' first written submission,  paras.  95 and 98. The United  States  points out that in 
EC – Chicken Cuts  the Appellate  Body held that the measures at issue in a dispute "'must be measures that are 
in existence at the time of the establishment of the panel'" . (United  States ' first written submission, para.  97 
(quoting  Appellate  Body Report, EC – Chicken Cuts , para.  156))  
62 United States ' first written submission, para.  106. 
63 United  States ' first written submission, paras.  101 and 110.  
64 China argues that "the imposition of 25 percent additional ad valorem duties on an approximate $200 
billion of imports from China – despite the  fact that the additional duties in place on this $200 billion of imports 
at the time of China's panel request was only 10 percent additional ad valorem  duties – is included in the terms 
of reference ." (China's first written submission, para.  26. See also China's second written submission, para.  15) 
65 China's first written submission, para.  26. 
66 China's second written submission, para.  21.  
67 China's second written submission, para.  15. See also China's response to Panel question No. 2, 
para. 2.  
68 China's  first written submission, para.  26. China also argues that a failure to reach a decision by the 
Panel on the additional duties that are currently in effect, at a rate of 25%, would preclude a "positive solution" 
to this dispute (China's response to Panel question No. 5, para.  6).  
69 China's second written submission, para.  17 (quoting Appellate  Body Report, Chile – Price Band 
System , para.  144).  
70 China's second written submission, para.  16.  
71 Australia's third -party statement, para.  18 and integrated executive summary, para.  15.  
72 Australia's third -party statement, para.  18 and integrated executive summary, para.  15. 
73 Australia's third -party statement, para.  18 and integrated executive summary, para.  15. 
74 European  Union s' third -party submission, para.  58 (quoting Appellate  Body Report, EC – Selected 
Customs Matters , para.  184).  
75 European  Union 's third -party submissi on, para.  61. See also European  Union's integrated executive 
summary, para.  15.  WT/DS543/R  
 
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  7.1.2.2   Overview of applicable principles  
7.30.  The Panel recalls that Article  6.2 of the DSU reads, in relevant part:  
The request for the establishment of a panel shall be made in writing. It shall indicate 
whether consultations were he ld, identify the specific measures at issue and provide a 
brief summary of the legal basis of the complaint sufficient to present the problem 
clearly. […]  
7.31.  In accordance  with Article  7.1 of the DSU, the Panel's terms of reference are the following:  
To exami ne, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by China in document 
WT/DS543/7 and to make such findings as will assist the DSB in making the 
recommendations or in g iving the rulings provided for in those agreements.76 
7.32.  While the parties agree that the imposition of additional duties of 25% on List 1 products (first 
measure) and the imposition of additional duties of 10% on List 2 products (second measure) are 
within t he Panel's terms of reference, they disagree whether the increase in the additional duty on 
List 2 products from 10% to 25% is also within the Panel's terms of reference.  
7.33.  At this stage, the issue before the Panel is whether the increase of the rate of addi tional duties 
on List 2 products from 10% to 25% of 9  May 2019 is covered by the Panel's  terms of reference.  
7.34.  It is well established by WTO adjudicators that a panel's mandate or terms of reference is to 
examine the measures and related claims the complaina nt has raised in its panel request.77 This is 
in conformity with the aim of the WTO dispute settlement system, which, inter alia , is to achieve a 
satisfactory settlement of the matter in accordance with the parties ' rights and obligations 
(Article  3.4 of the DSU) and to secure a positive solution to a dispute (Article  3.7 of the DSU).78 
7.35.  Prior panels and the Appellate  Body have observed that, as a general rule, "the measures 
included in a panel's terms of reference must be measures that are in existence at the time of the 
establishment of the panel".79 However, Article  6.2 of the DSU does not set out an express temporal 
condition or limitation on the measures that can be identified in a panel request.80 Measures enacted 
subsequent to the establishment of the panel "may, in certain limited circumstances, fall within a 
panel 's terms of reference".81 More specifically,  
[A] panel may examine a legal instrument enacted after the date of the panel's 
establishment, which amends one of the challen ged measures at issue, provided that 
 
76 Constitution Note of the Panel, WT/DS543/8, para.  2. 
77 See e.g. Appellate  Body Report, EC – Selected Customs Matters , para.  131 ("the panel request 
identifies the measures a nd the claims that a panel will have the authority to examine and on which it will have 
the authority to make findings") ; and Australia – Salmon , para.  223. See also Panel  Report , EC – Selected 
Customs Matters , para.  7.43.  
78 As prior WTO adjudicators have consistently held, a panel's terms of reference are important because 
they "fulfil an important due process objective" – they give the parties and third parties sufficient information 
concerning the claims at issue in the dispute in order to allow them an opportunity to respond to the 
complainant's case (Appellate  Body Report, Brazil – Desiccated Coconut , p. 22, DSR 1997:I, p.  186. See also 
Appellate  Body Reports, EU – PET (Pakistan) , para.  5.39; EC – Selected Customs Matters , para.  143; and 
Thailand  – H-Beams , para.  85; and Panel  Report s US – Zeroing (Japan) (Article  21.5 – Japan) , para.  7.104 ; 
and EC – Selected Customs Matters , para.  7.49). Moreover, the terms of reference establish the jurisdiction of 
the panel by defining the precise claim s at issue in the dispute. Clearly, "due process and adequate notice 
would not be served if a complaining party were free to add new measures or new claims to its original 
complaint as reflected in its panel request at a later stage of a panel proceeding ( Panel  Report , Argentina – 
Footwear (EC) , para.  8.45. See also Panel  Report , Canada – Wheat Exports and Grain Imports , fn 14). 
79 Appellate  Body Report, EC – Chicken Cuts , para.  156. See also Panel  Report s, US – Renewable 
Energy , para.  7.8 (currently under appeal) .  
80 Appellate  Body Report, US – Zeroing (Japan) (Article  21.5 – Japan) , para.  121 and Panel  Report , 
US – Renewable Energy , para.  7.8 (currently under appeal) .  
81 Appellate  Body Report, EC – Chicken Cuts , para.  156. See also Appell ate Body Report,  US – Zeroing 
(Japan)  (Article  21.5 – Japan) , para.  121; and Panel  Report , US – Renewable Energy , para.  7.8 (currently 
under appeal) . WT/DS543/R  
 
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  the panel request is broad enough to encompass such an amendment and the 
amendment does not change the "essence " of the measure.82 
7.36.  In other words, where a measure identified in the panel request has merely been amended 
by a subsequent  measure and the amendment did not, in any way, change the "essence" of the 
original measure, prior WTO adjudicators have deemed it appropriate to consider the measure as 
amended in coming to a decision in a dispute.83 
7.1.2.3   The measures covered b y China's panel request  
7.37.  China's panel  request reads, in relevant parts:  
The measures at issue in this request include the actions taken by the United  States , 
based on the USTR's investigation into China's acts, policies, and practices related to 
technology  transfer, intellectual property, and innovation under Section 301 of the 
Trade Act of 1974 and pursuant to sections 301(b), 301(c), and 304(a) of the Trade Act 
of 1974 and the direction made in the President's statement to impose an additional ad 
valorem duty upon certain imported products of Chinese origin. The above mentioned 
actions include:  
1. An additional 25% duty ad valorem  on approximately $34 billion worth of 
imports from China announced by the USTR on 15  June 2018 and implemented by the 
Federal R egister notice of 20  June 2018 ( Notice of Action and Request for Public 
Comment Concerning Proposed Determination of Action Pursuant to Section 301: 
China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property 
and Innovation , (83 Fed. Reg. 28,710)); and  
2. An additional 10% duty ad valorem  on approximately $200 billion worth of 
imports from China implemented on 24  September  2018, and the rate of additional duty 
will increase to 25% ad valorem on 1  January  2019,[13] according to the announcement 
by the USTR on 21  September  2018 ( Notice of Modification of Section 301 Action: 
China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property 
and Innovation , (83 Fed. Reg. 47,974)).84 
13 The applic ation of this additional 25% tariff for $200 billion imported products of Chinese origin 
may be postponed as per the statement by the United  States  after the bilateral meeting between 
China and the United  States  on 1 December  2018 in Argentina. […]  
7.38.  This statement  is followed by a list of legal instruments through which, among others, 
"[t]he  measures at issue are adopted and implemented".85 
7.39.  China's panel request also states that it "also concerns any modification, replacement or 
amendment to the measures ide ntified above, and any closely connected, subsequent measures."86 
Importantly , attached to this clause is the following footnote 29:  
Especially according to Notice of Modification of Section 301 Action: China 's Acts, 
Policies, and Practices Related to Technology Transfer, Intellectual Property, and 
Innovation , 83 FR 47,974 (Sept. 21, 2018), the present 10% additional tariffs imposed 
upon $200 billion worth of imports of Chinese origin shall be increased to 25% starting 
from 1  January  2019. China notes t hat the implementing date of 1  January  2019 may 
 
82 Panel  Report , Thailand – Cigarettes (Philippines) (Article  21.5 – Philippines) , para.  7.808 ( currently 
under appeal ). See also Appellate  Body Report s, Chile – Price Band System , paras.  136-144; and 
EC – Selected Customs Matters , para.  184; and Panel  Report s, Russia – Pigs, para.  7.130; Colombia – Textiles , 
para. 7.35; EC – IT Products,  para. 7.139 ; India – Additional Duties , para.  7.56; and US – Renewable Energy , 
para. 7.10 (currently under appeal) .  
83 See Appellate  Body Report, Chile – Price Band System , para.  144. See also Appellate  Body Report, 
EC – Chicken Cuts , para s. 156-157. 
84 China's panel request, p.  2. (emphasis original)  
85 China's panel request, p.  2. 
86 China's panel request, p.  4. WT/DS543/R  
 
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  be postponed as per the statement by the United  States  after the bilateral meeting 
between China and the United  States  on 1 December  2018 in Argentina.  
7.40.  China argues that its panel request "stated clearly and explicitly"87 that it also concerns any 
modification, replacement or amendment to the measures identified therein.88 Moreover, China 
explains that it specifically referenced the planned increase of the rate of additional duties on List  2 
products from 10% to 25% in its panel request and indicated that this increase might be 
postponed.89 
7.41.  The United  States  insists that the Notice of 9  May 2019, which increased the rate of additional 
duties on List 2 products from 10% to 25%, was a third, separate measure90. In support of this 
contention, the United  States  notes that the increase of the rate of additional duties on List  2 
products from 10% to 25% was implemented through a different legal instrument and that it "had 
its own, particular rationale".91 The United  States  explains that (i) the 10% additional duty on List  2 
products was imposed "after China 'made clear – both in public statements and in government -to-
government communications – that it [would] not change its policies' and instead 'responded  … by 
increasing duties on U.S. exports to China'"92; while (ii) developments in the bilateral negotiations 
in May 2019, in particular China's retreat from specific commitments agreed to in earlier rounds, 
resulted in the United  States  adopting a new measu re, which definitively set a duty level of 25% on 
List 2 products.93 
7.42.  China considers the United  States ' argument that the increase of the rate of additional duties 
on List 2 products from 10% to 25% had its own, particular rationale to be "irrelevant to th e issue 
of whether the List 2 tariffs raised from 10 percent to 25 percent are within the Panel's 'terms of 
reference'".94 For China, the essence of the measure remained the same and "the United  States ' 
'particular rationale' does not inform the Panel's analysis and should be disregarded".95 
7.43.  The Panel notes that China's panel request anticipates, on three occasions, the incre ase of 
the rate of additional duties on List 2 products:  
• The description of the second measure refers to an announcement that "the rate of additional 
duty will increase to 25% ad valorem  on 1 January 2019"96; 
• Footnote 13 refers to a statement by the United  States  after the bilateral meeting between 
China and the United  States  on 1 December  2018 in Argentina, according to which "[t]he 
application of this additional 25% tariff for $200 billion imported products of Chinese origin 
may be postponed"97; and  
• Footn ote 29 repeats that the additional duty of 10% on List 2 products "shall be increased to 
25% starting from 1 January 2019" and notes that "the implementing date of 1  January  2019 
may be postponed as per the statement by the United  States  after the bilatera l meeting 
between China and the United  States  on 1 December  2018 in Argentina".98 
7.44.  Further, the legal instrument implementing the initial additional duty on List 2 products 
anticipated the increase of the rate of additional duty from 10% to 25%. The Notice of 
 
87 China's first written submission, para.  26. 
88 China's panel request, p.  4. 
89 China's second written submission, para.  15 (referring to China's panel re quest).  
90 United  States ' first written submission, para.  33. See also United  States ' response to  Panel question 
No. 1, para.  4. 
91 United  States ' response to Panel question No. 4, para s. 30-31.  
92 United  States ' response to Panel question No. 4, para.  27 (quoting  the Notice of 21  September  2018 
(Exhibit CHN -3)). 
93 United  States ' response to Panel question No. 4, para.  30. 
94 China's response to Panel question No. 19, para.  6.  
95 China's response to Panel question  No. 19, para.  7. 
96 China's panel request, p.  2 (referring to the Notice of 21  September  2018, (Exhibit CHN -3)).  
97 China's panel request, p.  2, fn 13.  
98 China's panel request, p.  4, fn 29. WT/DS543/R  
 
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  21 September  2018 stated that "the rate of additional duty will increase to 25 percent ad valorem 
on January 1, 2019".99 
7.45.  Moreover, the legal instrument implementing the increase of the rate of additional duties on 
List 2 products from 10% to 25% (Notice  of 9 May 2019) explicitly refers to the legal instrument 
through which the initial additional duties of 10% were imposed on List 2 products (Notice of 
21 September 2018) on multiple occasions. Moreover, on at least three occasions, the Notice of 
9 May 2019 specifically states that it is adopted pursuant to a decision to modify the Notice of 
21 September  2018:  
• The Notice of 9 May 2019 recalls that, according to the Notice of 21 September 2018, "the 
rate of additional duty was set to increase to 25 percent o n January 1, 2019"100, and refers to 
the two occasions on which this increase was postponed101; 
• The Notice of 9  May 2019 explains that USTR "has determined to modify the action being 
taken in this Section 301 investigation by increasing the rate of additional duty from 10  
percent to 25 percent ".102 
• The Notice of 9 May also refers to USTR's "decision to modify the Septemb er 2018 action" and 
reads further that USTR "has determined that it is appropriate for the rate of additional duty 
under the September 2018 action to increase to 25%".103 These references appear to 
corroborate the proposition that the increase of the duty r ate from 10% to 25% is a 
modification, an amendment of the original measure rather than a different measure.  
7.46.  These cross -references between the legal instruments implementing the initial additional 
duties on List 2 products of 21  September  2018 and the inc rease of these additional duties on List  2 
products from 10% to 25% of 9  May 2019 point towards the existence of only one (albeit composite) 
action.  
7.47.  The parties disagree on the meaning and implications of the Appellate  Body's finding in 
Chile – Price Band System  that an amendment of a measure identified in a panel request may be 
considered within the panel's terms of reference, even if this amendment was enacted after the 
panel establishment, as long as it does not change the essence of the measure.104 The 
Appellate  Body concluded in this case that in these circumstances, "it is appropriate to consider the 
measure as amended ".105 
7.48.  In the Panel's view, the examination whether an amendment changes the essence of a 
measure identified in a panel request must remain circumscribed by the specific circumstances of 
the case at hand and cannot rely on pre -established factors. Prior WTO adjudicators have considered 
various factors, including the type of trade -restrictive effect sought (ban/additional duties)106; the 
range of products subject to duties107; the operation of the measure and the amendment108; their 
legal implications109; the identity of their regulatory purpose110; the proximity of design, structure 
and impact111; the existence of an explicit reference in the amendment to the original measure112; 
the title of the amendment113; the authority that issued the measure and the amendment114 and the 
 
99 Notice of 21  September  2018, (Exhibit CHN -3), p.  47975.  
100 Notice of 9  May 2019, (Exhibit CHN -4), p.  20459.  
101 Notice of 9  May 2019, (Exhibit CHN -4), p.  20459.  
102 Notice of 9  May 2019, (Exhibit CHN -4), p.  20459.  
103 Notice of 9  May 2019, (Exhibit CHN -4), p.  20460.  
104 Appellate  Body Report, Chile – Price Band System , para.  136. 
105 Appellate  Body Report, Chile – Price Band System , para.  144. (emphasis original )  
106 See e.g. Panel  Report , Colombia – Textiles , para.  7.37.  
107 See e.g. Panel  Report s, Colombia – Textiles , para.  7.37; and India – Additional Import Duties , 
para. 7.63; and Appellate  Body Report, EC – Chicken Cuts , para.  158. See also Panel  Report , 
Argentina  – Financial Services , para.  7.32.  
108 See e.g. Panel  Report s, Colombia – Textiles , para.  7.37; and EC – IT Products , para.  7.186.  
109 See e.g. Appel late Body Report, EC – Chicken Cuts , para.  158; and Panel  Report s, EC – IT Products , 
para. 7.186 ; and  India – Additional Import Duties , para.  7.63.  
110 See e.g. Panel  Report , Russia – Pigs, para. 7.156.  
111 See e.g. Panel  Report , Russia – Pigs, para. 7.156.  
112 See e.g. Appellate  Body Report, EC – Chicken Cuts , para.  158. 
113 See e.g. Panel  Report , Colombia – Textiles , para.  7.37.  
114 See e.g. Panel  Report , Colombia – Textiles , para.  7.37.   WT/DS543/R  
 
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  legal basis cited115, as well as whether the original measure remained in force "in substance".116 
Prior WTO adjudicators  have also put emphasis on the question whether the complaining party has 
requested findings on the measure as amended.117 In contrast, they have considered that facts such 
as the "apparent" consistency or inconsistency of a measure118, have limited bearing in this 
examination.  
7.49.  In this case, the increase of the rate of additional duties covers the same products (List 2 
products) as the second measure identified in China's panel request. The Annex of the Notice of 
9 May 2019 amends the Harmonized Tariff Sched ule of the United  States  "to provide that the rate 
of additional duties for the September 2018 action  will increase to 25 percent on May  10, 2019"119, 
and envisages the establishment of a process "by which interested persons may request that 
particular prod ucts classified within an HTSUS subheading covered by the September 2018 action  
be excluded from the additional duties".120 
7.50.  Further, the increase of the additional duties on List 2 products from 10% to 25% of 
9 May 2019 has the same alleged legal implications as the second measure identified in China's 
panel request, namely an increase of the additional duties allegedly above bindings that, according 
to China, has  nullified or impaired China's benefits arising from Articles I:1 and II:1 of the 
GATT  1994.121 The only element that changed was the rate of the additional duty. On this point, the 
Panel recalls the Appellate  Body's observation in China – Raw Materials that "the fact that one 
measure imposes a lesser export duty rate than another measure mi ght mean that the former is 
consistent while the latter is inconsistent with a WTO Member's obligations under Article  II of the 
GATT  1994", but that "[i]t is not clear, however, why this fact, taken alone, would necessarily mean 
that the two measures are n ot of the '"same essence'".122 
7.51.  The increase of the rate of additional duties on List 2 products from 10% to 25% of 
9 May 2019 was implemented through the same type of legal instrument (Notice published in the 
Federal Register), issued by the same authority (USTR) on the same legal basis in US domestic 
legislation (Section 307(a)(1) of the Trade Act of 1974) as the imposition of the initial additional 
duties of 10% on List 2 products. The Panel also recalls its earlier observation that the two Notices 
appear to be two subsequent parts of one composite action.123 
7.52.  In that context, the Panel notes the United  States ' argument that the increase of the rate of 
additional duties on List 2 products from 10% to 25% had its "own, particular rationale"124, different 
from t he rationale behind the adoption of the additional duties of 10% on List 2 products. The 
United  States  insists that "the 'fundamental or underlying' reason ( i.e. the 'rationale') behind a 
Member's decision to adopt a measure"125 cannot be disentangled from the measure's "essence".  
7.53.  The Panel is of the view that the rationale (or the policy justification) behind the increase of 
the rate of additional duties on List 2 products from 10% to 25% does not alter the nature or the 
essence of the measure. The new poli cy explanation invoked by the United  States  – that China 
retreated  from specific commitments agreed to in earlier rounds of negotiation – would, to the 
contrary, seem to confirm that the increase of the additional duties is intrinsically linked to the 
original measure imposing additional duties of 10% on List 2 products.126  
 
115 See e.g. Panel  Report , Colombia – Textiles , para.  7.37.   
116 Panel Report , Argentina – Footwear (EC) , para.  8.45.  
117 See e.g. Panel  Report , Russia – Tariff Treatment , para.  7.84.  
118 Appellate  Body Report, China – Raw Materials , fn 524. 
119 Notice of 9  May 2019, (Exhibit CHN -4), p.  20460. (emphasis added)  
120 Notice of 9  May 2019, (Exhibit CHN -4), p.  20460.  (emphasis added)  
121 On this point, the Panel recalls the Appellate  Body's observation in US – Gambling  that "[t]he DSU 
provides for the 'prompt settlement' of situations where Members consider that their ben efits under the 
covered agreements 'are being impaired by measures  taken by another Member'" and "the 'measure' must be 
the source  of the alleged impairment, which is in turn the effect  resulting from the existence or operation of 
the 'measure' ." (Appellat e Body Report, US – Gambling , para.  121 (emphasis original))  
122 Appellate  Body Report, China – Raw Materials , fn 524.  
123 See para. 7.46 above.  
124 United  States ' response to Panel question No. 4, para.  31.  
125 United  States  comment on China's response to Panel question No. 22, para.  18.  
126 However, it is hard to see how a difference in rationale, even if proven, would change the essence of 
the second measure, whic h still remains an imposition of additional duties above bindings.  WT/DS543/R  
 
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  7.54.  Finally, the Panel recalls that China's panel request explicitly refers to "any modification, 
replacement or amendment" of the listed measures. In other words, China's panel request 
anticipates the possibility that the measures listed would be amended, and pre -emptively refers to 
any such modification.  
7.55.  The parties disagree on the  implication of the inclusion of this clause included in China's panel 
request. The United  States  insists that the increase of the rate of additional duties on List 2 products 
from 10% to 25% of 9  May 2019 took effect after the Panel was established and ca n therefore not 
be part of the Panel's terms of reference. For the United  States , the phrase "any modification, 
replacement or amendment to the measures identified [in the Panel request] and any closely 
connected, subsequent measures"127, does not and canno t "serve as a net for capturing future 
measures of possible interest to China".128 According to the United  States , the utility of this phrase 
is to capture measures that came into existence before the date of panel establishment but were 
perhaps unknown to China.129 The United  States  argues that even in the presence of such clauses, 
a panel's terms of reference cannot cover any post -panel establishment changes.130 
7.56.  China asserts that the clause in its panel request referring to "any modification, replacement 
or amendment" covers the increase of the rate of additional duties on List 2 products from 10% to 
25% of 9  May 2019 precisely because this increase was "clearly a modification of a measure that 
China identified in both its request for consultations and panel  request".131 
7.57.  The Panel agrees with the consistent practice of prior WTO adjudicators in considering that 
broad references in panel requests – such as the phrase "any modification, replacement or 
amendment" in China's  panel request – authorize panels to con sider within their terms of reference 
legal instruments enacted after the panels' establishment .132 This is so because, otherwise, as noted 
by prior WTO adjudicators, respondents could easily shield measures from scrutiny by a panel by 
amending minor aspects during dispute settlement proceedings.133 
7.58.  In the panel's view, the increase of the rate of additi onal duties on List 2 products from 10% 
to 25% of 9  May 2019 is an amendment that did not change the essence of the second measure 
identified in China's panel request.  
7.59.  Therefore, the Panel considers that the increase of the rate of additional duties on Lis t 2 
products from 10% to 25% of 9 May 2019 is covered by the Panel's terms of reference, especially 
since China's panel request included (i) an express reference to the anticipated increase of the rate 
of additional duties on List 2 products; and (ii) a re ference to "any modification, replacement or 
amendment to the measures identified above".  
7.1.2.4   Conclusion on the measures covered by the Panel's terms of reference  
7.60.  In the Panel's view, it is appropriate to consider the increase of the rate of additional duties 
on List 2 products from 10% to 25% of 9 May 2019 as an amendment of the additional duties of 
10% imposed on List 2 products on 21  September  2018.  
7.61.  For these reasons, the Panel considers that the measures covered by its terms of reference 
are: 
 
127 China's panel request, p.  4.  
128 United  States ' response to Panel question No. 2, para.  8.  
129 United  States ' response to Panel question No. 2, para.  8.  
130 United  States ' response to Panel question No. 2, para.  9. For the United  States , the Appellate  Body's 
finding in Chile – Price Band System  "at most, suggests that a measure enacted after the date of panel 
establishment can serve as interpretive guidance for measures identified in a panel request, not that a panel is 
authorized to render findings on such a measure" . (United  States ' first written submission, para.  107) 
131 China's first written submission, para.  26.  
132 See e.g. Panel  Report s, China – Raw Materials , para.  7.12; and  EC – IT Products , para.  7.140. See 
also Appellate  Body Report, Chile – Price Band System , para.  135. 
133 Appellate  Body Report, Chile – Price Band System , para.  144. See also Panel  Report s, China – Raw 
Materials , para.  7.13; and Russia – Tariff Treatment , para. 7.83. As the Appellate  Body observed in 
Chile – Price Band System , "a complaining party should not have to adjust its pleadings throughout dispute 
settlement proceedings in order to deal with a disputed measure as a 'moving target' ." (Appellate  Body Report, 
Chile – Price Band System , para.  144) WT/DS543/R  
 
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  a. The additiona l duties of 25% imposed on List 1 products on 20 June 2018; and  
b. The additional duties imposed on List 2 products, at the initial rate of 10%, as imposed by 
the Notice of 21  September  2018, and at the rate of 25%, as imposed by the amendment 
of this measure  in the Notice of 9  May 2019.  
7.62.  For these reasons, the Panel considers that it is appropriate for it to make findings and 
recommendations with respect to the above -mentioned measures, i.e. the first measure as identified 
in China's panel request (additional duties of 25% on List 1 products), and the second measure as 
amended on 9  May 2019 (additional duties of 25% on List 2 products).  
7.1.3   China's request that the Panel reject Exhibit US -35 
7.63.   On 31  March  2020, along  with its comments on China's responses to the Panel questions  
following the second substantive meeting , the United  States  filed Exhibit US -35 – a Notice issued by 
the Guangdong Provincial Government on 3  February  2020, containing recommendations on 
accelera ting the development of the semiconductor and integrated circuit industries.134 The 
United  States  referred to Exhibit US -35 in support of its argument that "China continues to engage 
in the unfair and immoral practices documented in the Section 301 Report".135 
7.64.  In a letter of 7  April 2020, China requested the Panel to reject, as untimely filed, 
Exhibit  US-35, submitted by the United  States  with its comments on China's responses to the Panel's 
questions after the second substantive meeting. China argue s that th e submission of new evidence 
or new factual assertions with a party's last submission raises due process concerns that the Panel 
needs to address. China consider s that the United  States  could have provided Exhibit US -35 earlier 
in the proceedings, providin g an opportunity for China to comment on it. In its letter of 7  April 2020, 
China also comment s that Exhibit US -35 has no legal relevance for the dispute and does not support 
the United  States ' argument because it "fails to demonstrate the existence of any public morals 
concern, let alone establish any relationship between the products targeted and public morals".136 
7.65.  The United  States  provided comments on China's request in a letter of 9  April 2020. The 
United  States  argues that the submission of Exhibit US -35 falls within the terms of the Panel's 
Working Procedures. Specifically, the United  States  explains that Exhibit US -35 is an element of the 
United  States ' comments on China's response to Panel question No 23, and of the United  States ' 
rebuttal of the specific argument presented by China in this response. The United  States  points out 
that China has not made any assertion that the measure reflected in Exhibit US -35 does not exist, 
or that the United  States  has mis -described the content of the measure.  
7.66.  The Panel recalls that, i n principle, panel proceedings should progress in two stages. During 
the first stage, the complaining party "should set out its case in chief, including a full presentation 
of the facts on the b asis of submission of supporting evidence".137 The second stage is "generally 
designed to permit 'rebuttals' by each party of the arguments and evidence submitted by the other 
parties"138. Whereas parties should, in principle, submit evidence before the firs t meeting, prior WTO 
adjudicators have observed, however, that the submission of evidence may not always fall neatly 
into one or the other of these categories.139 There is no absolute bar against the submission of new 
evidence after the first substantive meeting.140 
7.67.  Indeed, pursuant to paragraph 5 (1) of the Panel's Working Procedures , 
Each party shall submit all evidence to the Panel no later than during the first 
substantive meeting, except evidence necessary for purposes of rebuttal, or evidence 
 
134 Exhibit US -35, p.  1.  
135 United  States ' comments on China's response to Panel question No . 23, para.  23 and fn  40.  
136 China's letter of 7  April 2020. (emphasis original)  
137 Appellate  Body Report, Argentina – Textiles and Apparel , para.  79. 
138 Appellate  Body Report, Argentina – Textiles and Apparel , para.  79. See also Appellate  Body Reports, 
US – FSC (Article  21.5 – EC), para.  240; and Thailand – Cigarettes (Philippines) , para.  149. 
139 Appellate  Body Report, Thailand – Cigarettes (Philippines) , para.  149. 
140 See Panel  Report s, China – Rare Earths , para.  7.17; and Canada – Aircraft , para.  9.73.  WT/DS543/R  
 
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  necessary for answers to questions or comments on answers provided by the other 
party. Additional exceptions may be granted upon a showing of good cause.  
7.68.  The United  States  submitted Exhibit US -35 at a late stage of the proceedings  on 
31 March  2020 (with its comments  on China's responses to the Panel's questions after the second 
substantive meet ing). Given the date of adoption of the measure reflected in Exhibit US -35 
(3 February 2020), the Panel notes that the United  States  could have submitted Exhibit US -35 at an 
earlier stage of the proceedings.  
7.69.  The Panel 's Working Procedures allow , however,  for submission  of "evidence necessary for 
purposes of rebuttal". The United  States  assert s that it submitted Exhibit US -35 in support of its 
rebuttal of China's views of the facts of the dispute . The United  States  explains that Exhibit US -35 
"is particularly helpful in supporting that the measures at issue are 'necessary' within the meaning 
of Article  XX(a)", because it "demonstrates that China continues to adopt new measures in order to 
unfairly acquire the technology of other WTO Members".141 
7.70.  The Panel's Working Procedures do not bar the submission of evidence such as Exhibit US -35 
"for purposes of rebuttal". Moreover, the Panel is of the view that Exhibit US -35 could potentially be 
relevant for its analysis of the United  States ' defence under Art icle XX(a) of the GATT  1994. The 
Panel also notes that China has not expressed concerns with respect to the existence of the measure 
reflected in Exhibit US -35, or with the accuracy of the United  States ' comments describing this 
measure. China has rather e xpressed its concerns with the moment at which the United  States  
submitted Exhibit  US-35. China has also explained why it considers that Exhibit US -35 does not 
support the United  States ' arguments under Article  XX(a).  
7.71.  The Panel agrees with the observation  of the panel in China – Rare Earths that "with respect 
to questions regarding the admission of evidence challenged by one party for lateness, due process 
is the vitally important general principle by which panels must be guided".142 The Panel considers 
that the due process rights of both parties have been respected. China provided its comment on the 
relevance of Exhibit US -35 in its letter of 7  April 2020, where China not only expressed its concerns 
with the procedural aspects of the timing of the United  States' submission of Exhibit US -35, but also 
commented on the substance of Exhibit US -35. The United  States  provided its comments on China's 
request in its letter of 9  April 2020.  
7.72.  In sum, the Panel notes that Exhibit US -35 was submitted at a late stage in the proceedings 
and could have been submitted earlier. However , the Panel considers that (i) its Working Procedures 
do not prohibit the submission of evidence necessary for the pur poses of rebuttal after the first 
meeting ; (ii) Exhibit US -35 could potentially  be relevant for the Panel's analysis; and (iii ) the due 
process  rights of both parties have been respected. For these reasons, the Panel will consider Exhibit 
US-35, to the ext ent that it finds it relevant for its analysis of the United  States ' defence under 
Article  XX(a) of the GATT  1994. 
7.2  Whether the measures at issue are inconsistent with Articles I:1 and II:1(a) and (b) 
of the GATT  1994  
7.2.1   Introduction  
7.73.  China argues that the meas ures are inconsistent with the United  States ' obligation s under 
Article  I:1 of the GATT  1994 because they fail to accord immediately and unconditionally to certain 
products originating in China and imported into the United  States  the advantage, favour, pri vilege 
or immunity granted by the United  States  "[w]ith respect to customs duties and charges of any kind 
imposed on or in connection with" the importation of like products originating in the territories of 
other WTO Members.143 China further argues that th e measures are inconsistent with the 
United  States ' obligation s under Article  II:1(a) and (b) of the GATT  1994 because they impose 
additional duties on certain imported products originating in China in excess of the United  States ' 
bound rates set forth in its Schedule.144 
 
141 United  States ' letter of 9  April 2020.  
142 Panel  Reports , China – Rare Earths , para.  7.19.  
143 China's first w ritten submission, para.  25.  
144 China's first written submission, para.  25. WT/DS543/R  
 
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  7.74.  The United  States  asserts that the measures at issue are " legally justified because they are  
measures  'necessary to protect public morals' within the meaning of Article  XX(a) of  the General 
Agreement on Tariffs and Trade 1994  ('GATT  1994')".145 
7.75.  The Panel notes that the United  States  has not raised arguments directly pertaining to the 
alleged inconsistency of the measures with Articles I:1 and II:1(a) and (b) of the GATT  1994. The 
United  States ' arguments pertaining to the consistency of the measures with the United  States ' 
obligation s under the GATT  1994 are focused on the justification of the measures under Article  XX(a) 
of the GATT  1994.  
7.76.  As prior WTO adjudicators have consistently observed, the initial burden in a dispute lies on 
the complaining party to establish a prima facie case of inconsistency with a provision of the covered 
agreements on the part of the defending party.146 A prima facie case must be based on evidence 
and legal argument put forward by the complaining party in relation to each of the elements of the 
claim.147 The evidence and legal argument must be "sufficient to identify the challenged measure 
and its basic import, identify the relevant WTO provision and obligation contained therein, and 
explain the basis for the claimed inconsistency of the measure with that pro vision".148 When that 
prima facie  case is made, "the burden of proof moves to the defending party, which must in turn 
counter or refute the claimed inconsistency".149 A prima facie  case is "one which, in the absence of 
effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of 
the complaining party presenting the prima facie  case".150 
7.77.  The United  States  has not presented to the Panel a ny refutation of China's assertion that the 
measures are inconsistent with Articles I:1 and II:1 (a) and (b) of the GATT  1994. Thus, if the Panel 
finds that China has established a prima facie  case of inconsistency of the measures with Articles 
I:1 and II:1(a) and (b) of the GATT  1994, the Panel will be required, as a matter of law, to find that 
the measures are inconsistent with these provisions.  
7.78.  Therefore, the Panel will assess whether China has established a prima facie case of 
inconsistency of the measures w ith Articles I:1 and II:1(a) and (b) of the GATT  1994. 
7.2.2   Whether the measures at issue are inconsistent with Article  I:1 of the GATT  1994  
7.79.  China argues that the measures are inconsistent with Article  I:1 of the GATT  1994, because 
the United  States  "fails to e xtend an advantage to China that it has granted to all other Members 
and thereby denies China the same competitive opportunities it extends to all other Members".151 
According to China, the measures "are facially discriminatory and deny China equal competit ive 
conditions with respect to the like products of other Members, and thus, are in violation of 
Article  I:1".152 
7.80.  Article  I:1 of the GATT  1994 reads, in relevant part:  
With respect to customs duties and charges of any kind imposed on or in connection 
with i mportation or exportation or imposed on the international transfer of payments 
for imports or exports, and with respect to the method of levying such duties and 
charges, and with respect to all rules and formalities in connection with importation and 
expor tation, and with respect to all matters referred to in paragraphs 2 and 4 of 
Article  III, any advantage, favour, privilege or immunity granted by any contracting 
party to any product originating in or destined for any other country shall be accorded 
 
145 United  States ' first written submission, para.  13.  
146 See e.g. Appellate  Body Reports, EC – Hormones , para.  98; Japan – Apples , para.  157; 
US – Gambling , para.  141; and  US – Zeroing (EC) , para.  217.  
147 Appellate  Body Report, US – Gambling , para.  140 (referring to Appellate  Body Report, US – Wool 
Shirts and Blouses , DSR 1997:I, p.  323, p.  16).  
148 Appellate  Body Report, US – Gambling , para.  141. 
149 Appellate  Body Report, EC – Hormones , para.  98. 
150 Appellate  Body Report, EC – Hormones , para.  104 (referring to Appellate  Body Report, US – Wool 
Shirts and Blouses , DSR 1997:I, p.  323, p.  14). 
151 China's first written submission, para.  60.  
152 China's first written submission, para.  78. WT/DS543/R  
 
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  immedi ately and unconditionally to the like product originating in or destined for the 
territories of all other contracting parties.  
7.81.  Prior WTO adjudicators have traditionally required that the complainant demonstrate four 
elements to establish an inconsistency w ith Article  I:1 of the GATT  1994.153 
7.82.  First, it must be demonstrated that  the measures at issue fall within the scope of application 
of Article  I:1. China asserts that this is the case, because the measures are "without dispute customs 
duties".154 In the cont ext of China 's claim under Article  II:1(b), presented before its claim under 
Article  I:1, China argues that the additional duties are "ordinary customs duties"155, because (i)  they 
are "'additional ad valorem  customs duties' that are calculated based on the value of the good"156; 
(ii) they are incorporated157 and form part of the HTSUS "which identifies all OCDs [ordinary customs 
duties] that importers have to pay upon importation of goods into the United  States "158; and 
(iii) they are collected by Customs and Border Protection "in the same manner as it collects other 
customs duties identified in Column 1 of the HTSUS" .159 The Panel observes that the measures 
consist of additional duties imposed on products from Ch ina classified under  specific subheadings of 
the HTSUS.160 Moreover, the measures modify Subchapter III of Chapter 99 of the HTSUS by 
inserting new headings and new notes.161 The Panel is of the view that the additional duties are 
customs duties within the m eaning of Article  I:1.  
7.83.  Second , it must be demonstrated that  the imported products at issue are "like" products 
within the meaning of Article  I:1. China explains that " [e]ach Chinese product subject to the 
Section  301 tariffs is a 'like' product from other  Members not subject to the additional duties within 
the meaning of Article  I:1"162, because the measures "discriminate against Chinese products based 
solely on the fact that the products originate from China" .163 The Panel notes that prior WTO 
adjudicators have consistently held that where a measure provides for a distinction based exclusively 
on origin, there will or can be products that are the same in all respects except for origin and, 
accordingly, "likeness" can be presumed.164 The additional duties at issue apply only to products 
"from China"165 and, therefore, provide for a distinction based exclusively on origin. For that reason, 
any product from China subject to additional duties can be presumed to be "like" any product from 
other WTO Members that is not subject to additional duties.   
7.84.  Third,  it must be demonstrated that  the measures confer an "advantage, favour, privilege, or 
immunity" on a product originating in the territory of any country. China argues that applying 
additional duties only to China and not to other WTO Members confers an "ad vantage" on the 
products originating in all other WTO Members except China, because the measures "deny China the 
advantage of equal treatment in conformity with the US bound tariffs".166 The Panel observes that 
"advantages" in the sense of Article  I:1 are t hose that create "more favourable competitive  
opportunities" or affect the commercial relationship between products of different origins.167 The 
United  States  imposes additional duties on products from China, whereas  identical products from 
other WTO Member s are not subject to additional duties. In other words, while products from other 
WTO Members are subject to general rates of duty, identical products from China are subject to 
 
153 See Appellate  Body Report, EC – Seal Products , para.  5.86.  
154 China's first written submission, para.  62. 
155 China's first written submission, para.  41. 
156 China's first written submission, para.  37. 
157 China's first written submission, para.  38. 
158 China's first written submission, para.  41. 
159 China's first written submission, para.  41. 
160 Notice of 20  June 2018, (Exhibit CHN -2), p.  28710 ; and Notice of 21  September  2018, 
(Exhibit  CHN-3), p.47974.  
161 Notice of 20  June 2018, (Exhibit CHN -2), Annex A ; and Notice of 21  September  2018, 
(Exhibit  CHN-3), Annex A.  
162 China's first written submission, para.  66. 
163 China's first written submission, para.  66. 
164 See e.g. Panel  Report s, Colombia – Ports of Entry , paras . 7.355 -7.356 ; and US – Poultry (China) , 
paras.  7.424 –7.432. For an application of this "presumption of likeness" in the field of trade in services, see 
Appellate  Body Report, Argentina – Financial Services , para.  6.38 
165 Notice of 20  June 2018, (Exhibit CHN -2), p.  28710 ; and Notice of 21  September  2018, (Exhibit 
CHN-3), p.47974.  
166 China's first written submission, para.  73. 
167 Panel  Report , Colombia – Ports of Entry , para.  7.341 , quoting  Panel  Report , EC – Bananas III , 
para. 7.239 . See also Panel  Report,  US – Poultry (China) , para.  7.415.  WT/DS543/R  
 
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  additional duties and to the general duty rates.168 The Panel is of the view tha t the United  States  
confers an "advantage" on products originating in all other WTO Members except China.  
7.85.  Fourth, it must be demonstrated that the advantage accorded is not extended "immediately" 
and "unconditionally" to "like" products originating in the territory of all WTO Members. China argues 
that "the United  States  has failed to confer immediately and unconditionally the advantage of MFN 
status on products originating in China that it confers to like products originating in all other Members 
after the  additional duties on the products identified in List 1 and List 2 went into effect on 
6 July 2018 and 24  September  2018, respectively".169 The Panel observes that the United  States  
imposes additional duties on products from China, while products from other  WTO Members are not 
subject to additional duties. Thus, the Panel is of the view that the United  States  does not extend to 
China "immediately" or "unconditionally" the identified "advantage" accorded to other 
WTO Members.   
7.86.  The Panel concludes that China has established a prima facie case that the measures are 
inconsistent with Article  I:1, because China has demonstrated that the additional duties apply only 
to products from China and thus fail to accord to products originating in China an advantage granted 
to the like product originating in all other WTO Members. The United  States  has not presented to 
the Panel a ny refutation of China's assertion that the measures are inconsistent with Article  I:1. 
7.87.  For the above reasons, the Panel finds tha t the measures are inconsistent with Article  I:1 of 
the GATT  1994. 
7.2.3   Whether the measures at issue are inconsistent with Article  II:1(a) and (b) of the 
GATT  1994   
7.88.   China argues that the measures impose additional duties on certain products from China that 
are in excess of the rates to which the United  States  bound itself in its Schedule, and thus, "are in 
flagrant violation of Article II:1(a) and (b)".170 
7.89.  Article  II:1 reads, in relevant parts:  
(a) Each contracting party shall accord to the commerce of the othe r contracting parties 
treatment no less favourable than that provided for in the appropriate Part of the 
appropriate Schedule annexed to this Agreement.  
(b) The products described in Part I of the Schedule relating to any contracting party, 
which are the p roducts of territories of other contracting parties, shall, on their 
importation into the territory to which the Schedule relates, and subject to the terms, 
conditions or qualifications set forth in that Schedule, be exempt from ordinary customs 
duties in excess of those set forth and provided therein. Such products shall also be 
exempt from all other duties or charges of any kind imposed on or in connection with 
the importation in excess of those imposed on the date of this Agreement or those 
directly and mandatorily required to be imposed thereafter by legislation in force in the 
importing territory on that date.  
7.90.  The Panel agrees with prior WTO adjudicators that Article  II:1(b) prohibits a specific kind of 
practice "that will always be inconsistent with pa ragraph (a)".171 For that reason, the Panel begins 
by assessing whether the measures are inconsistent with Article  II:1(b). If the Panel finds that the 
United  States  has applied customs duties in excess of those provided for in its Schedule, inconsistent 
with the requirements of Article  II:1(b), this would also constitute "less favourable" treatment 
inconsistent with the requirements of Article  II:1(a).  
 
168 Notice of 20  June 2018, (Exhibit CHN -2), Annex A, note 20 ; and Notice of 21  September  2018, 
(Exhibit CHN -3), Annex A, note 20(e).  
169 China's first written submission, para.  77. 
170 China's first written submissio n, para.  33.  
171 Appellate  Body Report, Argentina – Textiles and Apparel , para.  45. See also Panel  Report s, 
EC – Chicken Cuts , para.  7.63; and EC – IT Products , para.  7.747.  WT/DS543/R  
 
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  7.91.  First, China argues that the additional duties are "ordinary customs duties" .172 China further 
asserts that , even if the Panel were to conclude that the additional duties are not "ordinary customs 
duties", the measures would constitute "other duties or charges" imposed inconsistently with 
Article  II:1(b), "because no such 'other duty or charge' was recorded in the US Schedule consistently 
with the Understanding on Interpretation of Article  II:1(b) of the GATT  1994".173 
7.92.  The Panel recalls its assessment that the additional duties are customs duties within the 
meaning of Article  I:1. The Panel is also of the view th at the additional duties are "ordinary customs 
duties" within the meaning of Article  II:1(b).  
7.93.  Second, China argues that the measures are "in excess" of the duties to which the 
United  States  bound itself in its Schedule of Concessions and Commitments (Sched ule)174, because 
the duties are imposed "in addition to  any other duties, fees or charges that may also be due".175 
China asserts that the United  States ' bound rates in its Schedule are "virtually the same" as the MFN 
rates identified in Column 1 of the HSUS176, and for that reason "any additional duties imposed in 
addition to the duties identified in Column 1 of the HTSUS will result in applied duties above the rate 
notified in its Schedule".177 
7.94.  The Panel notes that the tariff binding in the United  States ' Schedule provides an upper limit 
on the amount of duty that may be imposed.178 China has provided evidence that "duties assessed 
on every Chinese product identified in Lists [ sic] 1 and List 2 as a result of the imposition of the 
Section 301 tariffs are, with regard to every product, in excess of the rates provided for in the US 
Schedule".179 The United  States  has not provided any evidence or argument to rebut China's prima 
facie case on that point. The Panel, therefore, is of the view that the additional duties composing 
the measures at issue are in excess of the duties to which the United  States  bound itself in its 
Schedule, inconsistent with Article  II:1(b). 
7.95.  China further argues that, because the measures accord imports from China "less favourable" 
treatment than that provided for in the United  States ' Schedule, they are also incons istent with 
Article  II:1(a).180 The Panel recalls its observation that a practice prohibited under Article  II:1(b) will 
always be inconsistent with Article  II:1(a).181 The application by the United  States  of customs duties 
in excess of those provided for in the United  States ' Schedule, inconsistent with Article  II:1(b), 
constitutes "less favourable" treatment in the sense of Article  II:1(a). Therefore, the Panel is of the 
view that the additional duties accord imports from China "less favourable treatment" th an that 
provided in the United  States ' Schedule, inconsistent with Article  II. 
7.96.  In sum, China has established a prima facie case that the measures are inconsistent with 
Article  II:1(b), because China has demonstrated that the additional duties are ordinary customs 
duties applied in excess of the rates to which the United  States  bound itself in its Schedule. China 
has also established a prima facie case that the measures are inconsistent with Article  II:1(a), 
because China has demonstrated that the additional  duties accord imports from China "less 
favourable treatment" than that provided in the United  States ' Schedule. The United  States  has not 
refuted China's assertion that the measures are inconsistent with Articles II:1(a) and II:1(b).  
7.97.  For the above reasons , the Panel finds that the measures are prima facie inconsistent with 
Articles II:1(a) and (b) of the GATT  1994. 
7.2.4   Conclusion  
7.98.  In sum, the Panel concludes that the measures at issue are prima facie inconsistent with 
Article  I:1, because the additional duties apply only to products from China and thus fail to accord 
 
172 China's first written submission, para.  41. See para. 7.82 above.   
173 China's first written submission, para.  45.  
174 China's first written submission, paras.  48-50, referring to United  States  Schedule of Concessions 
and Commitments (Exhibit CHN -1).  
175 China's first written submission, para.  50. 
176 China's first written submission, para.  51.  
177 China's first written submission, para.  52, referring to Exhibits CHN -15 and CHN -17. 
178 See Appellate  Body Report, Argentina – Textiles and Apparel , para.  46. 
179 China's first written submission, para.  53, referring to Exhibit CHN -17. 
180 China's first written submission, para.  56.  
181 See para.  7.90 above.  WT/DS543/R  
 
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  to products originating in China an advantage granted to the like product originating in all other 
WTO Members . The measures at issue are also prima facie inconsistent with Art icles II:1(a) and (b) , 
because the additional duties are ordinary customs duties applied in excess of the rates to which the 
United  States  bound itself in its Schedule  and accord imports from China "less favourable treatment" 
than that provided in the Unit ed States ' Schedule . 
7.99.  The Panel will now  assess the United  States ' argument that any inconsistency of the measures 
with provisions of the GATT  1994 is justified as necessary to protect US public morals pursuant to 
Article  XX(a) of the GATT  1994. 
7.3  The United  States ' defence under  Article  XX of the GATT  1994  
7.3.1   Introduction – the nature and purpose of Article  XX of the GATT  1994   
7.100.   The United  States  asserts that any inconsistency of the measures at issue with provisions of 
the GATT  1994 is justified as necessary to protect US public morals pursuant to Article  XX(a) of the 
GATT  1994. This is because, according to the United  States , China's acts, policies, and practices 
addressed in the relevant Section 301 Report amount to "state -sanctioned theft and 
misappropriation of U.S. technology, intellectual property, and commercial secrets"182 which violates 
the public morals prevailing in the United  States .183 
7.101.   China considers that the United  States  has failed to establish the existence of a public morals 
objective184, as the measures at issue "have nothing to do with protecting alleged 'public morals' in 
the United  States ".185 According to China, the United  States  "seeks to stretch the narrow paramete rs 
of Article  XX(a) to encompass blatantly coercive economic objectives" .186 
7.102.   Article  XX(a), together with the introductory clause ( chapeau ) of Article  XX, reads as follows : 
Subject to the requirement that such measures are not applied in a manner which woul d 
constitute a means of arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail, or a disguised restriction on international trade, nothing in 
this Agreement shall be construed to prevent the adoption or enforcement by  any 
contracting party of measures:  
(a) necessary to protect public morals; …  
7.103.   WTO Members can resort to Article  XX as an exception to justify measures that would 
otherwise be inconsistent with their GATT  1994 obligations. Specifically, the subparagraphs of 
Article  XX list various categories of policies that WTO Members may invoke to justify the potential 
inconsistency of their (challenged) measures with the substantive obligations of the GATT  1994.187 
7.104.   As prior WTO adjudicators have consistently noted, the exceptions of Article  XX may be 
invoked "as a matter of legal right".188 In other words, WTO Members have the legal right to invoke 
the policies listed in the subparagraphs of Article  XX to justify inconsistenci es with their obligations 
under the GATT  1994, precisely because these policies have been recognized as important and 
legitimate in character.189 Thus, Article  XX allows WTO Members to adopt measures , which  are a 
priori WTO-inconsistent if they do so in order to protect  certain values or provide for certain policies . 
This legal right is subject to the challenged WTO -inconsistent measures complying with the 
requirements of the relevant provisions of Article  XX. Because of  the importance that WTO Members 
 
182 United  States ' second written submission, para.  22.  
183 United  States ' second written submission, para.  22. See also United  States ' first written submission, 
para. 74.  
184 China's second written submission, para.  25. 
185 China's opening statement  at the first meeting, para.  6.  
186 China's second written submission, para.  77. 
187 See Appellate  Body Reports, US – Gasoline , p. 17 (DSR 1996:I, 3) ; and Indonesia – Import Licensing 
Regimes , para.  5.94. 
188 See, e.g. Appellate  Body Report, US – Gasoline , p. 22 (DSR 1996:I, 3) . See also Appellate  Body 
Report,  US – Shrimp , para.  156. 
189 Appellate  Body Report, US – Shrimp , para.  121. WT/DS543/R  
 
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  accord to this protection, the Panel recalls that the right to invoke the exceptions of Article  XX is 
"not to be rendered illusory ".190 
7.105.   At the same time, the exercise by a WTO Member of its right to invoke the exceptions of 
Article  XX, if abused or misused, will erode or render naught the substantive treaty rights of other 
WTO Members. For that reason, each of the subparagraphs of Article  XX should be seen as a limited 
and conditional  exception from the substantive obligation s contained in the other provisions of the 
GATT  1994.191 Thus, the burden lies on the respondent invoking the defence of Article  XX to prove 
that its challenged measure falls within the scope of the invoked subparagraph(s), and meets the 
requirements of the chapeau .192 
7.106.   It is generally accepted that the interpretation and application of Article  XX should be 
informed by the need to mai ntain a balance between the right of a WTO Member to invoke an 
exception under Article  XX and the duty of that same Member to respect the treaty rights of the 
other WTO Members.193 In other words, while the respondent may invoke the exceptions of 
Article  XX as a matter of legal right, they should not be applied so as to frustrate or defeat the legal 
obligations of the holder of the right under the GATT 's substantive rules.194 The balance between the 
right of a WTO Member to invoke the Article  XX exceptions an d its obligation to respect the rights of 
other WTO Members under the substantive provisions of the GATT  1994 is not fixed and unchanging 
but moves depending on the type and shape of the challenged measures and the facts in each 
case.195 
7.107.   Traditionally, pane ls have analysed claims of justification under Article  XX using a two -tiered 
analysis: panels have first examined whether the measure at issue provisionally falls under one of 
the exceptions listed in the subparagraphs of Article  XX, before considering whe ther the application 
of the challenged measure satisfies the requirements of the chapeau  of Article  XX.196  
7.108.   The Panel will therefore first assess if the United  States ' measures, found to be inconsistent 
with the GATT  1994, are provisionally justified under subparagraph (a). If it finds that this is the 
case, the Panel will consider whether the United  States  has applied the measures consistently with 
the requirements of the chapeau  of Article  XX. 
7.3.2   Whether the measures are provisionally justifie d under Article  XX(a) of the 
GATT  1994  
7.3.2.1   Introduction  
7.109.   To provisionally justify a challenged measure under one of the Article  XX subparagraphs, a 
responding Member must establish that the challenged measure addresses the interest specified in 
that paragraph, and that there is "a sufficient nexus between the measure and the interest 
protected ".197  
7.110.   Prior WTO adjudicators have considered that the first step under Article  XX(a) is to determine 
whether the claimed policy is a "public morals " objective within the me aning of Article  XX(a). They 
have then assessed whether the measure is "designed " to protect that public morals objective.198 
Finally, the text of Article  XX(a) refers to measures "necessary" to protect public morals, which 
 
190 Appellate  Body Report, US – Shrimp , para.  156. 
191 Appellate  Body Report, US – Shrimp , para.  157. 
192 See, e.g. Appellate  Body Reports, US – Wool Shirts and Blouses , p. 14 (DSR 1997:I, 323) ; and 
US – Gasoline , p. 22 (DSR 1996:I, 3) ; and  Panel  Report , EC – Asbestos , paras.  8.177 -8.178.  
193 See Appellate  Body Report, US – Shrimp , para.  156; and  Panel  Report , US – Gambling , paras.  6.452 
and 6.575.  
194 Appellate  Body Report, US – Gasoline , p. 22 (DSR 1996:I, 3) . 
195 See Appellate  Body Report , US – Shrimp , para.  159; and Panel  Report, Colombia – Textiles , 
para. 7.286.  
196 See e.g.  Appellate  Body Reports, US – Gasoline , p. 22 (DSR 1996:I, p. 3); Dominican  Republic  – 
Import and Sale of Cigarettes , para.  64; US – Shrimp , paras.  118-120; Brazil – Retreaded Tyres , para.  139; 
and Colombia – Textiles , para.  5.67; and Panel  Report s, Colombia – Textiles, para. 7.288 ; Brazil – Taxation , 
para. 7.857 ; and India – Solar Cells , para.  7.383.  
197 Appellate  Body Reports, EC – Seal Products , para.  5.169 (referring to Appellate  Body Report, 
US – Gambling , para.  292).  
198 Panel  Report , Brazil – Taxation , para.  7.519.  WT/DS543/R  
 
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  envisages a process of "weighing and balancing" of a series of factors and, in most cases, a 
comparison between the challenged measure and reasonably available WTO -consistent alternative 
measures.199 
7.111.   The Panel considers that its analysis under subparagraph (a) of Article  XX is a holistic  
exercise, which involves an overall assessment of whether the United  States  has demonstrated that 
the challenged measures are necessary to protect its invoked public morals, although this overall 
assessment will be based on the Panel 's interpretation of each element of Article  XX(a) and on its 
application to the specific facts of  this dispute. Using this holistic approach, the Panel will analyse 
the elements and requirements of subparagraph (a) together, before reaching its ultimate conclusion 
on whether the United  States  has demonstrated that the WTO -inconsistent measures are nec essary 
to protect its invoked public morals.  The Panel will refrain from reaching any intermediate conclusion 
before completing the entire analysis.200 Only such a holistic approach guarantees that the nature 
and purpose of Article  XX(a) are not frustrated.  
7.112.   In the following sections, we will therefore assess (i) whether the United  States  has raised 
a public morals objective  within the meaning of Article  XX(a) of the GATT  1994; (ii) whether the 
measures are designed  to protect the public morals objective as i nvoked by the United  States ; and 
(iii) whether the measures are necessary  to protect this objective. Each step of this analysis will 
allow us to continue our assessment towards an overall conclusion whether the challenged measures 
are "necessary to protect  public morals" within the meaning of Article  XX(a) of the GATT  1994. 
7.3.2.2   Whether the measures concern a public morals objective  within the meaning of 
Article  XX(a)  of the GATT  1994  
7.3.2.2.1   The concept of " public morals " under Article  XX(a)  
7.113.   The United  States  asserts that the measures at issue protect public morals within the 
meaning of Article  XX(a) because they have been adopted to "'obtain the elimination' of conduct 
that violates U.S. standards of rights and wrong, namely China 's unfair trade acts, policie s, and 
practices".201 In support of its argument, the United  States  has submitted evidence of several 
domestic instruments that reflect prevailing US "standards of right and wrong" and outlaw some 
(although not all) of the Chinese practices documented in th e Section 301 Report.202 The 
United  States  contends that acts, policies, and practices of China referred to  in the Section 301 
Report violate US "standards of right and wrong", in particular  the prohibition of theft, extortion, 
cyber -enabled theft and cyber -hacking, economic espionage and the misappropriation of trade 
secrets, anti -competitive behaviour, as well as the regulation of governmental takings of property 
(hereafter referred to as "the public morals as invoked by the United  States "). 
7.114.   China rejects the characterization of the United  States ' concerns as "public morals" within 
the meaning of Article  XX(a) and argues that the United  States  has failed to establish the existence 
of a valid "public morals" objective.203 According to China, the Unite d States ' reference to public 
morals is "nothing but a post hoc  attempt to justify a purely economic objective"204 and that the 
 
199 See e.g. Appellate  Body Reports, Colombia – Textiles , paras.  5.71-5.73 and 5.77; India – Solar Cells , 
para. 5.59; and Korea – Various Measures on Beef , paras.  162-164.  
200 The Panel does not consider itself obliged, in every instance, to make an explicit intermediate finding 
that a party has met its burden to establish a prima facie  case in respect of each element of a particular claim 
or defence (see e.g.  Appellate  Body Reports, Thailand – H-Beams , para.  134; Korea – Dairy , para.  145; 
Chile – Price Band System (Article  21.5 – Argentina) , para.  135; and China – Rare Earths , para.  5.141).  
201 United  States ' first written submission, para.  69 (fn omitted) . See also United  States ' second written 
submission, para.  20.  
202 United  States ' first written submission, para s. 74 and 75 ; United  States ' second written submission, 
paras.  22-31; and United  States ' response to Panel question No. 16 (a) and (b) , paras.  71-72. 
203 China's second written submission, Section V(A)(2)(a) and para.  33.  
204 China's second written submission, para.  28. With respect to China's argument that the justification 
raised by the United  States  is post hoc , the United  States  argues that the reasonin g behind these measures 
was not adopted only at the time of these proceedings. Instead, the United  States  submits that the 
Section  301 investigation – including public notice of the issues under investigation, a full notice and comment 
period, and public h earings – the Section 301 Report itself, as well as the notices imposing the measures, state 
that "the tariff measures were adopted to obtain the elimination of the unfair policies identified in the report ." 
(United  States ' comments on China's response to Panel question No. 18, para.  12) The United  States  also 
argues that there is no rule or concept that the factual and legal argumentation provided by a party asserting 
an Article  XX justification during a dispute is post hoc and inadmissible. According to t he United  States , "(i)f WT/DS543/R  
 
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  objective of the measures at issue is not to protect public morals, but to reduce China's exports to 
the United  States  and addres s the US trade deficit.205 
7.115.   The Panel begins by noting that the text of Article  XX(a) does not provide a definition for the 
term "public morals". Dictionary definitions refer to the word "public" as "of or pertaining to the 
people as a whole; belonging to, a ffecting, or concerning the community or nation"206 and to the 
word "morals" as "habits of life with regard to right and wrong conduct".207 Therefore, the ordinary 
meaning of the term "public morals" refers to a set of habits of life relating to right and wr ong 
conduct (i.e. societal values) that belong to, affect or concern a community or a nation. This 
understanding accords with prior panels which have considered that the term "public morals" 
denotes "standards of right and wrong conduct maintained by or on behalf of a community or 
nation".208 
7.116.   To the extent that the concept of public morals pertains to a group of individuals (a 
community or nation), the content and scope of this concept may vary from one WTO Member to 
another, influenced by each Member's syst ems and scales of values. Prior WTO adjudicators have 
similarly observed that the content of the concept of public morals for WTO Members can vary in 
time and space, depending on a range of factors, including prevailing social, cultural, ethical and 
religious values.209 
7.117.   Although the Panel must take into account how the responding Member articulat es the 
measure 's objective, the Panel is not bound by that characterization but must make an objective 
and independent assessment of the measure 's objective, taking into account all the evidence 
available to it.210 The panel in EC – Seal Products  explained its task of determining whether the 
challenged measures addressed a public morals concern in the following manner:  
[T]he question of whether a meas ure aims to address public morals relating to a 
particular concern in the society of a regulating Member requires, in our view, an 
assessment of two issues: first, whether the concern in question indeed exists in that 
society; and, second, whether such con cern falls within the scope of "public morals" as 
"defined and applied" by a regulating Member "in its territory, according to its own 
systems and scales of values".211  
7.118.   Prior WTO adjudicators have found the following policies as pertaining to public morals : 
prevention of underage gambling and the protection of pathological gamblers212; restricting 
prohibited content in cultural goods, such as violence or pornographic content, as well as protection 
of Chinese culture and traditional values213; protecting animal welfare214; combatting money 
laundering215; or bridging the digital divide within society and promoting social inclusion.216 
 
this were the case, no Member could meet a burden of establishing a justification under any Article  XX 
exception ." (United  States ' comments on China's response to Panel question No. 18, para.  13) 
205 China's opening statement  at the f irst meeting of the Panel , paras.  23-27; China's second written 
submission, para.  28; and China's comment on the United  States ' response to Panel question No. 21, para.  2. 
In support of this contention, China refers to a series of statements by United  States' officials "regarding the 
economic objectives of the measures at issue" . (China's second written submission, para.  28, referring to 
China's opening statement  at the first meeting of the Panel , paras.  23-31) 
206 Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, A.  Stevenson (eds) (Oxford University 
Press, 2002), p. 2393.  
207 Shorter Oxford English Dictionary, 5th edn, W.R. Trumble, A.  Stevenson (eds) (Oxford University 
Press, 2002),  p. 1829.  
208 Panel  Report s, US – Gambling , paras.  6.465; China – Publications and Audiovisual Products , 
para. 7.759; EC – Seal Products , para.  7.380; Colombia – Textiles , para.  7.299; and Brazil – Taxation , 
para. 7.520.  
209 Panel  Report s, US – Gambling , para.  6.461;  China – Publications and Audiovisual Products , 
para. 7.763; EC – Seal Products , para.  7.380; Colombia – Textiles , para.  7.299; and Brazil – Taxation , 
para. 7.520.  
210 See in this respect Panel  Report , Colombia – Textiles , para.  7.480.  
211 Panel  Report , EC – Seal Products , para.  7.383.  
212 Panel  Report , US – Gambling , para.  6.469.  
213 Panel  Report , China – Publications and Audiovisual Products , para.  7.763. 
214 Panel  Report , EC – Seal Products , para.  7.410.  
215 Panel  Report , Colombia – Textiles , paras.  7.338 -7.339.  
216 Panel  Report , Brazil – Taxation , paras.  7.521 and 7.568.  WT/DS543/R  
 
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  7.119.   It is against this background that the Panel will analyse the extent to which the United  States  
has raised a public morals objective within the meaning of Article  XX(a).  
7.3.2.2.2   Whether an explicit reference to public morals in the legal instruments 
implementing the measures is required  
7.120.   At the outset, the Panel notes that China argues that the absence of a reference to public 
morals in the measures at issue is relevant evidence proving that the measures at issue do not have 
a public morals objective.217 
7.121.   The United  States  considers that a measure need not include an explicit reference to public 
morals to be justifiable under Artic le XX(a), but that in any event the measures at issue "expressly 
mention an objective falling within the scope of 'public morals' in the United  States  – namely, the 
elimination of the unfair trade acts, policies, and practices documented in the Section 301  Report".218  
7.122.   Several third parties have also expressed views on this issue. Brazil considers that "while 
express mention of public morals objectives may be significant", the Panel should engage in an 
"assessment of the content, structure and expected opera tion of the measure itself" to determine 
whether it is designed to protect public morals.219 The European  Union  also notes that "whether or 
not the text of the statute that provides for the measure, or its legislative history, mention[s] the 
invoked public moral, while not dispositive, is directly relevant in order to identify the genuine 
objective of the measure".220  
7.123.   The Panel acknowledges that  the measures do not contain specific references to the societal 
concerns underlying the United  States ' decision to impose additional ad valorem duties (additional 
duties) on imports from China. The measures refer, however, t o the United  States  Trade 
Representative's determination in the Section 301 Report that certain Chinese acts, policies and 
practices are "unreasonable or discriminatory and burden or restrict U.S. commerce".221 The 
United  States ' submissions also refer to C hina's "conduct" documented in the Section 301 Report 
and the determinations of the Section 301 Report indicating US concern with China's documented 
conduct.222 
7.124.   The Panel observes that the Section 301 investigation, and the resulting Section 301 Report, 
are said to relate to "longstanding"223 concerns in the United  States  about "a wide range of unfair 
practices of the Chinese government […] related to technology transfer, intellectual property, and 
innovation".224 
7.125.   The Panel does not consider that for a measure  to fall within the scope of the public morals 
exception of Article  XX(a), the legal instruments implementing the measure must expressly mention 
a public morals objective. The Panel agrees with prior WTO adjudicators that measures that do not 
expressly ref er to "public morals" may nevertheless be found to have a relationship with public 
 
217 China's response to Panel question No. 13(a) , para.  27.  
218 United  States  response to Panel question No. 13(a) , para.  55.  
219 Brazil's response to Panel question No. 1 to the third parties, para.  3. See also Brazil's integ rated 
executive summary, para.  8.  
220 European  Union 's response to Panel question No. 1  to the third parties , para.  3.  
221 See Notice of 20  June 2018 (Exhibit CHN -2), p.  28711 ; and Notice of 21  September  2018 (Exhibit 
CHN-3), p.  49794.  
222 United  States ' first written submission, paras.  70-77 and United  States ' second written submission, 
paras.  20-31. The Section 301 Report is the result of a US domestic investigation that preceded the adoption of 
the measures. The Panel observes that the Section 301 Report doe s not specifically refer to an objective 
related to "public morals". The Section 301 Report also addresses issues not related to the United  States ' 
invoked public morals objective. In particular, the Section 301 Report covers aspects of China's industrial policy 
that do not seem to be directly related to the norms of "right and wrong" invoked by the United  States . These 
include China's outbound investment (Part IV of the Section 301 Report), China's alleged talent acquisition 
efforts (part VI.5 of the Secti on 301 Report), or China's Anti -Monopoly Law (part VI.5.3 of the Section 301 
Report, in which part the United  States  appears to take issue with provisions on intellectual property rights that 
are not specific to China – see USTR, Special 301 Report  (April 2019)). In addition, the Section 301 Report 
mentions practices by China that concern countries other than the United States, such as "acquisition of 
mineral deposits and other natural resource assets [in] Africa and Latin America" and "technology -focused 
investments [in] the United States and Europe". (Section 301 Report, p.  62) 
223 Section 301 Report (Exhibit US -1), p.  4.  
224 Section 301 Report (Exhibit US -1), p.  4.  WT/DS543/R  
 
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  morals following an assessment of their design, their content, structure and expected operation.225 
For that reason, the Panel does not consider the absence of a reference to  public morals in the US 
measures at issue to be determinative to the outcome of the United  States ' defence.  
7.126.   The Panel will therefore assess the United  States ' invocation of a public morals objective.  
7.3.2.2.3   The public morals objective invoked by the United  States 
7.127.   The United  States  asserts that China's actions documented in the Section 301 Report violate 
prevailing US "standards of right and wrong" as reflected in US domestic legislation.226 The 
United  States  has submitted as evidence several domestic instruments that reflect prevail ing US 
"standards of right and wrong" and that outlaw some (although not all) of the Chinese practices 
documented in the Section 301 Report.227 Specifically, the United  States  refers to:  
• state and federal laws, under which the act of "theft" is universally deemed a criminal 
offence228; 
• US laws that generally prohibit extortion229; 
• US laws that criminalize cyber -enabled theft and cyber -hacking230; 
• US laws that criminalize economic espionage and the misappropriation of trade secrets 
(including though acts of "bribery" or "extortion")231; 
• US laws against anti -competitive behaviour (in particular the prohibition and 
criminalization of monopolization)232, which reflect "fundamental concepts of fair 
competition and fair play"233, and the breach of which the United  States views as "a threat 
to the 'preservation of our democratic political and social institutions'"234; 
• US laws on contracts and torts235; 
• US laws on patents236; and  
• civil and criminal laws on, and governmental takings, of property.237  
7.128.   The United  States  explai ns that the economic concerns underlying some of these legal 
instruments are related to notions of fair competition and fair play238, and that the United  States  
does not view unfair competitive practices merely as a detriment to business and innovation, but  
also as a threat to the preservation of its democratic political and social institutions.239 The 
 
225 See Appellate  Body Reports , Colombia – Textiles, para. 5.69; and EC – Seal Products , para.  5.144.  
226 United States' first written submission, para.  74; and United States' second written submission, 
para. 22.  
227 United States' first written submission, para.  74; United States' second written submission, 
paras.  22-31; and United States' to Panel's question No. 16 (a) and (b) , paras.  71-72. 
228 California Code, Penal Code § 484 (General Theft Statute) (Exhibit US –12); Texas Penal Code, 
Title 7, Chapter 31 (Offenses against Property – Theft) (Exhibit US –13); 18 U.S.C. Chapter 31 (Embezzlement 
and Theft) (Exhibit US –14). 
229 18 U.S. C Chapter 41 (Extortion and threats) (Exhibit US -30). 
230 Computer Fraud and Abuse Act (18 U.S.C. § 1030) (Exhibit US –16), in particular  18 U.S.C. § 1030 
(a)(4). 
231 Economic Espionage Act of 1996 ( 18 U.S. C. §§ 1831-1832) (Exhibit US –17), Uniform Trade Secrets 
Act (1985) (Exhibit US –18). 
232 Federal Trade Commission Act, Section 5 U.S. C § 45 (Exhibit US –20); and Sherman Act, 
15 U.S.C.  § 1 (Exhibit US -31). 
233 United States' second written submission, para.  31. 
234 United States' second written submission, para.  25 (quoting Northern Pacific Railway Co. v. 
United  States, 356 U.S. 1, 4 -5 (1958) (Justice Hugo Black) (Exhibit US -32)).  
235 Restatement (Second) of Contracts, § 205 (Exhibit US –22); Restatement (Second) of Torts  § 766A.  
236 35 U.S.C. §200 (Patents Policy and objective) (Exhibit US –21). 
237 United States Constitution, Fifth Amendment.  
238 United States' second written submission, para.  31.  
239 United States' second written submission, para.  25.  WT/DS543/R  
 
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  United  States  also explains that it "imposes constraints on behavior  based on national concepts of 
right and wrong to ensure market -oriented outcomes".240 According to the United  States , China 
"uses coercion and subterfuge to steal or otherwise improperly acquire  intellectual property, trade 
secrets, technology, and confide ntial business information from U.S companies with the aim of 
advantaging Chinese companies and achieving China 's industrial policy goals."241 The United  States , 
considers that these acts, policies, and practices relating to intellectual property and techno logy 
transfer violate these US standards of right and wrong and  thus implicate US public morals within 
the meaning of Article  XX(a).242 
7.129.   China dismisses the United  States ' reference to its domestic legal instruments stating that 
"the fact that a Member has c riminalized certain conduct does not, by itself, provide sufficient 
evidence of a public morals objective".243 China also considers that the United  States  has not 
demonstrated that each of the  referenced  domestic laws embody alleged public morals that are 
implicated by China's practices at issue.244 
7.130.   Several third parties have expressed views on what can constitute a public morals policy for 
WTO Members. Australia underline s that the discretion accorded to WTO Members in determining 
what constitutes public mor als "is not without some limitations" .245 Singapore states that " Members 
must be afforded a certain degree of domestic policy space to define their own public morals 
objectives, having regard to their specific cultural, religious and other social contexts "246, a discretion 
that is limited by  the requirements set out in the design and the necessity tests.247 The 
European  Union  does not take a position on whether the standards of conduct invoked by the 
United  States  may, in the abstract, qualify as "public morals" within the meaning of Article  XX(a)248, 
but recalls " the broad deference accorded to each Member in view of defining its own public moral 
standards".249 Japan asserts that each WTO Member may have its own concepts of public morals 
and Members must be afforded a degree of policy space to define their own public moral 
objectives.250 Japan also confirms that "a Member's domes tic criminal law provides relevant evidence 
for evaluating what might constitute a 'public moral' in that Member".251 Chinese Taipei warns the 
Panel against using "an overly restrictive interpretive approach when reviewing a Member's 
invocation of Article  XX(a)".252 
7.131.   The Panel agrees with prior WTO adjudicators that "ascertaining the precise content and 
scope of morality in a given society may not be an easy task".253 WTO Members should have some 
scope to define and apply for themselves the concept of public mo rals in their respective territories, 
according to their own systems and scales of values, and the right to determine the level of 
protection that they consider appropriate.254 WTO Members are thus afforded a certain degree of 
deference in defining the scop e of public morals with respect to the values prevailing in their societies 
at a given time.255 Nevertheless, it remains for each WTO Member invoking an Article  XX(a) defence 
 
240 United States' second written submission, para.  26.  
241 United States' first written submission, para.  74. (emphasis original)  
242 United States' first written submission, para.  77. The United States asserts that, even after the 
adoption of the measures, China continues to engage in the practices documented in the Section 301 Report. 
(United States' comment s on China's response to Pa nel question No. 23, para.  23; and Exhibit US -35).  
243 China's second written submission, para.  32. See also China's response to Panel question No. 11, 
para. 22. 
244 China's second written submission, para.  27. 
245 Australia's third -party statement, para.  15; and integrated executive summary, para.  12.  
246 Singapore's third -party statement, para.  7; and integrated executive summary, para.  7. 
247 Singapore's third -party statement, para.  8; and integrated executive summary, para.  8. 
248 European  Union 's third -party sta tement, para.  12; and integrated executive summary, para.  10.  
249 European  Union 's integrated executive summary, para.  13 
250 Japan's third -party response to Panel question No. 1  to the third parties , para.  8. See also Japan's 
integrated executive summary, pa ra. 3.  
251 Japan's third -party statement, para.  10 and integrated executive summary, para.  4.  
252 Chinese Taipei 's third -party statement  and integrated executive summary , para.  2.  
253 Panel  Report , EC – Seal Products , para.  7.409.  
254 See Panel  Report s, US – Gambling , para.  6.461; China – Publications and Audiovisual Products , 
para. 7.759; EC – Seal Products , para.  7.381; Colombia – Textiles , para.  7.299 ; and Brazil – Taxation , 
para. 7.520.  
255 Panel  Report s, EC – Seal Products , para.  7.380; Colombia – Textiles , paras.  7.301 and 7.338 ; and 
Brazil – Taxation , para.  7.520. See also Appellate  Body Reports, EC  – Seal Products , para.  5.199.  WT/DS543/R  
 
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  to establish that the invoked policy objective at issue is a public morals objecti ve according to its 
value system .256 
7.132.   The Panel notes that the parties have engaged in discussions on whether the Article  XX 
exceptions, and specifically the concept of public morals in Article  XX(a), could encompass economic 
concerns.  
7.133.   China argues that the public morals objectives asserted by the United  States , "as a matter 
of law, do not fall within the scope of Article XX(a)"257. This is because, according to China, the scope 
of Article  XX(a) is limited to non -economic concerns.258 Generally, China consi ders that "interests 
within the realm of trade liberalization are not covered by Article  XX".259 Specifically, China argues 
that the term "public morals" in Article  XX(a) does not encompass economic policy concerns.260 
According to China, "a concern for so -called 'unfair conduct', including a lack of respect for fair 
competition and innovation" does not constitute a matter of public morals261 and Article  XX(a) does 
not allow WTO Members to "circumvent their WTO obligations by interpreting Article  XX(a) to 
encompass so -called 'unfair' trade, a topic which is addressed by several of the covered 
agreements".262 
7.134.   The United  States  considers that the concept of public morals in Article  XX(a) could relate to 
issues of economic concern263, and the phrase "public morals" cannot be read to exclude any 
concerns that are economic in nature.264 According to the United  States , a measure can have both 
moral and economic features265 and "some types of conduct or behaviour would appear to be 
immoral precisely because of the economic  harms that result from such conduct".266 
7.135.   The Panel understands the parties' disagreement in this respect to be twofold: first, the 
parties disagree whether the exceptions set out in Article  XX can pertain to economic interests and 
concerns; second, the par ties disagree whether the term "public morals" can encompass economic 
concerns, and in particular concerns pertaining to unfair competition.  
7.136.   On the first point, the Panel observes that several of the subparagraphs in Article  XX refer 
to the protection of i nterests that involve, directly or indirectly, a clear economic dimension, including 
the importation or exportation of gold or silver (Article  XX(c)), the protection of intellectual property 
rights (Article  XX(d))267, price stabilization efforts (Article  XX(i)) and products in short supply 
(Article  XX(j)).  
7.137.   On the second point, public morals objectives may frequently have inseparable economic 
aspects. For example, prior panels have recognized that measures targeting money laundering, 
bridging the digital divide or promoting social inclusion and fraud preventi on were measures related 
to public morals. In the Panel's view, a measure may be found to pursue a public morals objective 
even if it has economic aspects.268 Moreover, often the pursuit of non -economic concerns might lead 
to the adoption of measures that h ave economic effects – for instance, a restriction of imports so as 
to protect against , for example,  risks to health has a clear economic effect and directly affects trade.  
 
256 See Panel  Reports , Brazil – Taxation , para.  7.558.  
257 China's second written submission, para.  29.  
258 China's second written submission, para.  31. 
259 China's second written submission, para.  30. 
260 China's second written submission, paras.  30-31. 
261 China's response to Panel question No. 11, para.  21. See also China's second written submission, 
para. 27. 
262 China's response to Panel question No. 11, para.  21. 
263 United States' opening statement at the second meeting of the Panel, para.  27. 
264 United States' opening statement at the second meeting of the Panel, para . 29. 
265 United States' response to Panel question No. 13(a) , para.  56. 
266 United States' opening statement at the second meeting of the Panel, para.  31. 
267 See also GATT Panel  Report , US – Section 337 Tariff Act , paras.  5.22-5.35, which considered the 
relevance of United States' laws protecting intellectual property rights in relation to the exception in 
Article  XX(d) of the GATT 1947 . 
268 The Panel recalls, on that point, the example the United States presented at the seco nd meeting of 
the act of stealing money from a bank which brings about economic harm and can, at the same time, be 
considered immoral, because it is contrary to standards of wrong (see  United States' opening statement at the 
second meeting of the Panel, para.  31). WT/DS543/R  
 
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  7.138.   The United  States  has pointed to several domestic legal instruments that reflect pr evailing 
US "standards of right and wrong" and outlaw some (although not all) of the Chinese practices 
documented  in the Section 301 Report. In this connection, the Panel also recalls that prior WTO 
adjudicators have highlighted that WTO Members must be afforded a certain degree of deference  in 
defining the scope of public morals with respect to various values prevailing in their societies at a 
given time. Further, the Panel notes that most third parties confirm that  broad deference should be 
accorded to WT O Members in defining their own public moral standards.269 In addition, certain third 
parties express views on the specific kinds of acts, policies, and practices at issue in this dispute. 
According to Japan, " no country should require or pressure technology transfer from foreign 
companies to domestic companies ".270 Chinese  Taipei  "share[s] the same concerns as the 
United  States , and believe[s] it is important for these issues to be taken into account by the 
Panel ".271 
7.139.   The Panel takes note of the conc erns expressed by certain third parties and by China that 
the discretion accorded to WTO Members to define the scope of "public morals" with respect to 
various values in their societies should not be "without its limits"272 and that Article  XX(a) "does not 
allow [WTO Members] to circumvent their WTO obligations  by interpreting Article  XX(a) to 
encompass so -called 'unfair' trade".273 The Panel reaffirms its view that, in the present dispute, only 
a holistic approach  to the various elements of Article  XX(a) wou ld allow it to strike the necessary 
balance between the right to invoke the Article  XX(a) exception and the rights of other WTO Members 
under the substantive rules of the GATT.  
7.140.   The Panel also emphasizes that at this stage of its analysis it is considering the issue of the 
public morals objectives invoked by the United  States , and not the further questions that need to be 
answered under Article  XX of the relationship of such public morals to the measures challenged in 
this dispute. Against this b ackground, the Panel conclude s that the "standards of right and wrong" 
invoked by the United  States  (including norms against theft, misappropriation and unfair 
competition) could, at least at a conceptual level , be covered by the term "public morals" withi n the 
meaning of Article  XX(a) of the GATT  1994. 
7.141.   Accordingly, in continu ing its analysis, the Panel will now consider whether the challenged 
measures are designed to protect the public morals objective as invoked by the United  States . 
7.3.2.3   Whether the measures are designed to protect the public morals objective as 
invoked by the United  States  
7.142.   The United  States  considers that Article  XX(a) does not contain any textual requirement to 
show that a measure is "designed to" protect public morals.274 The United  States  asserts , however,  
that, in any event , "there is a clear relationship between the U.S. measures at issue and the objective 
of protecting public morals"275, and that the measures at issue satisfy the "design" requirement of 
Article  XX(a).  
7.143.   China considers that the measures are not designed to pro tect public morals, mainly because 
they are not designed to apply to "goods that embody content or conduct offensive to public morals 
in the United States".276 According to China, the measures at issue are "underpinned by economic 
concerns and are not desig ned to shield U.S. public morals from imported goods that contain 
offensive content or embody offensive conduct".277 
 
269 See Australia's third -party statement, para.  15; Australia's  integrated executive summary, para.  12; 
European  Union 's integrated  executive summary, para.  13; Japan's third -party response to Panel question 
No. 1, para.  8; Japan's  integra ted executive summary, para.  3; Singapore's third -party statement, para.  7; 
and Singapore's integrated executive summary, para.  7. 
270 Japan's third -party statement, para.  4. See also Japan's integrated executive summary, para.  1.  
271 Chinese Taipei's third -party statement and integrated executive summary, para.  4. 
272 Singapore's third -party statement, para.  8 and integrated executive summary, para.8 . See also 
Australia's third -party statement, para.  15; and integrated executive summary, para.  12. 
273 China's res ponse to Panel question No. 11, para.  21. 
274 United States' second written submission, para.  43.  
275 United States' second written submission, para.  50. 
276 China's response to Panel question No. 11, para.  21. 
277 China's second written submission, para.  46.  WT/DS543/R  
 
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  7.144.   Several third parties also express views on the Panel's approach to the "design" requirement 
of Article  XX(a). Brazil, Japan and Singapore i nvite the Panel to follow the approach prior WTO 
adjudicators have used in determining the existence of a relationship between the measures and the 
protection of public morals through an investigation of the measures' design, including their content, 
structure, and expected operation.278 The European  Union  – similarly to China – considers that the 
measures do not appear to be designed to protect public morals279, because they "seem not to seek 
to restrict specifically imports into the US territory of Chinese goods that offend the US public 
morals".280 According to the European  Union , Article  XX(a) requires that the risk to public morals, 
against which the measures are meant to protect, manifests itself either in the content of the goods 
or the methods in which they were obtained or produced.281 
7.145.   In past cases, the Appellate  Body considered the phrase "to protect public morals" requires 
the adjudicator to examine "the design of the challenged measure, including its content, structure 
and expected operation"282, with  a view to ensuring that the measure is "not incapable of" protecting 
public morals.283 Following this approach, if a panel finds that a measure is incapable of protecting 
the values considered by the responding Member as public morals, there is no relationship between 
the measure and the protection of public morals that would meet the requi rements of the "design" 
step. If, on the other hand, a panel finds the measure to be "not incapable of protecting public 
morals, this indicates  the existence of a relationship between the measure and the protection of 
public morals"284 that would meet the requirement of the design test.285 
7.146.   Against this background, the Panel will seek to assess whether the measures are designed 
to protect the "stand ards of right or wrong" invoked by the United  States  (the public morals objective 
as invoked by the United  States ). 
7.147.   The United  States  argues that the measures are not "incapable" of addressing the acts, 
policies , and practices documented in the Section 301  Report, because (i) the United  States  adopted 
the measures at issue "with the explicit goal of eliminating the unfair trade acts, policies, and 
practices documented in the Section 301 Report"286; (ii) the measures are " structured so as to target 
particular  types of goods that benefit from the unfair and immoral Chinese technology transfer 
policies "287; (iii) the measures "alert U.S. consumers and purchasers to the unfair and immoral 
practices that underlie many traded Chinese products and signal to U.S. cons umers and purchasers 
that such practices are not acceptable"288; and (iv) the same measures "raise the economic cost 
that China will incur so long as it maintains the unfair trade acts, policies, and practices document 
in the Section 301 Report".289 The Unit ed States  concludes that its measures  create a disincentive 
for China to continue its conduct found to be morally objectionable, and thus meet the minimal 
threshold of being "designed to" protect public morals for the purposes of Article  XX(a).290 
 
278 Brazil's integrated executive summary, para.  8; Japan's third -party statement, para.  12; Japan's  
integrated executive summary, para.  6; Singapore's third -party statement, para.  9; and Singapore's integrated 
executive summary, para.  16. 
279 European  Union 's third-party submission, para.  41; and integrated executive summary, para.  10. 
280 European  Union 's third -party submission, para.  46. 
281 European  Union 's third -party submission, para.  43. On that point, the Panel recalls that prior WTO 
adjudicators have reject ed arguments that Article  XX(a) requires the identification of a risk to the public moral 
concerns identified . (See Appellate  Body Report, EC – Seal Products , para.  5.198 ; and Panel  Report , 
Colombia  – Textiles , para.  7.302 ) 
282 Appellate  Body Report, Colombia – Textiles , para.  5.69.  
283 Appellate  Body Report, Colombia – Textiles , para.  5.68.  
284 Appellate  Body Report, Colombia – Textiles , para.  5.68. 
285 In fact, the use of a double negative in the articulation of the standard ("not incapable") sugg ests 
that, in practice, it would be rather the complainant's task to demonstrate that the measures at issue would be 
incapable of protecting the values considered by the responding Member as public morals. See  also 
Panel  Report s, Brazil – Taxation , para.  7.522; and Indonesia – Import Licensing Regimes , para.  7.680.  
286 United States' second written submission, para.  47.  
287 United States' response to Panel question Nos. 10 and 11, para.  46. See also United States' second 
written submission, para.  48.  
288 United  States' response to Panel question Nos. 10 and 11, para.  46. See also United States' second 
written submission, para.  48. 
289 United States' response to Panel question Nos. 10 and 11, para.  46. See also United States' second 
written submission, para.  49. 
290 United States' response to Panel question  Nos. 10 and 11, para.  47. WT/DS543/R  
 
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  7.148.   As noted earlier, China questions , however,  "whether the standard 'not incapable of 
protecting' is properly based on the text of Article  XX(a)" .291 Moreover, China asserts that for a 
measure to have a sufficient nexus to the public morals objective and so to be provisionally justified 
under Article  XX(a), it must be designed to apply to products that embody the morally offensive 
conduct or content.292 China concludes that the measures are incapable  of protecting public morals 
because "there is no evidence that the additional import duties imposed by the United  States  are 
designed to apply to goods that embody content or conduct offensive to public mora ls in the 
United  States ".293 
7.149.   While the United  States  asserts that there is no textual requirement in Article  XX(a) to show 
that a measure is "designed to" protect public morals294, China appears to consider that there is 
such a requirement, but questions whe ther the legal standard suggested by the Appellate  Body (i.e. 
"not incapable") is "properly based" on the text of Article  XX(a) of the GATT  1994.295 China also 
indicates that "even if the phrase 'to protect public morals' requires the measure at issue to be  'not 
incapable of' protecting public morals, the U.S. measures are incapable of protecting public 
morals".296 
7.150.    The Panel considers that every case must be assessed on its own merits. The Panel observes 
that the design test is a preliminary step aimed at as sisting and informing the further analysis of 
whether a measure is provisionally justified under sub paragraph  (a) of Article  XX. That said, it will 
sometimes be the case that the application of this test at a general level will not necessarily provide 
useful information that informs this further analysis.  
7.151.   In the present case, the Panel does not consider that the "design test ", if there is one, is an 
undemanding task to perform .297 Having said this, the Panel is not convinced that, in the absolute , 
the imposition of additional duties would always be incapable of protecting public morals or would 
never be incapable of protecting public morals. In the circumstances of this case, the Panel finds it 
difficult to assess at any general level whether the measures at issue are "designed " to protect public 
morals and is therefore not convinced that the intermediate step of such a design test is helpful for 
its analysis. The more detailed design aspects and consequential understanding of measures may 
only bec ome apparent once an analysis of the necessity of  the measures is advanced further. In this 
regard the Panel agrees with the Appellate  Body that it must not structure its analysis of the "design " 
step in such a way as to lead it to truncate its investigati on prematurely and thereby foreclose 
consideration of crucial aspects of the "necessity " analysis.298 
7.152.   The Panel recalls its preference for a holistic approach to determining whether the measures 
at issue are "necessary to protect public morals" within the m eaning of Article  XX(a).299 In the 
process of this holistic analysis, t he Panel considers that whether an appropriate nexus exist s 
between the products subject to the additional duties and the public morals objective as invoked by 
the United  States  pertains  rather to the assessment of the line or balance between the trade -
restrictive measures that are acceptable as necessary to protect public morals, and those that are 
not. For this reason, the Panel will address the parties' (and third parties') arguments r elated to the 
nexus between the products subject to additional duties and the public morals objective as invoked 
by the United  States , in the context of the necessity analysis.  
7.153.   The Panel will therefore continue its holistic examination of the challenged me asures to 
determine whether they are necessary to protect the invoked public morals objective, consistent 
with Article  XX(a).  
 
291 China's response to Panel question No. 11, para.  19. 
292 China's response to Panel question No. 11, para.  19.  
293 China's response to Panel question No. 11 , para.  21.  
294 United States' second written submission, para.  43.  
295 China's response to Panel question No. 11, para.  19. 
296 China's response to Panel question No. 11, para.  20. 
297 The Appellate  Body in Colombia – Textiles  observed that the "design step" of an analysis u nder 
Article  XX(a) is not "particularly demanding" . (Appellate  Body Report, Colombia – Textiles , para.  5.70)  
298 Appellate  Body Report, Argentina – Financial Services , para.  6.203. See also Appellate  Body Report, 
Colombia – Textiles , para.  5.77.  
299 See para. 7.111  and fn  200 above.  WT/DS543/R  
 
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  7.3.2.4   Whether the measures are necessary  to protect the public morals objective as 
invoked by the United  States  
7.154.   After having analysed the public morals objective raised by the United  States  and whether 
the measures at issue are designed to protect this public morals objective, the Panel now turns to 
assess whether the measures are necessary to protect the invoked public morals o bjective.  
7.3.2.4.1   Introduction – the nature and purpose of the necessity  requirement  
7.155.   The Panel recalls that its interpretation of each element of the subparagraphs of Article  XX 
is informed by the overall need to maintain a balance between the right of the United  States  to 
invoke the exception of Article  XX(a) and the duty of the United  States  to respect the market access 
rights of China under the GATT  1994.300 It is clear from the text of Article  XX(a) that the mere 
invocation of a public morals objective under Art icle XX(a) does not automatically render any WTO-
inconsistent action acceptable.  
7.156.   Pursuant to Article  11 of the DSU, one of a panel 's functions is to "make an objective 
assessment of the matter before it, including an objective assessment of the facts of th e case and 
the applicability of and conformity with the relevant covered agreements ". When carrying out this 
function, a panel will  clarify the existing provisions of the covered agreements in accordance with 
customary rules of interpretation of public international law , as set out in Article  3.2 of the DSU .301 
The Panel's duty as treaty interpreter is thus to examine the words of the covered agreements to 
determine the parties ' intentions.302 Article  31(1) of the Vienna  Convention  on the Law of Tre aties 
directs the Panel to interpret the GATT  1994 in good faith in accordance with the ordinary meaning 
to be given to the terms of the treaty in their context and in  the light of the treaty's object and 
purpose.303 One of the corollaries of this general r ule of treaty interpretation is the principle of 
effective treaty interpretation , according to which an interpretation must give meaning and effect to 
all the terms of a treaty . In effect,  an interpreter is "not free to adopt a reading that would result in  
reducing whole clauses or paragraphs of a treaty to redundancy or inutility".304 
7.157.   With these considerations in mind, the Panel begins by focusing on the ordinary meaning of 
the terms of Article  XX(a). The word "necessary" in Articles XX(a), XX(b) and XX(d) of the GATT  1994 
regulates and defines  the circumstances in which these provisions can be invoked . This is reflected 
in the requirement that there be a nexus  between the challenged measures and the values protected , 
in order for the measures to be sh own as necessary .305 The intensity of this nexus can vary, as the 
Appellate  Body explained in Korea – Various Measures on Beef  (in the context of Article  XX(d)):  
Measures which are indispensable or of absolute necessity or inevitable to secure 
compliance ce rtainly fulfil the requirements of Article  XX(d). But other measures, too, 
may fall within the ambit of this exception. As used in Article  XX(d), the term 
 
300 See para. 7.106  above. See also Appellate  Body Report, US – Shrimp , para.  156; and  Panel  Report , 
US – Gambling , paras.  6.452 and 6.575 . 
301 The text of Article  3.2 of the DSU reads as follows:  
The dispute settlement system of the WTO is a central element in providing security and 
predictability to the multilateral trading system. The Members recognize that it serves to 
preserve the rights and  obligations of Members under the covered agreements, and to clarify the 
existing provisions of those agreements in accordance with customary rules of interpretation of 
public international law. Recommendations and rulings of the DSB cannot add to or dimin ish the 
rights and obligations provided in the covered agreements.  
302 See Appellate  Body Reports, India – Patents (US) , paras.  45-46; and India – Quantitative 
Restrictions , footnote 23  to para. 94. 
303 Article  31 of the Vienna  Convention  reads, in relevant p arts: 
1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given 
to the terms of the treaty in their context and in the light of its object and purpose.  
2. The context for the purpose of the interpretation of a treat y shall comprise, in addition to the 
text, including its preamble and annexes:  
(a) any agreement relating to the treaty which was made between all the parties in connection 
with the conclusion of the treaty;  
(b) any instrument which was made by one or more  parties in connection with the conclusion of 
the treaty and accepted by the other parties as an instrument related to the treaty. […]  
304 See Appellate  Body Reports, US – Gasoline , p. 23 (DSR 1996:I, 3) ; and Korea – Dairy , para.  80. 
305 See Appellate  Body Reports, US – Gasoline , p. 16; US – Gambling , para.  292; EC – Seal Products , 
para. 5.169; and Colombia – Textiles , para.  5.67; and Panel  Reports , Brazil – Taxation , para.  7.516.  WT/DS543/R  
 
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  "necessary" refers, in our view, to a range of degrees of necessity. At one end of this 
continuum lie s "necessary" understood as "indispensable"; at the other end, is 
"necessary" taken to mean as "making a contribution to". We consider that a 
"necessary" measure is, in this continuum, located significantly closer to the pole of 
"indispensable" than to the  opposite pole of simply "making a contribution to".306 
7.158.   Prior WTO adjudicators have kept this general function of the necessity requirement in mind 
when "weighing and balancing" factors to assess whether WTO -inconsistent measures are justified 
under Articles XX(a), (b) or (d).307 
7.159.   This weighing and balancing approach requires an assessment of a series of factors, including 
(i) the relative importance of the pursued policy objective308; (ii) the restrictive impact of the 
challenged measures on trade309; and (iii) the contribution of these measures to the realization of 
the objective pursued310 (manifested in the existence of a "genuine relationship of ends and means 
between the objective pursued and the measure at issue"311), followed by an assessment  of whether 
potential WTO -consistent or less trade -restrictive alternatives, suggested by the complainant, are 
reasonably available to the responding Member.312 Prior WTO adjudicators have traditionally seen 
this analysis as a holistic  one "that involves putting al l the variables of the equation together and 
evaluating them in relation to each other after having examined them individually, in order to reach 
an overall judgement".313 
7.160.   The Panel also notes that the context of Article  XX(a) includes the  third recital of the 
Preamble of the WTO  Agreement , which refers to  the desire of WTO Members to contribute to  
"reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs 
and other barriers  to trade  and to the elimination of discrimi natory treatment in international trade 
relations ".314 Further, the object and purpose of the covered agreements are focused on the principle 
of liberalization of trade flows between WTO Members.  Accordingly, a n interpretation of Article  XX(a) 
allowing any type or range of restrictive trade measures that may otherwise breach a complainant's 
WTO rights, simply on the basis of an assertion that they were necessary, rather than a 
demonstration by a respondent of the necessity of the measures,  would be con trary both to the text 
of the Preamble of the WTO  Agreement , and to the spirit of the WTO covered agreements. Such an 
interpretation would reduce the word "necessary" used in Article  XX(a) to redundancy and inutility, 
running counter to the principle of effectiveness in treaty interpretation.  
7.161.   Against this background, the Panel will examine each of these factors to assess whether the 
measures at issue are necessary to protect the "standards of right or wrong" invoked by the 
United  States  (the public morals objective as invoked by the United  States). 
 
306 Appellate  Body Report, Korea – Various Measures on Beef , para.  161. See also Appellate  Body 
Report, India – Solar Cells , para.  5.62.  
307 See e.g. Appellate  Body Reports, Korea – Various Measures on Beef , para.  164; US – Gambling , 
para. 306; China – Publications and Audiovisual Products , para.  242; and EC – Seal Products , para.  5.214.  
308 The more important the societal value pursued by the measure at issue, the more easily the measure 
may be considered to be "necessary". ( See Appellate  Body Reports, EC – Asbestos , para.  172; and 
Korea  – Various Measures on Beef , para.  162; and Pa nel Reports , Brazil – Taxation , para.  7.525)  
309 The less restrictive the effects of the measure, the more likely it is to be characterized as 
"necessary". ( See Appellate  Body Report, China – Publications and Audiovisual Products , para.  310) 
310 The greater the contribution, the more easily a measure migh t be considered to be "necessary". ( See 
Appellate  Body Report, Korea – Various Measures on Beef , para.  163) 
311 Appellate  Body Report, Brazil – Retreaded Tyres , para.  145. See also e.g. Panel  Report s, 
Brazil  – Taxation , para.  7.526; EU – Energy Package , para . 7.1360 (currently under appeal); 
Colombia  – Textiles , para.  7.315; and India – Solar Cells , para.  7.361 ; and Appellate  Body Reports, EC – Seal 
Products , para.  5.210.  
312 Appellate  Body Reports, EC – Seal Products , para.  5.215; China – Publications and Audiovisual 
Products , para.  242; and US – Gambling , para.  307; and Panel  Reports , Brazil – Taxation , para.  7.531.  
313 Appellate  Body Report, Brazil – Retreaded Tyres , para.  182. 
314 Emphasis added. The Panel agrees with prior WTO adjudicators that the text of the preamble is 
useful for providing interpretative context for the operative provisions being interpreted . (See e.g. 
Panel  Report , Thailand – Cigarettes (Philippines) (Article  21.5 – Philippines) , para.  7.749  (currently under 
appeal) ) WT/DS543/R  
 
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  7.162.   The Panel notes that the disputing parties and the third parties agree with the legal test 
consistently applied in previous disputes, as described above.315 For this reason, in the next section, 
the Panel will proceed directly to assess the application  of this legal test to the present dispute after 
briefly noting parties' and third parties' main arguments.  
7.3.2.4.2   The Panel's assessment on whether the United  States  has demonstrated the 
necessity  of the measures at issue  
7.163.   The United  States  argues that the additi onal duties at issue are "necessary" to protect public 
morals because they "play a necessary role toward the goal of eliminating China's unfair trade acts, 
policies, and practices by raising the cost of such practices and reducing China's incentive to continue 
engaging in such conduct going forward ".316 According to the United  States , "it is reasonable to 
conclude that China will continue to pursue its unfair trade acts, policies, and practices while it is 
advantageous to China to do so, for  example, until the economic costs of doing so begin to approach 
or outweigh the economic benefits"317, and for that reason, "to protect U.S. interests in moral (right 
or wrong) economic behaviour, it is necessary for the United  States  to adopt measures tha t are 
capable of changing China 's economic cost -benefit analysis".318 The United  States  also asserts that 
the measures are necessary to achieve the public morals objective as invoked by the United  States  
because it was only after their adoption that China a greed to enter into negotiations with the 
United  States to address the concerns documented in the Section 301 Report.319 Finally, the 
United  States asserts that so long as a WTO Member can establish that a measure that aims to 
influence the policies or prac tices of another Member is necessary to protect public morals, that 
measure can be justified under Article  XX(a).320 
7.164.   According to China, the United  States ' arguments asserting that the measures are necessary  
are unrelated to the necessity analysis usually c onducted under Article  XX(a) of the GATT  1994.321 
China considers that the interpretation of the term "necessary", as suggested by the United  States , 
would render the necessity analysis meaningless in practice, because it would allow WTO Members 
to "ratchet  up duties on any product to any level for any length of time that the Member deems 
appropriate, regardless of whether the products contain or embody morally offensive content or 
conduct".322 China further considers that the measures at issue are not "neces sary to protect public 
morals" within the meaning of Article  XX(a) because "the importance of any interest in combatting 
particular criminal conduct that the United  States  may theoretically possess is significantly 
outweighed by the lack of contribution of  the U.S. measures to the achievement of that objective 
and their severe trade restrictiveness".323 In China's view, the measures do not contribute to any 
"public morals" objective within the meaning of Article  XX(a) because they are applied to products 
on the basis of economic objectives and not on the basis of the morally offensive content of the 
products themselves.324 China asserts that, even if the Panel were to find that certain products 
covered by the measures embody morally offensive conduct,  which is a position China does not 
 
315 See United States' second written submission, paras.  51-56; China's second written submission, 
paras.  53-61; Australia's third -party statement, paras.  14-15; Australia's  integrated executive summary, 
paras.  11-12; Brazil's third -party submission, paras.  11-12; Brazil's  integrated executive summary, para.  11; 
European  Union 's third -party submission, paras.  49-55; Singapore's third -party statement, paras.  11-12; and 
Singapore's integrated executive summary, paras.  11-12. 
316 United States' second written submission, para.  53.  
317 United States' first written submission, para.  78. See also United States' second written submission, 
paras.  38 and 60 ; United States' response to Panel question No. 12, para.  49; United States' respo nse to Panel 
question No. 15, para.  65; and United States' response to Panel question No. 21, para.  2. 
318 United States second written submission, paras.  38 and 60. See  also United States' response to 
Panel question No. 12, para.  49; and United States' resp onse to Panel question No. 21, para.  2. 
319 United States second written submission, para.  40. The United States contends that it has made 
significant efforts to change China's conduct, among others through "dialogue, admonishment, multilateral 
forums, bilat eral mechanisms, and the pursuit of criminal charges against individuals and entities affiliated with 
the Chinese government". According to the United States, because none of these efforts "have proven to be 
durably effective", imposition of the tariffs wa s necessary. (United States' first written submission, para.  80. 
(footnotes omitted)) However, the United States also notes that even after the adoption of the measures, 
"China continues to engage in the unfair and immoral practices documented in the Secti on 301 Report ." 
(United  States' comment on China's response to Panel question No. 23, para.  23; and Exhibit US -35) 
320 United States' second written submission, para.  64.  
321 China's second written submission, para.  53.  
322 China's second written submission, p ara. 54.  
323 China's second written submission, para.  55.  
324 China's second written submission, para.  56. WT/DS543/R  
 
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  concede,  a "genuine ends -means relationship would still not exist".325 Finally, China asserts that "the 
United  States  believes that a measure can be 'necessary' within the meaning of Article  XX(a) 
whenever it is designed to coerce another Member into adopting a particular policy"326; China 
continues that coercing another Member to change policies cannot be a matter of necessity under 
Article  XX(a).  
7.165.   Several third parties have also discussed the necessity analysis under Artic le XX(a). 
Australia, Brazil and Singapore emphasize that under the "necessity test", as developed by prior 
WTO adjudicators, only measures that are necessary  are permitted under Article  XX(a).The 
European  Union  agrees that the necessity test involves an as sessment of the contribution of the 
challenged measure to the policy goal pursued. According to the European  Union , in the present 
case, the contribution of the measures at issue to the objective invoked by the United  States  is "too 
indirect"327 and their t rade restrictiveness exceeds that of measures found provisionally justified 
under Article  XX(a) in previous cases, because in the present case the measures "apply 
indiscriminately to all imports of a very large category of products, regardless of whether t hey have 
been identified as morally tainted".328 
7.166.   The Panel now examines the factors traditionally assessed in the consideration whether the 
challenged measures (the additional duties) are necessary.  
7.3.2.4.2.1   Importance of the pursued policy objective  
7.167.   The United  States asserts that the measures pursue the vitally important objective of 
upholding US norms against theft and coercion, and that such values are "of tremendous importance 
to U.S. society and the functioning of the U.S. economy".329 China accepts that "addressing problems 
relating to crime could, in theory, be characterized as serving a societal interest"330, but considers 
that "the importance of any interest in combatting particular criminal conduct that the United  States  
may theoret ically possess is significantly outweighed by the lack of contribution of the U.S. measures 
to the achievement of that objective and their severe trade restrictiveness".331 
7.168.   The Panel recalls the deference accorded to WTO Members to define the scope of the public 
morals they want to protect in their societies, corresponding to their own system and scales of 
values. The analysis of the necessity of a challenged measure includes  an assessment of the 
importance of the pursued public policy objective not in general, but for the responding WTO 
Member , in light of the relevant public morals it has invoked as applicable in its territory. During this 
assessment, prior WTO adjudicators have focused on examining the protected societal interest, 
"rather than assuming that by virtue of its status as a 'public moral' objective the interest is per se  
vital or important to the highest degree".332 For instance, in US – Gambling , the panel examin ed the 
interests and values protected by the challenged measure and concluded that these interests and 
values "serve very important societal interests that can be characterized as 'vital and important in 
the highest degree'".333 Similarly, in EC – Seal Products, the panel noted the European  Union 's claim 
that the specific moral concern with regard to the protection of animals was regarded as a value of 
high importance in the European  Union , and found that "the protection of such public moral concerns 
is inde ed an important value or interest".334  
7.169.   In the circumstances of the present case, the Panel notes that the public morals objective 
as invoked by the United  States  reflects societal interests that the United  States  describes as highly 
important to it.  
 
325 China's second written submission, para.  57. 
326 China's second written submission, para.  54.  
327 European  Union 's third -party submission, para.  54.  
328 European  Union 's third -party submission, para.  55.  
329 United States' second written submission, para.  52.  
330 China's second written submission, para.  55.  
331 China's second written submission, para.  55.  
332 Panel  Reports,  Brazil – Taxation , para.  7.591. 
333 Panel  Report , US – Gambling , para.  6.492.  The Appellate  Body upheld this  finding.  
334 Panel  Report , EC – Seal Products , para.  7.632. Th e Appellate  Body upheld this finding . WT/DS543/R  
 
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  7.3.2.4.2.2   Restri ctive impact of the challenged measures on trade  
7.170.   The United  States  asserts that the measures at issue are not overly trade restrictive, because 
they "do not impose a ban on the import of any Chinese products, [but] tariffs at moderate levels, 
and […] calib rated to obtain the elimination of the conduct documented in the Section 301 Report".335 
China argues that measures at issue are severely trade -restrictive, because they "extend to 
essentially all imports from China and have resulted in increases of 25 perc ent above the bound 
tariff rates"336, which "have reduced the ability of Chinese imports to compete in the U.S. market by 
increasing their price relative to domestically -produced products and imports from third countries 
not subject to the additional import  duties".337 
7.171.   The Panel observes that the measures at issue are not an import ban, but rather additional 
tariff duties on a wide range of products imported from China. As the panel in Colombia – Textiles 
observed, a  "tariff is less restrictive on international trade than an import ban or measure having 
the effects of a ban"338, but still has "definite effects on international trade, by reducing the capacity 
of the products concerned to compete on [the] market".339 However, particularly given the wide  
range of products imported from China subject to the additional duties, the Panel notes that the 
measures have significant  effects on international trade.  
7.3.2.4.2.3   Contribution of the measures to the pursued public morals objective as 
invoked by the United  States  
7.172.   The United  States  contends that the measures at issue make a substantial contribution to 
the objective of protecting US public morals, because (i) they raise the cost of China's practices and 
reduce China's incentive to continue engaging in such conduct340; (ii) they signal to US citizens that 
China 's trading conduct is unacceptable and will not be rewarded in the marketplace, "and thereby 
reduce the incentive for U.S. actors to adopt behavior similar to China's"341; (iii) China entered into 
negotiations with  the United  States  to address the concerns documented in the Section 301 Report 
after the adoption of the measures at issue.342 The United  States  asserts that it "has made out a 
prime  facie case that the measures at issue contribute to the protection of pub lic morals and China 
has presented no arguments that would rebut this conclusion".343 
7.173.   China asserts that the measures do not contribute to any public morals objective within the 
meaning of Article  XX(a) because they are applied to products on the basis of t he United  States ' 
economic objectives and not on the basis of the morally offensive content of the products 
themselves.344 In China's view, even if the United  States  "may also have imposed tariffs on certain 
products that could theoretically embody alleged morally offensive conduct "345, this "is simply a 
function of the overbreadth of the U.S. measures, not evidence of a genuine ends -means 
relationship".346 
7.174.   The Panel recalls that  the extent to which the challenged measures contribute to the 
realization of the objective pursued is one of the aspects to be considered in evaluating whether 
they are "necessary" within the meaning of Article  XX(a).347 There is no generally applicable st andard 
requiring the use of a pre -determined threshold of contribution .348 For instance, in EC – Seal Products  
 
335 United States' second written submission, para.  55.  
336 China's second written submission, para.  59.  
337 China's second written submission, para.  59.  
338 Panel  Report , Colombia – Textiles , para.  7.444.  
339 Panel  Report , Colombia – Textiles , para.  7.442.  
340 United States' second written submission, para.  53. 
341 United States' second written submission, para.  54. 
342 United States' second written submission, para.  53. 
343 United States' comment on China's response to Panel question No. 23, para.  21. 
344 China's second written submission, para.  56.  
345 China's second written submission, para.  57. 
346 China's second written submission, para.  57. 
347 See e.g. Appellate  Body Report Korea – Various Measures on Beef , para.  163. The Panel observes 
that in this case, the Appellate  Body considered the choice of the measure and its level of trade restrictiveness 
to be indicative of the level of protection sought by the adopting Member: "[w] e think it unlikely that Korea 
intended to establish a level of protection that totally eliminates fraud with respect to the origin of beef 
(domestic or foreign) sold by retailers. The total elimination of fraud would probably require a total ban of 
import s." (Ibid. para.  178) 
348 Appellate  Body Reports, EC – Seal Products , para.  5.213.  WT/DS543/R  
 
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  the Appellate  Body disagreed with the European  Union 's argument that a contribution ought to be 
"material" and specifically cautioned against the use of a standard of "materiality" as a generally 
applicable pre -determined threshold in its contribution analysis.349 
7.175.   Prior WTO adjudicators have consistently held that contribution exists "when there is a 
genuine relationship of ends and means  between the objective pursued and the measure at issue".350 
They have thus determined the level of contribution  to be made by the challenged measures by 
assessing the extent to which these measures were "apt to" contribute to the objectives pursued.351 
This assessment can be either in quantitative or in qualitative terms352 and panels generally enjoy a 
certain latitude in designing the appropriate methodology to use and deciding how to structure or 
organize their analysis.353 Therefore, as previous WTO adjudic ators have done, the Panel will focus 
on determining the existence of a genuine relationship of ends and means  between th e public morals 
objective as invoked by the United  States  and the measures at issue.354 
7.176.   The Panel begins by noting the United  States ' assertion that the measures "make a 
substantial contribution"355 to the objective of protecting US public morals, because they raise the 
cost of China's practices and reduce China's incentive to continue engaging in them, and they reduce 
the incentive for US actors to engage in similar practices . The United  States  also notes that China 
entered into negotiations with the United  States  to address the concerns documented in the Section 
301 Report after the adoption of the measures at issue.356 The Panel recalls, however, that the 
contribution of a measure cannot be resolved on the basis of assertion alone, but must be supported 
by evidence and explanation demonstrating the contribution of the measure to the objective 
pursued, that would assist the Panel in arriving  at its overall conclusion on whether the necessity 
test is me t. Accordingly, the Panel will therefore consider the further arguments that the parties 
make in this area.  
7.177.   In this  connection, the Panel notes that both the United  States  and China appear to accept 
the need for there to be a sufficient nexus between the p ublic morals objective and the chosen 
measures. They diverge, however in their views on how  this relationship can be demonstrated  and 
reflected in the choice of the measure s and their contribution to the invoked policy goal . Responding 
to China, t he United  States  asserts that the text of Article  XX(a) does not require a direct correlation 
or "embodiment" between the products subject to the measure at issue and the "public morals" 
objective invoked by the defending WTO Member357, because "Article  XX(a) refers to measures 
'necessary to protect public morals' – full stop – not measures necessary  to protect public morals 
from morally offensive products".358 According to the United  States , "[a] measure may be necessary 
to protect public morals without being l imited to a product that itself offends public morals".359 China, 
although in the context of its arguments on the design test rather than the necessity test under 
Article  XX(a), argues that Article  XX(a) cannot be interpreted as permitting measures that tar get 
non-morally offensive products.360 According to China, such an interpretation "is  incorrect as a 
matter of treaty interpretation, unsupported by the relevant jurisprudence, and would set a 
dangerous precedent".361 In China's view, "a measure that targets  products on grounds other than 
their embodiment of morally offensive content or conduct is not genuinely related to enforcing 
 
349 Appellate  Body Reports, EC – Seal Products , para.  5.216.  
350 Appellate  Body Report, Brazil – Retreaded Tyres , para.  145. See also e.g. Panel  Report s, 
Brazil  – Taxation , para. 7.526; EU – Energy Package , para.  7.1360 (currently under appeal); 
Colombia  – Textiles , para.  7.315;  and India – Solar Cells , para.  7.361 ; and Appellate  Body Reports, EC – Seal 
Products , para.  5.210.  
351 Appellate  Body Reports, EC – Seal Products , para . 5.213.  
352 See Appellate  Body Reports, Brazil – Retreaded Tyres , para.  146; and Argentina – Financial Services , 
para. 6.234.  
353 Appellate  Body Report, Brazil – Retreaded Tyres , para.  145. See also Appellate  Body Report s, 
EC – Seal Products , para.  5.210.  
354 See e.g. Panel  Report s, Brazil – Taxation , para.  7.526; EU – Energy Package , para.  7.1360  (currently 
under appeal) ; Colombia – Textiles , para.  7.315;  and India – Solar Cells , para.  7.361 ; and Appellate  Body 
Reports, EC – Seal Products , para.  5.210 . 
355 United States' second written submission, para.  53. 
356 See para.  7.172  above.  
357 United States' second written submission, para.  59. 
358 United States' response to Panel question No. 21, para. 1.  
359 United States' response to Panel question Nos. 10 and 11, para.  41.  
360 China's second written submission, paras.  37-38. 
361 China's second wr itten submission, para.  43. WT/DS543/R  
 
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  policies for the protection of public morals".362 The European  Union  appears to agree with China and 
asserts that a "tariff increa se on a very large category or products, regardless, apparently, of 
whether the imports of the products concerned pose, by themselves, any threat to the public 
morals"363 makes the relationship between the measures at issue and the public policy objective 
pursued by the United  States  "too indirect ".364 
7.178.   For the purpose of this dispute the Panel does not consider it necessary to resolve at an 
abstract level the debate between the parties on th e above  issue. Rather , the Panel seeks to 
understand the United  States ' explanation of how the specific measures that it chose to impose, i.e. 
additional duties on specifically selected products from China, contribute to the public morals 
objective invoked . The Panel considers that to demonstrate the existence of such a contribution, and 
in particular of a genuine relationship of ends and means between the public morals objective and 
the measures at issue, the United  States  must demonstrate how the additional duties are apt to 
contribute to the public morals objective as invoked by the United  States . The Panel recalls that the 
measures in this case are additional duties apply ing to a very wide range of products .365 The Panel 
considers that a genuine relationship of ends and means between the measure s the United  States  
has chosen and the public morals objective could be discerned through demonstrating the existence 
of a nexus between these chosen measure s and the public morals objective as invoked by the 
United  States . In this way , the United  States  would be able to point to or prove a genuine 
relationship of ends and means between the measures at issue and the invoked public morals 
objective that would hi ghlight the contribution the measures ma ke to the stated objective and assist 
the Panel in reaching its conclusions on the necessity test as a whole . Therefore, the Panel  will direct 
its enquiry towards seeking to identify the nexus between the  measures  the United  States  has 
chosen (i.e. additional duties on a wide range of product s) and the US public morals concerns , in 
order to inform the examination of the question of whether and how the measures contribute, and 
could be shown or demonstrated to be "nece ssary" , to protect public morals  within the meaning of 
Article  XX(a) . 
7.179.   The Panel understands the United  States  to argue that a WTO Member that invokes an 
Article  XX(a)  defence  is not required to limit the products subject to the WTO -inconsistent measure s 
that it wishes to justify only to products which offend public morals . The United  States  asserts that 
"nothing in the text of Article XX(a) supports the view that Article XX(a) excludes measures aimed 
at inducing policy changes in other WTO Members".366 In the Panel's view, the scope of Article  XX(a) 
is intrinsically limited and is circumscribed, first, by the determination of the specific content of the 
public morals that the responding Member wishes to protect, and, second , by the requirement that 
the measure a Member has chosen can be demonstrated to be necessary  to the achievement of this 
public morals objective. In other words,  even assuming, arguendo , that a measure does not have 
to only apply to products that are considered to embody morally offens ive conduct  to be justified 
under Article  XX(a), the respondent still has to demonstrate that the measure it chose (in this case, 
additional duties  on a wide range of products from China)  is apt to contribute to protecting public 
morals concerns, by establ ishing the relevant nexus, and also that such measures do not go beyond 
what is necessary within the meaning of Article  XX(a).  
7.180.   For these reasons, the Panel considers that, in its examination of the contribution of the 
measures to the pursued public morals objective as invoked by the United  States , it must assess 
the explanation and evidence submitted by the United  States  that bears on the relationship of ends 
and means between the products subject to additional duties and the US public morals concerns . 
7.181.   Accordingly, the Panel will now  analyse the contribution of each of the two challenged 
measures to the pursued public morals objective as invoked by the United  States .  
 
362 China's response to Panel question No. 10, para.  17.  
363 European  Union 's third -party submission, para.  44 and integrated executive summary, para.  11. The 
European  Union  also raises this issue with regard to the design of the m easures.  
364 European  Union 's third -party submission, para.  44.  
365 This contrasts with previous cases where Article  XX(a) has been invoked , in which the measures at 
issue were more narrowly targeted or focused on specific goods or services sectors  (Panel  Reports and 
Appellate  Body Reports, US – Gambling , China – Publications and Audiovisual Products ; EC – Seal Products ; 
Colombia – Textiles ; and Brazil – Taxation ).  
366 United States' second written submission, para.  64.  WT/DS543/R  
 
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  Contribution of the imposition of additional duties on List 1 products to the  pursued 
public morals objective as invoked by the United  States  
Products covered by List 1  
7.182.   The United  States  asserts that its argument that the measures at issue are necessary "is not 
contingent on the application of those measures to any particular class of morally offensive 
products"367, but that – in any event – List 1 covers products that embody morally offen sive 
conduct.368 The United  States  affirms that the products subject to additional tariffs under List 1 "were 
found to benefit from the trade policies documented in the Section 301 Report, including 'Made in 
China 2025'" .369 According to the United  States , there is a "clear and direct relationship between the 
'List 1 Products' and the unfair technology transfer policies, and practices described in the 
Section  301 Report".370 This is demonstrated by the significant emphasis put in the legal instruments 
through which the United  States  adopted and implemented the measures at issue on "Made in China 
2025 and the Chinese industries that benefit from that initiative"371. The United  States  also notes 
that since "the benefits and advantages that China derives from its u nfair trade acts, policy, and 
practices are designed to serve China's 'industrial policy goals' and 'economic objectives' writ large 
and in a comprehensive sense, […] a corresponding response to China's unfair trade acts, policies, 
and practices could also  be expected to be broad -based and designed to apply economic pressure 
to China in a comprehensive sense, not just with respect to a narrow range of morally offensive 
products".372 
7.183.   China asserts that there is no "genuine relationship of ends and means" betw een the 
measures at issue and the public morals objective as invoked by the United  States , because the 
measures at issue "are not applied based on the morally offensive content of the products 
themselves".373 According to China, the measures at issue do not  target products "on the grounds 
that they contain content or embody conduct offensive to such concerns".374 China notes that (i) the 
United  States  determined the value of the products that would be covered by the measures based 
on the "estimated harm to the U.S. economy" and selected products based on their "likely impact 
on U.S. consumers"375; (ii) the United  States  "apparently weighed whether the s ame products could 
be sourced from alternative countries"376; and (iii) the United  States ' approach to evaluating 
exclusions from the application of the additional duties reveals the economic objectives pursued by 
the United  States .377 According to China, al l these elements establish that the measures at issue 
"are designed to punish China for alleged harm to the U.S. economy while avoiding causing economic 
harm to U.S. consumers".378 
7.184.   In its third -party submission, the European  Union  also asserts that the meas ures at issue 
provide for tariff increases on a "very large category of products, regardless, apparently, of whether 
the imports of the products concerned pose, by themselves, any threat to the public morals invoked 
by the United States".379 The European  Union notes that this makes the measures at issue "far more 
trade restrictive than the measures found provisionally justified under Article  XX(a) of the 
GATT  1994 in previous cases, because they apply indiscriminately to all imports of a very large 
category of products, regardless of whether they have been identified as morally tainted ".380 
 
367 United States' second written submission, para.  60. 
368 United States' second written submission, para.  62. 
369 United States' second written submission, para.  34. See also United States' opening statemen t at the 
first meeting of the Panel, para.  48; United States' response to Panel question No. 12, para.  51; United States' 
second written submission, para.  62; and United States' response to Panel question No. 21, para.  4.  
370 United States' response to Pane l question No. 21, para.  4.  
371 United States' response to Panel question No. 21, para.  8. 
372 United States' second written submission, para.  61; and United States' response to Panel question 
No. 21, para.  3.  
373 China's second written submission, para.  56. 
374 China's second written submission, para.  44.  
375 China's second written submission, para.  46. (emphasis omitted)  
376 China's second written submission, para.  46. According to China, this demonstrates that "[e]v idently, 
the covered products are not in and of themselves offensive to the public morals of the United States, 
otherwise the same products from alternative countries would pose the same risk of offence ." (Ibid. para.  46) 
377 China's second written submissio n, para.  48.  
378 China's second written submission, para.  48.  
379 European  Union 's third -party submission, para.  44 and integrated executive summary, para.  11.  
380 European  Union 's third -party submission, para.  55. WT/DS543/R  
 
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  7.185.   As noted previously, the Panel does not consider it necessary to resolve the debate between 
the parties and  third parties on this issue  in the abstract. Cases and disputes in which Article  XX(a) 
is invoked will concern  different public morals, measures and factual circumstances that will need to 
be considered by each adjudicator to determine whether the requisite nexus between the invoked 
public morals and the measures is demonstrated. Accordingly, the panel will focus on the choice of 
specific measures that a respondent has selected to determine whether such a nexus exists. 
Considering the evidence before it, the Panel understands that the selection process of products to 
be covered  by List 1 began with the  publication of a Notice in the Federal Register on 6  April 2018.381 
The Notice of 6  April 2018 summarized the findings of the Section 301 Report and proposed that 
"appropriate action" with regard to some of the US concerns related to Chinese acts, policies , and 
practic es documented in the Section 301 Report, would include the imposition of additional duties 
on products from China. The Notice of 6  April 2018 proposed a list of products (proposed List 1) that 
would be subject to the additional duties.  
7.186.   The Notice of 6  April 2018 explained the process of selection of the products covered by this 
proposed List 1 as follows:  
The list of products covered by the proposed action was developed using the following 
methodology:  
Trade analysts from several U.S. Government agencies identified products that benefit 
from Chinese industrial policies, including Made in China 2025.  The list was refined by 
removing specific products identified by analysts as likely to cause disruptions to the 
U.S. economy, and tariff lines that are subject t o legal or administrative constraints. 
The remaining products were ranked according to the likely impact on U.S. consumers, 
based on available trade data involving alternative country sources for each product. 
The proposed list was then compiled by selecti ng products from the ranked list with 
lowest consumer impact.  
The value of the list is approximately $50 billion in terms of estimated annual trade 
value for calendar year 2018. This level is appropriate both in light of the estimated 
harm to the U.S. econ omy, and to obtain elimination of China 's harmful acts, policies, 
and practices.382 
7.187.   Although the Notice of 6  April 2018 indicates that the imported products subject to additional 
duties " benefit[ted] from Chinese industrial policies, including Made in China  2025", the 
United  States  did not provide an explanation or evidence to further substantiate this assertion .383 
The Panel observes that the Notice of 6 April 2018 assessed the estimated annual trade value to be 
covered by the proposed additional duties, with the conclusion that this level was appropriate in light 
of the estimated harm to US economy  and to obtain eli mination of China's practices  documented in 
the Section 301 Report.  
7.188.   Following a comment period, on 20  June 2018 the United  States  published a second Notice 
in the Federal Register.384 The Notice of 20  June 2018 contained the final list of 818 tariff 
 
381 Notice of Determination and Request for Public Comment Concerning Proposed Determination of 
Action Pursuant to Section 301: China 's Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation, Federal Register, vol.  83, No. 67 (6  April 2018), p.  14906 (Exhibit 
CHN-10) (Notice of 6  April 2018).  
382 Notice of 6  April 2018 (Exhibit CHN -10), p.  14907. (emphasis added)  
383 In its response to Panel question No 16(c) ("Could you please indicate which industries are 
concerned by China's alleged acts, policies and practices relating to technology transfer, protection of 
intellectual property and innovation, explaining whether and how products made or services provided by these 
industries were considered in the process of the ado ption of the additional import duties on List 1 and on List 2 
products?"), the United States limited its response to reiterating its statement that List 1 products "were found 
to benefit from the Chinese policies detailed in the Section 301 Report, includi ng Made in China 2025" without 
providing any further explanation or evidence . (United States' response to Panel Question 16(c), para.  73) The 
United States referred to a broad list of industrial sectors "that contribute to or benefit from the 'Made in Chin a 
2025' industrial policy" and asserted that " [a]ll U.S. industries are ultimately concerned and affected by China 's 
forced technology transfer policies and practices ." (United States' response to Panel Question 16(c), para.  73) 
384 Notice of Action and Requ est for Public Comment Concerning Proposed Determination of Action 
Pursuant to Section 301: China 's Acts, Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation, Federal Register, Vol. 83, No. 119 (20  June 2018), p.  28710 (Notice of 
20 June 2018) (Exhibit CHN -2). WT/DS543/R  
 
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  subhead ings of Chinese imports, that were subject to an additional duty of 25% (List  1).385 With 
respect to the selection of the products to be covered by the additional duties, the Notice of 20 June 
reads as follows:  
USTR and the Section 301 Committee have carefu lly reviewed the public comments and 
the testimony from the three -day public hearing. In addition, and consistent with the 
Presidential directive, USTR and the interagency Section 301 Committee have carefully 
reviewed the extent to which the tariff subhead ings in the April  6, 2018 notice include 
products containing industrially significant technology, including technologies and 
products related to the "Made in China 2025 '" program. Based on this review process, 
the Trade Representative has determined to nar row the proposed list in the April  6, 
2018 notice to 818 tariff subheadings, with an approximate annual trade value of 
$34 billion.386 
7.189.   The Notice of 20 June also refers to a statement by the United  States  President of 
29 May 2018, according to which  
Under S ection 301 of the Trade Act of 1974, the United  States  will impose a 25 percent 
tariff on $50 billion of goods imported from China containing industrially significant 
technology, including those related to the 'Made in China 2025 ' program.387 
7.190.   The Panel notes the United  States ' assertions that it has imposed the additional duties on 
products that benefit ted from China's "immoral" practices documented in the Section 301 Report.  
The United  States  further reiterated that the measures at issue are "structured  so as to target 
particular types of goods that benefit from the conduct detailed in the Section 301 Report"  and, in 
this regard, they "alert U.S. consumers and purchasers to the unfair and immoral practices that 
underlie many traded Chinese products and s ignal to U.S. consumers and purchasers that such 
practices are not acceptable".388 However, the United  States  has not explained how the  legal 
instruments through which the United  States  adopted and im plemented the measures at issue 
support this assertion. T he most elaborate explanation of the selection process is provided in the 
Notice of 6  April 2018 which reads: "[t]rade analysts from several US Governmental agencies 
identified products that benefit from Chinese industrial policies".389 Moreover, the legal instruments 
through which the United  States  adopted and implemented the measures at issue (the Notice of 
20 June 2018, and by reference – the president's statement of 29  May 2018) indicate that the 
covered products " contain [] industrially signifi cant techn ology , including  those related to the 'Made 
in China 2025' programme".390 The legal instruments through which the United  States  adopted and 
implemented the measures do not provide any further explanation.  
7.191.   In the Panel's view, the legal instruments through which the United  States  adopted and 
implemented the measures at issue do not explain the relationship between the chosen measur es – 
additional duties applied to a range  of specified products – and the public morals objective pursued 
by the United  States . The United  States  has also not provided any other evidence in support of its 
assertion that the products on which it imposed add itional duties benefitted from practices of China 
that the U nited States  considered to be contrary to its public morals, nor evidence that would more 
generally demonstrate how the products it selected for additional duties treatment contributed to its 
public morals objective.  
7.192.   Moreover, the Panel observes that the Section 301 Report focuses on a certain number of 
Chinese industrial policies , including the "Made in China 2025" industrial policy391, and finds that 
China adopted the documented practices and poli cies "to advance China's industrial policy 
 
385 The Panel examines the process of the initial narrowing of the range of products covered by List 1 in 
paras . 7.196 -7.201  below.  
386 Notice of 20  June 2018 (Exhibit CHN -2), p.  28711.  
387 Notice of 20  June 2018 (Exhibit CHN -2), p.  28711, quoting Statement on Steps to Protect Domestic 
Technology and Intellectual Prope rty from China 's Discriminatory and Burdensome Trade Practices.  
388 United States' second written submission, para.  48.  
389 Notice of 6  April 2018 (Exhibit CHN -10), p.  14907.  
390 Notice of 20  June 2018 (Exhibit CHN -2), p.  28711 (emphasis added).  
391 The Sectio n 301 Report refers to "the National Medium - and Long -Term Science and Technology 
Development Plan Outline (2006 -2020) (MLP), the State Council Decision on Accelerating and Cultivating the 
Development of Strategic Emerging Industries (SEI Decision), and, m ore recently, the Notice on Issuing 'Made 
in China 2025'" (Made in China 2025 Notice)". (Section 301 Report (Exhibit US -1), p.  10, footnotes omitted)  WT/DS543/R  
 
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  objectives, in particular the goals  and objectives reflected in Made in China 2025, 'China 's ten-year 
plan for targeting ten strategic  advanced technology manufacturing industries for promotion and 
development'"392. The Section 301 Report does not seem to contain a comprehensive list of 
industries affected by the alleged Chinese acts, practices , or policies , that engage the public morals 
invoked by the U nited States  in this dispute . Instead, the document appears to mention sectors that 
have allegedly been the focus of these practices, or that are illustrative of China's actions. These 
sectors include agriculture, automotive (including new energy vehicles), aviation and aerospace, 
financial services, biotec hnology, chemicals, educational services, electrical generation and 
transmission equipment, energy (including new energies and nuclear power), environmental 
technology, exploration and development of oil and natural gas, information technology, integrated 
circuits advanced manufacturing, marine technology, medical devices, mining, pharmaceuticals, real 
estate and housing, robotics and automated machine tools, steel, telecommunications, 
transportation, water and mineral resources.393 An Update to the Section 301 Report394 specifies 
that "[i]ndustrial sectors that contribute to or benefit from the 'Made in China 2025' industrial policy 
include aerospace, information and communications technology, robotics, industrial machinery, new 
materials, and automobiles".395 The United  States  asserts that "[a]ll U.S. industries are ultimately 
concerned and affected by China 's forced technology transfer policies and practices".396 
7.193.   That said, the additional duties on List 1 products do not apply to all Chinese imports, but 
as no ted above, only to a selection of products that the United  States  asserts clearly benefit from 
the specific policies that are the subject of the US public morals concerns.397 In asserting the 
contribution that the additional duties on these products have to  the stated US public morals 
objectives , the United  States  points to a relationship between the specific products in List 1 to this 
stated contribution.398 Accordingly, the Panel will investigate this relationship further.  
7.194.   Following a preliminary review of the tariff lines subject to the additional duties, the Panel 
notes that certain product categories do not appear closely related to the list of affected industrial 
policies discussed in the Section 301 Report. List 1 products include fishery products, cosm etics (if 
not considered part of the chemical industry), textiles, wood, wooden products and paper, and 
possibly certain construction material. From the evidence presented to it, the Panel finds it unclear 
how the United  States  associated China's sectoral industrial policies with specific products within 
certain economic sectors that benefit from China's policies and practices considered to violate the 
public morals invoked by the United  States .399 
7.195.   The Panel continues its examination of the additional duties  actually imposed on List 1 
products to determine the extent to which the imposition of these additional duties on List 1 products 
contributes to the pursued public morals objective as invoked by the United  States . 
The initial narrowing of the range of products covered by List 1  
7.196.   The Panel recalls that,  as described before, the selection process of products to be covered 
by List 1 began with the  publication of a Notice in the Federal Register on 6  April 2018. The Notice 
of 6 April 2018 proposed a list of products with an approximate value of USD 50 billion (proposed 
List 1) and invited comments from interested persons on any aspect of the proposed action, including 
(i) the specific products to be subject to increased duties; (ii) the level of the increa se, if any, in the 
 
392 United States response to Panel question No. 21, para.  7; referring to Section 301 Report (Exhibit 
US-1), pp. 17, 20, 27, 29, 36, 63, 149, 150, and 153; and quoting Section 301 Report (Exhibit US –1), p.  14.  
393 See Section 301 Report, (Exhibit US -1), pp.  11, 13, 14, 23, 26, 65, 100, 156 , and Appendix D.  
394 Update Concerning China 's Acts, Policies, and Practice s Related to Technology Transfer, Intellectual 
Property, and Innovation under Section 301 of the Trade Act of 1974 (November 20, 2018) (Exhibit US -2) 
(Update to Section 301 Report).  
395 Update to Section 301 Report  (Exhibit US -2), p. 7. 
396 United States' response to Panel question No. 16(c), para.  73.  
397 United States' second written submission, paras.  34 and 62.  
398 See United States' second written submission, para.  54: "[t] he measures at issue further contribute 
to the objective of protecting public morals by signaling to U.S. citizens that China 's trading conduct is so 
unacceptable and contrary to basic norms of fairness that the United States government was compelled to take 
action by lowering trade in the Chinese products that may  benefit from China 's unfair trade policies. " 
399 On that point, China asserts that "[m]erely listing a series of economic sectors that supposedly 
'benefit from ' various policies does not prove that USTR determined that specific products within those sectors  
embody the allegedly 'unfair ' trade acts, policies, and practices ." (China's second written submission, para.  50 
(emphasis original) ) WT/DS543/R  
 
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  rate of duty; and (iii) the appropriate aggregate level of trade to be covered by additional duties.400 
Following the comment period, the United  States  published the Notice of 20  June 2018 which 
contained the final list of products with a n approximate value of USD  34 billion (final List 1). 
Compared with the proposed List 1 in the Notice of 6  April 2018, the final List 1 was narrowed down:  
USTR and the Section 301 Committee have carefully reviewed the public comments and 
the testimony from  the three -day public hearing. In addition, and consistent with the 
Presidential directive, USTR and the interagency Section 301 Committee have carefully 
reviewed the extent to which the tariff subheadings in the April  6, 2018 notice include 
products conta ining industrially significant technology, including  technologies and 
products related to the "Made in China 2025" program.  Based on this review process, 
the Trade Representative has determined to narrow the proposed list in the April  6, 
2018 notice to 818  tariff subheadings, with an approximate annual trade value of 
$34 billion.401 
7.197.   China has challenged the consistency of the additional duties on the final List 1 and not on 
the proposed List 1 with the GATT  1994. However, the Panel considers that the process  of initial 
narrowing of the range of products covered by List 1 is an aspect of the measure at issue that may 
help understand the existence of a genuine relationship of ends and means between the measure at 
issue and the public morals objective as invoked  by the United  States . 
7.198.   The final List 1 cover s some, but not all, of the products included in the proposed List 1. 
Following a comparative examination of the two Notices, the Panel observes that products covered 
by the proposed List 1 that were later exclu ded from  the final List 1 include certain inorganic 
chemicals402, all organic chemicals included in the proposed List 1403, all pharmaceutical products 
included in the proposed List 1404, certain rubber articles405, all iron and steel included in the 
proposed List 1406, all articles of iron or steel included in the proposed List 1407, all aluminium and 
aluminium articles included in the proposed List 1408, all miscellaneous articles of base metal included 
in the proposed List 1409, certain nuclear reactors , boilers, machinery and mechanical appliances and 
parts thereof410, certain electrical machinery and equipment and parts thereof, sound recorders and 
reproducers, television image and sound recorders and reproducers, and parts and accessories of 
such artic les411, certain vehicles other than railway or tramway rolling stock, and parts and 
accessories thereof412, certain aircraft, spacecraft, and parts thereof413, certain ships, boats and 
floating structures414, certain optical, photographic, cinematographic, mea suring, checking, 
precision, medical or surgical instruments and apparatus and parts and accessories thereof415, all 
clocks and watches and parts thereof included in the proposed List 1416, all arms and ammunition 
and parts and accessories thereof included i n the proposed List  1417, and all furniture, bedding, 
mattresses and other related products included in the proposed List 1.418 
 
400 Notice of 6  April 2018 (Exhibit CHN -10), p.  14908.  
401 Notice of 20  June 2018 (Exhibit CHN -2), p. 28711. (emphasis added ) 
402 Subheadings 28443010, 28443020 , and 28443050 from the United States' Harmonized Tariff 
Schedule (HTSUS).  
403 All subheadings from Chapter 29 (Organic chemicals) of the HTSUS.  
404 All subheadings from Chapter 30 (Pharmaceutical products) of the HTSUS.  
405 Subheadings 4061000 0, 40091200, 40094200, 40101100, 40121980, and 40169915 of the HTSUS.  
406 All subheadings from Chapter 72 (Iron and steel) of the HTSUS.  
407 All subheadings from Chapter 73 (Articles of iron and steel) of the HTSUS.  
408 All subheadings from Chapter 76 (Aluminum and articles thereof) of the HTSUS.  
409 All subheadings from Chapter 83 (Miscellaneous articles of base metal) of the HTSUS.  
410 For instanc e, subheadings 84159040, 84159080 , and others of the HTSUS.  
411 For instance, subheadings 85073080, 85079040, 85192000 , and others of the HTSUS.  
412 Subheading 87141000  of the HTSUS.   
413 Subheading 88010000 of the HTSUS.  
414 Subheading 89079000 of the HTSUS.  
415 For instance, subheadings 90079140, 90079180, 90191060 , and others  of the HTSUS.  
416 All subheadings from Chapter 91 (Clocks and watches and parts thereof) of the HTSUS.  
417 All subheadings from Chapter 93 (Arms and ammunition; parts and accessories thereof) of the 
HTSUS.  
418 All subheadings from Chapter 94 (Furniture; bedding, mattresses, mattress supports, cushions and 
similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated sign 
illuminated nameplates and the  like; prefabricated buildings) of the HTSUS.  WT/DS543/R  
 
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  7.199.   This narrowing of the range of products covered by List 1, in itself, does not support a specific 
conclusion with respect to the r elationship between the challenged measure and the public morals 
objective as invoked by the United  States . In addition, the legal instruments through which the 
United  States  implemented this narrowing of the range of products covered by List 1 do not indi cate 
any particular relationship between the narrowing process of List 1 and the public morals objective 
as invoked by the United  States . 
7.200.   Rather, the documents the parties submitted suggest that the narrowing of the range of 
products covered by List 1 was based on considerations related to the likely risks of disruptions to 
the US economy and to the value of imports covered by the additional duties on the "estimated harm 
to the U.S. economy".419 The elimination of certain imported products from List 1 does n ot appear 
to have considered the potential harm to the invoked public morals objective, nor the coherence of 
the policy goal pursued, in the process of narrowing the range of products covered by List 1.420  
7.201.   Therefore, the narrowing of the range of products covered by List 1 does not indicate how 
the United  States  sought to ensure , or how it would enable the United  States  to demonstrate, a 
genuine relationship of ends and means between the invoked objective of  public morals and the 
additional duties imposed on List 1 products.   
The exclusion of particular products from the scope of the additional duties  
7.202.   The Notice of 20  June 2018 envisages the exclusion of some products from the scope of the 
additional duties. The Notice of 20  June 2018 refers to the following considerations that warrant the 
establishment of a process allowing stakeholders to request the exclusion of particular products from 
the additional duties: (i) specific products that we re only available from China; (ii) the imposition of 
additional duties on the specific products would cause severe economic harm to a US interest, and 
(iii) the specific products were not strategically important or related to the "Made in China 2025" 
progr amme.421 
7.203.   On the basis of these considerations, on 11  July 2018 the United  States  published 
Procedures for requests for exclusion of particular products from the additional duties imposed on 
List 1 products (Procedures for exclusion).422 According to these Pr ocedures for exclusion, any 
request for exclusion from the additional duties of a particular product covered by List 1 must provide 
the rationale for the requested exclusion, addressing the following factors: (i) whether the particular 
product is available  only from China and whether the particular product and/or a comparable product 
is available from sources in the United  States  and/or in third countries; (ii) whether  the imposition 
of additional duties on the particular product would cause severe economic  harm to the requestor 
or other US interests; and (iii) whether the particular product is strategically important or related to 
"Made in China 2025" or other Chinese industrial programmes.423 
7.204.   The United  States  explained the process for granting product excl usions in the course of the 
proceedings.424 This process appears to involve two stages. First, in the course of a "public 
submission process", USTR publicly posts all received requests for product exclusions. Interested 
parties may support or oppose any exc lusion request. If a request is opposed, the requestor is given 
an opportunity to respond.  All these additional submissions are made publicly available.425 Second, 
in the course of a "review process", each request undergoes a "multistep review by trade and tariff 
experts"426. This review involves an examination of all the factors set out in the Procedures for 
exclusion on a case -by-case basis. At the end of this process, USTR issues a decision letter to the 
 
419 Notice of 6  April 2018 (Exhibit CHN -10), p.  14907.  
420 It is unclear to the Panel how this conforms with the United States' description of the contribution of 
the measures to the pursued public morals objecti ve (see para.  7.172  above) or with the United States' 
assertion that these measures were structured so as to target particular types of goods that benefit from these 
practices (see para.  7.147  above).   
421 Notice of 20  June 2018 (Exhibit CHN -2), p. 28711.  
422 Procedures To Consider Requests for Exclusion of Particular Products From the Determination of 
Action Pursuant to Section 301: China 's Acts, Policies, and Practices Rel ated to Technology Transfer, 
Intellectual Property, and Innovation, Federal Register, vol. 83, No. 133 (11  July 2018), p.  32181 (Exhibit 
CHN-20) (Procedures for Exclusion).  
423 Procedures for exclusion (Exhibit CHN -20), pp.  32182 -32183.  
424 United States' re sponse to Panel question No. 23, paras.  21-25. 
425 United States' response to Panel question No. 23, para.  23. 
426 United States' response to Panel question No. 23, para.  24. WT/DS543/R  
 
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  initial requestor, also publicly posted.427 The decis ion letter states whether the request has been 
granted or denied.428 If the request has been denied, the decision letter identifies which of the factors 
resulted in the denial.429 
7.205.   These explanations are helpful for the Panel's understanding of the procedure USTR followed 
to grant products exclusions. However, they provide little clarity on USTR 's substantive assessment 
of the relevant factors for granting product exclusions in each case, and specifically on whether 
excluded products could have benefitted from  China's practices and policies that the United  States  
considers inconsistent with its public morals.  
7.206.   The Panel notes the United  States ' argument that the Procedures for exclusion are not a 
measure challenged by China in this dispute.430 Although China has explicitly challenged only the 
adoption of additional duties on List 1 and List 2 products, the Panel notes that China's panel request 
expressly mentions the Procedures for exclusion in the list of legal instruments through which the 
measures at issue are adopted and implemented.431 Moreover, the Panel understands the references 
in China's submissions to the Procedures for exclusion to focus on the argument that the process for 
evaluating exclusions is "revealing of the economic objectives of the U.S. measur es"432, rather than 
a challenge of the WTO -consistency of the Procedures for exclusion themselves. In any event, the 
Panel examines the Procedures for exclusion only in an attempt to better understand the rationale 
behind the selection by the United  States  of the specific measures at issue . 
7.207.   China argues that "the exclusion process is an integral part of the tariff measures at issue 
and further confirms the economic objective of the measures themselves".433 According to China, 
the United  States  has failed to explain "how the criteria for granting exclusions are rationally related 
to the protection of public morals".434 In China's view, the United  States  has failed to explain "how 
public moral concerns were taken into account in granting or denying particular ex clusion 
request".435 China asserts that the United  States  grants exclusions to certain products "on the basis 
of economic considerations that have nothing to do with 'public morals'".436 
7.208.   According to the United  States , the factors used in the Procedures for exclusion "confirm 
that the U.S. tariff measures address the moral harm caused by China's unfair technology transfer 
policies".437 The United  States  asserts that nothing in Article  XX(a) requires WTO Members to ignore 
economic impacts in designing a measure  necessary to protect public morals.438 The United  States  
also asserts that it "did not intend to exclude products that benefit from China 's unfair and harmful 
industrial policies".439 The Panel considers it pertinent, nevertheless, to enquire further whether the 
exclusion processes could potentially lead to outcomes that would undermine or run counter to the 
stated US public morals objective.  
7.209.   The Panel observes that first two of the factors listed in the Procedures for exclusion clearly 
pertain to econ omic considerations. This fact does not necessarily point towards the lack of a genuine 
ends and means relationship between the measures at issue and the public morals objective as 
invoked by the United  States . However, the United  States  has not explained whether the excluded 
products benefitted (or not) from China's policies and practices considered by the United  States  to 
be inconsistent with its public morals.  
7.210.   It is unclear from the formulation of the third factor whether particular products could be 
excluded from the additional duties because they do not benefit from practices and policies that 
 
427 United States' response to Panel question No. 23, para.  24. 
428 United States' response to Panel question No. 23, para.  25. 
429 United States' response to Panel question No. 23, para.  25. 
430 United States' response to Panel question No. 22, para.  12. 
431 WT/DS54 3/7, p.  3. 
432 China's second written submission, para.  48. 
433 China's comments on the United States' response to Panel question No. 22, para.  8. See also China's 
second written submission, para.  48. 
434 China's second written submission, para.  70. See also China's comments on the United States' 
response to Panel question No. 23, para.  12.  
435 China's comments on the United States' response to Panel question No. 23, para.  12. 
436 China's second written submi ssion, para.  70. 
437 United States' response to Panel question No. 22, para.  13.  
438 United States' response to Panel question No. 22, para.  15. 
439 United States' response to Panel question No. 22, para.  15. WT/DS543/R  
 
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  violate the United  States ' invoked public morals objective, or because they are not strategically 
important enough to China's industrial programmes.  
7.211.   The United  States explained in its response to a Panel question that a number of exclusions 
have been explicitly denied on the basis of this third factor, "because the product subject to the 
request was covered by China 's Made in China 2025 program or other industrial programs"440, and 
provided a sample of three such denial letters.441 The denial letters provided as evidence by the 
United  States  do not contain explanations why exclusion for these particular products was denied on 
the basis of the third factor. Rather, t hese letters contain an identical statement that reads as 
follows: "Based on that review, and after careful consideration, your request was denied because 
the request concerns a product strategically important or related to 'Made in China 2025' or other 
Chinese industrial programs and the request failed to show that this particular product is available 
only from China." 442 
7.212.   The Panel is of the view that the United  States  has not sufficiently explained why products 
that were initially considered to benefit from  China's practices and policies (which the United  States  
claims harm its public morals) are excluded from the additional duties and how such exclusions do 
not undermine the achievement of the public morals objective as invoked by the United  States . In 
other words, the United  States  has not explain ed how the Procedures for exclusion are coherent with 
the policy objective invoked by the United  States  and do not undermine the achievement of this 
policy objective.  
7.213.   Absent sufficient explanation by the Unite d States , the Panel thus finds it difficult to see how 
the factors considered by the United  States  in the Procedures for exclusions, as well as the resulting 
exclusions of particular products from List 1, are coherent with the public morals objective as in voked 
by the United  States . The Procedures for exclusion could lead to situations where two products 
produced in China, using similar practices and policies that the United  States  considers contrary to 
US public morals, are treated differently (one product  is subject to additional punitive duties, and 
the other is not). This potential difference in treatment requires the United  States  to explain how it 
reconciles its public morals objective with these exclusions.  It is unclear to the Panel how this 
conforms  with the United  States ' description of the contribution of the measures to the pursued 
public morals objective443 and with the United  States ' assertion that these measures were structured 
so as to target particular types of goods that benefit from these pr actices .444 
7.214.   While , as earlier explained , a key  focus of the United  States ' arguments throughout these 
proceedings has been that the List 1 products subject to additional duties benefit from China 's 
policies  and practices that involve "public morals" concern s, the Panel also notes that the 
United  States  additionally argues that regardless of whether such products so benefit, all such 
additional duties  are apt to  contribute to , and are in fact necessary to protect, the invoked US public 
morals concerns . The Panel considers, however, that the  United  States  has not substantiated its 
assertions about the nature of  this contribution  and how such measures can be justified as necessary  
through a demonstrati on of  the requisite "ends and means" nexus or relatio nship envisaged by 
Article  XX(a).  
7.215.   In conclusion, the Panel considers that the United  States  has not  provided an explanation 
that demonstrates a genuine relationship of ends and means between the imposition of duties on 
List 1  products and the public morals  objective as invoked by the United  States . 
 
440 United States' response to Panel question No. 22, para. 18. 
441 USTR, Letters RE: Product Exclusion Requests  (Exhibit US -34). China asserts that these are "simply 
[…] form letter[s]" confirming "that the tariff measures are irrelevant to the public morals protection" . (China's 
comments on the United States'  response to Panel question No. 22, para.  11) 
442 USTR, Letters RE: Product Exclusion Requests  (Exhibit US -34), pp.  1, 2 and 3.  
443 See para. 7.172  above. 
444 See para. 7.147  above .  WT/DS543/R  
 
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  Contribution of the imposition of additional duties on List 2 products to the pursued 
public morals objective as invoked by the United  States  
7.216.   The United  States  adopted and implemented the additional duties on Lis t 2 products through 
the Notice of 21  September  2018. This Notice explains the rationale of the imposition of additional 
duties on List 2 products as follows:  
China 's unfair acts, policies, and practices include not just its specific technology 
transfer and IP polices referenced in the notice of initiation in the investigation, but also 
China 's subsequent defensive actions taken to maintain those policies. China has 
decided to impose approximately $50 billion in tariffs on U.S. goods, with the go al of 
encouraging the United  States  to drop its efforts to obtain the elimination of China 's 
unfair policies. Thus, instead of addressing the underlying problems, China has 
increased tariffs to further protect the unreasonable acts, policies, and practices  
identified in the investigation, resulting in increased harm to the U.S. economy.  
[…] 
The judgment during the period of investigation, based on then -available information, 
was that a $50 billion action would be effective in obtaining the elimination of Ch ina's 
policies.  
China 's response, however, has shown that the current action no longer is appropriate. 
China has made clear – both in public statements and in government -to-government 
communications - that it will not change its policies in response to the  current Section 
301 action. Indeed, China denies that it has any problems with respect to its policies 
involving technology transfer and intellectual property.445 
7.217.   Thus, the additional duties imposed by the Notice of 21  September  2018 do not seem to 
concern  products that have allegedly benefit ted from China's practices and policies documented in 
the Section 301 Report.  
7.218.   The United  States  explains that "List 2 measures apply to a broader class of products than 
those found to directly benefit from the unfair tr ade acts, policies, and practices documented in the 
Section 301 Report".446 The United  States  asserts that it imposed additional duties on List 2 products 
"after China 'made clear – both in public statements and in government -to-government 
communications – that it [would] not change its policies' and instead 'responded … by increasing 
duties on U.S. exports to China'".447 According to the United  States , the imposition of additional 
duties on List 2 products is "derivative" of the imposition of additional duti es on List 1 products.448 
For that reason, the United  States  argues that the imposition of additional duties on List 2 products 
is "also necessary to protect public morals in part because to fail to respond to China's economic 
retaliation would demonstrate that the United  States  Government is willing to acquiesce in theft and 
forced transfer of U.S. technology by one of its largest trading partners".449 
7.219.   China emphasizes that the United  States  does not assert that List 2 products benefit from 
China's practices and policies documented in the Section 301 Report. China considers the approach 
the United  States  chose in determining the range of List 2 products to be " overtly punitive"450, and 
asserts  that the additional duties on List 2 products "were not intended to target specific products 
that embody so -called 'unfair' industrial policies, let alone embody any morally offensive conduct".451 
According to China, "[t]here is nothing 'derivative' about the manner in which the United  States  
selected the approximately $200 billion worth of products. There is no reference to USTR having 
 
445 Notice of 21  September  2018 (Exhibit CHN -3), pp.  47974 -47975.  
446 United States' response to question No. 21, para.  11.  
447 United States' second written submission, para.  35, quoting N otice of Modification of Section 301 
Action: China 's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and 
Innovation, Federal Register, Vol. 83, No. 184 (21  September  2018), p.  47974 (Notice of 21  September  2018) 
(Exhibi t CHN -3).  
448 United States' second written submission, para.  35. See also United States' response to Panel 
question No. 12, para.  52; and United States' response to Panel question No. 21, para.  11. 
449 United States' response to Panel question No. 14, para.  61.  
450 China's second written submission, para.  51.  
451 China's comment on the United States' response to Panel question No. 21, para.  6.  WT/DS543/R  
 
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  selected those products based on their connection to the initial $50 billion worth of products allegedly 
found to have 'be nefit[ted] from Chinese industrial policies'".452 
7.220.   The Panel notes that the Notice of 21  September  2018 does not provide any explanation on 
the approach followed in selecting the range of List 2 products.453 In the course of the Panel's 
substantive meeting with the parties, the United  States  further stated that it adopted the additional 
duties on List 2 products because China had "made clear" that it would not change its policies.454 
The United  States  also explained during the Panel's substantive meetings with the parties, that List  2 
products are not necessarily products that have been found to benefit from China's practices and 
policies consid ered by the United  States  as contrary to its public morals.  
7.221.   The Panel understands the United  States  to argue that the imposition of additional duties on 
List 2 products contributes to the achievement of the public morals objective pursued by the 
United  States, because it "re -enforces" the imposition of additional duties on List 1 products, and 
applies stronger economic pressure on China "in a comprehensive sense".455 
7.222.   In the Panel's view, a genuine relationship of ends and means between the challenged 
measure  and the public morals objective pursued could not be derived from the potential existence 
of such a relationship with respect to a different measure. The Panel notes that the range of List 2 
products is not related to China's practices and policies allege dly harming US public morals . The 
Panel  observe s that the United  States  also asserts , as a general matter , that, irrespective of whether 
products on which additional duties are imposed benefit from China's practices and policies  that 
involve public morals concerns , all such additional duties contribute d to, and were in fact necessary 
to, protect the invoked US public morals concerns . In this context , the United  States  has not 
adequately explain ed how there is a genuine relationsh ip of ends and means between the imposition 
of additional duties on List 2 products and the public morals objective as invoked by the 
United  States . 
7.223.   The Panel further recalls that Article  XX(a) allows WTO Members to adopt measures which 
would be otherwise WTO-inconsistent to protect their public morals. As mentioned above, the scope 
of Article  XX(a) is limited by the specific public morals objective identified by the respondent, and 
by the requirement that the measures be necessary to achieve this public mo rals objective. While 
there are provisions in the WTO agreements that specifically provide for the imposition of additional 
tariffs above bound rates in certain defined circumstances, without any need to demonstrate any 
"necessity " for the measures to achi eve a particular purpose, those provisions are  not applicable to 
the current dispute .456 
 
452 China's second written submission, para.  51. 
453 The Panel notes that the range of List 2 products appears to also hav e been narrowed from an initial 
proposed list. However, the Notice of 21  September  2018 does not provide any explanation as to the factors 
considered in this narrowing process: "USTR and the Section 301 Committee have carefully reviewed the public 
comments and the testimony from the six -day public hearing. Based on this review process, the Trade 
Representative, at the direction of the President, has determined not to include certain tariff subheadings listed 
in the Annex to the July 17 notice, resul ting in 5,745 full and partial tariff subheadings with an approximate 
annual trade value of $200 billion ." (Notice of 21  September  2018 (Exhibit CHN -3), p.  47975)  
454 United States' response to Panel question No. 4, para.  27, United States' response to Panel question 
No. 14, para.  61 and United States' response to Panel question No. 21, para.  11. 
455 United States' second written submission, para.  61. The United States a lso provided evidence in 
support of its argument that China continues to engage in the practices documented in the Section 301 Report. 
(Exhibit US -35). 
456 Specifically, in the context of retaliation pursuant to Article  22 of the DSU, WTO Members are allowed  
to suspend obligations and concessions on a wide range of products that they have unilaterally selected, 
initially from the same sectors (and, ultimately, from other sectors, under certain conditions), so long as the 
value of the effects of such suspensio n is equivalent to the value of the level of nullification of benefits. This is, 
however, only possible following a multilateral determination of inconsistency of the measures challenged with 
the covered agreements; and with authorization from the DSB. Thi s is a situation distinct from the facts of the 
present dispute. In the present dispute, the United States argues that any inconsistency of the challenged 
additional duties with the GATT  1994 is justified because these additional duties are "necessary to p rotect 
public morals". Accordingly, in the context of Article  XX(a) the adopting Member must demonstrate that there 
exists a genuine relationship of ends and means between the public morals objective and the measures at 
issue that would meet the necessity requirement.  WT/DS543/R  
 
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  7.224.   The Panel notes that the United  States  has also adopted Procedures for exclusion for 
particular products from the additional duties on List 2 products.457 According to these Procedures 
for exclusion for List 2 products, any request for exclusion from the additional duties of a particular 
product covered by List 2 must provide the rationale for the requested exclusion, addressing the 
following factors: (i) whether the particular product is available only from China and whether the 
particular product and/or a comparable product is available from sources in the United  States  and/or 
in third countries; (ii) whether the requester has attempted to source the produ ct from the 
United  States  or third countries; (iii) whether  the imposition of additional duties on the particular 
product would cause severe economic harm to the requester or other US interests; and (iv) whether 
the particular product is strategically impo rtant or related to "Made in China 2025" or other Chinese 
industrial programmes.458 
7.225.   The factors used in these Procedures for exclusion for List 2 products are similar to the 
factors used in the Procedures for exclusion for List 1 products. The first three f actors clearly pertain 
to economic considerations, while the meaning of the fourth factor is unclear as to whether particular 
products could be excluded from the additional duties because they do not benefit from practices 
and policies that violate the Uni ted States ' invoked public morals, or because they are not 
strategically important enough to China's industrial programs.  
7.226.   For the same reasons stated above with respect to the Procedures for exclusion for List 1 
products, the Panel finds it difficult to se e how the factors considered by the United  States  in the 
Procedures for exclusions for List 2 products do not undermine the achievement of the public morals 
objective as invoked by the United  States .  
7.227.   In conclusion, the Panel considers that the United  States has not provided an explanation 
that would allow the Panel to understand the relationship between the additional duties imposed on 
List 2 products and the public morals objective invoked  by the United  States . 
7.3.2.4.2.4   Preliminary conclusion on necessity  after th e initial "weighing and balancing" 
of three factors  
7.228.   The Panel concludes that the public morals objective as invoked by the United  States  reflects 
societal interests and values that appear to be highly important in the United  States , and that the 
measures a t issue have significant  effects on international trade.  
7.229.   Having assessed the measures adopted by the United  States  on a holistic basis, the Panel 
considers , however,  that the United  States  has not provided a n explanation that demonstrates how 
the measures contribute to the public morals objective as invoked by the United  States . More 
specifically, the United  States  has not demonstrated that ther e is a genuine relationship of ends and 
means between the measures at issue and  the public morals objective pursued by the United  States . 
7.230.   With respect to the imposition of additional duties on List 1 products, the United  States  has 
not sufficiently explai ned how a genuine relationship of ends and means exists between the products 
subject to additional duties and the public morals objective as invoked by the United  States . This is 
also the case with respect to the initial narrowing of the range of List 1 products, or the adoption of 
Procedures for exclusion of particular products from the additional duties on List 1 products.  
7.231.   With respect to the imposition of additional duties on List 2 products, the United  States  has 
clearly stated that it imposed these additional duties because China had "made clear" that it would 
not change its polic ies459 and as a response to measures China had imposed on the United  States  
following the imposition by the United  States  of additional duties on List 1 products.  The Panel does 
not consider that the contribution of the imposition of additional duties on Li st 2 products to the 
achievement of the public morals objective as invoked by  the United  States  can be "derived" from 
the (potential) contribution of the imposition of additional duties on List 1 products. Moreover, the 
United  States  has not provided any o ther evidence or explanation that would demonstrate a genuine 
 
457 Procedures for Requests to Exclude Particular Products From the September 2018 Action Pursuant to 
Section 301, Federal Register, Vol. 84, No. 121 (24  June 2019), p.  29576 (Exhibit CHN -21) (Procedures for 
exclusion for List 2 products).  
458 Procedures for exclusion for List 2 products (Exhibit CHN -21), p.  29577.  
459 United States' response to Panel question No. 4, para.  27, United States' response to Panel question 
No. 14, para.  61; and United States' response to Panel question No. 21, para.  11. WT/DS543/R  
 
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  relationship of ends and means between the measures comprising the additional duties on List 2 
products and the public morals objective invoked by the United  States . 
7.3.2.4.2.5   Comparison with reasonably a vailable alternative measures  
7.232.   In assessing whether a challenged measure is "necessary" within the meaning of 
Articles  XX(a), XX(b) or XX(d), prior WTO adjudicators have traditionally  considered the existence 
of reasonably available alternatives.460 In particular, in Brazil  – Retreaded Tyres, it was decided that  
"[i]n order to determine whether a measure is 'necessary ' within the meaning of Article  XX(b) of the 
GATT  1994, a panel must assess all the relevant factors, particularly the extent of the contribution 
to the achievement of a measu re's objective and its trade restrictiveness, in the light of the 
importance of the interests or values at stake "461, and that " [i]f this analysis yields a preliminary 
conclusion that the measure is necessary , this result must be confirmed by comparing the measure 
with its possible alternatives, which may be less trade restrictive while providing an equivalent 
contribution to the achievement of the objective pursued" .462 
7.233.   China does not suggest any alternative measure. In China's view, the challenged measures 
are not about public morals, are not designed to deal with public morals and are certainly not 
necessary. Therefore, China considers that "there is no need for the Panel to analyse WTO -consistent 
alternative measures in order to confirm whether the U.S. me asures are 'necessary' for the 
protection of public morals".463 China asserts that "due to the unique facts of this dispute, there is 
no requirement for China to present or the Panel to examine alternative measures".464 
7.234.   The United  States , in support of its assertion that the measures are necessary within the 
meaning of Article  XX(a), points to its prior efforts to address its concerns with China's policies and 
practices "through dialogue, admonishment,  engagement in  multilateral  forums, [and] bilateral 
mechanisms".465 According to the United  States , "[t]hat none of these prior efforts have proven 
durably effective further demonstrates the necessity of the measures at issue".466 
7.235.   The Panel recalls China's refusal to put forward reasonably available alternativ e measures . 
The Panel's preliminary conclusion, based on a weighing and balancing of the relevant factors , is 
that the United  States  has not explained how the chosen measures are apt to contribute to the  
public morals objective , as invoked by the United  States, and how they could therefore be 
"necessary" . For all those reasons, the Panel is not required to  proceed to a comparison with 
reasonably available alternative measures.  
7.3.2.5   Conclusion on whether the measures are provisionally justified under 
subparagrap h (a) of Article  XX of the GATT  1994  
7.236.   As the Panel observed above, the nature and purpose of Article  XX – to allow WTO Members 
to adopt measures that would be otherwise WTO -inconsistent to protect their public morals – cannot 
be reconciled with a situation where WTO Members would be  allowed to restrict any trade from any 
WTO Member with the mere invocation of what might, in an abstract sense, be considered a valid 
policy objective within the meaning of Article  XX of the GATT  1994. The scope of the restrictive 
measures justifiable un der Article  XX(a) is determined by the public morals objective invoked and 
by the requirement that the measures be necessary to achieve this objective. In other words, there 
is a requirement that there be a nexus between the challenged measure and the interest protected 
by the policy objective at issue. In the case of Article  XX(a), this requirement is specified by the 
term "necessary to protect public morals". This is especially important in the context of Article  XX(a), 
 
460 Appellate  Body Reports, EC – Seal Products , para.  5.215; China – Publications and Audiovisual 
Products , para.  242; US – Gambling , para.  307; and Korea – Various Measures on Beef , para.  166; and 
Panel  Reports , Brazil – Taxation , paras.  7.531 -7.533.  
461 Appellate  Body Report, Brazil – Retreaded Tyres , para.  156. 
462 Appellate  Body Report, Brazil – Retreaded Tyres , para.  156 (emphasis added) . See also 
Appellate  Body Report, China – Publications and Audiovisual Products , paras.  242 and 249 ; and Panel  Report , 
Colombia – Ports of Entry , para.  7.611.  
463 China's second written submission, para.  60.  
464 China's response to Panel question No. 20, para.  9. China relies on a series of observations by the 
Appellate  Body that "there may be cases in which it  is not necessary for a Member to propose alternative 
measures ." (Ibid. para.  8) 
465 United States' second written submission, para. 56.  
466 United States' second written submission, para. 56.  WT/DS543/R  
 
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  because the concept of "public morals" is a broad  one, that may be based on considerations specific 
to individual WTO Members . 
7.237.   As the Panel has earlier emphasized, the invocation of each Article  XX defence needs to be 
considered carefully based on  the fact s relating to the particular sub paragraph  of Article  XX relied 
on and the challenged measures. The Panel notes that the text of Article  XX(a) itself limits the range 
of measures that WTO Members are allowed to rely on.  To fall within the limited scope of 
Article XX(a), the measures have to concern public morals. Moreover, the measures have to be 
"necessary" for the achievement of the public morals objective invoked. In other words, if the 
adopting WTO Member does not explain how the challenged measures cont ribute to the achievement 
of the public morals objective pursued, by showing that there is a genuine relationship of "ends and 
means" between these measures and the public morals objective, this is a strong indication that the 
challenged measures have exce eded the limits acceptable under Article  XX(a) of the GATT  1994.  
7.238.   As elaborated in the Panel 's earlier analysis, having assessed the evidence on a holistic basis 
in the present dispute, the Panel concludes  that the United  States  has not provided a n explanation 
that demonstrates how the imposition of additional duties on the selected imported products 
contribute s to the achievement of the public morals objective as invoked by the United  States . It 
follows that the United  States  has not adequately explained  how the measures the United  States  
has chosen are necessary to protect such public morals.   
7.3.3   Whether the United  States  has demonstrated that the measures satisfy the 
requirements of the chapeau of Article  XX of the GATT  1994  
7.239.   The U nited States  argues that it has not applied the measures in a manner that constitutes 
"a disguised restriction on international trade  "because it has taken "no steps to conceal the reasons 
for adopting the measures at issue" .467 The United  States  asserts that it has not applied the 
measures in a manner that constitutes "arbitrary or unjustifiable discrimination" because of the 
"deliberate nature" in which it proceeded before adopting the measures468 and because it "has 
explained the rationale and j ustification for adopting the measures at issue".469 The United  States  
also argues that it has not applied the measures in a manner inconsistent with the chapeau of 
Article  XX because "no other government is engaging in forced technology transfer policies a nd 
practices of the type or to the extent that China is".470 
7.240.   China argues that the measures are not provisionally justified under Article  XX(a) and that 
"there is no need to proceed to evaluate whether the measures are consistent with the conditions 
set for th in the chapeau of that provision".471 On an arguendo basis, China asserts that the measures 
fail to satisfy the requirements of the chapeau . 472 China argues that the "lack of a rational connection 
between the U.S. measures and the covered products reflec ts the true, coercive intent of the U.S. 
measures"473, and "a prohibition on unduly coercive action is tied directly to the limiting function of 
the chapeau ".474 China further argues that the measures "restrict international trade under the guise 
of a public morals measure"475 and "are nothing more than barely disguised restrictions on 
international trade".476 
7.241.   The Panel recalls its conclusion that the United  States  has not provided sufficient evidence  
or explanation  to substantiate its assertion that the measures are necessary to protect the 
"standards of right or wrong" invoked by the United  States  and which are considered as public morals 
in the United  States. Prior WTO adjudicators have traditionally refrained from assessing the 
 
467 United States' first written submission, para. 88.  
468 United States' first written submission, para. 84.  
469 United States' first written submission, para. 86.  
470 United States' first written submission, para. 83.  
471 China's second written submission, para. 6 2.  
472 China's second written submission, para. 63.  
473 China's second written submission, para. 67.  
474 China's second written submission, para. 68.  
475 China's second written submission, para. 74.  
476 China's second written submission, para. 75.  WT/DS543/R  
 
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  conformity with the chapeau of measures that they have found not to be provisionally justified under 
various subparagraphs of Article  XX.477 
7.242.   In light of its conclusion that the Unite d States  has not adequately explained how the 
measures chosen by it are necessary to protect public morals, the United  States  has not met its 
burden of demonstrating that the measures are provisionally justified under Article  XX(a). The Panel, 
therefore,  does not consider it necessary to make findings on whether the United  States  has 
demonstrated that its measures satisfy the requirements of the chapeau  of Article  XX. 
8  CONCLUSIONS AND RECOMMENDATION(S)  
8.1.  For the reasons set forth in this Report, the Panel conc ludes that:  
a. the parties have not reached a mutually satisfactory  solution within the meaning of 
Article  12.7 of the DSU , or otherwise relinquished their rights to pursue WTO dispute 
settlement action on the measures at issue in this dispute ; 
b. all measures challenged by China fall within the Panel 's terms of reference, and it  is 
appropriate for the Panel to make findings and recommendation s with respect to the first 
measure as identified in China's panel request (additional duties of 25% on List 1 
products), and the second measure as amended on 9  May 2019 (additional duties of 25% 
on List 2 products ); 
c. the challenged  measures are prima facie inconsisten t with Articles I:1, II:1(a) and II:1(b) 
of the GATT  1994; and 
d. the United  States  has not met its burden of demonstrating that the measures are 
provisionally justified under Article  XX(a)  of the GATT  1994. 
8.2.  As a consequence, the  Panel concludes that the measures at issue are inconsistent with 
Articles  I:1, II:1(a) and II:1(b) of the GAT T 1994. 
8.3.  Under Article  3.8 of the DSU, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case of 
nullification or impairment. The Panel concludes that, to the e xtent that the measures at issue are 
inconsistent with certain provisions of the GATT  1994, they have nullified or impaired benefits 
accruing to China under that agreement  within the meaning of Article  XXIII:1(a) of the GATT  1994. 
8.4.  Pursuant to Article  19.1 of the DSU, the Panel recommends that the United  States  bring its 
measures into conformity with its obligations under the GATT  1994. 
9  CONCLUDING COMMENTS  
9.1.  In conclusion, the Panel wishes to make some additional observations : 
9.2.  The Panel is very much aware of the wider context in which the WTO system currently operates , 
which  is one reflecting a range of unprecedented global trade tensions.  
9.3.  At the same time, it is not the role of this Panel to draw any legal conclusions or make 
recommendations on any matters o ther than those it has been specifically tasked to deal with 
through these dispute settlement proceedings. In this connection, the Panel recalls that the 
Government of the United  States  has not, up to the present time, initiated action under the WTO 
Disput e Settlement Understanding with respect to any measures China has imposed in response to 
the United  States ' measures at issue in this dispute.478 
 
477 See e.g. Pan el Report s, India – Solar Cells , paras.  7.389 -7.390 ; China – Audiovisual Products , 
para. 7.912 ; and  Colombia – Ports of Entry , para. 7.620. See also Appellate  Body Reports, India – Solar Cells , 
para. 5.155 ; and  China – Audiovisual Products , fn 614.  
478 Para. 7.4 of the Panel  Report refers.  WT/DS543/R  
 
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  9.4.  The Panel emphasizes that pursuant to the requirements of Article  11 of the DSU, it has sought 
to perform dilig ently its adjudicatory role in relation to the matters that fall within the terms of 
reference of these dispute settlement proceedings. Additionally, the Panel notes that the panel 
process is structured in such a way that time is available for the parties to take stock as proceedings 
evolve and further consider opportunities for mutually agreed and satisfactory solutions.479 
9.5.  Accordingly, recalling Article  3.7 of the DSU that highlights that the aim of the dispute 
settlement system is to achieve a positive solution to a dispute, the Panel express es its ongoing 
encouragement to the parties to pursue further efforts to achieve a mutually satisfactory solution to 
the matters that have been raised before it in this dispute.  
 
__________  
 
479 The last sentence of Article  11 of the DSU  refers.  