WTO A/V Products Case: Suspicions Confirmed? (Excerpt)

• Author: Stan Abrams

The origins of all this are shrouded in the mists of 2007, when the U.S., unhappy that China had failed to live up to its WTO commitments regarding the film industry, filed for dispute resolution. The U.S. claim involved the following issues:

On 10 April 2007, the United States requested consultations with China concerning: (1) certain measures that restrict trading rights with respect to imported films for theatrical release, audiovisual home entertainment products (e.g. video cassettes and DVDs), sound recordings and publications (e.g. books, magazines, newspapers and electronic publications); and (2) certain measures that restrict market access for, or discriminate against, foreign suppliers of distribution services for publications and foreign suppliers of audiovisual services (including distribution services) for audiovisual home entertainment products.

· Regarding trading rights, the United States seeks consultations on various Chinese measures that reserve, to certain Chinese state-designated and wholly or partially state-owned enterprises, the right to import films for theatrical release, audiovisual home entertainment products, sound recordings and publications;

· Regarding distribution services, the United States seeks consultations on various Chinese measures that impose market access restrictions or discriminatory limitations on foreign service providers seeking to engage in the distribution of publications and certain audiovisual home entertainment products.

The case was mostly about the ability of foreign enterprises to get involved in the importation and distribution of certain audiovisual products in China. According to the U.S., which won the case, China had promised when it joined the WTO to open up this sector to foreign investment. After the U.S. victory, we had a “What the heck is going on?” period where the two sides were struggling to find a way to settle.

I figured that the U.S. would hold China’s feet to the fire and persist in demanding implementation of the promises made when China joined the WTO; this would include opening up the import and distribution markets to foreign firms. I further assumed that the reason for the delay was that China needed to figure out how they would handle the implementation while maintaining the legal processes surrounding content review, quotas, etc.

When the deal was announced back in February, I did note my suspicions:

As to imports and distribution, will foreign firms now be able...