Trading Cultures: Appellate Body Report on China–Audiovisuals

Summary

Abstract: In China–Audiovisuals, a series of Chinese restrictions on the importation and distribution of certain ‘cultural’ or ‘content’ goods and services were found to violate GATT, GATS, and China's Accession Protocol. This paper reviews the definition of what is a ‘good’ (is a ‘film’ a good or a service?) and the extent to which GATT Article XX exceptions can justify violations under WTO instruments other than the GATT itself. We argue that trade volumes are unlikely to significantly rise as a result of this ruling as it does not affect China's right to keep out foreign films and publications if China finds them objectionable. However, foreign producers of audiovisuals can now gain potentially large economic rents, by being able to export and distribute their products into the Chinese market. Finally, we discuss the issue of the protection of cultural goods and review the recent literature on trade and culture that has put forward economic arguments to justify, under some conditions, the protection of cultural goods.

Summary of the dispute

China–Audiovisuals is a complex and broad-based dispute filed by the United States in April 2007 against a series of Chinese restrictions on the importation and distribution of certain ‘cultural’ or ‘content’ goods and services: (i) reading materials such as books, periodicals, and electronic publications; (ii) audiovisual home-entertainment products such as DVDs; (iii) sound recordings; and (iv) films for theatrical release.