INTRODUCTION

1. China and the United States each appeals certain issues of law and legal interpretations developed in the Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (the “Panel Report”). The Panel was established to consider a complaint by the United States concerning a series of Chinese measures regulating activities relating to the importation and distribution of: reading materials (for example, books, newspapers, periodicals, electronic publications); audiovisual home entertainment (“AVHE”) products (for example, videocassettes, video compact discs, digital video discs (“DVDs”)); sound recordings (for example, recorded audio tapes); and films for theatrical release. Further details regarding the content and the operation of the measures examined by the Panel are set out in section IV of this Report.

2. Before the Panel, the United States claimed that certain of the challenged Chinese measures violate trading rights commitments undertaken by China in the Protocol on the Accession of the People's Republic of China to the World Trade Organization (the “WTO”) (“China's Accession Protocol”) and the Report of the Working Party on the Accession of China to the WTO (“China's Accession Working Party Report”) because, by limiting trading rights to wholly Chinese State-owned enterprises, the measures restrict the right of enterprises in China, foreign enterprises, and foreign individuals, to import the relevant products into China.