INTRODUCTION

1.1 On 10 April 2007, the United States requested consultations with the Government of China pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”), Article XXII of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”), and Article XXII of the General Agreement on Trade in Services (“GATS”) with respect to (1) certain measures that appear to restrict trading rights with respect to imported films for theatrical release, audiovisual home entertainment products, sound recordings, and publications, and (2) certain measures that appear to 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. The request was circulated on 16 April 2007.

1.2 On 25 April 2007, the European Communities requested to join in the consultations requested by the United States. China accepted the European Communities' request.

1.3 Consultations were held on 5–6 June 2007. Those consultations did not resolve the dispute.

1.4 On 10 July 2007, the United States requested supplemental consultations with China pursuant to Articles 1 and 4 of the DSU, Article XXII of the GATT 1994, and Article XXII of the GATS with respect to certain market access concerns related to the distribution of imported films for theatrical release and the distribution of imported sound recordings, as well as sound recording distribution services, specifically, (1) certain measures that appear to provide less favourable distribution opportunities for imported films for theatrical release than for like domestic films, and (2) certain measures that appear to provide less favourable opportunities for foreign suppliers of sound recording distribution services and for the distribution of imported sound recordings in physical form than are provided to like service suppliers and like products.