Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products - Recourse by Argentina to Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (WT/DS207): Report of the Appellate Body

Summary

INTRODUCTION

Chile and Argentina each appeals certain issues of law and legal interpretations developed in the Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina (the “Panel Report”). The Panel was established to consider Argentina's complaint regarding the consistency with the Agreement on Agriculture, the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”), and the Marrakesh Agreement Establishing the World Trade Organization (the “WTO Agreement”) of the measure taken by Chile to comply with the recommendations and rulings of the Dispute Settlement Body (the “DSB”) in the original proceedings in Chile – Price Band System.

The original proceedings concerned Chile's price band system for certain agricultural products. The original panel found that Chile's price band system was a border measure similar to a variable import levy and to a minimum import price, other than ordinary customs duties, within the meaning of footnote 1 to Article 4.2 of the Agreement on Agriculture. Therefore, the original panel concluded that, because the price band system was a measure “of the kind which ha[s] been required to be converted into ordinary customs duties” under Article 4.2 of the Agreement on Agriculture, by maintaining such a measure, Chile acted inconsistently with that provision. The original panel also concluded that, because the duties resulting from the price band system were not recorded in the “other duties and charges” column of Chile's Schedule of Concessions, but were levied nonetheless, those duties were inconsistent with the second sentence of Article II:1(b) of the GATT 1994.

The Appellate Body upheld the original panel's finding that Chile's price band system was a border measure similar to a variable import levy and to a minimum import price and was, therefore, inconsistent with Article 4.2 of the Agreement on Agriculture. However, the Appellate Body disagreed with the original panel's definition of “ordinary customs duties” and, therefore, reversed the original panel's finding that the term “ordinary customs duty” within the meaning of Article 4.2 of the Agreement on Agriculture was to be understood as “referring to a customs duty which is not applied on the basis of factors of an exogenous nature”.