WORLD TRADE  
ORGANIZATION  WT/DS261/7 
14 January 2004 
 
 (04-0106) 
 Original:   Spanish 
  
 
 
URUGUAY – TAX TREATMENT ON CERTAIN PRODUCTS 
 
Notification of Mutually Agreed Solution
 
 
 
 The following communication, dated 8 January  2004, from the delegation of Chile and the 
delegation of Uruguay to the Chairman of the Dis pute Settlement Body, is circulated pursuant to 
Article 3.6 of the DSU.  
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  The Panel on the dispute Uruguay – Tax Treatment on Certain Products  (DS261) was 
established on 19 May 2003.  The Panel was constitu ted on 4 July, but its work was suspended as 
from 14 August at the joint request of the two litigants  in order to seek a positive and bilateral solution 
to the dispute. 
  The Republic of Chile and the Eastern Republic of Uruguay wish to inform you that, on 16 December 2003, the Ministers of Foreign Affairs of the two countries signed an Agreement 
between the Eastern Republic of Uruguay and th e Republic of Chile on Settlement of the WTO 
Dispute "Uruguay – Tax Treatment on Certain Products" .  A copy is attached. 
  The Agreement is a mutually agreed solution under Article 3, paragraphs 5 and 6, of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes.  Consequently, please 
circulate the present notification, together w ith the attached Agreement to WTO Members. 
 
 We avail ourselves of this opportunity to thank the Panel and the Secretariat for their 
readiness and to reiterate the assuranc es of our highest consideration. 
  (Signed) (Signed)  Mathias Francke Schnarbach Carlos Pérez del Castillo 
 Chargé d'affaires a.i. Ambassador 
 Permanent Mission of Chile Permanent Representative of Uruguay  to the WTO to the WTO WT/DS261/7 
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 AGREEMENT 
BETWEEN 
THE EASTERN REPUBLIC OF URUGUAY 
AND 
THE REPUBLIC OF CHILE 
ON SETTLEMENT OF THE WTO DISPUTE 
"URUGUAY – TAX TREATMENT ON CERTAIN PRODUCTS" 
 
  The Eastern Republic of Uruguay and the Republic  of Chile agree to conclude the following 
agreement under World Trade Organization rules in c onnection with the dispute initiated by Chile in 
the Organization:  "Uruguay – Tax Treatment  on Certain Products", dispute WT/DS261. 
 
Article 1  
  The Eastern Republic of Uruguay undertakes to en sure that the regime for the assessment and 
payment of the Internal Specific Tax on cigarettes from the Republic of Chile shall be governed and 
operated at all times wholly in accordance with the principles and obligations of Most-Favoured-
Nation and National Treatment stemming from its in ternational commitments, in particular, the 
principles, rules and interpretative notes of Articles I and III of GATT 1994.  
Article 2  
 
 The undertaking entered into does not prevent the Eastern Republic of Uruguay from modifying the present regime of assessment and pa yment, provided the modification is in keeping 
with the above-mentioned Most-Favoured-Nation a nd National Treatment principles and obligations. 
 
 
Article 3  
 
 This Agreement shall in no way prejudge the ri ght of the Republic of Chile to reject, rebut or 
challenge in future the Internal Specific Tax regime  of the Eastern Republic of Uruguay, regardless of 
the product taxed or for any other reason(s).  Nor sha ll it prejudge any allegations or issues of fact and 
law mentioned in the Request for Consultations (W T/DS261/1) and for the Establishment of the Panel 
(WT/DS261/4) submitted by the Republic of Chile to the World Trade Organization. 
 
Article 4  
 
 The Republic of Chile undertakes to immedi ately withdraw the Panel resulting from the 
complaint submitted against the Eastern Republic of Uruguay to the World Trade Organization on 
26 June on "The tax treatment on certain products  (WT/DS261)", once the procedures for signing this 
Agreement are finalized.  This withdrawal shall ne cessarily be made by joint notification by both 
countries to the Secretariat of the WTO Dispute Se ttlement Body and the Chairman of the Panel in 
charge of the dispute, which notification shall sp ecify that both parties have reached a mutually 
satisfactory solution and this Agreement is evid ence thereof under the terms of this solution. 
 
Article 5  
  If the further period of suspension of the WTO Panel procedure agreed on 12 October 2003 
ends before the procedure referred to in the preced ing paragraph is completed, the Republic of Chile 
undertakes to grant a third and final suspension in connection with the Eastern Republic of Uruguay up to a maximum period of 90 days.   WT/DS261/7 
 Page 3 
 
 
 Article 6  
 
 This Agreement shall enter into force on the date of signature. 
  Signed in Montevideo on the sixteenth day of December 2003 in two equally authentic and 
valid copies. 
  (Signature) (Signature)  For the Eastern Republic For the Republic  of Uruguay of Chile 
 
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