./.WORLD TRADE
ORGANIZATIONWT/DS87/8
WT/DS110/7
13 September 1999
(99-3787)
Original:  English
CHILE – TAXES ON ALCOHOLIC BEVERAGES
Notification of an Appeal by Chile under
paragraph 4 of Article 16 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU)
The following notification, dated 13 September 1999, sent by Chile to the Dispute Settlement
Body (DSB), is circulated to Members.  This noti fication also constitutes the Notice of Appeal, filed
on the same day with the Appellate Body, pursuant to the Working Procedures for Appellate Review .
_______________
In conformity with paragraph 4 of Article 16 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU) and Ru le 20 of the Working Procedures of Appellate
Review, the Government of Chile hereby notifies its decision to lodge an appeal with the Appellate
Body in connection with certain issues of law in the Report of the Panel on " Chile – Taxes on
Alcoholic Beverages " (WT/DS87/R; WT/DS110/R), circulated to the WTO Members on
15 June 1999, as well as certain legal interpretations developed by the Panel.
Chile asks the Appellate Body to review the following errors of law and erroneous legal
interpretation developed by the Panel in relation to the DSU and the General Agreement on Tariffs
and Trade 1994 (GATT 1994).
First, Chile considers that the Panel erred as a matter of law and legal interpretation in finding
that the New Chilean Tax system constitutes 'dissimilar taxation' of directly competitive or
substitutable products within the meaning of Article III:2, second sentence GATT 1994:
- The Panel erred in law in the interpretation and application of the concept of 'not
similarly taxed' as it is used in Article III:2, second sentence.  Among other things, thePanel's interpretation has the effect of unlawfully limiting WTO Member's taxation
freedom;
- In its interpretation and application of the 'dissimilarly' criterion, the Panel failed to
adequately explain the rationale for its findings, in violation of Article 12.7 DSU;
- The Panel's interpretation and application of 'dissimilarity' criterion also constitutes a
violation of Articles 3.2 and 19.2 DSU, as it both compromises the security and
predictability of the multilateral trading system and adds to the rights and obligations
of the Members under the GATT 1994.WT/DS87/8
WT/DS110/7
Page 2
Second, Chile considers that the Panel erred as a matter of law and legal interpretation in
finding that the New Chilean Tax system would meet the 'so as to afford protection to domestic
production' criterion of Article III:2, second sentence:
- The Panel erred in law in the interpretation and application of the concept of 'so as to
afford protection to domestic production' as it is used in Article III:2, second
sentence.  Not only does the structure of the New Chilean Tax system not support a
finding that it is 'so to afford protection to domestic production', but the anticipated
effects of the law do not support such a finding;
- The Panel erred in examining the efficiency and necessity of Chile's law in as related
to its stated legislative objectives, in violation of the general principles of WTO
dispute settlement and Articles 3.2 and 19.2 DSU.
__________