WT/DS461/RW/Add.1  
5 October 2018  
(18-6109) Page: 1/67 
 Original:  Spanish  
 
COLOMBIA – MEASURES RELATING TO THE IMPO RTATION  
OF TEXTILES, APPAREL  AND FOOTWEAR  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY C OLOMBIA  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY P ANAMA  
REPORT OF  THE PANELS  
Addendum  
This addendum contains Annexes A to C to the Report of the Panels to be found in document 
WT/DS461/RW.  
 
_______________  
 
 WT/DS461/RW/Add.1  
 
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  LIST OF ANNEXES  
ANNEX A 
WORKING PROCEDURES O F THE PANELS  
Contents  Page  
Annex  A-1 Harmonized Working Procedures of the P anels 4 
ANNEX B 
ARGUMENTS OF THE  PARTIES 
Contents  Page  
Annex   B-1 Integrated executive summary of Colombia  9 
Annex   B-2 Integrated executive summary of Panama  25 
ANNEX C 
ARGUMENTS OF THE THIRD PARTIES 
Contents  Page  
Annex   C-1 Integrated executive summary of Ecuador  52 
Annex   C-2 Integrated executive summary of the United States  54 
Annex   C-3 Integrated executive summary of Honduras  59 
Annex  C -4 Integrated executive summary of Japan  60 
Annex  C -5 Integrated executive summary of the European Union  63 
 
  WT/DS461/RW/Add.1  
 
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  ANNEX A 
WORKING PROCEDURES O F THE PANELS  
Contents  Page  
Annex  A-1 Harmonized Working Procedures of the P anels 4 
 
  WT/DS461/RW/Add.1  
 
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  ANNEX A -1 
Harmonized Working Procedures of the P anels1 
Adopted on 15  September  2017  
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU). In addition, the following harmonized 
Working Procedures shall apply.  
 
General  
2. The deliberations of the Panel and the documents submitted to it shall be kept confidential. 
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute 
(hereafter  "party") from disclosing statements of its own positions to t he public. Members shall treat 
as confidential information submitted to the Panel by another Member which the submitting Member 
has designated as confidential. Where a party submits a confidential version of its written 
submissions to the Panel, it shall a lso, upon request of a Member, provide a non -confidential 
summary of the information contained in its submissions that could be disclosed to the public.  
3. The Panel shall meet in closed session. The parties, and Members having notified their interest in 
the dispute to the Dispute Settlement Body in accordance with Article  10 of the DSU (hereafter 
"third  parties"), shall be present at the meetings only when invited by the Panel to appear before it.  
4. Each party and third party has the right to determine th e composition of its own delegation when 
meeting with the Panel. Each party and third party shall have the responsibility for all members of 
its own delegation and shall ensure that each member of such delegation acts in accordance with 
the DSU and these W orking Procedures, particularly with regard to the confidentiality of the 
proceedings.  
5. The Panel shall hold a joint substantive meeting and shall issue a single report concerning both 
proceedings.  
Submissions  
6. Before the joint substantive meeting of t he Panel with the parties, each party shall submit to the 
Panel a  first written submission, and subsequently a written rebuttal,  in which it  presents the facts 
of the case and its arguments, in accordance with the timetable adopted by the Panel.  
7. Should a party wish to request a preliminary ruling, it shall do so at the earliest possible 
opportunity and in any event no later than in its first written submission to the Panel. If  one of the 
parties  requests such a ruling from the Panel  in its capacity as co mplainant , the other party shall 
respond to the request in its first written submission as respondent. If one party  requests such a 
ruling in its capacity as respondent,  the other party shall submit its response to the request prior to 
the joint substantiv e meeting, within the period specified by the Panel. Exceptions to this rule may 
be granted upon a showing of good cause.  
8. Each party shall submit all factual evidence to the Panel no later than during the joint  substantive 
meeting, except with respect t o evidence necessary for answering questions or making comments 
on answers provided by the other party. The Panel may grant exceptions to this rule where good 
cause is shown. Where such exception has been granted, the  Panel shall accord the other party a 
period of time for comment, as appropriate, on any new factual evidence submitted after the joint 
substantive meeting.  
9. Where the original language of exhibits submitted to the Panel is not a WTO working language, 
the submitting party or third party shall  at the same time submit a translation of such exhibits into 
a WTO working language . The Panel may grant reasonable extensions of time for the translation of 
                                                
1 To facilitate understanding of  these Working P rocedures, the term "Panel" will be used in the singular 
where appropriate.  WT/DS461/RW/Add.1  
 
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  such exhibits upon a showing of good cause. Any objection as to the accuracy of a translation shal l 
be raised promptly in writing, no later than the next filing following the submission which contains 
the translation in question. Any objection shall be accompanied by a detailed explanation of the 
grounds of objection and an alternative translation.  
10. In order to facilitate the work of the Panel, each party and third party is invited to make its 
submissions in accordance with the WTO Editorial Guide for Panel Submissions, attached in annex, 
to the extent that it is practical to do so.  
11. To facilitate  the maintenance of a single record for both proceedings and maximize the clarity 
of submissions, each party and third party shall sequentially number its exhibits throughout the 
course of both proceedings. For example, exhibits submitted by Colombia could  be numbered COL -1, 
COL-2, etc., without distinguishing between proceedings. If the last exhibit in connection with the 
first submission as complainant was numbered COL -5, the first exhibit of its next submission as 
either complainant or respondent  would b e numbered COL -6. 
Questions  
12. The Panel may at any time pose questions to the parties and third parties, orally during the joint 
substantive meeting or in  writing.  
Joint substantive meeting  
13. Each party shall provide to the Panel the list of members of  its delegation in advance of the 
meeting and no later than 5 p.m. on the previous working day.  
14. The joint substantive meeting shall be conducted as follows:  
a. The Panel shall first invite Colombia to make an opening statement to present its case as 
complainant. Then Panama, as respondent , shall be invited to present its point of view. 
Subsequently, the Panel shall invite Panama to make an opening statement to present its 
case as complainant. Then Colombia, as  respondent , shall be invited to present its  point of 
view. This order may be modified by the Panel should it deem it necessary  to do so in light 
of the development of the proceedings.  
Before each party takes the floor, it shall provide the Panel and other participants at the 
meeting with a provisio nal written version of its statement. Each party shall make available 
to the Panel and the other party the final version of  its opening and closing statements, 
preferably at the end of the meeting, and in any event no later than  5 p.m. on the first 
working  day following the meeting.  
b. After the conclusion of the statements, the Panel shall give each party the opportunity to 
ask the other party questions or to make comments through the  Panel. Each  party shall 
then have an opportunity to answer such question s orally. Each  party shall send in writing, 
within a time -frame to be determined by the Panel, any questions to the other party to 
which it wishes to receive a response in writing. Each  party shall be invited to  respond in 
writing to the questions of the o ther party within a deadline to be determined by the  Panel.  
c. The Panel may subsequently pose questions to the parties. Each  party shall then hav e an 
opportunity to answer such  questions orally. The  Panel shall send in writing, within 
a time-frame to be determined by it, any questions to the parties to which it wishes to 
receive a response in writing. Each  party shall be invited to respond in writing to such 
questions within a deadline to be determined by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, following the order of statements set forth in (a.)  above.  
Third parties  
15. The Panel shall invite each third party to transmit to the Panel a written submission prior to the 
joint substantive meeting of the Panel with the parties, in accordance with the timetable adopted by WT/DS461/RW/Add.1  
 
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  the Panel. Those Members that have reserved their th ird-party rights in both proceedings shall have 
the opportunity to present their comments jointly in that submission.  
16. Each third party shall also be invited to present its views orally during a session of the joint 
substantive meeting, set aside for th at purpose. Each third party shall provide to the Panel the list 
of members of its delegation in advance of this session and no later than 5  p.m. on the previous 
working day.  
17. The third -party session shall be conducted as follows:  
a. For logistical reas ons, all third parties may be present during the entirety of this session 
even if they have not reserved their third -party rights in both proceedings under 
Article  21.5 of the DSU.  
b. The Panel shall first hear the arguments of the third parties in alphabe tical order. 
Third parties present at the third -party session and intending to present their views orally 
at that session, shall provide the Panel, the parties and other third parties with provisional 
written versions of their statements before they take t he floor. T hird parties  shall make 
available to the Panel, the parties and other third parties the final versions of their 
statements, preferably at the end of the session, and in any event no  later than 5  p.m. on 
the first working day following the sessio n. 
c. After the third parties have made their statements, the parties may be given the 
opportunity, through the Panel, to ask the third parties questions for clarification on any 
matter raised in the third parties' submissions or statements. Each  party sha ll send 
in writing, within a time -frame to be determined by the Panel, any questions to 
a third party to which it wishes to receive a response in writing.  
d. The Panel may subsequently pose questions to the third parties. Each third party shall then 
have t he opportunity to answer such questions orally. The Panel shall send in writing, within 
a time -frame to be determined by it, any questions to the third parties to which it wishes 
to receive a response in writing. Each third party shall be invited to respon d in writing to 
such questions within a deadline to be determined by the Panel.  
Descriptive part  
18. The description of the arguments of the parties and third parties in the descriptive part of  the 
single Panel report shall consist of integrated executive summaries provided by the parties and the 
third parties, which shall be attached as annexes to the report. These executive summaries shall not 
serve in any way as a substitute for the submissions of the parties and the third parties in the 
Panel's  examinat ion of the case.  
19. Each party shall provide a single integrated executive summary of the facts and arguments as 
presented to the Panel in its written submissions and oral statements concerning both proceedings , 
in accordance with the timetable adopted by  the Panel  for its work . This summar y may also include 
a summary of the replies to questions. These  summar ies shall not exceed 30  pages  each. The Panel 
shall not summarize the parties' replies to the questions in the descriptive part, nor shall it annex 
them to its report.  
20. Each third party shall submit an integrated executive summary of its arguments as presented to 
the Panel in its written submission and its statement concerning both proceedings, as appropriate, 
in accordance with the timetable adopted  by the Panel for its work. This summary may also include 
a summary of the replies to questions, where applicable. The integrated executive summary to be 
provided by each one of the third parties shall not exceed six pages.  
Interim review  
21. Following iss uance of the interim report, each party may submit a written request for a review 
of precise aspects of the interim report and request a further meeting with the Panel, in accordance WT/DS461/RW/Add.1  
 
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  with the timetable adopted by the Panel. The right to request such a meet ing shall be exercised 
no later than at the time the written request for review is submitted.  
22. In the event that no further meeting with the Panel is requested, each party may submit written 
comments on the other party's written request for review, in a ccordance with the timetable adopted 
by the Panel. Such comments shall be limited to commenting on the other party's written request 
for review.  
23. The interim report, like the final report prior to its official circulation, shall be kept strictly 
confide ntial and shall not be disclosed.  
Service of documents  
24. The following procedures regarding service of documents shall apply:  
a. Each party and third party shall submit all documents to the Panel by filing them with the 
DS Registry (office No.  2047).  
b. Each party and third party shall file two paper copies of all documents it submits to the 
Panel. The DS Registrar shall stamp the documents with the date and time of the filing. 
The paper version shall constitute the official version for the purposes of th e record of the 
dispute.  
c. Each party and third party shall also provide an electronic copy of all documents it submits 
to the Panel at the same time as the paper versions. The written submissions of the parties 
and the third parties shall, wherever possi ble, be submitted  in Microsoft Word format. In 
cases where, owing to their size, it is not possible to send the documents by email, they 
shall be submitted on a USB key, CD -ROM or DVD. In this case, four USB keys, CD -ROMs 
or DVDs shall be filed. Electronic  copies shall be sent by email to DSRegistry@wto.org , with 
a copy to ****.****@wto.org , ****.****@wto.org , ****.****@wto.org , 
****.****@wto.org  and ****.****@wto.org . If USB keys, CD -ROMS or DVDs are 
provided, they shall be filed with the DS  Registry.  
d. Each party  shall serve any document submitted to the Panel directly on the other party. 
Each party shall, in addition, serve on all third parties its written submissions in advance 
of the joint substantive meeting with the  Panel. Each third party shall serve any doc ument 
submitted to the Panel directly on the parties and all other third parties. Each  party and 
third party shall confirm, in writing, that copies have been served as required at the time 
it provides each document to the Panel.  
e. Each party and third party shall file its documents (paper copies and, where necessary , 
USB keys, CD -ROMs and/or DVDs) with the DS  Registry and serve copies on the other 
party (and third parties where appropriate) by  5 p.m. (Geneva  time) on the dates 
estab lished by the Panel.  
f. The Panel shall provide the parties with an electronic version of the descriptive part, of the 
interim report and of the final report, as well as of other documents as appropriate. 
When  the Panel transmits to the parties or third pa rties both paper and electronic versions 
of a document, the paper version shall constitute the official version for the purposes of 
the record of the dispute.  
25. The Panel reserves the  right to modify  these procedures, as necessary, after consultation wit h 
the parties.  WT/DS461/RW/Add.1  
 
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  ANNEX B 
ARGUMENTS OF THE  PARTIES 
Contents  Page  
Annex   B-1 Integrated executive summary of Colombia  9 
Annex   B-2 Integrated executive summary of Panama  25 WT/DS461/RW/Add.1  
 
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  ANNEX B -1 
INTEGRATED EXECUTIVE  SUMMARY OF COLOMBIA  
I. INTRODUCTION  
1. The Dispute Settlement Body (DSB) 's recommendations and rulings in the original proceedings 
were concerned with a compound tariff that was found to exceed Colombia 's bound tariffs.  Colombia 
repealed the compound tariff; and its new tariffs do not exceed its tariff commitments.  Colombia is, 
therefore, in full compliance with the DSB 's recommendations and rulings.  
2. The original dispute concerned the imposition by Colombia of a compound tariff on the 
importation of certain apparel and footwea r classified under Chapters 61 through 64 of Colombia 's 
Customs Tariff.1 In the original proceedings, the original panel and the Appellate Body found that 
the compound tariff exceeded the bound tariff rates in Colombia 's Schedule of Concessions in the 
instances identified in the Panel Report, and was, therefore, inconsistent with Articles II:1(a) and 
II:1(b) of the General Agreement on Tariffs and Trade 1994 (GATT 1994).2 On 2 November 2016, 
Colombia replaced the compound tariff provided for by Decree 456 w ith new tariffs established by 
Decree 1744.3 Decree 1744 established an ad valorem  tariff that does not exceed Colombia 's World 
Trade Organization (WTO) bound tariffs.  Consequently, Colombia has brought the measure found to 
be inconsistent with the GATT 1994 into conformity with its WTO obligations by removing the 
measure found to be inconsistent by the DSB and by establishing a new tariff with a rate that does 
not excee d the bound rate in Colombia 's Schedule of Concessions.  
3. The customs bond and the customs formalities challenged by Panama in these compliance 
proceedings are not "measures taken to comply " with the DSB 's recommendations and rulings in the 
original proce edings.  These measures therefore fall outside the scope of these Article 21.5 
proceedings, and, are not proper subjects of the Panel 's compliance review.  Even assuming arguendo  
that the measures challenged by Panama are properly within the Panel 's jurisdic tion, Colombia 
submits that these measures are not only consistent with Article XI:1 of the GATT 1994, but 
expressly permitted under the Covered Agreements (the Customs Valuation Agreement, Agreement 
on Trade Facilitation, and the Anti -Dumping Agreement).  Furthermore, Panama 's claims that the 
customs bond and the customs formalities constitute prohibited restrictions under Article XI:1 of the 
GATT 1994 are based on speculative allegations.  Panama fails to substantiate its claims with 
evidence and ultimately  fails to substantiate the allegations that the customs bond and customs 
formalities have a limiting effect on imports.  Moreover, even under the assumption that the customs 
bond and customs formalities are inconsistent with Article XI:1 of the GATT 1994, t hey are justified 
under Article XX, subparagraphs (a) and (d), of the GATT 1994.  
II. FACTUAL BACKGROUND  
4. The original dispute concerned the imposition by Colombia of a compound tariff on the 
importation of certain apparel and footwear classified under Ch apters 61 through 64 of Colombia 's 
Customs Tariff.4 The compound tariff under Decree 456 was composed of an ad valorem  levy, 
expressed as a percentage of the customs value of goods, and a speci fic levy, expressed in units 
of currency per unit of measuremen t. The original panel found, and the Appellate Body upheld, that 
the compound tariff was inconsistent with Articles II:1(a) and II:1( b), first sentence, of the 
GATT  1994.5 
5. On 2 November 2016, the Colombian Government issued Decree 1744 of 2016, which re pealed 
the compound tariff and modified the tariffs applicable to imports of products classified in Chapters 
61, 62 and 63 and certain items in Chapter 64.  Decree 1744 sets an ad valorem  MFN tariff of 40% 
for imports of products classified in Chapters 61 a nd 62 of the Customs Tariff of the Republic of 
Colombia when the declared f.o.b. import price is less than or equal to ten ($10) US dollars per 
gross kilogram.  This tariff is equal to the bound tariff in Colombia 's Schedule.  As regard to imports 
                                                
1 Original Panel Report, para. 2.1.  
2 Original Appellate Body Report, para. 6.3; and Original Panel Report, paras. 8.2 -8.4. 
3 Decree 1744 (Exhibit COL -1). 
4 Original Panel Report, para. 2.1.  
5 Original Panel Report, paras. 8.2 and 8.4; and Original Appellate Body Report, para. 6.3.  WT/DS461/RW/Add.1  
 
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  of product s classified under tariff headings 6401, 6402, 6403, 6404, and 6405, an MFN tariff of 35% 
ad valorem  is applied when the declared f.o.b. import price is less than or equal to prices that vary 
between six ($6) US dollars and ten ($10) US dollars per pair.6 For imports of products classified 
under subheading 6406.10.00.00, an MFN tariff of 35% ad valorem  will be applied when the declared 
f.o.b. price is less than or equal to five ($5) US dollars per gross kilogram.  These tariffs are equal to 
the tariff bound in Colombia 's Schedule.  In cases where the import price for these products exceeds 
the above -mentioned prices, the MFN tariff is provided in Decree 4927 of 2011 (as amended by 
Decree 2153 of 2016) or any amending decree.  Imports of the other products that were covered by 
the compound tariffs introduced by Decree 456 of 2014 are subject to the MFN ad valorem  tariff set 
forth in Decree 492 7 of 2011 (as amended by Decree  2153 of 2016) or any amending decree.7 
III. BURDEN OF P ROOF  
6. It is a "generally -accepted canon of evidence " that "the burden of proof rests upon the party, 
whether complaining or defending, who asserts the affirmative of a particular claim or defence. "8 To 
make out a prima facie  case of breach of a WTO Agree ment, the complaining party must provide 
both adequate evidence and legal argument tying the alleged facts to a legal claim.9 As in original 
proceedings, it is for the complaining party to establish in Article 21.5 proceedings that the 
respondent party has  failed to bring itself into compliance with the DSB recommendations and 
rulings.  Accordingly, Panama, as the complaining party, bears the burden of demonstrating that 
Colombia has failed to comply with the DSB recommendations and rulings.  Failure of Panam a to 
make out a prima facie  case must lead to the dismissal of its claims.  
7. In US / Canada – Continued Suspension , the Appellate Body considered that in Article 21.5 
proceedings, the original respondent has a limited burden of proof.   The original respon dent must 
"show that its implementing measure has cured the defects identified in the DSB 's recommendations 
and rulings ".10  For this purpose, it is sufficient for the original respondent to provide "a clear 
description of its implementing measure, and an adequate explanation regarding how this measure 
rectifies the inconsistencies found in the original proceedings, so as to place the Article 21.5 panel 
in a position to make an objective assessment of the matter and, in the absence of rebuttal, to rule 
in favour of the original respondent ".11 In accordance with the Appellate Body 's guidance in 
US  /  Canada – Continued Suspension , Colombia has demonstrated in these proceedings that 
Decree  1744 "has cured the defects identified in the DSB 's recommendations an d rulings " and, as a 
result, Colombia 's tariffs for the relevant products are in compliance with its Schedule of 
Concessions.   
IV. COLOMBIA HAS BROUGHT THE COMPOUND TARIFF INTO COMPLIANCE WITH ITS 
WTO OBLIGATIONS  
8. Colombia 's bound rate in its Schedule of  Concessions for products classified in Chapters 61 
and 62 is 40%.  Decree 1744 sets an ad valorem  MFN tariff of 40% for imports of products classified 
in Chapters 61 and 62 of the Customs Tariff of Colombia when the declared f.o.b. import price is 
less tha n or equal to ten ($10) US dollars per gross kilogram.  The ad valorem  tariff is the only tariff 
imposed in such circumstances.  In cases where the import price for products classified in Chapters 
61 and 62 exceeds ten ($10) US dollars, the MFN tariff will b e the one provided in Decree 4927 
(as amended by Decree 2153 of 2016) or any amending decree, containing the Customs Tariff of 
the Colombia.  Also, for import of products classified under Chapter 63, the applicable tariff is the 
MFN ad valorem  tariff set fo rth in Decree 4927.  In no case does the applied tariff rate exceed the 
tariff rates bound in Colombia 's Schedule of Concessions.  The tariffs are consistent with Colombia 's 
obligations under Article II:1(b) of the GATT 1994.  
9. Colombia 's bound rate in its Schedule of Concessions for products classified in tariff headings 
6401, 6402, 6403, 6404 and 6405 is 35%, except for 640520 which has a bound level of 40%.  For 
                                                
6 Decree 1744 (Exhibit COL -1). 
7 Decree 1744 (Exhibit COL -1); Decree 4927 (Exhibit COL -2); and Decree 2153 (Exhibit COL -3). 
8 Appellate Body Report, US – Wool Shirts and Blouses , at p. 14. See also  Panel Report, China – Autos 
(US), para. 7.6.  
9 Appellate Body Report, US – Gambling , para. 140 (quoting Appellate Body Report, US – Wool Shirts 
and Blouses , at p. 16). (emphasis in original)  
10 Appellate Body Re port, US / Canada – Continued Suspension , para. 362.  
11 Appellate Body Report, US / Canada – Continued Suspension , para. 362.  WT/DS461/RW/Add.1  
 
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  these tariff headings, Decree 1744 set an MFN tariff of 35% ad valorem  which is applied when th e 
declared f.o.b. import price is less than or equal to prices that vary between six ($6) US dollars and 
ten ($10) US dollars per pair.  Colombia 's bound rate in its Schedule of Concessions for products 
classified under subheading 6406.10.00.00 is 40%. For imports of products classified under this 
subheading, Decree 1744 set an MFN tariff of 35% ad valorem  when the declared f.o.b price is less 
than or equal to five ($5) US dollars per gross kilogram.  The tariffs are consistent with Colombia 's 
obligations und er Article II:1(b) of the GATT 1994.  
10. In cases where the import price for these products exceeds the above -mentioned prices, the 
MFN tariff will be the one provided in Decree 4927 (as amended by Decree 2153) or any amending 
decree, and, as such, neither  of the two mentioned levies will exceed Colombia 's bound tariffs.  Also 
for products classified in the headings of Chapter 64 not mentioned above, the applicable tariff is 
the MFN ad valorem  tariff set forth in Decree 4927 (as amended by Decree 2153).  These tariff rates 
do not exceed Colombia 's Schedule of Concessions.  Therefore, the tariffs applied by Colombia for 
Chapter 64 are consistent with Colombia 's obligations under Article II:1(b) of the GATT 1994.  
11. The original panel 's finding that, in the circ umstances it had identified, the compound tariff 
also accorded treatment less favourable than that envisaged in Colombia 's Schedule of Concessions, 
in a manner inconsistent with Article II:1(a) of the GATT 1994 was entirely dependent on its finding 
under A rticle II:1(b).12 As the tariffs set under Decree 1744 are consistent with the levels bound in 
Colombia 's Schedule of Concessions and no longer result in a breach of Article II:1(b), Decree 1744 
brings Colombia into conformity also w ith Article II:1(a) of the GATT  1994.  
12. For the reasons set out above, Colombia respectfully requests the Panel to find that Colombia 
has complied with the DSB recommendations and rulings in the original proceedings.  
V. TERMS OF REFERENCE  
13. First, in the Article 21.5 procee dings initiated by Colombia, Panama challenges the customs 
bond and special import regime established in Decree 1745 of 2016 under Articles XI:1 and X:3(a) 
of the GATT 1994.  The Panel 's terms of reference in these Article 21.5 proceedings are confined to 
examining "the matter referred to the DSB by Colombia in document WT/DS461/17 ".13 The "matter " 
in these Article 21.5 proceedings consists, in turn, of the measure(s) and claim(s) set out in 
Colombia 's panel request, that is, document WT/DS461/17.14 As regards to the measures, document 
WT/DS461/17 refers only to Decree 1744.  In terms of claims, document WT/DS461/17 refers only 
to the claims that were the subject of the DSB 's recommendations and rulings, namely, consistency 
with Articles II:1(a) and II:1( b) of the GATT 1994.  Accord ingly, the Panel in the Article  21.5 
proceedings initiated by Colombia is limited to examining the consistency of the Decree 1744 with 
Articles II:1(a) and II:1(b) of the GATT 1994.  Thus, the customs bond and special import regim e 
established in Decree 1745 of 2016, as well as Panama 's claims under Articles XI:1 and X:3(a) of 
the GATT 1994, fall outside of the  Panel 's terms of reference in these Article 21.5 proceedings 
initiated by Colombia.  
14. Second, proceedings under Article 21.5 concern a disagreement as to the "existence " or 
"consistency with a covered agreement " of measures "taken to comply " with the recommendations 
and rulings of the DSB in the original proceedings.  Therefore, proceedings under Article 21.5 do not 
concern just any measure, but rather, are limited to those measures that are taken to comply with 
the recommendations and rulings of the DSB.15 The scope of the measures "taken to comply " must 
be determined by reference to the recommendations and rulings of the DS B in the original 
proceedings and to the original measures at issue.16 In EC – Bed Linen (Article 21.5 – India), the 
Appellate Body also agreed with the Panel that "if a claim challenges a measure which is not a 
'measure taken to comply ', that claim cannot  properly be raised in Article 21.5 proceedings. "17  
15. The original dispute concerned the imposition by Colombia of a compound tariff on the 
importation of certain apparel and footwear classified under Chapters 61 through 64 of Colombia 's 
                                                
12 Original Panel Report, para. 7.192.  
13 WT/DS461/24.  
14 Panel Report, Australia – Automotive Leather (Article 21.5 – US), para. 6.4. 
15 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), para. 36.  
16 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 201.  
17 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 78.  WT/DS461/RW/Add.1  
 
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  Customs Tariff.18 The original panel and Appellate Body findings regarded the consistency of this 
compound tariff with Colombia 's Schedule of Concessions.  The DSB  recommendations and rulings in 
the original proceedings concerned exclusively the compound tariff on the importation of certain 
apparel and footwear classified under Chapters 61 through 64 of Colombia 's Customs Tariff.  The 
compound tariff found to be inco nsistent in the original proceedings has been repealed and replaced 
with an ad valorem tariff that is consistent with Colombia 's bound tariffs in its Schedule of 
Concessions.   
16. The Panel is precluded from examining the customs bond and special import re gime 
established in Decree 1745 in both Article 21.5 proceedings because they are not measures taken 
to comply with the recommendations and rulings of the DSB. Panama makes no attempt to link the 
challenged measures to the DSB 's recommendations and rulings  and generally fails to make a prima 
facie case that Decree 1745 is a "measure taken to comply " within the meaning of Article  21.5 of 
the DSU. This failure should lead to the conclusion that Panama has failed to establish that the 
challenged measures fall within the scope of Article  21.5.19 In fact, in the Article  21.3(c) proceedings, 
Panama recognized that measures other than repeal or modification of the compound tariff would 
not have the necessary links to the DSB 's recommendations and rulings to constit ute a "measure 
taken to comply ".20 
17. The drafting history of Decree 1744 confirms that it is the only measure taken to comply by 
Colombia. The minutes of the Triple A Committee meeting where the draft decree was considered 
clearly show that implementatio n of the DSB 's recommendations and rulings was the very purpose 
of Decree 1744 and that no other implementation measures were considered.21 No reference was 
made to the DSB 's recommendations and rulings when the draft of Decree 1745 was considered.22  
18. Panama 's use of the "closely connected " test developed in US – Zeroing (EC)  is contradictory.  
The premise of the "closely connected " test is that the measure being considered is not a measure 
taken to comply. Yet, Panama has repeatedly characterized the cu stoms bond and the special import 
regime as "measures taken to comply ".23 This is inherently contradictory.  Moreover, even if it were 
applicable, Panama would have failed to demonstrate that the customs bond and the special import 
regime are sufficiently c onnected to Decree 1744 so as to fall within the scope of these Article 21.5 
proceedings.   
19. Panama first alleges that Decree 1745 was enacted after the adoption of the DSB 's 
recommendations and rulings.24 The mere fact that a measure was enacted subsequ ent to the 
adoption of the DSB 's recommendations and rulings does not make such measure a "measure taken 
to comply ". Panama next refers to Decree 1745 having been adopted on the same day as 
Decree  1744.25 Adoption of a law or regulation on the same day as the measure taken to comply 
does turn the former into another measure taken to comply.   
20. The nature of Decree 1745 is significantly different to that of Decree 1744.  Decree 1745 is a 
customs measure whereas Decree 1744 is a tariff measure.  Indeed, the object of Decree 1744 is to 
establish import tariffs.26 By contrast, the object of Decree 1745 is to establish a mechanism to 
strengthen the risk management and customs control system.27 Also, Decree 1744 was adopted 
pursuant to Colombia 's tariff code, tha t is, Decree 4927 and subsequent amendments.28 By contrast, 
Decree 1745 was adopted pursuant to Law 1762 of 2015.29 That the two measures are enacted 
pursuant to different legal frameworks is further evidence of their different nature.  The fact that 
                                                
18 Original Panel Report, para. 2.1.  
19 The Appellate Body has noted that the complaining party “bears the burden of establishing that its 
claims are properly before the Panel” (Panel Report, Korea - Certain Paper (Article 21.5 - Indonesia) , 
para. 6.4). 
20 Award of the Arbitrator, Colombia – Textiles (Article 21.3(c)) , para. 3.23 (referring to Panama's 
submission (English translation), para. 125).  
21 Exhibit COL -4. 
22 Exhibit COL -4. 
23 See, for example, Panama's First Written Submission (Article 21.5 – Colomb ia), para. 32.  
24 Panama's First Written Submission (Article 21.5 – Colombia), para. 42.  
25 Panama's First Written Submission (Article 21.5 – Colombia), para. 43.  
26 Exhibit PAN -1. 
27 Exhibit PAN -2, Article 1.  
28 Exhibit PAN -1. 
29 Exhibit PAN -2. WT/DS461/RW/Add.1  
 
- 13 - 
 
  both D ecrees 1744 and 1745 were reviewed by the Triple A Committee does not mean that the 
two decrees are similar in nature.  The Triple A Committee has jurisdiction over a broad range of 
trade policy instruments.30  
21. The product coverage of both decrees is no t identical.  Decree 1744 applies to all products 
under HS chapters 61 and 62 and headings 64.01 -6405.31 Meanwhile, Decree 1745 applies only to 
apparel and footwear classified under chapters 61, 62, and 64 that are imported at prices below 
certain threshold s.  
22. Panama also errs in arguing that a common objective between the measure challenged in the 
original proceedings and Decree 1745 is an appropriate basis to characterize the latter as a measure 
taken to comply.  WTO Members take numerous measures that pursue a similar policy objective.  The 
compound tariff was taken with the objective of fighting money laundering.  Colombia has a broad, 
comprehensive and multi -disciplinary regime to fight money laundering, of which the compound 
tariff was a part.  It would  be a misuse of Article 21.5 to allow Panama to challenge in compliance 
proceedings any measure taken by Colombia to fight money laundering since the adoption of the 
DSB's recommendations and rulings in the original proceedings.   
23. Panama refers to the a lleged "effects ", arguing that the "restrictiveness to trade that is being 
mitigated by the new tariff is again undermined by the various measures contemplated in 
Decree  No. 1745".32 Panama then alleges "banking costs " linked to the customs bond and "logistical 
hindrances " resulting from the special import regime.33 Yet, these allegations are entirely 
unsubstantiated.  Panama does not provide any information about the "banking costs " of the customs 
bonds or of the so -called "logistical hindrances " of the spe cial import regime.  Nor does Panama 
provide any support for its assertion that the "banking costs " or "logistical hindrances " have trade 
restrictive effects.  Given that Panama 's allegations are unsubstantiated, they do not provide a basis 
for the Panel to consider "effects " in assessing Panama 's claim that the customs bond and special 
import regime are measures taken to comply.  
24. In sum, Panama has failed to establish that the  customs bond and special import regime are 
"measures to comply " within the meaning of Article 21.5 of the DSU.  Consequently, Panama 's claims 
against the customs bond and special import regime fall outsi de of the scope of both Article  21.5 
proceedings for this reason, and should be dismissed by the Panel.  
25. Allowing Decree 1745, a measure that was not the subject of the original proceedings, to be 
reviewed in these Article 21.5 proceedings would deprive Colombia of its rights under the DSU.  
Should the Art icle 21.5 Panel find that Decree 1745 is inconsistent with the GATT 1994, Colombia 
would be unfairly denied the right to a reasonable period of time to bring the Decree into compliance.  
In addition, Colombia would be denied the right to negotiate compensat ion before being subject to 
the suspension of concessions or other obligations.   
26. Lastly, Panama 's claims under the Customs Valuation Agreement and Article VIII of the  
GATT  1994 are outside of the Panel 's terms of reference and they do not form part of the "matter " 
before the Panel.  In any event, Colombia 's measures are consistent with the Customs  Valuation 
Agreement and Article VIII of the GATT 1994.  
VI. PANAMA HAS FAILED TO DEMONSTRATE THAT THE CUSTOMS BOND OR THE 
CUSTOMS FORMALITIES ESTABLISHED IN DEC REE 1745 IS INCONSISTENT WITH 
ARTICLE XI:1 OF THE GATT 1994  
A. Panama has failed to establish that the customs bond is a prohibited 
"restriction " under Article XI:1  
27. Customs bonds are routinely used to guarantee the payment of customs duties and are 
expressly recognized as permissible instruments by the WTO agreements.  Article 13 of the 
Customs  Valuation Agreement authorizes customs authorities to require a customs bond covering 
the ultimate payment of customs duties.  The use of customs bonds is also specifically contemplated 
                                                
30 Decre e 3303 de 2006, Article 1 (Exhibit COL -6). 
31 Exhibit PAN -1, Articles 1 and 2.  
32 Panama's First Written Submission, para. 46.  
33 Panama's First Written Submission, para. 47.  WT/DS461/RW/Add.1  
 
- 14 - 
 
  in the new Agreement on Trade Facilitation.  Furthermore, the Ad note to Article VI:1 of the 
GATT  1994 provides for the use of customs bonds in connection with anti -dumping or countervailing 
duty proceedings.  The Ad note also expre ssly recognizes that there are "many other cases in customs 
administration " where it is permissible for a Member to require reasonable security in the form of a 
bond or cash deposit.  
28. These provisions provide contextual guidance for the interpretation o f the term "restriction " 
in Article XI:1 of the GATT 1994.  Because customs bonds are permissible measures under the 
GATT  1994 and other WTO agreements, the requirement of a customs bond, and any associated 
administrative burden, cannot in themselves consti tute prohibited "restrictions " under Article XI:1 
of the GATT 1994.  Furthermore, Article VIII of the GATT 1994 recognizes that there may be fees 
associated with customs formalities.  Thus, the fact that a customs bond has associated fees or costs 
cannot, wi thout more, give rise to a prohibited "restriction " under Art icle XI:1 of the GATT 1994.  
29. Article XI:1 only covers "those prohibitions or restrictions that have a limiting effect on the 
quantity or amount of a product being imported or exported ".34 Panama has failed to provide any 
evidence that the customs bond limits the quantity or amount of the imported product.  The customs 
bond does not impose a limitation on the quantity or amount of products covered by the customs 
bond requirement that may be i mported.  Indeed, Panama has not identified any numerical quota or 
other quantitative limitation on imports of the products subject to the customs bond requirement.   
30. Panama complains that the customs bond makes the import process for the subject 
merchan dise "considerably costly ".35 Yet, Panama provides no evidence of the cost associated with 
the customs bond.  The customs bond seeks to guarantee the payment of both the customs taxes 
and any fines or penalties imposed by customs authorities.  There is a rel ationship between the 
amount of the customs bond and the obligations it seeks to guarantee.   
31. Moreover, Panama also asserts that there is an alleged correlation between the conditions 
that affect an individual importer and the conditions that affect the  importation of a product.36 This 
argument suggests that Article XI:1 requires that equal conditions be maintained for all Colombian 
importers (particularly those that are not credit worthy).  However, Panama fails to address why the 
customs formalities imp osed on risky importers end up affecting the importation of these products.  
In addition, Article XI:1 refers to limitations on the importation of products, not to limitations on 
importation by particular importers.  Limitations on importation by particular persons (or groups of 
persons) would be relevant to the Panels ' analysis only to the extent that the limitations on 
individuals ' ability to import are a limitation or a limiting condition on importation, or have a "limiting 
effect " on importation of the re levant products.37  
32. Panama also asserts that the "cost is variable because it will depend on the criteria for issuance 
of each participating financial entity or insurance company, on the risk profile of the importer, and 
on the magnitude of the covered  operation ".38 However, apart from some disconnected assumptions 
and random estimations, Panama offers no evidence that the cost is variable or of the factors that 
affect the costs of the customs bond.  Panama 's assertions are all entirely speculative.  On the 
contrary, based on the evidence submitted by Colombia, it is clear that the value of the bond is quite 
low compared to the overall value of the operation:  
                                                
34 Appellate Body Report, China – Raw Materials , para. 320.  
35 Panama's First Writt en Submission (Article 21.5 – Colombia), para. 56.  
36 See Panama's Responses to the Panel 's Questions, page 30.  
37 See United States  ' Third Party Submission, para. 44.  
38 Panama's First Written Submission (Article 21.5 – Panama), para. 37.  WT/DS461/RW/Add.1  
 
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  Decree  1745/2016  2218/2017  
Importer  IMPORTER 1  IMPORTER 2  IMPORTER 3  
Heading  6402 6401 6210 
Quantity  19130  18349  2240 
Origin  Mexico  Ecuador  Mexico  
Port of entry  Buenaventura  Ipiales  Buenaventura  
Insurance Company  Confianza  Seguros del Estado  Bolívar  
Threshold (USD)  $ 2,00  $  3,00  $ 9,00  
FOB Value (USD)  $  31.972,40  $ 35.852,97  $ 14.830,40  
Declared price (USD)  $ 1,67  $  1,95  $ 6,62  
Covered value (USD)  $  76.520,00  $ 110.094,00  $ 10.659,20  
Prime (USD)  $ 1.140,35  $  990,89  $  203,92  
Prime percentage  3,57%  2,76%  1,4%  
Source: COL -22, COL -18, COL -27. 
33. Furthermore, there is an inherent contradiction in Panama 's argument.  If the costs are variable 
as Panama alleges, and if they depend on factors such as the risk profile of the importer and the 
magnitude of the covered operation, the costs would be rationally related to such factors and co uld 
not be excessive.  After all, insurance companies and banks operate under market conditions.  
34. Panama also asserts that there is "uncertainty " because of the involvement of a third party.39 
Yet, Panama 's argument is entirely speculative.  The only reas on Panama offers for the alleged 
"uncertainty " is that obtaining the customs bond depends on a decision of the banking entity or 
insurance company.40 Panama offers no evidence of any requirements imposed by these banking 
entities or insurance companies tha t create the uncertainty.  There is nothing inherent in the 
involvement of third parties that generates uncertainty.  Moreover, these types of bonds "for the 
fulfillment of legal obligations " are quite common in the Colombian financial market.  More than 
24 insurance companies in Colombia issue these bonds on a regular basis and they are quite common 
in the business operations of legal importers.41 
35. In addition, Panama points to the customs bond being calculated on the basis of threshold 
levels rather than  the values declared by importers.42 Panama fails to mention that the imports 
subject to the customs bond are those that are suspected to have declared values that are artificially 
low. In such circumstances, it is entirely appropriate to use the threshold  for purposes of calculating 
the value of a customs bond.  In fact, if the value of the customs bond were calculated on the basis 
of the declared value, this would allow importers using artificially low prices to continue to avoid 
paying the full duties and  any applicable fines or penalties.  Panama also refers to importers who 
already have a global bond.43 Panama fails to point out that not all importers of the product subject 
to the customs bond will have a global bond since it is only available to importer s and exporters that 
undertake a large number of operations.  Furthermore, where imports at artificially low prices 
constitute an important share of the total imports, the global bond would be insufficient, as has been 
already proved by Colombia.44 
36. Panama alleges that the customs bond involves the payment of a premium or financial 
commission and the submission of certain documents, and also argues that the outcome of the 
application may be "favorable  or unfavorable  depending on the appreciation of the ba nk or insurance 
company ".45 Panama then refers to the commission allegedly charged by three Colombian financial 
entities.46 The three Colombian financial entities to which Panama refers are privately owned, and 
thus the costs and documents to which Panama refers are charges and requirements determined 
                                                
39 Panama's First Written Submission (Article 21.5 – Colombia), para. 55.  
40 Panama's First Written Submission (Article 21.5 – Colombia), para. 55.  
41 Exhibit COL -14. 
42 Panama's First Written Submission (Article 21.5 – Panama), para. 39.  
43 Panama's First Written Submission (Article 21.5 – Colombia), para. 54.  
44 Colombia 's Responses to the Panel 's Questions, page 19.   
45 Panama's Second Written Submission (Article 21.5 – Panama), para. 72.  
46 Panama's Second Written Submission (Article 21.5 – Panama), para. 73.  WT/DS461/RW/Add.1  
 
- 16 - 
 
  and collected by private actors.47 The fees that each bank charges for the customs bond are freely 
determined by each bank and are calculated based on the risk model of the financial entity and the 
risk profil e of the applicant.  Thus, the costs of the customs bond do not stem from Decree 1745, 
and the Colombian government does not provide administrative instructions or guidance to these 
private financial actors.  Panama likewise complains that the customs bond g uarantee "conditions 
the access of products to the will of a financial entity to the detriment of the predictability of the 
conditions for importation ".48 By Panama 's own admission, the restrictive effects about which it 
complains result from the conduct o f a private actor and not from government conduct.  For these 
reasons, the cost and potential restrictive effects of the customs bond cannot be attributed to the 
Colombian government and, consequently, cannot provide a basis for a claim that the customs bon d 
constitutes a "restriction " within the meaning of Article XI:1 of the GATT 1994.  
37. Ultimately, Panama 's claim that the customs bond is a prohibited "restriction " under 
Article  XI:1 is entirely based on unsubstantiated assertions.  For these reasons, Col ombia respectfully 
requests that the Article 21.5 Panel find that Panama has failed to establish that the customs bond 
in Decree 1745 is inconsistent with Article XI:1 of the GATT 1994.  Colombia also recalls that 
Decree  1745 is no longer in force.  
B. Panam a has failed to establish that the special import regime is inconsistent 
with Article XI:1  
38. Panama challenges the special import regime separately from the customs bond requirement 
under Article XI:1 of the GATT 1994.  However, the customs bond requirement is a component of 
the special import regime, as Panama has described it.  Therefore, Panama is improperly challenging 
the same measure twice.  Since the customs bond requirement is an integral part of the special 
import regime as described by Pan ama, and since Panama has not made a separate claim against 
the special import regime exclusive of the customs bond, Panama 's claim against the special import 
regime must also fail.  
39. In any event, customs formalities are a necessary component of interna tional trade.  While 
Article VIII:3 of the GATT 1994 and the Agreement on Trade Facilitation pursue the objective of 
reducing customs formalities, they recognize that such formalities are permissible.  It follows that, 
because customs formalities are permiss ible measures under the GATT 1994 and other 
WTO agreements, the imposition of a customs formality, and any associated administrative burden, 
cannot in themselves constitute prohibited "restrictions " under Article XI:1 of the GATT 1994.  
Furthermore, Article  VIII of the GATT 1994 recognizes that there may be fees associated with 
customs formalities.  Thus, the fact that a customs formality has associated fees or costs cannot, 
without more, give rise to a prohibited "restriction " under Article XI:1 of the GATT 1994.  
40. Panama alleges that the special regime makes the import process "considerably 'costly ' or 
'onerous '".49 However, customs authorities have the right to require that importers comply with 
certain formalities as part of the import process.  Article V III of the GATT 1994 recognizes that such 
formalities may generate fees or charges, which are not prohibited.  
41. Panama first refers to translation fees.50 However, Panama 's official language is Spanish51, 
and Panama fails to explain why its exporter woul d seek to translate their export documentation.  In 
any event, the fees for translation are not charged by the Colombian government.  These are fees 
charged by private parties.  The requirement to submit translated documents is entirely reasonable.  
WTO Member s are not required to operate in a language other than their own.52  
42. Panama also complains about the "lack of availability of official translators of certain 
languages " in Colombia and asserts that this is trade restrictive.53 The premise underlying Pa nama 's 
argument is that a Member may require official translations only if it ensures that there is an official 
                                                
47 Exhibits COL -9. 
48 Panama's Second Written Submission (Article 21.5 – Panama), heading III.6.  
49 Panama 's First Written Submission (Article 21.5 – Colombia), para. 59.  
50 Panama's First Written Submission (Article 21.5 – Colombia), para. 60.  
51 Article 7 of Panama's Constitution  (Exhibit COL -7). 
52 See, for example, Article 10.8 of the TBT Agreement and Article 1.1.2 of the Agreement on Trade 
Facilitation.  
53 Panama's Second Written Submission (Article 21.5 – Panama), para. 125.  WT/DS461/RW/Add.1  
 
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  translator for each and every language used in the world.  The unreasonableness of this proposition 
is self -evident.54 WTO Members cannot be expe cted to ensure that they designate an official 
translator for each language in the world in each of their ports before they can require official 
translations of documents that are to be submitted to the government.  In any event, Panama fails 
to point out t hat Colombia 's Ministry of Foreign Affairs has established procedures for situations 
where an official translator is not available.55 
43. Panama also asserts that official translations are only required for footwear and apparel.56 
Panama, however, does not  provide any explanation as to why the product coverage gives rise to a 
prohibited "restriction ". Article XI:1 of the GATT 1994 does not include a requirement that all 
customs formalities be applied horizontally to all products.  The fact that a measure applies to one 
or more categories of products does not turn that measure into a prohibited "restriction ".  
44. Panama then refers to alleged certification costs.57 The certification of documents in 
connection with importation is a f ormality that is expressly permitted under Article VIII of the 
GATT  1994.  Given that certification requirements are permitted and that Members are allowed to 
charge fees for their services, there is no support for Panama 's contention that the certification  
requirement or its costs constitute prohibited restrictions under Article XI:1 of the GATT 1994.  
Colombia recalls that, during the negotiations of the Agreement on Trade Facilitation, some 
WTO Members proposed to eliminate certification requirements.58 This proposal was ultimately 
unsuccessful.  If such measures were already prohibited under Article XI:1, they would not have 
been any point to Members proposing to eliminate them in the context of the negotiations of the 
Agreement on Trade Facilitation.  
45. Panama further alleges that an existence certificate costs US$ 30.59 The fee of US$ 30 is 
charged by, and paid to, an agency of the Panamanian State, and thus Panama is improperly seeking 
to attribute to Colombia fees that are determined and collected by Pa nama  itself.  Panama equally 
complains about the fee charged by the Panamanian Ministry of Foreign Affairs for the apostille or 
legalization.  Panama again improperly attempts to attribute to the Colombian government fees that 
are determined and collected by  the Panamanian government.  Fees determined and collected by the 
Panamanian government cannot give rise to a "restriction " that is "instituted or maintained by " 
Colombia under Article XI:1 of the GATT 1994.   
46. Colombia notes that Panama describes the cer tification of intent to sell in Colombia as 
"a disguised charge  on the importer ".60 Panama 's argument is an admission that the certification is 
not inconsistent with Article XI:1 of the GATT 1994.  This is because Article XI:1 only applies to 
"restrictions other than duties, taxes or other charges ".61 "Charges " are expressly excluded from the 
scope of Article XI:1.   
47. Panama next makes vague references to so -called "logistical costs ".62 Despite the label, these 
"logistical costs " seem to simply refer to the effort it takes an importer to execute the formalities.  
As the formalities are allowed, the time that it may take an importer to execute the formalities must 
also be permissible.  In any event, Panama fails to explain how the costs of the formalities have a 
limiting effect on imports.  Panama is simply asking the Panel to assume from the existence of the 
formalities, and from the mere existence of a cost associated to the formality that there are limiting 
effects such that there  is a prohibited restriction under Article XI:1.  Under Panama 's theory, all 
formalities imposed in connection with importation would constitute a prohibited restriction under 
Article XI:1 of the GATT 1994.  
48. As to the requirement to indicate, where appli cable, the economic relationship between the 
supplier and the importer, questioning the need for such information and arguing that it requires 
retaining a tax attorney or accountant63, it is generally recognized that a relationship between the 
                                                
54 Panama's Second Written Submission (Article 21.5 – Panama), paras. 124 -126 and 131.  
55 Exhibit COL -10. 
56 Panama's Second Written Submission (Article 21.5 – Panama), para. 132.  
57 Panama's First Written Submission (Article 21.5 – Colombia), para. 60.  
58 TN/TF/W/22 (United States and Uganda).  
59 Panama's Second Written Submission (Article 21.5 – Panama), para. 135.  
60 Panama's Second Written Submission (Article 21.5 – Panama), para. 142. (underlining added)  
61 Underlining added.  
62 Panama's First Written Submission (Article 21.5 – Colombia), para. 60.  
63 Panama's Second Written Submission (Article 21.5 – Panama), para. 142.  WT/DS461/RW/Add.1  
 
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  supplier and  the importer may affect the reliability of the declared price.64 Furthermore, there is no 
requirement in Article 4.1(a) of Decree 1745 to retain a tax attorney or accountant.  
49. Panama additionally complains about the requirement that the importer, the i mporter 's legal 
representative, or an agent be present during the inspection of the merchandise by Colombia 's 
customs authorities.  Panama has not challenged the right of Colombia 's customs authorities to 
inspect the merchandise.  The presence of the importe r, his/her legal representative, or agent is 
intended to safeguard the importer 's due process rights.  It is also an important element to ensure 
that the entities listed as importers are not shell companies being misused to conceal irregular 
operations and to evade the customs authorities.  The use of shell companies in trade -based money 
laundering operations is a practice that has been identified by law enforcement authorities.65 While 
Panama claims this requirement imposes additional costs, it provides no e vidence of such costs.66 
Panama has failed to provide any evidence as to how the mere presence of an individual acting for 
the interests of the importer during a customs inspection has limiting effects on the quantities of 
imports such that it constitutes a prohi bited restriction under Article  XI:1 of the GATT 1994.  
50. Panama 's allegation that the formalities limit the importer 's flexibility is also unpersuasive.67 
The fact remains that it is the importer that decides the quantity of the products to import  and the 
importer remains free to import as large a quantity of the products as it wants.  The importer also 
retains the right to change the quantity of the imports.  If the quantity changes after it has submitted 
the documentation, it is free to re -file the  documentation.  Panama provides no evidence of how the 
formality has limiting effects on the quantity of the product such that it constitutes a prohibited 
import restriction under Article XI:1 of the GATT 1994.  
51. Finally, Panama alleges that the customs formalities established in Decree 1745 "discourage " 
imports of the relevant merchandise.68 Panama supports its position by making the remarkable 
statement that importers may either comply with the formalities or "modify the declared values " of 
the merchand ise they are importing.69 Panama 's statement acknowledges the problem that the 
customs bond and the formalities are seeking to address: importers of apparel and footwear 
declaring a customs value that does not represent the actual price paid for the goods being imported.  
The suggestion that an importer simply "modify " the declared price shows a rather disappointing 
disregard for the customs legislation of the importing country.  Declaring a fictitious customs value, 
even if it is a higher one, involves a fal se statement in an official document and would constitute 
customs fraud.  In any event, Panama 's logic is flawed.  If the importer modifies the customs value, 
it does not necessarily mean that it is importing lower quantities of the good in question.  
52. For these reasons, Panama has failed to establish its claim that the special regime is 
inconsistent with Article XI:1 of the GATT 1994.  Colombia therefore respectfully requests that the 
Panel reject Panama 's claim.  
VII. PANAMA HAS FAILED TO DEMONSTRATE THAT THE ADMINISTRATION OF THE 
CUSTOMS BOND ESTABLISHED IN DECREE 1745 IS INCONSISTENT WITH 
ARTICLE X:3(a) OF THE GATT 1994  
A. Panama has failed to establish that decree 1745 fa lls within the scope of 
Article  X:3(a)  
53. The Appellate Body has stated that Artic le X:3(a) makes a distinction between the legal 
instrument being administered and the legal instrument that regulates the application or 
implementation of that instrument.70 A party may challenge under Article X:3(a):  (1) the manner in 
which legal instrume nts are applied or implemented in a particular case; and (2) the legal 
instruments that regulate such application or implementation.71 As Panama acknowledges, where a 
                                                
64 Article 1 of the Customs Valuation Agreement.  
65 Original Exhibit COL -11. 
66 Panama's First Written Submission (Article 21.5 – Colombia), para. 60.  
67 Panama' s First Written Submission (Article 21.5 – Colombia), para. 62.  
68 Panama's First Written Submission (Article 21.5 – Colombia), para. 64.  
69 Panama's First Written Submission (Article 21.5 – Colombia), para. 64.  
70 Appellate Body Report, EC – Selected Customs Matters , para.200.  
71 Appellate Body Report, EC – Selected Customs Matters , para. 200.  WT/DS461/RW/Add.1  
 
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  party challenges a legal instrument that administers another measure, the latter measure falls 
outside the scope of Article X:3(a).72  
54. Panama 's claim under Article X:3(a) is directed against the customs bond established in 
Decree 1745 (the "special bond " in Panama 's terms).73 Yet, Panama fails to explain, much less 
substantiate with eviden ce, that Decree 1745 "administer[s] " another legal instrument.  Panama 
does not provide any explanation or evidence that Decree 1745 somehow "administer[s] " 
requirements in Decrees 2685 and 390.  That Decree 1745 establishes a customs bond and that 
Decrees 2 685 and 390 may also contemplate customs bond is insufficient to establish that the former 
"administer[s] " the latter within the meaning of Article X:3(a).   
55. Colombia encourages the Panel to review Panama 's description of the operation of the customs 
bond established in Decree 1745.74 This description does not characterize Decree 1745 as an 
instrument that "administer[s] " requirements provided for elsewhere.  In fact, Panama itself 
characterizes the customs bond requirement as emanating directly from Decr ee 1745 and makes no 
mention of Decree 1745 administering a requirement established in a separate legal instrument.75 
56. For these reasons, Colombia respectfully requests that the Panel find that Panama has failed 
to establish that Decree 1745 falls withi n the scope of Article X:3(a).  
B. Decree 1745 is in any case consistent with Article X:3(a)  
57. Even if Decree 1745 were to fall within the scope of Article X:3(a), it is consistent with the 
provision.   
58. First, uniform administration requires that Membe rs ensure that their laws are applied 
consistently and predictably, and uniformly between individual traders.76 The panel in US – Stainless 
Steel (Korea)  noted that the requirement of uniform administration of laws and regulations must be 
understood to mea n uniformity of treatment in respect of persons similarly situated, and does not 
require identical results where relevant facts differ.77 Article X:3(a) should  not be read as a broad  
anti-discrimination  provision, and  should not  be interpreted  to require that all products  be treated  
identically.78 The panel in Argentina – Hides and Leather  dismissed the complaining party 's argument 
that it was improper for Argentina to construct a special set of procedures for administering its 
export laws for only one typ e of product (hides) while other products were treated differently.79 
59. The same logic applies in the context of the customs bond requirement.  The customs bond 
requirement applies to all apparel and footwear under certain value thresholds.  All importers of these 
products can expect treatment of the same kind, in the same manner, both over time and in different 
places and with respect to other persons.  Therefore, Colombia requests the Panel to find that the 
customs bond requirement does not lead to non -uniform treatmen t within the meaning of 
Article  X:3(a).  
60. Second, impartial administration has been considered to mean the application or 
implementation of the relevant laws and regulations in a fair, unbiased and unprejudiced manner.80 
Panama has not expla ined why it considers the measure to be partial, and more specifically, why 
the fact that the percentage set out in the bond requirement is fixed means that the requirement is 
not impartial.  It has therefore not shown how and why those provisions necessari ly lead to impartial 
administration.  The measure applies equally to all importers of covered apparel and footwear, and 
Panama has not explained to what entity Colombia is partial to and what interests it is favoring in 
applying the measure.  Therefore, Pana ma has not discharged its burden of substantiating how and 
                                                
72 Panama's First Written Submission (Article 21.5 – Colombia), para. 75.  
73 Panama's First Written Submission (Article 21.5 – Colombia), para. 76.  
74 See Panama 's First Written Submission (Article 21.5 – Colombia), paras. 34 -35. 
75 Panama's First Written Submission (Article 21.5 – Colombia), para. 34.  
76 Panel Report, Argentina – Hides and Leather , para. 11.83. See also Panel Reports, China – Raw 
Materials , para. 7.692; and US – COOL , para. 7.876.  
77 Panel Report, US – Stainless Steel (Korea) , para. 6.51.  
78 Panel Report, Argentina – Hides and Leather , para. 11.84.  
79 Panel Report, Argentina – Hides and Leather , paras. 11.58 and 11.85.  
80 Panel Report, Thai land – Cigarettes (Philippines), para. 7.899.  WT/DS461/RW/Add.1  
 
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  why those provisions necessarily lead to administration that is not impartial and has not made a 
prima facie  case in this respect.  
61. Third, reasonable administration means administration that is equitable, appropriate for the 
circumstances and based on rationality.81 In previous disputes, the requirement of reasonable 
administration was understood as requiring the examination of the features of the administrative 
act at issue in the light of its o bjective, cause or the rationale behind it.82 Panama 's allegation of 
unreasonable treatment is confined to the requirement that a customs bond is required of holders 
of a global bond.83 However, as already explained, where imports at artificially low price s constitute 
an important share of the total imports, the global bond would be insufficient.  Thus, Panama has 
failed to show that Decree 1745 leads to unreasonable administration.  
62. For the reasons set out above, Colombia respectfully requests that the P anel reject Panama 's 
claim that the customs bond is inconsistent with Article X:3(a) of the GATT 1994.  
VIII.  EVEN IF THE CUSTOMS BOND AND THE SPECIAL IMPORT REGIME WERE 
INCOMPATIBLE WITH ARTICLES X:3(a) OR XI:1 OF THE GATT 1994, THEY ARE 
JUSTIFIED UNDER AR TICLE XX OF THE GATT 1994  
A. The customs bond and customs formalities are measures necessary to 
protect public morals  
1. The customs bond and the customs formalities in Decree 1745 are 
measures taken to protect public morals  
63. Article XX(a) provides a justification for measures that are necessary to protect public 
morals.84 Provisional justification under Article XX(a) requires a Member to demonstrate: (i)  that it 
has adopted or enforced the measure "to protect public morals "; and (ii) that the measure is 
"necessary " to protect such public morals.85  
64. The Appellate Body has interpreted the term "public morals " to denote standards of right and 
wrong conduct maintained by or on behalf of a community or nation.86 The content o f public morals 
can vary from Member to Member, depending upon a range of factors, including prevailing social, 
cultural, ethical, and religious values.  Members should be given some discretion to define and apply 
for themselves the concept of public morals  in their respective territories, according to their own 
systems and scales of values.87 Members also have the right to determine the level of protection 
they consider appropriate.88 Money laundering is one of the forms of public morals found to fall 
within the scope of Article XX(a).89  
65. The Appellate Body has further found that a measure is designed to protect public morals if it 
is not incapable of protecting public morals, such that there is a relationship between the measure 
and the objective of pro tecting public morals.90 To determine the existence of such relationship, a 
panel must examine evidence regarding the design of the measure, including its content, structure, 
and expected operation.91 
66. A principal policy objective of Decree 1745 is to c ombat money laundering.  In the case of 
Colombia, the fight against money laundering is a matter of "public morals ", as recognized by the 
panel and the Appellate Body in the original proceedings.92 The policy objectives of Decree 1745 are 
                                                
81 Panel Report, China – Raw Materials , para. 7.696.  
82 Panel Report, US – COOL , para. 7.851.  
83 Panama's First Written Submission (Article 21.5 – Colombia), para. 88.  
84 Original Appellate Body Report, para. 6 .20. 
85 Appellate Body Report, EC – Seal Products , para. 5.169 (referring to Panel Report, US – Gambling , 
para. 6.455).  
86 Appellate Body Report, US – Gambling , para. 299.  
87 Panel Report, China – Publications and Audiovisual Products, para. 7.759.  
88 Appellate Body Report, EC – Seal Products , para. 5.119.  
89 Original Panel Report, para. 7.339.  
90 Original Appellate Body Report, para. 6.23.  
91 Original Appellate Body Report, para. 6.22.  
92 Original Panel Report, para. 7.339; and Original Appellate Body Repo rt, para. 5.105.  WT/DS461/RW/Add.1  
 
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  set out in the Dec ree's preamble.93 It explains that trade transactions are being utilized by criminal 
organizations to launder money, finance terrorism, and generate unfair competition.   The Decree 
further explains that one of the modalities used by criminal organizations consists of using practices 
involving customs fraud.  It adds that the footwear and apparel sectors have been significantly 
affected by money laundering and other illicit transactions and that, consequently, it is necessary to 
implement new mechanisms to co ntrol and counter this scourge.  The minutes of the Triple A 
Committee confirm that one of the principal policy objectives of Decree 1745 is to fight money 
laundering.94  
67. In short, Decree 1745 is a measure adopted to protect public morals within the mea ning of 
Article XX(a) of the GATT 1994.  
2. The customs bond and the customs formalities in Decree 1745 are necessary  
68. The examination of "necessity " involves, in each case, a process of "weighing and balancing " 
the following factors: (i) the extent to w hich the measure sought to be justified contributes to the 
realization of the end pursued; (ii) the relative importance of the societal interest or values that the 
measure is intended to protect; and (iii) the trade -restrictiveness of the challenged measur e.95 After 
this preliminary analysis of necessity, this result must be confirmed by comparing the measure with 
its possible alternatives.96 However, each Member has the right to determine the level of protection 
they consider appropriate, and the alternati ve suggested must be capable of achieving this level of 
protection.97 
69. First, as to the importance of the interests protected, the objective of combating money 
laundering reflects societal interests that are vital and important in the highest degree.98 Money 
laundering is linked to drug trafficking and the financing of criminal groups, so that the measures 
also seek to reduce the operational capacity of drug traffickers and criminal groups.  The importance 
of the fight against money laundering as an objec tive of Colombian public policy is reflected in 
statements made by high -ranking officials.99 Also, it has been recognized in other disputes that 
measures which address concerns relating to money laundering and organized crime protect values 
and interests that could be considered vital and important in the highest degree.100 
70. Second, as to the contribution, the measures are capable of making a material contribution to 
combating money laundering, because they reduce the incentives for using imports of app arel and 
footwear at artificially low prices for money laundering purposes.  The customs bond ensures the 
payment of duties and any fines or penalties on the importation of the goods, discourages under -
invoicing, and allows the collection of fines in those instances.   
71. The customs formalities provide information that permits customs authorities to undertake a 
more informed risk assessment, ensure that there is a legitimate relationship between the importer 
and the exporter, and also ensure that the suppli er declared by the importer is actually the entity 
that supplied it with the products being imported.  The certificate of existence and incorporation 
issued by the relevant national authority of the exporter 's country helps confirm that the exporting 
compan y actually exists, and it not merely a shell company.  The information of the distributors in 
Colombia allows the DIAN to assess whether the commercial activities claimed by the importer are 
real and not fictitious, and to keep a record  of the shelter compa nies, people, partners, fiscal 
supervisors, and persons participating in the scheme.  The signed statement by the legal 
representative of the importer certifying the accuracy of the commercial information provided to the 
DIAN, which acknowledges the legal r ight of the DIAN to send the customs information to other 
relevant governmental agencies, helps to identify precisely  the person in charge of the importation 
                                                
93 Exhibit PAN -2. 
94 Exhibit COL -4. 
95 Appellate Body Report, India – Solar Cells , para. 5.59; and Origina l Appellate Body Report, 
paras.  5.71-5.73 and 5.77.  
96 Panel Report, EC – Seal Products , para. 7.630.  
97 Panel Report, US – Gambling , para. 6.465; and Appellate Body Report, EC – Seal Products , 
para. 5.279.  
98 Original Appellate Body Report, para. 5.105.  
99 National Planning Department, National Development Plan (2010 -2014) (extracts) (Original Exhibit 
COL-33); and National Council for  Economic and Social Policy, National Policy against Money Laundering and 
the Financing of Terrorism, 18 December 2013 (Original Exhibit COL -19). 
100 See Panel Report, US – Gambling . WT/DS461/RW/Add.1  
 
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  and can be held as evidence of its participation in the operation.  Some of these documents should 
be apostilled or legalized and have an official translation in Spanish.  The purpose of the 
legalized/apostilled documents is to confirm that they are indeed issued by the relevant authority of 
the exporting country.    
72. Panama argues that there is an alt ernative instrument that could also contribute to the 
fulfillment  of these objectives.101 As a matter of logic, the existence of an alternative measure that 
can contribute to the fulfillment  of a particular objective  does not in itself mean that the challe nged 
measure is not apt to make a material contribution to the fulfillment  of the same objective.  Also, the 
assessment of contribution under the necessity test articulated by the Appellate Body evaluates the 
aptness of challenged measure and does not call for a comparison of its contribution with another 
measure.102 Thus, in this particular context, that another measure can contribute to the objective 
does not exclude that the customs bond and customs formalities in Decree 1745 contribute to the 
fulfillment  of the same objective.   
73. Colombia also recalls that the Appellate Body has clearly rejected a requirement to quantify 
the contribution of the challenged measures, explaining that the analysis of contribution "can be 
done in either quantitative or in qu alitative terms ".103 The Appellate Body has additionally observed 
that a measure may be justified under Article XX even if its contribution "is not immediately 
observable ".104 Therefore, Panama 's attempt to require quantification of the contribution of the  
measure to the fulfillment  of the objectives pursued is misplaced.105 
74. Third, the measures are not trade restrictive in any way.  Neither of the measures restricts the 
quantity of imports and therefore do not restrict trade.  The measures do not impose a ny quantitative 
limits on imports, and are carefully calibrated to affect imports likely to be used for money 
laundering.  Furthermore, the customs bond is a contingent liability.  Thus, to the extent it is found 
to have any restrictive effects, those would be significantly lower than requiring the payment of 
duties.  
75. Panama 's allegations on the trade restrictiveness of the measure are unpersuasive.  In the 
context of the customs bond, Panama merely lists features of the measures, but provides no analysis 
of how each of these features gives rise to trade restrictiveness.106 Furthermore, Panama fails to 
make any link between these features and its conclusion that the customs bond is "highly trade 
restrictive ".107 In the context of the customs formalities, Panama 's main complaint is that the 
measure encourages importers to shift from artificially low priced goods to higher priced goods.108 
Rather than demonstrating that the regime is "highly trade restrictive "109, Panama 's own assertion 
recognizes that, whil e the importer may vary the composition of the apparel and footwear goods it 
purchases, it can and will still import goods to Colombia.  This scenario cannot reasonably be 
described as "highly trade restrictive ".   
76. As an alternative less restrictive mea sure, Panama refers to a customs bond required after a 
customs controversy has arisen, which Panama claims makes an equivalent contribution.110 
However, Panama has not demonstrated that the "valuation controversy " bond would make an 
equivalent contribution  to reducing undervaluation and combatting money laundering.  The 
effectiveness of Panama 's proposal is limited by the resources of the customs administration and 
the possibility of human error.  These factors create a risk that irregular transactions will n ot be 
detected and therefore the undervalued imports being used for money laundering purposes will be 
entered without the posting of a customs bond.  This risk is not present in the case of the customs 
bond in Decree 1745 because it applies to all import tr ansactions of the covered products.  
                                                
101 Panama's Second Written Submission (Article 21.5 – Panama), paras. 20 7, 208, 227, and 251.  
102 Appellate Body Report, Brazil – Retreaded Tyres , para. 156.  
103 Appellate Body Report, Brazil – Retreaded Tyres , para. 146.  
104 Appellate Body Report, Brazil – Retreaded Tyres , para. 151.  
105 Panama's Second Written Submission (Article 21.5 – Panama), para. 209 (referring to Original 
Appellate Body Report, para. 5.110).  
106 Panama's Second Written Submission (Article 21.5 – Panama), para. 213.  
107 Panama's Second Written Submission (Article 21.5 – Panama), para. 214.  
108 Panama' s Second Written Submission (Article 21.5 – Panama), para. 239.  
109 Panama's Second Written Submission (Article 21.5 – Panama), para. 239.  
110 Panama's Second Written Submission (Article 21.5 – Panama), paras. 215 -219. WT/DS461/RW/Add.1  
 
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  77. Panama also proposes using the invoice as an alternative to the supplier 's sales certificate.111 
This alternative also does not make an equivalent contribution because it does not address the risk 
that the informatio n in the invoice may be inaccurate.112 Manipulation of the information provided 
in the invoice is one of the practices used in trade -based money laundering.  The supplier 's sales 
certificate provides a means to confirm the information provided in the invoic e. The other alternative 
measures proposed by Panama have an element in common, which is that the information would be 
supplied after the withdrawal of the merchandise.113 Thus, Panama does not question the value of 
the information itself, but rather the m oment when it is submitted.  However, the submission of this 
information after withdrawal of the merchandise does not address the problem posed by shell 
companies, which are a technique used for trade -based money -laundering.114 The use of shell 
companies al lows criminal groups to evade the customs authorities ' efforts to investigate and 
prosecute suspicious transactions after the merchandise has been withdrawn from customs.  In such 
situations, the criminal groups will use a different shell company for subseq uent imports.  In sum, 
the alternative proposed by Panama does not make an equivalent contribution to the policy 
objectives pursued by Colombia.  
78. For all these reasons, it is clear that both the customs bond and the special import regime are 
necessary to  protect public morals in the meaning of Article XX(a).  
B. The customs bond and special import regime are measures necessary to 
secure compliance with GATT -consistent laws and regulations  
79. Article XX(d) provides a justification for measures that are necessary to secure compliance 
with laws or regulations which are not inconsistent with the provisions of the GATT 1994.  A measure 
can be said to secure compliance with laws or regulations when its design reveals that it secures 
compliance with specific ru les, obligations, or requirements under such laws or regulations, even if 
the measure cannot be guaranteed to achieve such result with absolute certainty.115 The necessity 
test under Article XX(d) proceeds along similar lines as the necessity test under Ar ticle XX(a).  
80. Decree 1745 combats money laundering and therefore seeks to secure compliance with 
Article  323 of Colombia 's Criminal Code, which addresses money laundering.  In the original 
proceedings the Appellate Body recognized the link between underv aluation and money laundering 
in Colombia .116 The Appellate Body also recalled the original panel 's finding that "there is no reason 
to consider that Article 323 of the Colombian Criminal Code is itself inconsistent with the provisions 
of the GATT 1994. "117  
81. The customs bond and special import regime are also measures to secure compliance with 
Colombia 's customs laws and regulations, including Decrees 390 of 2016118 and 2685 of 1999.119 As 
indicated in Article 1 of the Decree, its objective is to rein force Colombia 's risk management and 
customs control system.120 Colombia 's customs laws and regul ations are consistent with 
GATT  1994.121 
82. Colombia has established that Decree 1745 makes a contribution to the fight against money 
laundering, that the fig ht against money laundering involves vital and important interests of the 
highest degree in Colombia122, and that the customs bond and formalities established under 
Decree  1745 do not have restrictive effects of trade.  In the circumstances, Decree 1745 mus t be 
found to be a measure necessary to secure compliance with Article 323 of the Colombian Criminal 
Code.  In addition, by guaranteeing the payment of the customs duties, taxes and possible penalties, 
                                                
111 Panama's Second Written Submissio n (Article 21.5 – Panama), paras. 247 and 251.  
112 Original Exhibit COL -11. 
113 Panama's Second Written Submission (Article 21.5 – Panama), paras. 248 -251. 
114 Original Exhibit COL -11. 
115 Appellate Body Report, Argentina – Financial Services , para. 6.203.  
116 Original Appellate Body Report, para. 5.145.  
117 Original Appellate Body Report, para. 5.139 (referring to Original Panel Report, para. 7.512).  
118 Exhibit PAN -4. 
119 Exhibit PAN -3. 
120 Exhibit PAN -2. 
121 Appellate Body Report, US – Carbon Steel , para. 157; see also Panel Report, Colombia – Ports of 
Entry , paras. 7.531 -7.532.  
122 Original Appellate Body Report, para. 5.105.  WT/DS461/RW/Add.1  
 
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  the customs bond contributes to guaranteeing customs ob ligations.123 The customs formalities 
provide information to the customs authority that allows it to detect and control transactions that 
do not comply with Colombia 's customs laws and regulations.  
83. Panama has not provided any rebuttal arguments or evid ence under subparagraph (d) of the 
Article XX and, consequently, the Panel should find that the customs bond and customs formalities 
in Decree 1745 are justified under Article XX(d) of the GATT 1994.  
C. The customs bond and special import regime are compat ible with the 
chapeau of Article XX of the GATT 1994  
84. The chapeau of Article XX requires that measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where the same 
conditions pr evail, or a disguised restriction on international trade.  Whether discrimination is 
arbitrary or unjustifiable, however, depends on the cause or rationale of the discrimination, not on 
the effects of the discrimination.124 The existence of a "disguised res triction on international trade " 
might be derived where a restriction on international trade, arising in the application of a measure 
provisionally justified under a specific paragraph of Article XX, would lead to that exception being 
abused or illegitimat ely used.125  
85. The customs bond and the special import regime comply with the chapeau of Article XX of the 
GATT 1994, because they are not applied in a manner which constitutes a means of arbitrary or 
unjustifiable discrimination or a disguised restrict ion on trade.  
86. The customs bond and customs formalities established in Decree 1745 are applicable to 
imports from all origins.  Moreover, customs bonds and customs formalities are legitimate 
instruments that are permitted under the GATT 1994 and the Agr eement on Trade Facilitation.  
Furthermore, there is nothing concealed or unannounced about the customs bond and customs 
formalities.  Both the customs and the customs formalities are set out in a decree that was published 
in Colombia 's Diario Oficial .126 Therefore, the customs bond and the customs formalities established 
in Decree 1745 are not "disguised restrictions " for purposes of the chapeau of  Article  XX of the 
GATT  1994.  
87. In sum, the customs bond and customs formalities in Decree 1745 are consistent  with the 
chapeau of Article XX of the GATT 1994.  
IX. CONCLUSION  
88. Colombia requests that the Article 21.5 Panels find that Colombia has implemented the 
recommendations and rulings of the DSB to bring its measures into conformity with its o bligations 
under the GATT 1994.  
                                                
123 Panel Report, US – Certain EC Products , para. 6.41.  
124 Appellate Body Report, Brazil – Retreaded Tyres , paras. 226 –228. 
125 Panel Report, Brazil – Retreaded Tyres , para. 7.320.  
126 Exhibits COL -12 and COL -13. WT/DS461/RW/Add.1  
 
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  ANNEX B -2 
INTEGRATED EXECUTIVE SUMMARY OF PANAMA  
I. INTRODUCTION  
1. More than a decade has passed since Panama called on Colombia to comply with its obligations 
under the agreements of the World Trade Organization (WTO) and cease causing impediments to 
trade. Not only has Colombia failed to heed these requests; it has continued exploring new subtle 
ways of hindering the international import trade. Panama considers this to be unacceptable and asks 
the Panels to find once again that Colombia is openly breaching its obligations to this international 
organization and that they issue recommendations and rulings  on the inconsistency with WTO l aw 
of the specific bond and the special import regime imposed by Decrees Nos.  1745 and 2218.  
2. The picture of compliance presented by Colombia in this dispute is incomplete. From a factual 
standpoint, Colombia refers to a tariff shift as the only measure of compliance, whereas it is clear 
that there are other Colombian compliance -related measures forming a complex system of customs 
control to restrict imports below certain thresholds. From the standpoint of the policies that are 
involved, Colombia alleges that this matter concerns its intention to combat underinvoicing and 
money launde ring. However, it submits no item of evidence that the imports at issue have been 
condemned by judicial or administrative authorities as acts involving underinvoicing and the offence 
of money laundering. What Colombia fails to mention is that the establish ment and maintenance of 
the measures at issue are underpinned by purposes of industrial protection, promotion of 
competitiveness, protection of jobs and policy coordination.  
3. The regulatory regime provided for explicitly and organically in Colombian legi slation is a 
regime that represents a major logistical challenge, expenditure of time and money, reputational 
and risk -management impact, ex -post control activities and possible criminal investigations in 
respect of money laundering and customs fraud.1 
4. Panama considers that the special import regime is inconsistent with Articles VIII:3, X:3(a) 
and XI:1 of the General Agreement on Tariffs and Trade (the GATT 1994), and Articles 1, 2, 3, 5, 6 
and 7 o f the Customs Valuation Agreement (CVA). Panama also cons iders that the specific bond 
provided for in that regime is inconsistent with Articles X:3(a) and XI:1 of the GATT, and with 
Article  13 of the Customs Valuation Agreement. Panama observes that both these claims and the 
changes in regulatory instruments und er the new Decrees No.  1786 and No.  2218, are duly covered 
by the collective terms of reference of these Panels. Panama is of the view that none of these 
measures is justified by Articles XX(a) and XX(d) of the GATT.  
II. THE MEASURES CONTAINED IN DECREES N O. 1745 AND NO . 2218 AND PANAMA'S 
CLAIMS ARE COVERED BY THE PANELS' TERMS OF REFERENCE  
5. Colombia has introduced regulatory changes affecting the already precarious competitive 
status of imports in the clothing and footwear sectors, to which the sectors o f textiles, fibres and 
yarns ("imports") have now also been added. On 27  December  2017, Colombia issue d 
Decree  No. 2218, replacing Decree No.  1745, as the legal basis of the specific bond and the special 
import regime.2 
6. Colombia seeks to shirk its oblig ations by arguing that Panama's clai ms are not covered by 
the Panel s' terms of reference. Colombia argues that the mandate of the Panel requested by 
Colombia is confined to the measures and provisions contained in its p anel request.3 Hence, 
according to Co lombia, the measures contained in Decree No.  1745 and Panama's claims under 
                                                
1 Customs Agency, Repremundo, "Arancel y medidas de importación confecciones y calzado – Dec. 1744 
y 1745, de 2016", 29  November  2017, Exhibit PAN -91. 
2 Panama notes that Decree No.  1744 has also recently been amended by Decree No.  1786 of 
2 Novembe r 2017 "partially amending the C ustoms Tariff" (Decree No.  1786), Exhibit PAN -45. 
3 Colombia's  rebuttal as complainant,  paras. 3 -14. WT/DS461/RW/Add.1  
 
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  Articles XI:1, X:3(a), VIII:3 of the GATT and Articles 1, 2, 3, 5, 6 and 7 of the Customs Valuation 
Agreement are not covered by the terms of reference of that Panel.4 
 
7. However,  Colombia's arguments are unconvincing. Panama considers that there is no 
procedural limitation preventing the panels from ruling on all the measures at issue and all the claims 
submitted by Panama. Both the measures contained in Decree No.  1745 and Panama 's claims under 
the aforementioned provisions form part of the terms of reference of the Panel requested by 
Colombia and the Panel requested by Panama, except for Article VIII of the GATT, which only forms 
part of the terms of reference of the Panel reques ted by Colombia.  
 
8.  As is well -known , the terms of reference of the Panel requested by Colombia are set out in 
its request for the establishment of a compliance panel, document WT/DS461/17. This document, 
which contains the matter  referred to the DSB by Colombia, includes the ad valorem  tariff of 
Decree  No. 1744, Article II of the GATT, as well as "[Panama's] concerns regarding Colombia's 
compliance with the DSB's recommendations and rulings", in particular, [Panama's] 
[dis]agree[ment] that Decree 1744 [… ] is consistent with the covered agreements and brings the 
compound tariff into conformity with the GATT 1994".5 These three issues, therefore, including 
Panama's disagreement, form part of the "matter" that has been referred to the Panel requested by 
Colombia, and fall within the terms of reference of that Panel. The mandate foreseen by Article  11 
of the DSU in order for the Panel to make an "objective assessment of the matter" implies that the 
Panel requested by Colombia must, at the very least, determine  the nature of Panama's 
disagreement, and verify whether it is well -founded.  
 
9. Panama has complied with the requirement to give explicit expression to that disagreement 
in its respective submissions  and to enable the Panel requested by Colombia to discharge its 
functions. As is well -known, Panama's position which gave rise to this disagreement is that the 
differential ad valorem  tariff under Decree No.  1744 is not the only compliance measure, but tha t 
there are also the measures contained in Decree No.  1745, and that these measures are inconsistent 
with the GATT and the Customs Valuation Agreement for numerous reasons, as explained in its 
submission s as both respondent and complainant.  
 
10. Panama lik ewise recalls that the terms of reference of a compliance panel are determined in 
the light of Articles 6.2 and 21.5 of the DSU taken together.6 It is well -established that the 
requirements of DSU Article 6.2 must be interpreted in accordance with the scop e and the function 
of the compliance proceedings7, and that t his function is one of examining fully the "consistency with 
a covered agreement " of the "measures taken to comply" with the recommendations and rulings of 
the DSB so as to ensure real and effect ive compliance.8 
 
11. It is for this reason that the compliance panel requested by Colombia should examine the 
compliance measures fully, that is, both the declared compliance measures and those measures that 
are not declared but which have a particularly close relationship or close nexus, in terms of timing, 
nature and effects , to the declared compliance measure and the recommendations and rulings of 
the DSB in accordance with the Appellate Body's jurisprudence on the close nexus .9 Panama sees 
no logical o r legal impediment to prevent these jurisprudential criteria from being applied in this 
case. 
 
12. In its previous submissions, Panama has demonstrated that the specific bond and the special 
import regime are "undeclared measures" with a particularly close  relationship to Decree No  1744, 
in terms of timing, nature and effects, and to the recommendations and rulings of the DSB.10 
Accordingly, all these measures must be considered as compliance measures duly covered by the 
terms of reference of the Panel reque sted by Colombia. It should be noted that the regulatory 
changes recently adopted by Colombia by means of Decree No.  2218 do not affect the terms of 
                                                
4 Ibid., paras. 3 -14. 
5 Colombia's compl iance panel  request , p. 2 and footnote 7.  
6 Panel Report, Australia – Salmon  (Article 21.5 – Canada) , para. 7.10 referring to para. 4 of the 
preliminary ruling in respect of its terms of reference.  
7 Appellate Body R eport, US – Zeroing (Article 21.5 – Japan) , para. 1.25.  
8 Appellate Body R eport, Canada – Aircraft (Article 21.5 – Brazil) , para. 41.  
9 Appellate Body R eport, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77; US – Zeroing (EC) 
(Article 21.5 – EC), para. 204.  
10 See Panama's first written submission as respondent, paras. 15 -48; Panama's rebuttal as 
complainant, paras. 6 -57 and Panama's rebuttal as respondent, paras. 37 -134. WT/DS461/RW/Add.1  
 
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  reference of the Panel requested by Colombia. Decree No.  2218 simply replaces Decree  No. 1745 
without chang ing the intrinsic  nature of the compliance measures as customs controls. It has to be 
borne in mind that it is wrong to say that Decree No.  2218 is a new "measure"; it is simply a new 
"normative act"11 which extends the validity of existing measures.  
 
13. However, in demonstrating that Colombia's compliance measure is broader than the declared 
measure, it is only to be expected that concerns pertaining to compliance other than those raised in 
the text of Colombia's panel request would arise. Thus, with respe ct to all the controls, requirements 
and conditions of the special import regime, Panama has serious concerns regarding compliance 
under Articles XI:1, X:3(a), and XIII:3 of the GATT; and Articles 1, 2, 3, 5 and 7 of the 
Customs  Valuation Agreement. These are not new concerns and the Colombia Panel can testify to 
their existence as early as the first occasion used by Panama to give its views as respondent, i.e. in 
its first written submission as respondent, on 29  November  2017.12 
 
14. Such being the case, it  is logical, without there being any contrary  legal impediment in the 
DSU, that issues of compliance concerning undeclared measures should be  covered by the mandate 
of the P anel requested by Colombia. In other words, and without prejudice to the fact that these 
issues form part of the "matter" referred to in Colombia's panel request as such, it may be asked 
what would be the point of accepting that certain undeclared measures form part of a panel's terms 
of reference in order subsequently to reject various compliance issues stemming from those same 
measures.  
 
15. Furthermore, Panama considers that such a contrived approach would not help the compliance 
Panel requested by Colombia to relieve itself of its obligations under Article 11 of the DSU, inas much 
as it would not be able to evaluate fully the matter of compliance by Colombia.13 An objective and 
full assessment of compliance could not be made if the Panel were unable to assess the compliance 
of the undeclared measures with WTO provisions other th an Article II of the GATT. Such an 
assessment would be based on an incomplete and even skewed or biased framework, as it would 
have been defined exclusively by one of the parties to the dispute. In addition, an analysis of this 
nature would run counter to achieving a "satisfactory settlement " of the dispute in accordance with 
Article 3.4 of the DSU, and to achieving a "prompt settlement" and " prompt compliance " in 
accordance with Articles 3.3 and 21.1 of the DSU.14 
 
16. In conclusion, Panama has no doubt that the measures contained in Decree No.  1745 and its 
claims under Articles XI:1, X:3(a), and XIII:3 of the GATT, as well a s under Articles 1, 2, 3, 5 and  7 
of the Customs Valuation Agreement are duly covered by the terms of reference of the Panel 
request ed by Colombia.  
 
17. Panama observes that, in any case, even if the Panel requested by Colombia were to consider 
that the measures under Decree No.  1745 do not form part of its terms of reference, these measures 
are nevertheless covered by the terms of ref erence of the Panel requested by Panama.15 In its panel 
request, Panama identified the specific bond and the special import regime as "the specific measures 
at issue".16 Similarly, even if the Panel requested by Colombia were to consider that Panama's claims  
under Articles X:3(a) and XI:1 of the GATT and under Articles 1, 2, 3, 5 and 7 of the 
Customs  Valuation Agreement do not form part of the terms of reference of the Panel requested by 
Colombia, they are covered by the terms of reference of the Panel reques ted by Panama.17 Thus, 
there is no procedural limitation preventing the P anels from ruling on the measures at issue and 
Panama's claims.  
 
18. That having been said, Panama observes that Article VIII of the GATT is not identified in its 
compliance panel request. At the time it submitted that request, the requirements of 
Decree  No. 1745 had been in force  for only a few months and, as a matter of good faith, Panama 
saw no cause for concern. Doubts began to arise, however, when regulatory changes were 
introduced  by Colombia. Already in its first submission as respondent, Panama placed on record its 
                                                
11 Panama's rebuttal as respondent, paras. 5 and 7.  
12 Panama's first submission as responde nt, para.  66(a).  
13 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), para. 41.  
14 Panel R eport, Australia – Salmon (Article 21.5 – Canada) , para. 7.10, referring to para. 27 of the 
preliminary ruling in respect of its terms of reference.  
15 WT/DS461/25 and WT/DS461/22.  
16 WT/DS461/22, paras. I.A. and I.D.  
17 WT/DS461/22, paras. II.A and II.D.  WT/DS461/RW/Add.1  
 
- 28 - 
 
  concern that the stringency of certain formalities represented a problem of comp liance by Colombia 
with Article  VIII:3 of the GATT.  
 
19. However, the concern became cr itical with the entry into force of Decree No.  2218 of 
27 December  2017, given the extreme nature of the le gal effects of that regulation. As will be 
recalled, as soon as Panama learned of that regulatory measure, it communicated that information 
to the Pa nels and underscored its claim under Article VIII:3 at the earliest available opportunity: its 
rebuttal as respondent.18 Panama could not have acted more quickly. In particular, Panama could 
not have included this claim in its compliance panel  request , beca use the legal consequence 
underpinning the claim was a novel element of Decree No.  2218 that had not existed at the time the 
request was made. Even under these circumstances, Panama commented that, in view of the 
importance of this claim and of due process , Panama was placing itself at the disposal of the Panels 
in order, if appropriate, to look at additional options that the Panels might consider relevant in order 
to ensure the due engagement of the parties on this matter.19 
 
20. Panama considers it importa nt to specify that, although the regulatory action of Colombia has 
not changed the measure intrinsically, it has introduced features into the measure which have 
obliged Panama to react in respect of steps to prevent Colombia from presenting an imprecise pi cture 
of compliance. Panama has addressed this (unexpected) situation in good faith and with a 
cooperative attitude, seeking to adapt its submissions and arguments to the volatile and changing 
regulatory environment prevailing in Colombia in respect of yar ns, textiles, apparel and footwear. 
Panama would be dismayed if, despite its actions being attuned to a moving target, its complaint 
concerning the violation of Article VIII:3 of the GATT were affected by procedural uncertainty 
regarding the precise limits  of the terms of reference of a compliance panel requested by the original  
respondent. Thus, a measure obviously inconsistent with WTO law would circumvent the authority 
and jurisdiction of these courts, leaving Panama with no other remedy than having to b ring a second 
Article 21.5 appeal under the Dispute Settlement Understanding, which would run counter to the 
system's objective of achieving  "prompt settlements ". 
 
21. In conclusion, for the reasons set forth above, Panama requests the Panels to reject 
Colombia's claim that the measures in dispute and the corresponding claims of Panama do not f orm 
part of the terms of reference of the Panels.  
 
III. THE SPECIFIC BOND AND THE SPECIAL REGIME ARE "COMPLIANCE MEASURES"  
 
22. For the purposes of these proceedings,  Colombia has conveniently decided to declare only the 
differential ad valorem  tariff of Decree No.  1744 as the compliance measure and to deny the 
relevance of the measures contained in Decree No.  1745, as currently reflected in Decree No.  2218. 
However, t his obvious attempt by Colombia to circumvent the compliance disciplines under Article 
21.5 of the DSU is at odds with the facts and with the Appellate Body's "close nexus" jurisprudence.  
 
23. The close nexus analysis has been used by numerous panels and t he Appellate Body in the 
past to determine that an undeclared measure has a close nexus  to the declared compliance 
measure, and is therefore duly covered by the mandate of the compliance panel.20 
 
24. Thus, Panama considers that an "undeclared measure" must  be considered as a "compliance 
measure" when it has a particularly close nexus  to the "declared measure". All the third  parties that 
submitted replies to the Panels' questions agree on this point.21 In practice, this nexus has been 
determined in terms of t iming, nature and effects as between the two measures, as well as between 
the measures themselves and the recommendations and rulings of the DSB.22 
 
                                                
18 Panama's rebuttal as respondent, paras. 9 -10, 423 -433. 
19 Panama's rebuttal as respondent, para. 12.  
20 See, inter alia, Australia – Salmon (Article 21.5 – Canada), US – Zeroing (EC) (Article 21.5 – EC), 
US – Upland Cotton.  
21 Ecuador's response to the Panels' question No.  6; United States' response to the Panels' question 
No. 1, para. 3; Japan's response to the Panels' question No.  1; European Union's respon se to the Panels' 
question No.  1, para. 1.  
22 Appellate Body R eports, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77; US – Zeroing 
(EC) (Article 21.5 – EC), para. 204.  WT/DS461/RW/Add.1  
 
- 29 - 
 
  25. The nexus is clear in this dispute.23 In particular:  
 
• Colombia explained during the Article 21.3(c) proce edings that its compliance measure 
would consist in the combined implementation of tariff measures and customs measures, 
in order to address money laundering issues; and that it would therefore resort to the 
publication of "two 'mutually supportive decrees ' as part of the implementation process";  
• Colombia has argued that the specific bond of Decree No.  1745 is essential for charging 
the tariffs of Decree No.  1744 in Exhibit COL -4; 
• the customs measures of Decree No.  1745 are a direct consequence of the 
recommendations and rulings of the DSB. Colombia has endeavoured to rectify the 
inconsistency with Article II of the GATT by means of Decree No.  1744, which imposes a 
purely ad valorem  differential tariff. At the same time, Colombia seeks to address the 
same policy objectives that supported its attempted justification of the compound tariff 
under Articles XX(a) and (d) of the GATT by means of Decree No.  1745, which imposes 
customs "cont rol" measures similar in effect to the specific component of the compound 
tariff in terms of its lack of sensitivity to price variations. As in the case of the compound 
tariff, Colombia, through these measures, limits access to the local market for importe d 
products (in this instance in a manner contrary to Article XI:1 of the GATT), and seeks to 
justify the inconsistency of these measures with Articles XX(a) and (d) of the GATT;  
• in terms of timing, Decrees Nos.  1744 and 1745 were adopted simultaneously on the same 
day following the adoption of the DSB recommendations;  
• in terms of nature, the measures under Decrees Nos.  1744 and 1745 are analogous to the 
compound tariff of Decree No.  456, in the sense that they include a price -sensitive 
component, the ad val orem tariff of Decree No.  1744, and a specific component that is 
not price -sensitive.  
 
                                                
23 See, for example, Panama's rebuttal as complain ant, paras. 6 -57; Panama's re buttal as respond ent, 
paras. 37 -134. WT/DS461/RW/Add.1  
 
- 30 - 
 
   
 
• In addition, the measures at issue are activated with regard to certain thresholds 
established by Colombia and have the same public policy objective as Decree No. 456; 
moreover, these measures apply to the same relevant products and were issued by the 
same entity during the same session;  
• Furthermore, on the same day that Decrees Nos.  1744 and 1745 were adopted, the 
Minister of Trade, Industry and Tourism of Colo mbia referred to these instruments 
collectively, stating that "the measures we have designed [Decrees Nos.  1744 and 1745] 
enable us to combat illegal phenomena efficiently, but at the same time we were careful 
not to adversely affect formal trade and to fu lly comply with the WTO mandate" 24; 
• It should be noted that these measures were designed "to achieve on an ongoing basis 
the policy objective pursued by the measures provided for in Decree 456 of 2014 and the 
amendments thereto" 25, and that "the adoption of the strategies" envisaged in both 
                                                
24 Exhibit PAN -46. 
25 Eighth preambular paragraph  of Decree No.  1745 (emphasis added). Similarly, the third preambular 
paragraph of Decree No.  1744 states that "taking into account the fact that the implementation period 
provided for in Article  5 of Decree 456 of 2014 , extended by Decrees 515 of 2016 and 1229 of 2016, expires 
on 1 November  2016, it is necessary to enforce the exception provided for  in Article 2, paragraph 2, 
of Law 1609 of 2013, in order to achieve on an o ngoing basis the policy objective pursued by this measure". 
(emphasis added).  
Decree No. 1745 (Decree No. 2218)
Presumption of unlawfulness below threshold
Specific charges Estimated costs
Specific bond US$1.29 -6.45/kg
(depending on heading)
Certificate of 
supplier’s existenceUS$30/shipment
Nexus analysis US$66.41/shipment
Translation of 
certificatesUS$61.20/shipment
Apostille/legalization US$20/shipment
Presence of importer 
or legal 
representativeUS$292.18 -
2.058.57/shipment
Requirement of time -limits and list of customers 
make the importation process unwieldyDecree No. 1744
Use of thresholds to apply tariffs
Differential ad valorem tariff 
(price sensitive)
15% (above threshold ) or 
35-40% (below threshold)Decree No. 456
Use of thresholds to apply tariff
Presumption of unlawfulness below the threshold
Ad valorem component
(price sensitive ) 
10%Specific component
(not price sensitive) 
US$5 or US$3 (above or below threshold)
US$5 or US$1.75 (above or below threshold)WT/DS461/RW/Add.1  
 
- 31 - 
 
  Decrees were adopted on the basis of the recommendation of the Inter -Institutional 
Commission against Smuggling at its special session on 24  August  201626; and,  
• In terms of effects, Decree No.  1745 perpetuates the restricti ve effect of the compound 
tariff by restricting imports of the relevant merchandise.  
26. Moreover, Panama considers that it would not be appropriate for the Panels to determine 
whether Colombia has complied with the recommendations and rulings of the DSB, without reference 
to the existence of Decree No. 1745 and its respective amendments.27 If the Panels were to work in 
this way, they would not be making an objective assessment of the facts as required by Article 11 
of the DSU, since they would ignore an ess ential element of the facts relevant to compliance, thereby 
failing to perform their duty of examining the compliance measures "in their totality".28 
27. Consequently, Panama considers that the measures challenged are "closely related" to the 
measure taken to comply and declared as such by Colombia, as well as to the recommendations and 
rulings of the DSB. In view of the foregoing, Panama reaffirms that the specific bond, as well as the 
special import regime, contained in Decree No.  1745, are "measures taken  to comply" within the 
meaning of Article 21.5 of the DSU.  
IV. THE SPECIFIC BOND AND THE SPECIAL IMPORT REGIME ARE RESTRICTIONS 
WITHIN THE MEANING OF ARTICLE XI:1 OF THE GATT  
 
A. THE SPEC IFIC BOND IS INCONSI STENT WITH ARTICLE XI:1 OF THE GATT 
 
28. The spec ific bond imposed by Decree No.  1745, and currently in force under Decree No.  2218, 
is inconsistent with Article XI:1 of the GATT. It is an indispensable condition for the importation of 
fibres, yarns, textiles, apparel and footwear under Decrees No.  1745,  and now No.  2218. This 
requirement has limited access to the Colombian market for such imports29, has impaired and 
nullified competitive opportunities for imported products and importers30, has affected the latter's 
investment plans, and has generated uncer tainty and significant transaction costs.31 At the outset, 
Colombia alleges that the specific bond, together with the other measures under Decree No.  1745, 
is designed to reduce incentives for importing apparel and footwear at "artificially low" prices32, 
which is an explicit acknowledgement that the bond modifies the conditions of competition for 
imports in order to exert a restrictive effect on the latter.  
 
29. The specific bond impedes access to the Colombian market for imports. Prior to 
Decree  No. 1745, t he prevailing regulatory conditions in Colombia, including the provisions of 
Decrees No.  258633, No. 492734, and No.  45635, allowed market access to Colombia for subject 
goods with the tariff as the sole barrier.36 Now, in addition to payment of the tariff, importers are 
required to obtain a specific bond and keep it in force for a period of three years.  
 
30. Obtainment of the specific bond depends on certain documentary requirements being met; on 
the asse ssment of the applicant's credit worthiness, including its credit history, and the amount 
requested; and on the approval of a credit quota under the criteria laid down by the entities 
                                                
26 Sixth p reambular paragraphs of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, 
respectively.  
27 Panel R eport, US  – Large Civil Aircraft (second complaint)(Article 21.5  – EU), para. 7.74.  
28 Appellate Body R eport, US  – Softwood Lumber  IV (Article 21.5  – Canada) para. 67 referring to 
Appellate Body R eport, US  – Shrimp (Article 21.5  – Malaysia) para. 87.  
29 Panama's first written submission as complainant, para. 40; Panama's  first written submission as 
respondent, para. 53; Panama's rebuttal as complainant, para. 98.  
30 Panama's first written submission as complainant, paras. 37 -39; Panama's first written submission as 
respondent, para. 54; Panama's rebuttal as complainant, pa ras. 71 -95. 
31 Panama's first written submission as complainant, para. 40; Panama's first written submission as 
respondent, para. 55; Panama's rebuttal as complainant, paras. 96 -104. 
32 Colombia's rebuttal as complainant, para. 119.  
33 Decree No.  2685, Exhibi t PAN -3. 
34 Colombian C ustoms Tariff. Exhibit PAN -1 (original  panel).  
35 Exhibit PAN -3 (original  panel).  
36 The tariff and the sales tax constitute the category of "customs taxes" under Colombian law. Article 1 
of Decree No.  2685, Exhibit PAN -3. WT/DS461/RW/Add.1  
 
- 32 - 
 
  concerned.37 It is not an automatic approval process. If the banking evaluator does not consider an 
applicant to be qualified, for whatever reasons, it will not obtain the specific bond, and will not 
therefore be able to import the products in question. Thus, the need to obtain the specific bond 
directly limits the capacity of importers t o import and in this way affects the access of imported 
products to the Colombian market.  
 
31. Panama understands that this bond is required in all cases, as there will always be a dispute 
regarding the value of imported products. Article 128(5) of Decree No. 2685 describes the valuation 
dispute as "the doubts raised during the physical or documentary customs inspection process with 
regard to the declared value of the imported goods, because this value is considered low according 
to DIAN r isk management system indicators".38 If the importer does not provide the specific bond 
required by Decree No.  2218, there can be no release, and hence no importation. Moreover, the fact 
that, on its face, the specific bond of Decree No.  2218 is meant to be covered by the sc ope of 
Article  13 of the Customs Valuation Agreement does not detract from its restrictive character. 
Rather, Colombia's use of this rule is a tacit acknowledgement that the specific bond constitutes a 
restriction which, if the conditions imposed by Articl e 13 of the Customs Valuation Agreement are 
fulfilled, would in Colombia's view be covered by this rule.  
 
32. The specific bond nullifies competitive and import opportunities for importers ineligible for a 
bank or insurance guarantee. Not all persons that could previously import the affected products by 
merely paying the tariff will have the same eligibility for b anking or insurance credit. Thus, the 
specific bond excludes ab initio  this category of importers for reasons unrelated to their import 
capacity.  
 
33. The facts support this assessment. In a context in which banks attach great value to low credit 
risk, and  where the Colombian Government announces that the transactions in question pose a  high 
risk of fraud and money laundering, it is not unlikely that the level of refusal of loan applications will 
be high, and that the only importe rs who qualify will be thos e that  already have an approved line of 
credit with the bank, or new importers with an impeccable credit history, a solid business track 
record and promising cash -flow prospects. Not all low -cost importers in Colombia, which usually 
import such products, w ould be in a p osition to satisfy these credit worthiness requirements, which 
are unrelated to  their mere import capacity. The remainder will not enjoy the right to import the 
products affected by the specific bond.  
 
34. The specific bond impairs competitive  import opportunities because it entails a substantial cost 
that limits imports. Importers' investment budget for the purchase of low -cost imports is reduced 
by the increase in import -related costs caused by the introduction of the specific bond. These cos ts 
have been duly documented by Panama. As was seen in Brazil – Retreaded Tyres39, the costs of the 
bond are of a magnitude such as to make it prohibitively expensive to enter the products subject to 
the decrees. The relative cost far exceeds the magnitude of Colombia's bound and applied tariffs of 
35% and 40 % ad valorem . There is no doubt that the imposition of a tariff, particularly a high tariff, 
may have a very restrictive effect on imports.40 Therefore, while it is reasonable to expect that an 
excessivel y high tariff will have a highly restrictive (or even prohibitive) effect on imports, a fortiori  
a measure that imposes a much more onerous economic burden on importers than a tariff equivalent 
to the bound tariff will have much greater restrictive effects  on imports.  
 
35. The specific bond imposes an unwarranted cost because there is no real need to cover customs 
or tax contingencies. The specific bond is a hollow requirement. A careful assessment of the 
operation of the import regime under Colombian law s hows that there are no major obligations 
justifying the requirement of the specific bond:  
 
• the customs taxes, including the tariff, have already been paid when the import declaration 
is submitted, so that they cannot be subject to coverage by the specific bond41, and if in 
any case there were a doubt about the customs value of the goods, there is a guarantee 
                                                
37 Panama's first written submission as complainant, paras. 37 and 40; Panama's first written 
submission as respondent, para. 55; Panama's rebuttal as complainant, paras. 96 -104. See also PAN -16 and 
PAN-23. 
38 Article 128(5) of De cree No.  2685, Exhibit PAN -3. (emphasis added)  
39 Panel Report, Brazil – Retreaded Tyres , para. 7.372.  
40 Panel Report, Colombia – Textiles , para. 7.441.  
41 Panama's rebuttal as complainant, para. 83.  WT/DS461/RW/Add.1  
 
- 33 - 
 
  mechanism under Colombian law which deals with this situation, so that the specific bond 
becomes superfluous or unnecessary42; 
• sanctions cannot be the su bject of guarantees unless an offence requiring imposition of 
monetary penalties or fines has been detected, as required by Article 7(3)(4) of the Trade 
Facilitation Agreement, or unless under Article 8 of Decree No.  390 a primary customs 
liability has to be insured.43 
36. The lack of substantiation becomes even more clear from the requirement of the specific bond 
in the case of importers which already hold a comprehensive guarantee . 
 
37. In addition, by virtue of its design, a specific bond covering a pre -established and fixed amount 
for each import cannot bear any relation to specific obligations for each operation. The criterion of 
200% coverage of the threshold price is arbitrary, is established on a theoretical basis, is unrelated 
to real values, and has  no capacity to provide equally valid coverage for each and every transaction 
involved. It is improbable that all transactions affected by the specific bond have the same 
characteristics with regard to the risk of non -compliance, such that the choice of a single number 
like 200 % to define the amount to be guaranteed would bear a close relationship to all of them.  
 
38. The specific bond affects predictability in the investment plans of importers, since it generates 
uncertainty at different levels. For import ers whose situation is uncertain vis-à-vis the financial 
system, the specific bond requirement introduces an element of uncertainty in their investment 
plans, because they do not know whether or not they will be eligible for credit with a financial 
institu tion, and whether they will eventually be able to import. Moreover, Colombia's continual and 
unexpected regulatory changes generate legal uncertainty regarding which products are affected by 
the Colombian measures and wh at are the specific requirements for  their importation. These 
uncertainties adversely affect importers' investment plans.  
 
39. In view of the foregoing, it would appear that importers have two options: not to import; or 
to change their investment plans and import goods in a higher market seg ment. The second option 
seems to have been the one chosen by importers of textiles and footwear following the introduction 
of the compound tariff, as is shown by Colombia's reply, inasmuch as virtually all imports have 
entered above threshold levels. Panam a considers that the introduction of the specific bond and its 
attendant costs involve a shift in imports towards those not restricted by this requirement but subject 
to higher costs. This means that the specific bond is a restrictive condition on the impo rtation of  the 
relevant products at competitive prices.  
 
40. Consequently, the specific bond requirement provided for in Article 7 of Decrees No.  1745 and 
No. 2218 is inconsistent with Article XI:1 of the GATT.  
 
B. THE SPECIAL IMPORT RE GIME IS INCONSISTENT  WITH ARTICLE XI:1  OF THE GATT 
 
41. The special import regime imposed by Decree No.  1745, and now in force under 
Decree  No. 2218, is in consistent with Article XI:1 of the GATT. This regime consists of a blend of 
requirements, reports, legal consequences  and, in general , disincentives which restrict imports 
priced at or below the thresholds of both decrees. The special import regime is presented as a set 
of "mechanisms to strengthen the customs risk management and control system in the face of 
possible situa tions involving customs fraud associated with imports" of products covered by each of 
the decrees.44 In practice, however, the se "mechanisms" have the effect  of dissuading importers 
from buying imported products at competitive prices, in flagrant violation of Article XI:1 of the GATT. 
Panama has given this the title "special import regime". However, in an environment closer to the 
political and indu strial level, both the G overnment itself and Colombian producers refer to it as the 
"customs ordeal".45 This is so because , in the view of those familiar with Colombian customs 
processes, this regime involves a major logistical challenge, costs in terms of time and money, a 
reputational and risk management impact, post-clearance controls and possible criminal 
                                                
42 Ibid, para. 84.  
43 Ibid., paras. 86 -87. 
44 Article 1 of Decree No.  1745, Exhibit PAN -2; Article 1 of Decree No.  2218, Exhibit PAN -43. 
45 Dinero, "El S.O.S de los empresarios para rescatar la industria de la confección", 18  January  2018, 
Exhibit PAN -90; Revista Industria y Comercio, "Los Retos del Comercio Exterior propuestos para el 2018", 
p. 36, Exhibit PAN -86. WT/DS461/RW/Add.1  
 
- 34 - 
 
  invest igations into money laundering and customs fraud.46 In particular, this regime operates in the 
following manner.  
 
42. Prior to importation , more than one month in advance, importers must produce a set of 
certificates and documents, requiring for their prepa ration the work o r cooperation of third parties, 
such as the foreign supplier, the authority that apostilles  or legalizes documents abroad, the official 
translator in Colombia, the customs broken  in Colombia, and even the distributors and other 
marketers w ho would purchase the goods after importation. Compliance with these documentary 
requirements entails costs, time -limits, formalities, legalizations, official translations and the good 
will of third parties involved. This documentation has to be submitted to the DIAN one month before 
the arrival of the goods in Colombia.  
 
43. However, in addition to the ex ante control, there is a control during  the import process ; where 
the self -declaration reflects a value not exceeding the thresholds, this value will be considered as 
"artificially low" by Colombia. This provides grounds for a customs inspection in the presence of an 
observer appointed and contracted by the industrial association concerned, which at any time may 
raise "fraud" alerts and submit "technical o pinions" and "recommendations" to the agent of the DIAN. 
Moreover, the presence of the importer itself or a legal representative is required in order – according 
to Colombia – to ensure "due process". This substantiation put forward by Colombia in one of i ts 
submissions is now understood to mean that Colombia envisages the presence of an employee of 
the competent national authority at  this inspection.  
 
44. In addition, importation at or below threshold level necessarily implies an internal report on 
the importer in the DIAN risk assessment system, which has a reputational impact for the import er 
in terms of future imports and exports. In order to withdraw the goods, the importer will have to 
post a specific bond with a bank or insurance company, and once the bond has been granted, provide  
it to the DIAN. As is well -known, an internal clearance of the relevant bank or insurer is required to 
obtain this specific bond, and keeping it up to date entails a significant cost.  
 
45. Finally, if all the necessary requirements were scrupulously satisfied, the goods would be 
released. However, in the event of non -compliance with the documentary or personal  attendance 
requirements at the time of importation, neither preshipment, nor the "correction" of errors, nor 
again the "legalization" of the goods, or their recovery would be feasible. This means that, once the 
legal time -limit established in the Customs Statute has elapsed, the goods must be placed at the 
disposal of the DIAN.  
 
46. As if this were not enough, after importation , the importer will have to maintain the specific 
bond for a period of three years. Apparently, it will also continue to be registered in Colombia's risk 
management system. The importer will be liable to inspection and verification with respect  to the 
information provided before importation, including its distribution and marketing chain, with the 
possibility of being subject to criminal investigation s by the P ublic Prosecutor's Office or the Financial 
Intelligence Unit.  
 
47. The "customs ordeal " is in fact a bureaucratic torment having the clear and unambiguous aim 
of discouraging imports in order to benefit a domestic industry which faces serious problems of 
competitiveness and productivity, and which lobbies vigorously on the Colombian politic al scene for 
government intervention in the economy.47 Some Colombian experts do not see this as the right 
way forward, and point out that "the future of the sector does not depend on the establishment or 
strengthening of protectionist measures".48 
 
48. The special import regime has been highly successful for the Colombian Government. In the 
footwear sector, the DIAN reports substantial reductions in "illegal" imports of footwear, considered 
as "unfair" competition for Colombian businesses. The reduction was from 20  million  to 1 million 
pairs in 2017. The Director of the DIAN states that "the good results are attributable to measures 
                                                
46 Customs Agency, Repremundo, "Arancel y medidas de importación confecciones y calzado – Dec. 
1744 y 1745, de 2016", 29  November  2017, Exhibit PAN -91. 
47 El País, "Textileros  salieron este martes a protestar por la crisis del sector", 3  October  2017, 
Exhibit  PAN-92; El País, "Anuncian medidas para proteger al sector textil", 18  October  2017, Exhibit PAN -93; 
El Nuevo Siglo, Bogotá, "Aranceles: tela para proteger confecciones", Bogotá, 3  October  2017, Exhibit PAN -87. 
48 Fenalco, "Incremento de aranceles podría agravar situación del sector de confecciones y calzado", 
Bogotá, 24  August  2017, Exhibit PAN -95. WT/DS461/RW/Add.1  
 
- 35 - 
 
  such as Decree 1745, which prevents the entry of footwear into the country at manifestly  low prices", 
adding that:  
 
 We must pro tect the footwear and leather goods sector, which generates a great deal 
of employment in the country. A year ago it was normal for the trade  association to 
state that more than 20  million pairs of footwear were entering the country at 
ridiculously low pri ces, of less than one or two dollars, and thanks to the measure 
adopted that number fell to less than 1  million pairs. […].49 
 
49. It is not surprising that the special import regime has been so successful in restricting imports. 
It is a regime that was con ceived, designed and structured precisely in order to limit conditions of 
access and competitive opportunities for imports on the Colombian market. The signals sent to 
importers have an intimidating effect for those that decide to import at prices equal to  or below the 
thresholds of Decrees No.  1745 and No.  2218. Thus, the special import regime, by its design, 
structure and architecture:  
 
• excludes certain importers from the import process at the outset (i.e. those not given 
credit approval by a bank or insu rance company to obtain the specific bond required by 
Article 7 of Decrees No.  1745 and No.  221850); 
• limits the capacity of importers to close transactions when they consider it appropriate to 
do so – it is impossible to purchase imported merchandise for ea rly delivery owing to the 
obligation framed in Article 4(1) to supply documents, and specify the port, quantity and 
price at least one month in advance of the arrival of the merchandise51; 
• limits the capacity of importers to close transactions with anyone t hey consider appropriate 
– it does not appear to be possible for the importer to diverge from the marketing chain 
reported to the DIAN as part of the requirements laid down by Article  4(1)52; 
• limits the capacity of importers to import with the frequency and  pace required by market 
conditions, owing to the time taken and the burdens generated by the procedures 
necessary for assembling the documentation required by Article 4(1)53; 
• imposes documentary requirements that are difficult to meet, either in terms of d irect 
costs (e.g. fees for official translations or legalizations), indirect costs linked to obtaining 
such documents (e.g. assessment of economic relationship for the "certification of 
intention to sell"54, or background check on the customer for the "decl aration by the 
customs broker")55, or logistical costs (Article 4.1)56; 
• ascribes a risk status to importers "that declare goods … at or below the threshold price 
[since] they must be reported to the Operational Analysis Management Subdirectorate of 
the [DIAN ] so that the information concerning such operations can be incorporated in the 
risk management system" (Article 8)57; 
• requires the presence of the importer, his legal representative or his agent (other than the 
customs broker) during the customs inspection  or valuation of the goods, with the 
attendant costs that this entails (Article 4.2)58; 
• authorizes the presence, together with the importer, of an import operations observer, 
who is a natural person appointed and paid by the local trade association59, who re ceives 
                                                
49 Vanguardia, "Se redujo en más del 90% el ingreso de calzado subfacturado e n Colombia", 
31 December  2017, Exhibit PAN -50. 
50 Decree s Nos. 1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
51 Idem.  
52 Idem.  
53 Idem.  
54 Article 4(1)(a) of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
55 Article 4(1)(d)  of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
56 Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
57 Idem.  
58 Idem.  
59 DIAN, "Fijan funciones para Observadores de Operaciones de Importación", Exhibit PAN -58. WT/DS461/RW/Add.1  
 
- 36 - 
 
  detailed information from the DIAN concerning the imports60 in order to "alert the customs 
authority"61, "closely monitor the process of inspection or valuation of the goods"62, issue 
"technical opinions, dealing with the tariff classification, descrip tion, identification, 
quantity, weight, value or other aspects of the products under investigation"63, and "make 
any recommendations he may deem [  ] appropriate [  ] to the inspector who carried out 
the process. These reports [  ] shall be submitted to the in spectors and in turn to the office 
of foreign trade, which shall serve as support for the  DIAN".64 
• prescribes a specific bond to cover customs obligations, including penalties and interest 
payments, the constitution and maintenance of which entail a cost (A rticle 7)65; 
• creates uncertainty among importers regarding the introduction of a restriction on ports 
of entry, given that Article 5 of Decree No.  1745 requires the DIAN to establish designated 
import locations, while Article 5 of Decree No.  2218 grants dis cretion ("may establish") for 
the establishment of customs controls upon entry, and expressly envisages the possibility 
of limiting the entry of imports66; 
• if the goods do not meet the requirements of Article 4, their reshipment may not be 
undertaken (Artic le 9 of Decree No.  2118), nor may they be recovered67 or legalized68 
(Article 10 of Decree No.  2218), and consequently, after the completion of a period of 
"legal abandonment", the goods may be disposed of by the DIAN.69 
50. Colombia itself has acknowledged that the purpose of these measures is to reduce inc entives 
so as to prevent importation  at prices equal to or below the thresholds70, i.e. to impose restrictive 
conditions in order to discourage imports. Consequently, the special import regime imposes a 
minimum import price scheme which is inconsistent with Article XI:1 of the GATT.  
 
V. FAILURE TO COMPLY WITH THE REQUIREMENTS OF DECREE NO. 2218 RESULTS IN 
A PENALTY INCONSISTENT WITH ARTICLE VIII:3 OF THE GATT  
 
51. Panama considers that, as a result of the combined  operation of Articles 4 and 9 and th e 
paragraph of Article 10 of  Decree No.  2218, the special import regime is patently  inconsistent with 
Article VIII:3 of the GATT. This provision is categorical and prohibits the imposition of substantial 
penalti es for  minor infringements. It will be recalled that, if the requirements of Decree No.  2218 
are not fulfilled, by virtue of Article 10 the goods will be apprehended, i.e. seized71; nor can they be 
legalized or recovered , by virtue of the paragraph of the s ame provision.72 Furthermore, if the 
non-compliance relates to the documentary requirements of Article 4, Article 9 provides that the 
importer may not reship its goods. In practical terms, a minor error in the context of compliance 
with the documentary requ irements of Article 4, for example, the presentation of an ordinary 
translation, instead of an official translation, or the omission of some general information which 
otherwise would be contained in another document, would necessarily result in the non -importability 
of the goods with no possibility of legalization, recovery or reshipment, so that after a certain period 
                                                
60 Resolution No.  000017 (22  March), regulating Article 6 of Decree No.  1745 of 2  November  2016, 
Exhibit PAN -59. 
61 Article 6 of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
62 Idem.  
63 Exhibit PAN -58. 
64 Idem.  
65 Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
66 Idem.  
67 According to Article 229 of Decree No.  390, "Goods of foreign origin, regarding which any customs 
obligation has not been satisfied, may be recovered by virtue of an initial  declaration of correction or 
modification, with or without payment of the recovery value. The customs declaration covering recovered 
goods does not determine their ownership, nor does it remedy the illicit acts involved in their ac quisition ." 
Exhibit PAN -4. 
68 According to Article 229, point 2.3.2, third paragraph, "Where reference is made in other regulations 
to legalization or declaration of legalization, this expression must be understood to refer to the recovery of 
goods using an initial customs declara tion or a declaration of correction or modification, in which a recovery 
value is assessed". Exhibit PAN -4. 
69 Article 211 of Decree No.  390, Exhibit PAN -4. 
70 Colombia's rebuttal as complainant, para. 73.  
71 See Articles 550, 561, 562 and 563 of Decree No.  390, Exhibit PAN -2. 
72 Article 229 and point 2.3.2 thereof, third paragraph, Exhibit PAN -4. WT/DS461/RW/Add.1  
 
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  of time laid down in Decrees No s. 2685 and  390 (Colombian Customs Statute), they would be kept 
at the disposal of the Colombian State. Obvio usly, this consequence stemming from the actual 
design, structure and architecture of the special import regime, in the context of Colombia's ordinary 
customs procedures, is a very substantial penal ty for a relatively minor offenc e in violation of Article 
VIII:3 of the GATT.73 
 
VI. THE SPECIFIC BOND AND THE SPECIAL IMPORT REGIME ARE NOT ADMINISTERED 
IN A  UNIFORM, IMPARTIAL AND REASONABLE MANNER IN ACCORDANCE WITH 
ARTICLE  X:3(A) OF THE GATT  
 
52. Panama also considers that Article 8 of Decree No.  390 is not administered in accordance with 
Article X:3(a) of the GATT.74 In addition, Panama challenges the administration of the risk 
management and customs control system, as provided for in Articles 493 and 486 of Decree No.  390, 
by means of the special import regime  under Article X:3(a) of the GATT.  
 
A. DECREES NO. 1745  AND NO. 2218  ADMINISTER ARTICLES 8, 493  AND 486  OF DECREE NO. 390 
 
53. Panama recalls that the term "administer" within the meaning of Article X:3(a) refers to 
"putting into practical effect" a legal instrument of the kind described in Article X:1.75 Decre e No. 390 
is Colombia's C ustoms Statue. It is therefore a "regulation of general application" covered by Article 
X:1 of the GATT. Article 1 of Decree No.  390 provides that this rule "regulates the lega l relations 
established between the customs administration and parties involved in the entry, retention, transfer 
and exit of goods." T hus, the C ustoms Statute establishes the guidelines governing the interaction 
between the "customs administration" and th e parties involved in the import and export of goods in 
Colombia. The manner in which the customs administration (DIAN) handles this interaction is a 
matter of ap plication or management of the C ustoms Statute.  
 
54. Decrees No.  1745 and No.  2218 administer Article 8 of Decree No.  390. In the context of the 
"general provisions" of the Customs Statute, Article 8 of Decree No.  390 establishes the so -called 
"bond" mechanism as "an obligation ancillary to the customs obligation, to enforce payment of duties 
and taxes, penalties and interest resulting from non -compliance with a customs obligation provided 
for in this Decree".  
 
55. The same rule does not specify the way in which the "bond" is to be "administered", but 
entrusts that function to the DIAN: "[t]he National Customs and Excise Directorate shall establish 
the type of bond that is to be posted  in accordance with the corresponding customs obligation" and 
"the special rules in force governing each of them are to be applied". Thus, any act establishing the 
"type of bond that is to be posted in accordance with" the relevant obligations is an act of 
"administration" of the Customs Statute.  
 
56. Article 9 of Decree No.  390 confirms  that the determination of the bond applicable to specific 
cases is an act of admini stration by ordering that "[a]ny bond … must have as its insurance -related 
purpose that of guaranteeing the payment of duties and taxes, penalties and any interest that may 
be due, as a consequence of non -compliance with the obligations and responsibilitie s set out [in the 
Customs Statute of Colombia]".76 
 
57. However, these decisions which , in normal circumstances , should be applied on a discretionary 
case-by-case basis by the DIAN are now taken a priori  by Decrees No.  1745 and No.  2218. Article 7 
of both d ecrees " puts into  practical effect" Article 8 of Decree No.  390. These special rules specify 
"the type of bond that is to be posted" in relation to the imports covered by these decrees to 
"guarantee the payment of duties and taxes, penalties, and any inter est that may be due, as a 
consequence  of non -compliance with the obligations and responsibilities set out [in the Customs 
Statute of Colombia]".77 Therefore, these rules necessarily give rise to the administration of a specific 
type of guarantee (among thos e provided for in the Customs Statute] in a specific type of 
                                                
73 Article 211 of Decree No.  390, Exhibit PAN -4. Panama's rebuttal as respondent, paras. 269, 338, 383, 
421-433. 
74 Panama's first written submission as respondent, par as. 76 -89. 
75 Appellate Body Report, EC – Selected Customs Matters , para. 224 and Panel Report, US – COOL , 
para. 7.821.  
76 Article 9 of Decree No.  390, Exhibit PAN -4. See also Article 8 of Decree No.  2685, Exhibit PAN -3. 
77 Articles 3 and 10 of Decree No.  1745; Articles 3 and 11 of Decree No.  2218, Exhibits PAN -2 and 
PAN-43, respectively.  WT/DS461/RW/Add.1  
 
- 38 - 
 
  circumstance. Consequently, Colombia's argument that Articles 7 of Decrees No.  1745 and No.  2218 
are not measures of "administration" covered by Article X:3(a) is incorrect.  
 
58. Decrees No.  1745 and No.  2218 administer Colombia's risk management system . This system 
is defined in Articles 493 and 486 of Decree No.  390. As previously observed, Decree No.  390 is the 
Customs Statute of Colombia and is therefore a "regulation of general application" u nder Article X:1 
of the GATT. Article 1 of Decrees No.  1745 and No.  2218, entit led "Purpose " provides that "this 
Decree establishes mechanisms to strengthen the risk management and customs control system in 
the face of possible [relevant] situations of cus toms fraud associated with imports".78 Consequently, 
the text of Decrees No.  1745 and No.  2218 itself makes it clear that their purpose is "to put into  
practical effect" the risk management and customs control system with regard to imports covered 
by the co rresponding decrees.79 
 
59. If the Panels were to consider that Decrees No.  1745 and No.  2218 are not acts "administering 
Article 8 and Articles 493 and 486 of Decree No.  390, this would mean that Decrees No.  1745 and 
No. 2218 impose a substantive requireme nt (i.e. posting o f a specific bond for relevant imports, as 
well as other requirements under the special import regime), and at the same time the specific 
parameters for its administration ). The fact that the substantive requirement and the parameters 
for its administration  are in the same instrument should not affect the applicability of Article X:3(a) 
to Decrees No.  1745 and No.  2218. Different characteristics of the specific bond may give rise to 
concerns of a different kind. Otherwise, WTO Members coul d easily evade their obligations under 
Article X:3(a) by combining the substantive characteristics and the parameters of administration  in 
the same instrument. Furthermore, Panama recalls that the applicat ion of Article XI:1 and 
Article  X:3(a) is not mutua lly exclusive.80 
 
B. THE SPECIFIC BOND AND  THE SPECIAL IMPORT REGIME NECESSARILY R ESULT IN AN ADMINIST RATION 
THAT IS NOT UNIFORM , IMPARTIAL AND REASONABLE IN ACCOR DANCE WITH ARTICLE X:3(A) OF THE 
GATT 
 
60. The compliance measures necessarily result in a non-uniform  administration inasmuch as they 
treat similarly situated goods differently.81 
 
• Both the specific bond – which is administered by Article 8 of the Customs Statute – and 
the special import regime – which is administered by the risk management system – apply 
only to imports covered by Decrees No.  1745 and No.  2218, but not to imports of other 
products "similarly situated" with regard to the problem of underinvoicing and money 
laundering according to Colombia, as is the case for spirits and cigarettes.82 
• We also note that the thresholds of Decrees No.  1745 and No.  2218 are established 
arbitrarily, on the basis of conversations between government officials and national trade 
associations.83 The setting of thresholds is very important, since they determine w hether 
or not the special import regime and the specific bond apply to imported goods. 
Furthermore, Colombia determines the thresholds on the basis of the four -digit tariff 
heading, despite being aware of the existence of multiple relevant products under e ach 
heading. Thus, Colombia applies the same treatment to products as dissimilar as men's or 
boys' suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and 
shorts, all of which have as their only common feature the fact of coming under 
heading  6203.84 
• Moreover, with respect to the specific bond of Decree No.  1745, Colombia determines the 
coverage of the bond on the basis of fixed parameters: the value of the relevant threshold 
                                                
78 Article 1 of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
79 Article 3 of Decrees No.  1745 and No.  2218, Exhib its PAN -2 and PAN -43, respectively.  
80 Panel R eport , Argentina – Hides and Leather , para. 11.58. See also paras. 11.35, 11.101, 12.1 
and 12.2. 
81 Panel R eport, US – Stainless Steel , para. 6.51.  
82 Panama's rebuttal as complainant, para 279; Panama's rebuttal as respondent, para. 312.  
83 Exhibit PAN -65. 
84 Panama's rebuttal as respondent, para. 351.  WT/DS461/RW/Add.1  
 
- 39 - 
 
  multiplied by 200%. The fact of applying fixed parameter s, ignoring the real values of 
goods below the thresholds, results by definition in a non -uniform administration.85 
• It would appear that Colombia seeks to release itself from any responsibility for the 
administration of the procedures for obtaining the spec ific bond by delegating the task of 
carrying out this administrative process to third parties. Panama considers that Colombia's 
failure to establish general criteria for third parties' compliance with the requirements for 
applying for a specific bond, and the considerations relevant to its approval, necessarily 
gives rise to a non -uniform administration of the process leading to obtainment of the 
specific bond.86  
61. Panama also considers that the compliance measures are necessaril y administered partially, 
since they are biased and based on prejudices.87 
• In particular, with regard to the special import regime, Panama considers that the powers 
granted to the "import operations observer" result in an unfair and biased administration 
of Colombia's risk managemen t system. The import operations observer is neither more 
nor less than the representative of the national producers' associations, i.e. those in direct 
competition with the imported goods. The national associations select, approve and hire a 
technical expe rt who is empowered by the Colombian State to generate alerts so that 
certain goods may be inspected, to be present during the customs inspection, to prepare 
technical opinions, and to put forward recommendations to the DIAN official responsible 
for inspec tion of the goods. Subsequently, the DIAN informs the Joint Commission, which 
includes the national associations, about the activities of the import operations observer. 
If the import operations observer were a government employee, there would be a clear 
conflict of interest. Obviously, an employee of the trade association would issue opinions 
and recommendations in favour of the association and detrimental to the imported goods. 
These opinions and recommendations form part of the "decision -making structure " of the 
DIAN and contribute to the final decisions concerning release of the merchandise.88 
• Apparently, the import operations observer would also not be subject to any liability if he 
were to use confidential information from the importers, including infor mation related to 
the importers' distribution and marketing chain, received in the context of the import 
process. Thus, Colombia apparently allows the import operations observer to share this 
information with his supervisor, the national producers' associa tion, the importer and the 
seller of imported goods. Failure to protect the confidential information of importers results 
in the partial administration of Colombia's risk management system.89 
• With regard to the administration resulting from the specific bon d, Panama considers that 
to take it for granted that the customs taxes and possible penalties will always be 
equivalent to 200% of the threshold price multiplied by the corresponding quantity of 
shipped goods is prejudicial and inequitable.90 
62. Similarly,  Panama considers that the compliance measures are not administered in a 
reasonable manner as they are n either  appropriate to the circumstances nor based on rationality.91 
 
• With regard to the administration of the risk management system, Panama notes that 
both Decree No.  1745 and Decree No.  2218 result in an administration that is not based 
on rationality. Under Decree No.  1745, goods not complying with the documentary 
requirements of Article 4 were seized, and the importers had to pay fines if they wished 
to recover and legalize their goods. This is inflexible and unreasonable. However, under 
Decree No.  2218, the importer does not have the option of legalizing the goods, or even 
of reshipping them to the supplier's country. After a period of time stipulated by the 
                                                
85 Panama's rebuttal as complainant, paras. 275 -278; Panama's rebuttal as respondent, 
paras.  314-315. 
86 Panama's rebuttal as respondent, paras. 330 -331, 390 -391. 
87 Panel Reports, China – Raw Materials , para. 7.694 (footnote s omitted).  
88 Panama's rebuttal as respondent, paras. 355 -368. 
89 Panama's rebuttal as respondent, paras. 369 -370. 
90 Panama's rebuttal as respondent, paras. 318 and 371.  
91 Panel R eports, China – Raw Ma terials , para. 7.696.  WT/DS461/RW/Add.1  
 
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  Customs Statute, the goods fall into legal abandonment and pass into the hands of the 
DIAN. This procedure defies reason, and clearly constitutes unreasonable administration.92 
• At the same time, the requirement to present certain documents results in  unreasonable 
administration of Colombia's risk management system. How can it be appropriate to the 
circumstances to request for each shipment the certification of the existence of the foreign 
supplier, with an officially apostilled or legalized translatio n, and why cannot copies of this 
certificate be accepted? While the first certificate could satisfy the purpose of confirming 
the existence of the supplier's enterprise, additional certificates serve no purpose and are 
therefore inappropriate to the circum stances. Moreover, Panama considers that the 
requirement to submit the "certification of intention to sell"93 is not reasonable. According 
to Colombia, this requirement fulfils the purpose of "ensuring that the supplier declared 
by the importer is really th e entity that supplied the imported goods".94 However, this 
purpose is already met by the sales invoices. Therefore, requiring the "certification of 
intention to sell"95 is inappropriate to the circumstances.96 
• With regard to the administration resulting from  the specific bond, Panama considers that 
it is unreasonable to require a specific bond when a comprehensive guarantee is available. 
If a comprehensive guarantee were not sufficient to cover the requirements of Decree 
No. 1745 or Decree No.  2218, the cover age of the specific bond should be equivalent to 
the amount that would not be covered by the comprehensive guarantee. However, 
Colombia requires the constitution of the specific bond in all cases without taking into 
account the coverage already provided by  the comprehensive guarantee.97 In addition, 
the guarantee under Decree No.  2218 continues requiring coverage that goes beyond that 
which is necessary to ensure compliance with the primary obligations, in some cases 
covering three times the value guaranteed .98 
• Lastly, by distancing itself from ordinary Colombian legislation, which prohibits importers 
from choosing which guarantee to provide in order to ensure payment of the definitive 
duties to which the goods may be liable, Colombia applies this requirement unreasonably. 
It would appear that entrusting the approval and granting of guarantees to third parties 
has the effect of creating an additional level of administrative bureaucracy which 
discourages importation of the relevant goods.99 
63. In view of the for egoing, Panama argues that the specific bond and the special import regime 
necessarily result in an administration that is not uniform , impartial and reasonable in accordance 
with Article X:3(a) of the GATT.  
 
VII. COLOMBIA HAS NOT DEMONSTRATED THAT THE SPECIFIC BOND AND THE SPECIAL 
REGIME ARE JUSTIFIED UNDER ARTICLES XX(A) AND XX(D) OF THE GATT  
 
64. Contrary to what is claimed by Colombia, Panama considers that neither the special import 
regime nor the specific bond are justified by Article XX(a) and Art icle XX(d) of the GATT. It would 
be frivolous to assert that the measures in question were designed solely to protect public morals 
and to ensure domestic compliance with the Colombian Criminal Code. Furthermore, Panama 
considers that Colombia has not demo nstrated that these measures are necessary to achieve its 
declared objectives of discouraging imports used for money laundering purposes. In fact, Colombia 
has not even identified the level of protection sought by these measures, and it is important to 
identify the level of protection of a measure in order even to consider its necessity.100 
 
65. The specific bond is not necessary for the protection of public morals under Article XX(a ). 
Colombia asserts that the specific bond ensures the payment of duties and any fines or penalties on 
the importation of the goods, since it discourages underinvoicing by allowing the collection of 
                                                
92 Panama's rebuttal as respondent, paras. 375 -387. 
93 Article 4(1)(a) of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
94 Colombia's written submission as respondent, para. 120.  
95 Article 4(1)(a) of Decrees No.  1745 and No.  2218, Exhibits PAN -2 and PAN -43, respectively.  
96 Panama's rebuttal as respondent, paras. 373 -374. 
97 Panama's rebuttal as respondent, paras. 320 -324. 
98 Panama's rebuttal as respondent, paras. 325 -328. 
99 Panama's rebuttal as respondent, paras. 332 -333. 
100 Japan's third -party submission, para. 6.  WT/DS461/RW/Add.1  
 
- 41 - 
 
  customs duties and fines when the goods are found to have been declared below their real value.101 
This mere assertion, without supporti ng evidence, cannot qualify as conclusive proof for the purpose 
of demonstrating "the extent of the measure's contribution" to the objective of Article  XX(a). Even 
if the assertion had any probative value, it is obvious that it also does not provide Colomb ia with the 
level of proof required by this same Panel (and endorsed by the Appellate Body) in the initial 
proceedings, to the effect that Colombia should specify "the amount or proportion of goods imported 
below the thresholds that are actually used for m oney laundering purposes, as well as the extent to 
which [the measure] acts as a disincentive to money laundering" in order to demonstrate "with 
sufficient clarity the  degree  of contribution made by [the measure] to the objective of combating 
money launder ing."102 
 
66. Moreover, a measure can only contribute  to achieving an objective if the objective has not yet 
been achieved, and the measure gives added value to the achievement of the objective. If that is 
not the case, the measure becomes a mere ornamental requirement with no real utility, in other 
words a hollow requirement for which there is no real necessity. Nor has Colombia shown why it is 
that a money laundering problem could not arise with imports priced above the thresholds. It is 
equally plausible that a money laundering problem could be caused by t he overvaluation of imports. 
What is more, the measures at issue have the paradoxical effect of discouraging  imports below  the 
thresholds, while at the same time encouraging  imports above  the thresholds. It should be borne in 
mind that money laundering in Colombia is also carried out by means of the overvaluation of 
imports.103 No similar controls are in place to ascertain that imports above the thresholds are not 
intended for these purposes. Consequently, given their effects on imports, and without prejudice  to 
the demonstration incumbent on Colombia, the contribution that the measures could make to the 
fight against money laundering is ambivalent, and possibly nil. Therefore, Colombia has failed to 
demonstrate the degree of contribution made by the specific bond to achieving the objective of 
discouraging imports used for money laundering.  
 
67. As regards the demonstration of the degree of restrictiveness of the specific bond on 
international trade, Colombia seeks to demonstrate that the measures challenged, i ncluding the 
specific bond, are not trade restrictive in any way.104 Colombia asserts that the measures do not 
restrict the quantity of imports and therefore do not restrict trade.105 However, as is well -known, a 
measure that does not impose quantitative limit s on imports can nevertheless limit trade in a manner 
inconsistent with Article XI:1 of the GATT.106 Colombia also says that the measures are carefully 
calibrated to affect imports likely to be used for money laundering.107 There is no evidence 
whatsoever of s uch careful calibration. The measures penalize all imports priced at or below the 
thresholds, regardless of whether or not they can be used for money laundering. Colombia also 
argues that the specific bond is a contingent liability.108 This mere assertion de monstrates nothing. 
Execution of the bond is dependent on circumstances, and in that sense it is "contingent". However, 
its monthly cost (as well as all the other costs associated with constitution and paperwork) are 
"actual liabilities" and tangible. Ther efore, the assertion is factually open to dispute.  
 
68. Moreover, the special import regime is also not necessary to protect public morals under 
Article XX(a ). Colombia asserts that it is necessary because it provides information that permits the 
customs a uthorities to undertake a more informed risk assessment.109 However, Colombia again 
bases itself on general and vague explanations, without reference to evidence, in order to seek to 
substantiate the "degree of contribution" of the measure to the objective o f Article XX(a). None of 
these assertions meets the applicable standard for Colombia.110 Additionally, Colombia addresses its 
obligation to demonstrate the degree of contribution as if the measure consisted solely of some of 
the documentary requirements unde r Article 4.1 of Decrees No. 1745 and No.  2218. Colombia offers 
no demonstration of the degree of contribution of other elements of the special import regime, such 
as: 
 
                                                
101 Colombia's rebuttal as complainant, para. 127.  
102 Appellate Body Report, Colombia – Textiles , para. 5.110.  
103 See Exhibit COL -10 in the proceedings before the original panel , p. 29.  
104 Colombia's rebuttal as complainant, para. 127. 
105 Idem.  
106 Appellate Body Report, Argentina – Import Measures , paras. 5.286, 5.288 and 6.3(c).  
107 Colombia's rebuttal as complainant, para. 126.  
108 Colombia's first written submission as respondent, para. 126.  
109 Colombia's rebuttal as complainant, paras. 121 -125. 
110 Appellate Body Report, Colombia – Textiles , para. 5.110.  WT/DS461/RW/Add.1  
 
- 42 - 
 
  • the requirement of a declaration signed by the legal representative of the Customs Agen cy, 
certifying that they have carried out a background check on the customer111; 
• the exclusion of certain importers from the import process (i.e. those that have no credit 
rating to obtain the specific bond)112; 
• the limitation of the capacity of importers to c lose transactions when  they deem it 
appropriate to do so because of the requirement to specify the port, quantity and price at 
least one month in advance of the arrival of the goods113; 
• the limitation of the capacity of importers to close transactions with anyone  they consider 
appropriate, owing to the marketing chain that has to be reported to the DIAN114; 
• the limitation of the capacity of importers to import with the frequency and pace required 
by the market, owing to the burdensome and costly procedures nece ssary for fulfilment 
of the documentary requirements115; 
• the requirement of the presence of the importer, his legal representative or his agent 
during the customs inspection or the valuation of the goods, with the attendant costs that 
this entails116; 
• the auth orization of the presence of an observer appointed and paid by the local industry 
to generate alerts to the customs authority and closely monitor the process of inspection 
and valuation of the goods117; 
• the uncertainty created among importers regarding the i ntroduction of a restriction on 
ports of entry and customs controls that limit the entry of imports118; 
• expropriation of the merchandise if it does not meet the requirements of Article 4.119 
69. Colombia has therefore failed to demonstrate the degree of contribution made by the special 
import regime to the achievement of the objective of discouraging imports used for money 
laundering.  
 
70. Regarding the demonstration of the degree of trade restrictiveness of the special import 
regime, Colombia's arguments  are the same as those with which it seeks to demonstrate the zero 
degree of restrictiveness of the specific bond. Colombia also mentions that, while importation below  
the thresholds is discouraged, the importer may continue importing  above  the thresholds,  and that, 
for this reason, this measure cannot be described as a highly restrictive measure.120 What Colombia 
fails to mention is that the special import regime challenged by Panama concerns the treatment of 
imports below  the thresholds, not above . Conseque ntly, the reference to the treatment of imports 
above  the threshold to justify treatment below  is inadequate. However, in asserting that importation 
below  the thresholds is not feasible, Colombia concedes that the restrictiveness is so high that it 
obliges  importers to modify their business and investment plans with a view to avoiding imports of 
goods below  the thresholds since this "option" would put them out of business. As a result, importers 
would be obliged to "adjust" the terms of their trade relation s with customary suppliers, thereby 
incurring higher transaction costs. In fact, therefore, Colombia imposes a de facto  prohibition on 
imports below  the thresholds. An import ban is "by design as trade -restrictive as can be".121 
 
                                                
111 Article 4(1)(d) of Decre e No. 1745, Exhibit  PAN-2. 
112 Decre es No. 1745 and No. 2218, Exhibits  PAN-2 and PAN-43, respectively . 
113 Idem.  
114 Idem.  
115 Idem.  
116 Idem.  
117 Article 6 of Decrees No. 1745 and No. 2218, Exhibits  PAN-2 and PAN-43, respectively . 
118 Decre es No. 1745 and No. 2218, Exhibits  PAN-2 and PAN-43, respectively . 
119 Article 211 of  Decree No. 390, Exhibit PAN -4. 
120 Colombia's rebuttal as respondent, para. 144, referring to Panama's rebuttal as complainant, 
para. 239. 
121 Panel Report, Brazil – Retreaded Tyres , para. 7.211, upheld by Appellate Body Report, Brazil – 
Retreaded Tyres , para. 150.  WT/DS461/RW/Add.1  
 
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  71. Consequently, and follow ing the Appellate Body's line of reasoning in this dispute, Panama 
considers that "[g]iven the lack of sufficient clarity regarding the degree of contribution of the 
measure to the objective of combating money laundering, and the degree of trade -restrictiv eness 
of the measure"122, the Panels should terminate their assessment of Colombia's defence under Article 
XX(a) at this stage.  
 
72. In any event, Panama observes that, in the necessity analysis, both the degree of contribution 
and the degree of restrictiven ess of the measures play a key role in "weighing and balancing" the 
different interests at stake. As for the policy objective, it will always be important.123 It follows that 
the contribution made by the importance of the policy objective in the exercise of "weighing and 
balancing" is relatively invariable, and that the decisive factor is the interrelationship between the 
degree of contribution and the degree of restrictiveness of the measures. In this case, Panama 
considers that, although the alleged policy objective could be important, the contribution of the 
measures at issue is ambiguous or at best minimal, and in addition to this, the restrictiveness 
exhibited by the measures at issue is very high and in some cases absolute. Panama therefore 
considers tha t the measures at issue are not provisionally "necessary" to achieve their declared 
objective.  
 
73. Panama suggests alternative measures that are less trade restrictive and which Colombia has 
not proved to be unavailable for addressing the concerns it face s: 
 
Elements of the special import regime for 
which Colombia raised defences under 
Article XX(a)  Alternative less trade -restrictive 
measures that comply with the objectives 
claimed by Colombia and are reasonably 
available to Colombia  
Specific bond  Valuation dispute bond  
Supplier's certification of sale (officially 
translated and apostilled or legalized, as 
appropriate)  Sales invoices  
List of distributors  Post-import list of distributors transmitted on a 
monthly basis to the DIAN  
Certification of value, storage and distribution  Post-import certification transmitted monthly 
to the DIAN with respect to the distribution 
and marketing chain  
 
Notification of storage warehouses, where 
appropriate, following authorization of release  
Certification of supplier's existence (officially 
translated and apostilled or legalized, as 
appropriate)  Annual presentation of an original certificate of 
the supplier's existence followed by 
presentation of copies of the certificate for 
subsequent shipments during the ye ar in 
question  
 
74. Colombia argues that the valuation dispute bond cannot be an alternative to the specific bond 
of Decree No. 1745, since it would not contribute with the same effectiveness to the objective of 
combating underinvoicing and money launderi ng, on account of two defects: the DIAN's resources 
and the possibility of human error. According to Colombia, if the valuation dispute bond were used, 
some irregular transactions might not be detected and the underinvoiced goods might be used to 
launder m oney.124 However, it is the same Colombia that presents the bond under Decree No. 2218, 
of 27 December 2017, as a bond which, in its view, is "ad hoc or case by case", i.e. which would 
require for its administration human resources and value judgement (and p robability of error), which 
it criticizes in the alternative put forward by Panama. Panama maintains its reservations about the 
way in which Colombia characterizes the bond under Decree No. 2218. However, it notes that it is 
Colombia's own actions and argu ments that demonstrate that the specific bond of Decree No. 1745 
is not "necessary" to achieve the proposed objectives. If this measure were necessary, Colombia 
would not have sought to present the appearance of a modification of the specific bond in Decre e 
No. 2218.  
                                                
122 Appellate Body Report, Colombia – Textiles , para. 5.115.  
123 See, for example, Appellate Body Report, EC – Asbestos, para. 175; Panel Reports, Canada – Wheat 
Exports and Grain Imports, para. 6.224; Dominican Republic – Import and Sale of Cigarettes, para. 7.215; 
Brazil – Retreaded Tyres, para. 7.111.  
124 Panama's reb uttal as respondent, para. 125.  WT/DS461/RW/Add.1  
 
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75. Consequently, Panama considers that Colombia has not demonstrated that the specific bond 
or the special import regime are necessary to protect public morals, and they are therefore not 
provisionally justified under Article XX(a) of the GATT.  
 
76. The specific bond and the special import regime are not necessary under Article XX(d) of the 
GATT . Panama notes that Colombia wholly bases itself on the same arguments it put forward under 
Article XX(a) in order to argue the need for the specifi c bond and the special import regime under 
Article XX(d) of the GATT.125 As Colombia develops no new argument beyond those already refuted 
by Panama in the context of Article XX(a), Panama considers that Colombia has failed to demonstrate 
that the specific b ond and special import regime are necessary measures under Article XX(d) of the 
GATT for the same reasons, mutatis mutandis . 
 
77. Colombia has not demonstrated that the specific bond and the special import regime meet the 
requirements of the chapeau  of Article XX. In its rebuttal as complainant, Colombia presents no 
argument to illustrate how it is that the specific bond and the special import regime are applied in a 
manner such as not to constitute means of arbitrary or unjustifiable discrimination between countries 
where similar conditions prevail, or disguised restrictions on trade. Panama has already commented 
on this matter in a previous submission.126 The Appellate Body has observed that the mere assertion 
that the measure in question complies wit h the requirements of the chapeau  because it applies to 
all products is not sufficient to establish a prima facie  defence under Article XX of the GATT.127 
 
78. Without prejudice to the above, Panama considers that Colombia discriminates arbitrarily and 
unjus tifiably against goods with prices below certain thresholds. Colombia assumes a priori  that such 
goods have "artificially low prices" and that, in having low prices, they are used for underinvoicing 
and money laundering.128 However, Colombia presents no evid ence to substantiate this presumption 
of illegality. To date, Colombia has put forward no criminal sentence, no law, no statutory decision 
establishing that imports below the thresholds are illegal. What is more, with no evidence that an 
infringement or an  offence has been committed. Colombia reports the importers of relevant goods 
as "subjects of risk" to the risk management system merely because they import goods at prices 
not agreeable to Colombia and the competition – domestic producers.  
 
79. Moreover,  in administering the measures under Decrees Nos. 1745 and 2218 on the basis of 
thresholds and ignoring the contingencies of each transaction, Colombia accords the same  treatment 
to all transactions under the threshold. Thus, Colombia imposes the requireme nt of posting a specific 
bond to ensure payment of penalties on all transactions covered by Decrees Nos. 1745 and 2218, 
irrespective of whether infringements have been found in the relevant transaction.129 Discrimination 
also occurs when dissimilar situation s are treated in an identical manner.130 It is arbitrarily 
discriminatory and unjustifiable for Colombia to require the posting of a specific bond in order to 
guarantee the payment of penalties in situations where no offences giving rise to penalties have 
been detected.  
 
80. Similarly, Colombia also fails to explain in the context of the analysis of arbitrary or 
unjustifiable discrimination why it only applies the measures of Decree No. 1745 to apparel, 
footwear, textiles, fibres and yarns, and not to other p roducts similarly situated131, such as alcoholic 
beverages and cigarettes.132 Even more importantly, according to the Report on the Estimated Level 
of Distortion in the Value of Colombian Imports 2016 (to which Colombia refers in Exhibit COL -38), 
underinvoiced  imports of apparel and footwear account for only 6.1% of underinvoiced goods. 
Moreover, imports of textiles, fibres and yarns do not even figure among the ten types of goods 
most used for underinvoicing. On the contrary, according to the DIAN itself, the most commonly 
                                                
125 Colombia's rebuttal as complainant, paras. 133 -134. 
126 Panama's rebuttal as complainant, paras. 255 -261. 
127 Appellate Body Report, Thailand – Cigarettes (Philippines) , paras. 179 -180. 
128 Panama's rebuttal as respondent, para.   
129 European Union's third -party submission, paras. 51 -52. It should also be noted that the guarantee 
referred to in Article 7(3)(4) of the Trade Facilitation Agreement applies  only in cases where an offence 
requiring imposition of penalties has been detec ted, and not for transactions in the abstract. See Panama's 
rebuttal as complainant, paras. 86 -87.  
130 European Union's third -party submission, paras. 51 -52, referring to Appellate Body R eport, Canada – 
Wheat Exports and Grain Imports , para. 87.  
131 Japan's t hird-party submission, para. 7.  
132 Panama's rebuttal as complainant, para. 279; Panama's rebuttal as respondent, para. 312.  WT/DS461/RW/Add.1  
 
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  underinvoiced imports are motor vehicles, tractors, cycles, parts and accessories (Chapter 87 of the 
Colombian Customs Tariff); mineral fuels and oils and products thereof (Chapter 27 of the Colombian 
Customs Tariff); and boilers, turbines, a ircraft and marine propulsion engines, machinery and parts 
(Chapter 84 of the Colombian Customs Tariff), among others.133 
 
81. Panama also fails to understand how it is that Colombia exempts from the application of 
Decree No. 2218 goods "owned by foreign com panies or persons not resident in the country, which 
have been introduced from abroad to international logistical distribution centres for distribution in 
their entirety to the rest of the world"134 and "owned by natural or legal persons resident in Colombia  
and recognized by the National Customs and Excise Directorate as authorized economic operators 
or trusted users".135 If it is assumed that the goods covered by Decrees No. 1745 and  No. 2218 are 
undervalued, it would appear that Colombia has no problem when the undervaluation leads to prices 
that do not compete with domestic industry prices, or to a situation of money laundering outside 
Colombia, but generates economic activity in Colombia, for example, in Colombia's international 
logistical distribution cent res. Panama does not see how the protection of public morals could admit 
of such an exception. It seems to Panama that this exception strengthens the theory that the 
measures at issue contain discriminatory, arbitrary and unjustifiable requirements, rather  than 
responding to the appeals of a domestic industry in crisis.  
 
82. Moreover, Panama notes that, apart from including a reference to Article X:3(a) in the title of 
its defence under Article XX of the GATT, Colombia provides no specific argument to just ify the 
incompatibility of the application of Article 8 of Decree No. 390 under the provisions of Article XX or 
the chapeau . Colombia makes absolutely no reference to the "application" or "administration" of the 
Customs Statute by means of the specific bon d in its defence under subparagraphs (a) and (d) of 
GATT Article XX. Colombia does not explain how the use of "200%" in relation to the coverage of 
the specific bond contributes to the protection of public morals under Article XX(a) or to securing 
complian ce with other laws or regulations which are not inconsistent with the GATT. Nor does 
Colombia explain how it is that requesting the constitution of a comprehensive guarantee when a 
specific bond is already available contributes to the protection of public morals or to securing 
compliance with other laws or regulations which are not inconsistent with the GATT. In addition, 
Colombia makes no reference to the "application" or "administration" of the Customs Statute through 
the specific bond under its defence r elating to the chapeau . Of course, the mention of Article X:3(a) 
in the title is not sufficient to justify a measure under Article XX of the GATT. Consequently, Colombia 
has not put forward a valid defence to justify the administration of Article 8 of Decr ee No. 390 in a 
manner that is not uniform, impartial and reasonable.  
 
VIII.  THE SPECIAL IMPORT REGIME AND THE SPECIFIC BOND ARE INCONSISTENT WITH 
ARTICLES 1, 2, 3, 5, 6, 7 AND 13 OF THE CUSTOMS VALU ATION AGREEMENT (CVA ) 
 
83. Both in its panel request and in its first submission as respondent, Panama gave an indication 
of its concern that the special import regime, because of its burdensomeness, is in effect a means 
of circumventing the case -by-case application of transaction value and the other permitted v aluation 
methods, contrary to the provisions of Articles 1, 2, 3, 5, and 6, or as a result of the application of 
the methods prohibited by Articles 7(b), (f) and (g) of the Customs Valuation Agreement (CVA). 
Moreover, in its panel request, Panama also expr essed its position that the specific bond was 
inconsistent with Article 13 of the CVA. However, given that Colombia itself, through the third 
paragraph of Article 7 of Decree No. 1745, made the distinction between the specific bond imposed 
by that regulati on and the guarantee required in its "valuation dispute" legislation, making it 
implicitly clear that the specific bond of the Decree was not a customs valuation dispute guarantee, 
Panama held back its claim on this point until the moment Decree No.  2218 w as issued. The terms 
of Article 7 of Decree No. 2218 leave no room for uncertainty that the specific bond is a guarantee 
based on doubts about the value of the merchandise, for which reason Panama considers that the 
specific bond is inconsistent with Artic le 13 of the CVA.  
 
                                                
133 DIAN, Report on the Estimated L evel of Distortion in the Value of Colombian I mports 2016, Exhibit 
PAN-106, page 28.  
134 Article 4, pa ra. 3 of Decree No. 2218 (Exhibit PAN -43); Article 2 of Decree No. 436 (Exhibit PAN -84). 
135 Article 2 of Decree No. 436 (Exhibit PAN -84). WT/DS461/RW/Add.1  
 
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  A. THE SPECIAL IMPORT RE GIME IS INCONSISTENT  WITH ARTICLES 1, 2, 3, 5, 6 AND 7 OF THE CUSTOMS 
VALUATION AGREEMENT  
 
84. Panama is of the view that the thresholds established by Colombia in Decrees No. 1745 and 
No. 2218 are clearly "arbitr ary or fictitious" values; the methodology for determining them has never 
been explained by Colombia, but their technical characteristics are questionable as they do not 
reflect an objective methodology and constitute the minimum above which the methodolog ies 
provided for in the CVA are taken into account. With these thresholds and with its position that the 
values they cover reflect "artificially low prices", Colombia's opening premise is one of doubt that 
the values of the imports in question are not the price "actually paid or payable" for the goods. 
Colombia's prejudice regarding the accuracy of the transaction value is not assuaged either by pre -
import checks, and the documents submitted for that purpose, or by the DIAN inspection at the time 
of importa tion and thereafter. Colombia authorizes release of the goods only if payment of the 
customs duties is assured for a value that is not based on the application by Customs of any of the 
valuation methods provided for in the CVA. This results in a customs va luation for the establishment 
of a guarantee for customs duties that are to be paid, without this valuation being adjusted to the 
case-by-case analysis required by the Agreement, based on the particular conditions of each sale.136 
 
85. The thresholds are established on a fixed basis, without adjustment or possibility of 
adjustment in the light of the specific characteristics of the products in question (e.g. products of 
high or low quality), or the particular circumstances of the transac tions involved (e.g. sale of 
remaindered goods, promotion or market penetration operations, including operations between 
related companies). This is a fixed amount, therefore, unaffected by the specificities of the various 
imports in question, with no marg in of discretion for the customs official to value the goods in the 
establishment of coverage on the basis of the valuation criteria foreseen in the CVA.  
 
86. The inevitable result of an importer declaring a value equal to or less than these thresholds is 
to be made subject to prohibitive consequences for importation under this regime. The options 
available to an importer are limited. It is not clear that Colombia's existing customs procedures allow 
the declared value to be "corrected" or "adjusted" in orde r to pass the threshold. Moreover, the 
option of re -exporting the goods is also not a genuine option. Consequently, as things stand at 
present, the possible scenarios are that either customs duties are collected on the basis of a value 
higher than the thre sholds, or the goods are not imported into Colombian customs territory.137 In 
practice, therefore, customs duties should not be collected on the basis of a value equal to or below 
the thresholds. In fact, Colombia's reply to the question concerning levels of  imports below or above 
the thresholds shows that the levels below are insignificant compared with total imports. This 
amounts to saying that the thresholds operate as "minimum prices" above which customs valuation 
in accordance with the CVA is indeed poss ible, but that this is not the case below the thresholds. 
These thresholds are inconsistent with Article 7.2(f) of the CVA.  
 
87. By its design, structure and architecture, therefore, the special import regime is conceived in 
such a way as to penalize the i mportation of products for which the "price actually paid or payable" 
is equal to or below the thresholds. It also penalizes the importation of products with a declared 
value resulting from the application of any of the methods foreseen in Articles 2, 3, 5 , 6  and 7 of 
the CVA.  
 
88. However, in the context of a market characterized by its dynamism and high turnover, the 
option of discontinuing imports (even on a temporary basis) does not appear to be realistic. 
Importing goods at higher prices would certain ly be a commercially viable option (and hence 
Panama's claim that the special import regime imposes a minimum price system inconsistent with 
Article XI:1 of the GATT). According to Colombia, Panama did not consider that the option of 
declaring an import va lue above the threshold that does not correspond to the price actually paid or 
payable for the goods would have been a legally viable option for importers. However, it would 
appear that the Colombian legal system, Article 128, point 5.1.3 of Decree No. 268 5, permits such 
"overvaluation" or "correction" of the import value with a view to avoiding the application of the 
special import regime; Panama would take this as an indication that importers "may", "freely and 
voluntarily", ignore the "price actually pai d or payable" for their goods and adjust to the minimum, 
arbitrary and fictitious value given by the thresholds, in violation of Articles 1, 7.2(f) and 7.2(g) of 
the CVA.  
                                                
136 Panel Report, Colombia – Ports of Entry , para. 7.142.  
137 Panel Report, Colombia – Ports of Entry , para. 7.150.  WT/DS461/RW/Add.1  
 
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89. In addition, the specific bond is required in the light of the final collection of customs duties. 
However, the final determination of the bond is not based on the substantive obligations governing 
the final determination of customs value in the CVA. The determination of the coverage of the specific 
bond takes not the slightest accoun t of the substantive provisions governing the determination of 
the value of the goods, in particular through application of the valuation methods established in the 
CVA "on a case by case basis, so as to reflect the particular conditions of the sale of the  product in 
question."138 This case by case consideration is impossible to observe when specific coverage is 
required a priori  for the specific bond, on a fixed basis established prior to any importation (200% 
of the threshold price for the quantity imported , or 200% of the difference between the threshold 
price and the value declared for the imported quantity). Without making this evaluation, the 
Colombian customs authorities do not have the necessary information to implement the valuation 
methods provided f or in Articles 1, 2, 3, 5, 6 and 7 of the CVA and to establish whether or not it is 
necessary to delay the valuation and the determination of the appropriate scope of the guarantee. 
For this reason, the special import regime is inconsistent with Articles 1, 2, 3, 5, 6 and 7.2(f) and 
(g) of the CVA.  
 
B. THE SPECIFIC BOND IS INCONSISTENT WITH ARTICLE 13 OF THE CUSTOMS VALUATION AGREEMENT  
 
90. With the issuance of Decree No. 2218, the specific bond would presumptively be a guarantee 
subject to the disciplines  of Article 13 of the CVA. Panama considers that this change in perspective 
does not free the specific bond of its inconsistency with WTO law. Article 13 of the CVA requires that 
the determination as to the need to delay the final determination of customs value should be made 
on a case -by-case basis. However, in the case of Decree No. 1745, it is clear that the requirement 
of the specific bond and its coverage are not established on a case -by-case basis. Nor is this case -
by-case approach adopted under Decre e No. 2218, as Panama has already demonstrated, because 
the prices concerned are characterized by Colombia as "artificially" or "manifestly low".  
 
91.  Panama also finds problematical the fact that Article 13 allows the specific bond to be required 
only if  the importer wishes to withdraw the goods, so that customs valuation may not be seen as an 
obstacle to importation. However, through its Article 7, Decree No. 1745 makes a specific bond a 
requirement for all imports, including those where the importer has  no intention of withdrawing the 
goods and is prepared to leave the goods in customs for the latter to conclude the final determination 
already initiated. This requirement would also exist in all cases under Decree No.  2218.  
 
92. Panama also notes that th e coverage of the specific bond does not correspond to the 
requirement under Article 13 of the CVA that the guarantee should cover "the ultimate payment of 
customs duties for which the goods may be liable". This provision is clear and does not foresee the 
possibility of requiring a guarantee beyond that which relates to the payment of customs duties. 
Thus, Article 13 does not authorize the requirement of a guarantee to cover non -existent penalties, 
for example. In the same vein, Article 7(3)(4) of the Trade  Facilitation Agreement allows for a 
customs guarantee to be required "[i]n cases where an offence … has been detected " (emphasis 
added). Therefore, the coverage of the guarantee provided for in Articles 7 of Decree No.  1745 and 
Decree No. 2218 exceeds the  scope of Article 13 of the CVA.  
 
93. In addition, as a subsidiary obligation, the specific bond must be sufficient to cover the 
ultimate payment of customs duties "for which the goods may be liable". Its coverage should 
therefore be in line with the cove rage of the primary obligation. In this connection, the use of the 
threshold as reference value is not in keeping with the specific import characteristics and the 
methods of evaluation permitted by the CVA. It is not therefore a valid reference value for 
determining the coverage of the guarantee. Panama does not consider that Members have given 
"carte blanche" for the national authorities to establish amounts of coverage not subject to any 
discipline. If that were the case, the disciplines of the CVA could easily be circumvented by requiring 
guarantees with a coverage that bears no relation to the primary obligation that has to be 
guaranteed. In fact, echoing what was said by the United States in its third -party submission139, 
Panama observes that Article 7.3 of the Trade Facilitation Agreement makes it clear that the amount 
of coverage of a customs guarantee "shall not be greater than the amount the Member requires to 
ensure payment of customs duties, taxes, fees, and charges ultimately due for the goods cover ed 
by the guarantee". Panama considers that the standard of "customs duties for which the goods may 
                                                
138 Panel Report, Colombia – Ports of Entry , para. 7.142.  
139 United States' third -party submission, para. 46.  WT/DS461/RW/Add.1  
 
- 48 - 
 
  be liable" in Article 13 of the CVA must be read in conjunction with the standard of the "the amount 
the Member requires to ensure payment of customs duties " in Article  7.3 of the Trade Facilitation 
Agreement. This balanced reading of the provisions in question calls for the application on a case -
by-case basis of the valuation methods provided for in the CVA, instead of pre -established criteria 
of the kind fo reseen in Decrees Nos. 1745 and 2218.  
 
94. Panama also notes that the requirement of a specific bond to cover possible penalties is not 
included in Article 13 of the Customs Valuation Agreement. It is inappropriate, therefore, to rely on 
this provision as justification for requiring the specific bond for the payment of penalties, as is done 
by Colombia in Decree No. 2218. In addition, it has to be borne in mind that Article 7.3.4 of the 
Trade Facilitation Agreement allows a customs guarantee to cover penalt ies and fines only if the 
existence of an offence requiring the imposition of such penalties and fines has previously been 
detected.  
 
95. In view of the foregoing, Panama considers that the specific bond under Articles 7 of Decree 
No. 1745 and Decree No. 2 218 is inconsistent with Article 13 of the Customs Valuation Agreement.  
 
IX. THE INCONSISTENCY OF THE SPECIFIC BOND AND THE SPECIAL IMPORT REGIME 
WITH THE CUSTOMS VALUATION AGREEMENT IS NOT JUSTIFIED UNDER 
ARTICLE  XX OF THE GATT   
 
96. Article XX of the GAT T cannot be used to justify violations of the specific bond with regard to 
Article 13 of the CVA, and violations of the special import regime with regard to Articles 1, 2, 3, 5, 
6 and 7 of the same Agreement. In order for Article XX to be able to justify a  violation of the CVA, 
it would have to be understood that Article VII contains the same obligations as the CVA. That is not 
the case. Article VII is ambiguous and establishes only exhortative rules regarding the primacy of 
the transaction value ("should b e") or of certain prohibited criteria ("should not be based on") (Article 
VII:2(a)), without however prescribing the sequence of methods or the case -by-case approach 
foreseen in the CVA. Although Article VII of the GATT may be considered as the basis on wh ich 
Members have been devising stronger customs valuation disciplines, this rule does not contain the 
"positive obligations" that are in fact contained in Articles 1, 2, 3, 5, 6 and 7 of the CVA. Moreover, 
Article VII does not provide for the possibility o f requiring a guarantee when an importer wishes to 
withdraw the goods from customs pending determination of the corresponding customs value. The 
chapeau  of Article XX of the GATT textually limits the applicability of GATT exceptions to the 
provisions of th at Agreement. It does not allow the coverage of such exceptions to be read as 
extending to other WTO agreements, all the more so if the obligations that are at issue in a dispute 
are not "enforceable" under the provisions of the GATT.  
 
97. Moreover, none of the provisions of the CVA refers to Article XX of the GATT. Not even 
Article  17 of the CVA establishes the "exceptionality" sought by Colombia. This provision merely 
acknowledges that the customs authorities shall have the right to satisf y themselves as to the truth 
or accuracy of the information submitted in respect of customs valuation, without this implying 
disregard for the enforceability of the valuation methods provided for in the CVA. For these purposes, 
the corresponding authority could make use of the procedures set out in the "Decision Regarding 
Cases where the Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the 
Declared Value". However, these procedures are far from bearing any resemblance to the content 
of Article 7 of Decrees No. 1745 and No. 2218. Therefore, Colombia would have no justification even 
for a defence under Article 17 of the CVA.  
 
98. It should be noted that, when another WTO agreement is applicable under the CVA, its 
applicability is expressl y provided for. For example, Article 19.1 of the CVA provides that the Dispute 
Settlement Understanding shall apply to consultations and the settlement of disputes under the CVA. 
This is not the case for Article XX of the GATT or any other exceptional rule  contained in that 
Agreement.  
 
99. Even if Article XX were applicable to violations of the CVA, Panama considers that there would 
be no justification for such violations on this legal basis, for the reasons given in respect of the 
invocation of Article XX  on the inconsistency of the measures in question with the GATT in all 
Panama's communications, written and oral, as both complainant and respondent, including the 
replies to questions and Panama's comments on the replies of Colombia. Panama takes it that,  
pursuant to its position regarding claims of violation of the GATT, Colombia is invoking Articles  XX(a) 
and XX(d) of the GATT as defence.  WT/DS461/RW/Add.1  
 
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100. With regard to the violation of Article 13 of the CVA, the specific bond is not a measure 
necessary to combat m oney laundering resulting from a problem of underinvoicing. As Colombia 
explains in its replies to the questions of the panels, the incidence of valuation dispute investigations 
in relation to total imports is minimal (6.1% of imports under the threshold),  and it is even negligible 
in relation to imports liable to underinvoicing (between 2.5% and 3% of imports as a whole), and 
there is not even any evidence at present of possible underinvoicing for the purpose of laundering 
money. A measure of this nature, therefore, like the specific bond, which has a highly 
trade -restrictive effect, with almost total suppression of trade subject to the thresholds (Colombia's 
response to question 6(b)), can in no way be considered a measure "necessary" to address this 
problem. It is a prohibitive measure which if anything creates the possibility of overvaluation of the 
goods (to avoid falling below the thresholds) and ultimately of money laundering. An alternative 
measure to address this problem is a guarantee applied on a c ase-by-case basis which has variable 
coverage according to the circumstances of each transaction.  
 
101. In any event, Panama observes that there is no reason to exclude from the administration of 
the specific bond goods entering the international logistica l distribution centres, since the same 
concerns relating to underinvoicing and money laundering may arise in these settings. The 
administration of the measure at issue would therefore necessarily give rise to discriminatory 
treatment as between situations where the same conditions (risk of money laundering through 
underinvoicing) prevail.  
 
102. Nor does Panama consider, with regard to the violation of Articles 1, 2, 3, 5, 6 and 7 of the 
CVA, that the special import regime is a measure necessary to combat mo ney laundering resulting 
from a problem of underinvoicing. For the same reasons as with respect to the bond, the incidence 
of valuation dispute investigations is minimal (6.1% of imports under the threshold) and it is 
negligible in respect of underinvoicin g (between 2.5% and 3% of imports overall), while there is not 
even any evidence of possible underinvoicing leading to money laundering. In the circumstances, a 
measure with a highly trade -restrictive effect (or even a prohibitive effect with regard to cer tain 
imports) cannot be considered as a measure "necessary" to address this problem. Panama considers 
that random controls or some of the measures indicated in its previous submissions (Panama's 
rebuttal as complainant, paras. 201 -261; Panama's rebuttal as  respondent, paras. 392 -420) are 
alternative, less trade -restrictive measures that would be available to Colombia.  
 
103. In any event, Panama notes that there is no reason to exclude from the application of the 
special import regime goods entering the inte rnational logistical distribution centres, since the same 
concerns relating to underinvoicing and money laundering may arise in those settings.  
 
X. CONCLUSION  
 
104. In the light of all of the foregoing, Panama requests the Panels under Article 21.5 of the DSU 
to find that:  
 
(i) in response to Colombia's objection, the specific bond and the special import regime, as well 
as all of Panama's claims are covered by the Panels' terms of reference;  
 
(ii) the specific bond and the special import regime are Colombia n "measures taken to comply" 
within the meaning of Article 21.5 of the DSU;  
 
(iii) the specific bond requirement is inconsistent with Article XI:1 of the GATT, and does not meet 
the requirements of Article 13 of the Customs Valuation Agreement;  
 
(iv) the special import regime is inconsistent with Article XI:1 of the GATT and with Articles 1, 2, 
3, 5, 6 and 7(f) and (g) of the Customs Valuation Agreement ; 
 
(v) the specific bond requirement necessarily gives rise to an administration of Article 8 of Decree 
No. 390 that is not uniform, impartial and reasonable, contrary to the provisions of Article 
X:3(a) of the GATT;  
 
(vi) the special import regime necessarily gives rise to an administration of Articles 493 and 486 
of Decree No. 390 that is not uniform, impartial and reasonable, contrary to the provisions of 
Article X:3(a) of the GATT;  WT/DS461/RW/Add.1  
 
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(vii) Colombia has not demonstrated that the requirements of the specific bond and the special 
import regime, and the administration to which they give rise, are justified  under 
Articles  XX(a) and (d) of the GATT;  
 
(viii) the special import regime results in the application of substantial penalties for minor 
infringements, such as failure to comply with certain requirements of Decree No. 2218, in a 
manner inconsistent with Article VIII:3 of the GATT.  
 
105. Consequently, Panama requests the Panels to find that Colombia has not brought its 
compliance measures into conformity with its obligations under the GATT and to make the relevant 
recommendations in accordance with Article  19 of the DSU.  
  WT/DS461/RW/Add.1  
 
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  ANNEX C 
ARGUMENTS OF THE THIRD PARTIES 
Contents  Page  
Annex   C-1 Integrated executive summary of Ecuador  52 
Annex   C-2 Integrated executive summary of the United States  54 
Annex   C-3 Integrated executive summary of Honduras  59 
Annex  C-4 Integrated executive summary of Japan  60 
Annex  C -5 Integrated executive summary of the European Union  63 WT/DS461/RW/Add.1  
 
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  ANNEX C -1 
INTEGRATED EXECUTIVE SUMMARY OF ECUADOR* 
This statement constitutes Ecuador's opinion on the "Compliance Proceedings under Article 21.5 of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes".  
 
Bearing in mind that the current proceedings relate to the determination to be made by the original 
panel regarding the measures taken by Co lombia to comply with the recommendations made by the 
Dispute Settlement Body (DSB) in Colombia – Measures Relating to the Importation of Textiles, 
Apparel and Footwear (Colombia – Textiles) , Ecuador considers it necessary to raise some legal 
points concer ning the obligation incumbent on all Members to adhere to the provisions of the covered 
agreements, as a general matter, and in particular to the recommendations that may be addressed 
to a Member in a dispute settlement proceeding.  
 
The Understanding on Ru les and Procedures Governing the Settlement of Disputes (DSU) provides 
that "[p]rompt compliance with recommendations or rulings of the DSB is essential in order to ensure 
effective resolution of disputes to the benefit of all Members". The time factor is of fundamental 
importance in the dispute settlement system of the World Trade Organization (WTO), as it is in any 
other organization, since justice administered slowly cannot be considered and denominated as such.  
 
Hence, with the aim of achieving a "promp t" and "effective" resolution of disputes, the procedure 
established in Article 21.5 is an expedited procedure inasmuch as the panel report must be circulated 
within a period of 90 days, in contrast to the nine months available to the original panel.1 
 
As has been highlighted by the Appellate Body, Article 21.5 "promote[s] the prompt compliance with 
DSB recommendations and rulings and the consistency of "measures taken to comply" with the 
covered agreements by making it unnecessary for a complainant to begi n new proceedings and by 
making efficient use of the original panelists and their relevant experience".2 
 
The DSU states that compliance must be immediate but also recognizes that it is not always 
practicable to comply immediately with all rulings and reco mmendations. Consequently, Members 
have what is known as a "reasonable period of time" to bring the challenged measure into conformity 
with the provisions of the covered agreements that have been breached.  
 
In that connection, the DSB is responsible for ma intaining surveillance of the implementation of 
recommendations and rulings; however, the standard of implementation may prove to be subjective, 
and the DSU therefore envisages a procedure whereby the original panel may intervene to determine 
whether the n ecessary measures have been taken to secure compliance with the DSB's 
recommendations and rulings and, if so, whether those measures are consistent with the provisions 
of the WTO covered agreements.  
 
For this procedure in particular, the point of contentio n appears to be that of determining what 
measures are to be assessed by the Panel as having been taken by Colombia to "comply" with the 
recommendations of the DSB, since Panama alleges that the Panel should also consider as a measure 
taken to comply the me asure contained in Decree 1745, issued simultaneously with Decree 1744, 
and that the latter is identified by Colombia as the only measure taken to comply with the Panel's 
findings.  
 
In this connection, Ecuador considers it important that the Panel take acc ount, in its analysis, of the 
full scope of the letter and spirit of the DSU rule, as set out in the opinion expressed by the Appellate 
Body in its report3, to the effect that compliance proceedings cannot be conducted in such a way as 
                                                
* Ecuador requested that its oral statement be considered as its executive summary. The original 
statement was made in Spanish.  
1 Articles 3.3 and 21. 1 of the DSU.  
2 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 212, referring to Appellate 
Body Report, US  – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina), para. 151.  
3 Appellate Body Report, US – Zeroing (EC ) (Article 21.5 – EC), para. 250, citing Appellate Body Report, 
US – Softwood Lumber IV (Article 21.5 – Canada), para. 71.  WT/DS461/RW/Add.1  
 
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  to allow a Member "t o comply through one measure, while, at the same time, negating compliance 
through another". In order to prevent the avoidance of effective compliance with the determinations 
made by a panel, the designation of certain measures by the responding Member as "measures 
taken to comply" with the DSB's recommendations and rulings is not determinative of the compliance 
panel's mandate.4 A compliance panel's mandate may cover both the measures that the responding 
Member designates as being "taken to comply" and tho se that the responding Member does not 
consider to have that purpose, but which the panel, following a careful legal analysis, considers to 
be relevant for clarifying all the existing variables that will enable it to establish beyond any doubt 
the complian ce or non -compliance with the determinations made by the DSB.  
 
Conclusion  
 
Ecuador considers that the essential purpose of initiating a dispute settlement proceeding under the 
DSU is to achieve the thorough verification of compliance with the determinations made by the DSB 
regarding measures taken by the defending and losing Member to comply with the provisions of the 
covered agreements. This is the direction taken by the rulings a nd recommendations adopted by the 
DSB, prior to the determinations made by the original panel, and by the Appellate  Body where 
applicable.  
 
Thus, the Member to which the recommendations were addressed has a "reasonable period of 
time" to adopt compliance measures, for which reason Ecuador considers that such compliance 
measures must be directed towards a single objective, namely full adherence to the obligations 
stemming from the WTO covered agreements.  
                                                
4 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 204.  WT/DS461/RW/Add.1  
 
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  ANNEX C -2 
INTEGRATED EXECUTIVE  SUMMARY OF THE UNITED S TATES  
THIRD PARTY WRITTEN SUBMISSION OF THE UNITED STATES OF AMERICA  
I. Terms of Reference of Panels in These Proceedings  
1. Articles 7.1 and 6.2 of the DSU reflect the standard terms of reference for a panel, and Article 
21.5 contains a more specific focus on a disagreement as to a measure taken to comply.  Under 
Article 7.1, when the DSB establishes a panel, it may give the panel standard terms of reference, 
which are "[t]o examine . . . the matter referred to the DSB " by the complaina nt in its panel request 
and "to make such findings as will assist the DSB in making the recommendations or in giving the 
rulings provided for in that/those agreement(s) ". Under Article 6.2, the "matter " consists of "the 
specific measures at issue " and "a brief summary of the legal basis of the complaint. " Thus, the task 
of any panel, including one established pursuant to DSU Article 21.5, is examining the "matter " 
referred to the DSB in the complaining Member 's panel request, with the "matter " consisting of  the 
"specific measures at issue " and the "legal basis of the complaint. " 
2. With regard to the "legal basis of the complaint, " this refers to the claims at issue in the 
proceeding. Where a single provision of a covered agreement contains multiple obligati ons, "a panel 
request might need to specify which of the obligations contained in the provision is being 
challenged. " Claims must be "set out clearly in a panel request " and where a panel request fails to 
specify adequately a claim, such claim will not for m part of a panel 's terms of reference.  
3. With regard to the "specific measures at issue, " Articles 6.2 and 7.1 of the DSU establish the 
relevant time for identifying these measures in any panel proceeding is when the "matter [is] 
referred to the DSB. " Thus, when the DSB establishes the panel and sets the panel 's terms of 
reference, the measures subject to the panel 's examination are those within "the matter " "referred 
to the DSB " when the panel was established. Accordingly, panels and the Appellate Bod y have 
recognized that the general rule set out by Articles 6.2 and 7.1 is that "the measures included in 
a panel 's terms of reference " "must be [those] that are in existence at the time of the establishment 
of the panel " and that a panel 's review should "focus[] on [the] legal instruments as they existed  … 
at the time of establishment of the panel. " 
4. DSU Article 21.5 further defines the terms of reference of panels established under that 
provision.  It provides that an Article 21.5 panel 's terms of refer ence are  limited to assessing the 
"existence " or "consistency with a covered agreement " of "measures taken to comply. "  "Measures 
taken to comply " refers to "measures which have been, or should be, adopted by a Member to bring 
about compliance with the rec ommendations and rulings of the DSB. " Thus, an Article 21.5 
proceeding extends to measures that were "taken in the direction of, or for the purpose of achieving, 
compliance " and to measures that should have been so taken.  Identifying the measure taken to 
comply involves examining "the factual and legal background against which relevant measures are 
taken. " The DSB recommendations and rulings in the original proceeding are the starting point for 
identifying the "measures taken to comply. " 
5. Therefore, in c ontrast to original panel proceedings, a complaining Member 's panel request 
may list some measures that, by definition, do not fall within an Article 21.5 panel 's terms of 
reference or may fail to list some measures that nevertheless do fall within a panel 's terms of 
reference. For example, the implementing Member may declare that a particular legal instrument is 
the "measure taken to comply " for purposes of an Article 21.5 proceeding. This declaration is 
"relevant " to an Article 21.5 panel 's analysis of the "measure taken to comply " but is not 
"conclusive. " Legal instruments other than the declared "measure taken to comply " may in effect be 
part of the "measure taken to comply " because of their relati onship to the measure found 
WTO-inconsist ent or effect on a Member 's compliance.  
6. In this dispute, with regard to the scope of measures taken to comply , Colombia suggests that 
Decree 1745 is not part of the "measure taken to comply " because the measures set out in Decree WT/DS461/RW/Add.1  
 
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  1745 are different "in nature " from the original measure because the original measure was a tariff 
measure and the measures in Decree 1745 are not.  As complainant, Colombia also argues that its 
panel request mentions only Decree 1744 and, therefore, it is the only measure withi n that Panel 's 
terms of reference.  
7. The United States does not consider that a measure taken to comply is necessarily limited to 
the type or kind of measure found in the original proceeding to be WTO -inconsistent. Rather, 
assessing whether a new measure has a sufficiently close relationship to the measure subject to the 
DSB recommendations (or to the declared measure taken to comply) is a fact -specific inquiry that 
may require examining "the timing, nature, and effects " of various measures. This analysis does not 
depend on whether a new measure is the same type of measure as the WTO -inconsistent measure. 
If it did, a Member could evade a DSB recommendation by simply changing the character of a 
measure. Thus, various factors may be relevant to assessing the  relationship between Decree 1745 
and the WTO -inconsistent measure subject to the DSB recommendation.   
8. With regard to Colombia 's other argument, the United States does not understand  that 
the analysis of the "measure taken to comply " differs depending o n which party initiated an 
Article  21.5 proceeding. As discussed above, one feature of Article 21.5 proceedings that is different 
from original proceedings is that, with regard to the measures within a panel 's terms of reference, 
Article 21.5 sets out spec ific rules that may supersede the description of the challenged measure in 
the panel request. Thus, a complaining Member may not draw into an Article 21.5 proceeding a 
measure other than a "measure taken to comply " by referring to that measure in its panel  request.  
Conversely, a Member may not constrain an Article 21.5 panel from assessing the effect on its claim 
of a "measure taken to comply " that the other party brings forward in the course of that proceeding 
simply by omitting that measure from its pane l request.  
9. Concerning Decree 2218 of 2017 , as explained above, Articles 6.2 and 7.1 of the DSU set out 
the general rule that "the measures included in a panel 's terms of reference, " and thus those on 
which the panel makes findings, "must be . . . in existence at the time of the establishment of the 
panel. " DSU Article 21.5 does not modify this rule. The Panels were established with standard terms 
of reference. Thus, it is the "measures taken to comply, " as they existed on the dates of the Panels ' 
establishment – March 6 and July 19, respectively – that are properly within the Panels ' terms of 
reference.  It is uncontested that Decree 2218 was enacted long after the Panels were established.  
Therefore, it is not part of the "matter " referred to the DSB.  As such, it is not within the Panels ' 
terms of reference, and the Panels should not make findings on it.  
10. Indeed, these proceedings illustrate that, in addition to being consistent with the text of the 
DSU, defining the "matter " within a panel 's terms of reference based on the measures as they existed 
at the time of panel establishment is the appropriate outcome. First, addressing "measures taken to 
comply " as a moving target leads to procedural unfairness and gaps in argumentation that can cause 
incohe rent findings. Colombia has had no meaningful opportunity to respond to Panama 's arguments 
or evidence on Decree 2218. Further, Panama has put forward no arguments or evidence that Decree 
2218 forms part of the "measures taken to comply, " simply presuming that it is within the Panels ' 
terms of reference. Second, defining the "matter " within a panel 's terms of reference based on the 
measures as they existed at the time of panel establishment benefits all parties, and the WTO dispute 
settlement system, by bal ancing the interests of complainants and respondents. Complainants may 
not obtain findings on substantively new measures introduced after the establishment of a panel.  
On the other hand, respondents may not avoid findings by altering or revoking measures after the 
date of panel establishment. As the Appellate Body has recognized, it does not serve the interests 
of the WTO dispute settlement system to require or allow parties to adjust their arguments 
throughout dispute settlement proceedings in order to de al with a disput ed measure as a moving 
target.  
11. With regard to the claims within the Panels ' terms of reference , as explained above, a panel 's 
terms of reference are generally to examine the "matter referred to the DSB " by the complaining 
Member. The claims falling within these terms of reference are those set out in the panel request. 
Both Panels in these proceedings were established with standard terms of reference. Thus, the terms 
of reference of the Panel established  in the proceeding initiated by Colombia extend to the "matter 
raised by Colombia in document WT/DS461/17. " The provisions mentioned in this document are 
Articles II:1(a) and (b), XX(a), and XX(d) of the GATT 1994, and the only obligations described 
relate  to the imposition of customs duties not in excess of Colombia 's bound rates.  Therefore, these 
are the claims within the terms of reference of the Panel established pursuant to Colombia 's request.  WT/DS461/RW/Add.1  
 
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  12. The argument that the terms of reference of an Article  21.5 panel extend to any inconsistency 
with any covered agreement, no matter the claims identified in the panel request, has no support in 
the text of the DSU, and Panama points to none.  Further, as discussed above, it is refuted by Articles 
7.1 and 6.2.  The Appellate Body report in EC – Bed Linen , which Panama cites as supporting this 
argument, does not do so.  In that dispute, the Appellate Body stated that the "complainant in Article 
21.5 proceedings may well raise new claims, arguments and factual cir cumstances different from 
those raised in the original proceedings, " due to differences between the original measure and the 
measure taken to comply. There was no suggestion, however, that the complainant could raise 
claims not raised in the panel request pursuant to which the compliance panel was established.  
Similarly, the Appellate Body did not suggest that a respondent in an Article 21.5 proceeding could 
raise claims not covered by the panel request.  
13. The argument that the two Panels must have the s ame terms of reference because they are 
both considering the issue of compliance with the DSB recommendations and rulings in the original 
proceeding also has no support in the DSU. Even under the approach of the Appellate Body in EC – 
Continued Suspension , the terms of reference of Article 21.5 panels remain tied to the panel request 
pursuant to which they were established, even if there are two such panels in a dispute and their 
schedules are harmonized. The schedules of the two Panels in this proceeding h ave been harmonized 
and a combined set of working procedures adopted. But the proceedings remain distinct in terms of 
the panel requests and the parties ' submissions. Thus, the terms of reference of the two Panels are 
not identical simply because the DSB r eferred two matters to the Panels pursuant to Article 21.5. 
And, indeed, they are not identical, as Colombia 's panel request does not cover all the claims 
subsequently raised by Panama.  
14. As to Panama 's argument that all the claims it has raised as complainant are covered by the 
terms of reference of the Panel established pursuant to its own panel request, the United States has 
two points. First, the terms of reference of the Panel requested by Panama are governed by Panama 's 
panel request. Therefore , the fact that Panama 's panel request does not refer to Article VIII:3 of the 
GATT 1994 suggests that claims under that provision are not within that Panel 's terms of reference. 
Further, for the provisions listed in Panama 's panel request, the Panel will still have to consider 
whether the references meet the standard of DSU Article 6.2.  Second, Panama 's submissions as 
complainant are not part of the record in the proceeding initiated by Colombia simply because the 
proceedings are in the same dispute. Ther efore, Panama 's argument that all the provisions and 
arguments it has raised as respondent are within the terms of reference of the Panel established 
pursuant to Panama 's panel request must be substantiated, for example, by reference to the working 
procedu res of the Panels or to Panama 's submissions as complainant. H owever, as the complainant, 
Panama seems not to have put forward argumentation concerning the claims under Article VIII:3 of 
the GATT 1994 and Articles 1, 2, 3, 5, 6, 7, and 13 of the CVA that i t raised in its second submission 
as respondent.  
II. Interpretation of Article XI:1 of the GATT 1994  
15. The ordinary meaning of the term "restriction, " in the context of Article XI:1, is "a limitation 
on action, a limiting condition or regulation. " The pa nel in India – Quantitative Restrictions thus 
found that "[t]he scope of the term 'restriction ' is . . . broad, as seen in its ordinary meaning. " The 
panel in India – Autos reached the same conclusion, finding that "any form of limitation imposed on, 
or in relation to importation constitutes a restriction on importation within the meaning of Article 
XI:1." The Appellate Body endorsed this approach in China – Raw Materials and Argentina – Import 
Measures , finding that "restriction " refers to "[a] thing which  restricts someone or something, a 
limitation on action, a limiting condition or regulation " and thus "refers generally to something that 
has a limiting effect. " 
16. A finding that a measure constitutes a restriction within the meaning of Article  XI:1 does  not 
require a showing that trade flows have been affected. Article XI:1 proscribes restrictions "on the 
importation " or "on the exportation " of any product, not restrictions on the level of imports or 
exports. The terms used reach the process of importing  or exporting. Similarly, the Appellate Body 
in Argentina – Import Measures recently concluded that the "limiting effect " of a restriction under 
Article XI:1 "need not be demonstrated by quantifying the effects of the measure at issue; rather, 
such limitin g effects can be demonstrated through the design, architecture, and revealing structure 
of the measure at issue considered in its relevant context. " WT/DS461/RW/Add.1  
 
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  17. On the other hand, it is not the case that any measure that makes importation more difficult 
is inconsi stent with Article XI:1. As the Appellate Body recognized in Argentina – Import Measures , 
"not every condition or burden placed on importation or exportation will be inconsistent with Article 
XI, but only those that are limiting, that is, those that limit the importation or exportation of 
products. " Numerous provisions of the covered agreements recognize that there may be formalities 
and fees associated with importation, which will inevitably place some burden on importation. 
Interpreting Article XI:1 as pr oscribing all such burdens would contradict the principle that the WTO 
Agreement is a single undertaking and, therefore, the provisions of the various covered agreements 
should be interpreted harmoniously.  
18. Thus, the critical question in determining wh ether Panama has shown that the customs bond  
is inconsistent with Article XI:1 is whether it has shown that the measure imposes a limitation or 
limiting condition on importation, or have a "limiting effect " on importation, of products into 
Colombia. The Pa nels should reject arguments suggesting that any "conditions " placed on 
importation – including all importation fees and formalities – are necessarily inconsistent with Article 
XI:1. A showing that a measure is a "condition " on importation that imposes some burden or cost 
on importers is not sufficient to establish an Article XI:1 claim.  On the other hand, Panama is correct 
that it is not necessary for it to demonstrate a measure 's effect on trade flows in order to show it i s 
inconsistent with Article XI:1.  
19. Also, as Article XI:1 refers to the importation of "product[s] of . . . any other contracting 
party, " the key inquiry is a measure 's effect on the products  of Members not on importers in 
Colombia.  A number of Panama 's arguments seem premised on the idea that Article XI:1 requires 
Colombia to maintain equal conditions for all Colombian importers (particularly those that are not 
credit worthy). This is incorrect. The text of Article XI:1 refers to limitations on the impo rtation of 
products , not limitations on importation by particular importers. Limitations on importation by 
particular persons would be relevant to the Panels ' analysis only to the extent that the limitations 
on individuals ' ability to import are a limitati on or limiting condition on importation, or had a "limiting 
effect " on importation, of the relevant products.  
20. With respect to the argument that customs bonds are "permissible instruments " and thus not 
inconsistent with Article XI:1, the United States a grees that the existence of a customs bond is not 
sufficient to es tablish an Article XI:1 claim. The WTO agreements are a single undertaking and should 
be read harmoniously. If all customs bonds were inconsistent with Article XI:1, provisions of the 
covere d agreements would be rendered meaningless.  And because customs bonds inherently involve 
some burdens or costs on importers, the existence of some burden or cost imposed by a customs 
bond is not sufficient to establish that the bond is i nconsistent with Ar ticle XI:1. The provisions of 
other covered agreements on customs bonds and import fees and formalities provide useful context 
for analyzing whether a customs bond rises to the level of being a "restriction " under Article XI:1. 
At a minimum, a customs bond  that is consistent  with such provisions would presumably not be 
inconsistent with Article XI:1.  
21. Panama also argues that the special import regime  is inconsistent with Article XI:1. In 
considering Panama 's arguments, the Panels should assess which of t hem are probative of whether 
the special import regime imposes a limitation or limiting condition "on importation " or has a "limiting 
effect " on importation. A successful Article XI:1 claim requires a Member to show that the measure 
restricts importation o f the relevant products; the existence of costs or difficulties for individual 
importers is not sufficient. On the other hand, the intervention of some element of private action 
does not relieve a Member of responsibility for the effects of a measure. If P anama shows that the 
special import regime necessarily results in costs and burdens that are a limitation or limiting 
condition on importation or have a "limiting effect " on importation of the covered products, the fact 
that private actors are involved in imposing or implementing these costs and burdens does not mean 
that the restriction does not stem from the challenged measure.  
RESPONSES OF THE UNITED STATES TO THE PANELS ' QUESTIONS TO THE THIRD PARTIES  
Questions 1, 2, and 7  
1.  Article 21.5 of the DSU  establishes that the question in assessing whether a measure is within 
the terms of reference of an Article 21.5 panel is whether it forms part of, or undermines the 
existence of, the "measure taken to comply. " The "closely connected " analysis from US – Zeroing  WT/DS461/RW/Add.1  
 
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  does not suggest that measures other than a "measure taken to comply " could be within the terms 
of reference of a compliance panel. Rather, the report explains that measures other than the declared  
"measure taken to comply " can in fact be measures t aken to comply and within the panel 's terms of 
reference. It states that a panel 's task is to determine whether "measures that are ostensibly not 
'taken to comply '" have "sufficiently close links " with the declared measure taken to comply and the 
recommend ations and rulings of the DSB "for [the panel] to characterize such other measures as 
'taken to comply ' and, consequently, " within the panel 's terms of reference. The Appellate Body took 
the same approach in US – Softwood Lumber IV . Thus, the "closely conn ected " analysis can assist 
an Article 21.5 panel in its analysis of whether a measure other than the declared "measure taken 
to comply " is within its terms of reference.  
Question 12  
2. One of the fundamental principles of Article XX is that it reflects the  right of a responding 
Member "to achieve its desired level of protection with respect to the objective pursued. " Thus, for 
a measure to be "necessary " under Article XX(a), it does not need to fully achieve its public morals 
objective. Similarly, a Member is not required to address all aspects of an objective together and 
equally because it chooses to address one aspect. The Appellate Body addressed this issue explicitly 
in its report in EC – Seal Products . Thus, contrary to Japan 's suggestion, Colombia doe s not need to 
explain why the measures at issue concern only textiles and apparel products, or show that the 
measures ' scope is "necessary " to combating money laundering, to meet the standard of Article 
XX(a).  
Question 13  
3. The first step of the Article XX chapeau analysis entails assessing whether a measure "results 
in discrimination " between countries where the "conditions " are relevantly "the same. "  Arguments 
by Japan and the EU ignore this step and thus misstate the chap eau legal standard.  
4. Japan 's argument omits this element of the chapeau analysis as a result of its focus on the 
"calibration test " applied in US – Tuna II . However, the "calibration test " was not put forward as a 
generally applicable approach to the cha peau. Rather, the Appellate Body found that, based on the 
arguments of the parties and the facts of the dispute, it was an appropriate way of assessing whether 
the U.S. tuna measure met the chapeau requirements. Moreover, the "calibration " analysis was 
applied after the complaining party demonstrated that the U.S. tuna measure discriminated between 
countries where the conditions were relevantly the same. Thus, even if the "calibration " test were a 
generally applicable approach to the "arbitrary and unjustif iable discrimination " standard, it would 
not displace the first step of the chapeau analysis.  
5. The EU 's argument that Colombia 's measure may treat two categories of products "similarly " 
even though they represent "different situations " and that this may constitute "discrimination " 
suffers from a similar flaw. The chapeau concerns discrimination "between countries where the same 
conditions prevail, " not merely discriminating among "different situations. "  The EU 's hypothetical of 
genuinely low -priced produ cts and under -valued products has no connection to the national origin 
of the two alleged types of products, and thus does not suggest that the measure discriminates 
"between countries where the same conditions prevail. "  The United States respectfully sug gests 
that the Panels ground their analysis of Colombia 's defenses in the text of the chapeau and the 
relevant arguments of the parties.  
 WT/DS461/RW/Add.1  
 
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  ANNEX C -3 
INTEGRATED EXECUTIVE SUMMARY OF HONDURAS* 
1. Honduras wishes to express its views on one aspect of this dispute that is of a systemic nature: 
the possibility that a Member could use the protection of public morals or the prosecution of offences 
under domestic law as a basis for imposing measures that affect international trade.  
 
2. Honduras ac knowledges that this possibility forms part of the public policy space available to 
every government for the management of its domestic affairs. However, Honduras considers that 
WTO panels should evaluate this type of argument with extreme care. The charac terization of an 
international trade operation as a threat to public morals or to the domestic criminal justice system 
of a State is not a matter that should be taken lightly, since it should have the highest priority for 
the government making such an alle gation. Because of this very priority, however, such a 
characterization should not be based solely on mere assertions or general explanations.  
 
3. Honduras is of the opinion that, despite the deference that Panels and the Appellate Body may 
accord to gover nments in the characterization of their domestic affairs, because of the fact that 
commitments assumed towards other Members of this Organization are at stake, these organs must 
base their assessment on the evidence supplied by the parties and not just on the assertions made 
or on mere explanations, which may appear plausible but are not supported by documentation. 
Without evidence based on actual facts and not mere hypotheses, Panels should be reluctant to 
accept without scrutiny allegations that a form of  corporate conduct is contrary to public morals or 
the domestic legal order of the government seeking to restrict imports.  
 
4. Honduras considers that this standard of review is also applicable to the matter of the 
contribution of the measure to the propos ed objectives and its degree of trade restrictiveness. Panels 
must carefully consider the explanatory material and evidence supporting these arguments. 
Particular attention must be paid to what Honduras would call the "collateral effects" of the measure. 
It must be assessed whether the measure's secondary effects on international trade would not give 
rise to the occurrence in a different form of the same problem that the measure is allegedly intended 
to prevent. If that is the case, the contribution of the measure should be called into question.  
 
5. In the instant case, Honduras has serious doubts as to whether the restriction on imports 
below certain prices might not have the opposite effect of encouraging traders to manipulate their 
prices upwards, above t he reference prices, which would also constitute a situation of customs fraud, 
and Honduras also has doubts as to whether this situation might not lend itself to the commission 
of a money laundering offence, which is meant to be prevented by the challenged  measures. 
Honduras hopes that the Panel will examine this situation with the utmost care.  
 
6. Honduras considers that Article XX of the GATT already provides ample public policy space for 
Members to pursue the domestic policies they deem necessary. Panels , and the Appellate Body in 
particular, should be extremely careful not to apply these rules in such a way as to loosen the 
existing standards even further.  
                                                
* Honduras requested that its oral statement be considered  as its executive summary. The original 
statement was made in Spanish.  WT/DS461/RW/Add.1  
 
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  ANNEX C -4 
INTEGRATED EXECUTIVE  SUMMARY OF JAPAN  
I. ARTICLE  21.5  OF THE  DSU 
A. Measures Taken to Comply pursuant to Article 21.5 of the DSU  
1. Compliance panels examine  the existence or the WTO -consistency of  "measures taken to 
comply" pursuant to the DSU Article 21.5. Both of the measures that Members declare as measures 
which have been, or should be, adopted to bring about compliance with the DSB's recommendations 
and rulings, and the measures that are closely connected to such measures and the DSB's 
recommendations and rulings, constitute such "measures taken to comply" under Artic le 21.5. While 
Japan does not take any specific position on the facts  of this dispute , Japan  considers that if the 
measures at issue  (i.e., the customs bond and the special import regime ) constitute "measures 
taken to comply" and are specified in the panel  request, they fall within the scope of the compliance 
Panel. 
2. In this regard, Japan is of the view that where a Member which was the respondent in the 
original proceeding has initiated a compliance proceeding with respect to its measures it refers to as 
"measures taken to comply" in its panel request, the other Member, which was the complainant in 
the original proceeding, will be free to initiate another compliance proceeding with regard to other 
measures in its panel request, if such measures truly cons titute "measures taken to comply" . 
3. In the compliance panel proceeding initiated by the original respondent Member, the original 
complainant Member may refer to the measures other than those the original respondent Member 
referred  to in order to prevent the panel from concluding that the original recommendations and 
rulings are fully implemented. However, in  such a proceeding  initiated by the original respondent 
Member , the panel should  not make findings on  the WTO -consistency of the measures  other than 
those the original respondent Member referred  to, because they are not specified as measures in 
the panel request.  
B. The Close Nexus Test  
4. The Appellate Body has laid out a set of criteria that a compliance panel should analyze when 
determining whether a n undeclared measure taken to comply has sufficiently close links to the 
declared measures "taken to comply" with the DSB's recommendations and ruling s to fall within the 
scope of a compliance p roceeding  ("close nexus test ").1 The determination requires a panel to 
"scrutinize the links, in terms of nature , effects , and timing , between those [undeclared] measures, 
the declared measures 'taken to comply', and the recommendations and rulings of the DSB."2 
5. In this regard, Japan considers  that in US – Large C ivil Aircraft ( 2nd Complaint) (21.5  – EC), 
the compliance panel applied the close nexus test by examining "nature" and "effect s", but not 
"timing" while, in other parts of its analysis, the panel examined "nature", but not "effect s" and 
"timing".3 Japan co nsiders that such inconsistent application of the close nexus test by compliance 
panels may lead to arbitrary determinations on the proper scope of compliance panels.  Japan 
requests that the Panel apply the close nexus test in a holistic manner "based on a careful weighing 
and balancing of all of the close nexus factors —nature, effects, and timing ."4 
6. Japan notes that the application of the close nexus test in a holistic manner on "nature", 
"effects" and "timing" may involve the examination of factors  relevant to  said three elements.  Japan 
considers that in examining the "nature" and "effects" of the measures, the Panel may want to look 
                                                
1 See e.g., Appellate Body Report, US – Zeroing (EC) (Article 21.5  – EC), para. 207. 
2 Appellate Body Report, US – Zeroing (EC) (Article 21.5  – EC), para. 229.  
3 Panel Report, US – Large Civil Aircraft (2nd Complaint) (Article 21.5 – EC), paras. 7.76 -7.79 and 
7.162 -7.168.  
4 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 262.  WT/DS461/RW/Add.1  
 
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  at the policy objective of the measures. The Panel may benefit from some articulation by the 
implementing member of the  objectives of the measure s that the member take s, yet if the Panel is 
to conduct a close nexus test, it should not rely on the mere assertions of the parties, and should 
not give disproportionate weight on the asserted objectives of the measures at issue.  
II. ARTICLE  XI OF THE  GATT  1994  
7. The text of Article XI:1 of GATT  1994 is very broad and comprehensive in its scope as it does 
not contain any qualification on the subject "prohibitions or restrictions" on the importation of 
products. Japan is aware that the Appellate Body in Argentina – Import Measures  stated that "only 
[measures that] have a limiting effect on the imp ortation [of products]"5 can be found to be 
inconsistent with Article XI:1.  Japan also notes that the Article does not specify any threshold for 
such "a limiting effect". While Article XI:1 refers to "prohibitions or restrictions …  on the importation  
of any product ,"  limitations on importation by a particular person fall within the scope of Article XI 
insofar as th ey produce any limiting effect.  
8. In Japan 's view, customs bond constitutes a limitation on the "importation" of products and, 
by nature it ha s a "limiting effect" thus would fall  under pr ohibited measures under Article  XI:1. 
However, measures prohibited under Article XI:1 may b e justified pursuant to Article  XX of the GATT 
1994 to the extent that they serves legitimate public policy purposes, a nd other specific 
requirements under the provision are met.  The imposition of customs bond on imports may be 
justified, under Article XX (d), to the extent "necessary to secure compliance with [certain WTO -
consistent] laws or regulations ." 
III. ARTICLE  XX( A) OF THE  GATT  1994  
9. What is at dispute is whether the customs bond and the special import regime under Decree 
1745 are "necessary" to achieve the objective of combatting money laundering, that , in principle,  
falls under public morals purpose. While Japan is aware that  the Appellate Body stated that 
"[m]embers have the right to determine the level of protection that they consider appropriate ,"6 
Japan is of the view that the Member seeking to justify a measure under Article  XX(a) of the GATT 
1994 must identify the level of protection which  it is pursuing through the measure. The Appellate 
Body has noted that when assessing whether a measure can be justified pursuant to Article XX, an 
analytical process entails a consi deration of whether the measure has been adopted or enforced to 
achieve its objective, and whether the measure is necessary for achieving that objective.7 It is only 
when the responding Member identifies the policy  objective  pursued by the measure  that the  Panel 
would be able to determine whether the measure is "necessary" to achieve the objective by engaging 
in a "holistic analysis of the relationship between the measure and the protection of public morals."8 
Japan is of the view that for a measure to be p rovisionally justified under Article XX(a) of the GATT 
1994, it must be designed to meet the policy objective pursued by the measure.  
10. In this regard, Japan notes that, while the relevant policy  objective is to combat money 
laundering, it is not clear t o Japan why the measure is limited to certain textiles, apparel, and 
footwear, rather than being more broadly applicable to all or most imports or sectors. As such, Japan 
considers that it would be important for the Panel to take into consideration the lac k of a reasonable 
explanation as to why the measure's narrow product scope is "necessary" or for combatting money 
laundering.   
11. Finally, Japan adds that the Panel should carefully assess the lack of explanation as to why 
the measure is limited to certa in products in determining whether the measure complies with the 
chapeau of Article XX.  The Appellate Body confirmed that the calibration test can be applied in the 
context of Article XX of the GATT.  In US – Tuna, the Appellate Body relied on a "calibrat ion test" 
and reviewed whether any differences in treatment under the measure at issue can be justified by 
                                                
5 Appellate Body Reports, Argentina – Import Measures , para. 5.241.  
6 Appellate Body Report, EC – Seal Products , para. 5.200; see Appellate Body Report, Brazil – Retreaded 
Tyres , para.  140. 
7 See Appellate Body Report, EC – Seal Products , para. 5.169.  
8 Appellate Body Report, Colombia – Textiles , para. 5.70. WT/DS461/RW/Add.1  
 
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  reference to the policy objective pursued because such differences reflect the differences in, or are 
calibrated to, the different risks.9   
12. While Japan does not take any specific position on the facts of this dispute, Japan believes 
that the Panel should carefully review whether the customs bond and custom formalities under 
Decree 1745 take into account different risks that may arise, depending on  each transaction. If it is 
the case that a measure applies a single threshold of transaction prices, and thus does not calibrate 
it to any differences in the risks of money laundering arising from different transactions, it is possible 
that such a measure  constitutes arbitrary or unjustifiable discrimination. By the same token, 
however, if a measure is not applicable uniformly to different product groups or countries, even 
though the risks do not differ, this may also run afoul of the requirements of the c hapeau. In this 
situation, the responding Member must be able to explain the rationale for adopting a single and 
uniform measure or, by contrast, a measure that differentiates in a discriminatory way.   
13. In this dispute, Colombia would have to explain w hy a measure setting a uniform price 
threshold, which by its design and structure may capture transactions that are not at all connected 
to money laundering, is rationally related to the measure's stated objective of combating money 
laundering. Colombia sh ould also explain why it is reasonable to regulate low -value imports of this 
limited category of products and not other goods that may be easier or equally easy to be used for 
money laundering purposes. It is Japan's view that, in the absence of this type of rational 
explanation, a panel would normally need to find that a measure results in arbitrary or unjustifiable 
discrimination under the chapeau of Article XX of the GATT 1994, and consequently, it could not be 
justified.  
                                                
9 Appellate Body Report, US – Tuna II (Mexico)(Article 21.5 – Mexico) , para s. 7.153, 7.155, 7.239, 
7.347.  WT/DS461/RW/Add.1  
 
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  ANNEX C -5 
INTEGRATED EXECUTIVE SU MMARY OF THE EUROPEA N UNION  
I. INTRODUCTION  
1. The European Union (the EU) exercises its right to participate as a third party in this case 
because of its systemic interest in the correct and consistent interpretation and application of the 
provisions of the covered agreements at issue in this dispute, in particular the General A greement 
on Tariffs and Trade (the GATT 1994), the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (the DSU) and the Customs Valuation Agreement (CVA).  
2. Whilst not taking a final position on all the facts of this case, the EU p rovide s its views on 
certain legal claims and arguments advanced by the Parties to the dispute . 
II. THE PANELS ' TERMS OF REFERENC E 
A. Whether Decree No. 1745 falls within the scope of the present compliance proceedings  
3. The EU considers that subject to c ompliance proceedings can be both declared and 
undeclared measures taken to comply. A panel 's mandate under Article 21.5 of DSU is not 
necessarily limited to an examination of an implementing Member 's measure declared to be taken 
to comply, but may include  a review of other measures which have close relationship to the 
recommendations and rulings of the DSB and the declared measure taken to comply.  
4. In EC – Bananas III  (Article 21.5 - US) the Appellate Body considered that it has to be 
analyzed first whet her the measure at issue is in itself a measure taken to comply and only if that 
analysis cannot provide a clear answer, then the analysis of US – Softwood Lumber IV (Article  21.5 
– Canada)  is of application. In other words, if the measure at issue is foun d to constitute in itself a 
measure taken to comply, it will not be necessary to establish a "particularly close relationship" of 
the measure at issue to the declared measure taken to comply in order to subject the measure at 
issue to the scope of Article 21.5 proceedings.  
5. The EU recalls that not only declared, but also undeclared measures can be reviewed by a 
panel in Article 21.5 proceedings. A panel's mandate under Article 21.5 of DSU  is not necessarily 
limited to an examination of an implementing Member's measure declared to be taken to comply, 
but may include a review of other measures which have close relationship to the declared measure 
taken to comply and to the recommendations an d rulings of the DSB.  
6. Undeclared measures cannot be excluded a priori  from the scope of compliance proceedings. 
Otherwise, the complainant would have to bring new procedures to challenge any measure with 
respect to which the respondent continues to deny  compliance.  
7. Accordingly, it is relevant to examine certain relevant aspects such as the timing, nature, 
and effects of the various measures in order to conclude if they have a sufficiently close relationship 
to the recommendations and rulings of the DS B and the declared measures taken to comply. The 
EU concurs with Japan in this regard.  
8. With respect to the timing, the EU notes that both Decree No. 1744 and Decree No. 1745 
were adopted on 2 November 2016, before the expiry of the RPT on 22 January 201 7. While the first 
decree modified certain customs duties and brought them in line with the DSB recommendations 
and rulings, Decree No. 1745 instituted measures for the prevention and control of customs fraud 
in apparel and footwear imports.  
9. The EU also  notes that Colombia itself explained the link between the two future decrees in 
the RPT arbitration proceeding. The EU reckons  that statements made by the parties within the 
framework of Article 21.3(c) of DSU arbitrations are relevant and may offer guida nce to a panel. 
However, the EU considers that such statements are not dispositive.  WT/DS461/RW/Add.1  
 
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  10. In order to ascertain whether there is a close nexus, for instance, between an undeclared 
measure taken to comply and the DSB's recommendations and rulings, it is neces sary to examine 
the 'design' of the measure, including its content, structure and expected operation. A panel needs 
to take into account objective factors in undertaking such an assessment, so as to enable it to 
analyse the nature, timing and effects of th e measures at issue.  
11. The EU also considers that the arbitrator's factual findings in Article 21.3(c) proceedings are 
relevant, but not dispositive. The purpose of Article 21.3(c) proceedings is to determine a reasonable 
period of time to comply, while the purpose of Article 21.5 proceedings is to determine if the 
respective party complied with the recommendations and rulings of the DSB.  
12. The nature of the initial measure and of the new measure seems to be similar: Colombia's 
new mechanism is analogou s to the previous compound tariff, as it is activated when the prices of 
the imports of apparel and footwear are below certain thresholds prescribed by Colombia itself, as 
was the case with the compound tariff. When this situation occurs, a higher ad valor em tariff is 
applied (within the bound limits - Decree No. 1744), together with several specific requirements 
(Decree No. 1745). For imports below the threshold there is in fact a presumption that they are of 
an illicit nature. Thus, the effect of this sin gle package of measures seems to be the same as that of 
the compound tariff: it combines a price sensitive component (an ad valorem  duty) with a price 
insensitive component (customs bonds and documentary requirements).  
13. Furthermore, the objectives of th e previous and the new measure are the same. The new 
measure has also as justification the fight against money laundering. In fact, with respect to the 
customs bond requirement and the special importation regime in Decree No. 1745 Colombia raises 
similar d efenses under the general exceptions in Articles XX(a) and (d) as it did in the original 
proceedings with regard to the compound tariff in Decree No. 456. 
14. With respect to the effects of the original measure and of Decree No. 1745, the EU notes 
that the  measure at issue in the original proceedings covered the importation of apparel and footwear 
classified in Chapters 61, 62, and 64 of the Colombian Customs Tariff. At the same time, the new 
Decree No. introduces special customs controls for the importatio n of apparel and footwear classified 
in the very same chapters 61, 62, and 64 of the Colombian Customs Tariff. Furthermore, the goods 
initially subject to Decree No. 456 were those having artificially low prices, while the imports subject 
to the customs bo nds requirements under Decree No. 1745 "are those that are suspected to have 
declared values that are artificially low". The effects of both the original measure and the new 
measure seem to be the limitation of imports of the targeted products.  
15. Finally , the measures contained in Decrees No. 1744 and 1745 are the response of Colombia 
to the recommendations and ruling of the original panel and the Appellate Body with respect to the 
compound tariff in Decree No. 456. If the compound tariff had not been fou nd incompatible with 
Article II of GATT and not justified under Article XX of GATT, there would have been no reason to 
replace Decree No. 456 with new measures. Therefore, Decrees No. 1744 and 1745 were adopted 
as a consequence of the recommendations and r ulings in the original proceedings.  
16. Thus, the EU considers that the Panels should follow the previous relevant guidance from 
the Appellate Body and ascertain whether the measures at issue are measures taken to comply or 
have a particularly close relati onship with those measures, taking into account the factual 
configuration of the present case.  
B. Whether Decree No. 2218 falls within the scope of the present compliance proceedings  
17. The EU recalls that the Appellate Body in US/Canada - Continued Suspension  referred to 
possible new violations, not covered in the implementing Member's Article 21.5 panel request . The 
EU considers that in a particular configuration like the one in the present proceedings, when the 
initial respondent is bringing first compliance proceedings, subsequently followed by the original 
complainant, the matter before the Panels is as described in both panel requests. It can be compared 
to the existence of one panel request consisting of two parts.  WT/DS461/RW/Add.1  
 
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  18. With regard to whether a m easure adopted after the panel request is within a panel's terms 
of reference , the EU considers that  it should be assessed on a case by case basis.  Consultations 
requests must be consistent with Article 4.4 of DSU and panel requests must be consistent with  
Article 6.2 of DSU. A panel may examine in compliance proceedings declared measures taken to 
comply and undeclared measures taken to comply that satisfy the close nexus test (nature, timing 
and effects). However, all such measures must be within the panel 's terms of reference. If an original 
complainant considers that a compliance panel request filed by an original respondent is incomplete, 
it must file its own panel request if it wishes to include other measures in the scope of the compliance 
proceedings.  
19. Measures coming into existence during the course of compliance panel proceedings can only 
be within the terms of reference of the compliance panel if they are covered by specific language in 
the panel request that is consistent with Article 6 of DSU, or if either party files a modified panel 
request.  
20. The EU notes that at page 7 of Panama 's panel request there is a "catch -all" clause referring 
to "any possible amendments, extensions or additions, where applicable ". However, even in the 
presence of s uch a catch -all clause, the new measure must remain "the same in essence" as the old 
measure, in order to be validly captured. Thus, the EU invites the Panels to assess whether Decree 
2218, repealing Decree 1745 and containing largely identical provisions (albeit with certain 
important differences) can be considered an amendment, extension or addition which does not 
change the essence of the measure . 
21. Furthermore, throughout its panel request Panama describes the security for release of 
goods and certain  documentary and certification requirements, which are similar to a certain extent 
both under Decree 1745 and subsequently under Decree 2218.  
22. In light of the above, the Panels will have to ascertain whether Colombia, as well as the third 
parties, recei ved sufficient notice with regard to Panama 's claims in the present dispute also with 
regard to the content of Decree 2218, in light of the terms of Panama 's panel request.  
23. Finally, should the Panels consider that Decree 2218 is within their terms of r eference, then 
due process should be respected. Panama seems to have submitted Decree 2218 to the Panels ' 
attention with the first procedural opportunity. The EU welcomes the possibility to comment on these 
aspects.  
24. This being said, the EU shares the o ther third parties ' "moving target " concerns and 
considers that it should be a case -by-case assessment in light of the existing relevant guidance from 
the Appellate Body.  
III. ARTICLE XI OF GATT  1994  
25. The EU agrees that Article XI:1 refers to restrictions on the importation of products. Different 
provisions of the GATT contain express references to products. As a matter of example, the non -
discrimination provisions (MFN, national treatment) refer  to 'like products' in the GATT  1994. 
However, th e GATS, for instance, expressly refers to like services and service suppliers, while the 
GATT 1994 does not contain similar references to like products and like producers.  
26. Previous panel reports shed light on the meaning of "restrictions" in Article XI :1. Those 
panels applied a legal test considering the implications on the competitive situation of an importer. 
Measures found in breach of Article XI:1 comprised measures which created uncertainties and 
affected investment plans, restricted market access for imports or made importation prohibitively 
costly. This is a rather broad interpretation, taking into account different circumstances that can act 
as limiting conditions on imports, discouraging importation.  
27. Previous panels constantly based their fi ndings on the design, structure of the measure and 
its potential to adversely affect importation, as opposed to a standalone analysis of the actual impact 
of the measure on trade flows.  WT/DS461/RW/Add.1  
 
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  28. The EU understands that in the present case Colombia requires the constitution of a customs 
bond covering 200% of the threshold price and the quantity of the respective goods with three -year 
validity.  
29. Certain provisions of other WTO agreements are relevant in ascertaining whether customs 
bonds and import fees and for malities are consistent with Article XI:1 of GATT 1994.  Customs bonds 
and customs formalities are in general legitimate instruments that are permitted under the GATT 
1994, the CVA and the Agreement on Trade Facilitation (TFA). If applied in conformity with  those 
provisions customs bonds are trade facilitating measures and not restrictions to trade.  
30. However, if customs bonds and customs formalities are applied in a manner inconsistent 
with the relevant provisions of the CVA and TFA, then this may be a st rong indication that they 
amount to restrictions within the meaning of Article XI of GATT 1994.  
31. Indeed, c ustoms bonds are permitted under different WTO agreements, in particular Article 
13 of CVA and Article 7(3) of Trade Facilitation Agreement.  
32. The EU notes that Article 13 of CVA refers to those situations when, in the course of 
determining the customs value of imported goods, it becomes necessary to delay the final 
determination of that customs value. In such circumstances, the importer of the g oods is 
nevertheless able to withdraw the respective goods from customs if it provides sufficient guarantee 
in the form of a surety, a deposit or another appropriate instrument, covering the ultimate payment 
of customs duties for which the goods may be lia ble. 
33. Thus, a customs bond requirement on all imports of the products at issue (whereas the 
importation price is below a certain threshold established by Colombia) would mean that it is 
necessary to delay the final determination of the customs value in all those cases. It establishes a 
presumption of illegality on all such imports, while each import should normally be treated in 
accordance with the relevant individual circumstances, as per Articles 1 -7 of CVA.  
34. The EU also notes that Article 7(3) of T FA differentiates between guarantees related to the 
payment of customs duties, taxes, fees, and charges ultimately due for the goods, and guarantees 
related to the detection of an offence requiring imposition of monetary penalties or fines. While the 
first type of guarantees may be imposed in all cases, in order to facilitate the release of goods prior 
to the final determination of customs duties, taxes, fees, and charges, the second type of guarantees 
are related to the detection of an offence.  
35. In ligh t of the above, a cumulative reading of Article 13 of CVA and Article 7(3) of TFA 
denotes that the role of those provisions is to facilitate trade and not to discourage importation. 
However, the EU could imagine situations when guarantees, whether in the f orm of customs bonds 
or in other forms, may rather discourage importation instead of facilitating trade. Take for instance 
the example of a prohibitively high guarantee, which has no link to the customs value of those goods, 
resulted from the application o f Articles 1 -7 of CVA. Such instances may very well amount to 
hindrances to importation, impacting on the competitive situation of importers.  
36. Similarly to our understanding of the relationship between Article XI of GATT 1994 and other 
relevant provisio ns with respect to the customs bond requirement, t he EU considers that other 
provisions of the GATT 1994 can offer useful context in understanding whether customs fees and 
formalities amount to restrictions within the meaning of Article XI.  
37. Indeed, Art icle VIII of GATT 1994 mentions that all fees and charges  shall be limited in 
amount to the approximate cost of services rendered and shall not represent an indirect protection 
to domestic products. It can be inferred that fees and charges which conform to  Article VIII are not 
inconsistent with Article XI.  
38. Similarly, Article 6(2) of TFA provides that fees and charges for customs processing shall be 
limited in amount to the approximate cost of the services rendered on or in connection with the 
specific i mport or export operation in question. Such fees and charges should not be inconsistent 
with Article XI.  WT/DS461/RW/Add.1  
 
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  IV. ARTICLE XX OF GATT  1994  
39. Similarly to the original proceedings, Colombia  attempts to justify the possible GATT 
violations  under paragraphs (a) a nd (d) of Article XX of GATT 1994 . 
40. The EU does not dispute that combating money laundering (linked with drug trafficking and 
other criminal activities) is one of the policies designed to protect public morals in Colombia. In light 
of the Appellate Body  Report in the original proceedings , it also seems that Decree No.  1745 is not 
"incapable" of addressing the purported objective of protecting the public morals.  Accordingly, the 
Panel s would have to closely look into the second element, of whether the mea sure at issue is 
"necessary" for the protection of public morals.  
41. The EU notes  that the initial critique from the Appellate Body with respect to the contribution 
of the initial measure to the objective of combating money laundering seems to be relevant  also in 
the context of the measures taken to comply. Thus, Colombia may need to further clarify the degree 
of contribution of the measure at issue to the objective of combating money laundering.  
42. As explained in the original proceedings, with regard to  the possible alternative measures 
which may be WTO consistent or less trade restrictive while providing an equivalent contribution to 
the achievement of the objective pursued, a possible example of a WTO consistent measure is the 
targeting of under -invoic ing more directly by applying the correct customs value to those artificially 
low priced imports. Thus, the money laundering operation may be frustrated, while not restricting 
at the same time imports which may be priced at a low level because of a differe nt reason.  
43. Colombia's measure applies to all relevant imports of textiles, apparel and footwear coming 
from all countries, if the price is below a certain threshold established by the Colombia authorities. 
However, the EU has doubts about the appropria teness of requiring bonds for certain imports based 
solely on their low declared customs values. The EU could imagine that there may be situations when 
there is a genuine low price of importation for some products which is not related to money 
laundering a ctivities of the criminal groups.  
44. The measures at issue may amount to a disguised restriction on international trade within 
the meaning of the chapeau  of Article XX. Article 7(3) of TFA refers to the requirement of a guarantee 
linked to the imposition of penalties and fines only in cases where an offence has been detected, 
and not in all cases, on the basis of a sweeping presumption of illegality.  
45. The EU also recalls that Members also enjoy a certain regulatory autonomy. In EU - Seal 
Products , when discussing Article XX(a) of GATT,  Canada suggested that the EU must recognize the 
same level of animal welfare risk in seal hunts as it does in its slaughterhouses and terrestrial wildlife 
hunts. Thus, Canada appeared to argue that a responding Member mus t regulate similar public moral 
concerns in similar ways for the purposes of satisfying the requirement "to protect" public morals 
under Article XX(a). The Appellate Body disagreed.  
V. CONCLUSIONS  
46. The EU hopes that its contribution in the present case will be helpful to the Panel s in 
objectively assessing the matter before them and in developing the respective legal interpretations 
of the relevant provisions of the covered agreements . 
__________