WT/DS457/R  
27 November 2014  
(14-6854)  Page: 1/127  
 Original: Spanish  
 
  PERU – ADDITIONAL DUTY ON IMPORTS OF CERTAIN 
AGRICULTURAL PRODUCTS 
REPORT OF THE PANEL 
 WT/DS457/R 
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  TABLE OF CONTENTS 
1   INTROD UCTION  ........................................................................................................ 14  
1.1   Complaint by Guatemala ........................................................................................... 14 
1.2   Panel establishm ent and comp osition .......................................................................... 14 
1.3   Panel proceedings ..................................................................................................... 14 
2   FACTUAL ASPECTS ..................................................................................................... 15  
2.1   Introduction ............................................................................................................. 15 
2.2   Measures  at issue ..................................................................................................... 15 
3   PARTIES' REQUESTS FOR FI NDINGS AND RECO MMENDATIONS ................................ 17  
4   ARGUMENTS OF  THE PARTIES ................................................................................... 18  
5   ARGUMENTS OF TH E THIRD PA RTIES ........................................................................ 18  
6   INTERIM REVIEW ...................................................................................................... 18  
7   FIND INGS ................................................................................................................. 22 
7.1   Preliminary considerations ......................................................................................... 22 
7.1.1   Intr oducti on ..........................................................................................................  22 
7.1.2   The Panel's terms of reference ................................................................................. 22 
7.1.3   Function of the Pane l and standard of review ............................................................. 23 
7.1.4   Interpretation of the relevant rules of the agreements ................................................. 23 
7.1.5   Burden  of proof ..................................................................................................... 24 
7.1.6   Order of analysis ................................................................................................... 25 
7.2   The question of whether the Panel should refrain from examining Guatemala's 
claims ........................................................................................................................ .... 26 
7.2.1   Intr oducti on ..........................................................................................................  26 
7.2.2   The content of the FTA and its le gal status ................................................................ 27 
7.2.2.1   Chronology of events relating to th e negotiation and entry into force of the FTA ........... 27 
7.2.2.2   Conten t of th e FTA .............................................................................................. 28 
7.2.3   Main argume nts of the parties ................................................................................. 30 
7.2.3.1   Peru .................................................................................................................. 30 
7.2.3.2   Guatem ala ......................................................................................................... 31 
7.2.4   Main arguments of the thir d parties .......................................................................... 33 
7.2.4.1   Argentina ........................................................................................................... 33 
7.2.4.2   Brazil .............................................................................................................. .. 33 
7.2.4.3   Colombia ........................................................................................................... 33 
7.2.4.4   United States ..................................................................................................... 34 
7.2.4.5   European Union .................................................................................................. 34 
7.2.5   Assessmen t by the Panel ........................................................................................ 35 
7.2.5.1   The principle of good faith under Articles 3.7 and 3.10 of the DSU .............................. 36 WT/DS457/R 
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  7.2.5.2   Whether Peru has shown that Guat emala did not initiate the present procedure 
in good faith ................................................................................................................. .. 39 
7.2.5.3   Conclusion ......................................................................................................... 41 
7.3   Description of the facts .............................................................................................. 42 
7.3.1   History of the Price Range System ............................................................................ 42 
7.3.2   The PRS and how it op erates ................................................................................... 44 
7.3.2.1   In troducti on ....................................................................................................... 44 
7.3.2.2   The PRS............................................................................................................. 44 
7.3.2.3   Objectiv es of the PRS .......................................................................................... 45 
7.3.2.4   Products subject to the PRS .................................................................................. 45 
7.3.2.5   The methodology for calcul ating duties or tariff rebates ............................................ 48 
7.3.2.6   The historical application of  the PRS ...................................................................... 52 
7.3.3   Peru's tariff policy and the recordin g of tariffs in its sch edule of co ncessi ons ................... 62 
7.4   The question of whether the duties resulting from the PRS are inconsistent with 
Article 4.2 of the Agr eement on Agriculture ......................................................................... 63 
7.4.1   Intr oducti on ..........................................................................................................  63 
7.4.2   Main argume nts of the parties ................................................................................. 63 
7.4.2.1   Guatemala's claim ............................................................................................... 63 
7.4.2.2   Peru 's defence .................................................................................................... 69 
7.4.3   Main arguments of the thir d parties .......................................................................... 73 
7.4.3.1   Argentina ........................................................................................................... 73 
7.4.3.2   Brazil .............................................................................................................. .. 73 
7.4.3.3   Colombia ........................................................................................................... 74 
7.4.3.4   Ecuador .............................................................................................................  74 
7.4.3.5   United States ..................................................................................................... 75 
7.4.3.6   European Union .................................................................................................. 76 
7.4.4   Assessmen t by the Panel ........................................................................................ 76 
7.4.4.1   Article 4.2 of the Agreement on Agriculture ............................................................. 76 
7.4.4.2   The question of whether the duties  resulting from the PRS are variable import 
levies, minimum import prices or similar bord er measures ..................................................... 84 
7.5   The question of whether the duties resu lting from the PRS are inconsistent with the 
second sentence of Article II:1(b) of th e GATT 1994 ............................................................. 95 
7.5.1   Intr oducti on ..........................................................................................................  95 
7.5.2   Main argume nts of the parties ................................................................................. 96 
7.5.2.1   Guatemala's claim ............................................................................................... 96 
7.5.2.2   Peru 's defence .................................................................................................... 98 
7.5.3   Main arguments of the third parties ........................................................................ 100  
7.5.3.1   Colombia ......................................................................................................... 10 0 
7.5.3.2   United States ................................................................................................... 100  
7.5.3.3   European Union ................................................................................................ 100  
7.5.4   Assessment by the Panel ...................................................................................... 101  
7.5.4.1   Intr oduction  ..................................................................................................... 10 1 WT/DS457/R 
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  7.5.4.2   The obligation under the second sentence of Article II:1(b) of the GATT 1994 ............ 101  
7.5.4.3   Definition of "oth er duties or charges" .................................................................. 102  
7.5.4.4   Assessment of "other duties or charges" in accordance with the obligations 
contained in the Understanding on the Interpretation of Article II:1(b) of the GATT 1994 ......... 107  
7.5.4.5   Conclusion ....................................................................................................... 10 7 
7.6   The question of whether Peru has acted inconsistently with Article X:1 of the 
GATT 1994 ................................................................................................................... 1 08 
7.6.1   Intr oduction  ........................................................................................................ 1 08 
7.6.2   Main argument s of the pa rties ............................................................................... 108  
7.6.2.1   Guatemala's claim ............................................................................................. 108  
7.6.2.2   Peru's defence .................................................................................................. 109  
7.6.3   Main arguments of the third parties ........................................................................ 110  
7.6.3.1   United States ................................................................................................... 110  
7.6.3.2   European Union ................................................................................................ 110  
7.6.4   Assessment by the Panel ...................................................................................... 110  
7.6.4.1   Intr oduction  ..................................................................................................... 11 0 
7.6.4.2   The publication requirement under Article X:1 of the GATT 1994 .............................. 111  
7.6.4.3   Conclusion ....................................................................................................... 11 4 
7.7   The question of whether Peru has acted inconsistently with Article X:3(a) of the 
GATT 1994 ................................................................................................................... 1 14 
7.7.1   Intr oduction  ........................................................................................................ 1 14 
7.7.2   Main argument s of the pa rties ............................................................................... 115  
7.7.2.1   Guatemala's claim ............................................................................................. 115  
7.7.2.2   Peru's defence .................................................................................................. 116  
7.7.3   Main arguments of the th ird parties – Euro pean Union .............................................. 117  
7.7.4   Assessment by the Panel ...................................................................................... 117  
7.7.4.1   Article X:3(a)  of the GATT 1994 .......................................................................... 117  
7.7.4.2   General considerations ....................................................................................... 118  
7.7.4.3   Measur es covered ............................................................................................. 118  
7.7.4.4   Meaning of  administra tion .................................................................................. 118  
7.7.4.5   The requiremen t of reasonab leness ..................................................................... 119  
7.7.4.6   Conclusion ....................................................................................................... 12 0 
7.8   Alternative claim under th e Customs Valuatio n Agreement ........................................... 120  
7.9   The question of whether, by means of the FTA, the parties modified their WTO 
rights between themselves .............................................................................................. 121  
7.9.1   Intr oduction  ........................................................................................................ 1 21 
7.9.2   Main argument s of the pa rties ............................................................................... 121  
7.9.2.1   Peru ................................................................................................................ 121  
7.9.2.2   Gu atemala ....................................................................................................... 122  
7.9.3   Main arguments of the third parties ........................................................................ 123  
7.9.3.1   Brazil ..............................................................................................................  123 
7.9.3.2   United States ................................................................................................... 124  WT/DS457/R 
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  7.9.3.3   European Union ................................................................................................ 124  
7.9.4   Assessment by the Panel ...................................................................................... 125  
7.10   Special and differential treatment ............................................................................ 125  
8   CONCLUSIONS AN D RECOMMEND ATION ................................................................. 126  
 
 WT/DS457/R 
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  LIST OF ANNEXES 
 
ANNEX A 
WORKING PROCEDURES OF THE PANEL 
Contents Page 
Annex A Working Procedures of the Panel A-1 
ANNEX B 
ARGUMENTS OF THE PARTIES 
GUATEMALA 
Contents Page 
Annex B-1 First part of the executive su mmary of the arguments of Guatemala B-2 
Annex B-2 Second part of the executive summary of the arguments of Guatemala B-13 
PERU 
Contents Page 
Annex B-3 First part of the executive summary of the arguments of Peru B-25 
Annex B-4 Second part of the executive summary of the arguments of Peru B-38 
ANNEX C 
ARGUMENTS OF THIRD PARTIES 
Contents Page 
Annex C-1 Executive summary of the arguments of Argentina C-2 
Annex C-2 Executive summary of the arguments of Brazil C-5 
Annex C-3 Executive summary of the arguments of Colombia C-6 
Annex C-4 Executive summary of the arguments of Ecuador C-8 
Annex C-5 Executive summary of the arguments of the United States C-10 
Annex C-6 Executive summary of the arguments of the European Union C-15 
 WT/DS457/R 
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  CASES CITED IN THIS REPORT 
Short Title Full Case Title and Citation 
Argentina – Hides and 
Leather Panel Report, Argentina – Measures Affecting th e Export of Bovine Hides and 
Import of Fini shed Leather, WT/DS155/R and Corr.1, adopted 16 February 2001 
Argentina – Poultry 
Anti-Dumping Duties Panel Report, Argentina – Definitive Anti-Dumpi ng Duties on Poultry from Brazil , 
WT/DS241/R, adopted 19 May 2003 
Argentina – Textiles and 
Apparel Appellate Body Report, Argentina – Measures Affect ing Imports of Footwear, 
Textiles, Apparel and Other Items , WT/DS56/AB/R and Corr.1, adopted 
22 April 1998 
Argentina – Textiles and 
Apparel Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, 
Apparel and Other Items , WT/DS56/R, adopted 22 April 1998, as modified by 
Appellate Body Repo rt WT/DS56/AB/R 
Australia – Salmon Appellate Body Report, Australia - Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998 
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/AB/R, adopted 17 December 2007 
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R, adopted 20 August 1999 
Canada – Autos Appellate Body Reports, Canada – Certain Measures Affecting the Automotive 
Industry , WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000 
Canada – Continued 
Suspension Appellate Body Report, Canada – Continued Suspension of Obligations in the 
EC - Hormones Dispute , WT/DS321/AB/R, adopted 14 November 2008 
Canada – Dairy 
(Article 21.5 – New Zealand 
and US II) Appellate Body Reports, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the 
DSU by New Zealand and the United States , WT/DS103/AB/RW2, 
WT/DS113/AB/RW2, adopted 17 January 2003 
Canada – Renewable 
Energy / Canada – Feed-in Tariff Program Appellate Body Reports,  Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff Program , WT/DS412/AB/R, WT/DS426/AB/R, adopted 24 May 2013 
Canada – Wheat Exports 
and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004 
Chile – Price Band System  Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R, adopted 
23 October 2002 
Chile – Price Band System  Panel Report, Chile – Price Band System and Safeguard Measures Relating to 
Certain Agricultural Products , WT/DS207/R, adopted 23 October 2002, 
as modified by Appellate Body Report WT/DS207/AB/R 
Chile – Price Band System 
(Article 21.5 – Argentina)  Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products  – Recourse to Article 21.5 of the DSU 
by Argentina , WT/DS207/AB/RW, adopted 22 May 2007 
Chile – Price Band System 
(Article 21.5 – Argentina)  Panel Report, Chile – Price Band System and Safeguard Measures Relating to 
Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina , 
WT/DS207/RW, adopted 22 May 2007, upheld by Appellate Body Report 
WT/DS207/AB/RW 
China – Auto Parts  Appellate Body Reports, China – Measures Affecting Imports of Automobile 
Parts, WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R, adopted 
12 January 2009 
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts , 
WT/DS339/R, WT/DS340/R, WT/DS342/R, Add.1 and Add.2, adopted 
12 January 2009, upheld (WT/DS339/R) and as modified (WT/DS340/R, 
WT/DS342/R) by Appellate Body Re ports WT/DS339/AB/R, WT/DS340/AB/R, 
WT/DS342/AB/R WT/DS457/R 
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  Short Title Full Case Title and Citation 
China – Rare Earths  Panel Reports, China – Measures Related to th e Exportation of Rare Earths, 
Tungsten, and Molybdenum , WT/DS431/R, WT/DS432/R, WT/DS433/R and 
Add.1, adopted 29 August 2014, upheld by Appellate Body reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R 
China – Raw Materials  Panel Reports, China – Measures Related to the Exportation of Various Raw 
Materials , WT/DS394/R, WT/DS395/R, WT/DS 398/R, Add.1 and Corr.1, adopted 
22 February 2012, as modified by Appellate Body Reports WT/DS394/AB/R, 
WT/DS395/AB/R, WT/DS398/AB/R 
Dominican Republic – 
Import and Sale of Cigarettes Panel Report, Dominican Republic – Measures Affecting the Importation and 
Internal Sale of Cigarettes , WT/DS302/R, adopted 19 May 2005, as modified by 
Appellate Body Report WT/DS302/AB/R 
Dominican Republic – 
Safeguard Measures Panel Reports, Dominican Republic – Safeguard Measures on Imports of 
Polypropylene Bags and Tubular Fabric , WT/DS415/R, WT/DS416/R, 
WT/DS417/R, WT/DS418/R and Add.1, adopted 22 February 2012 
EC – Approval and 
Marketing of Biotech 
Products  Panel Reports, European Communities – Measures  Affecting the Approval and 
Marketing of Biotech Products , WT/DS291/R, WT/DS292/R, WT/DS293/R, Add.1 
to Add.9 and Corr.1, adopted 21 November 2006 
EC – Asbestos  Panel Report, European Communities – Measur es Affecting Asbestos and 
Asbestos-Containing Products , WT/DS135/R and Add.1, adopted 5 April 2001, 
as modified by Appellate Body Report WT/DS135/AB/R 
EC – Bananas III  Appellate Body Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 1997 
EC – Bananas III 
(Article 21.5 – Ecuador) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador,  
WT/DS27/RW/ECU, adopted 6 May 1999 
EC – Bananas III  
(Article 21.5 – Ecuador II) / EC - Bananas III (Article 21.5 – US) Appellate Body Reports, European Communities – Regi me for the Importation, 
Sale and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by Ecuador , WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 / 
European Communities – Regi me for the Importation, Sa le and Distribution of 
Bananas – Recourse to Article 21.5 of the DSU by the United States , 
WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008 
EC – Bed Linen 
(Article 21.5 – India) Appellate Body Report, European Communities, Anti-D umping Duties on Imports 
of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by 
India, WT/DS141/AB/RW, adopted 24 April 2003 
EC – Chicken Cuts Appellate Body Reports, European Communities – Cu stoms Classification of 
Frozen, Boneless Chicken Cuts , WT/DS269/AB/R, WT/DS286/AB/R, adopted 
27 September 2005, and Corr.1 
EC – Export Subsidies on 
Sugar Appellate Body Reports , European Communities – Ex port Subsidies on Sugar , 
WT/DS265/AB/R, WT/DS266/AB/R, WT/D S283/AB/R, adopted 19 May 2005 
EC – Export Subsidies on 
Sugar (Australia) Panel Report, European Communities – Export Su bsidies on Sugar, Complaint by 
Australia , WT/DS265/R, adopted 19 May 2005, as modified by Appellate Body 
Reports WT/DS265/AB/R, WT/D S266/AB/R, WT/DS283/AB/R 
EC – Export Subsidies on 
Sugar (Brazil) Panel Report, European Communities – Export Su bsidies on Sugar, Complaint by 
Brazil , WT/DS266/R, adopted 19 May 2005, as modified by Appellate Body 
Reports WT/DS265/AB/R, WT/D S266/AB/R, WT/DS283/AB/R 
EC – Export Subsidies on 
Sugar (Thailand) Panel Report, European Communities – Export Su bsidies on Sugar, Complaint by 
Thailand , WT/DS283/R, adopted 19 May 2005, as modified by Appellate Body 
Reports WT/DS265/AB/R, WT/D S266/AB/R, WT/DS283/AB/R 
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on 
Certain Iron or Stee l Fasteners from China , WT/DS397/R and Corr.1, adopted 
28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R 
EC – Hormones Appellate Body Reports, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998 
EC – IT Products Panel Reports, European Communities and its Me mber States – Tariff Treatment 
of Certain Information Technology Products , WT/DS375/R, WT/DS376/R, 
WT/DS377/R, adopted 21 September 2010 WT/DS457/R 
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  Short Title Full Case Title and Citation 
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the 
Importation of Certain Poultry Products,  WT/DS69/AB/R, adopted 23 July 1998 
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines , 
WT/DS231/AB/R, adopted 23 October 2002 
EC – Seal Products Panel Reports, European Communities – Measures Prohibiting the Importation 
and Marketing of Seal Products , WT/DS400/R, WT/DS401/R and Add.1, adopted 
18 June 2014, as modified by Appellate Body Reports WT/DS400/AB/R, WT/DS401/AB/R 
EC – Selected Customs 
Matters Appellate Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R, adopted 11 December 2006 
EC – Selected Customs 
Matters Panel Report, European Communities – Selected Customs Matters , 
WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body Report WT/DS315/AB/R 
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting of 
Tariff Preferences to Developing Countries , WT/DS246/AB/R, adopted 
20 April 2004 
EC – Trademarks and 
Geographical Indications (Australia) Panel Report, European Communities – Prot ection of Trademarks and 
Geographical Indications for Agricultural  Products and Foodstuffs, Complaint by 
Australia , WT/DS290/R, adopted 20 April 2005 
EC – Trademarks and 
Geographical Indications 
(US) Panel Report, European Communities – Prot ection of Trademarks and 
Geographical Indications for Agricultural  Products and Foodstuffs, Complaint by 
the United States , WT/DS174/R, adopted 20 April 2005 
EC and certain member 
States – Large Civil Aircraft Panel Report, European Communities and Certai n Member States – Measures 
Affecting Trade in Large Civil Aircraft , WT/DS316/R, adopted 1 June 2011, as 
modified by Appellate Bo dy Report, WT/DS316/AB/R 
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear 
from China , WT/DS405/R, adopted 22 February 2012 
Guatemala – Cement I Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland 
Cement from Mexico , WT/DS60/R, adopted 25 November 1998, as reversed by 
Appellate Body Repo rt WT/DS60/AB/R 
Guatemala – Cement II Panel Report, Guatemala – Defini tive Anti-Dumping Measures on Grey Portland 
Cement from Mexico , WT/DS156/R, adopted 17 November 2000 
India – Additional Import 
Duties  Appellate Body Report, India – Additional and Extr a-Additional Duties on 
Imports from the United States , WT/DS360/AB/R, adopted 17 November 2008 
India – Additional Import 
Duties Panel Report, India – Additional and Extra-Additional Duties on Imports from the 
United States , WT/DS360/R, adopted 17 November 2008, as reversed by 
Appellate Body Report WT/DS360/AB/R 
India – Quantitative 
Restrictions Panel Report, India – Quantitative Restrictions on  Imports of Agricultural, Textile 
and Industrial Products , WT/DS90/R, adopted 22 September 1999, upheld by 
Appellate Body Repo rt WT/DS90/AB/R 
Indonesia – Autos  Panel Reports, Indonesia – Certain Measures A ffecting the Automobile Industry , 
WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, adopted 23 July 1998, and 
Corr.3 and Corr.4 
Japan – Alcoholic 
Beverages II Appellate Body Reports, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, 
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996 
Japan – Film Panel Report, Japan – Measures Affecting Cons umer Photographic Film and 
Paper,  WT/DS44/R, adopted 22 April 1998 
Korea – Various Measures 
on Beef  Panel Reports, Korea – Measures Affecting Import s of Fresh, Chilled and Frozen 
Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by 
Appellate Body Reports WT/DS161/AB/R, WT/DS169/AB/R 
Mexico – Corn Syrup 
(Article 21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose 
Corn Syrup (HFCS) from the United States  – Recourse to Article 21.5 of the DSU 
by the United States , WT/DS132/AB/RW, adopted 21 November 2001 
Mexico – Steel Pipes and 
Tubes Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from 
Guatemala , WT/DS331/R, adopted 24 July 2007 WT/DS457/R 
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  Short Title Full Case Title and Citation 
Mexico – Taxes on Soft 
Drinks Appellate Body Report, Mexico – Tax Measures on  Soft Drinks and Other 
Beverages , WT/DS308/AB/R, adopted 24 March 2006 
Thailand – Cigarettes 
(Philippines) Panel Report, Thailand – Customs and Fiscal Me asures on Cigarettes from the 
Philippines , WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body 
Report WT/DS371/AB/R 
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and 
Sections of Iron or Non-Alloy Steel and H-Beams from Poland , WT/DS122/AB/R, 
adopted 5 April 2001 
Turkey – Rice Panel Report, Turkey – Measures Affectin g the Importation of Rice , 
WT/DS334/R, adopted 22 October 2007 
Turkey – Textiles Appellate Body Report, Turkey – Restrictions  on Imports of Textile and Clothing 
Products , WT/DS34/AB/R, adopted 19 November 1999 
Turkey – Textiles Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products , 
WT/DS34/R, adopted 19 November 1999, as modified by Appellate Body Report WT/DS34/AB/R 
US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan , 
WT/DS162/R and Add.1, adopted 26 September 2000, upheld by Appellate Body 
Reports WT/DS136/AB/R, WT/DS162/AB/R 
US – Anti-Dumping and 
Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R, adopted 
25 March 2011 
US – Certain EC Products Panel Report, United States – Import Measures  on Certain Products from the 
European Communities , WT/DS165/R, Add.1, and Corr.1, adopted 
10 January 2001, as modified by Appellate Body Report WT/DS165/AB/R 
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL) 
Requirements , WT/DS384/R, WT/DS386/R, adopted 23 July 2012, as modified 
by Appellate Body Reports WT/DS384/AB/R, WT/DS386/AB/R 
US – Corrosion-Resistant 
Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties 
on Corrosion-Resistant Carbon Steel Flat Products from Japan , WT/DS244/AB/R, 
adopted 9 January 2004 
US – Cotton Yarn Panel Report, United States – Transitional Safeguard Measure on Combed 
Cotton Yarn from Pakistan , WT/DS192/R, adopted 5 November 2001, 
as modified by Appellate Body Report WT/DS192/AB/R 
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" , WT/DS108/AB/R, adopted 20 March 2000 
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 
20 April 2005, and Corr.1 
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996 
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 
23 August 2001 
US – Lamb Appellate Body Reports, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Me at from New Zealand and Australia , 
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001 
US – Offset Act 
(Byrd Amendment) Panel Reports, United States – Continued Dump ing and Subsidy Offset Act of  
2000, WT/DS217/R, WT/DS234/R, adopted 27 January 2003, as modified by 
Appellate Body Reports WT/DS217/AB/R, WT/DS234/AB/R 
US – Oil Country Tubular 
Goods Sunset Reviews Appellate Body Report, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R, 
adopted 17 December 2004 
US – Oil Country Tubular 
Goods Sunset Reviews (Article 21.5 – Argentina) Appellate Body Report, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country Tubular Goods from Argentina  – Recourse to 
Article 21.5 of the DSU by Argentina , WT/DS268/AB/RW, adopted 11 May 2007 WT/DS457/R 
- 11 - 
  Short Title Full Case Title and Citation 
US – Shrimp Appellate Body Report, United States – Impo rt Prohibition of Certain Shrimp and 
Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998 
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination 
with Respect to Certain So ftwood Lumber from Canada , WT/DS257/AB/R, 
adopted 17 February 2004 
US – Stainless Steel 
(Korea) Panel Report, United States – Anti-Dumping Measures on Stainless Steel Plate in 
Coils and Stainles s Steel Sheet and Strip from Korea , WT/DS179/R, adopted 
1 February 2001 
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on 
Steel Plate from India , WT/DS206/R, adopted 29 July 2002 
US – Underwear Panel Report, United States – Restrictions on  Imports of Cotton and Man-Made 
Fibre Underwear , WT/DS24/R and Corr.1, adopted 25 February 1997, 
as modified by Appellate Body Report WT/DS24/AB/R 
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R, adopted 21 March 2005 
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton , WT/DS267/R and 
Add.1 to Add.3, adopted 21 March 2005, as modified by Appellate Body Report 
WT/DS267/AB/R 
US – Wool Shirts and 
Blouses Appellate Body Report, United States – Measure A ffecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R, adopted 23 May 1997, 
and Corr.1 
US – Zeroing (EC) 
(Article 21.5 – EC) Appellate Body Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU 
by the European Communities , WT/DS294/AB/RW and Corr.1, adopted 
11 June 2009 
US – Zeroing (Japan) 
(Article 21.5 – Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset 
Reviews – Recourse to Article 21.5 of the DSU by Japan , WT/DS322/AB/RW, 
adopted 31 August 2009 
US – Zeroing (Japan) 
(Article 21.5 – Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews 
– Recourse to Article 21.5 of the DSU by Japan , WT/DS322/RW, adopted 
31 August 2009, upheld by Appellate Body Report WT/DS322/AB/RW 
 WT/DS457/R 
- 12 - 
  GATT PANEL REPORTS 
Short Title Full Case Title and Citation 
Canada – FIRA GATT Panel Report, Canada – Administration of the Foreign Investment 
Review Act , L/5504, adopted 7 February 1984, BISD 30S/140 
EEC – Import Restrictions GATT Panel Report, EEC – Quantitative Restrictions Against Imports of 
Certain Products from Hong Kong, L/5511 , adopted 12 July 1983, 
BISD 30S/129  
EEC – Minimum Import Prices GATT Panel Report, EEC – Programme of Minimum Import Prices, Licences 
and Surety Deposits for Certain Processed Fruits and Vegetables , L/4687, 
adopted 18 October 1978, BISD 25S/68 
Japan – Semi-Conductors GATT Panel Report, Japan – Trade in Semi-Conductors , L/6309, adopted 
4 May 1988, BISD 35S/116 
US – Customs User Fee GATT Panel Report, United States – Customs User Fee , L/6264, adopted 
2 February 1998, BISD 35S/245 
US – MFN Footwear GATT Panel Report, United States – Denial of Most-Favoured-Nation 
Treatment as to Non-Rubber Footwear from Brazil , DS18/R, adopted 
19 June 1992, BISD 39S/128 
US – Sugar Quota GATT Panel Report, United States – Imports of Sugar from Nicaragua , 
L/5607, adopted 13 March 1984, BISD 31S/67 
 WT/DS457/R 
- 13 - 
  ABBREVIATIONS USED IN THIS REPORT 
Abbreviation Description 
c.i.f. Cost, Insurance and Freight 
Customs Valuation Agreement Agreement on Implementation of Article VII of the 
General Agreement on Tariffs and Trade 1994 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Proced ures Governing the Settlement 
of Disputes 
Enabling Clause Decision on Differen tial and More Favourable Treatment, 
Reciprocity and Fuller  Participation of Developing Countries, 
adopted in 1979 by the CONTRACTING PARTIES to the GATT 
f.o.b. Free on board 
FTA Free Trade Agreement between Peru and Guatemala 
GATT 1994 General Agreement on Tariffs and Trade 1994 
PRS Price range system 
Understanding on Article II:1(b) of the 
GATT 1994 Understanding on the Interpretation of Article II:1(b) of the 
General Agreement on Tariffs and Trade 1994 
USD United States dollars 
Vienna Convention Vienna Convention on the Law of Treaties 
WTO World Trade Organization 
WTO Agreement Marrakesh Agreement Establishing  the World Trade Organization 
 WT/DS457/R 
- 14 - 
  1  INTRODUCTION 
1.1  Complaint by Guatemala 1.1.  On 12 April 2013, Guatemala requested consultations with Peru pursuant to Article 4 of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article 19 
of the Agreement on Agriculture, Article 19 of th e Agreement on Implementation of Article VII of 
the General Agreement on Tariffs and Trad e 1994 (Customs Valuation Agreement) and 
Article XXIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), with respect to the 
imposition by Peru of an "additional duty" on imports of certain agricultural products.
1 
1.2.  Consultations were held on 14 and 15 May 2013, but failed to resolve the dispute.2 
1.2  Panel establishment and composition 1.3.  On 13 June 2013, Guatemala requested the Dispute Settlement Body (DSB) to establish 
a panel pursuant to Articles 4.7 and 6 of the DS U, Article 19 of the Agreement on Agriculture, 
Article 19 of the Customs Valuation Agreement and Article XXIII:2 of the GATT 1994, with the 
standard terms of reference provided for in Article 7.1 of the DSU.
3 At its meeting on 23 July 2013, 
the DSB established a panel pursuant to the re quest of Guatemala in document WT/DS457/2, 
in accordance with Article 6 of the DSU.4 
1.4.  The Panel's terms of reference are the following: 
To examine, in the light of the relevant pr ovisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by Guatemala in document WT/DS457/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.
5 
1.5.  On 19 September 2013, the parties agreed to the following composition of the Panel: 
Chairman: Mr Gary Horlick Members: Ms Enie Neri de Ross 
 Mr Miguel Rodríguez Mendoza 
1.6.  Argentina, Brazil, China, Colombia
6, Ecuador, El Salvador, the European Union, Honduras, 
India, the Republic of Korea and the United States  reserved their right to participate in the panel 
proceedings as third parties. 
1.3  Panel proceedings 1.7.  After consultations with the parties, the Panel adopted its working procedures on 
8 October 2013
7 and its timetable on 4 October 2013. The timetable was modified on 
17 February 2014 and 10 April 2014, at the suggestion of the Panel in the first instance, and of the 
parties in the second. 
1.8.  Guatemala made its first written submission on 29 October 2013. Peru made its first written 
submission on 9 December 2013. On 20 December 2013, the Panel received third-party written 
submissions from Argentina, Brazil, Colombia, the European Union and the United States. 
                                               
1 See request for consultations by Guatemala, document WT/DS457/1 (of 16 April 2013). 
2 See request for the establishment of a panel by Guatemala, document WT/DS457/2 
(of 14 June 2013). 
3 Ibid. 
4 See minutes of the DSB meeting held in the Centre William Rappard on 23 July 2013, document 
WT/DSB/M/334 (of 2 October 2013) and constitution of the panel established at the request of Guatemala, 
document WT/DS457/3 (of 23 September 2013). 
5 WT/DS457/3. 
6 On 6 August 2013, Colombia notified its in terest in participating as a third party. 
7 See the Panel's Working Procedures in Annex A-1. WT/DS457/R 
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  1.9.  The Panel held the first substantive meeting with the parties on 14 and 15 January 2014. 
A session with the third parties took place on 14 January 2014. The Panel addressed questions to 
the parties and third parties before the substant ive meeting, on 10 January 2014. The Panel also 
addressed written questions to the parties and third parties after the meeting, which were 
transmitted to the parties on 21 January 2014 and to the third parties on 22 January 2014. 
On 29 January 2014, the following third parties furnished written responses to the Panel's questions: Argentina, Brazil, Colombia, Ecuado r, the European Union and the United States. 
The parties furnished their written responses to the Panel's questions on 5 February 2014. 
1.10.  The parties presented their second written submissions to the Panel on 5 March 2014. 1.11.  The Panel held the second substantive meeting with the parties on 2 and 3 April 2014. 
The Panel sent questions to the parties before the second substantive meeting on 31 March 2014. 
The Panel also addressed written questions to  the parties after the meeting, which were 
transmitted to the parties on 10 April 2014. On  1 May 2014, the parties furnished written 
responses to the Panel's questions, and on 12 May each party submitted comments on the 
responses provided by the other party. 
1.12.  During the proceedings, the Panel reminded the parties of its readiness, under the terms 
of the last sentence of Article 11 of the DSU, to consult with them and give them adequate 
opportunity to develop a mutually satisfactory solution. 
1.13.  The Panel submitted the descriptive (factual and argument) sections of its final report to the 
parties on 12 June 2014. On the same date, the Panel informed Argentina, Brazil, China, Colombia, Ecuador, El Salvador, the European Union, Honduras, India, the Republic of Korea and 
the United States that the descriptive part of the report would contain a summary of the 
arguments of each of them. On 24 June, Peru submitted its comments on the descriptive part of the report; on the same date, Guatemala notified that it had no comments. 
1.14.  The Panel issued its interim report to the parties on 12 August 2014. On 26 August, both 
Guatemala and Peru submitted written requests for the Panel to review specific aspects of the interim report. Neither of the parties requested a further meeting with the Panel to discuss the 
issues identified in their respective written comments. On 4 September, each of the parties 
submitted written comments to the Panel on the other party's request for review. 
1.15.  The Panel submitted its final report to the parties on 2 October 2014. 2  FACTUAL ASPECTS 
2.1  Introduction 
2.1.  In this section of the Report, the Panel will describe the measure at issue. The parties 
disagree on a number of factual issues. To the extent that it is necessary for the Panel to resolve 
those disputed factual issues, it will do so in its findings. 
2.2  Measures at issue 2.2.  In its request for the establishment of a panel, Guatemala identified the measure at issue in 
this dispute as "the additional duty imposed by Peru on imports of certain agricultural products, 
such as milk, maize, rice and sugar" (referre d to as "affected products"). As described by 
Guatemala, the measure has the following characteristics: (a) it has been in force since 22 June 2001; (b) it consists of a variable levy that is imposed in addition to the ordinary customs 
duty; (c) it is determined by using a mechanism known as the "Price Range System" (PRS) which, 
in its turn, operates on the basis of two components: (i) a range made up of a floor price and a ceiling price which reflect the international price over the last 60 months for the affected 
products; and (ii) a c.i.f. reference price which is published every two weeks and which reflects the 
average international market price for the affected products; (d) it may result in the imposition of an import levy on the affected products when the international reference prices of those products 
are below certain (floor price) levels, or in tariff rebates when these reference prices are above 
certain (ceiling price) levels; (e) both the price range and the c.i.f. reference prices vary periodically as a result of the application of certain formulas to the circumstances in the markets WT/DS457/R 
- 16 - 
  for the affected products; the price range varies every six months, while the c.i.f. reference prices 
vary every 15 days; (f) its amount is specific an d is expressed in United States dollars (USD) 
per metric ton; and (g) it is payable upon importation of the affected products, together with the ordinary customs duties and other import taxes on the affected products.
8 Hereinafter, the Panel 
will refer to this measure as "the  duties resulting from the PRS". 
2.3.  In its request for the establishment of a Panel, Guatemala identified the following legal 
instruments in which it believed the measure at issue to be contained9: 
a. Supreme Decree No. 115-2001-EF, published in  the Official Journal "El Peruano" on 
22 June 2001; 
b. Supreme Decree No. 124-2002-EF, published in  the Official Journal "El Peruano" on 
17 August 2002; 
c. Supreme Decree No. 153-2002-EF, published in  the Official Journal "El Peruano" on 
27 September 2002. 
d. Supreme Decree No. 174-2002-EF, published in  the Official Journal "El Peruano" on 
15 November 2002. 
e. Supreme Decree No. 184-2002-EF, published in  the Official Journal "El Peruano" on 
27 November 2002; 
f. Supreme Decree No. 197-2002-EF, published in  the Official Journal "El Peruano" on 
30 December 2002; 
g. Supreme Decree No. 003-2006-EF, published in  the Official Journal "El Peruano" on 
13 January 2006; 
h. Supreme Decree No. 121-2006-EF, published in  the Official Journal "El Peruano" on 
20 July 2006; 
i. Circular INTA-CR.62-2002 of 26 August 2002 of the National Technical Customs 
Department; 
j. the Supreme Decrees published semi-annually containing the customs tables for 
determining the floor and ceiling prices of the price range; 
k. the Vice-Ministerial Resolutions published every two weeks, containing the c.i.f. 
reference prices; and 
l. any other regulation, instruction, administrative or judicial practice, methodology or 
guideline, whether currently in force or adopted subsequently, that amends, 
supplements, complements, develops or is otherwise related to the aforementioned 
regulatory instruments. 
                                               
8 See request for the establishment of a panel by Guatemala, document WT/DS457/2 
(of 14 June 2013). 
9 In its request for the establishment of a panel, in addition to the inst ruments listed, Guatemala 
identified circular INTA-CR.82-2002 of 5 December 2002 of the National Customs Technical Department, Circular 002-2003-SUNAT/A of 28 February 2003 of the National Tax Administration Supervisory Authority, Circular 010-2004-SUNAT/A of 10 September 2004 of the Nati onal Tax Administration Supervisory Authority, 
Judgement 03041-A-2004 of the Tax Court, dated 14 May 2004, and Judgement 02364-A-2007 of the 
Tax Court, dated 15 March 2007. During the present proceedings, Guatemala made no reference to those instruments and did not submit them to the Panel for its consideration. WT/DS457/R 
- 17 - 
  3  PARTIES' REQUESTS FOR FI NDINGS AND RECOMMENDATIONS 
3.1.  Guatemala requests that the Panel find that: 
a. The duties resulting from the PRS are inconsistent with Article 4.2 of the 
Agreement on Agriculture, as they constitute variable import levies or measures similar 
to variable import levies; 
b. The duties resulting from the PRS are inconsistent with Article 4.2 of the 
Agreement on Agriculture, as they constitute minimum import prices or measures similar 
to minimum import prices; 
c. The duties resulting from the PRS are duties or charges inconsistent with the second 
sentence of Article II:1(b) of the GATT 1994; 
d. Peru's actions are inconsistent with Article X:1 of the GATT 1994, inasmuch as: 
i. it fails to publish the international prices used as a basis for calculating the floor price 
and the reference price, despite the fact that these international prices are an essential element of the measure at issue; 
ii. it has failed to publish the content of the "import costs", which is an essential 
element of the measure at issue; and 
iii. it has failed to publish the methodology for determining the amounts for freight and 
insurance, which is an essential element of the measure at issue; 
e. Peru's actions are inconsistent with Article X:3(a) of the GATT 1994, because it 
administers the measure in question in a manner that is not reasonable given its failure to observe the requirements of its own legislation. Specifically, Peru's failure to comply 
with its own legislation is shown by the following practices: 
i. extending the validity of the Customs Tables; 
ii. calculating the price ranges for dairy products by reference price intervals and not 
for each individual value; 
iii. calculating additional duties or customs rebates for two categories of rice (pounded 
and paddy rice); and 
iv. calculating and updating the reference price for dairy products monthly rather than 
fortnightly. 
3.2.  In the event that the Panel considers that  the duties resulting from the PRS are ordinary 
customs duties, Guatemala requests the Panel to find that Peru's actions are inconsistent with 
Articles 1, 2, 3, 5, 6 and 7 of the Customs Valuation Agreement, and in particular with 
Articles 7.2(f) and 7.2(g) of that Agreement, since Peru does not determine the customs value 
of the goods subject to the PRS in accordance wi th those provisions, but instead determines the 
customs value of those goods through the use of minimum, arbitrary or fictitious customs values. 
3.3.  In accordance with the second sentence of Article 19.1 of the DSU, Guatemala requests the 
Panel to suggest that Peru should completely dismantle the measure at issue, and at the same 
time eliminate the duties resulting from the PRS and the PRS itself. 
3.4.  In response to Peru's assertions, Guatemala requests that the Panel reject the allegation that 
Guatemala has not acted in good faith. 
3.5.  Peru maintains that, although Members ar e entitled to engage in procedures in the 
framework of the WTO dispute settlement system, they must do so in a manner consistent with 
the requirements established in the DSU, includin g Articles 3.7 and 3.10 thereof. Peru requests WT/DS457/R 
- 18 - 
  that the Panel find that Guatemala did not act in good faith in initiating these proceedings, 
and consequently requests the Panel not to analyse Guatemala's claims. 
3.6.  Should the Panel decide to examine Guatemal a's claims, Peru requests that they be rejected 
in their entirety by the Panel. In particular, Peru asserts that the duties resulting from the PRS are 
ordinary customs duties within the meaning of the first sentence of Article II:1(b) of the 
GATT 1994 and that they therefore stand outside the scope of the second sentence of that Article 
as well as Article 4.2 of the Agreement on Agriculture. Peru also asserts that the measure at issue 
is neither the same as nor sufficiently similar to the measures listed in footnote 1 of the 
Agreement on Agriculture and that Peru has complied with the obligations set forth in Article X:1 and Article X:3(a) of the GATT 1994. Lastly, acco rding to Peru, Guatemala's claims based on the 
Customs Valuation Agreement must be rejected since that agreement is not applicable to specific 
duties. 
3.7.  Finally, in the event that the Panel finds that the measure at issue is inconsistent with 
provisions of the WTO agreements, Peru considers that an inconsistency would be generated 
between the Free Trade Agreement signed in De cember 2011 by Peru and Guatemala (FTA) and 
the WTO agreements, in regard to which the terms of the FTA should prevail. 
4  ARGUMENTS OF THE PARTIES 
4.1.  The arguments of the parties are reflected in the executive summaries provided to the Panel 
in accordance with paragraph 20 of the Working Procedures (see Annexes B-1, B-2, B-3 and B-4). 
5  ARGUMENTS OF THE THIRD PARTIES 5.1.  The arguments of Argentina, Brazil, Colombia, Ecuador, the European Union, and the 
United States are reflected in the executive summ aries provided to the Panel in accordance with 
paragraph 21 of the Working Procedures (see Annexes C-1, C-2, C-3, C-4, C-5 and C-6). China, El Salvador, Honduras, India and the Republic of Korea did not submit written or oral arguments to 
the Panel. 
6  INTERIM REVIEW 6.1.  In accordance with Article 15.3 of the DSU, this section of the report sets out the Panel's 
response to the parties' arguments made at th e interim review stage, providing explanations 
where necessary. This section forms an integral part of the Panel's findings in the present case. The Panel thoroughly examined the parties' requests  for review and took them into account before 
issuing this final report. As explained below, the Panel modified aspects of its report in the light 
of the parties' comments when it considered it appropriate to do so.
10 
6.2.  Guatemala requests the Panel to make it clear at the end of paragraph 2.2 that it has used 
an abbreviated form, throughout the report, to refer to the measure at issue. Guatemala also 
suggests adjusting the way in which the Panel refers to the measure in two entries in the interim 
report.11 Peru opposes Guatemala's request, as it considers that the way in which the report refers 
to the measure at issue reflects the Panel's analysis.12 The Panel added a final sentence at the end 
of paragraph 2.2, based on the text suggeste d by Guatemala. The Panel also adjusted the 
language in various paragraphs of the report, in  order to use a single identifying term for the 
measure at issue (the "duties resulting from the PRS"). These adjustments were made in paragraph 7.321, at the request of Guatemala, and in the other following paragraphs of the 
report: 2.2, 3.1, 3.2, 3.3., 3.6, 7.40, 7.55, 7.99, 7.101, 7.113, 7.114, 7.126, 7.141, 7.149, 7.163, 
7.164, 7.174, 7.308, 7.309, 7.312, 7.313, 7.314, 7.315, 7.317, 7.318, 7.319, 7.321, 7.325, 7.326, 7.327, 7.330, 7.333, 7.339, 7.344, 7.348, 7.349, 7.350, 7.351, 7.352, 7.358, 7.359, 
7.360, 7.364, 7.366, 7.367, 7.368, 7.371, 7.400, 7.417, 7.418, 7.419, 7.439, 7.443, 7.460, 
7.461, 7.494, 7.495, 7.496, 7.497, 7.499, 8.1 and 8.7. For the same reason, the Panel made a similar adjustment to the title of section 7.4.4.2.3, at the request of Guatemala, and to the titles 
                                               
10 The numbering of paragraphs and footnotes in th e final report has changed in relation to the 
numbering in the interim report. The te xt of this section refers to the pa ragraph numbers of the interim report. 
11 Guatemala's request for review of the interim report, paras. 2.2-2.5. 
12 Peru's comments on Guatemala's request fo r review of the interim report, para. 5-8. WT/DS457/R 
- 19 - 
  of the other following sections and subsections of the report: 7.3.2.5, 7.3.2.5.3, 7.3.2.6.3, 
7.4.2.1.1, 7.4.2.1.1.1, 7.4.2.1.2, 7.4.4.2, 7.4.4.2.4, 7.4.4.2.4.4, 7.4.4.2.5 and 7.4.4.2.7. 
6.3.  With regard to the claim concerning the existence of minimum import prices or measures 
similar to minimum import prices, Guatemala requ e s t s  t h a t  a  r e v i e w  b e  m a d e  o f  t h e  s e c t i o n s  
summarizing its arguments on an alleged de facto  threshold.13 Peru opposes Guatemala's request 
which it considers would amount to adducing arguments already put forward by the parties, with a view to changing the Panel's analysis.
14 The Panel modified paragraphs 7.209 and 7.223, and 
introduced a new paragraph supplementing the former paragraph 7.353, in order to give a more 
precise reflection of the parties' arguments. In the light of Guatemala's request, the Panel also modified the language of paragraph 7.365 and inserted a new paragraph after that paragraph. 
6.4.  Guatemala requests that, in the description of the basic aspects of the structure and 
operation of the PRS contained in paragraph 7.317, the Panel should refer to the fact that, on 
various occasions, both the floor price and the ceiling price had been extended for successive periods, instead of being updated.
15 Peru considers that the addition is unnecessary, since this 
matter is dealt with in other sections of the report.16 As a supplement to the summary of the basic 
aspects of the structure and operation of the PR S, the Panel added a further section at the end 
of paragraph 7.317, based on the text suggested by Guatemala. 
6.5.  In the same paragraph 7.317, Guatemala requests that the description of the PRS be 
supplemented by a reference to the fact that the customs tables announce the resulting duties and rebates.
17 Peru does not consider this addition to be necessary, but does not oppose it.18 The Panel 
modified subparagraph (b) of paragraph 7.317, on the basis of the text suggested by Guatemala. 
6.6.  Peru requests that paragraph 7.319 of the repo rt provide clarification of its position regarding 
the way in which the customs tables and reference prices are published.19 Guatemala makes 
no comments on this point. In the light of Pe ru's request, the Panel made a clarificatory 
adjustment to paragraph 7.319 of the report, as well as to paragraph 7.239. 
6.7.  Peru requests modification of the reference in paragraph 7.321 of the report to the fact that 
the PRS contains a scheme or formula which causes and ensures automatic and continuous 
revision of the applicable duties. In Peru's opinion, the formula used by the PRS cannot ensure 
revisions of the applicable duties.20 Guatemala opposes Peru's request and considers that the 
affirmation contained in the report that the PRS ensures the revision of the applicable duties is correct.
21 The Panel rejects Peru's request, considering that the description contained in the 
paragraph corresponds to the description of the facts as reflected in the evidence and the 
arguments submitted by the parties. 
6.8.  Guatemala requests that paragraphs 7.322 and 7.323 include a reference to a similar finding 
issued by the Panel and the Appellate Body in Chile - Price Band System (Article 21.5 – Argentina) , 
as well as a reference to Guatemala's second written submission.22 Peru disagrees with the 
findings contained in these paragraphs of the report. Furthermore, Peru considers that, since the 
paragraphs in question contain factual findings, it would be unnecessary for the Panel to cite 
a different case.23 The Panel considers that, inasmuch as the paragraphs in question contain 
factual findings, it is inappropriate to add the references to a different case or to Guatemala's second written submission, as requested by Guatemala. 
                                               
13 Guatemala's request for review of the interim report, paras. 3.4-3.6. 
14 Peru's comments on Guatemala's request fo r review of the interim report, para. 18. 
15 Guatemala's request for review of  the interim report, para. 2.8. 
16 Peru's comments on Guatemala's request fo r review of the interim report, para. 23. 
17 Guatemala's request for review of the interim report, paras. 2.9-2.10. 
18 Peru's comments on Guatemala's request fo r review of the interim report, para. 24. 
19 Peru's request for review of  the interim report, p. 2. 
20 Peru's request for review of  the interim report, pp. 2-3. 
21 Guatemala's comments on Peru's  request for review of the in terim report, paras. 2.5-2.11. 
22 Guatemala's request for review of the interim report, paras. 2.11-2.12. 
23 Peru's comments on Guatemala's request for review of the interim report, paras. 9-10. WT/DS457/R 
- 20 - 
  6.9.  Peru requests that, in paragraph 7.323, the Panel should make it clear that the PRS 
legislation makes no mention of the possibility of extending the customs tables, and that such extensions are acts within the discretion of the Peruvian Executive.
24 Guatemala does not object to 
the report mentioning that the PRS legislation makes no reference to the possibility of extending 
the customs tables.25 However, Guatemala does object to the assertion in the report that the act 
of extending the customs tables is a discretionary ac t on the part of the Peruvian Executive, but is 
not opposed to it being indicated that Peru has made that assertion.26 Pursuant to Peru's request, 
the Panel made some clarificatory adjustments to paragraph 7.323. In addition, in 
paragraph 7.151, the Panel included a reference to the fact that the PRS legislation makes no mention of the possibility of extending the cu stoms tables. The Panel does not consider it 
appropriate to affirm, as a matter of fact, that su ch extensions are a discretionary act on the part 
of the Peruvian Executive, as this point is disputed between the parties, and in the Panel's opinion 
was not conclusively demonstrated in the course of the proceedings. However, Peru's arguments in 
this respect are reflected in the report, for example in paragraph 7.480. 
6.10.  Guatemala requests clarification by the Pane l of the findings contained in paragraphs 7.332 
to 7.335. In this connection, Guatemala disagrees with the assertion that Peru used futures prices to make price estimates.
27 Guatemala also considers that, in the wording of the interim report, the 
findings contained in paragraphs 7.332 to 7.335 do not reflect the totality of the arguments, the 
evidence or the estimates submitted by the parties.28 In this connection, Peru considers that the 
description given by the Panel is correct and does not need to be modified. In Peru's opinion, the additions proposed by Guatemala are incorrect and do not include the rebuttals submitted by 
Peru.
29 Pursuant to Guatemala's request, the Panel mo dified the language contained in paragraphs 
7.332 to 7.335, taking into account Peru's comments, and inserted a new paragraph after the former paragraph 7.332. 
6.11.  Guatemala requests the Panel to delete the word "average" from the phrase "average 
reference price" in paragraphs 7.337, 7.344 and 7.345. In Guatemala's opinion, the mere fact that a reference price is applied (instead of the transaction value of a particular consignment), 
regardless of whether it corresponds to an averag e, entails a systemic lack of transparency and 
predictability.
30 Peru opposes this request as it considers that the reference price is an average, 
and that the elimination of that term would obscure the real facts of the case.31 The Panel 
considers that the use of the term "average" in the description of the reference price does not 
affect the substance of its analysis. In addition, as is explained in the report, the reference price is 
an average. For these reasons, in the light of Gu atemala's request, the Panel adjusted the wording 
of paragraphs 7.337, 7.344 and 7.345. 
6.12.  Guatemala requests the Panel to include in paragraph 7.346 a reference to certain 
paragraphs from its opening statement at the firs t meeting of the Panel and its responses to the 
Panel's questions.32 Peru opposes this request as it considers that the paragraph in question 
constitutes a factual finding and that the Panel is under no obligation to repeat every argument 
of the parties on the matter.33 The Panel included the references mentioned by Guatemala because 
it considered that they give context to the finding set out in paragraph 7.346. 
6.13.  Guatemala requests that paragraph 7.352 be modified in order to avoid any confusion 
between the functions of the Panel and the possibi lity that the Appellate Body may complete the 
analysis on a specific point.34 Peru opposes the wording proposed by Guatemala, considering that 
a panel is not authorized to leave the analysis of certain aspects to the Appellate Body.35 The Panel 
modified paragraph 7.352, on the basis of the text suggested by Guatemala and taking Peru's 
observations into account. 
                                               
24 Peru's request for review of  the interim report, p. 2. 
25 Guatemala's comments on Peru 's request for review of th e interim report, para. 2.2. 
26 Guatemala's comments on Peru's  request for review of the interim report, paras. 2.3-2.4. 
27 Guatemala's request for review of the interim report, paras. 2.18-2.20. 
28 Guatemala's request for review of the interim report, paras. 2.21-2.25. 
29 Peru's comments on Guatemala's request for review of the interim report, paras. 11-13. 
30 Guatemala's request for review of the interim report, paras. 2.26-2.27. 
31 Peru's comments on Guatemala's request fo r review of the interim report, para. 14. 
32 Guatemala's request for review of the interim report, paras. 2.28-2.30. 
33 Peru's comments on Guatemala's request fo r review of the interim report, para. 22. 
34 Guatemala's request for review of the interim report, paras. 3.1-3.3. 
35 Peru's comments on Guatemala's request for review of the interim report, paras. 15-17. WT/DS457/R 
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  6.14.  Guatemala requests that the report reflect its arguments regarding ten factors which 
Guatemala identified as grounds for considering that the duties resulting from the PRS are a measure other than an ordinary customs duty. Gu atemala also asks the Panel to issue a finding 
with regard to those factors.
36 Peru opposes Guatemala's requests. In Peru's opinion, Guatemala's 
request concerning the ten factors that are said to make the duties resulting from the PRS 
a measure other than ordinary customs duties neither refers to specific aspects of the interim report nor identifies a specific section of the repo rt. Peru points out in addition that Guatemala's 
request would lead the Panel to make new findings without giving the parties an opportunity to 
make comments.
37 Regarding Guatemala's request that the report reflect its arguments in respect 
of the factors purporting to show that the duties resulting from the PRS are a measure other than ordinary customs duties, the Panel adjusted the la st part of paragraph 7.376; it inserted a new 
paragraph after that paragraph; and it also inserted a new paragraph after paragraph 7.387; all 
with the aim of reflecting the parties' arguments on the matter more extensively. The Panel considers it unnecessary to issue the additional and separate findings requested by Guatemala on 
this point. In this connection, the Panel made some explanatory adjustments to paragraphs 7.370 
and 7.417. 
6.15.  Guatemala asks that the report provide a better account of its arguments concerning Peru's 
proposal that consideration be given to whether the challenged measure is an ordinary customs 
duty on the basis of positive criteria. In this connection, Guatemala suggests that the wording of 
paragraph 7.377 be modified, and that an adequate description be given of its response to the arguments set forth by Peru, as described in paragraph 7.386.
38 Peru does not oppose the change 
proposed by Guatemala to paragraph 7.377, to the extent that the Panel may consider that the 
change in question is a more precise reflection of Guatemala's position on the matter. However, Peru is opposed to revising the description of its arguments in paragraph 7.386.
39 The Panel 
modified paragraph 7.377 on the basis of the wording suggested by Guatemala. In order to 
describe Guatemala's arguments, the Panel also inse rted an additional section at the end of the 
same paragraph, as well as an additional paragraph immediately thereafter. The Panel did not 
modify the description of Peru's arguments, but did include in footnote 469 to paragraph 7.385 an 
additional reference to a written communication in which Peru explained the basis of some of its arguments. 
6.16.  Guatemala asks that the report reflect the arguments of the parties as to whether the price 
range system of Peru has existed since 1991 or since 2001.
40 Concerning this request, Peru is 
opposed to the Panel including new analyses in the report without giving the parties an opportunity to submit comments on the subject.
41 Pursuant to Guatemala's request, the Panel 
modified the last part of paragraph 7.382, in order to reflect Guatemala's arguments on this point, 
and included a new footnote to paragraph 7.388 in  order to identify the written submissions in 
which Peru refers to this topic. 
6.17.  Guatemala requests the Panel to explain in more detail the reasons why it considers that 
issuing findings with respect to Guatemala's claims under Articles X:1 and X:3(a) of the GATT 1994 would not help the DSB in making precise recommendations to allow for prompt compliance by Peru.
42 Peru opposes Guatemala's request and states that the interim review would 
not be the appropriate stage for the Panel to include a new analysis in the report concerning the 
consistency of the challenged measure with Article X of the GATT 1994.43 In this connection, the 
Panel rejects Guatemala's request, as it considers that paragraphs 7.461 and 7.495 provide 
sufficient explanation as to why, given the finding that the duties resulting from the PRS are 
inconsistent with Peru's substantive obligations under the WTO agreements, it is unnecessary to take up the additional matter of whether certain elements of the system are in addition consistent 
with the obligations contained in Articles X:1 and X:3(a) of the GATT 1994. 
                                               
36 Guatemala's request for review of the interim report, paras. 4.1-4.5. 
37 Peru's comments on Guatemala's request fo r review of the interim report, para. 22. 
38 Guatemala's request for review of the interim report, paras. 4.6-4.8. 
39 Peru's comments on Guatemala's request fo r review of the interim report, para. 19. 
40 Guatemala's request for review of  the interim report, para. 4.9. 
41 Peru's comments on Guatemala's request fo r review of the interim report, para. 22. 
42 Guatemala's request for review of the interim report, paras. 5.1-5.6. 
43 Peru's comments on Guatemala's request fo r review of the interim report, para. 20. WT/DS457/R 
- 22 - 
  6.18.  Guatemala refers to Peru's argument to  the effect that, through the FTA, the parties 
modified their mutual rights under the WTO agreements. In this connection, Guatemala requests that the findings contained in paragraphs 7.520 to 7.522 of the report should mention the fact that 
Peru's argument would call for the Panel to in terpret the content of the FTA, which would go 
beyond the Panel's terms of reference.
44 Peru opposes Guatemala's request and asserts that the 
interim review would not be the appropriate stage for the Panel to modify its analysis.45 In this 
connection, the Panel rejects Guatemala's request, considering that paragraphs 7.521 and 7.522 
make it sufficiently clear that, since the FTA has not entered into force, it is unnecessary for the 
Panel to rule on the argument put forward by Peru. 
6.19.  Guatemala requests that paragraph 8.7 of the report be amended so as not to refer to the 
measure at issue. In its opinion, it is wrong to state that Guatemala identified the measure at 
issue as the additional duty imposed by Peru on im ports of certain agricultural products and that it 
did not challenge the PRS as such.46 Peru considers that Guatemala's request is contrary to the 
Panel's obligation to issue reasoned conclusions.47 In this connection, the Panel rejects 
Guatemala's request, since the measure at issue was identified in the request for the 
establishment of a panel submitted by Guatemala, in the manner described in paragraph 8.7 of the 
report. 
6.20.  In the light of the requests made  by the parties during the review stage48, and in order to 
reflect the arguments of the parties more precisel y, the Panel made adjustments to the following 
paragraphs: 7.40, 7.169, 7.170, 7.171, 7.203, 7.216, 7.330, 7.381 and 7.439. It also made minor corrections to the following paragraphs: 7.46, 7.92 and 7.321, as well as to the title of section 7.5. 
6.21.  The Panel also made additional typographi cal corrections to the following paragraphs: 1.13, 
2.2, 3.1, 7.9, 7.10, 7.26, 7.62, 7.67, 7.69, 7.88, 7.125, 7.145, 7.146, 7.174, 7.178, 7.183, 7.198, 7.215, 7.222, 7.223, 7.227, 7.250, 7.272, 7.288, 7.304, 7.369, 7.370, 7.383, 7.423, 7.494, 
7.496, 7.512, 7.514, 7.521 and 8.3, as well as to the title of section 7.4. 
7  FINDINGS 7.1  Preliminary considerations 
7.1.1  Introduction 
7.1.  The Panel considers that, before proceedin g to assess the issues raised in the present 
dispute, it would be useful to describe the legal framework it will apply with respect to its terms 
of reference, its task, the standard of review, tr eaty interpretation, the burden of proof and the 
order of analysis. 
7.1.2  The Panel's terms of reference 7.2.  This Panel was established by the DSB on 23 July 2013, with the following standard terms 
of reference: 
To examine, in the light of the relevant pr ovisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by Guatemala in document 
WT/DS457/2 and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.
49 
7.3.  In accordance with Article 6.2 of the DSU, the request for the establishment of a panel "shall ... identify the specific measures at issue and provide a brief summary of the legal basis 
of the complaint sufficient to present the problem clearly." 
                                               
44 Guatemala's request for review of the interim report, paras. 6.1-6.2. 
45 Peru's comments on Guatemala's request fo r review of the interim report, para. 21. 
46 Guatemala's request for review of the interim report, paras. 7.1-7.3. 
47 Peru's comments on Guatemala's request fo r review of the interim report, para. 8. 
48 See, for example, Guatemala's request for review of the interim report, para. 2.17. 
49 Constitution of the Panel established at th e request of Guatemala, document WT/DS457/3 
(of 23 September 2013), para. 2. WT/DS457/R 
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  7.4.  Accordingly, the terms of re ference of this Panel are delimited by the measures identified and 
the claims put forward by Guatemala in its panel request submitted on 13 June 2013.50 
7.1.3  Function of the Panel and standard of review 7.5.  Article 11 of the DSU indicates that the function of panels is "to assist the DSB in discharging 
its responsibilities under this Understanding and the covered agreements". Further, Article 3.4 
of the DSU provides that: 
Recommendations or rulings made by the DSB shall be aimed at achieving 
a satisfactory settlement of the matter in accordance with the rights and obligations 
under this Understanding and under the covered agreements. 
7.6.  To this end, and as required by Article 11 of the DSU, a panel should "make an objective 
assessment of the matter before it, including an objective assessment of the facts of the case and 
the applicability of and conformity with the rele vant covered agreements". It should also make 
such "findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements." 
7.7.  As regards the legal assessment, that is, the analysis of the consistency or inconsistency 
of the challenged measures with the applicable provisions, the obligation on a panel to make an objective assessment of the matter means that it may "freely ... use arguments submitted by 
any of the parties – or ... develop its own legal reasoning – to support its own findings and 
conclusions on the matter under its consideration".
51 
7.1.4  Interpretation of the relevant rules of the agreements 7.8.  In its objective assessment of the matter before it, the Panel may be called upon to clarify 
the scope of certain provisions of the covered agre ements cited by the parties. In this connection, 
Article 3.2 of the DSU states that the WTO dispute settlement system serves to "clarify the existing provisions of those agreements in acco rdance with customary rules of interpretation 
of public international law." 
7.9.  The "customary rules of interpretation of pu blic international law" referred to by the DSU are 
the rules of interpretation that have attained th e status of general customary international law, 
as codified in the Vienna Convention on th e Law of Treaties of 1969 (Vienna Convention).
52 
The Appellate Body explained that these "rules of  treaty interpretation … apply to any treaty, 
in any field of public international law, and not just to the WTO agreements. These rules of treaty interpretation impose certain common disciplines upon treaty interpreters, irrespective of the 
content of the treaty provision being examined and irrespective of the field of international law 
concerned".
53 
7.10.  Article 31 of the Vienna Convention contains a general rule of interpretation to the effect 
that "[a] treaty shall be interpreted in good fait h in accordance with the ordinary meaning to be 
given to the terms of the treaty in their context and in the light of its object and purpose".54 Under 
the terms of Article 31.2 of the Vienna Conv ention, the context for the purpose of the 
interpretation of a treaty shall comprise the text of the relevant agreement, including its preamble 
and annexes. 
                                               
50 Request for the establishment of a panel by Guatemala, document WT/DS457/2 (of 14 June 2013). 
51 Appellate Body Report, EC – Hormones , para. 156. See also Appellate Body Reports, 
Canada - Renewable Energy / Canada – Feed-in Tariff Program , para. 5.215. 
52 Appellate Body Reports, US - Gasoline , p. 17; Japan – Alcoholic Beverages II , p. 10. See also 
Vienna Convention on the Law of Treaties  (Vienna Convention), done at Vienna on 23 May 1969, 
United Nations document A/CONF.39/27. 
53 Appellate Body Report, US – Hot-Rolled Steel , para. 60. 
54 With respect to good faith, the Appellat e Body has indicated that "[t]hat means, inter alia , that terms 
of a treaty are not to be interpreted based on the assumption that one party is seeking to evade its obligations 
and will exercise its rights so as to cause inju ry to the other party". Appellate Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para. 326. WT/DS457/R 
- 24 - 
  7.11.  Article 32 of the Vienna Convention provid es that recourse may be had to supplementary 
means of interpretation, including the preparatory work of the treaty and the circumstances of its 
conclusion, in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31 leaves the meaning 
ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable.
55 
The Appellate Body emphasized that Article 32 does not define exhaustively the supplementary means of interpretation to which an interpreter may have recourse, so that an interpreter has 
a certain flexibility in considering relevant supplementary means in a given case so as to assist in 
ascertaining the common intentions of the parties.
56 
7.12.  Article XVI of the Marrakesh Agreement Establishing the World Trade Organization 
(WTO Agreement) indicates that the legal texts of the WTO are equally authentic in their English, 
French and Spanish versions.57 In view of the foregoing, and in accordance with the provisions 
of Article 33 of the Vienna Convention, the terms of the covered agreements are presumed to have 
the same meaning in each authentic text, and in the event that a difference of meaning is 
disclosed, the meaning that best reconciles the three texts, having regard to the object and 
purpose of the treaty, shall be adopted.58 
7.1.5  Burden of proof 
7.13.  Although the DSU does not contain any expr ess provision governing the burden of proof, by 
application of the general principles of law the WTO dispute settlement system has traditionally recognized that the burden of proof lies with the party asserting a fact, whether that party be the claimant or the defendant.
59 
7.14.  Accordingly, in a proceeding the burden  of proving that the impugned measure is 
inconsistent with the relevant provisions of covered agreements initially lies with the complainant. Once the complainant has made a prima facie  case for such inconsistency, the burden shifts to the 
defendant, who must in turn rebut the alleged inconsistency.
60 A prima facie  case is one which, in 
the absence of effective refutation by the defending party, requires a panel, as a matter of law, to 
rule in favour of the complaining party.61 In the words of the Appellate Body: 
[as] a general matter, the burden of proof rests upon the complaining Member. 
That Member must make out a prima facie case by presenting sufficient evidence to raise a presumption in favour of its claim. If the complaining Member succeeds, the responding Member may then seek to rebu t this presumption. Therefore, under the 
usual allocation of the burden of proof, a responding Member's measure will be 
treated as WTO-consistent, until sufficient evidence is presented to prove the contrary.
62 (emphasis original) 
7.15.  The Appellate Body added in this respect that precisely how much and precisely what kind 
of evidence will be required for the complaining party to establish its case will necessarily vary from measure to measure, provision to provision, and case to case.
63 In any event, it should be 
borne in mind that, in the context of the WTO dispute settlement system: 
                                               
55 Appellate Body Report, EC – Chicken Cuts , para. 282. 
56 Ibid. para. 283. 
57 See also the explanatory note to paragraph 2(c)(i) of the GATT 1994. 
58 The Appellate Body explained: "Article 33 of the Vienna Convention reflects the principle that 
the treaty text is equally authoritative in each language , unless the treaty provides or the parties agree that, 
in case of divergence, a particular text shall prev ail. For the covered agreements, Article XVI of the 
WTO Agreement provides that the English, French, and Spanish language each are authentic. Consequently, the terms of Article III:8(a) of the GATT 1994 are presumed  to have the same meanin g in each authentic text. 
"Appellate Body Report, Canada - Renewable Energy / Ca nada - Feed-in Tariff Program , fn. 512 to para. 5.66. 
See also, for example, Appellate Body Reports , Chile - Price Band System , para. 271; EC - Bed Linen 
(Article 21.5 - India) , fn. 153 to para. 123; US - Softwood Lumber IV , fn. 50 to para. 59, EC - Tariff 
Preferences , para. 147; and US - Upland Cotton, fn. 510 to para. 424. 
59 Appellate Body Report, US – Wool Shirts and Blouses , pp. 12-16. 
60 Appellate Body Report, EC – Hormones , para. 98. 
61 Ibid. para. 104. 
62 Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II) , para. 66. 
63 Appellate Body Report, US – Wool Shirts and Blouses , p. 14. WT/DS457/R 
- 25 - 
  A prima facie  case must be based on "evidence and legal argument" put forward by 
the complaining party in relation to each of the elements of the claim. A complaining party may not simply submit evidence and expect the panel to divine from it a claim of WTO-inconsistency. Nor may a complaining party simply allege facts without 
relating them to its legal arguments.
64 (emphasis original; footnotes omitted) 
7.16.  In the matter before us, and by application of the foregoing criteria, it lies with Guatemala 
to make out a prima facie  case for the violations of the prov isions of the WTO covered agreements 
it has invoked. If Guatemala succeeds in making a prima facie  case for its claims, it will then be for 
Peru to rebut them. 
7.1.6  Order of analysis 7.17.  The Appellate Body has stated that, as a general principle, panels are free to structure the 
order of their analysis as they see fit. Except insofar as there may be a mandatory sequence 
of analysis, deviation from which would lead to an error of law and/or affect the substance of the analysis itself, panels have discretion to structure the order of their analysis.
65 The Panel also 
recalls that, although panels may, in structuring their analysis, take account of the manner 
in which a complainant presents its claims, they may also follow a different sequential order.66 
In the present case, the Panel will determine the or der of analysis by focusing on the structure and 
logic of the provisions at issue in this dispute.67 
7.18.  First of all, the Panel notes that Peru has requested it to find that Guatemala did not act in 
good faith in engaging in the present proced ure and therefore to refrain from examining 
Guatemala's claims.68 Peru's request constitutes a preliminary question so that, if it were 
accepted, the Panel would not proceed to consider Guatemala's substantive claims. Accordingly, 
the Panel will begin by examining this argument put forward by Peru. 
7.19.  If, after analysing the above-mentioned pr eliminary question, the Panel concludes that it 
should continue with the analysis, it will proceed to consider the main substantive provisions 
invoked by Guatemala, that is to say, Article 4.2 of the Agreement on Agriculture and Article II:1(b) of the GATT 1994. With respect to the order in which these two provisions should be 
analysed, the Appellate Body has expressed a pref erence for beginning with Article 4.2 of the 
Agreement on Agriculture. In this connection, in the original proceedings in Chile – Price Band 
System , the Appellate Body stated: 
It is clear, as a preliminary matter, that Article 4.2 of the Agreement on Agriculture  
applies specifically  to agricultural products, whereas Article II:1(b) of the GATT applies 
generally  to trade in all goods. Moreover, Article 21.1 of the Agreement on Agriculture  
provides, in relevant part, that the provisions of the GATT 1994 apply "subject to the 
provisions" of the Agreement on Agriculture . In our Report in EC – Bananas III , we 
interpreted Article 21.1 to mean that: 
… the provisions of the GATT 1994 … apply to market access 
commitments concerning agricultural products, except to the extent that 
the Agreement on Agriculture contains specific provisions dealing 
specifically with the same matter … 
[A]s we see it, the difference between the two provisions is that Article 4.2 of the 
Agreement on Agriculture deals more specifically with preventing the circumvention 
of tariff commitments on agricultural products than does the first sentence 
of Article II:1(b) of the GATT 1994 … 
                                               
64 Appellate Body Report, US – Gambling , para. 140. 
65 Appellate Body Report, Canada - Wheat Exports and Grain Imports , paras. 126-127. 
66 Ibid.; US - Zeroing (EC) (Article 21.5 - EC) , para. 277. 
67 Appellate Body Reports, Canada - Autos , para. 151; Canada - Wheat Exports and Grain Imports, 
para. 109. 
68 Peru's first written subm ission, paras. 4.11-4.21. WT/DS457/R 
- 26 - 
  [A]ny finding under Article II:1(b) of the GATT 1994 would be subject to further 
inquiry under the Agreement on Agriculture . In contrast, if we were to find first that 
Chile's price band system is inconsistent with Article 4.2 of the Agreement on 
Agriculture , we would not need to make a separate finding on whether the price band 
system also results in a violation of Ar ticle II:1(b) of the GATT 1994 in order to 
resolve this dispute.69 (footnote - citing Appellate Body Report, EC - Bananas III , 
para. 155 - omitted; emphasis original) 
7.20.  The Panel does not find any justification for departing from the Appellate Body's reasoning 
in the circumstances of the present dispute.  Therefore, in the event that the Panel 
rejects the preliminary argument regarding the alleged lack of good faith, it will commence its analysis of the main substantive provisions invoked by Guatemala with Article 4.2 of the 
Agreement on Agriculture. The Panel will then co nsider, if appropriate, Guatemala's claims under 
Article II:1(b) of the GATT 1994. 
7.21.  After analysing, if necessary, the claims concerning the main substantive provisions invoked 
by Guatemala, the Panel will address, if appropri ate, the provisions concerning the application of 
the measure, that is to say, Articles X:1 and X:3(a) of the GATT 1994. 
7.22.  Subsequently, if the Panel finds that the me asure at issue is an ordinary customs duty, it 
will consider Guatemala's claims with respect to the Customs Valuation Agreement. 
7.23.  Peru has raised an additional argument in case the Panel finds the measure at issue to be 
inconsistent with any of the provisions identified by Guatemala. In that case, Peru asserts that, under the FTA between Peru and Guatemala, the parties modified, as between themselves, their 
reciprocal obligations under the WTO agreements , and that the provisions of the FTA should 
prevail. Given the conditional nature of this argument, the Panel will consider this defence only if it decides that the measure at issue is inconsistent with any of the provisions identified by 
Guatemala. 
7.2  The question of whether the Panel sh ould refrain from examining Guatemala's 
claims 
7.2.1  Introduction 
7.24.  As a preliminary issue, Peru refers to the FTA between Peru and Guatemala signed in 
December 2011.
70 Peru asserts that, under the FTA, Guatemala agreed that Peru could maintain 
its PRS.71 Peru argues that, therefore, in initiating this procedure against the PRS, Guatemala is 
violating the obligation to engage in WTO dispute settlement procedures in good faith.72 
Thus, according to Peru, the Panel should not consider Guatemala's claims.73 
7.25.  Peru maintains that its PRS is consistent with WTO rules, but even if the Panel were to find 
that it is not, there would be an inconsistenc y between the FTA and the WTO agreements. This is 
because the FTA allows Peru to maintain the PRS, whereas the WTO agreements would prohibit it from doing so. In the presence of such inconsistency, by virtue of the provisions of its 
Article 1.3.2, the FTA would prevail. This would re sult in the modification, between the parties, of 
any provision of the WTO agreements that prohibits the PRS.
74 
7.26.  Guatemala rejects Peru's argument that in the present proceedings it has acted contrary to 
good faith.75 According to Guatemala, a Member can only be found to have acted in breach of good 
faith if that Member challenges a measure after having clearly stated that it would not do so.76 
                                               
69 Appellate Body Report, Chile - Price Band System , paras. 186, 187 and 190. 
70 Free Trade Agreement between the Republic of Peru and the Republic of Guatemala (extracts) 
(Extracts from the FTA) (Exhibits PER-32 and PER-65). Se e also Peru's first written submission, para. 3.74. 
71 Peru's first written submission, paras. 3.74 and 3.76; second written submission, para. 2.21. 
72 Peru's first written submission, paras. 4.11 and 4.19-4.20. 
73 Ibid. para. 4.21; Peru's second  written submission, para. 2.3. 
74 Peru's second written submission, para. 2.63. 
75 Guatemala's second written submission, para. 9.4. 
76 Ibid. para. 9.7. WT/DS457/R 
- 27 - 
  Guatemala maintains that no waiver or modification of Guatemala's rights in the WTO with respect 
to the PRS can be inferred from the FTA.77 
7.27.  Furthermore, Guatemala maintains that Peru's request would require the Panel to rule on 
the consistency of Guatemala's actions with the provisions of the FTA, and this, in Guatemala's 
opinion, would lead the Panel to act outside its terms of reference.78 Guatemala points out that the 
Panel is not competent to hear disputes unrelated to the WTO covered agreements. Guatemala adds that the FTA is not a legal vehicle for waiving or modifying rights and obligations contained in 
the WTO Agreement.
79 
7.28.  Peru's arguments raise two separate issues. The first is whether Guatemala engaged in the 
present procedure in a manner inconsistent with the good faith required by the DSU and whether this means that the Panel should therefore refrai n from considering Guatemala's claims. The Panel 
will consider this aspect as a preliminary matter and, in the light of its conclusions, decide whether 
it should proceed with the consideration of the Guatemalan claims. 
7.29.  The second is whether – assuming that the Panel finds that the measure at issue is 
inconsistent with any of Peru's obligations under the provisions of the covered agreements – it can 
be considered that under the FTA the parties have modified, as between themselves, their 
reciprocal obligations under the WTO agreements, and if so, whether the provisions of the FTA 
should take precedence. Given the conditional nature of this Peruvian argument, the Panel will 
examine this defence only if it decides that the measure at issue is inconsistent with any of the 
provisions identified by Guatemala. 
7.2.2  The content of the FTA and its legal status 
7.30.  As a preliminary step, consideration will be  given to Peru's argument that the Panel should 
refrain from examining Guatemala's claims on th e grounds that Guatemala engaged in the present 
procedure in a manner contrary to the good faith required by the DSU. The Panel will begin by 
describing the relevant facts relating to the FTA, together with the provisions of the FTA invoked 
by the parties to the dispute. 
7.2.2.1  Chronology of events relating to the negotiation and entry into force of the FTA 
7.31.  The negotiations that led to the signing of the FTA arose out of the general negotiating 
framework agreed between Peru and various Central American countries (Costa Rica, Guatemala, Honduras and Panama) on 16 October 2010 at the VI
th Ministerial Meeting of the Latin American 
Pacific Arc Forum.80 Guatemala and Peru signed the FTA on 6 December 2011.81 
7.32.  The FTA was approved by the Guatemalan  Congress on 4 July 2013, by Decree No. 5-2013 
published in the Journal of Central America (Guatemala's official journal) on 23 July 2013.82 
In December 2013, Guatemala initiated the procedures for ratification of the FTA by the President 
of the Republic.83 On 5 March 2014, Peru received a communication from Guatemala, dated 
21 February 2014, notifying it that Guatemala had fulfilled the legal requirements for the entry 
into force of the FTA.84 
7.33.  As matters stand at the close of these pr oceedings, the available evidence indicates that 
Peru has not ratified the FTA. Peru has stated that , under Article 57 of its Political Constitution, the 
                                               
77 Guatemala's second written submission, paras. 9.9-9.14. 
78 Ibid. paras. 9.27 (citing Appellate Body Report, Mexico – Taxes on Soft Drinks , paras. 56 and 78), 
and 9.29-9.31. 
79 Guatemala's second written submission, para. 9.28;  response to Panel question No. 21, para. 35. 
80 Peru's first written submission, para. 3.71; Gene ral Framework for the nego tiation of a Free Trade 
Agreement between Costa Rica, Honduras, Guat emala, Panama and Pe ru (Exhibit PER-51). 
81 Peru's first written submission, para. 3.74; Decree No. 5-2013 of the Guatemalan Congress published 
on 23 July 2013 (Exhibit PER-30); Note from Guatemala to Peru (Exhibit PER-82). 
82 Peru's first written submission, para. 3.78; Peru 's response to Panel qu estion No. 23, para. 37; 
Decree No. 5-2013 of the Guatemalan Congress, publis hed on 23 July 2013 (Exhibit PER-30); Guatemala's 
response to Panel question No. 23, para. 45. 
83 Guatemala's response to Panel question No. 23, para. 45. 
84 Peru's opening statement at the second meeting of  the Panel, para. 6; Note from Guatemala to Peru 
(Exhibit PER-82); Guatemala's response to Panel question No. 89, para. 7. WT/DS457/R 
- 28 - 
  President of the Republic can ratify the FTA with out having to obtain the prior approval of the 
Congress.85 Peru has stated its intention that the FTA should enter into force, and consequently 
has not ruled out expressing its consent to be bound by the FTA, "provided that the balance 
agreed between Peru and Guatemala therein is respected".86 H o w e v e r ,  P e r u  h a s  s t a t e d  t h a t  i t  
"is not proceeding with the exchange of notifica tions at this time since the case brought by 
Guatemala has created uncertainty with regard to the existence of the balance negotiated".87 
7.2.2.2  Content of the FTA 
7.34.  The parties identified the following provisions of the FTA as relevant to the analysis of their 
arguments with regard to whether the Panel should reject Guatemala's claims. 
7.35.  The preamble to the FTA states: 
The Government of the Republic of Peru, on  the one part, and the Government of the 
Republic of Guatemala, on the other part, being resolved to: 
STRENGTHEN  the special bonds of friendship and cooperation between them and 
promote regional economic integration; 
FOSTER  the creation of an expanded and secu re market for the goods and services 
produced in their respective territories; 
PROMOTE  comprehensive economic development in order to reduce poverty; 
ENCOURAGE  the creation of new employment opportunities and improve working 
conditions and living standards in their respective territories; 
ESTABLISH  clear and mutually advantageous rules governing their trade; 
GUARANTEE  a predictable legal and commercial framework for trade and investment; 
RECOGNIZE  that the promotion and protection of investment by one Party in the 
territory of the other Party will contribute to enhancing the flow of investment and stimulate mutually advantageous trading activity; 
PREVENT  distortions in their reciprocal trade; 
PROMOTE  the competitiveness of their enterprises in global markets; 
FACILITATE  trade by promoting efficient and tr ansparent customs procedures that 
ensure predictability for their importers and exporters; 
STIMULATE  creativity and innovation and promote trade in innovative sectors of their 
economies; 
PROMOTE  transparency in international trade and investment; 
PRESERVE  their capacity for safeguarding public welfare; and 
BUILD ON  their respective rights and obligations under the Marrakesh Agreement  
Establishing the World Trade Organization , and other treaties to which they are 
parties
88, 
                                               
85 Peru's response to Pa nel question No. 23, para. 39. See the Political Constitution of Peru 
(Exhibit PER-1), p. 17. 
86 Peru's response to Panel questi on No. 94, paras. 15-16; comments on Guatemala's response to Panel 
question No. 89, para. 5. See also Peru's opening statement at the first meeting of  the Panel, para. 23. 
87 Peru's response to Panel question No. 23, para. 39. 
88 Extracts from the FTA (Exhibit PER-32). WT/DS457/R 
- 29 - 
  7.36.  Article 1.1 of the FTA provides as follows: 
The Parties to this Treaty, in accordance with the provisions of Article XXIV of the 
WTO General Agreement on Tariffs and Trade 1994  and Article V of the 
WTO General Agreement on Trade in Services , hereby establish a free trade area. 
(emphasis original) 
7.37.  Article 1.2 identifies as objectives of the FTA: 
(a) encouraging the expansion and diversif ication of trade between the Parties; 
(b) removing unnecessary barriers to trade and facilitating the cross-border 
movement of goods and services between the Parties; 
(c) promoting conditions of free competition within the free trade area; (d) expanding the opportunities for investment within the territories of the Parties; 
(e) appropriately and effectively protecting and enforcing intellectual property 
rights in the territory of each Party, while taking into consideration the balance between the rights and obligations deriving therefrom; and 
(f) creating effective procedures for the a pplication and observance of this Treaty, 
for its joint administration, and for preventing and settling disputes. 
7.38.  Article 1.3 of the FTA, on the relationship  with other international agreements, stipulates 
that: 
1. The Parties confirm their existing mutual rights and obligations under the 
WTO Agreement and other agreements to which they may be parties. 
2. In the event of any inconsistency be tween this Treaty and the agreements 
referred to in paragraph 1, this Treaty shall prevail to the extent of the inconsistency, 
unless otherwise provided in this Treaty. 
7.39.  Where tariff elimination is concerned, paragraph 2 of Article 2.3 of the FTA establishes that: 
Except as otherwise provided in this Treaty, each Party shall eliminate its customs 
tariffs on goods originating in the other Party, in accordance with Annex 2.3. 
7.40.  The parties have indicated that, during the negotiation of the FTA, they discussed what 
should be the treatment under the PRS for import s originating in Guatemala. The parties agreed 
that Peru would grant Guatemala a tariff quota free of "tariffs, including those deriving from the application of the Price Range System" for imports of certain products of Guatemalan origin, namely: cheese, food preparations and preparations of a kind used in animal feeding.
89 Peru has 
indicated that Guatemala requested that its sugar exports should also be free of tariffs, including 
the price range system.90 However, Guatemala and Peru failed to arrive at an agreement on this 
latter aspect.91 Finally, with respect to the PRS, paragraph 9 of Annex 2.3 to the FTA states that: 
Peru may maintain its Price Range System, established in Supreme Decree 
No. 1152001EF and the amendments thereto, with regard to the products subject to 
                                               
89 Situation of Products Subject to the Price Range in  Peru, as Compared with the Treatment Granted in 
the Guatemala-Peru Free Trade Agreement (Exhibit GTM- 44), pp. 8-9; Peru's resp onse to Panel question 
No. 31, para. 73. 
90 Guatemala's sugar proposal of 3 May 2011 (Exh ibit PER-66). See also Peru's second written 
submission, para. 2.31. 
91 Peru's first written submission, para. 3.73; Guatemala's response to Panel question No. 24, para. 46. WT/DS457/R 
- 30 - 
  the application of the system marked with an asterisk (*) in column 4 of Peru's 
Schedule as set out in this Annex.92 
7.41.  With respect to disputes that may arise under the FTA and other trade agreements, 
Article 15.3 of the FTA provides as follows: 
In the event of any dispute that may arise under this Treaty or under another free 
trade agreement to which the disputing Parties are party or the WTO Agreement , the 
complaining Party may choose the forum for settling the dispute.93 (emphasis original) 
7.42.  Finally, Article 19.5 of the FTA stipulates that: 
This Treaty shall enter into force sixty (60)  days after the date on which the Parties 
exchange written notifications confirming that they have completed their respective legal procedures or on the date on which the Parties so agree.
94 
7.2.3  Main arguments of the parties 
7.2.3.1  Peru 7.43.  Peru claims that Guatemala is seeking the "complete dismantlement" of the PRS through 
these proceedings, after having explicitly recognized, in the FTA, that Peru could maintain it.
95 
In Peru's opinion, this conduct is contrary to the obligation on Guatemala, under articles 3.7 and 3.10 of the DSU, to engage in dispute settlement procedures under the DSU in good faith.
96 
7.44.  Peru requests the Panel to make an ob jective assessment of the content of the FTA as 
a relevant factual matter, in order to verify whether Guatemala engaged in the present procedure in a manner contrary to good faith.
97 
7.45.  Peru maintains that, pursuant to articles 3.7 and 3.10 of the DSU, good faith is 
a requirement as to the admissibility of a Member initiating a procedure under the WTO dispute 
settlement system.98 Peru explains that its argument that Guatemala has not acted in good faith 
does not entail application of the estoppel principle in this case.99 
7.46.  Peru considers that the obligation on Memb ers to exercise their judgement as to whether 
bringing a case would be fruitful, in accordance with article 3.7 of the DSU, is not a matter of self-regulation.
100 According to Peru, the presumption that a Member has engaged in a 
procedure in good faith (identified by the Panel in EC – Export Subsidies on Sugar ) can be 
refuted.101 Given the possibility of refuting that pres umption, Peru considers that the Panel may 
determine that action under the present procedure would not be fruitful.102 
7.47.  In Peru's opinion, pursuant to Article 3.10 of the DSU, any action that implies bringing 
a case contrary to good faith is prohibited. According to Peru, actions contrary to good faith 
include cases where a Member initiates a dispute with the intention of causing injury to another 
                                               
92 For a list of the tariff lines marked with an as terisk, see Extracts from the FTA (Exhibit PER-32); 
Table containing the tariff items marked with an asteri sk in Peru's Schedule under the Guatemala-Peru FTA, 
and those subject to the Price Range System (Exhibit GTM-46). 
93 Guatemala's second written submission, para. 9.13. 
94 Extracts from the FTA (Exhibit PER-65). 
95 Peru's first written submission, para. 4.2. 
96 Peru's second written submission, para. 2.3. See also first written submission, paras. 4.11-4.13; 
response to Panel question No. 26, para. 53. 
97 Peru's first written submission, para. 4.3; second written submission, paras. 2.6 and 2.9; response to 
Panel question No. 22, para. 34.  See also X. Fernández Pons, La OMC y el Derecho internacional (The WTO and 
International Law) (Marcial Pons, 2006) (Exhibit PER-39).  
98 Peru's first written submission, para. 4.13; second  written submission, paras. 2.3 and 2.41; response 
to Panel question No. 90, para. 4. 
99 Peru's response to Panel questi on No. 39, para. 87; response to Panel question No. 92, para. 7. 
100 Peru's second written submission, paras. 2.38 and 2.41. 
101 Peru's second written submission, para. 2.42 (citing Panel Report, EC – Export Subsidies on Sugar 
(Australia) / EC – Export Subsidies on Sugar (Br azil) / EC – Export Subsidies on Sugar (Thailand) , para. 7.67). 
102 Peru's response to Panel question No. 96, para. 22. WT/DS457/R 
- 31 - 
  Member or impairing its rights, in order to waste time, as a retaliatory measure, or when the 
action diametrically contradicts what has been agreed in a free trade agreement.103 
7.48.  Peru maintains that the FTA was adopted an d ratified by Guatemala and Peru, but is not yet 
in force. In addition, neither of the two Parties has expressed the intention of not being party to 
the FTA. Therefore, in accordance with the pr ovisions of Article 18 of the Vienna Convention104, 
Guatemala is obliged not to defeat the object and purpose of the FTA through actions that would render the provisions of the treaty meaningless.
105 Peru states that Article 18 of the 
Vienna Convention is applicable as an expression of the principle of good faith.106 In addition, 
Peru asserts that, in order to find that Guatemala has not acted in good faith, the Panel need only determine that Guatemala violated Article 18 of the Vienna Convention.
107 
7.49.  According to Peru, paragraph 9 of Annex 2.3 to the FTA is a clear expression of Guatemala's 
willingness to agree that Peru could maintain the PRS.108 Peru also asserts that, given the bilateral 
nature of the FTA, the object and purpose of th e treaty includes all the rules contained therein.109 
Peru adds that bringing a case aimed at th e dismantlement of the PRS "would eviscerate" 
paragraph 9 of Annex 2.3 to the FTA, leaving it inoperative, and would constitute an action tending 
to defeat the object and purpose of the FTA.110 
7.50.  Consequently, Peru contends that Guatemala did not initiate these proceedings in good faith 
and requests the Panel to reject Guatemala's claims in limine .111 
7.51.  Peru observes that, when one party is not satisfied with what was negotiated in a bilateral 
treaty establishing that its provisions would take precedence over WTO provisions with which it might conflict, allowing that party to have recourse to the WTO to contest what was agreed in the 
treaty "undermines both the WTO system and the basic principles of international law, since it 
constitutes an open abuse of rights which cannot be permitted".
112 
7.2.3.2  Guatemala 
7.52.  Guatemala asserts that it acted with "the utmost caution and in the most cooperative spirit" 
in these proceedings, and therefore rejects any allegation of a lack of good faith.113 
7.53.  In Guatemala's view, Peru's request concerni ng violation of the provisions of the FTA would 
require the Panel to act outside its terms of reference.114 Guatemala asserts that panels cannot 
rule on disputes unrelated to the WTO covered agreements.115 Guatemala adds that the Panel is 
not precluded from assessing the FTA as a factual matter and from making factual findings in that respect.
116 
7.54.  With regard to Article 3.7 of the DSU, Gu atemala maintains that the obligation to exercise 
judgement as to whether bringing a case would be fruitful entails a decision by each Member, 
                                               
103 Peru's second written submission, para. 2.49; response to Panel ques tion No. 92, para. 8. 
104 See M. Dixon, Cases & Materials on International Law , 5th ed. (Oxford University Press, 2011) 
(Exhibit PER-36); M. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties  
(Martinus Nijhoff Publishers, 2009) (Exhibit PER-47). 
105 Peru's first written submission, para. 4.7. 
106 Peru's second written submission, para. 2.51; resp onse to Panel question No . 22, para. 35; response 
to Panel question No. 93. 
107 Peru's response to Panel question No. 93, para. 13. 
108 Peru's second written submission, paras. 2.19-2.26. 
109 Peru's response to Panel question No. 27. 
110 Peru's response to Panel questi on No. 28, para. 59. See also resp onse to Panel question No. 93, 
para. 14. 
111 Peru's first written submission, para. 4. 21; second written submission, para. 2.3. 
112 Peru's second written submission, para. 2.68. See also Peru's opening statement at the first meeting 
of the Panel, para. 10; opening statement at the second meeting of the Panel, para. 12. 
113 Guatemala's second written submission, para. 9.4. 
114 Guatemala's second written submission, paras. 9.29-9.31. See also response to Panel question 
No. 21, para. 35(a) (citin g Appellate Body Report, Mexico - Taxes on Soft Drinks , para. 78); response to Panel 
question No. 91, para. 16. 
115 Guatemala's second written submission, para. 9.27 (citing Appe llate Body Report, Mexico - Taxes on 
Soft Drinks , paras. 56 and 78). 
116 Guatemala's response to Panel question No. 91, para. 15. WT/DS457/R 
- 32 - 
  which a panel must presume to be made in good faith.117 According to Guatemala, Article 3.7 
of the DSU does not limit a Member's discretion with respect to the outcome of exercising its 
judgement as to whether engagement in a procedure would be fruitful. Consequently, Guatemala maintains that the outcome of that exercise could not be questioned by the respondent Member or 
by a panel.
118 
7.55.  Guatemala indicates that, under Article 3.10 of the DSU, it can only be found that a Member 
engaged in a procedure in a manner contrary to good faith if, before initiating the dispute, the 
Member in question clearly expressed its waiver of the right to challenge the measure in 
question.119 Guatemala contends that paragraph 9 of Annex 2.3 to the FTA cannot be read as 
an explicit or implicit waiver of any of Guatemala's WTO rights, including the right to bring a complaint under the DSU with regard to th e PRS or the duties resulting from the PRS.
120 
Guatemala does not agree with Peru's reading of what was agreed in the FTA. In particular, 
Guatemala considers that Article 1.3.1 of the FTA, read in conjunction with paragraph 9 of Annex 2.3 to the FTA, grants Peru the right to maintain the PRS for a limited number 
of products, without in any way affecting Peru's obligation  to comply with the WTO Agreement.
121 
7.56.  In addition to the foregoing, Guatemala rejects the possibility for a Member to waive – 
through a free trade agreement – its right to bring a case in the WTO. According to Guatemala, 
under the legal framework of the WTO, a waiver of that kind would have to be made through 
a mutually agreed solution in accordance with Article 3.5 of the DSU or a multilateral agreement.
122 
7.57.  Guatemala argues that Peru is requesting the Panel to act outside its terms of reference, 
since it would be required to verify whether an act by Guatemala defeats the object and purpose 
of a non-WTO treaty.123 In any event, Guatemala considers that  the initiation of these proceedings 
does not defeat the object and purpose of the FTA because: (a) under Chapter 15 of the FTA, 
Guatemala is allowed to bring a case before the WTO; (b) Guatemala has not in any way waived 
its right to challenge the PRS; (c) there is no conflict whatsoever between the provisions of the FTA and those of the WTO agreements
124; and (d) under Article 1.3.1 of the FTA, the parties 
confirm their rights and obligations under the WTO Agreement.125 Lastly, Guatemala adds that 
Peru's arguments regarding Article 18 of the Vienna  Convention are invalidated by Peru's apparent 
expression of the wish not to be bound by the FTA.126 
                                               
117 Guatemala's response to Panel question No. 29, para. 64 (citing Appe llate Body Reports, 
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 211; and 
Panel Report, EC – Export Subsidies on Sugar (Australia) / EC – Export Subsidies on Sugar (Brazil) / 
EC - Export Subsidies on Sugar (Thailand) , para. 7.67); response to Panel question No. 96, paras. 29-31 
(citing Appellate Body Reports, EC – Bananas III , para. 135; and Mexico – Corn Syrup (Article 21.5 – US) , 
para. 74). 
118 Guatemala's response to question No. 96, para. 32; comments on Peru's response to Panel question 
Nos. 88, 89, 90, 92, 95 and 96, paras. 14-15. 
119 Guatemala's response to Panel question No. 29,  paras. 65-66 (citing Appellate Body Reports, 
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 228). See also second 
written submission, paras. 9.5 and 9.7; comments on Peru's response to Panel question Nos. 88, 89, 90, 92, 95 and 96, paras. 16-18.  
120 Guatemala's second written submission, paras. 9.9-9.14; response to Panel question No. 29, 
paras. 67-68. 
121 Guatemala's second written submission, paras. 9.11-9.12. See also response to Panel question 
No. 25, para. 49. 
122 Guatemala's second written submission, para. 9.8 (referring to United States' third-party written 
submission, para. 50); response to Panel question No . 21, para. 36; response to Panel question No. 91, 
para. 19; comments on Peru's response  to Panel question No. 97, para. 27. 
123 Guatemala's second written submission, paras. 9.34-9.35; response to Panel question No. 27, 
para. 59 (citing Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 78); response to Panel question 
No. 88, para. 2. 
124 Guatemala's second written submission, paras. 9.13 and 9.36; response to Panel question No. 27, 
para. 60; response to Panel question No. 88, para. 4. 
125 Guatemala's response to Panel question No. 28, paras. 62-63. 
126 Guatemala's comments on Peru 's response to Panel question Nos. 93 and 94, paras. 21-23 
(referring to Guatemala's response to Panel question  No. 89, para. 10; and to Public statements by the 
Minister for Foreign Affairs and the Vice-Minister fo r Foreign Trade of Peru (Exhibit GTM-38); and to 
Peru's opening statement at the second meeting of the Panel, para. 23). WT/DS457/R 
- 33 - 
  7.58.  Guatemala adds that, since the FTA has not been accepted by all WTO Members, it cannot 
be used to interpret the provisions of the covered agreements, or in particular Articles 3.7 and 3.10 of the DSU.
127 
7.59.  Guatemala considers that its arguments remain valid regardless of whether or not the FTA is 
in force. In its view, the fact that the FTA ha s not entered into force strengthens the argument 
that this Treaty cannot be used to interpret the WTO agreements.128 
7.60.  Guatemala concludes by expressing concern at the effects that would be produced by 
acceptance of Peru's arguments. In particular, it considers that, if WTO Members were permitted 
to waive their right to challenge measures thro ugh free trade agreements, even before a dispute 
might arise in respect of such measures, "the door would be opened dangerously wide for political pressures and negotiating power imbalances to impa ir the rights of smaller and weaker parties".
129 
7.2.4  Main arguments of the third parties 
7.2.4.1  Argentina 7.61.  Argentina considers that, although the FTA has not entered into force, Guatemala and Peru, 
by virtue of having signed it, are subject to the obligation not to defeat its object and purpose.
130 
In Argentina's view, a price range system lack s transparency and impairs the predictability 
of trade. The foregoing is incompatible with collaboration and the promotion of trade sought by 
an agreement like the FTA. Argentina concludes that the search for ways of further opening up 
trade should not be hampered by obstacles "such as certain measures which, by their inherent 
characteristics, tend to impair transparency an d predictability, and thus to restrict trade".131 
7.2.4.2  Brazil 
7.62.  Brazil considers that a free trade agreement may be relevant to the determination of the 
parties' rights and obligations in their bilateral relations and that, in accordance with the provisions of Article XXIV of the GATT 1994, it may also serve as a context for assessing the rights and 
obligations of a WTO Member. However, given that the FTA has not entered into force, it is not 
relevant to the assessment of the present case.
132 Brazil adds that Article 18 of the 
Vienna Convention could be relevant within the scope of the FTA, but is not relevant in the context 
of a dispute concerning the compatibility of the challenged measure with WTO provisions.133 
In addition, the Appellate Body was clear about th e fact that panels and the Appellate Body must 
presume that the decision of any Member to initiate a case is made in good faith.134 Brazil asserts 
that nothing in the DSU authorizes a panel to exclude the alleged violation of a WTO rule from its 
jurisdiction.135 
7.2.4.3  Colombia 7.63.  Colombia considers that Articles 3.7 and 3.10 of the DSU must form part of the objective 
analysis of a complaint that panels must make in accordance with Article 11 of the DSU.
136 
Basing itself on Appellate Body statements, Colombia maintains that Articles 3.10 and 4.3 of the DSU require Members to act in good faith when initiating a dispute, and that Article 3.10 is one 
                                               
127 Guatemala's response to Panel question No. 21, para. 35(b) (citing Panel Report, EC - Approval and 
Marketing of Biotech Products , para. 7.68, and referring to Appellate Body Reports, EC - Chicken Cuts , 
paras. 271-273; and Japan - Alcoholic Beverages II , p. 15). 
128 Guatemala's response to Panel question No. 22, paras. 40-41. 
129 Guatemala's second written submission, para. 9.19;  response to Panel question No. 21, para. 38. 
In para. 9.20 of its second written submission, Guatem ala states that Peru's conduct in the present case, 
by threatening not to ratify the FTA if the dispute continue s, is an example of the type of political pressure to 
which it refers. See also Guatemala' s comments on Peru's response to Panel question No. 97, paras. 28-29. 
130 Argentina's response to Panel qu estion Nos. 1 and 2, pp. 1-2. 
131 Argentina's response to Panel qu estion Nos. 1 and 2, pp. 2-4. 
132 Brazil's response to Panel question No. 1, p. 1. 
133 Brazil's response to Panel question No. 2, p. 1. 
134 Brazil's response to Panel question No. 3, p. 2 (citing Appellate Body Reports, EC - Sardines , 
para. 278; and Mexico - Corn Syrup (Article 21.5 - US) , para. 74). 
135 Brazil's response to Panel question No. 3, p. 2. 
136 Colombia's third-party wr itten submission, para. 43. WT/DS457/R 
- 34 - 
  of the few provisions of the DSU that expressly limits the right of Members to bring a complaint.137 
In the context of Articles 3.7 and 3.10 of the DS U, the doctrine of the abuse of rights may be 
interpreted as the requirement to refrain from using the dispute settlement mechanism without the motivation to find a solution to the disput e or for the purpose of causing prejudice to one 
of the Members. Thus, the limits to the exercise of  the right to initiate a dispute would lie in the 
absence of "a genuine intention to resolve the conflict".
138 Finally, Colombia states that the PRS 
does not per se defeat the object and purpose of the FTA or the rules contained in Article 4 of the 
Agreement on Agriculture.139 
7.2.4.4  United States 7.64.  The United States considers that the FTA is irrelevant to the adjudication of this matter, 
since the determination as to whether a measure is consistent with a covered agreement does not 
hinge on the terms of a treaty such as the FTA which does not form part of the covered 
agreements.
140 Nor does the United States consider Article 18 of the Vienna Convention to be 
relevant to an assessment as to whether Guatemala is entitled to assert a claim under the DSU.141 
The United States considers that the Panel must reject Peru's requests, inasmuch as they imply 
that the Panel should make findings regarding obligations other than those contained in the covered agreements and should refrain from making findings on claims relating to violations of 
those agreements.
142 With regard to Article 3.7 of the DSU, the United States considers that the 
Appellate Body left it to Members to determine when to bring an action and made it clear that a procedure under the DSU would be presumed to be initiated in good faith.
143 Furthermore, the 
United States considers that Article 3.10 of the DSU places no obligation on a Member, but is 
confined to setting out a common understanding of how Members will act under the dispute 
settlement mechanism.144 
7.2.4.5  European Union 
7.65.  The European Union considers that a Member may waive its rights under the 
WTO agreements. For the purpose of determining whether a Member has undertaken to refrain 
from challenging a measure, the subsequent agreements between the parties regarding the 
interpretation of a treaty and any rules of intern ational law applicable between the parties may be 
relevant for the interpretation of the covered agreements. The European Union suggests in this connection that the Panel is empowered to consider whether the FTA contains a clear commitment on Guatemala's part to refrain from challenging the PRS in the WTO.
145 The European Union 
argues that Article 18 of the Vienna Convention may be relevant to the extent that the FTA 
contains a clear commitment by Guatemala to refrain from challenging the PRS in the WTO.146 
The European Union also considers that the doctrine of abuse of rights prohibits a Member from 
exercising a right for a purpose other than the one for which the right was established. In the case 
of the dispute settlement mechanism, the purpose is  to secure a positive solution to a dispute.147 
The European Union contends that the central is sue for determining the existence of any element 
                                               
137 Colombia's third-party written submission, paras. 44-45 (citing Appe llate Body Reports, 
Canada - Continued Suspension , para. 3.13; EC - Export Subsidies on Sugar , para. 312; EC - Bananas III , 
para. 135; and Mexico - Taxes on Soft Drinks , fn. 100). See also Colombia's third-party statement, para. 15. 
138 Colombia's response to Panel question  No. 3 (citing Appellate Body Reports, EC - Export Subsidies 
on Sugar , para. 312; EC - Bananas III , para. 135; Mexico - Taxes on Soft Drinks , fn. 100). 
139 Colombia's third-party st atement, paras. 12-13. 
140 United States' third-party stat ement, para. 19; response to Pa nel question No. 1, para. 4. 
141 United States' third-party writte n submission, para. 47; third-party statement, para. 21; response to 
Panel question No. 2. 
142 United States' third-party wri tten submission, para. 36. See also, third-party written submission, 
paras. 42-43 (citing A ppellate Body Report, Mexico - Taxes on Soft Drinks , para. 53). 
143 United States' third-part y statement, para. 22 (citing Appellate Body Report, Mexico - Corn Syrup  
(Article 21.5 - US) , paras. 73-74); respon se to Panel question  No. 3, para. 9. 
144 United States' third-party written submission, paras. 44-46; third-part y statement, para. 24; 
response to Panel question No. 3, para. 10. 
145 European Union's third-party written submission, paras. 17-18 (citing Appellate Body Report, 
EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 – US) , paras. 217 and 218); 
response to Panel questi on No. 1, paras. 1-3. 
146 European Union's response to Panel question No. 2, para. 5. 
147 European Union's response to Panel question No. 3, para. 8. WT/DS457/R 
- 35 - 
  preventing Guatemala from initiating these proc eedings is whether, under the FTA, Guatemala 
made a clear commitment to refrain from brin ging a case against the PRS before the WTO.148 
7.2.5  Assessment by the Panel 7.66.  Peru claims that Guatemala did not initiate this procedure in good faith, mainly because 
Guatemala accepted the maintenance of the PRS in the FTA and subsequently sought its 
dismantlement in the context of the present proceedings.
149 The Panel has carefully considered the 
arguments put forward by Peru. As the parties have observed, the assessment of this matter could 
have important systemic consequences.150 
7.67.  The Panel is aware that trade relation s between WTO Members are often not regulated 
solely and exclusively by the rules contained in the WTO agreements. On the contrary, these relations are frequently governed by a complex fr amework that includes not only the rules of the 
WTO but also other international commitments, including those derived from regional and bilateral 
trade agreements. The WTO agreements recognize this reality, as is clear, for example, from Article XXIV of the GATT 1994, the Decision on Differential and More Favourable Treatment, 
Reciprocity and Fuller Participation (Enabling Clause), adopted by the GATT CONTRACTING 
PARTIES in 1979
151, and Article V of the General Agreemen t on Trade in Services. At the same 
time, these provisions impose certain conditions in the event that a Member, in the context of a 
regional or bilateral agreement, requests exemption from any of its obligations under the 
WTO agreements.152 As the Appellate Body has observed, in performing its task of clarifying 
provisions of the covered agreements in the context of a specific dispute, a panel cannot read the texts of the agreements "in clinical isolation from public international law".
153 
7.68.  However, this Panel's task is circumscribed by the terms of reference conferred upon it by 
the DSU. These terms of reference delimit the Panel's authority as follows: 
To examine, in the light of the relevant provisions  of the covered agreements cited by 
the parties to the dispute , the matter referred to the DSB by Guatemala in 
document WT/DS457/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.
154 
(emphasis added) 
7.69.  For this reason, the Panel is only authorized to rule on the invocation of any rule of public 
international law applicable to the relations between the parties to the extent that the invocation of that rule of international law is based on a relevant provision of the covered agreements that 
has been invoked by one of the parties to the disp ute. In this specific case, the Panel's assessment 
of the argument put forward by Peru is limite d to examining whether Peru has succeeded in 
showing that Guatemala engaged in the present proc edure in a manner contrary to good faith and, 
if so, what consequences might flow from that finding, in the light of Articles 3.7 and 3.10 of the 
DSU.
155 
                                               
148 European Union's third-party wr itten submission, paras. 17-18. 
149 Peru's first written submission, para. 4. 11; second written submission, para. 2.3. 
150 Peru's second written submission, para. 2.68; Peru 's opening statement at the first meeting of the 
Panel, para. 10; Peru's opening statement at the second meeting of the Panel, para. 12. Guatemala's second written submission, para. 9.19; Guatemala's response to Panel question No. 21, para. 38. 
151 GATT document L/4903, BISD 26S/203-205. 
152 See, for example, Appellate Body Reports, Turkey - Textiles , paras. 44-59; EC - Tariff Preferences , 
paras. 89-99. 
153 Appellate Body Report, US - Gasoline , p. 17. 
154 Constitution of the Panel established at th e request of Guatemala, document WT/DS457/3 
(of 23 September 2013), para. 2. 
155 The Panel takes note of the argument put forward by the United States in its response to Panel 
question No. 3, to the effect that, even if Article 3. 10 were to impose binding ob ligations, Peru would have 
to submit a claim of violation of that provision to defend its position. Peru ha s rejected this argument. 
See Peru's second written submissi on, para. 2.45. The Panel notes that the argument put forward by the 
United States was not advanced by Guatemala. Th e Panel considers that, as was pointed out by the 
Appellate Body, "panels cannot simply ignore issues which go to the root of their jurisdiction – that is, to 
their authority to deal with and dispos e of matters" (Appe llate Body Report, Mexico - Corn Syrup (Article 21.5) , 
para. 36). Thus, the Panel will proceed to examine Peru's arguments with respect to the Panel's authority to examine the substance of the claims made by Guatemala in this case. WT/DS457/R 
- 36 - 
  7.70.  The Panel will commence its examination by recalling the scope of Members' obligations, 
under Articles 3.7 and 3.10 of the DSU, that are relevant to the analysis of the present case. The Panel will go on to examine whether Peru has shown that Guatemala engaged in the present 
procedure in a manner contrary to its obligation to do so in good faith. 
7.2.5.1  The principle of good faith under Articles 3.7 and 3.10 of the DSU 
7.71.  The first sentence of Article 3.7 of the DSU, to which the parties refer, stipulates that: 
Before bringing a case, a Member shall exercise its judgement as to whether action 
under these procedures would be fruitful. 
7.72.  In Mexico – Corn Syrup (Article 21.5 – US) , the Appellate Body examined a Mexican 
argument with respect to the alleged failure on the part of the United States to meet the requirement laid down in the first sentence of Article 3.7 of the DSU in initiating the compliance 
procedure in that case.
156 In its analysis, the Appellate Body considered that the first sentence 
of Article 3.7 "reflects a basic principle that Members should have recourse to WTO dispute 
settlement in good faith, and not frivolously set in motion the procedures contemplated in the 
DSU".157 
7.73.  In the same report, the Appellate Body referred to its finding in EC – Bananas III  with 
respect to the broad discretion accorded to every Member in deciding whether the action of 
bringing a case would be fruitful.158 In view of this broad discretion, the Appellate Body maintained 
that panels "must presume, whenever a Member submits a request for establishment of a panel, 
t h a t  s u c h  M e m b e r  d o e s  s o  i n  g o o d  f a i t h ,  h a v i n g  d u l y  e x e r c i s e d  i t s  j u d g e m e n t  a s  t o  w h e t h e r  recourse to that panel would be 'fruitful'".
159 The Appellate Body also pointed out that the first 
sentence of Article 3.7 of the DSU "neither requir es nor authorizes a panel to look behind that 
Member's decision and to question its exercise of judgement".160 Therefore, the Appellate Body 
considered that the panel in that case was not obliged to consider this issue on its own motion.161 
However, the Appellate Body's ruling does not indicate whether the presumption that a Member is 
acting in good faith and has duly exercised its judgement as to whether recourse to a panel would be fruitful is a rebuttable presumption. 
7.74.  Guatemala and Peru disagree about the scope  of the findings of the Appellate Body in 
Mexico – Corn Syrup (Article 21.5 – US ) with respect to Article 3. 7 of the DSU. According to 
Guatemala, in that case the Appellate Body clea rly found that a panel cannot question a Member's 
exercise of judgement as to whether initiation of a dispute settlement procedure would be 
fruitful.
162 For its part, Peru maintains that, despite the existence of a presumption, that 
presumption is rebuttable.163 
7.75.  As pointed out by the Appellate Body, Article 3.7 of the DSU is an expression of the principle 
that Members should have recourse to the dispute settlement procedure in good faith.164 
In addition, the Appellate Body indicated that ev ery Member should exercise its judgement as to 
whether the initiation of a procedure would be fruitful and that it was not for a panel to question 
the outcome of such exercise of judgement. On the contrary, a panel should presume good 
faith.165 The Panel does not find any support either in the text of Article 3.7 of the DSU or in panel 
or Appellate Body reports that would allow it, in the circumstances of the present case, to do anything other than presume that Guatemala duly exercised its judgement as to whether the 
initiation of this procedure would be fruitful. 
                                               
156 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US) , paras. 34, 41, 51 and 71. 
157 Ibid. para. 73. 
158 Ibid. para. 73 (citing Appellate Body Report, EC – Bananas III , para. 135). See also: Appellate Body 
Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 211. 
159 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 74. See also Panel Reports, 
EC – Export Subsidies on Sugar (Australia) / EC – Export  Subsidies on Sugar (Brazil) / EC – Export Subsidies 
on Sugar (Thailand) , para. 7.67. 
160 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US) , para. 74. 
161 Ibid. 
162 Guatemala's response to Panel question No. 96. 
163 Peru's second written submission, para. 2.42. 
164 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US) , para. 73. 
165 Ibid. para. 74. WT/DS457/R 
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  7.76.  Nevertheless, the Panel recalls the Appellate Body's consideration in EC – Export Subsidies 
on Sugar of an argument by the European Communities concerning the application of the principle 
of estoppel in that dispute. The Appellate Body ruled in the following terms on the limits that the DSU imposes on the right of Members to submit a claim: 
The principle of estoppel has never been a pplied by the Appellate Body. Moreover, the 
notion of estoppel, as advanced by the European Communities, would appear to inhibit the ability of WTO Members to initiate a WTO dispute settlement proceeding. 
We see little in the DSU that explicitly limi ts the rights of WTO Members to bring an 
action; WTO Members must exercise their "judgement as to whether action under these procedures would be fruitful", by virtue  of Article 3.7 of the DSU, and they must 
engage in dispute settlement procedures in good faith, by virtue of Article 3.10 of the 
DSU. This latter obligation covers, in our view, the entire spectrum of dispute 
settlement, from the point of initiation of  a case through implementation. Thus, even 
assuming arguendo  that the principle of estoppel could apply in the WTO, its 
application would fall within these narrow parameters set out in the DSU.
166 
7.77.  Within this context, the Panel consider s that the assessment of whether an action was 
brought in good faith can also be guided by the pr ovisions of Article 3.10 of the DSU. Accordingly, 
the Panel will examine the conten t and scope of Article 3.10. 
7.78.  The first sentence of Article 3.10 of the DSU, to which the parties refer, reads as follows: 
It is understood that requests for conciliation and the use of the dispute settlement 
procedures should not be intended or considered as contentious acts and that, if 
a dispute arises, all Members will engage in these procedures in good faith in an effort 
to resolve the dispute. 
7.79.  In the past, the Appellate Body and some panels have assessed the scope of this provision. 
The question of whether the behaviour of one of the parties over the course of a dispute 
settlement procedure could be deemed to have been limited by virtue of this provision has been analysed on several occasions.
167 In some of these cases, the Appellate Body pointed out that 
Article 3.10 obliges Members to participate in dispute settlement proceedings in good faith.168 
7.80.  The Appellate Body169 has also assessed the possible impact on a panel's terms of reference 
of failure to comply with the requirements of Ar ticle 3.10 of the DSU with regard to initiating 
a dispute settlement procedure in good faith. In the light of Peru's claim that Guatemala did not 
engage in the present procedure in good faith, the Panel will proceed to examine the 
considerations mentioned by the Appellate Body concerning how to determine whether a Member 
initiated a procedure in a manner contrary to good faith. 
                                               
166 Appellate Body Report, EC - Export Subsidies on Sugar , para. 312. 
167 Appellate Body Reports, US - Gambling , para. 269 (with reference to the moment at which 
a responding party should put forward its defence); Thailand - H-Beams , para. 97 (in analysing the sufficiency 
of the identification of the legal basis of the complaint in the request for the establishment of a panel); US - FSC , para. 166 (in examining the moment at which responding Members should bring procedural 
deficiencies to the attention of the panel); US - Lamb , para. 115 (in analysing the discretion that Members 
enjoy to argue claims); EC - Sardines , paras. 140-141 (in analysing the imposition of conditions on the 
withdrawal of an appeal); Canada - Aircraft , para. 190 (in assessing the duty of a Member to provide 
information requested by a panel); EC - Tariff Preferences , para. 117 (in assessing whether the complaining 
party should have analysed a possible defence of the responding party under the Enabling Clause). 
Panel Reports, US - Upland Cotton , para. 7.67 (in assessing the lack of a response from the responding party 
to questions from the complaining party during consultations); EC - Fasteners (China) , para. 7.522 
(in examining the moment at which the complaining party developed a claim); US - 1916 Act (Japan) , fn. 422; 
EC - Asbestos , fn. 3 of Section VII of the report (where refere nce is made to the opportunity for a Member to 
notify the panel during the interim review phase of any factual error co ntained in the preliminary report). 
168 See Appellate Body Reports, US - Lamb , para. 115; EC - Sardines , para. 140. 
169 So far, the matter has been discussed in EC - Export Subsidies on Sugar and EC - Bananas III 
(Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US) . In another case, the Appellate Body, 
in referring to the competence of a panel to examine non-mandatory me asures, stated that: "As long as 
a Member respects the principles set forth in Articles  3.7 and 3.10 of the DSU, namely, to exercise their 
'judgement as to whether ac tion under these procedures would be fruitfu l' and to engage in  dispute settlement 
in good faith, then that Member is entitled to reques t a panel to examine measures that the Member considers 
nullify or impair its benefits". Appellate Body Report, US - Corrosion-Resistant  Steel Sunset Review , para. 89. WT/DS457/R 
- 38 - 
  7.81.  In EC – Export Subsidies on Sugar , the Appellate Body stressed that Articles 3.7 and 3.10 
are among the few provisions that expressly li mit the right of Members to bring an action.170 
The Appellate Body referred to the Panel's finding in that case that it had not been possible to identify any facts or statements made by the complainants where they had admitted that the 
measure challenged was WTO-consistent or where they had undertaken not to take legal action 
against the European Communities.
171 The Appellate Body also noted that the Panel had found 
no evidence of a shared understanding of the Schedule of Concessions, as alleged by the 
European Communities, that would shelter the measure.172 The Appellate Body concluded that it 
had seen nothing in the Panel record to su ggest that the complaining Members had acted 
inconsistently with the principle of good faith.173 
7.82.  In EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , 
the Appellate Body reviewed the way in which th e Panel in that case had assessed a European 
Communities' argument concerning lack of jurisdiction to examine the substance of the complainants' request. The argument made by the European Communities was that the 
understandings on bananas signed with the comp lainants prevented the latter from initiating 
compliance proceedings under Article 21.5 of the DSU. The legal basis used by the European Communities for alleging this limitation was Article 3.10 of the DSU. In its analysis, the 
Appellate Body stated that "the complainants could be precluded from initiating Article 21.5 
proceedings by means of these Understandings only if the parties to these Understandings had, either explicitly or by necessary implication, agreed to waive their right to have recourse" to those proceedings.
174 The Appellate Body also expressed the vi ew that the relinquishment of rights 
granted by the DSU could not be lightly as sumed and therefore the language in the 
Understandings must "reveal clearly that the parties intended to relinquish their rights".175 
The Appellate Body added that "irrespective of the type of proceeding, if a WTO Member has not 
clearly stated that it would not take legal action with respect to a certain measure, it cannot be 
regarded as failing to act in good fa ith if it challenges that measure".176 
7.83.  Guatemala considers that this Appellate Body opinion is unequivocal in circumscribing the 
legal standard for assessing whether a Member has acted in contravention of its obligation to bring 
a case in good faith.177 In other words, in Guatemala's view, an action would be confirmed as 
being contrary to the obligation to engage in a procedure in good faith, under the terms of Article 3.10 of the DSU, only if the bringing of  the case were preceded by an express waiver on 
the part of the complaining Member of its right to challenge the measure in question. However, 
Peru does not agree that this is the only case in which there could be an infringement of the obligation to act in good faith. In this connection, Peru maintains that "there could be various ways 
of engaging in a procedure in bad faith"; an  example could be when a Member engages in 
a procedure with the intention of causing injury to another Member or impairing its rights.
178 
7.84.  The Panel does not consider it appropriate to make a general statement intended to cover 
all the possible situations in which it might be found that a Member engaged in a procedure in the 
absence of good faith. The Panel's assessment shou ld be made within the strict context of the 
present dispute and in the light of the eviden ce which each of the parties has submitted. 
In any event, pursuant to the observations of the Appellate Body in EC – Bananas III 
                                               
170 Appellate Body Report, EC - Export Subsidies on Sugar , para. 310. 
171 Ibid. para. 315. 
172 Ibid. para. 316. 
173 Ibid. para. 319. 
174 Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III 
(Article 21.5 - US) , para. 217. 
175 Ibid. para. 217 (where reference is made to the consideration by the International Court of Justice 
of the declaration of acceptance of the Court's jurisdic tion by Thailand in: International Court of Justice, 
Case concerning the Temple of Preah Vihear  (Cambodia v. Thailand), Preliminary Objections, ICJ Reports 1961, 
p. 32). 
176 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 - US) , para. 228. The Panel ruled similarly in Argentina – Poultry Anti-Dumping Duties , para. 7.38 
(in assessing the estoppel  argument put forward by  Argentina). 
177 Guatemala's second written submission, paras. 9.5 and 9.7. 
178 Peru's second written submission, para. 2.49 and fn. 43. Likewise, Colombia's response to Panel 
question No. 3, para. 4. Peru also pointed out, in its response to Panel question No. 92, para. 8, that other 
situations in which it might be possible to engage in a procedure in the absence of good faith include: 
"engaging in a procedure purely to wa ste time, as a means of retaliation or  when initiating such a procedure 
diametrically contradicts what has been agreed in a free trade agreement". WT/DS457/R 
- 39 - 
  (Article 21.5 - Ecuador II) / EC – Bananas III (Article 21.5 – US)179 and in EC – Export Subsidies 
on Sugar180, the Panel finds it useful to base its analysis on the question of whether Guatemala, 
before engaging in this procedure, expressly waived the right to bring a case with respect to the PRS or recognized the consistency of that measure with the WTO agreements.
181 The Panel does 
not find in the arguments put forward by Peru an d in the particular circumstances of the present 
case any reason for taking additional situations into consideration. In particular, the Panel does not find any evidence to suggest that the complaining party engaged in this procedure with the 
intention of causing injury to another Member or impairing its rights. In this connection, the Panel 
recalls that Article 3.10 of the DSU states that "[i]t is understood that requests for conciliation and the use of the dispute settlement procedures should not be intended or considered as contentious acts". 
7.85.  In addition, Peru asserts that Guatemala fa iled to comply with the procedural requirement 
under the DSU to act in good faith, inasmuch as the initiation of the present procedure defeats the object and purpose of the FTA.
182 
7.86.  Peru maintains that, even though the FTA is  not yet in force, neither of the signatories has 
expressed the intention of not being party to the treaty.183 In its opinion, in accordance with 
Article 18 of the Vienna Convention, both parties are obliged to refrain from acts which would 
defeat the object and purpose of the FTA by rend ering the provisions of the treaty meaningless.184 
Peru points out that both Peru and Guatemala are parties to the Vienna Convention.185 
7.87.  Peru asserts that Article 18 of the Vienna Convention can be instructive in determining 
whether a State has not acted in good faith in the context of a treaty that has been signed but is 
not yet in force.186 According to Peru, this does not mean that the Panel has to assess whether 
there has been a violation of Article 18; Peru proposes that the Panel take Article 18 of the Vienna Convention into consideration as an expression of the principle of good faith applicable to 
the present case.
187 For its part, Guatemala considers that the Panel would be acting outside its 
terms of reference if it were to rule on Peru's arguments relating to Article 18 of the Vienna Convention.
188 Guatemala also maintains that bringing the present case does not defeat 
the object and purpose of the FTA189 and that, in any case, Peru's arguments concerning Article 18 
of the Vienna Convention are invalidated by Peru's statement that it does not wish to be bound by 
the FTA.190 
7.2.5.2  Whether Peru has shown that Guatem ala did not initiate the present procedure 
in good faith 
7.88.  To begin with, the parties agree that the FTA has not yet entered into force.191 Peru's 
argument to the effect that paragraph 9 of Annex 2.3 to the FTA contains an undertaking by 
Guatemala not to challenge the PRS is limited by this undisputed fact. An international treaty only 
begins to produce legal effects and bind the parties from the moment it enters into force. 
                                               
179 Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III 
(Article 21.5 - US) , para. 228, with regard to the finding that lack of good faith can be determined only if 
an action is brought after the right to  do so has been expressly waived with respect to the measure challenged. 
180 Appellate Body Report, EC - Export Subsidies on Sugar , paras. 310-316. 
181 The Panel notes that no ruling is being made with  regard to the possibility that there may be other 
situations in which a Member could act in a manner contra ry to its obligation to engage in a dispute settlement 
procedure in good faith under the terms of Article 3.10 of the DSU, nor with regard to whether a Member may 
waive its right to engage in a dispute settlement procedure under the DSU. 
182 Peru's response to Panel questi on No. 88, para. 1. See also Pe ru's second written submission, 
para. 2.51. 
183 Peru's first written submission, para. 4. 7; second written submission, para. 2.51. 
184 Peru's first written submission, para. 4.7. 
185 Peru's response to Panel question No. 26, para. 45. 
186 Peru's response to Panel question No. 93, para. 10. 
187 Ibid. para. 13. 
188 Guatemala's second written submission, paras. 9.34-9.35; response to Panel question No. 27, 
para. 59 (citing Appellate Body Report, Mexico - Taxes on Soft Drinks , para. 78); response to Panel question 
No. 88, para. 2. 
189 Guatemala's second written submission, para. 9.36;  response to Panel question No. 27, para. 60; 
response to Panel question No. 88, para. 4. 
190 Guatemala's comments on Peru 's response to Panel questi on Nos. 93 and 94, para. 21. 
191 Ibid. para. 24; Peru's respon se to Panel question No. 94. WT/DS457/R 
- 40 - 
  The mere signing of a treaty, before it enters into force, imposes only limited obligations on the 
parties, fund amentally that of refraining from acting in such a way as  to defeat the object and purpose of the treaty. To impose, as an effect of  the signing of a treaty, legal consequences that 
go beyond those indicated in Article 18 of the Vienna Convention would blur the difference 
between a treaty in force and one that is not yet in force. Thus, the Panel cannot attribute to the 
FTA a legal value that it does not currently possess. 
7.89.  The Panel has also taken note of Peru's ar gument according to which, by having challenged 
the PRS through the present procedure, Guatemala is  defeating the object and purpose of the FTA, 
within the meaning of Article 18 of the Vienna Convention. In this connection, Peru has pointed out that its argument does not mean that it is asking the Panel to determine whether or not Guatemala is defeating the object and purpose of the FTA.
192 
7.90.  The relevant part of Article 18 of the Vienna Convention provides as follows: 
A State is obliged to refrain from acts which would defeat the object and purpose of a 
treaty when: 
(a) it has signed the treaty or has exchanged instruments constituting the treaty 
subject to ratification, acceptance or approval, until it shall have made its intention clear not to become a party to the treaty … 
7.91.  In the opinion of some scholars, the obligation contained in Article 18 of the 
Vienna Convention is in the nature of a customary rule of public international law.
193 In the 
circumstances of this dispute, it is not necessary for the Panel to rule on the applicability of this 
obligation. In any case, as emerges from the text, the provision does not require a signatory to 
comply with the terms of a treaty which it has not yet ratified, and does not even require the 
signatory not to act in a manner inconsistent with that treaty. The only obligation is to refrain from acts which would prevent it from being in a position to comply with the treaty once the latter 
enters into force or which would invalidate the object and purpose of the treaty.
194 
7.92.  The Panel is not convinced that the violat ion by a Member of the obligation contained in 
Article 18 of the Vienna Convention with respect to a treaty that does not form part of the 
WTO covered agreements can constitute evidence of lack of the good faith required by Articles 3.7 
and 3.10 of the DSU. In any event, and even assumi ng for the sake of argument that this were so, 
Peru's argument would require it to be shown that Guatemala's action, in initiating the present procedure, constitutes an act which has the effect of defeating the object and purpose of the FTA. 
This, in turn, would require the Panel to determine what is the object and purpose of the FTA. 
The Panel notes that the parties hold significantly divergent opinions on this issue.
195 In any event, 
to make a determination as to what is the object and purpose of the FTA would be to go beyond 
the terms of reference entrusted to this Panel by the DSB.196 
7.93.  Finally, Peru has suggested that a Member could also act in a manner contrary to its 
obligation to engage in a procedure in good faith if it does so: (a) with the intention of causing 
injury to another Member or impairing its rights; (b) solely to waste time; (c) as a means of 
retaliation; or (d) in a way diametrically contradicting what has been agreed in a free trade agreement.
197 However, Peru has not claimed or demonstrated that Guatemala's conduct matches 
                                               
192 Peru's response to Panel question No. 88, para. 1. 
193 P. Palchetti, "Article 18 of the 1969 Vienna Convention: A Vague and Ineffective Obligation or 
a Useful Means for Strengthening Legal Cooperation?", in: E Cannizzaro (ed.), The Law of Treaties Beyond 
the Vienna Convention  (Oxford University Press, 2011), p. 25. Likewise, M. Villiger, Commentary on the 1969 
Vienna Convention on the Law of Treaties , (Martinus Nijhoff Publishers, 2009), p. 252. See also, United Nations 
International Law Commission, Report on the Work of its Eighteenth Session (4 May-19 July 1966), 
Official Records of the General Assembly, Twenty-first Session, Supplement No. 9, A/6309/Rev.1, p. 202. 
194 A. Aust, Modern Treaty Law and Practice , 3rd ed. (2013), pp. 107 and 118-119. See also, 
United Nations International Law Commission, Report on the Work of its Fifty-ninth Session (7 May-5 June 2007), General Assembly, Official Records, Sixty-second Session, Supplement No. 10, A/62/10, p. 56. 
195 Guatemala's response to Panel question No. 28, paras. 61-62; Peru's response to Panel question 
No. 28, paras. 59-60. 
196 See Appellate Body Report, Mexico – Taxes on Soft Drinks , paras. 56 and 78. 
197 Peru's second written submission, para. 2.49; response to Panel ques tion No. 92, para. 8. WT/DS457/R 
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  any of these circumstances. Accordingly, it is no t necessary to rule on whether, in any of the 
circumstances listed by Peru, a panel would be precluded from ruling on a claim lodged under the DSU. 
7.94.  Peru has also proposed that, in its assessment of the obligation to engage in a procedure in 
good faith, the Panel should take into consideration the doctrine of abuse of rights.
198 Peru affirms 
that Guatemala has committed an abuse of its rights  by "seeking … to invoke the rules of the DSU 
in relation to situations which, having regard to its own circumstances, it has considered consistent 
with the framework of the WTO Agreement".199 In explaining the doctrine of abuse of rights as 
an expression of the principle of good faith,  Peru referred to the observations of the 
Appellate Body in US - Shrimp : 
The chapeau of Article XX is, in fact, but one expression of the principle of good faith. 
This principle, at once a general principle of law and a general principle 
of international law, controls the exercise of rights by states. One application of this general principle, the application widely known as the doctrine of abus de droit , 
prohibits the abusive exercise of a state's rights and enjoins that whenever 
the assertion of a right "impinges on the fiel d covered by [a] treaty obligation, it must 
be exercised bona fide, that is to say, reasonably."
200 An abusive exercise by 
a Member of its own treaty right thus results in a breach of the treaty rights of the 
other Members and, as well, a violation of  the treaty obligation of the Member so 
acting.201 
7.95.  The Appellate Body's approach indicates that a right will be exercised abusively when its 
assertion unreasonably interferes with the sphere covered by an obligation arising out of a treaty. 
This would occur when a Member initiates a dispute settlement procedure in a manner contrary to good faith, along the lines described above. Thus, in the Panel's opinion, the elements mentioned 
by Peru as forming part of the doctrine of abuse of rights coincide with those which the 
Appellate Body has identified as situations in which a Member acts inconsistently with its obligation to engage in a procedure in good faith. For this reason, the Panel does not find that the doctrine of 
abuse of rights would add anything to the elements already mentioned as being relevant for the 
purpose of assessing whether Guatemala engaged in the present procedure in good faith. 
7.2.5.3  Conclusion 7.96.  On the basis of these considerations, the Panel finds no evidence that Guatemala has 
engaged in the present procedure in a manner contra ry to the good faith obligations contained in 
Articles 3.7 and 3.10 of the DSU. In the light of this decision on the preliminary issue raised by 
Peru, the Panel will proceed to examine Guatemala' s claims under Article 4.2 of the Agreement on 
Agriculture. 
                                               
198 Peru's first written submission, paras. 4.11 and 4.20; response to Panel question No. 26, para. 53; 
response to Panel question No. 29. 
199 Peru's response to Panel questi on No. 29, para. 66. See also resp onse to Panel question No. 26, 
para. 53. 
200 (Footnote original) B. Cheng, General Principles of Law as appl ied by International Courts and 
Tribunals (Stevens and Sons, Ltd., 1953), Chapter 4, in particul ar, p. 125 elaborates: 
… A reasonable and bona fide exercise of a right in such a case is one which is appropriate and 
necessary for the purpose of the right ("i.e. in furtherance of the interests which the right is intended to protect). It should at the same time be  fair and equitable as between the parties  and 
not one which is calculated to procure for one of  them an unfair advantage in the light of the 
obligation assumed. A reasonable exercise of the right is regarded as compatible with the obligation. But the exercise of the right in such  a manner as to prejudice the interests of the 
other contracting party arising out of the treaty is  unreasonable and is considered as inconsistent 
with the bone fide execution of the treaty oblig ation, and a breach of the treaty … (emphasis 
added) 
Also see, for example, Jennings and Watts (eds.), Oppenheim's International Law , 9
th ed. Vol. I 
(Longman's, 1992), pp. 407-410, Border and Transborder Armed Actions Case , (1988) I.C.J. Rep. 105; 
Rights of Nationals of the United States in Morocco Case , (1952) I.C.J. Rep. 176; Anglo-Norwegian Fisheries 
Case, (1951) I.C.J. Rep. 142. 
201 Appellate Body Report, US - Shrimp , para. 158. WT/DS457/R 
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  7.3  Description of the facts 
7.97.  Before commencing its examination of Guatemala's claims, the Panel will give a description 
of the facts cited by the parties as fo rming the basis of the present dispute. 
7.98.  The Panel notes that the measure at issue identified by Guatemala in its request for the 
establishment of a panel, submitted on 13 June 2013, is: 
[T]he additional duty imposed by Peru on imports of certain agricultural products, 
such as milk, maize, rice and sugar (hereinafter affected products).202 
7.99.  Guatemala explains that the characteristics of the measure include the fact that: 
[I]t is determined by using a mechanism known as the "Price [Range] System" which, 
in its turn, operates on the basis of two components: (i) a [range] made up of a floor price and a ceiling price which, in accordance with the applicable regulations, reflect 
the international price over the last 60 months for the different products concerned; 
(ii) a c.i.f. reference price, which is published every two weeks and which, in accordance with the applicable regulations,  reflects the average international market 
price for the different products concerned …
203 
7.100.  This section will describe the facts relating to the history of the PRS, the PRS in force and 
the way it has operated since entering into force, as well as the relevant issues concerning Peru's 
tariff policy and the way in which Peru bound its tariffs in its Schedule of Concessions. 
7.3.1  History of th e Price Range System 
7.101.  Peru maintains that it established a system of specific duties in 1991 and has applied it 
ever since, and that the PRS is merely the same system, improved and adapted.204 Guatemala 
rejects this claim and maintains that Supreme Decree No. 115-EF-2001 tacitly repealed the 1991 
system of specific duties and established the PRS, for which reason the latter is a separate measure.
205 
7.102.  In support of its argument concerning the continuity between the system of specific duties 
introduced in 1991 and the PRS, Peru has provided the Panel with the texts of some of the instruments that established and modified the system between 1991 and 2001. These instruments 
are described below. 
7.103.  Supreme Decree No. 016-1991-AG of 30 Apr il 1991 regulated the imposition of a specific 
duty on certain food products comprising 18 tariff lines. The duty was calculated on the basis of an international reference price, fixed weekly, and customs tables, revised semi-annually.
206 
                                               
202 See request for the establishment of a panel by Guatemala, document WT/DS457/2 (14 June 2013), 
p. 1. See also Guatemala's response to Panel question No. 41, paras. 84-89. 
203 See request for the establishment of a panel by Guatemala, document WT/DS457/2 (14 June 2013), 
p. 1. 
204 Peru's first written submission, paras. 3.25 and 3.33; second written submission, para. 3.20; 
response to Panel question No. 42; response to Panel question No. 129, para. 115; response to Panel question 
No. 131, para. 124; response to Panel question No. 133;  response to Panel question No. 142; comments on 
Guatemala's response to Panel question No. 133; comm ents on Guatemala's response to Panel question 
No. 142. 
205 Guatemala's second written submission, paras. 5.64-5.72; opening statement at the first meeting 
of the Panel, paras. 59-62; response to Panel question No. 43, para. 95; response to Panel question No. 44, 
para. 101; response to Panel question No. 133; re sponse to Panel question No. 142; comments on 
Peru's response to Panel question No. 133. See also Circular INTA-CR.62-2002 of 26 August 2002 of the National Customs Technical Division (Circular INTA-CR.62-2002) (Exhibit GTM-3); Electro-Technical Report No. 7-2009-SUNAT/3D0410 of the Collection Department of the Callao Maritime Customs Division (Exhibit GTM-36); Memorandum No. 73-2009-SUNAT/2B4000 (Exhibit GTM-37). 
206 Supreme Decree No. 016-91-AG (Exhibit PER-22 ); Supreme Decree No. 016-91-AG with customs 
tables (Exhibit PER-71). The operation of this system is explained in some detail in Peru's first written 
submission, paras. 3.26-3.28. See also Peru's second written submission, para. 3.19; response to Panel question No. 42, paras. 100-101; response to Panel question No. 133, para. 132. WT/DS457/R 
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  7.104.  According to Article 1 of Supreme Decr ee No. 016-1991-AG, "the specific duty, expressed 
in United States dollars per metric ton, shall be determined in accordance with the respective customs tables … on the basis of the lowest f.o.b.  price of the product on the international market 
on the date of shipment of the goods, as evidence d by the date of the bill of lading or waybill". 
Article 2 of the same decree provided that a reference price, based on the weekly average 
of the closing f.o.b. spot prices for the pr evious week, would be supplied weekly by the 
Ministry of Agriculture to the Ministry of the Economy and Finance which, in its turn, would 
communicate it to the National Customs Superv isory Authority. Article 3 of Supreme Decree 
No. 016-1991-AG also indicated that the specific duty would be applied at the point in time at which the import duties became due. Finally, Article 4 provided that the revenue collected by levying the specific duty would be used to establish a support fund for the agricultural sector. 
7.105.  Article 2 and Annex No. 1 of Ministerial Resolution No. 258-91-EF-10 of 12 June 1991 
identified the reference sources which the Peruvian  authorities would use to calculate the specific 
duties.
207 Article 3 of the Ministerial Resolution made it  clear that a product-specific reference price 
would be reported to customs, and would be used to apply the specific duty, regardless of the 
source from which the product was purchased or the price indicated in the commercial invoice. Article 5 of Ministerial Resolution No. 258-91-EF-10  also indicated that the Ministry of the Economy 
and Finance would communicate the reference prices to the Peruvian National Customs 
Supervisory Authority and would publish them in the Official Journal "El Peruano" on the day after that on which they were received from the Ministry of Agriculture. 
7.106.  Ministerial Resolution No. 0768-91-AG of 31 October 1991 provided that the minimum 
f.o.b. reference price used to establish specific du ties higher than zero would be calculated from 
the simple arithmetic mean of the f.o.b. prices  for the past 60 months. These prices would be 
updated every six months, by eliminating the prices corresponding to the earlier six months and 
incorporating those corresponding to the latest six months at the time of updating.
208 
7.107.  Supreme Decree No. 114-93-EF of 27 July 1993 mo dified the tariff lines subject to specific 
duties.209 Article 2 of this decree established that  the specific duty would be expressed in 
"US dollars per metric ton" and would be determined  on the basis of the customs table on the date 
of shipment of the goods, in accordance with the da te indicated on the bill of lading or the waybill. 
Article 3 entrusted the Central Reserve Bank of Pe ru with the task of semi-annually reviewing and 
updating the customs tables for approval by Su preme Decree endorsed by the Ministers of the 
Economy and Finance and of Agriculture. Article 5 entrusted the Central Reserve Bank of Peru with 
the task of informing the Ministries of the Econ omy and Finance and of Agriculture, on a weekly 
basis, of the average f.o.b. reference prices; these f.o.b. reference prices would be published by 
the Ministry of the Economy and Finance in a ministerial resolution. Annex IV of the 
Supreme Decree added an adjustment for a proportion of the standard price deviation and established the following "inter-product proportionality factors": "in the case of flour and pasta, the 
specific duty is 30% above the specific duty for wh eat, and in the case of paddy rice, the specific 
duty is equal to 70% of the duty on pounded rice. In the case of dairy products, the specific duty 
applied to skimmed milk powder and anhydrous milk fat is the same as the duty applied to whole milk powder".
210 
7.108.  Supreme Decree No. 133-94-EF of 6 October 1994 introduced some adjustments to the 
sources of information on reference prices and a methodology for calculating a floor price.211 
Under the Supreme Decree, information on averag e f.o.b. reference prices would be provided 
weekly to the Ministries of the Economy and Fi nance and of Agriculture by the Central Reserve 
Bank of Peru in respect of products subject to the specific duty, except in the case of dairy 
products, for which information would be provided fortnightly. According to Annex IV of the 
Supreme Decree in question, the floor price is calc ulated as "the average of the past 60 monthly 
observations of the international f.o.b. prices infl ated by the United States Consumer Price Index. 
This average is adjusted by the proportion of th e standard deviation with respect to the average 
floor price [indicated in Annex II]".The same annex provides that the final calculation of the 
                                               
207 Ministerial Resolution No. 258-91-EF-10 (Exhibit PER-21). 
208 Ministerial Resolution No. 0768-91-AG (Exhibit PER-23). 
209 Supreme Decree No. 114-93-EF (Exhibit PER-24). 
210 Supreme Decree No. 114-93-EF (Exhibit PER-24). See also Peru's response to Panel question 
No. 133. 
211 Supreme Decree No. 133-94-EF (Exhibit PER-74). WT/DS457/R 
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  "surcharge" (also referred to in the Supreme Decree as "specific duty") is based on the difference 
between the floor price and the f.o.b. reference price, multiplied by an adjustment factor associated with import expenses. 
7.109.  Supreme Decree No. 083-98-EF of 5 August 1998 excluded certain tariff lines from the 
scope of the specific duty and updated the sources of information for the calculation of reference 
prices.
212 Supreme Decree No. 133-99-EF of 11 August 1999 modified the reference sources for 
calculating the floor price of some of the products subject to the specific duty.213 
7.110.  Supreme Decree No. 015-2001-EF of 29 January 2001 updated the information on the 
reference sources for calculating the customs tables and the reference price for rice, maize and sugar; further, for the purposes of the methodology used to calculate the customs tables, it eliminated the standard deviation from the floor price calculation.
214 
7.111.  Supreme Decree No. 021-2001-EF of 5 February 2001 repealed Supreme Decree 
No. 015-2001-EF and made some adjustments to the calculation of the specific duties. Supreme Decree No. 021-2001-EF introduced a timetable for updating the customs tables; 
confirmed the reference sources for the calculation of the customs tables, and the reference price 
for rice, maize and sugar; and reintroduced the standard deviation from the floor price calculation and the compilation of the customs tables.
215 
7.112.  Supreme Decree No. 15-2001-EF, of 21 June 2001, established the PRS applicable to 
imports of various agricultural products. The preamble to the Supreme Decree included the 
following two paragraphs: 
Whereas Supreme Decree No. 016-91-AG established a Specific Duty System 
imposing a levy on imports of certain agricultural products and that system was 
modified by Supreme Decree No. 021-2001-EF, which established the need to formulate a proposal for improving the variable specific duty methodology; 
Whereas, following review and evaluation  of the above-mentioned System, it was 
d e e m e d  n e c e s s a r y  t o  r e f i n e  i t  a n d  t o  b r i n g  i t  i n t o  l i n e  w i t h  t h e  n e e d s  o f  n a t i o n a l  agriculture, so as to enable domestic producers to plan their investments under 
conditions of reduced uncertainty …
216 
7.3.2  The PRS and how it operates 7.3.2.1  Introduction 7.113.  As previously mentioned
217, in its request for the establishment of a panel, Guatemala 
identified the measure at issue as "the addition al duty imposed by Peru on imports of certain 
agricultural products" and explained that this  duty was calculated by means of the PRS. 
7.114.  In this section, the Panel will describe the PRS and the duty or the tariff rebates that it can 
generate, together with the way in which the syst em has operated since it was first established. 
7.3.2.2  The PRS 7.115.  Supreme Decree No. 115-2001-EF
218, published on 22 June 2001, established the PRS 
applicable to imports of various tariff lines for rice, maize, milk and sugar. 
                                               
212 Supreme Decree No. 083-98-EF (Exhibit PER-25). 
213 Supreme Decree No. 133-99-EF (Exhibit PER-26). 
214 Annex IV to Supreme Decree No. 015-2001-EF (Exhibits PER-92 and GTM-59). See also 
Peru's response to Panel question No. 133. 
215 Supreme Decree No. 021-2001-EF (Exhibit PER- 49). See also Peru's response to Panel 
question No. 133. 
216 Supreme Decree No. 115-2001-EF (Exhibit GTM-4, p. 204887). 
217 See above, para. 7.98. 
218 Supreme Decree No. 115-2001-EF (Exhibit GTM-4). WT/DS457/R 
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  7.116.  According to Article 1 of Supreme Decree No. 115-2001-EF, the PRS was established 
"for the purpose of applying variable duties additional to the tariff", when the international reference prices for the products subject to the PRS are lower than certain floor price levels, and tariff rebates, when those reference prices are higher than certain ceiling price levels.
219 
7.117.  On the website of Peru's Ministry of th e Economy and Finance the PRS is illustrated as 
follows220: 
 
 
 
7.3.2.3  Objectives of the PRS 
7.118.  In the preamble to Supreme Decree No. 115-2001-EF the objectives of the PRS are 
described as follows221: 
Whereas national agricultural production is  being adversely affected by distortions 
reflected in uncertainty and instability of domestic prices and national production and 
due, in particular, to the agricultural poli cies implemented by the main food producing 
and exporting countries; 
Whereas the Price Range System is a stabilization and protection mechanism that 
makes it possible to neutralize the fluctuations of international prices and limit the negative effects of the fall in those prices; 
Whereas the System in question constitutes an appropriate means of improving the 
levels of competitiveness of domestic producers, by giving the market clear signals 
with regard to trends in prices, thereby allowing economic agents to operate efficiently and productively … 
7.119.  On the website of the Ministry of the Ec onomy and Finance, it is stated that the PRS 
"is intended to stabilize the costs of importing the products included in the System by ensuring effective prices both for the producer, by means of a floor price, and for the consumer, through 
a ceiling price, and applying Variable Additional Duties or Tariff Rebates on the c.i.f. value".
222 
7.3.2.4  Products subject to the PRS 7.120.  The PRS is applicable to various tariff li nes for four agricultural products, namely, rice, 
sugar, yellow maize and milk. 
                                               
219 Supreme Decree No. 115-2001-EF (Exhibit GTM-4), Article 1. 
220 Copy of the Peruvian Ministry of the Economy and Finance's web page ex plaining the Price Range 
System (Exhibit GTM-2). 
221 Supreme Decree No. 115-2001-EF (Exhibit GTM-4, p. 204887). 
222 Copy of the Peruvian Ministry of the Economy and Finance's web page ex plaining the Price Range 
System (Exhibit GTM-2). WT/DS457/R 
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  7.121.  Annex I to Supreme Decree No. 115-2001-EF, as amended223, identifies the following tariff 
lines subject to the PRS, and indicates whether the products concerned are "marker" products or "associated" products. 
Tariff line Description Classification under 
the PRS 
Rice 
1006.30.00.00 Semi-milled or wholly milled rice, whether or not 
polished or glazed Marker product 
1006.10.90.00 Rice in the husk (paddy or rough), other than for 
sowing Associated product 
1006.20.00.00 Husked (brown) rice Associated product 
1006.40.00.00 Broken rice Associated product 
Yellow maize 
1005.90.11.00 Yellow flint maize Marker product 
1005.90.12.00 White flint maize Associated product 
1005.90.90.90 Other maize Associated product 
1007.00.90.00 Grain sorghum, other than for sowing Associated product 
1103.13.00.00 Groats and meal of maize Associated product 
1108.12.00.00 Maize starch Associated product 
1108.13.00.00 Potato starch Associated product 
1702.30.20.00 Glucose syrup Associated product 
2309.90.90.00 Balanced food for animals Associated product 
3505.10.00.00 Dextrins and other modified starches Associated product 
Milk 
0402.21.19.00 Other milk in powder, granules or other solid forms, 
of a fat content, by weight, of 26% or more, on the 
dry product, in containers holding more than 2.5 kg Marker product 
0401.10.00.00 Milk and cream, not concentrated nor containing added 
sugar or other sweetening matter, of a fat content, by weight, not exceeding 1% Associated product 
0401.20.00.00 Milk and cream, not concentr ated nor containing added 
sugar or other sweetening matter, of a fat content, 
by weight, exceeding 1% but not exceeding 6%  
0402.10.10.00 Milk in powder of a fat content not exceeding 1.5%, 
in containers holdin g more than 2.5 kg Associated product 
0402.10.90.00 Other Associated product 
0402.21.11.00 Milk in powder of a fat content of 26% or more, 
in containers holding not more than 2.5 kg, not containing added sugar or other sweetening matter Associated product 
0402.21.91.00 Milk in powder of a fat co ntent exceeding 1.5% but not 
exceeding 26%, in containers holding not more than 
2.5 kg, not containing added sugar or other 
sweetening matter Associated product 
0402.21.99.00 Other Associated product 
0402.29.11.00 M i l k  i n  p o w d e r  o f  a  f a t  c o n t e n t  o f  2 6 %  o r  m o r e ,  
in containers holding not more than 2.5 kg, containing 
added sugar or other sweetening matter Associated product 
                                               
223 Annex I to Supreme Decree No. 15-2001-EF has been amended on the following occasions: 
(a) Supreme Decree No. 153-2002-EF, in Compilation of all Customs Tables published under the Price Range 
System (Exhibit GTM-5, pp. 145-147), expanded the number  of tariff lines associated with milk and sugar; 
(b) Supreme Decree No. 174-2002-EF (Exhibit GTM-6), added a tariff line associated with milk; and 
(c) Supreme Decree No. 197-2002-EF (Exhibit GTM-7) modified some tariff lines associated with milk. See also List of all tariff subheadings cove red by the PRS (Exhibit GTM-8). WT/DS457/R 
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  Tariff line Description Classification under 
the PRS 
0402.29.19.00 Other Associated product 
0402.29.91.00 Milk in powder of a fat co ntent exceeding 1.5% but not 
exceeding 26%, in containers holding not more than 
2.5 kg, containing added sugar or other sweetening 
matter Associated product 
0402.29.99.00 Other Associated product 
0402.99.10.00 Condensed milk Associated product 
0404.10.90.00 Whey, whether or not concentrated or containing  
added sugar or other sweetening matter, other than  
whey partially or completely demineralized Associated product 
0405.10.00.00 Butter Associated product 
0405.90.20.00 Butter oil Associated product 
0405.90.90.00 Other Associated product 
0406.30.00.00 Processed cheese, not grated or powdered Associated product 
0406.90.10.00 Other cheese, of a moisture content of less than 36% 
by weight Associated product 
0406.90.20.00 Other cheese, of a moisture content of 36% or more 
but less than 46% by weight Associated product 
0406.90.30.00 Other cheese, of a moisture content of 46% or more 
but less than 55% by weight Associated product 
0406.90.90.00 Other Associated product 
1901.90.90.00 Only: preparations containing 50% or more by weight 
of milk product Associated product 
2106.90.99.00 Only: soya-based preparations that substitute milk 
products Associated product 
Sugar 
1701.99.00.90 Other refined cane or beet sugar, in solid form, 
not containing added flavouring or colouring matter Marker product 
1701.11.90.00 Cane sugar, raw, not containing added flavouring 
or colouring matter, excluding brown sugar Associated product 
1701.12.00.00 Beet sugar, raw, not containing added flavouring 
or colouring matter Associated product 
1702.60.00.00 Other fructose and fructose syrup, containing in the 
d r y  s t a t e  m o r e  t h a n  5 0 %  b y  w e i g h t  o f  f r u c t o s e ,  
excluding invert sugar Associated product 
1702.90.20.00 Caramel Associated product 
1702.90.30.00 Sugars containing added flavouring or colouring matter Associated product 
1702.90.40.00 Other syrups Associated product 
 
7.122.  Annex II to Supreme Decree No. 115-2001-EF defines marker products as products whose 
international prices are used for calculating the ranges, and associated products as products 
obtained by processing or mixing of marker products or capable of replacing a marker product for industrial use or consumption. 
7.123.  As can be seen from Annex I to Supreme Decree No. 115-2001-EF, each of the four 
agricultural products subject to the PRS includes a tariff line that functions as a marker product and various lines that function as associated products. 
7.124.  The current marker products, identified in Annex IV to Supreme Decree No. 115-2001-EF, 
are: (a) No. 2 yellow maize (tariff line 1005.90.11.00); (b) white rice (tariff line 1006.30.00.00); (c) refined white sugar (tariff line 1701.99.00.90); and (d) whole milk, in powder, not containing added sugar (tariff line 0402.21.19.00). WT/DS457/R 
- 48 - 
  7.125.  According to Article 8 of Supreme Decree No. 115-2001-EF, the variable additional duties 
or tariff rebates for associated products will be equal to the variable additional duty or tariff rebate for their marker product. Therefore, for the purpos es of the PRS, only the values for the customs 
tables and reference prices corresponding to the four marker products will be calculated and these 
values will be used for the associated products. 
7.3.2.5  The methodology for calcul ating duties or tariff rebates 
7.126.  The methodology for calculating duties or tariff rebates resulting from the PRS includes 
various steps and mathematical formulas and consists of two essential components: (a) a price 
range with a ceiling price and a floor price; and (b) a reference price. Each of these components, 
steps and mathematical formulas is described below. 
7.3.2.5.1  The floor and ceiling prices 
7.3.2.5.1.1  The reference markets 
7.127.  Point 2 of Annex II to Supreme Decree No. 115-2001-EF stipulates that the range 
corresponding to each marker product is to be based on international prices expressed in 
United States dollars (USD) per metric ton, with the markets indicated in Annex IV to the Decree 
being used for reference purposes. 
7.128.  The current international reference markets are as follows
224: 
Marker product Reference market 
No. 2 yellow maize 
(tariff line 1005.90.11.00) f.o.b. Gulf, based on the Chicag o Exchange. Daily closing prices, 
first position. So urce: REUTERS. 
White rice 
(tariff line 1006.30.00.00) White rice 100% grade B, f.o.b. Bangkok, weekly prices. 
Source: Creed Rice. 
Refined white sugar 
(tariff line 1701.99.00.90) No. 5 contract, London Exchange. Da ily closing prices , first position. 
Source: REUTERS. 
Whole milk, in powder, not containing 
added sugar 
(tariff line 0402.21.19.00) Whole milk, in powder, not contai ning added sugar, f.o.b. price 
New Zealand. Source: Statistics, Ne w Zealand, official figures for 
monthly exports by volume and value. 
 
7.3.2.5.1.2  Calculation of  the confidence interval 
7.129.  To determine the floor price and the ceiling price it is first necessary to establish 
a confidence interval, using the following methodology, described in point 3.1 of Annex II to 
Supreme Decree No. 115-2001-EF: 
a. The monthly average f.o.b. prices for the past 60 months225 corresponding to the marker 
product on the international reference mark et are taken and converted into constant 
US dollars using as an inflator the United States Consumer Price Index with base equal 
to 100 in May or November of the last year, as appropriate. 
b. The average of the series is calculated from the following formula: 
Pm = {sum (PNt / IPC) / 60} 
                                               
224 The reference market for sugar was modified by Supreme Decree No. 121-2006-EF of 20 July 2006 
(Exhibit GTM-5, p. 121). 
225 Annex II to Supreme Decree No. 115-2001-EF explains that, in the case of rice, maize and sugar, 
the monthly values are taken up to May or November of the latest year, as appropriate. In the case of milk, 
the values are taken up to March or September of the la test year, as appropriate, due to the fact that the 
information for April and May is received after the first week of July. See Supreme Decree No. 115-2001-EF (Exhibit GTM-4). WT/DS457/R 
- 49 - 
  Where: 
Pm = Simple average PNt = Monthly nominal international price IPC = United States Consumer Price Index. 
c. The confidence interval is determined by adding a standard deviation to the f.o.b. 
average of the series to establish the upper bound and subtracting a standard deviation to establish the lower bound, using the following formulas: 
Upper bound = Pm + DS 
Lower bound = Pm - DS Where: DS = Standard deviation 
d. Extreme values located above and below the confidence interval are discarded. 
7.3.2.5.1.3  Calculatio n of the floor price 
7.130.  Point 3.2 of Annex II to Supreme Decree No. 115-2001-EF stipulates that the floor price is 
determined by calculating a new average with the values recorded within the confidence interval, 
using the following formula: 
Pfloor = {sum (PNt/ lPC) / N } 
Where: 
N = Number of observations within the confidence interval 
7.131.  In the case of the sugar range, the floor price calculation includes an adjustment factor 
that increases the floor price by 10.7%  by means of the following formula: 
Pfloor = {sum (PNt/ lPC) / N } * 1.107
226 
7.3.2.5.1.4  Calculation of the ceiling price 7.132.  Point 3.3 of Annex II to Supreme Decree No. 115-2001-EF indicates that the ceiling price 
is obtained by adding to the floor price a stan dard deviation of the original series, using the 
following formula: 
Pceiling = Pfloor + DS 
7.3.2.5.1.5  Conversion of the ceiling and floor prices to c.i.f. prices 
7.133.  Point 4 of Annex II to Supreme Decree No . 115-2001-EF states that the floor and ceiling 
prices expressed in f.o.b. terms are to be converte d into c.i.f. terms by adding the following freight 
and insurance costs, as indicated in Annex V to that Supreme Decree. 
                                               
226 This adjustment factor was not originally envisaged in Supreme Decree No. 115-2001-EF. 
Supreme Decree No. 153-2002-EF introduced an adjustment  factor of 1.441, which was reduced to 1.107 by 
Supreme Decree No. 003-2006-EF. See Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145); Supreme Decree No. 003-2006-EF (Exhibit GTM-5, p. 131). WT/DS457/R 
- 50 - 
  Product Freight 
(USD per tonne) Insurance 
(% of cost and freight) 
Yellow maize 20 0.5 
White rice 35 0.5 
Refined white sugar 25 0.5 
Whole milk, not cont aining added sugar 130 0.5 
 
7.134.  Annex V to Supreme Decree No. 115-2001-EF indicates the General Secretariat of the 
Andean Community as the source of the freight and insurance costs. These values coincide with 
the costs indicated in Annex 3 to Decision 371 of the Andean Price Band System.227 Decision 371 
contains no explanation as to how these values were determined. 
7.3.2.5.1.6  The semi-annual updating of  the ceiling and floor prices and their 
publication in the customs tables 
7.135.  Article 7 of Supreme Decree No. 115-2001-EF indicates that the Central Reserve Bank 
of Peru will semi-annually review and update the customs tables used to determine the floor and 
ceiling prices, for approval by supreme decree issued by the Constitutional President of the 
Republic of Peru with the endorsement of the Ministers of the Economy and Finance and 
of Agriculture. In accordance with Article 6 and point 3.3 of Annex II to Supreme Decree 
No. 115-2001-EF, the floor and ce iling prices are to be adjusted semi-annually by updating the 
respective price series, the inflator index and the amounts of freight and insurance. The customs tables are valid for six months (from 1 January to 30 June and from 1 July to 31 December of each 
year) and are to be published before 30 June and 31 December of each year. 
7.3.2.5.2  Reference prices 7.3.2.5.2.1  Calculatio n of reference prices 
7.136.  Article 4 of Supreme Decree No. 115-2001-EF stipulates that reference prices are to be 
published every two weeks and must reflect the av erage price obtained from the price quotations 
observed on the international reference markets of Annex IV, as described above.
228 
7.137.  Moreover, according to Article 5 of Supr eme Decree No. 115-2001-EF, the reference prices 
are to be converted into c.i.f. terms by applyi ng the freight and insurance costs of Annex V. 
7.3.2.5.2.2  Fortnightly updati ng of the reference prices and their publication by means 
of vice-ministerial resolutions 
7.138.  Article 7 of Supreme Decree No. 115-2001-EF stipulates that, on the first working day 
of each fortnight, the Central Reserve Bank of Pe ru will provide the Ministries of the Economy and 
Finance and of Agriculture with the average of the c.i.f. reference prices for the immediately preceding fortnight. 
7.139.  According to the same article, the Ministry  of the Economy and Finance is to publish these 
reference prices by means of a vice-ministerial resolution issued by the Vice-Minister of the Economy.
229 
7.3.2.5.3  Determination of the duties or tariff rebates 
7.140.  Point 1 of Annex III to Supreme Decree No. 115-2001-EF stipulates that a "variable 
additional duty" is to be applied if the reference price is lower than the c.i.f. floor price. 
                                               
227 Commission of the Cartagena Agreement, Decision 371: Andean Price Band System, 1994 
(Exhibit PER-27), Annex 3. 
228 See above, para. 7.128. 
229 Supreme Decree No. 115-2001-EF required the reference prices to be published by means 
of ministerial resolutions. Supreme Decree No. 184-2002-EF (Exhibit GTM-30), published on 
27 November 2002, amended Supreme Decree No. 115-2001-EF by providing for the reference prices to be published by means of vice -ministerial resolutions. WT/DS457/R 
- 51 - 
  The "variable additional duty" is equal to the difference between the floor price and the reference 
price multiplied by one plus the factor associated with the marker product import costs.  
7.141.  The amount of the "variable additional duty" is calculated by means of the following 
formula: 
DA = (1 + b) (Pfloor – Pr) 
Where: DA = Additional duty 
Pr = c.i.f. reference price 
b = Costs associated with import expenses: 12% or 20% of the ad valorem  tariff plus the "corresponding additional tariff 
surcharge (according to the product)", with an additional 3% for import expenses. 
7.142.  Article 4 of Supreme Decree No. 153-2002-EF of 26 September 2002 stipulates that: 
The variable additional duties resulting from the application of the provisions of the 
Price Range System …, plus the ad valorem  c.i.f. duties, may not exceed the basic 
standard tariff bound by Peru with the World Trade Organization for the subheadings 
included in the [PRS], each import transaction being considered individually and the c.i.f. value of the goods included in the tr ansaction concerned being taken as the basis 
for calculation.
230 
7.143.  Where tariff rebates are concerned, accord ing to point 2 of Annex III to Supreme Decree 
No. 115-2001-EF they are to be applied to marker products whenever the c.i.f. reference price is 
higher than the c.i.f. ceiling price. The tariff  rebate is equal to the difference between the 
reference price and the ceiling price, multiplied by  one plus the factor associated with the marker 
product import costs. 
7.144.  The tariff rebates are calculated  by means of the following formula: 
RA = (1 + b) (Pr – Pceiling) 
RA = Tariff rebate 
7.145.  Article 8 of Supreme Decree No. 115-2001-EF explains that "[i]n no circumstances shall 
the tariff rebate exceed the sum payable by the importer as the ad valorem  duty and additional 
tariff surcharge corresponding to each product". It should be noted that all the products subject to the PRS have an ad valorem  tariff of 0%, except for three tari ff lines for maize, which are subject 
to a 6% tariff (1108.12.00.00, 1108.13.00.00 and 3505.10.00.00).
231 Accordingly, at least at 
present, only these three products could obtain tariff rebates, where applicable. 
7.146.  Finally, point 2 of Annex III to Supreme Decree No. 115-2001-EF states that, where the 
reference price is equal to the floor price or the ceiling price, or lies between these two limits, only 
the corresponding tariff is to be paid and neither variable additional duties nor tariff rebates shall 
be applied. 
                                               
230 Supreme Decree No. 153-2002-EF, of 26 September 2002 (Exhibit GTM-5, p. 147). 
231Exhibit amending the Extract from Peru's Customs Tariff 2012, including the pages corresponding to 
tariff lines 1108.12.00.00, 1108.13.00,00 and 3505.10.00.00 (Exhibit GTM-1 corr, pp. 455.440 and 455.506). 
See also Supreme Decree No. 038-2008-EF (Exhibit PER-28); Supreme Decree No. 279-2010-EF (Exhibit PER-29). As regards the tariff lines for ri ce, sugar and dairy products, Peru has maintained 
a 0% ad valorem  tariff since 6 March 2008, and as regards the tariff lines for maize, Peru has maintained 
a 0% ad valorem  tariff since 31 December 2010, except for three lines (1108.12.00.00, 1108.13.00.00 
and 3505.10.00.00) which currently have an ad valorem  tariff of 6%. Peru's fi rst written submission, 
para. 3.59; Supreme Decree No. 038-2008-EF (Exhibit PER-28); Supreme Decree No. 279-2010-EF (Exhibit PER-29). WT/DS457/R 
- 52 - 
  7.147.  Article 8 of Supreme Decree No. 115-2001-EF explains that the "varia ble additional duties" 
and "tariff rebates" are to be expressed in US dollars per tonne. These additional duties or rebates shall be determined on the basis of the customs tabl es in force on the date of registration of the 
import declaration by applying the reference prices  for the previous fortnight. In this connection, 
previous fortnight shall mean the period betw een the first and the fifteenth or between the 
sixteenth and the last day of each month, as appropriate.
232 
7.148.  Point 3(f) of Circular INTA-CR.62-2002 of  26 August 2002 explains that, if on the date 
of registration of the single customs declaration the supreme decree or ministerial resolution 
updating the customs tables or determining the c.i.f. reference prices has not been published, the calculation shall be made on the basis of the table and price indicated in the immediately 
previous publication. In such cases, the authorit ies shall record the circumstances so that, once 
the corresponding values have been published, un paid taxes can, where appropriate, be assessed 
for collection or so that, in the event of an overpayment, a refund can be requested.
233 
7.149.  Finally, point 3(c) of the same circular states  that "the variable additional duties" should be 
paid by the importer in the customs office, together with the import duties and other import taxes. 
7.3.2.6  The historical application of the PRS 
7.3.2.6.1  Floor and ceiling prices 
7.150.  As already explained, under the Peruvian legislation, the floor prices and ceiling prices that 
form the price range are reproduced in customs tables which are valid for six months and are to be published before 30 June and 31 December each year. The legislation also states that the Central Reserve Bank of Peru shall review and update the customs tables semi-annually, 
for approval by supreme decree. 
7.151.  From 2001 to 2014 customs tables have been in force for every period. However, these 
customs tables have not always been updated semi-annually in accordance with Supreme Decree 
No. 115-2001-EF. On several occasions, the custom s tables have been extended instead of being 
updated, despite this possibility not being prov ided for in the PRS regulations, and on other 
occasions the customs tables have been replaced for only one product.
234 
7.152.  The following table reflects the instances in which the Peruvian authorities have updated, 
extended or replaced customs tables over the years of existence of the PRS: 
Supreme 
Decree Date 
of Publication Period of Validity Update Extension 
318-2013-EF235 19.12.13 01.01.14 – 30.06.14 For the four products - 
164-2013-EF236 30.06.13 01.07.13 – 31.12.13 For the four products - 
293-2012-EF237 23.12.12 01.01.13 – 30.06.13 For the four products - 
113-2012-EF238 29.06.12 01.07.12 – 31.12.12 For the four products - 
                                               
232 Supreme Decree No. 115-2001-EF stipulated that the variable additional duties and tariff rebates 
would be determined on the basis of the customs tables  in force on the date of shipment of the goods, 
as evidenced by the date of the bill of lading or waybill. Supreme Decree No. 124-2002-EF, published on 18 August 2002, provided that the variable addition al duties and tariff rebates would be determined 
on the basis of the customs tables in force on the date of registration of the import declaration. 
Supreme Decree No. 197-2002-EF, published on 30 December  2002, additionally provided that the reference 
prices for the fortnight prior to the date of registration  of the import declaration would apply. See Article 1, 
Supreme Decree No. 124-2002-EF (Exhibit PER-50); Article 2, Supreme Decree No. 197-2002-EF (Exhibit GTM-7). 
233 Point 3(f), Circular INTA-CR.62-2002 (Exhibit GTM-3). 
234 Chart summarizing the multiple extensions of the Customs Tables (Exhibit GTM-16). 
235 Supreme Decree No. 318-2013-EF of 18 December 2013, updating the Customs Tables 
(Exhibit GTM-35). 
236 Supreme Decree No. 164-2013-EF (Exhibit GTM-5, p. 1); Supreme Decree No. 164-2013-EF 
(containing the Customs Tables for the seco nd six months of 2013) (Exhibit GTM-11). 
237 Supreme Decree No. 293-2012-EF (Exhibit GTM-5, p. 11). 
238 Supreme Decree No. 113-2012-EF (Exhibit GTM-5, p. 21). WT/DS457/R 
- 53 - 
  Supreme 
Decree Date 
of Publication Period of Validity Update Extension 
244-2011-EF239 28.12.11 01.01.12 – 30.06.12 For the four products - 
117-2011-EF240 28.06.11 01.07.11 – 31.12.11 - For the four products 
278-2010-EF241 31.12.10 01.07.11 – 30.06.11 For the four products - 
138-2010-EF242 30.06.10 01.07.10 – 31.12.10 - For the four products 
318-2009-EF243 31.12.09 01.01.10 – 30.06.10 For the four products - 
183-2008-EF244 01.01.08 01.01.09 – 31.12.09 - For the four products 
084-2008-EF245 29.06.08 01.07.08 – 31.12.08 For the four products - 
001-2008-EF246 15.01.08 to 30.06.08 The customs table for 
maize was replaced in 
order to expand the 
reference prices - 
133-2007-EF247 31.08.07 to 30.06.08 The customs table for 
dairy products was 
replaced in order to 
expand the reference 
prices - 
086-2007-EF248 29.06.07 01.01.08 – 30.06.08 - For the four products 
183-2006-EF249 23.11.06 to 30.06.07 The customs table for 
maize was replaced in 
order to expand the 
reference prices - 
121-2006-EF250 20.07.06 to 30.06.07 The customs table for 
sugar was replaced 
owing to the change of 
reference market - 
094-2006-EF251 22.06.06 01.06.06 – 30.06.07 - For the four products 
074-2006-EF252 01.06.06 to 30.06.06 The customs table for 
sugar was replaced in 
order to expand the 
reference prices - 
003-2006-EF253 13.01.06 to 30.06.06 The customs table for 
sugar was replaced 
owing to the change in 
the methodology for 
calculating the floor 
price - 
074-2005-EF254 29.06.05 01.07.05 – 30.06.06 - For the four products 
075-2004-EF255 08.06.04 01.07.04 – 30.06.05 - For the four products 
                                               
239 Supreme Decree No. 244-2011-EF (Exhibit GTM-5, p. 35). 
240 Supreme Decree No. 117-2011-EF (Exhibit GTM-5, p. 53). 
241 Supreme Decree No. 278-2010-EF (Exhibit GTM-5, p. 55). 
242 Supreme Decree No. 138-2010-EF (Exhibit GTM-5, p. 71). 
243 Supreme Decree No. 318-2009-EF (Exhibit GTM-5, p. 73). 
244 Supreme Decree No. 183-2008-EF (Exhibit GTM-5, p. 87). 
245 Supreme Decree No. 084-2008-EF (Exhibit GTM-5, p. 89). 
246 Supreme Decree No. 001-2008-EF (Exhibit GTM-5, p. 105). 
247 Supreme Decree No. 133-2007-EF (Exhibit GTM-5, p. 109). 
248 Supreme Decree No. 086-2007-EF (Exhibit GTM-5, p. 113). 
249 Supreme Decree No. 183-2006-EF (Exhibit GTM-5, p. 115). 
250 Supreme Decree No. 121-2006-EF (Exhibit GTM-5, p. 121). 
251 Supreme Decree No. 094-2006-EF (Exhibit GTM-5, p. 125). 
252 Supreme Decree No. 074-2006-EF (Exhibit GTM-5, p. 127). 
253 Supreme Decree No. 003-2006-EF (Exhibit GTM-5, p. 131). 
254 Supreme Decree No. 074-2005-EF (Exhibit GTM-5, p. 135). 
255 Supreme Decree No. 075-2004-EF (Exhibit GTM-5, pp. 137-139). WT/DS457/R 
- 54 - 
  Supreme 
Decree Date 
of Publication Period of Validity Update Extension 
090-2003-EF256 25.06.03 01.07.03 – 30.06.04 - For the four products 
153-2002-EF257 27.09.02 01.01.03 – 30.06.03 The customs table for 
sugar was replaced 
owing to the change in 
the methodology for 
calculating the floor 
price For three products 
001-2002-EF258 04.01.02 01.01.02 – 30.06.02 For the four products - 
115-2001-EF259 22.06.01 01.07.01 – 31.12.01 First customs tables - 
 
7.153.  The following reasons for extending customs tables were given in the relevant supreme 
decrees: 
Given the economic difficulties currently besetting domestic agricultural production 
under the Price Range System, it is necessary  to extend the validity of the Customs 
Tables …260 
Given the current trend in the prices of agricultural products, it is considered advisable 
to maintain the Customs Tables for Maize, Rice, Sugar and Dairy Products …261 
7.154.  Peru has submitted an example of a tec hnical report and a legal report, issued by the 
competent departments of the Ministry of the Economy and Finance, both dated 24 June 2011, 
whereby the Vice-Minister of the Economy was reco mmended to extend the customs tables for the 
second half of 2011. Peru has also submitted an example of a technical report and a legal report 
issued by the competent departments of the Ministry of the Economy and Finance, dated 
17 December and 18 December 2013, respectively, whereby the Vice-Minister of the Economy was recommended to update the customs tables for the first half of 2014.
262 
7.155.  Moreover, since the first PRS customs tables, issued under Supreme Decree 
No. 115-2001-EF263, two different values of the specific duti es or tariff rebates have been used for 
rice: for paddy rice and pounded rice, respectively. Supreme Decree No. 115-2001-EF does not offer any explanation with regard to the use of these two values for rice. However, the distinction 
between the two kinds of rice has been applied si nce the pre-2001 customs tables of the specific 
duty system. Specifically, Supreme Decree No. 114-93-EF
264, of 27 July 1993, introduced into the 
definition of inter-product proportionality factors the words "in the case of paddy rice, its specific 
d u t y  i s  e q u a l  t o  7 0 %  o f  t h e  d u t y  f o r  p o u n d e d  r i c e " .  T h i s  d i s t i n c t i o n  i s  a l s o  t o  b e  f o u n d  i n  
Supreme Decree No. 133-94-EF and in Supreme Decree No. 021-2001-EF265 and in the updates to 
the customs tables during the period of  application of the previous system.266 
                                               
256 Supreme Decree No. 090-2003-EF (Exhibit GTM-5, pp. 141-143). 
257 Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145). 
258 Supreme Decree No. 001-2002-EF (Exhibit GTM-5, p. 153). 
259 Supreme Decree No. 115-2001-EF (Exhibit GTM-5, p. 163); (Exhibit GTM-4). 
260 Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145); Supreme Decree No. 090-2003-EF 
(Exhibit GTM-5, p. 143); Supreme Decree No. 075-2004-EF (Exhibit GTM-5, p. 139); Supreme Decree No. 074-2005-EF (Exhibit GTM-5, p. 135); Supreme Decree No. 094-2006-EF (Exhibit GTM-5, p. 125); Supreme Decree No. 086-2007-EF (Exhibit GTM-5, p. 113). 
261 Supreme Decree No. 183-2008-EF (Exhibit GTM-5, p. 87); Supreme Decree No. 138-2010-EF 
(Exhibit GTM-5, p. 71); Supreme Decree No. 117-2011-EF (Exhibit GTM-5, p. 53). 
262 Compendium of technical and legal reports (Exhibit PER-87). 
263 Annex VI to Supreme Decree No. 115-2001-EF (Exhibit GTM-4). 
264 Annex IV to Supreme Decree No. 114-93-EF (Exhibit PER-24). 
265 Annex IV to Supreme Decree No. 133-94-EF (Exhibit PER-74); Annex IV to Supreme 
Decree No. 021-2001-EF (Exhibit PER-49). 
266 See, for example, Annex I, Supreme Decree No. 114-93-EF (Exhibit PER-24); 
Annex I, Supreme Decree No. 083-98-EF (Exhibit PER-25); Annex I, Supreme Decree No. 133-99-EF (Exhibit PER-26). WT/DS457/R 
- 55 - 
  7.156.  In addition, since the first PRS customs tables, intervals of 50 have been used for the dairy 
product price ranges. The use of these intervals for dairy products can also be traced back to the customs tables of the 1991 specific duty system.
267 
7.3.2.6.2  Reference prices 
7.157.  As already explained, under the Peruvian legislation reference prices are updated 
fortnightly, for which purpose the Central Reserve Bank of Peru provides the Ministries of the 
Economy and Finance and of Agriculture, on the first working day of each fortnight, with the 
average of the c.i.f. reference prices for the imme diately preceding fortnight. The Ministry of the 
Economy and Finance subsequently publishes these reference prices by means of a vice-ministerial resolution of the Vice-Minister of the Economy. 
7.158.  During the period of existence of the PRS, the competent Peruvian authorities have 
published reference prices for every fortnight.
268 The only exception was for the 
period 1 to 15 November 2006, with respect to the reference price for maize.269 The reference 
prices are not published at the beginning of each fortnight to which they apply but a few days after 
that fortnight has begun.270 
7.159.  Moreover, although reference prices are published every fortnight, on some occasions the 
values coincide from one fortnight to the next, that is to say, on some occasions the reference 
prices are rolled over.271 
7.160.  Although this has happened with all the prod ucts at one time or another, in the case of 
dairy products, the reference prices are updated monthly and not fortnightly. In this connection, the Panel notes that the international reference market values for the marker product for dairy 
products are obtained monthly and not fortnightly.
272 
7.161.  The following table reflects all the public ations of vice-ministerial resolutions announcing 
reference prices between June 2001 and December 2013273: 
Period Vice-ministerial 
Resolution Date of 
publication Period Vice-ministerial 
Resolution Date of 
publication 
2013 
16-31/12 001-2014-EF/15.01 08.01.2014 01-15/12 025-2013-EF/15.01 20.12.2013 
16-30/11 024-2013-EF/15.01 06.12.2013 01-15/11 023-2013-EF/15.01 22.11.2013 
16-31/10 022-2013-EF/15.01 12.11.2013 01-15/10 021-2013-EF/15.01 24.10.2013 
16-30/09 020-2013-EF/15.01 08.10.2013 01-15/09 019-2013-EF/15.01 25.09.2013 
                                               
267 See, for example, Annex I, Supreme Decree No. 114-93-EF (Exhibit PER-24); 
Annex I, Supreme Decree No. 083-98-EF (Exhibit PER-25); Annex I, Supreme Decree No. 133-99-EF (Exhibit PER-26). 
268 See Compilation of Ministerial and Vice-Ministe rial Resolutions containing Reference Prices 
(Reference Price Resolutions) (Exhibit GTM-13); Vice-M inisterial Resolutions announcing Reference Prices 
(21 October 2013 to 7 January 2014) (Exhibit GTM-34); Vice-Ministerial Resolution No. 003-2014-EF/15.01 (Exhibit GTM-54); Vice-Ministerial Resolution No. 004-2014-EF/15.01 (Exhibit GTM-55). 
269 See Vice-Ministerial Resolution No. 023-2006-EF/15.01 (Exhibit GTM-13, p. 207). 
270 See List of publication dates of Ministerial and Vice-Ministerial Resoluti ons publishing Reference 
Prices and delay in the publication of those documents (Exhibit GTM-14). 
271 See History of Application of the Price Range Sy stem (Exhibit GTM-15); Update of Exhibit GTM-15 
(Exhibit GTM-15 bis); History of Application of the Price Range System (GTM-15), indicating the instances in 
which a reference price has remained the same in consecutive periods (Exhibit GTM-17); Repeat Reference Prices (Exhibit PER-78). 
272 Whole milk, in powder, without added sugar, f.o.b. price New Zealand. Source: Statistics, 
New Zealand, official figures for monthly exports by  volume and value. See Annex IV, Supreme Decree 
No. 115-2001-EF (Exhibit GTM-4). 
273 Vice-Ministerial Resolution No. 019-2013-EF/15.01 (containing the Reference Price for the 
first two weeks of September 2013) (Exhibit GTM-12); Reference Price Resolutions (Exhibit GTM-13); 
Vice-Ministerial Resolutions, announcing Reference Prices (21 October 2013 to 7 January 2014) 
(Exhibit GTM-34). See also Vice-Ministerial Resolution No. 003-2014-EF/15.01 (Exhibit GTM--54); Vice-Ministerial Resolution No. 004-2014-EF/15.01 (Exhibit GTM-55). WT/DS457/R 
- 56 - 
  Period Vice-ministerial 
Resolution Date of 
publication Period Vice-ministerial 
Resolution Date of 
publication 
16-31/08 018-2013-EF/15.01 06.09.2013 01-15/08 017-2013-EF/15.01 24.08.2013 
16-31/07 016-2013-EF/15.01 07.08.2013 01-15/07 015-2013-EF/15.01 27.07.2013 
16–30/06 014-2013-EF/15.01 08.07.2013 01-15/06 013-2013-EF/15.01 21.06.2013 
16–31/05 012-2013-EF/15.01 15.06.2013 01-15/05 011-2013-EF/15.01 24.05.2013 
16–30/04 010-2013-EF/15.01 08.05.2013 01-15/04 009-2013-EF/15.01 02.05.2013 
16–31/03 008-2013-EF/15.01 05.04.2013 01-15/03 007-2013-EF/15.01 27.03.2013 
16–28/02 006-2013-EF/15.01 14.03.2013 01-15/02 005-2013-EF/15.01 27.02.2013 
16–31/01 003-2013-EF/15.01 09.02.2013 01-15/01 002-2013-EF/15.01 22.01.2013 
2012 
16-31/12 001-2013-EF/15.01 16.01.2013 01-15/12 031-2012-EF/15.01 22.12.2012 
16–30/11 030-2012-EF/15.01 11.12.2012 01-15/11 029-2012-EF/15.01 27.11.2012 
16–31/10 028-2012-EF/15.01 10.11.2012 01-15/10 027-2012-EF/15.01 24.10.2012 
16-30/09 026-2012-EF/15.01 12.10.2012 01-15/09 025-2012-EF/15.01 22.09.2012 
16–31/08 024-2012-EF/15.01 07.09.2012 01-15/08 023-2012-EF/15.01 25.08.2012 
16-31/07 022-2012-EF/15.01 14.08.2012 01-15/07 021-2012-EF/15.01 25.07.2012 
16-30/06 020-2012-EF/15.01 12.06.2012 01-15/06 019-2012-EF/15.01 23.06.2012 
16-31/05 016-2012-EF/15.01 08.06.2012 01-15/05 015-2012-EF/15.01 26.05.2012 
16-30/04 012-2012-EF/15.01 11.05.2012 01-15/04 011-2012-EF/15.01 26.04.2012 
16-31/03 010-2012-EF/15.01 12.04.2012 01-15/03 009-2012-EF/15.01 25.03.2012 
16-29/02 008-2012-EF/15.01 09.03.2012 01-15/02 006-2012-EF/15.01 25.02.2012 
16-31/01 005-2012-EF/15.01 10.02.2012 01-15/01 002-2012-EF/15.01 22.01.2012 
2011 
16-31/12 001-2012-EF/15.01 16.01.2012 01-15/12 025-2011-EF/15.01 23.12.2011 
16–30/11 024-2011-EF/15.01 12.12.2011 01-15/11 023-2011-EF/15.01 25.11.2011 
16–31/10 022-2011-EF/15.01 10.11.2011 01-15/10 021-2011-EF/15.01 23.10.2011 
16-30/09 020-2011-EF/15.01 13.10.2011 01-15/09 019-2011-EF/15.01 24.09.2011 
16-31/08 018-2011-EF/15.01 06.09.2011 01-15/08 017-2011-EF/15.01 23.08.2011 
16-31/07 016-2011-EF/15.01 05.08.2011 01-15/07 015-2011-EF/15.01 23.07.2011 
16-30/06 014-2011-EF/15.01 08.07.2011 01-15/06 013-2011-EF/15.01 22.06.2011 
16-31/05 012-2011-EF/15.01 04.06.2011 01-15/05 011-2011-EF/15.01 20.05.2011 
16-30/04 010-2011-EF/15.01 10.05.2011 01-15/04 009-2011-EF/15.01 21.04.2011 
16-31/03 008-2011-EF/15.01 06.04.2011 01-15/03 006-2011-EF/15.01 23.03.2011 
16-28/02 005-2011-EF/15.01 10.03.2011 01-15/02 004-2011-EF/15.01 19.02.2011 
16-31/01 003-2011-EF/15.01 09.02.2011 01-15/01 002-2011-EF/15.01 22.01.2011 
2010 
16-31/12 001-2011-EF/15.01 07.01.2011 01-15/12 025-2010-EF/15.01 23.12.2010 
16–30/11 024-2010-EF/15.01 10.12.2010 01-15/11 023-2010-EF/15.01 24.11.2010 
16–31/10 022-2010-EF/15.01 06.11.2010 01-15/10 021-2010-EF/15.01 23.10.2010 
16-30/09 020-2010-EF/15.01 06.10.2010 01-15/09 019-2010-EF/15.01 18.09.2010 
16–31/08 018-2010-EF/15.01 04.09.2010 01-15/08 017-2010-EF/15.01 21.08.2010 
16-31/07 016-2010-EF/15.01 06.08.2010 01-15/07 015-2010-EF/15.01 24.07.2010 
16-30/06 014-2010-EF/15.01 03.07.2010 01-15/06 013-2010-EF/15.01 19.06.2010 WT/DS457/R 
- 57 - 
  Period Vice-ministerial 
Resolution Date of 
publication Period Vice-ministerial 
Resolution Date of 
publication 
16-31/05 012-2010-EF/15.01 05.06.2010 01-15/05 010-2010-EF/15.01 20.05.2010 
16-30/04 009-2010-EF/15.01 07.05.2010 01-15/04 008-2010-EF/15.01 23.04.2010 
16-31/03 007-2010-EF/15.01 10.04.2010 01-15/03 006-2010-EF/15.01 20.03.2010 
16-28/02 005-2010-EF/15.01 06.03.2010 01-15/02 004-2010-EF/15.01 23.02.2010 
16-31/01 003-2010-EF/15.01 06.02.2010 01-15/01 002-2010-EF/15.01 23.01.2010 
2009274 
16-31/12 001-2010-EF/15.01 08.01.2010 01-15/12 025-2009-EF/15.01 22.12.2009 
16–30/11 024-2009-EF/15.01 16.11.2009 01-15/11 023-2009-EF/15.01 19.11.2009 
16–31/10 022-2009-EF/15.01 04.11.2009 01-15/10 021-2009-EF/15.01 22.10.2009 
16-30/09 020-2009-EF/15.01 05.10.2009 01-15/09 019-2009-EF/15.01 21.09.2009 
16–31/08 018-2009-EF/15.01 03.09.2009 01-15/08 016-2009-EF/15.01 19.08.2009 
16-31/07 015-2009-EF/15.01 10.08.2009 01-15/07 014-2009-EF/15.01 30.07.2009 
16-30/06 013-2009-EF/15.01 07.07.2009 01-15/06 012-2009-EF/15.01 24.06.2009 
16-31/05 011-2009-EF/15.01 05.06.2009 01-15/05 010-2009-EF/15.01 22.05.2009 
16-30/04 009-2009-EF/15.01 08.05.2009 01-15/04 008-2009-EF/15.01 21.04.2009 
16-31/03 007-2009-EF/15.01 06.04.2009 01-15/03 006-2009-EF/15.01 20.03.2009 
16-28/02 005-2009-EF/15.01 05.03.2009 01-15/02 004-2009-EF/15.01 19.02.2009 
16-31/01 003-2009-EF/15.01 06.02.2009 01-15/01 002-2009-EF/15.01 23.01.2009 
2008 
16-31/12 001-2009-EF/15.01 09.01.2009 01-15/12 031-2008-EF/15.01 24.12.2008 
16–30/11 030-2008-EF/15.01 05.12.2008 01-15/11 029-2008-EF/15.01 20.11.2008 
16–31/10 024-2008-EF/15.01 08.11.2008 01-15/10 022-2008-EF/15.01 21.10.2008 
16-30/09 021-2008-EF/15.01 07.10.2008 01-15/09 020-2008-EF/15.01 23.09.2008 
16–31/08 019-2008-EF/15.01 06.09.2008 01-15/08 017-2008-EF/15.01 23.08.2008 
16-31/07 015-2008-EF/15.01 08.08.2008 01-15/07 014-2008-EF/15.01 22.07.2008 
16-30/06 013-2008-EF/15.01 08.07.2008 01-15/06 012-2008-EF/15.01 21.06.2008 
16-31/05 011-2008-EF/15.01 06.06.2008 01-15/05 010-2008-EF/15.01 24.05.2008 
16-30/04 009-2008-EF/15.01 13.05.2008 01-15/04 008-2008-EF/15.01 25.04.2008 
16-31/03 007-2008-EF/15.01 09.04.2008 01-15/03 006-2008-EF/15.01 20.03.2008 
16-29/02 005-2008-EF/15.01 08.03.2008 01-15/02 004-2008-EF/15.01 22.02.2008 
16-31/01 003-2008-EF/15.01 08.02.2008 01-15/01 002-2008-EF/15.01 19.01.2008 
2007 
16-31/12 001-2008-EF/15.01 10.01.2008 01-15/12 025-2007-EF/15.01 21.12.2007 
16–30/11 024-2007-EF/15.01 07.12.2007 01-15/11 023-2007-EF/15.01 22.11.2007 
16–31/10 022-2007-EF/15.01 09.11.2007 01-15/10 020-2007-EF/15.01 20.10.2007 
16-30/09 019-2007-EF/15.01 05.10.2007 01-15/09 018-2007-EF/15.01 20.09.2007 
16–31/08 017-2007-EF/15.01 07.09.2007 01-15/08 016-2007-EF/15.01 22.08.2007 
16-31/07 015-2007-EF/15.01 04.08.2007 01-15/07 014-2007-EF/15.01 19.07.2007 
16-30/06 013-2007-EF/15.01 06.07.2007 01-15/06 012-2007-EF/15.01 21.06.2007 
16-31/05 011-2007-EF/15.01 06.06.2007 01-15/05 010-2007-EF/15.01 24.05.2007 
                                               
274 In the case of vice-ministerial resolutions issued  in 2009, the table presents the dates of issue, 
not the dates of publication. WT/DS457/R 
- 58 - 
  Period Vice-ministerial 
Resolution Date of 
publication Period Vice-ministerial 
Resolution Date of 
publication 
16-30/04 009-2007-EF/15.01 09.05.2007 01-15/04 008-2007-EF/15.01 20.04.2007 
16-31/03 007-2007-EF/15.01 05.04.2007 01-15/03 006-2007-EF/15.01 21.03.2007 
16-28/02 005-2007-EF/15.01 07.03.2007 01-15/02 004-2007-EF/15.01 21.02.2007 
16-31/01 003-2007-EF/15.01 07.02.2007 01-15/01 002-2007-EF/15.01 19.01.2007 
2006 
16-31/12 001-2007-EF/15.01 06.01.2007 01-15/12 026-2006-EF/15.01 21.12.2006 
16-30/11 025-2006-EF/15.01 07.12.2006 01-15/11 023-2006-EF/15.01 22.11.2006 
16-31/10 022-2006-EF/15.01 07.11.2006 01-15/10 021-2006-EF/15 18.10.2006 
16-30/09 020-2006-EF/15 05.10.2006 01-15/09 019-2006-EF/15 22.09.2006 
16-31/08 018-2006-EF/15 05.09.2006 01-15/08 017-2006-EF/15 19.08.2006 
16-31/07 016-2006-EF/15 08.08.2006 01-15/07 015-2006-EF/15 08.08.2006 
  08.08.2006 01-15/07 014-2006-EF/15 21.07.2006 
16–30/06 013-2006-EF/15 06.07.2006 01-15/06 012-2006-EF/15 21.06.2006 
16–31/05 011-2006-EF/15 07.06.2006 01-15/05 010-2006-EF/15 20.05.2006 
16–30/04 009-2006-EF/15 05.05.2006 01-15/04 008-2006-EF/15 19.04.2006 
16–31/03 007-2006-EF/15 06.04.2006 01-15/03 006-2006-EF/15 21.03.2006 
16–28/02 005-2006-EF/15 04.03.2006 01-15/02 004-2006-EF/15 18.02.2006 
16–31/01 003-2006-EF/15 04.02.2006 01-15/01 002-2006-EF/15 19.01.2006 
2005 
16-31/12 001-2006-EF/15 07.01.2006 01-15/12 024-2005-EF/15 21.12.2005 
16–30/11 023-2005-EF/15 03.12.2005 01-15/11 022-2005-EF/15 18.11.2005 
16–31/10 021-2005-EF/15 05.11.2005 01-15/10 020-2005-EF/15 20.10.2005 
16-30/09 019-2005-EF/15 05.10.2005 01-15/09 018-2005-EF/15 20.09.2005 
16–31/08 017-2005-EF/15 03.09.2005 01-15/08 016-2005-EF/15 23.08.2005 
16-31/07 015-2005-EF/15 06.08.2005 01-15/07 014-2005-EF/15 19.07.2005 
16-30/06 013-2005-EF/15 07.07.2005 01-15/06 012-2005-EF/15 18.06.2005 
16-31/05 011-2005-EF/15 03.06.2005 01-15/05 010-2005-EF/15 18.05.2005 
16-30/04 009-2005-EF/15 04.05.2005 01-15/04 008-2005-EF/15 19.04.2005 
16-31/03 007-2005-EF/15 06.04.2005 01-15/03 006-2005-EF/15 18.03.2005 
16-28/02 005-2005-EF/15 04.03.2005 01-15/02 004-2005-EF/15 18.02.2005 
16-31/01 003-2005-EF/15 05.02.2005 01-15/01 002-2005-EF/15 20.01.2005 
2004 
16-31/12 001-2005-EF/15 06.01.2005 01-15/12 024-2004-EF/15 21.12.2004 
16–30/11 023-2004-EF/15 03.12.2004 01-15/11 022-2004-EF/15 19.11.2004 
16–31/10 021-2004-EF/15 05.11.2004 01-15/10 020-2004-EF/15 20.10.2004 
16-30/09 019-2004-EF/15 05.10.2004 01-15/09 018-2004-EF/15 18.09.2004 
16–31/08 017-2004-EF/15 04.09.2004 01-15/08 016-2004-EF/15 19.08.2004 
16-31/07 015-2004-EF/15 05.08.2004 01-15/07 014-2004-EF/15 20.07.2004 
16-30/06 013-2004-EF/15 03.07.2004 01-15/06 012-2004-EF/15 18.06.2004 
16-31/05 011-2004-EF/15 05.06.2004 01-15/05 010-2004-EF/15 20.05.2004 
16-30/04 009-2004-EF/15 05.05.2004 01-15/04 008-2004-EF/15 20.04.2004 
16-31/03 007-2004-EF/15 07.04.2004 01-15/03 006-2004-EF/15 20.03.2004 WT/DS457/R 
- 59 - 
  Period Vice-ministerial 
Resolution Date of 
publication Period Vice-ministerial 
Resolution Date of 
publication 
16-29/02 005-2004-EF/15 10.03.2004 01-15/02 004-2004-EF/15 21.02.2004 
16-31/01 003-2004-EF/15 07.02.2004 01-15/01 002-2004-EF/15 23.01.2004 
2003 
16-31/12 001-2004-EF/15 09.01.2004 01-15/12 024-2003-EF/15 24.12.2003 
16–30/11 023-2003-EF/15 06.12.2003 01-15/11 022-2003-EF/15 21.11.2003 
16–31/10 021-2003-EF/15 08.11.2003 01-15/10 020-2003-EF/15 29.10.2003 
16-30/09 019-2003-EF/15 08.10.2003 01-15/09 018-2003-EF/15 25.09.2003 
16–31/08 017-2003-EF/15 06.09.2003 01-15/08 016-2003-EF/15 28.08.2003 
16-31/07 015-2003-EF/15 08.08.2003 01-15/07 014-2003-EF/15 25.07.2003 
16-30/06 013-2003-EF/15 10.07.2003 01-15/06 012-2003-EF/15 26.06.2003 
16-31/05 011-2003-EF/15 06.06.2003 01-15/05 010-2003-EF/15 24.05.2003 
16-30/04 009-2003-EF/15 10.05.2003 01-15/04 008-2003-EF/15 24.04.2003 
16-31/03 007-2003-EF/15 05.04.2003 01-15/03 006-2003-EF/15 22.03.2003 
16-28/02 005-2003-EF/15 07.03.2003 01-15/02 004-2003-EF/15 21.02.2003 
16-31/01 003-2003-EF/15 11.02.2003 01-15/01 002-2003-EF/15 23.01.2003 
2002 
16-31/12 001-2003-EF/15 09.01.2003 01-15/12 004-2002-EF/15 20.12.2002 
16–30/11 003-2002-EF/15 07.12.2002 01-15/11 002-2002-EF/15 30.11.2002 
16–31/10 450-2002-EF/15 09.11.2002 01-15/10 449-2002-EF/15 09.11.2002 
16-30/09 165-2002-EF/15 31.10.2002 01-15/09 165-2002-EF/15 31.10.2002 
16–31/08 165-2002-EF/15 31.10.2002 01-15/08 165-2002-EF/15 31.10.2002 
16-31/07 165-2002-EF/15 31.10.2002 01-15/07 165-2002-EF/15 31.10.2002 
16-30/06 279-2002-EF/15 13.07.2002 01-15/06 270-2002-EF/15 29.06.2002 
16-31/05 269-2002-EF/15 29.06.2002 01-15/05 220-2002-EF/15 31.05.2002 
16-30/04 196-2002-EF/15 14.05.2002 01-15/04 173-2002-EF/15 26.04.2002 
16-31/03 148-2002-EF/15 13.04.2002 01-15/03 134-2002-EF/15 04.04.2002 
16-28/02 106-2002-EF/15 08.03.2002 01-15/02 106-2002-EF/15 08.03.2002 
16-31/01 106-2002-EF/15 08.03.2002 01-15/01 106-2002-EF/15 08.03.2002 
2001 
16-31/12 005-2002-EF/15 11.01.2002 01-15/12 381-2002-EF/15 28.12.2001 
16–30/11 377-2001-EF/15 22.12.2001 01-15/11 355-2001-EF/15 29.11.2001 
16–31/10 333-2001-EF/15 17.11.2001 01-15/10 332-2001-EF/15 17.11.2001 
16-30/09 312-2001-EF/15 17.10.2001 01-15/09 300-2001-EF/15 22.09.2001 
16–31/08 278-2001-EF/15 08.09.2001 01-15/08 276-2001-EF/15 23.08.2001 
16-31/07 270-2001-EF/15 15.08.2001 01-15/07 242-2001-EF/15 20.07.2001 
23-30/06 225-2001-EF/15 11.07.2001    
 
7.162.  Peru has submitted an example of a tec hnical report and a legal report issued by the 
competent departments of the Ministry of the Economy and Finance, dated 21 April and 22 April 2014, respectively, whereby the Vice-Minister of the Economy was recommended to 
publish the reference prices for the first two weeks of April 2014.
275 
                                               
275 Compendium of technical and legal reports (Exhibit PER-87). WT/DS457/R 
- 60 - 
  7.3.2.6.3  The duties and tariff  rebates resulting from the PRS 
7.163.  From the establishment of the PRS in June 2001 to the present time, the system has 
sometimes generated specific duties, at other times tariff rebates, for the four products subject to 
the PRS, and on other occasions has generated neither specific duties nor tariff rebates. 
7.164.  The following charts illustrate the evolution of the PRS for each of the four products 
subject to the system, including the ceiling and floor prices, the reference price and the total 
duties ( ad valorem  duties plus specific duties) applicable from July 2001 to January 2014276: 
020406080100120
020040060080010001200
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1Total duties (%)Prices (USD per MT)Trends in the PRS for Rice
TOTAL DUTIES (%) C.I.F. REFERENCE  PRICE FLOOR PRICE CEILING PRICE
 
 
                                               
276 These charts were drawn up by the Panel on the basis of the Fortnightly Information 
(SPFP - Reference 1991-2013)(Exhibit PER-75); checked against the information contained in the Historical Charts of the Price Range System (Exhibit GTM-20) and the Exhibit updating the information contained in GTM-20, including data from 1 October 2013 to 31 December 2013 (Exhibit GTM-20 bis). See also Statistics on 
the application on the Price Range System (Exhibit GTM-19 ). In the case of the tariff lines for rice, sugar and 
dairy products, Peru has maintained a 0% ad valorem tariff since 6 March 2008, and in the case of the tariff 
lines for maize, Peru has maintained a 0% ad valorem  tariff since 31 December 2010, with the exception of the 
three lines (1108120000, 1108130000 and 3505100000) which currently have an ad valorem tariff of 6%. 
Peru's first written submission, para. 3.59; Suprem e Decree No. 038-2008-EF (Exhibit PER-28); Supreme 
Decree No. 279-2010-EF (Exhibit PER-29). WT/DS457/R 
- 61 - 
  020406080100120140
0150300450600750900
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1Total duties (%)Prices (USD per MT)Trends in the PRS for Sugar
TOTAL DUTIES (%) C.I.F. REFERENCE  PRICE FLOOR PRICE CEILING PRICE
 
 
0153045607590
010002000300040005000
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1Total duties (%)Prices (USD per MT)Trends in the PRS for Dairy Products
TOTAL DUTIES (%) C.I.F. REFERENCE  PRICE FLOOR PRICE CEILING PRICE
 
 WT/DS457/R 
- 62 - 
  0102030405060
050100150200250300350400
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1Total duties (%)Prices (USD per MT)Trends in the PRS for Maize
TOTAL DUTIES (%) C.I.F. REFERENCE  PRICE FLOOR PRICE CEILING PRICE
 
 
7.3.3  Peru's tariff policy and the recording of tariffs in its schedule of concessions 
7.165.  Peru states that, under its tariff system, ad valorem  and compound tariffs are applied.277 
Peru points out that, in the context of the developm ent of its tariff policy in 1991, all the non-tariff 
b a r r i e r s  t h a t  i t  w a s  a p p l y i n g  t o  a g r i c u l t u r a l  p r o d u c t s  w e r e  r e m o v e d .278 Supreme Decree 
No. 060-91-EF of 22 March 1991 declared inoperative from that date "all non-tariff restrictions".279 
Legislative Decree No. 668 of 11 September 1991 prohibited, in relation to imports, 
"the application of surcharges, fees or any other levy with the sole exception of tariff duties and 
taxes which are also levied on the domestic sale of goods".280 
7.166.  With this context in mind, Peru explained that, during the Uruguay Round, it bound its 
tariffs at two levels. Most products were bound at the level of 30% ad valorem . Agricultural 
products were also for the most part bound at the level of 30% ad valorem , the exceptions being 
rice, sugar, dairy products, maize and whea t, which were bound at a level of 68%.281 
                                               
277 Peru's first written submission, paras. 3.9 and 3. 15. Peru explained that it used the expression 
"mixed duties" to refer to the situatio n in which the duty consists of an ad valorem  tariff and another specific 
tariff, for which reason it uses the expressions "compound duties" and "mix ed duties" as synonyms. 
Peru's response to Panel qu estion No. 11, paras. 12-13. 
278 Peru's first written submission, para. 3.10. See also Pre-1990 Legislation Relating to Non-Tariff 
Barriers for Agricultural Products (Exhibit PER-7); Nego tiating Group on Market Acce ss, List of Liberalization 
Measures, MTN.GNG/MA/W/10, 13 November 1991 (Exhibit PER-9), pp. 15-16. 
279 Supreme Decree No. 060-91-EF (Exhibit PER-10). 
280 Legislative Decree No. 668 (Exhibit PER-11). 
281 Peru's first written submission, para. 3.18. See Schedule XXXV - Peru, Uruguay Round, 15 April 1994 
(Exhibit PER-18). WT/DS457/R 
- 63 - 
  7.167.  As was indicated above, in the case of the tariff lines for rice, sugar and dairy products, 
Peru maintained an ad valorem  tariff at 0% from 6 March 2008, and for the maize tariff lines, 
Peru maintained an ad valorem  tariff at 0% from 31 December 2010, with the exception 
of three lines (1108120000, 1108130000 and 3505100000) which currently attract an ad valorem  
tariff of 6%.282 
7.4  The question of whether the duties re sulting from the PRS are inconsistent with 
Article 4.2 of the Agreement on Agriculture 
7.4.1  Introduction 
7.168.  As explained earlier, the Panel's consid eration of Guatemala's claims will begin with 
Article 4.2 of the Agreement on Agriculture. 
7.4.2  Main arguments of the parties 
7.4.2.1  Guatemala's claim 
7.169.  Guatemala asserts that the duties resulting from the PRS constitute variable import levies 
and minimum import prices, or alternatively, that they constitute measures similar to variable 
import levies and minimum import prices. Guatemala maintains that, consequently, the measure 
at issue is inconsistent with Article 4.2 of the Agreement on Agriculture.283 
7.4.2.1.1  The duties resulting from the PR S are variable import levies or measures 
similar to variable import levies 
7.170.  Guatemala argues that the duties resu lting from the PRS meet the three criteria 
established by the Appellate Body for constituting variable import levies or similar measures: (a) they exhibit inherent variability; (b) they lack  transparency and predictability with regard to 
the level of the resulting levies; and (c) they impede or obstruct transmission of international price 
developments to the domestic market.
284 
7.4.2.1.1.1  The duties resulting from the PRS are border measures 
7.171.  Guatemala argues that the duties resulting from the PRS are a measure applied to the 
importation of goods subject to the PRS by the Pe ruvian customs authorities, which therefore meet 
the requirement of being border measures.285 
7.4.2.1.1.2  The duties resulting fr om the PRS are inherently variable 
7.172.  Guatemala maintains that the duties re sulting from the PRS are inherently variable. 
Guatemala asserts that Peru calculates the duties and tariff rebates resulting from the PRS through the PRS, which is made up of various mathematical schemes and formulas that operate in 
a coordinated manner to calculate duties and rebates automatically and continuously.
286 
Guatemala adds that that the measure at issue possesses inherent variability because the measure itself, as a mechanism, imposes the variability of the duties.
287 
                                               
282 Peru's first written submission, para. 3.59; Supreme Decree No. 038-2008-EF (Exhibit PER-28); 
Supreme Decree No. 279-2010-EF (Exhibit PER-29). 
283 Guatemala's first written submission, paras. 4.3 and 4.96-4.98. 
284 Guatemala's first written submission, paras. 4.32 and 4.81-4.83; second written submission, 
paras. 4.8-4.9. 
285 Guatemala's first written submission, paras. 4.29-4.31; response to Panel question No. 100, 
para. 33. 
286 Guatemala's first written submission, paras. 4.34-4.35 and 4.44; second written submission, 
paras. 4.18-4.21; opening statement at th e first meeting of the Panel, para. 11. 
287 Guatemala's first writte n submission, para. 4.39. WT/DS457/R 
- 64 - 
  7.173.  Guatemala asserts that the duties resulting from the PRS are calculated in such a way that 
the authorities have no discretion to interfere in their application, since both the formulas and the manner of carrying out the calculations that produce the amounts of the resulting duties are contained in the applicable legislation. Guatemala adds that the mechanism guarantees that the 
resulting duties will vary every 15 days.
288 
7.174.  Guatemala points out that the PRS contains mathematical formulas not only for calculating 
the duty or tariff rebate, but also for establishing the floor price and ceiling price, every six 
months, and the reference prices every fortnight.289 
7.175.  Guatemala asserts that the changes in th e amounts of the duties resulting from the PRS 
are not produced independently or as a result of separate administrative or legislative action, because the authorities are obliged to act under the applicable rules, and administrative action is 
limited to announcing the level of the elements of the PRS and the resulting duties or rebates.
290 
7.176.  Guatemala maintains that an empirical analys is shows the inherent variability of the duties 
or rebates under the PRS. Guatemala affirms that, throughout the more than 12 years 
of application of the PRS: (a) the resulting duties or rebates have almost always varied with each 
new fortnight; (b) the floor and ceiling prices have varied with practically every publication of updated customs tables; and (c) the reference price has changed every fortnight in roughly 92 
to 96% of instances.
291 
7.177.  Guatemala asserts that any government measure can be changed by an autonomous and 
independent government decision, but explains that the measure at issue possesses a degree of additional variability, as the text thereof includes an inherent methodology requiring and 
necessarily implying periodic modifications.
292 
7.178.  Guatemala maintains that, unlike the variab ility that may occur in respect of ordinary 
customs duties, in the case of duties or rebates resulting from the PRS, there is no lack 
of a specific legislative act. The duties and rebate s owe their existence to the legislative act issued 
in 2001 which set out the formulas by which they ar e established. The acts publishing the customs 
tables and reference prices are merely an announcement of the outcome of application of the 
formulas.293 
7.179.  In contrast, according to Guatemala,  the Peruvian authorities modify ordinary ad valorem  
duty rates whenever they deem it appropriate to do so in the light of their trade policy. By way 
of example, Guatemala points out that the ad valorem  duties on bovine meat have changed once 
every three years, in contrast to the fortnightly variability of the measure at issue, which has 
resulted in 72 updates during the same period of three years.294 
7.180.  Guatemala also contends that Peru's argument to the effect that, in substance, 
all governmental measures are variable, would render redundant the term "variable" (in the 
expression "variable import levies").295 
                                               
288 Guatemala's first written submission, paras. 4.36-4.38; second written submission, paras. 4.8-4.11. 
289 Guatemala's first written submission, paras. 4.45-4.53. 
290 Guatemala's first writte n submission, para. 4.48. 
291 Guatemala's first written submission, paras. 4.54-4.57; History of Application of the Price Range 
System (Exhibit GTM-15); History of Application of the Price Range System (GTM-15), indicating the instances 
in which a reference price has remained the same in consecutive periods (Exhibit GTM-17). 
292 Guatemala's second written submission, paras. 4.22-4.27. 
293 Guatemala's first written submission, paras. 4.40-4.42. 
294 Guatemala's second written submission, paras. 4.28-4.36; comments on Peru's responses to the 
Panel's questions, para. 40; Extracts from Peru's Tariff of 2002, 2007 and 2012 relating to tariff line 
0202.30.00.00 (Exhibit GTM-52). 
295 Guatemala's second written submission, paras. 4.37-4.40. WT/DS457/R 
- 65 - 
  7.4.2.1.1.3  The duties resulting from th e PRS lack transparency and predictability 
7.181.  Guatemala maintains that, given their very  variability, the duties generated by the PRS 
lack both transparency and predictability, as a natural and inherent consequence of the variable nature of those duties, since an exporter is less likely to ship to a market if that exporter does not 
know and cannot reasonably predict what the amount of duties will be.
296 
7.182.  Guatemala asserts that the lack of tr ansparency and predictability is clear from 
an empirical analysis. Guatemala explains that, as the key elements of the PRS vary, the resulting 
values are not predictable, and a commercial operator will have no certainty as to what will be the 
reference price, or as to whether an additional duty will be applied in the coming months, and what will be its amount. Guatemala points out that the system in fact guarantees that the importer 
faces uncertainty.
297 
7.183.  Guatemala claims that not only is there a general level of uncertainty, but that this 
uncertainty also affects specific consignments, because operators are unaware at the date of shipment of the goods what will be the amount of the duties required by the Peruvian 
authorities at the time of arrival in Peru.
298 
7.184.  With regard to sugar, Guatemala indicates that the normal practice is to agree long-term 
contracts (usually with a duration of one to three years, and sometimes four or five years), 
with prices to be fixed at a date close to the date of shipment. In such cases, Guatemala asserts 
that, owing to the way in which commercial operators work, the imposition of additional duties is a total deterrent to imports from Guatemala, as importers would prefer to purchase sugar from a source not subject to the PRS.
299 
7.185.  Guatemala also contends that the following aspects of the PRS are characterized by lack 
of transparency: (a) the way in which Peru determines import-related costs; (b) the source used for determining the freight and insurance costs needed to convert f.o.b. values into c.i.f. values; 
and (c) the reason for the adjustment factor of 1.107 for the floor price of sugar and how it is 
determined.
300 
7.186.  Guatemala also indicates that the de terminant of the lack of transparency and 
predictability is not whether the levy is published or whether it conforms to the WTO bound tariff 
levels, but that the variability automatically entails a lack of transparency and predictability.301 
7.187.  Guatemala argues that, under the PRS, an  economic operator knows that the duty will 
vary on the first and the fifteenth day of each mo nth, but does not know the level of those duties. 
Guatemala adds that, even though economic operators may speculate about the future level 
of prices, this would never provide a degree of predictability sufficient to ensure the conditions of market access that were sought by the negotiators of the Agreement on Agriculture.
302 
                                               
296 Guatemala's first written submissi on, paras. 4.58-4.61; opening statem ent at the first meeting of the 
Panel, para. 26 (citing Appellate Body Report, Chile - Price Band System , para. 234); second written 
submission, paras. 4.12, 4.19 and 4.50; respon se to Panel question No. 56, paras. 134-138. 
297 Guatemala's first written submission, paras. 4.61-4.63. 
298 Guatemala's first written submission, paras. 4.64-4.71;  List of dates of publication of Ministerial and 
Vice-Ministerial Resolutions publishing reference pric es and delay in the publication of those documents 
(Exhibit GTM-14); Searates:  Tiempo de transporte marítimo - Distancia Tailandia – Perú  (Exhibit GTM-21); and 
Searates: Tiempo de transporte marítimo  - Distancia Guatemala - Perú (Exhibit GTM-22).  
299 Guatemala's response to Panel question No. 7, paras. 7-11; response to Panel question No. 58, 
paras. 196-198; Eight-month Forward Sales Contract (Exhibit GTM-41); Two-year Forward Sales Contract (Exhibit GTM-42); The White Paper on Sugar: A History of Protectionism (Exhibit GTM-48). 
300 Guatemala's first writte n submission, para. 4.70. 
301 Guatemala's opening statement at the first meeting of the Panel, para. 26. 
302 Guatemala's second written submission, paras. 4.50-4.53. WT/DS457/R 
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  7.188.  Guatemala also asserts that the task of price estimation requires a high degree 
of sophistication on the part of economic oper ators and generates costs imposed by a decision 
of the Peruvian Government. Guatemala adds that, although economic operators could estimate the reference prices and duties or rebates resulting from the PRS, this would not remedy the lack 
of predictability.
303 
7.189.  Guatemala also expresses concern at Peru's  attempt to condition its rights and obligations 
on the actions and capacities of private operators.304 
7.190.  Guatemala also states that economic operators cannot predict the future level of the 
reference price, because estimates fluctuate constantly and are based on data from the highly volatile futures markets, and there are no fortnightly estimates.
305 
7.191.  Guatemala rejects the estimates submitted by Peru because: (a) most commercial 
transactions have a long time horizon; (b) Peru used historical data, not future prices; 
(c) past trends are no guide to the future; and (d) estimates prove to be imprecise in the short term and become so imprecise in the long term that they hamper any serious commercial 
planning.
306 
7.192.  Guatemala concludes that neither economic operators nor governments can estimate the 
duties or rebates resulting from the PRS, either in the short term or the long term. In Guatemala's 
view, all margins of inaccuracy are commercially relevant in terms of generating uncertainty and 
persuading buyers to resort to other suppliers, particularly supplier countries that are not subject to the PRS.
307 
7.4.2.1.1.4  Inhibition of th e transmission of internationa l price developments to the 
domestic market 
7.193.  Guatemala claims that, because of its design, architecture and effect, the measure at issue 
insulates domestic prices in Peru from international price trends and impedes transmission of those 
trends to the domestic Peruvian market. Guatemala claims that the explicit objective of the PRS is 
to neutralize fluctuations in international prices and limit the negative effects of falls in such prices; and it has the effect of completely inhibiti ng or severely distorting the transmission of any 
decline in international prices to the Peruvian market.
308 
7.194.  Guatemala points out that the preamble to Supreme Decree No. 155-2001-EF confirms 
that the measure at issue constitutes a stabilization and protection mechanism that makes it possible to neutralize the fluctuations of international prices and limit the negative effects of falls 
in those prices. In Guatemala's opinion "neutralizing" and "stabilizing" international price 
fluctuations is equivalent to impeding their transmission.
309 
7.195.  Guatemala asserts that, in the short term, the system is designed to totally preclude the 
transmission of a decline in prices to the domestic Peruvian market. This is because any change in 
international prices produced during the period of validity of the floor price will not at all be reflected in the price at which imports may en ter the Peruvian market. Guatemala adds that, 
if there is a fall in international prices, reflected in a fall in the reference price, the PRS increases 
the resulting duties by the same amount as the fall in the reference price, thereby covering the 
                                               
303 Guatemala's response to Panel question No. 53, paras. 117-122; opening statement at the second 
meeting of the Panel, paras. 13-17; comments on Peru's responses to the Panel's questions, para. 66. 
304 Guatemala's second written submission, paras. 4.54-4.56. 
305 Guatemala's second written submission, paras. 4.57-4.58; response to Panel question No. 53, 
para. 109; Future price trends for Contract No. 5 (Exhibit GTM-47). 
306 Guatemala's second written submission, paras. 4.59-4.73; opening statement at the second meeting 
of the Panel, paras. 18-20; Estimate of future sugar pr ices during the first two weeks of February 2014, based 
on Peru's methodology (Exhibit GTM-57). 
307 Guatemala's second written submission, para. 4.74. 
308 Guatemala's first written submission, paras. 4.72-4.75; second written submission, para. 4.13. 
309 Guatemala's second written submission, paras. 4. 86-4.87; copy of the web page of the Peruvian 
Ministry of the Economy and Finance, explaining th e Price Range System (Exhibit GTM-2); and Supreme 
Decree No. 115-2001-EF (Exhibit GTM-4). WT/DS457/R 
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  difference between the reference price and the floor price. As a result, the duties generated by the 
PRS totally neutralize any change in international prices.310 
7.196.  Guatemala adds that, in the long term, ev en if the PRS does not completely preclude the 
transmission of international prices to the domestic market, it severely distorts such transmission 
owing to its cushioning effect. Guatemala asserts that the incorporation of changes in international 
prices into the floor price is highly diluted, beca use when there is a fall in those prices, the floor 
price would decrease at a much slower rate than the decline in the reference price, with a time lag 
of up to six months. Furthermore, if monthly prices outside the confidence interval are eliminated, 
it is possible that none of the prices will be inco rporated into the floor price, whereas no value is 
omitted from the reference price.311 
7.197.  Guatemala submits Exhibits GTM-31 and GTM-56 in order to support its arguments 
concerning the neutralizing and insulating effect of  the duties resulting from the PRS with respect 
to the prices of imports subject to that mechanism, in contrast to ordinary customs duties.312 
7.198.  Guatemala also asserts that the PRS not only covers the difference between the reference 
price and the floor price, since with the addition of 3% for import costs, the PRS has the effect 
of overcompensating for falls in international prices.313 
7.199.  With regard to the correlation that Peru  claims to exist between domestic prices and 
international prices, Guatemala contends that the variable nature of a levy has no bearing on the 
behaviour of prices.314 Guatemala points out that a variable levy impedes or distorts the 
transmission of international price developments to the domestic market through the prices of imported products, and this remains the case regardless of whether domestic prices are connected 
or not connected to international prices by virtue of any other factor.
315 
7.200.  Guatemala argues that the type of analysis proposed by Peru has no legal basis because: 
(a) Article 4.2 of the Agreement on Agriculture refers to variability as an inherent characteristic 
of a variable levy, and not to the economic effects of the measure; (b) it ignores the economic 
reality and would result in an arbitrary legal criterion, since the average domestic price reflects the prices of all products present on the market and is the result of a wide range of factors; and 
(c) it is equivalent to the trade effects test whic h has already been rejected in other cases, since 
the WTO provisions provide protection not for trade volumes but for expectations concerning conditions of competition.
316 
7.201.  Moreover, Guatemala identifies the following alleged methodological flaws in Peru's 
proposed analysis of the correlation between domestic prices and international prices: (a) the 
existence of anomalies in the application of the me asure, such as the extension of customs tables; 
(b) Peru is presenting data for periods when the measure was not applied and has failed to present 
data for 2013; and (c) Peru has not checked that the price data it uses are comparable.317 
7.202.  Guatemala also argues that, regardless of the methodological flaws, the data submitted by 
Peru show periods of correlation and periods of non-correlation, so that it is impossible to reach 
a conclusion on the existence or non-existence of correlation.318 
                                               
310 Guatemala's first writte n submission, para. 4.76. 
311 Guatemala's first writte n submission, para. 4.77. 
312 Guatemala's second written submission, paras. 4.86-4.91; opening statement at the first meeting 
of the Panel, para. 20; response to Panel question Nos. 116, 117 and 120, paras. 91-103 and 113-118; Chart demonstrating the neutralizing effect of the PRS (sugar imports July 2012-December 2013) (Exhibit GTM-31); Chart on the fluctuation of import prices (Exhibit GTM-56). 
313 Guatemala's first written submission, paras. 4.79-4.80; second written submission, paras. 4.12-4.24. 
314 Guatemala's second written submission, paras. 4.75-4.77. 
315 Guatemala's opening statement at the first meeting of the Panel, paras. 17 and 18 (citing 
Appellate Body Report, Chile - Price Band System , para. 246). 
316 Guatemala's second written submission, paras. 4.78-4.85; 4.108-4.111; opening statement at the 
first meeting of the Panel, paras. 21-22; response to Panel question No. 57, paras. 139-186. 
317 Guatemala's second written submission, paras. 4.94-4.100; response to Panel question No. 57, 
paras. 187-193. 
318 Guatemala's second written submission, paras. 4.101-4.107. WT/DS457/R 
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  7.4.2.1.2  The duties resulting from the PRS constitute minimum import prices or 
measures similar to minimum import prices 
7.203.  Guatemala claims that the duties resulting from the PRS also constitute minimum import 
prices or measures similar to minimum import prices, as they are the minimum price at which 
imports of certain products can enter the Peruvian domestic market.319 
7.204.  Guatemala asserts that the PRS seeks to prevent goods entering Peru at a price below the 
floor price, so that the floor price operates as a minimum price level which is applied to imports 
of the products subject to the PRS.320 
7.205.  Guatemala claims that the floor price fulfils the function of an indicative (or target) price, 
despite not being expressed in specific numerical terms321, since when the reference price falls 
below the floor price, an additional duty is imposed corresponding to the difference between the 
international reference price and the limit of the range. The floor price is the level which the PRS 
seeks to achieve with regard to the cost of importing the products.322 
7.206.  Guatemala asserts that the Peruvian measure is characterized by the following: 
(a) it guarantees that goods will not enter the Peruvian market at a price below a certain 
threshold; (b) it imposes an additional duty ba sed on the difference between the floor price and 
the reference price; (c) the amount of the additional duty varies in line with that difference; and 
(d) it impedes or distorts the transmission of a fall in world prices to the domestic market.323 
7.207.  According to Guatemala, it is also logi cal that the sum of the price of an individual 
consignment and the specific duty may not always reach the same level as the floor price, but this does not alter the fact that the measure was designed and conceived to prevent imports from 
entering Peru at a price below a certain threshold.
324 
7.208.  Guatemala also contends that the referenc e price, by definition, represents the typical 
average consignment which does not enter below the floor price, so that in the case of the typical 
average consignment, the floor price operates as a minimum price. Guatemala also explains that, 
if the prices of many consignments in a two-week period are below the floor price, this situation would be corrected in the following two-week pe riod by an adjustment of the reference price.
325 
7.209.  Guatemala also maintains that the floor price is not the only threshold serving as 
a minimum price, since the PRS guarantees that no consignment will enter at a price lower than the sum of the lowest international price and the additional duty. This sum constitutes a lower de facto  threshold than the floor price, and therefor e covers the two examples presented by Peru 
of transactions which entered at a level lower than the floor price, it being highly unlikely that 
there are any transactions for which the final price is situated below that threshold. Guatemala adds that the difference between a specific tariff an d the duty resulting from the PRS, with respect 
to a minimum price based on a de facto threshold, consists in the way in which the additional duty 
is determined, fortnightly by means of mathematical formulas, and in the fact that the lowest transaction price serves as an input for calculating the additional duty, which does not occur with 
a specific duty.
326 
                                               
319 Guatemala's first written submission, paras. 4.84-4.85 and 4.97; second written submission, 
para. 4.126. 
320 Guatemala's first written submission, para. 4.88; second written submission, paras. 4.127-4.130. 
321 Guatemala's response to Panel question No. 59, para. 201. 
322 Guatemala's second written submission, para. 4.134. 
323 Guatemala's first writte n submission, para. 4.94. 
324 Guatemala's second written submission, paras. 4. 135-4.136; opening statement at the first meeting 
of the Panel, paras. 31 and 34-35; response to Panel qu estion No. 59, para. 201; response to Panel question 
No. 123, paras. 119-127. 
325 Guatemala's second written submission, paras. 4. 137-4.140; opening statement at the first meeting 
of the Panel, paras. 31-36; response to Panel question No. 59, para. 203; response to Panel question No. 124, paras. 128-132; response to Panel question No. 125, paras. 133-134. 
326 Guatemala's second written submission, para. 4. 141; opening statement at the first meeting of 
the Panel, paras. 37-39; response to Panel question No. 59, para. 203; response to Panel question No. 126, paras. 135-152. WT/DS457/R 
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  7.210.  Guatemala also asserts that the PRS reflects the characteristic of minimum import prices in 
that it distorts the transmission of falls in international prices to the domestic market.327 
7.4.2.2  Peru's defence 7.211.  Peru argues that the measure at issue is  an ordinary customs duty, and that Article 4.2 
of the Agreement on Agriculture is therefore not applicable.
328 Peru also argues that the measure 
at issue does not exhibit characteristics such as to be considered a variable import levy, a minimum import price or a measure similar to these.
329 
7.4.2.2.1  The duties resulting from the PRS are ordinary customs duties 
7.212.  Peru identifies a series of characteristics of ordinary customs duties, which, it argues, are 
derived from the ordinary meaning of the text of the relevant agreements, taking into account their context, object and purpose, the supplemen tary means of interpretation and the previous 
decisions of panels and the Appellate Body.
330 
7.213.  Peru asserts that ordinary customs duties : (a) are duties subject to most-favoured-nation 
(MFN) treatment, forming part of the tariff regi me; (b) apply to imports and the obligation to pay 
them arises at the time of importation; (c) may be designed to collect revenue or to protect the 
domestic industry; (d) may be ad valorem , specific or compound duties; (e) may vary, but are 
subject to an upper limit, which is the level bound in the schedule of the respective Member; and 
(f) are transparent and predictable.331 Peru argues that the duties resulting from the PRS meet 
these characteristics, and are therefore ordinary customs duties.332 
7.214.  Peru explains that the duties resulting from the PRS: (a) came into being as part of the 
restructuring of its tariff system in 1991 and have formed part of its tariff policy since that date; 
(b) were included in Peru's tariff offer in the Ur uguay Round; (c) form part of the tariff reductions 
negotiated under free trade agreements; (d) the combination of specific duties and ad valorem  
duties may not exceed the bound level; and (e) they are customs duties, in accordance with its 
legislation.333 
7.215.  Regarding its assertion that its mixed duties formed part of its offer during the Uruguay 
Round negotiations, Peru indicates that its schedule of concessions reflects the fact that the 
customs tariffs were bound at a uniform rate of 30% ad valorem , with the exception 
of 20 agricultural products which were already subject to a specific duty as part of its tariff, and for 
which the tariff was bound at a rate of 68%. Peru argues that it assumed its commitments at the end of the Uruguay Round with a good faith understanding that it was following the established 
rules.
334 
                                               
327 Guatemala's first written submission, paras. 4.89-4.92; second written submission, 
paras. 4.128-4.132. 
328 Peru's first written submission, para. 5. 41; second written submission, para. 3.13. 
329 Peru's first written submission, para. 5. 54; second written submission, para. 3.35. 
330 Peru's first written submission, paras. 5.11-5.37. 
331 Peru's first written submission, paras. 5.38-5.39. 
332 Peru's first written submission, paras. 5.40-5.41;  opening statement at the first meeting of the 
Panel, para. 37. 
333 Peru's first written submission, paras. 5.40-5.50; second written submission, paras. 3.14-3.33; 
opening statement at the first meeting of the Panel,  para. 38; Communication fro m Peru to the Chairman 
of the Negotiating Group on Market Access, 14 December 1993 (Exhibit PER-15); Modalities for the Establishment of Specific Binding Commitments under the Reform Programme, MTN.GNG/MA/W/24, 20 December 1993 (Exhibit PER-19); Decree Law No. 26140 (Exhibit PER-53); Circular INTA-CR.62-2002 (Exhibit GTM-3). See also Decree Laws Nos. 25528 and 25784 (Exhibit PER-91). 
334 Peru's first written submission, paras. 5.46-5.50; second written submission, paras. 3.23-3.27; 
Communication from Peru to the Chairman of the Negotiating Group on Market Access, 14 December 1993 
(Exhibit PER-15); Modalities for the Establishment of Specific Binding Commitments under the Reform Programme, MTN.GNG/MA/W/24, 20 December 1993 (Exhibit PER-19). WT/DS457/R 
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  7.4.2.2.2  The duties resulting from the PRS are not variable import levies or minimum 
import prices 
7.216.  Peru maintains that the duties resulting fr om the PRS do not share the features of variable 
import levies and do not constitute minimum import prices.335 
7.4.2.2.2.1  The measure is neither fitted nor intended to arrive at an indicative price 
7.217.  Peru asserts that the main feature of minimum import prices and of variable import levies 
is that the import charge is based on a minimum import price, preventing products from entering 
a domestic market at a lower price.336 
7.218.  Peru maintains that the measure at issue is neither a variable import levy nor a minimum 
import price, since the PRS does not impose a mini mum import price, either by impeding the entry 
of goods at a price lower than the minimum or by varying the levy to equalize the import price 
with the established minimum.337 
7.219.  Peru asserts that the measure has neither the objective nor the capacity to arrive at 
an indicative (target) price and points out that it is meaningless to talk of either a variable import 
levy or a minimum import price in the absence of an indicative price.338 
7.220.  To demonstrate the foregoing, Peru pres ents an example of an import transaction for 
sugar where the c.i.f. entry price for the merchand ise was lower than the floor price, and another 
where the c.i.f. entry price was lower than the international reference price and the floor price.339 
7.221.  Peru also presents trade statistics for the four products subject to the PRS for the period 
between 2001 and 2013, in which it identifies the number of trade transactions that entered Peru 
at a price lower than the reference price and the floor price.340 
7.222.  Regarding Guatemala's argument that, in a typical transaction, the floor price operates as 
a minimum price, Peru maintains that the measure is applicable to all consignments and the decision on price is at the discretion of the selle r and the buyer. Peru also claims that Guatemala 
assumes without justification that the prices of products upon entry will affect price quotations in 
the reference market, pointing out that, if th e prices of many consignments are below the 
reference price for one fortnight, that situatio n would be corrected in the following fortnight.
341 
7.223.  Peru indicates that, to accept Guatemala's argument to the effect that, if the PRS does not 
succeed in equalizing entry prices with the floor prices, it does produce a de facto  equalization of 
entry prices with the price resulting from the sum of the lowest international price and the resulting specific duty, would imply that any imposition of a specific duty is de facto  a minimum 
import price, regardless of how it is calculated.
342 
                                               
335 Peru's first written submission, para. 5. 54; second written submission, para. 3.35. 
336 Peru's second written submission, para. 3.36. See also Peru's first written submission, 
paras. 5.59-5-60; second written submission, paras. 3.42 and 3.65-3.66; Discussion paper on tariffication submitted by the United States, MTN.GNG/NG5/W/97, 10 July 1989 (Exhibit PER-20); Negotiating Group on Non-Tariff Measures, Communication from Australia , MTN.GNG/NG2/W/24, 2 December 1988 
(Exhibit PER-48); Compendium of De finitions from the WTO Glossary (Exhibit PER-41) and J. Jackson, 
World Trade and the Law of the GATT  (Bobbs-Merrill, 1969) (Exhibit PER-38). 
337 Peru's first written submission, para. 5.61;  second written submission, paras. 3.36; 
opening statement at the first meeting of the Pane l, para. 41, response to Panel question No. 59, 
paras. 147-149. 
338 Peru's first written submission, para. 5.61; second written submission, paras. 3.36-3-41 and 3.67; 
opening statement at the first meeting of the Panel, para. 41; opening statement at the second meeting of the Panel, para. 37. 
339 Peru's first written submission, paras. 5.62-5.68. 
340 Peru's response to Panel question No. 123, paras.  98-99; Statistical data on product entries below 
the minimum price (Exhibit PER-90). 
341 Peru's second written submission, para. 3.40, subpara. (iv). 
342 Peru's second written submission, para. 3.40, subpara. (v); opening statement at the second 
meeting of the Panel, para. 37. WT/DS457/R 
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  7.4.2.2.2.2  The duties resulting from the PRS are not sufficiently similar to variable 
import levies or minimum import prices 
7.224.  Peru claims that the duties resulting from the PRS are not similar to variable import duties 
or minimum import prices.343 
7.4.2.2.2.3  The duties resulting from the PRS do not insulate the Peruvian market 
7.225.  Peru states that a key characteristic of variable import levies and minimum import prices is 
that they insulate the domestic market from the international market.344 
7.226.  Peru argues that insulation from the intern ational market does not occur in the case of its 
PRS because the resulting duties do not seek to impede the entry of goods below an indicative or minimum price, but are a function of prices on the international market; moreover, they cannot exceed the bound tariff level. Peru asserts that domestic prices consistently and progressively 
reflect trends in the international market.
345 
7.227.  Peru presents three charts relating to maize and one relating to sugar, which compare 
domestic prices over the five previous years with international reference prices and import prices 
from the United States and the European Union. Peru maintains that domestic prices closely follow 
import price patterns.346 
7.228.  Peru indicates that the PRS is established by law as a stabilization and protection 
mechanism that serves to neutralize fluctuations in international prices and limit the negative 
effects of falls in such prices. In Peru's opinion,  the PRS has been effective in seeking to achieve 
those objectives. Peru nevertheless points out that there is no reason to affirm that "neutralize" means "distort" or "isolate".
347 
7.229.  Peru notes that every customs duty neutraliz es international effects in relation to the local 
market, and that the distorting effect of variable import levies must be of a different or greater degree. Peru adds that the objective of its PRS is to cushion the impact of sharp price fluctuations 
in the short term.
348 
7.4.2.2.2.4  The duties resulting from the PRS are transparent and predictable 
7.230.  Peru claims that lack of transparency an d predictability is an additional characteristic 
independent of variability, and asserts that the high degree of transparency and predictability 
of the PRS distinguishes it from variable levies and minimum import prices.349 
7.231.  Peru argues that its measure is transparent and enables commercial operators to acquaint 
themselves with the amounts corresponding to the applicable tariff duties. Peru indicates that 
                                               
343 Peru's first written submission, paras. 5.69-5.73. 
344 Peru's first written submission, paras. 5.74-5.77; response to Panel question No. 46, para. 110; 
C. Coughlin and G. Wood, "An Introduction to Non-Tari ff Barriers to Trade", Federal Reserve Bank of St. Louis 
Review (1989) (Exhibit PER-42); G. Sampson and R. Snape, "Effects of Variable Import Levies and Options for Retaliation", Stockholm, Sweden, Institute for In ternational Economic Studies, Seminar Paper No. 120 
(Exhibit PER-43). 
345 Peru's first written submission, para. 5.78; second written submission, paras. 3.62-3.64; 
opening statement at the first meeting of the Panel, para. 43; opening statement at the second meeting of the Panel, para. 41. 
346 Peru's first written submission, paras. 5.79-5.87; response to Panel question No. 121, paras. 85-89; 
Statistical Compendium (Exhibit PER-46); Database of sugar and maize prices (Exhibit PER-69); Updated version of charts 1-7 (Exhibit  PER-70); Explanation of alleged flaw s in price charts (Exhibit PER-93). 
347 Peru's response to Panel question No. 49, paras. 116-119; second written submission, 
paras. 3.59-3.60; opening statement at the second meetin g of the Panel, para. 41; response to Panel question 
No. 115, paras. 75-77. 
348 Peru's second written submission, para. 3.61; re sponse to Panel question No. 115, paras. 75-77. 
349 Peru's first written submission, paras. 5.88 and 5.92; second written submission, para. 3.47; 
opening statement at the first meeting of the Panel, para. 44. WT/DS457/R 
- 72 - 
  operators know that the duty will never exceed th e bound rate and that all the essential elements 
for its calculation are published.350 
7.232.  In particular, Peru asserts that: (a) any interested party may log on to the official website 
in order to check the applicable duties; (b) the methodology is publicly accessible and open 
sources are required for its application; (c) the international reference markets are known351; 
(d) the reference prices are characterized by temporal proximity; (e) forward financial instruments exist for the determination of agricultural product prices; (f) the products subject to the PRS are 
commodities for which a wealth of forecasts exist in easily accessible time series; and (g) there is 
predictability with regard to the administrative practice of the Peruvian State. Peru claims that all of the foregoing ensures that duties under the PRS are reasonably predictable.
352 
7.233.  Peru also maintains that the transparent and predictable characteristics of the PRS enable 
economic operators to predict, prior to the cust oms declaration for the goods, what duties will 
apply.353 
7.234.  To demonstrate the foregoing, Peru explains that it attempted to make an advance 
calculation of reference prices for the first two weeks of February 2014 and that: (a) for maize it 
projected a reference price of between USD 231 and USD 232, and the actual price was USD 232; (b) for sugar it projected a reference price of between USD 433 and USD 434, and the actual price 
was USD 437; and (c) for dairy products it projected a reference price of between USD 5,048 and 
USD 5,555, and the actual price was USD 5,252.
354 Peru rejects Guatemala's allegation that it is 
impossible to make estimates.355 
7.4.2.2.2.5  The duties resulting from the PR S have no automatic or inherent variability 
7.235.  Peru acknowledges that the duties resulting from the PRS are in general variable, but 
claims that variability per se  is not a decisive factor or element, since it is a necessary but by no 
means sufficient condition.356 
7.236.  Peru affirms that ordinary customs duties may vary and in fact do so, since every Member 
may exact a duty upon importation and periodically change the rate at which it applies that duty.
357 
7.237.  Peru also claims that what varies in the Peruvian system is not the duties or rebates, but 
the reference price used to determine the applicable values, and each new calculation does not involve a change in the tariff, which for much of the period of application of the PRS has remained at zero.
358 
                                               
350 Peru's first written submission, paras. 5.89- 5.91; second written submission, para. 3.48; 
opening statement at the first meeting of the Panel, para. 44; Examples of Info rmation Available on the 
SUNAT Website (Exhibit PER-44). 
351 Peru adds that the Central Reserve Bank of Peru pu blishes data on the international prices of sugar, 
maize and rice, as well as the PRS reference prices. Peru's response to Panel question No. 114, para. 74; Statistical Tables from the Weekly Report of the Cent ral Reserve Bank of Peru (BCRP) (Exhibit PER-88). 
352 Peru's second written submission, paras. 3.56-3.58; response to Panel question No. 52, 
paras. 126-127; opening statement at the second meeting of the Panel, para. 40. 
353 Peru's response to Panel question No. 52, para. 126. 
354 Peru's second written submission, paras. 3.49-3.50; response to Panel question No. 53, para. 129; 
response to Panel question No. 109, paras. 54-62; Reference Prices (Exhibit PER-72); Slides presented by Peru (Exhibit PER-83).  
355 Peru's second written submission, paras. 3.51-3.55. 
356 Peru's first written submission, para. 5.92; second written submission, para. 3.43; opening 
statement at the first meeting of the Panel, para. 40; opening statement at the second meeting of the Panel, para. 38; response to Panel question No. 101, paras. 32-34. 
357 Peru's second written submission, para. 3.43; open ing statement at the first meeting of the Panel, 
para. 40; response to Panel question No. 101, para . 32; Compendium of Tariff Changes for Boneless 
Bovine Meat (Exhibit PER-85). 
358 Peru's first written submission, para. 5.92; second written submission, para. 3.44; opening 
statement at the first meeting of the Panel, para. 40; opening statement at the second meeting of the Panel, para. 38. WT/DS457/R 
- 73 - 
  7.238.  Peru also points out that the measure challenged by Guatemala is a duty under the PRS 
and not the PRS itself or other calculation mechanisms.359 
7.239.  Peru also asserts that the constituent el ements of the PRS do not operate automatically, 
since different State organs have to complete certain administrative steps in order for the 
reference prices and updated customs tables to be  published. Peru adds that every customs table 
is published with the same legal status as Su preme Decree No. 115-2001-EF and that on various 
occasions Peru has chosen not to publish a new ta ble and instead to extend the table for one or 
more products by supreme decree.360 
7.4.3  Main arguments of the third parties 7.4.3.1  Argentina 7.240.  Argentina considers that Members must be particularly careful to ensure compliance with 
and enforcement of Article 4.2 of the Agreement on  Agriculture, and avoid taking measures that 
could restrict market access for agricultural products.
361 
7.241.  In Argentina's opinion, the duties resulting from the PRS are a measure inconsistent with 
Article 4.2 of the Agreement on Agriculture, si nce they qualify as a variable import levy, 
a minimum import price, or as a measure similar to these.362 
7.242.  Argentina asserts that the obligation under Article 4.2 of the Agreement on Agriculture 
applies from the date of the entry into force of the WTO Agreement, which would not appear to 
match Peru's defence to the effect that the PR S was part of Peru's tariff offer during the 
Uruguay Round.363 
7.243.  Finally, Argentina states that it is particularly important that transparency and 
predictability should prevail in trade relations, and observes that, in general terms, a price band 
system will lessen the transparency and predictability of trade.364 
7.4.3.2  Brazil 
7.244.  In Brazil's view, in order to assess whether a border measure on agricultural products is 
consistent with market access commitments, it is not enough to establish whether the measure is consistent with the schedule of concessions of the particular Member, but it is also necessary to 
confirm that the measure is not one of those referred to in Article 4.2 of the Agreement on 
Agriculture.
365 
7.245.  Brazil argues that, in assessing whether a measure is inconsistent with Article 4.2 of the 
Agreement on Agriculture, it must be considered whether the challenged measure is similar to one 
of the measures identified in footnote 1 to the Agreement on Agriculture, without having to check 
that the measure is identical. Brazil points out that the fact that a measure shares characteristics with the duties set out in a Member's schedule of concessions does not, ipso facto , turn it into 
an ordinary customs duty.
366 Brazil also asserts that not all the duties calculated on the basis of 
the value and/or volume of imports constitute ordinary customs duties.367 
7.246.  Brazil considers that some characteristics of the measure at issue appear to be similar to 
those of the measures mentioned in footnote 1 to the Agreement on Agriculture.368 
                                               
359 Peru's second written submission, para. 3.44. 
360 Peru's second written submission, para. 3.45; opening statement at the second meeting of the Panel, 
para. 38; response to Panel question No. 104, paras. 42-44. 
361 Argentina's third-party wr itten submission, para. 10. 
362 Argentina's third-party written submission, para. 11; third-party statement, para. 8. 
363 Argentina's third-party written submission, paras. 13 and 14; thir d-party statement, paras. 4-6. 
364 Argentina's third-party wr itten submission, para. 17. 
365 Brazil's third-party written submission, para. 10. 
366 Brazil's third-party written submission, paras. 11-12. 
367 Brazil's third-party written submission, para. 10. 
368 Brazil's third-party written submission, paras. 14-18. WT/DS457/R 
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  7.247.  In Brazil's view, the inherent variabili ty of the measure appears to be undisputed. 
Regarding the lack of transparency and predictabi lity, Brazil considers that a measure with these 
characteristics generates costs and discourages the conclusion of long-term contracts.369 
Brazil indicates that the discouraging effect is even clearer when the measure does not apply to all 
Members.370 
7.248.  Brazil adds that the fact that a measure refers to the objective of disconnecting domestic 
prices from international market signals, beyond the normal effect of tariffs, and protecting local 
producers from the agricultural policies of other Members, appears to run counter to Article 4.2 
of the Agreement on Agriculture.371 
7.4.3.3  Colombia 7.249.  Colombia is of the view that the Agreement on Agriculture contains no provision 
suggesting that one of the fundamental characteristics of a variable levy is its inherent 
variability.
372 
7.250.  Colombia considers that the interpretation of variable import levies by the Appellate Body 
does not meet the customary rules of interpretation, insofar as it takes no account of the context 
of the entire sentence. Colombia explains that the use of the phrase "these measures include" 
in the footnote to the Agreement on Agriculture is not meant to indicate that the measures must 
"themselves contain" variable formulas or minimum prices, but serves to list measures of the kind 
that should be converted into tariffs.373 
7.251.  In Colombia's opinion, a system like the Peruvian one may be transparent and predictable, 
even though it exhibits a factor  of variation modulated by a methodology. Colombia adds that the 
Panel should not confine itself to the definition  of predictability and transparency proposed 
in Chile – Price Band System , since that definition relates to a specific case and not a definition 
authorized by Members. In Colombia's opinion, the fact that a measure includes a formula with 
fixed terms and coefficients would make it possible to predict the final result, while the existence 
of clear and public rules and a stable and equally public methodology for defining the tariff make it possible to characterize the mechanism as transparent.
374 
7.252.  Colombia considers that the interpretation of Article 4.2 of the Agreement on Agriculture in 
Chile – Price Band System  does not show that measures that isolate domestic markets are 
WTO-inconsistent. Colombia maintains that, in order for a measure to be WTO-inconsistent, it is necessary that the Member alleging the violation demonstrate that measures isolating domestic 
markets have similar or identical effects to measures that are prohibited under the provisions of 
the agreements. Colombia concludes that, in such cases, it is not necessary to examine whether the measure has the effect of isolating the Pe ruvian market from the international market.
375 
7.4.3.4  Ecuador 
7.253.  Ecuador considers that, to the extent that ordinary customs duties are not applied in 
excess of those set forth in a Member's schedule of concessions, it is possible for that Member to 
apply a type of duty different from the type provid ed for in its schedule. In Ecuador's opinion, the 
WTO agreements do not prohibit a Member from ad justing its customs duties; nor do they impose 
temporal restrictions on how such adjustments are made, as long as the duties are not in excess of the commitments undertaken in the Member's schedule.
376 
                                               
369 Brazil's third-party oral statement, para. 4. 
370 Brazil's third-party oral statement, para. 5. 
371 Brazil's response to Panel question No. 5. 
372 Colombia's third-party writ ten submission, para. 12 (cit ing Appellate Body Report, Chile - Price Band 
System , para. 233). 
373 Colombia's third-party writ ten submission, paras. 13-14. 
374 Colombia's third-party written su bmission, paras. 17-23; Colombia's third-party statement, para. 11. 
375 Colombia's response to Panel question No. 5, paras. 5-9. 
376 Ecuador's third-party statem ent, paras. 10-11; response to Panel question No. 6. WT/DS457/R 
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  7.4.3.5  United States 
7.254.  The United States considers that Peru's PRS appears to be a variable import levy, 
a minimum import price, or at least a measure similar to both of these.377 
7.255.  The United States notes that the following features of Peru's measure appear to be 
undisputed: (a) it is based on a mathematical formula such that when the reference price falls 
below the lower threshold, an additional duty is  applied based on the difference; (b) it employs 
a reference price that is updated every two weeks, based on international prices, and the lower 
threshold is obtained from average prices over the preceding five years; (c) it yields duties whose 
amounts change every two weeks; and (d) the further the reference price is below the lower threshold, the higher the resulting duty.
378 
7.256.  The United States argues that, in the light of those features, the PRS appears to be 
inherently variable and less transparent and predictable than ordinary customs duties, apart from 
which its design and structure im pede the transmission of international prices to the domestic 
market.379 
7.257.  In the United States' opinion, the lack  of transparency and predictability are not 
independent characteristics that a measure must possess in order to be considered a variable import levy, since it is the presence of a formula that makes a measure inherently variable, 
and this feature renders the levy less transparent and predictable than ordinary customs duties.
380 
7.258.  The United States also points out that the PRS appears to be similar to a minimum import 
price. The United States considers that the existence of a target price is not required to establish that a measure is similar to minimum import pr ices. The nature of the measure, including its 
tendency to distort the transmission of declines in world prices, suggests that Peru's measure is 
similar to minimum import prices.
381 
7.259.  In the United States' opinion, Article 4.2 of the Agreement on Agriculture does not require 
a finding as to whether the measure isolates the domestic market from international prices. 
According to the United States, even if the meas ure never causes effects, it may be prohibited, 
for which reason the evidence concerning th e effects will be of a secondary nature.382 
7.260.  The United States affirms that it is not necessary to define ordinary customs duties 
inasmuch as, if the measure is one of those included in footnote 1 of the Agreement on Agriculture, ordinary customs duties are defined by exclusion.
383 
7.261.  The United States considers that the characteristics of ordinary customs duties proposed 
by Peru do not constitute an effective argument, since ordinary customs duties and variable import 
levies share certain attributes.384 The United States also points out that a Member's 
characterization of its own measure is not conclusive, apart from which the evidence presented by 
Peru does not demonstrate that the measure constitutes ordinary customs duties.385 
7.262.  Finally, the United States points out that Peru's schedule of concessions does not 
incorporate the duties resulting from the PRS and does not include the system established 
in 2001; even if it did, this would not remedy the violation of Article 4.2 of the Agreement on 
                                               
377 United States' third-party written submissi on, para. 11. 
378United States' third-party written submission, para. 12. 
379 United States' third-party wri tten submission, paras. 13-16; response to Panel question No. 6, 
paras. 21-23. 
380 United States' third-party wr itten submission, paras. 10-12. 
381 United States' third-party wr itten submission, paras. 17-19. 
382 United States' response to Pane l question No. 5, paras. 17-20. 
383 United States' third-party wr itten submission, paras. 20-22. 
384 United States' third-party wr itten submission, paras. 24-26. 
385 United States' third-party wr itten submission, paras. 27-28. WT/DS457/R 
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  Agriculture, since the obligations contained in that provision would prevail over the content of the 
schedule of concessions.386 
7.4.3.6  European Union 7.263.  The European Union states that the Panel's task is to characterize the measure at issue 
within the framework of the categories contained in footnote 1 of the Agreement on Agriculture, 
particularly with regard to variable import levies.
387 
7.264.  The European Union refers to the two features of variable import levies identified by the 
Appellate Body in Chile – Price Band System : (a) their continuous and automatic variation; 
and (b) their lack of transparency and predictability.388 
7.265.  The European Union considers that partic ular attention should be paid to the lack 
of transparency and predictability, because this is what affects traders and governments. In the 
European Union's view, provided that all the el ements of the system are published and all the 
values used are publicly available, the system will be transparent and predictable, because the 
economic operator will be in a position to predict the nature of a change in the amount of the 
duties.389 
7.266.  The European Union asserts that, if a Member were to change its duties every day by 
legislative intervention, following international prices, and not through the use of a formula, 
the measure would continue to lack transparency and predictability.390 
7.267.  The European Union notes that no decisive weight can be given to the distortion in the 
transmission of declines in world prices, since this is a relative analysis.391 
7.268.  The European Union considers that a key characteristic of variable import levies, and of all 
the measures included in footnote 1 of the Agreemen t on Agriculture, is the fact that they prevent 
price competition for all imports or a part thereof,  thus distinguishing them from ordinary customs 
duties which permit price competition on all imports.392 
7.4.4  Assessment by the Panel 
7.4.4.1  Article 4.2 of th e Agreement on Agriculture 
7.4.4.1.1  Content of Article 4.2 of the Agreement on Agriculture 
7.269.  Article 4.2 of the Agreement on Agriculture,  together with the footnote thereto, reads as 
follows: 
2. Members shall not maintain, resort to, or revert to any measures of the kind 
which have been required to be converted into ordinary customs duties, except as 
otherwise provided for in Article 5 and Annex 5.1 
_______________________ 
(Footnote original)1 These measures include quantitative import restrictions, variable import 
levies, minimum import prices, discretionary impo rt licensing, non-tariff measures maintained 
through state-trading enterprises,  voluntary export restraints, an d similar border measures other 
than ordinary customs duties, whether or not the measures are maintained under 
country-specific derogations from the provisions  of GATT 1947, but not measures maintained 
under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement. 
                                               
386 United States' third-party written submission , paras. 29-31 (citing Appellate Body Report, 
EC - Export Subsidies of Sugar , paras. 221-222). 
387 European Union's third-party written submission, para. 42. 
388 European Union's third-party wr itten submission, paras. 43-47. 
389 European Union's third-party written submission, para. 47. 
390 European Union's third-party written submission, para. 48. 
391 European Union's third-party written submission, para. 49. 
392 European Union's third-party written submission, para. 50. WT/DS457/R 
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  7.4.4.1.2  Article 4.2 of the Agreement on Agriculture in previous disputes 
7.270.  Article 4.2 of the Agreement on Agricultur e has been examined by WTO panels and by the 
Appellate Body in only two disputes: Chile – Price Band System and Turkey – Rice . In Chile – Price 
Band System , both in the original and in the compliance  proceedings, the Panels and the Appellate 
Body clarified the scope of the text of Article 4. 2 of the Agreement on Agriculture and interpreted 
the terms "variable import levies", "minimum import prices" and "similar border measures". In Turkey – Rice , the Panel examined as the principal claim the consistency of the challenged 
measure, which was in the nature of a quantitative restriction, with Article 4.2.
393 
7.271.  In two other disputes, India – Quantitative Restrictions and Korea – Various Measures on 
Beef, the Panels found that the challenged measure was inconsistent with Article 4.2 of the 
Agreement on Agriculture, after having found an inconsistency with Article XI:1 of the GATT 1994. 
In these disputes, the Panels did not interpret the content of Article 4.2, considering that 
a quantitative restriction on agricultural products that was inconsistent with Article XI:1 of the GATT 1994 was necessarily also inconsistent with  Article 4.2 of the Agreement on Agriculture.
394 
Along the same lines, in EC – Seal Products , the Panel rejected a claim in respect of Article 4.2, 
having already rejected a claim relating to Article XI:1 of the GATT 1994.395 
7.272.  The interpretation of the scope of the obligation in Article 4.2 of the Agreement on 
Agriculture and the meaning of the terms "variable import levies", "minimum import prices" and 
"similar border measures", contained in the analyses carried out by the Panels and the Appellate Body in Chile – Price Band System  are more relevant to this dispute than those contained in the 
analyses of other disputes relating to Article 4.2.  For this reason, the Panel will take those reports 
into account in conducting its own analysis. 
7.4.4.1.3   Objective of Article 4. 2 of the Agreement on Agriculture 
7.273.  In the original Chile – Price Band System proceedings, the Appellate Body referred to the 
overall objectives set out in the preamble to the Agreement on Agriculture: 
[T]he preamble to the Agreement on Agriculture states that an objective of that 
Agreement is  "to establish a fair and market-oriented agricultural trading system", 
and to initiate a reform process "through the negotiation of commitments on support 
and protection and through the establishment of strengthened and more operationally effective GATT rules and disciplines".
396 The preamble further states that, to achieve 
this objective, it is necessary to provide for reductions in protection, "resulting in 
correcting and preventing restrictions and distortions in world agricultural markets"397, 
through achieving "specific binding commitments," inter alia , in the area of market 
access.398, 399 
7.274.  The Appellate Body went on to explain the specific objective of Article 4 of the Agreement 
on Agriculture: 
During the course of the Uruguay Round, negotiators identified certain border 
measures which have in common that they restrict the volume or distort the price 
of imports of agricultural products. Th e negotiators decided that these border 
measures should be converted into ordinary customs duties, with a view to ensuring enhanced market access for such imports. Thus, they envisioned that ordinary 
customs duties would, in principle, become the only form of border protection. 
As ordinary customs duties are more transparent and more easily quantifiable than non-tariff barriers, they are also more easily compared between trading partners, 
                                               
393 See Panel Report, Turkey - Rice, paras. 7.12-7.138. 
394 Panel Reports, India - Quantitative Restrictions , paras. 5.241-5.242; Korea - Various Measures 
on Beef , para. 762. (These panel findings were not appealed.) 
395 Panel Report, EC - Seal Products , para. 7.665. (This panel finding was not appealed.) 
396 (Footnote original) Preamble to the Agreement on Agriculture , second recital. 
397 (Footnote original) Ibid. third recital. 
398 (Footnote original) Ibid. fourth recital. 
399 Appellate Body Report, Chile - Price Band System, para. 196. WT/DS457/R 
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  and thus the maximum amount of such duties can be more easily reduced in future 
multilateral trade negotiations.400 
7.275.  The Appellate Body thus concluded that Article 4 of the Agreement on Agriculture "is … the 
legal vehicle for requiring the conversion into ordinary customs duties of certain market access 
barriers affecting imports of agricultural products."401 
7.4.4.1.4  Scope of Article 4.2 of the Agreement on Agriculture 
7.276.  With regard to the scope of Article 4.2 of the Agreement on Agriculture, in Chile – Price 
Band System , the Appellate Body explained that the obligation not to maintain, resort to, or revert 
to any measures of the kind  which have been required to be converted into ordinary customs 
duties applies from the date of the entry into force of the WTO Agreement, regardless of whether or not a Member converted any such measures before the conclusion of the Uruguay Round. 
The Appellate Body added that the fact that no  Member singled out any measure of any other 
Member does not mean that such a measure subsequently enjoys immunity.
402 
7.277.  The Appellate Body also stated that footno te 1 to the Agreement on Agriculture "lists six 
categories of border measures and a residual category of such measures that are included  in 
'measures of the kind which have been required to be converted into ordinary customs duties' within the meaning of Article 4.2."
403 The Appellate Body clarified that the list in the footnote is 
illustrative, and includes inter alia variable import levies, minimum import prices and similar 
border measures other than ordinary customs duties.404 
7.278.  In the original proceedings, the Appellate Body identified the features shared by all the 
border measures listed in footnote 1: 
Before looking at these categories of measures, we note that all of the border 
measures listed in footnote 1 have in common the object and effect of restricting the volumes, and distorting the prices, of imports of agricultural products in ways different 
from the ways that ordinary customs duties do. Moreover, all of these measures have 
in common also that they disconnect domestic prices from international price developments, and thus impede the transm i s s i o n  o f  w o r l d  m a r k e t  p r i c e s  t o  t h e  
domestic market.
405 (emphasis original) 
7.279.  The Appellate Body clarified that, if the me asure at issue in that dispute fell within any 
one of the categories of measures listed in footno te 1, it would be among the "measures of the 
kind which have been required to be converted in to ordinary customs duties", and thus could not 
be maintained, resorted to, or reverted to, as of the date of entry into force of the 
WTO Agreement.406 
7.280.  The Appellate Body also explained that the fact that any variable import levies or minimum 
import prices result in the payment of duties does not mean that they should not have been 
converted into ordinary customs duties.407 
7.281.  In addition, the Appellate Body referred to Article 5 of the Agreement on Agriculture, which 
provides for a market access exemption in the form  of a special safeguard. It pointed out that 
Article 4.2 should not  be interpreted in a way that permits Members to maintain measures that 
operate in a way similar to a special safeguard inasmuch as no proper meaning and effect could be given to the conditions for establishing the special safeguard.
408 
                                               
400 Appellate Body Report, Chile - Price Band System, para. 200. 
401 Ibid.  para. 201. 
402 Ibid.  para. 212. 
403 Ibid.  para. 219. 
404 Ibid.  para. 219. 
405 Ibid. para. 227. 
406 Ibid. para. 221. 
407 Ibid.  para. 216. 
408 Ibid.  para. 217. WT/DS457/R 
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  7.4.4.1.5  Relevant terms in Article 4.2 of the Agreement on Agriculture 
7.4.4.1.5.1  Variable import levies 7.282.  In the present case, the Panel will begin by considering what should be understood by 
"variable import levies" within the meaning of  footnote 1 to the Agreement on Agriculture.  
7.283.  According to the ordinary meaning of the terms, a " gravamen " (levy) is a " carga " 
or "obligación "
409 (charge or obligation); or an " [o]bligación de cualquier clase que pesa sobre 
alguien o algo " (an obligation of any kind imposed on someone or something), a " [c]anon ", 
"carga ", "censo ", "gabela ", "graveza ", "hipoteca ", "obligación ", "pecha ", "pecho ", "servidumbre " 
or "tributo "410 (various types of tax, charge, rent, mortgage, obligation, servitude or tribute). 
An "import levy" would thus be a charge or obligation applied for the purpose of importation. "Variable " is something " [q]ue varía o puede variar " (which varies or may vary), is " [i]nestable , 
inconstante y mudable "
411 (unstable, inconstant and movable); or something " [s]usceptible de 
variar " (liable to vary), " [m]uy o excesivamente inclinado o propenso a variar "412 (highly 
or excessively inclined or likely to vary). Furthermore, " variar " (vary) means " hacer que una cosa 
sea diferente en algo de lo que antes era " (to make something different in some way from what it 
was before), " cambiar de forma , propiedad o estado " (to change form, condition, or state), 
"ser diferente de otra "413 (to be different from something else); or else " [a]lterarse o cambiar " 
(to alter or change), " dejar una cosa o persona de ser de una manera y ser de otra " (to change 
something or someone from one condition to another), " [h]acer una cosa diferente de como era " 
(to make something different from what it was), " alterar " (to alter), " cambiar " (to change), 
"modificar " (to modify), " mudar " (to move) or " transformar " (to transform).414 Consequently, 
an "import levy" would be variable when it varies or may vary and, above all, is highly inclined or 
likely to vary. 
7.284.  The foregoing is consistent with the way in which the Appellate Body interpreted the words 
"variable import levies" in the original Chile – Price Band System proceedings: 
In examining the ordinary meaning of the term " variable import levies " as it appears 
in footnote 1, we note that a "levy" is a duty, tax, charge, or other exaction usually 
imposed or raised by legal execution or process.415 An "import" levy is, of course, 
a duty assessed upon importation. A levy is "variable" when it is "liable to vary".416, 417 
(emphasis original) 
7.285.  In this case, however, the Appellate Body also noted that variability alone is not 
determinative when defining a measure as a "variable import levy" within the meaning 
of footnote 1 to the Agreement on Agriculture: 
An "ordinary customs duty" could also fit this description. A Member may, fully in 
accordance with Article II of the GATT 1994, exact a duty upon importation and 
periodically change the rate at which it applies that duty … This change in the applied  rate of duty could be made, for example, through an act of a Member's 
legislature or executive at any time ... Thus, the mere fact that an import duty can be 
varied cannot, alone, bring that duty within the category of "variable import levies" for purposes of footnote 1.
418 (footnote omitted, emphasis original) 
7.286.  In order to determine what type of variability makes an import levy a "variable import 
levy", the Appellate Body considered the immediate context of the other terms in footnote 1 to the 
Agreement on Agriculture: 
                                               
409 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 783. 
410 María Moliner, Diccionario de Uso del Español , 2. ed. (Gredos, 1998), Vol. 1, p. 1,419. 
411 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 1,542. 
412 María Moliner, Diccionario de Uso del Español , 2nd ed. (Gredos, 1998), Vol. 2, p. 1,357. 
413 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 1,542. 
414 María Moliner, Diccionario de Uso del Español , 2nd ed. (Gredos, 1998), Vol. 2, pp. 1,357-1,358. 
415 (Footnote original) The New Shorter Oxford English Dictionary , supra , fn. 190, p. 1,574. 
416 (Footnote original) Ibid. p. 3,547. 
417 Appellate Body Report, Chile - Price Band System , para. 232. 
418 Ibid. WT/DS457/R 
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  The term "variable import levies" appears after the introductory phrase 
"[t]hese measures include". Article 4.2 - to which th e footnote is attached - also 
speaks of " measures ". This suggests that at least one feature of "variable import 
levies" is the fact that the measure itself - as a mechanism - must impose the 
variability of the duties. Variability is inherent in a measure if the measure 
incorporates a scheme or formula that causes and ensures that levies change automatically and continuously. Ordinary customs duties, by contrast, are subject to 
discrete changes in applied tariff rates th at occur independently, and unrelated to 
such an underlying scheme or formula. The level at which ordinary customs duties are applied can be varied by a legislature, but such duties will not be automatically and 
continuously variable. To vary the applied rate of duty in the case of ordinary customs 
duties will always require separate legislative or administrative action, whereas the 
ordinary meaning of the term "variable" implies that no such action is required.
419 
(emphasis original) 
7.287.  Variability within the meaning of footnote  1 to the Agreement on Agriculture, therefore, 
requires that the measure itself, as a mechanism, imposes the variability of the duties, that is to say, that variability is inherent in the measure. Variability will be inherent in a measure if it 
incorporates a scheme or formula that causes and ensures that levies change automatically and 
continuously.
420 
7.288.  An import levy that shows the inherent variability resulting from a scheme or formula that 
causes and ensures that the measure changes automatically and continuously is "variable", 
not only in the sense that it varies or may vary, but even more so because it is a measure 
"highly inclined or likely to vary". 
7.289.  Lastly, the Appellate Body added that, in a ddition to the existence of a formula that makes 
variability of the duties automatic and continuous, there are other features which make a measure 
a variable import levy under the terms of footnote 1 to the Agreement on Agriculture. As the Appellate Body stated: 
[T]he presence of a formula causing automatic and continuous variability of duties is 
a necessary, but by no means a sufficient,  condition for a particular measure to be 
a "variable import levy" within the meaning of footnote 1.
421 "Variable import levies" 
have additional features that undermine the object and purpose of Article 4, which is 
to achieve improved market access conditions for imports of agricultural products by 
permitting only the application of ordinary customs duties. These additional features include a lack of transparency and a lack of pr edictability in the level of duties that will 
result from such measures. This lack of tran sparency and this lack of predictability are 
liable to restrict the volume of imports … [A]n exporter is less likely to ship to a market if that exporter does not know and cannot reasonably predict what the 
amount of duties will be. This lack of transparency and predictability will also 
contribute to distorting the prices of  imports by impeding the transmission 
of international prices to the domestic market.
422 (footnote omitted, emphasis 
original) 
7.290.  As the Appellate Body pointed out, the foregoing does not mean that the 
"lack of transparency" and the "lack of predictabi lity" are independent or absolute characteristics 
that a measure must display in order to be considered a variable import levy.423 Rather, what the 
Appellate Body sought to explain was that: 
[T]he level of duties generated by variable import levies is less transparent and less 
predictable than is the case with ordinary customs duties.424 Thus [in the original 
                                               
419 Appellate Body Report, Chile - Price Band System , para. 233. 
420 Ibid. paras. 232-234; Panel Report Chile - Price Band System (Article 21.5 - Argentina) , para. 7.28; 
Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina) , paras. 155-158. 
421 (Footnote original) The participants agreed with th is in their responses to questioning at the oral 
hearing. 
422 Appellate Body Report, Chile - Price Band System , para. 234. 
423 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 156. 
424 (Footnote original) The Appellate Body explained that the Uruguay Round negotiators had identified 
"certain border measures which have in common that th ey restrict the volume or distort the price of imports WT/DS457/R 
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  case], the Appellate Body considered transpar ency and predictability in tandem and in 
relation to the level of resulting duties, observing that "an exporter is less likely to ship to a market if that exporter does not know and cannot reasonably predict what the amount of duties will be".
425 This is why variable import levies are "liable to 
restrict the volume of imports".426 In addition, they "contribute to distorting the prices 
of imports by impeding the transmission of international prices to the domestic market".
427, 428 
7.291.  In other words, in addition to the inherent variability resulting from the existence 
of a scheme or formula that causes and ensures that the measure is automatically and continuously modified, what defines a measure as a "variable import levy" within the meaning of footnote 1 to the Agreement on Agriculture is the presence of features which make it distinct 
from an ordinary customs duty. These features may include the measure's lack of transparency 
and predictability as compared to an ordinary customs duty.
429 
7.292.  In any event, all the measures contained in the illustrative list in footnote 1 to the 
Agreement on Agriculture are prohibited under Article 4.2, regardless of whether in practice they 
restrict volumes, distort import prices or insulate the domestic market from international price trends. In other words, the presence of these effects may help to determine the type of measure 
in question when compared to an ordinary customs duty, but does not constitute a necessary 
condition for qualifying the measure as a "variable import levy" within the meaning of footnote 1 to the Agreement on Agriculture. 
7.4.4.1.5.2  Minimum import prices 
7.293.  According to the ordinary meaning of the term, "minimum" is something " [t]an pequeño 
en su especie, que no lo hay menor ni igual " (so small of its type that there is nothing the same 
or smaller).
430 The term " mínimo " (minimum) " [s]e aplica a las cosas que son en cantidad o 
grado … lo más pequeñas posible o las más pequeñas entre las de su clase "431 (applies to things 
which in quantity or grade are the smallest possi ble or the smallest of their type). The term 
"minimum" may be used to indicate the" [l]ímite inferior, o extremo a que se puede reducir algo "432 
(the lowest or extreme limit to which something may be reduced). In the English text of the 
Agreement on Agriculture, the expression "minimum import prices" is used in footnote 1 as the equivalent of " precios minimos de importacion ". The ordinary meaning of the term "minimum" is 
"[t]he smallest amount or quantity possible, usual, attainable, etc."
433 
7.294.  The term "minimum" may be used to  qualify a requirement. For example, a " salario 
mínimo " (minimum wage) is " [e]l que establece la ley como retribución mínima para cualquier 
trabajador "434 (that which is established by law as the minimum remuneration for any worker). 
In EEC – Minimum Import Prices , for example, the Panel established under the GATT examined 
a minimum import price system in force at that  time in the European Community under which 
certain imports were allowed "but not below the minimum price level".435 In China - Raw Materials , 
the Panel considered the existence of a minimu m export price requirement under which export 
below such prices was not allowed and compliance with minimum prices was enforced through 
                                                                                                                                               
of agricultural products" and "decided that these border  measures should be conver ted into ordinary customs 
duties" which "would, in principle, become the only form  of border protection." Or dinary customs duties were 
viewed as the preferred border measure because they "are more transparent and more easily quantifiable", 
"more easily compared between trading partners" and, theref ore, "the maximum amount of such duties can be 
more easily reduced in future multilateral trade negotiations." (Appellate Body Report, Chile - Price Band 
System , para. 200 (emphasis added)) 
425 (Footnote original) Appellate Body Report, Chile - Price Band System , para. 234 (referring to 
Argentina's responses to questioning at the oral hearing in the original proceedings). 
426 (Footnote original) Ibid. 
427 (Footnote original) Ibid. 
428 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 156. 
429 Appellate Body Report, Chile - Price Band System, para. 234. 
430 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 1,023. 
431 María Moliner, Diccionario de Uso del Español , 2nd ed. (Gredos, 1998), Vol. 2, p. 352. 
432 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 1,023. 
433 Shorter Oxford English Dictionary , 6nd ed. (Oxford University Press, 2007), Vol. 1, p. 1,789. 
434 Diccionario de la Lengua Española , 22nd ed. (Real Academia Española, 2001), p. 1,365. 
435 GATT Panel Report, EEC – Minimum Import Prices , para. 4.9. WT/DS457/R 
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  the imposition of penalties.436 In China – Rare Earths , the Panel examined the minimum registered 
capital requirements imposed on trading enterprises as a condition for being able to obtain quota rights.
437 
7.295.  In the original Chile – Price Band System proceedings, the Appellate Body defined 
minimum import prices as follows: 
The term "minimum import price" refers gene rally to the lowest price at which imports 
of a certain product may enter a Member's domestic market. Here, too, no definition 
has been provided by the drafters of the Agreement on Agriculture. However, 
the Panel described "minimum import prices" as follows: 
… [these] schemes generally operate in relation to the actual transaction 
value of the imports. If the price of an individual consignment is below a 
specified minimum import price, an additional charge is imposed 
corresponding to the difference.438 
The Panel also said that minimum import prices "are generally not dissimilar from 
variable import levies in many respects, including in terms of their protective and 
stabilization effects, but that their mode of operation is generally less complicated."439 
The main difference between minimum import prices and variable import levies is, 
according to the Panel, that "variable import levies are generally based on the 
difference between the governmentally determined threshold  and the lowest world 
market offer price for the product concerned, while minimum import price schemes generally operate in relation to the actual transaction value  of the imports."
440, 441, 
(emphasis original) 
7.296.  In the compliance proceedings, the Panel summarized the features of minimum import 
prices as follows: 
In essence, a minimum import price is a measure which ensures that certain imported 
products will not enter a domestic market at a price lower than a certain threshold, normally by imposing an import duty assessed on the basis of the difference between 
such threshold and the transaction value of the imported goods.
442 
7.4.4.1.5.3  Similar border measures 7.297.  When examining the term "similar border measures" in the original Chile – Price Band 
System proceedings, the Appellate Body agreed with the Panel's definition of the word "similar" as 
"having a resemblance or likeness", "of the same nature or kind", and  "having characteristics in 
common".
443 
7.298.  The Appellate Body explained that "The better and appropriate approach is to determine 
similarity by asking the question whether two or more things have likeness or resemblance 
sufficient to be similar to each other."444 The Appellate Body added that, in its view, the task 
of determining whether something is similar to something else must be approached on 
an empirical basis.445 
                                               
436 Panel Report, China – Raw Materials, para. 7.1066. (The Appellate Body declared part of the Panel's 
analysis moot and of no legal effect on procedural grounds.) 
437 Panel Report, China - Rare Earths, paras. 7.218 and 7.233. 
438 (Footnote original) Panel Report, para. 7.36(e). 
439 (Footnote original) Panel Report, para. 7.36(e). 
440 Ibid. 
441 Appellate Body Report, Chile - Price Band System , paras. 236-237. 
442 Panel Report, Chile - Price Band System (Article 21.5 - Argentina), para. 7.30. 
443 Appellate Body Report, Chile - Price Band System , para. 226. 
444 Ibid. 
445 Ibid. WT/DS457/R 
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  7.299.  In the compliance proceedings in that particular case, the Appellate Body clarified what it 
had referred to in the original proceedings as the approach to determining whether something is similar on an empirical basis . 
[I]n advocating that the issue of similari ty be approached "on an empirical basis", 
the Appellate Body was contrasting this to, and counselling against, an approach that 
focused on the fundamental nature of the shared characteristics. The proper approach 
should, instead, entail both an analysis of the extent of such shared characteristics 
and a determination of whether these are sufficient to render the two things similar. 
Such characteristics can be identified from an analysis of both the structure and 
design of a measure as well as the effects of that measure. Thus, we do not consider that the Panel would have needed, as Chile's argument seems to imply, to focus its 
examination primarily on numerical or statistical data regarding the effects of that 
measure in practice. Where it exists, evidence on the observable effects of the measure should, obviously, be taken into consideration, along with information on the 
structure and design of the measure. The weight and significance to be accorded to 
such evidence will, as is the case with any evidence, depend on the circumstances of the case.
446 (emphasis original) 
7.300.  As already mentioned, in the original proceedings the Appellate Body explained that 
all of the border measures listed in footnote 1 have in common the object and effect of restricting the volumes, and distorting the prices, of imports of agricultural products in ways different from 
the ways that ordinary customs duties do , in addition to disconnecting domestic prices from 
international price developments, and thus impeding the transmission of world market prices to 
the domestic market.
447 
7.301.  The Appellate Body added that, even if a measure were to share these common 
characteristics with all of these border measures, it would not be sufficient to make that system 
a "similar border measure"; there must be something more: 
To be "similar", Chile's price band system - in its specific factual configuration - must 
have, to recall the dictionary definitions we mentioned, sufficient "resemblance or 
l i k e n e s s  t o " ,  o r  b e  " o f  t h e  s a m e  n a t u r e  o r  k i n d "  a s ,  at least one  of the specific 
categories of measures listed in footnote 1.448 (emphasis original) 
7.302.  The Appellate Body thus explained that  any examination of similarity presupposes 
a comparative analysis; therefore, in order to determine whether a measure is "similar" within the 
meaning of footnote 1, it is necessary to identify the categories with which it has to be compared.
449 
7.303.  In Chile – Price Band System , the Panel examined the similarity of the measure at issue 
with the two categories identified by the complainant, variable import levies and minimum import prices. In examining whether the measure at issue in Chile – Price Band System was a border 
measure similar to variable import levies or minimum import prices, the Appellate Body explained 
that what had to be determined was whether th e measure, in its particular features, shared 
sufficient features with either of these two categories of prohibited measures to resemble, or be of the same nature or kind and thus be prohibited by Article 4.2.
450 The Appellate Body concluded 
that, although there were some dissimilarities between the measure at issue and the features 
of minimum import prices and variable import levies, the way in which the measure was designed and the way it operated in its overall nature were sufficiently "similar" to the features of the two 
categories of prohibited measures to make the challenged measure a "similar border measure" 
within the meaning of footnote 1 to Article 4.2.
451  
                                               
446 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 189. 
447 Appellate Body Report, Chile - Price Band System, para. 227. 
448 Ibid. 
449 Ibid.  para. 228. 
450 Ibid.  para. 239. 
451 Ibid.  para. 252. WT/DS457/R 
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  7.304.  The Appellate Body explained that it had reached its conclusion 
[o]n the basis of the particular configuration and interaction of all these specific 
features of [the measure at issue]. In assessing this measure, no one feature is 
determinative of whether a specific measure creates intransparent and unpredictable 
market access conditions. Nor does any particular feature of Chile's price band 
system, on its own, have the effect of disconnecting Chile's market from international price developments in a way that insulates Chile's market from the transmission 
of international prices, and prevents enha nced market access for imports of certain 
agricultural products.
452 (emphasis original) 
7.305.  Lastly, in examining whether a measure that is neither a "variable import levy" nor 
a "minimum import price" should nevertheless be considered a "similar border measure", the 
context of footnote 1 to the Agreement on Agri culture has to be borne in mind. As already 
mentioned, Article 4 of the Agreement prohibits border measures that do not constitute ordinary customs duties. Thus, in considering whether a measure is similar to a "variable import levy" or 
a "minimum import price", this Panel finds it necessary also to examine whether the particular 
features of the measure, taking into account its structure and design as well as its effects, make it similar to the categories of measures prohibited by footnote 1 (in the present case, to a "variable 
import levy" or "minimum import price") or to an ordinary customs duty. 
7.4.4.1.5.4  Other than ordinary customs duties 
7.306.  In the Chile – Price Band System compliance proceedings , the Appellate Body explained 
that: 
[T]he structure and logic of footnote 1 make clear that variable import levies and 
minimum import prices cannot be ordinary customs duties. 
[I]nconsistency with Article 4.2 can be established when it is shown that a measure is 
a border measure similar to one of the measures explicitly identified in footnote 1. 
A separate analysis of whether […] the measure is "other than ordinary customs duties" may also be undertaken to confirm such a finding. However, these are not 
indispensable for reaching a conclusion on the categories listed in footnote 1.
453 
7.307.  If a measure is a variable import levy, a minimum import price or a measure similar to one 
of these, which have been required to be conv erted into ordinary customs duties, it cannot be 
an ordinary customs duty. For this reason, if a panel finds that a measure is one of those listed in 
the footnote, it may conclude that such a measure is not an ordinary customs duty. 
7.4.4.2  The question of whether the duties resulting from the PRS are variable import 
levies, minimum import prices or similar border measures 
7.4.4.2.1  General considerations 
7.308.  The question to be resolved by this Panel with regard to this claim is whether the measure 
at issue, the duties resulting from the PRS, constitute variable import levies or measures similar to 
variable import levies, or whether they constitute minimum import prices or measures similar to 
minimum import prices. 
7.309.  If the Panel finds that the duties resulting from the PRS constitute variable import levies or 
measures similar to variable import levies, or that they constitute minimum import prices or 
measures similar to minimum import prices, the measure would be one of those covered by 
footnote 1 to Article 4.2 of the Agreement on Agriculture. It would therefore be one of the 
measures required to be converted into ordinary cu stoms duties. If this is the case, by maintaining 
the measure, Peru would be acting inconsistently with Article 4.2 of the Agreement on Agriculture. 
                                               
452 Appellate Body Report, Chile - Price Band System, para. 261. 
453 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 167 and 171. WT/DS457/R 
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  7.4.4.2.2  Structure of the analysis 
7.310.  Guatemala has requested the Panel to find that the challenged measure is a variable 
import levy, a minimum import price, or a similar measure.454 Peru has requested the Panel to 
begin its analysis by examining whether th e measure is an ordinary customs duty.455 Peru deems 
it important that the Panel should not avoid tackli ng the issue of whether the duties resulting from 
the PRS are ordinary customs duties.456 
7.311.  The Panel notes that, both in the original and in the compliance proceedings in Chile - Price 
Band System , the Panels and the Appellate Body first examined whether the measure was one of 
those covered by the footnote to Ar ticle 4.2. In both proceedings, after finding that the measure at 
issue was one of those identified in the footno te, the Appellate Body did not proceed with the 
additional analysis on whether the measure was an ordinary customs duty. 
7.312.  In the circumstances of the present case , it appears more appropriate to commence the 
analysis by considering whether the duties result ing from the PRS are the kind of measure covered 
by Article 4.2 instead of considering whether the measure is the kind of measure not covered by 
that Article. 
7.313.  Accordingly, the Panel will commence its analysis by considering whether the duties 
resulting from the PRS constitute variable import levies or measures similar to variable import 
levies, or whether they constitute minimum import  prices or measures similar to minimum import 
prices. More specifically, the Panel will first consider whether the measure is a variable import levy or a measure similar to a variable import levy. Subsequently, and depending on its previous findings, the Panel will address the question of wh ether the measure is a minimum import price or 
a measure similar to a minimum import price. 
7.314.  The Panel will therefore examine whether the duties resulting from the PRS, by their 
structure, design and operation, and in their particular features, share sufficient features with 
variable import levies or minimum import prices as to constitute variable import levies or minimum 
import prices, or to bear a resemblance or be of the same nature or kind and thus to be prohibited by Article 4.2 of the Agreement on Agriculture. The Panel will arrive at its conclusion on the basis 
of the particular configuration and interaction of all the specific features of the duties resulting 
from the PRS. 
7.4.4.2.3  Whether the duties resultin g from the PRS are border measures 
7.315.  Before undertaking this analysis, the Panel notes that the duties resulting from the PRS are 
applied only to imported products and that the Pe ruvian authorities require that they be enforced 
at the border. Both parties agree that this is the case, so it is an undisputed fact that the duties resulting from the PRS are border measures.
457 
7.4.4.2.4  The question of whether the duties  resulting from the PRS are variable import 
levies or measures similar to variable import levies 
7.4.4.2.4.1  Descript ion of the measure 
7.316.  As already mentioned, in essence, a variable import levy is a duty applied upon 
importation and is liable to vary; moreover, it is highly inclined or likely to vary automatically and continuously on the basis of a scheme or formula that does not require any separate administrative or legislative measure.
458 
                                               
454 Guatemala's first written submission, para. 5.1; second written submission, para. 4.1. 
455 Peru's first written submission, paras. 5.51-5.53;  opening statement at the first meeting of the 
Panel, paras. 3-6; response to Pa nel question No. 55, paras. 131-134. 
456 Peru's response to Panel question No. 55, para. 133. 
457 Guatemala's response to Panel question No. 100,  para. 33; Peru's response to Panel question 
No. 100, para. 31. 
458 See paras. 7.283 to 7.292 of the present report. WT/DS457/R 
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  7.317.  The Panel recalls the fundamental aspects of  the structure and operation of the PRS, from 
which the duties that are the subject of this dispute arise: 
a. The declared objective of the PRS is to be "a stabilization and protection mechanism that 
serves to neutralize fluctuations in international prices and limit the negative effects 
of falls in such prices."459 
b. The main components of the system are a price range composed of a floor price and 
a ceiling price, together with a reference price. 
c. The floor price is obtained by calculating th e average price in the confidence interval 
derived from the deflated average price460 over the last 60 months for the corresponding 
marker product in the relevant reference mark et, and converting it to c.i.f. level by 
adding the freight and insurance costs indicated in the legislation. For sugar products, 
an adjustment factor of 10.7% is also added. 
d. The ceiling price is obtained by adding to the floor price the standard deviation by which 
the confidence interval was calculated and co nverting it to c.i.f. level by adding the 
freight and insurance costs indicated in the legislation. 
e. The floor price and ceiling price, and the addi tional duties and tariff rebates that are 
applicable in accordance with the reference price for each fortnight, are published twice 
yearly, prior to the start of the half-year in which they are to be applied, by means 
of customs tables published in Supreme De crees issued by the President of Peru, 
endorsed by the Ministers of Agriculture an d of the Economy and Finance, and on the 
basis of the data furnished by Peru's Central Reserve Bank. 
f. The reference price is obtained by calcul ating the fortnightly average price for the 
corresponding marker product in the same relevant reference market, for the fortnight prior to that in which the said price is to be applied, and converting it to c.i.f. level using 
the values indicated in the legislation. 
g. Reference prices are published fortnightly, during the fortnight in which they are to be 
applied, by means of vice-ministerial reso lutions of the Ministry of the Economy and 
Finance, based on the data furnished by Peru's Central Reserve Bank. 
h. When the reference price is lower than the floor price, a specific duty is imposed 
(corresponding to the measure at issue), which is expressed in United States dollars per metric ton, and is equivalent to the differ ence between the floor price and the reference 
price. This specific duty, together with the ad valorem tariff, may not exceed the tariff 
levels bound by Peru in the WTO. 
i. When the reference price is within the price range, i.e. between the floor and ceiling 
prices, only the relevant ad valorem tariff is applied. 
j. When the reference price rises above the ceiling price, a tariff rebate is applied that may 
not exceed the equivalent of the applicable ad valorem tariff. 
k. The additional duties and the tariff rebates, as applicable, are determined on the basis 
of the customs tables in force on the date of registration of the import declaration and must be paid by the importer at the customs,  together with the duties and other import 
taxes. 
l. From 2001 to 2014 customs tables have been in force for every period, but on several 
occasions, despite the provisions of Su preme Decree No. 115-EF-2001, these tables 
have been extended instead of being updated. 
                                               
459 Second preambular paragraph of Supreme Decree No. 115-2001-EF (Exhibit GTM-4). 
460 Using the United States Consumer Price Index. WT/DS457/R 
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  m. During the period of existence of the PRS,  the competent Peruvian authorities have 
published reference prices for every fortnight, except on one occasion in respect of maize. Publication usually takes place a few days after the fortnight has begun. 
7.4.4.2.4.2  Variability 
7.318.  As regards the variability of the measure, Guatemala contends that the measure at issue is 
inherently variable inasmuch as it is based on mathematical schemes or formulas which operate in a coordinated manner to calculate the specific duty automatically and continuously, and the 
measure itself, as a mechanism, imposes the variability of the duty.
461 
7.319.  Peru claims that variability is not a decisive element. It also states that, under WTO rules, 
Members may vary their ordinary customs duties. In its view, what varies under the PRS is the reference price and not the resulting specific duty . Peru contends that the PRS does not operate 
automatically because the various organs of the Peruvian State have to complete certain 
administrative steps in order for the customs tables and the reference prices to be updated.
462 
7.320.  As already mentioned, variability within th e meaning of footnote 1 to Article 4.2 requires 
that the measure itself, as a mechanism, imposes the variability of the duty; in other words, the 
variability is inherent in the measure. Variability can be said to be inherent in a measure if the measure incorporates a scheme or formula which causes and ensures that levies change 
automatically and continuously.
463 
7.321.  The measure at issue in this dispute, th e duties resulting from the PRS, is one of the 
possible outcomes of applying the system. The PR S includes a series of steps and mathematical 
formulas for calculating the ceiling and floor pr ices every six months, and the reference prices 
every fortnight. In application of these rules and on the basis of the formulas contained therein, 
the Peruvian authorities update and publish the co rresponding results. They use the rules of the 
PRS and the formulas contained therein to determine fortnightly a result which, depending on the 
calculations, may consist of imposing an additional duty, granting a tariff rebate, maintaining the 
duties or rebates already in effect, or deciding not to apply any rebate or duty. The PRS therefore contains a scheme or formula which causes and ensures automatic and continuous revision of the 
applicable duties or rebates, from one fortnight to the next. It is thus clear that the PRS, 
as a mechanism, imposes the variability of the additional duties. 
7.322.  Moreover, the half-yearly updating and pu blication of the supreme decrees containing the 
customs tables showing the floor and ceiling pr ices, and the fortnightly publication of the 
vice-ministerial resolutions showing the reference prices, are not discretionary administrative acts 
separate from the PRS. On the contrary, they  are regulated acts which the corresponding 
authorities issue in compliance with the rules governing the operation of the PRS. In essence, 
according to the rules in effect, action by the administrative authorities in this context is limited to 
applying the rules and formulas included in th e PRS and to publishing the results of such 
calculations. 
7.323.  The fact that, on some occasions, the Pe ruvian authorities had been able to extend the 
values in the customs tables, or even the values  of the reference prices, without relying on the 
formulas laid down in the applicable regulations
464, does not alter the nature of the action for 
which these authorities are responsible. It does not mean either that the administrative acts 
remain discretionary or separate from the PRS inasmuch as such acts are carried out in compliance 
with the legislation on the PRS, which obliges the authorities to announce the values resulting from the application of predetermined formulas. The facts show that every six months since the current 
PRS was first applied, the Peruvian authorities have issued a supreme decree
465, either updating or 
extending the corresponding customs tables , and every fortnight they have issued 
a vice-ministerial resolution, updating the referenc e prices in most cases. In any event, the rules 
governing the operation of the PRS have been the legal basis cited by the Peruvian authorities for 
                                               
461 Guatemala's first written submission, paras. 4.34-4.57; second written submission, paras. 4.14-4.43. 
462 Peru's first written submission, para. 5.92; second written submission, paras. 3.43-3.45. 
463 See above, paras. 7.287 and 7.288. 
464 See above, paras. 7.151-7.154 and 7.159-7.162. 
465 See above, para. 7.152. WT/DS457/R 
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  exercising their responsibilities, within the fr amework of the powers vested in the Peruvian 
Executive. 
7.324.  As the reference price is calculated anew every two weeks, the result of applying the PRS 
( w h e t h e r  i t  c o n s i s t s  o f  i m p o s i n g  a n  a d d i t i o n a l  duty, granting a tariff rebate, extending existing 
duties or rebates, or deciding not to apply any rebate or duty) is subject to fortnightly changes. 
The fact that the result may be the same for some or several fortnightly periods as a result of applying the formulas, owing for example to price stability in the reference markets, or even the 
fact that in some cases the formulas have not been  applied correctly, does not mean that the PRS, 
as a mechanism, does not impose fortnightly variability of duties. The fortnightly variability imposed by the PRS, as a mechanism, which is the result of rules and formulas that form part of 
the system and are applied automatically and co ntinuously, cannot be compared to the normal 
variability of ordinary customs duties, whose level may change at certain times as a result 
of specific trade policy decisions or separate decisions. 
7.325.  For the foregoing reasons, the Panel finds that the duties resulting from the PRS are 
an inherently variable measure. 
7.4.4.2.4.3  Addition al characteristics 
Transparency and predictability 
7.326.  Guatemala states that, because of this va riability, the duties resulting from the PRS lack 
both transparency and predictability. It also poin ts out that the system guarantees that importers 
face uncertainty because the resulting values cannot be predicted and a commercial operator will have no certainty as to the reference price, whether or not a variable additional duty will be 
imposed, and what will be the amount. Guatemala al so identifies a lack of transparency in the way 
in which Peru determines import-related costs, the source used to determine freight and insurance costs in order to convert the amounts to c.i.f. level, and the reason for the adjustment factor 
of 1.107 for sugar and how it is determined.
466 
7.327.  Peru, on the other hand, claims that it s measure is highly transparent and predictable 
because the specific duties applicable and all the essential elements for calculating them can be 
found in the printed texts of the legal instruments and on Peru's web pages. Peru also states that 
these characteristics enable economic operators to predict, prior to the customs declaration for the goods, what specific duties will apply, so traders may reasonably and with a high degree of certainty predict the specific duties.
467 
7.328.  As already mentioned, lack of transparency and predictability are not separate 
characteristics which a measure must have in order to be considered a variable import levy. In Chile – Price Band System , the Panels and the Appellate Body took into account lack 
of transparency and predictability as additional characteristics of the measure in question which 
undermined the object and purpose of Article 4 of the Agreement on Agriculture: achieving better market access conditions for imports of agricultural products, only allowing the application 
of ordinary customs duties. What is essential th erefore when examining any of the measures listed 
in footnote 1 to the Agreement on Agriculture is whether the measure in question has features which undermine the object and purpose of Articl e 4 of the Agreement. Depending on the case, 
these may be the measure's lack of transparency  and predictability. However, a quantitative 
restriction on imports, a variable import levy or a minimum import price, for example, may be 
transparent and predictable but for this reason alon e not cease to be one of the measures required 
to be converted into ordinary customs duties. In other words, the Panel's task with regard to this 
particular aspect is not to determine whether the measure is transparent or predictable, but rather 
whether the measure offers a level of transparency and predictability that is similar, but not necessary identical, to that of an ordinary customs duty.
468 
7.329.  In the present case, the arguments regard ing the lack of transparency and predictability 
of the challenged measure will be considered as a whole and in relation to the variability of the 
                                               
466 Guatemala's first written submission, paras. 4.58-4.71; second written submission, paras. 4.44-4.74. 
467 Peru's first written submission, paras. 5.88-5.91; second written submission, paras. 3.46-3.58. 
468 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 156, 214-215, 
and 221-222. WT/DS457/R 
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  level of the resulting duties. The Panel will theref ore consider the various elements of the measure 
at issue, their interaction and configuration. It will also take into account the object and purpose of Article 4 of the Agreement on Agriculture, to  achieve better market access for agricultural 
products. 
7.330.  Firstly, the Panel does not consider that a finding to the effect that the duties resulting 
from the PRS are inherently variable is sufficient for finding that the measure at issue has the additional characteristic of lack of transparen cy and predictability. Lack of transparency and 
predictability are elements distinct from variability and only constitute some of the additional 
characteristics a panel may consider when assessing a measure in the light of the provision in footnote 1 to the Agreement on Agriculture. At least in theory, a variable import levy may be inherently variable and be based on application of a formula that makes the variability of the 
duties automatic and continuous, and yet at the sa me time be transparent and predictable. In the 
latter case, the transparency and predictability of the measure would not imply per se  that the 
measure is consistent with Article 4 of the Agreement on Agriculture, or make it an ordinary 
customs duty. 
7.331.  Peru's legislation sets out the formulas us ed to calculate the floor and ceiling prices, the 
reference markets used, the import costs, the frei ght and insurance costs used to convert f.o.b. 
values into c.i.f. values and the adjustment valu e for sugar. In the supreme decrees containing the 
customs tables, the legislation also announces the floor and ceiling prices applicable for each six-month period and, in the vice-ministerial resolutions, the reference prices applicable for each fortnight. It should be noted, however, that the reference prices applicable during a fortnight are 
published a few days after the start of the two-week period
469; therefore, the customs authorities 
sometimes do not know what the final duty applicab le at the date of entry of the goods will be and 
use the figures for the previous fortnight, ma king the necessary adjustments subsequently. 
It should also be noted that, although Peru publishes some international prices for sugar, maize 
and rice470, it does not publish the reference market values used to calculate the reference prices 
and these values are not always available free of charge to commercial operators. 
7.332.  In response to the Panel's question No. 53 regarding the possibility of predicting the result 
of applying the PRS formulas for each marker product in the first fortnight of February 2014, Peru presented estimates for maize, sugar, and dairy products that were close to the actual results, albeit with a certain margin of error, and explained that, in order to arrive at the estimates 
for maize and sugar, it had used twenty historical data sets already available to it and had filled 
the gaps in the data on the basis of the trends indicated by the available data. Peru also claims 
that commercial operators can predict the applicable additional duties with a reasonable degree 
of precision, by using methods of estimation and historical data available in conjunction with 
futures prices.
471 
7.333.  Guatemala, for its part, expresses concern at what it calls Peru's attempt to condition its 
obligations on the actions and predictive capacity of private operators. Guatemala also rejects the 
claim that predictions can be made with a reasonab le degree of precision on the basis of futures 
prices, and indicates that the latter are highly volatile. Moreover, Guatemala asserts that, in the case of sugar, contracts have a long time horizon. Guatemala adds that, although the historical 
data had already been available to Peru on the da te of submission of its responses to the Panel, 
Peru's estimates are imprecise and any long-term estimate would be even more so. Finally, Guatemala presents examples of fictitious sales contracts for sugar, with dates on which 
futures prices differed substantially from the actual historical values, in order to demonstrate the 
impossibility of making reasonable estimates.
472 
7.334.  The Panel considers that, although the form  in which the duties resulting from the PRS are 
calculated is to a certain degree transparent and predictable and it is thus possible for private 
operators to use the available information in order to attempt to predict, with a certain margin 
                                               
469 See above, para. 7.158 
470 Statistical Tables from the Weekly Report of the BCRP (Exhibit PER-88). 
471 Peru's second written submission, paras. 3.46-3.56; opening statement at the second meeting 
of the Panel, paras. 39-40; response to Panel question No. 53, para. 129; response to Panel question No. 109, paras. 54-61. 
472 Guatemala's second written submission, paras. 4.44-4.74; response to Panel question No. 53, 
paras. 107-122; opening statement at the second me eting of the Panel, paras. 13-17; comments on 
Peru's response to Panel question No. 109, paras. 64-85. WT/DS457/R 
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  of error, what will be the additional duties applicable in a particular fortnight, this result, 
irrespective of the degree of precision achieved, will never be as transparent and predictable as 
ordinary customs duties. 
7.335.  In order to try to predict the result, a commercial operator would have to obtain all the 
information needed, including that published by Peru (i.e. the customs tables and historical 
reference prices), as well as information on prices in the reference market and futures prices. Subsequently, from one fortnight to the next, the commercial operator would have to forecast the 
way in which reference market prices will act and apply the appropriate formulas in order to arrive 
at the reference price and, where applicable, th e additional duty. Commercial operators would not 
be faced with this situation in the case of ordinary customs duties. 
7.336.  Furthermore, at least in the case of suga r, the evidence provided by the parties indicates 
that private operators enter into long-term contracts without any certainty as to the way in which 
prices in the global reference markets will behave, and thus without knowing the floor and ceiling prices and reference prices, and consequently the level of duties resulting from the PRS. This is 
the case even when prices are set at dates cl ose to the date of shipment of the goods. 
Although operators may attempt to estimate price trends using the available historical data and futures prices, this does not give a level of transparency and predictability comparable to that 
afforded by an ordinary customs duty. Likewise, given the link between the total amount of 
applicable duties and fluctuations in world market prices, such fluctuations may, in themselves, become an additional factor in lack  of transparency and predictability. 
7.337.  In the short term, as the examples given by Guatemala with regard to the time required 
for transport indicate
473, it is possible for commercial operators to undertake specific shipments 
without knowing with certainty what will be the final result of application of the PRS when the goods arrive in Peru. This is further complicated by the fact that Peru publishes reference prices 
some days after the commencement of the fortnight to which they apply. This does not occur with 
ordinary customs duties, concerning which any change is normally announced in advance. 
7.338.  Transparency and predictability are also affected by the mere existence of a reference 
price. The fact that specific additional duties ar e applied on the basis of an average reference price 
which changes every fortnight, rather than on th e value or the volume of the imported goods, 
entails a systemic lack of transparency and predictability.
474 
7.339.  Lastly, with regard to the additional sp ecific aspects of the PRS which Guatemala claims 
lack transparency and predictability (i.e. the wa y in which Peru determines the import-related 
costs, the source used to determine freight and insurance costs, and the reason for the existence 
of the 1.107 adjustment factor for sugar and the way it is determined), even though Peru's 
legislation does not specify how these values were originally determined, it does publish and 
announce the values utilized. Consequently, these specific aspects add no relevant information to the analysis of the transparency an d predictability of the measure. 
7.340.  For the foregoing reasons, even though th e system exhibits a degr ee of transparency and 
predictability in the way in which the resulting additional duties are calculated, it lacks transparency and predictability regarding the level of duties resulting from those calculations when 
compared to the transparency and predictab ility afforded by ordi nary customs duties. 
                                               
473 Searates: Tiempo de transporte marítimo - Distancia Tailandia – Perú  (Exhibit GTM-21); 
Searates: Tiempo de transporte marítimo  - Distancia Guatemala – Perú  (Exhibit GTM-22). 
474 See Panel Report, Chile - Price Band System (Article 21.5 - Argentina), para. 7.72. WT/DS457/R 
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  Distortion of import prices and inhibition of the transmission of international prices 
7.341.  Guatemala claims that, because of its design, structure and effect, the challenged measure 
insulates domestic prices in Peru from international price developments and impedes the transmission of those developments to Peru's domestic market, inasmuch as its explicit objective 
is to neutralize fluctuations in international prices and limit the negative effects of falls in such 
prices. Guatemala asserts that the measure has the effect of completely or severely distorting the transmission of any fall in international prices to the Peruvian market.
475 
7.342.  Peru maintains that its PRS does not insulate its domestic market from the international 
market because the specific duties applied do not depend on a domestic or controlled price but are a function of international market prices and may not exceed Peru's bound tariff. Peru states that 
domestic prices consistently and progressively reflect trends in the international market and 
presents evidence to show the correlation betwee n Peru's domestic market and the international 
market.
476 
7.343.  The Panel recalls that a common feature of all the measures in footnote 1 to the 
Agreement on Agriculture is that they act differe ntly from ordinary customs duties. One of the 
additional features that may be examined in this context is whether the challenged measure insulates domestic prices from international price developments and thus impedes the 
transmission of world market prices to the domestic market.
477 
7.344.  First of all, the Panel notes that the declared objective of the PRS is to act as 
"a stabilization and protection mechanism that makes it possible to neutralize fluctuations in international prices and limit the negative effects of falls in such prices".
478 This objective is 
particularly revealing in the sense that the purpose of the measure is to neutralize, at least to 
a certain degree, the transmission of declines in international prices for certain products to Peru's domestic market. 
7.345.  With regard to the structure and design of the PRS, in the short term, the system is 
designed to prevent any fall in prices from bein g transmitted to Peru's domestic market, as any 
change in international prices occurring during the six months in which the floor price is in effect 
will not be reflected in the price at which import s may enter Peru's market. If there is a fall in 
international prices, reflected to a certain extent in the fall in the reference price, the PRS generates an increase in the resulting additional duties in the same amount as the fall in the average reference price, thereby covering the difference between the reference price and the floor 
price. 
7.346.  In the medium term, the PRS may also dist ort the transmission of international prices to 
the domestic market because the incorporation into the floor price of changes in international 
prices for each six-monthly period is diluted. If prices fall, the decrease in the floor price will be 
much slower than that in the reference pric e and will be delayed by up to six months. 
Furthermore, if monthly prices outside the confidence interval are eliminated, it is possible that 
none of the prices will be incorporated into the floor price, whereas no value is omitted from the 
average reference price. 
7.347.  With regard to Peru's argument on the existence of a correlation between international 
market prices and Peru's domestic prices and the evidence it submitted on sugar and maize
479, 
the Panel notes that, as is claimed by Guatemala480, other factors may affect the transmission 
of international prices to Peru's domestic market. For example, in the case of sugar, a large 
                                               
475 Guatemala's first written submission, paras. 4.72-4.80; second written submission, 
paras. 4.75-4.124. 
476 Peru's first written submission, paras. 5.74-5.87; second written submission, paras. 3.59-3.64. 
477 See above, para. 7.292 
478 Second preambular paragraph, Supreme Decree No. 115-2001-EF (Exhibit GTM-4). 
479 Statistical Compendium (Exhibit PER-46); Database of sugar and maize prices (Exhibit PER-69); 
Updated version of charts 1-7 (E xhibit PER-70); Explanation of alleged omissions in price charts 
(Exhibit PER-93). 
480 Guatemala's opening statement at the second meeting of the Panel, para. 22; response to 
Panel question No. 57, paras. 155-156 and 164. WT/DS457/R 
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  proportion of imports entering Peru are not subjec t to application of the PRS, so the system has 
a limited impact on the transmission of international prices to the domestic market.481 
7.348.  Of noteworthy relevance in this connection is the objective of the Agreement on 
Agriculture to establish a fair and market-oriented agricultural trading system, and the specific 
objective of Article 4 to convert the border measures listed in footnote 1 into ordinary customs 
duties. 
7.349.  In conclusion, the structure, design an d operation of the PRS show that the resulting 
additional duty acts in such a way that it may distort the prices of imports subject to the PRS and 
limit the transmission of the prices of imports subject to the PRS to Peru's domestic market. In this respect, the system operates differently to ordinary customs duties. 
7.4.4.2.4.4  Conclusion regard ing whether the duties resulting from the PRS are variable 
import levies or measures similar to variable import levies 
7.350.  In conclusion, the duties resulting from th e PRS, by their structure, design and operation, 
are an inherently variable measure. This inherent variability is the result of rules imposed by the 
PRS, as a mechanism, and derives from rules and formulas that form part of the PRS itself and are 
applied automatically and continuously. In this regard, the duties resulting from the PRS are measures other than ordinary customs duties. As a further characteristic, the PRS lacks 
transparency and predictability regarding the le vel of the additional duties resulting from 
application of the rules and formulas, when compared to ordinary customs duties. Furthermore, such additional duties may distort import prices  subject to the PRS and limit the transmission 
of import prices subject to the PRS to Peru's domestic market in a different way to ordinary 
customs duties. 
7.351.  The Panel has found that the duties resultin g from the PRS, by their structure, design and 
operation and in their particular features, share sufficient features as to be or to resemble or to be 
of the same nature or kind as variable import levies and to be considered as a border measure 
similar to a variable import levy. 
7.352.  For the foregoing reasons, the Panel cons iders that the duties resulting from the PRS 
constitute variable import levies and, therefor e, a measure other than ordinary customs duties. 
In any event, such duties share sufficient characteristics with variable import levies as to constitute at the least a border measure similar to a variable import levy. 
7.4.4.2.5  The question of whether the du ties resulting from the PRS are minimum 
import prices or measures similar to minimum import prices 
7.353.  The Panel has found that the duties resulting from the PRS constitute variable import 
levies or, at least, a border measure similar to a variable import levy. In the light of this finding, it 
is not necessary for the Panel to carry out an additional review as to whether the measure also 
constitutes a minimum import price or a border  measure similar to a minimum import price. 
Nevertheless, in order to ensure that its analysis is exhaustive, the Panel will undertake such 
a review. 
7.354.  Guatemala asserts that the PRS seeks to prevent goods from entering Peru at a price lower 
than the floor price, and so the floor price operates as a minimum price level that is applied to imports of products subject to the PRS.
482 Guatemala claims that Peru's measure is a minimum 
import price or similar measure because: (a) it ensures that goods will not enter Peru's market at 
a price below a predetermined threshold (i.e. the floo r price); (b) it imposes an additional specific 
duty based on the difference between the floor price and the reference price; (c) the amount 
of the additional duty varies according to the difference between the floor price and the reference 
                                               
481 See Peru's response to Panel question No. 8, pa ra. 9; response to Panel questions Nos. 1 and 3, 
paras. 1 and 2; Spreadsheet for questions 1 and 3 (SPFP-XM 1993-2013) (Exhibit PER-59); Statistics of the 
International Sugar Organization (E xhibit GTM-51); Compendium of Peru 's Trade Agreements (extracts) 
(Exhibit PER-33). 
482 Guatemala's first written submission, para. 4.88; second written submission, paras. 4.127-4.130. WT/DS457/R 
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  price; and (d) the measure impedes or distorts the transmission of a fall in world prices to the 
domestic market.483 
7.355.  Guatemala also contends that the floor pr ice is not the only threshold that serves as 
a minimum price, since the PRS ensures that no consignment will enter at a price below the sum 
of the lowest international price and the additional duty, which constitutes a de facto  threshold 
lower than the floor price, and transactions with a final price lower than that threshold are highly unlikely to occur.
484 
7.356.  Peru claims that its PRS does not impose a minimum import price, either by impeding the 
entry of goods at a price lower than the minimum and/or by varying the levy to equalize the import price with the established minimum. Peru contends that the measure has neither the objective nor the capacity to arrive at an indicative ( target ) price, and adds that it applies the 
same tariff no matter what price the importer decides to declare.
485 
7.357.  Peru cited an example of an import transaction for sugar during a period in which no 
specific duties were imposed, where the c.i.f. price upon import of the goods was lower than the 
floor price, and another example in which a specific duty was charged but the c.i.f. entry price for 
the goods was less than both the international pric e and the floor price. Peru also submitted trade 
statistics for the period between 2001 and 2013 and pointed out that, in approximately 57% of the 
fortnightly periods since Supreme Decree No. 115-2001-EF came into force, various trade 
transactions entered Peru at a price lower than the reference price and the floor price in the range, accounting for more than one third of trade transa ctions recorded over these periods. Peru added 
that, in the case of sugar, 224 transactions had b een identified which had entered at c.i.f. prices 
lower than the reference price and the floor price in the range, amounting to approximately 3% 
of sugar imports since the introduction of the PRS. It pointed out that this situation also occurred 
for other imports related to the tariff lines for marker products.
486 
7.358.  In the Chile – Price Band System compliance proceedings, the Panel pointed out that: 
In essence, a minimum import price is a measure which ensures that certain imported 
products will not enter a domestic market at a price lower than a certain threshold, 
normally by imposing an import duty assessed on the basis of the difference between 
such threshold and the transaction value of the imported goods.487 
7.359.  In this connection, the Appellate Body added that: 
A measure is "similar" to a minimum import price when it shares a sufficient number 
of characteristics with, and has a design, structure, and effects similar to, a minimum 
import price, even if it is not "identical" to such a scheme in all respects.488 
7.360.  Taking into account the structure and design of the measure at issue, as well as the details 
concerning its operation, there is no evidence at all that the additional duties resulting from 
application of the PRS directly ensure that imported products subject to the PRS will not enter the Peruvian market at a price lower than a certain threshold. 
7.361.  This is clear, particularly when the way in which the duties resulting from the PRS operate 
is compared to the way in which ordinary customs du ties operate. There is no evidence at all that 
the duties resulting from the PRS directly impede the entry of products at prices below a limit or threshold. Nor is there any evidence that such duti es have the direct effect of preventing imported 
products from entering Peru's market at a price lower than a certain threshold in a way different 
from what would occur with ordinary customs duties and, for example, from what might occur with 
                                               
483 Guatemala's first written submission, paras. 4.84-4.95; second written submission, 
paras. 4.125-4.141. 
484 Guatemala's second written submission, para. 4.141; opening statement at the first meeting 
of the Panel, paras. 37-39; response to Panel question No. 126, paras. 135-152. 
485 Peru's first written submission, paras. 5.58-5.68; second written submission, paras. 3.36 and 3.41. 
486 Peru's first written submission, paras. 5.62-5.68; response to Panel question No. 123, paras. 98-99; 
Statistical data on product entries below the minimum price (Exhibit PER-90). 
487 Panel Report, Chile - Price Band System (Article 21.5 - Argentina) , para. 7.30. 
488 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina) , para. 193. WT/DS457/R 
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  a specific import tariff. In this respect, a specif ic tariff (for example a tariff of USD 100 per metric 
ton on a product) could indirectly ensure that imports of that product do not enter at a price lower than a certain threshold (in the case of the exampl e, it would be ensured that the specific tariff 
would operate as the lower threshold). Nevertheless, it would not convert the specific tariff into 
a minimum import price or a measure other than ordinary customs duties. 
7.362.  Having found that there is no evidence that the duties resulting from the PRS constitute 
minimum import prices, the Panel also has to consider whether such duties nonetheless constitute, 
at the least, a border measure similar to a minimum import price. In this connection, 
in Chile - Price Band System, the measure at issue (the Chilean price band system) was 
considered by the Panels and by the Appellate Bo dy to be a measure similar to a minimum import 
price inasmuch as it operated in practice as a "proxy" or "substitute" for a minimum import price. 
This conclusion was based on the fact that the measure operated in such a way as to impede the 
entry of imports subject to the measure at prices below the lower threshold in the band. In this case, the price with which the substitute for the minimum price was compared was not 
the transaction value of the product, as is the case for minimum prices, but the reference price.
489 
7.363.  In this connection, in the compliance proceedings in Chile – Price Band System, the 
Appellate Body stated: 
The overall approach taken by the Panel s eems to us to accord with the proper 
interpretation of a border measure that is similar to a minimum import price, as discussed above. The Panel examined the st ructure and design of the measure at 
issue, as well as evidence relating to its operation. The Panel found that, like the 
original price band system, this measure imposed a threshold that operates to ensure 
that, in all but the most unlikely circumstances, wheat and wheat flour will not enter the Chilean market at a price lower than that  threshold, and that does not ensure that 
entry prices fall in tandem with world mark et prices. The measure did so by imposing 
a specific duty assessed on the basis of the difference between such a threshold and another value, namely, a reference price.
490, 491 
7.364.  In the case before us, the measure operates in this regard in a way similar to the measure 
examined in Chile – Price Band System . In that case, the determination that the measure operated 
as a "proxy" or "substitute" for a minimum import price was based on consideration of the way in which duties calculated on the basis of the diffe rence between the lower threshold in the band and 
the reference price were imposed. In the present case, the duties are calculated on the basis of 
the difference between the floor price and the reference price. 
7.365.  Under Peru's PRS, when the reference price applicable during a particular fortnight is below 
the floor price, which is the lower threshold in the range, an additional specific duty is applied in 
the next fortnight based on the difference betwee n these two parameters. The lower the reference 
price in comparison with the floor price, the higher  the specific duty and the greater its protective 
impact. 
7.366.  In the present case, however, Peru has fu rnished evidence that the duties resulting from 
the PRS do not impede the entry of imports of the affected products into the Peruvian market at 
prices below the lower threshold of the range. As shown in Exhibit PER-90, in fortnights during 
which additional duties were applied, imports of products subject to the PRS at transaction prices 
below the floor price did not cease. In the Panel' s opinion, this shows that the measure at issue 
does not impede the entry of products subject to the PRS into the Peruvian market at a transaction 
value below the floor price. 
                                               
489 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina) , para. 194-195. 
490 (Footnote original) We recall that, under the meas ure at issue, the reference price is set every 
two months and calculated as the si mple average of daily f.o.b. prices  in certain foreign markets over 
a 15-day period. We also note that in a typical minimu m import price scheme the value to which the minimum 
import price or target price is compared is the transaction value of a particular shipment, rather than 
a calculated reference price. 
491 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina) , para. 195 
(one footnote omitted). WT/DS457/R 
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  7.367.  In any event, because of its design and st ructure, the PRS does not operate in relation to 
the true transaction value of imports but on the ba sis of international prices. The fact that prices 
may change every fortnight does not alter the fact that the imported products may enter the Peruvian market, and in fact do so, at a price below the floor price.  
7.368.  Nor is the Panel convinced that the duties resulting from the PRS lead to the establishment 
of a minimum import price with a de facto  threshold consisting of the sum of the lowest 
transaction price and the duty resulting from th e PRS. The Panel does not consider that this 
situation is different from the one that could arise, for example with a specific tariff, where the 
entry price might be no lower than the amount of the tariff itself, irrespective of the way in which the authorities of a Member determine the amount of the specific duty. 
7.369.  Lastly, as already stated, the duties resulting from the PRS do not operate in this respect 
in a manner that is different from the way in which ordinary customs duties might operate, 
in particular, when they are in the form of specific duties. 
7.370.  For the foregoing reasons, given the design and structure of the PRS and its effects, 
the Panel does not consider that the duties resulting from the PRS share sufficient characteristics 
with minimum import prices to make them, at th e least, a border measure similar to a minimum 
import price. 
7.4.4.2.6  Conclusion 
7.371.  The Panel, therefore, finds that the duties resulting from the PRS constitute variable import 
levies and, in any event, at the least, a border measure similar to a variable import levy. The Panel finds no evidence, however, that the duties resulting from the PRS constitute minimum 
import prices or a border measure similar to a minimum import price. 
7.372.  Variable import levies and similar border measures are included among the measures 
listed in footnote 1 to Article 4 of the Agreement on Agriculture and are thus measures of the kind 
which have been required to be converted into  ordinary customs duties. In maintaining these 
measures, Peru is acting inconsistently with Article 4.2 of the Agreement on Agriculture. 
7.4.4.2.7  The question of whether the du ties resulting from the PRS are ordinary 
customs duties 
7.373.  As mentioned above, if a measure is a variable import levy, a minimum import price or 
a measure similar to either of these, which have  been required to be converted into ordinary 
customs duties, it cannot at the same time be an ordinary customs duty. Consequently, if a panel 
finds that a measure is one of those listed in the footnote to Article 4.2 of the Agreement on 
Agriculture, it is not necessary for that panel to make a separate additional finding as to whether or not the measure is an ordinary customs duty.
492 
7.374.  The Panel has concluded that the duties resulting from the PRS constitute variable import 
levies and, in any event, at the least a border measure similar to a variable import levy. In the 
light of these findings, the Panel concludes that the measure does not constitute an ordinary 
customs duty, and it is not necessary to undertake further analysis in this regard. 
7.5  The question of whether the duties resu lting from the PRS are inconsistent with the 
second sentence of Articl e II:1(b) of the GATT 1994 
7.5.1  Introduction 
7.375.  In this section, the Panel will examin e the claims of Guatemala and Peru concerning 
whether the duties resulting from the PRS are inconsistent with the second sentence of Article II:1(b) of the GATT 1994. 
7.376.  The Panel will take up the arguments of  Guatemala and Peru and the opinions of third 
parties regarding Guatemala's claim. Subsequently, it will pursue its analysis of this case and, 
                                               
492 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 167 and 171. WT/DS457/R 
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  if appropriate, set out its findings on the consiste ncy of the duties resulting from the PRS with the 
second sentence of Article II:1(b) of the GATT 1994. 
7.5.2  Main arguments of the parties 7.5.2.1  Guatemala's claim 
7.377.  Guatemala considers that the duties resulting from the PRS constitute "other duties or 
charges of any kind" to which reference is made in the second sentence of Article II:1(b) of the GATT 1994 and which are inconsistent with that provision.
493 
7.378.  Guatemala claims that the "other duties or charges" are: (a) customs charges; 
(b) other than "ordinary customs duties"; and (c) other than measures covered by Article II:2 of the GATT 1994 (internal taxes, anti-dumping or  countervailing duties, or fees or charges 
commensurate with the cost of services rendered).
494 
7.379.  According to Guatemala, it is clear that the challenged measure is a customs charge495 
other than an "ordinary customs duty". As was explained in the previous section, Guatemala claims that the duties resulting from the PRS constitute a variable import levy and a minimum 
import price, or at least measures similar to these, within the meaning of footnote 1 to the 
Agreement on Agriculture. Guatemala cites the Appellate Body in asserting that "a measure listed in footnote 1 to the Agreement on Agriculture constitutes ipso jure  a measure other than ordinary 
customs duties".
496 
7.380.  As a supplementary argument, Guatemala maintains that under Peru's own regulations, 
the duties resulting from the PRS are considered distinct from Peru's ordinary customs duties.497 
Guatemala adds that under Peru's own regulations, there are relevant factors which confirm that 
the duties resulting from the PRS are consider ed distinct from ordinary customs duties.498 
In Guatemala's opinion, the duties resulting from the PRS are set forth in a supreme decree separate from the one establishing Peru's ordi nary customs duties, and those supreme decrees 
have no apparent links, were promulgated by two distinct types of governmental bodies and have 
different legal bases. Guatemala adds that the re gulations governing the form of payment of the 
duties resulting from the PRS allude to a diffe rence between these duties and ordinary customs 
duties; the duties resulting from the PRS are a pplied in a "temporary" and "exceptional" manner, 
while ordinary customs duties are applied definitive ly; the description of the duties resulting from 
the PRS under Peru's own regulations as "additional " indicates that they do not form part of the 
ordinary customs duties; the description of the duties resulting from the PRS under Peru's own 
regulations as "variable" indicates that they are distinct from ordinary customs duties which take 
an ad valorem  form; the objective of the duties resulting from the PRS is distinct from that 
of ordinary customs duties; and the financial reso urces collected by the duties resulting from the 
PRS appear to be intended for different purposes from those of income collected by ordinary 
customs duties.
499 Guatemala considers that Peru did not re fute those characteristics of the duties 
resulting from the PRS but confined itself to stating that Decree Law No. 26140 designates them 
as tariff duties. According to Guatemala, this argument is insufficient to rebut its argument 
                                               
493 Guatemala's first writte n submission, para. 4.99. 
494 Guatemala's first written submission, para. 4.110. 
495 Guatemala's first written submission, para. 4.117; second written submission, para. 5.6. 
496 Guatemala's first written submission, para. 4.120 (citing Appellate Body Report, Chile - Price Band 
System  (Article 21.5 - Argentina ), para. 172; and Panel Report, Chile - Price Band System 
(Article 21.5 - Argentina) , para. 7.104); second written submission, paras. 5.7-5.8. 
497 Guatemala's first written submission, paras. 4.123 and 4.125; second written submission, para. 5.9. 
See also response to Panel question No. 129; response to Panel question No. 134. 
498 See Guatemala's response to Panel question No. 134, paras. 187-188, where it states: "The Panel 
could reach this same conclusion [that the variable a dditional duties arising fro m the PRS are not ordinary 
customs duties] only by refe rring to its finding under Article 4.2 of the Agreement on Agriculture that the 
measure in question qualifies as a va riable import duty or a minimum import price, or a measure similar to 
both these concepts. This is due to the fact that Article 4.2 itself provides, in its footnote 1, that these types 
of measure are not considered as ordinary customs duties. 
Accordingly, Guatemala refers to thes e ten factors as "additional" by virt ue of the fact that they serve to 
confirm the previous conclusion that the variable additi onal duties are not ordinary customs duties." See also 
response to Panel question No. 64, paras. 215-217; response to Panel question No. 128, paras. 159-160. 
499 Guatemala's first written submission, para. 4.125. WT/DS457/R 
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  concerning the distinction in Peru's regulation s between the duties resulting from the PRS and 
Peru's ordinary customs duties.500 
7.381.  Guatemala considers that it is neither valid nor necessary for the Panel to follow Peru's 
proposal which would consist in examining whether the challenged measure is an ordinary customs 
duty on the basis of positive criteria.501 In Guatemala's opinion, "other duties or charges" 
are a residual category and to attempt a determ ination based on positive criteria would be 
of no value for distinguishing between an ordi nary customs duty and another duty or charge.502 
Guatemala considers that Peru's analytical proposal does not take into account other relevant 
criteria for identifying when a measure forms part of ordinary customs duties and eliminates the distinction between that concept and th a t  o f  " o t h e r  d u t i e s  o r  c h a r g e s " .
503 Guatemala also 
maintains that the application of positive criteria of the kind proposed by Peru in order to identify 
ordinary customs duties is contrary to the legal standard developed in the case law and would lead 
to an erroneous legal conclusion.504 
7.382.  In response to the criteria proposed by  Peru, Guatemala considers that the fact that 
a customs charge is applied on the basis of most favoured nation status505, that it is applied to 
imports and that the obligation to pay it arises at the time of importation506, and the form taken by 
that customs charge (i.e. ad valorem  specific or compound)507, are not helpful criteria for 
determining whether that customs charge is an or dinary customs duty or whether it comes under 
"other duties or charges". Guatemala adds that Peru is mistaken in affirming that a relevant criterion for distinguishing ordinary customs duties from "other duties or charges" is that they may be designed to collect income and protect the domestic industry.
508 Guatemala also refers to the 
type of variability of ordinary customs duties and reiterates that the duties resulting from the PRS 
do not fall within the framework of such variability; in addition, Guatemala affirms that the fact that a charge is subject to limits (the limit bound by a Member in its schedule of concessions) does 
not make it an ordinary customs duty.
509 Lastly, Guatemala maintains that transparency and 
predictability are a criterion common to ordinary customs duties and "other duties or charges", that all measures must be published in accordan ce with Article X:1 of the GATT 1994, that their 
publication does not make them ordinary customs duties, and that Peru proposes an incorrect legal 
standard with respect to this requirement.
 510 
7.383.  Guatemala also maintains that the duties resulting from the PRS do not constitute any 
of the measures covered by Article II:2 of the GATT 1994.511 
7.384.  Guatemala rejects Peru's argument concerning the way in which Peru conducted the 
negotiation and recorded its tariff bindings duri ng the Uruguay Round. Guatemala considers that, 
contrary to Peru's assertions, the negotiation of Peru's concessions cannot alter the legal nature 
of the measure at issue512 and that the conduct of the other Members in reaction to Peru's offer 
                                               
500 Guatemala's second written submission, paras. 5.36-5.43. 
501 Guatemala's second written submission, paras. 5.17-5.35; opening statement at the first meeting 
of the Panel, paras. 48-50; response to Panel question No. 64; response to Panel question No. 128. 
502 Guatemala's opening statement at the first meetin g of the Panel, paras. 48-50; response to Panel 
question No. 128, paras. 157-158. 
503 Guatemala's second written submission, paras. 5.17-5.21. 
504 Guatemala's second written submission, para. 5.22.  See also response to Panel question No. 64, 
paras. 2.10-2-14 and 2.19. 
505 Guatemala's second written submission, paras. 5.23-5.26; response to Panel question No. 64, 
paras. 220-222. 
506 Guatemala's second written submission, paras. 5.27-5.28; response to Panel question No. 64, 
paras. 223-224. 
507 Guatemala's second written submission, para. 5.31 (citing Appellate Body Reports, Chile - Price Band 
System , paras. 216 and 275; Chile - Price Band System  (Article 21.5 - Argentina) , paras. 149 and 164); 
response to Panel question No. 64, para. 227. 
508 Guatemala's second written submission, paras. 5.29-5.30; response to Panel question No. 64, 
paras. 225-226. 
509 Guatemala's second written submission, para. 5.32;  response to Panel question No. 64, para. 228. 
510 Guatemala's second written submission, para. 5.33;  response to Panel question No. 64, para. 229. 
511 Guatemala's first written submission, para. 4.128; second written submission, para. 5.10. 
512 Guatemala's second written submission, para. 5.47. WT/DS457/R 
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  during the Uruguay Round negotiations does not va lidate the inconsistency of the measure at issue 
with the WTO agreements.513 
7.385.  Guatemala asserts that the way in which other Members recorded compound duties in 
their schedules of concessions may be a relevant context for interpreting Peru's schedule of 
concessions.514 Some Members recorded a compound duty identifying the ad valorem  component 
and the specific component. In contrast to that  practice, Guatemala notes that Peru recorded 
a single amount under the ad valorem  heading, without making any reference to an amount in 
terms of a specific duty.515 
7.386.  Guatemala adds that the second sentence of Article II:1(b) and the Understanding on the 
Interpretation of Article II:1(b) of the General Agreement on Tariffs and Trade 1994 (Understanding on Article II:1(b) of the GATT 1994) impose three conditions for an "other duty or 
charge" to satisfy the WTO rules: (a) the "other duty or charge" or the mandatory legislation under 
which it is to be applied must have existed at 15 April 1994; (b) the "other duty or charge" may not exceed the levels applied on the above-ment ioned date; and (c) the "other duty or charge" 
must have been recorded in the schedule of concessions of the importing Member.
516 
7.387.  Guatemala points out that the duty resulting from the PRS was not recorded in Peru's 
schedule of concessions517, was not applied on the date of en try into force of the GATT 1994 and 
was not envisaged in Peru's binding legislation in  force on the date of entry into force of the 
GATT 1994.518 In response to Peru's argument that the specific duties have existed since 1991, 
Guatemala considers that there are two totall y different systems and that the 1991 system 
of specific duties was cancelled and replaced by the PRS in 2001.519 In support of this argument520, 
Guatemala claims that the Peruvian authorities themselves share that opinion.521 
7.388.  Guatemala concludes that Peru's action in  applying the duties resulting from the PRS is 
inconsistent with the second sentence of Article II:1(b) of the GATT 1994.522 
7.5.2.2  Peru's defence 
7.389.  Peru claims that the measure at issue, as an ordinary customs duty, is consistent with its 
obligations under the second sentence of Article II:1(b) of the GATT 1994.523  
7.390.  In Peru's view, the following are some of  the characteristics of ordinary customs duties: 
(a) they are duties subject to most-favoured-nati on (MFN) treatment, forming part of the tariff 
regime; (b) they are applied to imports and the obligation to pay them arises at the time 
of importation; (c) they may be designed to collect revenue and protect the domestic industry; 
(d) they may be ad valorem , specific or compound duties; (e) they may vary, but are subject to 
an upper limit, which is the level bound in the schedule of the respective Member; and (f) they are transparent and predictable.
524 
                                               
513 Guatemala's opening statement at the first meeting of the Panel, paras. 51-53; second written 
submission, paras. 5.48-5.51. 
514 Guatemala's response to Panel question No. 20, paras. 29-30. 
515 Guatemala's response to Panel question No. 20. 
516 Guatemala's first written submission, para. 4.114; second written submission, para. 5.53. 
517 Guatemala's first written submission, paras. 4.131-4.132; second written submission, para. 5.55. 
Guatemala indicates that Peru's schedule of concessions recorded only ad valorem duties of 30% for most 
agricultural products and of 68% for a restricted  group. See response to Panel question No. 13; 
Relevant Sections of Peru's Schedu le of Concessions (Exhibit GTM-26). 
518 Guatemala's second written submission, para. 5.2. 
519 Guatemala's opening statement at the first meeting of the Panel, paras. 59-62. See second written 
submission, paras. 5.63-5.73; response to Panel question No. 133, paras. 175-185. 
520 Guatemala's second written submission, paras. 5.63-5.73; response to Panel question No. 133, 
paras. 175-185. 
521 Guatemala's second written submission, paras. 5.67-5.68 (citing Electro-Technical Report 
No. 7-2009-SUNAT/3D 0410 of the Collection Department of the Callao Maritime Customs Division (Exhibit GTM-36) and Memorandum No. 73-2009-SUNAT/2B4000 (Exhibit GTM-37)) and 5.70. 
522 Guatemala's first written submission, para. 4.134. 
523 Peru's first written submission, paras. 5.93-5.94. 
524 Ibid. para. 5.38. See also response to Pane l question No. 128, where Peru explains the 
jurisprudential basis for the criteria it prop oses for defining an ordinary customs duty. WT/DS457/R 
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  7.391.  According to Peru, the following facts demonstrate that the duties resulting from the PRS 
meet the above characteristics: (a) Decree Law No. 26140525 stipulates that specific import duties, 
whether fixed or variable, are tariff duties subject to most-favoured-nation treatment, which shows that these specific duties are part of th e Peruvian tariff regime; (b) Article 1 of Supreme 
Decree No. 124-2002-EF
526 stipulates that the specific duty is determined on the date of the 
import declaration; (c) in accordance with the provisions of Supreme Decree No. 115-2001-EF527, 
the specific duties are designed as a stabilization and protection mechanism; (d) the specific duties 
are an element of the compound or mixed tariff that Peru applies to products subject to the PRS; 
(e) pursuant to Article 4 of Supreme Decree No. 153-2002-EF528, the specific duties vary without 
exceeding the tariff bound in Peru's Schedule of Concessions; and (f) the specific duties are transparent and predictable.
529 
7.392.  In addition, Peru maintains that thes e facts are confirmed and supplemented by the 
following: (a) the specific duties, which are the measure in question, have existed since 1991530; 
(b) the specific duties form part of the commitments that were bound by Peru during the 
Uruguay Round531; and (c) the Peruvian legal framework confirms that the specific duties are 
ordinary customs duties.532 
7.393.  Peru considers that Guatemala is "mistaken in concluding that the 'variable additional duty, 
in Peru's own legal system , is distinct from the ordinary customs duty'".533 In Peru's opinion, 
Guatemala omits to mention that Article 1 of Decree Law No. 26140 expressly provides that the 
specific duties, and the ad valorem  duties, are tariff duties.534 In addition, Peru considers that it is 
irrelevant, for the purpose of determining wh ether the duties resulting from the PRS are 
an ordinary customs duty, that: the PRS is set forth in a supreme decree different from the one 
establishing Peru's ordinary customs duties; th ere is no apparent link between those supreme 
decrees; and the supreme decree establishing the PRS was endorsed by the Ministry of Agriculture 
(Peru added that the two decrees were promulgate d by the Peruvian Executive). Peru adds that 
Guatemala is mistaken in: arguing that Circular  No. INTA-CR.62-2002 "alludes" to a difference 
between specific duties and ordinary customs duties  (Peru points out that the circular reiterates 
the description of specific duties as tariff duties contained in Decree Law No. 26140); maintaining 
that the supreme decrees establishing the PRS and the Peruvian ordinary customs duty have different legal bases, since both are based on ru les governing the imposition of tariffs; arguing 
that under the Peruvian legislation it is relevant that a specific duty is applied during periods where 
the reference price is below the floor price; arguing that it is relevant that the Peruvian legislation 
classifies the specific duties as "additional" or "variable" (on this point Peru asserts that an 
ordinary customs duty may vary, provided that it  is kept below the rates bound in the schedule 
of concessions of each Member); arguing that the di stinction between the objectives of the specific 
duties and the ad valorem  duties is relevant; and attaching importance to the destination of the 
financial resources collected from specific duties and ad valorem  duties.
535 
7.394.  Peru submits an alternative argument, in case the Panel finds that the specific duty 
constitutes "other duties or charges". Peru claims that, on the date of entry into force of the GATT 1994, its specific duty was already in existence and had been notified to the GATT in the context of the Uruguay Round negotiations.
536 Peru refers to paragraph 2 of the Understanding on 
                                               
525 Decree Law No. 26140 (Exhibit PER-53). See also Decree Laws Nos. 25528 and 25784 
(Exhibit PER-91). 
526 Supreme Decree No. 124-2002-EF (Exhibit PER-50). 
527 Supreme Decree No. 115-2001-EF (Exhibit GTM-4). 
528 Compilation of all published Customs Tables (Exhibit GTM-5), p. 147.  
529 Peru's first written submission, para. 5.40. 
530 Peru's second written submission, paras. 3.16-3.22. 
531 Peru's second written submission, paras. 3.23-3.33. See response to Panel question No. 14; 
response to Panel question No. 132; Communication from Peru to the Chairman of the Negotiating Group on 
Market Access, 14 December 1993, Communication from th e United States to Peru dated 10 December 1993, 
Communication from the European Union to Peru da ted 12 December 1993, Communication from Japan to 
Peru dated 14 December 1993 (Exhibit PER-15); Schedule XXXV - Peru, Uruguay Round, 15 April 1994 (Exhibit PER-18); Communications fro m Peru, March 1994 (Exhibit PER-62). 
532 Peru's second written submission, para. 3.28. 
533 Peru's first written submission , para. 5.43. (emphasis original) 
534 Peru's first written submission, para. 5.44. S ee Decree Law No. 26140 (Exhibit PER-53). See also 
Decree Laws Nos. 25528 and 25784 (Exhibit PER-91). 
535 Peru's second written submission, para. 3.32. 
536 Peru's second written submission, paras. 3.16-3.22; response to Panel question No. 133. WT/DS457/R 
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  Article II:1(b) of the GATT 1994 and suggests that the only question the Panel should consider is 
whether Peru has exceeded the levels it applied on 15 April 1994.537  According to Peru, 
Guatemala has not met its burden of proving that  the specific duty exceeds the amount of the 
duties applied by Peru "on the date of entry in to force of the GATT 1994"  and its claim that the 
duties resulting from the PRS are inconsistent with the second sentence of Article II:1(b) of the 
GATT 1994 should therefore be rejected.538 
7.5.3  Main arguments of the third parties 
7.5.3.1  Colombia 
7.395.  Colombia draws the Panel's attention to the need to assess the main or essential 
characteristics of the measure at issue, in order to determine whether it constitutes an ordinary customs duty.
539 Colombia considers that the duties resulting from the PRS match the elements 
of an ordinary customs duty (they are duties su bject to most-favoured-nation treatment, forming 
part of the Peruvian tariff regime; they apply to imports; the obligation to pay arises at the time of importation; and although they may be subject to a level of variation, they are governed by 
clear and transparent rules and by a methodology applicable to ordinary customs duties).
540 
7.5.3.2  United States 7.396.  The United States argues that, if the Panel finds that the PRS is inconsistent with 
Article 4.2 of the Agreement on Agriculture, it would not need to make any finding with regard to 
Article II:1(b) of the GATT 1994.
541 
7.397.  In the event that the Panel makes findings regarding Guatemala's claims under 
Article II:1(b), the United States submits that th e duties resulting from the PRS would not appear 
to constitute an ordinary customs duty, but would then fall under the residual category of other 
duties or charges. In addition, in the opinion of the United States, it appears to be undisputed that 
Peru did not record the PRS in its schedule of concessions, as called for by the Understanding on 
Article II:1(b) of the GATT 1994. For this reason, the duties resulting from the PRS would be 
imposed in excess of the amounts recorded in Peru's Schedule of Concessions, thereby violating the provisions of the second sentence  of Article II:1(b) of the GATT 1994.
542 
7.5.3.3  European Union 
7.398.  In the European Union's opinion, the Panel should begin its analysis by considering 
whether the PRS constitutes an "ordinary customs duty" within the meaning of Article II:1(b) of the GATT 1994.
543 
7.399.  The European Union submits that Members are free to impose the type of customs duty – 
ad valorem , specific or compound – that they deem appropriate, provided that such duties do not 
exceed the bound levels. Moreover, they are also entitled to modify the applied tariff from time 
to time.544 
7.400.  The European Union suggests that certain elements are not guiding criteria for determining 
whether a measure constitutes an ordinary customs duty. In this connection, the European Union 
indicates that neither the form of the duty (in the sense that it is not clear that bound duties are 
always ad valorem  or specific), nor the factors used to calculate it (in the sense that it is not clear 
that customs duties must be calculated on the ba sis of exogenous factors, such as the interests 
                                               
537 Peru's first written submission, para. 5. 98; second written submission, para. 3.34. 
538 Peru's first written submission, paras. 5.96-5. 98. See also Peru's second written submission, 
para. 3.34. 
539 Colombia's third-party wr itten submission, para. 34. 
540 Ibid. para. 36. 
541 United States' third-party written submissi on, para. 32. 
542 United States' third-party wr itten submission, paras. 33-34. 
543 European Union's third-party written submission, para. 25. 
544 European Union's third-party written submission, para. 26 (c iting Appellate Body Report, 
Argentina - Textiles and Apparel , paras. 46, 54-55). WT/DS457/R 
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  of consumers or of domestic producers), are determinative factors.545 The imposition of the duty at 
the time of importation is a necessary, but not a sufficient, criterion for confirming whether a duty is an ordinary customs duty.
546 Moreover, the rate of the duty applied may vary.547 
The European Union claims that one of the most important characteristics of an ordinary customs 
duty is its transparency and predictability, which help to differentiate it from the measures 
described in footnote 1 to the Agreement on Agriculture.548 The European Union considers that it 
would be wrong to argue that, in determining whether a measure is an ordinary customs duty, 
price band or price range systems are subject to a stricter legal standard than other forms of 
customs duties, with regard to the determination of their transparency and predictability.549 
The last element which the European Union suggests may be relevant for assessing whether a measure constitutes an ordinary customs duty is the schedule of concessions of the Member 
concerned.
550 
7.401.  In referring to other duties or charges, the European Union asserts that the objective 
of the second sentence of Article II:1(b) of th e GATT 1994 is to protect the level of tariff 
concessions negotiated, thereby preventing an increa se in the other duties or charges applied, and 
not to require Members to use a customs duty of a specific type or nature.551 In addition, the 
European Union notes that other duties or charges must be recorded in the Member's schedule 
of concessions at the levels applied on 15 April 1994 and must not be higher than the levels so 
recorded.552 In the European Union's opinion, the Panel must assess whether the duties resulting 
from the PRS were recorded in Peru's Schedule of Concessions or whether at 15 April 1994 any legislation was in force which required the imposition of such duties.
553 
7.5.4  Assessment by the Panel 
7.5.4.1  Introduction 7.402.  The Panel will now examine Guatemala's cl aims regarding the inconsistency of the duties 
resulting from the PRS with the second sentence of Article II:1(b) of the GATT 1994. The first step 
in the Panel's analysis is to review the scope of the obligation imposed on Members by the second sentence of Article II:1(b) of the GATT 1994. As pa rt of its analysis, the Panel will confirm which 
elements are relevant in defining "other duties or charges of any kind", within the meaning 
of Article II:1(b) of the GATT 1994. In the light of  this analysis, the Panel will consider whether 
duties resulting from the PRS constitute "other duties or charges". Lastly, and depending on its findings regarding the nature of the duties result ing from the PRS, the Panel will consider whether 
Peru complied with its obligation to record the duties resulting from the PRS in its 
Schedule of Concessions. 
7.5.4.2  The obligation under the second sent ence of Article II:1(b) of the GATT 1994 
7.403.  Article II:1(b) of the GATT 1994 provides as follows: 
Schedules of Concessions 
… 
(b) The products described in Part I of th e Schedule relating to any [Member], which 
are the products of territories of other [Members], shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or 
                                               
545 European Union's third-party written submission, paras. 28-29. The European Union bases its 
argument concerning the irrelevance of whether exogenou s factors are used as a basis for calculating the duty 
on the Panel Report, Dominican Republic - Safeguard Measures , para. 7.84 and the Appellate Body Report, 
Chile - Price Band System , paras. 271-278. 
546 European Union's third-party written submission, para. 30. 
547 European Union's third-party written submission, para. 31 (c iting Appellate Body Report, Chile - Price 
Band System , para. 232). 
548 European Union's third-party written submission, para. 32. 
549 Ibid. para. 33. 
550 Ibid. paras. 34-35. 
551 Ibid. para. 36. 
552 Ibid. para. 37. 
553 Ibid. paras. 38-39. WT/DS457/R 
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  qualifications set forth in that Schedule, be exempt from ordinary customs duties in 
excess of those set forth and provided therei n. Such products shall also be exempt 
from all other duties or charges of any kind imposed on or in connection with the importation in excess of those imposed on the date of this Agreement or those directly 
and mandatorily required to be imposed thereafter by legislation in force in the 
importing territory on that date. 
7.404.  The Understanding on the Interpretation of  Article II:1(b) of the GATT 1994 provides that: 
1. In order to ensure transparency of the legal rights and obligations deriving from 
paragraph 1(b) of Article II, the nature an d level of any "other duties or charges" 
levied on bound tariff items, as referred to in that provision, shall be recorded in the Schedules of concessions annexed to GATT 199 4 against the tariff item to which they 
apply. It is understood that such recording does not change the legal character 
of "other duties or charges". 
2. The date as of which "other duties or charges" are bound, for the purposes 
of Article II, shall be 15 April 1994. "Other  duties or charges" shall therefore be 
recorded in the Schedules at the levels applying on this date … 
3. "Other duties or charges" shall be re corded in respect of all tariff bindings. 
… 
7. "Other duties or charges" omitted from a Schedule  at the time of deposit of the 
instrument incorporating the Schedule in question into GATT 1994 with, until the date of entry into force of the WTO Agreement, the Director-General to the 
CONTRACTING PARTIES to GATT 1947 or, thereafter, with the Director-General of the 
WTO, shall not subsequently be added to it and any "other duty or charge" recorded 
at a level lower than that prevailing on the applicable date shall not be restored to 
that level unless such additions or changes are made within six months of the date 
of deposit of the instrument . (emphasis added) 
7.405.  In this case, Guatemala alleges a violation of the second sentence of Article II:1(b) of the 
GATT 1994. This sentence provides that imported goods shall be "be exempt from all other duties 
of any kind imposed on or in connection with the im portation" if such duties or charges of any kind 
exceed those applied on the date of entry into force of the GATT 1994 or "those directly and 
mandatorily required to be imposed thereafter by legislation in force in the importing territory on 
that date". 
7.406.  As Guatemala only claims a violation of the second sentence of Article II:1(b) of the 
GATT 1994, in the present case it is irrelevant whether the duties resulting from the PRS exceed 
the level bound by Peru for the products subject to the system. The Panel therefore has to decide 
whether the duties resulting from the PRS are, as Peru contends, part of an "ordinary customs duty" of the compound kind, which would be cove red by the 68% tariff bound by Peru in its 
Schedule of Concessions, or whether, as Guatemala asserts, it is rather an "other duty or charge" 
which was not recorded at that time in Peru's Schedule of Concessions. 
7.5.4.3  Definition of "other duties or charges" 7.407.  In India – Additional Import Duties , the Appellate Body specified that "the duties and 
charges covered by the second sentence of Article II:1(b) are 'defined in relation to' duties 
covered by the first sentence of Article II:1(b) , such that ODCs [other duties and charges] 
encompass only duties and charges that are not OCDs [ordinary customs duties]".
554 Moreover, 
                                               
554 Appellate Body Report, India - Additional Import Duties , para. 151 (citing Panel Report, 
India - Additional Import Duties , para. 7.125). WT/DS457/R 
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  the category of duties and charges in the second  sentence of Article II:1(b) of the GATT 1994 also 
does not cover the kind of charges or duties referred to in Article II:2 of the GATT 1994.555 
7.408.  Consequently, the concept of "other duties or charges of any kind" corresponds to 
a residual category.556 Thus, a specific measure will be included in this category if it does not 
constitute an ordinary customs duty and is  not covered by Article II:2 of the GATT 1994.557 
7.409.  In Dominican Republic – Safeguard Measures , the Panel went into detail concerning what 
was covered by an ordinary customs duty: 
In Spanish, the word " propiamente " used in " propiamente dichos " is related to the 
word " propiedad " [property], in the sense of " atributo o cualidad esencial " [essential 
attribute or quality] of something.558 Hence, a " derecho de aduana propiamente dicho " 
would be a duty that possesses the essential attributes or qualities of customs duties. 
"Proprement " in the French expression " proprement dits " relates to the strict meaning 
in which an expression is used.559 I n  o t h e r  w o r d s ,  w h i l e  a  M e m b e r  m a y  i m p o s e  
various duties at the border, the expressions customs duty " propiamente dicho " and 
customs duty " proprement dit " emphasize that the scope of the provision is limited to 
customs duties in the strict sense of the term ( stricto sensu ). 
The expression used in the text in English suggests a slightly different shade 
of meaning. "Ordinary" is defined as "Belonging to or occurring in regular custom or 
practice; normal, customary, usual". The contrary is "Extraordinary".560 In Spanish, 
"Ordinario " is defined as " Común, regular y que sucede habitualmente " [Common, 
regular and usually occurring]. The contrary would be " extraordinario " [extraordinary] 
or "inusual " [unusual].561 In French, " Ordinaire " is defined as " Conforme à l'ordre 
normal, habituel des choses " [in conformity with the normal, usual order of things] or 
"courant, habituel, normal, usuel " [current, customary, normal, usual]. The contrary 
would be " anormal " [abnormal], " exceptionnel " [exceptional] or " extraordinaire " 
[extraordinary].562 
… 
All in all, using a meaning that seeks to reconcile the texts of the GATT 1994 in the 
various official languages, we could conclu de that the expression "ordinary customs 
duties" in Article II:1(b) of the GATT 1994 refers to duties collected at the border which constitute "customs duties" in the strict sense of the term ( stricto sensu ) and 
that this expression does not cover possi ble extraordinary or exceptional duties 
collected in customs. This would be compat ible with the object and purpose of the 
GATT 1994 which, as the Appellate Body said in Chile – Price Band System , seeks to 
ensure that the application of customs duties  gives rise to transparent and predictable 
market access conditions and does not impede the transmission of international price developments to the domestic market of th e importing country. To reach a conclusion 
in this respect, the Panel must consider the design and structure of the measures 
concerned.
563 
                                               
555 Panel Report, Dominican Republic - Safeguard Measures , paras. 7.79 and 7.88; Panel Report, 
Dominican Republic - Import  and Sale of Cigarettes , para. 7.113; and Appellate Body Report, India - Additional 
Import Duties , para. 153. 
556 Panel Report, Dominican Republic - Safeguard Measures , para. 7.79. Regarding the difference in the 
nature of "ordinary customs duties" and "other duties and charges of any kind", see Appellate Body Report, 
India - Additional Import Duties , paras. 157-164. 
557 Panel Report, Dominican Republic - Import  and Sale of Cigarettes , paras. 7.113 and 7.114. 
558 (Footnote original) Diccionario de la Lengua Española , 22nd Ed. (Real Academia Española, 2001), 
p. 1,252. 
559 (Footnote original) Le Nouveau Petit Robert (Dictionnaires Le Robert , 2000), pp. 2,022-2,023. 
560 (Footnote original) Shorter Oxford English Dictionary , 6th Ed. (Oxford University Press, 2007), 
Vol. 2, p. 2,021. 
561 (Footnote original) Diccionario de la Lengua Española , 22nd Ed. (Real Academia Española, 2001), 
pp. 695, 878 and 1,105. 
562 (Footnote original) Le Nouveau Petit Robert (Dictionnaires Le Robert , 2000), pp. 1,732-1,733. 
563 Panel Report, Dominican Republic – Safeguard Measures , paras. 7.82-7.83, and 7.85. WT/DS457/R 
- 104 - 
  7.410.  In addition, in Dominican Republic – Safeguard Measures564, before deciding whether 
a measure is covered by the category of other duties and charges, the Panel specified that the scope of application of Article II:2 of the GATT has to be delimited. The text of this Article provides as follows: 
Nothing in this Article shall prevent any contracting party from imposing at any time 
on the importation of any product: 
(a) a charge equivalent to an internal tax imposed consistently with the 
provisions of paragraph 2 of Article III* in respect of the like domestic 
product or in respect of an article from which the imported product has been manufactured or produced in whole or in part; 
(b) any anti-dumping or countervailing duty applied consistently with the 
provisions of Article VI*; 
(c) fees or other charges commensurate with the cost of services 
rendered. 
7.411.  In other words, Article II:2 excludes three categories of measure from application of the 
disciplines of Article II of the GATT, even if they are imposed on the import of products. 
7.412.  Furthermore, until now no previous decisions by panels or the Appellate Body have 
provided a general definition of what constitutes an ordinary customs duty and what forms part 
of "other duties or charges". 
7.5.4.3.1  "Other duties or charges" and the internal taxes of Article III:2 of the 
GATT 1994 
7.413.  Article II:2(a) of the GATT 1994 covers charges equivalent to internal taxes payable on like 
domestic products or articles from which import ed products have been manufactured or produced 
in whole or in part, in accordance with the provisions of Article III:2 of the GATT 1994. 
In India - Additional Import Duties , the Appellate Body clarified that Article II:2(a) of the 
GATT 1994 refers to measures imposing duties in an amount equivalent to internal taxes or charges applied to like products.
565 Such measures should be applied in a manner consistent with 
the provisions of Article III:2 of the GATT 1994 (on national treatment in relation to taxation).566 
The Panel in Dominican Republic – Import and Sale of Cigarettes , for its part, underlined the 
mutually exclusive nature of measures equivalent to internal taxes or charges in regard to "other duties or charges of any kind".
567 
7.414.  In China – Auto Parts , the Panel addressed the distinction between internal taxes, 
governed by Article III:2 of the GATT 1994, and ordinary customs duties. In this connection, 
it considered that one characteristic element of "o rdinary customs duties" is that they are paid at 
the time goods are imported.568 It added, however, that importation is not the only element in the 
determination as to whether a charge falls within the scope of the first sentence of Article II:1(b) of the GATT 1994 (as an ordinary customs duty).
569 
7.5.4.3.2  "Other duties and charges" and anti-dumping duties 
7.415.  With regard to the measures covered by  Article II:1(b) of the GATT 1994, the Panel in 
United States – Zeroing (Japan) (Article 21.5 – Japan) indicated that a Member could impose 
an anti-dumping duty in excess of the rate  bound in its Schedule of Concessions. 
                                               
564 Panel Report, Dominican Republic – Safeguard Measures , para. 7.79. 
565 Appellate Body Report, India – Additional  Import Duties , paras. 166-175. 
566 Ibid.  paras. 176-181. 
567 Panel Report, Dominican Republic – Import  and Sale of Cigarettes , para. 7.84. 
568 Panel Report, China – Auto Parts , paras. 7.139-7.142, 7.154-7.166, 7.182-7.185 and 7.192. 
See also Appellate Body Report, China – Auto Parts , para. 209. 
569 Panel Report, China – Auto Parts , fn. 316. WT/DS457/R 
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  Such an anti-dumping duty would have to be applie d in conformity with the provisions of Article VI 
of the GATT 1994.570 
7.5.4.3.3  "Other duties and charges" an d "fees or charges for services rendered" 
7.416.  Concerning the measures covered by Article II:2(c) of the GATT 1994, in 
United States - Certain EC Products , the Panel stated that this rule required proof that the charge 
imposed on importers represented the approximate cost of any service.571 
7.417.  In Argentina – Textiles and Apparel, the Panel examined the consistency of a 
3% ad valorem  statistical tax applied by Argentina on the import of certain textiles. This tax was 
used to finance the Argentine Customs system for collecting statistics. In this case, the Panel considered that, although Argentina had included this tax in the "other duties and charges" column in its Schedule of Concessions, the tax was inco nsistent with Article V III:1(a) of the GATT 1994 
inasmuch as it gave rise to the imposition of charges in excess of the approximate costs of the 
services rendered, and because it was a measure of a fiscal nature.
572 
7.418.  In US – Customs User Fee , the Panel addressed the consistency of a fee charged by 
the United States to customs users for certain products and the United States' obligations under 
the GATT 1947. The purpose of the fee was to cover the cost of processing imported goods and was calculated as an ad valorem percentage of the said goods. The Panel found, however, that the 
measure was contrary to the United States' obligations under Articles II:2(c) and VIII:1(a) of the 
GATT 1947 in that it exceeded the approximate costs of customs processing.
573 
7.5.4.3.4  "Other duties or charges" and Article 4.2 of the Agreement on Agriculture 
7.419.  As already indicated, the Panel in Chile – Price Band System stated that the term "ordinary 
customs duties" must have the same meaning in Article 4.2 of the Agreement on Agriculture and 
the second sentence of Article II:1(b) of the GATT 1994.574 
7.420.  In examining whether Chile's price band sy stem constituted an ordinary customs duty, the 
Appellate Body in Chile – Price Band System made the following clarification with regard to the 
category of "other duties or charges": 
We further note, in examining Article 4.2 of the Agreement on Agriculture , that the 
second sentence of Article II:1(b) of the GATT 1994, does not specify what form 
"other duties or charges" must take to qualify as such within the meaning of that sentence. The Panel's own approach of reviewing Members' Schedules reveals that many, if not most, "other duties or charges" are expressed in ad valorem and/or 
specific terms, which does not, of course , make them "ordinary customs duties" under 
the first sentence of Article II:1(b).
575 (emphasis original) 
7.421.  Furthermore, the Panel in Dominican Republic – Safeguard Measures summarized the 
Appellate Body's findings regarding when a me asure constituted an ordinary customs duty: 
In its report in Chile – Price Band System , the Appellate Body made it clear that what 
determines whether "a duty imposed on an import at the border" constitutes an 
ordinary customs duty is not the form which that duty takes.576 Nor is the fact that the 
duty is calculated on the basis of ex ogenous factors, such as the interests 
of consumers or of domestic producers.577 The Appellate Body also explained that 
a Member may periodically change the rate at which it applies an "ordinary customs 
                                               
570 Panel Report, US – Zeroing (Japan) (Article 21.5 – Japan) , para. 7.207. See also Appellate Body 
Report, US - Zeroing (Japan) (Article 21.5 - Japan) , para. 209. 
571 Panel Report, US - Certain EC Products , para. 6.70. 
572 Panel Report, Argentina - Textiles and Apparel , paras. 6.81-6.83. 
573 GATT Panel Report, United States - Customs User Fee (BISD 35S/245), para. 125. 
574 Panel Report, Chile - Price Band System , para. 7.104; Appellate Body Report, Chile - Price Band 
System , para. 188. 
575 Appellate Body Report, Chile - Price Band System , para. 275. 
576 (Footnote original) Appellate Body Report, Chile - Price Band System , para. 216. 
577 Ibid. paras. 271-278. WT/DS457/R 
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  duty", provided it remains below the rate bound in the Member's schedule.578 
This change in the applied rate of duty could be made, for example, through an act of the Member's legislature or executive at any time. However, one essential feature of "ordinary customs duties" is that any change in them is discontinuous and 
unrelated to an underlying scheme or formula.
579 The Appellate Body noted that the 
price band system impugned in that case contained an inherent variability and had the effect of impeding the transmission of international price developments to Chile's 
market in the way in which ordinary customs duties normally would, also generating 
in its application a lack of transparency and predictability with respect to market access conditions.
580, 581 (emphasis original) 
7.422.  In Chile – Price Band System (Article 21.5 – Argentina) , the Appellate Body also 
commented on the effect of finding that a measure is similar to any of those specified in footnote 1 
to Article 4.2 of the Agreement on Agriculture on the determination as to whether such a measure is an ordinary customs duty. In this connection, the Appellate Body stated: 
We recall that an examination of "similarity" cannot be made in the abstract: it 
necessarily involves a comparative analysis. That analysis can be undertaken by 
comparing the measure at issue with at least one of the listed measures which, by 
definition, have characteristics different from the characteristics of an ordinary 
customs duty. The term "ordinary customs duties" in footnote 1 forms part of the phrase "similar border measures other than  ordinary customs duties". This phrase 
contains no punctuation, which suggests that the phrase as a whole defines a relevant 
concept for purposes of footnote 1. As we see it, "other than ordinary customs duties" 
is an adjectival phrase that qualifies the term "similar border measures". This language will, therefore, inform a panel's analysis of whether a measure is 
"similar" to one of the categories of measures listed in footnote 1. We observe, as 
well, that the structure and logic of footnote 1 make clear that variable import levies and minimum import prices cannot be ordinary customs duties . The same is true for 
border measures similar to variable impo rt levies and to minimum import prices.
582 
(emphasis added) 
7.423.  As already mentioned, a Member's measure which corresponds or is similar to any of the 
measures listed in footnote 1 to Article 4.2 of the Agreement on Agriculture may not correspond to 
the ordinary customs duty of the Member in question. The Panel has already concluded that the 
duties resulting from the PRS, because they are variable import levies or, at least, a measure similar to variable import levies within the meanin g of Article 4.2 of the Agreement on Agriculture, 
may not be ordinary customs duties.
583 The Panel recalls that the parties differ as to whether there 
are elements in the Peruvian legislation that coul d characterize the duties resulting from the PRS 
as ordinary customs duties. However, considering that a measure that is one of those covered by 
footnote 1 to the Agreement on Agriculture canno t be an ordinary customs duty, the Panel does 
not deem it necessary to rule on the impact of the elements of the Peruvian legislation on the 
characterization of the duties resulting from the PRS as ordinary customs duties. 
7.424.  As the next step, before considering whether the measure constitutes one of the 
"other duties or charges" within the meaning of  Article II:1(b) of the GATT 1994, the Panel would 
have to verify whether the measure is covered by any of the situations provided for in Article II:2. In this connection, the Panel finds that none of the parties has claimed, and there is no relevant 
evidence, that the duties resulting from the PR S correspond to any of the measures listed in 
Article II:2 (namely, charges equivalent to internal taxes imposed consistently with the provisions of Article III:2 of the GATT 1994, anti-dumping or countervailing duties applied consistently with 
the provisions of Article VI of the GATT 1994, or fees or other charges commensurate with the cost 
of services rendered). 
                                               
578 (Footnote original) Appellate Body Report, Chile - Price Band System , para. 232 (citing 
Appellate Body Report, Argentina - Textiles and Apparel , fn. 56 to para. 46). 
579 (Footnote original) Appellate Body Report, Chile - Price Band System , paras. 232-233. 
580 Ibid. paras. 246-251. 
581 Panel Report, Dominican Republic - Safeguard Measures, para. 7.84. 
582 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina) , para. 167. 
(footnote omitted) 
583 See above, para. 7.374 WT/DS457/R 
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  7.425.  Accordingly, having determined that the duties resulting from the PRS are border 
measures that do not constitute ordinary customs duties and do not correspond to any of the measures listed in Article II:2 of the GATT 1994, th e Panel concludes that they are "other duties or 
charges … imposed on or in connection with the importation", within the meaning of Article II:1(b) 
of the GATT 1944. 
7.5.4.4  Assessment of "other duties or ch arges" in accordance with the obligations 
contained in the Understanding on the Interpre tation of Article II:1(b) of the GATT 1994 
7.426.  Having found that the measure at issue comes under "other duties or charges" referred to 
in Article II:1(b) of the GATT 1994, the Panel will  now address the other elements in the second 
sentence of Article II:1(b) of the GATT 1994. In ot her words, it will assess whether the measure at 
issue is in excess of the other duties or charges imposed on the date of the GATT 1994 or "those 
directly or mandatorily required to be imposed thereafter by the legislation in force in the 
importing territory on that date", in conformity wi th the way in which they were recorded in Peru's 
Schedule of Concessions. 
7.427.  In this connection, in addition to the ab ove provisions of the GATT 1994, Guatemala refers 
to provisions in the Understanding on the Inte rpretation of Article II.1(b) of the GATT 1994.
584 
As already mentioned, the first two paragraphs of the Understanding on the Interpretation 
of Article II:1(b) of the GATT 1994 clarify the way in which Members have to record in their 
schedules of concessions the "other duties or charges of any kind" described in Article II:1(b) of the GATT 1994. 
7.428.  Some panels have reached conclusions on the Understanding on the Interpretation 
of Article II:1(b) of the GATT 1994. In Dominican Republic – Import and Sale of Cigarettes , 
the Panel held that: 
Reading Article II:1(b) together with paragraphs 1, 2, 7 and 4 of the Understanding as 
context, the Panel considers that the obligation under Article II:1(b), second sentence 
is for Members to record in their Schedules, within six months of the date of deposit of the instrument, all ODCs [other duties  and charges] as applied on 15 April 1994 
unless those levels breach previous bound le vels of ODCs. In case any Member did not 
record the ODCs in the Schedule within six months of the date of deposit of the said instrument, the right to record it in the Schedule and to invoke it expired after six months. In the context of the recording requirements as prescribed in the 
Understanding, the meaning of Article II:1(b), second sentence is specifically that 
imported products shall be exempted from all "other duties or charges" of any kinds in excess of those as validly recorded in the Schedule of the Member concerned .
585 
7.429.  In Argentina – Textiles and Apparel , the Panel stated that the inclusion of any "other duties 
and charges"  in a Member's Schedule of Concessions does not exempt such duties and charges 
from an examination of their consistency with ot her provisions of the WTO agreements. In that 
particular case, Argentina claimed that, by having been recorded in its Schedule of Concessions, 
the contested statistical tax was automatically considered to be consistent with its obligations under Article VIII of the GATT 1994. The Panel rejected this claim.
586 
7.5.4.5  Conclusion 
7.430.  Given the Panel's finding that the duties resulting from the PRS come under other duties or 
charges, the next question facing the Panel is wh ether such duties satisfy the requirements of the 
second sentence of Article II:1(b) of the GATT 1994 and the Understanding on the Interpretation 
of Article II:1(b) of the GATT 1994. 
7.431.  According to the second sentence of Article II:1(b) of the GATT 1994 and paragraphs 1, 2, 
3, 4 and 7 of the Understanding on the Interp retation of Article II:1(b) of the GATT 1994, 
                                               
584 Guatemala's request for the establishment of a panel, para. 2(b); first written submission, 
paras. 4.112-4.114; second written submission, paras. 5.52-5.55. 
585 Panel Report, Dominican Republic - Import  and Sale of Cigarettes, para. 7.88. A similar conclusion 
was reached by the Panel in Chile - Price Band System , para. 7.107.  
586 Panel Report, Argentina - Textiles and Apparel, paras. 6.81-6.83. WT/DS457/R 
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  Members are required to record in their Schedules of Concessions the other duties and charges 
applied in respect of all bound tariff lines. A Member which maintains or introduces a duty of this kind without having recorded it in the appropriate column in its Schedule of Concessions would be acting inconsistently with the second sentence of Article II:1(b) of the GATT 1994. 
7.432.  In the present case, it is a fact undispute d by the parties that the column corresponding to 
other duties or charges in Peru's Schedule of Concessions does not contain any record.
587 This fact 
shows that Peru did not record in its Schedule of Concessions any duty corresponding to 
"other duties or charges" within the six months following the date on which the instrument was 
deposited. In this respect, theref ore, Peru would be acting inconsistently with its obligations under 
the second sentence of Article II:1(b) of the GATT 1994 if it applied a duty corresponding to 
"other duties or charges". The Panel recalls its fi nding that the duties resulting from the PRS form 
part of other duties or charges and notes that ther e is evidence that these duties or charges have 
been applied by Peru. Consequently, Peru has acted inconsistently with its obligations under the second sentence of Article II:1(b) of the GATT 1994. 
7.6  The question of whether Peru has acte d inconsistently with Article X:1 of the 
GATT 1994 
7.6.1  Introduction 
7.433.  In this section, the Panel will examine Gu atemala's claim that Peru did not publish certain 
essential elements of the challenged measure. 
7.434.  The Panel will commence its examination by taking up the arguments of Guatemala and 
Peru and the opinions of third parties regarding Guatemala's claim. It will then continue with its 
analysis of this case. 
7.6.2  Main arguments of the parties 7.6.2.1  Guatemala's claim 
7.435.  Guatemala considers that Peru has violated its obligations under Article X:1 of the 
GATT 1994 by failing to publish certain aspect s of the duties resulting from the PRS. 
In Guatemala's opinion, this did not prevent operators from being acquainted with the essential 
elements of the challenged measure.
588 
7.436.  Guatemala claims that the disciplines of Article X:1 of the GATT 1994 apply to 
"laws, regulations, judicial decisions and administ rative rulings of general application". Guatemala 
asserts that measures of general application are those "that apply to a range of situations or 
cases, rather than being limited in their scope of application".589 Moreover, those measures must 
pertain to "the classification or the valuation of products for customs purposes", to "rates of duty, 
taxes or other charges", or to "requirements, restrictions or prohibitions on imports or exports", 
among other things.590 
7.437.  According to Guatemala, the publication requirement envisaged in Article X:1 of the 
GATT 1994 is intended to "enable governments and traders to become acquainted with [the rules 
in question]".591 Guatemala asserts that the content and operation of the measures must be 
published in sufficient detail for economic operators to familiarize themselves with the norm.592 
Guatemala suggests that Article X:1 requires that detailed information on the content of the norm 
                                               
587 See Schedule XXXV - Peru, Uruguay Round, 15 Ap ril 1994 (Exhibit PER-18); Relevant Sections 
of Peru's Schedule of Concessions (Exhibit GTM-26). 
588 Guatemala's first written submission, para. 4.135. 
589 Guatemala's first written submission, para. 4.140 (citing Panel Report, EC - Selected Customs 
Matters , para. 7.116, and referring to Appellate Body Report, EC - Poultry , para. 111 and Panel Report, 
Japan - Film , para. 10.385). 
590 Guatemala's first written submission, para. 4.141. 
591 Guatemala's first written submission, para. 4.139. 
592 Guatemala's first written submission, para. 4.142. WT/DS457/R 
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  should be published, "including sufficient information on the process of establishment of the 
essential elements of that norm."593 
7.438.  Guatemala considers that the rules governin g the duties resulting from the PRS are subject 
to the obligations contained in Article X:1 of the GATT 1994, inasmuch as they are laws of general 
application which refer to "taxes or other charges".594 Guatemala asserts that the methodologies 
and data used for determining the different components of the PRS are also subject to Article X:1. Those methodologies and those data constitute "esse ntial elements" of the PRS, since they directly 
or indirectly determine the tax burden placed on importers.
595 
7.439.  Guatemala considers that Peru failed to meet its obligation to publish the following 
essential elements of the challenged measure596: (a) the reasons for determining "import costs" 
at 3% of the reference price597; (b) the methodology for calculating the amounts for "freight" and 
"insurance" used to convert the ceiling, floor and reference prices from f.o.b. to c.i.f. values598; 
and (c) the international prices corresponding to the reference markets used to calculate the floor 
price, the ceiling price and the reference price.599 
7.440.  Guatemala also claims that Peru failed to meet its obligation to publish the rules, 
where these exist, authorizing its auth orities to: (a) extend customs tables600; (b) calculate price 
ranges for dairy products by reference price intervals601; (c) calculate different duties and rebates 
for two categories of rice602; and (d) maintain the reference price for dairy products at the same 
level for two consecutive fortnights.603 
7.6.2.2  Peru's defence 7.441.  Peru agrees with Guatemala that the PRS as a whole is subject to the publication obligation 
envisaged in Article X:1 of the GATT 1994.
604 However, Peru argues that it has published the 
elements to which Guatemala refers and denies that it has an obligation to publish the reasoning or the components for the calculation of the PRS.
605 Thus, Peru considers that Article X:1 does not 
require a Member to publish all aspects of a meas ure, but only "the essential elements" thereof.606 
7.442.  Peru asserts that, since establishing the duties resulting from the PRS in 1991, it has 
published in its official journal "every one of th e modifications regarding the duties, their elements 
and their calculation".607 Peru adds that Supreme Decree No. 115-2001-EF itself, which was duly 
published, details the way in which duties or rebates operate, as well as the tariff lines subject to the PRS, the methodology for calculating the floor and ceiling prices of the range, the methodology 
for calculating the duty or the rebate generated by the system, the marker products and reference 
markets, freight and insurance, the customs ta bles, and amendments to the above-mentioned 
decree, international reference prices and applicable customs tables.
608 
                                               
593 Guatemala's first written submission, para. 4.146. See also second written submission, 
paras. 6.2-6.3 (citing Panel Reports, Dominican Republic - Import  and Sale of Cigarettes , paras. 7.405 and 
7.407; and Thailand - Cigarettes (Philippines) , para. 7.778). 
594 Guatemala's first written submission, para. 4.147. 
595 Ibid. paras. 4.148-4.149. 
596 Guatemala's second written submission, para. 6.4. 
597 Guatemala's first written submission, paras. 4.150-4.157; second written submission, 
paras. 6.11-6.16. 
598 Guatemala's first written submission, paras. 4.158-4.164; second written submission, 
paras. 6.17-6.23. 
599 Guatemala's first written submission, paras. 4.165-4.172; second written submission, 
paras. 6.6-6.10. 
600 Guatemala's first written submission, paras. 4.173-4.180. 
601 Ibid. paras. 4.181-4.185. 
602 Guatemala's first written submission, paras. 4.186-4.192. 
603 Ibid. paras. 4.193-4.195. 
604 Peru's first written submission, para. 5.112. 
605 Ibid. para. 5.104. 
606 Peru's first written submission, para. 5.109 (citing Panel Report, Dominican Republic - Import and 
Sale of Cigarettes , para. 7.405, with regard to the sufficiency of published information). 
607 Peru's first written submission, para. 5.113. 
608 Ibid. WT/DS457/R 
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  7.443.  Peru claims that Guatemala confuses the scope of the concept of "essential elements", 
seeking to extend it to information for which there is no publication requirement. Peru maintains that Guatemala is mistaken in describing certain information about the calculation of the PRS as "essential elements" and that the relevant information on the 3% import costs
609 and on the 
amounts for freight and insurance610 was duly published by means of Supreme Decree 
No. 115-2001-EF. Peru adds that the prices used as a basis for calculating the floor price and the reference price are available to the public and that Supreme Decree No. 115-2001-EF specifies the 
relevant sources to which traders may have access in order to obtain those prices.
611 
7.444.  Peru also claims that it has published all necessary information regarding extensions of the 
customs tables, the calculation of price ranges for dairy products by reference price intervals, the calculation of duties and rebates for the two categories of rice and the maintenance of the 
reference price for dairy products at the same level for two consecutive fortnights.
612 
7.445.  Peru adds that, since the measure at issue is the duties resulting from the PRS and not the 
PRS itself, the elements that Guatemala describes as "essential" are unrelated to the measure and 
play a minor role in the calculation of such duties.613 
7.6.3  Main arguments of the third parties 7.6.3.1  United States 
7.446.  The United States states that the Pa nel should exercise caution in applying the 
"essential elements" test articulated by the Panel in Dominican Republic – Import and Sale 
of Cigarettes , with respect to the publication requirement envisaged in Article X:1 of the 
GATT 1994. The United States has difficulty understanding what would be the basis, in the 
language of that provision, for invoking that test.
614 
7.6.3.2  European Union 7.447.  The European Union argues that Article X:1 of the GATT 1994 requires the published 
information to contain a sufficient level of detail to enable the interested parties to become 
"acquainted" with the measures. In the European Un ion's opinion, the level of detail refers to the 
"essential elements" of the measure, as indicated by the Panel in Dominican Republic – Import and 
Sale of Cigarettes .
615  
7.448.  The European Union considers that, althou gh the elements identified by Guatemala could 
be subject to Article X:1 of the GATT 1994, the Pa nel should determine whether they are "essential 
elements" of the PRS.616 
7.6.4  Assessment by the Panel 
7.6.4.1  Introduction 7.449.  The question the Panel has to resolve is whether, as alleged by Guatemala, Peru failed to 
publish certain essential elements of the duties resulting from the PRS. Guatemala contends that 
the following elements of the system were no t published: (a) the reasons for determining 
"import costs" at 3% of the reference price; (b ) the methodology for calculating the amounts for 
"freight" and "insurance" used to convert the ceiling, floor and reference prices from f.o.b. values 
to c.i.f. values; (c) the international prices corresponding to the reference markets used to 
calculate the floor, ceiling and reference prices; (d) the rules, if any exist, authorizing the Peruvian 
authorities to extend customs tables; (e) the ru les, if any exist, authorizing the Peruvian 
                                               
609 Peru's first written submission, paras. 5.115-5.118; second written submission, paras. 4.8-4.11. 
610 Peru's first written submission, paras. 5.119-5.121; second written submission, paras. 4.12-4.13. 
611 Peru's first written submission, paras. 5.122-5.123; second written submission, paras. 4.14-4.15. 
612 Peru's first written submission, paras. 5.124-5.125.  
613 Peru's second written submission, paras. 4.1-4-2. 
614 United States' third-part y statement, paras. 15-18. 
615 European Union's third-party written subm ission, paras. 57-58 (citing Panel Report, 
Dominican Republic - Import  and Sale of Cigarettes , para. 7.405). 
616 European Union's third-party wr itten submission, paras. 61-62. WT/DS457/R 
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  authorities to calculate price ranges for dairy products by reference price intervals; (f) the rules,  
if any exist, authorizing the Peruvian authorities to  calculate different additional duties and rebates 
for two categories of rice; and (g) the rules, if any exist, authorizing the Peruvian authorities to 
keep the reference price for dairy products at the same level for two consecutive fortnights. 
7.6.4.2  The publication requirement under Article X:1 of the GATT 1994 
7.450.  Article X:1 of the GATT 1994 provides that: 
Laws, regulations, judicial decisions and administrative rulings of general application, 
made effective by any [Member], pertaining to the classification or the valuation 
of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, 
warehousing inspection, exhibition, processing, mixing or other use, shall be published 
promptly in such a manner as to enable governments and traders to become acquainted with them . Agreements affecting international trade policy which are in 
force between the government or a governmental agency of any [Member] and the 
government or governmental agency of any other [Member] shall also be published. 
The provisions of this paragraph shall not require any [Member] to disclose 
confidential information which would impede law enforcement or otherwise be 
contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public  or private. (emphasis added) 
7.6.4.2.1  Measures covered by Article X:1 of the GATT 1994 
7.451.  The analysis under Article X:1 of the GATT 1994 entails determining whether the measure 
is a law, regulation, judicial decision or administrative ruling of general application made effective by any Member. In addition, the measure in question must refer to the classification or the 
valuation of products for customs purposes, to rate s of duty, taxes or other charges, and to other 
matters listed in the article. It then has to be determined whether the measure in question was published promptly so that governments and traders could become acquainted with it.
617 In this 
regard, in EC – Poultry , the Appellate Body stated that Arti cle X:1 of the GATT refers to the 
publication and application of measures subject to its scope and not to their substantive content.
618 The provision therefore embodies  the principle of transparency.619 
7.452.  In EC – IT Products, the Panel held that the determination as to whether a measure is 
a "law", "regulation", "judicial decision" or "administrative ruling" of general application must be 
based primarily on the content and substance of the instrument, and not merely on its form or 
nomenclature.620 In other words, a measure is not excluded from this scope simply because the 
Member applying it characterizes it as not belonging to the aforementioned categories.621 
7.453.  As already stated by various panels, Article X:1 of the GATT 1994 includes a wide range 
of measures that have the potential to affect trade and traders.622 The Panel in 
United States - COOL, referring to the COOL law and regulations, stated: "[t]hese are formal legal 
instruments, which qualify as either 'laws' or 'reg ulations' within the meaning of Article X:1 of the 
GATT 1994".623 The Panel in Thailand – Cigarettes (Philippines) found that the methodology used 
to calculate the maximum retail selling price (MRSP) of cigarettes was a measure that fell within 
the scope of Article X:1 of the GATT 1994.624 In EC – IT Products , the Panel considered that, 
                                               
617 Panel Report, EC - IT Products, para. 7.1016. 
618 Appellate Body Report, EC - Poultry , para. 115. See also Panel Report, EC - IT Products , 
paras. 7.1013-7.1015. 
619 Panel Report, EC - IT Products, fn. 1312 to para. 7.1015 (citing Appellate Body Report, 
US - Underwear , p. 21). 
620 Ibid.  para. 7.1023. 
621 Ibid.  paras. 7.1023 and 7.1024. 
622 Ibid.  para. 7.1026. 
623 Panel Report, US - COOL , para. 7.815. 
624 Panel Report, Thailand - Cigarettes (Philippines) , paras. 7.773 and 7.778. WT/DS457/R 
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  despite not being legally binding under EC law, the Explanatory Notes to the Combined 
Nomenclature (CNEN) constituted a measure within the meaning of Article X:1.625 
7.454.  Article X:1 of the GATT 1994 requires that the measures indicated be of general 
application. In this connection, in EC – Selected Customs Matters , the Panel clarified that the 
measures covered by Article X:1 of the GATT 1994 do not include laws, regulations, judicial 
decisions and administrative rulings with a limited scope of application but those which apply to a range of situations or cases.
626 Likewise, the Panel in US – Underwear  held that 
an administrative ruling was of general application when it affected "an unidentified number 
of economic operators, including domestic and foreign producers".627 
7.455.  In EC – IT Products , the Panel found that the Explanatory Notes to the Combined 
Nomenclature (CNEN), by ensuring uniform application of the Common Customs Tariff and not 
applying to a single import or a single importer, fell within the category of measures 
of "general application".628 In Japan – Film , the Panel addressed the question of whether 
an administrative ruling adopted in an individual case which identified criteria or principles 
applicable in future cases could be deemed of general application.629 In EC – Poultry , the 
Appellate Body concluded that the EC rules pertaini ng to import licensing set out in a regulation 
were rules of general application.630 
7.456.  The next aspect which a panel has to address is whether the measure of general 
application refers to any of the specific elements cited in Article X:1 of the GATT 1994. These include "the classification or the valuation of products for customs purposes" and the "rates of duty, taxes or other charges" applied.
631 
7.457.  With regard to the requirement that the measures must have been made effective, 
in EC - IT Products , in referring to a draft of the Explanatory Notes to the Combined Nomenclature 
(CNEN), the Panel considered that this category covered both measures which had been formally 
promulgated and those which had been brought into effect or made operative in practice.632 
In this sense, the expression "made effective" is essentially linked to the fact that the measure has been made operative.
633 
7.6.4.2.2  Aspects concerning the type of publication which Members are required to 
make pursuant to Article X:1 of the GATT 1994 
7.458.  The next requirement imposed by Articl e X:1 of the GATT 1994 is that the measure in 
question must be published promptly. In EC – IT Products, the Panel pointed out that 
"the meaning of prompt is not an absolute concept, i.e. a pre-set period of time applicable in all 
cases".634 In that particular case, the Panel found that publication of CNEN amendments in the 
European Union's Official Journal a minimum of eight months after they had been made effective 
did not meet the requirement in Article X:1 of the GATT 1994.635 Nevertheless, noting that these 
amendments had been published on the European Union's Comitology website 
(the European Union's web page on the computer network) before they became effective, it could 
be considered that the measure had been published promptly.636 
7.459.  The last requirement to be satisfied in determining full compliance with obligations under 
Article X:1 of the GATT 1994 is that the texts must be published "in such a manner as to enable governments and traders to become acquainted with them". In EC – IT Products, the Panel 
considered whether publication of the Explanatory Notes to the Combined Nomenclature (CNEN) 
                                               
625 Panel Report, EC - IT Products , para. 7.1029. 
626 Panel Report, EC - Selected Customs Matters , para. 7.116 (cited in Panel Report, EC - IT Products , 
para. 7.1032). 
627 Panel Report, US - Underwear , para. 7.65. 
628 Panel Report, EC - IT Products , para. 7.1034. 
629 Panel Report, Japan - Film , para. 10.388. 
630 Appellate Body Report, EC - Poultry , para. 111. 
631 Panel Report, EC - IT Products , para. 7.1035. 
632 Ibid.  para. 7.1048 . 
633 Ibid.  paras. 7.1045-7.1047. 
634 Ibid. para. 7.1074. 
635 Ibid. para. 7.1076. 
636 Ibid. para. 7.1077. WT/DS457/R 
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  on the Comitology website met this requirement, The first aspect clarified by the Panel was that 
under Article X:1, unlike Article X:2, publication does not need to be in an official publication.637 
The Panel went on to address the scope of the obli gation to publish. Following the Panel's analysis 
in Chile – Price Band System, it found that the obligation analysed implied that the measures be 
made generally available through an appropriate medium.638 I t  a d d e d  t h a t  " n o t  a n y  m a n n e r  
of publication … would satisfy the requirement, bu t only those that would give power to or supply 
governments and traders with knowledge of the particular measures that is 'adequate' so that 
traders and Governments may become 'familiar' with them, or 'known' to them in a 'more or less 
complete' way".639 In the analysis of that particular case, the Panel concluded that publication of 
the draft CNENs on the Comitology website did not satisfy this requirement.640 
7.460.  The Panel, in Dominican Republic – Import and Sale of Cigarettes , examined what aspects 
of a measure had to be published. In that case, the Panel had to determine whether some of the 
surveys undertaken by the Central Bank of the Dominican Republic, used as a basis for calculating the tax on cigarettes, were a measure covered by Article XI:1 of the GATT 1994. In its analysis, 
the Panel found that, even though the surveys in  themselves were not administrative rulings 
of general application, they "would constitute an essential element of the administrative ruling: the 
determination of the tax base for cigarettes".
641 Because they were an essential element, the Panel 
found that "[i]n order to become acquainted with the process of establishing the tax base for the 
application of the Selective Consumption Tax on  cigarettes, governments and traders would be 
entitled to obtain information on the results of the survey, as well as on the methodology used in order to conduct the survey".
642 The Panel therefore found that the Dominican Republic was 
obliged to publish information on these surveys or, alternatively, to resort to another method that 
would enable governments and traders to become acquainted with the method used to determine the tax base for the Selective Consumption Tax on cigarettes.
643 
7.461.  In a similar vein, in Thailand – Cigarettes (Philippines) , the Panel addressed the issue 
of whether the data used by Thailand to calculate the maximum retail selling price (MRSP) for cigarettes had to be published. In the complainan t's opinion, these data fell within the scope 
of Article X:1 of the GATT 1994 as they were "e ssential elements" in the terms identified by 
the Panel in Dominican Republic – Import and Sale of Cigarettes.
644 In response, Thailand asserted 
that such information was not of general application and included company-specific confidential data.
645 The Panel concluded that such data could no t be considered generally and prospectively 
applicable rules as they concerned company-specific information subject to confidentiality.646 
With regard to application of the "essential element" test, the Panel found that it did not apply to that particular case as the information that wa s the subject of the dispute was confidential and 
company-specific, whereas in the case of the Dominican Republic the information in question was 
publicly available.
647 
7.462.  With regard to the content of the publication of the relevant rules, the Panel in 
Thailand - Cigarettes (Philippines) also considered whether the methodology used to calculate the 
maximum retail selling price (MRSP) had been published in such a way as to enable importers to become acquainted with it. In that particular case, Thailand argued that the elements of the 
methodology were clear, based on certain information included in the preamble to the rules which 
applied the MRSPs for cigarettes. The Panel considered that the publication in question was not 
sufficient to fulfil obligations under Article X:1 of the GATT 1994; for importers to become acquainted with the methodology, Thailand should  have enabled them to become familiar with 
aspects such as: how the information provided by the importers is processed and the way in which 
the authorities determine marketing costs (used to calculate the MRSPs for cigarettes).
648 
                                               
637 Panel Report, EC - IT Products , para. 7.1082. 
638 Ibid. paras. 7.1083 and 7.1084 (citing Panel Report, Chile - Price Band System , para. 7.128). 
639 Ibid. para. 7.1086. 
640 Ibid. para. 7.1087. 
641 Panel Report, Dominican Republic - Import  and Sale of Cigarettes , para. 7.405. 
642 Ibid. para. 7.407. 
643 Ibid. para. 7.414. 
644 Panel Report, Thailand - Cigarettes (Philippines), paras. 7.792-7.796. 
645 Ibid.  paras. 7.797-7.801. 
646 Ibid.  para. 7.806. 
647 Ibid.  paras. 7.807-7.808. 
648 Ibid.  para. 7.789. WT/DS457/R 
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  7.463.  In Thailand – Cigarettes (Philippines) , the Panel also examined the sufficiency of the 
publication of the generally applicable rules governing the right of importers to restitution of the guarantees deposited for the payment of certain internal taxes. In this connection, the Panel 
concluded that the rules did not clearly explain the existence of such a right, so importers might 
not be aware of its exact nature. In the Panel's view, this was a violation of the obligation 
contained in Article X:1 of the GATT 1994.
649 
7.464.  Article X:1 of the GATT 1994 also provides th at "[t]he provisions of  this paragraph shall 
not require any [Member] to disclose confidential information which would impede law 
enforcement or otherwise be contrary to the pub lic interest or would prejudice the legitimate 
commercial interests of particular enterprises, public or private". 
7.465.  Concerning the confidentiality requirement, in Thailand – Cigarettes (Philippines) , the 
Panel considered whether publication of the data used to calculate the maximum retail selling price 
(MRSP) of cigarettes would be equivalent to disclosing "confidential information" within the meaning of Article X:1 of the GATT 1994. The Panel had already found that it was not of general 
application, being company-specific information; therefore, for the sake of argument, it considered 
that the Philippines had not met the burden of proving a prima facie violation of the obligation to 
publish certain measures, inasmuch as it had acknowledged the confidential nature of the 
information which it claimed should be published. The Panel concluded that there was no obligation 
under Article X:1 of the GATT 1994 to publish a non-confidential summary of the confidential 
information.
650 
7.6.4.3  Conclusion 
7.466.  The Panel has already determined that the duties resulting from the PRS are inconsistent 
with Peru's obligations under Article 4.2 of the Agreement on Agriculture and the second sentence 
of Article II:1(b) of the GATT 1994.651 As recognized by the Appellate Body, panels are not obliged 
to deal with all the legal arguments put forward by the parties.652 The Appellate Body explained 
that "[a] panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt 
compliance by a Member with those recommendations and rulings 'in order to ensure effective 
resolution of disputes to the benefit of all Members'."
653 
7.467.  Having found that the duties resulting from the PRS are inconsistent with Peru's 
substantive obligations under the WTO agreements, it is not necessary for the Panel also to 
address the issue of whether certain elements of the system were published in the manner 
required by Article XI:1 of the GATT 1994. Any finding on the latter aspect would not alter the previous findings and would not help the DSB to make sufficiently precise recommendations to 
enable prompt compliance on the part of Peru. The Panel will not therefore rule on the claims 
made by Guatemala under Article X:1 of the GATT 1994 as regards failure to publish certain essential elements of the measure at issue. 
7.7  The question of whether Peru has acted inconsistently with Article X:3(a) of the 
GATT 1994 
7.7.1  Introduction 7.468.  In this section, the Panel will examine Gu atemala's claim that Peru did not administer the 
challenged measure in a reasonable manner. The Panel will commence its examination by 
presenting the arguments of Guatemala and Peru an d the opinions of third parties with regard to 
Guatemala's claim. The Panel will then set forth its analysis of the issue. 
                                               
649 Panel Report, Thailand - Cigarettes (Philippines), paras. 7.858-7-861. 
650 Ibid.  para. 7.819. 
651 See above, paras. 7.371-7.372 and 7.431-7.432. 
652 See Appellate Body Report, US - Wool Shirts and Blouses, pp. 21-22 (citing, inter alia , GATT Reports, 
EEC - Import Restrictions, BISD 30S/129, para. 33; Canada - FIRA , BISD 30S/140, para. 5.16; 
US - Sugar Quota , BISD 31S/67, paras. 4.5 and 4.6; Japan - Semi-Conductors , BISD 35S/116, para. 122; 
and US - MFN Footwear, BISD 39S/128, para. 6.18. 
653 Appellate Body Report, Australia - Salmon , para. 223. WT/DS457/R 
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  7.7.2  Main arguments of the parties 
7.7.2.1  Guatemala's claim 7.7.2.1.1  Lack of uniformity and impart iality in applying the rounding method 
7.469.  Guatemala initially claimed that Peru acted inconsistently with Article X:3(a) of the 
GATT 1994 owing to lack of uniformity and impartiality in calculating the additional duties and 
tariff rebates resulting from the PRS, in application of the rounding method. Guatemala contended that Peru facilitated upward rounding for the calculation of duties, and downward rounding for the 
calculation of rebates.
654 
7.470.  During the proceedings, Peru explained that rounded values are presented in its 
publications, but that the values are not rounded for the purpose of the actual calculations.655 
In the light of these explanations and informat ion submitted by Peru, Guatemala withdrew this 
claim.656 The Panel will therefore not address this issue. 
7.7.2.1.2  Lack of reasonableness in observan ce of the statutory provisions of the Price 
Range System 
7.471.  Guatemala claims that Peru administers the measure at issue in an unreasonable manner 
inasmuch as, with respect to four specific practi ces, Peru does not comply with the requirements 
of its own legislation.657 Guatemala asserts that the administration of a measure that is not carried 
out in conformity with the relevant domestic legislation does not meet the requirement 
of reasonableness provided for in Article X:3(a) of the GATT 1994.658 
7.472.  First of all, Guatemala claims that Peru  extended the customs tables for the previous 
six months instead of carrying out a new calculation, a situation not provided for in the rules 
governing the PRS, and for which Peru provided no legal justification.659 
7.473.  Guatemala rejects the idea that, in order to comply with Article X:3(a) of the GATT 1994, 
it is sufficient for the Executive to have an "inherent power" to exercise discretion in the 
administration of a measure, if this has no basis in the text of the measure.660 Guatemala asserts 
that an authority's exercise of discretion must conform to the limits set forth in Article X:3(a), that is to say that it cannot entail unreasonable administration.
661 
7.474.  Secondly, Guatemala maintains that, in the customs tables for dairy products, Peru uses 
reference price intervals instead of individual reference prices in accordance with the prescribed formulas. Guatemala states that, if the regulations were applied correctly, the result would lead to an additional duty for each reference price.
662 
7.475.  Guatemala does not consider relevant the fact that the first customs tables, in 2001, 
contained intervals for dairy products. Guatemala asserts that the fact that the first customs tables contained such intervals means that Peru has acted contrary to its legislation since the first act 
implementing Supreme Decree No. 115-2001-EF.
663 
                                               
654 Guatemala's first written submission, paras. 4.206- 4.217; Peruvian practices of rounding additional 
duties and rebates (Exhibit GTM-18). 
655 Peru's first written submission, paras. 5.134-5.136; response to Panel question No. 65, para. 156; 
"There is no rounding problem" (Exhib it PER-45); Rounding (Exhibit PER-73). 
656 Guatemala's second written submission, paras. 7.23-7.24. 
657 Guatemala's first written submission, para. 4.129; opening statement at the first meeting of 
the Panel, paras. 68-70. 
658 Guatemala's first written submission, para. 4.204 (citing Panel Report, Dominican Republic - Import 
and Sale of Cigarettes , paras. 7.385-7.388); second written submission, para. 7.2; response to Panel question 
No. 79, paras. 264-267.  
659 Guatemala's second written submission, paras. 7.3-7.6. 
660 Peru's second written submission, para. 4.5. 
661 Guatemala's opening statement at the second meeting of the Panel, paras. 35-37. 
662 Guatemala's first written submission, paras. 4.219-4.220; second written submission, 
paras. 7.7-7.12. 
663 Guatemala's response to Panel question No. 143, paras. 201-206. WT/DS457/R 
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  7.476.  Thirdly, Guatemala argues that Peru keep s the reference price for dairy products at the 
same level for two consecutive fortnights, in breach of its internal regulations. Guatemala considers that the fact that the price of the marker product is published monthly does not lessen the requirement in the Peruvian regulations th at reference prices must be furnished every 
two weeks.
664 
7.477.  Finally, Guatemala contends that Peru uses different additional duties and tariff rebates for 
"pounded rice" and "paddy rice" in relation to each reference price for the rice customs tables. 
In Guatemala's view, the proper implementation of the regulations would generate a single duty or 
rebate for each reference price under the customs table.665 
7.478.  Guatemala indicates that the instruments containing the breakdown of products are not 
relevant because they belong to the legal framewor k of the 1991 specific duty system, which is not 
in force.666 Nor does Guatemala consider relevant the fact that the first PRS customs tables 
contained two separate categories of rice, which means that Peru has acted in a manner contrary 
to its legislation since the first act of im plementation of Supreme Decree No. 115-2001-EF.667 
7.7.2.2  Peru's defence 
7.479.  Peru states that its practice is reasonab le and that Guatemala is seeking to equate the 
obligation of reasonableness with the publication obligation.668 Peru points out that Article X:3(a) 
of the GATT 1994 does not affect the "inherent authority" of each Member to exercise its discretion 
with regard to the management and administration of its measures, provided that it acts "within the international tariff binding limits" and within the national limit imposed by its own legal order.
669 
7.480.  First, with respect to the extension of the customs tables, Peru claims that the Supreme 
Decrees are a modification (in the form of an extension) of the measure and not an application of the measure.
670 Peru asserts that the possibility for a State to amend its regulations is 
supported by its normative framework, since the Executive has the inherent authority to issue 
supreme decrees amending Supreme Decree No. 115-200-EF, which does not prohibit 
extensions.671 Peru also asserts that the extension or non-extension of customs tables is a matter 
of sovereign authority, in the area of trade policy, to decide whether or not to maintain a certain 
level of trade protection. Peru adds that such ac tions were taken in accordance with the relevant 
constitutional and legal requirements and sufficien tly well in advance to enable traders to become 
acquainted with them.672  
7.481.  Secondly, with respect to the intervals used in the customs tables for dairy products, 
Peru asserts that the intervals are clearly indicated in Annex VI to Supreme Decree No. 115-2001-EF, and the fact that Annex III does not mention them is not related to the 
application of the duty resulting from the PRS. Peru adds that there is nothing absurd about the 
use of intervals for dairy products, since it is consistently applied and published with no element of surprise or arbitrariness, under the authority of the Executive.
673 Peru adds that the use of 
intervals for dairy products pre-dates the publication of Supreme Decree No. 115-2001-EF, as is 
shown in previous instruments.674 P e r u  a l s o  e x p l a i n s  t h a t  d a i r y  p r o d u c t  p r i c e s  h a v e  h i s t o r i c a l l y  
                                               
664 Guatemala's first written submission, paras. 4.219-4.220; second written submission, 
paras. 7.13-7.18. 
665 Guatemala's first written submission, paras. 4.219-4.220; second written submission, 
paras. 7.19-7.22. 
666 Guatemala's opening statement at the first meeting of the Panel, para. 71; response to Panel 
question No. 142, paras. 197-200. 
667 Guatemala's response to Panel question No. 143, paras. 201-206. 
668 Peru's first written submission, paras. 5.137-5.138. 
669 Peru's second written submission, paras. 4.16-4.17. 
670 Peru's second written submission, pa ra. 4.19 (referring  to Panel Report, Dominican Republic – Import 
and Sale of Cigarettes , paras. 7.380-7382). 
671 Peru's second written submission, paras. 4.19-4.21. 
672 Peru's response to Panel question No. 136, paras. 134-135. 
673 Peru's second written submission, paras. 4.22-4.24. 
674 Peru's response to Panel question No. 143, paras. 142-143; Supreme Decree No. 133-94-EF 
(Exhibit PER-74); Supreme Decree No. 083-98-EF (Exhibit PER-25); Supreme Decree No. 133-99-EF (Exhibit PER-26); Supreme Decree No. 021-2001-EF (Exhibit PER-49). WT/DS457/R 
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  been subject to a wide monthly variation, which would make it impractical for their presentation to 
be similar to that of other products.675 
7.482.  Thirdly, with respect to the maintenance of dairy product reference prices at the same 
level for two consecutive fortnights, Peru asserts that, as established in Supreme Decree 
No. 115-2001-EF, the international prices of marker  products used as a basis for calculating those 
reference prices are published monthly.676  
7.483.  Fourthly, Peru claims that paddy rice and pounded rice have been treated separately since 
the establishment of the duty sy stem in 1991, and that the distinction between the two categories 
of rice is made in Supreme Decree No. 114-93-EF and has not been revoked or replaced. In Peru's opinion, it is not unreasonable to apply different amounts to products that are different (in this case, the raw material – paddy ri ce – and the final product – pounded rice).
677 
7.7.3  Main arguments of the third parties – European Union 
7.484.  The European Union points out that Article X:3(a) of the GATT 1994 concerns the method 
of application of the measures identified in Arti cle X:1 of the GATT 1994 and that the requirements 
of uniformity, impartiality and reasonableness are distinct from each other.678 The European Union 
also asserts that the complainant must present solid evidence to demonstrate a breach of that Article and that the probative value of the eviden ce will depend on the circumstances of each 
case.
679 
7.485.  The European Union refers to the interpretation of the terms uniform, impartial and 
reasonable, and states that the Panel in Dominican Republic – Import and Sale of Cigarettes found 
with regard to the Selective Consumption Tax of the Dominican Republic that the fact of not 
relying on the rules in force at the time of the decision, disregarding them and using other 
methods, amounted to an unreasonable administration.680 
7.486.  The European Union does not question the characterization of the Peruvian measure in 
respect of Article X:1 of the GATT 1994, but assert s that the Panel will have to decide whether 
Guatemala has succeeded in demonstrating the alleged lack of uniform, impartial and reasonable administration.
681 
7.7.4  Assessment by the Panel 
7.7.4.1  Article X:3(a) of the GATT 1994 7.487.  Article X:3(a) of the GATT 1994 provides as follows: 
Each [Member] shall administer in a uniform, impartial and reasonable manner all its 
laws, regulations, decisions and rulings of the kind described in paragraph 1 of this 
Article. 
                                               
675 Peru's response to Panel question No. 137, para. 136. 
676 Peru's second written submission, paras. 4.25-4.26; response to Panel question No. 139, para. 137. 
677 Peru's second written submission, paras. 4.27-4.28; response to Panel question No. 142, 
paras. 140-141; response to Panel question No. 143, paras. 142-143; and Supreme Decree No. 114-93-EF 
(Exhibit PER-24). 
678 European Union's third-party wr itten submission, paras. 64-65. 
679 Ibid. paras. 66-67. 
680 Ibid. paras. 68-71. 
681 Ibid. para. 74. WT/DS457/R 
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  7.7.4.2  General considerations 
7.488.  In US – Shrimp , the Appellate Body indicated the following with regard to the essence 
of this obligation: 
It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum 
standards for transparency and procedural fairness in the administration of trade 
regulations.682 
7.489.  The Appellate Body also noted that: 
[A]llegations that the conduct of a WTO Memb er is biased or unreasonable are serious 
under any circumstances. Such allegations should not be brought lightly, or in a subsidiary fashion. A claim under Article X:3(a) of the GATT 1994 must be supported by solid evidence; the nature and the scope of the claim, and the evidence 
adduced by the complainant in support of it, should reflect the gravity of the 
accusations inherent in claims under Article X:3(a) of the GATT 1994.
683 
7.7.4.3  Measures covered 
7.490.  The text of Article X:3(a) of the GATT 1994 shows that the obligation contained therein 
extends to the application of the laws, regulations, judicial decisions and administrative rulings referred to in Article X:1. 
7.491.  In relation to Article X:1 of the GATT 1994, the kind of measures covered by this 
paragraph were examined.
684 That analysis will not be repeated here. 
7.7.4.4  Meaning of administration 7.492.  With regard to the term "administration", in EC – Bananas III , the Appellate Body 
explained that the obligation in Article X:3(a) of the GATT 1994 refers to the administration of the 
rules and not to their substantive content.
685 Likewise, the Appellate Body stated that: 
[To] the extent that [an] appeal relates to the substantive content  o f  t h e  E C  r u l e s  
themselves, and not to their publication  or administration , that appeal falls outside the 
scope of Article X of the GATT 1994. The WTO-consistency of such substantive content must be determined by reference to provisions of the covered agreements other than 
Article X of the GATT 1994.
686 
7.493.  The Appellate Body summarized its reason ing in the two above-mentioned paragraphs in 
the following way: 
[I]n EC – Bananas III and EC – Poultry , the Appellate Body distinguished between, on 
the one hand, the laws, regulations, judicial decisions, and administrative rulings of 
general application set out in Article X:1 of the GATT 1994 and, on the other hand, the administration of these legal instruments. The Appellate Body reasoned that, as 
Article X:3(a) establishes disciplines on the administration of the legal instruments of 
the kind described in Article X:1, claims concerning the substantive content of these 
Article X:1 legal instruments fall outside the scope of Article X:3(a).
687 
                                               
682 Appellate Body Report, US - Shrimp , para. 183. 
683 Appellate Body Report, US - Oil Country Tubular Goods Sunset Reviews , para. 217. 
684 See above, paras. 7.451-7.457. 
685 Appellate Body Report, EC - Bananas III , para. 200. 
686 Appellate Body Report, EC - Poultry , para. 115. (footnote omitted) 
687 Appellate Body Report, EC - Selected Customs Matters , para. 199. WT/DS457/R 
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  7.494.  Lastly, it should be pointed out that the Panel in US – Stainless Steel (Korea) stated that 
Article X:3(a) of the GATT 1994 does not serve to test the consistency of a measure with a Member's domestic law or practice: 
[T]he WTO dispute settlement system "serves to preserve the rights and obligations 
of Members under the covered agreements, and to clarify the existing provisions 
of those agreements".
688 It was not in our view intended to function as a mechanism 
to test the consistency of a Member's particular decisions or rulings with the Member's 
own domestic law and practice; that is a function reserved for each Member's 
domestic judicial system689, and a function WTO panels would be particularly ill-suited 
to perform.690 
7.7.4.5  The requirement of reasonableness 
7.495.  In Argentina – Hides and Leather , the Panel explained that the requirements of uniformity, 
impartiality and reasonableness are legally independent: 
As a preliminary matter, we note that Article X:3(a) provides that the administration 
of Customs laws, regulations and rules must be uniform, impartial and reasonable. 
Normally, we would address these three considerations in the order they appear in the treaty text. However, we note that in this instance the three requirements are legally 
independent in that Customs laws regulations and rules must satisfy each of the 
three standards. This gives us some freedom in the manner of discussing them.
691 
7.496.  Following the withdrawal of the claim regarding the method of rounding, the present case 
only concerns the claims raised by Guatemala with respect to the reasonableness requirement, 
so this will be the only requirement to be examined by the Panel. 
7.497.  With regard to the reasonableness requirement, in Dominican Republic – Import and Sale 
of Cigarettes, the Panel explained the following: 
Read in the context of Article X, which is entitled "Publication and Administration 
of Trade Regulations", the ordinary meanin g of the word "reasonable", refers to 
notions such as "in accordance with reason", "not irrational or absurd", 
"proportionate", "having sound judgement", "sensible", "not asking for too much", 
"within the limits of reason, not greatly less or more than might be thought likely or appropriate", "articulate".
692, 693 (emphasis original) 
7.498.  In China – Raw Materials , the Panel added the following: 
Applying this definition to the facts, reason able administration could be considered to 
be administration that is equitable, appropriate for the circumstances and based on rationality.
694 
7.499.  Lastly, in US – COOL , the Panel explained that the analysis of a claim of violation of the 
reasonableness requirement entails a case-by-case examination of the facts: 
In our view, whether an act of administration can be considered reasonable within the 
meaning of Article X:3(a) entails a consideration of factual circumstances specific to 
each case. This is confirmed by previous disputes where the requirement of reasonable administration was understood as requiring the examination of the 
                                               
688 (Footnote original) DSU Article 3.2. 
689 (Footnote original) It is for this reason that both Article X:3(b) of GATT 1994  and Article 13 
of the Anti-Dumping Agreement  require Members to maintain appropriate judicial, arbitral or administrative 
tribunals or procedures. 
690 Panel Report, US - Stainless Steel (Korea) , para. 6.50. 
691 Panel Report, Argentina - Hides and Leather , para. 11.86. 
692 (Footnote original) The New Shorter Oxford English Dictionary , supra note 52, Vol. II, p. 2,496. 
693 Panel Report, Dominican Republic - Import  and Sale of Cigarettes , para. 7.385. 
694 Panel Report, China - Raw Materials, para. 7.696. (The Appellate Body declared part of the Panel's 
analysis superfluous and having no le gal effect for procedural matters). WT/DS457/R 
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  features of the administrative act at issue in the light of its objective, cause or the 
rationale behind it.695, 696 
7.7.4.6  Conclusion 7.500.  The Panel has already determined that the duties resulting from the PRS are inconsistent 
with Peru's obligations under Article 4.2 of the Agreement on Agriculture and the second sentence 
of Article II:1(b) of the GATT 1994.
697 As already mentioned, panels are not obliged to address all 
the legal claims made by the parties and only have to consider those claims for which a finding is 
necessary in order to enable the DSB to make sufficiently precise recommendations and rulings to 
allow for prompt compliance by a Member with those recommendations and rulings in order to ensure effective resolution of disput es to the benefit of all Members. 
7.501.  Having found that the duties resulting from the PRS are inconsistent with Peru's 
substantive obligations under the WTO agreements, it is not necessary for the Panel also to 
address the question of whether, in certain respects, Peru administers the system in a reasonable manner, as required by Article X:3(a) of the GATT 1994. Any finding on the latter aspect could not 
modify the previous conclusions and would not help the DSB in making sufficiently precise 
recommendations to allow for prompt compliance by Peru. The Panel therefore expresses no opinion on the claims made by Guatemala relating  to Article X:3(a) of the GATT 1994 as regards 
unreasonable administration of the challenged measure. 
7.8  Alternative claim under the Customs Valuation Agreement 7.502.  Guatemala puts forward an alternative cl aim under the Customs Valuation Agreement, but 
only in the event that the Panel finds that the duties resulting from the PRS are ordinary customs 
duties within the meaning of Article II of the GA TT 1994. If this were to be the case, Guatemala 
contends that this system leads to customs valuation of certain agricultural products on the basis of a minimum, arbitrary or fictitious price scheme, which is inconsistent with the obligations in 
Articles 1, 2, 3, 5, 6 and 7 of the Customs Valu ation Agreement, more particularly paragraphs (f) 
and (g) of Article 7.2 thereof.
698 
7.503.  Inasmuch as the Panel has found that the duties resulting from the PRS are not ordinary 
customs duties, Guatemala's proviso in relation to examination of its claim under the Customs 
Valuation Agreement has not been met. Accordingly, it is not appropriate for the Panel to express any opinion on Guatemala's alternative claim under the Customs Valuation Agreement. 
7.504.  The Panel, nevertheless, notes that in the section 7.3 on the factual description of this 
dispute, there are sufficient factual elements so that if the criterion for making the alternative 
claim is met in any appeal, the Appellate Body may complete the analysis of Guatemala's alternative claim. 
                                               
695 (Footnote original) In Argentina - Hides and Leather , for example, the Panel considered access to 
confidential information by a competitor in the market to be a relevant factor in  determining reasonableness 
of the administrative action in that  dispute (para. 11.86). We  further recall the Appella te Body's analysis in 
Brazil - Retreaded Tyres that "the analysis of whet her the application of a meas ure results in arbitrary or 
unjustifiable discrimination should focus on the cause of  the discrimination, or the rationale put forward to 
explain its existence" (Appellate Body Report, Brazil - Retreaded Tyres , para. 226; Panel Report, 
Thailand - Cigarettes , para. 7.291). In Thailand - Cigarettes (Philippines), the Philippines claimed that the 
appointment of dual function officials as directors of  a company under administrative proceedings constituted 
unreasonable administration because the officials were in a position where they could gather and reveal 
confidential information on Philippines industries' direct competitors. The Panel found that Thailand did not act inconsistently with Article X:3(a). However, the overall delays in the administrative proceedings shown throughout the course of the review process of customs valuation were considered by the panel 
"not appropriate or proportionate" considered agains t the nature of the circumstances concerned, and 
therefore, the administration was consider ed to be "unreasonable" (Panel Report, Thailand - Cigarettes , 
para. 7.969). In Dominican Republic - Import  and Sale of Cigarettes , the Panel found that the 
Dominican Republic had administered the provisions governing the Selective Co nsumption Tax in a manner 
that was "unreasonable" and therefore inconsistent with Article X:3(a) of GATT 1994 (paras. 7.365-7.394). 
696 Panel Report, US - COOL, para. 7.851 . 
697 See above, paras. 7.371-7.372 and 7.431-7.432. 
698 Guatemala's first written submission, paras. 4.222-4.229; second written submission, 
paras. 8.1-8.18. WT/DS457/R 
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  7.9  The question of whether, by means of th e FTA, the parties modi fied their WTO rights 
between themselves 
7.9.1  Introduction 7.505.  This Panel has found that the duties resulting from the PRS are inconsistent with 
Article 4.2 of the Agreement on Agriculture, with  the second sentence of Article II:1(b) of the 
GATT 1994 and with the Understanding on Article II :1(b) of the GATT 1994. In the light of these 
findings, the condition for the Panel to address Peru's defence that, by means of the FTA, the 
parties modified any provision of the WTO agreements which prohibits the PRS has been met.
699 
7.9.2  Main arguments of the parties 7.9.2.1  Peru 7.506.  Peru states that, as a result of the mutual concessions that were negotiated, Guatemala 
agreed in paragraph 9 of Annex 2.3 to the FTA that Peru could maintain its PRS; Guatemala also 
gave an undertaking that, in the event of any inconsistency between the FTA and the WTO Agreement, the provisions of the FTA would prevail.
700 
7.507.  According to Peru, if the Panel were to conclude that the PRS is inconsistent with the 
WTO agreements, it would not be possible for Peru to maintain the PRS, and this would create a conflict with what was agreed by the parties in the FTA.
701 Peru argues that, inasmuch as the 
parties agreed that the FTA would prevail in such situations, this would result in the modification, 
as between the parties, of their WTO rights and obligations, to the extent that such rights and obligations might be inconsistent with the provisions of the FTA.
702 
7.508.  Peru refers to Article 41 of the Vienna Convention703 in support of its argument that 
two States parties to a multilateral treaty may modify their obligations as between themselves.704 
Peru maintains that the Appellate Body has recognized that Members may waive their rights in the WTO framework or modify them, expressly or tacitly.
705 Peru states that Article XXIV of the 
GATT 1994 demonstrates that Members may modify their WTO rights by means of regional trade 
agreements.706 Peru asserts that a modification of rights and obligations of this kind, which would 
                                               
699 Peru's second written submission, para. 2.63. 
700 Peru's first written submission, paras. 3.74, 3.82, 4.3 and 4.29; second written submission, 
paras. 2.17, 2.19-2.22 and 2.52; opening statement at the first meeting of the Pa nel, paras. 8, 18, 24-25 
and 27; opening statement at the second meeting of the Panel, paras. 5, 8 and 46. 
701 Peru's second written submission, paras. 2.63-2.65; opening statement at the second meeting 
of the Panel, para. 58. 
702 Peru's first written submission, paras. 4.22 and 4.26; second written submission, paras. 2.3, 2.17 
and 2.63; opening statement at the first meeting of the Panel, para. 27; opening statement at the second meeting of the Panel, paras. 57-58; response to  Panel question No. 37, para. 82; response to Panel 
question No. 38, para. 86; response to Panel question No. 97, para. 25. 
703 Article 41 of the Vienna Convention provides as follows: 
Agreements to modify multilateral treaties between certain of the parties only  
1. Two or more of the parties to a multilateral  treaty may conclude an agreement to modify 
the treaty as between themselves alone if: (a) the possibility of such a modificati on is provided for by the treaty; or 
(b) the modification in question is not prohibited by the treaty and: (i) does not affect the enjoyment by the other parties of their rights under the treaty or 
the performance of their obligations; (ii) does not relate to a provision, derogation  from which is incompatible with the effective 
execution of the object and purpose of the treaty as a whole. 2. Unless in a case falling under paragraph 1( a) the treaty otherwise provides, the parties 
in question shall notify the other parties of their intention to conclude the agreement and of the modification to the treaty for which it provides. 
704 Peru's first written submission, para. 4. 28; second written submission, para. 2.59. 
705 Peru's first written submission, paras.  4.23-4.25 (citing Appellate Body Report, EC - Bananas III 
(Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US) , para. 217); second written submission, 
para. 2.60; opening statement at the first meeting of th e Panel, para. 27; response to Panel question No. 37, 
paras. 80-81. 
706 Peru's first written submission, para . 4.28 (citing Appellate Panel Report Turkey - Textiles , 
para. 9.103); opening statement at the first meeting of the Panel, paras. 26-27; opening statement at WT/DS457/R 
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  not affect the other WTO Members, is different from the multilateral amendment procedure 
provided for in Article X of the WTO Agreement.707 
7.509.  In other words, Peru suggests that, even if Guatemala considered that it has a WTO right 
to challenge the application of the PRS, that right was concretely and unequivocally modified by 
the terms agreed in the FTA, to th e effect that Peru could maintain  the PRS and that the provisions 
of the FTA would take precedence over those of the WTO.708 
7.510.  In Peru's opinion, it would be neither useful nor correct for the Panel to analyse 
Guatemala's claims as if the FTA did not exist.709 Peru states that, if the Panel were to accept 
Guatemala's claims, it would be encouraging WTO Members to have recourse to the DSB in order to repudiate bilateral agreements signed und er Article XXIV of the GATT 1994 and alter the 
balance achieved in the framework of such agreements.
710 Peru therefore requests that the Panel 
conclude that, by virtue of what was agreed by the parties in the FTA: (a) Guatemala may not 
engage in a procedure against Peru; or alternatively (b) the parties modified their rights and obligations under the WTO agreements, to the extent that such rights and obligations might be 
incompatible with the provisions of the FTA.
711 
7.9.2.2  Guatemala 7.511.  Guatemala asserts that, regardless of whether or not the FTA is in force, it has 
no relevance to this dispute.
712 According to Guatemala, Peru proposes that the Panel examine 
whether there is an inconsistency between the FT A and the WTO Agreement and that it determine 
whether, through the FTA, Guatemala modified its WTO rights.713 In Guatemala's opinion, such 
an assessment would require the Panel to act outside its terms of reference, since panels cannot 
entertain disputes not related to the WTO covered agreements.714 
7.512.  Guatemala contends that the rights and obligations contained in the WTO agreements can 
only be modified through the procedures estab lished in Article X of the WTO Agreement and not 
through a bilateral treaty.715 Nor does Guatemala accept that the Parties can waive their 
WTO rights through an FTA, since such a waiver  could only be made in the legal framework 
of the WTO, either in the context of a disput e settlement procedure, by means of a mutually 
agreed solution, or under multilaterally agreed decisions (such as the Ministerial Decision 
of 7 December 2013 on "Public stockhol ding for food security purposes").716 
7.513.  Guatemala argues that, even if it were accepted that the free trade agreement can be a 
legal vehicle for waiving WTO rights, Peru would have had to demonstrate that Guatemala, in the 
                                                                                                                                               
the second meeting of the Panel, pa ras. 9-10; response to Panel question No. 37, para. 82; response to 
Panel question No. 97, paras. 23-24. 
707 Peru's second written submission, paras. 2.56 an d 2.61; opening statement at the second meeting 
of the Panel, para. 60. 
708 Peru's first written submission, para. 4.26; open ing statement at the first meeting of the Panel, 
paras. 25 and 28; response to Panel question No. 38, paras. 83-86. 
709 Peru's first written submission, paras. 4.27 and 4.29. 
710 Peru's second written submission, paras. 2. 66-2.68; opening statement at the first meeting 
of the Panel, para. 10; opening statement at the second meeting of the Panel, para. 12. 
711 Peru's first written submission, para. 4.30. 
712 Guatemala's response to Panel question No. 21, paras. 33 and 39; response to Panel question 
No. 22, para. 40. 
713 Guatemala's second written submission, paras. 9.29-9.30; response to Panel question No. 21, 
para. 34.  
714 Guatemala's second written submission, paras. 9.22-9.31 (citing Panel Report, Mexico - Taxes on 
Soft Drinks , paras. 56 and 78); response to Pane l question No. 21, paras. 35 and 39. 
715 Guatemala's second written submission, para. 9.39-9.40; response to Panel question No. 21, 
para. 35. 
716 Guatemala's second written submission, paras. 9.8 and 9.16-9.18 (citing Appellate Body Report, 
EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US) , para. 228); 
opening statement at the first meeting of the Pane l, para. 82; response to Panel question No. 21, 
paras. 36-37; response to Panel question No. 91, para . 19; comments on Peru's re sponse to Panel question 
No. 97, para. 27. WT/DS457/R 
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  FTA, waived its right to challenge the PRS before the WTO.717 In Guatemala's opinion, no provision 
of the FTA contains such a statement of waiver and, on the contrary, Article 1.3.1 of the FTA 
confirms the WTO rights and obligations of both Pa rties; moreover, by means of Article 15.3 of the 
FTA, the Parties reserved the right to have re course to the WTO dispute settlement mechanism.718 
7.514.  Guatemala asserts that, although paragraph 9 of Annex 2.3 to the FTA grants Peru 
the authority to maintain its PRS in respect of certain products, this does not represent a recognition that the PRS is WTO-consistent, nor does it exempt Peru from fulfilment of its 
obligations under the FTA itself and under the WTO agreements, nor again can it be read as 
an implicit or explicit relinquishment of the right to bring a case in accordance with the DSU.
719 
Guatemala notes that the provisions of the FTA, read in conjunction and in their proper context, indicate that Peru has the authority to maintain its PRS in respect of a limited number of products, 
as long as, at the same time, it complies with its obligations under the WTO agreements, which 
does not prevent Guatemala from exercising its WTO rights.
720 
7.515.  With respect to the possible inconsistency between the FTA and WTO rules, Guatemala 
affirms that in public international law there is a presumption against conflict.721 In this 
connection, Guatemala maintains that, in this case, there are no mutually exclusive obligations, but only the exercise of a right under the FTA and compliance with an obligation under the 
WTO agreements, for which reason Peru could comply with its obligations under both instruments 
(the FTA and the WTO agreements).
722 
7.516.  Guatemala also claims that Article XXIV of the GATT 1994 allows an exception to fulfilment 
of the most-favoured-nation treatment obligatio n in the context of a free trade agreement. 
Although this would enable the parties to grant each other greater rights, as between themselves, 
than under WTO rules, the free trade agreement co uld not modify the rights and obligations that 
continue to be vested in the Parties under the multilateral legal framework.723 
7.517.  Finally, Guatemala draws attention to the danger of WTO Members being permitted to 
waive their right to challenge measures through free trade agreements. In Guatemala's opinion, 
this would open the way for political pressures and negotiating power imbalances to impair the 
rights of smaller and weaker parties.724 
7.9.3  Main arguments of the third parties 7.9.3.1  Brazil 7.518.  In Brazil's opinion, if the FTA were in force, it could be relevant to determine Peru's and 
Guatemala's rights and obligations within the ambit of their bilateral relations and with regard to 
their bilateral commitments. However, as it has not entered into force, the FTA does not appear to be relevant as a rule of international law applicable between the parties, or to determine the law 
applicable in this dispute, which can be scrutinized in accordance with the covered agreements.
725 
                                               
717 Guatemala's second written submission, para. 9. 14; opening statement at  the first meeting of 
the Panel, paras. 81, 83 and 84 (citing Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) / 
EC - Bananas III (Article 21.5 - US) , para. 217); response to Panel question No. 21, para. 36. 
718 Guatemala's second written submission, para. 9. 13; opening statement at  the first meeting of 
the Panel, para. 83; opening statement at the second meeting of the Panel, para . 49; response to Panel 
question No. 21, para. 36. 
719 Guatemala's second written submission, para s. 9.9-9.10 and 9.42; opening statement at 
the first meeting of the Panel, para. 84; resp onse to Panel question No. 25, paras. 49-51. 
720 Guatemala's second written submission, para s. 9.11-9.12 and 9.44; opening statement at 
the first meeting of the Panel, paras. 84-85; response to Panel question No. 25, paras. 50-51. 
721 Guatemala's second written submission, paras. 9.47-9.48 (citing Panel Report, Indonesia - Autos , 
para. 14.28 and fn. 649), response to Pa nel question No. 25, paras. 54-55. 
722 Guatemala's second written submission, paras. 9.49-9.51; response to Panel question No. 25, 
para. 56. 
723 Guatemala's opening statement at the second meeting of the Panel, paras. 47-48 
(citing Appellate Body Report, Turkey - Textiles , para. 45 and fn. 13); comments on Peru's response to 
Panel question No. 97, para. 25. 
724 Guatemala's second written submission, paras. 9.19 and 9.20; response to Panel question No. 21, 
para. 38; comments on Peru's response to Panel question No. 97, paras. 28-29. 
725 Brazil's response to Panel question No. 1, p. 1. WT/DS457/R 
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  7.9.3.2  United States 
7.519.  The United States considers that the FTA is not relevant to resolving this dispute.726 
T h e  U n i t e d  S t a t e s  a s s e r t s  t h a t ,  i f  P e r u  i s  a s k i n g  t h e  P a n e l  t o  m a k e  f i n d i n g s  w i t h  r e g a r d  t o  obligations outside the covered agreements or to refrain from making findings within its terms 
of reference, such a request should be rejected.
727 The United States asserts that there is no basis 
in the DSU for panels or the Appellate Body to re solve disputes unrelated to the WTO or to apply 
rules from other agreements in order to examine compliance with obligations contained in 
the WTO agreements.728 Nor would there be any basis in the DSU for the Panel to decline to make 
findings on claims that fall within its terms of reference.729 
7.520.  The United States also asserts that the rights contained in the WTO agreements can only 
be modified by means of waivers, multilateral interpretations or amendments, in accordance with 
the provisions of the agreements themselves.730 With regard to the possibility of waiving the right 
to have recourse to the WTO dispute settlement mechanism, the United States considers that a bilateral agreement lacks the particular status that mutually agreed solutions would have under 
the DSU.
731 
7.521.  Finally, according to the United States, the fact that the FTA has not entered into force 
would be an additional reason for rejecting Peru's arguments, as there is no legal basis for Peru's 
assertion that provisions have been amended or rights waived under an existing multilateral 
agreement.732 
7.9.3.3  European Union 7.522.  The European Union asserts that the possibility for Members to waive their rights under 
the WTO agreements has been recognized by the Appellate Body.
733 In its opinion, when 
interpreting the WTO agreements, it may be relevant to consider both subsequent agreements between the parties regarding the application of the agreements and any relevant rule of 
international law applicable in the relations between the parties (without this implying that the FTA 
should be applied instead of, or in precedence to, the WTO agreements).
734 Consequently, the 
possibility that a Member, through a free trade agreement, may waive its rights in respect 
of WTO dispute settlement should not be dismissed a priori , and the analysis should be made on 
a case by case basis.735 
7.523.  The European Union considers that the analysis should begin with an assessment as to 
whether or not a Member has made a specific commitment to refrain from challenging a certain 
measure.736 In the present case, an analysis would be required as to whether the FTA contains 
a clear commitment on the part of Guatemala to refrain from challenging the PRS in the WTO.737 
7.524.  The European Union considers that there is an apparent contradiction between 
Articles 1.3.1 and 1.3.2 of the FTA, to the extent that the first provision states that the parties 
                                               
726 United States' third-party stat ement, para. 19; response to Pa nel question No. 1, para. 1. 
727 United States' third-party written submission, paras. 36-43; third-part y statement, para. 19; 
response to Panel question No. 1, para. 1. 
728 United States' third-party writte n submission, paras. 41-42 and 51 an d fn. 62, (citing Appellate Body 
Reports, Mexico - Taxes on Soft Drinks , para. 56; Brazil - Retreaded Tyres , para. 228); third-party statement, 
para. 19. 
729 United States' third-party written submission , paras. 41-43 (citing Appellate Body Report, 
Mexico - Taxes on Soft Drinks , para. 53); response to Panel question No. 1, para. 1. 
730 United States' third-party writte n submission, para. 49; response to  Panel question No. 1, para. 2. 
731 United States' third-party written submission , para. 50; third-party statement, para. 20. 
732 United States' response to Pa nel question No. 1, para. 4. 
733 European Union's third-party written submission, para. 17 (c iting Appellate Body Report, 
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 - US) , para. 217). 
734 European Union's third-party written su bmission, para. 17 (citing Panel Report, EC – Bananas III 
(Article 21.5 - Ecuador II), para. 7.58; response to Panel question No. 1, para. 3 (citing A ppellate Body Report, 
US - Gasoline , p. 17). 
735 European Union's response to Panel question No. 1, para. 2. 
736 European Union's third-party written submission, para. 17 (c iting Appellate Body Report, 
EC - Bananas III (Article 21.5 - Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 228). 
737 European Union's third-party wr itten submission, para. 18; response to Panel question No. 1, 
para. 1. WT/DS457/R 
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  consider their rights and obligations to be in conformity with their WTO obligations, while the 
second states that, in the event of inconsistency, the FTA rules shall prevail.738 
The European Union also observes that Article 15.3 of the FTA is confined to permitting the complaining party to choose the forum in which it wishes to bring its case and expressly 
mentions the WTO dispute settlement mechanism as one of the possible forums to which 
the parties may have recourse.
739 
7.9.4  Assessment by the Panel 
7.525.  Peru affirms that, if the Panel finds that the PRS is inconsistent with its obligations under 
the WTO agreements, there would be an inconsistency between the FTA (which allows Peru to maintain the PRS) and the WTO agreements (w hich prohibit the PRS). In the light of such 
inconsistency, Peru states that it should be understood that, the FTA has modified, as between 
the parties, those provisions of the WTO agreements which prohibit Peru from maintaining its PRS. 
Peru therefore claims that Guatemala waived the rights which it might have had under the WTO Agreement in relation to the PRS. 
7.526.  Peru's argument that the relevant clauses in the FTA – i.e. paragraph 9 of Annex 2.3 and 
Article 1.3 – modified certain obligations between the parties under the WTO agreements presupposes that those provisions in the FTA are legally binding on Guatemala and Peru. For this 
to be the case, the FTA would have had to enter into force. It is, however, an undisputed fact that 
the FTA has not yet entered into force. 
7.527.  As discussed above, a treaty signed by th e parties but which has not yet entered into force 
has only limited legal effects. Inasmuch as the FTA has not entered into force, its relevant 
provisions are not currently legally binding on the parties.
740 
7.528.  In the light of this fact, it is not necessa ry for this Panel to express an opinion on whether 
the parties may, through the FTA, modify between themselves their rights and obligations under 
the covered agreements; or whether there is a co nflict of rules between the FTA and the covered 
agreements and the consequences such a conflict would have. 
7.10  Special and differential treatment 
7.529.  Pursuant to Article 12.11 of the DSU: 
Where one or more of the parties is a deve loping country Member, the panel's report 
shall explicitly indicate the form in which account has been taken of relevant provisions on differential and more-favou rable treatment for developing country 
Members that form part of the covered agreements which have been raised by 
the developing country Member in the course of the dispute settlement procedures.  
7.530.  Moreover, Article 12.10 of the DSU provides as follows: 
[I]n examining a complaint against a developing country Member, the panel shall 
accord sufficient time for the developing country Member to prepare and present its argumentation. 
7.531.  In the present proceedings, none of the parties, neither the complainant nor the 
defendant, has invoked any provision of the WTO agreements in respect of special and differential treatment for developing countries. In any event, the Panel has taken into account the status of the parties as developing country Members, pa rticularly when preparing the timetable for the 
proceedings after having heard their respective view s. There are no other provisions on differential 
and more favourable treatment for developing country Members that should be the subject of special consideration by the Panel.  
                                               
738 European Unions' third-party written submission, para. 18. 
739 Ibid. para. 19. 
740 See above, para. 7.88. WT/DS457/R 
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  8  CONCLUSIONS AND RECOMMENDATION 
8.1.  For the reasons set out in this report, the Panel concludes as follows: 
a. The Panel finds no evidence that Guatem ala brought these proceedings in a manner 
contrary to good faith; there is therefore no reason for the Panel to refrain from 
assessing the claims put forward by Guatemala; 
b. the duties resulting from the PRS constitute variable import levies or, at the least, share 
sufficient characteristics with variable import levies to be considered a border measure 
similar to a variable import levy, within the meaning of footnote 1 to the Agreement 
on Agriculture; 
c. the duties resulting from the PRS do not constitute minimum import prices and do not 
share sufficient characteristics with minimum import prices to be considered a border 
measure similar to a minimum import price, within the meaning of footnote 1 to the 
Agreement on Agriculture; 
d. by maintaining measures which constitute a variable import levy or, at the least, are 
border measures similar to a variable import levy, and are thus measures of the kind 
which have been required to be converted into ordinary customs duties, Peru is acting inconsistently with its obligations under Article 4.2 of the Agreement on Agriculture; 
e. moreover, the additional duties resulting from the PRS constitute "other duties or 
charges … imposed on or in connection with the importation", within the meaning of the second sentence of Article II:1(b) of the GATT 1994. In applying measures which constitute "other duties or charges", without having recorded them in its 
Schedule of Concessions, Peru's actions are inconsistent with its obligations under the 
second sentence of Article II:1(b) of the GATT 1994; and 
f. inasmuch as the Free Trade Agreement signed by Peru and Guatemala in 
December 2011 has not entered into force, it is not necessary for this Panel to rule on 
whether the parties may, by means of the FTA, modify as between themselves their 
rights and obligations under the covered agreements. 
8.2.  In the light of the foregoing conclusions, th e Panel does not consider it necessary to rule on 
Guatemala's claims that: 
a. Peru's actions are inconsistent with its obligations under Article X:1 of the GATT 1994 
because it failed to publish certain elements of the measure which Guatemala considers 
essential; and 
b. Peru's actions are inconsistent with its obligations under Article X:3(a) of the GATT 1994 
because it administers the measure in question in a manner that is not reasonable, given 
that it fails to observe the requirements of its own legislation. 
8.3.  The Panel does not consider it relevant to address Guatemala's claim that Peru acted 
inconsistently with its obligations under Articles 1, 2, 3, 5, 6 and 7 of the Customs Valuation 
Agreement inasmuch as this claim was made by Gu atemala as an alternative, and only in case 
the Panel were to find that the duties resulting from the PRS are ordinary customs duties. 
8.4.  Pursuant to Article 3.8 of the DSU, in cases where there is an infringement of obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case 
of nullification or impairment of benefits accruing under the Agreement. The Panel therefore 
concludes that, to the extent that Peru has acted inconsistently with the provisions of the Agreement on Agriculture and the GATT 1994, it has nullified or impaired benefits accruing to 
Guatemala under those agreements. 
8.5.  Guatemala has requested the Panel, in exerci se of its discretionary powers afforded by the 
second sentence of Article 19.1 of the DSU, to suggest that Peru "completely dismantle the 
measure in question". In Guatemala's opinion, this would imply the elimination of the additional WT/DS457/R 
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  variable duty and the underlying calculation mechanism, i.e. the PRS.741 According to Guatemala, 
this would be the only way of enabling "Peru properly to bring its measure into conformity with WTO rules in view of the gravity, nature and manifest character of the legal violations in the measure in question".
742 
8.6.  The Appellate Body has indicated that the power vested in panels and the Appellate Body, 
under Article 19.1 of the DSU, to suggest to Members ways in which they could implement 
recommendations and rulings is of a discretionary nature.743 According to the provisions 
of Article 21.3 of the DSU, it is normally the Member to which the recommendations are addressed 
which has to decide on how to implement them.744 Exceptionally, panels have accepted a request 
by the complaining party to suggest to the respondent Member the way in which it could comply with panel recommendations.
745 
8.7.  The Panel recalls that, in its request for th e establishment of a panel, Guatemala identified 
the measure at issue as "the additional duty impo sed by Peru on imports of certain agricultural 
products". Guatemala added that the additi onal duty is determined using the PRS.746 
Bearing in mind that Guatemala challenged the duties resulting from the PRS and not the system 
as such, the Panel does not consider it appropriate to suggest that the proper way of implementing its recommendation is through the elimination of the underlying mechanism for calculating 
the additional duties. As part of the measures adopted with a view to complying with the Panel's 
rulings and recommendations, Peru may decide to dismantle the PRS completely. It is not, however, appropriate for the Panel to make a suggestion to that effect, which would go beyond the measure as defined by Guatemala. The Panel ther efore rejects Guatemala's request to suggest to 
Peru that the way in which its recommendation should be implemented is through the elimination 
of the PRS. 
8.8.  Pursuant to Article 19.1 of the DSU, and havi ng found that Peru has acted inconsistently with 
provisions of the Agreement on Agriculture an d the GATT 1994, the Panel recommends that Peru 
bring the challenged measure – namely, the duties resulting from the PRS – into conformity with 
its obligations under those agreements. 
__________  
                                               
741 Guatemala's first written submission, para. 5.2. See also second written submission, para. 10.2. 
742 Ibid. 
743 Appellate Body Reports , US - Zeroing (EC) (Article 21.5 - EC) , para. 466; US - Oil Country Tubular 
Goods Sunset Review (Article 21.5 - Argentina) , para. 182. 
744 Appellate Body Report, US - Oil Country Tubular Goods Sunset Review (Article 21.5 - Argentina) , 
paras. 173 and 184; Panel Report, EC - Fasteners (China) , para. 8.8 (citin g Panel Report, US - Hot-Rolled 
Steel, para. 8.13); Panel Report, US - Steel Plate , para. 8.8; Panel Report, EC and certain member 
States - Large Civil Aircraft , para. 8.8; Panel Report, EU - Footwear (China) , para. 8.12. 
745 In the following cases, the panels accepted th e complaining party's requ est to suggest a way of 
implementing its recommendations: US - Underwear , para. 8.3 (with regard to a sp ecific transitional safeguard 
measure under Article 6 of the Agreement on Textiles and Clothing); EC - Bananas III (Article 21.5 - Ecuador) , 
paras. 6.155-6.159 (with regard to the European Communities' banana import regime); Guatemala - Cement I , 
para. 8.6 (with regard to an anti-dumping measure); Guatemala - Cement II , paras. 9.6-9.7 (with regard to 
an anti-dumping measure); US - Cotton Yarn , para. 8.5 (with regard to a specific transitional safeguard 
measure under the Agreement on Textiles and Clothing); US – Offset Act (Byrd Amendment), para. 8.6 
(with regard to a law on anti-dumping and countervailing duties); Argentina - Poultry Anti-Dumping Duties, 
para. 8.7 (with regard to an anti-dumping measure); and Mexico - Steel Pipes and Tubes , paras. 8.12-8.13 
(with regard to an anti-dumping meas ure). In the following re ports, the panels made suggestions for taking 
into consideration the interests of developing country Members involved in the dispute: India - Quantitative 
Restrictions , paras. 7.5-7.6; EC - Export Subsidies on Sugar (Austral ia) / EC - Export Subsidies on Sugar 
(Brazil) / EC - Export Subsidies on Sugar (Thailand), para. 8.7. Lastly, in the Reports on EC - Trademarks and 
Geographical Indications (US) / EC - Trademarks and Geographical Indications (Australia), para. 8.5, 
the Panel made a suggestion on the way in which the European Communities might implement its 
recommendations. In many other disputes, however,  the panels refrained from making suggestions on 
how to implement their recommendations. 
746 See Request for the establishment of a Panel by Guatemala, document WT/DS457/2 (14 June 2013).