RESTRICTED  
  
WT/DSB/M/366  
 
28 September 2015  
(15-4990)  Page: 1/3  
Dispute Settlement Body 
31 July 2015    
 
 MINUTES OF MEETING 
HELD IN THE CENTRE WILLIAM RAPPARD 
ON 31 JULY 2015 
Chairman: Mr. Harald Neple (Norway) 
 
1  PERU – ADDITIONAL DUTY ON IMPORTS OF CERTAIN AGRICULTURAL PRODUCTS 
A.  Report of the Appellate Body (WT/DS457 /AB/R and Add.1) and Report of the Panel 
(WT/DS457/R and Add.1) 
1.1.  The Chairman drew attention to the comm unication from the Appellate Body contained in 
document WT/DS457/10 transmitting the Appellate Body Report in the dispute: "Peru – Additional 
Duty on Imports of Certain Agricultural Products", which had been circulated on 20 July 2015 in 
document WT/DS457/AB/R and Add.1. He reminded delegations that the Appellate Body Report 
and the Panel Report pertaining to this dispute ha d been circulated as unrestricted documents. As 
Members were aware, Article 17.14 of the DSU requ ired that: "An Appellate Body report shall be 
adopted by the DSB and unconditionally accepted  by the parties to the dispute unless the DSB 
decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to Members. This adoption procedure is without prejudice to the right of Members to 
express their views on an Appellate Body report". 
1.2.  The representative of Guatemala said th at his country wished to thank the Panel, the 
Appellate Body and the respective Secretariats for their work in assisting the parties to resolve the 
matter at issue. Guatemala valued its bilateral relationship with Peru and hoped that settlement of 
this matter would further strengthen the friendship and solidarity between the two countries. In 
particular, Guatemala wished to reiterate that in this dispute it had consistently acted in strict compliance with the principles of good faith governing international relations between States. This 
was noted by both the Panel and the Appella te Body. The Free Trade Agreement between 
Guatemala and Peru, irrespective of whether or not it was in force, did not pose any impediment to Guatemala initiating dispute settlement proceedings in relation to Peru's price-range system. Guatemala welcomed the Reports of the Panel and the Appellate Body with regard to their findings 
that the measure at issue was a variable import levy or similar measure, in violation of Article 4.2 
of the Agreement on Agriculture, and that it also constituted "other duties or charges" not recorded in Peru's Schedule of Concessions in violation of Article II:1(b) of the GATT 1994. 
Guatemala was also satisfied with the Appellate Body's ruling, which reversed the Panel's finding 
that the measure at issue was not a minimum im port price, although it regretted that the 
Appellate Body was unable to complete the analysis. 
1.3.  Guatemala noted that this was the first ti me that the arguments of the parties were not 
summarized by the Appellate Body, but instead anne xed to its Report in the form of executive 
summaries prepared by the participants in the a ppeal. This meant that the Appellate Body did not 
use the executive summaries to prepare its own descriptions of the parties' arguments. Thus, 
executive summaries were becoming even more important since they themselves contained the 
description of the participants' arguments. Guatemala welcomed this new practice by the Appellate Body. In the absence of concrete steps by Memb ers to address the dispute settlement system's 
workload issues, small actions taken by panels and the Appellate Body could serve as a palliative 
measure in order to make better use of the limited resources available. Nonetheless, it was WT/DSB/M/366 
 
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  important to point out that limiting the length of executive summaries to a maximum of 10% of 
the original submission's word count may not always be appropriate, particularly not in cases where the original submissions themselves were  quite short and the number of arguments high. 
Guatemala invited the Appellate Body to review the li mit on the length of submissions, in particular 
in light of the fact that executive summaries were now simply annexed to reports and should not 
therefore represent an addition to its workload. 
1.4.  Finally, he said that Guatemala hoped th at Peru, as a Member that respected its WTO 
commitments, would comply promptly with the rulings and recommendations of the Panel and the 
Appellate Body that would be adopted at the present meeting. 
1.5.  The representative of Peru said that his country wished to thank the Panel, the Appellate 
Body and the Secretariat who had worked on this case. First, Peru wished to stress that it did not 
support the findings and recommendations of the Appellate Body Report. As Peru has rightly 
pointed out on a number of occasions, this case  was unique in the history of the WTO dispute 
settlement system since it demonstrated the inconsistency in Guatemala's behaviour. Although 
Guatemala had clearly stated its agreement to the application of the measure when it had signed 
the bilateral agreement with Peru, it had then filed a dispute at the multilateral level. All Members must act in accordance with the principle of good faith, an essential prerequisite in relations 
between States in general, and in the WTO dispute settlement system in particular. 
1.6.  Peru considered that the Panel had the responsibility of interpreting Peru's obligations in 
accordance with the customary rules of interpretation of public international law, namely, by taking into account the provisions of Article 31 of the 1969 Vienna Convention on the Law of 
Treaties and also taking into consideration the implications of the Free Trade Agreement in the 
dispute. The Appellate Body had limited the good faith assessment and had failed to consider the 
obvious inconsistency in Guatemala's actions. In any case, Peru was convinced that the measure 
at issue was entirely consistent with its WTO obligations, as it constituted an ordinary customs 
duty and did not violate either Article II of th e GATT 1994 or Article 4.2 of the Agreement on 
Agriculture. The Panel had confirmed that "the measure does not operate in a manner that is 
different from the way in which ordinary cust oms duties might operate". The Panel had also 
recognized that the measure was neither a minimu m import price, given the conclusive evidence 
that it did not impede entry of the products at issue to the Peruvian market at below-range prices, nor an alleged de facto  threshold. Moreover, Peru considered that the main finding of the Panel 
and the Appellate Body, namely that the measure was a variable import levy, was incorrect, and 
that Article 4.2 of the Agreement on Agricultur e and Article II:1(b) of the GATT 1994 were not 
interpreted in accordance with the customary rules of interpretation of public international law. 
1.7.  Peru said that the measure challenged by Guatemala was included in the schedule of tariff 
commitments bound by Peru in the Uruguay Round and was simply an ordinary customs duty that 
varies. Peru disagreed with the standard applied by the Appellate Body, which would suggest that 
the presence of a formula would turn an ordinary customs duty into a prohibited measure. On the 
contrary, the existence of a formula made the du ty more transparent and predictable and did not 
impede the transmission of international price developments. Thus, the measure should have been treated, by both the Panel and the Appellate Body, as a measure substantially different from those 
prohibited under the Agreement on Agriculture and the GATT 1994 and consequently should have 
been properly compared to customs duties. 
1.8.  Notwithstanding the above, Peru would respect its commitments under the rules of the 
multilateral trading system and carry out the internal coordination process to implement the 
recommendations of the Appellate Body Report, within a reasonable period of time. 
1.9.  The representative of the United States said that his country thanked the Panel and the 
Appellate Body for their efforts in this disput e. The United States wished to offer a few 
observations on the Reports. The United States noted that the Panel and Appellate Body Reports provided important guidance on the meaning and application of the terms "variable import levies" and "minimum import prices" in footnote 1 of Ar ticle 4.2 of the Agreement on Agriculture. In 
particular, the Appellate Body had confirmed that  a "necessary and key element" of variable 
import levies was their inherent variability, based on a scheme or formula that caused and ensured that levies changed continuously and automatically. The Appellate Body had noted that variable 
import levies may have certain "additional features", such as lack of transparency and 
predictability, but cogently reasoned that these features were not independent or absolute WT/DSB/M/366 
 
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  characteristics that a variable import levy must display. Instead, these additional features may 
serve to confirm that a measure was inherently variable. This was an important development and clarification, particularly in light of language from previous Appellate Body Reports in the "Chile - Price Band" dispute that some Members had taken to indicate that lack of transparency 
and predictability were necessary elements. The United States also noted the Appellate Body's 
rejection of Peru's argument that it was permitted to maintain its WTO-inconsistent price range system based on the terms of the Peru-Guatemala FTA, which was not in force. As the Appellate 
Body had observed, an FTA cannot amend or modify provisions of the WTO Agreements. The 
proper route for assessing whether a provision in an FTA may permit a departure from WTO rules were the legal provisions specifically addressing regional trade agreements: Article XXIV of the GATT 1994, Article V of the GATS, and the Enabling Clause. Yet Peru had not relied on any of 
these provisions, and had conceded that an agreement that was not in force could not benefit from 
a defence under Article XXIV of the GATT 1994. The Appellate Body also had appropriately declined to accept the argument that Article 4.2 of the Agreement on Agriculture should be 
"interpreted" in light of this FTA. In rejecting these arguments, the Appellate Body had refrained 
from addressing certain issues of interpretation and public international law raised by Peru that were not necessary to resolve the dispute. This approach had allowed the Appellate Body to issue 
a concise, high-quality report, and the United States appreciated these efforts. As the 
United States had noted previously, such an approa ch promoted the efficient resolution of disputes 
and helped to mitigate the workload problems currently facing the WTO dispute settlement system. 
1.10.  The DSB took note of the statements and adopted the Appellate Body Report contained in 
WT/DS457/AB/R and Add.1 and the Panel Report contained in WT/DS457/R and Add.1, as 
modified by the Appellate Body Report. 
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