WORLD TRADE  
ORGANIZATION  WT/DS366/6 
18 September 2007 
 
 (07-3903) 
 Original:   English 
  
 
COLOMBIA – INDICATIVE PRICES AND RESTRICTIONS 
ON PORTS OF ENTRY 
 
Request for the Establishment of a Panel by Panama
 
 
 
 The following communication, dated 14 Sept ember 2007, from the delegation of Panama to 
the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU. 
 
_______________ 
 
  On 12 July 2007, Panama requested consultations  with Colombia pursuant to Article 4 of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes  ("DSU"), 
Article XXII:1 of the General Agreement on Tariffs and Trade 1994  ("GATT 1994") and 
Articles 19.1 and 19.2 of the Agreement on Implementation of  Article VII of the GATT 1994  
("Agreement on Customs Valuation") regarding certain Colombian customs measures on the 
importation of goods from Panama.  The request  was circulated on 17 July 2007 as document 
WT/DS366/1, G/L/824, G/VAL/D/9.
1   
  Panama and Colombia held c onsultations on the new measures on 31 July 2007.  However, no 
mutually agreed solution was found. 
  Panama's concerns relate to the Colombian measures as described below. 
 
 INDICATIVE PRICES 
  Colombia establishes indicative prices to dete rmine the value of products for the purpose of 
levying customs duties and internal taxes.  Th ese prices apply to specific goods from all countries 
except those with which Colombia has signed free tr ade agreements.  These prices are established and 
applied in accordance with Resolutions No. 07509,  No. 07510, No. 07511, No . 07512, No. 07513, and 
No. 07530 of 26 June 2007 of the Directorate of Ta xes and National Customs ("DIAN"), as well as 
framework legislation such as Colombia's Custom s Statute (Decree No. 2685 of 1999, in particular, 
Titles V and VI), Resolution No. 4240 of 2000 a nd Colombia's Tax Code (Decree No. 624 of 1989).  
  Colombia requires that importers of certain  goods pay customs duties and other duties or 
charges and taxes based on the indicative prices, in stead of on the valuation methods set out in 
                                                     
 
1 On 20 July 2006, Panama had requested consultations with Colombia on similar customs measures 
(Colombia – Certain Customs Measures on the Importation of Goods from Panama , Request for Consultations, 
25 July 2006, WT/DS348/1, G/L/782/, G/VAL/D/8).  Panama and Colombia had fruitful consultations and were 
able to arrive at a mutually agreed solution which was no tified by Panama pursuant to Article 3.6 of the DSU on 
7 December 2006.  The present request concerns new measures introduced by Colombia in June 2007 that have effects similar to those measures covered by the mutually agreed solution (Notification of a Mutually Agreed 
Solution, 7 December 2006, WT/DS348/10, G/L/782/Add.1, G/VAL/D/8/Add.1). WT/DS366/6 
Page 2  
 
  Article VII of the GATT 1994 and the Agreement on Customs Valuation.  Panama is challenging the 
indicative price measures on an "as such" and "as applied" basis. 
  Under Article 128.5(e) of Colombia's Customs Statute and Article 172.7 of Resolution No. 4240 of 2000, an importer declaring a FOB value that is below the indicative price can obtain the 
release of merchandise only if it corrects its import declaration to reflect indicative prices and pays 
customs duties, other duties or charges and relevant  taxes on the basis of those indicative prices.  
Article 115 of Colombia's Customs Statute further pr ovides that if an importer fails to obtain release 
of the merchandise within the custody period, th e merchandise shall be considered as legally 
abandoned and will eventually become the property of the State.  
 
 The operation of Colombia's im port regime relating to indicativ e prices prevents an importer 
from using the transaction value.  As a conseque nce, customs duties, other duties and charges and 
relevant taxes are determined on the basis of indi cative prices rather than the transaction value.  
Panama considers that this is inconsistent with  Articles 1 to 7 and 13 of the Agreement on Customs 
Valuation and the General Notes in its Annex 1, as well as Article VII and VIII:1(c) of the GATT 
1994.  Colombia does not comply with the valuations methods set out in the relevant provisions of the 
Agreement on Customs Valuation. Instead, Colombia  relies on a system which is proscribed by 
Article 7 of the Agreement on Customs Valuation Ag reement, in particular, Article 7.2(b) (the 
acceptance of the higher of two alternative values) , Article 7.2(f) (minimum customs values) and 
Article 7.2(g) (arbitrary or fictitious values). 
 
 Moreover, the tax base for the relevant internal taxes, including the sales tax
2, on imported 
products is based on the indicative prices.  In cont rast, the tax base for the internal taxes, including 
sales tax, on the like domestic products  is based on the transaction value.3  This difference in the 
determination of the tax base results in treatment less favourable to imports than that accorded to 
domestic like products, within the meaning of Ar ticle III:4 of the GATT 1994.  In any case, the 
difference in the tax bases results in the imposition of a tax burden on imported products that is higher 
than that borne by the domestic like products, wh ich is inconsistent with Article III:2 of the 
GATT 1994.       Colombia's customs laws and indicative prices are established and administered in a manner 
that is not "uniform, impartial and reasonable" and is inconsistent w ith its obligations under 
Article X:3(a) of the GATT 1994.  In particular, th ere is no meaningful opportunity afforded to an 
importer to challenge the valuation of a product as determined by the use of indicative prices prior to 
the legal abandonment of that product.   RESTRICTIONS ON THE PORTS OF ENTRY INTO COLOMBIA  
 
 Resolution No. 07373 of 22 June 2007, as modi fied by Resolution No. 07673 of 28 June 2007 
(the "ports of entry" measures) provides that  all goods classifiable under Chapters 50 to 64 of 
Colombia's Customs Tariff (textile and footwear products) coming from Panama must be entered and 
imported into Colombia only through specified ports of entry.  Such goods, including goods in transit 
from Panama, must be imported exclusively through the two designated ports: the Special 
Administration for Customs Service at Bogota and the Special Customs Administration at Barranquilla. This requirement does not apply to goods  arriving in Colombia directly from third 
countries.  Furthermore, the import declaration to  be used for goods from Panama must be presented 
in advance of their arrival in Colombia, but not more than 15 days in advance.  
 
                                                     
 
2 Article 459 of Colombia's Tax Code. 
3 Article 447 of Colombia's Tax Code.  WT/DS366/6 
 Page 3 
 
 
   If an importer does not comply with these requirements, it will be subject to special 
procedures under Colombia's Customs Statute, including the detention of goods pursuant to Article 502 of the Statute.  In addition, although an importer is normally allowed to correct any 
discrepancy between the information contained in the import declaration and the merchandise actually 
imported (through a legalization declaration without the payment of a special fee), with respect to the 
goods from Panama subject to these restrictions, this  possibility is limited only to those cases where 
there are differences in the weight per square me tre or the width of the imported cloth and these 
differences do not exceed 7% and 10%, respectively.   The ports of entry measures restrict the importation of goods from Panama into Colombia 
within the meaning of Article XI:1 of the GATT 1994.  As they apply only to the importation of 
goods from Panama, they are inconsistent with the ob ligations in Article I:1 and Article XIII:1 of the 
GATT 1994.  Furthermore, the ports of entry measur es restrict the freedom of transit through the 
Colombian territory inconsistently with Article V:2 of the GATT 1994. Moreover, the restriction on 
the ports of entry provides to goods in transit from Panama to Colombia trea tment less favourable 
than that accorded to products transported directly  from their place of origin, which is contrary to 
Article V:6 of the GATT 1994.    Panama considers that the Colo mbian measures at issue nullify or impair the benefits accruing 
to Panama under the GATT 1994 and the Customs Valua tion Agreement.  Pursuant to Article 19.1 of 
the Agreement on Customs Valuation, and Article 6.2 of the DSU, Panama therefore requests the 
Dispute Settlement Body ("DSB") to establish a pa nel with standard terms of reference under 
Article 7.1 of the DSU in order to examine the ma tter and measures described above.  This request 
also covers any amendments or extensions to th ese measures as well as any related acts, practices and 
implementing measures.  
 Panama asks that a Special Session of the DSB be convened at the first available date 
convenient to the Chairman of the DSB.   
__________