WORLD TRADE  
ORGANIZATION  WT/DS207/AB/RW 
7 May 2007 
 (07-1345) 
 Original:   English 
  
 
     
 
    
 
  
CHILE – PRICE BAND SYSTEM AND SAFEGUARD MEASURES 
RELATING TO CERTAIN AGRICULTURAL PRODUCTS 
 
RECOURSE TO ARTICLE 21.5 OF  THE DSU BY ARGENTINA 
   
AB-2007-2 
 
 
 
    
 
    
Report of the Appellate Body 
  WT/DS207/AB/RW 
 Page i 
 
 
 
I. Introduction................................................................................................................... ..............1  
II. Arguments of the Participants.................................................................................................. ...8 
A. Claims of Error by Chile – Appellant............................................................................ 8 
1. Burden of Proof ................................................................................................8  
2. Article 4.2 and Footnote 1 of the  Agreement on Agriculture ...........................9  
3. Articles 11 and 12.7 of the DSU.....................................................................16  
4. Conclusion ......................................................................................................17  
B. Arguments of Argentina – Appellee ............................................................................. 17 
1. Burden of Proof ..............................................................................................17  
2. Article 4.2 and Footnote 1 of the  Agreement on Agriculture .........................18  
3. Articles 11 and 12.7 of the DSU.....................................................................24  
4. Conclusion ......................................................................................................25  
C. Claims of Error by Argentina – Other Appellant ........................................................ 25 
1. Conditional Appeal and Completion of the Analysis .....................................26  
2. Scope of these Article 21.5 Proceedi ngs in Relation to Argentina's 
Claim under Article II:1(b) of the GATT 1994 ..............................................27  
3. Consistency of the Measure at Issue with Article II:1(b) of the GATT 1994.....................................................................................................28
 
D. Arguments of Chile  – Appellee ................................................................................... 29 
1. Conditional Appeal and Completion of the Analysis .....................................29  
2. Scope of these Article 21.5 Proceedi ngs in Relation to Argentina's 
Claim under Article II:1(b) of the GATT 1994 ..............................................30  
3. Consistency of the Measure at Issue with Article II:1(b) of the GATT 1994.....................................................................................................30
 
E. Arguments of the Third Participants............................................................................ 31 
1. Australia..........................................................................................................31  
2. Brazil...............................................................................................................32  
3. Canada ............................................................................................................35  
4. Colombia.........................................................................................................37  
5. European Communities...................................................................................37  
6. Thailand ..........................................................................................................39  
7. United States...................................................................................................40  
III. Issues Raised in This Appeal ................................................................................................... .41 
IV. Background and the Measure at Issue.......................................................................................42  
A. Overview of the Measure at Issue and the Original Price Band System ..................... 42 
B. The Original Price Band System.................................................................................. 44 
C. The Measure at Issue ................................................................................................... 45 
V. Burden of Proof ................................................................................................................ ........48  WT/DS207/AB/RW 
Page ii  
 
VI.
 Article 4.2 and footnote 1 of the  Agreement on Agriculture ....................................................53  
A. Interpretation of Article 4.2 and Foot note 1 of the Agreement on Agriculture ........... 54 
1. "Minimum Import Prices"...............................................................................55  
2. "Variable Import Levies"................................................................................56  
3. "Similar Border Measures Other Than Ordinary Customs Duties" ................59  
4. Additional Observations on the Re lationship Between Article 4 and 
Article 5 of the Agreement on Agriculture .....................................................62  
B. The Panel's Application of Article 4.2 and Footnote 1 of the Agreement on 
Agriculture to the Me asure at Issue............................................................................. 63 
1. The Panel's Analytical Approach....................................................................64  
2. Similarity to a Minimum Import Price............................................................68  
3. Similarity to a Variable Import Levy..............................................................72  
C. Conclusion ................................................................................................................... 79 
VII. Articles 11 and 12.7 of the DSU...............................................................................................8 0 
A. Article 11 of the DSU................................................................................................... 80 
B. Article 12.7 of the DSU................................................................................................ 86 
VIII. Conditional Appeal ............................................................................................................. ......88  
IX. "New" Exhibits Submitted by Chile on Appeal........................................................................89  
X. Findings and Conclusions....................................................................................................... ..90 
 
ANNEX I Notification of an Appeal by Chile under Article 16.4 and Article 17 of the 
Understanding on Rules and Procedures G overning the Settlement of Disputes 
(DSU), and under Rule 20(1) of the Working Procedures for Appellate Review  
 ANNEX II Notification of an Other Appeal by Ar gentina under Article 16.4 and Article 17 of  
the Understanding on Rules and Procedures Governing the Settlement of Disputes 
(DSU), and under Rule 23(1) of the Working Procedures for Appellate Review 
  WT/DS207/AB/RW 
 Page iii 
 
 
TABLE OF CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Australia – Salmon  Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Canada – Dairy  
(Article 21.5 – New Zealand and US II)
  Appellate Body Report, 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, DSR 2003:I, 213 
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, DSR 2002:VIII, 3045 
Chile – Price Band System  Award of the Arbitrator, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Arbitration under Article 21.3(c) of 
the DSU , WT/DS207/13, 17 March 2003, DSR 2003:III, 1237 
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, modified 
by Appellate Body Report, WT/DS207AB/R, DSR 2002:VIII, 3127 
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 and Corr.1, circulated to WTO Members 8 December 
2006 
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, modified by 
Appellate Body Report, WT/DS302/AB/R 
EC – Asbestos  Appellate Body Report, European Communities – Measures Affecting Asbestos 
and Asbestos-Containing Products , WT/DS135/AB/R, adopted 5 April 2001, 
DSR 2001:VII, 3243 
EC – Bed Linen  
(Article 21.5 – India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from I ndia – Recourse to Article 21.5 of the 
DSU  by India , WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, 965  
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Sardines  Appellate Body Report, European Communities – Trade Description of Sardines , 
WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
Egypt – Steel Rebar  Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from 
Turkey , WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, 2667 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998, 
DSR 1998:I, 9 
India – Quantitative 
Restrictions  Appellate Body Report, India – Quantitative Restrictions on Imports of 
Agricultural, Textile and Industrial Products , WT/DS90/AB/R, adopted 
22 September 1999, DSR 1999:IV, 1763 
Japan – Agricultural Products II  Appellate Body Report, Japan – Measures Affecting Agricultural Products , 
WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, 277 
Japan – Apples  Appellate Body Report, Japan - Measures Affecting the Importation of Apples , 
WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391 WT/DS207/AB/RW 
Page iv  
 
Short Title Full Case Title and Citation 
Korea – Alcoholic Beverages  Appellate Body Report, Korea – Taxes on Alcoholic Beverages , WT/DS75/AB/R, 
WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports  
of Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
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, 
DSR 2001:XIII, 6675 
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, DSR 2001:VII, 2701 
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779 
US – Countervailing Measures 
on Certain EC Products Panel Report, United States – Countervailing Measures Concerning Certain 
Products from the European Communities , WT/DS212/R, adopted 8 January 
2003, modified by Appellate Body Report, WT/DS212/AB/R, DSR 2003:I, 73 
US – Countervailing Measures on Certain EC Products 
(Article 21.5 – EC) Panel Report, United States – Countervailing Measures Concerning Certain 
Products from the European Communities – Recourse to Article 21.5 of the DSU 
by the European Communities , WT/DS212/RW, adopted 27 September 2005 
US – FSC  
(Article 21.5 – EC II) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Second Recourse to Article 21.5 of the DSU by the European Communities , WT/DS108/AB/RW2, adopted 14 March 2006 
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 
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, DSR 2004:VII, 3257 
US – Oil Country Tubular Goods Sunset Reviews  
(Article 21.5 – Argentina) Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil 
Country Tubular Goods from Argentina – Re course to Article 21.5 of the DSU by 
Argentina , WT/DS268/RW, circulated to WTO Members 30 November 2006  
US – Shrimp  
(Article 21.5 – Malaysia)  Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
 and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia , 
WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6481 
US – Softwood Lumber IV 
(Article 21.5 – Canada) Appellate Body Report, United States – Final Countervailing Duty Determination 
with Respect to Certain Softwood Lumber from Canada – Recourse by Canada to 
Article 21.5 of the DSU , WT/DS257/AB/RW, adopted 20 December 2005  
US – Softwood Lumber VI 
(Article 21.5 – Canada) Appellate Body Report, United States – Investigation of the International Trade 
Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the 
DSU by Canada , WT/DS277/AB/RW, adopted 9 May 2006  
US – Wheat Gluten  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717  WT/DS207/AB/RW 
 Page v 
 
 
Short Title Full Case Title and Citation 
US – Wool Shirts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 
23 May 1997, DSR 1997:I, 323 
US – Zeroing (Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews , 
WT/DS322/R, adopted 23 January 2007, modified by Appellate Body Report, 
WT/DS322/AB/R 
 WT/DS207/AB/RW 
Page vi  
 
TABLE OF ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation  Definition  
applied tariff a most-favoured-nation tariff of 6 per cent  ad valorem   
c.i.f. cost, insurance and freight 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
f.o.b. free on board 
GATT 1994 General Agreement on Tariffs and Trade 1994   
measure at issue Chile's amended price band system 
original panel panel in the  Chile – Price Band System   proceedings 
original panel report Panel Report, Chile – Price Band System   
Panel Panel in these Chile – Price Band System   (Article 21.5 – Argentina) 
proceedings 
Panel Report Panel Report,  Chile – Price Band System   (Article 21.5 – Argentina) 
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/5,  
4 January 2005 
WTO World Trade Organization 
WTO Agreement  Marrakesh Agreement Es tablishing the World Trade Organization  
 
  WT/DS207/AB/RW 
 Page 1 
 
 
WORLD TRADE ORGANIZATION  
APPELLATE BODY 
  
Chile – Price Band System and Safeguard 
Measures Relating to Certain Agricultural Products  
 
Recourse to Article 21.5 of the DSU by Argentina
 
 
Chile, Appellant/Appellee 
Argentina, Other Appellant/Appellee  
 Australia, Third Participant 
Brazil, Third Participant 
Canada, Third Participant 
China, Third Participant 
Colombia, Third Participant 
European Communities, Third Participant 
Peru, Third Participant  
Thailand, Third Participant 
United States, Third Participant 
  AB-2007-2 
  Present:   Baptista, Presiding Member 
 Abi-Saab, Member 
 Sacerdoti, Member  
  I. Introduction 
1. Chile and Argentina each appeals certain issues of  law and legal interpretations developed in 
the Panel Report, Chile – Price Band System and Safeguard Me asures Relating to Certain Agricultural 
Products – Recourse to Article 21.5 of the DSU by Argentina  (the "Panel Report").
1  T he Pa ne l  wa s 
established to consider Argentina's comp laint regarding the consistency with the Agreement on 
Agriculture , the  General Agreement on Tariffs and Trade 1994  (the "GATT 1994"), and the  
Marrakesh Agreement Es tablishing the World Trade Organization (the " WTO Agreement ") of the 
measure taken by Chile to comply with the recomme ndations and rulings of the Dispute Settlement 
Body (the "DSB") in the original proceedings in  Chile – Price Band System .2   
                                                      
1WT/DS207/RW and Corr.1, 8 December 2006.  
2The recommendations and rulings of the DSB resulted from the adoption on 23 October 2002, by the 
DSB, of the Appellate Body Report, WT/DS207/AB/R, and the Panel Report, WT/DS207/R, in Chile – Price 
Band System .  In this Report, we refer to the panel in these Artic le 21.5 proceedings as the "Panel".  We refer to the 
panel that considered the original complaint brought by Ar gentina as the "original panel" and to its report as the 
"original panel report".  WT/DS207/AB/RW 
Page 2  
 
2. The original proceedings concerned Chile's price band system for certain agricultural 
products.
3  The original panel found that Chile's price band system was a border measure similar to a 
variable import levy and to a mi nimum import price, other than ordi nary customs duties, within the 
meaning of footnote 1 to Article 4.2 of the  Agreement on Agriculture .4  Therefore, the original panel 
concluded that, because the price band system was a measure "of the kind which ha[s] been required to 
be converted into ordinary customs duties" under Article 4.2 of the Agreement on Agriculture , by 
maintaining such a measure, Chile acte d inconsistently with that provision.5  The original panel also 
concluded that, because the duties re sulting from the price band system we re not recorded in the "other 
duties and charges" column of Chile's Schedule of  Concessions, but were levied nonetheless, those 
duties were inconsistent with the second se ntence of Article II:1(b) of the GATT 1994.6 
3. The Appellate Body upheld the original panel' s finding that Chile's price band system was a 
border measure similar to a variable import levy and to a minimum import price and was, therefore, 
inconsistent with Article 4.2 of the  Agreement on Agriculture .7  However, the Appellate Body 
disagreed with the original panel's definition of "ord inary customs duties" and, therefore, reversed the 
original panel's finding that the term  "ordinary customs duty" within the meaning of Article 4.2 of the  
Agreement on Agriculture   was to be understood as "referring to a customs duty which is not applied 
on the basis of factors of an exogenous nature".8  In addition, the Appellate Body reversed the original 
panel's finding that the duties resulting from the origin al price band system were inconsistent with the 
second sentence of Ar ticle II:1(b) of the GATT 1994 on the grounds that this claim was not part of the 
matter before the original panel, and, by making this finding, the orig inal panel had acted inconsistently 
with Article 11 of the  Understanding on Rules and Procedures Governing the Settlem ent of Disputes  
(the "DSU").9   
4. On 23 October 2002, the DSB adopted the origin al panel and Appellate Body reports.  On 
6 December 2002, Chile requested that a reasonabl e period of time for the implementation of the 
                                                      
3The original panel also found that certain safeguard measures on products subject to the price band 
system were inconsistent with Article XIX:1(a) of the GATT 1994 and the  Agreement  on Safeguards .  These 
safeguard measures were withdrawn during the course of the original panel proceedings. (Original Panel Report, 
paras. 2.15, 7.109-7.198, and 8.1(b))  The original panel's findings regarding the safeguard measures were not 
appealed. 
4Original Panel Report, paras. 7.25, 7.47, and 7.65.  
5Ibid., paras. 7.102 and 8.1. 
6Ibid., paras. 7.107, 7.108, and 8.1. 
7Appellate Body Report, Chile – Price Band System , paras. 262, 280, and 288(c)(i). 
8Ibid., paras. 278 and 288(c)(ii);  Origin al Panel Report, paras. 7.52 and 7.60. 
9Appellate Body Report, Chile – Price Band System , paras. 173, 174, 177, and 288(a);  Original Panel 
Report, para. 7.108.  WT/DS207/AB/RW 
 Page 3 
 
 
recommendations and rulings of the DSB be determ ined through binding arbitration pursuant to 
Article 21.3(c) of the DSU.10  In an award issued on 17 March 2003, the arbitrator determined that the 
reasonable period of time for Chile to implement the recommendations and rulings of the DSB would 
be 14 months, ending on 23 December 2003.11  On 27 October 2003, Chile notified the DSB that it 
had made amendments to its price band system, which would enter into force on 16 December 2003.12  
However, Argentina considered  that Chile's amended measure failed to comply with the 
recommendations and rulings of the DSB in the original proceedings.13  On 29 December 2005, 
Argentina requested that the matter of compliance be referred to the original panel pursuant to 
Article 21.5 of the DSU.14  On 20 January 2006, the DSB referred the matter to the original panel.15   
5. The measure that Argentina challenged in these Article 21.5 proceedings is Chile's amended 
price band system, as applied to imports of wheat a nd wheat flour.  This measure (the "measure at 
issue") consists of:  (i) Article 12 of Chilean La w 18.525 on the Rules on the Importation of Goods, as 
amended by Law 19.897 published on  25 September 2003;  and (ii) Supreme Decree  831 of Chile's 
Ministry of Finance, published on 4 October 200 3, regulating the application of Article 12 of 
Law 18.525, as amended by Law 19.897.16  The constituent parts and the operation of the measure at 
issue are explained in the Panel Report17 and Section IV of this Report, and the factual aspects of this 
dispute are set out in greater detail in the Panel Report.18   
6. Before the Panel in these Article 21.5 proceedings , Argentina claimed that Chile had failed to 
implement the recommendations and rulings of the DSB, and that the measure at issue, as applied to 
wheat and wheat flour, was inconsistent with Article 4.2 of the  Agreement on Agriculture , the second 
sentence of Article II:1(b) of the GATT 1994, and Article XVI:4 of the  WTO Agreement . 
                                                      
10WT/DS207/9.  
11Award of the Arbitrator, Chile – Price Band System , para. 58. 
12WT/DS207/15/Add.1 and WT/DSB/M/157, para. 18.  
13On 24 December 2003, Ar gentina and Chile notified to the DSB their understanding regarding 
procedures under Articles 21 and 22 of the DS U with respect to the dispute. (WT/DS207/16) 
14WT/DS207/18. 
15WT/DS207/19. 
16Panel Report, para. 2.12;  Chilean Law 19.897 (Exhibits ARG-1 and CHL-1 submitted by Argentina 
and by Chile, respectively, to the Pane l);  Supreme Decree 831 of Chile's Ministry of Finance (Exhibits ARG-2 
and CHL-2 submitted by Argentina and by Chile, respectively, to the Panel). 
17Panel Report, paras. 2.12-2.32. 
18Ibid., paras. 1.1-2.11.  WT/DS207/AB/RW 
Page 4  
 
7. The Panel Report was circulated to the Members of the World Trade Organization 
(the "WTO") on 8 December 2006.  The Panel found that:  
(a) By maintaining a border measure similar to a variable import 
levy and to a minimum import price, Chile is acting in a 
manner inconsistent with Artic le 4.2 of the Agreement on 
Agriculture, and has thus failed to implement the recommendations and rulings of the DSB; and 
(b) It is unnecessary, for the resolution of this dispute, to make a 
separate finding on Argentina's claim under the second 
sentence of Article II:1(b) of GATT 1994.
19 
8. The Panel concluded that Chile's price band syst em continues to nullify and impair benefits 
accruing to Argentina under the  Agreement on Agriculture .20 
9. On 5 February 2007, Chile notified the DSB, pursuant to Article 16.4 of the DSU, of its 
intention to appeal certain issues of law covered in  the Panel Report and certain legal interpretations 
developed by the Panel and filed a Notice of Appeal21 pursuant to Rule 20 of the Working Procedures 
for Appellate Review  (the " Working Procedures ").22  On 12 February 2007, Chile filed an appellant's 
submission.23  On 19 February 2007, Argentina notified the DSB, pursuant to Article 16.4 of the 
DSU, of its intention to appeal certain issues of  law covered in the Pane l Report and certain legal 
interpretations developed by the Panel and filed a Notice of Other Appeal pursuant to Rule 23(1) 
and (2) of the Working Procedures .24  On 23 February 2007, Argentina filed an other appellant's 
submission.25  On 2 March 2007, Argentina filed an appellee's submission.26  On 6 March 2007, Chile 
filed an appellee's submission.27  On the same day, Australia, Brazil, Canada, the European 
                                                      
19Panel Report, para. 8.2.  The Panel also found that it was unnecessary, for the resolution of this 
dispute, to make a separate finding on Argentina's claim under Article XVI:4 of the WTO Agreement . (Ibid.)  
This finding of the Panel was not appealed. 
20Panel Report, para. 8.3. 
21WT/DS207/22 (attached as Annex I to this Report). 
22WT/AB/WP/5, 4 January 2005. 
23Pursuant to Rule 21 of the Working Procedures . 
24WT/DS207/23 (attached as Annex II to this Report). 
25Pursuant to Rule 23(3) of the Working Procedures , and pursuant to Rule 16(2) (see  infra , para. 11). 
26Pursuant to Rules 22 and 23(4) of the Working Procedures . 
27Pursuant to Rules 22 and 23(4) of the Working Procedures , and pursuant to Rule 16(2) (see  infra , 
para. 11).  WT/DS207/AB/RW 
 Page 5 
 
 
Communities, and the United States each filed a third participant's submission28, and China, 
Columbia, Peru, and Thailand each notified the Appellate Body Secretariat of its intention to appear at 
the oral hearing and to make an oral statement.29 
10. The oral hearing in this appeal was held on 15 March 2007.  The participants and the third 
participants (with the exception of China and Pe ru) presented oral arguments and responded to 
questions posed by the Members of the Division hearing the appeal. 
11. The Division received two procedural requests dur ing the course of the appeal.  First, on 
9 February 2007, the Division received a letter from Argentina requesting, pursuant to Rule 16(2) of 
the  Working Procedures , to change the date scheduled for f iling its other appellant's submission from 
20 February to 26 February 2007.  Argentina explai ned that filing a submission on 20 February would 
be "highly problematic fo r Argentina" because the oral hearing in another appellate proceeding, in 
which Argentina was also a participant, would be held on 19 February 2007.  The Appellate Body 
invited Chile and the third participants to comme nt on Argentina's request.  Neither Chile nor any 
third participant objected to Argentina's request, but  Chile and the United States requested extensions 
of the deadlines for filing their submissions in the event that the Division granted Argentina's 
request.30  By letter dated 15 February 2007, the Divi sion informed the participants and the third 
participants that it had decided to change the date  for filing Argentina's other appellant's submission 
from 20 February to 23 February 2007, and the da te for filing Chile's appellee's submission and the 
third participants' submissions  from 2 March to 6 March 2007. 
                                                      
28Pursuant to Rule 24(1) of the Working Procedures , and pursuant to Rule 16(2) (see  infra , para. 11).  
On 14 March 2007, the Director of the Appellate Body  Secretariat received the executive summary of the 
European Communities' third participant's submission.  By letter dated 14 March 2007, the Division informed 
the European Communities that the executive summary would not be accepted because it had been submitted 
after 6 March 2007, the deadline for filing a third participan t's submission, and in the interest of fairness to all 
participants and other third participants.  The original a nd nine copies of the execu tive summary were, therefore, 
returned to the European Communities. 
29Pursuant to Rule 24(2) of the Working Procedures . 
30By letter dated 9 February 2007, the Division hearing this appeal invited Chile and the third 
participants to submit written comments on Argentina's re quest.  Chile, Brazil, Columbia, Peru, and the United 
States submitted written comments.  Chile agreed that th e situation faced by Argentina constituted "exceptional 
circumstances", and stated that it ha d no objection to Argentina's reques t.  However, Chile requested that, 
should the Division decide to grant Argentina's request, the date for filing Chile's appellee's submission—due on 
2 March—also be extended by one week, to 9 March 2007.  Chile added that, in order to ensure that Chile's procedural rights were not compromised, the due date for Argentina's appellee's submission, 2 March 2007, 
should not be altered unless the date of the oral hearing were also changed.  The United States indicated that it 
had no objection to Argentina's request, but stated its "assum ption" that, if the date for the filing of Argentina's 
other appellant's submission were to be deferred until 26 February, the date for the filing of a third participant's 
submission would be adjusted "commensurately", that is, postponed from 2 March until 8 March.  Brazil, 
Columbia, and Peru indicated that they had no objection to Argentina's request.  WT/DS207/AB/RW 
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12. The second procedural request was made in a le tter from Argentina, dated 26 February 2007, 
asking the Division to reject 13 of 15 exhibits that were attached to Chile's appellant's submission on 
the grounds that these exhibits included new evid ence that was not before the Panel in these 
Article 21.5 proceedings and that Article 17.6 of the DSU precludes the Appellate Body from 
accepting such evidence.
31  The exhibits challenged by Argentina contain evidence relating to the 
operation of the measure at issue through Decemb er 2006, including various tables and charts, along 
with a sample Supreme Decree is sued in December 2006 pursuant to the measure at issue.  The 
exhibits also contain Supreme Decree No. 266 from 2002, which was issued pursuant to the original 
price band system and was mentioned in Law 18.52 5, as amended, as the basis on which the price 
band thresholds were established under the measure at issue.  By letter dated 27 February 2007, the 
Division invited Chile and the third participants to submit written comments on Argentina's request 
and, in particular, invited Chile to explain whether th e 13 exhibits were on the Panel record, and, if so, 
to identify where they could be found.  On 2 March 2007, the Division received comments from 
Chile, Canada, and the United States.32  In its reply, Chile explained, first, that, although the 
information concerning the period from July 2006 to December 2006 was not on the Panel record, 
such new evidence was submitted to the Appellate Body for the purpose of "completeness".  As for 
the Supreme Decree issued in December 2006, Chile argued that it was appropr iate for the Appellate 
Body to review this Decree because, like other bi-monthly Decrees, it was "part and parcel" of the 
measure at issue and was publicly available.  Chile  nevertheless deferred to the Appellate Body with 
regard to the admissibility of such new evidence.  With respect to the remaining 12 exhibits, Chile 
explained that, except for Supreme Decree No . 266 from 2002, the evidence contained in these 
exhibits relating to the period thr ough June 2006 was also submitted to the Panel, albeit in a different 
form, and was therefore properly before the Appellate  Body.  Finally, with respect to Supreme Decree 
No. 266, Chile maintained that it was the "source for the calculation" of price band thresholds in the 
measure at issue, was referenced before the Pane l, and was publicly available.  Chile nonetheless 
deferred to the Appellate Body as to the admissibility  of this Decree as ev idence in these appellate 
proceedings.  
                                                      
31Argentina requested the Appellate Body to reject Exhibits CHL-AB-3 through CHL-AB-15 attached 
to Chile's appellant's submission, along with related arguments, on the basis that they contained new evidence.  Alternatively, in th e event that the Appellate Body accepted Chile 's new evidence, Argentina requested the 
Appellate Body to permit Argentina to file its own new evidence.  
32Neither Canada nor the United States took a position on whether the 13 exhibits identified in 
Argentina's request constituted new evidence.  Neverthe less, they both expressed the view that, should the 
Appellate Body determine these exhibits to be new evidence that was not presented to the Panel, then the 
Appellate Body may not consider them.  WT/DS207/AB/RW 
 Page 7 
 
 
13. By letter dated 13 March 2007, the Division indicated that, if a ruling on the admissibility of 
these exhibits proved necessary, it would make such  a ruling in "due course" and expressed its 
"preliminary view" that the admissibility of such exhibits should be governed by the following three 
principles:  
First, any evidence relating to the operation of the measure at issue 
after June 2006 is new evidence that does not properly form part of 
the record upon which the Division must review the Panel's findings and conclusions in this case and is inadmissible. 
Secondly, Chile's exhibits are admissible insofar as they only present 
data that were before the Panel.  It is not necessary that the data were presented to the Panel in  precisely   the same form as they are now 
presented to the Appellate Body.  Nevertheless, exhibits presenting evidence in a form that differs fro m the way in which the evidence 
was presented to the Panel are admissible only if:  (i) the data 
presented can be clearly traced to data in the Panel record;  and 
(ii) the way in which the data presented to the Panel has been 
converted into the form in which it is presented in this appeal can be 
readily understood. 
Thirdly, a Decree that:  (i) is expressly referred to in the measure at 
issue in this appeal;  (ii) is publicly  available;  and (iii) the content of 
which was discussed before the Panel is, in principle, admissible, unless Argentina can establish that it will suffer prejudice were the Appellate Body to admit the text of this Decree. (original emphasis) 
14. In its statement at the oral hearing, Arge ntina submitted that, despite the "complex 
explanations" provided "ex post" by Chile, the data in the 13 exhibits could not be clearly traced to 
data on the Panel record, and the way in which the data was converted into the form in which it was 
presented on appeal could not be readily understood.  With respect to Exhibit CHL-AB-5, containing 
the text of Supreme Decree No. 266 from 2002, Argen tina maintained that its content had not been 
discussed before the Panel and, in any event, the Decree does not contain the information that Chile 
asserted it does.
33  Argentina considered that it could not properly respond to such evidence and had, 
as a result, suffered prejudice. 
15. For the reasons that we set out below34, we have not found it necessar y to make any additional 
ruling on the admissibility of the specific exhib its challenged by Argentina in its request of 
26 February 2007.  
                                                      
33Argentina's statement at the oral hearing. 
34Infra , para. 253. WT/DS207/AB/RW 
Page 8  
 
II. Arguments of the Participants 
A. Claims of Error by Chile – Appellant 
16. At the outset, Chile underlines the economic reality  behind this dispute and points out that it 
has significantly liberalized its agricultural mark ets and lowered its tariffs  and non-tariff barriers.  
Since the conclusion of the Uruguay Round, Chile h as periodically and systematically lowered its 
applied tariff rates from 11 per cent to the current 6 per cent on wheat and wheat flour, which is "a 
fraction of" the 31.5 per cent bound ra te in its Schedule of Concessions.
35  To make such free trade 
policies possible and sustainable, particularly for a developing country, some flexibility is needed.  
Chile explained at the oral hearing that this is why the measure at issue adjusts ordinary customs 
duties periodically in order to maintain a bare minimum in price stability, and that it would jeopardize 
Chile's overall free trade policies if the Appellate Bo dy were to strike down this delicate balance. 
1. Burden of Proof  
17. Chile contends that the Panel erred in its allocation of the burden of proof and wrongly 
required Chile to prove that the measure at issue was consistent with Chile's obligations under the 
covered agreements.  As a resu lt of this "fundamental flaw"36, Chile requests the Appellate Body to 
reverse the Panel's findings and conclusions re lating to Article 4.2 and footnote 1 of the  Agreement 
on Agriculture . 
18. Citing the Appellate Body Report in  Canada – Dairy (Article 21.5 – New Zealand and 
US II)37, Chile submits that the rules regarding the allo cation of burden of proof do not change in the 
context of Article 21.5 proceedings.  It was, therefor e, for Argentina to prove that the measure at issue 
violates Article 4.2 of the  Agreement on Agriculture .  On this basis, Chile argues that the Panel was 
required to undertake its review starting from th e position that the measure at issue was WTO-
consistent, until Argentina had presented sufficient ev idence to prove the cont rary.  If the evidence 
leaves any doubt as to the WTO-consistency of Chile' s measure at issue, then, in Chile's view, "the 
benefit of the doubt must go to Chile."38  
19. Chile alleges that, from the outset to the conclusi on of its analysis, the Panel consistently and 
expressly examined whether the measure found to be WTO-inconsistent in the original proceedings 
had been made consistent, rather than dete rmining whether Argentina had established a  prima facie  
                                                      
35Chile's appellant's submission, para. 38. 
36Chile's statement at the oral hearing. 
37Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II) , para. 66. 
38Chile's appellant's submission, para. 45.  WT/DS207/AB/RW 
 Page 9 
 
 
case that the measure at issue was inconsistent with the Agreement on Agriculture  and whether Chile 
had failed to rebut that case.  Chile points to the Pa nel's statement, at the beginning of its substantive 
analysis, that the "main issue for the Panel to de cide under this particular claim is whether the 
amendments introduced by Chile to its [price band sy stem] are such as to make the measure consistent  
with Article 4.2" of the  Agreement on Agriculture .39  Chile also refers to the Panel's conclusion that 
"the amendments introduced by Chile into its [pri ce band system] have failed to convert it into a 
measure which is no longer  a border measure similar to a 'varia ble import levy' and to a 'minimum 
import price'".40  Chile refers to several other instances in the Panel's analysis where, according to 
Chile, the Panel conducted its review based on whet her the measure at issue "continues to have 
sufficient resemblance or likeness" to variable im port levies or minimum import prices or "has been 
modified" in comparison to the original price band system.41  On this basis, Chile claims that the 
Panel proceeded on the assumption that the measure  at issue was WTO-inconsistent, thus relieving 
Argentina of its burden of proof while requiring Chile  to demonstrate that the measure at issue was no 
longer WTO-inconsistent.  
2. Article 4.2 and Footnote 1 of the  Agreement on Agriculture  
20. Chile alleges that the Panel erred in its in terpretation and application of the terms in 
Article 4.2 and footnote 1 of the Agreement on Agriculture , and requests the Appellate Body to 
reverse the Panel's findings that the measure at issu e was similar to a "variable import levy" and to a 
"minimum import price" within the meaning of the Agreement on Agriculture . 
(a) The Panel's Alleged Failure to Examine the Phrase "Other Than 
Ordinary Customs Duties" 
21. Chile argues that the Panel should have examined whether the measure at issue involved 
duties "other than ordinary cust oms duties" as set out in footnote 1 to Article 4.2 of the  Agreement on 
Agriculture , but that the Panel ignored this language.  Instead, the Panel's approach assumed that a 
finding that a measure is similar to a variable import levy or a minimum import price necessarily 
implies that the measure is, as a matter of law, "oth er than an ordinary customs duty".  According to 
Chile, by adopting such an approach, the Panel faile d to give proper meaning and effect to all the 
relevant terms in the text of footnote 1.  
                                                      
39Chile's appellant's submission, para. 46 (quoting Pa nel Report, para. 7.14). (emphasis added by Chile) 
40Ibid., para. 48 (quoting Panel Report, para. 7.96). (emphasis added by Chile) 
41Ibid., paras. 49 and 50 (quoting Panel Report, paras. 7. 81 and 7.92 and referring to paras. 6.12, 7.44, 
7.54, 7.55, and 7.79). WT/DS207/AB/RW 
Page 10  
 
22. In Chile's view, ordinary customs duties, lik e other measures listed in footnote 1, reduce 
import volumes, distort import prices, and may impede the transmission of international prices to the 
domestic market.  For example, an ordinary cust oms duty at a rate high enough to make imports 
prohibitive detaches domestic prices from international prices due to the absence of import competition.  Thus, ordinary customs duties may sh are certain substantive characteristics with the 
measures identified in the footnote.  In particular , the applied rates of ordinary customs duties may 
undergo changes not foreseeable to traders, and such changes may be affected by "exogenous" factors 
not known to the public.
42  Moreover, tariff-rate quotas, certain ty pes of variable duties, and seasonal 
duties are, according to Chile, "ordinary customs duties", even  though they share certain 
characteristics similar to variable import levies.  Ch ile also highlights certain statements made by the 
Appellate Body in the original proceedings that, in  Chile's view, suggest that ordinary customs duties 
share substantive characteristics with the measures lis ted in footnote 1, including the Appellate Body's 
observation that "ordinary customs duties are more  transparent and more easily  quantifiable than non-
tariff barriers".43  Chile also stresses that the Appellate Body  reversed the original panel's finding that 
the term "ordinary customs duty" is to be understo od as referring to a customs duty not applied on the 
basis of exogenous factors.   
23. On this basis, Chile submits that the Panel w as required to interpret the meaning of the phrase 
"other than ordinary customs duties" in footnote 1, review the substantive characteristics of the 
measure at issue, and conclude whether it constitute d an "ordinary customs duty."  Because the Panel 
did not do so, Chile argues, the Panel erred in its  interpretation and appli cation of Article 4.2 and 
footnote 1 of the  Agreement on Agriculture . 
(b) The Panel's Alleged Failure to Examine "Similarity" on an Empirical 
Basis 
24. Chile alleges that the Panel failed to conduct an  empirical analysis of the measure at issue 
and, instead, relied on theoretical comparisons w ith the original price band system in finding 
"similarity" between the measure at issue and the measures listed in footnote 1 of the  Agreement on 
Agriculture .  In the original proceedings, the Appellate Body stated that "the task of determining 
whether something is similar to something el se must be approached on an empirical basis "44, but, 
according to Chile, the Panel failed to identify any empirical evidence in finding that the measure at 
issue was similar to a variable import levy.  With r espect to the finding that the measure at issue was 
                                                      
42Chile's appellant's submission, para. 62.  
43Ibid., para. 61 (quoting Appellate Body Report,  Chile – Price Band System , para. 200). (emphasis 
added by Chile) 
44Ibid., para. 69 (quoting Appellate Body Report, Chile – Price Band System , para. 226). (emphasis 
added by Chile)  WT/DS207/AB/RW 
 Page 11 
 
 
similar to a minimum import price, Chile argu es that the Panel relied on "only a snapshot"45 of data to 
make a finding regarding the measure at issue as a whole, and failed to explain how such data 
supported Argentina's argument that the lower band threshold operated as a substitute for a minimum 
import price.  In addition, Chile asserts that the Pa nel erroneously rejected, as irrelevant, the evidence 
submitted by Chile regarding actual conditions of market access under the me asure at issue, even 
though the finding of "similarity" should ha ve been based on such empirical evidence.46 
(c) The Panel's Finding that the Measu re at Issue is Similar to a 
"Variable Import Levy" 
(i) Variability 
25. Chile alleges that the Panel misinterpreted the term "variable" in footnote 1 to Article 4.2 of 
the  Agreement on Agriculture   and erred in finding that the measure at issue was similar to a 
"variable import levy" within the meaning of footnote 1.    
26. First, Chile submits that the Panel was mistaken  in finding that the measure at issue imposed 
variability by setting forth a formula that establishe s an automatic and periodic adjustment in duty 
levels.  Chile's Ministry of Finance may revise at any time the methodologies for establishing specific 
duties and rebates.  Moreover, duty levels under th e measure at issue do not change automatically 
absent an administrative decree.  Chile adds that the Panel's finding would "create perverse 
incentives" for WTO Members to be l ess transparent and less predictable.47  Specifically, Members 
with a domestic legal structure that permits the exec utive branch to establish unilaterally the level of 
duties would be free to use any unpublished and non- transparent formula to change their duty levels 
without acting inconsistently with their WTO obligati ons.  In contrast, changes in the levels of such 
duties could be rendered WTO-inconsistent simply  because the executive bran ch of a Member, such 
as Chile, is required to publish the underlying methodol ogy by which an ordinary customs duty is set 
at a particular level.  
27. Secondly, Chile contests the Panel's findings that  a variable import levy is "a duty ... liable  to 
vary automatically and continuously", and that  the language of Law 18.525, as amended, and 
Supreme Decree 831 "contemplates  a scheme or formula" that causes and ensures automatic and 
                                                      
45Chile's appellant's submission, para. 73.  
46Chile refers to the evidence that specific duties were imposed in only 17 weeks of the period from 
16 December 2003 to 13 Janu ary 2006 (15.6 per cent of the time), and rebates were granted in 35 weeks (32.1 
per cent of the time) of the same time period.  For the rest of the time period, only the ad valorem   tariff was 
imposed. (Chile's appellant's submission, para. 37;  see also Panel Report, para. 2.31) 
47Chile's appellant's submission, para. 85. WT/DS207/AB/RW 
Page 12  
 
continuous changes in the level of specific duties and rebates.
48  In making these findings, Chile 
argues, the Panel erred in equating a "likelihood" of continuous variab ility with "ensuring" continuous 
variability, because "liable" mean s "apt or likely", and "contemplate" is defined as "[r]egard as 
possible, expect, take into account as a contingency".49  The Panel's finding, therefore, contradicts the 
Appellate Body's statement in the original proceedings that "variability" is inherent in a measure if the 
measure "causes and ensures" automatic and continuous changes of duties.50   
28. Thirdly, Chile asserts that the Panel erred in equating "periodic" variation with "continuous" 
variability.  Variable import levies and minimum import prices vary automatically and continuously 
on a transaction-by-transaction basis.  A periodic change in duty levels "simply does not rise to the same level of automatic and continuous variability".
51  Moreover, the Appellate Body itself 
distinguished between "periodic" a nd "continuous" variation in the original proceedings when it found 
that a WTO Member "may, fully in accordance w ith Article II of the GATT 1994, exact a duty upon 
importation and periodically  change the rate".52  Chile highlights that, whereas the original price band 
system changed the duty levels continuously 52 times per year, the measure at issue changes duty levels only periodically, that is, six times per year, and ensures that any applicable duty remains stable 
for all transactions made within each two-month period. 
(ii) Transparency and Predictability  
29. Chile claims that the Panel misunderstood and misapplied the tests of "transparency" and 
"predictability" in determining whether the measur e at issue was a border measure similar to a 
"variable import levy" within the meani ng of Article 4.2 and footnote 1 of the Agreement on 
Agriculture .  Rather than examining whether the level of  the duties resulting from the measure at issue 
was transparent and predictable, the Panel mistakenly examined whether the methodology underlying 
the calculation of the duty levels (how and why Chile set a particular level of duties) was transparent 
and predictable.  According to Chile, this is contra ry to the approach taken by the Appellate Body in 
the original proceedings.  Chile asserts that the le vel of resulting duties under the measure at issue is 
                                                     
 
48Chile's appellant's submission, paras. 86 and 87  (quoting Panel Report, paras. 7.28 and 7.58). 
(emphasis added by Chile) 
49Ibid., paras. 86 and 88 (quoting  Shorter Oxford English Dictionary , 5th edn, W.R. Trumble, 
A. Stevenson (eds) (Oxford University Press, 2002), Vol. 1, pp. 499 and 1583).  
50Ibid., para. 86 (quoting Appellate Body Report, Chile – Price Band System , para. 233).  
51Chile's statement at the oral hearing. 
52Chile's appellant's submission, para. 90 (quoting Appellate Body Report, Chile – Price Band System , 
para. 232). (emphasis added by Chile)  WT/DS207/AB/RW 
 Page 13 
 
 
transparent, and adds that "the obligation of tran sparency alone cannot limit WTO Members in respect 
of the substantive content or ways in which, or reasons for which, they impose duties."53 
30. In any event, Chile disagrees that the manner in  which it established thresholds and reference 
prices lacked transparency.  Unlike under the orig inal price band system, the thresholds are now 
established on a free on board ("f.o.b.") basis.  Mo reover, the Appellate Body's finding of a lack of 
transparency with respect to refe rence prices was premised on the fact that, under the original price 
band system, no Chilean legislation identified any "mar kets of concern" or "qualities of concern" for 
the purpose of calculating reference prices.  Because the markets and qualities of concern are now transparent and published, Chile argues that the Pane l erred in finding that the measure at issue lacked 
transparency simply because the reference price was not representative of existing world market 
prices and was calculated for two specific qua lities of wheat from two specific origins. 
31. Chile also contests the Panel's finding that the measure at issue lacked  predictability because, 
in Chile's opinion, the applicable duties under th e measure at issue are no less predictable than 
ordinary customs duties.  Chile likens the measure at  issue to the annual reductions in the tariff rates 
applied to wheat and wheat flour that Chile made  between 1999 and 2003.  In the same way as those 
annual decreases were "pre-publishe d", "automatic", and pursuant to a simple formula involving a 
reduction of 1 percentage point ever y year, change in the applicable duties under the measure at issue 
is "pre-published, is automatic on a two-m onth basis, and is pursuant to a formula".
54   
32. Chile further alleges that the Panel erred in finding, on the basis of conjecture rather than 
evidence, that the effect of the l ack of transparency and predictabil ity was to impede the transmission 
of international prices to the domestic market.  Chile presents various charts to show that the trend in 
the duty-inclusive import prices under the measure at  issue closely reflects the trend in the cost, 
insurance and freight ("c.i.f.") import prices, and, therefore, that the measure at issue affects import 
prices in ways similar to those of ordinary custom s duties and different from those of variable import 
levies and minimum import prices.  Chile adds that trends in domestic prices mirror trends in duty-
inclusive import prices.  On this basis, Chile c oncludes that the Chilean domestic prices respond to, 
and are not disconnected from, world prices.  
33. Moreover, Chile asserts that the Panel "est ablished a standard for ... transparency and 
predictability that was internally contradictory and impossible to satisfy".55  The Panel found that 
taking the average of daily prices from a 15-day peri od does not guarantee that the resulting reference 
                                                      
53Chile's appellant's submission, para. 108. 
54Ibid., para. 122. 
55Ibid., para. 112. WT/DS207/AB/RW 
Page 14  
 
prices will be representative for the whole of a 60-day period.
56  The Panel also found that, under the 
measure at issue, the link between the total amount of  duties and the fluctuation of world prices is, in 
itself, a factor of uncertainty and unpredictability.57  Chile alleges that these findings impose 
contradictory requirements, such that duties must  follow world market pr ices in a representative 
fashion and must, at the same time, be de-linked from world market prices.  Chile further argues that the Panel established "conflicting requirements" by "condemn[ing] any form of automaticity or fixed 
scheme or formula" while, at the same time, requiring full transparency and predictability in how the 
duty is calculated.
58  
34. Finally, with respect to the conversion factor  of 1.56—which is applied to the amount of 
specific duties and rebates determined for wheat in or der to calculate the duties and rebates applicable 
to wheat flour—Chile contends that the Panel's findi ng is also contradictory.  The Panel appeared to 
condemn the factor as lacking transparency and pr edictability because it cannot adjust to changes in 
the ratio of prices between wheat flour and wheat.  To  Chile, this finding of th e Panel is contradictory 
to the requirements of transparency and predictabilit y, as it implies that Chile would be required to 
modify this conversion factor with each change in the ratio of prices for wheat flour and wheat.  In 
any event, Chile argues, the Appe llate Body should reverse this finding because it is based on the 
Panel's erroneous findings with respect to wheat. 
(d) The Panel's Finding that the Measu re at Issue is Similar to a 
"Minimum Import Price" 
35. Chile claims that the Panel erred in its findi ng that the measure at issue was similar to a 
"minimum import price".  First, the Panel failed to examine the transparency and predictability of the 
measure at issue when finding it to be similar to a minimum import price.  Instead, the Panel "summarily"
59 concluded that the measure at issue had not been modified with respect to the features 
that were found to make the original price band syst em similar to a minimum import price.  Secondly, 
Chile contests the Panel's finding that the lower thre shold of the price band operated as a substitute for 
a domestic target price or a minimum import price.  According to Chile, empirical evidence shows that the lower threshold under the measure at i ssue falls well below domestic prices, making it 
impossible for the threshold to operate as a substitute for the latter.   
                                                     
 
56Panel Report, para. 7.66. 
57Ibid., para. 7.71. 
58Chile's appellant's submission, para. 115. 
59Ibid., para. 166.  WT/DS207/AB/RW 
 Page 15 
 
 
36. Thirdly, Chile contends that, contrary to the Panel's finding, the measure at issue does not 
"overcompensate" for a decline in reference pr ices by increasing import prices above the lower 
threshold.  Evidence submitted by Argentina shows that, during the period November 2004 to 
April 2005, there were only two days on which, as a result of the measure at issue, a decline in world 
prices corresponded to an increase in entry prices.60  For the remainder of the period, entry prices fell 
in tandem with world prices.  In using this ev idence, Chile argues, the Panel wrongly "relied upon 
only a snapshot of empirical data"61 and failed to explain how such evidence supported Argentina's 
argument that the price band's lower threshold operat ed as a substitute for a minimum import price.   
37. Finally, Chile points out that the Panel erred in concluding that, under the measure at issue, 
imports could not enter the Chilean market at prices below the lower threshold.  In this regard, Chile 
characterizes as "irrelevant" the mathematical exam ple provided by Argentina to show that imports 
will enter Chile at prices above the lower th reshold, except under certain unlikely scenarios.62  
According to Chile, the same resu lt will be reached under Argentina's mathematical example even if 
the application of any duties is removed from th e example.  For Chile, this "conclusively" 
demonstrates that it is not the measure at issu e that is causing entry pr ices to exceed the lower 
threshold, rather, it is the fact that the lo wer threshold was set on a low, f.o.b., basis.63 
(e) The Panel's Alleged Failure to Examine the Measure at Issue in its 
Entirety 
38. Chile asserts that, in assessing whether the measure  at issue is similar to a variable import 
levy or a minimum import price, the Panel examined discrete features in isolation in reaching its 
conclusion.  Had the Panel examined the measure in  its totality, it would have found that the measure 
is, instead, similar to an ordinary customs duty.  Ch ile highlights six aspects of the measure at issue in 
support of this claim:  (i) the duties are published an d changed periodically;  (ii) the level of duties in 
effect on the date of importation is transparent;  (iii)  the level of duties is predictable and will change 
on pre-announced dates;  (iv) the measure at issu e has no link to a domestic target price;  (v) the 
fluctuations of the duty rate as a result of the measure  at issue are gradual and narrow;  and (vi) due to 
the concessions of rebates, the measure at issue provi des greater market access than if it were not in 
effect. 
                                                      
60Chile's appellant's submission, paras. 73, 74, and 179 (referring to Exhibits ARG-11 and ARG-12 
submitted by Argentina to the Panel);  Chile's statement at the oral hearing. 
61Chile's appellant's submission, para. 73. 
62Chile's statement at the oral hearing.  
63Ibid. WT/DS207/AB/RW 
Page 16  
 
3. Articles 11 and 12.7 of the DSU
 
39. Chile also requests the Appellate Body to reverse the Panel's fi ndings and conclusions 
relating to Article 4.2 and footnote 1 of the  Agreement on Agriculture   on the grounds that, in making 
these findings, the Panel failed to discharge both it s duty under Article 11 of the DSU to carry out an 
objective assessment of the matter before it, as well as its duty under Article 12.7 of the DSU to set 
out the basic rationale behind its findings.   
40. Chile takes issue with four aspects of the Panel' s findings.  First, Chile contests the Panel's 
finding that the thresholds under the measure at issue were not established on an f.o.b. basis.  In so 
finding, according to Chile, the Panel ignored the requirement provided in Law 18.525, as amended, 
that the thresholds be established on an f.o.b. basi s and found, without basis, "that the Ministry of 
Finance acted in violation of Chilean law".64  Chile contends that the Panel identified no evidence, 
and provided no explanation, in support of its finding that Chile had failed to demonstrate the 
deduction of import costs when establishing such th resholds.  Moreover, in Chile's view, a WTO 
Member must be presumed to act in accordance with  its own national laws unless proven otherwise.   
41. Secondly, Chile asserts that, in concluding that  the lower threshold of the measure at issue 
operated as a substitute for a domestic target price, th e Panel relied on an alleged error in the original 
panel's findings.  The original pa nel "misunderstood" how the original  price band system operated and 
mistakenly believed that the reference prices were no t converted to c.i.f. terms before being compared 
to the price band thresholds that were in c.i.f. terms.65  Chile requested the Panel to correct this 
misunderstanding, but the Panel did not do so an d provided no explanation or authority for its 
statement that correcting the original panel's factual error was outside its mandate.66   
42. Thirdly, Chile submits that the Panel failed to  follow the approach set out by the Appellate 
Body in the original proceedings, which calls for an examination of the specific "configuration and 
interaction" of the different elements of the measure at issue.67  Instead, the Panel examined only 
discrete elements and "individual features" of the measure at issue "in isolation", compared them with features of the original price band system, and provide d no analysis or explanation of how the features 
of the measure interact to support its findings.
68  Chile submits that the Panel should have "weighed 
all features of the [measure at issue] as a whole before concluding whether, evaluated  holistically   
                                                      
64Chile's appellant's submission, para. 203. 
65Ibid., para. 206. 
66Ibid., para. 210 (referring to Panel Report, para. 6.14). 
67Ibid., para. 219 (quoting Appellate Body Report, Chile – Price Band System , para. 261). 
68Ibid., para. 220.  WT/DS207/AB/RW 
 Page 17 
 
 
and with due regard to their effects", the measure at  issue falls within a category of measures listed in 
footnote 1 and is inconsistent with Article 4.2 of the  Agreement on Agriculture .69   
43. Finally, Chile maintains that, except for a "partial dataset" submitted by Argentina70, the 
Panel failed to consider empirical evidence regarding the actual operation of the measure at issue.  In 
Chile's view, the evidence referred to by the Panel ap pears to contradict the Panel's finding regarding 
the disconnection between domestic and world prices.  Chile points out that it submitted a "substantial 
amount of evidence and data on the operation" of the me asure at issue, yet the Panel "did not refer [to] 
nor rely on any evidence regarding the actual operati on" of the measure at issue and also refused 
Chile's request, during the interim review stage, to re view its analysis in the light of the mathematical 
calculations presented by the parties.71  
4. Conclusion  
44. Chile requests the Appellate Body to rever se the Panel's findings and conclusions under 
Article 4.2 of the  Agreement on Agriculture   and to find, instead, that the Panel failed to comply with 
its duties under Articles 11 and 12.7 of the DSU, and that the measure at issue is consistent with 
Chile's obligations under Article 4.2 of the  Agreement on Agriculture . 
B. Arguments of Argentina – Appellee  
1. Burden of Proof  
45. Argentina requests the Appellate Body to dismi ss Chile's claim that the Panel inappropriately 
allocated the burden of proof.  Argentina points to previous Appellate Body reports establishing that a 
panel need not make an express ruling on whether a complainant has established a  prima facie  
case.72  Moreover, Chile's claim regarding the burden of  proof is not borne out by the Panel record.  
To establish a  prima facie   case of the inconsistency of the measure at issue with Article 4.2 of the  
Agreement on Agriculture , Argentina submitted to the Panel exte nsive arguments in its written and 
oral submissions and substantive evidence in its 38 e xhibits, including the text of the measure at issue 
and empirical evidence regarding its operation.  The Panel, on the basis of these arguments and 
                                                      
69Chile's appellant's submission, para. 224. (emphasis added) 
70Ibid., para. 226 (referring to Exhibits ARG-11 and ARG-12 submitted by Argentina to the Panel).  
71Ibid., paras. 226 and 227 (referring to Chile's firs t written submission to the Panel, Panel Report, 
p. A-83, para. 154;  Chile's second written submission to the Panel, Panel Report, p. C-78, paras. 173 and 174;  
Chile's replies to Questions 64, 72, and 73 posed by the Panel, Panel Report, pp. F-104 to F-106 and F-109 to  F-112;  and Panel Report, paras. 6.10 and 6.11).  
72Argentina's appellee's submission, paras. 191-193 (quoting Appellate Body Report, Korea – Dairy , 
para. 145;  and Panel Report, Egypt – Steel Rebar , para. 7.7). WT/DS207/AB/RW 
Page 18  
 
evidence, directed 22 questions to Argentina, out of 46 questions to both parties.  Argentina argues 
that, on the basis of all the arguments and evidence,  the Panel correctly concluded that Argentina had 
made out a  prima facie   case and correctly shifted the burden of  proof to Chile, which Chile failed to 
rebut.  As a result, the Panel rightly found the measure  at issue to be inconsistent with Article 4.2 of 
the  Agreement on Agriculture . 
2. Article 4.2 and Footnote 1 of the  Agreement on Agriculture
 
46. Argentina submits that, with the measure at issue, Chile has only "cosmetically"73 amended 
the original price band system while maintaining its non-transparency and unpredictability and fully 
preserving its distortive effects.  Argentina ther efore requests the Appellate Body to uphold the 
Panel's finding that the measure at issue is incons istent with Chile's obliga tions under Article 4.2 of 
the  Agreement on Agriculture . 
(a) The Panel's Alleged Failure to Examine the Phrase "Other Than 
Ordinary Customs Duties" 
47. Argentina points out that Chile's argument on appeal, that "[o]rdin ary customs duties may 
share substantive characteristics in common with th e measure identified in footnote 1", was already 
dismissed by the Panel.74  Specifically, the Panel found that "[t]he level of ordinary customs duties is 
in principle stable and predictable, at least until those duties are replaced with altogether new tariff 
rates."75  Argentina adds that Chile's argument ca nnot succeed because Argentina has shown that, 
unlike ordinary customs duties, changes in the leve l of duties are dependent on, and related to, an 
underlying scheme or formula.  
48. Moreover, Argentina maintains that the Panel co rrectly interpreted Article 4.2 and footnote 1 
of the  Agreement on Agriculture   by addressing the text of these provisions, as well as the objectives 
of the Agreement on Agriculture , in the light of the Appellate Body's findings in the original 
proceedings.  Having summarized both parties' arguments, the Panel stated that it would limit itself to considering the similarity of the measure at issue w ith only two of the categories of measures listed in 
footnote 1 to Article 4.2 of the  Agreement on Agriculture  (variable import levies and minimum 
import prices).   
                                                     
 
73Argentina's appellee's submission, para. 17. 
74Ibid., para. 168 (quoting Chile's appellant's submission, para. 62).  
75Ibid. (quoting Panel Report, para. 7.60).  WT/DS207/AB/RW 
 Page 19 
 
 
(b) The Panel's Alleged Failure to Examine "Similarity" on an Empirical 
Basis 
49. Argentina emphasizes that, before the Panel, it based each of its arguments on analytical, 
mathematical, and/or empirical evidence in support of the claim that, in th e light of the Appellate 
Body's findings in the original pr oceedings, the measure at issue was "similar" to a variable import 
levy and a minimum import price within the meaning of Article 4.2 of the  Agreement on Agriculture .  
The Panel, upon properly recalling the Appellate Body 's analysis and interpretation regarding the 
terms "variable import levies" and "minimum import prices", applied the correct interpretation of Article 4.2 to the measure at issue while taki ng into account arguments and evidence submitted by 
both parties.  Thus, the Panel conducted its analysis  consistently with the Appellate Body's findings 
and, on the basis of empirical evidence, rightly fo und that the measure continued to be a measure 
required to be converted into ordinary customs duties pursuant to Article 4.2 of the  Agreement on 
Agriculture .   
(c) The Panel's Finding that the Measu re at Issue is Similar to a 
"Variable Import Levy" 
(i) Variability 
50. Argentina submits that the Panel correctly foun d the measure at issue to be similar to a 
"variable import levy" within the meani ng of footnote 1 to Article 4.2 of the Agreement on 
Agriculture .   
51. According to Argentina, Chile's arguments on appeal imply that a variable import levy is 
defined as a measure that must "operate automatical ly to change the level of duties on each and every 
transaction ".76  Such a definition has no textual suppor t and is not based on Appellate Body 
jurisprudence.  In the original pr oceedings, the Appellate Body found that variability is inherent in a 
measure if the measure incorporates a scheme or fo rmula that causes and ensures that levies change 
automatically and continuously.  This is not th e same as the "transaction-by-transaction variability" 
standard that Chile introduces in this appeal.  Arge ntina adds that, even under the original price band 
system, which was already found to  be inconsistent with the  Agreement on Agriculture , specific 
duties did not vary on a transaction-by-transaction basis.   
52. Argentina considers that "variability", as define d by the Appellate Body, is inherent in the 
measure at issue because this measure incorporat es a formula that causes and ensures automatic and 
continuous changes in duties.  It is clear fro m the text of Law 18.525, as amended, and Supreme 
                                                      
76Argentina's appellee's submission, para. 146 (quoting Chile's appellant's submission, para. 94 
(original emphasis)).  WT/DS207/AB/RW 
Page 20  
 
Decree 831 that there exist specific formulas on the basis of which specific duties and rebates are 
established.  These formulas cause considerable variab ility in the level of specific duties, as Argentina 
demonstrated to the Panel by presenting a statistical  model showing the standard deviation of specific 
duties.  According to Argentina, these data establish that, if the me asure at issue had been in place 
since 1986, specific duties applied to wheat and wh eat flour would have varied much more than 
international f.o.b. prices for wheat and wheat flour over the same period.  
53. Moreover, Argentina maintains that the measure  at issue is an automatic mechanism that 
functions by itself and is activat ed "directly and ... unfailingly".
77  Pursuant to Law 18.525, as 
amended, a decree must be issued every two months  regardless of the level of the reference price in 
relation to the upper and lower thr esholds.  Moreover, the text of that Law shows that the imposition 
of specific duties (or rebates) is statutorily manda ted whenever the reference price falls below the 
lower (or above the upper) thresholds of the price band.78  Argentina submits, therefore, that in 
contrast to ordinary customs duties, which are subject  to "discrete changes in applied tariff rates that 
occur  independently , and are  unrelated   to such an underlying scheme or formula"79, duties resulting 
from the measure at issue are dependent and relate d to an underlying scheme or formula.  On this 
basis, Argentina claims that the Panel correctly f ound that the level of specific duties or rebates under 
the measure at issue is determined pursuant to  the mandate of Law 18. 525, as amended, and the 
variability in the level of specific duties or rebate s is not the result of separate, independent, and 
discrete administrative acts.  As the Panel rightly found, "the administrative action occurs after" the 
amount of specific duties or rebates has been calcula ted in accordance with a formula set out in this 
Law.80   
(ii) Transparency and Predictability  
54. Argentina recalls that, in the original proceed ings, the Appellate Body determined that the 
lack of transparency and predictability associated with the original price band system impeded the 
transmission of international prices to the domestic  market, thus preventing enhanced market access 
for imports of agricultural products, contrary to the object and purpose of the Agreement on 
                                                      
77Argentina's appellee's submission, para. 161. 
78In particular, Argentina recalls Article 12 of Law 18.525, as amended, which states, inter alia , that 
"[t]he amount of these duties and rebates  shall be established   as provided for in this Article". (Argentina's 
appellee's submission, para. 161 (quoting Panel Report, para. 2.14) (emphasis added by Argentina)) 
79Argentina's appellee's submission, para. 162 (quoting Appellate Body Report, Chile – Price Band 
System , para. 233). (emphasis added by Argentina) 
80Ibid., para. 166 (quoting Panel Report, para. 7.59).  WT/DS207/AB/RW 
 Page 21 
 
 
Agriculture .81  Argentina submits that the lack of transp arency and predictability of the measure at 
issue has the same effect.   
55. As regards the setting of the upper and lower thr esholds of the measure at issue, Argentina 
agrees with the Panel that "[t]he mere assertion by Chile that the calcu lation formula has been 
abolished and that import costs have been deducted is  not enough to demonstrate that, in this regard, 
the current system is any less intransp arent and unpredictable than the original."82  Argentina also 
agrees with the Panel's view that, by fixing the uppe r and lower thresholds for an 11-year period, "the 
effect of disconnecting domestic prices from inte rnational price developments, thus impeding the 
transmission of world market prices to the Chilean  domestic market, has been carried on into the 
[measure at issue]."83  In addition, the annual reduction factor  of 0.985, which will be applied to the 
price band thresholds from 2007 to 2014, mean s that from 2007 onwards the upper and lower 
thresholds will vary without any relation to  world market or historical prices.   
56. With respect to reference prices, Argentina point s out that the mere existence of a reference 
price affects transparency and predictability in the measure at issue.  Argen tina agrees with the Panel 
that the "fact that specific duties are added ... on  the basis of some periodically determined and 
constantly changing reference price, rather than on the basis of either the value or the volume of the 
imported goods, entails a  systemic   lack of transparency and predictability."84  Argentina emphasizes 
that traders will have difficulty in estimating the tota l amount of duties applicable  if a shipment is sent 
before the end of the 15-day period used for calcula ting a new reference price and does not arrive in 
Chile until after a new specific duty/rebate has been established on the basis of this reference price.  
Moreover, the fact that, under the measure at issue,  specific duties do not vary weekly (as they did 
under the original price band system) but vary bi-monthly does not bring more transparency or predictability.  Argentina also concurs with the Pane l's statement that "the only thing truly predictable 
about the level of duties ultimately assessed under the [m easure at issue] is that in principle such level 
will change every two months."
85 
57. Argentina maintains that, because of the way reference prices are established under the 
measure at issue, they are less representative of rele vant world market prices than were the reference 
prices under the original price band system.  U nder the original system, references prices were 
                                                      
81Argentina's appellee's submission, para. 170 (referring to Appellate Body Report, Chile – Price Band 
System , paras. 234 and 258). 
82Ibid., para. 105 (quoting Panel Report, para. 7.79). 
83Ibid. (quoting Panel Report, para. 7.79).  
84Ibid., para. 174 (quoting Panel Report, para. 7.72). (emphasis added by Argentina) 
85Ibid., para. 167 (quoting Panel Report, para. 7.61). WT/DS207/AB/RW 
Page 22  
 
adjusted every week, whereas under the measure at i ssue, the reference prices are set only six times 
per year.  Argentina refers to certain exhibits it s ubmitted to the Panel to show that, while the measure 
at issue has been in force, refe rence prices have been disconnected  from international f.o.b. prices.
86  
According to Argentina, such disconnection results from the fact that the relevant time periods for 
calculating the reference prices amount to a total of 90 days, or less than 25 per cent of a year.  Argentina argues, therefore, that, in "fixing one problem"
87 (that is, variability) by changing reference 
prices less frequently, Chile has created other proble ms that contribute to impeding price transmission 
from international markets to the Chilean market.   
58. Similarly, Argentina notes that neither the "markets of concern" nor the "qualities of concern" 
used to determine reference prices are representa tive of the markets and qualities of wheat imported 
into Chile, which insulates the Ch ilean market even more.  Although only Argentina and the United 
States are selected as the "markets of concern"  from 2004 to 2005, Canada was in fact a larger 
exporter of wheat to Chile than was the United States.  Moreover, in addition to Trigo Pan Argentino  
(Argentine bread wheat) and Soft Red Winter No. 2 , there are at least two other qualities of wheat 
imported to Chile, both of which have higher prices than the qualities chosen  by Chile for the purpose 
of establishing reference prices.  Argentina argues that  the fact that reference prices are determined on 
the basis of only two varieties of wheat from only tw o origins, but are used to  calculate specific duties 
or rebates imposed on imports of all wheat and wheat flour, further contributes to the effect of impeding the transmission of international pr ice developments to the Chilean market. 
59. Finally, Argentina highlights that the conversi on factor of 1.56 transmits to the methods for 
establishing duties on wheat flour imports the same non- transparency and unpredictability inherent in 
the methods for establishing duties on wheat imports.  Argentina stresses that this conversion factor 
was embodied in the Chilean legislation in 1986 a nd has remained unchanged ever since, even though 
the ratio of the price of wheat flour to that of wheat has changed over time.   
(d) The Panel's Finding that the Measu re at Issue is Similar to a 
"Minimum Import Price" 
60. Argentina argues that, contrary to Chile's asser tion on appeal, the Panel correctly found that 
the measure at issue operates so as to prevent the entry of imports of  wheat or wheat flour into the 
Chilean market at prices below the lower threshold of  the price band.  In the original proceedings, the 
Appellate Body explained that a minimum import pri ce "refers generally to the lowest price at which 
                                                     
 
86Argentina's appellee's submission, para. 116 (referring to Exhibits ARG-15 and ARG-17 submitted 
by Argentina to the Panel). 
87Argentina's response to questi oning at the oral hearing.  WT/DS207/AB/RW 
 Page 23 
 
 
imports of certain product may en ter a Member's domestic market".88  In the light of this definition, 
Argentina underlines that, as it demonstrated befo re the Panel, specific duties resulting from the 
measure at issue tend to elevate the entry price of imports to Chile above the price band's lower 
threshold.   
61. Argentina maintains that the measure at issue te nds to elevate the entry price of wheat imports 
to Chile at above the lower threshold of the price band except in certain unlikely scenarios.  With the 
current lower threshold of US$128 per tonne, this unlikely scenario only arises when the reference 
price exceeds the c.i.f. price of an import transaction by more than US$7.2453 per tonne.  Argentina explains that such a scenario is highly improbable because reference prices are established on an f.o.b. 
basis and always tend to be lower than the c.i. f. import prices.  As confirmed by the evidence 
submitted to the Panel, during the period of applicati on of the measure at issue, the c.i.f. prices of 
wheat imports to Chile were always much higher th an the f.o.b. reference prices for the corresponding 
time period.  On this basis, Argentina contends th at the formula used for calculating specific duties, 
together with the lower threshold, works as a "brake"
89 for the decline in the entry price and impeded 
any transmission of international prices below the level of the threshold.   
62. Moreover, Argentina agrees with the Pane l that the measure at issue tends to 
"overcompensate" for international price declin es when specific duties are applied.  This 
overcompensation refers to the s ituation in which, when international prices fall, and when the 
reference price is below the lowe r threshold of the price band, the combined application of the 
ad valorem   tariff and the specific duty under the measure at  issue results in an overall entry price that 
rises rather than falls.90  In this regard, Argentina recalls Ch ile's argument that "overcompensation" 
occurred on only two days and counters that, each tim e overcompensation occurs, this "inevitably  
taints   the rest of [the following two-month] period" because the level of duties and the entry price is 
affected by that initial "overcompensation".91 
63. Finally, in Argentina's view, the evidence that it submitted to the Panel also highlights that the 
measure at issue does not ensure that the entry pri ce of imports to Chile falls in tandem with falling 
world market prices.  This is due to the fact th at specific duties rise when international prices fall, 
                                                      
88Argentina's appellee's submission, para. 179 (quoting Appellate Body Report, Chile – Price Band 
System , para. 236). 
89Ibid., paras. 57 and 186. 
90Argentina submits that relevant evidence demonstrates that, following the imposition of a specific 
duty on 16 December 2004 and on 16 February 2005, the entry price of wheat imports rose by more than 4 per cent as compared to the previous day, despite decreases in the international f.o.b. prices used to calculate 
the reference prices. 
91Argentina's appellee's submission, para. 74. (original emphasis) WT/DS207/AB/RW 
Page 24  
 
thereby moving in the opposite direction to inte rnational prices and "completely undercutting the 
effect of the decline in ... international prices".
92 
(e) The Panel's Alleged Failure to Examine the Measure at Issue in its 
Entirety 
64. Argentina submits that the Panel did not conduct a cursory review of the relevant features of 
the measure at issue in isolation.  Instead, the Panel conducted an objective assessment of the measure 
at issue in the light of the evidence before it, an d consistently with the legal reasoning developed by 
the Appellate Body in the original proceedings.  
3. Articles 11 and 12.7 of the DSU  
65. Argentina submits that the Panel acted consis tently with its obligations under Articles 11 
and 12.7 of the DSU.  First, Argentina argues that Chile did not point to any textual basis in the Panel Report to support its assertion that the Panel found the Chilean Ministry of Finance to have violated 
Chilean law in establishing the thresholds of the price bands.  According to Argentina, the Panel 
found only that Chile had failed to demonstrate that the abolition of the calculation formula for 
establishing thresholds under the original price ba nd system had exerted any practical impact on the 
levels of thresholds under the measure at issue, a nd that Chile had failed to submit sufficient evidence 
to support its assertion that import costs were deducted for purposes of establishing the current 
thresholds.
93  Argentina points out that the Panel's findi ng was consistent with Chile's statement that 
the level of thresholds was a result of "an internal political agreement".94   
66. Secondly, in response to Chile's assertion that  the Panel should have corrected a factual 
finding made by the original panel—namely, the original panel's alleged misunderstanding that the 
reference prices were not converted to c.i.f. terms before being compared to the price band 
thresholds—Argentina argues that the Panel's task was not to correct alleged errors regarding the 
operation of the original price band system.  Chile had the opportunity during the original proceedings 
to bring this alleged error to the attention of the original panel and the Appellate Body, but Chile did 
not do so.  In these circumstances, the findings by the original panel and the Appellate Body, adopted 
by the DSB, constitute a final resolution of the dis pute concerning the original price band system.  In 
any event, correcting this alleged factual error woul d not have affected the Panel's conclusion that the 
                                                      
92Argentina's appellee's submission, para. 103. 
93Ibid., para. 201 (quoting Panel Report, para. 7.79). 
94Ibid., para. 202 (quoting Chile's opening statement at the Panel meeting, Panel Report, p. D-33, 
para. 25).  WT/DS207/AB/RW 
 Page 25 
 
 
way the reference price is established tends to im pede the transmission of international prices to 
Chile's domestic market, because the Panel made several  other findings in support of this conclusion. 
67. Thirdly, Argentina submits that the Panel did not conduct a cursory review of the relevant 
features of the measure at issue "in isolation", and di d not fail to consider relevant empirical evidence.  
Recalling the Appellate Body's previous interpretations  of a panel's obligations  under Article 11 of the 
DSU95, Argentina emphasizes that the Panel did not fail to conduct an objective assessment of the 
matter before it by disregarding or distorting any ev idence, even though Chile may have preferred the 
Panel to have accorded different weight to certain evidence. 
68. Finally, with respect to Chile's claim under Article 12.7 of the DSU, Argentina recalls the 
Appellate Body's interpreta tion of this provision in  Mexico – Corn Syrup (Article 21.5 – US)96 and 
submits that, pursuant to Article 12.7, a panel report must set forth explanations and reasons sufficient 
to disclose the essential justification for the findi ngs and recommendations the panel is making.  
Argentina maintains that the Panel indeed set forth such explanations and reasons by:  (i) identifying 
the relevant facts and applicable legal standard , namely, Article 4.2 and footnote 1 of the  Agreement 
on Agriculture ;  (ii) following the Appellate Body's interpre tation of this legal standard;  (iii) applying 
this interpretation to the facts;  (iv) addressing relevant arguments made by Chile and Argentina;  
and (v) sufficiently explaining the reasons underlying its findings.  
4. Conclusion  
69. Argentina requests the Appellate Body to reject  Chile's claims of error in their entirety, 
including its claims under Articles 11 and 12.7 of the DSU, and to uphold the Panel's findings and 
conclusions under Article 4.2 and footnote 1 of the  Agreement on Agriculture . 
C. Claims of Error by Argentina – Other Appellant 
70. In the event that the Appellate Body reverses th e Panel's finding that the measure at issue is 
inconsistent with Article 4.2 of the  Agreement on Agriculture , Argentina requests the Appellate Body 
to find that the measure at issue is inconsistent  with the second sentence of Article II:1(b) of the 
GATT 1994.  
                                                      
95Argentina's appellee's submission, paras. 221-223.  In particular, Argentina refers to Appellate Body 
Report, EC – Hormones , para. 133;  and Appellate Body Report, Japan – Apples , paras. 221 and 222. 
96Argentina's appellee's submission, para. 229 (quoting Appellate Body Report, Mexico – Corn Syrup 
(Article 21.5 – US) , paras. 106-108).  WT/DS207/AB/RW 
Page 26  
 
1. Conditional Appeal and Completion of the Analysis 
 
71. Argentina recalls that the Panel declined to rule  on Argentina's claim that the measure at issue 
is inconsistent with the second sentence of Article II:1(b) of the GATT 1994.  The Panel stated that a 
finding on this claim was unnecessary to resolve this  dispute, given that the measure at issue had 
already been found to be inconsistent with Article 4.2 of the  Agreement on Agriculture .97  Argentina 
submits that, should the Appellate  Body reverse the Panel's finding under Article 4.2 of the 
Agreement on Agriculture , a finding concerning the consistency of the measure at issue with the 
second sentence of Article II:1(b) of the GA TT 1994 would become necessary for the prompt 
settlement of this dispute.98 
72. Argentina asserts that the Appellate Body woul d be able to complete the analysis under the 
second sentence of Article II:1(b) of the GATT 1994 in these proceedings.  Referring to the Appellate 
Body's finding in EC – Asbestos99, Argentina considers that the Appellate Body has established a 
three-tier test for completion of the analysis:  (i) th ere is a sufficient factual basis in the panel record 
for the Appellate Body's analysis;  (ii) if the completion of the analysis requires interpretation of a provision not examined by the panel, then this prov ision is part of a logical continuum with the 
provision(s) that the panel did consider;  and (iii) the provision with respect to which a party requests 
a ruling is the subject of a prior interpretation or appl ication by either a panel or the Appellate Body.   
73. According to Argentina, there is a sufficient basis in the Panel record to complete the 
analysis, because Argentina developed its claim under the second sentence of Article II:1(b) of the GATT 1994 by providing arguments and evidence, a nd the Panel made extensive factual findings 
regarding the operation of the measure at issue.  In addition, Argentina contends that there is a close 
relationship between Article 4.2 of the  Agreement on Agriculture   and the second sentence of 
Article II:1(b) of the GATT 1994 because, in Argen tina's view, if a measure is not an "ordinary 
customs duty" under Article 4.2, it is necessarily an  "other duty or charge" that should have been 
recorded in a Member's Schedule of Concessions pur suant to Article II:1(b) and the Understanding on 
the Interpretation of Article II:1(b) of the GATT 1994.  Finally, Argentina emphasizes that the second 
                                                     
 
97Argentina's appellee's submission, para. 8 (referring to Panel Report, paras. 7.117-7.120).  
98In response to questioning at the oral hearing, Argentina indicated that it also requests the Appellate 
Body to complete the analysis under Article 4.2 of the  Agreement on Agriculture   should that prove necessary 
to resolve the dispute. 
99Argentina's other appellant's submission, para. 19 (referring to Appellate Body Report, EC – 
Asbestos , paras. 78-81).   WT/DS207/AB/RW 
 Page 27 
 
 
sentence of Article II:1(b) of the GATT 1994 was the s ubject of rulings by the original panel and has 
also been interpreted or applied by other panels.100   
2. Scope of these Article 21.5 Proceedings  in Relation to Argentina's Claim 
under Article II:1(b) of the GATT 1994  
74. Argentina asserts that its claim under the second sentence of Article II:1(b) of the GATT 1994 
was properly within the scope of these Article 21.5 proceedings.  Before the Panel, Chile contended 
that Argentina's claim could have been, but was not, raised in the original proceedings, and that for 
the Panel to address such a claim would prejudice Chil e's due process rights.  Argentina responds that 
Chile's arguments have no basis in  relevant Appellate Body jurisprudence and would impair the aim 
of the DSU, namely, to secure a prompt and positive solution to a dispute.  
75. Argentina refers to previous findings by the Appellate Body regarding the scope of 
Article 21.5 proceedings and alleges that, in acco rdance with these findings, a complainant may not, 
in Article 21.5 proceedings, raise a claim for which:   (i) there has been a definitive ruling of WTO-
consistency or inconsistency;  or (ii) there has been  a finding that the complainant failed to establish a  
prima facie   case in the original proceedings.101  In Argentina's view, neither of these conditions is 
satisfied in these proceedings because Argentina' s claim under the second sentence of Article II:1(b) 
of the GATT 1994 is a new claim with respect to a ne w measure.  Furthermore, this new claim relates 
to the measure at issue in its totality rather than to one aspect in particular.  Accordingly, Argentina 
considers that the situation in the curren t proceedings is different from those in  EC – Bed Linen 
(Article 21.5 – India)   and  US – Countervailing Measures on Certain EC Products (Article 21.5 – 
EC).   
76. Finally, Argentina contends that, if the Appe llate Body were to acc ept Chile's procedural 
objections and preclude Argentina from raising its claim under Article II:1(b) of the GATT 1994 in 
these Article 21.5 proceedings, it would mean that Ar gentina should have made all conceivable claims 
at the initial stages in the original proceedings re gardless of whether the claims would have been 
fruitful.  Because Article 3.7 of the DSU requires a Member to exercise its judgement as to whether 
initiating a dispute would be "fruitful", such a finding by the Appellate Body would preclude 
                                                      
100Argentina's other appellant's submission, para. 25 (referring to Panel Report, Dominican Republic – 
Import and Sale of Cigarettes , paras.  7.22-7.122;  and Panel Report, US – Countervailing Measures on Certain 
EC Products , paras. 6.62-6.72). 
101Ibid., paras. 58-61 (referring to Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , 
para. 96;  Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 71 and footnote 110 
thereto;  and Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , footnote 150 to 
para. 102). WT/DS207/AB/RW 
Page 28  
 
complainants from exercising their judgement as re quired by Article 3.7 of the DSU.  Argentina 
submits that this would add a new and undue burden on complainants.   
3. Consistency of the Measure at Issue with Article II:1(b) of the GATT 1994
 
77. Argentina requests the Appellate Body "to comp lete the analysis of the Panel where [the 
Appellate Body] reverses or modifies findings of the Panel or [where] completion of the analysis of 
the Panel is necessary to resolve this dispute."102  Argentina maintains that, regardless of whether the 
measure at issue is similar to a variable import levy or a minimum import price, the measure is inconsistent with the second sentence of Article II:1( b) of the GATT 1994.  Argentina contends that 
this is because the measure at issu e is an "other duty or charge" not recorded in the appropriate 
column in Chile's Schedule of Concessions, thus infringing the second sentence of Article II:1(b).  In 
this regard, Argentina agrees with Chile's statement,  made before the Appellate Body in the original 
proceedings, that the purpose of the second sentence of Article II:1(b) is to ensure that bindings on 
"ordinary customs duties" cannot be circumvented by the creation of new types of duties or 
charges.
103 
78. Argentina recalls the Appellate Body's finding in  the original proceedings that all that is 
required for a border measure to be an ordinary cust oms duty is that it be expressed in the form of an 
ad valorem   or specific rate.  In addition, the Appellate  Body found that the fact that duties resulting 
from the original price band system took the form of an "ordinary customs duty" did not imply that 
the measure underlying such duties was consistent with Article 4.2 of the Agreement on Agriculture .  
Argentina argues that this finding is equally appli cable in the context of Article II:1(b) of the 
GATT 1994.  The measure at issue is not expressed in an  ad valorem   or specific duty rate and 
therefore it does not constitute an ordinary custom s duty.  The duties resulting from the operation of 
this complex mechanism also cannot be ordinary cu stoms duties even though they take the form of a 
specific duty.  Argentina further recalls that, accord ing to the negotiating history of Article II:1(b), 
"other duties or charges" within the meaning of that  provision are defined only by exclusion, that is, 
as a residual category of duties or charges that do not constitute ordinary customs duties within the 
meaning of the first sentence of Article II:1(b).  Arge ntina concludes, therefore, that, because it is not 
an ordinary customs duty, and because it is not record ed in the appropriate colu mn for "other duties or 
charges" in Chile's Schedule of Concessions, the m easure at issue must constitute an "other duty or 
charge" that is prohibited under the second sen tence of Article II:1(b) of the GATT 1994. 
                                                      
102Argentina's other appellant's submission, para. 86. 
103Ibid., para. 31 (quoting Appellate Body Report, Chile – Price Band System , para. 51).   WT/DS207/AB/RW 
 Page 29 
 
 
D. Arguments of Chile  – Appellee 
79. Chile requests the Appellate Body to reject Ar gentina's claims made in its other appeal, 
namely:  (i) to reverse the Panel's finding that it was unnecessary to make a separate finding on 
Argentina's claim under the second sentence of Article II:1(b) of the GATT 1994;  and (ii) to 
complete the analysis and find that the measure at  issue is inconsistent with the second sentence of 
Article II:1(b) of the GATT 1994. 
1. Conditional Appeal and Completion of the Analysis  
80. As a threshold matter, Chile notes, based on Ar gentina's other appellant 's submission, that 
Argentina has not specifically requested the Appellate Body to complete the analysis under Article 4.2 
of the  Agreement on Agriculture , if the Appellate Body were to  reverse the Panel's findings and 
conclusions under the same provision.  Although Ar gentina makes a general reference to completing 
the analysis in its other appellant's submission, th at submission, according to Chile, refers to, and 
provides arguments regarding, completion of the an alysis only in respect of Argentina's claim under 
Article II:1(b) of the GATT 1994.  In Chile's view, because Argentina has provided no specific 
reference or arguments in relation to completing the analysis under the Agreement on Agriculture , 
the Appellate Body cannot complete the analysis on these claims.   
81. Chile alleges that, in any event, Argentina' s vague references to completing the analysis 
disguise the complexity involved in doing so in this  case.  In Chile's view, the Appellate Body would 
be required to complete the analysis  on each of three different levels.  First, the Appellate Body would 
need to find that it is appropriate to complete th e analysis with respect to  Argentina's claims under 
Article 4.2 of the  Agreement on Agriculture   and, if so, then proceed with determining whether the 
measure at issue is consistent with this provision.  Secondly, in the event that the measure at issue 
were found to be consistent with the  Agreement on Agriculture , the Appellate Body would then need 
to find that it is appropriate to complete the anal ysis with respect to whet her Argentina's claim under 
the second sentence of Article II:1(b) of the GAT T 1994 was properly within the mandate of the 
Panel.  Thirdly, if it finds that Argentina's cl aim was properly within the Panel's mandate, the 
Appellate Body would need to determine whethe r completing the analysis with respect to the 
substance of Argentina's claim under this provision is  appropriate and, if so, proceed to completing 
the analysis.  According to Chile, completing such a complex string of analyses would be 
inappropriate in this case, particularly given the absence of any prior findings under the second 
sentence of Article II:1(b) by the Appellate Body in the original proceedings or by the Panel in these 
Article 21.5 proceedings.   WT/DS207/AB/RW 
Page 30  
 
2. Scope of these Article 21.5 Proceedings  in Relation to Argentina's Claim 
under Article II:1(b) of the GATT 1994  
82. Chile asserts that Argentina's claim under the second sentence of Article II:1(b) of the 
GATT 1994 was not properly within the scope of these Article 21.5 proceedings.  Chile indicates that 
the original price band system and the measure at issue share the same fundamental feature, namely, 
that they both result in the application of specific duties or rebates.  Chile argues that, before the 
Panel, Argentina was asked to identify the new aspec ts of the measure at issue which did not exist 
under the original price band system and which tr iggered a potential violation of the second sentence 
of Article II:1(b) of the GATT 1994.  The Panel f ound that Argentina had failed to identify any such 
new aspect, and, according to Chile, Argentina has si milarly failed to do so before the Appellate 
Body.  Accordingly, Chile contends that, c onsistent with the findings of the panel in US – 
Countervailing Measures on Certain EC  Products (Article 21.5 – EC) , the Appellate Body should 
find that Argentina's claim is beyond the scope of th ese Article 21.5 proceedings.  For Chile, this is so 
because it is a new claim on an aspect  of the original measure that was never challenged and remained 
unchanged in the measure at issue.  Chile submits  that, to protect its due process rights in these 
Article 21.5 proceedings, the Appellate Body s hould find that Argentina's claim under the second 
sentence of Article II:1(b) of the GATT 1994 was not  properly within the terms of reference of the 
Panel.  
3. Consistency of the Measure at Issue with Article II:1(b) of the GATT 1994  
83. Chile submits that the measure at issue is  consistent with the second sentence of 
Article II:1(b) of the GATT 1994 because it is not, nor does it result in, "other duties or charges".  In 
Chile's view, Argentina's appeal rests on the argum ent that the measure at issue does not constitute 
"ordinary customs duties" becau se, despite the resulting duties taking the form of an  ad valorem   or 
specific rate, the measure itself is not expressed in the form of an  ad valorem   or specific rate.  Chile 
submits that the Appellate Body should reject Arge ntina's approach because it is inconsistent with 
Article II:1(b) of the GATT 1994 as well as the Appellate  Body's findings in the original proceedings.  
Specifically, Chile considers that Argentina, in making its arguments, seeks to exclude from the 
Appellate Body's examination of its claim under Ar ticle II:1(b) the duties resulting from the measure 
at issue.  However, if the resulting duties are i gnored, the measure at issue cannot possibly constitute 
"other duties or charges" under Article II:1(b) of the GATT 1994, or even a variable import levy or 
minimum import price under footnote 1 of the  Agreement on Agriculture .  In addition, Chile suggests 
that "Argentina's approach would mean that a me asure imposing ordinary customs duties could never 
refer to anything other than the numerical rates to be applied"104, contrary to the Appellate Body's 
                                                      
104Chile's appellee's submission, para. 31.  WT/DS207/AB/RW 
 Page 31 
 
 
finding in the original proceedings that a Memb er may consider "exogenous" factors in setting the 
level of ordinary customs duties.  
84. Moreover, Chile takes issue with Argentina's ar gument that the measure at issue "should be 
examined in isolation"105 and can constitute ordinary customs duties only if the measure itself is 
expressed in the form of an  ad valorem   or specific rate.  In Chile's view, accepting this argument 
would lead to "absurd results"106, because this would mean that all measures underlying the 
application of ordinary customs duties would be WTO-inconsistent if they are not limited to a 
numerical rate only.  Chile gives the exampl es of measures that provide for progressive duty 
liberalization, tariff rate quotas, seasonal duties, and other types of ordinary customs duties.  Chile contends that, according to Argentina's argument, thes e would all be found to be WTO-inconsistent if 
the measures themselves were not scheduled as a num erical rate, notwithstanding that the resulting 
duties are ordinary customs duties.  Chile submits,  therefore, that Argentina's approach should be 
rejected. 
E. Arguments of the Third Participants 
1. Australia
 
85. Australia contends that the Panel committed no e rror of law or legal interpretation in finding 
that the measure at issue is inconsistent with  Chile's obligations unde r Article 4.2 of the  Agreement 
on Agriculture .  While recognizing the substantial changes that Chile made to its price band system, 
Australia nevertheless submits that these changes we re not sufficient to bring Chile's measure into 
compliance with the recommendations and rulings of the DSB in the original proceedings.  The Panel 
correctly identified the principal issue before it as whether the amendments introduced by Chile to its 
price band system were such as to make the me asure consistent with Article 4.2 of the  Agreement on 
Agriculture , and correctly found that the measure at issu e has the restrictive features that characterize 
the border measures prohibited under Article 4.2 and footnote 1.  
86. Australia adds that the Panel did not fail to give  effect to the language "other than ordinary 
customs duties" in footnote 1 to Article 4.2.  The structure of the Panel Report shows that the Panel 
did analyze whether the measure at issue operated differently from "ordinary customs duties", along 
with its consideration of whether the measure at issue was similar to a variable import levy and to a 
minimum import price.   
                                                      
105Chile's appellee's submission, para. 6. 
106Ibid., para. 29. WT/DS207/AB/RW 
Page 32  
 
87. Australia further argues that the Panel did not fa il to examine, on an "empirical basis", the 
similarity of the measure at issue with variable import levies and minimum import prices.  Australia 
contends that Chile misinterprets the Appellate Body 's use of the term "empirical" in the original 
proceedings.  The term was used by the Appellate Bo dy to reject the original panel's assessment that 
certain characteristics of a measure could be cons idered as being of a "fundamental nature".  In 
Australia's opinion, the Appellate Body used "empir ical" simply to refer "to a comparison of actual 
characteristics as opposed to a theoretical asse ssment of 'fundamental' characteristics".
107  The term, 
according to Australia, was not intended to be limite d to only the economic impact, as suggested by 
Chile.  Therefore, the Panel's appr oach was consistent with the A ppellate Body's use of the term 
"empirical".   
88. Australia rejects Chile's contention that th e measure at issue does not impose automatic 
variability as it requires a separate administrative act to change the duty levels.  In accordance with 
the findings of the Appellate Body in the origin al proceedings, the Panel correctly found that the 
measure at issue falls within this definition becau se it contains a formula that establishes automatic 
and periodic adjustment in the levels of specific du ties and rebates.  The Panel was also correct in 
concluding that continuous variability of the duties is a feature inherent in the measure at issue.  The 
Appellate Body's use of the term "continuous" does not suggest a requirement for a particular 
frequency.  Instead, according to Australia, the Appella te Body's reference to the right of Members to 
change periodically the rate at which they apply du ties was a reference to change which is periodic in 
the sense that it is not inherent in the operation of  an underlying measure, which is not the case in the 
measure at issue.   
89. Australia acknowledges that the fixing of the upper and lower thresholds for an extended 
period of time under the measure at issue is an "impr ovement", but maintains that the reference prices 
remain unpredictable and the way in which they are calculated lacks transparency.  Australia submits 
that traders are "faced with a degree of unpredic tability not materially different from the original 
[measure]"108 when they want to find out the amount of duties beyond the next bi-monthly duty 
adjustment.   
2. Brazil  
90. Brazil submits that the measure at issue shares fundamental characteristics with the original 
price band system and continues to be similar to  a variable import levy and to a minimum import 
price.  Like the original measure, the measure at issue has an automatic protective effect when prices 
                                                      
107Australia's third participant's submission, para. 14. 
108Ibid., para. 19.  WT/DS207/AB/RW 
 Page 33 
 
 
fall below the lower threshold, and it still contai ns a pre-determined formula that changes the 
reference prices within short periods to reflect inte rnational prices.  Furthermore, Brazil submits, the 
measure at issue imposes specific duties that more th an fill the gap between the international price and 
the lower threshold so as to insulate domestic produ cers from the price declines.  Brazil asserts that 
the differences between the original price band system and the measure at issue are essentially "minor details that do not alter the functioning of the syst em as a variable import levy and minimum price".
109  
91. Brazil contends that the Panel correctly analyzed  "variability" and found the measure at issue 
to be similar to a variable import levy.  The Pane l correctly reflected the reasoning of the Appellate 
Body in the original proceedings in  finding the measure at issue to be "variable" due to its in-built 
formula that causes specific duties to vary on a bi-mont hly basis.  The measure at issue could also be 
considered to be "variable" because its in-built form ula means that a trader may be faced with one of 
three scenarios:  (i) a requirement to pay a specific duty on top of  ad valorem   duties;  (ii) a 
requirement to pay only  ad valorem   duties;  or (iii) a rebate on  ad valorem   duties.  Brazil also 
disagrees with Chile's assertion that the measure  at issue does not, in itself, impose variability, 
because Supreme Decree 831 specifies that Chile's Mi nistry of Finance can revise aspects of the 
measure at any time.  This argument is not te nable because it is Law 18.525, as amended, that 
establishes the measure at issue and its formul a, whereas Supreme Decree 831 merely specifies 
certain operational details of the mechanism.  Brazil  further refers to the findings of the Appellate 
Body in  US – Oil Country Tubular Goods Sunset Reviews   and of the panel in  US – Zeroing (Japan) , 
and contends that "the mere possibility" that a challenged measure may be modified in the future 
"cannot shield [it] from a finding of WTO-inconsistency".110  
92. Brazil rejects Chile's attempt to distinguish the variability of the measure at issue from that of 
the original measure by characterizing the latter as a measure which imposed duties that varied continuously on a transaction-by-transaction basis.  In  fact, the only difference in variation is that 
under the measure at issue the duti es are fixed for a two-month period rather than weekly, and this 
change does not make the variability disappear.  Furt hermore, the Panel correctly concluded that the 
fact that there is a separate administrative act of publishing a decree every two months was "a mere formality", and did not mean that the measure was no longer "automatic".
111  Rather, Brazil maintains, 
                                                      
109Brazil's third participant' s submission, para. 9. 
110Ibid., para. 16 (referring to Appellate Body Report, US – Oil Country Tubular Goods Sunset 
Reviews , para. 187;  and Panel Report, US – Zeroing (Japan) , para. 7.57).  
111Ibid., para. 21. WT/DS207/AB/RW 
Page 34  
 
the variable duties resulting from the measure at issu e continue to be "inherently unpredictable and 
lacking in transparency".
112 
93. Brazil also disagrees with Chile's argument that  the variations in the measure at issue are 
equivalent to modifications of "ordinary customs du ties".  Fluctuations in the duties resulting from the 
measure at issue are fundamentally different, b ecause they result from an in-built formula and are 
mandated for a two-month period.  With respect to the transparency and pred ictability of the measure 
at issue, Brazil maintains that none of the modifi cations that Chile made to the original measure 
changed its intrinsic lack of predictability and transpar ency nor its similarity to a variable import levy.  
94. According to Brazil, the measure at issue al so continues to be a measure similar to a 
minimum import price, because it sets a numerical benchmark (the lower threshold) below which import prices can fall only in the most exceptional ci rcumstances.  Even in the unlikely event that 
world market prices fall "precipitously" within a two-month period, the measure at issue would 
nonetheless neutralize the fall in prices when the sp ecific duty levels are updated in the subsequent 
two months.
113  This confirms that the measure at issue continues to be similar to a minimum import 
price.  Brazil further argues that it is not necessary fo r the thresholds to be expressed in c.i.f. terms 
for the measure at issue to function as a minimum import price.   
95. Brazil argues that the Panel was not required to  make an additional determination that the 
measure at issue was not an "ordinary customs duty" .  This is because, according to Brazil, a finding 
that a measure falls within footnote 1 to Article 4.2 of the Agreement on Agriculture  necessarily 
implies that the measure is not an "ordinary custom s duty".  In addition, the Appellate Body, in the 
original proceedings, did not make a separate findi ng that the measure was not an "ordinary customs 
duty" after finding that it was similar to a variable import levy and to a minimum import price.  In any 
event, the measure at issue is not  an "ordinary customs duty", becau se it is not expressed either as an  
ad valorem   duty, a specific duty, or a combination ther eof, and also because it does not impose a duty 
regularly, but rather, exceptionally. 
96. In addition, Brazil is of the opinion that the Pa nel did not misallocate the burden of proof but 
"merely required that Chile substantiate a par ticular factual assertion" that Chile had made.114  The 
Panel did not start from the premise that the measure at issue was WTO-inconsistent, but merely 
considered the measure at issue against the "backdr op" of the original measure, and in line with the 
                                                      
112Brazil's third participant' s submission, para. 28. 
113Ibid., para. 29. 
114Ibid., para. 37.  WT/DS207/AB/RW 
 Page 35 
 
 
previous Appellate Body statements that an exam ination of the measure taken to comply cannot be 
done in abstraction from the measure that w as the subject of the original proceedings.115   
97. Regarding Argentina's conditional appeal, Braz il submits that, in the event the Appellate 
Body reverses the Panel's findings under Article 4.2 of the  Agreement on Agriculture , the Appellate 
Body should complete the analysis and find the meas ure at issue to be inconsistent with the second 
sentence of Article II:1(b) of the GATT 1994.  Th e measure at issue is not  an "ordinary customs 
duty", but constitutes "other duties or charges" that are not recorded in Chile's Schedule of 
Concessions. 
98. Brazil submits that Argentina's claim under the second sentence of  Article II:1(b) was within 
the terms of reference of the Panel because it concerns a " changed aspect   of a  new  measure".116  
Brazil disagrees with certain  obiter   statements of the Panel which imply that "a complaining 
Member must challenge  every conceivable violation   in the original proceedings in order to preserve 
its rights upon implementation."117  Brazil submits that such an a pproach may lead to an increase in 
the use of judicial economy and place "an excess ive burden" on the complainant and the dispute 
settlement system.118 
3. Canada  
99. Canada submits that, should the Appellate Body reach Argentina's conditional appeal, a 
clarification of the jurisdiction of Article 21.5 pane ls is required.  Although the Appellate Body need 
not review the Panel's extensive comments on this is sue, it remains open to the Appellate Body to do 
so as part of its broader review of this dispute.   In Canada's opinion, the narrow approach to the 
jurisdiction of Article 21.5 panels enunciated by  the Panel was inappropriate.  Adopting such an 
approach would fetter the ability of Members to adva nce their claims and would be detrimental to the 
efficient and effective operation of the dispute settle ment system.  For Canada, it is "incontestable" 
that a Member has a right to bring new claims and arguments before an Artic le 21.5 panel relating to 
new measures.119  Canada submits that an Article 21.5 panel should also be presumed to have 
jurisdiction over all claims and arguments raised by  the complainant and should not reject such claims 
or arguments on the sole basis that they could have been raised previously.   
                                                      
115Brazil's third participant's submission, para . 38 (referring to Appellate Body Report, US – Softwood 
Lumber VI (Article 21.5 – Canada) , para 102). 
116Ibid., para. 42. (original emphasis) 
117Ibid., para. 43. (original emphasis) 
118Ibid., para. 43. 
119Canada's third participant's submission, para. 5. WT/DS207/AB/RW 
Page 36  
 
100. In Canada's opinion, there are three reasons why this should be the "starting presumption" for 
Article 21.5 panels.  First, a complaining Member should be presumed in all proceedings to be acting 
in good faith in bringing claims and arguments it considers fruitful to resolve the dispute.  Secondly, 
the DSU contains no provision directing or authorizing panels to reject claims solely on the basis that 
they could have been raised previously, but it does require panels to make an objective assessment of 
the matter.  Thirdly, a "presumption of inadmiss ibility of arguments" may result in complainants 
multiplying their claims, regardless of their mer its, in the original proceedings, so as to avoid 
subsequent procedural challeng es during Article 21.5 proceedings.
120   
101. Canada maintains that, in any event, "[t]o ha ve a presumption in favour of admission of all 
claims and arguments is not to say that the presumption cannot be rebutted"121, and points to the 
Appellate Body Reports in  US – Shrimp (Article 21.5 – Malaysia) , EC – Bed Linen (Article 21.5 – 
India) , and the Panel Report in  US – Countervailing Measures on Cert ain EC Products (Article 21.5 – 
EC) as examples of whether the presumption was appropriately rebutted.122  In addition, claims and 
arguments are also subject to general principles of international law, such as procedural fairness and 
res judicata .  In this regard, Canada indicates that, fo r example, in cases where unfair prejudice to a 
party would result, a panel could exercise discretion to refuse to exercise jurisdiction.  In Canada's 
view, however, the Panel did not assess whether there could be potential prejudice to Chile if Argentina's claims under Article II:1(b) of the GA TT 1994 were to be allowed.  Instead, the Panel 
merely "formulated a particularly narrow rule fo r jurisdiction" which created a presumption that 
Article 21.5 panels will not cons ider arguments that could have been raised in the original 
proceedings, but were not, unless three stringent conditions are met.
123  Such a narrow approach 
places a high burden on the complainant and allows a respondent to rely on a presumption of prejudice to its position.  It is not consistent with the presumption of good faith that should be 
accorded complainants and it does not acknowledge th at the complainant has already established that 
the original measure was WTO-inconsistent.   
102. Canada believes that the facts of this case illustrate the unreasonableness of the Panel's 
approach.  Argentina's claim in the original proceedings was based on the first sentence of 
Article II:1(b), and Argentina argued that the duties imposed by Chile through the original price band 
system were "ordinary customs duti es" within the meaning of that sen tence.  However, the original 
                                                     
 
120Canada's third participant's submission, para. 9. 
121Ibid., para. 10. 
122Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , para. 97;  Appellate Body Report, 
EC – Bed Linen (Article 21.5 – India) , para. 96;  Panel Report, US – Countervailing Measures on Certain EC 
Products (Article 21.5 – EC) , footnote 294 to para. 7.75.  
123Canada's third participant's submission, para. 13.  WT/DS207/AB/RW 
 Page 37 
 
 
panel disagreed.  Subsequently, the Appellate Body reversed the original panel's finding but did not 
make a finding on whether duties in the original pr ice band system were in fact "ordinary customs 
duties".  Canada argues that the Panel's narrow approach would unfairly preclude Argentina from 
bringing a claim whose potential validity was only clear  after the findings in the original proceedings, 
and that Chile would suffer no prejudice were an Article 21.5 panel to consider that claim.   
4. Colombia  
103. Colombia chose not to submit a third participant' s submission pursuant to Rule 24(2) of the  
Working Procedures .  In its statement at the oral hearing, Colombia addressed the burden of proof 
applied by the Panel and the interpretation of the te rm "variable import levy", and joined Chile in its 
criticism of the Panel's interpretations and findings. 
5. European Communities  
104. The European Communities requests the Appellate Bo dy to find that the Panel erred in law in 
its analysis of the consistency of the measure at issue with Article 4.2 of the Agreement on 
Agriculture and to rectify, as appropriate, the views expressed by the Panel on the scope of the 
jurisdiction of Article 21.5 panels.  The European  Communities also submits that, because, in its 
view, the measure at issue should be considered an "ordinary customs duty", there is no breach of 
Article II:1(b) of the GATT 1994 and that a finding in  this respect is not necessary to the resolution of 
the dispute.    
105. The European Communities agrees with Chile that the Panel conducted only a "cursory 
review" of the measure at issue and merely compar ed it to the original price band system without 
establishing rigorously in law whether the measure at issue was still similar to a variable import levy 
or to a minimum import price.124  When properly assessed against the standards established by the 
Appellate Body, the measure at issue should be found to meet the requirements of an "ordinary 
customs duty" in terms of transparency and predictab ility.  In examining the similarity of the measure 
at issue to a minimum import price, the issue of  whether the measure disconnects domestic prices 
from international prices should not be given too much  weight.  This is in line with the approach 
adopted by the Appellate Body which "put [the] main emphasis on the lack of transparency and 
predictability" when analyzing similarity.125  The European Communities adds that transparency and 
predictability must be considered in the light of the actual effects of the measure at issue. 
                                                      
124European Communities' third participant's submission, para. 1. 
125Ibid., para. 4. WT/DS207/AB/RW 
Page 38  
 
106. According to the European Co mmunities, the Panel erred in assessing the measure at issue 
against the highest possible standard of transparen cy and predictability, instead of using the proper 
standard, that is, the transparency and predictab ility of ordinary customs duties.  Below bound duty 
rates, there is no specific level of predictability or transparency imposed on the administration or level 
of ordinary customs duties.  In the same way, the Panel's analysis of transparency and predictability 
should not have focused on the level of the resu lting duties but on the measure at issue and its 
operation.  The European Communities adds th at the Panel should also have undertaken a 
comprehensive and empirical review of the measure at issue in the light of the object and purpose of Article 4.2 of the  Agreement on Agriculture , which the Appellate Body identified as enhanced market 
access, and  not  as either transparency and predictability  per se ,  or unfettered market access. 
107. The European Communities submits that, when properly analyzed in the light of these 
requirements, the measure at issue is sufficiently tr ansparent and predictable.  The changes in duties 
are not, strictly speaking, continuous, and there is  reasonable transparency and predictability in the 
variations in duties.  Under the measure at issue, traders know the level of duties to be paid for each 
two-month period, and are "able, to a reasonable ex tent, to understand the dynamics of the system and 
anticipate the evolution of the payable duty during the next [two-month] period."
126  Although they 
cannot anticipate the precise amount of specific duty or rebate that will be applie d, this is no different 
from the situation where a Member reviews its applie d rates.  In addition, when, as in this case, the 
operation of the measure results in an increase in th e entry price of imports that is transparent and 
predictable, then the system should be deemed  to operate as an ordinary customs duty. 
108. The European Communities disagrees with  the Panel's views, expressed as  obiter dicta , with 
respect to the scope of review by an Article 21. 5 panel.  The European Communities disagrees, in 
particular, with the Panel's statements that Article  21.5 panels are precluded from examining claims 
that could have been raised during the original proceedings, and that an Article 21.5 panel may not 
assess new claims that relate to aspects of the or iginal measure that remain unchanged.  In the 
European Communities' opinion, the scope of ju risdiction of an Article 21.5 panel is framed 
exclusively by the terms of Article 21.5 of the DSU,  the request for the establishment of a panel, and 
the  res judicata   principle.  By definition, the latter principle cannot apply in the situation where the 
claim was not made in the original proceedings.  
109. The European Communities ar gues that the Panel's  obiter dicta   would force a complainant to 
identify all of its potential claims before an original  panel.  Such a condition has no basis in the DSU, 
and would deny Members the right to exercise thei r own "process economy" and to bring actions that 
                                                      
126European Communities' third participant's submission, para. 9.  WT/DS207/AB/RW 
 Page 39 
 
 
they consider "fruitful".127   The European Communities "fundame ntally disagrees" with the Panel's 
view that an Article 21.5 panel would "create a situ ation of uncertainty for the respondent", and would 
"jeopardize the security and predictability" of the WT O dispute settlement system, if it were to admit 
new claims.128  Rather, the Panel's restrictive approach would create a situation of uncertainty for 
complainants, and be counterproductive to the prompt  and efficient settlement of disputes, because it 
would, in effect, prevent complainants from ex ercising "process economy" by limiting themselves to 
the claims that they consider to be the strongest, and force them to include a maximum of claims in 
the original proceedings.   
110. Furthermore, according to the European Communities, allowing new claims at the 
implementation stage would not imply subjecting a respondent to immediate retaliation before having 
been afforded a reasonable period of time to comply.  The European Communities argues that 
"reasonable periods of time" are grace periods "derogating from the normal rule [of] immediate 
compliance and not stemming from an automatic right".129  As such, the European Communities does 
not view the lack of a reasonable period of tim e as sufficient to limit Members from bringing new 
claims. 
111. The European Communities also registers its di sagreement with the reasoning of the panel in 
US – Countervailing Measures on Certain EC Products (Article 21.5 – EC) .  In the view of the 
European Communities, that case, along with the Panel's  obiter dicta   in this case, create great 
uncertainty regarding the scope of Article 21.5 proceedings.  The European Communities therefore 
requests the Appellate Body to "rectify" the Panel's  obiter dicta , or, at least, to declare it "unsound 
and thus moot and without legal effect".130  
6. Thailand  
112. Pursuant to Rule 24(2) of the Working Procedures , Thailand chose not to submit a third 
participant's submission.  In its statement at th e oral hearing, Thailand addressed the question of 
whether the measure at issue continued to be simila r to a "variable import levy" and agreed with the 
Panel's analysis of, and findings on, this issue. 
                                                      
127European Communities' third participant's submission, para. 21. 
128Ibid., para. 22 (quoting Panel Report, para. 7.152). 
129Ibid., para. 27. 
130Ibid., para. 30. WT/DS207/AB/RW 
Page 40  
 
7. United States
 
113. The United States asserts that the Panel correc tly interpreted and applied Article 4.2 and 
footnote 1 of the  Agreement on Agriculture   and properly found that the measure at issue is similar to 
a variable import levy and to a minimum import pric e.  According to the United States, the Panel was 
correct to focus its analysis on whether the measure at issue was similar to a variable import levy and 
to a minimum import price.  An additional analysis  in the light of the phrase "other than ordinary 
customs duties" was not required.  This is consis tent with the approach adopted by the Appellate 
Body in the original proceedings and, in any ev ent, undertaking such an analysis would not have 
changed the Panel's ultimate conclusions.  The Un ited States points out that, under the measure at 
issue, Chile cannot provide a list of exact levels and dates of the application of duties to wheat imports 
throughout the year, which highlights that the meas ure at issue is not like seasonal duties, which are 
predictable and transparent "ordinary customs duties". 
114. In the view of the United States, the Panel corr ectly found that the changes in the duty levels 
under the measure at issue were continuous.  As under the original price band system, under the measure at issue duties are applied on a transaction- by-transaction basis.  The only change is that, 
instead of the duties being calculated every week, duty levels are now set on a bi-monthly basis and 
applied to those imports with waybills dated within  that two-month period.  The United States further 
disagrees with Chile that the Panel applied the wrong standard in concluding that the measure at issue 
is applied "continuously" because it "contemplates" a scheme or formula that causes automatic and 
continuous changes in duties.  According to the Un ited States, the fact that the Panel used the verb 
"contemplate" instead of the verb "incorporate" —which was used by the Appellate Body in the 
original proceedings—does not affect the Panel's analysis and ultimate findings on the "continuous" 
nature of the change in resulting duties under the measure at issue. 
115. The United States contests Chile's argument that the measure at issue is not "automatic" on 
the basis that the Chilean Ministry  of Finance has the ability to cha nge certain aspects of the measure 
at issue, and that a separate administrative action is required to change the level of duties.  The fact 
that the Ministry of Finance may theoretically c hoose to make certain future changes does not alter 
the continuous and automatic nature of the formula as it stands.  Similarly, the United States argues 
that the mere interjection of "a layer of clerical tasks (publication of the level of duty set by the 
formula)"
131 does not suffice to break the link between the formula and the level of duties 
automatically calculated by virtue of its application. 
                                                      
131United States' third participant's submission, para. 13.  WT/DS207/AB/RW 
 Page 41 
 
 
116. The United States disagrees with Chile that the sc ope of the Panel's analysis of transparency 
and predictability should have been restricted to  an examination of the duties resulting from the 
measure at issue.  The Panel correctly followed th e guidance of the Appellate Body by also applying 
the transparency and predictability test to the methodol ogy incorporated in the measure at issue.  This 
is logical because, in order to predict resulting duty levels, an exporter must have a sense of how the 
measure that fixes the level of duties operates.  In this regard, the United States argues that the Panel's 
conclusion that the measure at issue was neither pred ictable nor transparent was correct.  As under the 
original price band system, under the measure at i ssue, traders will often not be in a position to 
predict, before sending their shipments, th e specific duties that may be applicable. 
117. The United States considers that the Panel correc tly concluded that the lower threshold of the 
measure at issue acts as a substitute or a proxy for a minimum import price.  A finding to the contrary 
would allow a WTO Member to avoid its obligations under Article 4.2 of the Agreement on 
Agriculture simply by labelling its measure something other than a "c.i.f. price", "minimum import 
price", or "entry price".  Furthermore, just because import prices have not yet triggered the threshold does not mean that a minimum import price does not exist.  The United States also points out that 
there is evidence that the speci fic duties applied by virtue of the measure at issue tend to 
"overcompensate" for price declines and elevate th e entry price of wheat imports above the lower 
threshold.
132   
118. Lastly, the United States submits that it is not necessary for the Appellate Body to make a 
separate finding on Argentina's claim under the sec ond sentence of Article II:1(b) of the GATT 1994. 
 
III. Issues Raised in This Appeal 
119. The following issues are ra ised in this appeal: 
(a) whether the Panel erred in its a llocation of the burden of proof;  
(b) whether the Panel erred in its interpreta tion and application of Article 4.2 and 
footnote 1 of the  Agreement on Agriculture   in finding that:  
(i) the measure at issue is "similar" to a "variable import levy" and to a 
"minimum import price" within the meaning of footnote 1;  and 
(ii) the measure at issue is inconsistent with Article 4.2; 
                                                      
132United States' third participant's submission, para. 18. WT/DS207/AB/RW 
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(c) whether the Panel failed to discharge its duties under Article 11 of the DSU to 
conduct an objective assessment of the matter before it and under Article 12.7 of the 
DSU to set out a basic rationale for its findings;  and 
(d) if the Appellate Body reverses the Panel's findings that the measure at issue is 
inconsistent with Article 4.2 of the  Agreement on Agriculture ,  then: 
(i) whether the Appellate Body can and should rule on Argentina's claim under 
the second sentence of Article II:1(b) of the GATT 1994;  and, if so, then 
(ii) whether the measure at issue is inc onsistent with the second sentence of 
Article II:1(b) of the GATT 1994. 
IV. Background and the Measure at Issue 
A. Overview of the Measure at Issue and the Original Price Band System 
120. The measure at issue in these Article 21.5 pro ceedings is a Chilean measure that amends 
Chile's original price band system.
133  The original price band system was found to be inconsistent 
with Article 4.2 of the  Agreement on Agriculture  because it was "similar" to a "variable import levy" 
and to a "minimum import price", within the meaning of footnote 1 to that provision, and was, 
therefore, required to have been converted into "ordinary customs duties".134  Subsequently, Chile 
adopted the measure at issue in order to comply w ith the recommendations and rulings adopted by the 
DSB in the original proceedings.  Argentina, howev er, considered that Chile had failed to comply 
with those recommendations and rulings, and ch allenged Chile's measure in these Article 21.5 
proceedings.   
121. The measure at issue applies to imports of wheat and wheat flour, as did the original price 
band system.135  Chile has bound its tariff for wheat and wheat flour at 31.5 per cent  ad valorem , and 
applies a most-favoured-nati on tariff of 6 per cent  ad valorem   on such products (the "applied tariff").136  
                                                      
133See infra , para. 127.  
134Original Panel Report, para. 8.1(a);  Appellate Body Report, Chile – Price Band System , 
para. 288(c)(iii). 
135In addition to wheat and wheat flour, the measure at issue applies to imports of sugar;  the original 
price band system applied to imports of sugar and edible vegetable oils.  (Panel Report, para. 2.18;  Original 
Panel Report, para. 2.9)  Because Argentina's claim in these Article 21.5 proceedi ngs concerns only wheat and 
wheat flour, we examine the measure at issue, and recall aspects of the original price band system, only to the 
extent that they relate to wheat and wheat flour.   
136Panel Report, para. 2.17.  The ad valorem  rate was 7 per cent in 2002, when the original proceedings 
were concluded. (Appellate Body Report, Chile – Price Band System , para. 14)  WT/DS207/AB/RW 
 Page 43 
 
 
The total amount of duties collected on a shipment of wheat or wheat flour imports could, however, 
be equal to, or higher or lower than, the applied tariff, as a result of the operation of the measure at 
issue.137 
122. It is not disputed that the measure at issue and the original price band system "share the 
fundamental feature that they may result in the application of specific duties or rebates".138  Under 
both measures, two parameters are used to dete rmine whether specific duties or rebates will be 
applied, as well as the amount of such specific duti es and rebates—a price ba nd defined by its lower 
and upper thresholds (or band thresholds), and a reference price.139  When the reference price is below 
the lower threshold, a specific duty is im posed in addition to the applied tariff.140  When the reference 
price is between the lower and upper threshold, only the applied tariff is imposed.  When the reference 
price is above the upper threshold, a rebate is  deducted from the amount of the applied tariff.141  With 
regard to wheat flour, the specific duties or reba tes are established by multiplying the specific duties 
and rebates for wheat by a conversion factor of 1.56.142  When a specific duty is imposed in addition 
to the applied tariff, the sum of the two is ca pped at Chile's bound tariff rate of 31.5 per cent 
ad valorem .143  The value of any rebate is deducted from (but may not exceed) the amount payable as 
the applied tariff.144 
123. The original price band system, however, diffe red from the measure at issue in several 
aspects.  Thus, before turning to examine the measu re at issue and the Panel's assessment of it, we 
consider that recalling certain features of the or iginal price band system provides background useful 
to our task.   
                                                      
137Panel Report, para. 2.18. 
138Chile's appellee's submission, para. 22;  Argentin a's first written submission to the Panel, Panel 
Report, p. A-12, para. 36. 
139Panel Report, para. 2.20. 
140Ibid., paras. 2.25 and 2.26. 
141Ibid. 
142Ibid., para. 2.27.  As explained by Chile, the figure of 1.56 results from the fact that, between 
January 1986 and December 1995 , the average ratio of the pr ice of wheat flour to the price of wheat was 1.566.  
This figure was then built into the Chilean legislation and it has remained unchanged ever since. ( Ibid., 
para. 7.80)  
143Ibid., para. 2.19 
144Ibid. WT/DS207/AB/RW 
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B. The Original Price Band System 
124. The original price band system was contained in Article 12 of Chilean Law 18.525 on the 
Rules on the Importation of Goods.
145  Under the original system, th e lower and upper thresholds were 
announced annually, and were determined using av erage monthly free on board ("f.o.b.") Gulf of 
Mexico prices for a specific quality of wheat, namely,  Hard Red Winter No. 2 , for the preceding 60 
months on the Kansas Exchange.146  After having been adjusted to account for international inflation, 
these average monthly prices were listed in descending order and up to 25 per cent of the highest and 
lowest of the 60 monthly prices were eliminated.147  Among the remaining monthly prices, the highest 
and the lowest were selected, and import costs and the applied  ad valorem   tariff were added to these 
two prices to establish the upper and lower thresholds  on a cost, insurance and freight ("c.i.f.") 
basis.148   
125. Reference prices were determined weekly (every Friday) by selecting the lowest daily f.o.b. 
price in foreign markets of concern during that week.149  These markets of concern included 
Argentina, Australia, Canada, and the United States.  The reference prices so determined remained in 
force for the following week and could be consul ted by the public at th e offices of the Chilean 
customs authorities.150   
126. The reference price used to calculate the specifi c duty or rebate applicable to a particular 
import shipment was the reference price in force for the week during which the shipment was sent 
from the exporting country.151  When the reference price was be low the lower threshold, the amount 
of the specific duty was equal to the difference be tween these two parameters.  Conversely, when the 
reference price was above the upper threshold, the amount of the rebate was equal to the difference 
between these two parameters.152  The annual decrees that establi shed the price bands contained a 
table that set out a range of reference prices and the rebate or specific duty th at would be applied in 
                                                      
145Original Panel Report, para. 2.2 and footnotes 4 and 5 thereto.  The original price band system was 
amended by Law 19.772, published on 19 November 2001, whereb y Chile placed a cap on the duties payable so 
as to ensure they did not exceed the bound tariff rate of 31.5 per cent  ad valorem .  (Panel Report, para. 2.13 and 
footnote 23 thereto) 
146Panel Report, para. 2.22. 
147Ibid.;  Appellate Body Report, Chile – Price Band System , para. 18. 
148Panel Report, para. 2.22;  Appellate Body Report, Chile – Price Band System , para. 18. 
149Panel Report, para. 2.24;  Appellate Body Report, Chile – Price Band System , para. 21. 
150Panel Report, para. 2.24. 
151Panel Report, Chile – Price Band System , para. 2.6;  Appellate Body Report, Chile – Price Band 
System , para. 22. 
152Panel Report, para. 2.26;  Appellate Body Report, Chile – Price Band System , para. 29.  WT/DS207/AB/RW 
 Page 45 
 
 
respect of each of those reference prices.  Once the reference price that applied for a particular week 
had been established, the corresponding specific duty or  rebate for that reference price could be found 
in the table.153 
C. The Measure at Issue  
127. The measure at issue in these proceedings unde r Article 21.5 of the DSU consists of:  
(i) Article 12 of Law 18.525 on the Rules on the Importation of Goods, as amended by Law 19.897 
published on 25 September 2003;  and (ii) Supreme D ecree 831 of the Ministry of Finance, published 
on 4 October 2003, which regulates the application of Article 12 of Law 18.525, as amended by 
Law 19.897.154  The relevant provisions of Law 18.525, as amended, and Supreme Decree 831 entered 
into force on 16 December 2003.155   
128. The lower and upper band thresholds under the m easure at issue are speci fied for the 11-year 
period between 2003 and 2014.156  For the first four years of that period (from 16 December 2003 to 
15 December 2007), the lower and upper threshol ds are set at US$128 per tonne and US$148 per 
tonne, respectively.157  From 16 December 2007 to 15 December  2014, the thresholds will be adjusted 
annually by multiplying the thresholds in force during the previous annual period by a factor of 0.985,  
                                                      
153Appellate Body Report, Chile – Price Band System , para. 29. 
154As explained in paragraph 2.15 of the Panel Report, the amended version of Article 12 of 
Law 18.525 expressly provides for the issuance of a supr eme decree to establish:  th e periods in which specific 
duties and tariff rebates are to be established and applied;  the most relevant markets;  the procedures and dates for calculating the reference prices;  and other methodological factors necessary for the implementation of 
Article 12. 
155Panel Report, paras. 2.12-2.16. 
156Ibid., para. 2.21.  Article 12 of Law 18.525 (as modified by Law 19.897) is reproduced in 
paragraph 2.14 of the Panel Report and provides, in relevant part: 
For the purpose of determining the duties and rebates up until the annual 
period ending in 2007, the floor and ceiling prices for wheat ... shall be 
considered in the drafting of Chilean Ministry of Finance exempt decrees 
No. 266 ... published in the Official Journal of 16 May 2002, expressed in f.o.b. terms in United States dollars per tonne.  There shall be established, 
on the one hand, specific duties when th e reference price is below the floor 
price of US$128 for wheat ... and, on the other hand, rebates on the amounts 
payable as ad valorem  duties established in the Customs Tariff when the 
reference price is above the ceiling price of US$148 for wheat ... . 
For the purpose of determining the du ties and rebates as from the annual 
period ending in 2008 and up to 2014, the floor and ceiling prices 
established in the previous paragraph shall be adjusted annually by multiplying the values in force during the previous annual period by a factor 
of 0.985 in the case of wheat ... . 
157Panel Report, para. 2.21.  WT/DS207/AB/RW 
Page 46  
 
which amounts to a US$2 reduction per year.
158  Accordingly, for the last year of this 11-year period 
(from 16 December 2013 to 15 December 2014), the lo wer and upper thresholds will be US$114 and 
US$134, respectively.159   
129. Reference prices are determined by the Ch ilean authorities once every two months, in 
December, February, April, June, August, and October.160  A reference price is calculated as the 
simple average of daily f.o.b. prices for wheat in  the "most relevant markets", recorded during a 15-
day period ending on the 10th day of these months.161  The "most relevant markets" are Argentina (for 
the reference prices determined in December, Febr uary, and April), and the United States (for the 
reference prices determined in June , August, and October).  The daily prices used are the daily prices 
quoted for  Trigo Pan Argentino ,  f.o.b Argentine port and  Soft Red Winter  No. 2 ,  f.o.b Gulf of 
Mexico.162   
130. Every two months, the reference price thus establis hed is compared to the band thresholds to 
determine the amount of the specific duty or rebate, if any.  When the reference price is below the 
                                                      
158Panel Report, para. 2.21.  
159The lower and upper thresholds in force for each y ear from 16 December 2003 to 15 December 2014 
are set out in a table in Article 6 of Supreme Decree 831, reproduced in paragraph 2.16 of the Panel Report. 
160Panel Report, para. 2.23.  Article 12 of Law 18.525, as amended, is reproduced in paragraph 2.14 of 
the Panel Report and provides, in relevant part, that the amount of specific duties and rebates shall be 
established as provided in that Article  "by way of a supreme decree issued ... six times for wheat in the course of 
each twelve-month period extending from 16 December to  15 December of the following year."  See also 
Article 5 of Supreme Decree 831, reproduced in paragraph 2.16 of the Panel Report.  
161Panel Report, para. 2.23;  Chile's response to Question 63 posed by the Panel, Panel Report,  
p. F-103.  Article 12 of Law 18.525, as amended, is reproduced in paragraph 2.14 of the Panel Report and provides, in relevant part: 
The f.o.b. reference price shall co nsist of the average of the daily 
international prices for wheat ... recorded  in the most relevant markets over 
a period of 15 calendar days for wheat  ... reckoned from the date fixed by 
the Regulations for each Decree. 
See also Article 7 of Supreme D ecree 831, reproduced in paragraph 2.16 of the Panel Report, which 
provides: 
The reference price for wheat shall co rrespond to the average of the daily 
prices recorded in the markets specifi ed in Article 8, over a period of 
15 days counted retroactively from the 10
th day of the month in which the 
relevant decree is to be published. 
162Panel Report, para. 2.23.  See also Article 8 of Supreme Decree 831, reproduced in paragraph 2.16 
of the Panel Report, which provides: 
The most relevant market for wheat, during the period of application of 
duties and rebates extending from 16 December to 15 June of the following 
year, shall be that of Trigo Pan Argentino,  and the prices will correspond to 
the daily prices quoted for that product f.o.b. Argentine port ;  during the 
period of application extending from 16 June to 15 December, it shall be 
that of Soft Red Winter No. 2 , and the prices will correspond to the daily 
prices quoted for that product f.o.b. Gulf of Mexico .  WT/DS207/AB/RW 
 Page 47 
 
 
lower price band threshold, the amount of the specific duty is equivalent to the difference between 
these two parameters, multiplied by 1.06.163  When the reference price is above the upper price band 
threshold, the amount of the rebate is equivale nt to the difference between these two parameters, 
multiplied by 1.06.164  The amount of the specific duty or rebate so calculated is announced in  
bi-monthly supreme decrees issued by the Chilean Ministry of Finance.165  Once announced, a 
specific duty or rebate is applied to all wheat a nd wheat flour imports arriving in Chile during the 
two-month period beginning on the 16th day of the month in which a bi-monthly Supreme Decree is 
published.166  
131. From 16 December 2003 (when the measure at issu e entered into force) to 13 January 2006, 
only two reference prices, namely , those calculated in December  2004 and February 2005, were 
below the lower band threshold.167  As a result, a specific duty was imposed on 16 December 2004 
and on 16 February 2005, with each duty remaini ng effective for the following two-month period.168  
This means that, from 16 December 2003 to 13 January 2006:  specific duties were applied in 17 weeks;  rebates were applied in 35 weeks;  and, for the remaining 57 weeks of that period, only the  
                                                     
 
163The rate of 1.06 corresponds to one plus the general  ad valorem   rate of 6 per cent. (Panel Report, 
para. 2.25)  See also the text of Article 12 of Law 18.525, as amended, and Article 14 of Supreme Decree 831, reproduced in paragraphs 2.14 and 2.16 of the Panel Report, respectively. 
164The rate of 1.06 corresponds to one plus the general  ad valorem   rate of 6 per cent. (Panel Report, 
para. 2.25)  See also the text of Article 12 of Law 18.525, as amended, and Article 15 of Supreme Decree 831, reproduced in paragraphs 2.14 and 2.16 of the Panel Report, respectively. 
165Panel Report, para. 2.28.  These bi-monthly decrees do not specify the referen ce price used or set out 
the underlying calculation, but simply contain the result of that calculation. (Panel Report, para. 2.29;  Exhibit 
ARG-5 submitted by Argentina to the Panel) 
166The Annex to Supreme Decree 831 specifies the date s for announcing specific duties or rebates, their 
periods of validity, and the periods and most relevant markets for determining reference prices, as reproduced in 
paragraph 2.16 of the Panel Report: 
Periods for the 
calculation of  
reference prices Period of publication 
of decree Periods of validity  
of specific duties  
or rebates Most relevant market 
26 Nov. - 10 Dec. 
27 Jan. - 10 Feb. 27 March - 10 April 
27 May - 10 June 
27 July - 10 Aug. 26 Sep. - 10 Oct. 11-15 Dec.  
11-15 Feb.  11-15 April 
11-15 June 
11-15 Aug. 11-15 Oct. 16 Dec. - 15 Feb. 
16 Feb. - 15 April 16 April - 15 June 
16 June - 15 Aug. 
16 Aug. - 15 Oct. 16 Oct. - 15 Dec. Trigo Pan Argentino 
Trigo Pan Argentino Trigo Pan Argentino 
Soft Red Winter No. 2 
Soft Red Winter No. 2 Soft Red Winter No. 2 
 
167Argentina's first written submission to the Panel, Panel Report, pp. A-28 to A-31, paras. 133-140 
and 149.   
168Chile's second written submission to the Panel, Panel Report, pp. C-61 and C-65, paras. 49  
and 80.  Chile's oral statement and response to questioni ng at the oral hearing.  See also Decree 762 of  
13 December 2004 and Decree 88 of 10 February 2005, contained in Exhibit ARG- 5 submitted by Argentina  
to the Panel. WT/DS207/AB/RW 
Page 48  
 
ad valorem   applied tariff was applied to wheat and wheat flour imports to Chile.
169  In addition, from 
13 January to June 2006, wheat and wheat flour imports entered into Chile subject only to the 
ad valorem   applied tariff.170 
V. Burden of Proof 
132. Chile claims that the Panel did not properly  allocate the burden of proof because the Panel 
proceeded on the  assumption   that the measure at issue was inconsistent with Article 4.2 of the  
Agreement on Agriculture .  In so doing, Chile argues, the Pane l relieved Argentina of its burden of 
proof and wrongly required Chile to demonstrate that the measure at issue was consistent with this 
provision.  Chile requests the Appellate Body to reverse "all of the Panel's conclusions" because of 
this "fundamental flaw".171   
133. In Argentina's view, the Panel correctly found, on the basis of the arguments and evidence on 
the Panel record, that Argentina had established a  prima face   case and that Chile had failed to rebut it, 
and thereby rightly concluded that the measure at issue was inconsistent with Article 4.2 of the  
Agreement on Agriculture .  Accordingly, Argentina requests the Appellate Body to dismiss this ground 
of Chile's appeal. 
134. We first recall that, in WTO dispute settlement , as in most legal systems and international 
tribunals, the burden of proof rests on the party that asserts the affirmative of a claim or defence.172  A 
complaining party will satisfy its burden when it establishes a  prima facie   case by putting forward 
adequate legal arguments and evidence.173  The nature and scope of arguments and evidence required 
"will necessarily vary from measure to measure,  provision to provision, and case to case".174  When a 
claim is brought against a WTO Member's legislation or regulation, a panel may, in some circumstances, 
consider that the text of the relevant legal instru ment is sufficiently clear to establish the scope and 
meaning of the law.  However, in other cases, a panel may consider that additional evidence is 
                                                      
169Panel Report, para. 2.31. 
170Ibid. 
171Chile's statement at the oral hearing. 
172Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:1, 323, at 335.  Moreover, 
each party bears the burden of proving th e facts that it asserts in support of its claim or defence (Appellate Body 
Report, Japan – Apples , para. 157), and it is  not  for a panel "to make the case for a complaining party". 
(Appellate Body Report, Japan – Agricultural Products II , para. 129)  In addition, a "panel may not take upon 
itself to rebut the claim (or defence) where the responding party (or complaining party) itself has not done so." 
(Appellate Body Report, US – Gambling , para. 282) 
173"[A] prima facie   case is one which, in the absence of ef fective refutation by the defending party, 
requires a panel, as a matter of law, to rule in fa vour of the complaining party." (Appellate Body Report, EC – 
Hormones , para. 104)  
174Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:1, 323, at 335;  Appellate 
Body Report, US – Carbon Steel , para. 157.    WT/DS207/AB/RW 
 Page 49 
 
 
necessary to do so.175  Once the complaining party has established a  prima facie   case, it is then for 
the responding party to rebut it.176   
135. A panel errs when it sustains a claim for which the complaining party has failed to make out a  
prima facie   case.177  Nevertheless, a panel does not commit le gal error merely by omitting to specify 
which party bears the burden of proof in respect of each claim or defence.178  Moreover, a panel is not 
obliged, in every instance, to make  an explicit finding that a complaining party has met its burden to 
establish a  prima facie   case in respect of each element of a particular claim, or that the responding 
party has effectively rebutted a  prima facie   case.179  Thus, a panel is not required to make an explicit 
ruling that a complaining party has established a  prima facie   case of inconsistency before examining 
the responding party's defence and evidence.180  At the same time, the mere articulation by a panel of 
the correct rules as to the burden of proof is not sufficient if the panel does not, in fact, properly 
allocate that burden in the case before it.181   
136. Neither Chile nor Argentina suggests that the general rules on burden of proof, which imply 
that a responding party's measure will be treated  as WTO-consistent unless proven otherwise, do not 
apply in proceedings under Article 21.5 of the DSU.  We observe, in this regard, that Article 21.5 
proceedings do not occur in isolation from the origin al proceedings, but that both proceedings form 
part of a continuum of events.182  The text of Article 21.5 expressly links the "measures taken to 
comply" with the recommendations and rulings of the DSB concerning the original measure.183  A  
panel's examination of a measure taken to comply cannot, therefore, be undertaken in abstraction from 
the findings by the original panel and the Appellate Body adopted by the DSB.184  Such findings 
identify the WTO-inconsistency with respect to the original measure, and a panel's examination of a 
measure taken to comply must be conduc ted with due cognizance of this background.185  Thus, the 
                                                      
175Appellate Body Report, US – Carbon Steel , para. 157. 
176See, for example, Appellate Body Report, US – Gambling , para. 139 and footnote 149 thereto.   
177Ibid., para. 139;  Appellate Body Report, Japan – Agricultural Products II , para. 129.   
178Appellate Body Report, India – Quantitative Restrictions , para. 137. 
179Appellate Body Report, Thailand – H-Beams , para. 134. 
180Appellate Body Report, Korea – Dairy , para. 145. 
181Appellate Body Report, India – Patents (US) , para. 74.   
182Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 121. 
183Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) , 
para. 142;  Appellate Body Report, US – FSC (Article 21.5 – EC II) , para. 61;  Appellate Body Report, US – 
Softwood Lumber IV (Article 21.5 – Canada) , para. 68. 
184Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 102;  Appellate 
Body Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 77. 
185Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 121. WT/DS207/AB/RW 
Page 50  
 
adopted findings from the original proceedings may well figure prominently in proceedings under 
Article 21.5, especially where the measure taken to comply is alleged to be  inconsistent with WTO 
law in ways similar to the original measure.
186  In our view, these considerations may influence the 
way in which the complaining party presents its case, and they may also be relevant to the manner in 
which an Article 21.5 panel determines whether th at party has discharged its burden of proof and 
established a  prima facie   case. 
137. We note that the Panel in these Article 21.5 proceedings did not make any express statement 
regarding the allocation of the burden of proof in its Report.  Chile points to various statements in the 
Panel Report purportedly indicating th at, "[t]hroughout its analysis, from the first paragraph to the last 
paragraph", the Panel misallo cated the burden of proof.187  According to Chile, the Panel erred in 
conducting its review by focusing on whether the me asure at issue "continues to have sufficient 
resemblance or likeness" to variable import levies and to minimum import prices, or "has been 
modified" in comparison to the original price band system.188  The statements referred to by Chile are 
mostly found in the introductory or concluding para graphs in each section of the Panel's substantive 
analysis.  For example, in the first paragraph of its substantive analysis, the Panel stated that the "main 
issue" for it to decide was "whether the amendmen ts introduced by Chile to its [price band system] are 
such as to make the measure consistent  with Article 4.2" of the  Agreement on Agriculture .189  Chile 
also refers to the Panel's conclusion that "the am endments introduced by Chile into its [price band 
system] have failed to convert it in to a measure which is no longer  a border measure similar to a 
'variable import levy' and to a 'minimum import price'".190   
138. These statements must, however, be understood  in the context of these Article 21.5 
proceedings, which include the recommendations and rulings of the DSB in the original proceedings 
and the measure taken to comply with them.  In th e original proceedings, Chile's original price band 
system was found to be similar to a variable im port levy and to a minimum import price, and thus 
inconsistent with Article 4.2 of the  Agreement on Agriculture .  In these Article 21.5 proceedings, the 
task of the Panel was to examine Argentina's claim that the measure taken to comply was similar to a 
variable import levy and to a minimum import price and, therefore, inconsistent with Article 4.2.191  
                                                      
186Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 109. 
187Chile's statement at the oral hearing. 
188Chile's appellant's submission, paras. 49 and 50 (quoting Panel Report, paras. 6.12, 7.44, 7.54, 7.55, 
7.79, 7.81, and 7.92). 
189Ibid., para. 46 (quoting Panel Report, para. 7.14). (emphasis added by Chile) 
190Ibid., para. 48 (quoting Panel Report, para. 7.96). (emphasis added by Chile) 
191In the Request for the Establishment of a Panel, Argentina claimed that Chile continued to maintain 
a measure similar to a variable import levy and to a mi nimum import price, thereby acting inconsistently with 
Article 4.2 of the Agreement on Agriculture . (Panel Report, pp. G-2 and G-3)  WT/DS207/AB/RW 
 Page 51 
 
 
The panel and the Appellate Body reports in the or iginal proceedings contain detailed interpretations 
of this provision, and provide a reasoned analysis a pplying these interpretations to the various features 
of the original price band system and explaining why it was inconsistent with Article 4.2.  The Panel's 
examination of the measure at issue in these Ar ticle 21.5 proceedings was conducted against this 
background and in the light of the paramete rs set out in the original reports.   
139. In addition, before the Panel, both Argentin a and Chile made claims and arguments that 
referred extensively to the original price band syst em as well as to the interpretations, reasonings, and 
findings of the panel and the Appellate  Body in the original proceedings.192  Argentina claimed that, 
through the measure at issue, Chile had only "cos metically" amended the original price band system 
while preserving its distortive effects and its lack of transparency and predictability.193  In response, 
Chile countered that the measure was "in keeping wi th" the original findings and their application to 
the original price band system, arguing that Chile "was only required to take action with respect to 
specific aspects of the [original price band syst em] that the Appellate Body had identified".194  I n  
making their arguments, both parties recognized that the measure at issue shares certain features of 
the original price band system, such as the existence of band thresholds, reference prices, the resulting 
specific duties and rebates for wheat, and the conversion factor of 1.56 for calculating duties and 
rebates on wheat flour.195  Their disagreement focused, to a la rge degree, on whether the measure at 
issue has  the same characteristics   that were found by the original panel and the Appellate Body to 
have rendered the original price band system  inconsistent with Article 4.2 of the  Agreement on 
Agriculture .   
140. Read in this context, the statemen ts in the Panel Report quoted by Chile196 do not indicate a 
misallocation of the burden of proof.  Rather, they  reflect the Panel's approach in analyzing the 
measure at issue in the light of the interpretation of the requirements of Article 4.2 in the original 
proceedings and the parties' claims and arguments in these Article 21.5 proceedings.  In these 
circumstances, it was appropriate for the Panel to make comparisons between the measure at issue and 
the original price band system, especially with regard  to the specific aspects th at had been modified.  
We do not consider, therefore, that the Panel erred merely because it examined the modifications 
                                                      
192Panel Report, paras. 7.6-7.12. 
193See Argentina's opening statement at the Panel meeting, Panel Report, p. D-3, para. 7. 
194Panel Report, paras. 7.9. 
195See, for example, Argentina's first written submission to the Panel, Panel Report, p. A-12, para. 36;  
and Chile's first written submission to the Panel,  Panel Report, pp. A-64 and A-65, paras. 20-30. 
196Chile's appellant's submission, paras. 46-50 (quoting Panel Report, paras. 6.12, 7.14, 7.44, 7.54, 
7.55, 7.79, 7.81, 7.92, and 7.96). WT/DS207/AB/RW 
Page 52  
 
made to Chile's original price band system thr ough the measure at issue in the light of the 
recommendations and rulings of the DSB.  
141. Moreover, a careful reading of the Panel Report suggests that the Panel conducted its analysis 
on the basis of Argentina's arguments and evidence presented in order to establish a  prima facie   
case, as it proceeded to consider Chile's argument s and evidence submitted in rebuttal.  The Panel 
record reveals that, in its two written submissions  and two oral statements, Argentina developed 
extensive legal arguments supported by evidence presen ted in 38 exhibits, including the legal text of 
the measure at issue and mathematical/statistical ev idence regarding the application of the measure.  
Argentina sought to demonstrate that the measure at issue, " per se   and in its specific application to 
imports of wheat and wheat flour"
197, was inconsistent with Article 4.2 of the Agreement on 
Agriculture .  The Panel commenced its examination with the text of the measure at issue and found 
that, "[o]n its face, the language of the [measure at  issue] will necessarily result in variability in the 
level of duties".198  Because Chile contested this characterization of its measure, the Panel went on to 
consider Chile's arguments and evidence.  The Pane l found these to be unpersuasive "in light of the 
available evidence to the contrary and,  indeed, of Chile's own explanations".199  Similarly, the Panel 
considered the empirical evidence regarding the a pplication of the measure at issue contained in 
certain exhibits submitted by Argentina, and found th at even Chile's argument s and evidence appeared 
to confirm Argentina's position that the lower threshold of the price band continued to operate as a substitute for a minimum price.
200  Such statements and findings suggest that the Panel considered that 
Argentina had provided sufficient proof for its cl aim as it turned to examine whether Chile had 
effectively rebutted that claim.  That the Pane l did not expressly specify the moment at which it 
determined that Argentina had established a  prima facie   case and announce when it would turn to 
Chile's rebuttal does not constitute an error in the allocation of the burden of proof.201 
142. In the light of the foregoing, we are satisfied th at the Panel properly considered that Argentina 
had presented arguments and evidence sufficient to establish a  prima facie   case of inconsistency 
with Article 4.2 of the  Agreement on Agriculture , and appropriately focused its analysis, as well, on 
whether Chile had succeeded in rebutting Argentina's  prima facie   case.   
                                                      
197Argentina's first written submission to the Pane l, Panel Report, pp. A-7 and A-8, para. 14. 
198Panel Report, para. 7.58.  
199Ibid., para. 7.59. 
200Ibid., 7.87-7.92. 
201Appellate Body Report, India – Quantitative Restrictions , para. 142.  WT/DS207/AB/RW 
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143. We nevertheless wish to express reservations regard ing certain statements made by the Panel.  
For example, at the outset of its analysis, after summarizing the parties' arguments and quoting the 
relevant treaty provision, the Panel immediately stat ed that the "main issue for the Panel to decide ... 
is whether [Chile's] amendments ... are such as to  make the measure [at issue] consistent with 
Article 4.2" of the  Agreement on Agriculture .202  Given that the Panel did not specifically articulate 
its allocation of the burden of proof, such a statemen t, read in isolation, could be construed to imply 
that the Panel might have proceeded to consider  whether Chile had proven the WTO-consistency of 
the measure at issue without analyzing whether Argentina had established a  prima facie   case of 
inconsistency.  In our view, the Panel could have made it more discernable, in its reasoning, that it 
was mindful of the burden on Argentina.   
144. In conclusion, having carefully examined the Panel's analysis, the Panel record, and the 
arguments presented on appeal, we are of the view th at the Panel did not err in its allocation of the 
burden of proof.   
VI. Article 4.2 and footnote 1 of the  Agreement on Agriculture 
145. Before turning to the specifics of Chile's appeal, we consider it useful to recall certain general 
observations made by the Appellate Body in the cour se of the original proceedings.  Part III of the  
Agreement on Agriculture   consists of two articles, Article 4 on market access and Article 5 on special 
safeguard provisions.  The Appellate Body  observed that "Article 4 of the  Agreement on Agriculture  
is appropriately viewed as the legal vehicle for re quiring the conversion into ordinary customs duties 
of certain market access barriers affec ting imports of agricultural products"203, and explained its origin 
and function as follows: 
                                                      
202Panel Report, para. 7.14. 
203Appellate Body Report, Chile – Price Band System , para. 201. WT/DS207/AB/RW 
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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.  The negotiators decided that these bor der measures should be converted 
into ordinary customs duties, with a view to ensuring enhanced 
market access for such imports.  T hus, 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, and thus the maximum 
amount of such duties can be more easily reduced in future 
multilateral trade negotiations.  The Uruguay Round negotiators 
agreed that market access would be improved—both in the short term and in the long term—through bindings  and reductions of tariffs and 
minimum access requirements, which were to be recorded in 
Members' Schedules.
204  
146. In our analysis below, we fi rst consider specific issues arising in connection with the 
interpretation of Article 4.2 and footnote 1 and then turn to consider whether the Panel properly 
applied those provisions in these proceedings. 
A. Interpretation of Article 4.2 and Foot note 1 of the Agreement on Agriculture 
147. This dispute centres on the second paragraph of Article 4 of the Agreement on Agriculture , 
which, along with its footnote 1, provides: 
2. Members shall not maintain, resort to, or revert to any 
measures of the kind which have b een required to be converted into 
ordinary customs duties1, except as otherwise provided for in 
Article 5 and Annex 5.  
____________ 
1 These measures include quantitative import restrictions, variable 
import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary 
export restraints, and 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. 
148. Article 4.2, therefore, prohibits Members from ma intaining, resorting to, or reverting to, "any 
measures of the kind which have been required to be  converted into ordinary customs duties".  This 
                                                      
204Appellate Body Report, Chile – Price Band System , para. 200.   WT/DS207/AB/RW 
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requirement applies from the date of entry into force of the  WTO Agreement , regardless of whether a 
Member  in fact   converted such measures into ordinary customs duties.205   
149. Footnote 1 provides a non-exhaustive list of the measures that are covered by the obligation 
under Article 4.2.  The various border measures id entified in footnote 1 have different forms and 
structures and apply to imports in different ways .  Yet, these measures "have in common that they 
restrict the volume or distort the pri ce of imports of agricultural products"206 and, therefore, frustrate a 
key objective of the  Agreement on Agriculture —to achieve improved market access conditions for 
imports of agricultural products by permitting only th e application of ordinary customs duties.  Some 
of the measures specifically identified in footnote 1 entail the payment of duties at the border, while 
others do not.  The mere fact that a measure  results   in the payment of duties that take the same  form   
as ordinary customs duties does not, alone , mean that the measure falls outside the scope of 
footnote 1.207  Thus, in order to ascertain whether a me asure is among the "measures of the kind which 
have been required to be converted into ordinary customs duties", it is necessary to conduct an in-
depth examination of the measure itself.  Such an examination must take due account of the scope and 
meaning of the relevant language in footnote 1.   
150. In these Article 21.5 proceedings, as in the orig inal proceedings, three categories of measures 
mentioned in footnote 1 are relevant to the determin ation of whether the measure at issue falls within 
the scope of that provision:  (i) minimum import prices;  (ii) variable import levies;  and (iii) similar border measures other than ordinary customs duties.  We examine these in turn.  For each element, we 
first identify its scope and meaning.  Then, for thos e elements in respect of which Chile has alleged 
that the Panel committed interpretative error, we examine whether any such error was made. 
1. "Minimum Import Prices"
 
151. Although Chile has not appealed the Panel's in terpretation of "minimum import prices" in 
footnote 1 to the  Agreement on Agriculture , it has appealed the Panel's application of this concept to 
the measure at issue.  Accordingly, we briefly review the meaning of "minimum import prices" so as to facilitate our subsequent analysis.   
152. In the original proceedings, the Appellate Body stated that the "term 'minimum import price' 
refers generally to the lowest price at which imports of a certain product may enter a Member's 
                                                     
 
205Appellate Body Report, Chile – Price Band System , para. 212. 
206Ibid., para. 200. 
207Ibid., para. 216. WT/DS207/AB/RW 
Page 56  
 
domestic market."
208  The Appellate Body also quoted certain statements made by the original panel, 
including its explanation that, generally speaking,  under a minimum import price scheme, "[i]f the 
price of an individual consignment is below a specifi ed minimum import price, an additional charge is 
imposed corresponding to the difference"209, and that: 
... minimum import prices "are gene rally not dissimilar from variable 
import levies in many respects, including in terms of their protective and stabilization effects, but [...] th eir mode of operation is generally 
less complicated."  The main difference between minimum import 
prices and variable import levies is, according to the [original 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."
210 (emphasis added by the 
Appellate Body)   
153. In these proceedings, the Panel's definition of "minimum import price", which was based on 
the original panel and Appellate Body reports, was as follows: 
In essence, a minimum import price is a measure which ensures that 
certain imported products will not en ter 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.
211 
154. In response to questioning at the oral heari ng in this appeal, neither Chile nor Argentina 
indicated any objection to this definition.   
2. "Variable Import Levies"  
155. In examining the meaning of the term "variabl e import levies", the Appellate Body explained 
that a levy is "variable" when it is "liable to vary".212  This characteristic alone, however, would not 
suffice to characterize a measure as a "variable import levy" within the meaning of footnote 1.  In 
addition, as the Appellate Body found, "variable import levies" are measures which themselves—as a 
mechanism—impose the variability of  the duties, that is, measures that are "inherently" variable 
because they "incorporate[] a scheme or formul a that causes and ensures that levies change 
                                                      
208Appellate Body Report, Chile – Price Band System , para. 236. 
209Ibid. (quoting Original Panel Report, para. 7.36(e)).   
210Ibid., para. 237 (quoting Original Panel Report, para. 7.36(e)). 
211Panel Report, para. 7.30. 
212Appellate Body Report, Chile – Price Band System , para. 232.  WT/DS207/AB/RW 
 Page 57 
 
 
automatically and continuously".213  The presence of this underlying formula distinguishes variable 
import levies from ordinary customs duties, which ar e also subject to variation, but through discrete 
changes in applied tariff rates that occur independ ently and as a result of separate administrative or 
legislative action.214   
156. The Appellate Body further observed that variable import levies are characterized by certain 
additional features which include "a lack of transpar ency and a lack of predictability in the level of 
duties that will result from such measures".215  In making this statement, the Appellate Body was not 
identifying a "lack of transparency" and a "lack of predictability" as independent or absolute 
characteristics that a measure must display in order to be considered a variable import levy.  Rather, 
the Appellate Body was simply explaining that the le vel of duties generated by  variable import levies 
is less transparent and less predictable th an is the case with ordinary customs duties.216  Thus, the 
Appellate Body considered transparency and predic tability in tandem and in relation to the level of 
resulting duties, observing that "an exporter is less like ly to ship to a market if that exporter does not 
know and cannot reasonably predict wh at the amount of duties will be."217  This is why variable 
import levies are "liable to restrict the volume of imports".218  In addition, they "contribute to 
distorting the prices of imports by impeding the transmission of international prices to the domestic 
market".219   
157. Turning to examine the Panel's definition of "v ariable import levies" in these proceedings, we 
observe that the Panel quoted extensively from the A ppellate Body's interpretation of this term, and 
synthesized its understanding of the proper approach as follows: 
                                                      
213Appellate Body Report, Chile – Price Band System , para. 233.   
214Ibid.  
215Ibid., para. 234.  
216The Appellate Body explained that the Uruguay Round negotiators had identified "certain border 
measures which have in common that they restrict the volume or distort the price of imports of agricultural 
products" and "decided that these border measures should be converted into ordinary customs duties" which 
"would, in principle, become the only form of border protection."  Ordinary 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, therefore, "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)) 
217Ibid., para. 234 (referring to Argentina's responses to questioning at the oral hearing in the original 
proceedings).  
218Ibid.   
219Ibid.  WT/DS207/AB/RW 
Page 58  
 
In essence, a variable import levy is a duty assessed upon importation, which is liable to vary  automatically and continuously 
on the basis of an underlying scheme or formula that does not require any discrete or independent legislative or administrative action and is intransparent and unpredictable as to the level of resulting duties.
220 
158. This description by the Panel seems to us to be an accurate rendering of the meaning of 
"variable import levies", as interpreted by the Ap pellate Body.  Indeed, Chile's appeal does not 
challenge this definition  per se , but subsequent statements made by the Panel that reveal, according 
to Chile, a mistaken understanding of the m eaning of "variable import levies".    
159. Chile contends that the Panel erred in attributin g meaning to the word "variable" that did not 
accord in two ways with the meaning identified by the Appellate Body in the original proceedings:  
(i) in finding that a measure constitutes a variable  import levy merely because the measure makes it  
likely or possible   that resulting duties will change continuous ly;  and (ii) in finding that "periodic 
variability"221 is equivalent to the automatic and continuous  variability that is emblematic of variable 
import levies.  We examine each of these arguments in turn.  
160. On the first point, Chile claims that the Panel erred because it did not require that a measure 
make  certain   that resulting duties change continuously in order to constitute a variable import levy. 
Chile points to the Panel's statement that the measure at issue "contemplates  a scheme or formula that 
both causes and ensures that the level of such duties or rebates changes automatically and 
continuously over time".222 According to Chile, the Panel's use of  the verb "contemplates" shows that 
the Panel accepted that a measure may be a variable import levy when it merely makes it  likely or 
possible   that resulting duties will change continuously.  We observe, however, that, in the same 
sentence quoted by Chile, the Panel observed that  "the language of the legislation ... will  necessarily   
result in variability in the level of duties collected or rebates granted".223  Thus, when read in its 
entirety, the relevant sentence of the Panel Report seems  to us to reflect accurately the approach taken 
by the Appellate Body in the original proceedings.  The Appellate Body explained that measures that 
are inherently variable will fall within the scope of footnote 1, and that "[v]ariability is inherent in a 
measure if the measure incorporates a scheme or fo rmula that causes and ensures that levies change 
automatically and continuously."224  We consider that the Panel properly recognized that measures 
                                                      
220Panel Report, para. 7.28. 
221Chile's appellant's submission, para. 91.   
222Ibid., para. 87 (quoting Panel Report, para. 7.58). (emphasis added by Chile) 
223Panel Report, para. 7.58. (emphasis added) 
224Appellate Body Report, Chile – Price Band System , para. 233.  WT/DS207/AB/RW 
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containing underlying formulas, which produce automatic  changes in duties, display the same type of 
"inherent variability" that characterizes variable import levies. 
161. Secondly, Chile argues that the Panel erred in accepting that "periodic variability" is 
equivalent to automatic and continuous variability.  For Chile, a "periodic" adjustment is not the same 
as the "automatic and continuous" adjustment of duties that is inherent in variable import levies.  We 
are not, however, persuaded by Chile's arguments.  The Panel did not equate periodic change with 
automatic and continuous change.  Rather, it defined an inherently variable measure as one that causes 
and ensures automatic and continuous changes in duty levels, and properly recognized that a measure 
produces such automatic changes wh en it incorporates an underlying scheme or formula.  The Panel 
then examined the measure at issue and found that  it exhibited these characteristics.  Moreover, 
although we need not resolve the issue here, it does not seem to us that the concepts of "periodic 
change", on the one hand, and "automatic and continuous cha nge", on the other hand, are  necessarily  
mutually exclusive, as Chile asserts.225   
162. We, therefore, see no error in the Panel's interp retation of the term "variable import levies" 
within the meaning of footnote 1 of the  Agreement on Agriculture .  
3. "Similar Border Measures Other Than Ordinary Customs Duties"  
163. A third category of measures defined in footnote 1 as subject to the obligation in Article 4.2 
of the  Agreement on Agriculture   is that of "similar border meas ures other than ordinary customs 
duties".  In the original proceedings, the Appellate Body endorsed the original panel's definition of the 
term "similar" as "having a resemblance or likenes s", "of the same nature or kind", and "having 
characteristics in common".226  Similarity must be determined by undertaking a comparative analysis 
between an actual measure and one or more of the measures explicitly listed in footnote 1, and such a 
task "must be approached on an empirical basis".227  The Appellate Body observed that all of the 
border measures expressly mentioned 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".
228  A measure need not be  identical  to one of the 
prohibited categories of measures listed in footnote 1 to fall nevertheless within the scope of that 
                                                      
225Even periodic changes may amount to automatic and continuous change in circumstances where 
those changes are frequent enough to render  the resulting duties "inherently variable". 
226Appellate Body Report, Chile – Price Band System , paras. 225 and 226 (quoting Original Panel 
Report, para. 7.26;  and The New Shorter Oxford English Dictionary , L. Brown (ed.) (Clarendon Press), 1993, 
Vol. II, p. 2865).  
227Ibid., para. 226. 
228Ibid., para. 227. WT/DS207/AB/RW 
Page 60  
 
provision.  Rather, as the Appellate Body explained, in order to be a "similar border measure" within 
the meaning of footnote 1, a measure must, "in its specific factual configuration", have "sufficient 
'resemblance or likeness to', or be 'of the same nature or kind' as,  at least one  of the specific 
categories of measures listed in footnote 1".
229   
164. As regards the words "ordinary customs duties" in footnote 1, the Appellate Body reversed 
the original panel's finding that this term is to be understood as "referring to a customs duty which is 
not applied on the basis of f actors of an exogenous nature".230  The Appellate Body observed that 
"ordinary customs duties" are expressed in the form of  ad valorem   or specific rates and are 
calculated on the basis of the value and/or volume of im ports.  At the same time, the mere fact that the 
duties resulting from the application of a measure take the form of  ad valorem   or specific rates, or 
are calculated on the basis of the value and/or volume of imports, does not, alone, imply that the 
underlying measure or scheme constitutes ordinary cu stoms duties and cannot be similar to one of the 
categories of measures explicitly identified in footnote 1.231 
165. In this appeal, Chile contends that, because the Panel did not make a finding or conduct any 
analysis as to whether the measure at issue constitu ted "ordinary customs duties", the Panel failed to 
give proper meaning and effect to the language "other  than ordinary customs duties" in footnote 1.  
Chile submits that the Panel erroneously assumed that a finding that a measure is similar to a variable 
import levy or a minimum import price necessarily implies that the measure is, as a matter of law, "other than ordinary customs duties".   
166. Chile's arguments are, therefore, based on the premise that footnote 1 requires a separate 
examination of two distinct elements:  (i) a measure 's "similarity" to a liste d category of measures;  
and (ii) whether the measure constitutes an ordinary  customs duty.  According to Chile, the Panel was 
required to review whether the measure at issue c onstitutes "ordinary customs duties" and to make an 
express conclusion in that regard.  
167. We recall that an examination of "similarity" cannot be made in the abstract:  it necessarily 
involves a  comparative  analysis.
232  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 
                                                      
229Appellate Body Report, Chile – Price Band System , para. 227. (original emphasis) 
230Ibid., para. 288(c)(ii).  
231Ibid., paras. 274-279. 
232Ibid., para. 228.  WT/DS207/AB/RW 
 Page 61 
 
 
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 or dinary customs duties" is an adjectival phrase that 
qualifies the term "similar border measures".  This la nguage 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 foot note 1 make clear that variable import levies and 
minimum import prices cannot be ordinary customs du ties.  The same is true for border measures 
similar to variable import levies and to minimum import prices.   
168. In these proceedings, the Panel undertook no separate inquiry into whether the measure at 
issue was "other than ordinary customs duties".  Instead, after finding that the measure at issue was 
similar to a variable import levy and to a minimu m import price, the Panel simply added that, "[a]s 
such, it is not an ordinary customs duty."233  The Panel's approach differs in this regard from that of 
the original panel, which did conduct a separate anal ysis of the phrase "other than ordinary customs 
duties" and, on the basis of that analysis, found that  the characteristics of the original price band 
system differed from the characteris tics of "ordinary customs duties".234   
169. The Panel's approach is, however, consistent with the approach taken by the Appellate Body 
in the original proceedings.  Having reversed th e original panel's definition of "ordinary customs 
duties"235, the Appellate Body made no separate finding as to whether the original  measure was "other 
than ordinary customs duties".  The Appellate Body e xplicitly stated that its reversal of the original 
panel's finding did not affect the conclusion of the original panel, which the Appellate Body shared, 
that the original price band system was a measure "similar" to "variable import levies" and to 
"minimum import prices" within the meani ng of Article 4.2 and footnote 1 of the  Agreement on 
Agriculture .236  Thus, the original measure was characterized as a "similar border measure other than 
ordinary customs duties", even in  the absence of a separate finding th at it was "other than ordinary 
customs duties". 
170. In addition, even though the orig inal panel did undertake a separate analysis before making an 
express finding that the original measure was "other than ordinary customs duties", it does not seem to 
have considered itself bound by the text of footnote 1 to do so.  The original panel stated that "a 
measure explicitly listed in footnote 1 ... is  necessarily   not, at the same time, an ordinary customs 
duty" and that "a measure which is 'similar to' any of the measures listed in footnote 1 will also be 
                                                      
233Panel Report, para. 7.104. 
234Original Panel Report, paras. 7.48-7.65. 
235Appellate Body Report, Chile – Price Band System , para. 278. 
236Ibid., para. 279.  WT/DS207/AB/RW 
Page 62  
 
'other than ordinary customs duties'."
237  Other language used by the original panel also suggests that 
it was of the view that this additional step of th e analysis was not necessary, but would "reinforce" 
and provide further support for its finding regarding th e similarity of the original price band system to 
a variable import levy and a minimum import price.238   
171. Taking account of all of the above, we are of the view that inconsistenc y 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, or an additional demonstration that, 
the measure is "other than ordinary  customs duties" may also be undert aken to confirm such a finding.  
However, these are not indispensable for reaching a c onclusion on the categories listed in footnote 1.   
172. Accordingly, the Panel did not err in om itting to undertake a separate and independent 
analysis of whether the measure at  issue is "other than ordinary customs duties".  Having found that 
the measure was similar to a variable import levy  and to a minimum import price, the Panel could 
properly conclude from these findings that, "[a]s such, it is not an ordinary customs duty."239   
4. Additional Observations on the Relations hip Between Article 4 and Article 5 
of the  Agreement on Agriculture  
173. In the original proceedings, the Appellate Body acknowledged the importance of agricultural 
products to many developing countr y Members of the WTO, and the role of special and differential 
treatment for developing country Members under the  Agreement on Agriculture.240  At the same time, 
the Appellate Body recognized that the requirements of the Agreement on Agriculture apply to 
developing country Members except where otherwise provided .241  Article 4.2 expressly identifies two 
exceptions to the obligations that it imposes on all WTO Members, namely, Article 5 and Annex 5 to 
the  Agreement on Agriculture .  Annex 5 exempts  developing country Members from these disciplines 
in specific circumstances.  Article 5 specifies th at a Member may, under certain conditions, impose a 
special safeguard on imports of an agricultural prod uct "in respect of which measures referred to in 
[Article 4.2] have been converted into an ordi nary customs duty".  The provisions of Article 5 
establish the conditions in which a Member may have  recourse to such a special safeguard, set out 
rules on the form and duration of such safeguard  measures, and establish certain transparency 
                                                      
237Original Panel Report, para. 7.24. (emphasis added)  
238The original panel said:  "[o]ur findings regarding one of those two aspects can therefore be expected 
to reinforce our findings regarding the other";  and "our findings regarding 'similar to variable import levy and 
minimum import price' and 'other than ordinary customs dut ies' are mutually reinforcing". (Original Panel Report, 
paras. 7.24 and 7.48, respectively) 
239Panel Report, para. 7.104. 
240Appellate Body Report, Chile – Price Band System , para. 197. 
241Ibid., paras. 197 and 198.  WT/DS207/AB/RW 
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requirements that attach to their use.  One circumstance in which a qualifying Member may be 
authorized to adopt a special safeguard is when th e price of imports of a relevant agricultural product 
falls below a specified trigger price.  However, pursuant to Article 5, a special safeguard can be 
imposed only on those agricultural products for wh ich measures within the meaning of footnote 1 
were converted into ordinary customs duties and fo r which a Member has reserved in its Schedule of 
Concessions a right to resort to these safeguards.  Because Chile reserved no such right in respect of 
wheat and wheat flour, Chile cannot avail itself of th e mechanism set out in Article 5 for imports of 
these products.   
174. The existence of an exemption from the market access requirements in the form of a special 
safeguard under Article 5 suggests that this prov ision (in addition to Annex 5) was the narrowly 
circumscribed vehicle to be used by those Member s who reserved their rights to do so in order to 
derogate from the requirements of Article 4.2.  We  note that paragraph 9 of Article 5 provides that 
Article 5 is to remain in force for the duration of  the process of reform.  Negotiations for the process 
of reform are envisaged in Article 20 of the  Agreement on Agriculture   and form part of the Doha 
Development Agenda.242  The establishment of a special safeguard mechanism for developing country 
Members forms part of the Doha Work Programme on agriculture.243  We, however, are charged with 
reviewing the Panel's interpretati on of an existing obligation.  We  recall, in this regard, that 
Article 4.2 must be interpreted in a way that does not deprive Article 5 of proper meaning and 
effect.244   
B. The Panel's Application of Article 4.2 and Footnote 1 of the Agreement on 
Agriculture to the Measure at Issue 
175. Chile contends that the Panel erred in  its application of footnote 1 of the Agreement on 
Agriculture   and, thereby, in finding the measure at issue to  be inconsistent with Article 4.2 of the  
Agreement on Agriculture .  We consider these allegations below. 
                                                      
242Doha Ministerial Declaration, WT/MIN(01)/DEC/1, adopted 14 November 2001, para. 13. 
243See paragraph 42 of Annex A of the Decision Adopted by the General Council on 1 August 2004 
(the "July Package"), WT/L/579, as well as paragr aph 7 of the Hong Kong Ministerial Declaration, 
WT/MIN(05)/DEC, adopted 18 December 2005. 
244Appellate Body Report, Chile – Price Band System , para. 217. WT/DS207/AB/RW 
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1. The Panel's Analytical Approach
 
176. Chile points to two alleged errors in the analy tical approach adopted by the Panel.  First, 
Chile claims that the Panel erred in examining onl y discrete features of the measure at issue, in 
isolation, rather than conducting "a holistic appraisal of all of the features of the [measure at issue] 
and its effects taken together".245  Secondly, Chile faults the Panel for failing to analyze the similarity 
of the measure at issue to variable import levies and minimum prices on an "empirical basis". 
177. As regards the first issue, Chile submits that the Panel failed to follow the approach set out by 
the Appellate Body in the original proceedings .  Instead, the Panel ex amined only "individual 
features" of the measure at issue in isolation, comp aring them with features of the original price band 
system, and supplied no analysis or explanation of the particular configuration and interaction of all of 
the specific features of the measure at issue.246  Chile maintains that: 
... the Panel should have weighed all features of the [measure at 
issue] as a whole before concluding whether, evaluated holistically and with due regard to their eff ects, the [measure at issue] is a 
"border measure other than ordinary customs duties" similar to a "variable import duty."
247 
178. Chile adds that, if the Panel had properly exam ined the measure in its totality, it would have 
found that the measure is similar to an ordinary customs duty. 
179. Argentina submits that the Panel did not examine relevant features of the measure at issue in 
isolation, but properly conducted an objective assessme nt of the measure at issue consistently with the 
interpretation of Article 4.2 of the  Agreement on Agriculture   and the legal reasoning developed by 
the Appellate Body in the original proceedings, and in the light of the evidence on the Panel record.  
180. In the original proceedings, the Appellate Body  emphasized that it had reached the conclusion 
that the original measure was simi lar to a variable import levy and to a minimum import price on the 
basis of: 
                                                      
245Chile's appellant's submission, para. 225. 
246Ibid., paras. 219-225. 
247Ibid., para. 224.  WT/DS207/AB/RW 
 Page 65 
 
 
... the particular configuration and interaction of all these specific features of Chile's price band system.  In assessing this measure, no one  feature is determinative of whether a specific measure creates 
intransparent and unpredictable ma rket 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 enhanced market access for imports of certain agricultural products.
248 (original 
emphasis) 
181. We observe that the Panel directly quoted from or  referred to this approach in several places 
in its Report.  The Panel explaine d that "a determination of whethe r Chile has amended its [price band 
system] in a manner so as to comp ly with the DSB's recommendations and rulings and to bring the 
measure into conformity with the WTO agreem ents requires a review that goes beyond the 
consideration of 'specific aspects'" and then q uoted the above passage from the Appellate Body 
Report.249  The Panel then stated its intention to proceed  with its analysis in the following manner:  
We will thus examine Chile's am ended [price band system], 
considering the configuration and in teraction of its different features , 
in order to determine whether it can still be considered to be a border 
measure similar to a "variable import levy" or a "minimum import price", in the terms of footnote 1 to Article 4.2 of the [ Agreement on 
Agriculture ].
250 (emphasis added) 
182. The Panel referred to its examination of the c onfiguration and interaction of the different 
aspects of the measure at issue on two further occasions, including in its conclusion.251  Moreover, in 
response to comments made by Chile during the interi m review stage, the Panel again summarized the 
principal factors that led to its conclusion that th e measure at issue was similar to a variable import 
levy and to a minimum import price and reiterated th at its finding was made "on the basis of the 
configuration and interaction of the different f eatures of Chile's amended [price band system]".252   
183. In our view, the explanations provided by the Pane l as to its approach are consistent with the 
guidance provided by the Appellate Body and demonstrate that the Panel undertook a proper assessment of the measure at issue and of the specific configuration and interaction of its various 
features. 
                                                     
 
248Appellate Body Report, Chile – Price Band System , para. 261. 
249Panel Report, para. 7.53. 
250Ibid., para. 7.54.  
251Ibid., paras. 7.95 and 7.96. 
252Ibid., para. 6.12. WT/DS207/AB/RW 
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184. Chile also alleges that the Panel erred in assessing "similarity", because it failed to carry out 
the requisite "empirical analysis" of the measure at issue and instead relied on theoretical comparisons 
with the original price band system as a basis for finding that the measure at issue is similar to a 
variable import levy and to a minimum import price.   
185. In response, Argentina emphasizes that it submitted analytical, mathematical, and/or 
empirical evidence to the Panel in support of its claims and arguments and that the Panel properly 
relied on some of this evidence in finding that the m easure at issue was inconsistent with Article 4.2 
of the  Agreement on Agriculture .  
186. We recall that, in the original proceedings, the Appe llate Body stated its view that "the task of 
determining whether something is similar to some thing else must be approached on an empirical 
basis."
253  The Panel recognized this statement and adopted it: 
As indicated by the Appellate Body, in order to determine whether 
[the measure at issue] is a border measure similar to a variable import 
levy or a minimum import price within the meaning of footnote 1 to 
Article 4.2, we should start by considering, on an empirical basis , 
whether it bears sufficient likeness or resemblance to those two categories of measures so as to be considered similar.
254 (emphasis 
added) 
187. Thus, the Panel explicitly articulated the corr ect "empirical" approach.  Nonetheless, Chile 
maintains that, despite this statement, "the Panel fi ndings contain virtually no empirical analysis of the 
[measure at issue] and instead are en tirely based on theoretical conclusions".255   
188. In our view, Chile's appeal on this point attributes a meaning to "empirical" approach other 
than the meaning contemplated by the Appellate Body in the original proceedings.  There, the 
Appellate Body agreed with the original panel that an examination of similarity involved a 
comparison of two things and an assessment of the characteristics that they share.  The Appellate 
Body disagreed, however, with the original panel's additional observation that, in order for two things 
to be similar, they must share some but not a ll "fundamental characteristics", and that a "border 
measure should therefore have  some   fundamental characteristics in common with one or more of the 
measures explicitly listed in footnote 1."256  The Appellate Body explained:  
                                                      
253Appellate Body Report, Chile – Price Band System , para. 226. 
254Panel Report, para. 7.24.  
255Chile's appellant's submission, para. 70. 
256Original Panel Report, para. 7.26. (original emphasis)  WT/DS207/AB/RW 
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We see no basis for determining similarity by relying on characteristics of a "fundamental" nature.  The Panel seems to substitute for the task of defining the term "similar" that of defining the term "fundamental".  This mere ly complicates matters, because it 
raises the question of how to distinguish "fundamental" 
characteristics from those of a   less than  "fundamental" nature.  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.  In our view, the 
task of determining whether something is similar to something else 
must be approached on an empirical basis .257 (original italics, 
underlining added) 
189. As this excerpt makes clear, in advocating that the issue of similarity be approached "on an 
empirical basis", the Appellate Body  was contrasting this to, and coun selling 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 rega rding the effects of that measure 
in practice.  Where it exists, evidence on the observa ble 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 evid ence will, as is the case w ith any evidence, depend 
on the circumstances of the case.  
190. In this case, the Panel took careful account of th e design and structure of the measure at issue 
and discussed in some detail the features that led to its characterization as a measure similar to a 
variable import levy and to a minimum import pr ice.  The Panel's reasoning relied on, but was not 
limited to, its observations regarding the d esign and structure of the measure at issue.258  The Panel 
also stated that it had given careful consideration to the evidence available259 and, in its reasoning, 
referred to some such evidence, notably as support fo r its findings that "the lower threshold of the 
band in the [measure at issue] appears to continue to  operate in practice as a 'proxy' or substitute for a 
minimum import price" and that, as a result of the operation of the measure at issue, "the Chilean 
                                                      
257Appellate Body Report, Chile – Price Band System , para. 226. 
258At paragraph 6.12 of its Report, the Panel said th at "[i]t is on the basis of the configuration and 
interaction of the different features of [the measure at issue], and not only on [the basis of] particular 
mathematical calculations provided by the parties", that the Panel found the measure at issue to be inconsistent 
with Article 4.2 of the Agreement on Agriculture . (emphasis added) 
259Panel Report, paras. 6.9-6.12. WT/DS207/AB/RW 
Page 68  
 
domestic price has been disconnected fr om international price developments."
260  We see no error in 
this analysis, which appears to us to have  been conducted on an empirical basis.  
2. Similarity to a Minimum Import Price  
191. According to Chile, the Panel erred in finding that the measure at issue was similar to a 
minimum import price.  Chile asserts that the Panel "summarily"261 concluded that the measure at 
issue had the same features that were found to ma ke the original price band system similar to a 
minimum import price, and ignored relevant evidence or relied on incomplete data in finding that the 
measure "overcompensates" for a decline in refe rence prices by increasing import prices above the 
lower threshold, and that the lower threshold of th e price band operated as a substitute for a domestic 
target price or a minimum import price.   
192. Argentina submits that, contrary to Chile's ass ertion on appeal, the Panel correctly found that 
the measure at issue operates so as to prevent the entry of imports of  wheat or wheat flour into the 
Chilean market at prices below the lower threshold of the band.  Moreover, Argentina agrees with the 
Panel that the measure at issue tends to "overcom pensate" for international price declines when 
specific duties are applied.  In Argentina's view, the evidence that it submitted to the Panel highlights 
that, due to the application of specific duties, the m easure at issue does not ensure that the entry price 
of imports to Chile falls in tandem with falling world market prices.  
193. Before turning to scrutinize the Panel's reasoning on this issue in the light of Chile's appeal, it 
bears repeating that Argentina did not claim, and the Panel did not find, that the measure at issue is a 
minimum import price, but that it is  similar to   a minimum import price within the meaning of 
footnote 1.  A measure is "similar" to a minimum import price when it shares a sufficient number of 
characteristics with, and has a design, structure, a nd effects similar to, a minimum import price, even 
if it is not "identical" to such a scheme in all respects. 
194. The Panel began its analysis of whether the measure at issue was similar to a minimum 
import price by referring to the Appellate Body's analys is of the same issue in relation to the original 
measure, as well as to Chile's view that "[t]he defi ning characteristic of a minimum import price is the 
impossibility for any commercial operation to be expressed in terms of a price lower than the 
                                                      
260Panel Report, para. 7.87 and footnote 178 thereto (referring to Exhibits ARG-11 and ARG-12 
submitted by Argentina to the Panel).  The Panel also  referred to evidence supporting its reasoning in  ibid., 
paragraphs 7.59, 7.66, 7.69, and 7.89. 
261Chile's appellant's submission, para. 166.  WT/DS207/AB/RW 
 Page 69 
 
 
established price."262  The Panel then recalled that the lowe r threshold of the measure at issue had 
been set by using the figures of a lower threshold under the original price band system.  The lower 
threshold of the original price band system had alre ady been held to operate in a manner similar to a 
minimum import price.  The Panel then referred to "the available evidence"263 and noted that it 
showed that the measure at issue "appears to conti nue to operate in practice as a 'proxy' or substitute 
for a minimum import price"264 and to disconnect the Chilean domestic price from international price 
developments, because it "operates so as to prevent th e entry of imports of wheat or wheat flour into 
the Chilean market at prices below the lower threshold of the band".265   
195. The overall approach taken by the Panel seems to  us to accord with the proper interpretation 
of a border measure that is similar to a minimum import price, as discussed above.266  The Panel 
examined the structure and design of the measure at is sue, 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 un likely 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 market 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.267  
On this basis, the Panel observed that the features th at made the original price band system similar to 
a minimum import price had not been modified, and were features of the measure at issue as well.268   
196. Chile focuses in its allegations of error on two specific aspects of the Panel's analysis.  First, 
the Panel considered that the measure at issue "opera tes so as to prevent the entry of imports of wheat 
or wheat flour into the Chilean market at prices below the lower threshold of the band".269  Secondly, 
the Panel observed that the measure at issue do es not merely ensure a reasonable margin of 
fluctuation of domestic prices, but may also "overc ompensate" such that, wh en international prices 
fall and reference prices are below the lower thresholds of the price band, "the combined application 
                                                      
262Panel Report, para. 7.84 and footnote 175 thereto (referring to Chile's response to Question 19 posed 
by the Panel, Panel Report, p. F-92). 
263Ibid., para. 7.87. 
264Ibid.  
265Ibid., para. 7.91. 
266Supra , paras. 151-153.  
267We recall that, under the measure at issue, the refe rence price is set every two months and calculated 
as the simple average of daily f.o.b. prices in certain fo reign markets over a 15-day pe riod.  We also note that in 
a typical minimum 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.   
268Panel Report, para. 7.92. 
269Ibid., para. 7.91. WT/DS207/AB/RW 
Page 70  
 
of the  ad valorem   tariff rates and the specific duties resulti ng from the [measure at issue] may result 
in an overall entry price of that sh ipment that rises rather than falls."
270   
197. On the first issue, Chile acknowledges, as it did be fore the Panel, that it is extremely unlikely 
that wheat and wheat flour will enter the Chilean market at prices below the lower band threshold.271  
Chile nonetheless maintains that it is not the operation of the measure at issue that causes entry prices 
to exceed the lower threshold, but the fact that the level of this threshold is low, notably because it is 
set on an f.o.b. basis.272   
198. We do not see how this argument assists Chile .  The entry price of any given shipment 
depends not only on the specific duty applied, if any, but also on the c.i.f. transaction value and the  ad valorem   tariff applied to that c.i.f. value.  This does not mean, as Chile's arguments imply, that the 
lower band threshold has nothing to do with the r esulting level of entry prices.  Because any specific 
duty is applied on the basis of the difference between the lower band threshold and the reference 
price, the lower threshold is an indispensable factor  in determining the magnitude of the specific duty.  
As the Appellate Body observed in the original pr oceedings, an examination of whether the measure 
at issue is similar to a minimum import price should not place "too much emphasis on whether or not 
Chile's price bands are related to domestic target prices or domestic market prices".
273  Even if the 
lower threshold of the measure at issue does not serve as a target domestic price  per se274, it does 
serve the function of ensuring that, the more the refe rence prices fall below that lower threshold, the 
higher the specific duties imposed will be.  This  is accompanied by a high likelihood that the 
corresponding entry price in the Chilean market will be  higher than that threshold.  Thus, the fact that 
the lower band threshold was expressed on an f.o.b. basis indicates that the measure at issue is not 
"identical" to a minimum import price but does not, in and of itself, preclude a finding that the measure at issue is "similar" to a minimum import price.   
199. On the second issue, Chile does not dispute th at evidence submitted by Argentina for the 
period between November 2004 and April 2005 show s that, during this time period, there were two 
occasions on which a decline in world prices corresponde d to an increase in the entry prices as a result 
                                                     
 
270Panel Report, para. 7.88 (referri ng to Appellate Body Report, Chile – Price Band System , para. 260).  
In footnote 178 to paragraph 7.87 of its Report, the Panel referred to Exhibits ARG-11 and ARG-12 submitted 
by Argentina to the Panel.  These exhibits relate d to the operation of the measure at issue between 
November 2004 and April 2005, when specific duties were applied. 
271Panel Report, para. 7.89 (referring to Chile's res ponse to Question 58 posed by the Panel, Panel 
Report, p. F-99). 
272Chile's statement at the oral hearing. 
273Appellate Body Report, Chile – Price Band System , para. 246. 
274We observe that it could be argued that the lower band threshold  plus average c.i.f. costs and the 
applied tariff   serves as a proxy for a domestic target price, although Argentina has not made such an argument.  WT/DS207/AB/RW 
 Page 71 
 
 
of the measure at issue.275  Chile argues, instead, that, in us ing this evidence, the Panel wrongly 
"relied upon only a snapshot of empirical data" in order to find that the measure at issue 
overcompensated for declines in world prices.276  In Chile's view, the changes made on those two 
occasions merely adjusted the level of protection, no t the trends in entry prices themselves.  Those 
trends, Chile argues, followed international price developments and were fundamentally different 
from the trends that would have occurred with the application of a minimum import price.  
200. Argentina believes that the Panel drew the a ppropriate conclusions from the evidence before 
it.  The measure at issue does not en sure that the entry price of imports to Chile falls in tandem with 
falling world market prices because specific duties rise when international prices fall.  Argentina rejects Chile's argument that "overcompensation" occurred on only two days, arguing, instead, that the 
rise in entry prices on each of those two days "inevitably  taint[ed]   the rest of [the following two-
month] period" because the level of duties and the entry price were affected by that initial 
"overcompensation".
277 
201. In examining this claim of error by Chile, we recall that our task is to consider whether the 
Panel erred in its applicati on of Article 4.2 of the  Agreement on Agriculture   to the measure at issue 
and, in particular, in finding that the measure at is sue does not ensure that the entry price of imports to 
Chile falls in tandem with falling world market prices, albeit to a lesser extent than the decrease in these prices.
278  In our view, it is primarily the periods in which the reference price is below the lower 
band threshold that will be the most relevant to the assessment of whether the effects of the measure 
at issue are similar to the effects of a minimum im port price.  The formula set out in the measure at 
issue yielded a reference price that was lower than the lower threshold on only two occasions.279  
Although the reference price fell below the lower thre shold only twice, Chile does not dispute that, on 
both of those occasions, when the new specific duty was imposed for the following two-month period, 
the entry price of wheat and wheat flour imports rose notwithstanding that world prices and the 
reference price had decreased.  In these circumstances, we see no error in the Panel's reasoning or its  
                                                      
275Chile's appellant's submission, paras. 73 and 179 (referring to Exhibits ARG-11 and ARG-12 
submitted by Argentina to the Panel);  Chile's statement and response to questioning at the oral hearing. 
276Chile's appellant's submission, para. 73. 
277Argentina's appellee's submission, para. 74. (original emphasis) 
278We note that Chile also challenges the objectivity of the Panel's assessment of the facts. (See  infra , 
Section VII.A)  
279Chile's appellant's submission, paras. 73 and 179 (referring to Exhibits ARG-11 and ARG-12 
submitted by Argentina to the Panel);  Chile's statement and response to questioning at the oral hearing.  See 
also  supra , para. 131.  WT/DS207/AB/RW 
Page 72  
 
reliance on the evidence submitted by Argentina afte r having weighed the evidence submitted by both 
parties.  
202. In sum, the measure at issue shares the follo wing characteristics with a minimum import price 
scheme, all of which were also characteristics exhib ited by the original price band system:  (i) when a 
reference price applicable to a shipment falls belo w a specified level (the lower band threshold), an 
additional specific duty is imposed on the basis of th e difference between those two parameters;  (ii) 
due to the operation of the measure, it is highly im probable that the entry prices of wheat and wheat 
flour in the Chilean market will fall below the lowe r band threshold;  (iii) the lower band threshold 
operates, at least to a degree, as a proxy or substitut e for domestic target prices;  (iv) the lower the 
reference price relative to the lower band threshold,  the higher the specific duty and the greater its 
protective effects;  and (v) the measure distorts th e transmission of declines in world prices to the 
domestic market.  Notwithstanding certain dissimilarities between the measure at issue and a 
minimum import price scheme
280, which were also present in the original price band system, the 
overall nature of the measure at issue, including its  design and structure, and the way it operates, are 
sufficiently "similar" to a minimum import price to  make it, as the Panel found, a prohibited border 
measure within the meaning of footnote 1 to Article 4.2.  
203. For all of the above reasons, we see no error in  the Panel's finding, in paragraph 7.92 of the 
Panel Report, that the measure at issue is simila r to a minimum import price within the meaning of 
footnote 1 of the  Agreement on Agriculture .  We observe that this finding, in itself, would be a 
sufficient basis on which to find the measure at issue inconsistent with Article 4.2 of the  Agreement 
on Agriculture .  We nevertheless continue to examine Chile's appeal of the Panel's finding that the 
measure at issue is also similar to a variable import levy.  
3. Similarity to a Variable Import Levy  
(a) Variability 
204. Chile submits that the Panel erred in character izing the measure at issue as similar to a 
variable import levy within the meaning of footnote 1 of the  Agreement on Agriculture .  According to 
Chile, the Panel's errors included characterizing the me asure at issue as "variabl e" when it lacked the 
type of variability that would have made it similar to a variable import levy, misapplying the tests of 
                                                      
280In particular:  (i) the measure at issu e does not operate on the basis of the transaction value of a 
shipment, but instead involves a comparison between the lower threshold and a reference price   not directly 
related to that transaction value;  (ii) the measure at issue does not operate only to bring the entry price of a 
shipment up to the level of the lower threshold, but instead en sures that the entry price of wheat and wheat 
imports will almost always  exceed   the lower band threshold;  and (iii) the lower band thresholds under the 
measure at issue are fixed as a functio n of historical international prices rather than domestic market prices.  WT/DS207/AB/RW 
 Page 73 
 
 
"transparency" and "predictability", and erroneously finding that the me asure at issue is likely to lead 
to a reduction in the volume of imports and to impe de the transmission of international prices to the 
domestic market. 
205. Before turning to the specifics of Chile's a ppeal, it is useful to review how the Panel 
undertook its analysis of whether the measure at issu e is similar to a variable  import levy.  The Panel 
first recalled the Appellate Body's interpretation of  footnote 1 from the original proceedings and 
proceeded to apply that interpretation to the measure at issue.  The Panel then examined "variability" 
and found that "continuous variability of  the duties is a feature inherent in"281 the measure at issue 
because it set forth "a scheme or formula that estab lishes an automatic and periodic adjustment in 
such levels".282  The Panel observed that the level of duties that would result every two months was 
not predictable and, after examining various aspects of  the measure at issue, determined that "several 
crucial aspects of the design and operation of the [measu re at issue] continue to be characterized by a 
lack of both transparency and predictability"283, and that these also had the effect of impeding the 
transmission of international price developments to the Chilean market.  In addition, in response to 
comments made by Chile at the interim review stag e, the Panel explained that its finding that the 
measure at issue was similar to a variable import levy: 
... was reached mainly  on the basis that the [measure at issue] 
contains a scheme or formula that causes and ensures that the level of 
duties collected or rebates granted under the system changes 
automatically and continuously over time, as well as   that the design 
and operation of the [measure at issue] continues to be characterized by a lack of both transparency and predictability, features also 
observed in the course of the orig inal proceedings.  These aspects 
affect the basic elements of the [me asure at issue], i.e., the reference 
price and the thresholds of the band.
284 (emphasis added) 
206. We note that the Panel's use of the word "mainl y" in summarizing its approach suggests that it 
considered "variability" first and foremost and then looked, "as well", at predictability, transparency, 
and the extent of transmission of international pr ices to the domestic market.  In broad terms, 
therefore, in applying footnote 1 to the measure at  issue, the Panel appears to have followed the 
approach laid down by the Appellate Body in the or iginal proceedings.  We turn to consider Chile's 
various allegations concerning specific elements of the Panel's analysis. 
                                                      
281Panel Report, para. 7.61. 
282Ibid., para. 7.59. 
283Ibid., para. 7.63. 
284Ibid., para. 6.10. WT/DS207/AB/RW 
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207. On the issue of whether the Panel erred in ch aracterizing the measure at issue as "variable", 
Chile argues that the Panel could not properly find that the measure at issu e ensures automatic and 
continuous changes in duty levels.  According to Chile, the measure at issue does not entail 
"automatic" changes, because any changes in specific duties or rebates can be effected only through 
the enactment of additional, separate, bi-monthly admi nistrative decrees.  Chile adds that the measure 
at issue does not involve "continuous" variati on, because changes in duty levels occur only 
periodically, that is, six times per year, which is a much lower frequency of change than occurred 
under the original measure.  
208. For Argentina, the Panel properly found that th e measure at issue is an automatic mechanism 
that functions by itself and is activated "directly and ... unfailingly".
285  Argentina points to a 
statistical model that it presented to the Panel show ing the considerable variation in specific duties 
that results from the measure at issue, and rejects the suggestion that changes in duty levels occur only 
as a result of separate, independent administrative acts.  The issuance of bi-monthly decrees does not 
prevent the measure at issue from being character ized as "variable" because, as the Panel rightly 
found, this administrative action occurs pursuan t to the mandatory language of Law 18.525, as 
amended, and Supreme Decree 831.  Those instruments require specific duties or rebates to be applied 
depending on the level of the refe rence price in relation to the band thresholds and prescribe a formula 
for calculating the amount of such duties or rebates.   Thus, Argentina asserts, the bi-monthly decrees 
"are neither  independent   nor  separate   legislative or administrative actions".286  
209. We note that the Panel took account of each of the features of the measure at issue addressed 
by Chile in these Article 21.5 pro ceedings, and nonetheless characteriz ed it as "variable" within the 
meaning of footnote 1.  As regards the "automaticity " of the measure, the Panel considered that the 
relevant scheme or formula is found in the mechanism set forth in the measure at issue.  The issuance 
of bi-monthly decrees is specifically provided for under the measure at issue, and the bi-monthly 
decrees simply publish the level of the relevant sp ecific duty or rebate, as calculated in accordance 
with the mathematical formula mandated by La w 18.525, as amended, and Supreme Decree 831.287  
The Panel seems to have considered that the i ssuance of these bi-monthly decrees did not suffice to 
break the link between the formula and the level of duties automatically calculated by virtue of its 
application.  We see no error in this analysis. 
                                                      
285Argentina's appellee's submission, para. 161. 
286Ibid., para. 165 (referring in footnote 86 to Appellate Body Report, Chile – Price Band System , 
para. 233). 
287Panel Report, para. 7.59.  WT/DS207/AB/RW 
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210. Chile also contests the Panel's finding that "peri odic" adjustment of the duty or rebate levels 
every two months can constitute "variability" within the meaning of footnote 1 to the  Agreement on 
Agriculture .  Chile relies on a statement made by the A ppellate Body in the original proceedings to 
the effect that Members may "periodically" change their applied duty rates.288  Chile draws an analogy 
between its measure, under which the level of speci fic duties/rebates changes six times per year, and 
Chile's gradual reduction of its app lied tariff rate between 1984 and 2003.   In addition, Chile contrasts 
the measure at issue, which involves periodic chang es in duty levels, with the original price band 
system pursuant to which, according to Chile, sp ecific duties varied on a transaction-by-transaction 
basis.   
211. As our interpretation of footnote 1 above has s hown, the frequency of change effected by a 
measure may be relevant in dete rmining whether it is "variable".289  However, this criterion is not 
determinative in and of itself.  No specific frequenc y of change in resulting duties is required in order 
for a measure to be considered "variable" within the meaning of footnote 1.  That a measure produces 
duties that vary with  every   transaction is not a necessary condition for a measure to be "variable".  
Rather, "variability" must be assessed on the basis of  the overall configuration of a measure and the 
interaction of its specific features.290  Thus, although the measure at issue involves less frequent 
changes in duties than the original price band system, the frequency of change is but one of the features to be considered in an assessment of the "variability" of the measure at issue.  That 
assessment must also take account of the extent to  which the changes are automatic and based on an 
underlying mechanism or formula.   
212. In this case, the Panel held that there is a st rong element of automaticity in the measure at 
issue, as a result of a formula that produces changes in the level of duties or rebates every two months.  These features were, in the view of the Panel, su fficient to establish the "inherent variability" of the 
measure at issue.  We see no error in the reasoni ng that led the Panel to this conclusion.   
(b) The "additional features" of  the measure at issue 
213. In order to complete its evaluation of whether the measure at issue fell within the scope of 
footnote 1 to Article 4.2 of the  Agreement on Agriculture , the Panel went on to consider whether the 
measure was also characterized by a lack of transp arency and predictability in the level of resulting  
                                                     
 
288Appellate Body Report, Chile – Price Band System , para. 232. 
289Supra , paras. 155-162.  
290Appellate Body Report, Chile – Price Band System , para. 261. WT/DS207/AB/RW 
Page 76  
 
duties that would be liable to restrict market a ccess for imports and impede the transmission of 
international prices to the domestic market.  We pr oceed to Chile's appeal of the Panel's findings 
regarding these additional features. 
214. As a preliminary matter, we note that, in making its extensive arguments regarding the 
alleged errors made by the Panel in examining the "additional features" of the measure at issue, Chile 
seems to assign too prominent a role to these "additiona l features".  In the original proceedings, after 
having explained what might constitute the requis ite "variability" for purposes of footnote 1, the 
Appellate Body remarked that variable import le vies have additional features that undermine one of 
the objectives of the Agreement on Agriculture , namely, to improve  market access conditions for 
imports of agricultural products by permitting th e application of only ordinary customs duties.
291  The 
Appellate Body observed that these additional features "include a lack of transparency and a lack of 
predictability in the level of duties that will result fr om such measures" that "are liable to restrict the 
volume of imports" and which "will also contribute to  distorting the prices of imports by impeding the 
transmission of international prices to the domestic market".292   
215. The Appellate Body thus envisaged that an anal ysis of the "additional features" that make a 
"variable" duty a "variable import levy" within the meaning of footnote 1 would be undertaken in the 
light of the function of that provision—to enhance market access for agricultu ral products.  With these 
considerations in mind, we continue  our examination of Chile's appeal. 
216. Chile insists that the duties resulting from the operation of the measure at issue are 
predictable, because they are derived from decrees that are readily available to traders, and because 
they are fixed for two months at a time, in advance.   Chile compares this to applied "ordinary customs 
duties", which can change at any time, to any leve l (below the bound rate), as well as with the original 
price band system, where the duties changed on a weekly basis.   
217. Chile's arguments do not, in our view, suffice to sh ow that the Panel erred in its approach to 
resolving this issue.  The Panel opined that, because of the way that the reference price is calculated, 
                                                      
291Appellate Body Report, Chile – Price Band System , para. 234.  
292Ibid.   WT/DS207/AB/RW 
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traders often will not be able to predict their total duty liability before sending a shipment293, and 
added that "the only thing truly predictable a bout the level of duties ultimately assessed under the 
[measure at issue] is that in principl e such level will change every two months."294 
218. It is true, as Chile argues, that applied ordinary  customs duties can be changed.  However, the 
Panel found that the measure at issue, which engi neers automatic and continuous change every two 
months, does not afford exporters a degree of predicta bility similar to that of ordinary customs duties, 
and we see no error in this reasoning.   
219. Chile makes an additional argument that the Pane l mistakenly conflated two distinct criteria 
for determining whether a measure is a variable impor t levy:  continuous variability and predictability.  
Chile understands the Panel to have  made this error when it reject ed the analogy that Chile drew 
between the measure at issue and Chile's programme of progressive reductions in its applied tariff.  
The Panel instead observed that "Chile's  programme of gradually lowering its  ad valorem   tariff is an 
example of a predictable movement in the conditions of market access", and added that, in contrast, "the only thing truly predictable about the level of duties ultimately assessed under the [measure at issue] is that in principle such level will change every two months."
295  Unlike Chile, we see no 
"conflation" of the separate "requirements" of "c ontinuous variation" and "predictability" in this 
statement.  The Panel simply found that, under the me asure at issue, the level of resulting duties is not 
predictable, but the fact that their level ma y change every two months is predictable  because   such 
change is automatic.   
220. With respect to the Panel's analysis of transp arency, or its absence, in the operation of the 
measure at issue, Chile contests various aspects of the Panel's reasoning explaining why, in the Panel's view, both the reference price and the band thresholds  lacked transparency.  To an extent, Chile's 
arguments rest on the mistaken assumption that "tra nsparency" is an indepe ndent criterion that, if 
satisfied, conclusively establishes that a measure cannot  be similar to a variable import levy.  As we 
                                                     
 
293Panel Report, para. 7.71.  The Panel also quoted from Brazil in support of its finding regarding the 
lack of predictability of resulting duties: 
[E]ven though traders often speculate on the evolution of prices, they cannot 
predict changes with the certainty require d to afford predictability to trade.  
Variable import levies are prohibited precisely because the  Agreement on 
Agriculture   requires that market access be  based on predictable regulation 
that does not alter with market prices. 
(Ibid. and footnote 153 thereto (referring to Brazil's oral statement before the Panel, Panel Report, p. E-6, 
para. 10)) 
294Ibid., para. 7.61. 
295Ibid., paras. 7.60 and 7.61. WT/DS207/AB/RW 
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have seen, this is not the case.
296  Moreover, in the original proceed ings, the Appellate Body analyzed 
"transparency" in tandem with the predictability of the level of the duties resulting from the operation 
of the original price band system.   
221. It is true that Chile has enacted certain modifications that render the measure at issue more 
transparent than the original price band system, including fixing the levels of the band thresholds 
through 2014.  Yet, in its analysis  of additional features of the measure  at issue, the issue before the 
Panel was how those modifications affected the transp arency and predictability of the levels of duties 
resulting from the measure at issue, in particular, as compared to variable import levies.  In examining 
this issue, the Panel expressed the view that, not withstanding the modifications made by Chile, in 
general, the use of a reference price "entails a sy stematic lack of transparency and predictability", 
particularly when the reference price is periodi cally determined and constantly changing, and 
detached from the transaction value, volume, and origin of a shipment. 297  We believe that the Panel 
did not err in finding that the measure at issue l acks transparency and predictability even though the 
system of fixing the reference price is more  transparent than was the case under the original price 
band system, and the band thresholds are now pre-determined and known in advance.   
222. We are, however, concerned by certain aspects of  the Panel's analysis of transparency.  For 
example, the Panel found that the reference price lacked transparency b ecause it was insufficiently 
representative of world market prices.298  In so finding, the Panel seems to have used transparency as 
an independent criterion, rather than examining, as it should have done, whether the various elements 
of the measure at issue in their interaction and c onfiguration are sufficiently transparent to enable 
traders to anticipate their duty liability.  Overa ll, however, we do not think that these concerns 
materially affect the analysis undertaken by the Panel, or vitiate its conclusions. 
223. Finally, we see no error in the Panel's assessme nt that the measure at issue impeded the 
transmission of world market prices to the Chilean market.  As discussed above, the Panel had before 
it evidence showing that, when the reference price is  below the lower threshold, the measure at issue 
distorts the transmission of declines in world prices to the domestic market.299  In addition, the Panel 
observed that the 1.56 conversion factor used to calculate specific duties and rebates on wheat flour 
                                                      
296Supra , para. 156. 
297Panel Report, paras. 7.72 and 7.73. 
298This opinion was based on the fact that the reference price is calculated using prices from only 15 
days out of a 60-day period;  that it is calculated on the basis of prices in one market (Argentina) and one quality of concern for half the year ( Trigo Pan Argentino ) and another market (United States) and another quality of 
concern ( Soft Red Winter  No. 2 ) for the other half of the year, but did not take account of Canadian market 
prices notwithstanding that Canada was the second largest exporter of wheat to Chile in 2004 and 2005.  (Panel 
Report, paras. 7.66-7.69) 
299Supra , paras. 199-202.   WT/DS207/AB/RW 
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imports also reinforces the insulation of the Chilean  market and impedes the transmission to it of 
world market prices of wheat flour.300  This is so because the conversion factor is based on the 
average ratio of wheat flour to wheat prices between January 1986 and December 1995301 even though 
the wheat flour to wheat price ratio has changed over time.  
224. In sum, the measure at issue shares the following  characteristics with variable import levies, 
all of which were also characteristics exhibited by the original price band system:  (i) when an 
administratively determined reference price falls belo w a specified threshold, an additional charge is 
imposed on the basis of the difference between these two parameters;  (ii) the amount of any specific 
duty automatically changes in response to movements in  either or both of these parameters;  (iii) it is 
highly improbable that the entry prices of wheat and wheat flour in the Chilean market will fall below 
the lower band threshold;  (iv) the lower the refere nce price relative to the lower band threshold, the 
higher the specific duty and the greater its protective effects;  and (v) the mode of operation of the 
measure compromises the transparency and predic tability of the resulting duties and distorts the 
transmission of declines in world prices to the dom estic market.  As the Panel found, the measure at 
issue, in its overall nature, design and structure, a nd the way it operates, is "similar" to a variable 
import levy. 
225. For all of the above reasons, we see no error in  the Panel's finding, in paragraph 7.81 of the 
Panel Report, that the measure at issue is "similar"  to a "variable import levy" within the meaning of 
footnote 1 to Article 4.2 of the  Agreement on Agriculture . 
C. Conclusion 
226. We, therefore,  uphold   the Panel's finding, in paragraph 7.104 of the Panel Report302, that the 
measure at issue is a border measure similar to a variable import levy and to a minimum import price 
within the meaning of footnote 1 to Article 4.2 of the  Agreement on Agriculture ;  and  uphold   the 
Panel's consequential finding, in paragra ph 8.2(a) of the Panel Report, that:  
By maintaining a border measure similar to a variable import levy 
and to a minimum import price, Chile is acting in a manner inconsistent with Article 4.2 of  the Agreement on Agriculture, and 
has thus failed to implement the recommendations and rulings of the 
DSB. 
                                                     
 
300Panel Report, para. 7.80.  
301Argentina's appellee's submission, para. 142;  Ch ile's second written submission to the Panel, Panel 
Report, p. C-82, para. 201. 
302See also Panel Report, paras. 7.81, 7.92, and 7.96. WT/DS207/AB/RW 
Page 80  
 
VII. Articles 11 and 12.7 of the DSU 
227. Chile maintains that the Panel failed to comply  with its duties under Articles 11 and 12.7 of 
the DSU.  The claims of error raised by Chile under both provisions relate to the following four 
aspects of the Panel's analysis:  (i) its findings with respect to the methodology for fixing the upper 
and lower thresholds of the measure at issue;  (i i) its references to the original panel's and the 
Appellate Body's findings that, under the original measure, the reference price was not adjusted for 
"import costs", and the Panel's related statement th at reviewing the characteristics of the original 
measure was outside its mandate;  (iii) its allegedly "cursory review" of individual features of the 
measure at issue "in isolation";  and (iv) its alle ged failure to consider "empirical evidence" in 
reaching its findings. 
228. Because the duties imposed on panels by virtue of these two provisions are distinct, we first 
consider whether the Panel complied with its duty under Article 11 to make an objective assessment 
of the matter, and then examine whether it satisfied  the requirement under Article 12.7 to provide a 
"basic rationale" for its findings.   
A. Article 11 of the DSU 
229. Article 11 of the DSU deals with the function of  panels and assigns to them certain duties, 
inter alia , to "make an objective assessment of the ma tter before it, including an objective assessment 
of the facts of the case and the applicability of and co nformity with the relevant covered agreements".  
The Appellate Body has considered these duties on many occasions, and has consistently recognized 
that Article 11 affords panels a margin of discretion in their assessment of the facts.
303  This margin 
includes the discretion to identify which evidence the panel considers most relevant in making its 
findings304, and to determine how much weight to attach to the various items of evidence placed 
before it by the parties to the case.305  A panel does not commit erro r simply because it declines to 
accord to the evidence the weight that one of  the parties believes should be accorded to it.306  The 
relevant standard has been summarized  by the Appellate Body as follows: 
                                                      
303Appellate Body Report, EC – Asbestos , para. 161;  Appellate Body Report, EC – Hormones , 
para. 132;  Appellate Body Report, EC – Sardines , para. 299;  Appellate Body Report, Japan – Apples , 
para. 221;  and Appellate Body Report, US – Wheat Gluten , para. 151. 
304Appellate Body Report, EC – Hormones , para. 135. 
305Appellate Body Report, Korea – Dairy , para. 137. 
306Appellate Body Report, Australia – Salmon , para. 267;  Appellate Body Report, Japan – Apples , 
para. 221;  and Appellate Body Report, Korea – Alcoholic Beverages , para. 164.  WT/DS207/AB/RW 
 Page 81 
 
 
Article 11 requires panels to take account of the evidence put before 
them and forbids them to wilfully disregard or distort such evidence.  Nor may panels make affirmative findings that lack a basis in the evidence contained in the panel reco rd.  Provided that panels' actions 
remain within these parameters, however, we have said that "it is 
generally within the discretion of th e Panel to decide which evidence it 
chooses to utilize in making findings"
 , and, on appeal, we "will not 
interfere lightly with a panel's exercise of its discretion".307  
230. Chile submits, first, that the Panel breached this  standard in finding that the band thresholds 
under the measure at issue were established on a c.i.f.  basis despite the fact that Chilean law required 
that the bands be established on an f.o.b. basis.  In doing so, the Panel, in Chile's view, "ignored the direct evidence in the Chilean le gislation" and "necessarily concluded that the Ministry of Finance 
acted in violation of Chilean law".
308  Chile points out that Law 18.525, as amended, provides that 
"the values considered shall be the [band thres holds from the 2002 Decree] in United States dollars 
f.o.b. per tonne."309  Article 4 of Supreme Decree 831 also expressly states that the "floor and ceiling 
values and the reference prices provided for in these regulations shall be expr essed in f.o.b terms".310   
231. Chile's arguments assume that the Panel found th e band thresholds to ha ve been established 
on the basis of c.i.f. values and  not  f.o.b. values.  In our view, the Panel did not make such a finding.  
When considering the transparency of the band thres holds, the Panel noted that these levels have been 
established until 2014, and acknowledged Chile 's explanation as to their origin.311  After recalling the 
two problematic aspects that the A ppellate Body had identified in c onnection with the band thresholds 
                                                      
307Appellate Body Report, US – Carbon Steel , para. 142. (footnotes referring to Appellate Body 
Reports in EC – Hormones and US – Wheat Gluten omitted)  
308Chile's appellant's submission, para. 203. (original emphasis omitted) 
309Ibid., para. 202.  See also supra , footnote 156.  The text of Article 12 of Law 18.525, as amended, is 
reproduced in paragraph 2.14 of the Panel Report.  
310The text of Supreme Decree 831 is reproduced in paragraph 2.16 of the Panel Report.  
311Chile explained that the band thresholds had been established on the basis of the thresholds provided 
for under the original price band system in a decree from May 2002, "expressed at import cost level, by 
deducting [from those 2002 floor and ceiling thresholds under the original price band system] all import costs applicable to an ordinary trading transaction at the date  of entry into force of the Law (second half of 2003)." 
(Panel Report, para. 7.74 (quoting from Chile's response to Question 52 posed by the Panel, Panel Report,  
p. F-96)) WT/DS207/AB/RW 
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under the original price band system
312, the Panel expressed the opinion that the current thresholds are 
"affected by the same deficiencies"313 and explained that: 
Chile has not demonstrated that  the alleged abolition of the 
calculation formula that included discarding the highest and lowest 
25 per cent of world prices, has had any practical impact on the levels 
at which the upper and lower thresholds of the band have been set.  
Nor has Chile provided any evidenc e to support its assertion that 
"import costs" were indeed deducted in the process of calculating the 
current thresholds.  The mere assertion by Chile that the calculation 
formula has been abolished and that import costs have been deducted 
is not enough to demonstrate that, in this regard, the current system is 
any less intransparent and unpred ictable than the original.314 
(emphasis added) 
232. Chile reads the Panel's statement that Chile has not "provided any evidence to support its 
assertion that 'import costs' were indeed deducted" as a factual finding that import costs were  not  
deducted, that is, that the thresholds of the meas ure at issue were established on a c.i.f. basis, 
particularly when this statement is read together  with the subsequent sentence.  The Panel itself, 
however, made no explicit finding that such thres holds were derived from or expressed as c.i.f. 
values.  Indeed, the Panel expressly acknowledged, in  the same paragraph, "that the upper and lower 
thresholds of the band were set by Chile on the b asis of the [band thresholds] provided for under the 
original [price band system], after deducting 'import costs'."315  To us, the reasoning quoted above 
suggests that the Panel's concern was not with  whether   import costs had been deducted in 
establishing the band thresholds on an f.o.b. basis,  but with the lack of transparency as to  how  this 
had been done.  We fail to see how the Panel's stat ement that the "mere assertion ... that import costs 
have been deducted is not enough to  demonstrate that ... the current system is any less intransparent 
and unpredictable" amounts to finding that import co sts had not been deducted.  Rather, the Panel 
simply observed that the basis on which the band th resholds had been established was not altogether 
transparent.  Therefore, assuming that Chilean law requires that the band thre sholds be established on 
an f.o.b. basis, we consider that the Panel did not make any finding that the Chilean Ministry of 
Finance acted in violation of Chilean law.   
                                                      
312The Panel observed that the Appellate Body had found:  (i) that discarding 25 per cent of "atypical 
observations" of world market prices at the bottom and top increased the likelihood that the lower threshold 
would equal or exceed the internal price and impeded th e transmission of international price developments to 
the domestic market;  and (ii) that the way in which Chile  converted f.o.b. prices to a c.i.f. basis, by adding 
"import costs", was intransparent and unpredictable because no published legislation set out how those costs 
were calculated. (Panel Report, paras. 7.75 and 7.76 (referring to Appellate Body Report, Chile – Price Band 
System , para. 246)) 
313Panel Report, para. 7.77. 
314Ibid., para. 7.79.  
315Ibid., para. 7.79.   WT/DS207/AB/RW 
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233. Chile also claims that the Panel acted inconsiste ntly with Article 11 of the DSU in refusing to 
re-assess certain aspects of the original price band system that, according to Chile, both the original 
panel and the Appellate Body misunde rstood, and in relying on this "factual error" in its analysis of 
the measure at issue.  Chile argues that the orig inal panel and Appellate Body mistakenly believed 
that, under the original measure, the c.i.f. band thres holds were compared to an f.o.b. reference price 
in order to determine applicable specific duties a nd rebates.  Chile contends that, in fact, although 
reference prices were  determined   on an f.o.b. basis, they were only compared to the original band 
thresholds  after having been converted to a c.i.f. basis .   
234. In examining this aspect of Chile's appeal, we first note that Chile did not raise this alleged 
misunderstanding concerning the operation of the origin al measure either to the original panel at the 
interim review stage, or during the appeal in the original proceedings.316  Moreover, Chile itself 
appeared to state, in response to a question posed by the original panel, that the reference prices 
determined on an f.o.b. basis were not subject to any adjustment.317  This response would appear to be 
the basis for the original panel's statement that "as confirmed by Chile, the f.o.b. prices used for the 
[band thresholds] are adjusted, inter alia , for 'usual import costs', whereas the f.o.b. prices used for the 
Reference Prices are not ".318 
235. Chile contends, in support of this  part of its appeal, that the Panel "clearly relied" on the 
original panel's "factual error".319  We do not detect such relianc e in the passages where the Panel 
refers to the operation of the original price band system.320  In addition, the Panel expressly stated that 
its findings and conclusions regarding the measure at issue did  not  depend on whether, under the 
                                                      
316Chile did not, in response to questioning at the oral hearing, asserts that it had brought this alleged 
misunderstanding to the attention of the original panel or the Appellate Body. 
317In its statement at the oral hearing in this app eal, Argentina pointed to Question 9(d) posed by the 
original panel, along with Chile's response, which are as follows:   
(d) Is the weekly import reference price also adjusted in the manner 
indicated in paragraph 15(h) of Chile's first submission?  If so is allowance 
made for differences of cost as between different import origins? 
Response  
 The reference price notified on a weekly basis by Customs is not 
subject to any adjustment mechanisms , and hence no allowance needs to be 
made for differences of cost or for different import origins. 
318Original Panel Report, para. 7.63. (underlining added)  We note that, in footnote 640 to this sentence, 
the original panel referred to Chile's response to question 9(e).  Since, however, question 9(e) does not touch upon this issue, the original panel undoubtedly intended to refer to Chile's answer to question 9(d). 
319Chile's appellant's submission, para. 211. 
320Panel Report, paras. 7.40, 7.48, 7.50, 7.75, 7.86, and 7.88.  WT/DS207/AB/RW 
Page 84  
 
original price band system, the reference price was converted to a c.i.f. basis.
321  In other words, even 
assuming  arguendo   that this aspect of the operation of the original price band system was 
misunderstood in the original proceedings, this mi sunderstanding would not have  affected the Panel's 
findings with respect to the measure at issue, and, therefore, even its correction would not have assisted Chile in these proceedings. 
236. We also recall that, in  Mexico – Corn Syrup (Article 21.5 – US) , the Appellate Body declined 
to "revisit the original panel report" because that  report had "been adopted and ... these Article 21.5 
proceedings concern a  subsequent   measure."
322  In this regard, the A ppellate Body referred to 
Articles 3.2 and 3.3 of the DSU and the importan ce of security, predictability, and the prompt 
settlement of disputes.  Moreover, we are mindful th at adopted panel and Appellate Body reports must 
be accepted by the parties to a dispute.323  These same considerations must also be taken into account 
in this appeal, and they confirm our view that the Panel did not, in this case, fail to comply with its 
duties under Article 11 of the DSU in declining to  correct the alleged misunderstanding concerning 
the original price band system.   
237. Chile's third allegation that the Panel failed to  make an objective assessment under Article 11 
of the DSU is based on the argument that the Pane l conducted only a "cursory review" of discrete 
features of the measure at issue "in isolation", rather than a "holistic appraisal of all of the features of 
the [measure at issue] and its effects taken together".324  As we have seen, Chile also claimed that the 
                                                      
321In response to Chile's comments at the interim review stage, the Panel stated: 
In any event, even if, ad arguendo , we were to accept Chile's explanation 
that there is a misunderstanding about the way in which, in the original 
[price band system], the reference pri ce was not adjusted for "import costs", 
this would not affect the conclusions contained in this compliance Panel 
report.  
(Panel Report, para. 6.14) 
322Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , paras. 78 and 79. (original 
emphasis) 
323Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , para. 97;  Appellate Body Report, 
EC – Bed Linen (Article 21.5 – India) , para. 93. 
324Chile's appellant's submission, para. 225.  WT/DS207/AB/RW 
 Page 85 
 
 
Panel erred in its application of Article 4.2 of the  Agreement on Agriculture   on the same grounds.  It 
is not clear to us how its claim of error unde r Article 11 of the DSU differs from that claim.325   
238. In any event, we see no breach of Article 11 in  the Panel's approach.  As discussed above, the 
Panel properly applied Article 4.2 and footnote 1 of the  Agreement on Agriculture   to the measure at 
issue, in accordance with the interpretative guidance provided by the Appellate Body in the original 
proceedings.  The fact that the Panel did not agr ee with arguments or evidence proffered by Chile 
cannot, in itself, establish a failure to consider su ch evidence or to assess it objectively as required by 
Article 11.  We see no indication that the Panel's treatment of the evidence was biased or otherwise exceeded the bounds of discretion enjoyed by the Panel as the trier of fact.  We also recall that a claim 
that a panel failed to comply with its duties unde r Article 11 of the DSU must stand by itself and 
should not be made merely as a subsidiary argument or claim in support of a claim that a panel failed 
to apply correctly a provision of the covered agreements.
326 
239. Chile's last allegation of error under Article 11 of the DSU characterizes the Panel's alleged 
"refusal to consider empirical evidence" in its eval uation of the measure at issue as a failure to make 
an objective assessment of the facts.327  Chile points out that it submitted a "substantial amount of 
evidence and data on the operation" of the measure at issue, yet the Panel "did not refer [to or] rely on 
any evidence regarding the actual operation" of the measure at issue, and refused Chile's request 
during the interim review stage to review its analys is in the light of the mathematical calculations 
presented by the parties.328   
240. We are mindful that the information placed befo re a panel is often vol uminous in nature and 
that the probative value of specific pieces of evid ence varies considerably.  A panel must examine and 
consider all of the evidence placed before it, mu st identify the evidence upon which it has relied in 
reaching its findings, and must not make findings th at are unsupported by evidence.  Yet, a panel is 
also afforded a considerable margin of discretion in its appreciation of the evidence.  This means, 
                                                      
325In claiming that the Panel failed to comply with its Article 11 duties, Chile submits, for example, 
that:  "the Panel found ... automa tic and continuous variation,  notwithstanding Chile’s arguments   that (1) the 
duty varies only with the enactment of a separate administrative decree;  and (2) the frequency of variation is 
down from continuous (based on a transaction-by-transaction basis) to 6 times per year."  Similarly, Chile 
submits that "the Panel finds that the [measure at issue] continues to be affected by a lack of transparency and 
predictability,  notwithstanding Chile’s arguments   that (1) the bands are now fixed and no longer subject to 
added 'import costs' and the 25 percent rule; and (2) reference prices are fully predictable and transparent."  (Chile's appellant's submission, para. 223. (emphasis added))  These arguments repeat the arguments that Chile 
made in support of its allegation that the Panel erred in applying Article 4.2 of the  Agreement on Agriculture   to 
the measure at issue.  See supra , paras. 177, 207, 210, and 216. 
326Appellate Body Report, US – Steel Safeguards , para. 498. 
327Chile's appellant's submission, para. 227. 
328Ibid., paras. 226 and 227. WT/DS207/AB/RW 
Page 86  
 
among other things, that a panel is not required, in  its report, to explain precisely how it dealt with 
each and every piece of evidence on the panel record.  As we see it, Chile is trying to have us weigh 
the evidence differently than did the Panel.
329  Chile may well consider that the Panel should have 
ascribed more weight to, and relied upon, certain evid ence that Chile put forward, or should not have 
relied on certain evidence submitted by Argentina, but,  in the absence of any indication that the Panel 
ignored or distorted Chile's evidence, or made findings that were unsupported by  any  evidence, we 
see no basis for interfering with the Panel's exercise of its discretion in this case.  
241. Thus, on the basis of the above, we find that the Panel did not fail to comply with its duties 
under Article 11 of the DSU.   
B. Article 12.7 of the DSU 
242. Chile's allegations that the Panel acted inconsis tently with Article 12.7 of the DSU are based 
on the same four alleged deficiencies in the Panel's analysis that Chile invoked in its claims under 
Article 11 of the DSU.  Chile contends that the Pane l failed to provide a "basic rationale":  (i) for its 
alleged finding that the Ministry of Finance acted in violation of Chilean law in establishing the levels of the price band thresholds;  (ii) for its finding that  the correction of an alleged factual error made by 
the panel and the Appellate Body in the or iginal proceedings was outside its mandate
330;  (iii) in 
finding that the measure at issue fell within the scope of footnote 1 of the  Agreement on Agriculture   
on the basis of an allegedly cursory review of indi vidual features of that measure;  and (iv) for its 
alleged failure to conduct an empiri cal analysis in making its findings. 
243. Before turning to the merits of Chile's appeal, we briefly review the duties that Article 12.7 of 
the DSU imposes on a panel in the event that the pa rties do not reach a mutually satisfactory solution 
to their dispute.  Specifically, a panel is to "submit its findings in the form of a written report to the 
DSB" and, according to the second sentence of Article  12.7, "the report of a panel shall set out the 
findings of fact, the applicability of relevant pr ovisions and the basic rationale behind any findings 
and recommendations that it makes."  The Appella te Body has explained that this provision 
"establishes a minimum standard for the reasoning that panels must provide in support of their 
findings and recommendations", namely, that the expl anations and reasons provided must suffice "to 
disclose the essential, or fundamental, justification for those findings and recommendations".331  
                                                      
329Chile itself acknowledges that the Panel did refer to two exhibits submitted by Argentina regarding 
the operation of the measure at issu e as well as certain other evidence. (Chile's appellant's submission, 
para. 226)  Moreover, at the interim review stage, the Panel stated that it had taken note of the extensive 
explanations provided by the parties and had reached its conclusions based on those ex planations along with the 
available evidence.  (Panel Report, paras. 6.9 and 6.10) 
330Supra , para. 233.  
331Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 106.  WT/DS207/AB/RW 
 Page 87 
 
 
Panels need not "expound at length on the reasons fo r their findings and recommendations" in order to 
satisfy their obligations under Article 12.7.332  Moreover, panels may refer to reasoning from other 
sources, in particular: 
[A] panel acting pursuant to Ar ticle 21.5 of the DSU would be 
expected to refer to the initial panel report, particularly in cases where the implementing measure is closely related to the original 
measure, and where the claims made in the proceeding under 
Article 21.5 closely resemble the claims made in the initial panel proceedings.
333  
244. Bearing in mind all of the above, we do not cons ider that the Panel failed to provide a basic 
rationale for its findings.  First, with respect to th e alleged finding that the Ministry of Finance acted 
in violation of Chilean law in establishing the levels of the price band thresholds on a c.i.f. basis, we 
have already observed that the Panel made no e xplicit finding that the band thresholds were 
established on such a basis.334   
245. Secondly, Chile alleges that the Panel breached  its obligations under Article 12.7 because it 
did not supply any reasons for finding that the co rrection of a misunderstandi ng regarding reference 
prices under the original measure was beyond its manda te.  The "finding" challenged by Chile on this 
basis is contained in the Panel's response to Chile 's comments during the interim review.  In response 
to Chile's request to correct the alleged misunders tanding, the Panel referred to various observations 
made by the Appellate Body and the original panel and stated: 
The Panel has noted Chile's arguments in  this regard.  It is outside the 
Panel's mandate, however, to review the characteristics of the original [price band system], as they  were described in the original 
proceedings by the Appellate Body and by [the original panel].
335 
246. This response indicates that the  reason  why the Panel viewed Chile's request as being 
outside its mandate in these Article 21.5 proceedings was  because   it related to the description of the  
original   price band system in the  original   proceedings.  To us, this is sufficient to satisfy the Panel's 
obligations under Article 12.7.   
                                                      
332Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 109. 
333Ibid.  
334Supra , para. 232.  Because the Panel made no such find ing, it had no corresponding duty to provide a 
basic rationale.  
335Panel Report, para. 6.14. (footnote omitted) WT/DS207/AB/RW 
Page 88  
 
247. Thirdly, Chile alleges that the Panel failed to  provide a basic rationale when it found—on the 
basis of only a cursory review of individual feat ures "in isolation"—that the measure at issue fell 
within the scope of footnote 1 of the  Agreement on Agriculture .  We have already dealt with, and 
dismissed, Chile's arguments that the Panel's a pproach in this regard constituted an erroneous 
application of footnote 1 and Article 4.2 of the  Agreement on Agriculture , as well as a failure to 
comply with Article 11 of the DSU.
336  Chile's arguments under Article 12.7 of the DSU challenge the 
same elements of the Panel's substantive analysis us ing a different legal basis, but without identifying 
how that analysis lacks a basic rationale.  In fa ct, Chile's own arguments disclose that the Panel 
provided ample reasoning in support of its findings.  Moreover, our examination has shown that the 
Panel analyzed the measure at issue in detail, and explained why it found the measure to be similar to 
a variable import levy and to a minimum import price.   The mere fact that Chile disagrees with the 
substance of that reasoning cannot suffice to establish a violation of Article 12.7. 
248. Lastly, as regards the Panel's alleged failure to  supply a basic rationale for its "failure to 
consider empirical evidence", we recall that we  have already expressed the view that Chile's 
arguments seek to attribute to the phrase "an empiri cal basis" a meaning other than the one intended 
by the Appellate Body in the original proceedings.337  We have also determined that the Panel  did  
consider empirical evidence, even if it did not acco rd as much weight or si gnificance to the evidence 
submitted by Chile as Chile would have liked.338  Thus, the Panel provided the essential justification 
for its findings, including an identification and ex planation of the "empirical" evidence on which it 
relied.  
249. We, therefore, consider that the Panel did not fail to satisfy its duty, under Article 12.7 of the 
DSU, to provide a "basic rationale" for its findings and conclusions.   
VIII.  Conditional Appeal  
250. Argentina makes an appeal that is conditional upon our reversal of the Panel's findings that 
the measure at issue is inconsistent with Article 4.2 of the  Agreement on Agriculture .  In the event of 
a reversal of the findings of the Panel in paragraphs  8.2(a), 8.3 and 8.4 of the Panel Report, Argentina 
requests the Appellate Body to determine that it is necessary, for the resoluti on of this dispute, to 
make a separate finding on Argentina's claim under the second sentence of Article II:1(b) of the GATT 1994, and to find that the measure at issue is in consistent with the obligation contained therein.   
                                                     
 
336Supra , paras. 183 and 238.  
337Supra , paras. 188-190. 
338Supra , paras. 190 and 240.   WT/DS207/AB/RW 
 Page 89 
 
 
251. We have upheld the Panel's findings that the measu re at issue is inconsistent with Article 4.2 
of the  Agreement on Agriculture.  Accordingly, the condition on which Argentina's appeal is 
predicated is not satisfied, and we need not rule on Argentina's other appeal.   
252. If the condition on which Argentina's appeal is made had been satisfied, we would have had 
to consider whether Argentina's claim under the second sentence of Article II:1(b) of the GATT 1994 
was within the scope of these Article 21.5 proceed ings.  The Panel provided an extensive discussion 
of the issue of when "an Article 21.5 compliance panel may consider a new claim, not raised before 
the original panel"339—a discussion which the Panel itself characterized as " obiter dicta ".340  S o m e  
third participants have expressed differing views as to whether we could have or should have 
reviewed these comments by the Panel concerning th e scope of proceedings under Article 21.5 of the 
DSU.341  Because we do not address Argentina's conditional appeal, we neither consider nor express a 
view on the Panel's discourse on this issue.  
IX. "New" Exhibits Submitted by Chile on Appeal 
253. We have reached our findings and conclusions on the basis of a careful examination of the 
Panel Report in the light of the claims of error a nd arguments raised on appeal.  In undertaking this 
task, we did not find it necessary to have recourse to the information provided by Chile in Exhibits 
CHL-AB-3 through CHL-AB-15 attached to its appe llant's submission.  As a result, we need not 
make any separate or additional ruling on the admissibility of these exhibits.342   
                                                      
339Panel Report, para. 7.151. The Panel set out its analysis at paragraphs 7.121-7.161 of the Panel 
Report.   
340Ibid. para. 7.121.   
341Australia notes that the Panel's findings were "u nnecessary for the resolution of the dispute" and 
submits that, "[w]hile the issues raised are important ... it would [not] be useful for the Appellate Body to 
resolve this question absent a specific factual issue neces sitating such resolution." (Aus tralia's statement at the 
oral hearing)  Canada submits that whether or not we reverse the Panel's findings on Article 4.2 of the  
Agreement on Agriculture , "it remains open to the Appellate Body to reconsider the Panel's analysis concerning 
this question as part of its broader review of this dispute."  According to Canada, clarification of the jurisdiction 
of Article 21.5 panels is required due to the systemic  importance of this issue. (Canada's third participant's 
submission, paras. 3 and 4)  The European Communities asserts that the Panel's comments contribute to "great 
uncertainty" concerning the scope of Article 21.5 proceedings, and that th e Appellate Body should avail itself of 
the opportunity to resolve this uncertainty, or at least declare the Panel's approach to be moot and without legal effect. (European Communities' third participant's submission, para. 30)  The United States argues that, given 
that the Panel's comments are  obiter dicta , they are moot and of no legal e ffect, and adds that, because neither 
Argentina nor Chile appealed the Panel's  dicta , the Appellate Body is not in a position to declare them to be 
moot and of no legal effect. (United St ates' statement at the oral hearing)  
342We set out our preliminary view of the principles  that should govern the admissibility of these 
exhibits in a letter, dated 13 March 2007, to the participants and the third participants. ( Supra , para. 12) WT/DS207/AB/RW 
Page 90  
 
X. Findings and Conclusions 
254. For the reasons set forth in this Report, the Appellate Body: 
(a) finds
 that the Panel did not err in its a llocation of the burden of proof;  
(b) finds  that the Panel did not err in its interpre tation of Article 4.2 and footnote 1 of the  
Agreement on Agriculture , or in its application of those provisions to the measure at 
issue and, therefore:  
(i) upholds  the Panel's finding, in paragr aph 7.104 of the Panel Report343, that 
the measure at issue is a border measure similar to a variable import levy and 
to a minimum import price within the meaning of footnote 1 to Article 4.2 of 
the  Agreement on Agriculture ;  and 
(ii) upholds  the Panel's finding, in paragraph 8. 2(a) of the Panel Report, that, by 
maintaining a border measure similar to a variable import levy and to a 
minimum import price, Chile is acting inconsistently with  its obligations 
under Article 4.2 of the  Agreement on Agriculture   and has not implemented 
the recommendations and rulings of the DSB; 
(c) finds  that the Panel did not fail to discharge its duties under Article 11 of the DSU to 
conduct an objective assessment of the matte r before it or under 12.7 of the DSU to 
set out a basic rationale for its findings;  and   
(d) finds , in the light of these findings, that, because the condition on which Argentina's 
other appeal is predicated has not been fu lfilled, it is not necessary to consider that 
appeal. 
255. The Appellate Body recommends  that the DSB request Chile to bring its measure, found in 
this Report, and in the Panel Report as upheld by this Report, to be inconsistent with the  Agreement 
on Agriculture , into conformity with its oblig ations under that Agreement. 
 
                                                      
343See also Panel Report, paras. 7.81, 7.92, and 7.96.  WT/DS207/AB/RW 
 Page 91 
 
 
 
Signed in the original in Geneva this 20th day of April 2007 by: 
 
 
 
  
_________________________ 
Luiz Olavo Baptista 
Presiding Member 
 
 
 
 
 _________________________ _________________________ 
 Georges Abi-Saab Giorgio Sacerdoti 
 Member Member 
 WT/DS207/AB/RW 
Page 92  
 
ANNEX I
 
 WORLD TRADE  
ORGANIZATION  WT/DS207/22 
5 February 2007 
 
 (07-0519) 
 Original:   English 
 
CHILE – PRICE BAND SYSTEM AND SAFEGUARD MEASURES 
RELATING TO CERTAIN AGRICULTURAL PRODUCTS 
 
Recourse to Article 21.5 of the DSU by Argentina  
 
Notification of an Appeal by Chile  
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
 The following notification, dated 5 February  2007, from the Delegation of Chile, is being 
circulated to Members. 
_______________ 
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review, Chile 
hereby notifies its decision to appeal to the Appellate  Body certain issues of law covered in the Report 
of the Panel on  Chile – Price Band System and Safeguard Me asures Relating to Certain Agricultural 
Products - Recourse to Article 21.5 of the DSU by Argentina (WT/DS207/RW) and certain legal 
interpretations developed by the Panel.   
 Chile seeks review by the Appellate Body of cer tain Panel conclusions that are in error and 
are based upon erroneous findings on issues of law and on related le gal interpretations. 
 1. The Panel failed to determine and apply the appropriate burden of proof applicable to a 
dispute settlement proceeding under Article 21.5 of  the DSU by allocating to Chile the burden to 
prove that Law 19.897 and Supreme Decree 831 (collec tively, the "Implementing Measure") were no 
longer WTO inconsistent rather than allocati ng the burden to Argentina to prove that the 
Implementing Measure was inconsistent with Ch ile's WTO obligations under Article 4.2 and 
footnote 1 of the  Agreement on Agriculture .
1 
 2. The Panel erred in its interpretation of Article 4.2 and footnote 1 of the  Agreement on 
Agriculture  by failing to give effect to the language  "other than ordinary customs duties" in 
footnote 1,
2 by failing to examine "similarity" with variable import levies and minimum import prices 
on an empirical basis with reference to th e actual effects of the Implementing Measure,3 by 
                                                      
1The Panel's errors are reflected in its overall analysis  in paragraphs 7.14 to 7.104, most notably in its 
findings in paragraphs 7.14, 7.44, 7.54, 7.55, 7.79, 7.81, 7.92, 7.96, and in its findings in relation to the parties' 
comments on the interim report in paragraphs 6.8 to 6.12, most notably paragraph 6.12. 
2The Panel's error is set forth in paragraphs 7.14, 7.20, 7.54, 7.81, 7.92 and 7.104. 
3The Panel's error is set forth in paragraphs 6.9 to 6.12 and 7.97 to 7.103 and otherwise apparent from 
the Panel's analysis in paragraphs 7.14 to 7.104.  WT/DS207/AB/RW 
 Page 93 
 
 
misinterpreting the term "variable" in footnote 1, including in a manner not in accordance with the Appellate Body's findings,
4 by interpreting the terms "transpare ncy" and "predictability" in a manner 
not in accordance with the Appellate Body's findings,5 and by otherwise developing a legal test for 
compliance with Article 4.2 and footnote 1 of the  Agreement on Agriculture   that is internally 
contradictory and not in accordance with the A ppellate Body's findings in the prior dispute.6  
 
3. The Panel erred in its application of  Article 4.2 and footnote 1 of the  Agreement on 
Agriculture   to the Implementing Measure, including its findings relating to whether the 
Implementing Measure, was similar to a "variable import levy"7 and its findings relating to whether 
the Implementing Measure was similar to a "minimum import price"8 particularly when such an 
analysis is appropriately conducted on an empirical basis. 
 4. The Panel acted inconsistently with its oblig ations under Article 11 of the DSU to "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 re levant covered agreements " and Article 12.7 of the 
DSU to set out "the findings of fact, the applicab ility of relevant provisions and the basic rationale 
behind any findings and recommendations that it makes" by,  inter alia :  
 
(a) concluding, without explanation, that the Ministry of Finance violated Chilean law in establishing the levels of the price bands;
9 
 
(b) failing, without explanation, to correct e rrors in the Original Panel's characterization 
of the Price Band System, although the Panel relied on such characterization in making its 
own findings;10  
 (c)  conducting only a cursory review of rele vant features of the Implementing Measure 
in isolation;
11  and 
 (d) failing to consider empirical evidence on the actual operation of the Implementing Measure.
12 
  Chile respectfully requests that the Appellate Body reverse the findings and conclusions of 
the Panel and modify accordingly the r ecommendations and rulings of the Panel.
13 
 
_______________ 
                                                      
4The Panel's errors are set forth in paragraphs 7.28 and 7.55 to 7.104. 
5The Panel's errors are set forth in paragraphs 7.28 and 7.55 to 7.104. 
6The Panel's errors are reflected in its overa ll analysis in paragraphs 7.14 to 7.104. 
7The Panel's error is set forth in paragraphs 7.55 to 7.104, in particular paragraphs 7.55 to 7.81. 
8The Panel's errors are reflected in paragraphs 7.55 to 7.104, in particular paragraphs 7.82 to 7.92. 
9The Panel's error is set forth in paragraph 7.79. 
10The Panel's error is set forth in paragraphs 6.14, 7.40(d), 7.48, 7.50, 7.75, and 7.86 to 7.88. 
11The Panel's errors are reflected in its overa ll analysis in paragraphs 7.14 to 7.104. 
12The Panel's errors are reflected in its overall analysis in paragraphs 7.14 to 7.104 and in its findings in 
relation to the parties' comments on the interim report in paragraphs 6.8 to 6.12. 
13See  paragraphs 8.2(a), 8.3, and 8.4. WT/DS207/AB/RW 
Page 94  
 
ANNEX II
 
 WORLD TRADE  
ORGANIZATION  WT/DS207/23 
26 February 2007 
 (07-0799) 
 Original:   English 
  
CHILE – PRICE BAND SYSTEM AND SAFEGUARD MEASURES 
RELATING TO CERTAIN AGRICULTURAL PRODUCTS 
 
Recourse to Article 21.5 of the DSU by Argentina
 
 
Notification of an Other Appeal by Argentina  
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 23(1) of the Working Procedures for Appellate Review  
   The following notification, dated 19 February 2007, from the Delegation of Argentina, is 
being circulated to Members. 
_______________ 
 
 Pursuant to Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing 
the Settlement of Disputes  ("DSU") and Rule 23(1) of the Working Procedures for Appellate Review , 
Argentina submits its Notice of Other Appeal on cert ain issues of law covered in the Report of the 
Panel on Chile – Price Band System and Safeguard Me asures Relating to Certain Agricultural 
Products
1, and certain legal interpretati ons developed by the Panel.  
 
 On 5 February 2007, Chile filed its Noti ce of Appeal pursuant to Rule 20 of the Working 
Procedures for Appellate Review .  Chile requested that the Appellate Body, inter alia , reverse the 
findings and conclusions of the Panel and modify accordingly the recommendations and rulings of the 
Panel as set forth in paragraphs 8.2(a) , 8.3 and 8.4 of the Panel Report.  
 
 If the Appellate Body were to reverse an y of the Panel's findings, recommendations and 
rulings as set forth in paragraphs 8.2(a), 8.3 and 8.4 of the Panel Report, Argentina respectfully requests the Appellate Body seek review of the Pane l's conclusion, and its re lated legal findings and 
interpretations, that it is unnecessary, for the resoluti on of this dispute, to make a separate finding on 
Argentina's claim under the second sentence of Article II:1(b) of the GATT 1994.
2 
 
 In that event, Argentina respectfully requests that the Appellate Body find: 
 
(a) that it is necessary, for the resolution of this dispute, to make a separate finding on 
Argentina's claim under the second sentence of Article II:1(b) of the GATT 1994; 
                                                      
1Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/RW, circulated 8 December 2006 (the 
"Panel Report"). 
2This conclusion is set out in paragraph 8.2(b) of the Panel Report.  The related legal findings and 
interpretations of the Panel are set out in paragraphs 6.6, 6.7, 7.3, 7.5 and 7.105 to 7.162 of the Panel Report.   WT/DS207/AB/RW 
 Page 95 
 
 
(b) that the amended PBS is inconsistent with  the second sentence of Article II:1(b) of 
the GATT 1994. 
 
 Argentina also requests the Appellate Body to complete the analysis of the Panel where it 
reverses or modifies findings of the Panel or comple tion of the analysis of the Panel is necessary to 
resolve this dispute. 
 
__________