WT/DS207/RW 
 Page E-1 
 
 
  ANNEX E 
 
ORAL STATEMENTS OF THIRD PARTIES AT THE 
SUBSTANTIVE MEETING OF THE PANEL  
 
Contents Page 
Annex E-1  Oral Statement by Australia (2 August 2006) E-2  
Annex E-2 Oral Statement by Brazil (2 August 2006) E-5 
Annex E-3 Oral Statement by Canada (2 August 2006) E-8 
Annex E-4 Oral Statement by Colombia (2 August 2006) E-11 
Annex E-5 Oral Statement by the European Communities (2 August 2006) E-13 
Annex E-6 Oral Statement by Thailand (2 August 2006) E-17 
Annex E-7 Oral Statement by the United States (2 August 2006) E-19 
 WT/DS207/RW 
Page E-2  
 
  ANNEX E-1 
 
ORAL STATEMENT BY AUSTRALIA 
(2 AUGUST 2006) 
 Mr Chairman, 
 1. Australia has read with interest the submissi ons of the parties to this dispute and the points 
raised by third parties.  
2. Australia joined the original dispute as a third party in view of our systemic interests in the 
questions under consideration.  We retain a systemic  interest in the issues being considered in the 
current proceedings brought by Argentina under Article 21.5 of the DSU.   3. Our systemic interest in these proceedings  concerns the consequences of the Price Band 
System (PBS). In particular, Australia wishes to dr aw the Panel's attention to the continued potential 
of the PBS to distort trade, and to the reasons why  Australia agrees with Argentina that the new PBS 
is inconsistent with Article 4. 2 of the Agreement on Agriculture. 
 4. Australia makes this oral statement, howev er, in a constructive spirit bearing in mind our 
excellent bilateral relations with Chile, especia lly as a fellow Cairns Group member, and Chile's 
commendably low general tariff structure. 
 5. Australia notes that on 23 October 2002 the DSB adopted the Appellate Body Report on Chile 
– Price Band  System and Safe guard Measures Relating to C ertain Agricultural Products  and the 
Panel Report as modified by the Appellate Body Re port.  The Appellate Body recommended that the 
DSB request Chile to bring its price band syst em, as found to be inconsistent with the Agreement on 
Agriculture , into conformity with its obligations under that Agreement (paragraph 289 AB report).   
 6. Chile claims to have complied with this recommendation by adopting Law number 
19.897/2003 and Decree number 831/2003. Argentina st ates in its rebuttal submission that Chile's 
modified PBS is still a border measure similar to  a "variable import levy" and a "minimum import 
price" within the meaning of footnote 1 to Article 4.2 of the Agreement on Agriculture.  
 7. In Australia's view, the question before the Panel is whether the new amendments are 
sufficient to convert the PBS into a measure th at does not have the restrictive features that 
characterise border measures prohibited under footnote 1 of Article 4.2. Australia respectfully submits 
that despite Chile's best efforts, they are not. A lthough we concede that the amendments do go some 
way to ameliorate the more obviously  inconsistent aspects of the meas ure, we are nevertheless of the 
view that inherent incons istencies remain unchanged. 
 8. The Panel will recall that the raison d'etre  of Article 4.2 is improved market access for 
agricultural imports by permitting only the application of  ordinary customs duties.  To this end, border 
measures that are trade distorting, such as those listed  in the footnote to Article 4.2, are prohibited. As 
the Appellate Body noted, this is because they ha ve the objective and effect of "restricting the 
volumes, and distorting the prices, of imports of agri cultural products in ways different from the ways 
that ordinary customs duties do….[they]…disconnect domestic prices from international price developments, and thus impede the transmission of world market prices to the domestic market" 
(paragraph 227). Fundamentally therefore, any measu re that is consistent with Article 4.2 must 
necessarily be shown to be absent of this trade rest rictive objective and effect. This is made clearer by 
the Appellate Body's deliberations in paragraphs 26 0 and 261 where it explains that the effect of a 
measure is relevant, that is whether a measure creat es "intransparent and unpredictable market access" 
and "prevent[s] enhanced market access for imports".  WT/DS207/RW 
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9. In Australia's opinion, the Chilean revised PBS for wheat and wheat flour remains a system 
which distorts the price of imports of agricultura l products in a different way from ordinary customs 
tariffs and continues to insulate the Chilean domestic  market from international price fluctuations. As 
such, we submit that it must be found to be akin to a "variable import levy " and inconsistent with 
Article 4.2. 
 
Variability  
 
10. The meaning of the term "variable import levy " was considered by the Appellate Body and it 
is instructive to recall its comments. It decided th at a "necessary condition" for a variable levy is the 
presence of a formula causing automatic and continuous  variability of duties. In contrast ordinary 
customs duties are as set out in paragraph 233: "subj ect to discrete changes in applied tariff rates that 
occur independently, and unrelated to such an underlying scheme or formula . The level at which 
ordinary customs duties are applied can be varied by a legislature, but such duties will not be 
automatically and continuously variable. To vary the applied rate of duty in the case of ordinary 
customs duties will always require separat e legislative or administrative action." 
 11. Chile in its first submission states that under Law 19.897, the duty (or rebate or neither) is 
now fixed by legal directive in the form of a d ecree issued by the Ministry of Finance, and then 
remains unchanged for two months until a subseque nt administrative act (paragraph 93). Chile's 
submission claims that the effect of  this change is that the new system is no longer "variable" as 
decided by the Appellate Body.   12. With respect, Australia submits that this argu ment is misplaced. It is correct that the new 
Chilean system has moved to require separate ex ecutive action to instigate each variation in 
applicable duties. However this only partially meet s the conditions that the Appellate Body noted are 
required to convert such a levy into an ordinary customs duty. The Appellate Body also noted that 
ordinary customs duties cannot simply reflect chan ges mechanistically determined by an underlying 
scheme or formula, which we consider re mains the case with the Chilean Law.  
 
Transparency and predictability
 
 
13. As Chile notes in its submission, the Appellate Body stated in paragraph 232 that "variability" 
was a necessary but by no means "sufficient" condi tion for a particular measure to be a "variable 
import levy". In addition, lack of transparency and predictability that flow from such measures are 
also important. 
 
14. Chile submits that the revised PBS is both mo re transparent and more predictable than its 
predecessor. Under the old PBS, the reference pric e was changed every week. Under Law 19.897 it is 
now changed every two months. In addition the pri ce bands were previously adjusted on a yearly 
basis. Now they are in place for el even years. On this basis, Chile  argues that these changes provide 
stable conditions to afford bette r predictability to exporters. 
 
15. That much is correct. The material question how ever is whether it is sufficient. Australia does 
accept that these changes give greater transparency and stability. Howeve r, the underlying structure of 
the measure remains the same. Even though this instability is partially offset by the introduction of 
11 year periods of application for price bands, fluctu ations in the reference price cannot be predicted. 
More broadly, this mechanism in itself has th e effect of insulating the Chilean market from 
international price fluctuations as it is less flexible . Accordingly, it cannot be said that predictability 
for exporters has improved. As such, the trade dist orting aspects of the PBS have not been remedied. 
 WT/DS207/RW 
Page E-4  
 
  16. In conclusion, Australia submits that desp ite the changes to the Chilean PBS, they are 
insufficient to achieve consistency with Chile's rights and obligations under Article 4.2 of the 
Agriculture Agreement. It continues to preser ve an underlying structure of variability and 
unpredictability that is non-transparent and contra ry to the object and purpose of the Agreement on 
Agriculture. 
 
17. Australia would respectfully encourage the Panel to find the Chilean Price Bands System 
continues to be inconsistent  with Article 4.2 of the Agreement on Agriculture and that Chile has 
therefore not complied with the recommendations and rulings of the Dispute Settlement Body in this 
dispute . 
  WT/DS207/RW 
 Page E-5 
 
 
  ANNEX E-2 
 
ORAL STATEMENT BY BRAZIL 
(2 AUGUST 2006) 
  
I. Introduction 
 
1. Mr. Chairman, distinguished Panelists, and me mbers of the Secretariat, Brazil welcomes the 
opportunity to present its views to you this morning.  In our statement, we will address Article 4.2 of 
the Agreement on Agriculture  as well as the Panel's terms of reference. 
 
II. Article 4.2 of the Agreement on Agriculture 
 
2. The claim under Article 4.2 of the Agreement on Agriculture  is that, by adopting the new 
PBS, Chile has "resort[ed]" to another measure of the kind that had to be converted into ordinary 
customs duties at the end of the Uruguay Round.  Sp ecifically, the new PBS is a measure similar to a 
"variable import levy" and to a "minimum import price" ("MIP").  3. In addressing these claims, the Panel is assisted  by the findings of the original panel and the 
Appellate Body.  Both found that the old Chilean PBS was a measure similar to both a variable import 
levy and a MIP.  On implementation, the key pr ohibited elements of the old PBS have not been 
touched, and are part and parcel of the new PBS.   Thus, the essence of the PBS seems to remain the 
same.  
Variable Import Levies 
 4. Chile's new PBS meets all the characteristics of a variable import levy . 
 5. First, the amount of the duty is the difference between two parameters: (i) the floor of the 
price band  and (ii) a reference price  fixed by the government based on world market prices.  The 
reference price changes every two months, ther eby purportedly ensuring that the duty varies 
frequently to reflect the most recent developments in world market prices. 
 6. Second, under the new PBS, imports are very un likely to enter at prices below the price band 
floor.  Argentina has explained to the Panel in detail why this is so.
1 Although this can legally occur, 
it will happen only in very unusual factual circumst ances—namely, when world market prices drop by 
20 to 30 per cent within a period of two months.  And even if  this improbable price decrease occurred, 
the new PBS would neutralize it after just two months  because the reference price would be updated.   
 7. Third, the Chilean measure stabilizes the price of imports by neutralizing decreases in world 
market prices.  The PBS is designed – and operates – such that the entry price is virtually always 
above the lower threshold and also such that the entry price does not exceed the upper threshold of the 
band system by much.  Importantly, as world ma rket prices decrease, the duty increases, thereby 
exercising a stabilizing effect on prices in Chile th at insulates its producers from the fluctuations in 
the world prices.  8. On implementation, Chile has not altered the fundamental characteristics of a measure that 
continues to meet the requirements of a variable impor t levy or a measure similar thereto.  In short, 
the changes made are more of form than substance.   
                                                     
 
1 Argentina's First Written Submission, paras. 100–114.  WT/DS207/RW 
Page E-6  
 
  9. Contrary to Chile's arguments, variation in th e duty continues to be an integral and automatic 
feature of the measure, and it occurs frequently.  Also, as the world market price falls, protection under the PBS rises, insulating Chile's market from the world market.    10. Chile suggests somewhat improbably that duties imposed under the new PBS are predictable 
because traders can predict future world market pr ices.  Thus, it believes, traders can foresee the 
duties that will be imposed under th e PBS as market prices evolve.
2  Yet, even though traders often 
speculate on the evolution of prices, they cannot pred ict changes with the certainty required to afford 
predictability to trade.  Variable impor t levies are prohibited precisely because the Agreement on 
Agriculture  requires that market access be based on pr edictable regulation that does not alter with 
market prices. 
 11. Chile also asserts that there is greater tran sparency in the new PBS because: the price band 
floors and ceilings have been fixed 11 years in advance
3; the "markets of concern" have been 
identified4; and the amount of the special PBS duty is published every two months.5  This misses the 
point.  The WTO consistency of the PBS does not change solely because the features making it a 
variable import levy are now openly published.  The measure continues to lack both predictability and 
transparency because its level varies at an unpredic table rate, making the measure intransparent.  
 
Minimum Import Prices  
12. It is also claimed that the new PBS is a minimum import price This is because the floor of the 
price band functions as a  de facto  MIP.  Despite the minor changes Chile has made to the PBS, it 
continues to guarantee that – in all but the most exce ptional situations – the entry price of imports will 
not fall below the price band floor. 
 
III. The Panel's Terms of Reference 
 
13. Brazil turns to address Chile's contention that  Argentina cannot challenge certain features of 
the new PBS, namely the wheat conversion factor , and also cannot challenge the new measure under 
Article II:1(b) of the GATT 1994.  Chile argues that, because Argentina did not make these claims in 
the original proceedings, it is now barred from doi ng so in the current Article 21.5 proceedings. 
 
14. First, in both the original proceedings a nd these Article 21.5 proceedings, Argentina made a 
claim under Article 4.2 of the Agreement on Agriculture .  In these proceedings, Argentina relies on 
the wheat conversion factor as an argument  to demonstrate that the new PBS is inconsistent with 
Article 4.2.  Invoking the wheat conversion factor does not, therefore, involve a new claim  but rather 
a new argument  to substantiate an old claim.  No thing precludes a WTO Member from making 
arguments  in Article 21.5 proceedings that it did not make in the original dispute. 
 15. Secondly, and more importantly, Brazil is concerned about the systemic implications of 
Chile's argument.  Chile is essen tially asking the panel to rule that a Member is precluded from 
challenging, in Article 21.5 proceedings, any aspect of  a new measure that was present in the original 
measure but that was not challenged in the original proceedings.  
 16. In Brazil's view, Chile's approach intends to add a new and undue burden on the complaining 
party, since it would force it to prosecute every conceivable violation  in the original proceedings in 
order to preserve its rights on implementation. 
                                                     
 
2 Chile's First Written Submission, paras. 158 to 163. 
3 Chile's First Written Submission, para. 108; Chile's Second Written Submission, para. 73. 
4 Chile's First Written Submission, para. 115.  
5Chile's First Written Submission, para. 93.  Chile's Second Written Submission, paras. 89-90.   WT/DS207/RW 
 Page E-7 
 
 
   
17. Chile's arguments also compel a complaining party to assess, as early as its initial request for 
consultations, how its claims will fare in dispute settlement: which claims might be upheld, and which 
might be subject to judicial economy.  It also co mpels an assessment of the many ways in which a 
respondent might choose to implement, while leav ing intact objectionable parts of a challenged 
measure. 
 18. Not surprisingly, Chile does not cite to any tr eaty text in order to support its approach.  In 
fact, this is because there is nothi ng in the text of the DSU that precludes a complaining Member from 
bringing a claim that was not brought in the origin al proceedings. According to the DSU, Article 21.5 
proceedings may, in principle, involve claims made under any provision of  any covered agreement.
6  
Any limitations to the scope of an Article 21.5 dispute must be found in the treaty text.  It was precisely on the basis of treaty text that the Appellate Body found in US – Shrimp  and EC – Bed Linen 
(Article 21.5 – India)  that there are certain limitations on the claims that can be made in Article 21.5 
proceedings.  The Appellate Body ruled that a comp lainant cannot pursue a claim against an aspect of 
a measure when, in the original proceedings, that same claim was rejected , for example, because the 
complainant failed to prove its case.
7  This limitation was based on treaty text in Articles 16.4, 17.14, 
19.1, Article 21(1) and (3), and Article 22.1 of the DSU.  The limitation corresponds to the well-
established legal principle, non bis in idem .  In layman's terms, no person can be tried twice  for the 
same alleged offense.    
19. No equivalent treaty text support Chile's pos ition that a Member cannot contest for the first 
time an aspect of a new measure that also featured in an old measure.  
IV. Conclusion 
 
20. Mr. Chairman, distinguished members of the panel, Brazil thanks you for the opportunity of 
presenting its views and looks forward to responding any questions you may have. 
 
                                                     
 
6 Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 79 and Appellate Body Report, 
Canada – Aircraft (Article 21.5 – Brazil) , paras. 40-41.  
7 Appellate Body Report, EC – Bed Linen (Article21.5 – India) , paras. 96-99. WT/DS207/RW 
Page E-8  
 
  ANNEX E-3 
 
ORAL STATEMENT BY CANADA 
(2 AUGUST 2006) 
  
Introduction 
 
1. Canada welcomes the opportunity to particip ate in this proceeding. Canada's submission 
today is limited to the question of the jurisdiction of this Panel to consider arguments that had not 
been put before the original panel. 
 2. Specifically, Argentina claims that the Chilean measures are a violation of GATT  
Article II:1(b), second sentence. It considers that this  Panel has the jurisdiction to hear such a claim. 
Chile disagrees. It submits that this claim was not  articulated before the original panel and that, 
therefore, this Panel does not have the jurisdiction to  consider the claim. In Canada's view, the Panel 
has such jurisdiction.  
Legal Analysis  
 
3. What is the scope of a Member's right to raise new claims and arguments before an Article 21.5 panel?  
 
4. It is incontestable that a Member has the ri ght to bring new claims and arguments before a 
panel relating to new measures, as the facts, claims, and arguments relevant to those measures may be 
distinct from measures previously considered.
1 The Appellate Body determined in Canada – Aircraft 
(Article 21.5 – Brazil)  that:2 
 
"… the utility of the review envisaged under Article 21.5 of the DSU would be 
seriously undermined if a panel were restricted to examining the new measure from 
the perspective of the claims, arguments and factual circumstances that related to the 
original measure …" 
5. Canada recognizes that such a right is not ab solute. As Chile correctly notes, where a Member 
has challenged a measure but has failed to make out a prima facie  case, it may not re-argue the same  
claim before an Article 21.5 panel. This would permit one Member to enga ge others in endless 
litigation, thereby undermining pred ictability and security in the dis pute settlement mechanism of the 
WTO.  6. However, that is not the question before you. Rather, the question is whether a panel is 
prohibited from considering arguments and claims on the sole basis that they could  have been made 
before the original panel but were not. Where the measure is appropriately before a panel, and the 
DSB has made no findings or recommendations in resp ect of such measure or the claims made by the 
complaining party, a panel may not then reject such  claims or arguments on the sole basis that they 
could have been raised previously. And this is so for at least three reasons. 
 
7. First, the DSU  makes no provision for such a rejection. The Panel is required by Article 11 of 
the DSU  to assess objectively the matter before it, that matter consisting of the measure and the claims 
                                                     
 
1 Canada – Aircraft (Article 21.5 – Brazil) , Appellate Body Report, paras. 40-42; See also US – FSC 
(Article 21.5 – EC), Appellate Body Report para. 62, footnote 119. 
2 Para. 41.  WT/DS207/RW 
 Page E-9 
 
 
  of violation. If the measure and th e claims are appropriately before  the Panel under Articles 6.2, 7.1 
and 21.5 of the DSU , the Panel should exercise caution in declining jurisdiction to hear a claim. 
 8. Second, the findings of the Appellate Body in  respect of the jurisdiction of an Article 21.5 
panel to consider claims already litigated were based  on particular facts that  do not apply here. Chile 
does not suggest that Argentina's cl aim has already been considered an d rejected; it argues merely that 
Argentina could have articulated that claim earlier. Canada is not aware of any rule or precedent in the jurisprudence of the WTO that would require a Member  to make all of its arguments and bring all of 
its claims at one time. Of course, in bringi ng a dispute Members should exercise good faith; a 
Member ought not, in principle, engage in litiga tion techniques such as "case splitting". But neither 
the DSU  nor principles of due process enjoin an Article 21.5 panel from considering a claim on the 
sole ground that it could have been brought earlier.  9. Finally, Canada questions the wisdom of such  an approach from a systemic perspective. For 
one thing, it would force a complaining Member to overburden its original submissions with any and 
all arguments and claims, regardless of their merit,  to avoid a procedural challenge later on. This, 
despite the fact that the object of dispute settlement is to settle disputes, not to make claims based on a 
fear of later procedural challenges. For another,  if the Panel allows Chile's position to succeed, it 
would invite highly contentious arguments before Ar ticle 21.5 panels concerning whether claims and 
arguments could have been made before on previo us facts, and whether or not certain facts are 
actually new. Such an approach would constrain an Article 21.5 panel from considering claims and 
arguments which could not reasonably have been contemplated at the time of the original panel – and 
notably those based upon subsequent rulings and recommendations of the DSB.   10. Let me now turn to this case. The right of a complaining Member to raise claims and arguments based upon the rulings and recommendations of the DSB is particularly relevant here. 
Before the original panel, Argentina based its  argument upon its position that the duties imposed 
through the price band system were "ordinary customs duties" within the meaning of both Article 4.2 of the Agreement on Agriculture , and GATT  Article II:1(b). Argentina thus argued under the first 
sentence of Article II:1(b), which relates to "ordin ary customs duties". The original panel found that 
the duties were not "ordinary customs duties", and so  Article II:1(b), first sentence could not apply. 
Significantly, while the Appellate Body disagreed, it did not come to any conclusion as to whether the 
Chilean duties are in fact "ordin ary customs duties". Nor did it consider it necessary to consider 
Article II:1(b), first sentence, since it found a violation under Article 4.2 of the Agreement on 
Agriculture .
3   
 11. Argentina considers that this presents a va lid ground to raise the relevance of the second 
sentence of Article II:1(b). Chile has argued that "[t]o entertain that claim now would seriously affect 
Chile's rights and would subject a case warranting a full hearing to summary and expedited proceedings".
4 
 12. Canada disagrees with Chile's assessment. The application of GATT  Article II:1(b), second 
sentence is a legal issue of interpretation grounded in the facts as established. There is no prejudice to 
Chile if the existing factual record – with consider ation given to new Chilean measures – is raised in 
support of Argentina's claim. Further, accepting Chile's interpretation would suggest that new 
arguments could never be entertained in "summa ry and expedited proceedings" – a position clearly 
rejected by the Appellate Body. This is not a case involving a wholly new argument, such as United 
States – Countervailing Measures Concerning Ce rtain Products from the European Communities 
                                                     
 
3 Chile – Price Band System , Panel Report, paras. 7.55-7.60 and 7.104-7.108; Report of the Appellate 
Body, paras. 165, 278-287. 
4 Chilean submissions, para. 50. WT/DS207/RW 
Page E-10  
 
  (Article 21.5 – EC) , where a party is seeking, for all intents and purposes, a de novo  review.
5  Canada 
notes that the possibility that Article II:1(b), second  sentence, could be applicable to this case was 
raised by the original panel on its own initiative. Wh ile that consideration was found to be outside the 
panel's jurisdiction by the Appellate Body, it is unr easonable now for Chile to suggest that they are 
taken by surprise by Argentina's argumen t based upon that very same sentence. 
 
13. In the instant case, the Appellate Body found that Argentina did not articulate a claim under 
Article II:1(b), second sentence.6 With no claim, there could be no finding that Argentina failed to make a 
prima facie  case, much less a finding against them on this po int. To now deprive Argentina of the right to 
bring a claim which it never previously raised, and to make that claim in respect of Chile's new measures, 
would greatly limit Members in their ability to presen t their strongest case, and would improperly curtail 
the ability of Article 21.5 panels to  review fully the compliance of Members with their WTO obligations. 
 14. For these reasons, Canada submits that this Panel should find that it has jurisdiction to 
consider Argentina's claim concerning GATT Article  II:1(b), second sentence.  We thank the Panel, 
and welcome any questions that you may have. 
 
                                                     
 
5 Report of the Panel (WT/DS212/RW), paras. 7.72-7.76. 
6 Report of the Appellate Body, para. 168.  WT/DS207/RW 
 Page E-11 
 
 
  ANNEX E-4* 
 
ORAL STATEMENT BY COLOMBIA 
(2 AUGUST 2006) 
  
1. Colombia has reserved its third party rights in the case brought by Argentina against the 
measures taken by Chile to comply with the r ecommendations of the WTO Dispute Settlement Body 
(DSB). 
2. Argentina requested that the Panel find that the new price band system applied by Chile to 
imports of wheat and wheat flour
1 is "inconsistent – in itself and in its application – " with Article 4.2 
of the Agreement on Agriculture, with the second sen tence of paragraph 1(b) of Article II of the 
GATT 1994, and with paragraph 4 of Article XVI of the Marrak esh Agreement Establishing the 
World Trade Organization. 
3. For Colombia, it is clear that the complainant may not put forward new facts.  The dispute 
comes under Article 21.5 of the Dispute Settle ment Understanding (DSU), and WTO case law 
establishes that in such cases, the scope of DSB repor ts must be restricted to their express terms2, 
based on the interpretation of paragraph 14 of the DSU. 
4. It is also clear to Colombia that Argentina, as the complainant, bears the burden of proof with 
respect to Article 21.5 proceedings and that the Ar ticle 21.5 panel must rely on the relevant data 
submitted to it, as established in WTO case law.3 
5. Chile maintains that the new measures adopt ed represent a substantial change from the 
previous price band system and that "as a practical consequence of changes to the system, there is no 
variable import levy or minimum import price", nor any similar measure which operates in this way, 
within the meaning of Article 4.2 of the Agreement on Agriculture. 
6. The Panel's assessment must be limited exclus ively to an examination of the new Chilean 
price band system, that is, to the measures taken by Chile to comply with the recommendations and 
rulings of the DSB. 
7. The Appellate Body has made it clear that an import levy may vary and that this fact alone 
does not enable the measure to be qualified as a vari able levy within the meaning of footnote 1 to 
Article 4.2 of the Agreement on Agriculture.  This  is borne out by the fact that WTO Members are 
authorized to change their tariffs, at any time, provided that the changed tariff does not exceed bound 
levels.  The Appellate Body has also clearly poi nted out that the presence of a formula causing 
automatic and continuous variability of duties is a necessary, but by no means a sufficient, condition 
for a particular measure to be a "variable im port levy" within the meaning of footnote 1. 
                                                      
* Annex E-4 contains the oral statement by Colombia.  This text was originally submitted in Spanish by 
Colombia. 
1 Law 19.897 and Exempt Decree No. 831/2003. 
2 "14.  An Appellate Body report shall be ad opted by the DSB and unconditionally accepted by the 
parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 
30 days following its circulation to the Members.8  This adoption procedure is without prejudice to the right of 
Members to express their views on an Appellate Body report". 
3 The Appellate Body in Canada – Aircraft  (Article 21.5 – Brazil)  determined that the examination of 
"measures taken to comply" is based on the relevant facts proved, by the complainant, in the Article 21.5 panel proceedings:  "We add also that the examination of "measures taken to comply" is based on the relevant facts 
proved, by the complainant, to the Article 21.5 panel, during the panel proceedings". WT/DS207/RW 
Page E-12  
 
  8. The Appellate Body has also pointed out that  import levies have additional features which 
include "a lack of transparency and a lack of predic tability" in the level of duties that result from such 
measures.  In the opinion of the Appellate Body, su ch features are liable to restrict the volume of 
imports and distort the prices of imports by impedi ng the transmission of international prices to the 
domestic market. 
9. In this context, Chile's new system contained a number of changes, including:  (i) the 
abolition of the formula that discarded the highest and lowest 25 per cent of the prices observed, 
(ii) the elimination of discretion in the determinati on of import costs, (iii) the use of f.o.b. values in 
the different parameters of the system and (iv) express identification of relevant markets for the 
purpose of determining the reference price.  In Colombia's opinion, these changes help make the 
Chilean price band system more transparent and predictable. 
10. The Appellate Body also refers to the follo wing definition given by the Panel:  "[these] 
schemes generally operate in relation to the actual transaction value of the imports.  If the price of an 
individual consignment is below a specified minimu m import price, an additional charge is imposed 
corresponding to the difference".  In this conn ection, Chile's new mech anism uses the system's 
parameters to calculate the customs duties that w ill be applied on the transaction value and not on a 
minimum price.  WT/DS207/RW 
 Page E-13 
 
 
  ANNEX E-5 
 
ORAL STATEMENT BY THE EUROPEAN COMMUNITIES 
(2 AUGUST 2006) 
  
I. INTRODUCTION 
1. Mr. Chairman, Distinguished Members of th e Panel, the European Communities ("EC") 
would like to thank the Panel for this opportuni ty to submit observations on the present dispute. 
2. As is customary, the EC will refrain from analys ing in detail the facts of this case, and from 
applying the law to those facts.  The EC will present its views on a number of issues which raise 
systemic concerns.  It will first consider the appropriate interpretation of Article 4.2 of the Agreement 
on Agriculture .  Thereafter, it examines the extent to whic h a complainant may raise new claims in an 
Article 21.5 proceeding. 
II. INTERPRETATION OF ARTICLE 4.2 OF THE AGREEMENT ON AGRICULTURE   
3. The task of the Panel is to determine whether the revised Price Band System (PBS) is 
consistent with Article 4.2 of the Agreement on Agriculture .  In order to prevail, Argentina must 
convince you that the revised PBS is a measure whic h would have been required to be converted into 
ordinary customs duties.  The revised PBS will not be such a measure unless it can be shown to be "a 
similar border measure" to "variable import levies" or "minimum import prices".   
4. As you are well aware, the Appellate Body h as had occasion to examine these terms.  The 
Appellate Body concluded that a "variable import levy" had the following characteristics: 
• Continuous variation; 
• Automatic variation; 
• A lack of transparency; and,  
• A lack of predictability.
1 
5. The Appellate Body emphasised that the first two of these conditions were necessary  
characteristics but that they were not sufficient  in themselves.2  This can only be taken as meaning that 
at least all four conditions must be present for a va riable import levy to exist.  Of course here, the 
Panel is tasked with analysing whether a measure similar  to a variable import levy is being 
maintained by Chile.  In the words of the Appellate  Body, the measure being examined must "share 
sufficient features" with a variable import le vy before it can be considered "similar".3   
6. The EC must express a certain amount of sympathy with the Panel and the main parties to this 
dispute.  Defining how "continuous" the variation must be, how "automatic" it should be, and whether 
the measure is sufficiently "transparent" or "predi ctable" is no easy task.  Once defined, deciding 
whether there is sufficient sharing of features so as to make the measure "similar" is again far from 
clear.  Unfortunately, as currently fra med, there is little which is transp arent or predictable about this 
test.  Nevertheless, in the view of the EC, the high standards Argentina is asking you to set for this test 
                                                      
1 Appellate Body Report, Chile – Price Band System , paras. 233 and 234. 
2 Ibid. para. 234. 
3 Ibid. para. 239. WT/DS207/RW 
Page E-14  
 
  are not supported by the text of Article 4.2 Agreement on Agriculture .  To give one concrete example, 
the "transparency" obligation does not, in the view of the EC, require a WTO Member to explain why
 
it chose particular reference prices, provided it explains what those prices are. 
7. Argentina's attempt to load obligations onto the back of Article 4.2 should be kept carefully in 
context.  It should be recalled that the Agreement on Agriculture  is the start of a reform process in the 
field of international agricultural trade, intended eventually to bring the obligations on agricultural 
products in line with those applicable to industria l products.  The scope of Article 4.2 should not be 
expanded into a soul-searching transparency exerci se, or a blunt instrument intended to prohibit 
alleged "disconnects" between intern ational and domestic prices. This is particularly the case when no 
such requirements exist under the law applicable to trade in industrial goods, and when such 
requirements clearly go beyond those features distinctive to the types of measures brought under the 
scope of Article 4.2. 
8. The EC starts its analysis by recalling that the Appellate Body has determined that GATT 
1994 does not regulate the type of duties which can be imposed.  In Argentina – Footwear  the 
Appellate Body held that Argentina could apply a specific duty provided that the ad valorem  
equivalent of that specific duty did not exceed the bound rate (which was expressed in ad valorem  
form).4  That case concerned a specific duty calculated on the basis of a "representative international 
price".  Members are thus in a position to apply diff erent types of duties.  They can calculate such 
duties in a number of different manners without acting inconsistently with GATT 1994.  A Member 
may even decide a particular tariff on the basi s of no form of calculation – other than a non-
arithmetical political or economic one.  Further, as th e Appellate Body recognised, varying a duty is a 
common occurrence and a perfectly legal one at that.  To provide a concrete example, it is perfectly 
legal for a WTO Member to review, from time-to-time, an applied duty, and to adjust it in the light of 
market developments (i.e. to increase the duty as in ternational prices decrease), provided of course the 
Member stays within its bound levels.   
9. Given variations of tariffs, the transparency of the calculation of the tariff, the predictability 
of the moment of the change of the tariff (provi ded there is appropriate publication) and frequent 
variation of the tariff are not regulated by the GA TT the question arises as to when such elements are 
such as to give rise to an inc onsistency with Article 4.2 of the Agreement on Agriculture .  In the view 
of the EC, it is only when the measures clearly ha ve sufficient similarity to measures coming under 
the scope of Article 4.2 - that is features unique to  the measures listed in the footnote to Article 4.2 are 
also found in the measures challenged - that there is a possible violation of Article 4.2.  The existence 
of features which are not unique to the measures fou nd under Article 4.2 cannot be sufficient, on their 
own, to render a measure inc onsistent with Article 4.2. 
10. The Appellate Body stressed that the varia tion in the amount of the duties had to be 
"continuous".  What amounts to a "continuous" varia tion is not clear.  In the original case, neither 
Argentina nor Chile disputed that the variation was c ontinuous.  In the original PBS, the variation in 
the amount of the duties occurred every week, i.e. 52 times a year.  In the revised PBS, the variation 
takes place every two months, i.e. six times a year.  The EC has considerable difficulty in describing a 
variation which takes place so infrequently as "continuous."   
11. The criterion of automaticity is likewise far from clear.  A variation in a duty could be 
brought about automatically in the sense that no legi slative or executive action is required to vary the 
duty.  If the executive has no discretion, but yet still has to act in order to vary the duty, and the nature 
of the variation in the duty is determined by a formul a, then it is hard to describe that variation of the 
duty as anything other than automatic.   
                                                      
4 See, Appellate Body Report, Argentina – Footwear (EC) , para. 55.  WT/DS207/RW 
 Page E-15 
 
 
  12. As already noted, the key features of a variable  import levy are the continuous and automatic 
variation, and a lack of transparency and predictabi lity.  The EC considers that for a measure to be 
"similar" to such a measure, it must display all of these features.  If these first conditions are met, the 
question then arises as to how untransparent and ho w unpredictable the measure must be, and whether 
other criteria also have to be met.  The EC subm its that provided all the elements of the calculation 
are published, and if all of the data  used is publicly available, then the system is both transparent and 
predictable because an interested economic operator will be in a position to predict the nature of a 
change in the amount of the duties – where that  is necessary because a change is pending.  In 
particular, in the view of the EC, it is not necessa ry that transparency extend to why a particular 
market has been chosen to calculate representative pr ices, provided it is clear what prices are to be 
used. 
13. Both Argentina and Brazil make a great deal of an alleged "disconnect" between domestic 
Chilean and international prices.  The Appellate Body  never explicitly addressed the weight, if any, to 
be given to this issue.  In the view of the EC, the Panel should be very cau tious in approaching this 
issue.  It is a feature of tariffs to soften the im pact of, or disconnect international prices from domestic 
markets.  This is the effect of  any tariff, whether specific or ad valorem .  The extent of the softening 
or disconnect varies from case to case.  Further, the ex tent of the softening can be adjusted, either by 
varying an applied tariff within the limits of bindings or even by undertaking Article XXVIII 
negotiations.  So, in the view of the EC, decisive  weight cannot be given to the existence of any 
disconnect or softening in assessing consistency with Ar ticle 4.2, since the extent of such a disconnect 
or softening will always be a relative analysis.  For these reasons, the EC suggests that extreme 
caution be used in analysing this issue. 
14. In terms of conclusion on Article 4.2, the EC  would like to stress than in its view, for a 
measure similar to a measure listed in the footnote of Article 4.2 to exist, the measure must exhibit all 
of the features identified by the Appellate Body in the original dispute. That is, any duty must vary 
continuously and automatically, but in additi on, the measure must lack transparency and 
predictability.  In the view of the EC it is not necessary that a measure e xplain why certain choices 
have been made, provided those choices are clearly made public and are predictable.  Finally, the EC 
is far from convinced that the question of the alle ged disconnect between international and domestic 
price should be given anywhere near the importance it appears to have been given by Argentina.   
III. SCOPE OF ARTICLE 21.5 PROCEEDINGS 
15. A first observation of the EC in relation to th e issues at stake under this section is that the 
parties do not dispute the fact that the revised pri ce band system is a "new measure". The core of the 
claims on the nature of this new measure is whethe r it is, as the previous PBS was determined to be, a 
"similar border measure" inconsis tent with Article 4.2 of the Agreement on Agriculture . In this 
respect, the revised PBS may also be seen as similar to the original one, but it is both formally and 
substantially different, and this seems undisputed.  
16. On this basis, the EC generally holds the view th at the mere fact that the measure is a new one 
globally entails the emergence of new factual circ umstances and thus a broad right to bring new 
claims against the new measure in all its elements , irrespective of the fact that a new claim may 
concern an aspect or element of the new measure which was taken over from the previous regulatory 
framework without any formal change, provided, of cour se,  that this element is part of "the measure 
taken to comply".  
17. What is important then is that the new factual a nd legal contexts will, as a matter of principle, 
provoke a change in the factual circumstances – "t he relevant facts" - on the basis of which the 
conformity or not of the new measure with an y provision of the covered agreements should be 
analysed. Both parties have referred to the Appellate Body report in the EC-Bed Linen  (Art 21.5 WT/DS207/RW 
Page E-16  
 
  India) case, where indeed this right for a complainan t in Article 21.5 proceedings to raise new claims, 
arguments and factual circumstances different from those raised in the original proceedings is 
acknowledged
5.  
18. Whether the invocation by Argentina of the 1.56 conversion factor is to  be construed as a new 
argument or as a new claim, the factual circumstan ces of its operation have changed with the adoption 
of the revised PBS, and thus the examination of its  effect on the conformity of the revised PBS with 
Article 4.2 of the Agreement on Agriculture  should fall within the terms of reference of this Panel.  
19. As regard the claim made by Argentina relati ng to the second sentence of Article II:1(b) of 
the GATT, and in the view of the EC, what counts in this context is again the fact that the new 
measure (the revised PBS) has created a new set of regulatory and factual circumstances which imply 
that the claim is new insofar that it is directed against a different set of measures under a different set 
of "relevant facts". Therefore, the fact that a si milar claim may have been brought against a similar 
measure in the original dispute should be held as irrelevant.  
20. Further, the EC contends that in any case, it is not a claim from the original dispute where 
Argentina would have "failed to establish a prima faci e case", pursuant to the standard retained by the 
Appellate Body in the EC – Bed Linen  (Article 21.5 India)6 and therefore the right to bring such a 
claim should not be excluded on the basis of such a precedent.  Nevertheless, since the EC believes 
that the PBS system should be considered an ordi nary customs duty, the EC has some difficulty in 
identifying a substantive breach of th e second sentence of Article II:1(b). 
IV. CONCLUSION  
21. Mr. Chairman, Distinguished Members of the Panel,  the EC is grateful for this opportunity to 
present its views and trusts they will be taken into  account as you draw your own conclusions in this 
dispute.  The EC will, of course, be happy to an swer any questions which you may have.  Thank you. 
 
                                                      
5 See para. 79 of the Appellate Body's report. 
6 Para. 96.  WT/DS207/RW 
 Page E-17 
 
 
  ANNEX E-6 
 
ORAL STATEMENT BY THAILAND 
(2 AUGUST 2006) 
  
I. INTRODUCTION 
 
Mr. Chairman and Members of the Panel,  
1. Thailand appreciates the opportunity to particip ate in this proceeding and to present its views 
on this matter to the Panel today.    
II. COMMENTS 
 
2. Thailand believes that the task before this Panel is simple and straightforward.  As the 
Appellate Body expressed in Canada – Measures Affecting the Ex port of Civilian Aircraft, Recourse 
by Brazil to Article 21.5 of the DSU  (DS70), the standard for an Article 21.5 panel is to examine 
whether a revised measure is in conformity with WTO rules.
1  The Appellate Body subsequently 
refined this standard in United States – Final Countervailing Duty Determination with respect to 
Certain Softwood Lumber from Canada, Recourse by Canada to Article 21.5 of the DSU  (DS257), 
emphasizing the express link contained in Article 21. 5 between "measures taken to comply" and the 
recommendations and rulings of the Dispute Settlement Body (DSB).2    
 3. Therefore, the task before you is to examin e the WTO-consistency of the revised price band 
measures taken by Chile taking into account the DS B recommendations and rulings in the original 
dispute.   
 4. In that dispute, both the Panel and the Appe llate Body found that Chile's price band system 
was inconsistent with Article 4.2 of the Ag reement on Agriculture and made simple and 
straightforward recommendations and rulings:  Chile must bring its price band system into conformity 
with Article 4.2 of the Agreement on Agriculture, which requires Members to not "maintain . . . any 
measures of the kind which have been required to be converted into ordinary customs duties."
3  In this 
regard, the Appellate Body found Ch ile's price band system to be a border measure of such kind, and 
in particular,  similar to, inter alia , a variable import levy.4  The Appellate Body further found that the 
right of WTO Members to maintain such a measure,  including that of Chile, ended from the date of 
entry into force of the WTO Agreement.5 
 
Mr. Chairman and Members of the Panel,   5. Chile claims to have ended its WTO-inconsis tent price band system through the instigation of 
Law No. 19.897 of 2003.  This new law introduces some changes to Chile's price band system.  For 
example, it narrows the scope of the system by excl uding edible vegetable oils, it establishes the price 
                                                     
 
1 Appellate Body Report, Canada – Measures Affecting the Export  of Civilian Aircraft, Recourse by 
Brazil to Article 21.5 of the DSU , WT/DS70/AB/R, paras. 36 and 41.  
2 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/R, 
para. 68. 
3 Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain 
Agricultural Products , WT/DS207/AB/R, paras. 288-289. 
4 Ibid, paragraph 238. 
5 Ibid, paragraph 212. WT/DS207/RW 
Page E-18  
 
  band's floor and ceiling prices for 11 years (albeit with annual adjustments) as opposed to on an 
annual basis, and it determines the reference pri ce on a bi-monthly basis instead of a weekly one.
6   
 6. However, Thailand is of the view that d espite these changes, the WTO-inconsistent price 
band system is well and alive.  As Argentina has clearly demonstrated, the fundamental elements of 
the illegal system remain in place.  Firstly, the to tal duties applicable still comprise ad valorem and 
specific duties, like its predecessor.  Secondly, the calculation of the specific duty still involves the 
comparison of the floor and ceiling of the price band to  a reference price, all of which are determined 
in a non-transparent manner (albeit on a less freque nt basis).  Thirdly, because duties under the new 
system continue to vary depending on price fl uctuations, under Law No. 19.897 of 2003 Chile still 
maintains a variable import levy prohibited by Article  4.2 of the Agreement on Agriculture.  In effect, 
Chile's maintenance of the price band system r esulting in a variable import levy undermines an 
essential goal of the Agreement on Agriculture, namely , to ensure that market access commitments on 
agricultural products are secure, transp arent and predictable for traders. 
 
7. Thailand will not examine in detail the precise elements or formula of Chile's new price band 
system to demonstrate that it is a variable impor t levy.  We consider that Argentina has already 
undertaken a thorough and comprehensive analysis in this regard.   We also take no view on other 
issues subject to the review of this Panel.   Su ffice it to say that Thailand fully supports Argentina's 
assertion that Chile's implementing measures fail to bring it into compliance because they maintain a 
price band system in violation of Chile's obligati ons under the Agreement on Agriculture in much the 
same way as their predecessor did.  
 
III. RECOMMENDATION 
 
Mr. Chairman and Members of the Panel,  
 
8. Article 11 of the DSU provides that one of the functions of panels is to make findings that will assist the DSB in making recommendations.  In addition, DSU Article 3.7 establishes that "the 
aim of the dispute settlement mechanism is to secure a positive solution to a dispute".  In light of these 
provisions, and to avoid infinite compliance proce dures, Thailand strongly believes that this Panel 
should find that any price band system resulting in the application of customs duties that vary 
depending on the fluctuations of internationa l prices constitutes a mechanism leading to the 
imposition of variable import levies, a border measur e that is prohibited under Article 4.2 of the 
Agriculture Agreement.  Thailand thus believes th at this Panel should recommend Chile to withdraw 
its price band system in order to act consistently  with the covered agreements, to implement the DSB 
recommendations and rulings in the original dispute, and to provide a positive solution to this dispute. 
 
IV. CONCLUSION 
 
9. Thailand hopes that these views will assist th e Panel in considering the issues brought before 
it.  Again, we thank you for this opportunity to appear before you today.  
                                                     
 
6 First Written Submission of Argentina, 19  April 2006, paras. 8, 33, and 38.   WT/DS207/RW 
 Page E-19 
 
 
  ANNEX E-7 
 
ORAL STATEMENT BY THE UNITED STATES 
(2 AUGUST 2006) 
  
1. Mr. Chairman and Members of the Panel, the United States is pleased to present its views as a 
third party in this Article 21.5 proceeding.   
2. As the Panel knows, the United States was not in  a position to make written submissions prior 
to this meeting.  As a result, our statement toda y is effectively our only opportunity to present our 
views to the Panel, and it is therefore longer than it might otherwise have been.  We thank the Panel 
and the other delegations present today, in a dvance, for their attention to these comments. 
3. This proceeding concerns the modifications that  Chile has made to its price band system, a 
measure found to have been incons istent with Article 4.2 of the Agreement on Agriculture .
1  
Argentina argues that the modified system is incons istent, as such and as applied to imports of wheat 
and wheat flour, with three WTO provisions: (1) Article 4.2 of the Agreement on Agriculture ; (2) the 
second sentence of Article II:1(b) of the General Agreement on Tariffs and Trade 1994  ("GATT 
1994"); (3) and Article XVI:4 of the Marrakesh Agreement Establishing the World Trade 
Organization .2  The United States would like to offer some observations today on the first two of 
these claims.  As for the third claim, we note simply that it is a derivative claim dependent upon a finding of inconsistency on the basis of one or both of the first two claims. 
Article 4.2 of the Agreement on Agriculture
 
 1. The Proper Interpretive Approach 
 
4. In this proceeding, as in the or iginal, the central question rai sed by Argentina's Article 4.2 
claim is whether the measure at issue is "similar" to a "variable import levy" or "minimum import 
price."  Interpretation of the terms "variable impor t levy" and "minimum import price" is key to the 
resolution of the question presented.  Pursuant to Article 3.2 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU"), and as the Appellate Body explained in 
the original proceeding, these terms must be interpre ted using the customary rules of interpretation of 
public international law,3 in particular, according to their ordina ry meaning, in their context, and in 
the light of the object and purpose of the WTO agreements.  
5. The United States thus cannot support Chile's asser tion that, in the absence of any definition 
for the terms "variable import levy and/or a minimum import price, the point of departure can only be 
that indicated by the Panel and the Appellate Body with respect to the elements which make up such 
measures."4  It is of course correct that the issue befo re this compliance Panel involves the findings of 
                                                      
1 See Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain 
Agricultural Products , WT/DS207/R, adopted as modified 23 Octobe r 2002, para. 8.1(a) (hereinafter "Panel 
Report"); Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain 
Agricultural Products , WT/DS207/AB/R, adopted as modified 23 Oc tober 2002, para. 288(c)(iii) (hereinafter 
"Appellate Body Report"). 
2 Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products: 
Recourse by Argentina to Article 21.5 , First Written Submission by Argentina, para. 2 (19 April 2006) 
(hereinafter "Argentina First Written Submission") 
3 Appellate Body Report, para. 231. 
4 Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products: 
Recourse by Argentina to Article 21.5 , Chile Rebuttal Submission, para. 4 (24 May 2006) (hereinafter "Chile 
Rebuttal Submission") (emphasis added). WT/DS207/RW 
Page E-20  
 
  the Panel and Appellate Body in the original pro ceeding, because Article 21.5 of the DSU concerns 
the existence or consistency w ith a covered agreement of measures taken to comply with the 
recommendations and rulings of the Dispute Settlement  Body.  However, the Appellate Body has also 
explained, in the Canada – Aircraft  Article 21.5 proceeding, that "t he claims, arguments and factual 
circumstances which are pertinent to the 'measure taken to comply' will not, necessarily, be the same 
as those which were pertinent in the original dispute."
5 
6. Chile's argument appears to be that: (a) in the original proceeding, the Appellate Body 
identified only "specific (and thus limited) features"6 of the price band system as being the 
"fundamental and central aspects" that "made the [sys tem] a measure similar to a variable import levy 
or minimum import price;"7 and (b) "Chile dealt with those 'certa in features' identified, analysed and 
questioned by the Appellate Body."8  
7. The United States disagrees with Chile's premi se (a).  To the contrary, the Appellate Body 
expressly rejected any attempt to assess the WTO-consistency of  the original price band system based 
on whether it shared characteristics of a "fundame ntal" nature with variable import levies and 
minimum import prices.9  According to the Appellate Body: "[t]his merely complicates matters, 
because it raises the question of how to distinguis h 'fundamental' characteristics with those of a less 
than 'fundamental' nature."10 
8. The Appellate Body endorsed, instead, a comp rehensive analysis, using as the point of 
departure the ordinary meaning of the terms "variable import levies" and "minimum import prices" in their context, and in light of the object and purpose of the WTO agreements.
11  The Appellate Body's 
analysis resulted in a finding that though there we re "some dissimilarities between Chile's price band 
system and the features of 'minimum im port prices' and 'variable import levies' ... the way Chile's 
system is designed, and the way it operates in its overall nature , are sufficiently 'similar' to the 
features of both those two categories of prohibited measures to make Chile's price band system – in its particular features – a 'similar border measure' w ithin the meaning of footnote 1 to Article 4.2."
12 
9. An assessment of the modified measure in th is Article 21.5 proceeding requires the same  
comparison of the price band system, as it is desi gned and as it operates in its overall nature, to 
variable import levies and minimum import prices.  It is not sufficient merely to compare the original and modified price band systems to determine whet her Chile has addressed the "certain features" of 
the former that allegedly are "fundamental." 
 2. The Modified Price Band System Appe ars to be "Similar" To A Variable Import 
Levy and a Minimum Import Price Within  the Meaning of Article 4.2 of the 
Agreement on Agriculture 
 
10. Although Chile asserts that it has changed the pr ice band system in such a way as to render it 
WTO-consistent, it appears that Chile's modified  price band mechanism continues to vary the 
applicable duty based on the difference between a floor  price and a calculated reference price.  Chile 
appears just to have modified so mewhat the way in which those parameters are determined.  The price 
band system with these modifications would therefore still appear to be a measure similar to variable 
                                                     
 
5 Appellate Body Report, Canada – Measures Affecting the Export  of Civilian Aircraft: Recourse by 
Brazil to Article 21.5 of the DSU , WT/DS70/AB/RW, adopted 4 August 2000, para. 41. 
6 Chile Rebuttal Submission, para. 19. 
7 Chile Rebuttal Submission, para. 28. 
8 Chile Rebuttal Submission, para. 6. 
9 Appellate Body Report, para. 226. 
10 Appellate Body Report, para. 226 (emphasis in original). 
11 Appellate Body Report, para. 232. 
12 Appellate Body Report, para. 252 (emphasis added).  WT/DS207/RW 
 Page E-21 
 
 
  import levies and minimum import prices within the meaning of footnote 1 to Article 4.2 of the 
Agreement on Agriculture .  
  ( a) Variable Import Levy 
 11. Examining the ordinary meaning of the term "var iable import lev[y]" in light of its context, 
and the object and purpose of the agreements, th e Appellate Body explained that a "variable import 
levy" is a "duty, tax, charge or other exaction"  "assessed upon importation" that is "liable to vary."
13  
Further, given the context in which the term is used  in footnote 1 of Article 4.2, the Appellate Body 
clarified that the variability must be intrinsic to  the measure itself, for example, because of the 
incorporation into the measure of a "scheme or fo rmula that causes and ensures that levies change 
automatically and continuously."14  Apart from these elements, the Appellate Body noted that a 
common feature of variable import levies is "a lack of transparency and lack of predictability in the 
level of duties that will result from such measures."15  The Appellate Body indicated that a measure 
"similar" to variable import levies would also share that feature.16   
12. Chile's modified price band system would appear to be a measure similar to variable import 
levies under this reasoning.  The price band duty under the modified system is a "duty, tax, charge or 
other exaction" "assessed upon importation."  Moreover, Chile's Law No. 19.897 sets out a formula that must be applied by the Chilean Executive every two months to establish a new amount of duty under the price band system.  In the case of wheat, this duty is the (positive) difference between a 
reference price and the floor price "multiplied by a factor of one (1), plus the general ad valorem  duty 
in force" for wheat.
17  In the case of wheat flour, it is the dut y determined using the formula for wheat 
multiplied by a factor of 1.56.18  The price band duty is, thus, "liable to vary" because of an intrinsic 
"formula that causes and ensures that levies change automatically and continuously."  
13. Chile has argued that the price band duty h as ceased varying "continuously" because it now 
changes once every two months, rather than once ever y week as it did under the original price band 
system.  We cannot discern, nor has Chile identified,  a basis for such a distinction to be drawn.  
14. Similarly, the fact that Chile has added a ne w administrative requirement that the Chilean 
Executive publish the amount of the price band duty in  a Ministry of Finance Decree at the start of 
every two-month period does not alter the conclusion  that the price band duty varies "automatically" 
because of the formula set out in Law No. 19.897 .  Chile correctly notes the Appellate Body's 
clarification that "[t]o vary the a pplied rate of duty in the case of ordinary customs duties will always 
require separate  legislative or administrative action, whereas the ordinary meaning of the term 
'variable' implies that no such action is required."19  However, it is not clear how simply interjecting a 
layer of clerical tasks could break the link between the formula established as part of the price band system and the level of the duties automatically calculated through its application. 
15. As for the Appellate Body's observation that a common feature of variable import levies is "a 
lack of transparency and lack of predictability in the level of duties that will result from such 
measures, "
20 we note that it is not just any "lack of transparency" and "lack of predictability" that is of 
                                                      
13 Appellate Body Report, paras. 232-233. 
14 Appellate Body Report, paras. 233. 
15 Appellate Body Report, para. 234 (emphasis added). 
16 Appellate Body Report, paras. 234 and 246-252. 
17 Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products: 
Recourse by Argentina to Article 21.5 , First Written Submission by Chile, para. 17 (3 May 2006) (hereinafter 
"Chile First Written Submission") 
18 Chile First Written Submission, para. 17. 
19 See Chile Rebuttal Submission, para. 100 (quoting Appellate Body Report, para. 233) 
20 Appellate Body Report, para. 234 (emphasis added). WT/DS207/RW 
Page E-22  
 
  concern.  Rather, it is a "lack of transparency" or "l ack of predictability" rega rding "the level of duties 
that will result from such measures."  It is not clear to us that this aspect of  "transparency" is being 
addressed in the debate between the parties on issues of transparency relating to other aspects of the 
price band system. 
16. When one looks at Chile's modified price band system and variable import levies from the 
standpoint of an exporter, the measures do seem to be similar in the lack of transparency and 
predictability in the level of the duties resulting fro m their application.  In both cases, the lack of 
transparency and predictability results from the complex nature of the mechanism applied to 
determine the level of the duties and the fact that it may be difficult to ascertain – if not impossible to know ahead of time – all of the elements necess ary to determine the precise level of duties. 
17. To illustrate, consider the fact that to determin e the level of the duty under Chile's modified 
price band system, it is necessary to know the referen ce price that will be compared to the price band 
threshold.  The reference price consists of "the  average of the daily international wheat prices 
recorded in the markets most relevant to Chile over a period of 15 calendar days counted backwards 
from the [bi-monthly] date set out in Regulati on No. 831 for each decree establishing specific 
duties."
21  Unless an exporter sells, ships, and lands the shipment within the current two-month 
window – which would be unusual, according to Argentina, as a " majority  of sales are made under 
forward contracts"22 – the exporter will simply not know the level of the duty that will apply to its 
exports.23 
18. Chile attempts to minimize this result by arguing that wheat traders could use futures 
contracts prices and their "own skills in predictin g prices" to try to determine what the reference 
prices might be in the future.24  The same assertion, however, could be made about variable import 
levies – and yet, all agree that those measures are within the ambit of Article 4.2 of the  Agreement on 
Agriculture .  The United States submits that the question is  not whether a trader can attempt to make 
an educated guess as to what the level of the duty might be.  Rather, the question is whether a trader 
can " know and ... reasonably predict  what the amount of duties will be" in much the same way as if an 
ordinary customs duty were in place.25  As the Appellate Body explai ned, in the absence of that kind 
of transparency and predictability about the level of the duties, there is a dange r that exporters will not 
ship to the market in question, which will impede  the transmission of international prices to the 
domestic market.26 
  ( b) Minimum Import Price 
 
19. Turning next to the question of whether the modified price band system is similar to a 
minimum import price, it would appear that there has been little change to the price band system that would make it any less similar to a minimum import price now than it was before.  
20. Chile asserts that "minimum import price schem es generally operate in relation to the actual 
transaction value of ... imports."
27  However, neither the original price band system nor the modified 
system calculates duties by reference to actual tran saction prices.  Rather, both use as the reference 
price the price for a certain quality of wheat in the foreign "markets of concern."  Chile argues that 
because "the reference price [in the modified price band system] has nothing to do with the 
                                                      
21 Chile First Written Submission, para. 30. 
22 Argentina First Written Submission, para. 275 (emphasis in original). 
23 Argentina First Written Submission, para. 275. 
24 Chile First Written Submission, paras. 158-163. 
25 Appellate Body Report, para. 234 (emphasis added). 
26 Appellate Body Report, para. 234. 
27 Chile Rebuttal Submission, para. 139.  WT/DS207/RW 
 Page E-23 
 
 
  transaction value" the system is "neither a minimum import price nor similar to one."28  However, this 
distinction did not preclude a finding of "similarity" in the original proceeding,29 and it is not clear 
why it would do so now. 
21. We also question whether the analysis of similarity to a minimum import price system is 
affected by the fact that the price band threshol ds are expressed in Law No. 19.589 in "FOB terms," 
rather than as a "minimum import price," "a CIF price," or "an entry price."30  If so, a Member could 
avoid the obligations of Article 4.2 of the Agreement on Agriculture by maintaining a minimum 
import price (or a measure similar to one) and simp ly labelling the threshold price as something other 
than a "minimum import price," "a CIF price," or "an entry price." 
(c) "Sustaining" an entry price, int ernal price, or an administratively 
determined price above the domestic price 
 
22. Finally, Chile makes a general argument rega rding the alleged "fundamental characteristics" 
of variable import levies and minimum import prices that we would like to address.  Specifically, Chile argues that a "fundamental characteristic" of these measures is the intent "to sustain a price and 
that that price is measured as an entry price, as an in ternal price, as a value linked to the internal price, 
or as an administratively determined pri ce which is above the domestic price."
31  Chile cites, as the 
basis for this assertion, a listing of "fundamental characteristics of variable import levies and minimum import price" from the Panel Report in the original proceeding, which the Panel said it had "distilled from the pre-Uruguay Round notificati ons and examination thereof by the GATT 
Contracting Parties."
32   
23. Chile argues that since the two prices compar ed to determine the price band duty – the 
modified floor and reference price – are not the ex act same as the ones used in the case of variable 
import levies and minimum import prices according to th e Panel's list, "the current parameters do not 
possess any of the fundamental characteristics whic h the WTO itself has defined and discussed for" 
those two categories of measures."33  Chile concludes that, "[t]herefore, the Chilean system 
established by Law 19.897 and its Regulations is  not inconsistent with ... Article 4.2."34 
24. We note that the Appellate Body agreed with  the arguments that Chile advanced in the 
original proceeding, that it is not useful to endor se certain characteristics "a s being of a 'fundamental' 
nature."35  Instead of endorsing the kind of assessment  that Chile is now urging of "fundamental 
characteristics," the Appellate Body conducted an anal ysis involving an examination of the ordinary 
meaning of the terms "variable import levy" and "minim um import price" in their context, and in light 
of the object and purpose of the agreements.36  There is no reason why the same approach should not 
be used here. 
Article II:1(b) of the GATT 1994  
 
25. The Appellate Body has explained that, if the pr ice band system is found to be inconsistent 
with Article 4.2 of the Agreement on Agriculture , it is not necessary to consider whether the price 
band system also results in a breach of Article II:1(b) of the GATT 1994.  "This is because a finding 
                                                      
28 Chile Rebuttal Submission, para. 160. 
29 Appellate Body Report, para. 248, 252. 
30 Chile Rebuttal Submission, para. 140. 
31 Chile Rebuttal Submission, para. 117. 
32 Panel Report, para. 7.37-7.37. 
33 Chile Rebuttal Submission, para. 123. 
34 Chile Rebuttal Submission, para. 123. 
35 Appellate Body Report, para. 230. 
36 Appellate Body Report, para. 231. WT/DS207/RW 
Page E-24  
 
  that Chile's price band system as such is a measure prohibited by Article 4.2 would mean that the 
duties resulting from the application of that price band system could no longer be levied —no matter 
what the level of those duties may be.  Without a price band system, there could be no price band duties."
37  Applying this reasoning, we believe that th is Panel can properly end its analysis in this 
proceeding with a finding under Article 4.2 of the Agreement on Agriculture . 
* * * * * 
 26. This concludes the oral statement of the United States.  Thank you for your attention. 
 
 
                                                     
 
37 Appellate Body Report, para. 190.