RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/240 
23 November 2007 
 (07-5162) 
Dispute Settlement Body 
28 September 2007  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 28 September 2007  
 
Chairman:  Mr. Bruce Gosper (Australia) 
 
 
1. Colombia – Indicative prices and restrictions on ports of entry 
 
(a) Request for the establishment of a panel by Panama (WT/DS366/6) 
 1. The Chairman
 drew attention to the communicati on from Panama contained in document 
WT/DS366/6, and invited the repr esentative of Panama to speak. 
 
2. The representative of Panama  noted that his country's request for the establishment of a panel, 
concerning indicative prices and restrictions on port s of entry imposed by Colombia, with respect to 
the importation of goods from Panama, was the only ite m on the agenda of the present meeting.  Since 
June 2005, Panama had been encountering serious  problems of access to Colombia's market as a 
result of the entry into force of a series of cust oms measures affecting goods from, or originating in, 
Panama.  This had had a negative impact on the country's export activities, particularly those 
conducted in its free trade area known as the Colon Free Zone.  The Colon Free Zone, located at the Atlantic entrance of the Panama Canal, was consid ered the second largest free zone in the world and 
the largest in the Western Hemisphere.  It was one of the world's most important and most dynamic trade hubs, accounting for more than 15 billion dollar s of trade a year and generating an average of 
11,000 direct jobs and 25,000 indir ect jobs.  It also accounted for some 8 per cent of the country's 
GDP and its commercial activities had helped to build  up a solid relationship with more than 50 WTO 
supplier Members across the world.  Ever since it ha d been created more than 55 years ago, the Colon 
Free Zone had acted as a focal point for the collection and distribution of goods from different suppliers throughout the world with, as a final des tination, the major markets of Latin America. 
3. As could be expected, Colombia's market was one  of the main destinations for the Colon Free 
Zone, and had been from the outset;  so that these measu res had directly affected the legal certainty of 
the re-exportation activities of national and intern ational suppliers with Colombia as a final 
destination.  Panama had been trying to solve this problem for two years now.  As of the middle of 2005, it had initiated diplomatic contacts with the Co lombian authorities with a view to organizing 
talks in order to find a solution.  At the same ti me, because these talks were stagnating, in early 2006 
the delegation of Panama had begun to express and explain its concern regarding these customs 
measures before the WTO Committee on Customs Valu ation and the Council for Trade in Goods.  On 
15 September 2006, the first round of  consultations had taken place be tween Panama and Colombia at 
the WTO.  On 31 October, following a fruitful exch ange of views and considerable efforts by the 
authorities of the two countries, Colombia had agreed  to put an end to the customs restrictions by 
repealing all of the resolutions containing restrictive measures against Panama.  At the same time, as 
part of this arrangement, the customs authoriti es of the two countries had signed a Protocol of WT/DSB/M/240 
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  Cooperation and Exchange of Customs Information,  which had entered into force in November 2006 
in the framework of the Multilateral Conventio n on Cooperation and Mutual Assistance between 
Customs Administrations of Latin America, Spain and Portugal, the purpose of which was to institutionalize mutual cooperation and assistance, mainly  with a view to the prevention, investigation 
and repression of customs offences between Panama and Colombia. 
4. Since the measures had been repealed, and following the conclusion of the Protocol, on 
1 December 2006 Panama had notified the DSB that  the parties had reached a mutually agreed 
solution under Article 3.6 of the DSU.  In conn ection with the Convention on Customs Cooperation 
between Colombia and Panama, evaluation meetings had been held, and a num ber of conclusions had 
been reached, which his delegation wished to high light now.  At a first meeting on 12 February 2007, 
the Director of National Customs of Colombia and th e Director of Customs of Panama had stated that 
"the two parties were pleased with the success of th e Protocol in force since November 2006" and that 
"any measure of a restrictive nature was unnecessary,  since the discussions between the parties had 
clarified the levels of compliance achieved by bot h Panama and Colombia through this Protocol" (see 
the introductory paragraph and pa ragraph 4 of the Records of the Evaluation of the Protocol of 
Cooperation and Exchange of Customs Information concluded on 12 February 2007, of which a copy 
had been made available to Members). 
5. In April 2007, reaffirming these positive results, the Foreign Ministers of Colombia and 
Panama (in the framework of the Good Neighbourli ness Commission), in the presence of the highest 
customs authorities from both countries, had noted th at "the results obtained to date have permitted 
the DIAN (National Customs and Excise Directorate)  and other supervisory bodies to carry out their 
investigations successfully, improve risk profiles and correct distortions in the national market ... " 
(Records of the Good Neighbourliness Commission, paragr aph 3.1.1).  And yet, eight months after the 
repeal of the measures, with a customs convention in force, and following two evaluation meetings 
that highlighted the success of the customs coope ration between Colombia and Panama – which had 
enabled Colombia to overcome the customs problems it was facing – Colombia had decided, entirely 
unexpectedly and unilaterally, to ignore the solution th at had been mutually agreed with Panama in 
the WTO, and to reintroduce measures with similar effects to those initially challenged by Panama in 
2006, which Colombia had eliminated.  Highly con cerned by this development, on 12 July 2007, 
Panama had once again requested consultations, which had produced no satisfactory solution.  
Consequently, Panama had no choice but to turn to  the DSB for a decision that would enable it to 
resolve, once and for all, a situation that was se riously undermining the advantages for Panama of the 
GATT 1994 and of the Agreement on Customs Valu ation and hence the competitiveness of its 
logistical re-exportation centre. 
6. Finally, his delegation wished to explain very br iefly the nature of the restrictions imposed by 
Colombia's customs authorities.  Colombia had in troduced a series of internal measures aimed at 
establishing what it had called indicative prices for certain goods that originated in and/or were 
imported from Panama, for the purpose of collecti ng customs duties and internal taxes.  These 
indicative prices were applied to specific goods fro m all countries except those which had concluded 
free trade agreements with Colombia, obliging impor ters of certain goods to pay customs duties and 
other duties and taxes on the basis of arbitrary or fictitious prices rather than their transaction value, 
making it a measure which, in Panama's view, was not uniform, impartia l and reasonable, or 
consistent with the valuation met hods set forth in Article VII of the GATT 1994 and in the Agreement 
on Customs Valuation.  At the same time, owing to the way in which the import regime based on 
indicative prices was administered, the establishment of those prices did not reflect uniform, impartial 
or reasonable criteria and procedures.  The same was true for implementation, which could have 
unreasonable consequences for impor ters:  for example, when the transaction value presented was 
below the indicative price, if the importer did not co rrect the declared value to reflect the indicative 
price, the imported goods were liable to be declared  in legal abandonment and to end up in the hands 
of the State.  Panama also considered the measur e to be inconsistent with Article X:3(a) of the  WT/DSB/M/240 
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  GATT 1994.  Furthermore, by using a different tax base for imported products – subject to indicative 
prices – and for like national products, Colombia  was applying domestic tax regulations, which 
ensured less favourable treatment for imported produc ts than for like products of domestic origin, in 
violation of Article III:4 of the GATT 1994.  In any case, this difference in regulations resulted in the 
imposition of internal taxes on impor ted products in excess of those a pplied to like domestic products, 
in violation of Article III:2 of the GATT 1994.  Meanwhile, Colombia had also established 
restrictions on the use of ports by assigning cer tain points of entry into the country for goods 
classified under Chapters 15 to 64 (textiles and foot wear products) from or originating in Panama.  In 
practice that meant that the goods in question must  be imported through two designated ports only:  
the Special Administration for Customs Service in Bogota and the Special Customs Administration in 
Barranquilla.  Moreover, there were other discrimin atory provisions that applied only to goods from 
Panama, such as the obligation to present import d eclarations for such products in advance, and 
limitation of the possibility of presenting the legaliza tion declaration without payment of a rescue fee, 
in the case of corrections in declarations pertaining to textiles, only to situa tions where differences in 
weight or the width of the cloth did not exceed 7 per cent and 10 per cent respectively.  An importer 
that failed to comply with these requirements was subj ect to special procedures, including detention of 
goods.  This measure did not apply to goods from th ird countries entering Colombia directly.  Panama 
considered that these measures relating to ports of  entry were inconsistent with the obligations 
contained in Articles I, V, XI, and XIII of the GATT,  and that they provided to goods in transit from 
Panama to Colombia treatment less favourable than  that accorded to products transported directly 
from their place of origin, which was in violation of Article V:6 of the GATT 1994. 
7. The representative of Colombia  noted that Panama's request for the establishment of a panel 
was being submitted at the special DSB meeting.  She recalled that at the regular DSB meeting on 
25 September 2007, Colombia had stated its objection to this special DSB meeting, the convening of 
which, in Colombia's view, constituted a procedural  error.  Article 2.3 of the DSU was a general 
provision which did not prevail over a specific provision such as Article 6 of the DSU, which 
regulated the establishment of panels.  With regard  to Panama's request for the establishment of a 
panel, Colombia noted that, on 31 July 2007,  cons ultations had been held with Panama.  During those 
consultations, Colombia had had the opportunity to explain the scope of the measures challenged by 
Panama and their consistency with WTO rules.  In Colombia's view, this was a very useful meeting, 
in which answers had been provided to 31 quest ions raised beforehand by Panama without any 
objections being made to Colombia's replies.  Colo mbia believed that it was important that the parties 
to the dispute continued to work in the framework  of consultations.  For that reason, Colombia 
objected to the establishment of a panel at the present meeting. 
8. The DSB took note  of the statements and agreed  to revert to this matter. 
__________