DOMINICAN REPUBLIC – MEASURES AFFECTING THE IMPORTATION AND INTERNAL SALE OF CIGARETTES
Document: Request for the Establishment of a Panel by Honduras
Date: 9 December 2003
Document codes: WT/DS302/5
Complainant: Honduras
Respondent: Dominican
Third parties: Chile, China, EU, El Salvador, Guatemala, Nicaragua, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. III:2, III:4, X:3(a), X:1, II:1, XI:1, XV  GATT 1994

DOMINICAN REPUBLIC – MEASURES AFFECTING THE IMPORTATION
AND INTERNAL SALE OF CIGARETTES

Request for the Establishment of a Panel by Honduras

 The following communication, dated 8 December 2003, from the Delegation of Honduras to
the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 On 8 October 2003, Honduras requested consu ltations with the Dominican Republic pursuant
to Article 4 of the Understanding on Rules and Pr ocedures Governing the Settlement of Disputes
(DSU) and Article XXII:1 of the General Ag reement on Tariffs and Trade 1994 (the GATT)
concerning certain measures by the Dominican Repub lic affecting the importation and internal sale of
cigarettes. This request was circulated to Members on 13 October 2003 in Document ,
 The Dominican Republic and Honduras held consultations in Geneva on 4 November 2003
with a view to reaching a mutually satisfactory soluti on to this issue. Unfortunately, the consultations
failed to settle the dispute.

 The specific measures at i ssue which are of concern to Honduras are the following:

1. The Dominican Republic applies special rules, procedures and administrative practices to
determine the value of imported cigarettes for the purpose of applying the Selective Consumption Tax
in accordance with Article 367 of its Tax Code, Article 3 of Decree 79-03 - Regulations Governing
the Application of Title IV of the Tax Code (the Regulations), and Article I of General Rule 02-96. In
certain instances the value of imported cigarettes is c onsidered to be equal to the value of the "nearest
similar" product in the domestic market. Honduras considers that these special rules, procedures and
administrative practices discriminate against imported cigarettes and therefore violate Article III:2 and
Article III:4 of the GATT. Honduras further cons iders that the failure to establish and apply
transparent and generally applicable criteria for determining the value of imported cigarettes, in
particular the failure to establish and apply such cr iteria for the identification of the "nearest similar"
product in the domestic market, cannot be reconciled with the requirements set out in Article X:3(a)
of the GATT.
2. The Dominican Republic does not publish the surveys conducted by the Central Bank that are
to be used according to Article 367 of the Tax Code and Article 3 of the Regul ations to determine the
value of cigarettes for the purpose of applying th e Selective Consumption Tax. Honduras considers
that the failure to publish the surveys is inconsistent with Article X:1 of the GATT.
3. The Dominican Republic accords conditions of competition to imported cigarettes that are
less favourable than those accorded to domestic cigarettes by requiring, pursuant to Article 37 of the
Regulations, Articles 1-3 of Decr ee 130-02 and Article 3 of Law 858 as amended or corrected by

Laws 190 and 368, that stamps be affixed to cigarette packages in the territory of the Dominican
Republic. Honduras considers that this requirement and the related administrative practices violate
Article III:4 of the GATT.
4. The Dominican Republic requires importers of cigarettes to post a bond pursuant to Article 14
of the Regulations. This requirement and the laws, regulations and practices implementing this
requirement entail costs and administrative burdens hindering the importation of cigarettes and are
therefore in the view of Honduras inconsistent with Article II:1(a) and (b) and Article XI:1 of the
GATT, or - if they were deemed to be intern al measures - inconsistent with Article III:2 and
Article III:4 of the GATT.
5. The Dominican Republic levies a transitional surcharge for economic stabilization in
accordance with Decrees 646-03 and 693-03, a surcharge which currently amounts to 2 per cent of the
c.i.f. value of the imported goods. Honduras cons iders that the surcharg e constitutes a charge
imposed on or in connection with importation inconsistent with Article II:1(a) and (b) of the GATT.
6. The Dominican Republic levies a foreign excha nge fee in accordance with the Seventeenth
Resolution of the Monetary Board dated 24 January 1991 as amended, inter alia , by the First
Resolution of 27 September 2001, the First Resolutio n of 20 August 2002, and the First Resolution of
22 October 2003. The fee is currently 10 per cent "calculated on the value of the imports". Honduras
considers that this fee constitutes a charge impo sed on or in connection with importation which does
not meet the requirements laid down in Article II:1( a) and (b) of the GATT. Honduras also considers
that the fee constitutes an exchange action frustra ting the intent of the provisions of the GATT and
that it is therefore inconsistent with Article XV:4 of the GATT.
 In view of the above considerations, and in conformity with Articles 4.7 and 6 of the DSU
and Article XXIII:2 of the GATT, Honduras hereby re quests the Dispute Settlement Body to establish
a Panel to examine the matters set forth above.