COLOMBIA – MEASURES RELATING TO THE IMPORTATION OF TEXTILES, APPAREL AND FOOTWEAR RECOURSE TO ARTICLE 21.5 OF THE DSU BY PANAMA REQUEST FOR THE ESTABLISHMENT OF A PANEL
Document: Appellate Body Report
Date: 12 May 2017
Document codes: WT/DS461/22
Complainant: Panama
Respondent: Colombia
Third parties: Ecuador, El Salvador, EU, China, Guatemala, Honduras, U.S., Philippines
Dispute stage: Implementation & Compliance
Agreements cited: Art. II:1(b), II:1(a), VIII:1, X:3(a)  GATT 1994

COLOMBIA – MEASURES RELATING TO THE IMPORTATION
OF TEXTILES, APPAREL AND FOOTWEAR
RECOURSE TO ARTICLE 21.5 OF THE DSU BY PANAMA
REQUEST FOR THE ESTABLISHMENT OF A PANEL
The following communication, dated 10 May 2017, from the delegation of Panama to the
delegation of Colombia and the Chair person of the Dispute Settlement Body, is circulated in
accordance with Article 21.5 of the DSU.

On 22 June 2016, the Dispute Settlement Body (DSB) adopted the Appellate Body Report
and the Panel Report, as modified by the Appellate Body, in the case Colombia – Measures
Relating to the Importation of Textiles, Apparel and Footwear (Colombia – Textiles).1 The Panel
and the Appellate Body found that Colombia's compound tariff, contained in Decree
No. 456/20142, was inconsistent with Article II:1(a) and II:1(b), first sentence, of the General
Agreement on Tariffs and Trade 1994 ( GATT 1994 ), since in certain instances it exceeded the
bound tariff rates in Colombia's Schedule of Concessions for imports of texti les and footwear
classified in Chapters 61, 62, 63 and 643 of Colombia's Customs Tariff (Decree No. 4297/20114).
Consequently, the DSB recommended that Colombia bring the offending measure into conformity
with its obligations under the GATT 1994.5
Pursuant to Article 21.3(c) of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU), on 8 August 2016 Panama requested that the reasonable period of
time for compliance be determined through binding arbitration .6 During that arbitration, Colombia
stated that the implementation process would consist of the joint implementation of tariff
measures and anti-money laundering customs measures , to be implemented by issuing
"two 'mutually supportive decrees ' as part of the implementation pro cess".7 The Arbitrator
appointed in accordance with Article 21.3(c) of the DSU determined that the "reasonable period of
time in the present dispute should include the time needed to enact both the tariff measure and
the customs measure" 8, and granted Colo mbia a "reasonable period of time " for compliance of
seven months from the date of adoption of the Panel and Appellate Body reports .9 The reasonable

1 Dispute Settlement Body, minutes of the meeting held on 22 June 2016 (WT/DSB/M/380), para. 9.7.
See also Action by the Dispute Settlement Body, adoption of the Panel report, as modified by the
Appellate Body report, in Colombia – Textiles (WT/DS461/10).
2 Decree of the President of the Republic of Colombia No. 456 of 28 February 2014 "partially amending
the Customs Tariff" (Decree No. 456/2014).
3 Except for heading 64.06, but including tariff line 6406.10.00.00 (uppers).
4 Decree of the President of the Republic of Colombia No. 4927 of 26 December 2011, "adopting the
Customs Tariff and other provisions" (Decree No. 4297/2011).
5 Appellate Body report, Colombia – Textiles, para. 6.12.
6 Request by Panama for Arbitration Under Article 21.3(c) of the DSU (WT/DS461/11).
7 Award of the Arbitrator, Colombia – Textiles, (Article 21.3(c)), para. 3.34 (referring to Colombia's
submission, para. 29) (emphasis added).
8 Award of the Arbitrator, Colombia – Textiles, (Article 21.3(c)), para. 3.42.
9 Award of the Arbitrator, Colombia – Textiles, (Article 21.3(c)), para. 4.1.

period of time for compliance expired on 2 2 January 2017.10 Nevertheless, in Panama's view,
Colombia has thus far failed to comply with the DSB's recommendations and rulings.
On 2 November 2016, Colombia adopted two decrees that modify the tariff and customs
regime for the importation of textiles and footwear : ( i) Decre e No. 1744 of 2 November 2016
"partially modifying the Customs Tariff " ( Decree No. 1744/2016); a nd (ii) Decre e No. 1745
of 2 November 2016 " adopting measures for the prevention and control of customs fraud in
connection with imports of apparel and footwear" (Decree No. 1745/2016). The adoption of these
two decrees was recommended by the Committee on Customs, Tariffs and Foreign Trade of
Colombia at the same session , No. 299, of 7 October 2016.11 Moreover, both decrees refer
expressly to Decree No. 456/2014 containing the compound tariff found to be i nconsistent with
Colombia's WTO obligations.12
Panama is of the opinion that these amendments, far from bringing the measure into
conformity with Colombia's WTO obligations, perpetuate the nullification and impairment of
benefits accruing to Panama directly or indirectly under the GATT 1994.
On 9 March 2017, Panama requested consultations with Colombia under Article 21.5 and
Article 4 of the DSU, Article 19 of the Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1994 ( Customs Valuation Agreement), and Article XXII of the
GATT 1994 with respect to certain implementing measures resulting from the implementation of
the DSB's rulings and recommendations in this case.
The consultations took place in Geneva on 2 8 March 2017. Unfortunately, the y failed to
resolve the dispute . C onsequently, Panama requests the establi shment of a panel under
Article 21.5 of the DSU.
I. MEASURES IN DISPUTE
A. SECURITY FOR RELEASE OF GOODS
Decree No. 1745/2016 introduces special customs controls fo r the importation of apparel
and footwear classified in Chapters 61, 62 and 64 of Colombia's Customs Tariff when the declared
f.o.b. value of such products is less than or equal to the thresholds established in Article 3 of that
Decree.13 No expiry date has been set for Decree No. 1745/2016.

In order to guarantee the payment of such customs duties and penalties as may apply ,
Article 7 of Decree No. 1745/2016 provides that as a prerequisite for the release of the goods
referred to in Article 3 of the Decree, the importer shall furnish security in the form of "a specific
bank or insurance guarantee of 200% of the unit 'threshold' price established in [ ] Article [3],
multiplied by the quantity imported, for a period of three (3) years …" (hereinafter the security).

The same article also provides that "[s]hould the obligation to post a guarantee in a
valuation dispute coincide with the obligation mentioned in this article, the latter shall prevail and
the procedures provided for in the customs legislation governing the approval, control and
safekeeping of guarantees shall apply in determining the customs value of the imported goods and
the penalty".

10 Award of the Arbitrator, Colombia – Textiles, (Article 21.3(c)), para. 4.1.
11 See Recital 7 of the preamble to Decree No. 1745/2016 and Recital 2 of the preamble to Decree
No. 1744/2016.
12 The preamble to Decree No. 1745/2016 points out that "the customs measures set forth in this
Decree are applied to ensure continued compliance with the policy objective pursued by the measures
contained in Decree 456 of 2014 and the amendments thereto". (Recital 8 of the preamble to Decree
No. 1745/2016) (emphasis added). Similarly, the preamble to Decree No. 1744/2016 mentions that "bearing in
mind that the implementation period stipulated in Article 5 of Decree 456 of 2014, extended by Decrees 515
of 2016 and 1229 of 2016, expires on 1 November 2016, it is necessary to apply the exception provided for in
Article 2, paragraph 2 of Law 1609 of 2013, in order to ensure continued compliance with the policy objective
pursued by that measure". (Recital 3 of the preamble to Decree No. 1744/2016) (emphasis added).
13 Articles 2 and 3 of Decree No. 1745/2016.

Thus, the security has the following characteristics:

 Its purpose is to guarantee the payment of such customs duties and penalties as may
apply14;

 It applies to imports of apparel and footwear classified in Chapters 61, 62 and 64 of
Colombia's Customs Tariff when the declared f.o.b. value of such products is less than or
equal to the thresholds established in Article 3 of Decree 1745/201615;

 It consists of a specific bank or insurance guarantee of 200% of the corresponding unit
threshold price multiplied by the quantity imported, for a three-year period16;

 It prevails in case s where it coincides with the obligation t o post a guarantee in a
valuation dispute17; and

 It enters into force indefinitely as from 2 November 2016.18
Panama understands that this measure is contained in the following legislation:

(i) Decree No. 1745/2016; and
(ii) Decree No. 4297/2011 of 2 6 December 2011 as regards the definition of the products
covered by the nomenclature of Chapters 61, 62 and 64 of Colombia's Customs Tariff.
B. ENTRY RESTRICTED TO SPECIFIC PORTS OF ENTRY
Article 5 of Decree No. 1745/2016 provides that within ten days following the Decree's entry
into force, the National Customs and Excise Directorate (DIAN) shall announce the locations that
are authorized to import apparel and footwear classified in Chapters 61, 62 and 64 of Colombia's
Customs Tariff whose declared f.o.b. price is less than or equal to the thresholds established in
Article 3 of the Decree.19 No expiry date has been set for Decree No. 1745/2016.20

A DIAN Draft Resolution21 states that "the entry and importation of apparel and footwear
classified in Chapters 61, 62 and 64 of the Customs Tariff and listed in Article 3 of Decree 1745
of 2 November can only take place through public ports, airports and places of arrival located in
the jurisdiction of the Sectional Directorates of Buenaventura, Cartagena and Santa Marta".22

Panama understands that this measure is contained in the following legislation:

(i) Decree No. 1745/2016;
(ii) Decree No. 4297/2011 of 2 6 December 2011 as regards the definition of the products
covered by the nomenclature of Chapters 61, 62 and 64 of Colombia's Customs Tariff;
and

14 Article 7 of Decree No. 1745/2016.
15 Articles 2 and 3 of Decree No. 1745/2016.
16 Article 7 of Decree No. 1745/2016. Note that this article also states that "having provided a general
security or not having the obligation to do so shall not exempt the importer from the obligation mentioned
herein".
17 Article 7 of Decree No. 1745/2016.
18 Article 11 of Decree No. 1745/2016.
19 Articles 2 and 3 of Decree No. 1745/2016.
20 Article 11 of Decree No. 1745/2016.
21 DIAN Draft Resolution "adding a subparagraph to Article 39 of Resolution 4240 of 2000".
DIAN Resolution 4240 of 2 June 2000 regulates Decree 2685 of 28 December 1999 "amending the Customs
Legislation". Article 39 of Resolution 4240 refers to "restrictions on entry of goods".
22 See Article 1 of the DIAN Draft Resolution (emphasis added). Although Panama understands that the
DIAN did not issue the final resolution concerning the locations authorized to import the apparel and footwear
in question, the DIAN Draft Resolution confirms that the ports of entry for these goods are to be established.
As explained further on, Panama reserves the right to challenge the DIAN's final resolution on this matter as
well as any amendments, extensions or additions to this measure.

(iii) The DIAN Draft Resolution.23
c. CUSTOMS DUTY
Decree No. 1744/2016 introduces a new tariff regime for imports of apparel and footwear
classified in Chapters 61, 62 and 64 of Colombia's Customs Tariff when the declared f.o.b. value of
such products is less than or equal to the thresholds established in that Decree .24 In principle,
Decree No. 1744/2016 is valid for one year.25

Article 1 of Decree No. 1744/2016 establishes a tariff of 40% ad valorem for imports
classified in Chapters 61 and 62 of Col ombia's Customs Tariff whose declared f.o.b. price is less
than or equal to 10 US dollars per gross kilogram.

Article 2 of Decree No. 1744/2016 establishes a tariff of 35% ad valorem for
imports classified under the tariff headings of Chapter 64 of Colomb ia's Customs Tariff whose
declared f.o.b. price is less than or equal to the thresholds established in that article .26
The paragraph under Article 2 provides that imports classified under tariff heading 6406.10.00.00
(uppers) whose declared f.o.b. price is less than or equal to 5 US dollars per gross kilogram shall
be subject to a tariff of 35% ad valorem.

Article 3 of Decree No. 1744/2016 states that "products classified in Chapters 61, 62 and 64
of the Customs Tariff that are not subject to the tariff s set forth in Articles 1 and 2 of this Decree
shall be subject to the tariff provided for in Decree 4927 o f 2011 [Colombia's Customs Tariff] and
its amendments" .27 Certain goods are also exempted from the application of Decree
No. 1744/2016.28

Panama understands that this measure is contained in the following legislation:

(i) Decree No. 1744/2016; and
(ii) Decree No. 4297/2011 of 2 6 December 2011 as regards the determination of products
covered by the nomenclature of Chapters 61, 62 and 64 of Colombia's Customs Tariff.
D. CUSTOMS AND TARIFF RE GIME APPLICABLE TO G OODS WHOSE PRICES AR E LESS THAN OR EQUAL TO THE
 THRESHOLDS ESTABLISHED BY COLOMBIA
Decree No. 1745/2016 and Decree No. 1744/2016 constitute a new customs and tariff
regime applicable to imports of apparel and f ootwear classified in Chapters 61, 62 and 64 of
Colombia's Customs Tariff when the declared f.o.b. value of such products is less than or equal to
the thresholds established in those decrees.29

Under this regime, importers not only have to provide a securi ty for release of the goods,
use specific ports of entry, and pay customs duties amounting to 40 % ad valorem (apparel) or
35% ad valorem (footwear)30, but they also have to comply with documentary, certification,
monitoring, and other requirements.

23 DIAN Draft Resolution "adding a subparagraph to Article 39 of Resolution 4240 of 2000".
24 Articles 1 and 2 of Decree No. 1744/2016.
25 Article 6 of Decree No. 1744/2016 states that the Decree shall remain in force for one year starting
on 2 November 2016, and that once it has expired, the duties set forth in Colombia's Customs Tariff (Decree
No. 4927/2011 and its amendments) shall be reinstated.
26 The thresholds established are the following: heading 6401 (6 US dollars per pair); heading 6402
(6 US dollars per pair); heading 6403 (10 US dollars per pair); heading 6404 (6 US dollars per pair);
heading 6405 (7 US dollars per pair).
27 That is, a tariff of 15% ad valorem.
28 Articles 4 and 5 of Decree No. 1744/2016 exempt the following goods from the application of the
Decree: (i) goods from a Special Customs Regime Zone or a free zone, provided such goods do not enter other
parts of the country's customs territory, and (ii) residues and/or waste of commercial value from the clothing
industry covered by the Plan Vallejo.
29 Articles 2 and 3 of Decree No. 1745/2016, and Articles 1 and 2 of Decree No. 1744/2016.
30 Note that Article 3 of Decree No. 1744/2016 provides that "products classified in Chapters 61, 62 and
64 of the Customs Tariff that are not subject to the tariff set forth in Articles 1 and 2 of this decree shall be
subject to the tariff provided for in Decree 4927 of 2011 [Customs Tariff of Colombia] and its amendments".

Regarding the documentary and certification requirements, Article 4 of Decree
No. 1745/2016 requires that for each shipment the importer submit to the Customs Operation
Management Division (or whichever service is acting on its behalf) of the Sectional Customs and
Excise Directorate with jurisdiction over the place of arrival, one month ahead of time and in
addition to the advance declaration and the identity and liability form, the following
five documents31:

● Certification from the foreign supplier, legalized, with an official Spanish translation,
providing evidence of the intention to sell to the importer in Colombia and indicating,
where appropriate, the type of economic relationship with the importer in accordance
with the Tax Code, also providing the address , telephone number and email address
of the supplier as well as the six -digit tariff subheading containing the detailed
description of the products to be exported, the quantity, and their respective prices.32

● Certification of the existence of the foreign supplier, legalized, with an official Spanish
translation, issued by the foreign entity that keeps the official register of producers or
commercial agents or, should no such entity exist, by the foreign suppl ier under
oath.33

● List of distributors in Colombia of the imported goods, including their Tax
Identification Number (NIT), business name, address, telephone number and email
address.34

● Declaration signed by the legal representative of the Customs Agenc y, where
appropriate, certifying that they have conducted a background check on the customer
for the importer, established how long the parties have been working together, and
acted as customs broker.35

● Signed declaration by the importer or the importer's legal representative certifying the
following: (i) that the value to be declared for the imported goods corresponds to the
price actually paid or to be paid ; ( ii) the address of the storage facilities for the
imported goods; (iii) detailed information on the distribution and marketing chain for
the imported goods in Colombia; (iv) that they are aware that the customs authorities
are entitled to submit the documents related to the import transaction to the Office of
the Public Prosecutor and the Financial Information and Analysis Unit (UIAF).36

Regarding the special monitoring requirements, Article 8 of Decree No. 1745/2016 states
that "importers that declare goods … indicated in Article 3 of this Decree, at a price lower than or
equal to the threshold esta blished in that Article, must be reported to the Operational Analysis
Management Sub -Directorate of the National Customs and Excise Directorate so that the
information concerning such operations can be incorporated in the risk management system" .
Furthermore, Article 6 of the same Decree provides that "import operations observers" shall
"examine the information [provided by DIAN] and alert the customs authorities, and also closely
monitor the inspection and valuation process with respect to the goods classi fied under the
headings listed in Article 3 of this Decree".

Panama understands that this measure is contained in the following legislation:

(i) Decree No. 1745/2016;
(ii) Decree No. 1744/2016;

Consequently, imports of the products in question whose f.o.b. value exceeds the established thresholds are
subject to a 15% ad valorem tariff.
31 Article 4(1) of Decree No. 1745/2016.
32 Article 4(1)(a) of Decree No. 1745/2016.
33 Article 4(1)(b) of Decree No. 1745/2016.
34 Article 4(1)(c) of Decree No. 1745/2016.
35 Article 4(1)(d) of Decree No. 1745/2016.
36 Article 4(1)(e) of Decree No. 1745/2016.

(iii) Decree No. 4297/2011 of 26 December 2011, as regards the definition o f the products
covered by the nomenclature of Chapters 61, 62 and 64 of Colombia's Customs Tariff ;
and
(iv) the DIAN Draft Resolution.
II. LEGAL CLAIMS
The implementing measures adopted by Colombia are inconsistent with its obligations under
the Agreement Estab lishing the World Trade Organization (WTO Agreement) . S pecifically, the
measures display the following inconsistencies:
A. SECURITY FOR RELEASE OF GOODS
(i) This measure is a "restriction [ ]" on "importation" in violation of Article XI:1 of the
GATT 1994 in that its inordinately high amount and the fact that it is required for each
and every shipment operate as a condition that limits the importation of the textile and
footwear products concerned.
(ii) Insofar as the security is imposed because "it becomes necessary to delay the
determination of the value" of the goods, this measure is inconsistent with Article 13 of
the Agreement on Customs Valuation in that it exceeds the amount necessary "to cover
the ultimate payment of customs duties for which the goods may be liable".
(iii) Insofar as the security for release of the goods is not applied in a uniform, impartial and
reasonable manner, this measure is inconsistent with Article X:3(a) of the GATT 1994.
B. ENTRY RESTRICTED TO SPECIFIC PORTS OF ENTRY
(i) This measure is a "rest riction[ ]" on "importation" in violation of Article XI:1 of the
GATT 1994 in that it limits the entry into Colombia of the textile and footwear products
concerned to specific ports of entry.
(ii) Insofar as the entry restricted to specific ports of entry is no t applied in a uniform,
impartial and reasonable manner, this measure is inconsistent with Article X:3(a) of the
GATT 1994.
C. CUSTOMS DUTY
(i) Insofar as the security provided for in Decree No. 1745/2016 covers the payment of the
relevant customs duties, the "tariff" provided for in Decree 1744/2016 would be a "duty
or charge" other than ordinary customs duties inconsistent with Article II:1 (b),
second sentence, of the GATT 1994.
(ii) Insofar the customs duty is not applied in a uniform, impartial and reasonable m anner,
this measure is inconsistent with Article X:3(a) of the GATT 1994.
D. CUSTOMS AND TARIFF RE GIME APPLICABLE TO G OODS WHOSE PRICES AR E LESS THAN OR EQUAL TO THE
THRESHOLDS ESTABLISHED BY COLOMBIA
(i) This measure is a "restriction [ ]" on "importation" in violation of Article XI:1 of the
GATT 1994 in that the joint application of more onerous customs and tariff measures to
textile and footwear products whose prices are less than or equal to the thresholds
established by Colombia has a paralyzing effect on imports of the products concerned.
(ii) Moreover, this more burdensome customs and tariff regime operates in practice as an
incentive to raise the prices of the goods artificially , introducing de facto minimum
customs values in violation of Articles 1, 2, 3, 5, 6 and 7.2(f) of the Agreement on
Customs Valuation.

(iii) Insofar as the customs and tariff regime applicable to goods whose prices are less than
or equal to the thresholds established by Colombia is not applied in a uniform, impartial
and reasonable manner, thi s measure is inconsistent with Article X:3(a) o f the
GATT 1994.
Panama has identified the rules which, in its view , underpin the measures at issue .
Nevertheless, this list is without prejudice to any other rules, administrative or judicial decisions,
acts, practices, guidance or guidelines issued by Colombia that may be relevant in examining this
dispute. Accordingly, the scope of this request covers all of the aforementioned rules as well as
any possible amendments, extensions or additions where applicable.
 Given the inconsistencies described above, pursuant to Article 3.8 of the DSU, Panama
considers that the measure at issue nullifies or impairs the advantages accruing to Panama under
the provisions mentioned in this request.

 Panama requests that, pursuant to Articles 6 and 21.5 of the DSU, the DSB establish a panel
to examine this matter . Panama further requests that the panel be given the standard terms of
reference provided for in Article 7.1 of the DSU.

 Panama asks that this request for the establ ishment of a panel be included in the agenda of
the DSB meeting scheduled for 22 May 2017.