PERU – ADDITIONAL DUTY ON IMPORTS OF CERTAIN AGRICULTURAL PRODUCTS REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 27 November 2014
Document codes: WT/DS457/R
Complainant: Guatemala
Respondent: Peru
Third parties: Argentina, China, El Salvador, EU, India, U.S., Brazil, Ecuador, South Korea, Honduras, Colombia
Dispute stage: Appellate Body
Agreements cited: Art. 4.2  AgricultureArt. II:1, XI:1, X:1, X:3(a)  GATT 1994Art. 1, 2, 3, 5, 6, 7  Customs valuationArt. 3.8  Dispute Settlement Understanding (DSU)

PERU – ADDITIONAL DUTY ON IMPORTS OF CERTAIN
AGRICULTURAL PRODUCTS
REPORT OF THE PANEL

LIST OF ANNEXES

ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A Working Procedures of the Panel A-1
ANNEX B
ARGUMENTS OF THE PARTIES
GUATEMALA
Contents Page
Annex B-1 First part of the executive su mmary of the arguments of Guatemala B-2
Annex B-2 Second part of the executive summary of the arguments of Guatemala B-13
PERU
Contents Page
Annex B-3 First part of the executive summary of the arguments of Peru B-25
Annex B-4 Second part of the executive summary of the arguments of Peru B-38
ANNEX C
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the arguments of Argentina C-2
Annex C-2 Executive summary of the arguments of Brazil C-5
Annex C-3 Executive summary of the arguments of Colombia C-6
Annex C-4 Executive summary of the arguments of Ecuador C-8
Annex C-5 Executive summary of the arguments of the United States C-10
Annex C-6 Executive summary of the arguments of the European Union C-15

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Hides and
Leather
Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and
Import of Finished Leather, and Corr.1, adopted 16 February 2001
Argentina – Poultry
Anti-Dumping Duties
Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil,
, adopted 19 May 2003
Argentina – Textiles and
Apparel
Appellate Body Report, Argentina – Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, and Corr.1, adopted

Argentina – Textiles and
Apparel
Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles,
Apparel and Other Items, , adopted 22 April 1998, as modified by
Appellate Body Report WT/DS56/AB/R
Australia – Salmon Appellate Body Report, Australia - Measures Affecting Importation of Salmon,
WT/DS18/AB/R, adopted 6 November 1998
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres,
WT/DS332/AB/R, adopted 17 December 2007
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian
Aircraft, WT/DS70/AB/R, adopted 20 August 1999
Canada – Autos Appellate Body Reports, Canada – Certain Measures Affecting the Automotive
Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000
Canada – Continued
Suspension
Appellate Body Report, Canada – Continued Suspension of Obligations in the
EC - Hormones Dispute, WT/DS321/AB/R, adopted 14 November 2008
Canada – Dairy
(Article 21.5 – New Zealand
and US II)
Appellate Body Reports, Canada – Measures Affecting the Importation of Milk
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the
DSU by New Zealand and the United States, WT/DS103/AB/RW2,
WT/DS113/AB/RW2, adopted 17 January 2003
Canada – Renewable
Energy / Canada – Feed-in
Tariff Program
Appellate Body Reports, Canada – Certain Measures Affecting the Renewable
Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff
Program, WT/DS412/AB/R, WT/DS426/AB/R, adopted 24 May 2013
Canada – Wheat Exports
and Grain Imports
Appellate Body Report, Canada – Measures Relating to Exports of Wheat and
Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted
23 October 2002
Chile – Price Band System Panel Report, Chile – Price Band System and Safeguard Measures Relating to
Certain Agricultural Products, WT/DS207/R, adopted 23 October 2002,
as modified by Appellate Body Report WT/DS207/AB/R
Chile – Price Band System
(Article 21.5 – Argentina)
Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU
by Argentina, WT/DS207/AB/RW, adopted 22 May 2007
Chile – Price Band System
(Article 21.5 – Argentina)
Panel Report, Chile – Price Band System and Safeguard Measures Relating to
Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina,
WT/DS207/RW, adopted 22 May 2007, upheld by Appellate Body Report

China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile
Parts, WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R, adopted
12 January 2009
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/R, WT/DS340/R, WT/DS342/R, Add.1 and Add.2, adopted
12 January 2009, upheld (WT/DS339/R) and as modified (WT/DS340/R,
WT/DS342/R) by Appellate Body Reports WT/DS339/AB/R, WT/DS340/AB/R,

Short Title Full Case Title and Citation
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare Earths,
Tungsten, and Molybdenum, WT/DS431/R, WT/DS432/R, WT/DS433/R and
Add.1, adopted 29 August 2014, upheld by Appellate Body reports
WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw
Materials, WT/DS394/R, WT/DS395/R, WT/DS398/R, Add.1 and Corr.1, adopted
22 February 2012, as modified by Appellate Body Reports WT/DS394/AB/R,
WT/DS395/AB/R, WT/DS398/AB/R
Dominican Republic –
Import and Sale of
Cigarettes
Panel Report, Dominican Republic – Measures Affecting the Importation and
Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified by
Appellate Body Report WT/DS302/AB/R
Dominican Republic –
Safeguard Measures
Panel Reports, Dominican Republic – Safeguard Measures on Imports of
Polypropylene Bags and Tubular Fabric, WT/DS415/R, WT/DS416/R,
WT/DS417/R, WT/DS418/R and Add.1, adopted 22 February 2012
EC – Approval and
Marketing of Biotech
Products
Panel Reports, European Communities – Measures Affecting the Approval and
Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R, Add.1
to Add.9 and Corr.1, adopted 21 November 2006
EC – Asbestos Panel Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5 April 2001,
as modified by Appellate Body Report WT/DS135/AB/R
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation,
Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997
EC – Bananas III
(Article 21.5 – Ecuador)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador,
WT/DS27/RW/ECU, adopted 6 May 1999
EC – Bananas III
(Article 21.5 – Ecuador II) /
EC - Bananas III
(Article 21.5 – US)
Appellate Body Reports, European Communities – Regime for the Importation,
Sale and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU
by Ecuador, WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 /
European Communities – Regime for the Importation, Sale and Distribution of
Bananas – Recourse to Article 21.5 of the DSU by the United States,
WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008
EC – Bed Linen
(Article 21.5 – India)
Appellate Body Report, European Communities, Anti-Dumping Duties on Imports
of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by
India, WT/DS141/AB/RW, adopted 24 April 2003
EC – Chicken Cuts Appellate Body Reports, European Communities – Customs Classification of
Frozen, Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted
27 September 2005, and Corr.1
EC – Export Subsidies on
Sugar
Appellate Body Reports, European Communities – Export Subsidies on Sugar,
WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, adopted 19 May 2005
EC – Export Subsidies on
Sugar (Australia)
Panel Report, European Communities – Export Subsidies on Sugar, Complaint by
Australia, WT/DS265/R, adopted 19 May 2005, as modified by Appellate Body
Reports WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R
EC – Export Subsidies on
Sugar (Brazil)
Panel Report, European Communities – Export Subsidies on Sugar, Complaint by
Brazil, WT/DS266/R, adopted 19 May 2005, as modified by Appellate Body
Reports WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R
EC – Export Subsidies on
Sugar (Thailand)
Panel Report, European Communities – Export Subsidies on Sugar, Complaint by
Thailand, WT/DS283/R, adopted 19 May 2005, as modified by Appellate Body
Reports WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on
Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted
28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R
EC – Hormones Appellate Body Reports, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998
EC – IT Products Panel Reports, European Communities and its Member States – Tariff Treatment
of Certain Information Technology Products, WT/DS375/R, WT/DS376/R,
WT/DS377/R, adopted 21 September 2010

Short Title Full Case Title and Citation
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines,
WT/DS231/AB/R, adopted 23 October 2002
EC – Seal Products Panel Reports, European Communities – Measures Prohibiting the Importation
and Marketing of Seal Products, WT/DS400/R, WT/DS401/R and Add.1, adopted
18 June 2014, as modified by Appellate Body Reports WT/DS400/AB/R,

EC – Selected Customs
Matters
Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006
EC – Selected Customs
Matters
Panel Report, European Communities – Selected Customs Matters,
WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body
Report WT/DS315/AB/R
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting of
Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted
20 April 2004
EC – Trademarks and
Geographical Indications
(Australia)
Panel Report, European Communities – Protection of Trademarks and
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by
Australia, WT/DS290/R, adopted 20 April 2005
EC – Trademarks and
Geographical Indications
(US)
Panel Report, European Communities – Protection of Trademarks and
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by
the United States, WT/DS174/R, adopted 20 April 2005
EC and certain member
States – Large Civil Aircraft
Panel Report, European Communities and Certain Member States – Measures
Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as
modified by Appellate Body Report, WT/DS316/AB/R
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear
from China, WT/DS405/R, adopted 22 February 2012
Guatemala – Cement I Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland
Cement from Mexico, WT/DS60/R, adopted 25 November 1998, as reversed by
Appellate Body Report WT/DS60/AB/R
Guatemala – Cement II Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey Portland
Cement from Mexico, WT/DS156/R, adopted 17 November 2000
India – Additional Import
Duties
Appellate Body Report, India – Additional and Extra-Additional Duties on
Imports from the United States, WT/DS360/AB/R, adopted 17 November 2008
India – Additional Import
Duties
Panel Report, India – Additional and Extra-Additional Duties on Imports from the
United States, WT/DS360/R, adopted 17 November 2008, as reversed by
Appellate Body Report WT/DS360/AB/R
India – Quantitative
Restrictions
Panel Report, India – Quantitative Restrictions on Imports of Agricultural, Textile
and Industrial Products, WT/DS90/R, adopted 22 September 1999, upheld by
Appellate Body Report WT/DS90/AB/R
Indonesia – Autos Panel Reports, Indonesia – Certain Measures Affecting the Automobile Industry,
WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, adopted 23 July 1998, and
Corr.3 and Corr.4
Japan – Alcoholic
Beverages II
Appellate Body Reports, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and
Paper, WT/DS44/R, adopted 22 April 1998
Korea – Various Measures
on Beef
Panel Reports, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen
Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by
Appellate Body Reports WT/DS161/AB/R, WT/DS169/AB/R
Mexico – Corn Syrup
(Article 21.5 – US)
Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose
Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU
by the United States, WT/DS132/AB/RW, adopted 21 November 2001
Mexico – Steel Pipes and
Tubes
Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from
Guatemala, WT/DS331/R, adopted 24 July 2007

Short Title Full Case Title and Citation
Mexico – Taxes on Soft
Drinks
Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other
Beverages, WT/DS308/AB/R, adopted 24 March 2006
Thailand – Cigarettes
(Philippines)
Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the
Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body
Report WT/DS371/AB/R
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R,
adopted 5 April 2001
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice,
WT/DS334/R, adopted 22 October 2007
Turkey – Textiles Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing
Products, WT/DS34/AB/R, adopted 19 November 1999
Turkey – Textiles Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products,
WT/DS34/R, adopted 19 November 1999, as modified by Appellate Body Report

US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan,
WT/DS162/R and Add.1, adopted 26 September 2000, upheld by Appellate Body
Reports WT/DS136/AB/R, WT/DS162/AB/R
US – Anti-Dumping and
Countervailing Duties
(China)
Appellate Body Report, United States – Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted
25 March 2011
US – Certain EC Products Panel Report, United States – Import Measures on Certain Products from the
European Communities, WT/DS165/R, Add.1, and Corr.1, adopted
10 January 2001, as modified by Appellate Body Report WT/DS165/AB/R
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements, WT/DS384/R, WT/DS386/R, adopted 23 July 2012, as modified
by Appellate Body Reports WT/DS384/AB/R, WT/DS386/AB/R
US – Corrosion-Resistant
Steel Sunset Review
Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties
on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R,
adopted 9 January 2004
US – Cotton Yarn Panel Report, United States – Transitional Safeguard Measure on Combed
Cotton Yarn from Pakistan, WT/DS192/R, adopted 5 November 2001,
as modified by Appellate Body Report WT/DS192/AB/R
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations", WT/DS108/AB/R, adopted 20 March 2000
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border
Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted
20 April 2005, and Corr.1
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted
23 August 2001
US – Lamb Appellate Body Reports, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001
US – Offset Act
(Byrd Amendment)
Panel Reports, United States – Continued Dumping and Subsidy Offset Act of
2000, WT/DS217/R, WT/DS234/R, adopted 27 January 2003, as modified by
Appellate Body Reports WT/DS217/AB/R, WT/DS234/AB/R
US – Oil Country Tubular
Goods Sunset Reviews
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R,
adopted 17 December 2004
US – Oil Country Tubular
Goods Sunset Reviews
(Article 21.5 – Argentina)
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina – Recourse to
Article 21.5 of the DSU by Argentina, WT/DS268/AB/RW, adopted 11 May 2007

Short Title Full Case Title and Citation
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp and
Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination
with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R,
adopted 17 February 2004
US – Stainless Steel
(Korea)
Panel Report, United States – Anti-Dumping Measures on Stainless Steel Plate in
Coils and Stainless Steel Sheet and Strip from Korea, WT/DS179/R, adopted
1 February 2001
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on
Steel Plate from India, WT/DS206/R, adopted 29 July 2002
US – Underwear Panel Report, United States – Restrictions on Imports of Cotton and Man-Made
Fibre Underwear, WT/DS24/R and Corr.1, adopted 25 February 1997,
as modified by Appellate Body Report WT/DS24/AB/R
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton,
WT/DS267/AB/R, adopted 21 March 2005
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R and
Add.1 to Add.3, adopted 21 March 2005, as modified by Appellate Body Report

US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1
US – Zeroing (EC)
(Article 21.5 – EC)
Appellate Body Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU
by the European Communities, WT/DS294/AB/RW and Corr.1, adopted
11 June 2009
US – Zeroing (Japan)
(Article 21.5 – Japan)
Appellate Body Report, United States – Measures Relating to Zeroing and Sunset
Reviews – Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW,
adopted 31 August 2009
US – Zeroing (Japan)
(Article 21.5 – Japan)
Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews
– Recourse to Article 21.5 of the DSU by Japan, WT/DS322/RW, adopted
31 August 2009, upheld by Appellate Body Report WT/DS322/AB/RW

GATT PANEL REPORTS
Short Title Full Case Title and Citation
Canada – FIRA GATT Panel Report, Canada – Administration of the Foreign Investment
Review Act, L/5504, adopted 7 February 1984, BISD 30S/140
EEC – Import Restrictions GATT Panel Report, EEC – Quantitative Restrictions Against Imports of
Certain Products from Hong Kong, L/5511 , adopted 12 July 1983,
BISD 30S/129
EEC – Minimum Import Prices GATT Panel Report, EEC – Programme of Minimum Import Prices, Licences
and Surety Deposits for Certain Processed Fruits and Vegetables , L/4687,
adopted 18 October 1978, BISD 25S/68
Japan – Semi-Conductors GATT Panel Report, Japan – Trade in Semi-Conductors , L/6309, adopted
4 May 1988, BISD 35S/116
US – Customs User Fee GATT Panel Report, United States – Customs User Fee , L/6264, adopted
2 February 1998, BISD 35S/245
US – MFN Footwear GATT Panel Report, United States – Denial of Most-Favoured-Nation
Treatment as to Non-Rubber Footwear from Brazil , DS18/R, adopted
19 June 1992, BISD 39S/128
US – Sugar Quota GATT Panel Report, United States – Imports of Sugar from Nicaragua ,
L/5607, adopted 13 March 1984, BISD 31S/67

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
c.i.f. Cost, Insurance and Freight
Customs Valuation Agreement Agreement on Implementation of Article VII of the
General Agreement on Tariffs and Trade 1994
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement
of Disputes
Enabling Clause Decision on Differen tial and More Favourable Treatment,
Reciprocity and Fuller Participation of Developing Countries,
adopted in 1979 by the CONTRACTING PARTIES to the GATT
f.o.b. Free on board
FTA Free Trade Agreement between Peru and Guatemala
GATT 1994 General Agreement on Tariffs and Trade 1994
PRS Price range system
Understanding on Article II:1(b) of the
GATT 1994
Understanding on the Interpretation of Article II:1(b) of the
General Agreement on Tariffs and Trade 1994
USD United States dollars
Vienna Convention Vienna Convention on the Law of Treaties
WTO World Trade Organization
WTO Agreement Marrakesh Agreement Establishing the World Trade Organization

1 INTRODUCTION
1.1 Complaint by Guatemala
1.1. On 12 April 2013, Guatemala requested consultations with Peru pursuant to Article 4 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article 19
of the Agreement on Agriculture, Article 19 of th e Agreement on Implementation of Article VII of
the General Agreement on Tariffs and Trad e 1994 (Customs Valuation Agreement) and
Article XXIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), with respect to the
imposition by Peru of an "additional duty" on imports of certain agricultural products.
1
1.2. Consultations were held on 14 and 15 May 2013, but failed to resolve the dispute.2
1.2 Panel establishment and composition
1.3. On 13 June 2013, Guatemala requested the Dispute Settlement Body (DSB) to establish
a panel pursuant to Articles 4.7 and 6 of the DS U, Article 19 of the Agreement on Agriculture,
Article 19 of the Customs Valuation Agreement and Article XXIII:2 of the GATT 1994, with the
standard terms of reference provided for in Article 7.1 of the DSU.
3 At its meeting on 23 July 2013,
the DSB established a panel pursuant to the re quest of Guatemala in document WT/DS457/2,
in accordance with Article 6 of the DSU.4
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Guatemala in document
WT/DS457/2 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
5
1.5. On 19 September 2013, the parties agreed to the following composition of the Panel:
Chairman: Mr Gary Horlick
Members: Ms Enie Neri de Ross
 Mr Miguel Rodríguez Mendoza
1.6. Argentina, Brazil, China, Colombia
6, Ecuador, El Salvador, the European Union, Honduras,
India, the Republic of Korea and the United States reserved their right to participate in the panel
proceedings as third parties.
1.3 Panel proceedings
1.7. After consultations with the parties, the Panel adopted its working procedures on
8 October 2013
7 and its timetable on 4 October 2013. The timetable was modified on
17 February 2014 and 10 April 2014, at the suggestion of the Panel in the first instance, and of the
parties in the second.
1.8. Guatemala made its first written submission on 29 October 2013. Peru made its first written
submission on 9 December 2013. On 20 December 2013, the Panel received third-party written
submissions from Argentina, Brazil, Colombia, the European Union and the United States.

1 See request for consultations by Guatemala, document WT/DS457/1 (of 16 April 2013).
2 See request for the establishment of a panel by Guatemala, document WT/DS457/2
(of 14 June 2013).
3 Ibid.
4 See minutes of the DSB meeting held in the Centre William Rappard on 23 July 2013, document
WT/DSB/M/334 (of 2 October 2013) and constitution of the panel established at the request of Guatemala,
document WT/DS457/3 (of 23 September 2013).
5 WT/DS457/3.
6 On 6 August 2013, Colombia notified its interest in participating as a third party.
7 See the Panel's Working Procedures in Annex A-1.

1.9. The Panel held the first substantive meeting with the parties on 14 and 15 January 2014.
A session with the third parties took place on 14 January 2014. The Panel addressed questions to
the parties and third parties before the substant ive meeting, on 10 January 2014. The Panel also
addressed written questions to the parties and third parties after the meeting, which were
transmitted to the parties on 21 January 2014 and to the third parties on 22 January 2014.
On 29 January 2014, the following third parties furnished written responses to the Panel's
questions: Argentina, Brazil, Colombia, Ecuado r, the European Union and the United States.
The parties furnished their written responses to the Panel's questions on 5 February 2014.
1.10. The parties presented their second written submissions to the Panel on 5 March 2014.
1.11. The Panel held the second substantive meeting with the parties on 2 and 3 April 2014.
The Panel sent questions to the parties before the second substantive meeting on 31 March 2014.
The Panel also addressed written questions to the parties after the meeting, which were
transmitted to the parties on 10 April 2014. On 1 May 2014, the parties furnished written
responses to the Panel's questions, and on 12 May each party submitted comments on the
responses provided by the other party.
1.12. During the proceedings, the Panel reminded the parties of its readiness, under the terms
of the last sentence of Article 11 of the DSU, to consult with them and give them adequate
opportunity to develop a mutually satisfactory solution.
1.13. The Panel submitted the descriptive (factual and argument) sections of its final report to the
parties on 12 June 2014. On the same date, the Panel informed Argentina, Brazil, China,
Colombia, Ecuador, El Salvador, the European Union, Honduras, India, the Republic of Korea and
the United States that the descriptive part of the report would contain a summary of the
arguments of each of them. On 24 June, Peru submitted its comments on the descriptive part
of the report; on the same date, Guatemala notified that it had no comments.
1.14. The Panel issued its interim report to the parties on 12 August 2014. On 26 August, both
Guatemala and Peru submitted written requests for the Panel to review specific aspects of the
interim report. Neither of the parties requested a further meeting with the Panel to discuss the
issues identified in their respective written comments. On 4 September, each of the parties
submitted written comments to the Panel on the other party's request for review.
1.15. The Panel submitted its final report to the parties on 2 October 2014.
2 FACTUAL ASPECTS
2.1 Introduction
2.1. In this section of the Report, the Panel will describe the measure at issue. The parties
disagree on a number of factual issues. To the extent that it is necessary for the Panel to resolve
those disputed factual issues, it will do so in its findings.
2.2 Measures at issue
2.2. In its request for the establishment of a panel, Guatemala identified the measure at issue in
this dispute as "the additional duty imposed by Peru on imports of certain agricultural products,
such as milk, maize, rice and sugar" (referre d to as "affected products"). As described by
Guatemala, the measure has the following characteristics: (a) it has been in force since
22 June 2001; (b) it consists of a variable levy that is imposed in addition to the ordinary customs
duty; (c) it is determined by using a mechanism known as the "Price Range System" (PRS) which,
in its turn, operates on the basis of two components: (i) a range made up of a floor price and
a ceiling price which reflect the international price over the last 60 months for the affected
products; and (ii) a c.i.f. reference price which is published every two weeks and which reflects the
average international market price for the affected products; (d) it may result in the imposition of
an import levy on the affected products when the international reference prices of those products
are below certain (floor price) levels, or in tariff rebates when these reference prices are above
certain (ceiling price) levels; (e) both the price range and the c.i.f. reference prices vary
periodically as a result of the application of certain formulas to the circumstances in the markets

for the affected products; the price range varies every six months, while the c.i.f. reference prices
vary every 15 days; (f) its amount is specific an d is expressed in United States dollars (USD)
per metric ton; and (g) it is payable upon importation of the affected products, together with the
ordinary customs duties and other import taxes on the affected products.
8 Hereinafter, the Panel
will refer to this measure as "the duties resulting from the PRS".
2.3. In its request for the establishment of a Panel, Guatemala identified the following legal
instruments in which it believed the measure at issue to be contained9:
a. Supreme Decree No. 115-2001-EF, published in the Official Journal "El Peruano" on
22 June 2001;
b. Supreme Decree No. 124-2002-EF, published in the Official Journal "El Peruano" on
17 August 2002;
c. Supreme Decree No. 153-2002-EF, published in the Official Journal "El Peruano" on
27 September 2002.
d. Supreme Decree No. 174-2002-EF, published in the Official Journal "El Peruano" on
15 November 2002.
e. Supreme Decree No. 184-2002-EF, published in the Official Journal "El Peruano" on
27 November 2002;
f. Supreme Decree No. 197-2002-EF, published in the Official Journal "El Peruano" on
30 December 2002;
g. Supreme Decree No. 003-2006-EF, published in the Official Journal "El Peruano" on
13 January 2006;
h. Supreme Decree No. 121-2006-EF, published in the Official Journal "El Peruano" on
20 July 2006;
i. Circular INTA-CR.62-2002 of 26 August 2002 of the National Technical Customs
Department;
j. the Supreme Decrees published semi-annually containing the customs tables for
determining the floor and ceiling prices of the price range;
k. the Vice-Ministerial Resolutions published every two weeks, containing the c.i.f.
reference prices; and
l. any other regulation, instruction, administrative or judicial practice, methodology or
guideline, whether currently in force or adopted subsequently, that amends,
supplements, complements, develops or is otherwise related to the aforementioned
regulatory instruments.

8 See request for the establishment of a panel by Guatemala, document WT/DS457/2
(of 14 June 2013).
9 In its request for the establishment of a panel, in addition to the instruments listed, Guatemala
identified circular INTA-CR.82-2002 of 5 December 2002 of the National Customs Technical Department,
Circular 002-2003-SUNAT/A of 28 February 2003 of the National Tax Administration Supervisory Authority,
Circular 010-2004-SUNAT/A of 10 September 2004 of the National Tax Administration Supervisory Authority,
Judgement 03041-A-2004 of the Tax Court, dated 14 May 2004, and Judgement 02364-A-2007 of the
Tax Court, dated 15 March 2007. During the present proceedings, Guatemala made no reference to those
instruments and did not submit them to the Panel for its consideration.

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Guatemala requests that the Panel find that:
a. The duties resulting from the PRS are inconsistent with Article 4.2 of the
Agreement on Agriculture, as they constitute variable import levies or measures similar
to variable import levies;
b. The duties resulting from the PRS are inconsistent with Article 4.2 of the
Agreement on Agriculture, as they constitute minimum import prices or measures similar
to minimum import prices;
c. The duties resulting from the PRS are duties or charges inconsistent with the second
sentence of Article II:1(b) of the GATT 1994;
d. Peru's actions are inconsistent with Article X:1 of the GATT 1994, inasmuch as:
i. it fails to publish the international prices used as a basis for calculating the floor price
and the reference price, despite the fact that these international prices are an
essential element of the measure at issue;
ii. it has failed to publish the content of the "import costs", which is an essential
element of the measure at issue; and
iii. it has failed to publish the methodology for determining the amounts for freight and
insurance, which is an essential element of the measure at issue;
e. Peru's actions are inconsistent with Article X:3(a) of the GATT 1994, because it
administers the measure in question in a manner that is not reasonable given its failure
to observe the requirements of its own legislation. Specifically, Peru's failure to comply
with its own legislation is shown by the following practices:
i. extending the validity of the Customs Tables;
ii. calculating the price ranges for dairy products by reference price intervals and not
for each individual value;
iii. calculating additional duties or customs rebates for two categories of rice (pounded
and paddy rice); and
iv. calculating and updating the reference price for dairy products monthly rather than
fortnightly.
3.2. In the event that the Panel considers that the duties resulting from the PRS are ordinary
customs duties, Guatemala requests the Panel to find that Peru's actions are inconsistent with
Articles 1, 2, 3, 5, 6 and 7 of the Customs Valuation Agreement, and in particular with
Articles 7.2(f) and 7.2(g) of that Agreement, since Peru does not determine the customs value
of the goods subject to the PRS in accordance wi th those provisions, but instead determines the
customs value of those goods through the use of minimum, arbitrary or fictitious customs values.
3.3. In accordance with the second sentence of Article 19.1 of the DSU, Guatemala requests the
Panel to suggest that Peru should completely dismantle the measure at issue, and at the same
time eliminate the duties resulting from the PRS and the PRS itself.
3.4. In response to Peru's assertions, Guatemala requests that the Panel reject the allegation that
Guatemala has not acted in good faith.
3.5. Peru maintains that, although Members ar e entitled to engage in procedures in the
framework of the WTO dispute settlement system, they must do so in a manner consistent with
the requirements established in the DSU, includin g Articles 3.7 and 3.10 thereof. Peru requests

that the Panel find that Guatemala did not act in good faith in initiating these proceedings,
and consequently requests the Panel not to analyse Guatemala's claims.
3.6. Should the Panel decide to examine Guatemal a's claims, Peru requests that they be rejected
in their entirety by the Panel. In particular, Peru asserts that the duties resulting from the PRS are
ordinary customs duties within the meaning of the first sentence of Article II:1(b) of the
GATT 1994 and that they therefore stand outside the scope of the second sentence of that Article
as well as Article 4.2 of the Agreement on Agriculture. Peru also asserts that the measure at issue
is neither the same as nor sufficiently similar to the measures listed in footnote 1 of the
Agreement on Agriculture and that Peru has complied with the obligations set forth in Article X:1
and Article X:3(a) of the GATT 1994. Lastly, acco rding to Peru, Guatemala's claims based on the
Customs Valuation Agreement must be rejected since that agreement is not applicable to specific
duties.
3.7. Finally, in the event that the Panel finds that the measure at issue is inconsistent with
provisions of the WTO agreements, Peru considers that an inconsistency would be generated
between the Free Trade Agreement signed in De cember 2011 by Peru and Guatemala (FTA) and
the WTO agreements, in regard to which the terms of the FTA should prevail.
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in the executive summaries provided to the Panel
in accordance with paragraph 20 of the Working Procedures (see Annexes B-1, B-2, B-3 and B-4).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Argentina, Brazil, Colombia, Ecuador, the European Union, and the
United States are reflected in the executive summ aries provided to the Panel in accordance with
paragraph 21 of the Working Procedures (see Annexes C-1, C-2, C-3, C-4, C-5 and C-6). China,
El Salvador, Honduras, India and the Republic of Korea did not submit written or oral arguments to
the Panel.
6 INTERIM REVIEW
6.1. In accordance with Article 15.3 of the DSU, this section of the report sets out the Panel's
response to the parties' arguments made at th e interim review stage, providing explanations
where necessary. This section forms an integral part of the Panel's findings in the present case.
The Panel thoroughly examined the parties' requests for review and took them into account before
issuing this final report. As explained below, the Panel modified aspects of its report in the light
of the parties' comments when it considered it appropriate to do so.
10
6.2. Guatemala requests the Panel to make it clear at the end of paragraph 2.2 that it has used
an abbreviated form, throughout the report, to refer to the measure at issue. Guatemala also
suggests adjusting the way in which the Panel refers to the measure in two entries in the interim
report.11 Peru opposes Guatemala's request, as it considers that the way in which the report refers
to the measure at issue reflects the Panel's analysis.12 The Panel added a final sentence at the end
of paragraph 2.2, based on the text suggeste d by Guatemala. The Panel also adjusted the
language in various paragraphs of the report, in order to use a single identifying term for the
measure at issue (the "duties resulting from the PRS"). These adjustments were made in
paragraph 7.321, at the request of Guatemala, and in the other following paragraphs of the
report: 2.2, 3.1, 3.2, 3.3., 3.6, 7.40, 7.55, 7.99, 7.101, 7.113, 7.114, 7.126, 7.141, 7.149, 7.163,
7.164, 7.174, 7.308, 7.309, 7.312, 7.313, 7.314, 7.315, 7.317, 7.318, 7.319, 7.321, 7.325,
7.326, 7.327, 7.330, 7.333, 7.339, 7.344, 7.348, 7.349, 7.350, 7.351, 7.352, 7.358, 7.359,
7.360, 7.364, 7.366, 7.367, 7.368, 7.371, 7.400, 7.417, 7.418, 7.419, 7.439, 7.443, 7.460,
7.461, 7.494, 7.495, 7.496, 7.497, 7.499, 8.1 and 8.7. For the same reason, the Panel made
a similar adjustment to the title of section 7.4.4.2.3, at the request of Guatemala, and to the titles

10 The numbering of paragraphs and footnotes in the final report has changed in relation to the
numbering in the interim report. The text of this section refers to the paragraph numbers of the interim report.
11 Guatemala's request for review of the interim report, paras. 2.2-2.5.
12 Peru's comments on Guatemala's request for review of the interim report, para. 5-8.

of the other following sections and subsections of the report: 7.3.2.5, 7.3.2.5.3, 7.3.2.6.3,
7.4.2.1.1, 7.4.2.1.1.1, 7.4.2.1.2, 7.4.4.2, 7.4.4.2.4, 7.4.4.2.4.4, 7.4.4.2.5 and 7.4.4.2.7.
6.3. With regard to the claim concerning the existence of minimum import prices or measures
similar to minimum import prices, Guatemala requ e s t s t h a t a r e v i e w b e m a d e o f t h e s e c t i o n s
summarizing its arguments on an alleged de facto threshold.13 Peru opposes Guatemala's request
which it considers would amount to adducing arguments already put forward by the parties, with
a view to changing the Panel's analysis.
14 The Panel modified paragraphs 7.209 and 7.223, and
introduced a new paragraph supplementing the former paragraph 7.353, in order to give a more
precise reflection of the parties' arguments. In the light of Guatemala's request, the Panel also
modified the language of paragraph 7.365 and inserted a new paragraph after that paragraph.
6.4. Guatemala requests that, in the description of the basic aspects of the structure and
operation of the PRS contained in paragraph 7.317, the Panel should refer to the fact that, on
various occasions, both the floor price and the ceiling price had been extended for successive
periods, instead of being updated.
15 Peru considers that the addition is unnecessary, since this
matter is dealt with in other sections of the report. 16 As a supplement to the summary of the basic
aspects of the structure and operation of the PR S, the Panel added a further section at the end
of paragraph 7.317, based on the text suggested by Guatemala.
6.5. In the same paragraph 7.317, Guatemala requests that the description of the PRS be
supplemented by a reference to the fact that the customs tables announce the resulting duties and
rebates.
17 Peru does not consider this addition to be necessary, but does not oppose it.18 The Panel
modified subparagraph (b) of paragraph 7.317, on the basis of the text suggested by Guatemala.
6.6. Peru requests that paragraph 7.319 of the report provide clarification of its position regarding
the way in which the customs tables and reference prices are published. 19 Guatemala makes
no comments on this point. In the light of Pe ru's request, the Panel made a clarificatory
adjustment to paragraph 7.319 of the report, as well as to paragraph 7.239.
6.7. Peru requests modification of the reference in paragraph 7.321 of the report to the fact that
the PRS contains a scheme or formula which causes and ensures automatic and continuous
revision of the applicable duties. In Peru's opinion, the formula used by the PRS cannot ensure
revisions of the applicable duties. 20 Guatemala opposes Peru's request and considers that the
affirmation contained in the report that the PRS ensures the revision of the applicable duties is
correct.
21 The Panel rejects Peru's request, considering that the description contained in the
paragraph corresponds to the description of the facts as reflected in the evidence and the
arguments submitted by the parties.
6.8. Guatemala requests that paragraphs 7.322 and 7.323 include a reference to a similar finding
issued by the Panel and the Appellate Body in Chile - Price Band System (Article 21.5 – Argentina),
as well as a reference to Guatemala's second written submission. 22 Peru disagrees with the
findings contained in these paragraphs of the report. Furthermore, Peru considers that, since the
paragraphs in question contain factual findings, it would be unnecessary for the Panel to cite
a different case. 23 The Panel considers that, inasmuch as the paragraphs in question contain
factual findings, it is inappropriate to add the references to a different case or to Guatemala's
second written submission, as requested by Guatemala.

13 Guatemala's request for review of the interim report, paras. 3.4-3.6.
14 Peru's comments on Guatemala's request for review of the interim report, para. 18.
15 Guatemala's request for review of the interim report, para. 2.8.
16 Peru's comments on Guatemala's request for review of the interim report, para. 23.
17 Guatemala's request for review of the interim report, paras. 2.9-2.10.
18 Peru's comments on Guatemala's request for review of the interim report, para. 24.
19 Peru's request for review of the interim report, p. 2.
20 Peru's request for review of the interim report, pp. 2-3.
21 Guatemala's comments on Peru's request for review of the interim report, paras. 2.5-2.11.
22 Guatemala's request for review of the interim report, paras. 2.11-2.12.
23 Peru's comments on Guatemala's request for review of the interim report, paras. 9-10.

6.9. Peru requests that, in paragraph 7.323, the Panel should make it clear that the PRS
legislation makes no mention of the possibility of extending the customs tables, and that such
extensions are acts within the discretion of the Peruvian Executive.
24 Guatemala does not object to
the report mentioning that the PRS legislation makes no reference to the possibility of extending
the customs tables.25 However, Guatemala does object to the assertion in the report that the act
of extending the customs tables is a discretionary ac t on the part of the Peruvian Executive, but is
not opposed to it being indicated that Peru has made that assertion. 26 Pursuant to Peru's request,
the Panel made some clarificatory adjustments to paragraph 7.323. In addition, in
paragraph 7.151, the Panel included a reference to the fact that the PRS legislation makes no
mention of the possibility of extending the cu stoms tables. The Panel does not consider it
appropriate to affirm, as a matter of fact, that su ch extensions are a discretionary act on the part
of the Peruvian Executive, as this point is disputed between the parties, and in the Panel's opinion
was not conclusively demonstrated in the course of the proceedings. However, Peru's arguments in
this respect are reflected in the report, for example in paragraph 7.480.
6.10. Guatemala requests clarification by the Pane l of the findings contained in paragraphs 7.332
to 7.335. In this connection, Guatemala disagrees with the assertion that Peru used futures prices
to make price estimates.
27 Guatemala also considers that, in the wording of the interim report, the
findings contained in paragraphs 7.332 to 7.335 do not reflect the totality of the arguments, the
evidence or the estimates submitted by the parties. 28 In this connection, Peru considers that the
description given by the Panel is correct and does not need to be modified. In Peru's opinion, the
additions proposed by Guatemala are incorrect and do not include the rebuttals submitted by
Peru.
29 Pursuant to Guatemala's request, the Panel modified the language contained in paragraphs
7.332 to 7.335, taking into account Peru's comments, and inserted a new paragraph after the
former paragraph 7.332.
6.11. Guatemala requests the Panel to delete the word "average" from the phrase "average
reference price" in paragraphs 7.337, 7.344 and 7.345. In Guatemala's opinion, the mere fact that
a reference price is applied (instead of the transaction value of a particular consignment),
regardless of whether it corresponds to an averag e, entails a systemic lack of transparency and
predictability.
30 Peru opposes this request as it considers that the reference price is an average,
and that the elimination of that term would obscure the real facts of the case. 31 The Panel
considers that the use of the term "average" in the description of the reference price does not
affect the substance of its analysis. In addition, as is explained in the report, the reference price is
an average. For these reasons, in the light of Guatemala's request, the Panel adjusted the wording
of paragraphs 7.337, 7.344 and 7.345.
6.12. Guatemala requests the Panel to include in paragraph 7.346 a reference to certain
paragraphs from its opening statement at the firs t meeting of the Panel and its responses to the
Panel's questions. 32 Peru opposes this request as it considers that the paragraph in question
constitutes a factual finding and that the Panel is under no obligation to repeat every argument
of the parties on the matter.33 The Panel included the references mentioned by Guatemala because
it considered that they give context to the finding set out in paragraph 7.346.
6.13. Guatemala requests that paragraph 7.352 be modified in order to avoid any confusion
between the functions of the Panel and the possibi lity that the Appellate Body may complete the
analysis on a specific point. 34 Peru opposes the wording proposed by Guatemala, considering that
a panel is not authorized to leave the analysis of certain aspects to the Appellate Body.35 The Panel
modified paragraph 7.352, on the basis of the text suggested by Guatemala and taking Peru's
observations into account.

24 Peru's request for review of the interim report, p. 2.
25 Guatemala's comments on Peru's request for review of the interim report, para. 2.2.
26 Guatemala's comments on Peru's request for review of the interim report, paras. 2.3-2.4.
27 Guatemala's request for review of the interim report, paras. 2.18-2.20.
28 Guatemala's request for review of the interim report, paras. 2.21-2.25.
29 Peru's comments on Guatemala's request for review of the interim report, paras. 11-13.
30 Guatemala's request for review of the interim report, paras. 2.26-2.27.
31 Peru's comments on Guatemala's request for review of the interim report, para. 14.
32 Guatemala's request for review of the interim report, paras. 2.28-2.30.
33 Peru's comments on Guatemala's request for review of the interim report, para. 22.
34 Guatemala's request for review of the interim report, paras. 3.1-3.3.
35 Peru's comments on Guatemala's request for review of the interim report, paras. 15-17.

6.14. Guatemala requests that the report reflect its arguments regarding ten factors which
Guatemala identified as grounds for considering that the duties resulting from the PRS are
a measure other than an ordinary customs duty. Gu atemala also asks the Panel to issue a finding
with regard to those factors.
36 Peru opposes Guatemala's requests. In Peru's opinion, Guatemala's
request concerning the ten factors that are said to make the duties resulting from the PRS
a measure other than ordinary customs duties neither refers to specific aspects of the interim
report nor identifies a specific section of the repo rt. Peru points out in addition that Guatemala's
request would lead the Panel to make new findings without giving the parties an opportunity to
make comments.
37 Regarding Guatemala's request that the report reflect its arguments in respect
of the factors purporting to show that the duties resulting from the PRS are a measure other than
ordinary customs duties, the Panel adjusted the la st part of paragraph 7.376; it inserted a new
paragraph after that paragraph; and it also inserted a new paragraph after paragraph 7.387; all
with the aim of reflecting the parties' arguments on the matter more extensively. The Panel
considers it unnecessary to issue the additional and separate findings requested by Guatemala on
this point. In this connection, the Panel made some explanatory adjustments to paragraphs 7.370
and 7.417.
6.15. Guatemala asks that the report provide a better account of its arguments concerning Peru's
proposal that consideration be given to whether the challenged measure is an ordinary customs
duty on the basis of positive criteria. In this connection, Guatemala suggests that the wording of
paragraph 7.377 be modified, and that an adequate description be given of its response to the
arguments set forth by Peru, as described in paragraph 7.386.
38 Peru does not oppose the change
proposed by Guatemala to paragraph 7.377, to the extent that the Panel may consider that the
change in question is a more precise reflection of Guatemala's position on the matter. However,
Peru is opposed to revising the description of its arguments in paragraph 7.386.
39 The Panel
modified paragraph 7.377 on the basis of the wording suggested by Guatemala. In order to
describe Guatemala's arguments, the Panel also inse rted an additional section at the end of the
same paragraph, as well as an additional paragraph immediately thereafter. The Panel did not
modify the description of Peru's arguments, but did include in footnote 469 to paragraph 7.385 an
additional reference to a written communication in which Peru explained the basis of some of its
arguments.
6.16. Guatemala asks that the report reflect the arguments of the parties as to whether the price
range system of Peru has existed since 1991 or since 2001.
40 Concerning this request, Peru is
opposed to the Panel including new analyses in the report without giving the parties an
opportunity to submit comments on the subject.
41 Pursuant to Guatemala's request, the Panel
modified the last part of paragraph 7.382, in order to reflect Guatemala's arguments on this point,
and included a new footnote to paragraph 7.388 in order to identify the written submissions in
which Peru refers to this topic.
6.17. Guatemala requests the Panel to explain in more detail the reasons why it considers that
issuing findings with respect to Guatemala's claims under Articles X:1 and X:3(a) of the
GATT 1994 would not help the DSB in making precise recommendations to allow for prompt
compliance by Peru.
42 Peru opposes Guatemala's request and states that the interim review would
not be the appropriate stage for the Panel to include a new analysis in the report concerning the
consistency of the challenged measure with Article X of the GATT 1994. 43 In this connection, the
Panel rejects Guatemala's request, as it considers that paragraphs 7.461 and 7.495 provide
sufficient explanation as to why, given the finding that the duties resulting from the PRS are
inconsistent with Peru's substantive obligations under the WTO agreements, it is unnecessary to
take up the additional matter of whether certain elements of the system are in addition consistent
with the obligations contained in Articles X:1 and X:3(a) of the GATT 1994.

36 Guatemala's request for review of the interim report, paras. 4.1-4.5.
37 Peru's comments on Guatemala's request for review of the interim report, para. 22.
38 Guatemala's request for review of the interim report, paras. 4.6-4.8.
39 Peru's comments on Guatemala's request for review of the interim report, para. 19.
40 Guatemala's request for review of the interim report, para. 4.9.
41 Peru's comments on Guatemala's request for review of the interim report, para. 22.
42 Guatemala's request for review of the interim report, paras. 5.1-5.6.
43 Peru's comments on Guatemala's request for review of the interim report, para. 20.

6.18. Guatemala refers to Peru's argument to the effect that, through the FTA, the parties
modified their mutual rights under the WTO agreements. In this connection, Guatemala requests
that the findings contained in paragraphs 7.520 to 7.522 of the report should mention the fact that
Peru's argument would call for the Panel to in terpret the content of the FTA, which would go
beyond the Panel's terms of reference.
44 Peru opposes Guatemala's request and asserts that the
interim review would not be the appropriate stage for the Panel to modify its analysis. 45 In this
connection, the Panel rejects Guatemala's request, considering that paragraphs 7.521 and 7.522
make it sufficiently clear that, since the FTA has not entered into force, it is unnecessary for the
Panel to rule on the argument put forward by Peru.
6.19. Guatemala requests that paragraph 8.7 of the report be amended so as not to refer to the
measure at issue. In its opinion, it is wrong to state that Guatemala identified the measure at
issue as the additional duty imposed by Peru on im ports of certain agricultural products and that it
did not challenge the PRS as such. 46 Peru considers that Guatemala's request is contrary to the
Panel's obligation to issue reasoned conclusions. 47 In this connection, the Panel rejects
Guatemala's request, since the measure at issue was identified in the request for the
establishment of a panel submitted by Guatemala, in the manner described in paragraph 8.7 of the
report.
6.20. In the light of the requests made by the parties during the review stage 48, and in order to
reflect the arguments of the parties more precisel y, the Panel made adjustments to the following
paragraphs: 7.40, 7.169, 7.170, 7.171, 7.203, 7.216, 7.330, 7.381 and 7.439. It also made minor
corrections to the following paragraphs: 7.46, 7.92 and 7.321, as well as to the title of section 7.5.
6.21. The Panel also made additional typographi cal corrections to the following paragraphs: 1.13,
2.2, 3.1, 7.9, 7.10, 7.26, 7.62, 7.67, 7.69, 7.88, 7.125, 7.145, 7.146, 7.174, 7.178, 7.183, 7.198,
7.215, 7.222, 7.223, 7.227, 7.250, 7.272, 7.288, 7.304, 7.369, 7.370, 7.383, 7.423, 7.494,
7.496, 7.512, 7.514, 7.521 and 8.3, as well as to the title of section 7.4.
7 FINDINGS
7.1 Preliminary considerations
7.1.1 Introduction
7.1. The Panel considers that, before proceedin g to assess the issues raised in the present
dispute, it would be useful to describe the legal framework it will apply with respect to its terms
of reference, its task, the standard of review, tr eaty interpretation, the burden of proof and the
order of analysis.
7.1.2 The Panel's terms of reference
7.2. This Panel was established by the DSB on 23 July 2013, with the following standard terms
of reference:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Guatemala in document
WT/DS457/2 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
49
7.3. In accordance with Article 6.2 of the DSU, the request for the establishment of a panel
"shall ... identify the specific measures at issue and provide a brief summary of the legal basis
of the complaint sufficient to present the problem clearly."

44 Guatemala's request for review of the interim report, paras. 6.1-6.2.
45 Peru's comments on Guatemala's request for review of the interim report, para. 21.
46 Guatemala's request for review of the interim report, paras. 7.1-7.3.
47 Peru's comments on Guatemala's request for review of the interim report, para. 8.
48 See, for example, Guatemala's request for review of the interim report, para. 2.17.
49 Constitution of the Panel established at the request of Guatemala, document WT/DS457/3
(of 23 September 2013), para. 2.

7.4. Accordingly, the terms of reference of this Panel are delimited by the measures identified and
the claims put forward by Guatemala in its panel request submitted on 13 June 2013.50
7.1.3 Function of the Panel and standard of review
7.5. Article 11 of the DSU indicates that the function of panels is "to assist the DSB in discharging
its responsibilities under this Understanding and the covered agreements". Further, Article 3.4
of the DSU provides that:
Recommendations or rulings made by the DSB shall be aimed at achieving
a satisfactory settlement of the matter in accordance with the rights and obligations
under this Understanding and under the covered agreements.
7.6. To this end, and as required by Article 11 of the DSU, a panel should "make an objective
assessment of the matter before it, including an objective assessment of the facts of the case and
the applicability of and conformity with the rele vant covered agreements". It should also make
such "findings as will assist the DSB in making the recommendations or in giving the rulings
provided for in the covered agreements."
7.7. As regards the legal assessment, that is, the analysis of the consistency or inconsistency
of the challenged measures with the applicable provisions, the obligation on a panel to make
an objective assessment of the matter means that it may "freely ... use arguments submitted by
any of the parties – or ... develop its own legal reasoning – to support its own findings and
conclusions on the matter under its consideration".
51
7.1.4 Interpretation of the relevant rules of the agreements
7.8. In its objective assessment of the matter before it, the Panel may be called upon to clarify
the scope of certain provisions of the covered agre ements cited by the parties. In this connection,
Article 3.2 of the DSU states that the WTO dispute settlement system serves to "clarify the
existing provisions of those agreements in acco rdance with customary rules of interpretation
of public international law."
7.9. The "customary rules of interpretation of pu blic international law" referred to by the DSU are
the rules of interpretation that have attained th e status of general customary international law,
as codified in the Vienna Convention on th e Law of Treaties of 1969 (Vienna Convention).
52
The Appellate Body explained that these "rules of treaty interpretation … apply to any treaty,
in any field of public international law, and not just to the WTO agreements. These rules of treaty
interpretation impose certain common disciplines upon treaty interpreters, irrespective of the
content of the treaty provision being examined and irrespective of the field of international law
concerned".
53
7.10. Article 31 of the Vienna Convention contains a general rule of interpretation to the effect
that "[a] treaty shall be interpreted in good fait h in accordance with the ordinary meaning to be
given to the terms of the treaty in their context and in the light of its object and purpose". 54 Under
the terms of Article 31.2 of the Vienna Conv ention, the context for the purpose of the
interpretation of a treaty shall comprise the text of the relevant agreement, including its preamble
and annexes.

50 Request for the establishment of a panel by Guatemala, document WT/DS457/2 (of 14 June 2013).
51 Appellate Body Report, EC – Hormones, para. 156. See also Appellate Body Reports,
Canada - Renewable Energy / Canada – Feed-in Tariff Program, para. 5.215.
52 Appellate Body Reports, US - Gasoline, p. 17; Japan – Alcoholic Beverages II, p. 10. See also
Vienna Convention on the Law of Treaties (Vienna Convention), done at Vienna on 23 May 1969,
United Nations document A/CONF.39/27.
53 Appellate Body Report, US – Hot-Rolled Steel, para. 60.
54 With respect to good faith, the Appellate Body has indicated that "[t]hat means, inter alia, that terms
of a treaty are not to be interpreted based on the assumption that one party is seeking to evade its obligations
and will exercise its rights so as to cause injury to the other party". Appellate Body Report, US – Anti-Dumping

7.11. Article 32 of the Vienna Convention provid es that recourse may be had to supplementary
means of interpretation, including the preparatory work of the treaty and the circumstances of its
conclusion, in order to confirm the meaning resulting from the application of Article 31, or to
determine the meaning when the interpretation according to Article 31 leaves the meaning
ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable.
55
The Appellate Body emphasized that Article 32 does not define exhaustively the supplementary
means of interpretation to which an interpreter may have recourse, so that an interpreter has
a certain flexibility in considering relevant supplementary means in a given case so as to assist in
ascertaining the common intentions of the parties.
56
7.12. Article XVI of the Marrakesh Agreement Establishing the World Trade Organization
(WTO Agreement) indicates that the legal texts of the WTO are equally authentic in their English,
French and Spanish versions. 57 In view of the foregoing, and in accordance with the provisions
of Article 33 of the Vienna Convention, the terms of the covered agreements are presumed to have
the same meaning in each authentic text, and in the event that a difference of meaning is
disclosed, the meaning that best reconciles the three texts, having regard to the object and
purpose of the treaty, shall be adopted.58
7.1.5 Burden of proof
7.13. Although the DSU does not contain any expr ess provision governing the burden of proof, by
application of the general principles of law the WTO dispute settlement system has traditionally
recognized that the burden of proof lies with the party asserting a fact, whether that party be the
claimant or the defendant.
59
7.14. Accordingly, in a proceeding the burden of proving that the impugned measure is
inconsistent with the relevant provisions of covered agreements initially lies with the complainant.
Once the complainant has made a prima facie case for such inconsistency, the burden shifts to the
defendant, who must in turn rebut the alleged inconsistency.
60 A prima facie case is one which, in
the absence of effective refutation by the defending party, requires a panel, as a matter of law, to
rule in favour of the complaining party.61 In the words of the Appellate Body:
[as] a general matter, the burden of proof rests upon the complaining Member.
That Member must make out a prima facie case by presenting sufficient evidence to
raise a presumption in favour of its claim. If the complaining Member succeeds, the
responding Member may then seek to rebu t this presumption. Therefore, under the
usual allocation of the burden of proof, a responding Member's measure will be
treated as WTO-consistent, until sufficient evidence is presented to prove the
contrary.
62 (emphasis original)
7.15. The Appellate Body added in this respect that precisely how much and precisely what kind
of evidence will be required for the complaining party to establish its case will necessarily vary
from measure to measure, provision to provision, and case to case.
63 In any event, it should be
borne in mind that, in the context of the WTO dispute settlement system:

55 Appellate Body Report, EC – Chicken Cuts, para. 282.
56 Ibid. para. 283.
57 See also the explanatory note to paragraph 2(c)(i) of the GATT 1994.
58 The Appellate Body explained: "Article 33 of the Vienna Convention reflects the principle that
the treaty text is equally authoritative in each language, unless the treaty provides or the parties agree that,
in case of divergence, a particular text shall prevail. For the covered agreements, Article XVI of the
WTO Agreement provides that the English, French, and Spanish language each are authentic. Consequently,
the terms of Article III:8(a) of the GATT 1994 are presumed to have the same meaning in each authentic text.
"Appellate Body Report, Canada - Renewable Energy / Canada - Feed-in Tariff Program, fn. 512 to para. 5.66.
See also, for example, Appellate Body Reports, Chile - Price Band System, para. 271; EC - Bed Linen
(Article 21.5 - India), fn. 153 to para. 123; US - Softwood Lumber IV, fn. 50 to para. 59, EC - Tariff
59 Appellate Body Report, US – Wool Shirts and Blouses, pp. 12-16.
60 Appellate Body Report, EC – Hormones, para. 98.
61 Ibid. para. 104.
62 Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II), para. 66.
63 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.

A prima facie case must be based on "evidence and legal argument" put forward by
the complaining party in relation to each of the elements of the claim. A complaining
party may not simply submit evidence and expect the panel to divine from it a claim
of WTO-inconsistency. Nor may a complaining party simply allege facts without
relating them to its legal arguments.
64 (emphasis original; footnotes omitted)
7.16. In the matter before us, and by application of the foregoing criteria, it lies with Guatemala
to make out a prima facie case for the violations of the provisions of the WTO covered agreements
it has invoked. If Guatemala succeeds in making a prima facie case for its claims, it will then be for
Peru to rebut them.
7.1.6 Order of analysis
7.17. The Appellate Body has stated that, as a general principle, panels are free to structure the
order of their analysis as they see fit. Except insofar as there may be a mandatory sequence
of analysis, deviation from which would lead to an error of law and/or affect the substance of the
analysis itself, panels have discretion to structure the order of their analysis.
65 The Panel also
recalls that, although panels may, in structuring their analysis, take account of the manner
in which a complainant presents its claims, they may also follow a different sequential order. 66
In the present case, the Panel will determine the order of analysis by focusing on the structure and
logic of the provisions at issue in this dispute.67
7.18. First of all, the Panel notes that Peru has requested it to find that Guatemala did not act in
good faith in engaging in the present proced ure and therefore to refrain from examining
Guatemala's claims. 68 Peru's request constitutes a preliminary question so that, if it were
accepted, the Panel would not proceed to consider Guatemala's substantive claims. Accordingly,
the Panel will begin by examining this argument put forward by Peru.
7.19. If, after analysing the above-mentioned pr eliminary question, the Panel concludes that it
should continue with the analysis, it will proceed to consider the main substantive provisions
invoked by Guatemala, that is to say, Article 4.2 of the Agreement on Agriculture and
Article II:1(b) of the GATT 1994. With respect to the order in which these two provisions should be
analysed, the Appellate Body has expressed a pref erence for beginning with Article 4.2 of the
Agreement on Agriculture. In this connection, in the original proceedings in Chile – Price Band
System, the Appellate Body stated:
It is clear, as a preliminary matter, that Article 4.2 of the Agreement on Agriculture
applies specifically to agricultural products, whereas Article II:1(b) of the GATT applies
generally to trade in all goods. Moreover, Article 21.1 of the Agreement on Agriculture
provides, in relevant part, that the provisions of the GATT 1994 apply "subject to the
provisions" of the Agreement on Agriculture . In our Report in EC – Bananas III , we
interpreted Article 21.1 to mean that:
… the provisions of the GATT 1994 … apply to market access
commitments concerning agricultural products, except to the extent that
the Agreement on Agriculture contains specific provisions dealing
specifically with the same matter …
[A]s we see it, the difference between the two provisions is that Article 4.2 of the
Agreement on Agriculture deals more specifically with preventing the circumvention
of tariff commitments on agricultural products than does the first sentence
of Article II:1(b) of the GATT 1994 …

64 Appellate Body Report, US – Gambling, para. 140.
65 Appellate Body Report, Canada - Wheat Exports and Grain Imports, paras. 126-127.
66 Ibid.; US - Zeroing (EC) (Article 21.5 - EC), para. 277.
67 Appellate Body Reports, Canada - Autos, para. 151; Canada - Wheat Exports and Grain Imports,
para. 109.
68 Peru's first written submission, paras. 4.11-4.21.

[A]ny finding under Article II:1(b) of the GATT 1994 would be subject to further
inquiry under the Agreement on Agriculture . In contrast, if we were to find first that
Chile's price band system is inconsistent with Article 4.2 of the Agreement on
Agriculture, we would not need to make a separate finding on whether the price band
system also results in a violation of Ar ticle II:1(b) of the GATT 1994 in order to
resolve this dispute. 69 (footnote - citing Appellate Body Report, EC - Bananas III,
para. 155 - omitted; emphasis original)
7.20. The Panel does not find any justification for departing from the Appellate Body's reasoning
in the circumstances of the present dispute. Therefore, in the event that the Panel
rejects the preliminary argument regarding the alleged lack of good faith, it will commence its
analysis of the main substantive provisions invoked by Guatemala with Article 4.2 of the
Agreement on Agriculture. The Panel will then co nsider, if appropriate, Guatemala's claims under
Article II:1(b) of the GATT 1994.
7.21. After analysing, if necessary, the claims concerning the main substantive provisions invoked
by Guatemala, the Panel will address, if appropri ate, the provisions concerning the application of
the measure, that is to say, Articles X:1 and X:3(a) of the GATT 1994.
7.22. Subsequently, if the Panel finds that the me asure at issue is an ordinary customs duty, it
will consider Guatemala's claims with respect to the Customs Valuation Agreement.
7.23. Peru has raised an additional argument in case the Panel finds the measure at issue to be
inconsistent with any of the provisions identified by Guatemala. In that case, Peru asserts that,
under the FTA between Peru and Guatemala, the parties modified, as between themselves, their
reciprocal obligations under the WTO agreements , and that the provisions of the FTA should
prevail. Given the conditional nature of this argument, the Panel will consider this defence only if it
decides that the measure at issue is inconsistent with any of the provisions identified by
Guatemala.
7.2 The question of whether the Panel sh ould refrain from examining Guatemala's
claims
7.2.1 Introduction
7.24. As a preliminary issue, Peru refers to the FTA between Peru and Guatemala signed in
December 2011.
70 Peru asserts that, under the FTA, Guatemala agreed that Peru could maintain
its PRS.71 Peru argues that, therefore, in initiating this procedure against the PRS, Guatemala is
violating the obligation to engage in WTO dispute settlement procedures in good faith. 72
Thus, according to Peru, the Panel should not consider Guatemala's claims.73
7.25. Peru maintains that its PRS is consistent with WTO rules, but even if the Panel were to find
that it is not, there would be an inconsistenc y between the FTA and the WTO agreements. This is
because the FTA allows Peru to maintain the PRS, whereas the WTO agreements would prohibit it
from doing so. In the presence of such inconsistency, by virtue of the provisions of its
Article 1.3.2, the FTA would prevail. This would re sult in the modification, between the parties, of
any provision of the WTO agreements that prohibits the PRS.
74
7.26. Guatemala rejects Peru's argument that in the present proceedings it has acted contrary to
good faith.75 According to Guatemala, a Member can only be found to have acted in breach of good
faith if that Member challenges a measure after having clearly stated that it would not do so. 76

69 Appellate Body Report, Chile - Price Band System, paras. 186, 187 and 190.
70 Free Trade Agreement between the Republic of Peru and the Republic of Guatemala (extracts)
(Extracts from the FTA) (Exhibits PER-32 and PER-65). See also Peru's first written submission, para. 3.74.
71 Peru's first written submission, paras. 3.74 and 3.76; second written submission, para. 2.21.
72 Peru's first written submission, paras. 4.11 and 4.19-4.20.
74 Peru's second written submission, para. 2.63.
75 Guatemala's second written submission, para. 9.4.
76 Ibid. para. 9.7.

Guatemala maintains that no waiver or modification of Guatemala's rights in the WTO with respect
to the PRS can be inferred from the FTA.77
7.27. Furthermore, Guatemala maintains that Peru's request would require the Panel to rule on
the consistency of Guatemala's actions with the provisions of the FTA, and this, in Guatemala's
opinion, would lead the Panel to act outside its terms of reference.78 Guatemala points out that the
Panel is not competent to hear disputes unrelated to the WTO covered agreements. Guatemala
adds that the FTA is not a legal vehicle for waiving or modifying rights and obligations contained in
the WTO Agreement.
79
7.28. Peru's arguments raise two separate issues. The first is whether Guatemala engaged in the
present procedure in a manner inconsistent with the good faith required by the DSU and whether
this means that the Panel should therefore refrai n from considering Guatemala's claims. The Panel
will consider this aspect as a preliminary matter and, in the light of its conclusions, decide whether
it should proceed with the consideration of the Guatemalan claims.
7.29. The second is whether – assuming that the Panel finds that the measure at issue is
inconsistent with any of Peru's obligations under the provisions of the covered agreements – it can
be considered that under the FTA the parties have modified, as between themselves, their
reciprocal obligations under the WTO agreements, and if so, whether the provisions of the FTA
should take precedence. Given the conditional nature of this Peruvian argument, the Panel will
examine this defence only if it decides that the measure at issue is inconsistent with any of the
provisions identified by Guatemala.
7.2.2 The content of the FTA and its legal status
7.30. As a preliminary step, consideration will be given to Peru's argument that the Panel should
refrain from examining Guatemala's claims on the grounds that Guatemala engaged in the present
procedure in a manner contrary to the good faith required by the DSU. The Panel will begin by
describing the relevant facts relating to the FTA, together with the provisions of the FTA invoked
by the parties to the dispute.
7.2.2.1 Chronology of events relating to the negotiation and entry into force of the FTA
7.31. The negotiations that led to the signing of the FTA arose out of the general negotiating
framework agreed between Peru and various Central American countries (Costa Rica, Guatemala,
Honduras and Panama) on 16 October 2010 at the VI
th Ministerial Meeting of the Latin American
Pacific Arc Forum.80 Guatemala and Peru signed the FTA on 6 December 2011.81
7.32. The FTA was approved by the Guatemalan Congress on 4 July 2013, by Decree No. 5-2013
published in the Journal of Central America (Guatemala's official journal) on 23 July 2013. 82
In December 2013, Guatemala initiated the procedures for ratification of the FTA by the President
of the Republic. 83 On 5 March 2014, Peru received a communication from Guatemala, dated
21 February 2014, notifying it that Guatemala had fulfilled the legal requirements for the entry
into force of the FTA.84
7.33. As matters stand at the close of these pr oceedings, the available evidence indicates that
Peru has not ratified the FTA. Peru has stated that, under Article 57 of its Political Constitution, the

77 Guatemala's second written submission, paras. 9.9-9.14.
78 Ibid. paras. 9.27 (citing Appellate Body Report, Mexico – Taxes on Soft Drinks, paras. 56 and 78),
and 9.29-9.31.
79 Guatemala's second written submission, para. 9.28; response to Panel question No. 21, para. 35.
80 Peru's first written submission, para. 3.71; General Framework for the negotiation of a Free Trade
Agreement between Costa Rica, Honduras, Guatemala, Panama and Peru (Exhibit PER-51).
81 Peru's first written submission, para. 3.74; Decree No. 5-2013 of the Guatemalan Congress published
on 23 July 2013 (Exhibit PER-30); Note from Guatemala to Peru (Exhibit PER-82).
82 Peru's first written submission, para. 3.78; Peru's response to Panel question No. 23, para. 37;
Decree No. 5-2013 of the Guatemalan Congress, published on 23 July 2013 (Exhibit PER-30); Guatemala's
response to Panel question No. 23, para. 45.
83 Guatemala's response to Panel question No. 23, para. 45.
84 Peru's opening statement at the second meeting of the Panel, para. 6; Note from Guatemala to Peru
(Exhibit PER-82); Guatemala's response to Panel question No. 89, para. 7.

President of the Republic can ratify the FTA with out having to obtain the prior approval of the
Congress.85 Peru has stated its intention that the FTA should enter into force, and consequently
has not ruled out expressing its consent to be bound by the FTA, "provided that the balance
agreed between Peru and Guatemala therein is respected". 86 H o w e v e r , P e r u h a s s t a t e d t h a t i t
"is not proceeding with the exchange of notifica tions at this time since the case brought by
Guatemala has created uncertainty with regard to the existence of the balance negotiated".87
7.2.2.2 Content of the FTA
7.34. The parties identified the following provisions of the FTA as relevant to the analysis of their
arguments with regard to whether the Panel should reject Guatemala's claims.
7.35. The preamble to the FTA states:
The Government of the Republic of Peru, on the one part, and the Government of the
Republic of Guatemala, on the other part, being resolved to:
STRENGTHEN the special bonds of friendship and cooperation between them and
promote regional economic integration;
FOSTER the creation of an expanded and secu re market for the goods and services
produced in their respective territories;
PROMOTE comprehensive economic development in order to reduce poverty;
ENCOURAGE the creation of new employment opportunities and improve working
conditions and living standards in their respective territories;
ESTABLISH clear and mutually advantageous rules governing their trade;
GUARANTEE a predictable legal and commercial framework for trade and investment;
RECOGNIZE that the promotion and protection of investment by one Party in the
territory of the other Party will contribute to enhancing the flow of investment and
stimulate mutually advantageous trading activity;
PREVENT distortions in their reciprocal trade;
PROMOTE the competitiveness of their enterprises in global markets;
FACILITATE trade by promoting efficient and tr ansparent customs procedures that
ensure predictability for their importers and exporters;
STIMULATE creativity and innovation and promote trade in innovative sectors of their
economies;
PROMOTE transparency in international trade and investment;
PRESERVE their capacity for safeguarding public welfare; and
BUILD ON their respective rights and obligations under the Marrakesh Agreement
Establishing the World Trade Organization , and other treaties to which they are
parties
88,

85 Peru's response to Panel question No. 23, para. 39. See the Political Constitution of Peru
(Exhibit PER-1), p. 17.
86 Peru's response to Panel question No. 94, paras. 15-16; comments on Guatemala's response to Panel
question No. 89, para. 5. See also Peru's opening statement at the first meeting of the Panel, para. 23.
87 Peru's response to Panel question No. 23, para. 39.
88 Extracts from the FTA (Exhibit PER-32).

7.36. Article 1.1 of the FTA provides as follows:
The Parties to this Treaty, in accordance with the provisions of Article XXIV of the
WTO General Agreement on Tariffs and Trade 1994 and Article V of the
WTO General Agreement on Trade in Services , hereby establish a free trade area.
(emphasis original)
7.37. Article 1.2 identifies as objectives of the FTA:
(a) encouraging the expansion and diversif ication of trade between the Parties;
(b) removing unnecessary barriers to trade and facilitating the cross-border
movement of goods and services between the Parties;
(c) promoting conditions of free competition within the free trade area;
(d) expanding the opportunities for investment within the territories of the Parties;
(e) appropriately and effectively protecting and enforcing intellectual property
rights in the territory of each Party, while taking into consideration the balance
between the rights and obligations deriving therefrom; and
(f) creating effective procedures for the a pplication and observance of this Treaty,
for its joint administration, and for preventing and settling disputes.
7.38. Article 1.3 of the FTA, on the relationship with other international agreements, stipulates
that:
1. The Parties confirm their existing mutual rights and obligations under the
WTO Agreement and other agreements to which they may be parties.
2. In the event of any inconsistency be tween this Treaty and the agreements
referred to in paragraph 1, this Treaty shall prevail to the extent of the inconsistency,
unless otherwise provided in this Treaty.
7.39. Where tariff elimination is concerned, paragraph 2 of Article 2.3 of the FTA establishes that:
Except as otherwise provided in this Treaty, each Party shall eliminate its customs
tariffs on goods originating in the other Party, in accordance with Annex 2.3.
7.40. The parties have indicated that, during the negotiation of the FTA, they discussed what
should be the treatment under the PRS for import s originating in Guatemala. The parties agreed
that Peru would grant Guatemala a tariff quota free of "tariffs, including those deriving from the
application of the Price Range System" for imports of certain products of Guatemalan origin,
namely: cheese, food preparations and preparations of a kind used in animal feeding.
89 Peru has
indicated that Guatemala requested that its sugar exports should also be free of tariffs, including
the price range system. 90 However, Guatemala and Peru failed to arrive at an agreement on this
latter aspect.91 Finally, with respect to the PRS, paragraph 9 of Annex 2.3 to the FTA states that:
Peru may maintain its Price Range System, established in Supreme Decree
No. 1152001EF and the amendments thereto, with regard to the products subject to

89 Situation of Products Subject to the Price Range in Peru, as Compared with the Treatment Granted in
the Guatemala-Peru Free Trade Agreement (Exhibit GTM-44), pp. 8-9; Peru's response to Panel question
No. 31, para. 73.
90 Guatemala's sugar proposal of 3 May 2011 (Exhibit PER-66). See also Peru's second written
submission, para. 2.31.
91 Peru's first written submission, para. 3.73; Guatemala's response to Panel question No. 24, para. 46.

the application of the system marked with an asterisk (*) in column 4 of Peru's
Schedule as set out in this Annex.92
7.41. With respect to disputes that may arise under the FTA and other trade agreements,
Article 15.3 of the FTA provides as follows:
In the event of any dispute that may arise under this Treaty or under another free
trade agreement to which the disputing Parties are party or the WTO Agreement, the
complaining Party may choose the forum for settling the dispute.93 (emphasis original)
7.42. Finally, Article 19.5 of the FTA stipulates that:
This Treaty shall enter into force sixty (60) days after the date on which the Parties
exchange written notifications confirming that they have completed their respective
legal procedures or on the date on which the Parties so agree.
94
7.2.3 Main arguments of the parties
7.2.3.1 Peru
7.43. Peru claims that Guatemala is seeking the "complete dismantlement" of the PRS through
these proceedings, after having explicitly recognized, in the FTA, that Peru could maintain it.
95
In Peru's opinion, this conduct is contrary to the obligation on Guatemala, under articles 3.7 and
3.10 of the DSU, to engage in dispute settlement procedures under the DSU in good faith.
96
7.44. Peru requests the Panel to make an ob jective assessment of the content of the FTA as
a relevant factual matter, in order to verify whether Guatemala engaged in the present procedure
in a manner contrary to good faith.
97
7.45. Peru maintains that, pursuant to articles 3.7 and 3.10 of the DSU, good faith is
a requirement as to the admissibility of a Member initiating a procedure under the WTO dispute
settlement system.98 Peru explains that its argument that Guatemala has not acted in good faith
does not entail application of the estoppel principle in this case.99
7.46. Peru considers that the obligation on Memb ers to exercise their judgement as to whether
bringing a case would be fruitful, in accordance with article 3.7 of the DSU, is not a matter
of self-regulation.
100 According to Peru, the presumption that a Member has engaged in a
procedure in good faith (identified by the Panel in EC – Export Subsidies on Sugar ) can be
refuted.101 Given the possibility of refuting that pres umption, Peru considers that the Panel may
determine that action under the present procedure would not be fruitful.102
7.47. In Peru's opinion, pursuant to Article 3.10 of the DSU, any action that implies bringing
a case contrary to good faith is prohibited. According to Peru, actions contrary to good faith
include cases where a Member initiates a dispute with the intention of causing injury to another

92 For a list of the tariff lines marked with an asterisk, see Extracts from the FTA (Exhibit PER-32);
Table containing the tariff items marked with an asterisk in Peru's Schedule under the Guatemala-Peru FTA,
and those subject to the Price Range System (Exhibit GTM-46).
93 Guatemala's second written submission, para. 9.13.
94 Extracts from the FTA (Exhibit PER-65).
95 Peru's first written submission, para. 4.2.
96 Peru's second written submission, para. 2.3. See also first written submission, paras. 4.11-4.13;
response to Panel question No. 26, para. 53.
97 Peru's first written submission, para. 4.3; second written submission, paras. 2.6 and 2.9; response to
Panel question No. 22, para. 34. See also X. Fernández Pons, La OMC y el Derecho internacional (The WTO and
International Law) (Marcial Pons, 2006) (Exhibit PER-39).
98 Peru's first written submission, para. 4.13; second written submission, paras. 2.3 and 2.41; response
99 Peru's response to Panel question No. 39, para. 87; response to Panel question No. 92, para. 7.
100 Peru's second written submission, paras. 2.38 and 2.41.
101 Peru's second written submission, para. 2.42 (citing Panel Report, EC – Export Subsidies on Sugar
(Australia) / EC – Export Subsidies on Sugar (Brazil) / EC – Export Subsidies on Sugar (Thailand), para. 7.67).
102 Peru's response to Panel question No. 96, para. 22.

Member or impairing its rights, in order to waste time, as a retaliatory measure, or when the
action diametrically contradicts what has been agreed in a free trade agreement.103
7.48. Peru maintains that the FTA was adopted and ratified by Guatemala and Peru, but is not yet
in force. In addition, neither of the two Parties has expressed the intention of not being party to
the FTA. Therefore, in accordance with the pr ovisions of Article 18 of the Vienna Convention 104,
Guatemala is obliged not to defeat the object and purpose of the FTA through actions that would
render the provisions of the treaty meaningless.
105 Peru states that Article 18 of the
Vienna Convention is applicable as an expression of the principle of good faith. 106 In addition,
Peru asserts that, in order to find that Guatemala has not acted in good faith, the Panel need only
determine that Guatemala violated Article 18 of the Vienna Convention.
107
7.49. According to Peru, paragraph 9 of Annex 2.3 to the FTA is a clear expression of Guatemala's
willingness to agree that Peru could maintain the PRS. 108 Peru also asserts that, given the bilateral
nature of the FTA, the object and purpose of th e treaty includes all the rules contained therein. 109
Peru adds that bringing a case aimed at th e dismantlement of the PRS "would eviscerate"
paragraph 9 of Annex 2.3 to the FTA, leaving it inoperative, and would constitute an action tending
to defeat the object and purpose of the FTA.110
7.50. Consequently, Peru contends that Guatemala did not initiate these proceedings in good faith
and requests the Panel to reject Guatemala's claims in limine.111
7.51. Peru observes that, when one party is not satisfied with what was negotiated in a bilateral
treaty establishing that its provisions would take precedence over WTO provisions with which it
might conflict, allowing that party to have recourse to the WTO to contest what was agreed in the
treaty "undermines both the WTO system and the basic principles of international law, since it
constitutes an open abuse of rights which cannot be permitted".
112
7.2.3.2 Guatemala
7.52. Guatemala asserts that it acted with "the utmost caution and in the most cooperative spirit"
in these proceedings, and therefore rejects any allegation of a lack of good faith.113
7.53. In Guatemala's view, Peru's request concerni ng violation of the provisions of the FTA would
require the Panel to act outside its terms of reference. 114 Guatemala asserts that panels cannot
rule on disputes unrelated to the WTO covered agreements. 115 Guatemala adds that the Panel is
not precluded from assessing the FTA as a factual matter and from making factual findings in that
respect.
116
7.54. With regard to Article 3.7 of the DSU, Gu atemala maintains that the obligation to exercise
judgement as to whether bringing a case would be fruitful entails a decision by each Member,

103 Peru's second written submission, para. 2.49; response to Panel question No. 92, para. 8.
104 See M. Dixon, Cases & Materials on International Law, 5th ed. (Oxford University Press, 2011)
(Exhibit PER-36); M. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties
(Martinus Nijhoff Publishers, 2009) (Exhibit PER-47).
105 Peru's first written submission, para. 4.7.
106 Peru's second written submission, para. 2.51; response to Panel question No. 22, para. 35; response
to Panel question No. 93.
107 Peru's response to Panel question No. 93, para. 13.
108 Peru's second written submission, paras. 2.19-2.26.
109 Peru's response to Panel question No. 27.
110 Peru's response to Panel question No. 28, para. 59. See also response to Panel question No. 93,
para. 14.
112 Peru's second written submission, para. 2.68. See also Peru's opening statement at the first meeting
of the Panel, para. 10; opening statement at the second meeting of the Panel, para. 12.
113 Guatemala's second written submission, para. 9.4.
114 Guatemala's second written submission, paras. 9.29-9.31. See also response to Panel question
No. 21, para. 35(a) (citing Appellate Body Report, Mexico - Taxes on Soft Drinks, para. 78); response to Panel
question No. 91, para. 16.
115 Guatemala's second written submission, para. 9.27 (citing Appellate Body Report, Mexico - Taxes on
Soft Drinks, paras. 56 and 78).
116 Guatemala's response to Panel question No. 91, para. 15.

which a panel must presume to be made in good faith. 117 According to Guatemala, Article 3.7
of the DSU does not limit a Member's discretion with respect to the outcome of exercising its
judgement as to whether engagement in a procedure would be fruitful. Consequently, Guatemala
maintains that the outcome of that exercise could not be questioned by the respondent Member or
by a panel.
118
7.55. Guatemala indicates that, under Article 3.10 of the DSU, it can only be found that a Member
engaged in a procedure in a manner contrary to good faith if, before initiating the dispute, the
Member in question clearly expressed its waiver of the right to challenge the measure in
question.119 Guatemala contends that paragraph 9 of Annex 2.3 to the FTA cannot be read as
an explicit or implicit waiver of any of Guatemala's WTO rights, including the right to bring
a complaint under the DSU with regard to th e PRS or the duties resulting from the PRS.
120
Guatemala does not agree with Peru's reading of what was agreed in the FTA. In particular,
Guatemala considers that Article 1.3.1 of the FTA, read in conjunction with paragraph 9
of Annex 2.3 to the FTA, grants Peru the right to maintain the PRS for a limited number
of products, without in any way affecting Peru's obligation to comply with the WTO Agreement.
121
7.56. In addition to the foregoing, Guatemala rejects the possibility for a Member to waive –
through a free trade agreement – its right to bring a case in the WTO. According to Guatemala,
under the legal framework of the WTO, a waiver of that kind would have to be made through
a mutually agreed solution in accordance with Article 3.5 of the DSU or a multilateral
agreement.
122
7.57. Guatemala argues that Peru is requesting the Panel to act outside its terms of reference,
since it would be required to verify whether an act by Guatemala defeats the object and purpose
of a non-WTO treaty.123 In any event, Guatemala considers that the initiation of these proceedings
does not defeat the object and purpose of the FTA because: (a) under Chapter 15 of the FTA,
Guatemala is allowed to bring a case before the WTO; (b) Guatemala has not in any way waived
its right to challenge the PRS; (c) there is no conflict whatsoever between the provisions of the
FTA and those of the WTO agreements
124; and (d) under Article 1.3.1 of the FTA, the parties
confirm their rights and obligations under the WTO Agreement. 125 Lastly, Guatemala adds that
Peru's arguments regarding Article 18 of the Vienna Convention are invalidated by Peru's apparent
expression of the wish not to be bound by the FTA.126

117 Guatemala's response to Panel question No. 29, para. 64 (citing Appellate Body Reports,
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 211; and
Panel Report, EC – Export Subsidies on Sugar (Australia) / EC – Export Subsidies on Sugar (Brazil) /
EC - Export Subsidies on Sugar (Thailand), para. 7.67); response to Panel question No. 96, paras. 29-31
(citing Appellate Body Reports, EC – Bananas III, para. 135; and Mexico – Corn Syrup (Article 21.5 – US),
para. 74).
118 Guatemala's response to question No. 96, para. 32; comments on Peru's response to Panel question
Nos. 88, 89, 90, 92, 95 and 96, paras. 14-15.
119 Guatemala's response to Panel question No. 29, paras. 65-66 (citing Appellate Body Reports,
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 228). See also second
written submission, paras. 9.5 and 9.7; comments on Peru's response to Panel question Nos. 88, 89, 90, 92,
95 and 96, paras. 16-18.
120 Guatemala's second written submission, paras. 9.9-9.14; response to Panel question No. 29,
paras. 67-68.
121 Guatemala's second written submission, paras. 9.11-9.12. See also response to Panel question
No. 25, para. 49.
122 Guatemala's second written submission, para. 9.8 (referring to United States' third-party written
submission, para. 50); response to Panel question No. 21, para. 36; response to Panel question No. 91,
para. 19; comments on Peru's response to Panel question No. 97, para. 27.
123 Guatemala's second written submission, paras. 9.34-9.35; response to Panel question No. 27,
para. 59 (citing Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 78); response to Panel question
No. 88, para. 2.
124 Guatemala's second written submission, paras. 9.13 and 9.36; response to Panel question No. 27,
125 Guatemala's response to Panel question No. 28, paras. 62-63.
126 Guatemala's comments on Peru's response to Panel question Nos. 93 and 94, paras. 21-23
(referring to Guatemala's response to Panel question No. 89, para. 10; and to Public statements by the
Minister for Foreign Affairs and the Vice-Minister for Foreign Trade of Peru (Exhibit GTM-38); and to
Peru's opening statement at the second meeting of the Panel, para. 23).

7.58. Guatemala adds that, since the FTA has not been accepted by all WTO Members, it cannot
be used to interpret the provisions of the covered agreements, or in particular Articles 3.7 and
3.10 of the DSU.
127
7.59. Guatemala considers that its arguments remain valid regardless of whether or not the FTA is
in force. In its view, the fact that the FTA ha s not entered into force strengthens the argument
that this Treaty cannot be used to interpret the WTO agreements.128
7.60. Guatemala concludes by expressing concern at the effects that would be produced by
acceptance of Peru's arguments. In particular, it considers that, if WTO Members were permitted
to waive their right to challenge measures thro ugh free trade agreements, even before a dispute
might arise in respect of such measures, "the door would be opened dangerously wide for political
pressures and negotiating power imbalances to impair the rights of smaller and weaker parties".
129
7.2.4 Main arguments of the third parties
7.2.4.1 Argentina
7.61. Argentina considers that, although the FTA has not entered into force, Guatemala and Peru,
by virtue of having signed it, are subject to the obligation not to defeat its object and purpose.
130
In Argentina's view, a price range system lack s transparency and impairs the predictability
of trade. The foregoing is incompatible with collaboration and the promotion of trade sought by
an agreement like the FTA. Argentina concludes that the search for ways of further opening up
trade should not be hampered by obstacles "such as certain measures which, by their inherent
characteristics, tend to impair transparency and predictability, and thus to restrict trade".131
7.2.4.2 Brazil
7.62. Brazil considers that a free trade agreement may be relevant to the determination of the
parties' rights and obligations in their bilateral relations and that, in accordance with the provisions
of Article XXIV of the GATT 1994, it may also serve as a context for assessing the rights and
obligations of a WTO Member. However, given that the FTA has not entered into force, it is not
relevant to the assessment of the present case.
132 Brazil adds that Article 18 of the
Vienna Convention could be relevant within the scope of the FTA, but is not relevant in the context
of a dispute concerning the compatibility of the challenged measure with WTO provisions. 133
In addition, the Appellate Body was clear about th e fact that panels and the Appellate Body must
presume that the decision of any Member to initiate a case is made in good faith. 134 Brazil asserts
that nothing in the DSU authorizes a panel to exclude the alleged violation of a WTO rule from its
jurisdiction.135
7.2.4.3 Colombia
7.63. Colombia considers that Articles 3.7 and 3.10 of the DSU must form part of the objective
analysis of a complaint that panels must make in accordance with Article 11 of the DSU.
136
Basing itself on Appellate Body statements, Colombia maintains that Articles 3.10 and 4.3 of the
DSU require Members to act in good faith when initiating a dispute, and that Article 3.10 is one

127 Guatemala's response to Panel question No. 21, para. 35(b) (citing Panel Report, EC - Approval and
Marketing of Biotech Products, para. 7.68, and referring to Appellate Body Reports, EC - Chicken Cuts,
paras. 271-273; and Japan - Alcoholic Beverages II, p. 15).
128 Guatemala's response to Panel question No. 22, paras. 40-41.
129 Guatemala's second written submission, para. 9.19; response to Panel question No. 21, para. 38.
In para. 9.20 of its second written submission, Guatemala states that Peru's conduct in the present case,
by threatening not to ratify the FTA if the dispute continues, is an example of the type of political pressure to
which it refers. See also Guatemala's comments on Peru's response to Panel question No. 97, paras. 28-29.
130 Argentina's response to Panel question Nos. 1 and 2, pp. 1-2.
131 Argentina's response to Panel question Nos. 1 and 2, pp. 2-4.
132 Brazil's response to Panel question No. 1, p. 1.
133 Brazil's response to Panel question No. 2, p. 1.
134 Brazil's response to Panel question No. 3, p. 2 (citing Appellate Body Reports, EC - Sardines,
135 Brazil's response to Panel question No. 3, p. 2.
136 Colombia's third-party written submission, para. 43.

of the few provisions of the DSU that expressly limits the right of Members to bring a complaint.137
In the context of Articles 3.7 and 3.10 of the DS U, the doctrine of the abuse of rights may be
interpreted as the requirement to refrain from using the dispute settlement mechanism without
the motivation to find a solution to the disput e or for the purpose of causing prejudice to one
of the Members. Thus, the limits to the exercise of the right to initiate a dispute would lie in the
absence of "a genuine intention to resolve the conflict".
138 Finally, Colombia states that the PRS
does not per se defeat the object and purpose of the FTA or the rules contained in Article 4 of the
Agreement on Agriculture.139
7.2.4.4 United States
7.64. The United States considers that the FTA is irrelevant to the adjudication of this matter,
since the determination as to whether a measure is consistent with a covered agreement does not
hinge on the terms of a treaty such as the FTA which does not form part of the covered
agreements.
140 Nor does the United States consider Article 18 of the Vienna Convention to be
relevant to an assessment as to whether Guatemala is entitled to assert a claim under the DSU. 141
The United States considers that the Panel must reject Peru's requests, inasmuch as they imply
that the Panel should make findings regarding obligations other than those contained in the
covered agreements and should refrain from making findings on claims relating to violations of
those agreements.
142 With regard to Article 3.7 of the DSU, the United States considers that the
Appellate Body left it to Members to determine when to bring an action and made it clear that
a procedure under the DSU would be presumed to be initiated in good faith.
143 Furthermore, the
United States considers that Article 3.10 of the DSU places no obligation on a Member, but is
confined to setting out a common understanding of how Members will act under the dispute
settlement mechanism.144
7.2.4.5 European Union
7.65. The European Union considers that a Member may waive its rights under the
WTO agreements. For the purpose of determining whether a Member has undertaken to refrain
from challenging a measure, the subsequent agreements between the parties regarding the
interpretation of a treaty and any rules of intern ational law applicable between the parties may be
relevant for the interpretation of the covered agreements. The European Union suggests in this
connection that the Panel is empowered to consider whether the FTA contains a clear commitment
on Guatemala's part to refrain from challenging the PRS in the WTO.
145 The European Union
argues that Article 18 of the Vienna Convention may be relevant to the extent that the FTA
contains a clear commitment by Guatemala to refrain from challenging the PRS in the WTO. 146
The European Union also considers that the doctrine of abuse of rights prohibits a Member from
exercising a right for a purpose other than the one for which the right was established. In the case
of the dispute settlement mechanism, the purpose is to secure a positive solution to a dispute. 147
The European Union contends that the central is sue for determining the existence of any element

137 Colombia's third-party written submission, paras. 44-45 (citing Appellate Body Reports,
Canada - Continued Suspension, para. 3.13; EC - Export Subsidies on Sugar, para. 312; EC - Bananas III,
para. 135; and Mexico - Taxes on Soft Drinks, fn. 100). See also Colombia's third-party statement, para. 15.
138 Colombia's response to Panel question No. 3 (citing Appellate Body Reports, EC - Export Subsidies
on Sugar, para. 312; EC - Bananas III, para. 135; Mexico - Taxes on Soft Drinks, fn. 100).
139 Colombia's third-party statement, paras. 12-13.
140 United States' third-party statement, para. 19; response to Panel question No. 1, para. 4.
141 United States' third-party written submission, para. 47; third-party statement, para. 21; response to
Panel question No. 2.
142 United States' third-party written submission, para. 36. See also, third-party written submission,
paras. 42-43 (citing Appellate Body Report, Mexico - Taxes on Soft Drinks, para. 53).
143 United States' third-party statement, para. 22 (citing Appellate Body Report, Mexico - Corn Syrup
(Article 21.5 - US), paras. 73-74); response to Panel question No. 3, para. 9.
144 United States' third-party written submission, paras. 44-46; third-party statement, para. 24;
response to Panel question No. 3, para. 10.
145 European Union's third-party written submission, paras. 17-18 (citing Appellate Body Report,
EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 – US), paras. 217 and 218);
response to Panel question No. 1, paras. 1-3.
146 European Union's response to Panel question No. 2, para. 5.
147 European Union's response to Panel question No. 3, para. 8.

preventing Guatemala from initiating these proc eedings is whether, under the FTA, Guatemala
made a clear commitment to refrain from bringing a case against the PRS before the WTO.148
7.2.5 Assessment by the Panel
7.66. Peru claims that Guatemala did not initiate this procedure in good faith, mainly because
Guatemala accepted the maintenance of the PRS in the FTA and subsequently sought its
dismantlement in the context of the present proceedings.
149 The Panel has carefully considered the
arguments put forward by Peru. As the parties have observed, the assessment of this matter could
have important systemic consequences.150
7.67. The Panel is aware that trade relation s between WTO Members are often not regulated
solely and exclusively by the rules contained in the WTO agreements. On the contrary, these
relations are frequently governed by a complex fr amework that includes not only the rules of the
WTO but also other international commitments, including those derived from regional and bilateral
trade agreements. The WTO agreements recognize this reality, as is clear, for example, from
Article XXIV of the GATT 1994, the Decision on Differential and More Favourable Treatment,
Reciprocity and Fuller Participation (Enabling Clause), adopted by the GATT CONTRACTING
PARTIES in 1979
151, and Article V of the General Agreemen t on Trade in Services. At the same
time, these provisions impose certain conditions in the event that a Member, in the context of a
regional or bilateral agreement, requests exemption from any of its obligations under the
WTO agreements.152 As the Appellate Body has observed, in performing its task of clarifying
provisions of the covered agreements in the context of a specific dispute, a panel cannot read the
texts of the agreements "in clinical isolation from public international law".
153
7.68. However, this Panel's task is circumscribed by the terms of reference conferred upon it by
the DSU. These terms of reference delimit the Panel's authority as follows:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute , the matter referred to the DSB by Guatemala in
document WT/DS457/2 and to make such findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in those agreements.
154
(emphasis added)
7.69. For this reason, the Panel is only authorized to rule on the invocation of any rule of public
international law applicable to the relations between the parties to the extent that the invocation
of that rule of international law is based on a relevant provision of the covered agreements that
has been invoked by one of the parties to the dispute. In this specific case, the Panel's assessment
of the argument put forward by Peru is limite d to examining whether Peru has succeeded in
showing that Guatemala engaged in the present procedure in a manner contrary to good faith and,
if so, what consequences might flow from that finding, in the light of Articles 3.7 and 3.10 of the
DSU.
155

148 European Union's third-party written submission, paras. 17-18.
150 Peru's second written submission, para. 2.68; Peru's opening statement at the first meeting of the
Panel, para. 10; Peru's opening statement at the second meeting of the Panel, para. 12. Guatemala's second
written submission, para. 9.19; Guatemala's response to Panel question No. 21, para. 38.
151 GATT document L/4903, BISD 26S/203-205.
152 See, for example, Appellate Body Reports, Turkey - Textiles, paras. 44-59; EC - Tariff Preferences,
paras. 89-99.
153 Appellate Body Report, US - Gasoline, p. 17.
154 Constitution of the Panel established at the request of Guatemala, document WT/DS457/3
(of 23 September 2013), para. 2.
155 The Panel takes note of the argument put forward by the United States in its response to Panel
question No. 3, to the effect that, even if Article 3.10 were to impose binding obligations, Peru would have
to submit a claim of violation of that provision to defend its position. Peru has rejected this argument.
See Peru's second written submission, para. 2.45. The Panel notes that the argument put forward by the
United States was not advanced by Guatemala. The Panel considers that, as was pointed out by the
Appellate Body, "panels cannot simply ignore issues which go to the root of their jurisdiction – that is, to
their authority to deal with and dispose of matters" (Appellate Body Report, Mexico - Corn Syrup (Article 21.5),
para. 36). Thus, the Panel will proceed to examine Peru's arguments with respect to the Panel's authority
to examine the substance of the claims made by Guatemala in this case.

7.70. The Panel will commence its examination by recalling the scope of Members' obligations,
under Articles 3.7 and 3.10 of the DSU, that are relevant to the analysis of the present case.
The Panel will go on to examine whether Peru has shown that Guatemala engaged in the present
procedure in a manner contrary to its obligation to do so in good faith.
7.2.5.1 The principle of good faith under Articles 3.7 and 3.10 of the DSU
7.71. The first sentence of Article 3.7 of the DSU, to which the parties refer, stipulates that:
Before bringing a case, a Member shall exercise its judgement as to whether action
under these procedures would be fruitful.
7.72. In Mexico – Corn Syrup (Article 21.5 – US) , the Appellate Body examined a Mexican
argument with respect to the alleged failure on the part of the United States to meet the
requirement laid down in the first sentence of Article 3.7 of the DSU in initiating the compliance
procedure in that case.
156 In its analysis, the Appellate Body considered that the first sentence
of Article 3.7 "reflects a basic principle that Members should have recourse to WTO dispute
settlement in good faith, and not frivolously set in motion the procedures contemplated in the
DSU".157
7.73. In the same report, the Appellate Body referred to its finding in EC – Bananas III with
respect to the broad discretion accorded to every Member in deciding whether the action of
bringing a case would be fruitful.158 In view of this broad discretion, the Appellate Body maintained
that panels "must presume, whenever a Member submits a request for establishment of a panel,
t h a t s u c h M e m b e r d o e s s o i n g o o d f a i t h , h a v i n g d u l y e x e r c i s e d i t s j u d g e m e n t a s t o w h e t h e r
recourse to that panel would be 'fruitful'".
159 The Appellate Body also pointed out that the first
sentence of Article 3.7 of the DSU "neither requir es nor authorizes a panel to look behind that
Member's decision and to question its exercise of judgement". 160 Therefore, the Appellate Body
considered that the panel in that case was not obliged to consider this issue on its own motion. 161
However, the Appellate Body's ruling does not indicate whether the presumption that a Member is
acting in good faith and has duly exercised its judgement as to whether recourse to a panel would
be fruitful is a rebuttable presumption.
7.74. Guatemala and Peru disagree about the scope of the findings of the Appellate Body in
Mexico – Corn Syrup (Article 21.5 – US ) with respect to Article 3. 7 of the DSU. According to
Guatemala, in that case the Appellate Body clea rly found that a panel cannot question a Member's
exercise of judgement as to whether initiation of a dispute settlement procedure would be
fruitful.
162 For its part, Peru maintains that, despite the existence of a presumption, that
presumption is rebuttable.163
7.75. As pointed out by the Appellate Body, Article 3.7 of the DSU is an expression of the principle
that Members should have recourse to the dispute settlement procedure in good faith. 164
In addition, the Appellate Body indicated that ev ery Member should exercise its judgement as to
whether the initiation of a procedure would be fruitful and that it was not for a panel to question
the outcome of such exercise of judgement. On the contrary, a panel should presume good
faith.165 The Panel does not find any support either in the text of Article 3.7 of the DSU or in panel
or Appellate Body reports that would allow it, in the circumstances of the present case, to do
anything other than presume that Guatemala duly exercised its judgement as to whether the
initiation of this procedure would be fruitful.

156 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US), paras. 34, 41, 51 and 71.
157 Ibid. para. 73.
158 Ibid. para. 73 (citing Appellate Body Report, EC – Bananas III, para. 135). See also: Appellate Body
Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 211.
159 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 74. See also Panel Reports,
EC – Export Subsidies on Sugar (Australia) / EC – Export Subsidies on Sugar (Brazil) / EC – Export Subsidies
on Sugar (Thailand), para. 7.67.
160 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US), para. 74.
161 Ibid.
162 Guatemala's response to Panel question No. 96.
163 Peru's second written submission, para. 2.42.
164 Appellate Body Report, Mexico - Corn Syrup (Article 21.5 - US), para. 73.
165 Ibid. para. 74.

7.76. Nevertheless, the Panel recalls the Appellate Body's consideration in EC – Export Subsidies
on Sugar of an argument by the European Communities concerning the application of the principle
of estoppel in that dispute. The Appellate Body ruled in the following terms on the limits that the
DSU imposes on the right of Members to submit a claim:
The principle of estoppel has never been applied by the Appellate Body. Moreover, the
notion of estoppel, as advanced by the European Communities, would appear to
inhibit the ability of WTO Members to initiate a WTO dispute settlement proceeding.
We see little in the DSU that explicitly limi ts the rights of WTO Members to bring an
action; WTO Members must exercise their "judgement as to whether action under
these procedures would be fruitful", by virtue of Article 3.7 of the DSU, and they must
engage in dispute settlement procedures in good faith, by virtue of Article 3.10 of the
DSU. This latter obligation covers, in our view, the entire spectrum of dispute
settlement, from the point of initiation of a case through implementation. Thus, even
assuming arguendo that the principle of estoppel could apply in the WTO, its
application would fall within these narrow parameters set out in the DSU.
166
7.77. Within this context, the Panel consider s that the assessment of whether an action was
brought in good faith can also be guided by the pr ovisions of Article 3.10 of the DSU. Accordingly,
the Panel will examine the content and scope of Article 3.10.
7.78. The first sentence of Article 3.10 of the DSU, to which the parties refer, reads as follows:
It is understood that requests for conciliation and the use of the dispute settlement
procedures should not be intended or considered as contentious acts and that, if
a dispute arises, all Members will engage in these procedures in good faith in an effort
to resolve the dispute.
7.79. In the past, the Appellate Body and some panels have assessed the scope of this provision.
The question of whether the behaviour of one of the parties over the course of a dispute
settlement procedure could be deemed to have been limited by virtue of this provision has been
analysed on several occasions.
167 In some of these cases, the Appellate Body pointed out that
Article 3.10 obliges Members to participate in dispute settlement proceedings in good faith.168
7.80. The Appellate Body169 has also assessed the possible impact on a panel's terms of reference
of failure to comply with the requirements of Ar ticle 3.10 of the DSU with regard to initiating
a dispute settlement procedure in good faith. In the light of Peru's claim that Guatemala did not
engage in the present procedure in good faith, the Panel will proceed to examine the
considerations mentioned by the Appellate Body concerning how to determine whether a Member
initiated a procedure in a manner contrary to good faith.

166 Appellate Body Report, EC - Export Subsidies on Sugar, para. 312.
167 Appellate Body Reports, US - Gambling, para. 269 (with reference to the moment at which
a responding party should put forward its defence); Thailand - H-Beams, para. 97 (in analysing the sufficiency
of the identification of the legal basis of the complaint in the request for the establishment of a panel);
US - FSC, para. 166 (in examining the moment at which responding Members should bring procedural
deficiencies to the attention of the panel); US - Lamb, para. 115 (in analysing the discretion that Members
enjoy to argue claims); EC - Sardines, paras. 140-141 (in analysing the imposition of conditions on the
withdrawal of an appeal); Canada - Aircraft, para. 190 (in assessing the duty of a Member to provide
information requested by a panel); EC - Tariff Preferences, para. 117 (in assessing whether the complaining
party should have analysed a possible defence of the responding party under the Enabling Clause).
Panel Reports, US - Upland Cotton, para. 7.67 (in assessing the lack of a response from the responding party
to questions from the complaining party during consultations); EC - Fasteners (China), para. 7.522
(in examining the moment at which the complaining party developed a claim); US - 1916 Act (Japan), fn. 422;
EC - Asbestos, fn. 3 of Section VII of the report (where reference is made to the opportunity for a Member to
notify the panel during the interim review phase of any factual error contained in the preliminary report).
169 So far, the matter has been discussed in EC - Export Subsidies on Sugar and EC - Bananas III
(Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US). In another case, the Appellate Body,
in referring to the competence of a panel to examine non-mandatory measures, stated that: "As long as
a Member respects the principles set forth in Articles 3.7 and 3.10 of the DSU, namely, to exercise their
'judgement as to whether action under these procedures would be fruitful' and to engage in dispute settlement
in good faith, then that Member is entitled to request a panel to examine measures that the Member considers
nullify or impair its benefits". Appellate Body Report, US - Corrosion-Resistant Steel Sunset Review, para. 89.

7.81. In EC – Export Subsidies on Sugar , the Appellate Body stressed that Articles 3.7 and 3.10
are among the few provisions that expressly li mit the right of Members to bring an action. 170
The Appellate Body referred to the Panel's finding in that case that it had not been possible to
identify any facts or statements made by the complainants where they had admitted that the
measure challenged was WTO-consistent or where they had undertaken not to take legal action
against the European Communities.
171 The Appellate Body also noted that the Panel had found
no evidence of a shared understanding of the Schedule of Concessions, as alleged by the
European Communities, that would shelter the measure. 172 The Appellate Body concluded that it
had seen nothing in the Panel record to su ggest that the complaining Members had acted
inconsistently with the principle of good faith.173
7.82. In EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) ,
the Appellate Body reviewed the way in which th e Panel in that case had assessed a European
Communities' argument concerning lack of jurisdiction to examine the substance of the
complainants' request. The argument made by the European Communities was that the
understandings on bananas signed with the comp lainants prevented the latter from initiating
compliance proceedings under Article 21.5 of the DSU. The legal basis used by the
European Communities for alleging this limitation was Article 3.10 of the DSU. In its analysis, the
Appellate Body stated that "the complainants could be precluded from initiating Article 21.5
proceedings by means of these Understandings only if the parties to these Understandings had,
either explicitly or by necessary implication, agreed to waive their right to have recourse" to those
proceedings.
174 The Appellate Body also expressed the vi ew that the relinquishment of rights
granted by the DSU could not be lightly as sumed and therefore the language in the
Understandings must "reveal clearly that the parties intended to relinquish their rights". 175
The Appellate Body added that "irrespective of the type of proceeding, if a WTO Member has not
clearly stated that it would not take legal action with respect to a certain measure, it cannot be
regarded as failing to act in good faith if it challenges that measure".176
7.83. Guatemala considers that this Appellate Body opinion is unequivocal in circumscribing the
legal standard for assessing whether a Member has acted in contravention of its obligation to bring
a case in good faith. 177 In other words, in Guatemala's view, an action would be confirmed as
being contrary to the obligation to engage in a procedure in good faith, under the terms
of Article 3.10 of the DSU, only if the bringing of the case were preceded by an express waiver on
the part of the complaining Member of its right to challenge the measure in question. However,
Peru does not agree that this is the only case in which there could be an infringement of the
obligation to act in good faith. In this connection, Peru maintains that "there could be various ways
of engaging in a procedure in bad faith"; an example could be when a Member engages in
a procedure with the intention of causing injury to another Member or impairing its rights.
178
7.84. The Panel does not consider it appropriate to make a general statement intended to cover
all the possible situations in which it might be found that a Member engaged in a procedure in the
absence of good faith. The Panel's assessment shou ld be made within the strict context of the
present dispute and in the light of the eviden ce which each of the parties has submitted.
In any event, pursuant to the observations of the Appellate Body in EC – Bananas III

170 Appellate Body Report, EC - Export Subsidies on Sugar, para. 310.
171 Ibid. para. 315.
172 Ibid. para. 316.
173 Ibid. para. 319.
174 Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III
(Article 21.5 - US), para. 217.
175 Ibid. para. 217 (where reference is made to the consideration by the International Court of Justice
of the declaration of acceptance of the Court's jurisdiction by Thailand in: International Court of Justice,
Case concerning the Temple of Preah Vihear (Cambodia v. Thailand), Preliminary Objections, ICJ Reports 1961,
p. 32).
176 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III
(Article 21.5 - US), para. 228. The Panel ruled similarly in Argentina – Poultry Anti-Dumping Duties, para. 7.38
(in assessing the estoppel argument put forward by Argentina).
177 Guatemala's second written submission, paras. 9.5 and 9.7.
178 Peru's second written submission, para. 2.49 and fn. 43. Likewise, Colombia's response to Panel
question No. 3, para. 4. Peru also pointed out, in its response to Panel question No. 92, para. 8, that other
situations in which it might be possible to engage in a procedure in the absence of good faith include:
"engaging in a procedure purely to waste time, as a means of retaliation or when initiating such a procedure
diametrically contradicts what has been agreed in a free trade agreement".

(Article 21.5 - Ecuador II) / EC – Bananas III (Article 21.5 – US) 179 and in EC – Export Subsidies
on Sugar180, the Panel finds it useful to base its analysis on the question of whether Guatemala,
before engaging in this procedure, expressly waived the right to bring a case with respect to the
PRS or recognized the consistency of that measure with the WTO agreements.
181 The Panel does
not find in the arguments put forward by Peru an d in the particular circumstances of the present
case any reason for taking additional situations into consideration. In particular, the Panel does not
find any evidence to suggest that the complaining party engaged in this procedure with the
intention of causing injury to another Member or impairing its rights. In this connection, the Panel
recalls that Article 3.10 of the DSU states that "[i]t is understood that requests for conciliation and
the use of the dispute settlement procedures should not be intended or considered as contentious
acts".
7.85. In addition, Peru asserts that Guatemala fa iled to comply with the procedural requirement
under the DSU to act in good faith, inasmuch as the initiation of the present procedure defeats the
object and purpose of the FTA.
182
7.86. Peru maintains that, even though the FTA is not yet in force, neither of the signatories has
expressed the intention of not being party to the treaty. 183 In its opinion, in accordance with
Article 18 of the Vienna Convention, both parties are obliged to refrain from acts which would
defeat the object and purpose of the FTA by rend ering the provisions of the treaty meaningless. 184
Peru points out that both Peru and Guatemala are parties to the Vienna Convention.185
7.87. Peru asserts that Article 18 of the Vienna Convention can be instructive in determining
whether a State has not acted in good faith in the context of a treaty that has been signed but is
not yet in force. 186 According to Peru, this does not mean that the Panel has to assess whether
there has been a violation of Article 18; Peru proposes that the Panel take Article 18 of the
Vienna Convention into consideration as an expression of the principle of good faith applicable to
the present case.
187 For its part, Guatemala considers that the Panel would be acting outside its
terms of reference if it were to rule on Peru's arguments relating to Article 18 of the
Vienna Convention.
188 Guatemala also maintains that bringing the present case does not defeat
the object and purpose of the FTA189 and that, in any case, Peru's arguments concerning Article 18
of the Vienna Convention are invalidated by Peru's statement that it does not wish to be bound by
the FTA.190
7.2.5.2 Whether Peru has shown that Guatem ala did not initiate the present procedure
in good faith
7.88. To begin with, the parties agree that the FTA has not yet entered into force. 191 Peru's
argument to the effect that paragraph 9 of Annex 2.3 to the FTA contains an undertaking by
Guatemala not to challenge the PRS is limited by this undisputed fact. An international treaty only
begins to produce legal effects and bind the parties from the moment it enters into force.

179 Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III
(Article 21.5 - US), para. 228, with regard to the finding that lack of good faith can be determined only if
an action is brought after the right to do so has been expressly waived with respect to the measure challenged.
180 Appellate Body Report, EC - Export Subsidies on Sugar, paras. 310-316.
181 The Panel notes that no ruling is being made with regard to the possibility that there may be other
situations in which a Member could act in a manner contrary to its obligation to engage in a dispute settlement
procedure in good faith under the terms of Article 3.10 of the DSU, nor with regard to whether a Member may
waive its right to engage in a dispute settlement procedure under the DSU.
182 Peru's response to Panel question No. 88, para. 1. See also Peru's second written submission,
para. 2.51.
184 Peru's first written submission, para. 4.7.
185 Peru's response to Panel question No. 26, para. 45.
186 Peru's response to Panel question No. 93, para. 10.
187 Ibid. para. 13.
188 Guatemala's second written submission, paras. 9.34-9.35; response to Panel question No. 27,
para. 59 (citing Appellate Body Report, Mexico - Taxes on Soft Drinks, para. 78); response to Panel question
No. 88, para. 2.
189 Guatemala's second written submission, para. 9.36; response to Panel question No. 27, para. 60;
response to Panel question No. 88, para. 4.
190 Guatemala's comments on Peru's response to Panel question Nos. 93 and 94, para. 21.
191 Ibid. para. 24; Peru's response to Panel question No. 94.

The mere signing of a treaty, before it enters into force, imposes only limited obligations on the
p a r t ie s , fu n d a m e n t a lly t h a t o f r e fr a in i n g fr o m a c t i n g in s u c h a wa y a s t o d e fe a t t h e ob je c t a nd
purpose of the treaty. To impose, as an effect of the signing of a treaty, legal consequences that
go beyond those indicated in Article 18 of the Vienna Convention would blur the difference
between a treaty in force and one that is not yet in force. Thus, the Panel cannot attribute to the
FTA a legal value that it does not currently possess.
7.89. The Panel has also taken note of Peru's ar gument according to which, by having challenged
the PRS through the present procedure, Guatemala is defeating the object and purpose of the FTA,
within the meaning of Article 18 of the Vienna Convention. In this connection, Peru has pointed out
that its argument does not mean that it is asking the Panel to determine whether or not
Guatemala is defeating the object and purpose of the FTA.
192
7.90. The relevant part of Article 18 of the Vienna Convention provides as follows:
A State is obliged to refrain from acts which would defeat the object and purpose of a
treaty when:
(a) it has signed the treaty or has exchanged instruments constituting the treaty
subject to ratification, acceptance or approval, until it shall have made its intention
clear not to become a party to the treaty …
7.91. In the opinion of some scholars, the obligation contained in Article 18 of the
Vienna Convention is in the nature of a customary rule of public international law.
193 In the
circumstances of this dispute, it is not necessary for the Panel to rule on the applicability of this
obligation. In any case, as emerges from the text, the provision does not require a signatory to
comply with the terms of a treaty which it has not yet ratified, and does not even require the
signatory not to act in a manner inconsistent with that treaty. The only obligation is to refrain from
acts which would prevent it from being in a position to comply with the treaty once the latter
enters into force or which would invalidate the object and purpose of the treaty.
194
7.92. The Panel is not convinced that the violat ion by a Member of the obligation contained in
Article 18 of the Vienna Convention with respect to a treaty that does not form part of the
WTO covered agreements can constitute evidence of lack of the good faith required by Articles 3.7
and 3.10 of the DSU. In any event, and even assuming for the sake of argument that this were so,
Peru's argument would require it to be shown that Guatemala's action, in initiating the present
procedure, constitutes an act which has the effect of defeating the object and purpose of the FTA.
This, in turn, would require the Panel to determine what is the object and purpose of the FTA.
The Panel notes that the parties hold significantly divergent opinions on this issue.
195 In any event,
to make a determination as to what is the object and purpose of the FTA would be to go beyond
the terms of reference entrusted to this Panel by the DSB.196
7.93. Finally, Peru has suggested that a Member could also act in a manner contrary to its
obligation to engage in a procedure in good faith if it does so: (a) with the intention of causing
injury to another Member or impairing its rights; (b) solely to waste time; (c) as a means of
retaliation; or (d) in a way diametrically contradicting what has been agreed in a free trade
agreement.
197 However, Peru has not claimed or demonstrated that Guatemala's conduct matches

192 Peru's response to Panel question No. 88, para. 1.
193 P. Palchetti, "Article 18 of the 1969 Vienna Convention: A Vague and Ineffective Obligation or
a Useful Means for Strengthening Legal Cooperation?", in: E Cannizzaro (ed.), The Law of Treaties Beyond
the Vienna Convention (Oxford University Press, 2011), p. 25. Likewise, M. Villiger, Commentary on the 1969
Vienna Convention on the Law of Treaties, (Martinus Nijhoff Publishers, 2009), p. 252. See also, United Nations
International Law Commission, Report on the Work of its Eighteenth Session (4 May-19 July 1966),
Official Records of the General Assembly, Twenty-first Session, Supplement No. 9, A/6309/Rev.1, p. 202.
194 A. Aust, Modern Treaty Law and Practice, 3rd ed. (2013), pp. 107 and 118-119. See also,
United Nations International Law Commission, Report on the Work of its Fifty-ninth Session
(7 May-5 June 2007), General Assembly, Official Records, Sixty-second Session, Supplement No. 10, A/62/10,
p. 56.
195 Guatemala's response to Panel question No. 28, paras. 61-62; Peru's response to Panel question
No. 28, paras. 59-60.
196 See Appellate Body Report, Mexico – Taxes on Soft Drinks, paras. 56 and 78.
197 Peru's second written submission, para. 2.49; response to Panel question No. 92, para. 8.

any of these circumstances. Accordingly, it is no t necessary to rule on whether, in any of the
circumstances listed by Peru, a panel would be precluded from ruling on a claim lodged under
the DSU.
7.94. Peru has also proposed that, in its assessment of the obligation to engage in a procedure in
good faith, the Panel should take into consideration the doctrine of abuse of rights.
198 Peru affirms
that Guatemala has committed an abuse of its rights by "seeking … to invoke the rules of the DSU
in relation to situations which, having regard to its own circumstances, it has considered consistent
with the framework of the WTO Agreement". 199 In explain ing th e doctrine of abuse of rig hts as
an expression of the principle of good faith, Peru referred to the observations of the
Appellate Body in US - Shrimp:
The chapeau of Article XX is, in fact, but one expression of the principle of good faith.
This principle, at once a general principle of law and a general principle
of international law, controls the exercise of rights by states. One application of this
general principle, the application widely known as the doctrine of abus de droit ,
prohibits the abusive exercise of a state's rights and enjoins that whenever
the assertion of a right "impinges on the fiel d covered by [a] treaty obligation, it must
be exercised bona fide, that is to say, reasonably."
200 An abusive exercise by
a Member of its own treaty right thus results in a breach of the treaty rights of the
other Members and, as well, a violation of the treaty obligation of the Member so
acting.201
7.95. The Appellate Body's approach indicates that a right will be exercised abusively when its
assertion unreasonably interferes with the sphere covered by an obligation arising out of a treaty.
This would occur when a Member initiates a dispute settlement procedure in a manner contrary to
good faith, along the lines described above. Thus, in the Panel's opinion, the elements mentioned
by Peru as forming part of the doctrine of abuse of rights coincide with those which the
Appellate Body has identified as situations in which a Member acts inconsistently with its obligation
to engage in a procedure in good faith. For this reason, the Panel does not find that the doctrine of
abuse of rights would add anything to the elements already mentioned as being relevant for the
purpose of assessing whether Guatemala engaged in the present procedure in good faith.
7.2.5.3 Conclusion
7.96. On the basis of these considerations, the Panel finds no evidence that Guatemala has
engaged in the present procedure in a manner contra ry to the good faith obligations contained in
Articles 3.7 and 3.10 of the DSU. In the light of this decision on the preliminary issue raised by
Peru, the Panel will proceed to examine Guatemala' s claims under Article 4.2 of the Agreement on
Agriculture.

198 Peru's first written submission, paras. 4.11 and 4.20; response to Panel question No. 26, para. 53;
response to Panel question No. 29.
199 Peru's response to Panel question No. 29, para. 66. See also response to Panel question No. 26,
para. 53.
200 (Footnote original) B. Cheng, General Principles of Law as applied by International Courts and
Tribunals (Stevens and Sons, Ltd., 1953), Chapter 4, in particular, p. 125 elaborates:
… A reasonable and bona fide exercise of a right in such a case is one which is appropriate and
necessary for the purpose of the right ("i.e. in furtherance of the interests which the right is
intended to protect). It should at the same time be fair and equitable as between the parties and
not one which is calculated to procure for one of them an unfair advantage in the light of the
obligation assumed. A reasonable exercise of the right is regarded as compatible with the
obligation. But the exercise of the right in such a manner as to prejudice the interests of the
other contracting party arising out of the treaty is unreasonable and is considered as inconsistent
with the bone fide execution of the treaty oblig ation, and a breach of the treaty … (emphasis
added)
Also see, for example, Jennings and Watts (eds.), Oppenheim's International Law, 9
th ed. Vol. I
(Longman's, 1992), pp. 407-410, Border and Transborder Armed Actions Case, (1988) I.C.J. Rep. 105;
Rights of Nationals of the United States in Morocco Case, (1952) I.C.J. Rep. 176; Anglo-Norwegian Fisheries
Case, (1951) I.C.J. Rep. 142.
201 Appellate Body Report, US - Shrimp, para. 158.

7.3 Description of the facts
7.97. Before commencing its examination of Guatemala's claims, the Panel will give a description
of the facts cited by the parties as forming the basis of the present dispute.
7.98. The Panel notes that the measure at issue identified by Guatemala in its request for the
establishment of a panel, submitted on 13 June 2013, is:
[T]he additional duty imposed by Peru on imports of certain agricultural products,
such as milk, maize, rice and sugar (hereinafter affected products).202
7.99. Guatemala explains that the characteristics of the measure include the fact that:
[I]t is determined by using a mechanism known as the "Price [Range] System" which,
in its turn, operates on the basis of two components: (i) a [range] made up of a floor
price and a ceiling price which, in accordance with the applicable regulations, reflect
the international price over the last 60 months for the different products concerned;
(ii) a c.i.f. reference price, which is published every two weeks and which, in
accordance with the applicable regulations, reflects the average international market
price for the different products concerned …
203
7.100. This section will describe the facts relating to the history of the PRS, the PRS in force and
the way it has operated since entering into force, as well as the relevant issues concerning Peru's
tariff policy and the way in which Peru bound its tariffs in its Schedule of Concessions.
7.3.1 History of the Price Range System
7.101. Peru maintains that it established a system of specific duties in 1991 and has applied it
ever since, and that the PRS is merely the same system, improved and adapted. 204 Guatemala
rejects this claim and maintains that Supreme Decree No. 115-EF-2001 tacitly repealed the 1991
system of specific duties and established the PRS, for which reason the latter is a separate
measure.
205
7.102. In support of its argument concerning the continuity between the system of specific duties
introduced in 1991 and the PRS, Peru has provided the Panel with the texts of some of the
instruments that established and modified the system between 1991 and 2001. These instruments
are described below.
7.103. Supreme Decree No. 016-1991-AG of 30 Apr il 1991 regulated the imposition of a specific
duty on certain food products comprising 18 tariff lines. The duty was calculated on the basis
of an international reference price, fixed weekly, and customs tables, revised semi-annually.
206

202 See request for the establishment of a panel by Guatemala, document WT/DS457/2 (14 June 2013),
p. 1. See also Guatemala's response to Panel question No. 41, paras. 84-89.
203 See request for the establishment of a panel by Guatemala, document WT/DS457/2 (14 June 2013),
p. 1.
204 Peru's first written submission, paras. 3.25 and 3.33; second written submission, para. 3.20;
response to Panel question No. 42; response to Panel question No. 129, para. 115; response to Panel question
No. 131, para. 124; response to Panel question No. 133; response to Panel question No. 142; comments on
Guatemala's response to Panel question No. 133; comments on Guatemala's response to Panel question
No. 142.
205 Guatemala's second written submission, paras. 5.64-5.72; opening statement at the first meeting
of the Panel, paras. 59-62; response to Panel question No. 43, para. 95; response to Panel question No. 44,
para. 101; response to Panel question No. 133; response to Panel question No. 142; comments on
Peru's response to Panel question No. 133. See also Circular INTA-CR.62-2002 of 26 August 2002 of the
National Customs Technical Division (Circular INTA-CR.62-2002) (Exhibit GTM-3); Electro-Technical
Report No. 7-2009-SUNAT/3D0410 of the Collection Department of the Callao Maritime Customs Division
(Exhibit GTM-36); Memorandum No. 73-2009-SUNAT/2B4000 (Exhibit GTM-37).
206 Supreme Decree No. 016-91-AG (Exhibit PER-22); Supreme Decree No. 016-91-AG with customs
tables (Exhibit PER-71). The operation of this system is explained in some detail in Peru's first written
submission, paras. 3.26-3.28. See also Peru's second written submission, para. 3.19; response to Panel
question No. 42, paras. 100-101; response to Panel question No. 133, para. 132.

7.104. According to Article 1 of Supreme Decr ee No. 016-1991-AG, "the specific duty, expressed
in United States dollars per metric ton, shall be determined in accordance with the respective
customs tables … on the basis of the lowest f.o.b. price of the product on the international market
on the date of shipment of the goods, as evidence d by the date of the bill of lading or waybill".
Article 2 of the same decree provided that a reference price, based on the weekly average
of the closing f.o.b. spot prices for the pr evious week, would be supplied weekly by the
Ministry of Agriculture to the Ministry of the Economy and Finance which, in its turn, would
communicate it to the National Customs Superv isory Authority. Article 3 of Supreme Decree
No. 016-1991-AG also indicated that the specific duty would be applied at the point in time at
which the import duties became due. Finally, Article 4 provided that the revenue collected by
levying the specific duty would be used to establish a support fund for the agricultural sector.
7.105. Article 2 and Annex No. 1 of Ministerial Resolution No. 258-91-EF-10 of 12 June 1991
identified the reference sources which the Peruvian authorities would use to calculate the specific
duties.
207 Article 3 of the Ministerial Resolution made it clear that a product-specific reference price
would be reported to customs, and would be used to apply the specific duty, regardless of the
source from which the product was purchased or the price indicated in the commercial invoice.
Article 5 of Ministerial Resolution No. 258-91-EF-10 also indicated that the Ministry of the Economy
and Finance would communicate the reference prices to the Peruvian National Customs
Supervisory Authority and would publish them in the Official Journal "El Peruano" on the day after
that on which they were received from the Ministry of Agriculture.
7.106. Ministerial Resolution No. 0768-91-AG of 31 October 1991 provided that the minimum
f.o.b. reference price used to establish specific du ties higher than zero would be calculated from
the simple arithmetic mean of the f.o.b. prices for the past 60 months. These prices would be
updated every six months, by eliminating the prices corresponding to the earlier six months and
incorporating those corresponding to the latest six months at the time of updating.
208
7.107. Supreme Decree No. 114-93-EF of 27 July 1993 mo dified the tariff lines subject to specific
duties.209 Article 2 of this decree established that the specific duty would be expressed in
"US dollars per metric ton" and would be determined on the basis of the customs table on the date
of shipment of the goods, in accordance with the da te indicated on the bill of lading or the waybill.
Article 3 entrusted the Central Reserve Bank of Pe ru with the task of semi-annually reviewing and
updating the customs tables for approval by Su preme Decree endorsed by the Ministers of the
Economy and Finance and of Agriculture. Article 5 entrusted the Central Reserve Bank of Peru with
the task of informing the Ministries of the Econ omy and Finance and of Agriculture, on a weekly
basis, of the average f.o.b. reference prices; these f.o.b. reference prices would be published by
the Ministry of the Economy and Finance in a ministerial resolution. Annex IV of the
Supreme Decree added an adjustment for a proportion of the standard price deviation and
established the following "inter-product proportionality factors": "in the case of flour and pasta, the
specific duty is 30% above the specific duty for wh eat, and in the case of paddy rice, the specific
duty is equal to 70% of the duty on pounded rice. In the case of dairy products, the specific duty
applied to skimmed milk powder and anhydrous milk fat is the same as the duty applied to whole
milk powder".
210
7.108. Supreme Decree No. 133-94-EF of 6 October 1994 introduced some adjustments to the
sources of information on reference prices and a methodology for calculating a floor price. 211
Under the Supreme Decree, information on averag e f.o.b. reference prices would be provided
weekly to the Ministries of the Economy and Fi nance and of Agriculture by the Central Reserve
Bank of Peru in respect of products subject to the specific duty, except in the case of dairy
products, for which information would be provided fortnightly. According to Annex IV of the
Supreme Decree in question, the floor price is calc ulated as "the average of the past 60 monthly
observations of the international f.o.b. prices infl ated by the United States Consumer Price Index.
This average is adjusted by the proportion of th e standard deviation with respect to the average
floor price [indicated in Annex II]".The same annex provides that the final calculation of the

207 Ministerial Resolution No. 258-91-EF-10 (Exhibit PER-21).
208 Ministerial Resolution No. 0768-91-AG (Exhibit PER-23).
209 Supreme Decree No. 114-93-EF (Exhibit PER-24).
210 Supreme Decree No. 114-93-EF (Exhibit PER-24). See also Peru's response to Panel question
No. 133.
211 Supreme Decree No. 133-94-EF (Exhibit PER-74).

"surcharge" (also referred to in the Supreme Decree as "specific duty") is based on the difference
between the floor price and the f.o.b. reference price, multiplied by an adjustment factor
associated with import expenses.
7.109. Supreme Decree No. 083-98-EF of 5 August 1998 excluded certain tariff lines from the
scope of the specific duty and updated the sources of information for the calculation of reference
prices.
212 Supreme Decree No. 133-99-EF of 11 August 1999 modified the reference sources for
calculating the floor price of some of the products subject to the specific duty.213
7.110. Supreme Decree No. 015-2001-EF of 29 January 2001 updated the information on the
reference sources for calculating the customs tables and the reference price for rice, maize and
sugar; further, for the purposes of the methodology used to calculate the customs tables,
it eliminated the standard deviation from the floor price calculation.
214
7.111. Supreme Decree No. 021-2001-EF of 5 February 2001 repealed Supreme Decree
No. 015-2001-EF and made some adjustments to the calculation of the specific duties.
Supreme Decree No. 021-2001-EF introduced a timetable for updating the customs tables;
confirmed the reference sources for the calculation of the customs tables, and the reference price
for rice, maize and sugar; and reintroduced the standard deviation from the floor price calculation
and the compilation of the customs tables.
215
7.112. Supreme Decree No. 15-2001-EF, of 21 June 2001, established the PRS applicable to
imports of various agricultural products. The preamble to the Supreme Decree included the
following two paragraphs:
Whereas Supreme Decree No. 016-91-AG established a Specific Duty System
imposing a levy on imports of certain agricultural products and that system was
modified by Supreme Decree No. 021-2001-EF, which established the need to
formulate a proposal for improving the variable specific duty methodology;
Whereas, following review and evaluation of the above-mentioned System, it was
d e e m e d n e c e s s a r y t o r e f i n e i t a n d t o b r i n g i t i n t o l i n e w i t h t h e n e e d s o f n a t i o n a l
agriculture, so as to enable domestic producers to plan their investments under
conditions of reduced uncertainty …
216
7.3.2 The PRS and how it operates
7.3.2.1 Introduction
7.113. As previously mentioned
217, in its request for the establishment of a panel, Guatemala
identified the measure at issue as "the addition al duty imposed by Peru on imports of certain
agricultural products" and explained that this duty was calculated by means of the PRS.
7.114. In this section, the Panel will describe the PRS and the duty or the tariff rebates that it can
generate, together with the way in which the system has operated since it was first established.
7.3.2.2 The PRS
7.115. Supreme Decree No. 115-2001-EF
218, published on 22 June 2001, established the PRS
applicable to imports of various tariff lines for rice, maize, milk and sugar.

212 Supreme Decree No. 083-98-EF (Exhibit PER-25).
213 Supreme Decree No. 133-99-EF (Exhibit PER-26).
214 Annex IV to Supreme Decree No. 015-2001-EF (Exhibits PER-92 and GTM-59). See also
Peru's response to Panel question No. 133.
215 Supreme Decree No. 021-2001-EF (Exhibit PER-49). See also Peru's response to Panel
question No. 133.
216 Supreme Decree No. 115-2001-EF (Exhibit GTM-4, p. 204887).
217 See above, para. 7.98.
218 Supreme Decree No. 115-2001-EF (Exhibit GTM-4).

7.116. According to Article 1 of Supreme Decree No. 115-2001-EF, the PRS was established
"for the purpose of applying variable duties additional to the tariff", when the international
reference prices for the products subject to the PRS are lower than certain floor price levels, and
tariff rebates, when those reference prices are higher than certain ceiling price levels.
219
7.117. On the website of Peru's Ministry of th e Economy and Finance the PRS is illustrated as
follows220:

7.3.2.3 Objectives of the PRS
7.118. In the preamble to Supreme Decree No. 115-2001-EF the objectives of the PRS are
described as follows221:
Whereas national agricultural production is being adversely affected by distortions
reflected in uncertainty and instability of domestic prices and national production and
due, in particular, to the agricultural policies implemented by the main food producing
and exporting countries;
Whereas the Price Range System is a stabilization and protection mechanism that
makes it possible to neutralize the fluctuations of international prices and limit the
negative effects of the fall in those prices;
Whereas the System in question constitutes an appropriate means of improving the
levels of competitiveness of domestic producers, by giving the market clear signals
with regard to trends in prices, thereby allowing economic agents to operate efficiently
and productively …
7.119. On the website of the Ministry of the Ec onomy and Finance, it is stated that the PRS
"is intended to stabilize the costs of importing the products included in the System by ensuring
effective prices both for the producer, by means of a floor price, and for the consumer, through
a ceiling price, and applying Variable Additional Duties or Tariff Rebates on the c.i.f. value".
222
7.3.2.4 Products subject to the PRS
7.120. The PRS is applicable to various tariff li nes for four agricultural products, namely, rice,
sugar, yellow maize and milk.

219 Supreme Decree No. 115-2001-EF (Exhibit GTM-4), Article 1.
220 Copy of the Peruvian Ministry of the Economy and Finance's web page explaining the Price Range
System (Exhibit GTM-2).
221 Supreme Decree No. 115-2001-EF (Exhibit GTM-4, p. 204887).
222 Copy of the Peruvian Ministry of the Economy and Finance's web page explaining the Price Range
System (Exhibit GTM-2).

7.121. Annex I to Supreme Decree No. 115-2001-EF, as amended223, identifies the following tariff
lines subject to the PRS, and indicates whether the products concerned are "marker" products or
"associated" products.
Tariff line Description Classification under
the PRS
Rice
1006.30.00.00 Semi-milled or wholly milled rice, whether or not
polished or glazed
Marker product
1006.10.90.00 Rice in the husk (paddy or rough), other than for
sowing
Associated product
1006.20.00.00 Husked (brown) rice Associated product
1006.40.00.00 Broken rice Associated product
Yellow maize
1005.90.11.00 Yellow flint maize Marker product
1005.90.12.00 White flint maize Associated product
1005.90.90.90 Other maize Associated product
1007.00.90.00 Grain sorghum, other than for sowing Associated product
1103.13.00.00 Groats and meal of maize Associated product
1108.12.00.00 Maize starch Associated product
1108.13.00.00 Potato starch Associated product
1702.30.20.00 Glucose syrup Associated product
2309.90.90.00 Balanced food for animals Associated product
3505.10.00.00 Dextrins and other modified starches Associated product
Milk
0402.21.19.00 Other milk in powder, granules or other solid forms,
of a fat content, by weight, of 26% or more, on the
dry product, in containers holding more than 2.5 kg
Marker product
0401.10.00.00 Milk and cream, not concentrated nor containing added
sugar or other sweetening matter, of a fat content,
by weight, not exceeding 1%
Associated product
0401.20.00.00 Milk and cream, not concentrated nor containing added
sugar or other sweetening matter, of a fat content,
by weight, exceeding 1% but not exceeding 6%

0402.10.10.00 Milk in powder of a fat content not exceeding 1.5%,
in containers holding more than 2.5 kg
Associated product
0402.10.90.00 Other Associated product
0402.21.11.00 Milk in powder of a fat content of 26% or more,
in containers holding not more than 2.5 kg, not
containing added sugar or other sweetening matter
Associated product
0402.21.91.00 Milk in powder of a fat content exceeding 1.5% but not
exceeding 26%, in containers holding not more than
2.5 kg, not containing added sugar or other
sweetening matter
Associated product
0402.21.99.00 Other Associated product
0402.29.11.00 M i l k i n p o w d e r o f a f a t c o n t e n t o f 2 6 % o r m o r e ,
in containers holding not more than 2.5 kg, containing
added sugar or other sweetening matter
Associated product

223 Annex I to Supreme Decree No. 15-2001-EF has been amended on the following occasions:
(a) Supreme Decree No. 153-2002-EF, in Compilation of all Customs Tables published under the Price Range
System (Exhibit GTM-5, pp. 145-147), expanded the number of tariff lines associated with milk and sugar;
(b) Supreme Decree No. 174-2002-EF (Exhibit GTM-6), added a tariff line associated with milk; and
(c) Supreme Decree No. 197-2002-EF (Exhibit GTM-7) modified some tariff lines associated with milk. See also
List of all tariff subheadings covered by the PRS (Exhibit GTM-8).

Tariff line Description Classification under
the PRS
0402.29.19.00 Other Associated product
0402.29.91.00 Milk in powder of a fat content exceeding 1.5% but not
exceeding 26%, in containers holding not more than
2.5 kg, containing added sugar or other sweetening
matter
Associated product
0402.29.99.00 Other Associated product
0402.99.10.00 Condensed milk Associated product
0404.10.90.00 Whey, whether or not concentrated or containing
added sugar or other sweetening matter, other than
whey partially or completely demineralized
Associated product
0405.10.00.00 Butter Associated product
0405.90.20.00 Butter oil Associated product
0405.90.90.00 Other Associated product
0406.30.00.00 Processed cheese, not grated or powdered Associated product
0406.90.10.00 Other cheese, of a moisture content of less than 36%
by weight
Associated product
0406.90.20.00 Other cheese, of a moisture content of 36% or more
but less than 46% by weight
Associated product
0406.90.30.00 Other cheese, of a moisture content of 46% or more
but less than 55% by weight
Associated product
0406.90.90.00 Other Associated product
1901.90.90.00 Only: preparations containing 50% or more by weight
of milk product
Associated product
2106.90.99.00 Only: soya-based preparations that substitute milk
products
Associated product
Sugar
1701.99.00.90 Other refined cane or beet sugar, in solid form,
not containing added flavouring or colouring matter
Marker product
1701.11.90.00 Cane sugar, raw, not containing added flavouring
or colouring matter, excluding brown sugar
Associated product
1701.12.00.00 Beet sugar, raw, not containing added flavouring
or colouring matter
Associated product
1702.60.00.00 Other fructose and fructose syrup, containing in the
d r y s t a t e m o r e t h a n 5 0 % b y w e i g h t o f f r u c t o s e ,
excluding invert sugar
Associated product
1702.90.20.00 Caramel Associated product
1702.90.30.00 Sugars containing added flavouring or colouring matter Associated product
1702.90.40.00 Other syrups Associated product

7.122. Annex II to Supreme Decree No. 115-2001-EF defines marker products as products whose
international prices are used for calculating the ranges, and associated products as products
obtained by processing or mixing of marker products or capable of replacing a marker product for
industrial use or consumption.
7.123. As can be seen from Annex I to Supreme Decree No. 115-2001-EF, each of the four
agricultural products subject to the PRS includes a tariff line that functions as a marker product
and various lines that function as associated products.
7.124. The current marker products, identified in Annex IV to Supreme Decree No. 115-2001-EF,
are: (a) No. 2 yellow maize (tariff line 1005.90.11.00); (b) white rice (tariff line 1006.30.00.00);
(c) refined white sugar (tariff line 1701.99.00.90); and (d) whole milk, in powder, not containing
added sugar (tariff line 0402.21.19.00).

7.125. According to Article 8 of Supreme Decree No. 115-2001-EF, the variable additional duties
or tariff rebates for associated products will be equal to the variable additional duty or tariff rebate
for their marker product. Therefore, for the purpos es of the PRS, only the values for the customs
tables and reference prices corresponding to the four marker products will be calculated and these
values will be used for the associated products.
7.3.2.5 The methodology for calculating duties or tariff rebates
7.126. The methodology for calculating duties or tariff rebates resulting from the PRS includes
various steps and mathematical formulas and consists of two essential components: (a) a price
range with a ceiling price and a floor price; and (b) a reference price. Each of these components,
steps and mathematical formulas is described below.
7.3.2.5.1 The floor and ceiling prices
7.3.2.5.1.1 The reference markets
7.127. Point 2 of Annex II to Supreme Decree No. 115-2001-EF stipulates that the range
corresponding to each marker product is to be based on international prices expressed in
United States dollars (USD) per metric ton, with the markets indicated in Annex IV to the Decree
being used for reference purposes.
7.128. The current international reference markets are as follows
224:
Marker product Reference market
No. 2 yellow maize
(tariff line 1005.90.11.00)
f.o.b. Gulf, based on the Chicago Exchange. Daily closing prices,
first position. Source: REUTERS.
White rice
(tariff line 1006.30.00.00)
White rice 100% grade B, f.o.b. Bangkok, weekly prices.
Source: Creed Rice.
Refined white sugar
(tariff line 1701.99.00.90)
No. 5 contract, London Exchange. Daily closing prices, first position.
Source: REUTERS.
Whole milk, in powder, not containing
added sugar
(tariff line 0402.21.19.00)
Whole milk, in powder, not containing added sugar, f.o.b. price
New Zealand. Source: Statistics, New Zealand, official figures for
monthly exports by volume and value.

7.3.2.5.1.2 Calculation of the confidence interval
7.129. To determine the floor price and the ceiling price it is first necessary to establish
a confidence interval, using the following methodology, described in point 3.1 of Annex II to
Supreme Decree No. 115-2001-EF:
a. The monthly average f.o.b. prices for the past 60 months225 corresponding to the marker
product on the international reference mark et are taken and converted into constant
US dollars using as an inflator the United States Consumer Price Index with base equal
to 100 in May or November of the last year, as appropriate.
b. The average of the series is calculated from the following formula:
Pm = {sum (PNt / IPC) / 60}

224 The reference market for sugar was modified by Supreme Decree No. 121-2006-EF of 20 July 2006
(Exhibit GTM-5, p. 121).
225 Annex II to Supreme Decree No. 115-2001-EF explains that, in the case of rice, maize and sugar,
the monthly values are taken up to May or November of the latest year, as appropriate. In the case of milk,
the values are taken up to March or September of the latest year, as appropriate, due to the fact that the
information for April and May is received after the first week of July. See Supreme Decree No. 115-2001-EF
(Exhibit GTM-4).

Where:
Pm = Simple average
PNt = Monthly nominal international price
IPC = United States Consumer Price Index.
c. The confidence interval is determined by adding a standard deviation to the f.o.b.
average of the series to establish the upper bound and subtracting a standard deviation
to establish the lower bound, using the following formulas:
Upper bound = Pm + DS
Lower bound = Pm - DS
Where:
DS = Standard deviation
d. Extreme values located above and below the confidence interval are discarded.
7.3.2.5.1.3 Calculation of the floor price
7.130. Point 3.2 of Annex II to Supreme Decree No. 115-2001-EF stipulates that the floor price is
determined by calculating a new average with the values recorded within the confidence interval,
using the following formula:
Pfloor = {sum (PNt/ lPC) / N }
Where:
N = Number of observations within the confidence interval
7.131. In the case of the sugar range, the floor price calculation includes an adjustment factor
that increases the floor price by 10.7% by means of the following formula:
Pfloor = {sum (PNt/ lPC) / N } * 1.107
226
7.3.2.5.1.4 Calculation of the ceiling price
7.132. Point 3.3 of Annex II to Supreme Decree No. 115-2001-EF indicates that the ceiling price
is obtained by adding to the floor price a stan dard deviation of the original series, using the
following formula:
Pceiling = Pfloor + DS
7.3.2.5.1.5 Conversion of the ceiling and floor prices to c.i.f. prices
7.133. Point 4 of Annex II to Supreme Decree No . 115-2001-EF states that the floor and ceiling
prices expressed in f.o.b. terms are to be converted into c.i.f. terms by adding the following freight
and insurance costs, as indicated in Annex V to that Supreme Decree.

226 This adjustment factor was not originally envisaged in Supreme Decree No. 115-2001-EF.
Supreme Decree No. 153-2002-EF introduced an adjustment factor of 1.441, which was reduced to 1.107 by
Supreme Decree No. 003-2006-EF. See Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145);
Supreme Decree No. 003-2006-EF (Exhibit GTM-5, p. 131).

Product Freight
(USD per tonne)
Insurance
(% of cost and freight)
Yellow maize 20 0.5
White rice 35 0.5
Refined white sugar 25 0.5
Whole milk, not containing added sugar 130 0.5

7.134. Annex V to Supreme Decree No. 115-2001-EF indicates the General Secretariat of the
Andean Community as the source of the freight and insurance costs. These values coincide with
the costs indicated in Annex 3 to Decision 371 of the Andean Price Band System. 227 Decision 371
contains no explanation as to how these values were determined.
7.3.2.5.1.6 The semi-annual updating of the ceiling and floor prices and their
publication in the customs tables
7.135. Article 7 of Supreme Decree No. 115-2001-EF indicates that the Central Reserve Bank
of Peru will semi-annually review and update the customs tables used to determine the floor and
ceiling prices, for approval by supreme decree issued by the Constitutional President of the
Republic of Peru with the endorsement of the Ministers of the Economy and Finance and
of Agriculture. In accordance with Article 6 and point 3.3 of Annex II to Supreme Decree
No. 115-2001-EF, the floor and ce iling prices are to be adjusted semi-annually by updating the
respective price series, the inflator index and the amounts of freight and insurance. The customs
tables are valid for six months (from 1 January to 30 June and from 1 July to 31 December of each
year) and are to be published before 30 June and 31 December of each year.
7.3.2.5.2 Reference prices
7.3.2.5.2.1 Calculation of reference prices
7.136. Article 4 of Supreme Decree No. 115-2001-EF stipulates that reference prices are to be
published every two weeks and must reflect the av erage price obtained from the price quotations
observed on the international reference markets of Annex IV, as described above.
228
7.137. Moreover, according to Article 5 of Supreme Decree No. 115-2001-EF, the reference prices
are to be converted into c.i.f. terms by applying the freight and insurance costs of Annex V.
7.3.2.5.2.2 Fortnightly updating of the reference prices and their publication by means
of vice-ministerial resolutions
7.138. Article 7 of Supreme Decree No. 115-2001-EF stipulates that, on the first working day
of each fortnight, the Central Reserve Bank of Pe ru will provide the Ministries of the Economy and
Finance and of Agriculture with the average of the c.i.f. reference prices for the immediately
preceding fortnight.
7.139. According to the same article, the Ministry of the Economy and Finance is to publish these
reference prices by means of a vice-ministerial resolution issued by the Vice-Minister of the
Economy.
229
7.3.2.5.3 Determination of the duties or tariff rebates
7.140. Point 1 of Annex III to Supreme Decree No. 115-2001-EF stipulates that a "variable
additional duty" is to be applied if the reference price is lower than the c.i.f. floor price.

227 Commission of the Cartagena Agreement, Decision 371: Andean Price Band System, 1994
(Exhibit PER-27), Annex 3.
228 See above, para. 7.128.
229 Supreme Decree No. 115-2001-EF required the reference prices to be published by means
of ministerial resolutions. Supreme Decree No. 184-2002-EF (Exhibit GTM-30), published on
27 November 2002, amended Supreme Decree No. 115-2001-EF by providing for the reference prices to be
published by means of vice-ministerial resolutions.

The "variable additional duty" is equal to the difference between the floor price and the reference
price multiplied by one plus the factor associated with the marker product import costs.
7.141. The amount of the "variable additional duty" is calculated by means of the following
formula:
DA = (1 + b) (Pfloor – Pr)
Where:
DA = Additional duty
Pr = c.i.f. reference price
b = Costs associated with import expenses:
12% or 20% of the ad valorem tariff plus the "corresponding additional tariff
surcharge (according to the product)", with an additional 3% for import expenses.
7.142. Article 4 of Supreme Decree No. 153-2002-EF of 26 September 2002 stipulates that:
The variable additional duties resulting from the application of the provisions of the
Price Range System …, plus the ad valorem c.i.f. duties, may not exceed the basic
standard tariff bound by Peru with the World Trade Organization for the subheadings
included in the [PRS], each import transaction being considered individually and the
c.i.f. value of the goods included in the transaction concerned being taken as the basis
for calculation.
230
7.143. Where tariff rebates are concerned, accord ing to point 2 of Annex III to Supreme Decree
No. 115-2001-EF they are to be applied to marker products whenever the c.i.f. reference price is
higher than the c.i.f. ceiling price. The tariff rebate is equal to the difference between the
reference price and the ceiling price, multiplied by one plus the factor associated with the marker
product import costs.
7.144. The tariff rebates are calculated by means of the following formula:
RA = (1 + b) (Pr – Pceiling)
RA = Tariff rebate
7.145. Article 8 of Supreme Decree No. 115-2001-EF explains that "[i]n no circumstances shall
the tariff rebate exceed the sum payable by the importer as the ad valorem duty and additional
tariff surcharge corresponding to each product". It should be noted that all the products subject to
the PRS have an ad valorem tariff of 0%, except for three tari ff lines for maize, which are subject
to a 6% tariff (1108.12.00.00, 1108.13.00.00 and 3505.10.00.00).
231 Accordingly, at least at
present, only these three products could obtain tariff rebates, where applicable.
7.146. Finally, point 2 of Annex III to Supreme Decree No. 115-2001-EF states that, where the
reference price is equal to the floor price or the ceiling price, or lies between these two limits, only
the corresponding tariff is to be paid and neither variable additional duties nor tariff rebates shall
be applied.

230 Supreme Decree No. 153-2002-EF, of 26 September 2002 (Exhibit GTM-5, p. 147).
231Exhibit amending the Extract from Peru's Customs Tariff 2012, including the pages corresponding to
tariff lines 1108.12.00.00, 1108.13.00,00 and 3505.10.00.00 (Exhibit GTM-1 corr, pp. 455.440 and 455.506).
See also Supreme Decree No. 038-2008-EF (Exhibit PER-28); Supreme Decree No. 279-2010-EF
(Exhibit PER-29). As regards the tariff lines for rice, sugar and dairy products, Peru has maintained
a 0% ad valorem tariff since 6 March 2008, and as regards the tariff lines for maize, Peru has maintained
a 0% ad valorem tariff since 31 December 2010, except for three lines (1108.12.00.00, 1108.13.00.00
and 3505.10.00.00) which currently have an ad valorem tariff of 6%. Peru's first written submission,
para. 3.59; Supreme Decree No. 038-2008-EF (Exhibit PER-28); Supreme Decree No. 279-2010-EF
(Exhibit PER-29).

7.147. Article 8 of Supreme Decree No. 115-2001-EF explains that the "variable additional duties"
and "tariff rebates" are to be expressed in US dollars per tonne. These additional duties or rebates
shall be determined on the basis of the customs tabl es in force on the date of registration of the
import declaration by applying the reference prices for the previous fortnight. In this connection,
previous fortnight shall mean the period betw een the first and the fifteenth or between the
sixteenth and the last day of each month, as appropriate.
232
7.148. Point 3(f) of Circular INTA-CR.62-2002 of 26 August 2002 explains that, if on the date
of registration of the single customs declaration the supreme decree or ministerial resolution
updating the customs tables or determining the c.i.f. reference prices has not been published,
the calculation shall be made on the basis of the table and price indicated in the immediately
previous publication. In such cases, the authorit ies shall record the circumstances so that, once
the corresponding values have been published, un paid taxes can, where appropriate, be assessed
for collection or so that, in the event of an overpayment, a refund can be requested.
233
7.149. Finally, point 3(c) of the same circular states that "the variable additional duties" should be
paid by the importer in the customs office, together with the import duties and other import taxes.
7.3.2.6 The historical application of the PRS
7.3.2.6.1 Floor and ceiling prices
7.150. As already explained, under the Peruvian legislation, the floor prices and ceiling prices that
form the price range are reproduced in customs tables which are valid for six months and are to be
published before 30 June and 31 December each year. The legislation also states that the
Central Reserve Bank of Peru shall review and update the customs tables semi-annually,
for approval by supreme decree.
7.151. From 2001 to 2014 customs tables have been in force for every period. However, these
customs tables have not always been updated semi-annually in accordance with Supreme Decree
No. 115-2001-EF. On several occasions, the custom s tables have been extended instead of being
updated, despite this possibility not being prov ided for in the PRS regulations, and on other
occasions the customs tables have been replaced for only one product.
234
7.152. The following table reflects the instances in which the Peruvian authorities have updated,
extended or replaced customs tables over the years of existence of the PRS:
Supreme
Decree
Date
of Publication Period of Validity Update Extension
318-2013-EF235 19.12.13 01.01.14 – 30.06.14 For the four products -
164-2013-EF236 30.06.13 01.07.13 – 31.12.13 For the four products -
293-2012-EF237 23.12.12 01.01.13 – 30.06.13 For the four products -
113-2012-EF238 29.06.12 01.07.12 – 31.12.12 For the four products -

232 Supreme Decree No. 115-2001-EF stipulated that the variable additional duties and tariff rebates
would be determined on the basis of the customs tables in force on the date of shipment of the goods,
as evidenced by the date of the bill of lading or waybill. Supreme Decree No. 124-2002-EF, published
on 18 August 2002, provided that the variable additional duties and tariff rebates would be determined
on the basis of the customs tables in force on the date of registration of the import declaration.
Supreme Decree No. 197-2002-EF, published on 30 December 2002, additionally provided that the reference
prices for the fortnight prior to the date of registration of the import declaration would apply. See Article 1,
Supreme Decree No. 124-2002-EF (Exhibit PER-50); Article 2, Supreme Decree No. 197-2002-EF
(Exhibit GTM-7).
233 Point 3(f), Circular INTA-CR.62-2002 (Exhibit GTM-3).
234 Chart summarizing the multiple extensions of the Customs Tables (Exhibit GTM-16).
235 Supreme Decree No. 318-2013-EF of 18 December 2013, updating the Customs Tables
(Exhibit GTM-35).
236 Supreme Decree No. 164-2013-EF (Exhibit GTM-5, p. 1); Supreme Decree No. 164-2013-EF
(containing the Customs Tables for the second six months of 2013) (Exhibit GTM-11).
237 Supreme Decree No. 293-2012-EF (Exhibit GTM-5, p. 11).
238 Supreme Decree No. 113-2012-EF (Exhibit GTM-5, p. 21).

Supreme
Decree
Date
of Publication Period of Validity Update Extension
244-2011-EF239 28.12.11 01.01.12 – 30.06.12 For the four products -
117-2011-EF240 28.06.11 01.07.11 – 31.12.11 - For the four products
278-2010-EF241 31.12.10 01.07.11 – 30.06.11 For the four products -
138-2010-EF242 30.06.10 01.07.10 – 31.12.10 - For the four products
318-2009-EF243 31.12.09 01.01.10 – 30.06.10 For the four products -
183-2008-EF244 01.01.08 01.01.09 – 31.12.09 - For the four products
084-2008-EF245 29.06.08 01.07.08 – 31.12.08 For the four products -
001-2008-EF246 15.01.08 to 30.06.08 The customs table for
maize was replaced in
order to expand the
reference prices
-
133-2007-EF247 31.08.07 to 30.06.08 The customs table for
dairy products was
replaced in order to
expand the reference
prices
-
086-2007-EF248 29.06.07 01.01.08 – 30.06.08 - For the four products
183-2006-EF249 23.11.06 to 30.06.07 The customs table for
maize was replaced in
order to expand the
reference prices
-
121-2006-EF250 20.07.06 to 30.06.07 The customs table for
sugar was replaced
owing to the change of
reference market
-
094-2006-EF251 22.06.06 01.06.06 – 30.06.07 - For the four products
074-2006-EF252 01.06.06 to 30.06.06 The customs table for
sugar was replaced in
order to expand the
reference prices
-
003-2006-EF253 13.01.06 to 30.06.06 The customs table for
sugar was replaced
owing to the change in
the methodology for
calculating the floor
price
-
074-2005-EF254 29.06.05 01.07.05 – 30.06.06 - For the four products
075-2004-EF255 08.06.04 01.07.04 – 30.06.05 - For the four products

239 Supreme Decree No. 244-2011-EF (Exhibit GTM-5, p. 35).
240 Supreme Decree No. 117-2011-EF (Exhibit GTM-5, p. 53).
241 Supreme Decree No. 278-2010-EF (Exhibit GTM-5, p. 55).
242 Supreme Decree No. 138-2010-EF (Exhibit GTM-5, p. 71).
243 Supreme Decree No. 318-2009-EF (Exhibit GTM-5, p. 73).
244 Supreme Decree No. 183-2008-EF (Exhibit GTM-5, p. 87).
245 Supreme Decree No. 084-2008-EF (Exhibit GTM-5, p. 89).
246 Supreme Decree No. 001-2008-EF (Exhibit GTM-5, p. 105).
247 Supreme Decree No. 133-2007-EF (Exhibit GTM-5, p. 109).
248 Supreme Decree No. 086-2007-EF (Exhibit GTM-5, p. 113).
249 Supreme Decree No. 183-2006-EF (Exhibit GTM-5, p. 115).
250 Supreme Decree No. 121-2006-EF (Exhibit GTM-5, p. 121).
251 Supreme Decree No. 094-2006-EF (Exhibit GTM-5, p. 125).
252 Supreme Decree No. 074-2006-EF (Exhibit GTM-5, p. 127).
253 Supreme Decree No. 003-2006-EF (Exhibit GTM-5, p. 131).
254 Supreme Decree No. 074-2005-EF (Exhibit GTM-5, p. 135).
255 Supreme Decree No. 075-2004-EF (Exhibit GTM-5, pp. 137-139).

Supreme
Decree
Date
of Publication Period of Validity Update Extension
090-2003-EF256 25.06.03 01.07.03 – 30.06.04 - For the four products
153-2002-EF257 27.09.02 01.01.03 – 30.06.03 The customs table for
sugar was replaced
owing to the change in
the methodology for
calculating the floor
price
For three products
001-2002-EF258 04.01.02 01.01.02 – 30.06.02 For the four products -
115-2001-EF259 22.06.01 01.07.01 – 31.12.01 First customs tables -

7.153. The following reasons for extending customs tables were given in the relevant supreme
decrees:
Given the economic difficulties currently besetting domestic agricultural production
under the Price Range System, it is necessary to extend the validity of the Customs
Tables … 260
Given the current trend in the prices of agricultural products, it is considered advisable
to maintain the Customs Tables for Maize, Rice, Sugar and Dairy Products … 261
7.154. Peru has submitted an example of a tec hnical report and a legal report, issued by the
competent departments of the Ministry of the Economy and Finance, both dated 24 June 2011,
whereby the Vice-Minister of the Economy was recommended to extend the customs tables for the
second half of 2011. Peru has also submitted an example of a technical report and a legal report
issued by the competent departments of the Ministry of the Economy and Finance, dated
17 December and 18 December 2013, respectively, whereby the Vice-Minister of the Economy was
recommended to update the customs tables for the first half of 2014.
262
7.155. Moreover, since the first PRS customs tables, issued under Supreme Decree
No. 115-2001-EF263, two different values of the specific duti es or tariff rebates have been used for
rice: for paddy rice and pounded rice, respectively. Supreme Decree No. 115-2001-EF does not
offer any explanation with regard to the use of these two values for rice. However, the distinction
between the two kinds of rice has been applied si nce the pre-2001 customs tables of the specific
duty system. Specifically, Supreme Decree No. 114-93-EF
264, of 27 July 1993, introduced into the
definition of inter-product proportionality factors the words "in the case of paddy rice, its specific
d u t y i s e q u a l t o 7 0 % o f t h e d u t y f o r p o u n d e d r i c e " . T h i s d i s t i n c t i o n i s a l s o t o b e f o u n d i n
Supreme Decree No. 133-94-EF and in Supreme Decree No. 021-2001-EF 265 and in the updates to
the customs tables during the period of application of the previous system.266

256 Supreme Decree No. 090-2003-EF (Exhibit GTM-5, pp. 141-143).
257 Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145).
258 Supreme Decree No. 001-2002-EF (Exhibit GTM-5, p. 153).
259 Supreme Decree No. 115-2001-EF (Exhibit GTM-5, p. 163); (Exhibit GTM-4).
260 Supreme Decree No. 153-2002-EF (Exhibit GTM-5, p. 145); Supreme Decree No. 090-2003-EF
(Exhibit GTM-5, p. 143); Supreme Decree No. 075-2004-EF (Exhibit GTM-5, p. 139);
Supreme Decree No. 074-2005-EF (Exhibit GTM-5, p. 135); Supreme Decree No. 094-2006-EF
(Exhibit GTM-5, p. 125); Supreme Decree No. 086-2007-EF (Exhibit GTM-5, p. 113).
261 Supreme Decree No. 183-2008-EF (Exhibit GTM-5, p. 87); Supreme Decree No. 138-2010-EF
(Exhibit GTM-5, p. 71); Supreme Decree No. 117-2011-EF (Exhibit GTM-5, p. 53).
262 Compendium of technical and legal reports (Exhibit PER-87).
263 Annex VI to Supreme Decree No. 115-2001-EF (Exhibit GTM-4).
264 Annex IV to Supreme Decree No. 114-93-EF (Exhibit PER-24).
265 Annex IV to Supreme Decree No. 133-94-EF (Exhibit PER-74); Annex IV to Supreme
Decree No. 021-2001-EF (Exhibit PER-49).
266 See, for example, Annex I, Supreme Decree No. 114-93-EF (Exhibit PER-24);
Annex I, Supreme Decree No. 083-98-EF (Exhibit PER-25); Annex I, Supreme Decree No. 133-99-EF
(Exhibit PER-26).

7.156. In addition, since the first PRS customs tables, intervals of 50 have been used for the dairy
product price ranges. The use of these intervals for dairy products can also be traced back to the
customs tables of the 1991 specific duty system.
267
7.3.2.6.2 Reference prices
7.157. As already explained, under the Peruvian legislation reference prices are updated
fortnightly, for which purpose the Central Reserve Bank of Peru provides the Ministries of the
Economy and Finance and of Agriculture, on the first working day of each fortnight, with the
average of the c.i.f. reference prices for the imme diately preceding fortnight. The Ministry of the
Economy and Finance subsequently publishes these reference prices by means of a vice-ministerial
resolution of the Vice-Minister of the Economy.
7.158. During the period of existence of the PRS, the competent Peruvian authorities have
published reference prices for every fortnight.
268 The only exception was for the
period 1 to 15 November 2006, with respect to the reference price for maize. 269 The reference
prices are not published at the beginning of each fortnight to which they apply but a few days after
that fortnight has begun.270
7.159. Moreover, although reference prices are published every fortnight, on some occasions the
values coincide from one fortnight to the next, that is to say, on some occasions the reference
prices are rolled over.271
7.160. Although this has happened with all the prod ucts at one time or another, in the case of
dairy products, the reference prices are updated monthly and not fortnightly. In this connection,
the Panel notes that the international reference market values for the marker product for dairy
products are obtained monthly and not fortnightly.
272
7.161. The following table reflects all the public ations of vice-ministerial resolutions announcing
reference prices between June 2001 and December 2013273:
Period Vice-ministerial
Resolution
Date of
publication Period Vice-ministerial
Resolution
Date of
publication
2013
16-31/12 001-2014-EF/15.01 08.01.2014 01-15/12 025-2013-EF/15.01 20.12.2013
16-30/11 024-2013-EF/15.01 06.12.2013 01-15/11 023-2013-EF/15.01 22.11.2013
16-31/10 022-2013-EF/15.01 12.11.2013 01-15/10 021-2013-EF/15.01 24.10.2013
16-30/09 020-2013-EF/15.01 08.10.2013 01-15/09 019-2013-EF/15.01 25.09.2013

267 See, for example, Annex I, Supreme Decree No. 114-93-EF (Exhibit PER-24);
Annex I, Supreme Decree No. 083-98-EF (Exhibit PER-25); Annex I, Supreme Decree No. 133-99-EF
(Exhibit PER-26).
268 See Compilation of Ministerial and Vice-Ministerial Resolutions containing Reference Prices
(Reference Price Resolutions) (Exhibit GTM-13); Vice-Ministerial Resolutions announcing Reference Prices
(21 October 2013 to 7 January 2014) (Exhibit GTM-34); Vice-Ministerial Resolution No. 003-2014-EF/15.01
(Exhibit GTM-54); Vice-Ministerial Resolution No. 004-2014-EF/15.01 (Exhibit GTM-55).
269 See Vice-Ministerial Resolution No. 023-2006-EF/15.01 (Exhibit GTM-13, p. 207).
270 See List of publication dates of Ministerial and Vice-Ministerial Resolutions publishing Reference
Prices and delay in the publication of those documents (Exhibit GTM-14).
271 See History of Application of the Price Range System (Exhibit GTM-15); Update of Exhibit GTM-15
(Exhibit GTM-15bis); History of Application of the Price Range System (GTM-15), indicating the instances in
which a reference price has remained the same in consecutive periods (Exhibit GTM-17); Repeat Reference
Prices (Exhibit PER-78).
272 Whole milk, in powder, without added sugar, f.o.b. price New Zealand. Source: Statistics,
New Zealand, official figures for monthly exports by volume and value. See Annex IV, Supreme Decree
No. 115-2001-EF (Exhibit GTM-4).
273 Vice-Ministerial Resolution No. 019-2013-EF/15.01 (containing the Reference Price for the
first two weeks of September 2013) (Exhibit GTM-12); Reference Price Resolutions (Exhibit GTM-13);
Vice-Ministerial Resolutions, announcing Reference Prices (21 October 2013 to 7 January 2014)
(Exhibit GTM-34). See also Vice-Ministerial Resolution No. 003-2014-EF/15.01 (Exhibit GTM--54);
Vice-Ministerial Resolution No. 004-2014-EF/15.01 (Exhibit GTM-55).

Period Vice-ministerial
Resolution
Date of
publication Period Vice-ministerial
Resolution
Date of
publication
16-31/08 018-2013-EF/15.01 06.09.2013 01-15/08 017-2013-EF/15.01 24.08.2013
16-31/07 016-2013-EF/15.01 07.08.2013 01-15/07 015-2013-EF/15.01 27.07.2013
16–30/06 014-2013-EF/15.01 08.07.2013 01-15/06 013-2013-EF/15.01 21.06.2013
16–31/05 012-2013-EF/15.01 15.06.2013 01-15/05 011-2013-EF/15.01 24.05.2013
16–30/04 010-2013-EF/15.01 08.05.2013 01-15/04 009-2013-EF/15.01 02.05.2013
16–31/03 008-2013-EF/15.01 05.04.2013 01-15/03 007-2013-EF/15.01 27.03.2013
16–28/02 006-2013-EF/15.01 14.03.2013 01-15/02 005-2013-EF/15.01 27.02.2013
16–31/01 003-2013-EF/15.01 09.02.2013 01-15/01 002-2013-EF/15.01 22.01.2013
2012
16-31/12 001-2013-EF/15.01 16.01.2013 01-15/12 031-2012-EF/15.01 22.12.2012
16–30/11 030-2012-EF/15.01 11.12.2012 01-15/11 029-2012-EF/15.01 27.11.2012
16–31/10 028-2012-EF/15.01 10.11.2012 01-15/10 027-2012-EF/15.01 24.10.2012
16-30/09 026-2012-EF/15.01 12.10.2012 01-15/09 025-2012-EF/15.01 22.09.2012
16–31/08 024-2012-EF/15.01 07.09.2012 01-15/08 023-2012-EF/15.01 25.08.2012
16-31/07 022-2012-EF/15.01 14.08.2012 01-15/07 021-2012-EF/15.01 25.07.2012
16-30/06 020-2012-EF/15.01 12.06.2012 01-15/06 019-2012-EF/15.01 23.06.2012
16-31/05 016-2012-EF/15.01 08.06.2012 01-15/05 015-2012-EF/15.01 26.05.2012
16-30/04 012-2012-EF/15.01 11.05.2012 01-15/04 011-2012-EF/15.01 26.04.2012
16-31/03 010-2012-EF/15.01 12.04.2012 01-15/03 009-2012-EF/15.01 25.03.2012
16-29/02 008-2012-EF/15.01 09.03.2012 01-15/02 006-2012-EF/15.01 25.02.2012
16-31/01 005-2012-EF/15.01 10.02.2012 01-15/01 002-2012-EF/15.01 22.01.2012
2011
16-31/12 001-2012-EF/15.01 16.01.2012 01-15/12 025-2011-EF/15.01 23.12.2011
16–30/11 024-2011-EF/15.01 12.12.2011 01-15/11 023-2011-EF/15.01 25.11.2011
16–31/10 022-2011-EF/15.01 10.11.2011 01-15/10 021-2011-EF/15.01 23.10.2011
16-30/09 020-2011-EF/15.01 13.10.2011 01-15/09 019-2011-EF/15.01 24.09.2011
16-31/08 018-2011-EF/15.01 06.09.2011 01-15/08 017-2011-EF/15.01 23.08.2011
16-31/07 016-2011-EF/15.01 05.08.2011 01-15/07 015-2011-EF/15.01 23.07.2011
16-30/06 014-2011-EF/15.01 08.07.2011 01-15/06 013-2011-EF/15.01 22.06.2011
16-31/05 012-2011-EF/15.01 04.06.2011 01-15/05 011-2011-EF/15.01 20.05.2011
16-30/04 010-2011-EF/15.01 10.05.2011 01-15/04 009-2011-EF/15.01 21.04.2011
16-31/03 008-2011-EF/15.01 06.04.2011 01-15/03 006-2011-EF/15.01 23.03.2011
16-28/02 005-2011-EF/15.01 10.03.2011 01-15/02 004-2011-EF/15.01 19.02.2011
16-31/01 003-2011-EF/15.01 09.02.2011 01-15/01 002-2011-EF/15.01 22.01.2011
2010
16-31/12 001-2011-EF/15.01 07.01.2011 01-15/12 025-2010-EF/15.01 23.12.2010
16–30/11 024-2010-EF/15.01 10.12.2010 01-15/11 023-2010-EF/15.01 24.11.2010
16–31/10 022-2010-EF/15.01 06.11.2010 01-15/10 021-2010-EF/15.01 23.10.2010
16-30/09 020-2010-EF/15.01 06.10.2010 01-15/09 019-2010-EF/15.01 18.09.2010
16–31/08 018-2010-EF/15.01 04.09.2010 01-15/08 017-2010-EF/15.01 21.08.2010
16-31/07 016-2010-EF/15.01 06.08.2010 01-15/07 015-2010-EF/15.01 24.07.2010
16-30/06 014-2010-EF/15.01 03.07.2010 01-15/06 013-2010-EF/15.01 19.06.2010

Period Vice-ministerial
Resolution
Date of
publication Period Vice-ministerial
Resolution
Date of
publication
16-31/05 012-2010-EF/15.01 05.06.2010 01-15/05 010-2010-EF/15.01 20.05.2010
16-30/04 009-2010-EF/15.01 07.05.2010 01-15/04 008-2010-EF/15.01 23.04.2010
16-31/03 007-2010-EF/15.01 10.04.2010 01-15/03 006-2010-EF/15.01 20.03.2010
16-28/02 005-2010-EF/15.01 06.03.2010 01-15/02 004-2010-EF/15.01 23.02.2010
16-31/01 003-2010-EF/15.01 06.02.2010 01-15/01 002-2010-EF/15.01 23.01.2010
2009274
16-31/12 001-2010-EF/15.01 08.01.2010 01-15/12 025-2009-EF/15.01 22.12.2009
16–30/11 024-2009-EF/15.01 16.11.2009 01-15/11 023-2009-EF/15.01 19.11.2009
16–31/10 022-2009-EF/15.01 04.11.2009 01-15/10 021-2009-EF/15.01 22.10.2009
16-30/09 020-2009-EF/15.01 05.10.2009 01-15/09 019-2009-EF/15.01 21.09.2009
16–31/08 018-2009-EF/15.01 03.09.2009 01-15/08 016-2009-EF/15.01 19.08.2009
16-31/07 015-2009-EF/15.01 10.08.2009 01-15/07 014-2009-EF/15.01 30.07.2009
16-30/06 013-2009-EF/15.01 07.07.2009 01-15/06 012-2009-EF/15.01 24.06.2009
16-31/05 011-2009-EF/15.01 05.06.2009 01-15/05 010-2009-EF/15.01 22.05.2009
16-30/04 009-2009-EF/15.01 08.05.2009 01-15/04 008-2009-EF/15.01 21.04.2009
16-31/03 007-2009-EF/15.01 06.04.2009 01-15/03 006-2009-EF/15.01 20.03.2009
16-28/02 005-2009-EF/15.01 05.03.2009 01-15/02 004-2009-EF/15.01 19.02.2009
16-31/01 003-2009-EF/15.01 06.02.2009 01-15/01 002-2009-EF/15.01 23.01.2009
2008
16-31/12 001-2009-EF/15.01 09.01.2009 01-15/12 031-2008-EF/15.01 24.12.2008
16–30/11 030-2008-EF/15.01 05.12.2008 01-15/11 029-2008-EF/15.01 20.11.2008
16–31/10 024-2008-EF/15.01 08.11.2008 01-15/10 022-2008-EF/15.01 21.10.2008
16-30/09 021-2008-EF/15.01 07.10.2008 01-15/09 020-2008-EF/15.01 23.09.2008
16–31/08 019-2008-EF/15.01 06.09.2008 01-15/08 017-2008-EF/15.01 23.08.2008
16-31/07 015-2008-EF/15.01 08.08.2008 01-15/07 014-2008-EF/15.01 22.07.2008
16-30/06 013-2008-EF/15.01 08.07.2008 01-15/06 012-2008-EF/15.01 21.06.2008
16-31/05 011-2008-EF/15.01 06.06.2008 01-15/05 010-2008-EF/15.01 24.05.2008
16-30/04 009-2008-EF/15.01 13.05.2008 01-15/04 008-2008-EF/15.01 25.04.2008
16-31/03 007-2008-EF/15.01 09.04.2008 01-15/03 006-2008-EF/15.01 20.03.2008
16-29/02 005-2008-EF/15.01 08.03.2008 01-15/02 004-2008-EF/15.01 22.02.2008
16-31/01 003-2008-EF/15.01 08.02.2008 01-15/01 002-2008-EF/15.01 19.01.2008
2007
16-31/12 001-2008-EF/15.01 10.01.2008 01-15/12 025-2007-EF/15.01 21.12.2007
16–30/11 024-2007-EF/15.01 07.12.2007 01-15/11 023-2007-EF/15.01 22.11.2007
16–31/10 022-2007-EF/15.01 09.11.2007 01-15/10 020-2007-EF/15.01 20.10.2007
16-30/09 019-2007-EF/15.01 05.10.2007 01-15/09 018-2007-EF/15.01 20.09.2007
16–31/08 017-2007-EF/15.01 07.09.2007 01-15/08 016-2007-EF/15.01 22.08.2007
16-31/07 015-2007-EF/15.01 04.08.2007 01-15/07 014-2007-EF/15.01 19.07.2007
16-30/06 013-2007-EF/15.01 06.07.2007 01-15/06 012-2007-EF/15.01 21.06.2007
16-31/05 011-2007-EF/15.01 06.06.2007 01-15/05 010-2007-EF/15.01 24.05.2007

274 In the case of vice-ministerial resolutions issued in 2009, the table presents the dates of issue,
not the dates of publication.

Period Vice-ministerial
Resolution
Date of
publication Period Vice-ministerial
Resolution
Date of
publication
16-30/04 009-2007-EF/15.01 09.05.2007 01-15/04 008-2007-EF/15.01 20.04.2007
16-31/03 007-2007-EF/15.01 05.04.2007 01-15/03 006-2007-EF/15.01 21.03.2007
16-28/02 005-2007-EF/15.01 07.03.2007 01-15/02 004-2007-EF/15.01 21.02.2007
16-31/01 003-2007-EF/15.01 07.02.2007 01-15/01 002-2007-EF/15.01 19.01.2007
2006
16-31/12 001-2007-EF/15.01 06.01.2007 01-15/12 026-2006-EF/15.01 21.12.2006
16-30/11 025-2006-EF/15.01 07.12.2006 01-15/11 023-2006-EF/15.01 22.11.2006
16-31/10 022-2006-EF/15.01 07.11.2006 01-15/10 021-2006-EF/15 18.10.2006
16-30/09 020-2006-EF/15 05.10.2006 01-15/09 019-2006-EF/15 22.09.2006
16-31/08 018-2006-EF/15 05.09.2006 01-15/08 017-2006-EF/15 19.08.2006
16-31/07 016-2006-EF/15 08.08.2006 01-15/07 015-2006-EF/15 08.08.2006
 08.08.2006 01-15/07 014-2006-EF/15 21.07.2006
16–30/06 013-2006-EF/15 06.07.2006 01-15/06 012-2006-EF/15 21.06.2006
16–31/05 011-2006-EF/15 07.06.2006 01-15/05 010-2006-EF/15 20.05.2006
16–30/04 009-2006-EF/15 05.05.2006 01-15/04 008-2006-EF/15 19.04.2006
16–31/03 007-2006-EF/15 06.04.2006 01-15/03 006-2006-EF/15 21.03.2006
16–28/02 005-2006-EF/15 04.03.2006 01-15/02 004-2006-EF/15 18.02.2006
16–31/01 003-2006-EF/15 04.02.2006 01-15/01 002-2006-EF/15 19.01.2006
2005
16-31/12 001-2006-EF/15 07.01.2006 01-15/12 024-2005-EF/15 21.12.2005
16–30/11 023-2005-EF/15 03.12.2005 01-15/11 022-2005-EF/15 18.11.2005
16–31/10 021-2005-EF/15 05.11.2005 01-15/10 020-2005-EF/15 20.10.2005
16-30/09 019-2005-EF/15 05.10.2005 01-15/09 018-2005-EF/15 20.09.2005
16–31/08 017-2005-EF/15 03.09.2005 01-15/08 016-2005-EF/15 23.08.2005
16-31/07 015-2005-EF/15 06.08.2005 01-15/07 014-2005-EF/15 19.07.2005
16-30/06 013-2005-EF/15 07.07.2005 01-15/06 012-2005-EF/15 18.06.2005
16-31/05 011-2005-EF/15 03.06.2005 01-15/05 010-2005-EF/15 18.05.2005
16-30/04 009-2005-EF/15 04.05.2005 01-15/04 008-2005-EF/15 19.04.2005
16-31/03 007-2005-EF/15 06.04.2005 01-15/03 006-2005-EF/15 18.03.2005
16-28/02 005-2005-EF/15 04.03.2005 01-15/02 004-2005-EF/15 18.02.2005
16-31/01 003-2005-EF/15 05.02.2005 01-15/01 002-2005-EF/15 20.01.2005
2004
16-31/12 001-2005-EF/15 06.01.2005 01-15/12 024-2004-EF/15 21.12.2004
16–30/11 023-2004-EF/15 03.12.2004 01-15/11 022-2004-EF/15 19.11.2004
16–31/10 021-2004-EF/15 05.11.2004 01-15/10 020-2004-EF/15 20.10.2004
16-30/09 019-2004-EF/15 05.10.2004 01-15/09 018-2004-EF/15 18.09.2004
16–31/08 017-2004-EF/15 04.09.2004 01-15/08 016-2004-EF/15 19.08.2004
16-31/07 015-2004-EF/15 05.08.2004 01-15/07 014-2004-EF/15 20.07.2004
16-30/06 013-2004-EF/15 03.07.2004 01-15/06 012-2004-EF/15 18.06.2004
16-31/05 011-2004-EF/15 05.06.2004 01-15/05 010-2004-EF/15 20.05.2004
16-30/04 009-2004-EF/15 05.05.2004 01-15/04 008-2004-EF/15 20.04.2004
16-31/03 007-2004-EF/15 07.04.2004 01-15/03 006-2004-EF/15 20.03.2004

Period Vice-ministerial
Resolution
Date of
publication Period Vice-ministerial
Resolution
Date of
publication
16-29/02 005-2004-EF/15 10.03.2004 01-15/02 004-2004-EF/15 21.02.2004
16-31/01 003-2004-EF/15 07.02.2004 01-15/01 002-2004-EF/15 23.01.2004
2003
16-31/12 001-2004-EF/15 09.01.2004 01-15/12 024-2003-EF/15 24.12.2003
16–30/11 023-2003-EF/15 06.12.2003 01-15/11 022-2003-EF/15 21.11.2003
16–31/10 021-2003-EF/15 08.11.2003 01-15/10 020-2003-EF/15 29.10.2003
16-30/09 019-2003-EF/15 08.10.2003 01-15/09 018-2003-EF/15 25.09.2003
16–31/08 017-2003-EF/15 06.09.2003 01-15/08 016-2003-EF/15 28.08.2003
16-31/07 015-2003-EF/15 08.08.2003 01-15/07 014-2003-EF/15 25.07.2003
16-30/06 013-2003-EF/15 10.07.2003 01-15/06 012-2003-EF/15 26.06.2003
16-31/05 011-2003-EF/15 06.06.2003 01-15/05 010-2003-EF/15 24.05.2003
16-30/04 009-2003-EF/15 10.05.2003 01-15/04 008-2003-EF/15 24.04.2003
16-31/03 007-2003-EF/15 05.04.2003 01-15/03 006-2003-EF/15 22.03.2003
16-28/02 005-2003-EF/15 07.03.2003 01-15/02 004-2003-EF/15 21.02.2003
16-31/01 003-2003-EF/15 11.02.2003 01-15/01 002-2003-EF/15 23.01.2003
2002
16-31/12 001-2003-EF/15 09.01.2003 01-15/12 004-2002-EF/15 20.12.2002
16–30/11 003-2002-EF/15 07.12.2002 01-15/11 002-2002-EF/15 30.11.2002
16–31/10 450-2002-EF/15 09.11.2002 01-15/10 449-2002-EF/15 09.11.2002
16-30/09 165-2002-EF/15 31.10.2002 01-15/09 165-2002-EF/15 31.10.2002
16–31/08 165-2002-EF/15 31.10.2002 01-15/08 165-2002-EF/15 31.10.2002
16-31/07 165-2002-EF/15 31.10.2002 01-15/07 165-2002-EF/15 31.10.2002
16-30/06 279-2002-EF/15 13.07.2002 01-15/06 270-2002-EF/15 29.06.2002
16-31/05 269-2002-EF/15 29.06.2002 01-15/05 220-2002-EF/15 31.05.2002
16-30/04 196-2002-EF/15 14.05.2002 01-15/04 173-2002-EF/15 26.04.2002
16-31/03 148-2002-EF/15 13.04.2002 01-15/03 134-2002-EF/15 04.04.2002
16-28/02 106-2002-EF/15 08.03.2002 01-15/02 106-2002-EF/15 08.03.2002
16-31/01 106-2002-EF/15 08.03.2002 01-15/01 106-2002-EF/15 08.03.2002
2001
16-31/12 005-2002-EF/15 11.01.2002 01-15/12 381-2002-EF/15 28.12.2001
16–30/11 377-2001-EF/15 22.12.2001 01-15/11 355-2001-EF/15 29.11.2001
16–31/10 333-2001-EF/15 17.11.2001 01-15/10 332-2001-EF/15 17.11.2001
16-30/09 312-2001-EF/15 17.10.2001 01-15/09 300-2001-EF/15 22.09.2001
16–31/08 278-2001-EF/15 08.09.2001 01-15/08 276-2001-EF/15 23.08.2001
16-31/07 270-2001-EF/15 15.08.2001 01-15/07 242-2001-EF/15 20.07.2001
23-30/06 225-2001-EF/15 11.07.2001

7.162. Peru has submitted an example of a tec hnical report and a legal report issued by the
competent departments of the Ministry of the Economy and Finance, dated 21 April and
22 April 2014, respectively, whereby the Vice-Minister of the Economy was recommended to
publish the reference prices for the first two weeks of April 2014.
275

275 Compendium of technical and legal reports (Exhibit PER-87).

7.3.2.6.3 The duties and tariff rebates resulting from the PRS
7.163. From the establishment of the PRS in June 2001 to the present time, the system has
sometimes generated specific duties, at other times tariff rebates, for the four products subject to
the PRS, and on other occasions has generated neither specific duties nor tariff rebates.
7.164. The following charts illustrate the evolution of the PRS for each of the four products
subject to the system, including the ceiling and floor prices, the reference price and the total
duties (ad valorem duties plus specific duties) applicable from July 2001 to January 2014276:
0
20
40
60
80
100
120
0
200
400
600
800
1000
1200
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1
Total duties (%)
Prices (USD per MT)
Trends in the PRS for Rice
TOTAL DUTIES (%) C.I.F. REFERENCE PRICE FLOOR PRICE CEILING PRICE

276 These charts were drawn up by the Panel on the basis of the Fortnightly Information
(SPFP - Reference 1991-2013)(Exhibit PER-75); checked against the information contained in the Historical
Charts of the Price Range System (Exhibit GTM-20) and the Exhibit updating the information contained in
GTM-20, including data from 1 October 2013 to 31 December 2013 (Exhibit GTM-20bis). See also Statistics on
the application on the Price Range System (Exhibit GTM-19). In the case of the tariff lines for rice, sugar and
dairy products, Peru has maintained a 0% ad valorem tariff since 6 March 2008, and in the case of the tariff
lines for maize, Peru has maintained a 0% ad valorem tariff since 31 December 2010, with the exception of the
three lines (1108120000, 1108130000 and 3505100000) which currently have an ad valorem tariff of 6%.
Peru's first written submission, para. 3.59; Supreme Decree No. 038-2008-EF (Exhibit PER-28); Supreme
Decree No. 279-2010-EF (Exhibit PER-29).

0
20
40
60
80
100
120
140
0
150
300
450
600
750
900
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1
Total duties (%)
Prices (USD per MT)
Trends in the PRS for Sugar
TOTAL DUTIES (%) C.I.F. REFERENCE PRICE FLOOR PRICE CEILING PRICE

0
15
30
45
60
75
90
0
1000
2000
3000
4000
5000
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1
Total duties (%)
Prices (USD per MT)
Trends in the PRS for Dairy Products
TOTAL DUTIES (%) C.I.F. REFERENCE PRICE FLOOR PRICE CEILING PRICE

0
10
20
30
40
50
60
0
50
100
150
200
250
300
350
400
2001‐6
2001‐10
2002‐1
2002‐5
2002‐8
2002‐12
2003‐3
2003‐7
2003‐10
2004‐2
2004‐5
2004‐9
2004‐12
2005‐4
2005‐7
2005‐11
2006‐2
2006‐6
2006‐9
2007‐1
2007‐4
2007‐8
2007‐11
2008‐3
2008‐6
2008‐10
2009‐1
2009‐5
2009‐8
2009‐12
2010‐3
2010‐7
2010‐10
2011‐2
2011‐5
2011‐9
2011‐12
2012‐4
2012‐7
2012‐11
2013‐2
2013‐6
2013‐9
2014‐1
Total duties (%)
Prices (USD per MT)
Trends in the PRS for Maize
TOTAL DUTIES (%) C.I.F. REFERENCE PRICE FLOOR PRICE CEILING PRICE

7.3.3 Peru's tariff policy and the recording of tariffs in its schedule of concessions
7.165. Peru states that, under its tariff system, ad valorem and compound tariffs are applied. 277
Peru points out that, in the context of the developm ent of its tariff policy in 1991, all the non-tariff
b a r r i e r s t h a t i t w a s a p p l y i n g t o a g r i c u l t u r a l p r o d u c t s w e r e r e m o v e d .278 Supreme Decree
No. 060-91-EF of 22 March 1991 declared inoperative from that date "all non-tariff restrictions". 279
Legislative Decree No. 668 of 11 September 1991 prohibited, in relation to imports,
"the application of surcharges, fees or any other levy with the sole exception of tariff duties and
taxes which are also levied on the domestic sale of goods".280
7.166. With this context in mind, Peru explained that, during the Uruguay Round, it bound its
tariffs at two levels. Most products were bound at the level of 30% ad valorem . Agricultural
products were also for the most part bound at the level of 30% ad valorem, the exceptions being
rice, sugar, dairy products, maize and wheat, which were bound at a level of 68%.281

277 Peru's first written submission, paras. 3.9 and 3.15. Peru explained that it used the expression
"mixed duties" to refer to the situation in which the duty consists of an ad valorem tariff and another specific
tariff, for which reason it uses the expressions "compound duties" and "mixed duties" as synonyms.
Peru's response to Panel question No. 11, paras. 12-13.
278 Peru's first written submission, para. 3.10. See also Pre-1990 Legislation Relating to Non-Tariff
Barriers for Agricultural Products (Exhibit PER-7); Negotiating Group on Market Access, List of Liberalization
Measures, MTN.GNG/MA/W/10, 13 November 1991 (Exhibit PER-9), pp. 15-16.
279 Supreme Decree No. 060-91-EF (Exhibit PER-10).
280 Legislative Decree No. 668 (Exhibit PER-11).
281 Peru's first written submission, para. 3.18. See Schedule XXXV - Peru, Uruguay Round, 15 April 1994
(Exhibit PER-18).

7.167. As was indicated above, in the case of the tariff lines for rice, sugar and dairy products,
Peru maintained an ad valorem tariff at 0% from 6 March 2008, and for the maize tariff lines,
Peru maintained an ad valorem tariff at 0% from 31 December 2010, with the exception
of three lines (1108120000, 1108130000 and 3505100000) which currently attract an ad valorem
tariff of 6%.282
7.4 The question of whether the duties re sulting from the PRS are inconsistent with
Article 4.2 of the Agreement on Agriculture
7.4.1 Introduction
7.168. As explained earlier, the Panel's consid eration of Guatemala's claims will begin with
Article 4.2 of the Agreement on Agriculture.
7.4.2 Main arguments of the parties
7.4.2.1 Guatemala's claim
7.169. Guatemala asserts that the duties resulting from the PRS constitute variable import levies
and minimum import prices, or alternatively, that they constitute measures similar to variable
import levies and minimum import prices. Guatemala maintains that, consequently, the measure
at issue is inconsistent with Article 4.2 of the Agreement on Agriculture.283
7.4.2.1.1 The duties resulting from the PR S are variable import levies or measures
similar to variable import levies
7.170. Guatemala argues that the duties resu lting from the PRS meet the three criteria
established by the Appellate Body for constituting variable import levies or similar measures:
(a) they exhibit inherent variability; (b) they lack transparency and predictability with regard to
the level of the resulting levies; and (c) they impede or obstruct transmission of international price
developments to the domestic market.
284
7.4.2.1.1.1 The duties resulting from the PRS are border measures
7.171. Guatemala argues that the duties resulting from the PRS are a measure applied to the
importation of goods subject to the PRS by the Peruvian customs authorities, which therefore meet
the requirement of being border measures.285
7.4.2.1.1.2 The duties resulting from the PRS are inherently variable
7.172. Guatemala maintains that the duties re sulting from the PRS are inherently variable.
Guatemala asserts that Peru calculates the duties and tariff rebates resulting from the PRS through
the PRS, which is made up of various mathematical schemes and formulas that operate in
a coordinated manner to calculate duties and rebates automatically and continuously.
286
Guatemala adds that that the measure at issue possesses inherent variability because the measure
itself, as a mechanism, imposes the variability of the duties.
287

282 Peru's first written submission, para. 3.59; Supreme Decree No. 038-2008-EF (Exhibit PER-28);
Supreme Decree No. 279-2010-EF (Exhibit PER-29).
283 Guatemala's first written submission, paras. 4.3 and 4.96-4.98.
284 Guatemala's first written submission, paras. 4.32 and 4.81-4.83; second written submission,
paras. 4.8-4.9.
285 Guatemala's first written submission, paras. 4.29-4.31; response to Panel question No. 100,
para. 33.
286 Guatemala's first written submission, paras. 4.34-4.35 and 4.44; second written submission,
paras. 4.18-4.21; opening statement at the first meeting of the Panel, para. 11.
287 Guatemala's first written submission, para. 4.39.

7.173. Guatemala asserts that the duties resulting from the PRS are calculated in such a way that
the authorities have no discretion to interfere in their application, since both the formulas and the
manner of carrying out the calculations that produce the amounts of the resulting duties are
contained in the applicable legislation. Guatemala adds that the mechanism guarantees that the
resulting duties will vary every 15 days.
288
7.174. Guatemala points out that the PRS contains mathematical formulas not only for calculating
the duty or tariff rebate, but also for establishing the floor price and ceiling price, every six
months, and the reference prices every fortnight.289
7.175. Guatemala asserts that the changes in th e amounts of the duties resulting from the PRS
are not produced independently or as a result of separate administrative or legislative action,
because the authorities are obliged to act under the applicable rules, and administrative action is
limited to announcing the level of the elements of the PRS and the resulting duties or rebates.
290
7.176. Guatemala maintains that an empirical analysis shows the inherent variability of the duties
or rebates under the PRS. Guatemala affirms that, throughout the more than 12 years
of application of the PRS: (a) the resulting duties or rebates have almost always varied with each
new fortnight; (b) the floor and ceiling prices have varied with practically every publication
of updated customs tables; and (c) the reference price has changed every fortnight in roughly 92
to 96% of instances.
291
7.177. Guatemala asserts that any government measure can be changed by an autonomous and
independent government decision, but explains that the measure at issue possesses a degree
of additional variability, as the text thereof includes an inherent methodology requiring and
necessarily implying periodic modifications.
292
7.178. Guatemala maintains that, unlike the variab ility that may occur in respect of ordinary
customs duties, in the case of duties or rebates resulting from the PRS, there is no lack
of a specific legislative act. The duties and rebate s owe their existence to the legislative act issued
in 2001 which set out the formulas by which they are established. The acts publishing the customs
tables and reference prices are merely an announcement of the outcome of application of the
formulas.293
7.179. In contrast, according to Guatemala, the Peruvian authorities modify ordinary ad valorem
duty rates whenever they deem it appropriate to do so in the light of their trade policy. By way
of example, Guatemala points out that the ad valorem duties on bovine meat have changed once
every three years, in contrast to the fortnightly variability of the measure at issue, which has
resulted in 72 updates during the same period of three years.294
7.180. Guatemala also contends that Peru's argument to the effect that, in substance,
all governmental measures are variable, would render redundant the term "variable" (in the
expression "variable import levies").295

288 Guatemala's first written submission, paras. 4.36-4.38; second written submission, paras. 4.8-4.11.
289 Guatemala's first written submission, paras. 4.45-4.53.
290 Guatemala's first written submission, para. 4.48.
291 Guatemala's first written submission, paras. 4.54-4.57; History of Application of the Price Range
System (Exhibit GTM-15); History of Application of the Price Range System (GTM-15), indicating the instances
in which a reference price has remained the same in consecutive periods (Exhibit GTM-17).
292 Guatemala's second written submission, paras. 4.22-4.27.
293 Guatemala's first written submission, paras. 4.40-4.42.
294 Guatemala's second written submission, paras. 4.28-4.36; comments on Peru's responses to the
Panel's questions, para. 40; Extracts from Peru's Tariff of 2002, 2007 and 2012 relating to tariff line
0202.30.00.00 (Exhibit GTM-52).
295 Guatemala's second written submission, paras. 4.37-4.40.

7.4.2.1.1.3 The duties resulting from the PRS lack transparency and predictability
7.181. Guatemala maintains that, given their very variability, the duties generated by the PRS
lack both transparency and predictability, as a natural and inherent consequence of the variable
nature of those duties, since an exporter is less likely to ship to a market if that exporter does not
know and cannot reasonably predict what the amount of duties will be.
296
7.182. Guatemala asserts that the lack of tr ansparency and predictability is clear from
an empirical analysis. Guatemala explains that, as the key elements of the PRS vary, the resulting
values are not predictable, and a commercial operator will have no certainty as to what will be the
reference price, or as to whether an additional duty will be applied in the coming months, and
what will be its amount. Guatemala points out that the system in fact guarantees that the importer
faces uncertainty.
297
7.183. Guatemala claims that not only is there a general level of uncertainty, but that this
uncertainty also affects specific consignments, because operators are unaware at the date
of shipment of the goods what will be the amount of the duties required by the Peruvian
authorities at the time of arrival in Peru.
298
7.184. With regard to sugar, Guatemala indicates that the normal practice is to agree long-term
contracts (usually with a duration of one to three years, and sometimes four or five years),
with prices to be fixed at a date close to the date of shipment. In such cases, Guatemala asserts
that, owing to the way in which commercial operators work, the imposition of additional duties is
a total deterrent to imports from Guatemala, as importers would prefer to purchase sugar from a
source not subject to the PRS.
299
7.185. Guatemala also contends that the following aspects of the PRS are characterized by lack
of transparency: (a) the way in which Peru determines import-related costs; (b) the source used
for determining the freight and insurance costs needed to convert f.o.b. values into c.i.f. values;
and (c) the reason for the adjustment factor of 1.107 for the floor price of sugar and how it is
determined.
300
7.186. Guatemala also indicates that the de terminant of the lack of transparency and
predictability is not whether the levy is published or whether it conforms to the WTO bound tariff
levels, but that the variability automatically entails a lack of transparency and predictability.301
7.187. Guatemala argues that, under the PRS, an economic operator knows that the duty will
vary on the first and the fifteenth day of each mo nth, but does not know the level of those duties.
Guatemala adds that, even though economic operators may speculate about the future level
of prices, this would never provide a degree of predictability sufficient to ensure the conditions
of market access that were sought by the negotiators of the Agreement on Agriculture.
302

296 Guatemala's first written submission, paras. 4.58-4.61; opening statement at the first meeting of the
Panel, para. 26 (citing Appellate Body Report, Chile - Price Band System, para. 234); second written
submission, paras. 4.12, 4.19 and 4.50; response to Panel question No. 56, paras. 134-138.
297 Guatemala's first written submission, paras. 4.61-4.63.
298 Guatemala's first written submission, paras. 4.64-4.71; List of dates of publication of Ministerial and
Vice-Ministerial Resolutions publishing reference prices and delay in the publication of those documents
(Exhibit GTM-14); Searates: Tiempo de transporte marítimo - Distancia Tailandia – Perú (Exhibit GTM-21); and
Searates: Tiempo de transporte marítimo - Distancia Guatemala - Perú (Exhibit GTM-22).
299 Guatemala's response to Panel question No. 7, paras. 7-11; response to Panel question No. 58,
paras. 196-198; Eight-month Forward Sales Contract (Exhibit GTM-41); Two-year Forward Sales Contract
(Exhibit GTM-42); The White Paper on Sugar: A History of Protectionism (Exhibit GTM-48).
300 Guatemala's first written submission, para. 4.70.
301 Guatemala's opening statement at the first meeting of the Panel, para. 26.
302 Guatemala's second written submission, paras. 4.50-4.53.

7.188. Guatemala also asserts that the task of price estimation requires a high degree
of sophistication on the part of economic oper ators and generates costs imposed by a decision
of the Peruvian Government. Guatemala adds that, although economic operators could estimate
the reference prices and duties or rebates resulting from the PRS, this would not remedy the lack
of predictability.
303
7.189. Guatemala also expresses concern at Peru's attempt to condition its rights and obligations
on the actions and capacities of private operators.304
7.190. Guatemala also states that economic operators cannot predict the future level of the
reference price, because estimates fluctuate constantly and are based on data from the highly
volatile futures markets, and there are no fortnightly estimates.
305
7.191. Guatemala rejects the estimates submitted by Peru because: (a) most commercial
transactions have a long time horizon; (b) Peru used historical data, not future prices;
(c) past trends are no guide to the future; and (d) estimates prove to be imprecise in the short
term and become so imprecise in the long term that they hamper any serious commercial
planning.
306
7.192. Guatemala concludes that neither economic operators nor governments can estimate the
duties or rebates resulting from the PRS, either in the short term or the long term. In Guatemala's
view, all margins of inaccuracy are commercially relevant in terms of generating uncertainty and
persuading buyers to resort to other suppliers, particularly supplier countries that are not subject
to the PRS.
307
7.4.2.1.1.4 Inhibition of th e transmission of internationa l price developments to the
domestic market
7.193. Guatemala claims that, because of its design, architecture and effect, the measure at issue
insulates domestic prices in Peru from international price trends and impedes transmission of those
trends to the domestic Peruvian market. Guatemala claims that the explicit objective of the PRS is
to neutralize fluctuations in international prices and limit the negative effects of falls in such
prices; and it has the effect of completely inhibiti ng or severely distorting the transmission of any
decline in international prices to the Peruvian market.
308
7.194. Guatemala points out that the preamble to Supreme Decree No. 155-2001-EF confirms
that the measure at issue constitutes a stabilization and protection mechanism that makes it
possible to neutralize the fluctuations of international prices and limit the negative effects of falls
in those prices. In Guatemala's opinion "neutralizing" and "stabilizing" international price
fluctuations is equivalent to impeding their transmission.
309
7.195. Guatemala asserts that, in the short term, the system is designed to totally preclude the
transmission of a decline in prices to the domestic Peruvian market. This is because any change in
international prices produced during the period of validity of the floor price will not at all be
reflected in the price at which imports may en ter the Peruvian market. Guatemala adds that,
if there is a fall in international prices, reflected in a fall in the reference price, the PRS increases
the resulting duties by the same amount as the fall in the reference price, thereby covering the

303 Guatemala's response to Panel question No. 53, paras. 117-122; opening statement at the second
meeting of the Panel, paras. 13-17; comments on Peru's responses to the Panel's questions, para. 66.
304 Guatemala's second written submission, paras. 4.54-4.56.
305 Guatemala's second written submission, paras. 4.57-4.58; response to Panel question No. 53,
para. 109; Future price trends for Contract No. 5 (Exhibit GTM-47).
306 Guatemala's second written submission, paras. 4.59-4.73; opening statement at the second meeting
of the Panel, paras. 18-20; Estimate of future sugar prices during the first two weeks of February 2014, based
on Peru's methodology (Exhibit GTM-57).
307 Guatemala's second written submission, para. 4.74.
308 Guatemala's first written submission, paras. 4.72-4.75; second written submission, para. 4.13.
309 Guatemala's second written submission, paras. 4.86-4.87; copy of the web page of the Peruvian
Ministry of the Economy and Finance, explaining the Price Range System (Exhibit GTM-2); and Supreme
Decree No. 115-2001-EF (Exhibit GTM-4).

difference between the reference price and the floor price. As a result, the duties generated by the
PRS totally neutralize any change in international prices.310
7.196. Guatemala adds that, in the long term, ev en if the PRS does not completely preclude the
transmission of international prices to the domestic market, it severely distorts such transmission
owing to its cushioning effect. Guatemala asserts that the incorporation of changes in international
prices into the floor price is highly diluted, beca use when there is a fall in those prices, the floor
price would decrease at a much slower rate than the decline in the reference price, with a time lag
of up to six months. Furthermore, if monthly prices outside the confidence interval are eliminated,
it is possible that none of the prices will be inco rporated into the floor price, whereas no value is
omitted from the reference price.311
7.197. Guatemala submits Exhibits GTM-31 and GTM-56 in order to support its arguments
concerning the neutralizing and insulating effect of the duties resulting from the PRS with respect
to the prices of imports subject to that mechanism, in contrast to ordinary customs duties.312
7.198. Guatemala also asserts that the PRS not only covers the difference between the reference
price and the floor price, since with the addition of 3% for import costs, the PRS has the effect
of overcompensating for falls in international prices.313
7.199. With regard to the correlation that Peru claims to exist between domestic prices and
international prices, Guatemala contends that the variable nature of a levy has no bearing on the
behaviour of prices. 314 Guatemala points out that a variable levy impedes or distorts the
transmission of international price developments to the domestic market through the prices of
imported products, and this remains the case regardless of whether domestic prices are connected
or not connected to international prices by virtue of any other factor.
315
7.200. Guatemala argues that the type of analysis proposed by Peru has no legal basis because:
(a) Article 4.2 of the Agreement on Agriculture refers to variability as an inherent characteristic
of a variable levy, and not to the economic effects of the measure; (b) it ignores the economic
reality and would result in an arbitrary legal criterion, since the average domestic price reflects the
prices of all products present on the market and is the result of a wide range of factors; and
(c) it is equivalent to the trade effects test whic h has already been rejected in other cases, since
the WTO provisions provide protection not for trade volumes but for expectations concerning
conditions of competition.
316
7.201. Moreover, Guatemala identifies the following alleged methodological flaws in Peru's
proposed analysis of the correlation between domestic prices and international prices: (a) the
existence of anomalies in the application of the me asure, such as the extension of customs tables;
(b) Peru is presenting data for periods when the measure was not applied and has failed to present
data for 2013; and (c) Peru has not checked that the price data it uses are comparable.317
7.202. Guatemala also argues that, regardless of the methodological flaws, the data submitted by
Peru show periods of correlation and periods of non-correlation, so that it is impossible to reach
a conclusion on the existence or non-existence of correlation.318

310 Guatemala's first written submission, para. 4.76.
311 Guatemala's first written submission, para. 4.77.
312 Guatemala's second written submission, paras. 4.86-4.91; opening statement at the first meeting
of the Panel, para. 20; response to Panel question Nos. 116, 117 and 120, paras. 91-103 and 113-118;
Chart demonstrating the neutralizing effect of the PRS (sugar imports July 2012-December 2013)
(Exhibit GTM-31); Chart on the fluctuation of import prices (Exhibit GTM-56).
313 Guatemala's first written submission, paras. 4.79-4.80; second written submission, paras. 4.12-4.24.
314 Guatemala's second written submission, paras. 4.75-4.77.
315 Guatemala's opening statement at the first meeting of the Panel, paras. 17 and 18 (citing
Appellate Body Report, Chile - Price Band System, para. 246).
316 Guatemala's second written submission, paras. 4.78-4.85; 4.108-4.111; opening statement at the
first meeting of the Panel, paras. 21-22; response to Panel question No. 57, paras. 139-186.
317 Guatemala's second written submission, paras. 4.94-4.100; response to Panel question No. 57,
paras. 187-193.
318 Guatemala's second written submission, paras. 4.101-4.107.

7.4.2.1.2 The duties resulting from the PRS constitute minimum import prices or
measures similar to minimum import prices
7.203. Guatemala claims that the duties resulting from the PRS also constitute minimum import
prices or measures similar to minimum import prices, as they are the minimum price at which
imports of certain products can enter the Peruvian domestic market.319
7.204. Guatemala asserts that the PRS seeks to prevent goods entering Peru at a price below the
floor price, so that the floor price operates as a minimum price level which is applied to imports
of the products subject to the PRS.320
7.205. Guatemala claims that the floor price fulfils the function of an indicative (or target) price,
despite not being expressed in specific numerical terms 321, since when the reference price falls
below the floor price, an additional duty is imposed corresponding to the difference between the
international reference price and the limit of the range. The floor price is the level which the PRS
seeks to achieve with regard to the cost of importing the products.322
7.206. Guatemala asserts that the Peruvian measure is characterized by the following:
(a) it guarantees that goods will not enter the Peruvian market at a price below a certain
threshold; (b) it imposes an additional duty ba sed on the difference between the floor price and
the reference price; (c) the amount of the additional duty varies in line with that difference; and
(d) it impedes or distorts the transmission of a fall in world prices to the domestic market.323
7.207. According to Guatemala, it is also logi cal that the sum of the price of an individual
consignment and the specific duty may not always reach the same level as the floor price, but this
does not alter the fact that the measure was designed and conceived to prevent imports from
entering Peru at a price below a certain threshold.
324
7.208. Guatemala also contends that the referenc e price, by definition, represents the typical
average consignment which does not enter below the floor price, so that in the case of the typical
average consignment, the floor price operates as a minimum price. Guatemala also explains that,
if the prices of many consignments in a two-week period are below the floor price, this situation
would be corrected in the following two-week period by an adjustment of the reference price.
325
7.209. Guatemala also maintains that the floor price is not the only threshold serving as
a minimum price, since the PRS guarantees that no consignment will enter at a price lower than
the sum of the lowest international price and the additional duty. This sum constitutes a lower
de facto threshold than the floor price, and therefor e covers the two examples presented by Peru
of transactions which entered at a level lower than the floor price, it being highly unlikely that
there are any transactions for which the final price is situated below that threshold. Guatemala
adds that the difference between a specific tariff an d the duty resulting from the PRS, with respect
to a minimum price based on a de facto threshold, consists in the way in which the additional duty
is determined, fortnightly by means of mathematical formulas, and in the fact that the lowest
transaction price serves as an input for calculating the additional duty, which does not occur with
a specific duty.
326

319 Guatemala's first written submission, paras. 4.84-4.85 and 4.97; second written submission,
para. 4.126.
320 Guatemala's first written submission, para. 4.88; second written submission, paras. 4.127-4.130.
321 Guatemala's response to Panel question No. 59, para. 201.
322 Guatemala's second written submission, para. 4.134.
323 Guatemala's first written submission, para. 4.94.
324 Guatemala's second written submission, paras. 4.135-4.136; opening statement at the first meeting
of the Panel, paras. 31 and 34-35; response to Panel question No. 59, para. 201; response to Panel question
No. 123, paras. 119-127.
325 Guatemala's second written submission, paras. 4.137-4.140; opening statement at the first meeting
of the Panel, paras. 31-36; response to Panel question No. 59, para. 203; response to Panel question No. 124,
paras. 128-132; response to Panel question No. 125, paras. 133-134.
326 Guatemala's second written submission, para. 4.141; opening statement at the first meeting of
the Panel, paras. 37-39; response to Panel question No. 59, para. 203; response to Panel question No. 126,
paras. 135-152.

7.210. Guatemala also asserts that the PRS reflects the characteristic of minimum import prices in
that it distorts the transmission of falls in international prices to the domestic market.327
7.4.2.2 Peru's defence
7.211. Peru argues that the measure at issue is an ordinary customs duty, and that Article 4.2
of the Agreement on Agriculture is therefore not applicable.
328 Peru also argues that the measure
at issue does not exhibit characteristics such as to be considered a variable import levy,
a minimum import price or a measure similar to these.
329
7.4.2.2.1 The duties resulting from the PRS are ordinary customs duties
7.212. Peru identifies a series of characteristics of ordinary customs duties, which, it argues, are
derived from the ordinary meaning of the text of the relevant agreements, taking into account
their context, object and purpose, the supplemen tary means of interpretation and the previous
decisions of panels and the Appellate Body.
330
7.213. Peru asserts that ordinary customs duties : (a) are duties subject to most-favoured-nation
(MFN) treatment, forming part of the tariff regi me; (b) apply to imports and the obligation to pay
them arises at the time of importation; (c) may be designed to collect revenue or to protect the
domestic industry; (d) may be ad valorem, specific or compound duties; (e) may vary, but are
subject to an upper limit, which is the level bound in the schedule of the respective Member; and
(f) are transparent and predictable. 331 Peru argues that the duties resulting from the PRS meet
these characteristics, and are therefore ordinary customs duties.332
7.214. Peru explains that the duties resulting from the PRS: (a) came into being as part of the
restructuring of its tariff system in 1991 and have formed part of its tariff policy since that date;
(b) were included in Peru's tariff offer in the Ur uguay Round; (c) form part of the tariff reductions
negotiated under free trade agreements; (d) the combination of specific duties and ad valorem
duties may not exceed the bound level; and (e) they are customs duties, in accordance with its
legislation.333
7.215. Regarding its assertion that its mixed duties formed part of its offer during the Uruguay
Round negotiations, Peru indicates that its schedule of concessions reflects the fact that the
customs tariffs were bound at a uniform rate of 30% ad valorem, with the exception
of 20 agricultural products which were already subject to a specific duty as part of its tariff, and for
which the tariff was bound at a rate of 68%. Peru argues that it assumed its commitments at the
end of the Uruguay Round with a good faith understanding that it was following the established
rules.
334

327 Guatemala's first written submission, paras. 4.89-4.92; second written submission,
paras. 4.128-4.132.
330 Peru's first written submission, paras. 5.11-5.37.
331 Peru's first written submission, paras. 5.38-5.39.
332 Peru's first written submission, paras. 5.40-5.41; opening statement at the first meeting of the
Panel, para. 37.
333 Peru's first written submission, paras. 5.40-5.50; second written submission, paras. 3.14-3.33;
opening statement at the first meeting of the Panel, para. 38; Communication from Peru to the Chairman
of the Negotiating Group on Market Access, 14 December 1993 (Exhibit PER-15); Modalities for the
Establishment of Specific Binding Commitments under the Reform Programme, MTN.GNG/MA/W/24,
20 December 1993 (Exhibit PER-19); Decree Law No. 26140 (Exhibit PER-53); Circular INTA-CR.62-2002
(Exhibit GTM-3). See also Decree Laws Nos. 25528 and 25784 (Exhibit PER-91).
334 Peru's first written submission, paras. 5.46-5.50; second written submission, paras. 3.23-3.27;
Communication from Peru to the Chairman of the Negotiating Group on Market Access, 14 December 1993
(Exhibit PER-15); Modalities for the Establishment of Specific Binding Commitments under the Reform
Programme, MTN.GNG/MA/W/24, 20 December 1993 (Exhibit PER-19).

7.4.2.2.2 The duties resulting from the PRS are not variable import levies or minimum
import prices
7.216. Peru maintains that the duties resulting from the PRS do not share the features of variable
import levies and do not constitute minimum import prices.335
7.4.2.2.2.1 The measure is neither fitted nor intended to arrive at an indicative price
7.217. Peru asserts that the main feature of minimum import prices and of variable import levies
is that the import charge is based on a minimum import price, preventing products from entering
a domestic market at a lower price.336
7.218. Peru maintains that the measure at issue is neither a variable import levy nor a minimum
import price, since the PRS does not impose a minimum import price, either by impeding the entry
of goods at a price lower than the minimum or by varying the levy to equalize the import price
with the established minimum.337
7.219. Peru asserts that the measure has neither the objective nor the capacity to arrive at
an indicative (target) price and points out that it is meaningless to talk of either a variable import
levy or a minimum import price in the absence of an indicative price.338
7.220. To demonstrate the foregoing, Peru pres ents an example of an import transaction for
sugar where the c.i.f. entry price for the merchand ise was lower than the floor price, and another
where the c.i.f. entry price was lower than the international reference price and the floor price.339
7.221. Peru also presents trade statistics for the four products subject to the PRS for the period
between 2001 and 2013, in which it identifies the number of trade transactions that entered Peru
at a price lower than the reference price and the floor price.340
7.222. Regarding Guatemala's argument that, in a typical transaction, the floor price operates as
a minimum price, Peru maintains that the measure is applicable to all consignments and the
decision on price is at the discretion of the selle r and the buyer. Peru also claims that Guatemala
assumes without justification that the prices of products upon entry will affect price quotations in
the reference market, pointing out that, if th e prices of many consignments are below the
reference price for one fortnight, that situation would be corrected in the following fortnight.
341
7.223. Peru indicates that, to accept Guatemala's argument to the effect that, if the PRS does not
succeed in equalizing entry prices with the floor prices, it does produce a de facto equalization of
entry prices with the price resulting from the sum of the lowest international price and the
resulting specific duty, would imply that any imposition of a specific duty is de facto a minimum
import price, regardless of how it is calculated.
342

336 Peru's second written submission, para. 3.36. See also Peru's first written submission,
paras. 5.59-5-60; second written submission, paras. 3.42 and 3.65-3.66; Discussion paper on tariffication
submitted by the United States, MTN.GNG/NG5/W/97, 10 July 1989 (Exhibit PER-20); Negotiating Group
on Non-Tariff Measures, Communication from Australia, MTN.GNG/NG2/W/24, 2 December 1988
(Exhibit PER-48); Compendium of Definitions from the WTO Glossary (Exhibit PER-41) and J. Jackson,
World Trade and the Law of the GATT (Bobbs-Merrill, 1969) (Exhibit PER-38).
337 Peru's first written submission, para. 5.61; second written submission, paras. 3.36;
opening statement at the first meeting of the Panel, para. 41, response to Panel question No. 59,
paras. 147-149.
338 Peru's first written submission, para. 5.61; second written submission, paras. 3.36-3-41 and 3.67;
opening statement at the first meeting of the Panel, para. 41; opening statement at the second meeting
of the Panel, para. 37.
339 Peru's first written submission, paras. 5.62-5.68.
340 Peru's response to Panel question No. 123, paras. 98-99; Statistical data on product entries below
the minimum price (Exhibit PER-90).
341 Peru's second written submission, para. 3.40, subpara. (iv).
342 Peru's second written submission, para. 3.40, subpara. (v); opening statement at the second

7.4.2.2.2.2 The duties resulting from the PRS are not sufficiently similar to variable
import levies or minimum import prices
7.224. Peru claims that the duties resulting from the PRS are not similar to variable import duties
or minimum import prices.343
7.4.2.2.2.3 The duties resulting from the PRS do not insulate the Peruvian market
7.225. Peru states that a key characteristic of variable import levies and minimum import prices is
that they insulate the domestic market from the international market.344
7.226. Peru argues that insulation from the intern ational market does not occur in the case of its
PRS because the resulting duties do not seek to impede the entry of goods below an indicative or
minimum price, but are a function of prices on the international market; moreover, they cannot
exceed the bound tariff level. Peru asserts that domestic prices consistently and progressively
reflect trends in the international market.
345
7.227. Peru presents three charts relating to maize and one relating to sugar, which compare
domestic prices over the five previous years with international reference prices and import prices
from the United States and the European Union. Peru maintains that domestic prices closely follow
import price patterns.346
7.228. Peru indicates that the PRS is established by law as a stabilization and protection
mechanism that serves to neutralize fluctuations in international prices and limit the negative
effects of falls in such prices. In Peru's opinion, the PRS has been effective in seeking to achieve
those objectives. Peru nevertheless points out that there is no reason to affirm that "neutralize"
means "distort" or "isolate".
347
7.229. Peru notes that every customs duty neutraliz es international effects in relation to the local
market, and that the distorting effect of variable import levies must be of a different or greater
degree. Peru adds that the objective of its PRS is to cushion the impact of sharp price fluctuations
in the short term.
348
7.4.2.2.2.4 The duties resulting from the PRS are transparent and predictable
7.230. Peru claims that lack of transparency an d predictability is an additional characteristic
independent of variability, and asserts that the high degree of transparency and predictability
of the PRS distinguishes it from variable levies and minimum import prices.349
7.231. Peru argues that its measure is transparent and enables commercial operators to acquaint
themselves with the amounts corresponding to the applicable tariff duties. Peru indicates that

343 Peru's first written submission, paras. 5.69-5.73.
344 Peru's first written submission, paras. 5.74-5.77; response to Panel question No. 46, para. 110;
C. Coughlin and G. Wood, "An Introduction to Non-Tariff Barriers to Trade", Federal Reserve Bank of St. Louis
Review (1989) (Exhibit PER-42); G. Sampson and R. Snape, "Effects of Variable Import Levies and Options
for Retaliation", Stockholm, Sweden, Institute for International Economic Studies, Seminar Paper No. 120
(Exhibit PER-43).
345 Peru's first written submission, para. 5.78; second written submission, paras. 3.62-3.64;
opening statement at the first meeting of the Panel, para. 43; opening statement at the second meeting
of the Panel, para. 41.
346 Peru's first written submission, paras. 5.79-5.87; response to Panel question No. 121, paras. 85-89;
Statistical Compendium (Exhibit PER-46); Database of sugar and maize prices (Exhibit PER-69);
Updated version of charts 1-7 (Exhibit PER-70); Explanation of alleged flaws in price charts (Exhibit PER-93).
347 Peru's response to Panel question No. 49, paras. 116-119; second written submission,
paras. 3.59-3.60; opening statement at the second meeting of the Panel, para. 41; response to Panel question
No. 115, paras. 75-77.
348 Peru's second written submission, para. 3.61; response to Panel question No. 115, paras. 75-77.
349 Peru's first written submission, paras. 5.88 and 5.92; second written submission, para. 3.47;
opening statement at the first meeting of the Panel, para. 44.

operators know that the duty will never exceed th e bound rate and that all the essential elements
for its calculation are published.350
7.232. In particular, Peru asserts that: (a) any interested party may log on to the official website
in order to check the applicable duties; (b) the methodology is publicly accessible and open
sources are required for its application; (c) the international reference markets are known 351;
(d) the reference prices are characterized by temporal proximity; (e) forward financial instruments
exist for the determination of agricultural product prices; (f) the products subject to the PRS are
commodities for which a wealth of forecasts exist in easily accessible time series; and (g) there is
predictability with regard to the administrative practice of the Peruvian State. Peru claims that all
of the foregoing ensures that duties under the PRS are reasonably predictable.
352
7.233. Peru also maintains that the transparent and predictable characteristics of the PRS enable
economic operators to predict, prior to the cust oms declaration for the goods, what duties will
apply.353
7.234. To demonstrate the foregoing, Peru explains that it attempted to make an advance
calculation of reference prices for the first two weeks of February 2014 and that: (a) for maize it
projected a reference price of between USD 231 and USD 232, and the actual price was USD 232;
(b) for sugar it projected a reference price of between USD 433 and USD 434, and the actual price
was USD 437; and (c) for dairy products it projected a reference price of between USD 5,048 and
USD 5,555, and the actual price was USD 5,252.
354 Peru rejects Guatemala's allegation that it is
impossible to make estimates.355
7.4.2.2.2.5 The duties resulting from the PRS have no automatic or inherent variability
7.235. Peru acknowledges that the duties resulting from the PRS are in general variable, but
claims that variability per se is not a decisive factor or element, since it is a necessary but by no
means sufficient condition.356
7.236. Peru affirms that ordinary customs duties may vary and in fact do so, since every Member
may exact a duty upon importation and periodically change the rate at which it applies that
duty.
357
7.237. Peru also claims that what varies in the Peruvian system is not the duties or rebates, but
the reference price used to determine the applicable values, and each new calculation does not
involve a change in the tariff, which for much of the period of application of the PRS has remained
at zero.
358

350 Peru's first written submission, paras. 5.89-5.91; second written submission, para. 3.48;
opening statement at the first meeting of the Panel, para. 44; Examples of Information Available on the
SUNAT Website (Exhibit PER-44).
351 Peru adds that the Central Reserve Bank of Peru publishes data on the international prices of sugar,
maize and rice, as well as the PRS reference prices. Peru's response to Panel question No. 114, para. 74;
Statistical Tables from the Weekly Report of the Central Reserve Bank of Peru (BCRP) (Exhibit PER-88).
352 Peru's second written submission, paras. 3.56-3.58; response to Panel question No. 52,
paras. 126-127; opening statement at the second meeting of the Panel, para. 40.
353 Peru's response to Panel question No. 52, para. 126.
354 Peru's second written submission, paras. 3.49-3.50; response to Panel question No. 53, para. 129;
response to Panel question No. 109, paras. 54-62; Reference Prices (Exhibit PER-72); Slides presented by Peru
(Exhibit PER-83).
355 Peru's second written submission, paras. 3.51-3.55.
356 Peru's first written submission, para. 5.92; second written submission, para. 3.43; opening
statement at the first meeting of the Panel, para. 40; opening statement at the second meeting of the Panel,
para. 38; response to Panel question No. 101, paras. 32-34.
357 Peru's second written submission, para. 3.43; opening statement at the first meeting of the Panel,
para. 40; response to Panel question No. 101, para. 32; Compendium of Tariff Changes for Boneless
Bovine Meat (Exhibit PER-85).
358 Peru's first written submission, para. 5.92; second written submission, para. 3.44; opening
statement at the first meeting of the Panel, para. 40; opening statement at the second meeting of the Panel,
para. 38.

7.238. Peru also points out that the measure challenged by Guatemala is a duty under the PRS
and not the PRS itself or other calculation mechanisms.359
7.239. Peru also asserts that the constituent el ements of the PRS do not operate automatically,
since different State organs have to complete certain administrative steps in order for the
reference prices and updated customs tables to be published. Peru adds that every customs table
is published with the same legal status as Su preme Decree No. 115-2001-EF and that on various
occasions Peru has chosen not to publish a new ta ble and instead to extend the table for one or
more products by supreme decree.360
7.4.3 Main arguments of the third parties
7.4.3.1 Argentina
7.240. Argentina considers that Members must be particularly careful to ensure compliance with
and enforcement of Article 4.2 of the Agreement on Agriculture, and avoid taking measures that
could restrict market access for agricultural products.
361
7.241. In Argentina's opinion, the duties resulting from the PRS are a measure inconsistent with
Article 4.2 of the Agreement on Agriculture, si nce they qualify as a variable import levy,
a minimum import price, or as a measure similar to these.362
7.242. Argentina asserts that the obligation under Article 4.2 of the Agreement on Agriculture
applies from the date of the entry into force of the WTO Agreement, which would not appear to
match Peru's defence to the effect that the PR S was part of Peru's tariff offer during the
Uruguay Round.363
7.243. Finally, Argentina states that it is particularly important that transparency and
predictability should prevail in trade relations, and observes that, in general terms, a price band
system will lessen the transparency and predictability of trade.364
7.4.3.2 Brazil
7.244. In Brazil's view, in order to assess whether a border measure on agricultural products is
consistent with market access commitments, it is not enough to establish whether the measure is
consistent with the schedule of concessions of the particular Member, but it is also necessary to
confirm that the measure is not one of those referred to in Article 4.2 of the Agreement on
Agriculture.
365
7.245. Brazil argues that, in assessing whether a measure is inconsistent with Article 4.2 of the
Agreement on Agriculture, it must be considered whether the challenged measure is similar to one
of the measures identified in footnote 1 to the Agreement on Agriculture, without having to check
that the measure is identical. Brazil points out that the fact that a measure shares characteristics
with the duties set out in a Member's schedule of concessions does not, ipso facto, turn it into
an ordinary customs duty.
366 Brazil also asserts that not all the duties calculated on the basis of
the value and/or volume of imports constitute ordinary customs duties.367
7.246. Brazil considers that some characteristics of the measure at issue appear to be similar to
those of the measures mentioned in footnote 1 to the Agreement on Agriculture.368

359 Peru's second written submission, para. 3.44.
360 Peru's second written submission, para. 3.45; opening statement at the second meeting of the Panel,
para. 38; response to Panel question No. 104, paras. 42-44.
361 Argentina's third-party written submission, para. 10.
362 Argentina's third-party written submission, para. 11; third-party statement, para. 8.
363 Argentina's third-party written submission, paras. 13 and 14; third-party statement, paras. 4-6.
364 Argentina's third-party written submission, para. 17.
365 Brazil's third-party written submission, para. 10.
366 Brazil's third-party written submission, paras. 11-12.
367 Brazil's third-party written submission, para. 10.
368 Brazil's third-party written submission, paras. 14-18.

7.247. In Brazil's view, the inherent variabili ty of the measure appears to be undisputed.
Regarding the lack of transparency and predictabi lity, Brazil considers that a measure with these
characteristics generates costs and discourages the conclusion of long-term contracts. 369
Brazil indicates that the discouraging effect is even clearer when the measure does not apply to all
Members.370
7.248. Brazil adds that the fact that a measure refers to the objective of disconnecting domestic
prices from international market signals, beyond the normal effect of tariffs, and protecting local
producers from the agricultural policies of other Members, appears to run counter to Article 4.2
of the Agreement on Agriculture.371
7.4.3.3 Colombia
7.249. Colombia is of the view that the Agreement on Agriculture contains no provision
suggesting that one of the fundamental characteristics of a variable levy is its inherent
variability.
372
7.250. Colombia considers that the interpretation of variable import levies by the Appellate Body
does not meet the customary rules of interpretation, insofar as it takes no account of the context
of the entire sentence. Colombia explains that the use of the phrase "these measures include"
in the footnote to the Agreement on Agriculture is not meant to indicate that the measures must
"themselves contain" variable formulas or minimum prices, but serves to list measures of the kind
that should be converted into tariffs.373
7.251. In Colombia's opinion, a system like the Peruvian one may be transparent and predictable,
even though it exhibits a factor of variation modulated by a methodology. Colombia adds that the
Panel should not confine itself to the definition of predictability and transparency proposed
in Chile – Price Band System , since that definition relates to a specific case and not a definition
authorized by Members. In Colombia's opinion, the fact that a measure includes a formula with
fixed terms and coefficients would make it possible to predict the final result, while the existence
of clear and public rules and a stable and equally public methodology for defining the tariff make it
possible to characterize the mechanism as transparent.
374
7.252. Colombia considers that the interpretation of Article 4.2 of the Agreement on Agriculture in
Chile – Price Band System does not show that measures that isolate domestic markets are
WTO-inconsistent. Colombia maintains that, in order for a measure to be WTO-inconsistent, it is
necessary that the Member alleging the violation demonstrate that measures isolating domestic
markets have similar or identical effects to measures that are prohibited under the provisions of
the agreements. Colombia concludes that, in such cases, it is not necessary to examine whether
the measure has the effect of isolating the Peruvian market from the international market.
375
7.4.3.4 Ecuador
7.253. Ecuador considers that, to the extent that ordinary customs duties are not applied in
excess of those set forth in a Member's schedule of concessions, it is possible for that Member to
apply a type of duty different from the type provid ed for in its schedule. In Ecuador's opinion, the
WTO agreements do not prohibit a Member from ad justing its customs duties; nor do they impose
temporal restrictions on how such adjustments are made, as long as the duties are not in excess
of the commitments undertaken in the Member's schedule.
376

369 Brazil's third-party oral statement, para. 4.
370 Brazil's third-party oral statement, para. 5.
371 Brazil's response to Panel question No. 5.
372 Colombia's third-party written submission, para. 12 (citing Appellate Body Report, Chile - Price Band
System, para. 233).
373 Colombia's third-party written submission, paras. 13-14.
374 Colombia's third-party written submission, paras. 17-23; Colombia's third-party statement, para. 11.
375 Colombia's response to Panel question No. 5, paras. 5-9.
376 Ecuador's third-party statement, paras. 10-11; response to Panel question No. 6.

7.4.3.5 United States
7.254. The United States considers that Peru's PRS appears to be a variable import levy,
a minimum import price, or at least a measure similar to both of these.377
7.255. The United States notes that the following features of Peru's measure appear to be
undisputed: (a) it is based on a mathematical formula such that when the reference price falls
below the lower threshold, an additional duty is applied based on the difference; (b) it employs
a reference price that is updated every two weeks, based on international prices, and the lower
threshold is obtained from average prices over the preceding five years; (c) it yields duties whose
amounts change every two weeks; and (d) the further the reference price is below the lower
threshold, the higher the resulting duty.
378
7.256. The United States argues that, in the light of those features, the PRS appears to be
inherently variable and less transparent and predictable than ordinary customs duties, apart from
which its design and structure im pede the transmission of international prices to the domestic
market.379
7.257. In the United States' opinion, the lack of transparency and predictability are not
independent characteristics that a measure must possess in order to be considered a variable
import levy, since it is the presence of a formula that makes a measure inherently variable,
and this feature renders the levy less transparent and predictable than ordinary customs duties.
380
7.258. The United States also points out that the PRS appears to be similar to a minimum import
price. The United States considers that the existence of a target price is not required to establish
that a measure is similar to minimum import pr ices. The nature of the measure, including its
tendency to distort the transmission of declines in world prices, suggests that Peru's measure is
similar to minimum import prices.
381
7.259. In the United States' opinion, Article 4.2 of the Agreement on Agriculture does not require
a finding as to whether the measure isolates the domestic market from international prices.
According to the United States, even if the meas ure never causes effects, it may be prohibited,
for which reason the evidence concerning the effects will be of a secondary nature.382
7.260. The United States affirms that it is not necessary to define ordinary customs duties
inasmuch as, if the measure is one of those included in footnote 1 of the Agreement on
Agriculture, ordinary customs duties are defined by exclusion.
383
7.261. The United States considers that the characteristics of ordinary customs duties proposed
by Peru do not constitute an effective argument, since ordinary customs duties and variable import
levies share certain attributes. 384 The United States also points out that a Member's
characterization of its own measure is not conclusive, apart from which the evidence presented by
Peru does not demonstrate that the measure constitutes ordinary customs duties.385
7.262. Finally, the United States points out that Peru's schedule of concessions does not
incorporate the duties resulting from the PRS and does not include the system established
in 2001; even if it did, this would not remedy the violation of Article 4.2 of the Agreement on

377 United States' third-party written submission, para. 11.
378United States' third-party written submission, para. 12.
379 United States' third-party written submission, paras. 13-16; response to Panel question No. 6,
paras. 21-23.
380 United States' third-party written submission, paras. 10-12.
381 United States' third-party written submission, paras. 17-19.
382 United States' response to Panel question No. 5, paras. 17-20.
383 United States' third-party written submission, paras. 20-22.
384 United States' third-party written submission, paras. 24-26.
385 United States' third-party written submission, paras. 27-28.

Agriculture, since the obligations contained in that provision would prevail over the content of the
schedule of concessions.386
7.4.3.6 European Union
7.263. The European Union states that the Panel's task is to characterize the measure at issue
within the framework of the categories contained in footnote 1 of the Agreement on Agriculture,
particularly with regard to variable import levies.
387
7.264. The European Union refers to the two features of variable import levies identified by the
Appellate Body in Chile – Price Band System : (a) their continuous and automatic variation;
and (b) their lack of transparency and predictability.388
7.265. The European Union considers that partic ular attention should be paid to the lack
of transparency and predictability, because this is what affects traders and governments. In the
European Union's view, provided that all the el ements of the system are published and all the
values used are publicly available, the system will be transparent and predictable, because the
economic operator will be in a position to predict the nature of a change in the amount of the
duties.389
7.266. The European Union asserts that, if a Member were to change its duties every day by
legislative intervention, following international prices, and not through the use of a formula,
the measure would continue to lack transparency and predictability.390
7.267. The European Union notes that no decisive weight can be given to the distortion in the
transmission of declines in world prices, since this is a relative analysis.391
7.268. The European Union considers that a key characteristic of variable import levies, and of all
the measures included in footnote 1 of the Agreemen t on Agriculture, is the fact that they prevent
price competition for all imports or a part thereof, thus distinguishing them from ordinary customs
duties which permit price competition on all imports.392
7.4.4 Assessment by the Panel
7.4.4.1 Article 4.2 of the Agreement on Agriculture
7.4.4.1.1 Content of Article 4.2 of the Agreement on Agriculture
7.269. Article 4.2 of the Agreement on Agriculture, together with the footnote thereto, reads as
follows:
2. Members shall not maintain, resort to, or revert to any measures of the kind
which have been required to be converted into ordinary customs duties, except as
otherwise provided for in Article 5 and Annex 5.1
(Footnote original) 1 These measures include quantitative import restrictions, variable import
levies, minimum import prices, discretionary impo rt licensing, non-tariff measures maintained
through state-trading enterprises, voluntary export restraints, and similar border measures other
than ordinary customs duties, whether or not the measures are maintained under
country-specific derogations from the provisions of GATT 1947, but not measures maintained
under balance-of-payments provisions or under other general, non-agriculture-specific provisions
of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.

386 United States' third-party written submission, paras. 29-31 (citing Appellate Body Report,
EC - Export Subsidies of Sugar, paras. 221-222).
387 European Union's third-party written submission, para. 42.
388 European Union's third-party written submission, paras. 43-47.
389 European Union's third-party written submission, para. 47.
390 European Union's third-party written submission, para. 48.
391 European Union's third-party written submission, para. 49.
392 European Union's third-party written submission, para. 50.

7.4.4.1.2 Article 4.2 of the Agreement on Agriculture in previous disputes
7.270. Article 4.2 of the Agreement on Agricultur e has been examined by WTO panels and by the
Appellate Body in only two disputes: Chile – Price Band System and Turkey – Rice. In Chile – Price
Band System, both in the original and in the compliance proceedings, the Panels and the Appellate
Body clarified the scope of the text of Article 4. 2 of the Agreement on Agriculture and interpreted
the terms "variable import levies", "minimum import prices" and "similar border measures".
In Turkey – Rice , the Panel examined as the principal claim the consistency of the challenged
measure, which was in the nature of a quantitative restriction, with Article 4.2.
393
7.271. In two other disputes, India – Quantitative Restrictions and Korea – Various Measures on
Beef, the Panels found that the challenged measure was inconsistent with Article 4.2 of the
Agreement on Agriculture, after having found an inconsistency with Article XI:1 of the GATT 1994.
In these disputes, the Panels did not interpret the content of Article 4.2, considering that
a quantitative restriction on agricultural products that was inconsistent with Article XI:1 of the
GATT 1994 was necessarily also inconsistent with Article 4.2 of the Agreement on Agriculture.
394
Along the same lines, in EC – Seal Products , the Panel rejected a claim in respect of Article 4.2,
having already rejected a claim relating to Article XI:1 of the GATT 1994.395
7.272. The interpretation of the scope of the obligation in Article 4.2 of the Agreement on
Agriculture and the meaning of the terms "variable import levies", "minimum import prices" and
"similar border measures", contained in the analyses carried out by the Panels and the Appellate
Body in Chile – Price Band System are more relevant to this dispute than those contained in the
analyses of other disputes relating to Article 4.2. For this reason, the Panel will take those reports
into account in conducting its own analysis.
7.4.4.1.3 Objective of Article 4.2 of the Agreement on Agriculture
7.273. In the original Chile – Price Band System proceedings, the Appellate Body referred to the
overall objectives set out in the preamble to the Agreement on Agriculture:
[T]he preamble to the Agreement on Agriculture states that an objective of that
Agreement is "to establish a fair and market-oriented agricultural trading system",
and to initiate a reform process "through the negotiation of commitments on support
and protection and through the establishment of strengthened and more operationally
effective GATT rules and disciplines".
396 The preamble further states that, to achieve
this objective, it is necessary to provide for reductions in protection, "resulting in
correcting and preventing restrictions and distortions in world agricultural markets"397,
through achieving "specific binding commitments," inter alia, in the area of market
access.398, 399
7.274. The Appellate Body went on to explain the specific objective of Article 4 of the Agreement
on Agriculture:
During the course of the Uruguay Round, negotiators identified certain border
measures which have in common that they restrict the volume or distort the price
of imports of agricultural products. Th e negotiators decided that these border
measures should be converted into ordinary customs duties, with a view to ensuring
enhanced market access for such imports. Thus, they envisioned that ordinary
customs duties would, in principle, become the only form of border protection.
As ordinary customs duties are more transparent and more easily quantifiable than
non-tariff barriers, they are also more easily compared between trading partners,

393 See Panel Report, Turkey - Rice, paras. 7.12-7.138.
394 Panel Reports, India - Quantitative Restrictions, paras. 5.241-5.242; Korea - Various Measures
on Beef, para. 762. (These panel findings were not appealed.)
395 Panel Report, EC - Seal Products, para. 7.665. (This panel finding was not appealed.)
396 (Footnote original) Preamble to the Agreement on Agriculture, second recital.
397 (Footnote original) Ibid. third recital.
398 (Footnote original) Ibid. fourth recital.
399 Appellate Body Report, Chile - Price Band System, para. 196.

and thus the maximum amount of such duties can be more easily reduced in future
multilateral trade negotiations.400
7.275. The Appellate Body thus concluded that Article 4 of the Agreement on Agriculture "is … the
legal vehicle for requiring the conversion into ordinary customs duties of certain market access
barriers affecting imports of agricultural products."401
7.4.4.1.4 Scope of Article 4.2 of the Agreement on Agriculture
7.276. With regard to the scope of Article 4.2 of the Agreement on Agriculture, in Chile – Price
Band System, the Appellate Body explained that the obligation not to maintain, resort to, or revert
to any measures of the kind which have been required to be converted into ordinary customs
duties applies from the date of the entry into force of the WTO Agreement, regardless of whether
or not a Member converted any such measures before the conclusion of the Uruguay Round.
The Appellate Body added that the fact that no Member singled out any measure of any other
Member does not mean that such a measure subsequently enjoys immunity.
402
7.277. The Appellate Body also stated that footno te 1 to the Agreement on Agriculture "lists six
categories of border measures and a residual category of such measures that are included in
'measures of the kind which have been required to be converted into ordinary customs duties'
within the meaning of Article 4.2."
403 The Appellate Body clarified that the list in the footnote is
illustrative, and includes inter alia variable import levies, minimum import prices and similar
border measures other than ordinary customs duties.404
7.278. In the original proceedings, the Appellate Body identified the features shared by all the
border measures listed in footnote 1:
Before looking at these categories of measures, we note that all of the border
measures listed in footnote 1 have in common the object and effect of restricting the
volumes, and distorting the prices, of imports of agricultural products in ways different
from the ways that ordinary customs duties do. Moreover, all of these measures have
in common also that they disconnect domestic prices from international price
developments, and thus impede the transm i s s i o n o f w o r l d m a r k e t p r i c e s t o t h e
domestic market.
405 (emphasis original)
7.279. The Appellate Body clarified that, if the me asure at issue in that dispute fell within any
one of the categories of measures listed in footno te 1, it would be among the "measures of the
kind which have been required to be converted in to ordinary customs duties", and thus could not
be maintained, resorted to, or reverted to, as of the date of entry into force of the
WTO Agreement.406
7.280. The Appellate Body also explained that the fact that any variable import levies or minimum
import prices result in the payment of duties does not mean that they should not have been
converted into ordinary customs duties.407
7.281. In addition, the Appellate Body referred to Article 5 of the Agreement on Agriculture, which
provides for a market access exemption in the form of a special safeguard. It pointed out that
Article 4.2 should not be interpreted in a way that permits Members to maintain measures that
operate in a way similar to a special safeguard inasmuch as no proper meaning and effect could be
given to the conditions for establishing the special safeguard.
408

400 Appellate Body Report, Chile - Price Band System, para. 200.
401 Ibid. para. 201.
402 Ibid. para. 212.
403 Ibid. para. 219.
404 Ibid. para. 219.
405 Ibid. para. 227.
406 Ibid. para. 221.
407 Ibid. para. 216.
408 Ibid. para. 217.

7.4.4.1.5 Relevant terms in Article 4.2 of the Agreement on Agriculture
7.4.4.1.5.1 Variable import levies
7.282. In the present case, the Panel will begin by considering what should be understood by
"variable import levies" within the meaning of footnote 1 to the Agreement on Agriculture.
7.283. According to the ordinary meaning of the terms, a " gravamen" (levy) is a " carga"
or "obligación"
409 (charge or obligation); or an " [o]bligación de cualquier clase que pesa sobre
alguien o algo " (an obligation of any kind imposed on someone or something), a " [c]anon",
"carga", " censo", " gabela", " graveza", " hipoteca", " obligación", " pecha", " pecho", " servidumbre"
or "tributo"410 (various types of tax, charge, rent, mortgage, obligation, servitude or tribute).
An "import levy" would thus be a charge or obligation applied for the purpose of importation.
"Variable" is something " [q]ue varía o puede variar " (which varies or may vary), is " [i]nestable,
inconstante y mudable "
411 (unstable, inconstant and movable); or something " [s]usceptible de
variar" (liable to vary), " [m]uy o excesivamente inclinado o propenso a variar "412 (highly
or excessively inclined or likely to vary). Furthermore, " variar" (vary) means " hacer que una cosa
sea diferente en algo de lo que antes era " (to make something different in some way from what it
was before), " cambiar de forma , propiedad o estado " (to change form, condition, or state),
"ser diferente de otra "413 (to be different from something else); or else " [a]lterarse o cambiar "
(to alter or change), " dejar una cosa o persona de ser de una manera y ser de otra " (to change
something or someone from one condition to another), " [h]acer una cosa diferente de como era "
(to make something different from what it was), " alterar" (to alter), " cambiar" (to change),
"modificar" (to modify), " mudar" (to move) or " transformar" (to transform). 414 Consequently,
an "import levy" would be variable when it varies or may vary and, above all, is highly inclined or
likely to vary.
7.284. The foregoing is consistent with the way in which the Appellate Body interpreted the words
"variable import levies" in the original Chile – Price Band System proceedings:
In examining the ordinary meaning of the term " variable import levies" as it appears
in footnote 1, we note that a "levy" is a duty, tax, charge, or other exaction usually
imposed or raised by legal execution or process. 415 An "import" levy is, of course,
a duty assessed upon importation. A levy is "variable" when it is "liable to vary".416, 417
(emphasis original)
7.285. In this case, however, the Appellate Body also noted that variability alone is not
determinative when defining a measure as a "variable import levy" within the meaning
of footnote 1 to the Agreement on Agriculture:
An "ordinary customs duty" could also fit this description. A Member may, fully in
accordance with Article II of the GATT 1994, exact a duty upon importation and
periodically change the rate at which it applies that duty … This change in the
applied rate of duty could be made, for example, through an act of a Member's
legislature or executive at any time ... Thus, the mere fact that an import duty can be
varied cannot, alone, bring that duty within the category of "variable import levies" for
purposes of footnote 1.
418 (footnote omitted, emphasis original)
7.286. In order to determine what type of variability makes an import levy a "variable import
levy", the Appellate Body considered the immediate context of the other terms in footnote 1 to the
Agreement on Agriculture:

409 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 783.
410 María Moliner, Diccionario de Uso del Español, 2. ed. (Gredos, 1998), Vol. 1, p. 1,419.
411 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 1,542.
412 María Moliner, Diccionario de Uso del Español, 2nd ed. (Gredos, 1998), Vol. 2, p. 1,357.
413 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 1,542.
414 María Moliner, Diccionario de Uso del Español, 2nd ed. (Gredos, 1998), Vol. 2, pp. 1,357-1,358.
415 (Footnote original) The New Shorter Oxford English Dictionary, supra, fn. 190, p. 1,574.
416 (Footnote original) Ibid. p. 3,547.
417 Appellate Body Report, Chile - Price Band System, para. 232.
418 Ibid.

The term "variable import levies" appears after the introductory phrase
"[t]hese measures include". Article 4.2 - to which th e footnote is attached - also
speaks of " measures". This suggests that at least one feature of "variable import
levies" is the fact that the measure itself - as a mechanism - must impose the
variability of the duties. Variability is inherent in a measure if the measure
incorporates a scheme or formula that causes and ensures that levies change
automatically and continuously. Ordinary customs duties, by contrast, are subject to
discrete changes in applied tariff rates th at 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 separate legislative or administrative action, whereas the
ordinary meaning of the term "variable" implies that no such action is required.
419
(emphasis original)
7.287. Variability within the meaning of footnote 1 to the Agreement on Agriculture, therefore,
requires that the measure itself, as a mechanism, imposes the variability of the duties, that is to
say, that variability is inherent in the measure. Variability will be inherent in a measure if it
incorporates a scheme or formula that causes and ensures that levies change automatically and
continuously.
420
7.288. An import levy that shows the inherent variability resulting from a scheme or formula that
causes and ensures that the measure changes automatically and continuously is "variable",
not only in the sense that it varies or may vary, but even more so because it is a measure
"highly inclined or likely to vary".
7.289. Lastly, the Appellate Body added that, in addition to the existence of a formula that makes
variability of the duties automatic and continuous, there are other features which make a measure
a variable import levy under the terms of footnote 1 to the Agreement on Agriculture. As the
Appellate Body stated:
[T]he 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 import levy" within the meaning of footnote 1.
421 "Variable import levies"
have additional features that undermine the object and purpose of Article 4, which is
to achieve improved market access conditions for imports of agricultural products by
permitting only the application of ordinary customs duties. These additional features
include a lack of transparency and a lack of predictability in the level of duties that will
result from such measures. This lack of transparency and this lack of predictability are
liable to restrict the volume of imports … [A]n exporter is less likely to ship to
a market if that exporter does not know and cannot reasonably predict what the
amount of duties will be. This lack of transparency and predictability will also
contribute to distorting the prices of imports by impeding the transmission
of international prices to the domestic market.
422 (footnote omitted, emphasis
original)
7.290. As the Appellate Body pointed out, the foregoing does not mean that the
"lack of transparency" and the "lack of predictabi lity" are independent or absolute characteristics
that a measure must display in order to be considered a variable import levy. 423 Rather, what the
Appellate Body sought to explain was that:
[T]he level of duties generated by variable import levies is less transparent and less
predictable than is the case with ordinary customs duties. 424 Thus [in the original

419 Appellate Body Report, Chile - Price Band System, para. 233.
420 Ibid. paras. 232-234; Panel Report Chile - Price Band System (Article 21.5 - Argentina), para. 7.28;
Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 155-158.
421 (Footnote original) The participants agreed with this in their responses to questioning at the oral
hearing.
422 Appellate Body Report, Chile - Price Band System, para. 234.
423 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 156.
424 (Footnote original) The Appellate Body explained that the Uruguay Round negotiators had identified
"certain border measures which have in common that they restrict the volume or distort the price of imports

case], the Appellate Body considered transparency and predictability in tandem and in
relation to the level of resulting duties, observing that "an exporter is less likely to
ship to a market if that exporter does not know and cannot reasonably predict what
the amount of duties will be".
425 This is why variable import levies are "liable to
restrict the volume of imports".426 In addition, they "contribute to distorting the prices
of imports by impeding the transmission of international prices to the domestic
market".
427, 428
7.291. In other words, in addition to the inherent variability resulting from the existence
of a scheme or formula that causes and ensures that the measure is automatically and
continuously modified, what defines a measure as a "variable import levy" within the meaning
of footnote 1 to the Agreement on Agriculture is the presence of features which make it distinct
from an ordinary customs duty. These features may include the measure's lack of transparency
and predictability as compared to an ordinary customs duty.
429
7.292. In any event, all the measures contained in the illustrative list in footnote 1 to the
Agreement on Agriculture are prohibited under Article 4.2, regardless of whether in practice they
restrict volumes, distort import prices or insulate the domestic market from international price
trends. In other words, the presence of these effects may help to determine the type of measure
in question when compared to an ordinary customs duty, but does not constitute a necessary
condition for qualifying the measure as a "variable import levy" within the meaning of footnote 1
to the Agreement on Agriculture.
7.4.4.1.5.2 Minimum import prices
7.293. According to the ordinary meaning of the term, "minimum" is something " [t]an pequeño
en su especie, que no lo hay menor ni igual " (so small of its type that there is nothing the same
or smaller).
430 The term " mínimo" (minimum) " [s]e aplica a las cosas que son en cantidad o
grado … lo más pequeñas posible o las más pequeñas entre las de su clase "431 (applies to things
which in quantity or grade are the smallest possi ble or the smallest of their type). The term
"minimum" may be used to indicate the"[l]ímite inferior, o extremo a que se puede reducir algo"432
(the lowest or extreme limit to which something may be reduced). In the English text of the
Agreement on Agriculture, the expression "minimum import prices" is used in footnote 1 as the
equivalent of " precios minimos de importacion ". The ordinary meaning of the term "minimum" is
"[t]he smallest amount or quantity possible, usual, attainable, etc."
433
7.294. The term "minimum" may be used to qualify a requirement. For example, a " salario
trabajador"434 (that which is established by law as the minimum remuneration for any worker).
In EEC – Minimum Import Prices , for example, the Panel established under the GATT examined
a minimum import price system in force at that time in the European Community under which
certain imports were allowed "but not below the minimum price level".435 In China - Raw Materials,
the Panel considered the existence of a minimu m export price requirement under which export
below such prices was not allowed and compliance with minimum prices was enforced through

of agricultural products" and "decided that these border measures should be converted into ordinary customs
duties" which "would, in principle, become the only form of border protection." Ordinary customs duties were
viewed as the preferred border measure because they "are more transparent and more easily quantifiable",
"more easily compared between trading partners" and, therefore, "the maximum amount of such duties can be
more easily reduced in future multilateral trade negotiations." (Appellate Body Report, Chile - Price Band
System, para. 200 (emphasis added))
425 (Footnote original) Appellate Body Report, Chile - Price Band System, para. 234 (referring to
Argentina's responses to questioning at the oral hearing in the original proceedings).
426 (Footnote original) Ibid.
427 (Footnote original) Ibid.
428 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 156.
429 Appellate Body Report, Chile - Price Band System, para. 234.
430 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 1,023.
431 María Moliner, Diccionario de Uso del Español, 2nd ed. (Gredos, 1998), Vol. 2, p. 352.
432 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 1,023.
433 Shorter Oxford English Dictionary, 6nd ed. (Oxford University Press, 2007), Vol. 1, p. 1,789.
434 Diccionario de la Lengua Española, 22nd ed. (Real Academia Española, 2001), p. 1,365.
435 GATT Panel Report, EEC – Minimum Import Prices, para. 4.9.

the imposition of penalties.436 In China – Rare Earths, the Panel examined the minimum registered
capital requirements imposed on trading enterprises as a condition for being able to obtain quota
rights.
437
7.295. In the original Chile – Price Band System proceedings, the Appellate Body defined
minimum import prices as follows:
The term "minimum import price" refers generally to the lowest price at which imports
of a certain product may enter a Member's domestic market. Here, too, no definition
has been provided by the drafters of the Agreement on Agriculture. However,
the Panel described "minimum import prices" as follows:
… [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 minimum import price, an additional charge is imposed
corresponding to the difference.438
The Panel also said that minimum import prices "are generally not dissimilar from
variable import levies in many respects, including in terms of their protective and
stabilization effects, but that their mode of operation is generally less complicated." 439
The main difference between minimum import prices and variable import levies is,
according to the Panel, that "variable import levies are generally based on the
difference between the governmentally determined threshold and the lowest world
market offer price for the product concerned, while minimum import price schemes
generally operate in relation to the actual transaction value of the imports."
440, 441,
(emphasis original)
7.296. In the compliance proceedings, the Panel summarized the features of minimum import
prices as follows:
In essence, a minimum import price is a measure which ensures that certain imported
products will not enter a domestic market at a price lower than a certain threshold,
normally by imposing an import duty assessed on the basis of the difference between
such threshold and the transaction value of the imported goods.
442
7.4.4.1.5.3 Similar border measures
7.297. When examining the term "similar border measures" in the original Chile – Price Band
System proceedings, the Appellate Body agreed with the Panel's definition of the word "similar" as
"having a resemblance or likeness", "of the same nature or kind", and "having characteristics in
common".
443
7.298. The Appellate Body explained that "The better and appropriate approach is to determine
similarity by asking the question whether two or more things have likeness or resemblance
sufficient to be similar to each other." 444 The Appellate Body added that, in its view, the task
of determining whether something is similar to something else must be approached on
an empirical basis.445

436 Panel Report, China – Raw Materials, para. 7.1066. (The Appellate Body declared part of the Panel's
analysis moot and of no legal effect on procedural grounds.)
437 Panel Report, China - Rare Earths, paras. 7.218 and 7.233.
438 (Footnote original) Panel Report, para. 7.36(e).
439 (Footnote original) Panel Report, para. 7.36(e).
440 Ibid.
441 Appellate Body Report, Chile - Price Band System, paras. 236-237.
442 Panel Report, Chile - Price Band System (Article 21.5 - Argentina), para. 7.30.
443 Appellate Body Report, Chile - Price Band System, para. 226.
444 Ibid.
445 Ibid.

7.299. In the compliance proceedings in that particular case, the Appellate Body clarified what it
had referred to in the original proceedings as the approach to determining whether something is
similar on an empirical basis.
[I]n advocating that the issue of similari ty be approached "on an empirical basis",
the Appellate Body was contrasting this to, and counselling against, an approach that
focused on the fundamental nature of the shared characteristics. The proper approach
should, instead, entail both an analysis of the extent of such shared characteristics
and a determination of whether these are sufficient to render the two things similar.
Such characteristics can be identified from an analysis of both the structure and
design of a measure as well as the effects of that measure. Thus, we do not consider
that the Panel would have needed, as Chile's argument seems to imply, to focus its
examination primarily on numerical or statistical data regarding the effects of that
measure in practice. Where it exists, evidence on the observable effects of the
measure should, obviously, be taken into consideration, along with information on the
structure and design of the measure. The weight and significance to be accorded to
such evidence will, as is the case with any evidence, depend on the circumstances
of the case.
446 (emphasis original)
7.300. As already mentioned, in the original proceedings the Appellate Body explained that
all of the border measures listed in footnote 1 have in common the object and effect of restricting
the volumes, and distorting the prices, of imports of agricultural products in ways different from
the ways that ordinary customs duties do , in addition to disconnecting domestic prices from
international price developments, and thus impeding the transmission of world market prices to
the domestic market.
447
7.301. The Appellate Body added that, even if a measure were to share these common
characteristics with all of these border measures, it would not be sufficient to make that system
a "similar border measure"; there must be something more:
To be "similar", Chile's price band system - in its specific factual configuration - must
have, to recall the dictionary definitions we mentioned, sufficient "resemblance or
l i k e n e s s t o " , o r b e " o f t h e s a m e n a t u r e o r k i n d " a s , at least one of the specific
categories of measures listed in footnote 1.448 (emphasis original)
7.302. The Appellate Body thus explained that any examination of similarity presupposes
a comparative analysis; therefore, in order to determine whether a measure is "similar" within the
meaning of footnote 1, it is necessary to identify the categories with which it has to be
compared.
449
7.303. In Chile – Price Band System , the Panel examined the similarity of the measure at issue
with the two categories identified by the complainant, variable import levies and minimum import
prices. In examining whether the measure at issue in Chile – Price Band System was a border
measure similar to variable import levies or minimum import prices, the Appellate Body explained
that what had to be determined was whether th e measure, in its particular features, shared
sufficient features with either of these two categories of prohibited measures to resemble, or be
of the same nature or kind and thus be prohibited by Article 4.2.
450 The Appellate Body concluded
that, although there were some dissimilarities between the measure at issue and the features
of minimum import prices and variable import levies, the way in which the measure was designed
and the way it operated in its overall nature were sufficiently "similar" to the features of the two
categories of prohibited measures to make the challenged measure a "similar border measure"
within the meaning of footnote 1 to Article 4.2.
451

446 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 189.
447 Appellate Body Report, Chile - Price Band System, para. 227.
448 Ibid.
449 Ibid. para. 228.
450 Ibid. para. 239.
451 Ibid. para. 252.

7.304. The Appellate Body explained that it had reached its conclusion
[o]n the basis of the particular configuration and interaction of all these specific
features of [the measure at issue]. In assessing this measure, no one feature is
determinative of whether a specific measure creates intransparent and unpredictable
market access conditions. Nor does any particular feature of Chile's price band
system, on its own, have the effect of disconnecting Chile's market from international
price developments in a way that insulates Chile's market from the transmission
of international prices, and prevents enha nced market access for imports of certain
agricultural products.
452 (emphasis original)
7.305. Lastly, in examining whether a measure that is neither a "variable import levy" nor
a "minimum import price" should nevertheless be considered a "similar border measure", the
context of footnote 1 to the Agreement on Agri culture has to be borne in mind. As already
mentioned, Article 4 of the Agreement prohibits border measures that do not constitute ordinary
customs duties. Thus, in considering whether a measure is similar to a "variable import levy" or
a "minimum import price", this Panel finds it necessary also to examine whether the particular
features of the measure, taking into account its structure and design as well as its effects, make it
similar to the categories of measures prohibited by footnote 1 (in the present case, to a "variable
import levy" or "minimum import price") or to an ordinary customs duty.
7.4.4.1.5.4 Other than ordinary customs duties
7.306. In the Chile – Price Band System compliance proceedings, the Appellate Body explained
that:
[T]he structure and logic of footnote 1 make clear that variable import levies and
minimum import prices cannot be ordinary customs duties.
[I]nconsistency with Article 4.2 can be established when it is shown that a measure is
a border measure similar to one of the measures explicitly identified in footnote 1.
A separate analysis of whether […] the measure is "other than ordinary customs
duties" may also be undertaken to confirm such a finding. However, these are not
indispensable for reaching a conclusion on the categories listed in footnote 1.
453
7.307. If a measure is a variable import levy, a minimum import price or a measure similar to one
of these, which have been required to be conv erted into ordinary customs duties, it cannot be
an ordinary customs duty. For this reason, if a panel finds that a measure is one of those listed in
the footnote, it may conclude that such a measure is not an ordinary customs duty.
7.4.4.2 The question of whether the duties resulting from the PRS are variable import
levies, minimum import prices or similar border measures
7.4.4.2.1 General considerations
7.308. The question to be resolved by this Panel with regard to this claim is whether the measure
at issue, the duties resulting from the PRS, constitute variable import levies or measures similar to
variable import levies, or whether they constitute minimum import prices or measures similar to
minimum import prices.
7.309. If the Panel finds that the duties resulting from the PRS constitute variable import levies or
measures similar to variable import levies, or that they constitute minimum import prices or
measures similar to minimum import prices, the measure would be one of those covered by
footnote 1 to Article 4.2 of the Agreement on Agriculture. It would therefore be one of the
measures required to be converted into ordinary customs duties. If this is the case, by maintaining
the measure, Peru would be acting inconsistently with Article 4.2 of the Agreement on Agriculture.

452 Appellate Body Report, Chile - Price Band System, para. 261.
453 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 167 and 171.

7.4.4.2.2 Structure of the analysis
7.310. Guatemala has requested the Panel to find that the challenged measure is a variable
import levy, a minimum import price, or a similar measure. 454 Peru has requested the Panel to
begin its analysis by examining whether th e measure is an ordinary customs duty. 455 Peru deems
it important that the Panel should not avoid tackli ng the issue of whether the duties resulting from
the PRS are ordinary customs duties.456
7.311. The Panel notes that, both in the original and in the compliance proceedings in Chile - Price
Band System, the Panels and the Appellate Body first examined whether the measure was one of
those covered by the footnote to Article 4.2. In both proceedings, after finding that the measure at
issue was one of those identified in the footno te, the Appellate Body did not proceed with the
additional analysis on whether the measure was an ordinary customs duty.
7.312. In the circumstances of the present case , it appears more appropriate to commence the
analysis by considering whether the duties resulting from the PRS are the kind of measure covered
by Article 4.2 instead of considering whether the measure is the kind of measure not covered by
that Article.
7.313. Accordingly, the Panel will commence its analysis by considering whether the duties
resulting from the PRS constitute variable import levies or measures similar to variable import
levies, or whether they constitute minimum import prices or measures similar to minimum import
prices. More specifically, the Panel will first consider whether the measure is a variable import levy
or a measure similar to a variable import levy. Subsequently, and depending on its previous
findings, the Panel will address the question of wh ether the measure is a minimum import price or
a measure similar to a minimum import price.
7.314. The Panel will therefore examine whether the duties resulting from the PRS, by their
structure, design and operation, and in their particular features, share sufficient features with
variable import levies or minimum import prices as to constitute variable import levies or minimum
import prices, or to bear a resemblance or be of the same nature or kind and thus to be prohibited
by Article 4.2 of the Agreement on Agriculture. The Panel will arrive at its conclusion on the basis
of the particular configuration and interaction of all the specific features of the duties resulting
from the PRS.
7.4.4.2.3 Whether the duties resulting from the PRS are border measures
7.315. Before undertaking this analysis, the Panel notes that the duties resulting from the PRS are
applied only to imported products and that the Pe ruvian authorities require that they be enforced
at the border. Both parties agree that this is the case, so it is an undisputed fact that the duties
resulting from the PRS are border measures.
457
7.4.4.2.4 The question of whether the duties resulting from the PRS are variable import
levies or measures similar to variable import levies
7.4.4.2.4.1 Description of the measure
7.316. As already mentioned, in essence, a variable import levy is a duty applied upon
importation and is liable to vary; moreover, it is highly inclined or likely to vary automatically and
continuously on the basis of a scheme or formula that does not require any separate
administrative or legislative measure.
458

455 Peru's first written submission, paras. 5.51-5.53; opening statement at the first meeting of the
Panel, paras. 3-6; response to Panel question No. 55, paras. 131-134.
456 Peru's response to Panel question No. 55, para. 133.
457 Guatemala's response to Panel question No. 100, para. 33; Peru's response to Panel question
No. 100, para. 31.
458 See paras. 7.283 to 7.292 of the present report.

7.317. The Panel recalls the fundamental aspects of the structure and operation of the PRS, from
which the duties that are the subject of this dispute arise:
a. The declared objective of the PRS is to be "a stabilization and protection mechanism that
serves to neutralize fluctuations in international prices and limit the negative effects
of falls in such prices."459
b. The main components of the system are a price range composed of a floor price and
a ceiling price, together with a reference price.
c. The floor price is obtained by calculating th e average price in the confidence interval
derived from the deflated average price460 over the last 60 months for the corresponding
marker product in the relevant reference mark et, and converting it to c.i.f. level by
adding the freight and insurance costs indicated in the legislation. For sugar products,
an adjustment factor of 10.7% is also added.
d. The ceiling price is obtained by adding to the floor price the standard deviation by which
the confidence interval was calculated and co nverting it to c.i.f. level by adding the
freight and insurance costs indicated in the legislation.
e. The floor price and ceiling price, and the addi tional duties and tariff rebates that are
applicable in accordance with the reference price for each fortnight, are published twice
yearly, prior to the start of the half-year in which they are to be applied, by means
of customs tables published in Supreme De crees issued by the President of Peru,
endorsed by the Ministers of Agriculture an d of the Economy and Finance, and on the
basis of the data furnished by Peru's Central Reserve Bank.
f. The reference price is obtained by calcul ating the fortnightly average price for the
corresponding marker product in the same relevant reference market, for the fortnight
prior to that in which the said price is to be applied, and converting it to c.i.f. level using
the values indicated in the legislation.
g. Reference prices are published fortnightly, during the fortnight in which they are to be
applied, by means of vice-ministerial reso lutions of the Ministry of the Economy and
Finance, based on the data furnished by Peru's Central Reserve Bank.
h. When the reference price is lower than the floor price, a specific duty is imposed
(corresponding to the measure at issue), which is expressed in United States dollars per
metric ton, and is equivalent to the differ ence between the floor price and the reference
price. This specific duty, together with the ad valorem tariff, may not exceed the tariff
levels bound by Peru in the WTO.
i. When the reference price is within the price range, i.e. between the floor and ceiling
prices, only the relevant ad valorem tariff is applied.
j. When the reference price rises above the ceiling price, a tariff rebate is applied that may
not exceed the equivalent of the applicable ad valorem tariff.
k. The additional duties and the tariff rebates, as applicable, are determined on the basis
of the customs tables in force on the date of registration of the import declaration and
must be paid by the importer at the customs, together with the duties and other import
taxes.
l. From 2001 to 2014 customs tables have been in force for every period, but on several
occasions, despite the provisions of Su preme Decree No. 115-EF-2001, these tables
have been extended instead of being updated.

459 Second preambular paragraph of Supreme Decree No. 115-2001-EF (Exhibit GTM-4).
460 Using the United States Consumer Price Index.

m. During the period of existence of the PRS, the competent Peruvian authorities have
published reference prices for every fortnight, except on one occasion in respect
of maize. Publication usually takes place a few days after the fortnight has begun.
7.4.4.2.4.2 Variability
7.318. As regards the variability of the measure, Guatemala contends that the measure at issue is
inherently variable inasmuch as it is based on mathematical schemes or formulas which operate in
a coordinated manner to calculate the specific duty automatically and continuously, and the
measure itself, as a mechanism, imposes the variability of the duty.
461
7.319. Peru claims that variability is not a decisive element. It also states that, under WTO rules,
Members may vary their ordinary customs duties. In its view, what varies under the PRS is the
reference price and not the resulting specific duty . Peru contends that the PRS does not operate
automatically because the various organs of the Peruvian State have to complete certain
administrative steps in order for the customs tables and the reference prices to be updated.
462
7.320. As already mentioned, variability within th e meaning of footnote 1 to Article 4.2 requires
that the measure itself, as a mechanism, imposes the variability of the duty; in other words, the
variability is inherent in the measure. Variability can be said to be inherent in a measure if the
measure incorporates a scheme or formula which causes and ensures that levies change
automatically and continuously.
463
7.321. The measure at issue in this dispute, th e duties resulting from the PRS, is one of the
possible outcomes of applying the system. The PR S includes a series of steps and mathematical
formulas for calculating the ceiling and floor pr ices every six months, and the reference prices
every fortnight. In application of these rules and on the basis of the formulas contained therein,
the Peruvian authorities update and publish the co rresponding results. They use the rules of the
PRS and the formulas contained therein to determine fortnightly a result which, depending on the
calculations, may consist of imposing an additional duty, granting a tariff rebate, maintaining the
duties or rebates already in effect, or deciding not to apply any rebate or duty. The PRS therefore
contains a scheme or formula which causes and ensures automatic and continuous revision of the
applicable duties or rebates, from one fortnight to the next. It is thus clear that the PRS,
as a mechanism, imposes the variability of the additional duties.
7.322. Moreover, the half-yearly updating and pu blication of the supreme decrees containing the
customs tables showing the floor and ceiling pr ices, and the fortnightly publication of the
vice-ministerial resolutions showing the reference prices, are not discretionary administrative acts
separate from the PRS. On the contrary, they are regulated acts which the corresponding
authorities issue in compliance with the rules governing the operation of the PRS. In essence,
according to the rules in effect, action by the administrative authorities in this context is limited to
applying the rules and formulas included in th e PRS and to publishing the results of such
calculations.
7.323. The fact that, on some occasions, the Pe ruvian authorities had been able to extend the
values in the customs tables, or even the values of the reference prices, without relying on the
formulas laid down in the applicable regulations
464, does not alter the nature of the action for
which these authorities are responsible. It does not mean either that the administrative acts
remain discretionary or separate from the PRS inasmuch as such acts are carried out in compliance
with the legislation on the PRS, which obliges the authorities to announce the values resulting from
the application of predetermined formulas. The facts show that every six months since the current
PRS was first applied, the Peruvian authorities have issued a supreme decree
465, either updating or
extending the corresponding customs tables , and every fortnight they have issued
a vice-ministerial resolution, updating the referenc e prices in most cases. In any event, the rules
governing the operation of the PRS have been the legal basis cited by the Peruvian authorities for

461 Guatemala's first written submission, paras. 4.34-4.57; second written submission, paras. 4.14-4.43.
462 Peru's first written submission, para. 5.92; second written submission, paras. 3.43-3.45.
463 See above, paras. 7.287 and 7.288.
464 See above, paras. 7.151-7.154 and 7.159-7.162.
465 See above, para. 7.152.

exercising their responsibilities, within the fr amework of the powers vested in the Peruvian
Executive.
7.324. As the reference price is calculated anew every two weeks, the result of applying the PRS
( w h e t h e r i t c o n s i s t s o f i m p o s i n g a n a d d i t i o n a l duty, granting a tariff rebate, extending existing
duties or rebates, or deciding not to apply any rebate or duty) is subject to fortnightly changes.
The fact that the result may be the same for some or several fortnightly periods as a result
of applying the formulas, owing for example to price stability in the reference markets, or even the
fact that in some cases the formulas have not been applied correctly, does not mean that the PRS,
as a mechanism, does not impose fortnightly variability of duties. The fortnightly variability
imposed by the PRS, as a mechanism, which is the result of rules and formulas that form part of
the system and are applied automatically and co ntinuously, cannot be compared to the normal
variability of ordinary customs duties, whose level may change at certain times as a result
of specific trade policy decisions or separate decisions.
7.325. For the foregoing reasons, the Panel finds that the duties resulting from the PRS are
an inherently variable measure.
7.4.4.2.4.3 Additional characteristics
Transparency and predictability
7.326. Guatemala states that, because of this va riability, the duties resulting from the PRS lack
both transparency and predictability. It also poin ts out that the system guarantees that importers
face uncertainty because the resulting values cannot be predicted and a commercial operator will
have no certainty as to the reference price, whether or not a variable additional duty will be
imposed, and what will be the amount. Guatemala also identifies a lack of transparency in the way
in which Peru determines import-related costs, the source used to determine freight and insurance
costs in order to convert the amounts to c.i.f. level, and the reason for the adjustment factor
of 1.107 for sugar and how it is determined.
466
7.327. Peru, on the other hand, claims that it s measure is highly transparent and predictable
because the specific duties applicable and all the essential elements for calculating them can be
found in the printed texts of the legal instruments and on Peru's web pages. Peru also states that
these characteristics enable economic operators to predict, prior to the customs declaration for the
goods, what specific duties will apply, so traders may reasonably and with a high degree of
certainty predict the specific duties.
467
7.328. As already mentioned, lack of transparency and predictability are not separate
characteristics which a measure must have in order to be considered a variable import levy.
In Chile – Price Band System , the Panels and the Appellate Body took into account lack
of transparency and predictability as additional characteristics of the measure in question which
undermined the object and purpose of Article 4 of the Agreement on Agriculture: achieving better
market access conditions for imports of agricultural products, only allowing the application
of ordinary customs duties. What is essential therefore when examining any of the measures listed
in footnote 1 to the Agreement on Agriculture is whether the measure in question has features
which undermine the object and purpose of Articl e 4 of the Agreement. Depending on the case,
these may be the measure's lack of transparency and predictability. However, a quantitative
restriction on imports, a variable import levy or a minimum import price, for example, may be
transparent and predictable but for this reason alone not cease to be one of the measures required
to be converted into ordinary customs duties. In other words, the Panel's task with regard to this
particular aspect is not to determine whether the measure is transparent or predictable, but rather
whether the measure offers a level of transparency and predictability that is similar, but not
necessary identical, to that of an ordinary customs duty.
468
7.329. In the present case, the arguments regard ing the lack of transparency and predictability
of the challenged measure will be considered as a whole and in relation to the variability of the

466 Guatemala's first written submission, paras. 4.58-4.71; second written submission, paras. 4.44-4.74.
467 Peru's first written submission, paras. 5.88-5.91; second written submission, paras. 3.46-3.58.
468 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 156, 214-215,
and 221-222.

level of the resulting duties. The Panel will theref ore consider the various elements of the measure
at issue, their interaction and configuration. It will also take into account the object and purpose
of Article 4 of the Agreement on Agriculture, to achieve better market access for agricultural
products.
7.330. Firstly, the Panel does not consider that a finding to the effect that the duties resulting
from the PRS are inherently variable is sufficient for finding that the measure at issue has the
additional characteristic of lack of transparen cy and predictability. Lack of transparency and
predictability are elements distinct from variability and only constitute some of the additional
characteristics a panel may consider when assessing a measure in the light of the provision in
footnote 1 to the Agreement on Agriculture. At least in theory, a variable import levy may be
inherently variable and be based on application of a formula that makes the variability of the
duties automatic and continuous, and yet at the sa me time be transparent and predictable. In the
latter case, the transparency and predictability of the measure would not imply per se that the
measure is consistent with Article 4 of the Agreement on Agriculture, or make it an ordinary
customs duty.
7.331. Peru's legislation sets out the formulas us ed to calculate the floor and ceiling prices, the
reference markets used, the import costs, the frei ght and insurance costs used to convert f.o.b.
values into c.i.f. values and the adjustment value for sugar. In the supreme decrees containing the
customs tables, the legislation also announces the floor and ceiling prices applicable for each
six-month period and, in the vice-ministerial resolutions, the reference prices applicable for each
fortnight. It should be noted, however, that the reference prices applicable during a fortnight are
published a few days after the start of the two-week period
469; therefore, the customs authorities
sometimes do not know what the final duty applicable at the date of entry of the goods will be and
use the figures for the previous fortnight, ma king the necessary adjustments subsequently.
It should also be noted that, although Peru publishes some international prices for sugar, maize
and rice470, it does not publish the reference market values used to calculate the reference prices
and these values are not always available free of charge to commercial operators.
7.332. In response to the Panel's question No. 53 regarding the possibility of predicting the result
of applying the PRS formulas for each marker product in the first fortnight of February 2014,
Peru presented estimates for maize, sugar, and dairy products that were close to the actual
results, albeit with a certain margin of error, and explained that, in order to arrive at the estimates
for maize and sugar, it had used twenty historical data sets already available to it and had filled
the gaps in the data on the basis of the trends indicated by the available data. Peru also claims
that commercial operators can predict the applicable additional duties with a reasonable degree
of precision, by using methods of estimation and historical data available in conjunction with
futures prices.
471
7.333. Guatemala, for its part, expresses concern at what it calls Peru's attempt to condition its
obligations on the actions and predictive capacity of private operators. Guatemala also rejects the
claim that predictions can be made with a reasonab le degree of precision on the basis of futures
prices, and indicates that the latter are highly volatile. Moreover, Guatemala asserts that, in the
case of sugar, contracts have a long time horizon. Guatemala adds that, although the historical
data had already been available to Peru on the da te of submission of its responses to the Panel,
Peru's estimates are imprecise and any long-term estimate would be even more so.
Finally, Guatemala presents examples of fictitious sales contracts for sugar, with dates on which
futures prices differed substantially from the actual historical values, in order to demonstrate the
impossibility of making reasonable estimates.
472
7.334. The Panel considers that, although the form in which the duties resulting from the PRS are
calculated is to a certain degree transparent and predictable and it is thus possible for private
operators to use the available information in order to attempt to predict, with a certain margin

469 See above, para. 7.158
470 Statistical Tables from the Weekly Report of the BCRP (Exhibit PER-88).
471 Peru's second written submission, paras. 3.46-3.56; opening statement at the second meeting
of the Panel, paras. 39-40; response to Panel question No. 53, para. 129; response to Panel question No. 109,
paras. 54-61.
472 Guatemala's second written submission, paras. 4.44-4.74; response to Panel question No. 53,
paras. 107-122; opening statement at the second meeting of the Panel, paras. 13-17; comments on
Peru's response to Panel question No. 109, paras. 64-85.

of error, what will be the additional duties applicable in a particular fortnight, this result,
irrespective of the degree of precision achieved, will never be as transparent and predictable as
ordinary customs duties.
7.335. In order to try to predict the result, a commercial operator would have to obtain all the
information needed, including that published by Peru (i.e. the customs tables and historical
reference prices), as well as information on prices in the reference market and futures prices.
Subsequently, from one fortnight to the next, the commercial operator would have to forecast the
way in which reference market prices will act and apply the appropriate formulas in order to arrive
at the reference price and, where applicable, th e additional duty. Commercial operators would not
be faced with this situation in the case of ordinary customs duties.
7.336. Furthermore, at least in the case of suga r, the evidence provided by the parties indicates
that private operators enter into long-term contracts without any certainty as to the way in which
prices in the global reference markets will behave, and thus without knowing the floor and ceiling
prices and reference prices, and consequently the level of duties resulting from the PRS. This is
the case even when prices are set at dates cl ose to the date of shipment of the goods.
Although operators may attempt to estimate price trends using the available historical data and
futures prices, this does not give a level of transparency and predictability comparable to that
afforded by an ordinary customs duty. Likewise, given the link between the total amount of
applicable duties and fluctuations in world market prices, such fluctuations may, in themselves,
become an additional factor in lack of transparency and predictability.
7.337. In the short term, as the examples given by Guatemala with regard to the time required
for transport indicate
473, it is possible for commercial operators to undertake specific shipments
without knowing with certainty what will be the final result of application of the PRS when the
goods arrive in Peru. This is further complicated by the fact that Peru publishes reference prices
some days after the commencement of the fortnight to which they apply. This does not occur with
ordinary customs duties, concerning which any change is normally announced in advance.
7.338. Transparency and predictability are also affected by the mere existence of a reference
price. The fact that specific additional duties are applied on the basis of an average reference price
which changes every fortnight, rather than on th e value or the volume of the imported goods,
entails a systemic lack of transparency and predictability.
474
7.339. Lastly, with regard to the additional sp ecific aspects of the PRS which Guatemala claims
lack transparency and predictability (i.e. the wa y in which Peru determines the import-related
costs, the source used to determine freight and insurance costs, and the reason for the existence
of the 1.107 adjustment factor for sugar and the way it is determined), even though Peru's
legislation does not specify how these values were originally determined, it does publish and
announce the values utilized. Consequently, these specific aspects add no relevant information to
the analysis of the transparency and predictability of the measure.
7.340. For the foregoing reasons, even though th e system exhibits a degr ee of transparency and
predictability in the way in which the resulting additional duties are calculated, it lacks
transparency and predictability regarding the level of duties resulting from those calculations when
compared to the transparency and predictability afforded by ordinary customs duties.

473 Searates: Tiempo de transporte marítimo - Distancia Tailandia – Perú (Exhibit GTM-21);
Searates: Tiempo de transporte marítimo - Distancia Guatemala – Perú (Exhibit GTM-22).
474 See Panel Report, Chile - Price Band System (Article 21.5 - Argentina), para. 7.72.

Distortion of import prices and inhibition of the transmission of international prices
7.341. Guatemala claims that, because of its design, structure and effect, the challenged measure
insulates domestic prices in Peru from international price developments and impedes the
transmission of those developments to Peru's domestic market, inasmuch as its explicit objective
is to neutralize fluctuations in international prices and limit the negative effects of falls in such
prices. Guatemala asserts that the measure has the effect of completely or severely distorting the
transmission of any fall in international prices to the Peruvian market.
475
7.342. Peru maintains that its PRS does not insulate its domestic market from the international
market because the specific duties applied do not depend on a domestic or controlled price but are
a function of international market prices and may not exceed Peru's bound tariff. Peru states that
domestic prices consistently and progressively reflect trends in the international market and
presents evidence to show the correlation betwee n Peru's domestic market and the international
market.
476
7.343. The Panel recalls that a common feature of all the measures in footnote 1 to the
Agreement on Agriculture is that they act differe ntly from ordinary customs duties. One of the
additional features that may be examined in this context is whether the challenged measure
insulates domestic prices from international price developments and thus impedes the
transmission of world market prices to the domestic market.
477
7.344. First of all, the Panel notes that the declared objective of the PRS is to act as
"a stabilization and protection mechanism that makes it possible to neutralize fluctuations in
international prices and limit the negative effects of falls in such prices".
478 This objective is
particularly revealing in the sense that the purpose of the measure is to neutralize, at least to
a certain degree, the transmission of declines in international prices for certain products to Peru's
domestic market.
7.345. With regard to the structure and design of the PRS, in the short term, the system is
designed to prevent any fall in prices from bein g transmitted to Peru's domestic market, as any
change in international prices occurring during the six months in which the floor price is in effect
will not be reflected in the price at which import s may enter Peru's market. If there is a fall in
international prices, reflected to a certain extent in the fall in the reference price, the PRS
generates an increase in the resulting additional duties in the same amount as the fall in the
average reference price, thereby covering the difference between the reference price and the floor
price.
7.346. In the medium term, the PRS may also dist ort the transmission of international prices to
the domestic market because the incorporation into the floor price of changes in international
prices for each six-monthly period is diluted. If prices fall, the decrease in the floor price will be
much slower than that in the reference pric e and will be delayed by up to six months.
Furthermore, if monthly prices outside the confidence interval are eliminated, it is possible that
none of the prices will be incorporated into the floor price, whereas no value is omitted from the
average reference price.
7.347. With regard to Peru's argument on the existence of a correlation between international
market prices and Peru's domestic prices and the evidence it submitted on sugar and maize
479,
the Panel notes that, as is claimed by Guatemala 480, other factors may affect the transmission
of international prices to Peru's domestic market. For example, in the case of sugar, a large

475 Guatemala's first written submission, paras. 4.72-4.80; second written submission,
paras. 4.75-4.124.
476 Peru's first written submission, paras. 5.74-5.87; second written submission, paras. 3.59-3.64.
477 See above, para. 7.292
478 Second preambular paragraph, Supreme Decree No. 115-2001-EF (Exhibit GTM-4).
479 Statistical Compendium (Exhibit PER-46); Database of sugar and maize prices (Exhibit PER-69);
Updated version of charts 1-7 (Exhibit PER-70); Explanation of alleged omissions in price charts
(Exhibit PER-93).
480 Guatemala's opening statement at the second meeting of the Panel, para. 22; response to
Panel question No. 57, paras. 155-156 and 164.

proportion of imports entering Peru are not subjec t to application of the PRS, so the system has
a limited impact on the transmission of international prices to the domestic market.481
7.348. Of noteworthy relevance in this connection is the objective of the Agreement on
Agriculture to establish a fair and market-oriented agricultural trading system, and the specific
objective of Article 4 to convert the border measures listed in footnote 1 into ordinary customs
duties.
7.349. In conclusion, the structure, design an d operation of the PRS show that the resulting
additional duty acts in such a way that it may distort the prices of imports subject to the PRS and
limit the transmission of the prices of imports subject to the PRS to Peru's domestic market. In this
respect, the system operates differently to ordinary customs duties.
7.4.4.2.4.4 Conclusion regarding whether the duties resulting from the PRS are variable
import levies or measures similar to variable import levies
7.350. In conclusion, the duties resulting from th e PRS, by their structure, design and operation,
are an inherently variable measure. This inherent variability is the result of rules imposed by the
PRS, as a mechanism, and derives from rules and formulas that form part of the PRS itself and are
applied automatically and continuously. In this regard, the duties resulting from the PRS are
measures other than ordinary customs duties. As a further characteristic, the PRS lacks
transparency and predictability regarding the le vel of the additional duties resulting from
application of the rules and formulas, when compared to ordinary customs duties. Furthermore,
such additional duties may distort import prices subject to the PRS and limit the transmission
of import prices subject to the PRS to Peru's domestic market in a different way to ordinary
customs duties.
7.351. The Panel has found that the duties resultin g from the PRS, by their structure, design and
operation and in their particular features, share sufficient features as to be or to resemble or to be
of the same nature or kind as variable import levies and to be considered as a border measure
similar to a variable import levy.
7.352. For the foregoing reasons, the Panel cons iders that the duties resulting from the PRS
constitute variable import levies and, therefor e, a measure other than ordinary customs duties.
In any event, such duties share sufficient characteristics with variable import levies as to
constitute at the least a border measure similar to a variable import levy.
7.4.4.2.5 The question of whether the du ties resulting from the PRS are minimum
import prices or measures similar to minimum import prices
7.353. The Panel has found that the duties resulting from the PRS constitute variable import
levies or, at least, a border measure similar to a variable import levy. In the light of this finding, it
is not necessary for the Panel to carry out an additional review as to whether the measure also
constitutes a minimum import price or a border measure similar to a minimum import price.
Nevertheless, in order to ensure that its analysis is exhaustive, the Panel will undertake such
a review.
7.354. Guatemala asserts that the PRS seeks to prevent goods from entering Peru at a price lower
than the floor price, and so the floor price operates as a minimum price level that is applied to
imports of products subject to the PRS.
482 Guatemala claims that Peru's measure is a minimum
import price or similar measure because: (a) it ensures that goods will not enter Peru's market at
a price below a predetermined threshold (i.e. the floo r price); (b) it imposes an additional specific
duty based on the difference between the floor price and the reference price; (c) the amount
of the additional duty varies according to the difference between the floor price and the reference

481 See Peru's response to Panel question No. 8, para. 9; response to Panel questions Nos. 1 and 3,
paras. 1 and 2; Spreadsheet for questions 1 and 3 (SPFP-XM 1993-2013) (Exhibit PER-59); Statistics of the
International Sugar Organization (Exhibit GTM-51); Compendium of Peru's Trade Agreements (extracts)
(Exhibit PER-33).
482 Guatemala's first written submission, para. 4.88; second written submission, paras. 4.127-4.130.

price; and (d) the measure impedes or distorts the transmission of a fall in world prices to the
domestic market.483
7.355. Guatemala also contends that the floor pr ice is not the only threshold that serves as
a minimum price, since the PRS ensures that no consignment will enter at a price below the sum
of the lowest international price and the additional duty, which constitutes a de facto threshold
lower than the floor price, and transactions with a final price lower than that threshold are highly
unlikely to occur.
484
7.356. Peru claims that its PRS does not impose a minimum import price, either by impeding the
entry of goods at a price lower than the minimum and/or by varying the levy to equalize the
import price with the established minimum. Peru contends that the measure has neither the
objective nor the capacity to arrive at an indicative ( target) price, and adds that it applies the
same tariff no matter what price the importer decides to declare.
485
7.357. Peru cited an example of an import transaction for sugar during a period in which no
specific duties were imposed, where the c.i.f. price upon import of the goods was lower than the
floor price, and another example in which a specific duty was charged but the c.i.f. entry price for
the goods was less than both the international pric e and the floor price. Peru also submitted trade
statistics for the period between 2001 and 2013 and pointed out that, in approximately 57% of the
fortnightly periods since Supreme Decree No. 115-2001-EF came into force, various trade
transactions entered Peru at a price lower than the reference price and the floor price in the range,
accounting for more than one third of trade transa ctions recorded over these periods. Peru added
that, in the case of sugar, 224 transactions had b een identified which had entered at c.i.f. prices
lower than the reference price and the floor price in the range, amounting to approximately 3%
of sugar imports since the introduction of the PRS. It pointed out that this situation also occurred
for other imports related to the tariff lines for marker products.
486
7.358. In the Chile – Price Band System compliance proceedings, the Panel pointed out that:
In essence, a minimum import price is a measure which ensures that certain imported
products will not enter a domestic market at a price lower than a certain threshold,
normally by imposing an import duty assessed on the basis of the difference between
such threshold and the transaction value of the imported goods.487
7.359. In this connection, the Appellate Body added that:
A measure is "similar" to a minimum import price when it shares a sufficient number
of characteristics with, and has a design, structure, and effects similar to, a minimum
import price, even if it is not "identical" to such a scheme in all respects.488
7.360. Taking into account the structure and design of the measure at issue, as well as the details
concerning its operation, there is no evidence at all that the additional duties resulting from
application of the PRS directly ensure that imported products subject to the PRS will not enter the
Peruvian market at a price lower than a certain threshold.
7.361. This is clear, particularly when the way in which the duties resulting from the PRS operate
is compared to the way in which ordinary customs du ties operate. There is no evidence at all that
the duties resulting from the PRS directly impede the entry of products at prices below a limit or
threshold. Nor is there any evidence that such duti es have the direct effect of preventing imported
products from entering Peru's market at a price lower than a certain threshold in a way different
from what would occur with ordinary customs duties and, for example, from what might occur with

483 Guatemala's first written submission, paras. 4.84-4.95; second written submission,
paras. 4.125-4.141.
484 Guatemala's second written submission, para. 4.141; opening statement at the first meeting
of the Panel, paras. 37-39; response to Panel question No. 126, paras. 135-152.
485 Peru's first written submission, paras. 5.58-5.68; second written submission, paras. 3.36 and 3.41.
486 Peru's first written submission, paras. 5.62-5.68; response to Panel question No. 123, paras. 98-99;
Statistical data on product entries below the minimum price (Exhibit PER-90).
487 Panel Report, Chile - Price Band System (Article 21.5 - Argentina), para. 7.30.
488 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 193.

a specific import tariff. In this respect, a specif ic tariff (for example a tariff of USD 100 per metric
ton on a product) could indirectly ensure that imports of that product do not enter at a price lower
than a certain threshold (in the case of the exampl e, it would be ensured that the specific tariff
would operate as the lower threshold). Nevertheless, it would not convert the specific tariff into
a minimum import price or a measure other than ordinary customs duties.
7.362. Having found that there is no evidence that the duties resulting from the PRS constitute
minimum import prices, the Panel also has to consider whether such duties nonetheless constitute,
at the least, a border measure similar to a minimum import price. In this connection,
in Chile - Price Band System, the measure at issue (the Chilean price band system) was
considered by the Panels and by the Appellate Bo dy to be a measure similar to a minimum import
price inasmuch as it operated in practice as a "proxy" or "substitute" for a minimum import price.
This conclusion was based on the fact that the measure operated in such a way as to impede the
entry of imports subject to the measure at prices below the lower threshold in the band.
In this case, the price with which the substitute for the minimum price was compared was not
the transaction value of the product, as is the case for minimum prices, but the reference price.
489
7.363. In this connection, in the compliance proceedings in Chile – Price Band System, the
Appellate Body stated:
The overall approach taken by the Panel s eems to us to accord with the proper
interpretation of a border measure that is similar to a minimum import price, as
discussed above. The Panel examined the st ructure and design of the measure at
issue, as well as evidence relating to its operation. The Panel found that, like the
original price band system, this measure imposed a threshold that operates to ensure
that, in all but the most unlikely circumstances, wheat and wheat flour will not enter
the Chilean market at a price lower than that threshold, and that does not ensure that
entry prices fall in tandem with world mark et prices. The measure did so by imposing
a specific duty assessed on the basis of the difference between such a threshold and
another value, namely, a reference price.
490, 491
7.364. In the case before us, the measure operates in this regard in a way similar to the measure
examined in Chile – Price Band System. In that case, the determination that the measure operated
as a "proxy" or "substitute" for a minimum import price was based on consideration of the way in
which duties calculated on the basis of the diffe rence between the lower threshold in the band and
the reference price were imposed. In the present case, the duties are calculated on the basis of
the difference between the floor price and the reference price.
7.365. Under Peru's PRS, when the reference price applicable during a particular fortnight is below
the floor price, which is the lower threshold in the range, an additional specific duty is applied in
the next fortnight based on the difference betwee n these two parameters. The lower the reference
price in comparison with the floor price, the higher the specific duty and the greater its protective
impact.
7.366. In the present case, however, Peru has fu rnished evidence that the duties resulting from
the PRS do not impede the entry of imports of the affected products into the Peruvian market at
prices below the lower threshold of the range. As shown in Exhibit PER-90, in fortnights during
which additional duties were applied, imports of products subject to the PRS at transaction prices
below the floor price did not cease. In the Panel' s opinion, this shows that the measure at issue
does not impede the entry of products subject to the PRS into the Peruvian market at a transaction
value below the floor price.

489 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 194-195.
490 (Footnote original) We recall that, under the measure at issue, the reference price is set every
two months and calculated as the simple average of daily f.o.b. prices in certain foreign markets over
a 15-day period. We also note that in a typical minimum import price scheme the value to which the minimum
import price or target price is compared is the transaction value of a particular shipment, rather than
a calculated reference price.
491 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 195
(one footnote omitted).

7.367. In any event, because of its design and st ructure, the PRS does not operate in relation to
the true transaction value of imports but on the ba sis of international prices. The fact that prices
may change every fortnight does not alter the fact that the imported products may enter the
Peruvian market, and in fact do so, at a price below the floor price.
7.368. Nor is the Panel convinced that the duties resulting from the PRS lead to the establishment
of a minimum import price with a de facto threshold consisting of the sum of the lowest
transaction price and the duty resulting from th e PRS. The Panel does not consider that this
situation is different from the one that could arise, for example with a specific tariff, where the
entry price might be no lower than the amount of the tariff itself, irrespective of the way in which
the authorities of a Member determine the amount of the specific duty.
7.369. Lastly, as already stated, the duties resulting from the PRS do not operate in this respect
in a manner that is different from the way in which ordinary customs duties might operate,
in particular, when they are in the form of specific duties.
7.370. For the foregoing reasons, given the design and structure of the PRS and its effects,
the Panel does not consider that the duties resulting from the PRS share sufficient characteristics
with minimum import prices to make them, at th e least, a border measure similar to a minimum
import price.
7.4.4.2.6 Conclusion
7.371. The Panel, therefore, finds that the duties resulting from the PRS constitute variable import
levies and, in any event, at the least, a border measure similar to a variable import levy.
The Panel finds no evidence, however, that the duties resulting from the PRS constitute minimum
import prices or a border measure similar to a minimum import price.
7.372. Variable import levies and similar border measures are included among the measures
listed in footnote 1 to Article 4 of the Agreement on Agriculture and are thus measures of the kind
which have been required to be converted into ordinary customs duties. In maintaining these
measures, Peru is acting inconsistently with Article 4.2 of the Agreement on Agriculture.
7.4.4.2.7 The question of whether the du ties resulting from the PRS are ordinary
customs duties
7.373. As mentioned above, if a measure is a variable import levy, a minimum import price or
a measure similar to either of these, which have been required to be converted into ordinary
customs duties, it cannot at the same time be an ordinary customs duty. Consequently, if a panel
finds that a measure is one of those listed in the footnote to Article 4.2 of the Agreement on
Agriculture, it is not necessary for that panel to make a separate additional finding as to whether
or not the measure is an ordinary customs duty.
492
7.374. The Panel has concluded that the duties resulting from the PRS constitute variable import
levies and, in any event, at the least a border measure similar to a variable import levy. In the
light of these findings, the Panel concludes that the measure does not constitute an ordinary
customs duty, and it is not necessary to undertake further analysis in this regard.
7.5 The question of whether the duties resu lting from the PRS are inconsistent with the
second sentence of Article II:1(b) of the GATT 1994
7.5.1 Introduction
7.375. In this section, the Panel will examin e the claims of Guatemala and Peru concerning
whether the duties resulting from the PRS are inconsistent with the second sentence
of Article II:1(b) of the GATT 1994.
7.376. The Panel will take up the arguments of Guatemala and Peru and the opinions of third
parties regarding Guatemala's claim. Subsequently, it will pursue its analysis of this case and,

492 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), paras. 167 and 171.

if appropriate, set out its findings on the consiste ncy of the duties resulting from the PRS with the
second sentence of Article II:1(b) of the GATT 1994.
7.5.2 Main arguments of the parties
7.5.2.1 Guatemala's claim
7.377. Guatemala considers that the duties resulting from the PRS constitute "other duties or
charges of any kind" to which reference is made in the second sentence of Article II:1(b) of the
GATT 1994 and which are inconsistent with that provision.
493
7.378. Guatemala claims that the "other duties or charges" are: (a) customs charges;
(b) other than "ordinary customs duties"; and (c) other than measures covered by Article II:2
of the GATT 1994 (internal taxes, anti-dumping or countervailing duties, or fees or charges
commensurate with the cost of services rendered).
494
7.379. According to Guatemala, it is clear that the challenged measure is a customs charge 495
other than an "ordinary customs duty". As was explained in the previous section, Guatemala
claims that the duties resulting from the PRS constitute a variable import levy and a minimum
import price, or at least measures similar to these, within the meaning of footnote 1 to the
Agreement on Agriculture. Guatemala cites the Appellate Body in asserting that "a measure listed
in footnote 1 to the Agreement on Agriculture constitutes ipso jure a measure other than ordinary
customs duties".
496
7.380. As a supplementary argument, Guatemala maintains that under Peru's own regulations,
the duties resulting from the PRS are considered distinct from Peru's ordinary customs duties. 497
Guatemala adds that under Peru's own regulations, there are relevant factors which confirm that
the duties resulting from the PRS are consider ed distinct from ordinary customs duties. 498
In Guatemala's opinion, the duties resulting from the PRS are set forth in a supreme decree
separate from the one establishing Peru's ordi nary customs duties, and those supreme decrees
have no apparent links, were promulgated by two distinct types of governmental bodies and have
different legal bases. Guatemala adds that the re gulations governing the form of payment of the
duties resulting from the PRS allude to a diffe rence between these duties and ordinary customs
duties; the duties resulting from the PRS are a pplied in a "temporary" and "exceptional" manner,
while ordinary customs duties are applied definitive ly; the description of the duties resulting from
the PRS under Peru's own regulations as "additional " indicates that they do not form part of the
ordinary customs duties; the description of the duties resulting from the PRS under Peru's own
regulations as "variable" indicates that they are distinct from ordinary customs duties which take
an ad valorem form; the objective of the duties resulting from the PRS is distinct from that
of ordinary customs duties; and the financial reso urces collected by the duties resulting from the
PRS appear to be intended for different purposes from those of income collected by ordinary
customs duties.
499 Guatemala considers that Peru did not re fute those characteristics of the duties
resulting from the PRS but confined itself to stating that Decree Law No. 26140 designates them
as tariff duties. According to Guatemala, this argument is insufficient to rebut its argument

493 Guatemala's first written submission, para. 4.99.
494 Guatemala's first written submission, para. 4.110.
496 Guatemala's first written submission, para. 4.120 (citing Appellate Body Report, Chile - Price Band
System (Article 21.5 - Argentina), para. 172; and Panel Report, Chile - Price Band System
(Article 21.5 - Argentina), para. 7.104); second written submission, paras. 5.7-5.8.
497 Guatemala's first written submission, paras. 4.123 and 4.125; second written submission, para. 5.9.
See also response to Panel question No. 129; response to Panel question No. 134.
498 See Guatemala's response to Panel question No. 134, paras. 187-188, where it states: "The Panel
could reach this same conclusion [that the variable additional duties arising from the PRS are not ordinary
customs duties] only by referring to its finding under Article 4.2 of the Agreement on Agriculture that the
measure in question qualifies as a variable import duty or a minimum import price, or a measure similar to
both these concepts. This is due to the fact that Article 4.2 itself provides, in its footnote 1, that these types
of measure are not considered as ordinary customs duties.
Accordingly, Guatemala refers to these ten factors as "additional" by virtue of the fact that they serve to
confirm the previous conclusion that the variable additional duties are not ordinary customs duties." See also
response to Panel question No. 64, paras. 215-217; response to Panel question No. 128, paras. 159-160.
499 Guatemala's first written submission, para. 4.125.

concerning the distinction in Peru's regulation s between the duties resulting from the PRS and
Peru's ordinary customs duties.500
7.381. Guatemala considers that it is neither valid nor necessary for the Panel to follow Peru's
proposal which would consist in examining whether the challenged measure is an ordinary customs
duty on the basis of positive criteria. 501 In Guatemala's opinion, "other duties or charges"
are a residual category and to attempt a determ ination based on positive criteria would be
of no value for distinguishing between an ordi nary customs duty and another duty or charge. 502
Guatemala considers that Peru's analytical proposal does not take into account other relevant
criteria for identifying when a measure forms part of ordinary customs duties and eliminates the
distinction between that concept and th a t o f " o t h e r d u t i e s o r c h a r g e s " .
503 Guatemala also
maintains that the application of positive criteria of the kind proposed by Peru in order to identify
ordinary customs duties is contrary to the legal standard developed in the case law and would lead
to an erroneous legal conclusion.504
7.382. In response to the criteria proposed by Peru, Guatemala considers that the fact that
a customs charge is applied on the basis of most favoured nation status 505, that it is applied to
imports and that the obligation to pay it arises at the time of importation506, and the form taken by
that customs charge (i.e. ad valorem specific or compound) 507, are not helpful criteria for
determining whether that customs charge is an or dinary customs duty or whether it comes under
"other duties or charges". Guatemala adds that Peru is mistaken in affirming that a relevant
criterion for distinguishing ordinary customs duties from "other duties or charges" is that they may
be designed to collect income and protect the domestic industry.
508 Guatemala also refers to the
type of variability of ordinary customs duties and reiterates that the duties resulting from the PRS
do not fall within the framework of such variability; in addition, Guatemala affirms that the fact
that a charge is subject to limits (the limit bound by a Member in its schedule of concessions) does
not make it an ordinary customs duty.
509 Lastly, Guatemala maintains that transparency and
predictability are a criterion common to ordinary customs duties and "other duties or charges",
that all measures must be published in accordan ce with Article X:1 of the GATT 1994, that their
publication does not make them ordinary customs duties, and that Peru proposes an incorrect legal
standard with respect to this requirement.
 510
7.383. Guatemala also maintains that the duties resulting from the PRS do not constitute any
of the measures covered by Article II:2 of the GATT 1994.511
7.384. Guatemala rejects Peru's argument concerning the way in which Peru conducted the
negotiation and recorded its tariff bindings duri ng the Uruguay Round. Guatemala considers that,
contrary to Peru's assertions, the negotiation of Peru's concessions cannot alter the legal nature
of the measure at issue 512 and that the conduct of the other Members in reaction to Peru's offer

500 Guatemala's second written submission, paras. 5.36-5.43.
501 Guatemala's second written submission, paras. 5.17-5.35; opening statement at the first meeting
of the Panel, paras. 48-50; response to Panel question No. 64; response to Panel question No. 128.
502 Guatemala's opening statement at the first meeting of the Panel, paras. 48-50; response to Panel
question No. 128, paras. 157-158.
503 Guatemala's second written submission, paras. 5.17-5.21.
504 Guatemala's second written submission, para. 5.22. See also response to Panel question No. 64,
paras. 2.10-2-14 and 2.19.
505 Guatemala's second written submission, paras. 5.23-5.26; response to Panel question No. 64,
paras. 220-222.
506 Guatemala's second written submission, paras. 5.27-5.28; response to Panel question No. 64,
paras. 223-224.
507 Guatemala's second written submission, para. 5.31 (citing Appellate Body Reports, Chile - Price Band
System, paras. 216 and 275; Chile - Price Band System (Article 21.5 - Argentina), paras. 149 and 164);
response to Panel question No. 64, para. 227.
508 Guatemala's second written submission, paras. 5.29-5.30; response to Panel question No. 64,
paras. 225-226.
509 Guatemala's second written submission, para. 5.32; response to Panel question No. 64, para. 228.
510 Guatemala's second written submission, para. 5.33; response to Panel question No. 64, para. 229.
512 Guatemala's second written submission, para. 5.47.

during the Uruguay Round negotiations does not validate the inconsistency of the measure at issue
with the WTO agreements.513
7.385. Guatemala asserts that the way in which other Members recorded compound duties in
their schedules of concessions may be a relevant context for interpreting Peru's schedule of
concessions.514 Some Members recorded a compound duty identifying the ad valorem component
and the specific component. In contrast to that practice, Guatemala notes that Peru recorded
a single amount under the ad valorem heading, without making any reference to an amount in
terms of a specific duty.515
7.386. Guatemala adds that the second sentence of Article II:1(b) and the Understanding on the
Interpretation of Article II:1(b) of the General Agreement on Tariffs and Trade 1994
(Understanding on Article II:1(b) of the GATT 1994) impose three conditions for an "other duty or
charge" to satisfy the WTO rules: (a) the "other duty or charge" or the mandatory legislation under
which it is to be applied must have existed at 15 April 1994; (b) the "other duty or charge" may
not exceed the levels applied on the above-ment ioned date; and (c) the "other duty or charge"
must have been recorded in the schedule of concessions of the importing Member.
516
7.387. Guatemala points out that the duty resulting from the PRS was not recorded in Peru's
schedule of concessions517, was not applied on the date of en try into force of the GATT 1994 and
was not envisaged in Peru's binding legislation in force on the date of entry into force of the
GATT 1994.518 In response to Peru's argument that the specific duties have existed since 1991,
Guatemala considers that there are two totall y different systems and that the 1991 system
of specific duties was cancelled and replaced by the PRS in 2001.519 In support of this argument520,
Guatemala claims that the Peruvian authorities themselves share that opinion.521
7.388. Guatemala concludes that Peru's action in applying the duties resulting from the PRS is
inconsistent with the second sentence of Article II:1(b) of the GATT 1994.522
7.5.2.2 Peru's defence
7.389. Peru claims that the measure at issue, as an ordinary customs duty, is consistent with its
obligations under the second sentence of Article II:1(b) of the GATT 1994.523
7.390. In Peru's view, the following are some of the characteristics of ordinary customs duties:
(a) they are duties subject to most-favoured-nati on (MFN) treatment, forming part of the tariff
regime; (b) they are applied to imports and the obligation to pay them arises at the time
of importation; (c) they may be designed to collect revenue and protect the domestic industry;
(d) they may be ad valorem, specific or compound duties; (e) they may vary, but are subject to
an upper limit, which is the level bound in the schedule of the respective Member; and
(f) they are transparent and predictable.
524

513 Guatemala's opening statement at the first meeting of the Panel, paras. 51-53; second written
submission, paras. 5.48-5.51.
514 Guatemala's response to Panel question No. 20, paras. 29-30.
515 Guatemala's response to Panel question No. 20.
517 Guatemala's first written submission, paras. 4.131-4.132; second written submission, para. 5.55.
Guatemala indicates that Peru's schedule of concessions recorded only ad valorem duties of 30% for most
agricultural products and of 68% for a restricted group. See response to Panel question No. 13;
Relevant Sections of Peru's Schedule of Concessions (Exhibit GTM-26).
518 Guatemala's second written submission, para. 5.2.
519 Guatemala's opening statement at the first meeting of the Panel, paras. 59-62. See second written
submission, paras. 5.63-5.73; response to Panel question No. 133, paras. 175-185.
520 Guatemala's second written submission, paras. 5.63-5.73; response to Panel question No. 133,
paras. 175-185.
521 Guatemala's second written submission, paras. 5.67-5.68 (citing Electro-Technical Report
No. 7-2009-SUNAT/3D 0410 of the Collection Department of the Callao Maritime Customs Division
(Exhibit GTM-36) and Memorandum No. 73-2009-SUNAT/2B4000 (Exhibit GTM-37)) and 5.70.
522 Guatemala's first written submission, para. 4.134.
523 Peru's first written submission, paras. 5.93-5.94.
524 Ibid. para. 5.38. See also response to Panel question No. 128, where Peru explains the
jurisprudential basis for the criteria it proposes for defining an ordinary customs duty.

7.391. According to Peru, the following facts demonstrate that the duties resulting from the PRS
meet the above characteristics: (a) Decree Law No. 26140525 stipulates that specific import duties,
whether fixed or variable, are tariff duties subject to most-favoured-nation treatment, which
shows that these specific duties are part of th e Peruvian tariff regime; (b) Article 1 of Supreme
Decree No. 124-2002-EF
526 stipulates that the specific duty is determined on the date of the
import declaration; (c) in accordance with the provisions of Supreme Decree No. 115-2001-EF 527,
the specific duties are designed as a stabilization and protection mechanism; (d) the specific duties
are an element of the compound or mixed tariff that Peru applies to products subject to the PRS;
(e) pursuant to Article 4 of Supreme Decree No. 153-2002-EF 528, the specific duties vary without
exceeding the tariff bound in Peru's Schedule of Concessions; and (f) the specific duties are
transparent and predictable.
529
7.392. In addition, Peru maintains that thes e facts are confirmed and supplemented by the
following: (a) the specific duties, which are the measure in question, have existed since 1991 530;
(b) the specific duties form part of the commitments that were bound by Peru during the
Uruguay Round531; and (c) the Peruvian legal framework confirms that the specific duties are
ordinary customs duties.532
7.393. Peru considers that Guatemala is "mistaken in concluding that the 'variable additional duty,
in Peru's own legal system , is distinct from the ordinary customs duty'". 533 In Peru's opinion,
Guatemala omits to mention that Article 1 of Decree Law No. 26140 expressly provides that the
specific duties, and the ad valorem duties, are tariff duties.534 In addition, Peru considers that it is
irrelevant, for the purpose of determining wh ether the duties resulting from the PRS are
an ordinary customs duty, that: the PRS is set forth in a supreme decree different from the one
establishing Peru's ordinary customs duties; th ere is no apparent link between those supreme
decrees; and the supreme decree establishing the PRS was endorsed by the Ministry of Agriculture
(Peru added that the two decrees were promulgate d by the Peruvian Executive). Peru adds that
Guatemala is mistaken in: arguing that Circular No. INTA-CR.62-2002 "alludes" to a difference
between specific duties and ordinary customs duties (Peru points out that the circular reiterates
the description of specific duties as tariff duties contained in Decree Law No. 26140); maintaining
that the supreme decrees establishing the PRS and the Peruvian ordinary customs duty have
different legal bases, since both are based on ru les governing the imposition of tariffs; arguing
that under the Peruvian legislation it is relevant that a specific duty is applied during periods where
the reference price is below the floor price; arguing that it is relevant that the Peruvian legislation
classifies the specific duties as "additional" or "variable" (on this point Peru asserts that an
ordinary customs duty may vary, provided that it is kept below the rates bound in the schedule
of concessions of each Member); arguing that the distinction between the objectives of the specific
duties and the ad valorem duties is relevant; and attaching importance to the destination of the
financial resources collected from specific duties and ad valorem duties.
535
7.394. Peru submits an alternative argument, in case the Panel finds that the specific duty
constitutes "other duties or charges". Peru claims that, on the date of entry into force of the
GATT 1994, its specific duty was already in existence and had been notified to the GATT in the
context of the Uruguay Round negotiations.
536 Peru refers to paragraph 2 of the Understanding on

525 Decree Law No. 26140 (Exhibit PER-53). See also Decree Laws Nos. 25528 and 25784
(Exhibit PER-91).
526 Supreme Decree No. 124-2002-EF (Exhibit PER-50).
527 Supreme Decree No. 115-2001-EF (Exhibit GTM-4).
528 Compilation of all published Customs Tables (Exhibit GTM-5), p. 147.
529 Peru's first written submission, para. 5.40.
530 Peru's second written submission, paras. 3.16-3.22.
531 Peru's second written submission, paras. 3.23-3.33. See response to Panel question No. 14;
response to Panel question No. 132; Communication from Peru to the Chairman of the Negotiating Group on
Market Access, 14 December 1993, Communication from the United States to Peru dated 10 December 1993,
Communication from the European Union to Peru dated 12 December 1993, Communication from Japan to
Peru dated 14 December 1993 (Exhibit PER-15); Schedule XXXV - Peru, Uruguay Round, 15 April 1994
(Exhibit PER-18); Communications from Peru, March 1994 (Exhibit PER-62).
532 Peru's second written submission, para. 3.28.
533 Peru's first written submission, para. 5.43. (emphasis original)
534 Peru's first written submission, para. 5.44. See Decree Law No. 26140 (Exhibit PER-53). See also
Decree Laws Nos. 25528 and 25784 (Exhibit PER-91).
535 Peru's second written submission, para. 3.32.
536 Peru's second written submission, paras. 3.16-3.22; response to Panel question No. 133.

Article II:1(b) of the GATT 1994 and suggests that the only question the Panel should consider is
whether Peru has exceeded the levels it applied on 15 April 1994. 537 According to Peru,
Guatemala has not met its burden of proving that the specific duty exceeds the amount of the
duties applied by Peru "on the date of entry in to force of the GATT 1994" and its claim that the
duties resulting from the PRS are inconsistent with the second sentence of Article II:1(b) of the
GATT 1994 should therefore be rejected.538
7.5.3 Main arguments of the third parties
7.5.3.1 Colombia
7.395. Colombia draws the Panel's attention to the need to assess the main or essential
characteristics of the measure at issue, in order to determine whether it constitutes an ordinary
customs duty.
539 Colombia considers that the duties resulting from the PRS match the elements
of an ordinary customs duty (they are duties su bject to most-favoured-nation treatment, forming
part of the Peruvian tariff regime; they apply to imports; the obligation to pay arises at the time
of importation; and although they may be subject to a level of variation, they are governed by
clear and transparent rules and by a methodology applicable to ordinary customs duties).
540
7.5.3.2 United States
7.396. The United States argues that, if the Panel finds that the PRS is inconsistent with
Article 4.2 of the Agreement on Agriculture, it would not need to make any finding with regard to
Article II:1(b) of the GATT 1994.
541
7.397. In the event that the Panel makes findings regarding Guatemala's claims under
Article II:1(b), the United States submits that th e duties resulting from the PRS would not appear
to constitute an ordinary customs duty, but would then fall under the residual category of other
duties or charges. In addition, in the opinion of the United States, it appears to be undisputed that
Peru did not record the PRS in its schedule of concessions, as called for by the Understanding on
Article II:1(b) of the GATT 1994. For this reason, the duties resulting from the PRS would be
imposed in excess of the amounts recorded in Peru's Schedule of Concessions, thereby violating
the provisions of the second sentence of Article II:1(b) of the GATT 1994.
542
7.5.3.3 European Union
7.398. In the European Union's opinion, the Panel should begin its analysis by considering
whether the PRS constitutes an "ordinary customs duty" within the meaning of Article II:1(b)
of the GATT 1994.
543
7.399. The European Union submits that Members are free to impose the type of customs duty –
ad valorem, specific or compound – that they deem appropriate, provided that such duties do not
exceed the bound levels. Moreover, they are also entitled to modify the applied tariff from time
to time.544
7.400. The European Union suggests that certain elements are not guiding criteria for determining
whether a measure constitutes an ordinary customs duty. In this connection, the European Union
indicates that neither the form of the duty (in the sense that it is not clear that bound duties are
always ad valorem or specific), nor the factors used to calculate it (in the sense that it is not clear
that customs duties must be calculated on the ba sis of exogenous factors, such as the interests

538 Peru's first written submission, paras. 5.96-5.98. See also Peru's second written submission,
para. 3.34.
539 Colombia's third-party written submission, para. 34.
540 Ibid. para. 36.
541 United States' third-party written submission, para. 32.
542 United States' third-party written submission, paras. 33-34.
543 European Union's third-party written submission, para. 25.
544 European Union's third-party written submission, para. 26 (citing Appellate Body Report,
Argentina - Textiles and Apparel, paras. 46, 54-55).

of consumers or of domestic producers), are determinative factors.545 The imposition of the duty at
the time of importation is a necessary, but not a sufficient, criterion for confirming whether a duty
is an ordinary customs duty.
546 Moreover, the rate of the duty applied may vary. 547
The European Union claims that one of the most important characteristics of an ordinary customs
duty is its transparency and predictability, which help to differentiate it from the measures
described in footnote 1 to the Agreement on Agriculture. 548 The European Union considers that it
would be wrong to argue that, in determining whether a measure is an ordinary customs duty,
price band or price range systems are subject to a stricter legal standard than other forms of
customs duties, with regard to the determination of their transparency and predictability. 549
The last element which the European Union suggests may be relevant for assessing whether
a measure constitutes an ordinary customs duty is the schedule of concessions of the Member
concerned.
550
7.401. In referring to other duties or charges, the European Union asserts that the objective
of the second sentence of Article II:1(b) of th e GATT 1994 is to protect the level of tariff
concessions negotiated, thereby preventing an increase in the other duties or charges applied, and
not to require Members to use a customs duty of a specific type or nature. 551 In addition, the
European Union notes that other duties or charges must be recorded in the Member's schedule
of concessions at the levels applied on 15 April 1994 and must not be higher than the levels so
recorded.552 In the European Union's opinion, the Panel must assess whether the duties resulting
from the PRS were recorded in Peru's Schedule of Concessions or whether at 15 April 1994
any legislation was in force which required the imposition of such duties.
553
7.5.4 Assessment by the Panel
7.5.4.1 Introduction
7.402. The Panel will now examine Guatemala's cl aims regarding the inconsistency of the duties
resulting from the PRS with the second sentence of Article II:1(b) of the GATT 1994. The first step
in the Panel's analysis is to review the scope of the obligation imposed on Members by the second
sentence of Article II:1(b) of the GATT 1994. As pa rt of its analysis, the Panel will confirm which
elements are relevant in defining "other duties or charges of any kind", within the meaning
of Article II:1(b) of the GATT 1994. In the light of this analysis, the Panel will consider whether
duties resulting from the PRS constitute "other duties or charges". Lastly, and depending on its
findings regarding the nature of the duties result ing from the PRS, the Panel will consider whether
Peru complied with its obligation to record the duties resulting from the PRS in its
Schedule of Concessions.
7.5.4.2 The obligation under the second sentence of Article II:1(b) of the GATT 1994
7.403. Article II:1(b) of the GATT 1994 provides as follows:
Schedules of Concessions
…
(b) The products described in Part I of th e Schedule relating to any [Member], which
are the products of territories of other [Members], shall, on their importation into the
territory to which the Schedule relates, and subject to the terms, conditions or

545 European Union's third-party written submission, paras. 28-29. The European Union bases its
argument concerning the irrelevance of whether exogenous factors are used as a basis for calculating the duty
on the Panel Report, Dominican Republic - Safeguard Measures, para. 7.84 and the Appellate Body Report,
Chile - Price Band System, paras. 271-278.
546 European Union's third-party written submission, para. 30.
547 European Union's third-party written submission, para. 31 (citing Appellate Body Report, Chile - Price
Band System, para. 232).
548 European Union's third-party written submission, para. 32.
549 Ibid. para. 33.
550 Ibid. paras. 34-35.
551 Ibid. para. 36.
552 Ibid. para. 37.
553 Ibid. paras. 38-39.

qualifications set forth in that Schedule, be exempt from ordinary customs duties in
excess of those set forth and provided therei n. Such products shall also be exempt
from all other duties or charges of any kind imposed on or in connection with the
importation in excess of those imposed on the date of this Agreement or those directly
and mandatorily required to be imposed thereafter by legislation in force in the
importing territory on that date.
7.404. The Understanding on the Interpretation of Article II:1(b) of the GATT 1994 provides that:
1. In order to ensure transparency of the legal rights and obligations deriving from
paragraph 1(b) of Article II, the nature an d level of any "other duties or charges"
levied on bound tariff items, as referred to in that provision, shall be recorded in the
Schedules of concessions annexed to GATT 199 4 against the tariff item to which they
apply. It is understood that such recording does not change the legal character
of "other duties or charges".
2. The date as of which "other duties or charges" are bound, for the purposes
of Article II, shall be 15 April 1994. "Other duties or charges" shall therefore be
recorded in the Schedules at the levels applying on this date …
3. "Other duties or charges" shall be recorded in respect of all tariff bindings.
…
7. "Other duties or charges" omitted from a Schedule at the time of deposit of the
instrument incorporating the Schedule in question into GATT 1994 with, until the date
of entry into force of the WTO Agreement, the Director-General to the
CONTRACTING PARTIES to GATT 1947 or, thereafter, with the Director-General of the
WTO, shall not subsequently be added to it and any "other duty or charge" recorded
at a level lower than that prevailing on the applicable date shall not be restored to
that level unless such additions or changes are made within six months of the date
of deposit of the instrument. (emphasis added)
7.405. In this case, Guatemala alleges a violation of the second sentence of Article II:1(b) of the
GATT 1994. This sentence provides that imported goods shall be "be exempt from all other duties
of any kind imposed on or in connection with the importation" if such duties or charges of any kind
exceed those applied on the date of entry into force of the GATT 1994 or "those directly and
mandatorily required to be imposed thereafter by legislation in force in the importing territory on
that date".
7.406. As Guatemala only claims a violation of the second sentence of Article II:1(b) of the
GATT 1994, in the present case it is irrelevant whether the duties resulting from the PRS exceed
the level bound by Peru for the products subject to the system. The Panel therefore has to decide
whether the duties resulting from the PRS are, as Peru contends, part of an "ordinary customs
duty" of the compound kind, which would be cove red by the 68% tariff bound by Peru in its
Schedule of Concessions, or whether, as Guatemala asserts, it is rather an "other duty or charge"
which was not recorded at that time in Peru's Schedule of Concessions.
7.5.4.3 Definition of "other duties or charges"
7.407. In India – Additional Import Duties , the Appellate Body specified that "the duties and
charges covered by the second sentence of Article II:1(b) are 'defined in relation to' duties
covered by the first sentence of Article II:1(b) , such that ODCs [other duties and charges]
encompass only duties and charges that are not OCDs [ordinary customs duties]".
554 Moreover,

554 Appellate Body Report, India - Additional Import Duties, para. 151 (citing Panel Report,

the category of duties and charges in the second sentence of Article II:1(b) of the GATT 1994 also
does not cover the kind of charges or duties referred to in Article II:2 of the GATT 1994.555
7.408. Consequently, the concept of "other duties or charges of any kind" corresponds to
a residual category. 556 Thus, a specific measure will be included in this category if it does not
constitute an ordinary customs duty and is not covered by Article II:2 of the GATT 1994.557
7.409. In Dominican Republic – Safeguard Measures , the Panel went into detail concerning what
was covered by an ordinary customs duty:
In Spanish, the word " propiamente" used in " propiamente dichos" is related to the
word "propiedad" [property], in the sense of " atributo o cualidad esencial " [essential
attribute or quality] of something.558 Hence, a "derecho de aduana propiamente dicho"
would be a duty that possesses the essential attributes or qualities of customs duties.
"Proprement" in the French expression "proprement dits" relates to the strict meaning
in which an expression is used. 559 I n o t h e r w o r d s , w h i l e a M e m b e r m a y i m p o s e
various duties at the border, the expressions customs duty " propiamente dicho" and
customs duty "proprement dit" emphasize that the scope of the provision is limited to
customs duties in the strict sense of the term (stricto sensu).
The expression used in the text in English suggests a slightly different shade
of meaning. "Ordinary" is defined as "Belonging to or occurring in regular custom or
practice; normal, customary, usual". The contrary is "Extraordinary". 560 In Spanish,
"Ordinario" is defined as " Común, regular y que sucede habitualmente " [Common,
regular and usually occurring]. The contrary would be " extraordinario" [extraordinary]
or " inusual" [unusual]. 561 In French, " Ordinaire" is defined as " Conforme à l'ordre
normal, habituel des choses" [in conformity with the normal, usual order of things] or
"courant, habituel, normal, usuel " [current, customary, normal, usual]. The contrary
would be " anormal" [abnormal], " exceptionnel" [exceptional] or " extraordinaire"
[extraordinary].562
…
All in all, using a meaning that seeks to reconcile the texts of the GATT 1994 in the
various official languages, we could conclu de that the expression "ordinary customs
duties" in Article II:1(b) of the GATT 1994 refers to duties collected at the border
which constitute "customs duties" in the strict sense of the term ( stricto sensu) and
that this expression does not cover possi ble extraordinary or exceptional duties
collected in customs. This would be compat ible with the object and purpose of the
GATT 1994 which, as the Appellate Body said in Chile – Price Band System , seeks to
ensure that the application of customs duties gives rise to transparent and predictable
market access conditions and does not impede the transmission of international price
developments to the domestic market of th e importing country. To reach a conclusion
in this respect, the Panel must consider the design and structure of the measures
concerned.
563

555 Panel Report, Dominican Republic - Safeguard Measures, paras. 7.79 and 7.88; Panel Report,
Dominican Republic - Import and Sale of Cigarettes, para. 7.113; and Appellate Body Report, India - Additional
Import Duties, para. 153.
556 Panel Report, Dominican Republic - Safeguard Measures, para. 7.79. Regarding the difference in the
nature of "ordinary customs duties" and "other duties and charges of any kind", see Appellate Body Report,
India - Additional Import Duties, paras. 157-164.
557 Panel Report, Dominican Republic - Import and Sale of Cigarettes, paras. 7.113 and 7.114.
558 (Footnote original) Diccionario de la Lengua Española, 22nd Ed. (Real Academia Española, 2001),
p. 1,252.
560 (Footnote original) Shorter Oxford English Dictionary, 6th Ed. (Oxford University Press, 2007),
Vol. 2, p. 2,021.
561 (Footnote original) Diccionario de la Lengua Española, 22nd Ed. (Real Academia Española, 2001),
pp. 695, 878 and 1,105.
563 Panel Report, Dominican Republic – Safeguard Measures, paras. 7.82-7.83, and 7.85.

7.410. In addition, in Dominican Republic – Safeguard Measures 564, before deciding whether
a measure is covered by the category of other duties and charges, the Panel specified that the
scope of application of Article II:2 of the GATT has to be delimited. The text of this Article provides
as follows:
Nothing in this Article shall prevent any contracting party from imposing at any time
on the importation of any product:
(a) a charge equivalent to an internal tax imposed consistently with the
provisions of paragraph 2 of Article III* in respect of the like domestic
product or in respect of an article from which the imported product has
been manufactured or produced in whole or in part;
(b) any anti-dumping or countervailing duty applied consistently with the
provisions of Article VI*;
(c) fees or other charges commensurate with the cost of services
rendered.
7.411. In other words, Article II:2 excludes three categories of measure from application of the
disciplines of Article II of the GATT, even if they are imposed on the import of products.
7.412. Furthermore, until now no previous decisions by panels or the Appellate Body have
provided a general definition of what constitutes an ordinary customs duty and what forms part
of "other duties or charges".
7.5.4.3.1 "Other duties or charges" and the internal taxes of Article III:2 of the
GATT 1994
7.413. Article II:2(a) of the GATT 1994 covers charges equivalent to internal taxes payable on like
domestic products or articles from which import ed products have been manufactured or produced
in whole or in part, in accordance with the provisions of Article III:2 of the GATT 1994.
In India - Additional Import Duties , the Appellate Body clarified that Article II:2(a) of the
GATT 1994 refers to measures imposing duties in an amount equivalent to internal taxes or
charges applied to like products.
565 Such measures should be applied in a manner consistent with
the provisions of Article III:2 of the GATT 1994 (on national treatment in relation to taxation). 566
The Panel in Dominican Republic – Import and Sale of Cigarettes , for its part, underlined the
mutually exclusive nature of measures equivalent to internal taxes or charges in regard to
"other duties or charges of any kind".
567
7.414. In China – Auto Parts , the Panel addressed the distinction between internal taxes,
governed by Article III:2 of the GATT 1994, and ordinary customs duties. In this connection,
it considered that one characteristic element of "o rdinary customs duties" is that they are paid at
the time goods are imported.568 It added, however, that importation is not the only element in the
determination as to whether a charge falls within the scope of the first sentence of Article II:1(b)
of the GATT 1994 (as an ordinary customs duty).
569
7.5.4.3.2 "Other duties and charges" and anti-dumping duties
7.415. With regard to the measures covered by Article II:1(b) of the GATT 1994, the Panel in
United States – Zeroing (Japan) (Article 21.5 – Japan) indicated that a Member could impose
an anti-dumping duty in excess of the rate bound in its Schedule of Concessions.

564 Panel Report, Dominican Republic – Safeguard Measures, para. 7.79.
565 Appellate Body Report, India – Additional Import Duties, paras. 166-175.
566 Ibid. paras. 176-181.
567 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.84.
568 Panel Report, China – Auto Parts, paras. 7.139-7.142, 7.154-7.166, 7.182-7.185 and 7.192.
See also Appellate Body Report, China – Auto Parts, para. 209.
569 Panel Report, China – Auto Parts, fn. 316.

Such an anti-dumping duty would have to be applied in conformity with the provisions of Article VI
of the GATT 1994.570
7.5.4.3.3 "Other duties and charges" and "fees or charges for services rendered"
7.416. Concerning the measures covered by Article II:2(c) of the GATT 1994, in
United States - Certain EC Products, the Panel stated that this rule required proof that the charge
imposed on importers represented the approximate cost of any service.571
7.417. In Argentina – Textiles and Apparel, the Panel examined the consistency of a
3% ad valorem statistical tax applied by Argentina on the import of certain textiles. This tax was
used to finance the Argentine Customs system for collecting statistics. In this case, the Panel
considered that, although Argentina had included this tax in the "other duties and charges" column
in its Schedule of Concessions, the tax was inco nsistent with Article V III:1(a) of the GATT 1994
inasmuch as it gave rise to the imposition of charges in excess of the approximate costs of the
services rendered, and because it was a measure of a fiscal nature.
572
7.418. In US – Customs User Fee , the Panel addressed the consistency of a fee charged by
the United States to customs users for certain products and the United States' obligations under
the GATT 1947. The purpose of the fee was to cover the cost of processing imported goods and
was calculated as an ad valorem percentage of the said goods. The Panel found, however, that the
measure was contrary to the United States' obligations under Articles II:2(c) and VIII:1(a) of the
GATT 1947 in that it exceeded the approximate costs of customs processing.
573
7.5.4.3.4 "Other duties or charges" and Article 4.2 of the Agreement on Agriculture
7.419. As already indicated, the Panel in Chile – Price Band System stated that the term "ordinary
customs duties" must have the same meaning in Article 4.2 of the Agreement on Agriculture and
the second sentence of Article II:1(b) of the GATT 1994.574
7.420. In examining whether Chile's price band sy stem constituted an ordinary customs duty, the
Appellate Body in Chile – Price Band System made the following clarification with regard to the
category of "other duties or charges":
We further note, in examining Article 4.2 of the Agreement on Agriculture , that the
second sentence of Article II:1(b) of the GATT 1994, does not specify what form
"other duties or charges" must take to qualify as such within the meaning of that
sentence. The Panel's own approach of reviewing Members' Schedules reveals that
many, if not most, "other duties or charges" are expressed in ad valorem and/or
specific terms, which does not, of course, make them "ordinary customs duties" under
the first sentence of Article II:1(b).
575 (emphasis original)
7.421. Furthermore, the Panel in Dominican Republic – Safeguard Measures summarized the
Appellate Body's findings regarding when a measure constituted an ordinary customs duty:
In its report in Chile – Price Band System , the Appellate Body made it clear that what
determines whether "a duty imposed on an import at the border" constitutes an
ordinary customs duty is not the form which that duty takes.576 Nor is the fact that the
duty is calculated on the basis of ex ogenous factors, such as the interests
of consumers or of domestic producers. 577 The Appellate Body also explained that
a Member may periodically change the rate at which it applies an "ordinary customs

570 Panel Report, US – Zeroing (Japan) (Article 21.5 – Japan), para. 7.207. See also Appellate Body
Report, US - Zeroing (Japan) (Article 21.5 - Japan), para. 209.
571 Panel Report, US - Certain EC Products, para. 6.70.
572 Panel Report, Argentina - Textiles and Apparel, paras. 6.81-6.83.
573 GATT Panel Report, United States - Customs User Fee (BISD 35S/245), para. 125.
574 Panel Report, Chile - Price Band System, para. 7.104; Appellate Body Report, Chile - Price Band
System, para. 188.
575 Appellate Body Report, Chile - Price Band System, para. 275.
576 (Footnote original) Appellate Body Report, Chile - Price Band System, para. 216.
577 Ibid. paras. 271-278.

duty", provided it remains below the rate bound in the Member's schedule. 578
This change in the applied rate of duty could be made, for example, through an act
of the Member's legislature or executive at any time. However, one essential feature
of "ordinary customs duties" is that any change in them is discontinuous and
unrelated to an underlying scheme or formula.
579 The Appellate Body noted that the
price band system impugned in that case contained an inherent variability and had the
effect of impeding the transmission of international price developments to Chile's
market in the way in which ordinary customs duties normally would, also generating
in its application a lack of transparency and predictability with respect to market
access conditions.
580, 581 (emphasis original)
7.422. In Chile – Price Band System (Article 21.5 – Argentina) , the Appellate Body also
commented on the effect of finding that a measure is similar to any of those specified in footnote 1
to Article 4.2 of the Agreement on Agriculture on the determination as to whether such a measure
is an ordinary customs duty. In this connection, the Appellate Body stated:
We recall that an examination of "similarity" cannot be made in the abstract: it
necessarily involves a comparative analysis. That analysis can be undertaken by
comparing the measure at issue with at least one of the listed measures which, by
definition, have characteristics different from the characteristics of an ordinary
customs duty. The term "ordinary customs duties" in footnote 1 forms part of the
phrase "similar border measures other than ordinary customs duties". This phrase
contains no punctuation, which suggests that the phrase as a whole defines a relevant
concept for purposes of footnote 1. As we see it, "other than ordinary customs duties"
is an adjectival phrase that qualifies the term "similar border measures".
This language will, therefore, inform a panel's analysis of whether a measure is
"similar" to one of the categories of measures listed in footnote 1. We observe, as
well, that the structure and logic of footnote 1 make clear that variable import levies
and minimum import prices cannot be ordinary customs duties . The same is true for
border measures similar to variable impo rt levies and to minimum import prices.
582
(emphasis added)
7.423. As already mentioned, a Member's measure which corresponds or is similar to any of the
measures listed in footnote 1 to Article 4.2 of the Agreement on Agriculture may not correspond to
the ordinary customs duty of the Member in question. The Panel has already concluded that the
duties resulting from the PRS, because they are variable import levies or, at least, a measure
similar to variable import levies within the meanin g of Article 4.2 of the Agreement on Agriculture,
may not be ordinary customs duties.
583 The Panel recalls that the parties differ as to whether there
are elements in the Peruvian legislation that coul d characterize the duties resulting from the PRS
as ordinary customs duties. However, considering that a measure that is one of those covered by
footnote 1 to the Agreement on Agriculture canno t be an ordinary customs duty, the Panel does
n o t d e e m it n e c e s s a r y t o r u le o n t h e im p a c t o f the elements of the Peruvian legislation on the
characterization of the duties resulting from the PRS as ordinary customs duties.
7.424. As the next step, before considering whether the measure constitutes one of the
"other duties or charges" within the meaning of Article II:1(b) of the GATT 1994, the Panel would
have to verify whether the measure is covered by any of the situations provided for in Article II:2.
In this connection, the Panel finds that none of the parties has claimed, and there is no relevant
evidence, that the duties resulting from the PR S correspond to any of the measures listed in
Article II:2 (namely, charges equivalent to internal taxes imposed consistently with the provisions
of Article III:2 of the GATT 1994, anti-dumping or countervailing duties applied consistently with
the provisions of Article VI of the GATT 1994, or fees or other charges commensurate with the cost
of services rendered).

578 (Footnote original) Appellate Body Report, Chile - Price Band System, para. 232 (citing
Appellate Body Report, Argentina - Textiles and Apparel, fn. 56 to para. 46).
579 (Footnote original) Appellate Body Report, Chile - Price Band System, paras. 232-233.
580 Ibid. paras. 246-251.
581 Panel Report, Dominican Republic - Safeguard Measures, para. 7.84.
582 Appellate Body Report, Chile - Price Band System (Article 21.5 - Argentina), para. 167.
(footnote omitted)
583 See above, para. 7.374

7.425. Accordingly, having determined that the duties resulting from the PRS are border
measures that do not constitute ordinary customs duties and do not correspond to any of the
measures listed in Article II:2 of the GATT 1994, the Panel concludes that they are "other duties or
charges … imposed on or in connection with the importation", within the meaning of Article II:1(b)
of the GATT 1944.
7.5.4.4 Assessment of "other duties or ch arges" in accordance with the obligations
contained in the Understanding on the Interpretation of Article II:1(b) of the GATT 1994
7.426. Having found that the measure at issue comes under "other duties or charges" referred to
in Article II:1(b) of the GATT 1994, the Panel will now address the other elements in the second
sentence of Article II:1(b) of the GATT 1994. In other words, it will assess whether the measure at
issue is in excess of the other duties or charges imposed on the date of the GATT 1994 or "those
directly or mandatorily required to be imposed thereafter by the legislation in force in the
importing territory on that date", in conformity with the way in which they were recorded in Peru's
Schedule of Concessions.
7.427. In this connection, in addition to the ab ove provisions of the GATT 1994, Guatemala refers
to provisions in the Understanding on the Inte rpretation of Article II.1(b) of the GATT 1994.
584
As already mentioned, the first two paragraphs of the Understanding on the Interpretation
of Article II:1(b) of the GATT 1994 clarify the way in which Members have to record in their
schedules of concessions the "other duties or charges of any kind" described in Article II:1(b)
of the GATT 1994.
7.428. Some panels have reached conclusions on the Understanding on the Interpretation
of Article II:1(b) of the GATT 1994. In Dominican Republic – Import and Sale of Cigarettes ,
the Panel held that:
Reading Article II:1(b) together with paragraphs 1, 2, 7 and 4 of the Understanding as
context, the Panel considers that the obligation under Article II:1(b), second sentence
is for Members to record in their Schedules, within six months of the date of deposit
of the instrument, all ODCs [other duties and charges] as applied on 15 April 1994
unless those levels breach previous bound levels of ODCs. In case any Member did not
record the ODCs in the Schedule within six months of the date of deposit of the said
instrument, the right to record it in the Schedule and to invoke it expired after six
months. In the context of the recording requirements as prescribed in the
Understanding, the meaning of Article II:1(b), second sentence is specifically that
imported products shall be exempted from all "other duties or charges" of any kinds in
excess of those as validly recorded in the Schedule of the Member concerned.
585
7.429. In Argentina – Textiles and Apparel, the Panel stated that the inclusion of any "other duties
and charges" in a Member's Schedule of Concessions does not exempt such duties and charges
from an examination of their consistency with ot her provisions of the WTO agreements. In that
particular case, Argentina claimed that, by having been recorded in its Schedule of Concessions,
the contested statistical tax was automatically considered to be consistent with its obligations
under Article VIII of the GATT 1994. The Panel rejected this claim.
586
7.5.4.5 Conclusion
7.430. Given the Panel's finding that the duties resulting from the PRS come under other duties or
charges, the next question facing the Panel is wh ether such duties satisfy the requirements of the
second sentence of Article II:1(b) of the GATT 1994 and the Understanding on the Interpretation
of Article II:1(b) of the GATT 1994.
7.431. According to the second sentence of Article II:1(b) of the GATT 1994 and paragraphs 1, 2,
3, 4 and 7 of the Understanding on the Interp retation of Article II:1(b) of the GATT 1994,

584 Guatemala's request for the establishment of a panel, para. 2(b); first written submission,
paras. 4.112-4.114; second written submission, paras. 5.52-5.55.
585 Panel Report, Dominican Republic - Import and Sale of Cigarettes, para. 7.88. A similar conclusion
was reached by the Panel in Chile - Price Band System, para. 7.107.
586 Panel Report, Argentina - Textiles and Apparel, paras. 6.81-6.83.

Members are required to record in their Schedules of Concessions the other duties and charges
applied in respect of all bound tariff lines. A Member which maintains or introduces a duty of this
kind without having recorded it in the appropriate column in its Schedule of Concessions would be
acting inconsistently with the second sentence of Article II:1(b) of the GATT 1994.
7.432. In the present case, it is a fact undisputed by the parties that the column corresponding to
other duties or charges in Peru's Schedule of Concessions does not contain any record.
587 This fact
shows that Peru did not record in its Schedule of Concessions any duty corresponding to
"other duties or charges" within the six months following the date on which the instrument was
deposited. In this respect, therefore, Peru would be acting inconsistently with its obligations under
the second sentence of Article II:1(b) of the GATT 1994 if it applied a duty corresponding to
"other duties or charges". The Panel recalls its fi nding that the duties resulting from the PRS form
part of other duties or charges and notes that ther e is evidence that these duties or charges have
been applied by Peru. Consequently, Peru has acted inconsistently with its obligations under the
second sentence of Article II:1(b) of the GATT 1994.
7.6 The question of whether Peru has acte d inconsistently with Article X:1 of the
GATT 1994
7.6.1 Introduction
7.433. In this section, the Panel will examine Gu atemala's claim that Peru did not publish certain
essential elements of the challenged measure.
7.434. The Panel will commence its examination by taking up the arguments of Guatemala and
Peru and the opinions of third parties regarding Guatemala's claim. It will then continue with its
analysis of this case.
7.6.2 Main arguments of the parties
7.6.2.1 Guatemala's claim
7.435. Guatemala considers that Peru has violated its obligations under Article X:1 of the
GATT 1994 by failing to publish certain aspect s of the duties resulting from the PRS.
In Guatemala's opinion, this did not prevent operators from being acquainted with the essential
elements of the challenged measure.
588
7.436. Guatemala claims that the disciplines of Article X:1 of the GATT 1994 apply to
"laws, regulations, judicial decisions and administ rative rulings of general application". Guatemala
asserts that measures of general application are those "that apply to a range of situations or
cases, rather than being limited in their scope of application". 589 Moreover, those measures must
pertain to "the classification or the valuation of products for customs purposes", to "rates of duty,
taxes or other charges", or to "requirements, restrictions or prohibitions on imports or exports",
among other things.590
7.437. According to Guatemala, the publication requirement envisaged in Article X:1 of the
GATT 1994 is intended to "enable governments and traders to become acquainted with [the rules
in question]". 591 Guatemala asserts that the content and operation of the measures must be
published in sufficient detail for economic operators to familiarize themselves with the norm. 592
Guatemala suggests that Article X:1 requires that detailed information on the content of the norm

587 See Schedule XXXV - Peru, Uruguay Round, 15 April 1994 (Exhibit PER-18); Relevant Sections
of Peru's Schedule of Concessions (Exhibit GTM-26).
588 Guatemala's first written submission, para. 4.135.
589 Guatemala's first written submission, para. 4.140 (citing Panel Report, EC - Selected Customs
Matters, para. 7.116, and referring to Appellate Body Report, EC - Poultry, para. 111 and Panel Report,
Japan - Film, para. 10.385).
590 Guatemala's first written submission, para. 4.141.
591 Guatemala's first written submission, para. 4.139.
592 Guatemala's first written submission, para. 4.142.

should be published, "including sufficient information on the process of establishment of the
essential elements of that norm."593
7.438. Guatemala considers that the rules governing the duties resulting from the PRS are subject
to the obligations contained in Article X:1 of the GATT 1994, inasmuch as they are laws of general
application which refer to "taxes or other charges". 594 Guatemala asserts that the methodologies
and data used for determining the different components of the PRS are also subject to Article X:1.
Those methodologies and those data constitute "essential elements" of the PRS, since they directly
or indirectly determine the tax burden placed on importers.
595
7.439. Guatemala considers that Peru failed to meet its obligation to publish the following
essential elements of the challenged measure 596: (a) the reasons for determining "import costs"
at 3% of the reference price 597; (b) the methodology for calculating the amounts for "freight" and
"insurance" used to convert the ceiling, floor and reference prices from f.o.b. to c.i.f. values 598;
and (c) the international prices corresponding to the reference markets used to calculate the floor
price, the ceiling price and the reference price.599
7.440. Guatemala also claims that Peru failed to meet its obligation to publish the rules,
where these exist, authorizing its auth orities to: (a) extend customs tables 600; (b) calculate price
ranges for dairy products by reference price intervals 601; (c) calculate different duties and rebates
for two categories of rice 602; and (d) maintain the reference price for dairy products at the same
level for two consecutive fortnights.603
7.6.2.2 Peru's defence
7.441. Peru agrees with Guatemala that the PRS as a whole is subject to the publication obligation
envisaged in Article X:1 of the GATT 1994.
604 However, Peru argues that it has published the
elements to which Guatemala refers and denies that it has an obligation to publish the reasoning
or the components for the calculation of the PRS.
605 Thus, Peru considers that Article X:1 does not
require a Member to publish all aspects of a measure, but only "the essential elements" thereof.606
7.442. Peru asserts that, since establishing the duties resulting from the PRS in 1991, it has
published in its official journal "every one of th e modifications regarding the duties, their elements
and their calculation". 607 Peru adds that Supreme Decree No. 115-2001-EF itself, which was duly
published, details the way in which duties or rebates operate, as well as the tariff lines subject to
the PRS, the methodology for calculating the floor and ceiling prices of the range, the methodology
for calculating the duty or the rebate generated by the system, the marker products and reference
markets, freight and insurance, the customs ta bles, and amendments to the above-mentioned
decree, international reference prices and applicable customs tables.
608

593 Guatemala's first written submission, para. 4.146. See also second written submission,
paras. 6.2-6.3 (citing Panel Reports, Dominican Republic - Import and Sale of Cigarettes, paras. 7.405 and
594 Guatemala's first written submission, para. 4.147.
595 Ibid. paras. 4.148-4.149.
596 Guatemala's second written submission, para. 6.4.
597 Guatemala's first written submission, paras. 4.150-4.157; second written submission,
paras. 6.11-6.16.
598 Guatemala's first written submission, paras. 4.158-4.164; second written submission,
paras. 6.17-6.23.
599 Guatemala's first written submission, paras. 4.165-4.172; second written submission,
paras. 6.6-6.10.
600 Guatemala's first written submission, paras. 4.173-4.180.
601 Ibid. paras. 4.181-4.185.
602 Guatemala's first written submission, paras. 4.186-4.192.
603 Ibid. paras. 4.193-4.195.
604 Peru's first written submission, para. 5.112.
605 Ibid. para. 5.104.
606 Peru's first written submission, para. 5.109 (citing Panel Report, Dominican Republic - Import and
Sale of Cigarettes, para. 7.405, with regard to the sufficiency of published information).
607 Peru's first written submission, para. 5.113.
608 Ibid.

7.443. Peru claims that Guatemala confuses the scope of the concept of "essential elements",
seeking to extend it to information for which there is no publication requirement. Peru maintains
that Guatemala is mistaken in describing certain information about the calculation of the PRS as
"essential elements" and that the relevant information on the 3% import costs
609 and on the
amounts for freight and insurance 610 was duly published by means of Supreme Decree
No. 115-2001-EF. Peru adds that the prices used as a basis for calculating the floor price and the
reference price are available to the public and that Supreme Decree No. 115-2001-EF specifies the
relevant sources to which traders may have access in order to obtain those prices.
611
7.444. Peru also claims that it has published all necessary information regarding extensions of the
customs tables, the calculation of price ranges for dairy products by reference price intervals, the
calculation of duties and rebates for the two categories of rice and the maintenance of the
reference price for dairy products at the same level for two consecutive fortnights.
612
7.445. Peru adds that, since the measure at issue is the duties resulting from the PRS and not the
PRS itself, the elements that Guatemala describes as "essential" are unrelated to the measure and
play a minor role in the calculation of such duties.613
7.6.3 Main arguments of the third parties
7.6.3.1 United States
7.446. The United States states that the Pa nel should exercise caution in applying the
"essential elements" test articulated by the Panel in Dominican Republic – Import and Sale
of Cigarettes, with respect to the publication requirement envisaged in Article X:1 of the
GATT 1994. The United States has difficulty understanding what would be the basis, in the
language of that provision, for invoking that test.
614
7.6.3.2 European Union
7.447. The European Union argues that Article X:1 of the GATT 1994 requires the published
information to contain a sufficient level of detail to enable the interested parties to become
"acquainted" with the measures. In the European Un ion's opinion, the level of detail refers to the
"essential elements" of the measure, as indicated by the Panel in Dominican Republic – Import and
Sale of Cigarettes.
615
7.448. The European Union considers that, althou gh the elements identified by Guatemala could
be subject to Article X:1 of the GATT 1994, the Panel should determine whether they are "essential
elements" of the PRS.616
7.6.4 Assessment by the Panel
7.6.4.1 Introduction
7.449. The question the Panel has to resolve is whether, as alleged by Guatemala, Peru failed to
publish certain essential elements of the duties resulting from the PRS. Guatemala contends that
the following elements of the system were no t published: (a) the reasons for determining
"import costs" at 3% of the reference price; (b ) the methodology for calculating the amounts for
"freight" and "insurance" used to convert the ceiling, floor and reference prices from f.o.b. values
to c.i.f. values; (c) the international prices corresponding to the reference markets used to
calculate the floor, ceiling and reference prices; (d) the rules, if any exist, authorizing the Peruvian
authorities to extend customs tables; (e) the ru les, if any exist, authorizing the Peruvian

609 Peru's first written submission, paras. 5.115-5.118; second written submission, paras. 4.8-4.11.
610 Peru's first written submission, paras. 5.119-5.121; second written submission, paras. 4.12-4.13.
611 Peru's first written submission, paras. 5.122-5.123; second written submission, paras. 4.14-4.15.
612 Peru's first written submission, paras. 5.124-5.125.
613 Peru's second written submission, paras. 4.1-4-2.
614 United States' third-party statement, paras. 15-18.
615 European Union's third-party written submission, paras. 57-58 (citing Panel Report,
Dominican Republic - Import and Sale of Cigarettes, para. 7.405).
616 European Union's third-party written submission, paras. 61-62.

authorities to calculate price ranges for dairy products by reference price intervals; (f) the rules,
if any exist, authorizing the Peruvian authorities to calculate different additional duties and rebates
for two categories of rice; and (g) the rules, if any exist, authorizing the Peruvian authorities to
keep the reference price for dairy products at the same level for two consecutive fortnights.
7.6.4.2 The publication requirement under Article X:1 of the GATT 1994
7.450. Article X:1 of the GATT 1994 provides that:
Laws, regulations, judicial decisions and administrative rulings of general application,
made effective by any [Member], pertaining to the classification or the valuation
of products for customs purposes, or to rates of duty, taxes or other charges, or to
requirements, restrictions or prohibitions on imports or exports or on the transfer
of payments therefor, or affecting their sale, distribution, transportation, insurance,
warehousing inspection, exhibition, processing, mixing or other use, shall be published
promptly in such a manner as to enable governments and traders to become
acquainted with them . Agreements affecting international trade policy which are in
force between the government or a governmental agency of any [Member] and the
government or governmental agency of any other [Member] shall also be published.
The provisions of this paragraph shall not require any [Member] to disclose
confidential information which would impede law enforcement or otherwise be
contrary to the public interest or would prejudice the legitimate commercial interests
of particular enterprises, public or private. (emphasis added)
7.6.4.2.1 Measures covered by Article X:1 of the GATT 1994
7.451. The analysis under Article X:1 of the GATT 1994 entails determining whether the measure
is a law, regulation, judicial decision or administrative ruling of general application made effective
by any Member. In addition, the measure in question must refer to the classification or the
valuation of products for customs purposes, to rate s of duty, taxes or other charges, and to other
matters listed in the article. It then has to be determined whether the measure in question was
published promptly so that governments and traders could become acquainted with it.
617 In this
regard, in EC – Poultry , the Appellate Body stated that Arti cle X:1 of the GATT refers to the
publication and application of measures subject to its scope and not to their substantive
content.
618 The provision therefore embodies the principle of transparency.619
7.452. In EC – IT Products, the Panel held that the determination as to whether a measure is
a "law", "regulation", "judicial decision" or "administrative ruling" of general application must be
based primarily on the content and substance of the instrument, and not merely on its form or
nomenclature.620 In other words, a measure is not excluded from this scope simply because the
Member applying it characterizes it as not belonging to the aforementioned categories.621
7.453. As already stated by various panels, Article X:1 of the GATT 1994 includes a wide range
of measures that have the potential to affect trade and traders. 622 The Panel in
United States - COOL, referring to the COOL law and regulations, stated: "[t]hese are formal legal
instruments, which qualify as either 'laws' or 'reg ulations' within the meaning of Article X:1 of the
GATT 1994".623 The Panel in Thailand – Cigarettes (Philippines) found that the methodology used
to calculate the maximum retail selling price (MRSP) of cigarettes was a measure that fell within
the scope of Article X:1 of the GATT 1994. 624 In EC – IT Products , the Panel considered that,

617 Panel Report, EC - IT Products, para. 7.1016.
618 Appellate Body Report, EC - Poultry, para. 115. See also Panel Report, EC - IT Products,
paras. 7.1013-7.1015.
619 Panel Report, EC - IT Products, fn. 1312 to para. 7.1015 (citing Appellate Body Report,
US - Underwear, p. 21).
620 Ibid. para. 7.1023.
621 Ibid. paras. 7.1023 and 7.1024.
622 Ibid. para. 7.1026.
624 Panel Report, Thailand - Cigarettes (Philippines), paras. 7.773 and 7.778.

despite not being legally binding under EC law, the Explanatory Notes to the Combined
Nomenclature (CNEN) constituted a measure within the meaning of Article X:1.625
7.454. Article X:1 of the GATT 1994 requires that the measures indicated be of general
application. In this connection, in EC – Selected Customs Matters , the Panel clarified that the
measures covered by Article X:1 of the GATT 1994 do not include laws, regulations, judicial
decisions and administrative rulings with a limited scope of application but those which apply to
a range of situations or cases.
626 Likewise, the Panel in US – Underwear held that
an administrative ruling was of general application when it affected "an unidentified number
of economic operators, including domestic and foreign producers".627
7.455. In EC – IT Products , the Panel found that the Explanatory Notes to the Combined
Nomenclature (CNEN), by ensuring uniform application of the Common Customs Tariff and not
applying to a single import or a single importer, fell within the category of measures
of "general application".628 In Japan – Film , the Panel addressed the question of whether
an administrative ruling adopted in an individual case which identified criteria or principles
applicable in future cases could be deemed of general application. 629 In EC – Poultry , the
Appellate Body concluded that the EC rules pertaini ng to import licensing set out in a regulation
were rules of general application.630
7.456. The next aspect which a panel has to address is whether the measure of general
application refers to any of the specific elements cited in Article X:1 of the GATT 1994.
These include "the classification or the valuation of products for customs purposes" and the
"rates of duty, taxes or other charges" applied.
631
7.457. With regard to the requirement that the measures must have been made effective,
in EC - IT Products, in referring to a draft of the Explanatory Notes to the Combined Nomenclature
(CNEN), the Panel considered that this category covered both measures which had been formally
promulgated and those which had been brought into effect or made operative in practice. 632
In this sense, the expression "made effective" is essentially linked to the fact that the measure has
been made operative.
633
7.6.4.2.2 Aspects concerning the type of publication which Members are required to
make pursuant to Article X:1 of the GATT 1994
7.458. The next requirement imposed by Articl e X:1 of the GATT 1994 is that the measure in
question must be published promptly. In EC – IT Products, the Panel pointed out that
"the meaning of prompt is not an absolute concept, i.e. a pre-set period of time applicable in all
cases".634 In that particular case, the Panel found that publication of CNEN amendments in the
European Union's Official Journal a minimum of eight months after they had been made effective
did not meet the requirement in Article X:1 of the GATT 1994. 635 Nevertheless, noting that these
amendments had been published on the European Union's Comitology website
(the European Union's web page on the computer network) before they became effective, it could
be considered that the measure had been published promptly.636
7.459. The last requirement to be satisfied in determining full compliance with obligations under
Article X:1 of the GATT 1994 is that the texts must be published "in such a manner as to enable
governments and traders to become acquainted with them". In EC – IT Products, the Panel
considered whether publication of the Explanatory Notes to the Combined Nomenclature (CNEN)

625 Panel Report, EC - IT Products, para. 7.1029.
626 Panel Report, EC - Selected Customs Matters, para. 7.116 (cited in Panel Report, EC - IT Products,
para. 7.1032).
628 Panel Report, EC - IT Products, para. 7.1034.
630 Appellate Body Report, EC - Poultry, para. 111.
631 Panel Report, EC - IT Products, para. 7.1035.
632 Ibid. para. 7.1048.
633 Ibid. paras. 7.1045-7.1047.
634 Ibid. para. 7.1074.
635 Ibid. para. 7.1076.
636 Ibid. para. 7.1077.

on the Comitology website met this requirement, The first aspect clarified by the Panel was that
under Article X:1, unlike Article X:2, publication does not need to be in an official publication. 637
The Panel went on to address the scope of the obli gation to publish. Following the Panel's analysis
in Chile – Price Band System, it found that the obligation analysed implied that the measures be
made generally available through an appropriate medium. 638 I t a d d e d t h a t " n o t a n y m a n n e r
of publication … would satisfy the requirement, bu t only those that would give power to or supply
governments and traders with knowledge of the particular measures that is 'adequate' so that
traders and Governments may become 'familiar' with them, or 'known' to them in a 'more or less
complete' way".639 In the analysis of that particular case, the Panel concluded that publication of
the draft CNENs on the Comitology website did not satisfy this requirement.640
7.460. The Panel, in Dominican Republic – Import and Sale of Cigarettes , examined what aspects
of a measure had to be published. In that case, the Panel had to determine whether some of the
surveys undertaken by the Central Bank of the Dominican Republic, used as a basis for calculating
the tax on cigarettes, were a measure covered by Article XI:1 of the GATT 1994. In its analysis,
the Panel found that, even though the surveys in themselves were not administrative rulings
of general application, they "would constitute an essential element of the administrative ruling: the
determination of the tax base for cigarettes".
641 Because they were an essential element, the Panel
found that "[i]n order to become acquainted with the process of establishing the tax base for the
application of the Selective Consumption Tax on cigarettes, governments and traders would be
entitled to obtain information on the results of the survey, as well as on the methodology used in
order to conduct the survey".
642 The Panel therefore found that the Dominican Republic was
obliged to publish information on these surveys or, alternatively, to resort to another method that
would enable governments and traders to become acquainted with the method used to determine
the tax base for the Selective Consumption Tax on cigarettes.
643
7.461. In a similar vein, in Thailand – Cigarettes (Philippines) , the Panel addressed the issue
of whether the data used by Thailand to calculate the maximum retail selling price (MRSP) for
cigarettes had to be published. In the complainan t's opinion, these data fell within the scope
of Article X:1 of the GATT 1994 as they were "e ssential elements" in the terms identified by
the Panel in Dominican Republic – Import and Sale of Cigarettes.
644 In response, Thailand asserted
that such information was not of general application and included company-specific confidential
data.
645 The Panel concluded that such data could no t be considered generally and prospectively
applicable rules as they concerned company-specific information subject to confidentiality. 646
With regard to application of the "essential element" test, the Panel found that it did not apply to
that particular case as the information that wa s the subject of the dispute was confidential and
company-specific, whereas in the case of the Dominican Republic the information in question was
publicly available.
647
7.462. With regard to the content of the publication of the relevant rules, the Panel in
Thailand - Cigarettes (Philippines) also considered whether the methodology used to calculate the
maximum retail selling price (MRSP) had been published in such a way as to enable importers to
become acquainted with it. In that particular case, Thailand argued that the elements of the
methodology were clear, based on certain information included in the preamble to the rules which
applied the MRSPs for cigarettes. The Panel considered that the publication in question was not
sufficient to fulfil obligations under Article X:1 of the GATT 1994; for importers to become
acquainted with the methodology, Thailand should have enabled them to become familiar with
aspects such as: how the information provided by the importers is processed and the way in which
the authorities determine marketing costs (used to calculate the MRSPs for cigarettes).
648

637 Panel Report, EC - IT Products, para. 7.1082.
638 Ibid. paras. 7.1083 and 7.1084 (citing Panel Report, Chile - Price Band System, para. 7.128).
639 Ibid. para. 7.1086.
640 Ibid. para. 7.1087.
641 Panel Report, Dominican Republic - Import and Sale of Cigarettes, para. 7.405.
642 Ibid. para. 7.407.
643 Ibid. para. 7.414.
644 Panel Report, Thailand - Cigarettes (Philippines), paras. 7.792-7.796.
645 Ibid. paras. 7.797-7.801.
646 Ibid. para. 7.806.
647 Ibid. paras. 7.807-7.808.
648 Ibid. para. 7.789.

7.463. In Thailand – Cigarettes (Philippines) , the Panel also examined the sufficiency of the
publication of the generally applicable rules governing the right of importers to restitution of the
guarantees deposited for the payment of certain internal taxes. In this connection, the Panel
concluded that the rules did not clearly explain the existence of such a right, so importers might
not be aware of its exact nature. In the Panel's view, this was a violation of the obligation
contained in Article X:1 of the GATT 1994.
649
7.464. Article X:1 of the GATT 1994 also provides th at "[t]he provisions of this paragraph shall
not require any [Member] to disclose confidential information which would impede law
enforcement or otherwise be contrary to the pub lic interest or would prejudice the legitimate
commercial interests of particular enterprises, public or private".
7.465. Concerning the confidentiality requirement, in Thailand – Cigarettes (Philippines) , the
Panel considered whether publication of the data used to calculate the maximum retail selling price
(MRSP) of cigarettes would be equivalent to disclosing "confidential information" within the
meaning of Article X:1 of the GATT 1994. The Panel had already found that it was not of general
application, being company-specific information; therefore, for the sake of argument, it considered
that the Philippines had not met the burden of proving a prima facie violation of the obligation to
publish certain measures, inasmuch as it had acknowledged the confidential nature of the
information which it claimed should be published. The Panel concluded that there was no obligation
under Article X:1 of the GATT 1994 to publish a non-confidential summary of the confidential
information.
650
7.6.4.3 Conclusion
7.466. The Panel has already determined that the duties resulting from the PRS are inconsistent
with Peru's obligations under Article 4.2 of the Agreement on Agriculture and the second sentence
of Article II:1(b) of the GATT 1994.651 As recognized by the Appellate Body, panels are not obliged
to deal with all the legal arguments put forward by the parties. 652 The Appellate Body explained
that "[a] panel has to address those claims on which a finding is necessary in order to enable the
DSB to make sufficiently precise recommendations and rulings so as to allow for prompt
compliance by a Member with those recommendations and rulings 'in order to ensure effective
resolution of disputes to the benefit of all Members'."
653
7.467. Having found that the duties resulting from the PRS are inconsistent with Peru's
substantive obligations under the WTO agreements, it is not necessary for the Panel also to
address the issue of whether certain elements of the system were published in the manner
required by Article XI:1 of the GATT 1994. Any finding on the latter aspect would not alter the
previous findings and would not help the DSB to make sufficiently precise recommendations to
enable prompt compliance on the part of Peru. The Panel will not therefore rule on the claims
made by Guatemala under Article X:1 of the GATT 1994 as regards failure to publish certain
essential elements of the measure at issue.
7.7 The question of whether Peru has acted inconsistently with Article X:3(a) of the
GATT 1994
7.7.1 Introduction
7.468. In this section, the Panel will examine Gu atemala's claim that Peru did not administer the
challenged measure in a reasonable manner. The Panel will commence its examination by
presenting the arguments of Guatemala and Peru an d the opinions of third parties with regard to
Guatemala's claim. The Panel will then set forth its analysis of the issue.

649 Panel Report, Thailand - Cigarettes (Philippines), paras. 7.858-7-861.
650 Ibid. para. 7.819.
651 See above, paras. 7.371-7.372 and 7.431-7.432.
652 See Appellate Body Report, US - Wool Shirts and Blouses, pp. 21-22 (citing, inter alia, GATT Reports,
US - Sugar Quota, BISD 31S/67, paras. 4.5 and 4.6; Japan - Semi-Conductors, BISD 35S/116, para. 122;
and US - MFN Footwear, BISD 39S/128, para. 6.18.
653 Appellate Body Report, Australia - Salmon, para. 223.

7.7.2 Main arguments of the parties
7.7.2.1 Guatemala's claim
7.7.2.1.1 Lack of uniformity and impartiality in applying the rounding method
7.469. Guatemala initially claimed that Peru acted inconsistently with Article X:3(a) of the
GATT 1994 owing to lack of uniformity and impartiality in calculating the additional duties and
tariff rebates resulting from the PRS, in application of the rounding method. Guatemala contended
that Peru facilitated upward rounding for the calculation of duties, and downward rounding for the
calculation of rebates.
654
7.470. During the proceedings, Peru explained that rounded values are presented in its
publications, but that the values are not rounded for the purpose of the actual calculations. 655
In the light of these explanations and informat ion submitted by Peru, Guatemala withdrew this
claim.656 The Panel will therefore not address this issue.
7.7.2.1.2 Lack of reasonableness in observan ce of the statutory provisions of the Price
Range System
7.471. Guatemala claims that Peru administers the measure at issue in an unreasonable manner
inasmuch as, with respect to four specific practi ces, Peru does not comply with the requirements
of its own legislation.657 Guatemala asserts that the administration of a measure that is not carried
out in conformity with the relevant domestic legislation does not meet the requirement
of reasonableness provided for in Article X:3(a) of the GATT 1994.658
7.472. First of all, Guatemala claims that Peru extended the customs tables for the previous
six months instead of carrying out a new calculation, a situation not provided for in the rules
governing the PRS, and for which Peru provided no legal justification.659
7.473. Guatemala rejects the idea that, in order to comply with Article X:3(a) of the GATT 1994,
it is sufficient for the Executive to have an "inherent power" to exercise discretion in the
administration of a measure, if this has no basis in the text of the measure. 660 Guatemala asserts
that an authority's exercise of discretion must conform to the limits set forth in Article X:3(a),
that is to say that it cannot entail unreasonable administration.
661
7.474. Secondly, Guatemala maintains that, in the customs tables for dairy products, Peru uses
reference price intervals instead of individual reference prices in accordance with the prescribed
formulas. Guatemala states that, if the regulations were applied correctly, the result would lead to
an additional duty for each reference price.
662
7.475. Guatemala does not consider relevant the fact that the first customs tables, in 2001,
contained intervals for dairy products. Guatemala asserts that the fact that the first customs tables
contained such intervals means that Peru has acted contrary to its legislation since the first act
implementing Supreme Decree No. 115-2001-EF.
663

654 Guatemala's first written submission, paras. 4.206-4.217; Peruvian practices of rounding additional
duties and rebates (Exhibit GTM-18).
655 Peru's first written submission, paras. 5.134-5.136; response to Panel question No. 65, para. 156;
"There is no rounding problem" (Exhibit PER-45); Rounding (Exhibit PER-73).
656 Guatemala's second written submission, paras. 7.23-7.24.
657 Guatemala's first written submission, para. 4.129; opening statement at the first meeting of
the Panel, paras. 68-70.
658 Guatemala's first written submission, para. 4.204 (citing Panel Report, Dominican Republic - Import
and Sale of Cigarettes, paras. 7.385-7.388); second written submission, para. 7.2; response to Panel question
No. 79, paras. 264-267.
659 Guatemala's second written submission, paras. 7.3-7.6.
660 Peru's second written submission, para. 4.5.
661 Guatemala's opening statement at the second meeting of the Panel, paras. 35-37.
662 Guatemala's first written submission, paras. 4.219-4.220; second written submission,
paras. 7.7-7.12.
663 Guatemala's response to Panel question No. 143, paras. 201-206.

7.476. Thirdly, Guatemala argues that Peru keep s the reference price for dairy products at the
same level for two consecutive fortnights, in breach of its internal regulations. Guatemala
considers that the fact that the price of the marker product is published monthly does not lessen
the requirement in the Peruvian regulations th at reference prices must be furnished every
two weeks.
664
7.477. Finally, Guatemala contends that Peru uses different additional duties and tariff rebates for
"pounded rice" and "paddy rice" in relation to each reference price for the rice customs tables.
In Guatemala's view, the proper implementation of the regulations would generate a single duty or
rebate for each reference price under the customs table.665
7.478. Guatemala indicates that the instruments containing the breakdown of products are not
relevant because they belong to the legal framework of the 1991 specific duty system, which is not
in force. 666 Nor does Guatemala consider relevant the fact that the first PRS customs tables
contained two separate categories of rice, which means that Peru has acted in a manner contrary
to its legislation since the first act of implementation of Supreme Decree No. 115-2001-EF.667
7.7.2.2 Peru's defence
7.479. Peru states that its practice is reasonab le and that Guatemala is seeking to equate the
obligation of reasonableness with the publication obligation. 668 Peru points out that Article X:3(a)
of the GATT 1994 does not affect the "inherent authority" of each Member to exercise its discretion
with regard to the management and administration of its measures, provided that it acts "within
the international tariff binding limits" and within the national limit imposed by its own legal
order.
669
7.480. First, with respect to the extension of the customs tables, Peru claims that the Supreme
Decrees are a modification (in the form of an extension) of the measure and not an application
of the measure.
670 Peru asserts that the possibility for a State to amend its regulations is
supported by its normative framework, since the Executive has the inherent authority to issue
supreme decrees amending Supreme Decree No. 115-200-EF, which does not prohibit
extensions.671 Peru also asserts that the extension or non-extension of customs tables is a matter
of sovereign authority, in the area of trade policy, to decide whether or not to maintain a certain
level of trade protection. Peru adds that such ac tions were taken in accordance with the relevant
constitutional and legal requirements and sufficien tly well in advance to enable traders to become
acquainted with them.672
7.481. Secondly, with respect to the intervals used in the customs tables for dairy products,
Peru asserts that the intervals are clearly indicated in Annex VI to Supreme Decree
No. 115-2001-EF, and the fact that Annex III does not mention them is not related to the
application of the duty resulting from the PRS. Peru adds that there is nothing absurd about the
use of intervals for dairy products, since it is consistently applied and published with no element of
surprise or arbitrariness, under the authority of the Executive.
673 Peru adds that the use of
intervals for dairy products pre-dates the publication of Supreme Decree No. 115-2001-EF, as is
shown in previous instruments. 674 P e r u a l s o e x p l a i n s t h a t d a i r y p r o d u c t p r i c e s h a v e h i s t o r i c a l l y

664 Guatemala's first written submission, paras. 4.219-4.220; second written submission,
paras. 7.13-7.18.
665 Guatemala's first written submission, paras. 4.219-4.220; second written submission,
paras. 7.19-7.22.
666 Guatemala's opening statement at the first meeting of the Panel, para. 71; response to Panel
question No. 142, paras. 197-200.
667 Guatemala's response to Panel question No. 143, paras. 201-206.
668 Peru's first written submission, paras. 5.137-5.138.
669 Peru's second written submission, paras. 4.16-4.17.
670 Peru's second written submission, para. 4.19 (referring to Panel Report, Dominican Republic – Import
and Sale of Cigarettes, paras. 7.380-7382).
671 Peru's second written submission, paras. 4.19-4.21.
672 Peru's response to Panel question No. 136, paras. 134-135.
673 Peru's second written submission, paras. 4.22-4.24.
674 Peru's response to Panel question No. 143, paras. 142-143; Supreme Decree No. 133-94-EF
(Exhibit PER-74); Supreme Decree No. 083-98-EF (Exhibit PER-25); Supreme Decree No. 133-99-EF
(Exhibit PER-26); Supreme Decree No. 021-2001-EF (Exhibit PER-49).

been subject to a wide monthly variation, which would make it impractical for their presentation to
be similar to that of other products.675
7.482. Thirdly, with respect to the maintenance of dairy product reference prices at the same
level for two consecutive fortnights, Peru asserts that, as established in Supreme Decree
No. 115-2001-EF, the international prices of marker products used as a basis for calculating those
reference prices are published monthly.676
7.483. Fourthly, Peru claims that paddy rice and pounded rice have been treated separately since
the establishment of the duty system in 1991, and that the distinction between the two categories
of rice is made in Supreme Decree No. 114-93-EF and has not been revoked or replaced. In Peru's
opinion, it is not unreasonable to apply different amounts to products that are different
(in this case, the raw material – paddy rice – and the final product – pounded rice).
677
7.7.3 Main arguments of the third parties – European Union
7.484. The European Union points out that Article X:3(a) of the GATT 1994 concerns the method
of application of the measures identified in Article X:1 of the GATT 1994 and that the requirements
of uniformity, impartiality and reasonableness are distinct from each other. 678 The European Union
also asserts that the complainant must present solid evidence to demonstrate a breach of that
Article and that the probative value of the eviden ce will depend on the circumstances of each
case.
679
7.485. The European Union refers to the interpretation of the terms uniform, impartial and
reasonable, and states that the Panel in Dominican Republic – Import and Sale of Cigarettes found
with regard to the Selective Consumption Tax of the Dominican Republic that the fact of not
relying on the rules in force at the time of the decision, disregarding them and using other
methods, amounted to an unreasonable administration.680
7.486. The European Union does not question the characterization of the Peruvian measure in
respect of Article X:1 of the GATT 1994, but assert s that the Panel will have to decide whether
Guatemala has succeeded in demonstrating the alleged lack of uniform, impartial and reasonable
administration.
681
7.7.4 Assessment by the Panel
7.7.4.1 Article X:3(a) of the GATT 1994
7.487. Article X:3(a) of the GATT 1994 provides as follows:
Each [Member] shall administer in a uniform, impartial and reasonable manner all its
laws, regulations, decisions and rulings of the kind described in paragraph 1 of this
Article.

675 Peru's response to Panel question No. 137, para. 136.
676 Peru's second written submission, paras. 4.25-4.26; response to Panel question No. 139, para. 137.
677 Peru's second written submission, paras. 4.27-4.28; response to Panel question No. 142,
paras. 140-141; response to Panel question No. 143, paras. 142-143; and Supreme Decree No. 114-93-EF
(Exhibit PER-24).
678 European Union's third-party written submission, paras. 64-65.
679 Ibid. paras. 66-67.
680 Ibid. paras. 68-71.
681 Ibid. para. 74.

7.7.4.2 General considerations
7.488. In US – Shrimp , the Appellate Body indicated the following with regard to the essence
of this obligation:
It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum
standards for transparency and procedural fairness in the administration of trade
regulations.682
7.489. The Appellate Body also noted that:
[A]llegations that the conduct of a WTO Member is biased or unreasonable are serious
under any circumstances. Such allegations should not be brought lightly, or in
a subsidiary fashion. A claim under Article X:3(a) of the GATT 1994 must be
supported by solid evidence; the nature and the scope of the claim, and the evidence
adduced by the complainant in support of it, should reflect the gravity of the
accusations inherent in claims under Article X:3(a) of the GATT 1994.
683
7.7.4.3 Measures covered
7.490. The text of Article X:3(a) of the GATT 1994 shows that the obligation contained therein
extends to the application of the laws, regulations, judicial decisions and administrative rulings
referred to in Article X:1.
7.491. In relation to Article X:1 of the GATT 1994, the kind of measures covered by this
paragraph were examined.
684 That analysis will not be repeated here.
7.7.4.4 Meaning of administration
7.492. With regard to the term "administration", in EC – Bananas III , the Appellate Body
explained that the obligation in Article X:3(a) of the GATT 1994 refers to the administration of the
rules and not to their substantive content.
685 Likewise, the Appellate Body stated that:
[To] the extent that [an] appeal relates to the substantive content o f t h e E C r u l e s
themselves, and not to their publication or administration, that appeal falls outside the
scope of Article X of the GATT 1994. The WTO-consistency of such substantive content
must be determined by reference to provisions of the covered agreements other than
Article X of the GATT 1994.
686
7.493. The Appellate Body summarized its reason ing in the two above-mentioned paragraphs in
the following way:
[I]n EC – Bananas III and EC – Poultry, the Appellate Body distinguished between, on
the one hand, the laws, regulations, judicial decisions, and administrative rulings of
general application set out in Article X:1 of the GATT 1994 and, on the other hand, the
administration of these legal instruments. The Appellate Body reasoned that, as
Article X:3(a) establishes disciplines on the administration of the legal instruments of
the kind described in Article X:1, claims concerning the substantive content of these
Article X:1 legal instruments fall outside the scope of Article X:3(a).
687

682 Appellate Body Report, US - Shrimp, para. 183.
683 Appellate Body Report, US - Oil Country Tubular Goods Sunset Reviews, para. 217.
684 See above, paras. 7.451-7.457.
685 Appellate Body Report, EC - Bananas III, para. 200.
686 Appellate Body Report, EC - Poultry, para. 115. (footnote omitted)
687 Appellate Body Report, EC - Selected Customs Matters, para. 199.

7.494. Lastly, it should be pointed out that the Panel in US – Stainless Steel (Korea) stated that
Article X:3(a) of the GATT 1994 does not serve to test the consistency of a measure with
a Member's domestic law or practice:
[T]he WTO dispute settlement system "serves to preserve the rights and obligations
of Members under the covered agreements, and to clarify the existing provisions
of those agreements".
688 It was not in our view intended to function as a mechanism
to test the consistency of a Member's particular decisions or rulings with the Member's
own domestic law and practice; that is a function reserved for each Member's
domestic judicial system689, and a function WTO panels would be particularly ill-suited
to perform.690
7.7.4.5 The requirement of reasonableness
7.495. In Argentina – Hides and Leather, the Panel explained that the requirements of uniformity,
impartiality and reasonableness are legally independent:
As a preliminary matter, we note that Article X:3(a) provides that the administration
of Customs laws, regulations and rules must be uniform, impartial and reasonable.
Normally, we would address these three considerations in the order they appear in the
treaty text. However, we note that in this instance the three requirements are legally
independent in that Customs laws regulations and rules must satisfy each of the
three standards. This gives us some freedom in the manner of discussing them.
691
7.496. Following the withdrawal of the claim regarding the method of rounding, the present case
only concerns the claims raised by Guatemala with respect to the reasonableness requirement,
so this will be the only requirement to be examined by the Panel.
7.497. With regard to the reasonableness requirement, in Dominican Republic – Import and Sale
of Cigarettes, the Panel explained the following:
Read in the context of Article X, which is entitled "Publication and Administration
of Trade Regulations", the ordinary meanin g of the word "reasonable", refers to
notions such as "in accordance with reason", "not irrational or absurd",
"proportionate", "having sound judgement", "sensible", "not asking for too much",
"within the limits of reason, not greatly less or more than might be thought likely or
appropriate", "articulate".
692, 693 (emphasis original)
7.498. In China – Raw Materials, the Panel added the following:
Applying this definition to the facts, reason able administration could be considered to
be administration that is equitable, appropriate for the circumstances and based on
rationality.
694
7.499. Lastly, in US – COOL , the Panel explained that the analysis of a claim of violation of the
reasonableness requirement entails a case-by-case examination of the facts:
In our view, whether an act of administration can be considered reasonable within the
meaning of Article X:3(a) entails a consideration of factual circumstances specific to
each case. This is confirmed by previous disputes where the requirement of
reasonable administration was understood as requiring the examination of the

688 (Footnote original) DSU Article 3.2.
689 (Footnote original) It is for this reason that both Article X:3(b) of GATT 1994 and Article 13
of the Anti-Dumping Agreement require Members to maintain appropriate judicial, arbitral or administrative
tribunals or procedures.
690 Panel Report, US - Stainless Steel (Korea), para. 6.50.
691 Panel Report, Argentina - Hides and Leather, para. 11.86.
692 (Footnote original) The New Shorter Oxford English Dictionary, supra note 52, Vol. II, p. 2,496.
693 Panel Report, Dominican Republic - Import and Sale of Cigarettes, para. 7.385.
694 Panel Report, China - Raw Materials, para. 7.696. (The Appellate Body declared part of the Panel's
analysis superfluous and having no legal effect for procedural matters).

features of the administrative act at issue in the light of its objective, cause or the
rationale behind it.695, 696
7.7.4.6 Conclusion
7.500. The Panel has already determined that the duties resulting from the PRS are inconsistent
with Peru's obligations under Article 4.2 of the Agreement on Agriculture and the second sentence
of Article II:1(b) of the GATT 1994.
697 As already mentioned, panels are not obliged to address all
the legal claims made by the parties and only have to consider those claims for which a finding is
necessary in order to enable the DSB to make sufficiently precise recommendations and rulings to
allow for prompt compliance by a Member with those recommendations and rulings in order to
ensure effective resolution of disputes to the benefit of all Members.
7.501. Having found that the duties resulting from the PRS are inconsistent with Peru's
substantive obligations under the WTO agreements, it is not necessary for the Panel also to
address the question of whether, in certain respects, Peru administers the system in a reasonable
manner, as required by Article X:3(a) of the GATT 1994. Any finding on the latter aspect could not
modify the previous conclusions and would not help the DSB in making sufficiently precise
recommendations to allow for prompt compliance by Peru. The Panel therefore expresses no
opinion on the claims made by Guatemala relating to Article X:3(a) of the GATT 1994 as regards
unreasonable administration of the challenged measure.
7.8 Alternative claim under the Customs Valuation Agreement
7.502. Guatemala puts forward an alternative cl aim under the Customs Valuation Agreement, but
only in the event that the Panel finds that the duties resulting from the PRS are ordinary customs
duties within the meaning of Article II of the GA TT 1994. If this were to be the case, Guatemala
contends that this system leads to customs valuation of certain agricultural products on the basis
of a minimum, arbitrary or fictitious price scheme, which is inconsistent with the obligations in
Articles 1, 2, 3, 5, 6 and 7 of the Customs Valu ation Agreement, more particularly paragraphs (f)
and (g) of Article 7.2 thereof.
698
7.503. Inasmuch as the Panel has found that the duties resulting from the PRS are not ordinary
customs duties, Guatemala's proviso in relation to examination of its claim under the Customs
Valuation Agreement has not been met. Accordingly, it is not appropriate for the Panel to express
any opinion on Guatemala's alternative claim under the Customs Valuation Agreement.
7.504. The Panel, nevertheless, notes that in the section 7.3 on the factual description of this
dispute, there are sufficient factual elements so that if the criterion for making the alternative
claim is met in any appeal, the Appellate Body may complete the analysis of Guatemala's
alternative claim.

695 (Footnote original) In Argentina - Hides and Leather, for example, the Panel considered access to
confidential information by a competitor in the market to be a relevant factor in determining reasonableness
of the administrative action in that dispute (para. 11.86). We further recall the Appellate Body's analysis in
Brazil - Retreaded Tyres that "the analysis of whether the application of a measure results in arbitrary or
unjustifiable discrimination should focus on the cause of the discrimination, or the rationale put forward to
explain its existence" (Appellate Body Report, Brazil - Retreaded Tyres, para. 226; Panel Report,
Thailand - Cigarettes, para. 7.291). In Thailand - Cigarettes (Philippines), the Philippines claimed that the
appointment of dual function officials as directors of a company under administrative proceedings constituted
unreasonable administration because the officials were in a position where they could gather and reveal
confidential information on Philippines industries' direct competitors. The Panel found that Thailand did not act
inconsistently with Article X:3(a). However, the overall delays in the administrative proceedings shown
throughout the course of the review process of customs valuation were considered by the panel
"not appropriate or proportionate" considered against the nature of the circumstances concerned, and
therefore, the administration was considered to be "unreasonable" (Panel Report, Thailand - Cigarettes,
para. 7.969). In Dominican Republic - Import and Sale of Cigarettes, the Panel found that the
Dominican Republic had administered the provisions governing the Selective Consumption Tax in a manner
that was "unreasonable" and therefore inconsistent with Article X:3(a) of GATT 1994 (paras. 7.365-7.394).
697 See above, paras. 7.371-7.372 and 7.431-7.432.
698 Guatemala's first written submission, paras. 4.222-4.229; second written submission,
paras. 8.1-8.18.

7.9 The question of whether, by means of the FTA, the parties modified their WTO rights
between themselves
7.9.1 Introduction
7.505. This Panel has found that the duties resulting from the PRS are inconsistent with
Article 4.2 of the Agreement on Agriculture, with the second sentence of Article II:1(b) of the
GATT 1994 and with the Understanding on Article II :1(b) of the GATT 1994. In the light of these
findings, the condition for the Panel to address Peru's defence that, by means of the FTA, the
parties modified any provision of the WTO agreements which prohibits the PRS has been met.
699
7.9.2 Main arguments of the parties
7.9.2.1 Peru
7.506. Peru states that, as a result of the mutual concessions that were negotiated, Guatemala
agreed in paragraph 9 of Annex 2.3 to the FTA that Peru could maintain its PRS; Guatemala also
gave an undertaking that, in the event of any inconsistency between the FTA and the
WTO Agreement, the provisions of the FTA would prevail.
700
7.507. According to Peru, if the Panel were to conclude that the PRS is inconsistent with the
WTO agreements, it would not be possible for Peru to maintain the PRS, and this would create
a conflict with what was agreed by the parties in the FTA.
701 Peru argues that, inasmuch as the
parties agreed that the FTA would prevail in such situations, this would result in the modification,
as between the parties, of their WTO rights and obligations, to the extent that such rights and
obligations might be inconsistent with the provisions of the FTA.
702
7.508. Peru refers to Article 41 of the Vienna Convention 703 in support of its argument that
two States parties to a multilateral treaty may modify their obligations as between themselves. 704
Peru maintains that the Appellate Body has recognized that Members may waive their rights in the
WTO framework or modify them, expressly or tacitly.
705 Peru states that Article XXIV of the
GATT 1994 demonstrates that Members may modify their WTO rights by means of regional trade
agreements.706 Peru asserts that a modification of rights and obligations of this kind, which would

699 Peru's second written submission, para. 2.63.
700 Peru's first written submission, paras. 3.74, 3.82, 4.3 and 4.29; second written submission,
paras. 2.17, 2.19-2.22 and 2.52; opening statement at the first meeting of the Panel, paras. 8, 18, 24-25
and 27; opening statement at the second meeting of the Panel, paras. 5, 8 and 46.
701 Peru's second written submission, paras. 2.63-2.65; opening statement at the second meeting
of the Panel, para. 58.
702 Peru's first written submission, paras. 4.22 and 4.26; second written submission, paras. 2.3, 2.17
and 2.63; opening statement at the first meeting of the Panel, para. 27; opening statement at the
second meeting of the Panel, paras. 57-58; response to Panel question No. 37, para. 82; response to Panel
703 Article 41 of the Vienna Convention provides as follows:
Agreements to modify multilateral treaties between certain of the parties only
1. Two or more of the parties to a multilateral treaty may conclude an agreement to modify
the treaty as between themselves alone if:
(a) the possibility of such a modification is provided for by the treaty; or
(b) the modification in question is not prohibited by the treaty and:
(i) does not affect the enjoyment by the other parties of their rights under the treaty or
the performance of their obligations;
(ii) does not relate to a provision, derogation from which is incompatible with the effective
execution of the object and purpose of the treaty as a whole.
2. Unless in a case falling under paragraph 1(a) the treaty otherwise provides, the parties
in question shall notify the other parties of their intention to conclude the agreement and of
the modification to the treaty for which it provides.
705 Peru's first written submission, paras. 4.23-4.25 (citing Appellate Body Report, EC - Bananas III
(Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US), para. 217); second written submission,
para. 2.60; opening statement at the first meeting of the Panel, para. 27; response to Panel question No. 37,
paras. 80-81.
706 Peru's first written submission, para. 4.28 (citing Appellate Panel Report Turkey - Textiles,
para. 9.103); opening statement at the first meeting of the Panel, paras. 26-27; opening statement at

not affect the other WTO Members, is different from the multilateral amendment procedure
provided for in Article X of the WTO Agreement.707
7.509. In other words, Peru suggests that, even if Guatemala considered that it has a WTO right
to challenge the application of the PRS, that right was concretely and unequivocally modified by
the terms agreed in the FTA, to the effect that Peru could maintain the PRS and that the provisions
of the FTA would take precedence over those of the WTO.708
7.510. In Peru's opinion, it would be neither useful nor correct for the Panel to analyse
Guatemala's claims as if the FTA did not exist. 709 Peru states that, if the Panel were to accept
Guatemala's claims, it would be encouraging WTO Members to have recourse to the DSB in order
to repudiate bilateral agreements signed und er Article XXIV of the GATT 1994 and alter the
balance achieved in the framework of such agreements.
710 Peru therefore requests that the Panel
conclude that, by virtue of what was agreed by the parties in the FTA: (a) Guatemala may not
engage in a procedure against Peru; or alternatively (b) the parties modified their rights and
obligations under the WTO agreements, to the extent that such rights and obligations might be
incompatible with the provisions of the FTA.
711
7.9.2.2 Guatemala
7.511. Guatemala asserts that, regardless of whether or not the FTA is in force, it has
no relevance to this dispute.
712 According to Guatemala, Peru proposes that the Panel examine
whether there is an inconsistency between the FT A and the WTO Agreement and that it determine
whether, through the FTA, Guatemala modified its WTO rights. 713 In Guatemala's opinion, such
an assessment would require the Panel to act outside its terms of reference, since panels cannot
entertain disputes not related to the WTO covered agreements.714
7.512. Guatemala contends that the rights and obligations contained in the WTO agreements can
only be modified through the procedures estab lished in Article X of the WTO Agreement and not
through a bilateral treaty. 715 Nor does Guatemala accept that the Parties can waive their
WTO rights through an FTA, since such a waiver could only be made in the legal framework
of the WTO, either in the context of a disput e settlement procedure, by means of a mutually
agreed solution, or under multilaterally agreed decisions (such as the Ministerial Decision
of 7 December 2013 on "Public stockholding for food security purposes").716
7.513. Guatemala argues that, even if it were accepted that the free trade agreement can be a
legal vehicle for waiving WTO rights, Peru would have had to demonstrate that Guatemala, in the

the second meeting of the Panel, paras. 9-10; response to Panel question No. 37, para. 82; response to
Panel question No. 97, paras. 23-24.
707 Peru's second written submission, paras. 2.56 and 2.61; opening statement at the second meeting
of the Panel, para. 60.
708 Peru's first written submission, para. 4.26; opening statement at the first meeting of the Panel,
paras. 25 and 28; response to Panel question No. 38, paras. 83-86.
709 Peru's first written submission, paras. 4.27 and 4.29.
710 Peru's second written submission, paras. 2.66-2.68; opening statement at the first meeting
of the Panel, para. 10; opening statement at the second meeting of the Panel, para. 12.
711 Peru's first written submission, para. 4.30.
712 Guatemala's response to Panel question No. 21, paras. 33 and 39; response to Panel question
No. 22, para. 40.
713 Guatemala's second written submission, paras. 9.29-9.30; response to Panel question No. 21,
para. 34.
714 Guatemala's second written submission, paras. 9.22-9.31 (citing Panel Report, Mexico - Taxes on
Soft Drinks, paras. 56 and 78); response to Panel question No. 21, paras. 35 and 39.
715 Guatemala's second written submission, para. 9.39-9.40; response to Panel question No. 21,
para. 35.
716 Guatemala's second written submission, paras. 9.8 and 9.16-9.18 (citing Appellate Body Report,
EC - Bananas III (Article 21.5 - Ecuador II) / EC - Bananas III (Article 21.5 - US), para. 228);
opening statement at the first meeting of the Panel, para. 82; response to Panel question No. 21,
paras. 36-37; response to Panel question No. 91, para. 19; comments on Peru's response to Panel question
No. 97, para. 27.

FTA, waived its right to challenge the PRS before the WTO. 717 In Guatemala's opinion, no provision
of the FTA contains such a statement of waiver and, on the contrary, Article 1.3.1 of the FTA
confirms the WTO rights and obligations of both Parties; moreover, by means of Article 15.3 of the
FTA, the Parties reserved the right to have recourse to the WTO dispute settlement mechanism.718
7.514. Guatemala asserts that, although paragraph 9 of Annex 2.3 to the FTA grants Peru
the authority to maintain its PRS in respect of certain products, this does not represent
a recognition that the PRS is WTO-consistent, nor does it exempt Peru from fulfilment of its
obligations under the FTA itself and under the WTO agreements, nor again can it be read as
an implicit or explicit relinquishment of the right to bring a case in accordance with the DSU.
719
Guatemala notes that the provisions of the FTA, read in conjunction and in their proper context,
indicate that Peru has the authority to maintain its PRS in respect of a limited number of products,
as long as, at the same time, it complies with its obligations under the WTO agreements, which
does not prevent Guatemala from exercising its WTO rights.
720
7.515. With respect to the possible inconsistency between the FTA and WTO rules, Guatemala
affirms that in public international law there is a presumption against conflict. 721 In this
connection, Guatemala maintains that, in this case, there are no mutually exclusive obligations,
but only the exercise of a right under the FTA and compliance with an obligation under the
WTO agreements, for which reason Peru could comply with its obligations under both instruments
(the FTA and the WTO agreements).
722
7.516. Guatemala also claims that Article XXIV of the GATT 1994 allows an exception to fulfilment
of the most-favoured-nation treatment obligatio n in the context of a free trade agreement.
Although this would enable the parties to grant each other greater rights, as between themselves,
than under WTO rules, the free trade agreement co uld not modify the rights and obligations that
continue to be vested in the Parties under the multilateral legal framework.723
7.517. Finally, Guatemala draws attention to the danger of WTO Members being permitted to
waive their right to challenge measures through free trade agreements. In Guatemala's opinion,
this would open the way for political pressures and negotiating power imbalances to impair the
rights of smaller and weaker parties.724
7.9.3 Main arguments of the third parties
7.9.3.1 Brazil
7.518. In Brazil's opinion, if the FTA were in force, it could be relevant to determine Peru's and
Guatemala's rights and obligations within the ambit of their bilateral relations and with regard to
their bilateral commitments. However, as it has not entered into force, the FTA does not appear to
be relevant as a rule of international law applicable between the parties, or to determine the law
applicable in this dispute, which can be scrutinized in accordance with the covered agreements.
725

717 Guatemala's second written submission, para. 9.14; opening statement at the first meeting of
the Panel, paras. 81, 83 and 84 (citing Appellate Body Report, EC - Bananas III (Article 21.5 - Ecuador II) /
EC - Bananas III (Article 21.5 - US), para. 217); response to Panel question No. 21, para. 36.
718 Guatemala's second written submission, para. 9.13; opening statement at the first meeting of
the Panel, para. 83; opening statement at the second meeting of the Panel, para. 49; response to Panel
question No. 21, para. 36.
719 Guatemala's second written submission, paras. 9.9-9.10 and 9.42; opening statement at
the first meeting of the Panel, para. 84; response to Panel question No. 25, paras. 49-51.
720 Guatemala's second written submission, paras. 9.11-9.12 and 9.44; opening statement at
the first meeting of the Panel, paras. 84-85; response to Panel question No. 25, paras. 50-51.
721 Guatemala's second written submission, paras. 9.47-9.48 (citing Panel Report, Indonesia - Autos,
para. 14.28 and fn. 649), response to Panel question No. 25, paras. 54-55.
722 Guatemala's second written submission, paras. 9.49-9.51; response to Panel question No. 25,
para. 56.
723 Guatemala's opening statement at the second meeting of the Panel, paras. 47-48
(citing Appellate Body Report, Turkey - Textiles, para. 45 and fn. 13); comments on Peru's response to
Panel question No. 97, para. 25.
724 Guatemala's second written submission, paras. 9.19 and 9.20; response to Panel question No. 21,
para. 38; comments on Peru's response to Panel question No. 97, paras. 28-29.
725 Brazil's response to Panel question No. 1, p. 1.

7.9.3.2 United States
7.519. The United States considers that the FTA is not relevant to resolving this dispute. 726
T h e U n i t e d S t a t e s a s s e r t s t h a t , i f P e r u i s a s k i n g t h e P a n e l t o m a k e f i n d i n g s w i t h r e g a r d t o
obligations outside the covered agreements or to refrain from making findings within its terms
of reference, such a request should be rejected.
727 The United States asserts that there is no basis
in the DSU for panels or the Appellate Body to re solve disputes unrelated to the WTO or to apply
rules from other agreements in order to examine compliance with obligations contained in
the WTO agreements.728 Nor would there be any basis in the DSU for the Panel to decline to make
findings on claims that fall within its terms of reference.729
7.520. The United States also asserts that the rights contained in the WTO agreements can only
be modified by means of waivers, multilateral interpretations or amendments, in accordance with
the provisions of the agreements themselves. 730 With regard to the possibility of waiving the right
to have recourse to the WTO dispute settlement mechanism, the United States considers that
a bilateral agreement lacks the particular status that mutually agreed solutions would have under
the DSU.
731
7.521. Finally, according to the United States, the fact that the FTA has not entered into force
would be an additional reason for rejecting Peru's arguments, as there is no legal basis for Peru's
assertion that provisions have been amended or rights waived under an existing multilateral
agreement.732
7.9.3.3 European Union
7.522. The European Union asserts that the possibility for Members to waive their rights under
the WTO agreements has been recognized by the Appellate Body.
733 In its opinion, when
interpreting the WTO agreements, it may be relevant to consider both subsequent agreements
between the parties regarding the application of the agreements and any relevant rule of
international law applicable in the relations between the parties (without this implying that the FTA
should be applied instead of, or in precedence to, the WTO agreements).
734 Consequently, the
possibility that a Member, through a free trade agreement, may waive its rights in respect
of WTO dispute settlement should not be dismissed a priori, and the analysis should be made on
a case by case basis.735
7.523. The European Union considers that the analysis should begin with an assessment as to
whether or not a Member has made a specific commitment to refrain from challenging a certain
measure.736 In the present case, an analysis would be required as to whether the FTA contains
a clear commitment on the part of Guatemala to refrain from challenging the PRS in the WTO.737
7.524. The European Union considers that there is an apparent contradiction between
Articles 1.3.1 and 1.3.2 of the FTA, to the extent that the first provision states that the parties

726 United States' third-party statement, para. 19; response to Panel question No. 1, para. 1.
727 United States' third-party written submission, paras. 36-43; third-party statement, para. 19;
response to Panel question No. 1, para. 1.
728 United States' third-party written submission, paras. 41-42 and 51 and fn. 62, (citing Appellate Body
Reports, Mexico - Taxes on Soft Drinks, para. 56; Brazil - Retreaded Tyres, para. 228); third-party statement,
para. 19.
729 United States' third-party written submission, paras. 41-43 (citing Appellate Body Report,
Mexico - Taxes on Soft Drinks, para. 53); response to Panel question No. 1, para. 1.
730 United States' third-party written submission, para. 49; response to Panel question No. 1, para. 2.
731 United States' third-party written submission, para. 50; third-party statement, para. 20.
732 United States' response to Panel question No. 1, para. 4.
733 European Union's third-party written submission, para. 17 (citing Appellate Body Report,
EC - Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 - US), para. 217).
734 European Union's third-party written submission, para. 17 (citing Panel Report, EC – Bananas III
(Article 21.5 - Ecuador II), para. 7.58; response to Panel question No. 1, para. 3 (citing Appellate Body Report,
US - Gasoline, p. 17).
735 European Union's response to Panel question No. 1, para. 2.
736 European Union's third-party written submission, para. 17 (citing Appellate Body Report,
EC - Bananas III (Article 21.5 - Ecuador II) / EC – Bananas III (Article 21.5 – US), para. 228).
737 European Union's third-party written submission, para. 18; response to Panel question No. 1,
para. 1.

consider their rights and obligations to be in conformity with their WTO obligations, while the
second states that, in the event of inconsistency, the FTA rules shall prevail. 738
The European Union also observes that Article 15.3 of the FTA is confined to permitting
the complaining party to choose the forum in which it wishes to bring its case and expressly
mentions the WTO dispute settlement mechanism as one of the possible forums to which
the parties may have recourse.
739
7.9.4 Assessment by the Panel
7.525. Peru affirms that, if the Panel finds that the PRS is inconsistent with its obligations under
the WTO agreements, there would be an inconsistency between the FTA (which allows Peru
to maintain the PRS) and the WTO agreements (w hich prohibit the PRS). In the light of such
inconsistency, Peru states that it should be understood that, the FTA has modified, as between
the parties, those provisions of the WTO agreements which prohibit Peru from maintaining its PRS.
Peru therefore claims that Guatemala waived the rights which it might have had under the
WTO Agreement in relation to the PRS.
7.526. Peru's argument that the relevant clauses in the FTA – i.e. paragraph 9 of Annex 2.3 and
Article 1.3 – modified certain obligations between the parties under the WTO agreements
presupposes that those provisions in the FTA are legally binding on Guatemala and Peru. For this
to be the case, the FTA would have had to enter into force. It is, however, an undisputed fact that
the FTA has not yet entered into force.
7.527. As discussed above, a treaty signed by the parties but which has not yet entered into force
has only limited legal effects. Inasmuch as the FTA has not entered into force, its relevant
provisions are not currently legally binding on the parties.
740
7.528. In the light of this fact, it is not necessa ry for this Panel to express an opinion on whether
the parties may, through the FTA, modify between themselves their rights and obligations under
the covered agreements; or whether there is a co nflict of rules between the FTA and the covered
agreements and the consequences such a conflict would have.
7.10 Special and differential treatment
7.529. Pursuant to Article 12.11 of the DSU:
Where one or more of the parties is a deve loping country Member, the panel's report
shall explicitly indicate the form in which account has been taken of relevant
provisions on differential and more-favou rable treatment for developing country
Members that form part of the covered agreements which have been raised by
the developing country Member in the course of the dispute settlement procedures.
7.530. Moreover, Article 12.10 of the DSU provides as follows:
[I]n examining a complaint against a developing country Member, the panel shall
accord sufficient time for the developing country Member to prepare and present its
argumentation.
7.531. In the present proceedings, none of the parties, neither the complainant nor the
defendant, has invoked any provision of the WTO agreements in respect of special and differential
treatment for developing countries. In any event, the Panel has taken into account the status
of the parties as developing country Members, pa rticularly when preparing the timetable for the
proceedings after having heard their respective views. There are no other provisions on differential
and more favourable treatment for developing country Members that should be the subject
of special consideration by the Panel.

738 European Unions' third-party written submission, para. 18.
739 Ibid. para. 19.
740 See above, para. 7.88.

8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set out in this report, the Panel concludes as follows:
a. The Panel finds no evidence that Guatem ala brought these proceedings in a manner
contrary to good faith; there is therefore no reason for the Panel to refrain from
assessing the claims put forward by Guatemala;
b. the duties resulting from the PRS constitute variable import levies or, at the least, share
sufficient characteristics with variable import levies to be considered a border measure
similar to a variable import levy, within the meaning of footnote 1 to the Agreement
on Agriculture;
c. the duties resulting from the PRS do not constitute minimum import prices and do not
share sufficient characteristics with minimum import prices to be considered a border
measure similar to a minimum import price, within the meaning of footnote 1 to the
Agreement on Agriculture;
d. by maintaining measures which constitute a variable import levy or, at the least, are
border measures similar to a variable import levy, and are thus measures of the kind
which have been required to be converted into ordinary customs duties, Peru is acting
inconsistently with its obligations under Article 4.2 of the Agreement on Agriculture;
e. moreover, the additional duties resulting from the PRS constitute "other duties or
charges … imposed on or in connection with the importation", within the meaning of the
second sentence of Article II:1(b) of the GATT 1994. In applying measures which
constitute "other duties or charges", without having recorded them in its
Schedule of Concessions, Peru's actions are inconsistent with its obligations under the
second sentence of Article II:1(b) of the GATT 1994; and
f. inasmuch as the Free Trade Agreement signed by Peru and Guatemala in
December 2011 has not entered into force, it is not necessary for this Panel to rule on
whether the parties may, by means of the FTA, modify as between themselves their
rights and obligations under the covered agreements.
8.2. In the light of the foregoing conclusions, th e Panel does not consider it necessary to rule on
Guatemala's claims that:
a. Peru's actions are inconsistent with its obligations under Article X:1 of the GATT 1994
because it failed to publish certain elements of the measure which Guatemala considers
essential; and
b. Peru's actions are inconsistent with its obligations under Article X:3(a) of the GATT 1994
because it administers the measure in question in a manner that is not reasonable, given
that it fails to observe the requirements of its own legislation.
8.3. The Panel does not consider it relevant to address Guatemala's claim that Peru acted
inconsistently with its obligations under Articles 1, 2, 3, 5, 6 and 7 of the Customs Valuation
Agreement inasmuch as this claim was made by Gu atemala as an alternative, and only in case
the Panel were to find that the duties resulting from the PRS are ordinary customs duties.
8.4. Pursuant to Article 3.8 of the DSU, in cases where there is an infringement of obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case
of nullification or impairment of benefits accruing under the Agreement. The Panel therefore
concludes that, to the extent that Peru has acted inconsistently with the provisions of the
Agreement on Agriculture and the GATT 1994, it has nullified or impaired benefits accruing to
Guatemala under those agreements.
8.5. Guatemala has requested the Panel, in exerci se of its discretionary powers afforded by the
second sentence of Article 19.1 of the DSU, to suggest that Peru "completely dismantle the
measure in question". In Guatemala's opinion, this would imply the elimination of the additional

variable duty and the underlying calculation mechanism, i.e. the PRS. 741 According to Guatemala,
this would be the only way of enabling "Peru properly to bring its measure into conformity with
WTO rules in view of the gravity, nature and manifest character of the legal violations in the
measure in question".
742
8.6. The Appellate Body has indicated that the power vested in panels and the Appellate Body,
under Article 19.1 of the DSU, to suggest to Members ways in which they could implement
recommendations and rulings is of a discretionary nature. 743 According to the provisions
of Article 21.3 of the DSU, it is normally the Member to which the recommendations are addressed
which has to decide on how to implement them. 744 Exceptionally, panels have accepted a request
by the complaining party to suggest to the respondent Member the way in which it could comply
with panel recommendations.
745
8.7. The Panel recalls that, in its request for th e establishment of a panel, Guatemala identified
the measure at issue as "the additional duty impo sed by Peru on imports of certain agricultural
products". Guatemala added that the additi onal duty is determined using the PRS. 746
Bearing in mind that Guatemala challenged the duties resulting from the PRS and not the system
as such, the Panel does not consider it appropriate to suggest that the proper way of implementing
its recommendation is through the elimination of the underlying mechanism for calculating
the additional duties. As part of the measures adopted with a view to complying with the Panel's
rulings and recommendations, Peru may decide to dismantle the PRS completely. It is not,
however, appropriate for the Panel to make a suggestion to that effect, which would go beyond the
measure as defined by Guatemala. The Panel ther efore rejects Guatemala's request to suggest to
Peru that the way in which its recommendation should be implemented is through the elimination
of the PRS.
8.8. Pursuant to Article 19.1 of the DSU, and having found that Peru has acted inconsistently with
provisions of the Agreement on Agriculture an d the GATT 1994, the Panel recommends that Peru
bring the challenged measure – namely, the duties resulting from the PRS – into conformity with
its obligations under those agreements.
Goods Sunset Review (Article 21.5 - Argentina), para. 182.
744 Appellate Body Report, US - Oil Country Tubular Goods Sunset Review (Article 21.5 - Argentina),
paras. 173 and 184; Panel Report, EC - Fasteners (China), para. 8.8 (citing Panel Report, US - Hot-Rolled
Steel, para. 8.13); Panel Report, US - Steel Plate, para. 8.8; Panel Report, EC and certain member
States - Large Civil Aircraft, para. 8.8; Panel Report, EU - Footwear (China), para. 8.12.
745 In the following cases, the panels accepted the complaining party's request to suggest a way of
implementing its recommendations: US - Underwear, para. 8.3 (with regard to a specific transitional safeguard
measure under Article 6 of the Agreement on Textiles and Clothing); EC - Bananas III (Article 21.5 - Ecuador),
paras. 6.155-6.159 (with regard to the European Communities' banana import regime); Guatemala - Cement I,
para. 8.6 (with regard to an anti-dumping measure); Guatemala - Cement II, paras. 9.6-9.7 (with regard to
an anti-dumping measure); US - Cotton Yarn, para. 8.5 (with regard to a specific transitional safeguard
measure under the Agreement on Textiles and Clothing); US – Offset Act (Byrd Amendment), para. 8.6
(with regard to a law on anti-dumping and countervailing duties); Argentina - Poultry Anti-Dumping Duties,
para. 8.7 (with regard to an anti-dumping measure); and Mexico - Steel Pipes and Tubes, paras. 8.12-8.13
(with regard to an anti-dumping measure). In the following reports, the panels made suggestions for taking
into consideration the interests of developing country Members involved in the dispute: India - Quantitative
Restrictions, paras. 7.5-7.6; EC - Export Subsidies on Sugar (Australia) / EC - Export Subsidies on Sugar
(Brazil) / EC - Export Subsidies on Sugar (Thailand), para. 8.7. Lastly, in the Reports on EC - Trademarks and
Geographical Indications (US) / EC - Trademarks and Geographical Indications (Australia), para. 8.5,
the Panel made a suggestion on the way in which the European Communities might implement its
recommendations. In many other disputes, however, the panels refrained from making suggestions on
how to implement their recommendations.
746 See Request for the establishment of a Panel by Guatemala, document WT/DS457/2 (14 June 2013).