URUGUAY – TAX TREATMENT ON CERTAIN PRODUCTS
Document: Notification of Mutually Agreed Solution
Date: 14 January 2004
Document codes: WT/DS261/7
Complainant: Chile
Respondent: Uruguay
Third parties: EU, Mexico, U.S.
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. I, III  GATT 1994

URUGUAY – TAX TREATMENT ON CERTAIN PRODUCTS

Notification of Mutually Agreed Solution

 The following communication, dated 8 January 2004, from the delegation of Chile and the
delegation of Uruguay to the Chairman of the Dis pute Settlement Body, is circulated pursuant to
Article 3.6 of the DSU.

 The Panel on the dispute (DS261) was
established on 19 May 2003. The Panel was constitu ted on 4 July, but its work was suspended as
from 14 August at the joint request of the two litigants in order to seek a positive and bilateral solution
to the dispute.

 The Republic of Chile and the Eastern Republic of Uruguay wish to inform you that, on
16 December 2003, the Ministers of Foreign Affairs of the two countries signed an Agreement
between the Eastern Republic of Uruguay and th e Republic of Chile on Settlement of the WTO
Dispute "". A copy is attached.

 The Agreement is a mutually agreed solution under Article 3, paragraphs 5 and 6, of the
Understanding on Rules and Procedures Governing the Settlement of Disputes. Consequently, please
circulate the present notification, together with the attached Agreement to WTO Members.

 We avail ourselves of this opportunity to thank the Panel and the Secretariat for their
readiness and to reiterate the assurances of our highest consideration.

 (Signed) (Signed)
 Mathias Francke Schnarbach Carlos Pérez del Castillo
 Chargé d'affaires a.i. Ambassador
 Permanent Mission of Chile Permanent Representative of Uruguay
 to the WTO to the WTO

AGREEMENT
BETWEEN
THE EASTERN REPUBLIC OF URUGUAY
AND
THE REPUBLIC OF CHILE
ON SETTLEMENT OF THE WTO DISPUTE
""

 The Eastern Republic of Uruguay and the Republic of Chile agree to conclude the following
agreement under World Trade Organization rules in c onnection with the dispute initiated by Chile in
the Organization: "", dispute WT/DS261.

Article 1

 The Eastern Republic of Uruguay undertakes to en sure that the regime for the assessment and
payment of the Internal Specific Tax on cigarettes from the Republic of Chile shall be governed and
operated at all times wholly in accordance with the principles and obligations of Most-Favoured-
Nation and National Treatment stemming from its in ternational commitments, in particular, the
principles, rules and interpretative notes of Articles I and III of GATT 1994.

Article 2

 The undertaking entered into does not prevent the Eastern Republic of Uruguay from
modifying the present regime of assessment and pa yment, provided the modification is in keeping
with the above-mentioned Most-Favoured-Nation and National Treatment principles and obligations.

Article 3

 This Agreement shall in no way prejudge the ri ght of the Republic of Chile to reject, rebut or
challenge in future the Internal Specific Tax regime of the Eastern Republic of Uruguay, regardless of
the product taxed or for any other reason(s). Nor shall it prejudge any allegations or issues of fact and
law mentioned in the Request for Consultations (WT/DS261/1) and for the Establishment of the Panel
(WT/DS261/4) submitted by the Republic of Chile to the World Trade Organization.

Article 4

 The Republic of Chile undertakes to immedi ately withdraw the Panel resulting from the
complaint submitted against the Eastern Republic of Uruguay to the World Trade Organization on
26 June on "The tax treatment on certain products (WT/DS261)", once the procedures for signing this
Agreement are finalized. This withdrawal shall ne cessarily be made by joint notification by both
countries to the Secretariat of the WTO Dispute Se ttlement Body and the Chairman of the Panel in
charge of the dispute, which notification shall sp ecify that both parties have reached a mutually
satisfactory solution and this Agreement is evidence thereof under the terms of this solution.

Article 5

 If the further period of suspension of the WTO Panel procedure agreed on 12 October 2003
ends before the procedure referred to in the preced ing paragraph is completed, the Republic of Chile
undertakes to grant a third and final suspension in connection with the Eastern Republic of Uruguay
up to a maximum period of 90 days.

Article 6

 This Agreement shall enter into force on the date of signature.

 Signed in Montevideo on the sixteenth day of December 2003 in two equally authentic and
valid copies.

 (Signature) (Signature)
 For the Eastern Republic For the Republic
 of Uruguay of Chile