CHILE – PRICE BAND SYSTEM AND SAFEGUARD MEASURES RELATING TO CERTAIN AGRICULTURAL PRODUCTS
Document: Recourse to Article 21.5 of the DSU by Argentina Request for the Establishment of a Panel
Date: 9 January 2006
Document codes: WT/DS207/18
Complainant: Argentina
Respondent: Chile
Third parties: Australia, Brazil, Canada, China, Colombia, Costa Rica, EU, Ecuador, El Salvador, Guatemala, Honduras, Japan, Nicaragua, Paraguay, Peru, Thailand, Venezuela, U.S.
Dispute stage: Implementation & Compliance
Agreements cited: Art. XIX:1, II  GATT 1994Art. 4  AgricultureArt. 2, 3, 4, 5, 6, 12  Safeguards

CHILE – PRICE BAND SYSTEM AND SAFEGUARD MEASURES
RELATING TO CERTAIN AGRICULTURAL PRODUCTS

Recourse to Article 21.5 of the DSU by Argentina

Request for the Establishment of a Panel

 The following communication, dated 29 Decemb er 2005, from the delegation of Argentina to
the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the DSU.

 On 23 October 2002, the Dispute Settlement Body (DSB) adopted the Report of the Appellate
Body
1 and the report of the Panel 2 as modified by the Appellate Body in the dispute Chile – Price
Band System and Safeguard Measures Relating to Cert ain Agricultural Products (Chile – Price Band
System).

 The Appellate Body upheld the Panel's finding that Chile's price band system (hereinafter
PBS) is a border measure that is similar to variable import levies and minimum import prices 3,
inconsistent with Article 4.2 of the Agreement on Agriculture.4

 In accordance with these reports, the DSB requ ested Chile to "bring its price band system, as
found ... to be inconsistent with the Agreement on Agriculture , into conformity with its obligations
under that Agreement."

 On 6 December 2002, Chile communicated a requ est to the DSB that the determination of a
reasonable period of time for implementation of th e recommendations and rulings of the DSB be the
subject of binding arbitration, in accordance with Article 21.3(c) of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (hereinafter the DSU).
5

 On 17 March 2003, the award of the arbitrator determined that the reasonable period of time
for Chile to implement the recommendations and ruli ngs of the DSB was 14 months from the date of
the adoption of the above-mentioned reports. This reasonable period of time expired on
23 December 2003.

 On 25 September 2003, Chile published in the Official Journal Law No. 19.897 establishing
rules on the importation of goods into the country , amending Article 12 of Law No. 18.525 and the
Customs Tariff, and on 4 October 2003 Chile published in the Official Journal Supreme

1 WT/DS207/AB/R.
2 WT/DS207/R.
3 WT/DS207/AB/R, paragraph 228(c)(i).
4 WT/DS207/AB/R, paragraph 288(c)(iii).
5 WT/DS207/9.

Decree No. 831 of the Ministry of Finance regulating the application of Article 12 of Law 18.525, as
substituted by Article 1 of Law 19.897.
6 This Decree regulates certain aspects of the PBS, the
modifications of which entered into force on 16 D ecember 2003 for the products at issue in this
dispute, with the exception of edible vegetable oils , which ceased to be subject to the PBS as of the
date of publication of Law No. 19.897.7

 Argentina strongly disagreed that these changes to the PBS, as regards wheat and wheat flour,
were in compliance with the recommendations and rulings of the DSB.8

 On 24 December 2003, Argentina and Chile concluded an Understanding regarding
procedures under Articles 21 and 22 of the DSU with r espect to this dispute, a copy of which is
attached hereto (WT/DS207/16 of 7 January 2004).

 On 19 May 2005, Argentina initiated proceedi ngs under Article 21.5 of the DSU, requesting
consultations with Chile.
9 These consultations were held in Geneva on 17 June 2004, but failed to
settle the dispute. Consequently, there is disag reement, under Article 21.5 of the DSU, as to the
existence or consistency with a covered agreem ent of the measures taken to comply with the
recommendations and rulings of the DSB.

 In Argentina's view, the cha nges to Chilean legislation on the PBS do not bring the measure
into conformity and are inconsistent with the covered agreements.

 Specifically, imports of wheat and wheat flour are still affected by the imposition of specific
duties and rebates whose application continues to be subject to floor and ceiling parameters, as well as
to the reference price mechanism and other components that do not alter the PBS in its essence.

 Thus, Chile continues to maintain a measure si milar to a variable import levy and a minimum
import price with respect to the products at issue as referred to in the findings contained in the
Appellate Body Report.
10

 Similarly, by maintaining the PBS unaltered in its essence and failing to exempt wheat and
wheat flour from the measure, Argentina considers th at Chile is imposing "other duties or charges"
within the meaning of Article II of the GATT 1994 that are not recorded in the relevant column of its
Schedule.

 In other words, Chile has not ensured th e conformity of its laws, regulations and
administrative procedures with its obligations as provided in the WTO Agreements.

6 WT/DS207/15 of 22 September 2003, WT/DS207/15/Add.1 of 28 October 2003, and
WT/DS207/15/Add.2 of 21 November 2003.
7 National Customs Service of the Government of Chile, Technical Undersecretariat and Department of
Classification, Circular No. 292 of 14 October 2003. See also Chile's statement to the DSB of
7 November 2003 (WT/DSB/M/157, paragraph 20).
8 See, for example, Argentina's statements to the DSB of 2 October, 7 November and 1 December 2003
(WT/DSB/M/156 paragraphs 17-19; WT/DSB/M/157 paragraph 19; and WTO/DSB/M/159 paragraph 19,
respectively); 23 January, 17 February, 19 March, 20 April, 19 May and 22 June 2004 (WT/DSB/M/163
paragraph 18; WT/DSB/M/165 and WT/DSB/M/166 paragraph 18; WT/DSB/M/167 paragraph 18;
WT/DSB/M/169 paragraph 20; WT/DSB/M/171 paragraph 32). The difference of opinion was also recorded in
document WT/DS/207/16.
9 WT/DS207/17 of 25 May 2004.
10 WT/DS207/AB/R, paragraph 288(c)(i).

 Consequently, Argentina considers that the measures adopted by Chile to implement the
recommendations and rulings of the DSB are inconsistent, inter alia, with the following provisions of
the covered agreements:

• Article 4.2 of the Agreement on Agriculture;

• the second sentence of Article II:1(b) of the GATT 1994;

and hence,

• Article XVI:4 of the Marrakesh Agreement Establishing the World Trade
Organization.

 Thus, in the light of the Understanding c oncluded between the two countries regarding
procedures under Articles 21 and 22 of the DSU (WT/DS207/16), and in accordance with Article 21.5
of the DSU, since "there is disagreement as to the existence or consistency with a covered agreement
of measures taken to comply with the recommendati ons and rulings" of the DSB, Argentina requests
that if possible, this matter be submitted to the or iginal panel with the standard terms of reference
provided for in Article 7 of the DSU.

 Argentina requests the Panel to find that Chile has not taken measures to comply fully with
the rulings and recommendations of the DSB of 23 October 2002. In particular, Argentina requests
the Panel to find that Chile's PBS is inconsistent with Article 4.2 of the Agreement on Agriculture and
the second sentence of Article II:1(b) of the GATT 1994, and hence, Article XVI:4 of the Marrakesh
Agreement Establishing the World Trade Organization.

ANNEX

7 January 2004

 (04-0040)
 Original: Spanish

Understanding Between Argentina and Chile Regarding Procedures

Under Articles 21 and 22 of the DSU

 The following communication, dated 24 December 2003, from the delegation of Argentina
and the delegation of Chile to the Chairman of the Dispute Settlement Body, is circulated at the
request of these delegations.

 The Argentine Republic and the Republic of Chile would like to inform the Dispute
Settlement Body that they have concluded th e attached "Understanding between the Argentine
Republic and the Republic of Chile Regarding Proc edures Under Articles 21 and 22 of the DSU with
Respect to the Dispute (WT/DS207)".

 (signed) (signed)
 Alicia de Hoz Alejandro Jara Puga
 Minister Ambassador
 Chargé d'Affaires a.i. Permanent Representative of Chile
Permanent Mission of the Argentine Republic to the WTO
 to the United Nations Office at Geneva

Understanding Between the Argentine Republic and the Republic of Chile Regarding
Procedures Under Articles 21 and 22 of the DSU with Respect to the Dispute
 (WTO/DS207)

 Considering that on 23 October 2002 the Disput e Settlement Body (DSB) adopted the Report
of the Appellate Body
11 and the Report of the Panel 12 as modified by the Appellate Body in the
dispute Chile – Price Band System and Safeguard Me asures Relating to Certain Agricultural
Products;

 Recalling that on 6 December 2002, Chile communicated a request to the DSB "that the
determination of a reasonable period be the subj ect of binding arbitration, in accordance with
Article 21.3(c) of the Understanding on Rul es and Procedures Governing the Settlement of
Disputes."
13

 Given that on 17 March 2003, the award of the arbitrator determined that the reasonable
period of time for Chile to implement the recomme ndations and rulings of the DSB was 14 months
from the date of adoption of the above-mentioned re ports, and that this reasonable period of time
expired on 23 December 2003;

 Considering that Argentina and Chile disagree, within the meaning of Article 21.5 of the
DSU, as to the consistency of the measures taken by Chile with the recommendations and rulings of
the DSB, and that it is therefore necessary to agree on the rules of procedure applicable to Article 21.5
and 22.6 of the DSU for the exclusive purposes of the dispute referred to as WT/DS207;

 The Argentine Republic and the Republic of Chile hereby agree as follows:

1. If it so deems appropriate, Argentina shall request consultations, which the parties shall agree
to hold within 15 days from the date of circulation of the request. Argentina and Chile agree that at
the end of such consultations, should either party so state, the parties shall jointly consider that the
consultations have failed to settle the dispute.
2. Consequently, as from the date of the said statement, Argentina shall be entitled to request the
establishment of a panel pursuant to Article 21.5 of the DSU.
3. At the first DSB meeting in which Argentina's request for the establishment of an Article 21.5
panel appears on the agenda, Chile shall accept the establishment of that panel.
4. Argentina and Chile shall cooperate to enable the Article 21.5 panel to circulate its report
within 90 days of the panel's establishment, ex cluding such time during which the panel's work may
be suspended pursuant to Article 12.12 of the DSU.
5. In case there is an appeal against the Article 21.5 panel report, Argentina and Chile shall
cooperate to enable the Appellate Body to circulate its report within no more than 90 days from the
date of notification of the appeal to the DSB.
6. With respect to the adoption of the panel a nd Appellate Body reports in the Article 21.5
proceedings, the time-frames of Articles 16 and 17.14 of the DSU shall apply.

11 WT/DS207/AB/R.
12 WT/DS207/R.
13 WT/DS207/9.

7. Argentina shall not request authorization to suspend concessions or other obligations under
Article 22 of the DSU until the adoption by the DSB of the Article 21.5 reports. If on the basis of the
results of these reports, Argentina should decide to initiate proceedings under Article 22 of the DSU,
Chile shall not assert that Argentina is precl uded from obtaining DSB authorization because its
request was made outside the 30-day time-period sp ecified in Article 22.6 of the DSU. This is
without prejudice to Chile's right to have the ma tter referred to arbitration in accordance with
Article 22.6.
8. If Argentina requests authorization to suspend concessions or other obligations pursuant to
Article 22.2 of the DSU, and if Chile objects under Ar ticle 22.6 of the DSU to the level of suspension
of concessions or other obligations and/or makes a claim under DSU Article 22.3, the matter shall be
referred to arbitration pursuant to DSU Article 22. 6. Argentina shall not pose any objection to the
referral of the matter to such arbitration.
9. If any of the original panellists were not availa ble either for the Article 21.5 panel or for the
Article 22.6 arbitration, or both, Argentina and Ch ile agree to request the Director-General of the
WTO to appoint, as soon as possible, a replacement for the proceeding or proceedings in which such a
replacement is required.
10. Argentina and Chile agree to continue to co operate in all matters referred to in this
Understanding and not to raise any procedural objections to any of the steps set out therein. If, during
the application of these procedures, Argentina and Chile consider that a procedural aspect has not
been properly addressed they shall endeavour to find a solution within the shor test time possible that
will not affect the other aspects and steps herein agreed.

Agreed in Geneva on 24 December 2003

 (signed) (signed)
 Alicia de Hoz Alejandro Jara Puga
 Minister Ambassador
 Chargé d'Affaires a.i. Permanent Representative of Chile
Permanent Mission of the Argentine Republic to the WTO
 to the United Nations Office at Geneva