COLOMBIA – MEASURES RELATING TO THE IMPORTATION OF TEXTILES, APPAREL AND FOOTWEAR RECOURSE TO ARTICLE 21.5 OF THE DSU BY COLOMBIA RECOURSE TO ARTICLE 21.5 OF THE DSU BY PANAMA REPORT OF THE PANELS
Document: REPORT OF THE PANELS
Date: 5 October 2018
Document codes: WT/DS461/RW
Complainant: Panama
Respondent: Colombia
Third parties: Ecuador, El Salvador, EU, China, Guatemala, Honduras, U.S., Philippines
Dispute stage: Implementation & Compliance
Agreements cited: Art. II:1(b), II:1(a), VIII:1, X:3(a)  GATT 1994

COLOMBIA – MEASURES RELATING TO THE IMPORTATION
OF TEXTILES, APPAREL AND FOOTWEAR
RECOURSE TO ARTICLE 21.5 OF THE DSU BY COLOMBIA
RECOURSE TO ARTICLE 21.5 OF THE DSU BY PANAMA
REPORT OF THE PANELS

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANELS
Contents Page
Annex A-1 Harmonized Working Procedures of the Panels 3
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of Colombia 9
Annex B-2 Integrated executive summary of Panama 25
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of Ecuador 52
Annex C-2 Integrated executive summary of the United States 54
Annex C-3 Integrated executive summary of Honduras 59
Annex C-4 Integrated executive summary of Japan 60
Annex C-5 Integrated executive summary of the European Union 63

CASES CITED IN THIS REPORT
Short title Full case title and citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of
Footwear, , adopted 12 January 2000, DSR 2000:I, p. 515
Argentina – Footwear (EC) Panel Report, Argentina – Safeguard Measures on Imports of Footwear,
, adopted 12 January 2000, as modified by Appellate Body
Report , DSR 2000:II, p. 575
Argentina – Hides and
Leather
Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and
the Import of Finished Leather, and Corr.1, adopted
16 February 2001, DSR 2001:V, p. 1779
Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, / / , adopted

Argentina – Import Measures Panel Reports, Argentina – Measures Affecting the Importation of Goods,
 and Add.1 / and Add.1 / and Add.1,
adopted 26 January 2015, as modified (WT/DS438/R) and upheld
(WT/DS444/R / WT/DS445/R) by Appellate Body Reports WT/DS438/AB/R /
WT/DS444/AB/R / WT/DS445/AB/R
Argentina – Textiles and
Apparel
Appellate Body Report, Argentina – Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted
22 April 1998, DSR 1998:III, p. 1003
Australia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of
Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010,
DSR 2010:V, p. 2175
Australia – Automotive
Leather II (Article 21.5 – US)
Panel Report, Australia – Subsidies Provided to Producers and Exporters of
Automotive Leather – Recourse to Article 21.5 of the DSU by the United
States, WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 2000:III,
p. 1189
Australia – Salmon
(Article 21.5 – Canada)
Panel Report, Australia – Measures Affecting Importation of Salmon –
Recourse to Article 21.5 of the DSU by Canada, WT/DS18/RW, adopted
20 March 2000, DSR 2000:IV, p. 2031
Brazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut,
WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167
Brazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres,
WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body
Report WT/DS332/AB/R, DSR 2007:V, p. 1649
Canada – Aircraft
(Article 21.5 – Brazil)
Appellate Body Report, Canada – Measures Affecting the Export of Civilian
Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW,
adopted 4 August 2000, DSR 2000:IX, p. 4299
Canada – Continued
Suspension
Appellate Body Report, Canada – Continued Suspension of Obligations in the
EC – Hormones Dispute, WT/DS321/AB/R, adopted 14 November 2008, DSR
2008:XIV, p. 5373
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, DSR 2002:VIII, p. 3045 (Corr.1, DSR 2006:XII, p. 5473)
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of
Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R /
WT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p. 3295
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw
Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and Corr.1 /
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, DSR 2012:VII, p. 3501
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry,
WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535
Colombia – Textiles Appellate Body Report, Colombia – Measures Relating to the Importation of
Textiles, Apparel and Footwear, WT/DS461/AB/R and Add.1, adopted
22 June 2016
Colombia – Textiles Panel Report, Colombia – Measures Relating to the Importation of Textiles,
Apparel and Footwear, WT/DS461/R and Add.1, adopted 22 June 2016, as
modified by Appellate Body Report WT/DS461/AB/R

Short title Full case title and citation
Colombia – Textiles
(Article 21.3(c))
Award of the Arbitrator, Colombia – Measures Relating to the Importation of
Textiles, Apparel and Footwear – Arbitration under Article 21.3(c) of the
DSU, WT/DS461/13, 15 November 2016
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, DSR 2005:XV, p. 7425
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, DSR 1997:II, p. 591
EC – Bananas III
(Article 21.5 – Ecuador II)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by
Ecuador, WT/DS27/RW2/ECU, adopted 11 December 2008, as modified by
Appellate Body Report WT/DS27/AB/RW2/ECU, DSR 2008:XVIII, p. 7329
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, DSR 2008:XVIII, p. 7165
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, DSR 2003:III,
p. 965
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of
Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted
27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Chicken Cuts (Brazil) Panel Report, European Communities – Customs Classification of Frozen
Boneless Chicken Cuts, Complaint by Brazil, WT/DS269/R, adopted
27 September 2005, as modified by Appellate Body Report WT/DS269/AB/R,
WT/DS286/AB/R, DSR 2005:XIX, p. 9295
EC – Chicken Cuts (Thailand) Panel Report, European Communities – Customs Classification of Frozen
Boneless Chicken Cuts, Complaint by Thailand, WT/DS286/R, adopted
27 September 2005, as modified by Appellate Body Report WT/DS269/AB/R,
WT/DS286/AB/R, DSR 2005:XX, p. 9721
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R,
adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,
DSR 1998:I, p. 135
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, DSR 2010:III,
p. 933
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted
23 July 1998, DSR 1998:V, p. 2031
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/AB/R /
WT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7
EC – Selected Customs
Matters
Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EU – PET (Pakistan) Panel Report, European Union – Countervailing Measures on Certain
Polyethylene Terephthalate from Pakistan, WT/DS486/R, Add.1 and Corr.1,
adopted 28 May 2018, as modified by Appellate Body Report

Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding
Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998,
DSR 1998:IX, p. 3767

Short title Full case title and citation
India – Autos Panel Report, India – Measures Affecting the Automotive Sector,
WT/DS146/R, WT/DS175/R, and Corr.1, adopted 5 April 2002, DSR 2002:V,
p. 1827
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, p. 9
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, DSR 1999:V, p. 1799
Indonesia – Import Licensing
Regimes
Panel Report, Indonesia – Importation of Horticultural Products, Animals and
Animal Products, WT/DS477/R, WT/DS478/R, Add.1 and Corr.1, adopted
22 November 2017, as modified by Appellate Body Report WT/DS477/AB/R,

Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996,
DSR 1996:I, p. 97
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and
Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, p. 1179
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR
2000:I, p. 3
Korea – Various Measures on
Beef
Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled
and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted
10 January 2001, DSR 2001:I, p. 5
Korea – Various Measures on
Beef
Panel Report, 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 Report WT/DS161/AB/R, WT/DS169/AB/R, DSR
2001:I, p. 59
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,
DSR 2001:XIII, p. 6675
Peru – Agricultural Products
(Article 21.3(c))
Award of the Arbitrator, Peru – Additional Duty on Imports of Certain
Agricultural Products – Arbitration under Article 21.3(c) of the DSU,
WT/DS457/15, 16 December 2015
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, DSR 2011:IV, p. 2299
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, DSR 2011:V, p. 2869
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany,
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX,
p. 3779
US – Certain EC Products Panel Report, United States – Import Measures on Certain Products from the
European Communities, WT/DS165/R and Add.1, adopted 10 January 2001,
as modified by Appellate Body Report WT/DS165/AB/R, DSR 2001:II, p. 413
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations
in the EC – Hormones Dispute, WT/DS320/AB/R, adopted
14 November 2008, DSR 2008:X, p. 3507
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application
of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR
2009:III, p. 1291
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, DSR
2012:VI, p. 2745

Short title Full case title and citation
US – FSC
(Article 21.5 – EC II)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Second Recourse to Article 21.5 of the DSU by the
European Communities, WT/DS108/AB/RW2, adopted 14 March 2006, DSR
2006:XI, p. 4721
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I,
p. 3
US – Large Civil Aircraft
(2nd complaint)
(Article 21.5 – EU)
Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft
(Second Complaint) – Recourse to Article 21.5 of the DSU by the European
Union, WT/DS353/RW and Add.1, circulated to WTO Members 9 June 2017
[appealed by the European Union 29 June 2017]
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, DSR 2004:VII, p. 3257
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR
1998:VII, p. 2755
US – Shrimp
(Article 21.5 – Malaysia)
Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia,
WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6481
US – Shrimp (Ecuador) Panel Report, United States – Anti-Dumping Measure on Shrimp from
Ecuador, WT/DS335/R, adopted on 20 February 2007, DSR 2007:II, p. 425
US – Shrimp (Thailand)/
US – Customs Bond Directive
Appellate Body Report, United States – Measures Relating to Shrimp from
Thailand / United States – Customs Bond Directive for Merchandise Subject
to Anti-Dumping/Countervailing Duties, WT/DS343/AB/R / WT/DS345/AB/R,
adopted 1 August 2008, DSR 2008:VII, p. 2385 / DSR 2008:VIII, p. 2773
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand,
WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report
WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, p. 2539
US – Softwood Lumber IV
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada –
Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted
20 December 2005, DSR 2005:XXIII, p. 11357
US – Softwood Lumber IV
(Article 21.5 – Canada)
Panel Report, United States – Final Countervailing Duty Determination with
Respect to Certain Softwood Lumber from Canada – Recourse by Canada to
Article 21.5 [of the DSU], WT/DS257/RW, adopted 20 December 2005,
upheld by Appellate Body Report WT/DS257/AB/RW, DSR 2005:XXIII,
p. 11401
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, DSR 2001:IV, p. 1295
US – Stainless Steel (Mexico)
(Article 21.3(c))
Award of the Arbitrator, United States – Final Anti-Dumping Measures on
Stainless Steel from Mexico – Arbitration under Article 21.3(c) of the DSU,
WT/DS344/15, 31 October 2008, DSR 2008:XX, p. 8619
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton,
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
US – Upland Cotton
(Article 21.5 – Brazil)
Appellate Body Report, United States – Subsidies on Upland Cotton –
Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW, adopted
20 June 2008, DSR 2008:III, p. 809
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, DSR 1997:I, p. 323
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, DSR 2009:VII, p. 2911
US – Zeroing (EC)
(Article 21.5 – EC)
Panel 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/RW, adopted 11 June 2009,
as modified by Appellate Body Report WT/DS294/AB/RW, DSR 2009:VII,
p. 3117

Short title Full case title and citation
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, DSR 2009:VIII, p. 3441

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short title Title
COL–1/PAN–1 Decree No. 1744/2016 Decreto No. 1744 del Ministerio de Comercio,
Industria y Turismo de Colombia, de fecha 2 de
parcialmente el Arancel de Aduanas (Decree No. 1744
of the Ministry of Trade, Industry and Tourism of
Colombia, dated 2 November 2016, partially modifying
the Customs Tariff)
COL–2 Extract from
Decree No. 4927/2011
Comercio, Industria y Turismo de Colombia, de fecha
Arancel de Aduanas y otras disposiciones (Extract from
Decree No. 4927 of the Ministry of Trade, Industry and
Tourism o f Colombia, dated 26 December 2011,
adopting the Customs Tariff and other provisions)
COL–4 Minutes of the
299th session of the
Triple A Committee
Acta de sesión 299 del Comité de Asuntos Aduaneros,
Arancelarios y de Comercio Exterior (7 de octubre de
2016) (Minutes of the 299 th Session of the Committee
on Customs, Tariffs and Foreign Trade
(7 October 2016))
COL–6 Article 1 of Decree
No. 3306/2006
Comercio, Industria y Turismo, de fecha 25 de
Arancelarios y de Comercio Exterior (Article 1 of Decree
No. 3306 of the Ministry of Trade, Industry and
Tourism, dated 25 September 2006, enacting
provisions related to the Committee on Customs, Tariffs
and Foreign Trade)
COL–10 Resolution
No. 3269/2016
Resolución No. 3269 del Ministerio de Relaciones
de octubre de 2014 (Resolution No. 3269 of the Ministry
of Foreign Affairs, dated 2 0 July 2016, adopting the
procedure for apostilling and/or legalizing documents
and repealing Resolution No. 7144 of 24 October 2014)
COL–12 Extract from the Official
Journal of Colombia,
2 November 2016
Extracto del Diario Oficia l de Colombia, de fecha 2 de
No. 1745/2016 (Extract from the Official Journal of
Colombia, dated 2 November 2016, approving Decree
No. 1745/2016)
COL–13 Extract from the Official
Journal of Colombia,
27 December 2017
Extracto del Diario Oficial de Colombia, de fecha 27 de
No. 1874/2017 (Extract from the Official Journal of
Colombia, dated 2 7 December 2017, approving
Law No. 1874/2017)
COL–17 Insurance policy of
Colombiana Kimberly
Colpapel
Póliza de seguro de Colombiana Kimberly Colpapel,
(Insurance Policy of Colombiana Kimberly Colpapel,
accepted by the DIAN on 11 January 2018)
COL–28/COL–29 DIAN presentation on
customs fraud
Presentación de la DIAN, "Fraude aduanero . Comercio
ilícito de confecciones, textiles y calzado asociado al
lavado de activos" (DIAN presentation, "Customs fraud,
illicit trade in clothing, textiles and footwear associated
with money laundering")
COL–32 Actual cases of imports
effected under the
special regime guarantee
Casos reales de importaciones realizadas bajo la
garantía del régimen especial (actual cases of imports
effected under the special regime guarantee)
COL–39 List of 802 import
declarations
DIAN, relación de 802 declaraciones de importación con
en el Decreto No. 1745 de 2016 (DIAN, list of 802
import declarations with prices at or below the
thresholds established in Decree No. 1475 of 2016)

Exhibit Short title Title
COL–46 Article 1 of Resolution
No. 000017/2017
Decreto No. 1745 del 2 de noviembre de 2016 ( Article
1 of Resolution No 000017 of 22 March 2017, regulating
Article 6 of Decree No. 1745 of 2 November 2016)
COL–47 Decree No. 349/2018 Decreto No. 349 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 20 de febrero de 2018,
No. 2685/1999 y No. 390/2016 y se dictan otras
disposiciones (Decree No. 349 of the Ministry of Finance
and Public Credit of Colombia, dated 20 February 2018,
amending Decrees No. 2685/1999 and No. 390/2016
and enacting other provisions)
COL–53 Decision No. 378 Extracto de Comisión del Acuerdo de Cartagena,
Decisión No. 378 de Valoración Aduanera (Extract of the
Commission of the Cartagena Agreement, Decision
No. 378 on Customs Valuation)
COL–54 Decision No. 379 Comisión del Acuerdo de Cartagena, Decisión No. 379
de Declaración Andina de Valor (Commission of the
Cartagena Agreement, Decision No. 379 on the Andean
Declaration of Value)
COL–58 Communiqué on Decree
No. 390/2016
que se encuentran vigentes a 9 de abril de 2018 (DIAN,
communiqué on the Articles of Decree No. 390 of 2016
in force at 9 April 2018)
COL–61 Import figures for goods
under Decree
No. 2218/2017
DIAN, cifras de importación de mercancías bajo el
Decreto No. 2218/2017 (DIAN, import figures for goods
under Decree No. 2218/2017)
PAN–2 Decree No. 1745/2016 Decreto No. 1745 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 2 de noviembre de 2016,
confecciones y calzado (Decree No. 1745 of the Ministry
of Finance and Public Credit of Colombia, dated
2 November 2016, adopting measures for the
prevention and control of customs fraud in connection
with imports of clothing and footwear)
PAN–3 Decree No. 2685/1999 Decreto No. 2685 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 28 de diciembre de 1999,
No. 2685 of the Ministry of Finance and Public Credit of
Colombia, dated 28 December 1999, amendin g the
customs legislation)
PAN–4 Decree No. 390/2016 Decreto No. 390 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 7 de marzo de 2016, por
No. 390 of the Ministry of Finance and Public Credit of
Colombia, dated 7 March 2016, establishing the
Customs Statute)
PAN–10 Extract from the DIAN
webpage
DIAN, Normatividad, "DIAN combate el contrabando y
noviembre de 2016", disponible en www.dian.gov.co
(DIAN, Regulations, "DIAN combats smuggling and
underinvoicing of clothing and footwear through
implementation of Decrees 1744 and 1745 of
2 November 2016", available at www.dian.gov.co
PAN–40 Resolution
No. 4240/2000
Resolución No. 4240 de la Dirección de Impuestos y
diciembre de 1999 (Resolution No. 4240 of the National
Customs and Excise Directorate, dated 9 June 2000,
regulating Decree No. 2685 of 28 December 1999)

Exhibit Short title Title
PAN–43 Decree No. 2218/2017 Decreto No. 2218 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 27 de diciembre de 2017,
fibras, hilados, tejidos, confecciones y calzado (Decree
No. 2218 of the Ministry of Finance and Public Credit of
Colombia, dated 27 December 2017, adopting
measures for the prevention and control of customs
fraud in connection with imports of fibres, yarns,
fabrics, clothing and footwear)
PAN–44 Joint Circular
No. 001/2018
de Comercio, industria y Turismo, de fecha 19 de enero
No. 2218/2017 (Joint Circular No. 001 from the Office
of the Minister of Tra de, Industry and Tourism, dated
19 January 2010, referring to the implementation of
Decree No. 2218/2017
PAN–45 Decree No. 1786/2017 Decreto No. 1786 del Ministerio de Comercio,
Industria y Turismo de Colombia, de fecha 2 de
parcialmente el Arancel de Aduanas (Decree No. 1786
of the Ministry of Trade, Industry and Tourism of
Colombia, dated 2 November 2017, partially modifying
the Customs Tariff
PAN–46 "Two decrees
strengthening customs
control of footwear and
clothing", El Espectador
"Dos decretos que fortalecen control aduanero de
calzado y ropa", El Espectador (2 de noviembre de
2016) ("Two decrees strengthening customs control of
(2 November 2016))
PAN–50 "Entry of underinvoiced
footwear into Colombia
reduced by more than
90%", Vanguardia
ingreso de calzado subfacturado en Colombia",
Vanguardia (Y. R odríguez Barajas, "Entry of
underinvoiced footwear into Colombia reduced by more
than 90%", Vanguardia)
PAN–63 Resolution
No. 2199/2005

Resolución No. 2199 de la Dirección General de
Impuestos y Aduanas Nacionales, de fecha 30 de marzo
Decreto No. 2685 de 1999 (Resolution No. 2199 of the
National Customs and Excise Directorate, dated
30 March 2005, regulating Article 74 -1 of Decree
No. 2685 of 1999)
PAN–64 Resolution
No. 6934/2005
Resolución No. 6934 de la Dirección General de
Impuestos y Aduanas Nacionales, de fecha 8 de agosto
del 30 de marzo de 2005 (Resolution No. 6934 of the
National Customs and Excise Directorate, dated
8 August 2005, amending Resolution No. 02199 of
30 March 2005)
PAN–65 "New decree on customs
control for textiles to be
issued", Vanguardia
"Se expedirá un nuevo decreto de control aduanero
para textiles", Vanguardia (17 de agosto de 2017)
("New decree on customs control for textiles to be
issued", Vanguardia (17 August 2017))
PAN–83 Communications
between the parties in
the arbitration under
Article 21.3(c)
extraordinaria de la Comisión Interinstitucional de
Lucha contra el Contrabando, página 4 . COL-ARB-02
(Communications between the parties in the arbitration
under Article 21.3(c), Minutes of the Special Session of
the Inter-Institutional Commission against Smuggling,
p. 4, COL-ARB-02)
PAN–84 Decree No. 436/2018 Decreto No. 436 del Ministerio de Hacienda y Crédito
Público de Colombia, de fecha 6 de marzo de 2018, por
No. 436 of the Ministry of Finance and Public Credit of
Colombia, dated 6 March 2018, modifying Decree
No. 2218/2017

Exhibit Short title Title
PAN–104 Circular No. 0170 Circular No. 0170 de la DIAN, de fecha 10 de octubre
activos (DIAN Circular No. 0170, dated
10 October 2002, on the prevention and control of
money laundering

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Customs Valuation Agreement Agreement on Implementation of Article VII of the General Agreement on
Tariffs and Trade 1994
DIAN Dirección de Impuestos y Aduanas Nacionales de Colombia (National
Customs and Excise Directorate of Colombia)
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of
Disputes
f.o.b. free on board
GATT 1994 General Agreement on Tariffs and Trade 1994
kg kilograms
MFN Most favoured nation
NIT número de identificación tributaria (Tax Identification Number)
RUT registro único tributario (Single Tax Register)
Triple A Committee Committee on Customs, Tariffs and Foreign Trade
UAP usuarios aduaneros permanentes (Regular Customs Users)
USD United States dollars
WTO World Trade Organization

1 INTRODUCTION
1.1. This report contains the findings of the Panels established separately at the request of Colombia
and Panama under Article 21.5 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) . Both proceedings relate to Colombia's compliance with the rulings
and recommendations made by the Dispute Settlement Body (DSB) in the original proceeding in
Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear.
1.2. In the original proceeding, Panama challenged the imposition by Colombia of a compound tariff
affecting imports of textiles, apparel and footwear . The tariff was regulated by Decree No. 074 of
the Ministry of Trade, Industry and Tourism of Colomb ia, dated 23 January 2013
(Decree No. 074/2013), which was subsequently amended by Decree No. 456 of the Ministry of
Trade, Industry and Tourism of Colombia, dated 28 February 2014 (Decree No. 456/2014).1
1.3. The Panel found that, in certain situations involving imports of products classified in
Chapters 61, 62, 63 and 64 of the Colombian Customs Tariff 2, the compound tariff constituted an
ordinary customs duty which exceeded the levels bound in Colombia's Schedule of Concessions, and
was therefore inconsistent with Article II:1(b), first sentence, of the GATT 1994 . It also found that
in those instances, the compound tariff accorded less favourable treatment than that provided for in
Colombia's Schedule of Concessions, in a manner inconsistent with Article II:1(a) of the GATT 1994.
Lastly, the Panel also found that Colombia had failed to demonstrate that the compound tariff was
a measure necessary to protect public morals within the meaning of Article XX(a) of the GATT 1994
or a measure necessary to secure compliance with the Colombian anti-money laundering legislation,
within the meaning of Article XX(d) of the GATT 1994.3
1.4. The Panel Report was circulated to Members on 2 7 November 2015. O n 22 January 2016,
Colombia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and
legal interpretations developed in the report . In its report circulated to Members on 7 June 2016,
the Appellate Body found that, for imports of products classified in Chapters 61, 62, 63 and 64
(except for heading 64.06, but including tariff line 6406.10.00.00) of Colombia's Customs Tariff, in
the instances identified in the Panel Report, the compound tariff exceeded th e tariff rates bound in
Colombia's Schedule of Concessions, and was therefore inconsistent with Articles II:1(a) and II:1(b)
of the GATT 1994, confirming the Panel's findings in that respect .4 In addition, the Appellate Body
found that Colombia had failed to demonstrate that the compound tariff was a measure necessary
to protect public morals within the meaning of Article XX(a) of the GATT 1994 or necessary to secure
compliance with laws or regulations which are not inconsistent with the GATT 1994 within the
meaning of Article XX(d) of that Agreement.5 Consequently, the Appellate Body recommended that
Colombia bring the measure found to be inconsistent with the GATT 1994 into conformity with its
obligations under that Agreement.6
1.5. At its meeting on 2 2 June 2016, the DSB adopted the Appellate Body Report and the
Panel Report, as modified by the Appellate Body Report.7
1.6. At the DSB meeting held on 21 July 2016, Colombia stated its intention to implement the DSB's
recommendations and rulings and indicated that it would need a reasonable period of time to do so.8
On 8 August 2016, Panama reques ted that the reasonable period of time be determined through
binding arbitration pursuant to Article 21.3(c) of the DSU.9 On 30 August 2016, the Director-General
appointed Mr Giorgio Sacerdoti to act as arbitrator under Article 21.3(c) of the DSU . Mr Sacerdoti
accepted this appointment by letter dated 5 September 2016.10

1 Panel Report, paras. 1.1, 2.1 and 2.3.
2 Extract from Decree No. 4927/2011 (Exhibit COL-2).
3 Panel Report, Colombia – Textiles, paras. 7.189, 7.192-7.194, 7.471, 7.537, 7.591-7.592 and 8.2-8.6.
4 Appellate Body Report, Colombia – Textiles, paras. 6.3.a and 6.3.b.
5 Appellate Body Report, Colombia – Textiles, paras. 6.4-6.11.
6 Appellate Body Report, Colombia – Textiles, para. 6.12.
7 DSB, Minutes of the meeting held on 22 June 2016, WT/DSB/M/380, para. 9.7.
8 DSB, Minutes of the meeting held on 21 July 2016, WT/DSB/M/383, para. 2.2.
9 Panama's request for arbitration under Article 21.3(c) of the DSU, WT/DS461/11.
10 Note by the Secretariat on appointment of arbitrator under Article 21.3(c) of the DSU
(WT/DS461/12).

1.7. On 15 November 2016, the Award of the Arbitrator was circulated to Members. The Arbitrator
determined the reasonable period of time to be seven months from the date on which the DSB
adopted the Panel and Appellate Body reports . Accordingly, the reasonable period of time expired
on 22 January 2017.11
1.8. On 13 December 2016, Colombia notified the DSB of the adoption of Decree No. 1744 of the
Ministry of Trade, Industry and Tourism of Colombia, date d 2 November 2016, partially modifying
the Customs Tariff (Decree No. 1744/2016).12 This Decree modified the tariffs applicable to imports
of products classified in Chapters 61 and 62 of the Customs Tariff, and certain items in Chapter 64.
Colombia indicated that it had fully complied with the DSB's recommendations and rulings adopted
on 22 June 2016.13
1.9. On 9 February 2017, Panama filed a request with the DSB for authorization to suspend
concessions or other obligations in the amount of US$210 million, pursuant to Article 22.2 of the
DSU.14 In a communication of 1 7 February 2017 to the DSB, Colombia challenged the request
submitted by Panama.15 At its meeting on 20 February 2017, the DSB noted that the matter raised
by Colombia in document WT/DS461/18 had been referred to arbitration, pursuant to Article 22.6
of the DSU.16
1.1 Panel establishment and composition
1.1.1 Establishment of the compliance panel requested by Colombia
1.10. On 9 February 2017, Colombia requested the establishment of a compliance panel under
Article 21.5 of the DSU .17 At the DSB meeting on 2 0 February 2017, Panama objected to the
establishment of the compliance panel requested by Colombia, arguing that no consultations h ad
been held.18 Without prejudice to its position that, in this case, Article 21.5 of the DSU would not
require the request for consultations as a preliminary to the panel request, on 27 February 2017
Colombia requested consultations with Panama pursuant to Article 21.5 and Article 4 of the DSU and
Article XXII of the GATT 1994.19
1.11. At its meeting on 6 March 2017, the DSB referred to the original Panel, if possible, the matter
raised by Colombia in document WT/DS461/17, pursuant to Article 21.5 of the DSU.20
1.12. The Panel's terms of reference are the following:
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 Colombia in document
WT/DS461/17 and to make such findings a s will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.21
1.13. Australia, China, Ecuador, the European Union, Guatemala, Honduras, India, Korea, the
Russian Federation, Chinese Taipei and the United States r eserved their third -party rights to
participate in the compliance panel proceedings.
1.1.2 Establishment of the compliance panel requested by Panama
1.14. On 9 March 2017, Panama requested consultations with Colombia under Article 21.5 and
Article 4 of the DSU, Articl e 19 of the Agreement on Implementation of Article VII of the General

11 Award of the Arbitrator, Colombia – Textiles (Article 21.3(c)), para. 4.1 (WT/DS461/13).
12 Exhibits COL-1/PAN-1.
13 Communication from Colombia, WT/DS461/15.
14 Recourse to Article 22.2 of the DSU by Panama, WT/DS461/16.
15 Recourse to Article 22.6 of the DSU by Colombia, WT/DS461/18.
16 DSB, Minutes of the meeting held on 20 February 2017, WT/DSB/M/392, para. 8.20.
17 Colombia's request for the establishment of a panel, WT/DS461/17.
18 DSB, Minutes of the meeting held on 20 February 2017, WT/DSB/M/392, para. 9.4.
19 Colombia's request for consultations, WT/DS/461/19.
20 DSB, Minutes of the meeting held on 6 March 2017, WT/DSB/M/393, para. 1.14.
21 Note by the Secretariat on the constitution of the Panel established at the request of Colombia,
WT/DS461/24, para. 2.

Agreement on Tariffs and Trade 1994 ( Customs Valuation Agreement ) and Article XXII of the
GATT 1994.22 The consultations took place on 28 March 2017.
1.15. On 10 May 2017, Panama requested the establishment of a panel pursuant to Article 6 and
Article 21.5 of the DSU.23
1.16. At its meeting on 19 June 2017, the DSB referred to the original Panel, if possible, the matter
raised by Panama in document WT/DS461/22, in accordance with Article 21.5 of the DSU.24
1.17. The Panel's terms of reference are the following:
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 Panama in document
WT/DS461/22 and to make such findi ngs as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.25
1.18. Australia, China, Ecuador, the European Union, Guatemala, Honduras, India, Indonesia,
Japan, Kazakhstan, Korea, the Russian Federation, Singapore, Chinese Taipei and the United States
reserved their third-party rights to participate in the compliance panel proceedings.
1.1.3 Meeting prior to composition of the Panels
1.19. On 24 July 2017, in the absence of a sequencing agreement, the WTO Secretariat met with
the parties to ascertain their intentions with regard to the conduct of the two compliance proceedings
and the arbitration provided for in Article 22.6 of the DSU. As a result of the meeting and subsequent
exchanges, the parties separately expressed the following points of view:
a. Both compliance proceedings (including review by the Panels and possible subsequent
appeal) would take place prior to the arbitration provided for in Article 22.6 of the DSU; a
single harmonized timetable would be adopted, wit h uniform deadlines for the
presentation of written submissions by the parties and third parties ; a single joint
substantive meeting would be held; and a single report would be issued;
b. Members that reserved their third -party rights solely in connection with the compliance
proceeding initiated at Panama's request would also have access, for practical purposes,
to the compliance proceeding initiated at Colombia's request.
1.1.4 Composition of the Panels
1.20. Pursuant to Article 21.5 of the DSU, on 6 September 201726 both Panels were composed with
the same members as the original Panel:
Chairman: Mr Elbio Rosselli
Members: Mr Carlos Véjar Borrego
Mr Fabián Villarroel Ríos
1.21. For ease of reference, the term "Panel" will be used in the singular in this report to refer to
both panels. If one panel needs to be referred to in particular, it will be expressly identified.

22 Panama's request for consultations, WT/DS461/21.
23 Panama's request for the establishment of a panel, WT/DS461/22.
24 DSB, Minutes of the meeting held on 19 June 2017, WT/DSB/M/398, para. 6.9.
25 Note by the Secretariat on the constitution of the Panel established at the request of Panama,
WT/DS461/25, para. 2.
26 On the same date, 6 September 2017, and in accordance with Article 22.6 of the DSU, the Arbitrator
was constituted with the original panelists (Note by the Secretariat on recourse to Article 22.6 of the DSU by
Colombia, WT/DS461/23).

1.2 Panel proceedings
1.22. After consultation with the parties and in the light of the views expressed by them (see
para. 1.19 above), the Panel adopted harmonized working procedures on 15 September 2017.27 In
particular, paragraph 5 of the harmonized working procedures provides that "[the] Panel shall hold
a joint substantive meeting and shall issue a single report concerning both proceedings".
1.23. The Panel also adopted a harmonized timetable for both proceedings on 19 September 2017.
The harmonized timetable was modified on 18 January, 23 March, 5 April, 25 May, 14 June and
20 July 2018.
1.24. In a communication dated 12 January 2018, Colombia stated that it was having difficulties in
accessing some of the exhibits provided by Panama, since they were not available among the printed
exhibits or in the CD -ROMs or the Digital Dispute Settlemen t Registry.28 In view of the foregoing,
Colombia asked that Panama make available the exhibits concerned . In addition, considering that
situation and the range of exhibits submitted by Panama to date, Colombia asked the Panel for an
extension of the period of time for presenting respondent second written submissions . O n
16 January 2018, Panama submitted the exhibits requested by Colombia and stated that it had no
objections to the request for extending the deadline. On 18 January 2018, the Panel established new
deadlines for the presentation of respondent second written submissions and third -party
submissions.
1.25. In a communication of 2 6 January 2018, Panama informed the Panel that it had taken
cognizance of two new regulatory instruments issued by the Colombian Government which were, on
their face, related to the matters dealt with in this dispute. The instruments in question were Decree
No. 2218 of the Ministry of Finance and Public Credit of Colombia, dated 27 December 2017,
adopting measures for the preventio n and control of customs fraud in connection with imports of
fibres, yarns, fabrics, clothing and footwear (Decree No. 2218/2017)29, and Joint Circular 001 of the
Ministry of Trade, Industry and Tourism of Colombia, dated 19 January 2018, on the administration
of Decree No. 2218/2017.30 On 3 1 January 2018, Colombia requested that neither Panama's
communication nor the exhibits should be deemed to have been submitted and that, otherwise, the
period of time for presenting its second written submission as respondent should be extended. On
2 February 2018, Panama expressed its disagreement with those requests. On 6 February 2018, the
Panel informed the parties that it rejected Colombia's request.
1.26. In a communication dated 1 5 March 2018, Panama informed the Panel that it had taken
cognizance of the enactment of Decree No. 436 of the Ministry of Finance and Public Credit
of Colombia, dated 6 March 2018, amending Decree No. 2218/2017 (Decree No. 436/2018).31
1.27. The Panel held a substantive meeting with the parties on 20 and 2 1 March 2018. T he
third-party session took place on 21 March 2018.
1.28. On 2 3 March 2018, the Panel, after consulting the parties and in order to preserve the
procedural rights of Colombia, accorded to Colombia the possibilit y of presenting its arguments
relating to Decree No. 2218/2017 in an additional written submission no later than 20 April 2018.
1.29. In a communication dated 4 April 2018, Colombia requested an extension of the deadline for
responding to the questions posed by Panama and by the Panel. On 5 April 2018, Panama indicated
that it had no objections to Colombia's request and asked that, if the request were approved, the
time-limit for submitting comments on the re sponses should be extended. On the same date, the
Panel set new time -limits for the submission of responses to qu estions from the Panel and the
parties, and for the submission of comments on those responses.

27 See the Panel's Working Procedures in Annex A-1.
28 Specifically, Exhibits PAN-18, PAN-19 and PAN-20.
29 Decree No. 2218/2017 (Exhibit PAN-43).
30 Joint Circular No- 001/2018 (Exhibit PAN-44).
31 Decree No. 436/2018 (Exhibit PAN-84).

1.30. On 28 May 2018, the Panel issued the descriptive part of its Report to the Parties. The Panel
issued its Interim Report to the p arties on 26 June 2018. The Panel issued its Final Report to the
parties on 26 July 2018.
2 FACTUAL ASPECTS
2.1 Introduction
2.1. This dispute concerns certain measures adopted by Colombia subsequent to the adoption of
the DSB's rulings and recommendations in the original proceeding, Colombia – Measures Relating to
the Importation of Textiles, Apparel and Footwear.32
2.2. The Parties disagree as to which measures adopted by Colombia are "measures taken to
comply" with the DSB's rulings and recommendations within the meaning of Article 21.5 of the DSU.
In the light of that disagreement, the Panel will confine itself, in this section of its report, to
describing the measures identified by Colombia and Panama as measures at issue . Insofar as the
parties disagree on this or any other factual issue that needs to be resolved, the Panel will address
it in its findings.
2.2 Measures at issue according to Colombia
2.3. In its panel request, referring to its statement before the DSB mentioned in paragraph 1.8
above, Colombia explains that it "replaced the compound tariff with an ad valorem tariff that does
not exceed Colombia's WTO bound tariffs, and in that sense, it has brought the measure subject to
the DSB's recommendations into compliance with its WTO obligations".33
2.4. Colombia refers to the adoption on 2 November 2016 of Decree No. 1744/201634 modifying
the tariffs applicable to imports of products classified in Chapte rs 61 and 62 of the Customs Tariff,
and certain items in Chapter 64 .35 Articles 1 to 3 of Decree No. 1744/2016, which are reproduced
below, specify how the new ad valorem tariffs operate:
ARTICLE 1. Establishment of a tariff of forty per cent (40%) on impor ts of products
classified in Chapters 61 and 62 of the National Customs Tariff, when the declared
f.o.b. price is lower than or equal to US$10 per gross kilogram.
ARTICLE 2. Establishment of a tariff of thirty-five per cent (35%) on imports for which
the declared f.o.b. price is lower than or equal to the threshold specified for the following
tariff headings:
TARIFF
HEADING
US$/PAIR
THRESHOLD
6401 6
6402 6
6403 10
6404 6
6405 7

Paragraph: For imports of subheading 6406.10.00.00 ("uppers") the tariff established
in this article shall be applied when the declared f.o.b. price is lower than or equal to
US$5 per gross kilogram.
ARTICLE 3. The products classified in Chapters 61, 62 and 64 of the Customs Tariff
that are not subject to the tariff set forth in Articles 1 and 2 of this Decree shall be
subject to the tariff provided for in Decree 4927 of 2011 and the amendments thereto.

32 DSB, Minutes of the meeting held on 22 June 2016, WT/DSB/M/380, para. 9.7.
33 Colombia's request for the establishment of a panel, WT/DS461/17, p. 1.
34 Decree No. 1744/2016 (Exhibits COL-1/PAN-1).
35 Colombia's request for the establishment of a panel, WT/DS461/17, p. 2.

2.5. As indicated in the aforementioned Article 3, for imports of products classified in Chapters 61,
62 and 64 of the Customs Tariff that are not subject to the tariff set forth in Decree No. 1744/2016,
the applicable tariff is the one provided for in Decree No. 4927 of the Ministry of Trade, Industry and
Tourism of Colombia , dated 26 December 2011, adopting the Customs Tariff and other provisions
(Decree No. 4927/2011) and the amendments thereto .36 The Decree in question, No. 4927/2011,
contains the Colombian Customs Tariff in force since 1 January 2012.37
2.6. For imports of the other products that were subject to the compound tariffs introduced by
Decree No. 456/2014, including the products classified in Chapter 63 of the Customs Tariff and those
classified under the headings of Chapter 64 not mentioned above, the applicable tariff, as from
2 November 2017, would be the one provided for in Decree No. 4927/2011 or any amending
decree.38
2.7. The difference between the most-favoured-nation ( MFN) tariff applicable to imports of the
relevant products with a free on board (f.o.b.) price equal to or lower than the thresholds provided
for in Articles 1 and 2 of Decree No. 1744/2016, and the MFN tariff applicable to imports with an
f.o.b. price exceeding those thresholds, may be summarized as follows:
Table 1: Difference between tariffs
Product MFN tariff where f.o.b.
price does not exceed
the respective threshold
MFN tariff where f.o.b.
price exceeds the
respective threshold
(Decree No. 4927/2011
and amendments thereto)
Chapter 61 40% 15%
Chapter 62 40% 15%
Chapter 63 No differentiated regime
Headings 64.01 to 64.05 35% 15%
Heading 64.06 No differentiated regime
- Subheading 6406.10.00.00 35% 10%
Source: Prepared by the Secretariat.
2.8. Article 6 of Decree No. 1744/2016 provides that the tariffs thereunder would be in
force for a period of one year from the date of their entry into force, 2 November 2016. O n
2 November 2017, Colombia issued Decree No. 1786 of the Ministry of Trade, Industry and Tourism
of Colomb ia, dated 2 November 2017, partially modifying the Customs Tariff (Decree
No. 1786/2017).39 Article 6 of Decree No. 1786/2017 establishes the same tariffs as Decree
No. 1744/2016, which will be in force for a period of two years from the date of their entry into
force, 2 November 2017.
2.9. The determination of the thresholds under Decrees No. 1744/2016 and No. 1786/2017 is
carried out on the basis of the thresholds previously in force under Decrees No. 074/2013,
No. 456/2014 et seq., taking into account the pric es used by the National Customs and Excise
Directorate of Colombia (DIAN) to establish the risk profiles and average price of imports in a period
preceding the issuance of those decrees (the average in question being US$10.4/kg for clothing and
US$6.8/pair for footwear).40

36 Decree No. 1744/2016 (Exhibits COL-1/PAN-1), Article 3.
37 Extract from Decree No. 4927/2011 (Exhibit COL-2).
38 Colombia's second written submission as complainant, para. 44.
39 Decree No. 1786/2017 (Exhibit PAN-45).
40 Colombia's response to Panel question No. 1, para. 3.

2.3 Measures at issue according to Panama
2.3.1 Introduction
2.10. In its panel request41, Panama identifies as measures at issue, inter alia:
a. The requirement of a security for the release of goods under Chapters 61, 62 and 64 of
the Colombian Customs Tariff, when priced at or below certain thresholds (the "specific
bond"), as contained in Decree No. 1745 of the Ministry of Finance and Public Cre dit of
Colombia, dated 2 November 2016, adopting measures for the prevention and control of
customs fraud in connection with imports of clothing and footwear (Decree
No. 1745/2016)42; and
b. The customs and tariff regime applicable to imports of goods under those Chapters, when
priced at or below the thresholds established by Colombia in the above-mentioned Decree
No. 1745/2016 (the "special import regime").
2.11. In its written submissions, Panama identifies as measures at issue the specific bond and the
special imp ort regime, both with the characteristics described in Decree No. 1745/201643 and,
following its enactment, with the characteristics described in Decree No. 2218/2017.44
2.12. Panama's request included two additional measures, namely the "entry restricted to speci fic
ports of entry" and the "customs duty" (i.e. the ad valorem tariff of Decree No. 1744/2016 described
in section 2.2 above). The respective claims were not subs equently developed by Panama . When
consulted about this on 1 0 April 2018, Panama informed the Panel that it does not maintain its
claims with regard to those measures.45
2.13. Set out below are the measures challenged by Panama, in relation to the corresponding
regulations.
2.3.2 Measures challenged by Panama as contained in Decree No. 1745/2016
2.3.2.1 Scope and application of Decree No. 1745/2016
2.14. On 2 November 2016, Colombia issued Decree No. 1745/2016 "establishing mechanisms to
strengthen the risk management system and customs control in the face of possible situations of
customs fraud associated with imports of clothing and footwear".46 Decree No. 1745/2016 entered
into force on 2 November 2016, the date of its publication in the Official Journal47, and was repealed
on 2 7 December 2017 by Decree No. 2218/2017 (see section 2.3.3.1 below). T he mechanisms
established by Decree No. 1745/2016 are additional to the import requirements prescribed in
Colombia's general import regime.48
2.15. With regard to the scope of Decree No. 1745/2016, Article 2 thereof provides as follows:
ARTICLE 2 . Scope. Imports of products co nsisting of clothing and footwear under
Chapters 61, 62 and 64 of the Customs Tariff, for which the declared f.o.b. price is lower than
or equal to the threshold established in Article 3 of this Decree, shall be subject to the
measures set out herein.

41 Panama's request for the establishment of a panel (WT/DS461/22, sections I.A and I.C.
42 Decree No. 1765/2016 (Exhibit PAN-2).
43 Panama's first written submission as complainant, para. 15. See also Panama's first written
submission as respondent, paras. 5, 32 and 90(i); and second written submission as complainant, paras. 57
and 285.
44 See for example, Panama's second written submission as respondent, paras. 6-11.
45 Panama's response to Panel questions Nos. 50 and 51.
46 Decree No. 1745/2016 (Exhibit PAN-2), Article 1.
47 Extract from the Official Journal of Colombia, 2 November 2016 (Exhibit COL-12).
48 This regime is contained in Decree No. 2685/1999 (Exhibit PAN-3) and Decree No. 390/2016
(Exhibit PAN-4), and the amendments and regulations thereto. (Colombia's response to Panel question No. 12,
para. 36.)

2.16. As indicated in Article 2 itself, the relevant thresholds are established in Article 3 of the Decree
in question. These thresholds differ from those established in Decree No. 1744/2016, as described
in paragraph 2.4 above. Article 3 of Decree No. 1745/2016 provides as follows:
ARTICLE 3. Thresholds for strengthening the risk management and customs control
system. The measures provided for in this Decree shall be app licable to imported goods for
which the declared f.o.b. price is lower than or equal to the threshold determined for the
following tariff headings and subheading:

Clothing:

TARIFF
HEADING
GROSS
US$/KG
THRESHOLD
61.01 10
61.02 10
61.03 6
61.04 6
61.05 5
61.06 5
61.07 3
61.08 3
61.09 3
61.10 6
61.11 7
61.12 9
61.13 10
61.14 9
61.15 3
61.16 3
61.17 4
62.01 10
62.02 10
62.03 7
62.04 5
62.05 7
62.06 7
62.07 3
62.08 5
62.09 3
62.10 9
62.11 9
62.12 5
62.13 3
62.14 3
62.15 3
62.16 3
62.17 3

Footwear:
TARIFF
HEADING
US$/PAIR
THRESHOLD
64.01 3
64.02 2
64.03 7
64.04 3
64.05 4

TARIFF
SUBHEADING
GROSS
US$/KG
THRESHOLD
6406.10.00.00 2

Paragraph: The Government shall revise the thresholds established in this Article annually
or at shorter intervals when foreign trade trends so warrant.

2.17. In order to determine the thresholds of Decree No. 1745/2016, Colombia estimated the
implicit price of imports (US$/net k g; US$/pair) per tariff heading. For this purpose, consideratio n
was given to the prices used by the DIAN to establish risk profiles and the information on
monthly imports of products during the period 2010 -2017 (excluding imports registered under the
re-import regime and the temporary import systems for inward processing). Using this information,
the threshold was estimated in terms of the average value of the implicit price corresponding to the
tenth percentile of each tariff heading group, for the period 2010-2017.49
2.18. Article 9 of Decree No. 1745/2016 provides that, if in the course of ex post control procedures,
goods covered by Article 3 that have been shipped after its entry into force are found not to be in
compliance with the requirements of that article, they shall be subject to seizure.50
2.19. During the period from 4 November 2016 to 31 December 2017, the total number of import
declarations concerning products covered by Decree No. 1745/2016, independently of their declared
f.o.b. price, was 332,744 . O f those import declarations, 331,942 cont ained prices above the
thresholds and 802 contained prices below the thresholds.51
2.20. The Panel now proceeds to describe the measures contained in this Decree which are
challenged by Panama.
2.3.2.2 The specific bond under Decree No. 1745/2016
2.21. This measure consists of the requirement imposed on importers of clothing and footwear
classified in Chapters 61, 62 and 64 of the Colombian Customs Tariff to post a specific bank or
insurance guarantee in order to secure release of the imported goods when the declared f.o.b. price
is lower than or equal to a certain threshold . The specific bond is contained in Article 7 of Decree
No. 1745/2016, which provides as follows:
ARTICLE 7. Guarantee. Once all the requirements stipulated in this Decree have been
met, the importer, as a prerequisite for the release of the goods referred to in Article 3
of this Decree, shall furnish a specific bank or insurance guarantee of 200% of the unit
"threshold" price established in that article, multiplied by the quantity imported, for a
period of three (3) years, for the purpose of guaranteeing payment of the customs taxes
and penalties that may apply.

49 Colombia's response to Panel question No. 1, para. 4.
50 The concept of seizure is regulated under the general customs regime in Article 550 of Decree
No. 390/2016. This article was amended by Decree No. 349/2018 (Exhibit COL-47). (Colombia's response to
Panel question No. 40, para. 219.)
51 DIAN presentation on customs fraud (Exhibits COL-28 and COL-29); List of 802 import declarations
(Exhibit COL-39); and Colombia's response to Panel questions No. 6(a), para. 20, and No. 6(b), para. 21.

The fact of having provided a general guarantee or not having the obligation to do so
shall not exempt the importer from the obligation mentioned herein.
Should the obligation to post a guarantee in a valuation dispute coincide with the
obligation mentioned in this article, the latter shall prevail and the procedures provided
for in the customs legislation governing the approval, control and custody of guarantees
shall apply in determining the customs value of the imported goods and the penalty.
Once the release has been authorized, if appropriate, the Customs Operation
Management Division, or whichever service is acting on its behalf, shall submit to th e
Inspection Management Division copies of the declaration together with supporting
documents, and of the guarantee and the inspection report, in accordance with its remit.
2.22. Therefore, any importer of clothing and footwear classified in Chapters 61, 62 and 64 of
Colombia's Customs Tariff will be obliged to post a specific bank or insurance guarantee for an
amount equivalent to 200% of the corresponding threshold price, multiplied by the quantity imported
(see para. 2.16 above), in order to obtain the release of the imported goods when the declared f.o.b.
price is lower than or equal to the threshold . The guarantee will have to be posted for a period of
three years. The fact of posting a general guarantee or not being obliged to do so does not exempt
the importer from the obligation to post the specific guarantee stipulated in this article.
2.3.2.3 Special import regime under Decree No. 1745/2016
2.23. This measure would comprise various aspects of the special import regime established under
Decree No. 1745/2016, which is applicable to imports of clothing and footwear classified in
Chapters 61, 62 and 64 of Colombia's Customs Tariff, when the declared f.o.b. value of the relevant
imported products is lower than or equal to the thresholds established in Article 3 of that Decree
(see para. 2.16 above). The aspects in question would include the s pecific bond described as a
separate measure in the previous section and other requirements set out in the articles referred to
below.
2.3.2.3.1 Documentary and certification requirements
2.24. Article 4 of Decree No. 1745/2016 establishes certain documentation and certif ication
requirements, as follows:
ARTICLE 4. Importation. Natural or legal persons seeking to import into the national
customs territory and/or to bring into a free zone goods from abroad consisting of
clothing and footwear classified in the headings and s ubheading of the Customs Tariff
listed in Article 3 of this Decree, at a price lower than or equal to the threshold specified
in that article, shall be required to provide evidence to the Customs Operation
Management Division (or whichever service is actin g on its behalf) of the Sectional
Customs and Excise Directorate with jurisdiction over the place of arrival, that the
following requirements have been met:
1. Without prejudice to submission of the advance declaration in the terms and in
the manner prescribed by the National Customs and Excise Directorate, the
importer, which must also be the consignee, shall be required, at least one month
in advance of the arrival of the goods in the national customs territory, to submit
for each shipment the identity and liability form, under such terms and conditions
as may be specified by the National Customs and Excise Directorate for that
purpose, accompanied by the following documents:
(a) Certification from the foreign supplier, apostilled or legalized with an official
translation into Spanish, showing evidence of the intention to sell to the
importer in Colombia and indicating, where appropriate, the type of
economic relationship with the importer in accordance with the Tax Statute,
and also providing the address, telephone number and email address of the
supplier as well as the six -digit tariff subheading containing the detailed
description of the products to be exported, the quantity and their respective
prices.

(b) Apostilled or legalized certification, with an official translation into Spanish,
of the existence of the foreign supplier, to be issued by the entity in the
exporting country that keeps the official register of producers or traders .
Should no such entity exist, the importer must testify to tha t fact under
oath, which shall be deemed to be have been taken by the signing of the
document, without prejudice to the supervisory and inspection powers of
the National Customs and Excise Directorate.
(c) List of distributors in Colombia of the goods to be imported, indicating their
tax identification number (NIT), business name, address, telephone
number and email address.
(d) Declaration signed by the legal representative of the customs agency,
where appropriate, certifying that they have conducted a background check
on the customer for the importer for which they are to act as customs
broker, and indicating how long the parties have worked together.
(e) Declaration signed by the importer or the importer's legal representative,
certifying the following:
(i) that the value to be declared for the goods being imported
corresponds to the price actually paid or payable;
 (ii) the address of the storage facilities for the goods being imported;
(iii) detailed information on the distribution and marketing chain i n
Colombia for the goods being imported;
(iv) that they are aware that the customs authority is entitled to submit
the documents related to the import transaction to the Attorney
General's Office and the Financial Information and Analysis Unit
(UIAF).
2. Without prejudice to the presence of the customs representative from the
customs agency, where action is taken through the latter, the importer, the legal
representative or the agent of the importing company must be present for the
process of customs inspec tion or examination (aforo) of the goods . F or this
purpose, the importer's agent must be different from the customs agency. The
absence of the importer, the legal representative or the agent of the importing
company shall result in the non-admissibility or non-authorization of release.
Paragraph 1. The identity and liability form and the documents referred to in this
article shall constitute supporting documents for the import declaration.
Failure to submit or the extemporaneous submission of these documents shall result in
the non-admissibility or non-authorization of release.
Paragraph 2. In the case of goods that are to be imported from a free zone to the
remainder of the national customs territory, the importer must be the same as the
consignee whose name appears in the transport document with which the goods entered
the free zone, unless it is a matter of products classified under subheading 6406100000
and consigned to an industrial user of goods or of goods and services.
In the event that the consignee and the importer are not the same , this will result in
the non-admissibility or non-authorization of release.
2.25. Thus, in order to be able to import goods regulated by Decree No. 1745/2016 at prices equal
to or below the thresholds prescribed in that Decree (see paragraph 2.16 above), importers are
required to submit a set of documents to the customs au thority at least one month in advance of
the arrival of the goods in Colombian territory . Likewise, such importation requires the physical
presence of the importer, the legal representative or the agent of the importing company, as

appropriate, during the process of customs inspection or examination of the goods. If the importer
does not submit the required documents or does so extemporaneously, the goods cannot be
released.
2.3.2.3.2 Authorized entry sites
2.26. Article 5 of Decree No. 1745/2016 provides for the possibility of designating authorized sites
for the entry of such goods in the following terms:
ARTICLE 5. Authorized entry sites. In order to strengthen customs control and the
risk management system within the ten (10) days following the entry into force of this
Decree, the National Customs and Excise Directorate shall establish by administrative
decision the authorized sites for the importation of clothing and footwear classified in
the headings and subheading of the Customs Tariff referred to in Article 3 of this Decree.
2.27. The DIAN would therefore be empowered to determine what would be the authorized sites for
the import of goods under the decree within ten days following its entry into force. The DIAN did not
determine the entry sites in accordance with this prov ision during the period of validity of Decree
No. 1745/2016.
2.3.2.3.3 Import operations observers
2.28. Article 6 of Decree No. 1745/2016 provides for the intervention of import operations
observers in the following terms:
ARTICLE 6 . I mport Operations Observers . The National Customs and
Excise Directorate shall provide the Import Operations Observers with information to be
constituted by resolution of that entity, which shall be issued within sixty (60) calendar
days following the entry into force of this Decree ; the resolution in question shall also
establish the procedure for the provision of the information to the said observers.
The observer shall provide cooperation and collaboration required by the
customs authority, including the technical report, where appropri ate, on the tariff
classification, identification, quantity, description, weight and price of the goods, among
other aspects.
For the purposes of this Decree, the role of the observer shall be confined to analysing
the information and generating alerts to the customs authority, as well as closely
monitoring the conduct of the inspection or examination procedure with respect to the
goods classified under the headings listed in Article 3 of this Decree.
The customs authority shall safeguard the confidentiality of the information, taking into
account the provisions of the Political Constitution and Laws 863 of 2003 and 1712 of
2014 and other amending or supplementary regulations.
2.29. Decree No. 1745/2016 would therefore permit the participation of import operations
observers, whose role is to analyse the information supplied and generate alerts to the customs
authority, and also to closely monitor the inspection or examination procedure with respect to the
corresponding goods.52

52 The Colombian customs regime envisages the use of import operations observers for all types of
imports. The observers are members of Colombian private industry and are selected from lists of candidates
submitted by the trade associations and approved by the Joint National Commission on Tax Management. The
observers work voluntarily, at the request of the interested trade associations, generating no costs for the
Colombian State. The observers make non-binding recommendations to the customs officials. (Decree
No. 2685/1999 (Exhibit PAN-3), Article 74-1 and Decree No. 390/2016 (Exhibit PAN-4), Article 183.) See
Colombia's response to Panel questions Nos. 38b, c, d and f, paras. 210-215 and Resolution No. 6934/2005
(Exhibit PAN-64).

2.3.2.3.4 Risk management
2.30. With respect to risk management, Article 8 of Decree No. 1745/2016 provides as follows:
ARTICLE 8. Risk management. Importers that declare goods consisting of clothing
and footwear classified under the headings and subheading of the Customs Tariff listed
in Article 3 of this De cree, at a price lower than or equal to the threshold specified in
that Article, must be reported to the Operational Analysis Management Subdirectorate
of the National Customs and Excise Directorate so that the information concerning such
operations can be incorporated in the risk management system.
2.31. Consequently, the DIAN will be informed of any importers of clothing and footwear classified
in Chapters 61, 62 and 64 of Colombia's Customs Tariff at prices lower than or equal to the respective
thresholds, so that these operations can be incorporated in the risk management system.53
2.3.3 Measures challenged by Panama as contained in Decree No. 2218/2017
2.3.3.1 Scope and application of Decree No. 2218/2017
2.32. On 2 7 December 2017, Colombia issued Decree No. 2218/2017 repealing D ecree
No. 1745/2016. D ecree No. 2218/2017 establishes "mechanisms to strengthen the risk
management system and customs control in the face of possible situations of customs fraud
associated with imports of fibres, yarns, fabrics, clothing and footwear".54 Decree No. 2218/2017
entered into force on 27 December 2017, the date of its publication in Colombia's Official Journal.55
The mechanisms established by Decree No. 2218/2017 are additional to the import requirements
prescribed in Colombia's general import regime.56
2.33. With regard to the scope of Decree No. 2218/2017, Article 2 thereof provides as follows:
ARTICLE 2. Scope. Imports of products consisting of fibres, yarns, fabrics, clothing
and footwear under Chapters 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63 and 64 of the
Customs Tariff, for which the declared f.o.b. price is lower than or equal to the threshold
established in Article 3 of this Decree, shall be subject to the measures provided for
herein.
2.34. As indicated in Article 2 itself, the relevant thresholds are established in Article 3 of the same
decree, which provides as follows:
ARTICLE 3. Thresholds for strengthening the risk management and customs
control system. The measures envisaged in this Decree shall apply to imported goods
with a declared f.o.b. pr ice lower than or equal to the threshold prescribed for the
following tariff headings and subheading:
Yarns

53 Panama's request for the establishment of a panel, WT/DS461/22, section D.
54 Decree No. 2218/2017 (Exhibit PAN-43), Article 1. On 6 March 2018, Colombia issued Decree
No. 436/2018 (Exhibit PAN-84) amending Decree No. 2218/2017. The second preambular paragraph of Decree
No. 436/2018 explains that the purpose of the decree is "to provide some details concerning the conditions laid
down in Decree 2218 of 2017 with respect to the goods subject to control therein". In particular, changes were
made to some of the thresholds established in Article 3 (Thresholds for strengthening the risk management
and customs control system), the paragraphs of Article 4 (Importation) and the whole of Article 10 (Seizure
and confiscation). Panama has not requested the Panel to rule on these changes.
55 Colombia's response to Panel question No. 8, para. 26 and extract from the Official Journal of
Colombia, 27 December 2017 (Exhibit COL-13).
56 See footnote 48.
TARIFF
HEADING
US$/KG
THRESHOLD
5205 2.00
5402 2.00
5509 2.00
5510 2.00

Fibres
TARIFF
HEADING
US$/KG
THRESHOLD
5503 1.00
5504 1.00
5505 1.00
5506 1.00
5507 1.00

Fabrics
TARIFF
HEADING
US$/KG
THRESHOLD
5208 2.50
5209 2.50
5210 2.50
5211 2.50
5212 2.50
5309 2.50
5407 2.50
5408 2.50
5512 2.50
5513 2.50
5514 2.50
5515 2.50
5516 2.50
5601 2.50
5801 2.50
5802 2.50
5803 2.50
5804 2.50
5805 2.50
5806 2.50
5901 2.50
5903 2.50
5906 2.50
5907 2.50
5910 2.50
5911 2.50
6001 2.50
6002 2.50
6003 2.50
6004 2.50
6005 2.50
6006 2.50

Clothing
HEADING US$/KG
THRESHOLD
6101 10.00
6102 10.00
6103 5.00
6104 8.00
6105 5.00
6106 5.00
6107 5.00

HEADING US$/KG
THRESHOLD
6108 5.00
6109 5.00
6110 8.00
6111 5.00
6112 8.00
6113 10.00
6114 10.00
6115 5.00
6116 5.00
6117 5.00
6201 10.00
6202 10.00
6203 5.00
6204 5.00
6205 10.00
6206 8.00
6207 5.00
6208 5.00
6209 5.00
6210 8.00
6211 10.00
6212 5.00
6213 5.00
6214 5.00
6215 5.00
6216 5.00
6217 5.00

Made up textile articles
HEADING US$/KG
THRESHOLD
6301 2.0
6302 2.0
6303 1.5
6304 4.5

Footwear
HEADING US$/PAIR
THRESHOLD
6401 3.0
6402 3.0
6403 8.0
6404 3.0
6405 4.0

TARIFF
SUBHEADING
US$/KG
THRESHOLD
6406.10.00.00 2.0

Paragraph: The Government shall revise the thresholds established in this article
annually or at shorter intervals when foreign trade trends so warrant.

2.35. The thresholds of Decree No. 2218/2017 were determined in accordance with the same
methodology applied in connection with Decree No. 1745/2016, as described in paragraph 2.17
above.57
2.36. Article 1 0 of Decree No. 2218/2017 provides that, if in the course of ex post control
procedures, goods covered by Article 3 that have been shipped after its entry into force are found
not to be in compliance with the requirements of that Article, they shall be sub ject to seizure. The
seized goods may under no circumstances be the subject of legalization or recovery.58
2.37. The Panel now proceeds to describe the measures contained in this Decree that are challenged
by Panama.
2.3.3.2 The specific bond under Decree No. 2218/2017
2.38. This measure consists of the requirement imposed on the importer of clothing and footwear
classified in Chapters 52, 53, 54, 56, 58, 59, 60, 61, 62, 63 and 64 of Colombia's Customs Tariff,
when a valuation dispute arises, to post a specific bank or insuran ce guarantee in order to secure
release of the imported goods where the declared f.o.b. price is lower than or equal to a certain
threshold. The specific bond is contained in Article 7 of Decree No. 2218/2017, as follows:
ARTICLE 7. Guarantee. In the case of goods covered by the scope of application of
this Decree, if the valuation dispute arises in connection with the inspection or
examination procedure, and it becomes necessary for that reason to delay the final
determination of the customs value of the g oods, in accordance with Article 13 of the
Customs Valuation Agreement of the World Trade Organization, the importer may
secure release by posting a guarantee sufficient to ensure payment of any customs
taxes, penalties and interest that may apply.
The guarantee shall be accorded on a value equivalent to two hundred per cent (200%)
of the difference between the f.o.b. price declared by the importer and the result of
multiplying the threshold unit price established in Article 3 of this Decree by the
imported quantity.
The guarantee must be from a bank or insurance company. There shall be no possibility
of posting a guarantee in the form of a monetary deposit.
The period of validity of the guarantee shall be three (3) years.
The fact of having provided a general guarantee or not having the obligation to do so
shall not exempt the importer from the obligation mentioned herein.
Once the release has been authorized, the Customs Operation Management Division, or
whichever service is acting on its behalf, shall subm it to the Inspection Management
Division copies of the import declaration together with supporting documents, and of
the guarantee and the inspection report in accordance with its remit.
2.39. Thus, in cases where a valuation dispute arises in connection with th e inspection or
examination procedure, the importer of clothing and footwear will be obliged to post a specific bank
or insurance guarantee for an amount equivalent to 200 % of the difference between the declared
f.o.b. price and the result of multiplying the threshold unit price (see paragraph 2.34 above) by the
quantity imported, in order to secure the release of the imported goods when the declared f.o.b.
price is lower than or equal to that threshold . The guarantee must be constituted for a period of
three years and may not be constituted in the form of a monetary deposit.
2.3.3.3 Special import regime under Decree No. 2218/2017
2.40. This measure would comprise different aspec ts of the special import regime established by
Decree No. 2218/2017, applicable to imports of clothing and footwear classified in Chapters 52, 53,

57 See paragraph 2.17 above. Colombia's response to Panel question No. 1, para. 4.
58 See footnote 50.

54, 55, 56, 58, 59, 60, 61, 62, 63 and 64 of Colombia's Customs Tariff, where the declared f.o.b.
value of th e relevant imported products is lower than or equal to the thresholds established in
Article 3 of that Decree (see para. 2.34 above). T hose aspects would include t he specific bond
described as a separate measure in the previous section as well as other requirements contained in
Articles 4, 5, 6 and 8 of Decree No. 2218/2017.
2.41. With regard to the requirements concerning the presence of import operations observers
(Article 6) and risk management (Article 8), see sections 2.3.2.3.3-2.3.2.3.4 of this Report, which
describe such requirements with respect to identical provisions in Decree No. 1745/2016. The Panel
will now describe the requirements contained in Articles 4 and 5 of Decree No. 2218/2017, which
exhibit some discrepancies with respect to the respective Articles 4 and 5 of Decree No. 1745/2016.
2.3.3.3.1 Documentary and certification requirements
2.42. With regard to the documenta ry and certification requirements, Article 4 of Decree
No. 2218/2017 provides as follows:
ARTICLE 4. Importation. Natural or legal persons seeking to import into the national
customs territory and/or to bring into a free zone goods from abroad consisting of fibres,
yarns, fabrics, clothing and footwear classified in the subheadings of the Customs Tariff
listed in Article 3 of this Decree, at a price lower than or equal to the threshold specified
in that Article, shall be required to provide evidence to the Customs Operation
Management Division (or whichever service is acting on its behalf) of the Sectional
Customs and Excise D irectorate with jurisdiction over the place of arrival, that the
following requirements have been met:
1. Without prejudice to submission of the advance declaration in the terms and in
the manner prescribed by the National Customs and Excise Directorate, t he
importer, which must also be the consignee, shall be required, at least one month
in advance of the arrival of the goods in the national customs territory, to submit
for each shipment the identity and liability form, under such terms and conditions
as m ay be specified by the National Customs and Excise Directorate for that
purpose, accompanied by the following documents:
(a) Certification from the foreign supplier, apostilled or legalized with an official
translation into Spanish, showing evidence of the intention to sell to the
importer in Colombia and indicating, where appropriate, the type of
economic relationship with the importer in accordance with the Tax Statute,
and also providing the address, telephone number and email address of the
supplier as well as the six -digit tariff subheading , containing the detailed
description of the products to be exported, the quantity and their respective
prices.
(b) Apostilled or legalized certification, with an official translation into Spanish,
of the existence of the foreign supplier, to be issued by the entity in the
exporting country that keeps the official register of producers or traders .
Should no such entity exist, the importer must testify to that fact under
oath, which shall be deemed to have been taken by the signing of the
document, without prejudice to the supervisory and inspection powers of
the National Customs and Excise Directorate.
(c) If the importer of the goods is to sell them in the same state, it must submit
a list of the distributors of the go ods in Colombia, indicating their tax
identification number (NIT), business name, address, telephone number
and email address.
(d) Declaration of the goods signed by the legal representative of the
Colombian customs agency, indicating their tax identification
number (NIT), business name, address, telephone number and email
address, where appropriate, certifying that they have conducted a
background check on the customer for the importer for which they are to

act as customs broker, and indicating how long th e parties have worked
together.
(e) Declaration signed by the importer or the importer's legal representative,
certifying the following:
(i) That the value to be declared for the good s being imported
corresponds to the price actually paid or payable.
(ii) The address of the storage facilities for the goods being imported.
(iii) Detailed information on the distribution and marketing chain in
Colombia for the goods being imported.
(iv) That they are aware that the customs authority is entitled to submit
the d ocuments related to the import transaction to the Attorney
General's Office and the Financial Information and Analysis Unit
(UIAF).
2. Without prejudice to the presence of the customs representative from the
customs agency, where action is taken through the latter, the importer, the legal
representative or the agent of the importing company must be present for the
process of customs inspection or examination of the goods.
For this purpose, the importer's agent must be different from the Customs
Agency.
The absence of the importer, the legal representative or the agent of the
importing company shall result in the non-admissibility or non -authorization of
release.
Paragraph 1. The iden tity and liability form and the doc uments referred to in this
article shall constitute supporting documents for the import declaration.
Failure to submit or the extemporaneous submission of these documents shall result in
the non-admissibility or non-authorization of release.
Paragraph 2. In the case of goods that are to be imported from a free zone to the
remainder of the national customs territory, the importer must be the same as the
consignee whose name appears in the transport document with which the goods entered
the free zone, unless it is a matter of products classified under subheading 6406100000,
and consigned to an industrial user of goods or of goods and services.
In the event that the consignee and the importer are not the same, this will result in
the non-admissibility or non-authorization of release.
Paragraph 3. The special measures provided for in this Decree shall not apply to the
goods specified in Article 3 hereof, owned by foreign companies or persons not resident
in the country, which have been introduced from abroad to I nternational Logistical
Distribution Centres, for distribution in their entirety to the rest of the world.
2.43. Thus, in order to be able to import goods regulated by Decree No. 2218/2017 at prices equal
to or below the thresholds prescribed in that Decree (see paragraph 2.34 above), importers are
required to submit a set of documents to the customs authority at least one month in advance of
the arrival of the goods in Colombian territory . Likewise, such importation requires the physical
presence of the importer, the legal rep resentative or the agent of the importing company, as
appropriate, during the process of customs inspection or examination of the goods. If the importer
does not submit the required documents or does so extemporaneously, the goods cannot be
released.

2.44. Pursuant to Article 4, paragraph 3, of the above -mentioned Decree No. 2218/2017, the
importation of goods owned by foreign companies or persons not resident in the country, which have
been introduced from abroad to International Logistical Distribution Centres59 for distribution in their
entirety to the rest of the world, is exempted from the special measures provided for in that Decree.60
2.45. Article 9 of Decree No. 2218/2017 prohibits the reshipment of goods subject to this Decree
when they do not meet the requirements set out in Article 4.61
2.3.3.3.2 Entry controls
2.46. Article 5 of Decree No. 2218/2017 provides for the possibility of establishing customs controls
on the entry of goods in the following terms:
ARTICLE 5. Entry controls. In accordance with risk management system criteria, the
Special Administrative Unit of the National Customs and Excise Directorate (DIAN) may
establish customs controls on the entry of goods referred to in this Decree. If measures
restricting entry come to be established, they must be duly supported and justified in
accordance with the analysis and technical report stemming from the same risk
management system.
2.47. Thus, the DIAN may establish customs controls on the entry of goods subject to the decree,
in accordance with criteria based on the Colombian risk management system.
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Colombia requests that the Panel find that it has complied with the DSB's recommendations
and rulings in the original proceeding to bring its measures into conformity with its obligations under
the GATT 1994.62
3.2. Panama requests that the Panel, considering the enactment and entry into force of Decree
No. 2218/2017 in the course of this proceeding and the fact that the measures challenged by
Panama are governed by that regulation, should adopt:
a. Findings on the measures with the characteristics contained in Decree No. 1745/2016;
and
b. Findings and recommendations on the measures with the characteristics contained in
Decree No. 2218/2017.63
3.3. In particular, Panama requests the Panel to find that:
a. The specific bond and the special import regime are Colombian "measures taken to
comply" within the meaning of Article 21.5 of the DSU.64

59 The International Logistical Distribution Centres are public warehouses authorized by the DIAN,
located in ports, airports or specialized logistical infrastructures, when the latter have authorized arrival sites,
in which foreign or domestic goods may be entered for storage, as may goods in the final stages of a
suspensive procedure or a processing and/or assembly procedure, which are to be distributed by reshipment,
importation or exportation. (Decree No. 390/2016 (Exhibit PAN-4), Articles 111 et seq. and Colombia's
response to Panel question No. 14, paras. 52-54.)
60 Decree No. 2218/2017 (Exhibit PAN-43), Article 4, para. 3.
61 Ibid. Article 9.
62 Colombia's first written submission as complainant, para. 39; first written submission as respondent,
para. 139; second written submission as complainant, para. 138; and second written submission as
respondent, para. 162.
63 Panama's response to Panel question No. 49.
64 Panama's first written submission as respondent, para. 90; second written submission as

b. The specific bond requirement is inconsistent with Article XI:1 of the GATT 1994.65
c. The specific bond requirement does not meet the requirements of Article 13 of the Customs
Valuation Agreement.66
d. The specific bond is not administered in a uniform, impartial and reasonable manner,
contrary to Colombia's obligations under Article X:3(a) of the GATT 1994.67
e. The special import regime is inconsistent with Article XI:1 of the GATT 1994.68
f. The special import regime is inconsistent with Articles 1, 2, 3, 5, 6 and 7(f) and (g) of the
Customs Valuation Agreement.69
g. The special import regime gives rise to an administration of Articles 493 and 486 of Decree
No. 390/2016 that is not uniform, impartial and reasonable, contrary to Colombia's
obligations under Article X:3(a) of the GATT 1994.70
h. The special import regime results in the application of substantial penalties for minor
infringements, in a manner inconsistent with Article VIII:3 of the GATT 1994.71
i. Colombia has failed to demonstrate that the requirements of the specific bond and the
special import regime are justified under Article XX of the GATT 1994.72
3.4. Consequently, Panama requests the Panel to find that Colombia has not brought its compliance
measures into conformity with its obligations under the GATT 1994 and to make the relevant
recommendations in accordance with Article 19 of the DSU.73
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the Panel
in accordance with paragraph 18 of the Working Procedures adopted by the Panel (see Annexes B-1
and B-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Ecuador, the European Union, Honduras, Japan and the United States are
reflected in their executive summaries, provided in accordance w ith paragraph 20 of the
Working Procedures adopted by the Panel (see Annexes C -1, C-2, C-3, C-4 and C -5). Australia,
China, Guatemala, India, Indonesia, Kazakhstan, Korea, the Russian Fe deration, Singapore and
Chinese Taipei did not submit written or oral arguments to the Panel.

65 Panama's first written submission as complainant, para. 73; first written submission as respondent,
para. 90; second written submission as complainant, para. 285; and second written submission as respondent,
para. 473.
66 Panama's second written submission as respondent, para. 473.
67 Panama's first written submission as respondent, para. 90; second written submission as
68 Panama's first written submission as complainant, para. 73; first written submission as respondent,
para. 90; second written submission as complainant, para. 285; and second written submission as respondent,
para. 473.
69 Panama's second written submission as respondent, para. 473.
70 Panama's first written submission as respondent, para. 90; second written submission as
71 Panama's second written submission as respondent, para. 473.
72 Panama's second written submission as complainant, para. 285; and second written submission as
respondent, para. 473.
73 Panama's first written submission as complainant, para. 74; first written submission as respondent,
para. 91; second written submission as complainant, para. 286; and second written submission as respondent,
para. 474.

6 INTERIM REVIEW
6.1 Introduction
6.1. On 26 June 2018, the Panel submitted its Interim Report to the parties. On 10 July 2018,
Panama informed the Panel that it did not intend to request the review of any precise aspects of the
Interim Report. Colombia did submit written requests for the review of some precise aspects of the
Interim Report. Neither of the parties requested an interim review meeting. On 17 July 2018,
Panama submitted comments on Colombia's requests for review.
6.2. In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the Panel's
response to the requests made by Colombia and the comments submitted thereon by Panama at
the interim review stage. The Panel modified aspects of its Report in the light of Colombia's requests
where it considered that it was appropriate to do so, as explained below. The Panel also corrected a
number of typographical and other non -substantive errors, including those identified by Colombia
with respect to footnote 235 and paragraphs 2.7, 7.142 and 7.157.
6.2 Colombia's specific requests for review
6.2.1 Descriptive part
6.3. Colombia suggests amending the wording of footnote 52 to paragraph 2.29 as follows: "The
observers are members of Colombian private industry ] natural persons with knowledge of and
experience in a productive economic sector". Colombia also suggests referring to Exhibit PAN-64 in
the plural. Panama opposes the request, indicating that the description of the observers as members
of Colombian private industry stems from Colombian customs law and that the amendment would
make it appear that the import operations observers could be linked to the DIAN. The Panel declines
to make the amendments suggested by Colombia. In the Panel's view, the relevance of the role of
the observers for this dispute lies in the fact that they are representatives of industry and not in
their being natural persons with knowledge of and experience in the sector. As for Exhibit PAN -64,
it is a single exhibit containing various documents, not various exhibits.
6.2.2 The question of which measures are the ones "taken to comply" in the present
proceedings
6.4. With respect to paragraph 7.67, Colombia suggests amending the wording of the last sentence
as follows: "In all cases, moreover, there is the presumption it is considered that imports at or below
the level of the thresholds have a high risk of being unlawful in nature". Panama opposes this
request, citing submissions from Colombia in which it is expressly indicated that it is suspicions that
are involved. Panama therefore requests that the original language be maintained or that the word
"presumption" be changed to "suspicion". The Panel notes that the sentence in question refers to
Colombia's arguments. It therefore accepts Colombia's request for review, making the neces sary
adjustments to reflect this fact.
6.5. With respect to paragraph 7.72, Colombia suggests amending the wording of the first sentence
as follows: "The fact that Decrees No. 1744/2016 and No. 1745/2016 are constructed around the
presumption that imports at or below the level of the thresholds are having a high risk of being
unlawful in nature". Panama opposes this request for the same reasons as described in the preceding
paragraph. The Panel considers that, in this paragraph, a "suspicion" can indeed be referred to given
that, as Panama points out, it is the term used by Colombia in its submissions and this assessment
follows from the preceding paragrap hs. Consequently, the Panel decides to adjust the text by
replacing the term "presumption" with "suspicion". The Panel also sees no difficulty in accepting
Colombia's request to include the words "a high risk of being".
6.2.3 Panama's claims under Article XI:1 of the GATT 1994
6.6. With respect to paragraph 7.260, Colombia suggests that the Panel amend the wording to
indicate that the limited flexibility of the regime is "alleged". Panama has made no objection to this.
The Panel accepts Colombia's request for review, making the necessary adjustments to the wording
of paragraph 7.260.

7 FINDINGS
7.1 Preliminary issues
7.1.1 Introduction
7.1. It is a distinguishing feature of the present proceedings under Article 21.5 of the DSU that, as
described in section 1.1 above, they have been initiated by both parties. 74 This complicates the
situation because there are two different panel requests in which the measures at issue and the
claims are not the same.
7.2. The problem that forms the subject of the terms of reference in the present proceedings resides
mainly in the fact that the parties are faced with the question of which measures are the ones taken
by Colombia to comply with the recommendations and rulings of the DSB within the meaning of
Article 21.5 of the DSU. Whereas Colombia argues that the only "measure taken to comply" is the
replacement of the compound tariff by an ad valorem one via Decree No. 1744/2016, Panama
maintains that the specific bond and the special import regime with the characteristics envisaged in
Decree No. 1745/2016, and subsequently in Decree No. 2218/2017, are also "measures taken to
comply".
7.3. The Panel's first task will therefore be to settle the question of which measures are the o nes
that Colombia has taken to comply. If from this analysis it is concluded that the specific bond and
the special import regime with the characteristics envisaged in Decree No. 1745/2016 fall within the
Panel's terms of reference, it will be necessary to examine whether, as claimed by Panama, the
specific bond and the special import regime with the characteristics envisaged in Decree
No. 2218/2017, which replaces and repeals Decree No. 1745/2016, are likewise within the Panel 's
terms of reference. This al so raises the question of whether, as Panama requests, findings should
be made with regard to the measures regulated by Decree No. 1745/2016, as well as findings and
recommendations concerning those regulated by Decree No. 2218/2017.
7.4. Together with these fundamental issues relating to the Panel's terms of reference, this section
also addresses the question of whether the claims made by Panama in its panel request fall within
the terms of reference of the panel established at the request of Colombia. Moreover , Colombia's
objections relating to the claims made by Panama under Article VIII:3 of the GATT 1994 and
Article 7.2(g) of the Customs Valuation Agreement will also be examined.
7.5. The analysis begins with the question of the measure or measures "taken to comp ly" by
Colombia.
7.1.2 The question of which measures are the ones "taken to comply" in the present
proceedings
7.1.2.1 Arguments of the parties
7.1.2.1.1 Colombia
7.6. Colombia maintains that the compliance measure is Decree No. 1744/2016. In its opinion, the
customs bond and the customs formalities of Decree No. 1745/2016 are very different in nature
from the compound tariff declared to be inconsistent 75 and fall outside the scope of these
proceedings. For Colombia, the Article 21.5 procedure is limited to an assessment of "the existence
or consistency with a covered agreement of measures taken to comply with the
recommendations and rulings of the DSB" and, therefore, the scope of the "measures taken to

74 Although this situation could be described as exceptional in the light of previous practice, there are
precedents; for example, in EC – Bananas III and, more recently, US – Tuna II (Mexico). In EC – Bananas III,
the European Communities initiated its own proceeding under Article 21.5, without the assistance of the
complainant (United States). In the parallel case, Ecuador (another of the complainants) initiated a proceeding
under Article 21.5. In US – Tuna II (Mexico), both the United States and Mexico initiated Article 21.5
proceedings which were dealt with jointly. Recently, there has been a case in which only the responding party
instituted a compliance proceeding (India – Agricultural Products (Article 21.5 – India)).
75 Colombia's first written submission as respondent, para. 19; and opening statement at the meeting of

comply" must be determined with reference to the said recommendations and rulings and the original
measures at issue.76
7.7. Colombia points out that the measure which formed the subject of the findings of inconsistency
has been withdrawn, resulting in the achievement of the "first objective of the dispute settlement
mechanism" in accordan ce with Article 3.7 of the DSU. 77 Colombia stresses that the
recommendations and rulings of the DSB referred exclusively to the compound tariff applied to
imports of certain items of apparel and footwear. That tariff has been repealed and replaced by new
tariffs established by Decree No. 1744, the decree which Colombia has notified as the measure taken
to comply.78 According to Colombia, Panama, in its first written submission, in describing the result
of the original proceeding, acknowledges that the DSB's recommendations relate exclusively to the
compound tariff. 79 Given that Panama does not link the measures challenged with the
recommendations and rulings of the DSB, the Panel should conclude that it has not been
demonstrated that the measures challenged fall within the scope of Article 21.5.80
7.8. For Colombia, the text of Decree No. 1745/2016 clearly shows that its purpose is to strengthen
aspects of the administration and implementation of Colombia 's customs procedures to combat
money laundering, terrorism and unfair competition. There is nothing in the text of the decree to
indicate that it is a measure taken to comply with the recommendations and rulings of the DSB.
Colombia maintains that independent discussions of the decrees confirm that Decree No. 1744/2016
was adopted to comply with the recommendations and rulings of the DSB and that other measures
intended for that purpose were not considered.81 Colombia argues that in the meeting no reference
was made to the DSB 's recommendations and rulings when Decree No. 1745/2016 was being
discussed. In agreement with the representative of the DIAN, the measures were established to
strengthen the risk management system and customs controls in the face of situations where there
was a suspicion of customs fraud. The Comm ittee recommended the adoption of the measures of
this Decree "as a policy matter".82
7.9. According to Colombia, Decree No. 1745/2016 is significantly different in nature from the
compound tariff at issue in the original proceeding and from the tariffs of Decre e No. 1744/2016.
Decree No. 1745/2016 establishes customs control measures and does not directly impose import
tariffs. Even if this Decree, as a customs measure, might be relevant in the context of tariff collection,
it is not a measure that regulates tariffs and their levels, which is the subject of the original measure
and the measure taken to comply.83
7.10. Colombia maintains that Panama makes no attempt to link the challenged measures with the
recommendations and rulings of the DSB and fails to make a prima facie case that
Decree No. 1745/2016 is a "measure taken to comply". In the opinion of Colombia, Panama 's
argument appears to be based on unconvincing ideas: the Article 21.3(c) proceedings and the claim
that the challenged measures pursue the same policy objective as the original measure.84 Colombia
notes that in the arbitration process Panama admitted that measures other than repeal or
amendment of the compound tariff would not have the necessary links with the DSB's
recommendations and rulings to constitute a "measure taken to comply" .85 For Colombia, there is
no consistency between Panama's assertion during the arbitration and its argument that the bond
and the customs formalities are closely related to the recommendations and rulings of the DSB. The
decision taken by the Arbitrator with respect to this argument is not relevant to this proc eeding.86
For Colombia, recourse to the award of the Article 21.3(c) Arbitrator is out of place, since the latter's

76 Colombia's first written submission as respondent, paras. 15-18; and second writt en submission as
respondent, para. 39.
77 Colombia's opening statement at the meeting of the Panel as complainant, para. 15.
78 Colombia's first written submission as respondent, paras. 21-23; and second written submission as
respondent, paras. 18-20.
79 Panama's first written submission as complainant, para. 12.
80 Colombia's first written submission as respondent, para. 24.
81 Colombia's first written submission as respondent, paras. 25 and 28-30; and second written submission
as complainant, paras. 17-18.
82 Colombia's first written submission as respondent, paras. 26-27; and second written submission as
complainant, paras. 19-20. (emphasis added)
83 Colombia's first written submission as respondent, para. 33.
84 Colombia's first written submission as respondent, para. 34.
85 Award of the Arbitrator, Colombia –Textiles (Article 21.3(c)), para. 3.23.
86 Colombia's first written submission as respondent, paras. 35-36; second written submission as
complainant, paras. 21-22; and second written submission as respondent, paras. 36-38.

terms of reference are very limited and concern only the determination of the reasonable period of
time for the implementation of the recomme ndations and rulings of the DSB. They do not include
the determination of a measure as "taken to comply" within the meaning of Article 21.5 of the DSU.87
7.11. Colombia argues that to accept that a new measure should be included in this proceeding
solely because it shares a policy objective with the original measure would set a dangerous
precedent. It would be an excessively broad interpretation of the scope of Article 21.5. The existence
of a common objective is not a sufficient basis for such a characterization, since Members can adopt
numerous measures to pursue a similar policy objective. Colombia has a broad, comprehensive and
multidisciplinary regime for fighting money laundering, of which the compound tariff formed part. It
would be a misuse of Article 21.5 to allow any measure adopted by Colombia for that purpose to be
challenged in compliance proceedings.88
7.12. Colombia adds that, when a measure is declared to be inconsistent with WTO rules, the DSU
expressly recognizes the right of the responding Member to a reasonable period of time in which to
implement the DSB's recommendations and rulings, and even if this period proves to be insufficient
or it is not possible to comply within it, the possibility of offering compensation, before being subject
to the suspensi on of concessions or other obligations. 89 If the Pan el were to find that
Decree No. 1745/2016 is inconsistent with Article XI:1 of the GATT 1994, Colombia would be unfairly
deprived of the right to a reasonable period of time to bring the Decree into conformity and negotiate
compensation before becoming subject to the suspension of concessions or other obligations.90
7.13. Colombia maintains that Panama can initiate new proceedings at any time if it wishes to
challenge the WTO consistency of Decree No. 1745/2016. At this time, however, it is trying to bypass
the rights and procedures established by the DSU by challenging Decree No. 1745/2016.91
7.14. Colombia maintains that, in the original proceeding, Panama asked the Panel to make a
suggestion for the implementation of the recommendations and rulings of the DSB in accordance
with Article 19.1 of the DSU, and specifically that it suggest the introduction of a "capping
mechanism that ensures the observance of the relevant bound tariffs, or a return to the ad valorem
tariff system, without exceeding the limits of 35% and 40% ad valorem depending on the product".92
Decree No. 1744/2016 repealed the compound tariff and established new tariffs that do not exceed
Colombia's Schedule of Concessions, as Panama requested. In attempting to challenge the measures
of Decree No. 1745/2016, Panama is seeking to obtain a remedy that it did not seek in the original
proceeding.93
7.15. Colombia explains that the "matter" in the proceeding initiated by Colombia consists of the
measures and claims set out in document WT/DS461/17, in which Colombia explained that by means
of Decree No. 1744/2016 it had replaced the compound tariff with an ad valorem one that did not
exceed Colombia's bound tariffs and, consequently had brought the measure into conformi ty with
its obligations. The document in question mentions only the measure under Decree No.
1744/2016 and the claims that were the subject of the recommendations and rulings of the DSB
(that is, Articles II:1(a) and II:1(b) of the GATT 1994). Consequently, the terms of reference of the
Panel entrusted with the proceeding initiated by Colombia are limited to examining the consistency
of the measure taken to comply (Decree No. 1744/2016) with Article s II:1(a) and II:1(b) of the
GATT 1994. Any other measures and claims are excluded from the terms of reference of the Panel
in the proceeding initiated by Colombia (including the claims under Article X:3(a) and Article XI:1 of
the GATT 1994).94

87 Colombia's first written submission as respondent, para. 37.
88 Colombia's first written submission as respondent, paras. 38-39; second written submission as
complainant, para. 33; second written submission as respondent, para. 32; and opening statement at the
meeting of the Panel as complainant, para. 20.
89 Colombia's first written submission as respondent, paras. 40-41.
90 Colombia's first written submission as respondent, para. 42; and opening statement at the meeting of
91 Colombia's first written submission as respondent, paras. 43 and 46.
93 Colombia's first written submission as respondent, paras. 44-45.
94 Colombia's second written submission a s complainant, paras. 4-8 and 12-14; and opening statement
at the meeting of the Panel as complainant, para. 23.

7.16. Colombia acknowledges the existence of the "close nexus" theo ry established by the
Appellate Body. However, Colombia considers that in this case the DSB 's recommendations were
limited to the compound tariff and therefore bear no relation to the measures implemented through
Decree No. 1745/2016. Colombia adds that Panama has failed to establish the existence of a close
connection between the measure it seeks to challenge in the Article 21.5 proceedings, the measure
declared as taken to comply, and the recommendations and rulings of the DSB.95
7.17. According to Colombia, the use of the "close nexus" test by Panama is contradictory since the
premise of this test is that the measure examined is not a measure taken to comply. However,
Panama repeatedly describes the specific bond and the special import regime as "measures taken
to comply". Colombia maintains that these measures cannot simultaneously be measures taken to
comply and "closely related" measures. 96 In any event, even if Panama had adduced that these
measures are "closely related" measures and not "measures taken to comply ", it would still have
failed to establish that they fall within the scope of the present proceedings. 97 Colombia contests
Panama's line of argument with respect to the elements of the "close nexus" theory (timing, nature
and effects).
7.18. As far as timing is c oncerned, Colombia maintains that the mere fact that a measure is
introduced after the adoption of the DSB's recommendations and rulings does not mean that it is a
"measure taken to comply". The fact that an instrument is adopted after the DSB's recommendations
enter into effect does not necessarily mean that that instrument automatically falls within the scope
of Article 21.5. That would convert any measure introduced after the DSB 's recommendations and
rulings into a measure taken to comply, which would i nclude a possibly unlimited number of
measures and leave the responding Member forever subject to Article 21.5 proceedings. Likewise,
the adoption of an instrument on the same day as the measure taken to comply does not convert
the former into another measure taken to comply. It is not reasonable to assert that any legislative
or regulatory activity that takes place on the same day comprises measures taken to comply. This
approach would encompass a broad range of measures bearing no relation to the
recommendations and rulings of the DSB.98
7.19. With regard to "nature", for Colombia the nature of the measures is substantially different
and Panama is trying to circumvent this difference by means of an erroneous characterization of the
measures. Colombia considers the fact that the two measures were introduced under different legal
regimes to be further evidence of their different nature. Decree No. 1744/2016 is a tariff measure
that establishes import tariffs and was adopted under Colombia 's tariff code. On the other hand,
Decree No. 1745/2016 is a customs measure whose purpose is to establish a mechanism for
strengthening the risk management and customs control system, and was adopted under a different
legal regime (Law No. 1762 of 2015). 99 Moreover, in its opinion, t he fact that the decrees were
examined by the Committee on Customs, Tariffs and Foreign Trade ( Triple A Committee) does not
mean that they are similar in nature, since this Committee has jurisdiction over a wide range of
trade policy instruments. In fact, they were examined by the Committee under different powers.
Decree No. 1744/2016 was examined under the powers conferred on the Triple A Committee by
paragraph 1 of Article 1 of Decree No. 3303/2006, and Decree No. 1745/2016 was examined in
accordance with paragraph 2.100 Moreover, the drafting history of the two decrees demonstrates
that the Triple A Committee examined them separately and the minutes clearly indicate that the
Committee considered that Decree No. 1744/2016 was being proposed to comply with th e DSB's
recommendations and rulings.101 Colombia contends that the coverage of the two decrees is not the
same: Decree No. 1744/2016 applies to all the products classified in Chapters 61 and 62 and in
headings 64.01-64.05, whereas Decree No. 1745/2016 only a pplies to the products classified in
Chapters 61, 62 and 64 that are imported at prices below certain thresholds. Likewise, Colombia

95 Colombia's response to Panel question No. 57, paras. 254-257; comments on Panama's response to
Panel question No. 57; and additional written submission, para. 12.
96 Colombia's second written submission as complainant, para. 24; and second written submission as
respondent, para. 17.
97 Colombia's second written submission as complainant, paras. 23 and 25.
98 Colombia's second written submission as complainant, paras. 26-27; second written submission as
respondent, para. 30; response to Panel question No. 57; comments on Panama's response to Panel question
99 Colombia's second written su bmission as complainant, para. 29; and second written submission as
respondent, para. 34.
100 Decree No. 3306/2006 (Exhibit COL-6), Article 1.
101 Colombia's second written submission as complainant, para. 30.

points out that the thresholds of the two measures are very different and that different rationales
were used for determining them. The tariff thresholds are fixed in accordance with those bound by
Colombia within the WTO for imports above the threshold, whereas the thresholds of the customs
control measure were determined by taking into account the historica l level of imports over a
seven-year period.102
7.20. Colombia argues that WTO Members adopt a variety of measures in furtherance of a similar
policy objective. An excessively broad interpretation of the scope of Article 21.5 would seriously
undermine the rights of Members by subjecting them to the possibility of suspension of concessions
without a reasonable period of time for broad categories of measures and would have a "chilling
effect" on the right of Members to regulate. The fact that a measure pursues the same public policy
objective is not a sufficient reason to consider that a measure is one taken to comply. Governments
adopt a variety of measures that pursue the same public policy objective. Under this interpretation,
each of these measures could fall within the scope of Article 21.5.103
7.21. With regard to effects, Colombia maintains that Panama does not provide any information
concerning the "banking costs" of the customs bonds or of the so -called "logistical hindrances" of
the special import regime.104 Nor does it offer any support for the assertion that the banking costs
and the logistical hindrances have trade-restrictive effects. Being uncorroborated, these claims do
not constitute a basis for the Panel to examine the "effects" in assessing whether the customs bond
and the special import regime are measures taken to comply . Colombia notes that neither the
Appellate Body nor the original panel referred to Decree No. 1745/2016, much less to its effects.105
7.22. For Colombia, an opinion similar to that of Panama was rejected by the compliance panel in
US – Large Civil Aircraft (2 nd complaint). That panel observed that "the close nexus test is not
satisfied by merely identifying any links at all between the 'undeclared' measure and the declared
measures taken to comply or the DSB recommendations and rulings".106
7.23. Colombia contends that in the previous cases in which it was determined that measures were
"closely related", the links between the measures were significantly stronger. For example,
administrative decisions adopted in the same anti -dumping or countervailing duty proceedings as
the measure found to be inconsistent in the original proceedings 107, an import quarantine measure
applied at sub-federal level after a similar quarantine measure at federal level had been found to be
inconsistent108 and a loan 109 to a company that had had been the recipient of a grant which had
been found to constitute a subsidy in the original proceedings.110
7.1.2.1.2 Panama
7.24. Panama maintains that the "measure taken to comply" goes beyond the measure declared by
Colombia and that the requirement of a specific bond and the application of a special import regime
to imports of textiles and footwear at prices equal to or lower than those determined by Colombia
in Decree No. 1745/2016 form part of the "measure taken to comply".111
7.25. Panama considers that the designation of certain measures by the r esponding party as
"measures taken to comply" is not determinative of the compliance panels' terms of reference, since

102 Colombia's second written submission as complainant, para. 31; comments on Panama's response to
Panel question No. 57; and additional written submission, para. 15.
103 Colombia's second written submission as complainant, para. 32; second written submission as
respondent, para. 31; response to Panel question No. 57, para. 256; comments on Panama's response to Panel
question No. 57; and additional written submission, para. 14.
104 Panama provides more information in this respect in its last submission as respondent.
105 Colombia's second written submission as complainant, para. 34; and second written submission as
respondent, para. 35.
106 Colombia refers to the panel report in US – Large Civil Aircraft (2 nd complaint) (Article 21.5 – EU),
para. 7.67. (Second written submission as complainant, paras. 2-4).
107 Appellate Body Reports, US – Zeroing (EC) (Article 21.5 – EC), paras. 230-235; and US – Softwood
Lumber IV (Article 21.5 – Canada), paras. 83-85.
108 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.10(22).
109 Panel Report, Australia – Automotive Leather II (Article 21.5 – US), paras. 6.4-6.5.
110 Colombia's second written submission as complainant, para. 4.
111 Panama's first written submission as respondent, para. 32; and opening statement at the meeting of
the Panel, para. 37.

the latter may also encompass measures that the Member in question does not consider to serve
that purpose. In Panama 's opinion, the meas ures taken to comply are not limited to those which
"move in the direction of, or have the objective of achieving, compliance", so that even actions which
move away from or impair compliance may be "measures taken to comply". Thus, these measures
must be assessed "in their totality", for which purpose panels should assess them in their full context,
including how they are introduced into, and how they function within, the particular system of the
Member concerned. With respect to their enactment, for exampl e, declarations of government
agencies indicating that an undeclared measure was introduced to comply with the
recommendations and rulings of the DSB may constitute evidence that the measure in question
forms part of the "measures taken to comply".112
7.26. Panama considers that an "undeclared measure" should be considered to be a "compliance
measure" if there is an especially close link to the "declared measure". According to Panama, all the
third parties that have replied to Panel questions agree on this point. 113 In practice, Panama
observes, such a connection has been determined between the two measures in terms of timing,
nature and effects, as well as between the measures and the recommendations and rulings of the
DSB.114
7.27. Thus, for Panama, the specific bond and the special import regime are "closely related" to the
measure declared by Colombia and the recommendations and rulings of the DSB, and would
therefore form part of the "measures taken to comply."115 Where timing is concerned, Panama points
out that Decrees No. 1744/2016 and No. 1745/2016 were issued simultaneously on
2 November 2016 ( 4 months and 11 days after the adoption of the DSB's rulings
and recommendations), so that the measures contained in the two decrees are closely related as
regards the time of their appearance.
7.28. With regard to their nature, Panama maintains that the measures are "closely related" to each
other and to the recommendations and rulings of the DSB, since the two decrees: (a) were
recommended by the same Colombian regulatory body (Triple A Committee) and at the same
299th session of 7 October 2016116; (b) apply to the same products117; and (c) are being applied to
achieve the public policy objective pursued by the old Decree No. 456/2014 (which contai ned the
compound tariff declared inconsistent). For Panama, Decrees No. 1744/2016 and No. 1745/2016
are two sides of the same coin. The preamble to Decree No. 1745/2016 indicates that one of its
underlying purposes was the need to implement new mechanisms that make it possible to counteract
"behaviour [that] adversely affects the industrial and commercial sector as a result of unfair
competition with organizations which, among other things, evade the payment of customs
taxes" and that its adoption was neces sary in order to "achieve on a continuing basis the policy
objective pursued by the measures provided for in Decree 456 of 2014 and its amendments".118 For
its part, the third preambular paragraph of Decree No. 1744/2016 states that its adoption is
necessary in view of the pending expiration of the "application period provided for in Article 5 of
Decree 456 of 2014" and "to achieve on a continuing basis the policy objective pursued by means
of that measure".119

112 Panama's first written submission as respondent, paras. 22-23 and 41; and second written submission
as complainant, paras. 8 and 24-26 (referring to Appellate Body Reports, US – Zeroing (EC) (Article 21.5 – EC),
para. 204; US – Softwood Lumber IV (Article 21.5 – Canada), para. 67; and US – Upland Cotton (Article 21.5 –
Brazil), para. 202).
113 Panama's response to Panel question No. 57 (referring to Ecuador's third-party response to Panel
question No. 6, and the third-party responses of the United States, Japan and the European Union to Panel
question No. 1).
114 Panama's response to Panel question No. 57 (referring to the Appellate Body Reports, US – Softwood
Lumber IV (Article 21.5 – Canada), para. 77; and US – Zeroing (EC) (Article 21.5 – EC), para. 204.)
115 Panama's fir st written submission as respondent, paras. 42-48; second written submission as
complainant, paras. 10-12 and 16; Panama 's second written submission as respondent, paras. 90-101; and
Panama's opening statement at the meeting of the Panel, paras. 39-40.
116 Decree No. 1745/2016 (Exhibit PAN-2), seventh preambular paragraph, and Decree No. 1744/2016
(Exhibits COL-1/PAN-1), second preambular paragraph.
117 Decree No. 1744/2016 (Exhibits COL -1/PAN-1), Articles 1-2, and Decree No. 1745/2016
(Exhibit PAN-2), Article 2.
118 Panama's second written submission as complainant, paras. 12 and 20-23.
119 Decree No. 1744/2016 (Exhibits COL-1/PAN-1), third preambular paragraph; Panama 's first written
submission as complainant, para. 14; and second written submission as respondent, paras. 71-72.

7.29. Panama notes that on its website the DIAN stresses that it is "combating the smuggling and
underinvoicing of clothing and footwear by applying Decrees 1744 and 1745"120 and, with reference
to certain measures, indicates that they were adopted "for the purpose of implementing
Decrees 1744 and 1745". Accordin g to Panama, the DIAN recognizes that
Decrees No. 1744/2016 and No. 1745/2016 are a "single package" intended to combat "the
smuggling and underinvoicing of clothing and footwear". 121 Likewise, on the same day the
decrees were adopted, the Colombian Minister of Trade, Industry and Tourism referred to these
instruments as being used in conjunction, asserting that "the measures we are drafting … will enable
us effectively to combat the illegal practices but, at the same time, we have taken good care to
avoid any adverse effect on formal trade and to comply fully with the instructions of the WTO".122
7.30. Panama considers the fact that Decree No. 1744/2016 imposes a tariff, whereas
Decree No. 1745/2016 imposes customs measures, to be irrelevant as far as the analysis o f the
nature of the measures is concerned. According to Panama, the nature of a measure is related to its
basic or inherent characteristics, or to its character or qualities. Panama points out that, according
to the statements made by Colombia in the origi nal proceedings and in the arbitration process, a
basic or inherent characteristic of the compound tariff of Decree No. 456/2014 was the protection
of public morals through the campaign against money laundering and compliance with Colombian
anti-money laundering legislation. In these compliance proceedings Colombia maintains that the
measures of Decree No. 1745/2016 share the same inherent characteristic of protecting public
morals and securing compliance with Colombian anti-money-laundering legislation. Accordingly, for
Panama, the measures contained in Decree No. 1745/2016 are identical in nature to the measures
in Decree No. 456/2014.123
7.31. Panama also points out that Decree No. 1745/2016 contains customs verification measures
for the collection of the tariff in Decree No. 1744/2016, so that from a narrowly tariff perspective as
well, the measures of Decree No. 1745/2016 and the tariffs of Decree No. 1744/2016 are "closely
related" with respect to their nature.124
7.32. With regard to effects, Panama argues that the tr ade restrictiveness, mitigated by the new
tariff, continues to have an undermining effect through the measures of Decree No. 1745/2016. In
the original proceedings, Colombia argued that "the compound tariff leads to an increase in the unit
price of apparel and footwear imports, thereby reducing the artificially high profit margin." 125
Panama considers that the costs and logistical obstacles linked with the posting of a specific bond
and the special customs regime are currently increasing import costs and, in some cases, completely
deterring importers.
7.33. Panama also notes that "the adoption of the strategies" envisaged in the two
Decrees No. 1745/2016 and No. 2218/2017 was based on the recommendation of the
Inter-Institutional Commission against Smuggling, at its special session on 24 August 2016. 126 In
the minutes of that special session 127 it is explained that the need to implement these "strategies"
is closely connected with the recommendations and rulings of the DSB and, according to Panama, it
is made clear th at the customs measures of Decree No. 1745/2016 combined with the tariff
measures of Decree No. 1744/2016 together constitute the compliance measure taken by Colombia
to comply with the recommendations and rulings of the DSB. Panama points out that in the minutes,
among other things, it is proposed to work on strategies that are to be implemented by taking into
account three ranges or thresholds.128

120 Extract from the DIAN web page (Exhibit PAN-10).
121 Panama's second written submission as complainant, paras. 14-15.
122 Panama's second written submission as respondent, paras. 72 and 97; and "Dos decretos que
fortalecen control aduanero de calzado y ropa", El Espectador (Exhibit PAN-46).
123 Panama's second written submission as complainant, paras. 30-31.
124 Panama's second written submission as complainant, para. 32.
125 Appellate Body Report, Colombia – Textiles, para. 5.88 (referring to Panel Report, Colombia – Textiles,
para. 7.410).
126 Decree No. 1745/2016 (Exhibit PAN-2), sixth preambular paragraph and Decree No. 2218/2017
(Exhibit PAN-43), sixth preambular paragraph.
127 Communications between the parties in the Article 21.3(c) arbitration (Exhibit PAN-83), and minutes
of the special session of the Inter-Institutional Commission against Smuggling (Minutes COL-ARB-02).
128 Panama's response to Panel question No. 57.

7.34. Moreover, Panama points out that the information submitted by Colombia itself demonstrates
that the tariff measure would have a close connection with these customs measures. The minutes
of the Triple A Committee session mention "customs verification measures" that form part of the
tariff collection control mechanism. Nevertheless, adds Panama, neither Decree No. 1744/2016 nor
Colombia's description of the measure contain any reference to these customs verification measures.
Thus, the "customs verification measures" mentioned in the Triple A Committee session would have
to be the measures of Decree No. 1745/2016 discussed and adopted at the same session.129
7.35. According to Panama, Colombia misunderstands the jurisprudence of the close connection
when it claims that the "measures taken to comply" cannot simultaneously be "closely connected
measures". Panama explains that it is using the jurisprudence on the "close connection" to
demonstrate that the specific bond and the special import regime are measures taken to comply.
That is to say, if it is determined that an undeclared measure has the "close connection" it has to be
understood that the measure is a "measure taken to comply" and will fall within the scope of
Article 21.5 of the DSU. 130 According to Panama, if Colombia 's position that only those measures
whose explicit purpose is compliance with the recommendations and rulings of the DSB could be
considered "measures taken to comply", the Appellate Body 's jurisprudence on the "close
connection" would have no utility.131 According to Panama, maintaining that a tariff can have a close
connection only with a tariff would allow M embers easily to evade the compliance disciplines of
Article 21.5 of the DSU by changing the "type" or "wrapping" of the measure, in an attempt to
achieve compliance by means of one measure while the general conclusion of compliance with WTO
law is undermined by means of another measure. For these reasons, if Colombia's restrictive reading
of Article 21.5 of the DSU were to be followed, the scope of these proceedings would be very
limited and lead to their becoming a mockery, together with the principle of prompt compliance with
the recommendations and rulings of the DSB.132
7.36. Panama considers it unconvincing and inappropriate that Colombia should have changed its
position at different stages of the same dispute.133 Panama notes that during the binding arbitration
under Article 21.3(c) of the DSU, Colombia explained that its compliance measure would consist in
the joint application of tariff measures and non-tariff measures of a customs nature, in order to deal
with money laundering, and that it would therefore hav e recourse to two "mutually supportive
decrees". Colombia indicated that action should not be limited to terminating the measure, but that
attention should also be paid to other requirements for achieving specific public policy objectives. In
fact, the Arb itrator disagreed with Panama 's argument that those aspects related to combating
money laundering were "extraneous" to the recommendations and rulings of the DSB and agreed
with Colombia that the "reasonable period of time in the present dispute should inc lude the time
needed to enact both the tariff measure and the customs measure". 134 In Panama's opinion, the
Arbitrator determined the reasonable period of time on the understanding that compliance included
both aspects.135
7.37. According to the Appellate Body, the evaluation of the "measures taken to comply" in their
totality includes their context and the way in which these measures are introduced. 136 It has
therefore indicated that statements by government agencies constitute evidence of a measure
forming part of the measures taken to comply.137
7.38. Moreover, so argues Panama, Colombia maintained a double standard with regard to the
value of what was argued during arbitration, since in paragraphs 35 and 36 of its first written

129 Panama's second written submission as complainant, paras. 13-14 and 19.
130 Panama's second written submission as respondent, paras. 103-106.
131 Panama's second written submission as complainant, paras. 25-26.
132 Panama's comments on Colombia's response to Panel question No. 57.
133 Panama's second written submission as complainant, paras. 34 and 36.
134 Award of the Arbitrator, Colombia – Textiles (Article 21.3(c)), paras. 3.34 and 3.41-3.42 and
Annex A; and integrated executive summary of Colombia, paras. 1 and 3.
135 Panama's first written submission as compl ainant, para. 13; first written submission as respondent,
paras. 37-39; second written submission as complainant, section II.D; and second written submission as
respondent, para. 71.
136 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 67.
137 Panama refers to Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 202.
(Panama's first written submission as respondent, paras. 38-39.)

submission as respondent it mentions Panama 's arguments during arb itration and then, in
paragraph 37 of the submission, maintains that referring to those arguments is "inapposite".138
7.39. Panama regards as irrelevant Colombia 's argument according to which accepting that a
common policy objective brings a ne w measure within the scope of compliance proceedings would
set a "dangerous precedent". For Panama, only those measures having a "close connection" with
the declared measure and the recommendations and rulings of the DSB could be regarded as
measures taken to comply.139
7.40. Panama considers that Colombia is mistaken in suggesting that including within the terms of
reference of a compliance panel a measure which was not a subject of the original proceedings
deprives it of its rights to a reasonable period of time for compliance (Article 21.3 of the DSU) and
to compensation negotiations (Article 22.2 of the DSU). The automatic right to a reasonable period
of time arises only in the event of immediate compliance not being feasible. 140 Moreover, argues
Panama, the DSU does not establish a reasonable period of time for compliance or the possibility of
negotiating compensation for "measures taken to comply". These rights do not exist at this stage of
the process. The period was previously granted to introduce t hese measure s and expired on
22 January 2017 and the negotiations to seek mutually acceptable compensation were conducted
without bearing fruit.141
7.41. Panama points out that Colombia does not explain what it is referring to when it alleges that
Panama is seeking to obtain a remedy that goes beyond what it was seeking to obtain in the original
proceedings. The one and only remedy sought by Panama is that Colombia should fulfil its WTO
obligations.142 Panama explains that, in the original proceedings, Panama requested as a reme dy
the removal of the illegal tariff. This suggestion was rejected by the panel and the Appellate Body,
since the Member responsible for implementing the recommendations and rulings of the DSB enjoys
a measure of discretion in choosing the means and method of implementation.143 However, the
measures adopted by Colombia raise new concerns with regard to their consistency with the covered
agreements, which did not previously exist. The Appellate Body has observed that " an Article 21.5
panel could not properly c arry out its mandate to assess whether a 'measure taken to comply' is
fully consistent with WTO obligations if it were precluded from examining claims additional to, and
different from, the claims raised in the original proceedings".144
7.42. With respect to the panel requested by Colombia, Panama observes that its mandate is to
examine "the matter referred to the DSB by Colombia" in document WT/DS461/24. Among other
things, Panama points out that i n that document Colombia made express reference to the
disagreement with Panama and Panama 's concerns relating to Colombian compliance. Thus, this
disagreement and concerns have always been present (including through being expressly mentioned
by Colombia) and form an integral part of the "matter" before the panel request ed by Colombia.145
According to Panama, there is no limitation that restricts the assessment solely to the measures and
claims that formed the subject of the original proceedings. Former panels have examined measures
not mentioned in a panel request as being measures closely related to those expressly mentioned.
Thus, on the basis of its request, Colombia should have "reasonably expected that any further
measures it [Colombia] would take to comply [with the recommendations and rulings] could be
scrutinized by the Panel".146 The mandate in Article 11 of the DSU for the panel to make an "objective
assessment of the matter" means that the panel requested by Colombia should, at the very least,
establish the nature of Panama's disagreement and verify whether there is any basis for it. Panama

138 Panama's second written submission as complainant, paras. 40-41.
139 Ibid. paras. 43-46.
140 Panama refers to Award of the Arbitrator, Peru – Agricultural Products (Article 21.3(c)), para. 3.28.
(Panama's second written submission as complainant, paras. 47-49.)
141 Panama's second written submission as complainant, paras. 50-52.
142 Ibid. paras. 53-54.
143 Panama refers to Award of the Arbitrator, US – Stainless Steel (Mexico) (Article 21.3(c)) , para. 42.
(Panama's second written submission as complainant, para. 55.)
144 Panama cites Appellate Body Report, EC – Bed Linen (Article 21.5 – India), pa ra. 79. (Panama's
second written submission as complainant, paras. 55-56; and second written submission as respondent,
paras. 27-29.)
145 Panama's second written submission as respondent, paras. 16-26; and opening statement at the
146 Panama refers to Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.10. (Panama's
second written submission as respondent, para. 24.)

considers that "so blunt" an approach would not enable the compliance panel requested by Colombia
to discharge its obligations under Article 11 of the DSU, since it would not be able fully to assess the
matter of Colombian complia nce. An objective and complete assessment of compliance would not
be possible if the panel could not assess the compliance of t he undeclared measures with
WTO provisions other than Article II of the GATT. Such an assessment would be based on an
incomplete and indeed skewed or partial framework, since it would have been defined solely by one
of the parties to the dispute.147
7.43. For Panama it is logical that questions of compliance with respect to undeclared measures
should be covered by the terms of reference of the panel requested by Colombia. It is a general
principle of law that no distinctions should be made where the law does not make any. In this
respect, there is no objective reason either in the Understanding or in pure logic to make a distinction
in coverage between undeclared measures and questions of compliance derived from those same
measures.148
7.44. In Panama 's view, trying to exclude "undeclared measures" from the Panel 's terms of
reference when the disagreement between the parties turned on those measures (and in any case
it had been found that "closely connected measures" were involved) would be inconsistent with the
requirement under Article 3.10 of the DSU that Members engage in "an effort to resolve" the dispute,
and with the objective of Articles 3.3 and 21.1 to ensure "prompt compliance" with decisions. 149
Panama contends that it is a fiction that the panels have different terms of reference. For Panama,
it is the same panel with the same members, with harmonized procedures as regards the submission
of documents and evidence and the holding of meetings, and faced with a single substantive matter.
In any event, both the specific bond and the special import regime, as well as the claims under
Articles X:3(a) and XI:1 of the GATT and under Articles 1, 2, 3, 5 and 7 of the Customs Valuation
Agreement, form part of the terms of reference of the panel requested by Panama.150
7.45. Panama argues that the measur es of Decrees No. 1744/2016 and No. 1745/2016 are the
continuation of the former compound tariff. Colombia has d evised a mechanism akin to that tariff,
which is activated when import prices fall below certain thresholds prescribed by Colombia, as with
the compound tariff. The effect of the new measures is the same: they combine a price -sensitive
component (an ad valorem duty) with a price-insensitive component (specific duty or specific bond
and documentary requirements) for the purpose of discouraging imports of products at competitive
prices in order to protect the domestic industry, using as justification the aim of c ombating money
laundering.151 According to Panama, in adopting Decree No. 456/2014 and Decrees No. 1744/2016
and No. 1745/2016 Colombia based itself on the same conceptual and diagnostic framework: that
there would be certain thresholds which determine what is a real value and what is an "artificially
low" value, because imports which enter at "artificially low prices" are used for money laundering.152
The decrees have the same structure: they use thresholds for determining which values are real and
which are "artificially low". This activates measures, which originally consisted of a compound tariff
that imposed an ad valorem levy and a specific levy and now consist of an ad valorem tariff (via
Decree No. 1744/2016) and multiple requirements involving specific charges (via
Decree No. 1745/2016), which together impose a burden greater than that of the specific levy of
Decree No. 456/2014, because of the costs associated with the new measures.153
7.46. According to Panama, the two decrees have the same policy objective: t o combat money
laundering within the framework of customs risk management (as indicated in the preamble to
Decree No. 1745)154 and the same effects: making imports of textiles and footwear at competitive
prices more expensive and limiting imports. In the ori ginal proceedings, Colombia argued that
Decree No. 456/2014 was making money laundering operations more expensive and thus
discouraging them. In the compliance proceedings , the differential tariff together with the specific
charges of Decree No. 1745/2016 increase the costs of imports at competitive prices, thereby

147 Panama's opening statement at the meeting of the Panel, paras. 36 and 44.
148 Panama's opening statement at the meeting of the Panel, paras. 42-43.
149 Panama's second written submission as respondent, para. 25; and opening statement at the meeting
of the Panel, para. 44.
150 Panama's second written submission as respondent, paras. 30-36; and opening statement at the
151 Panama's second written submission as respondent, paras. 40-41.
152 Ibid. paras. 42-45.
153 Ibid. paras. 47-52.
154 Panama's second written submission as respondent, paras. 55-57.

discouraging their entry into Colombia and making them commercially unviable for traders. In fact,
in 2017, the DIAN publicly announced as "good results" the reduction of imports for at least the
footwear sector "thanks to measures such as Decree 1745".155
7.47. Panama argues that Colombia decided to split up its measure as a result of the declaration
by the Appellate Body, transferring the matter of the "illegality" of imports below the threshold from
the strictly tariff context to one in which there is no conflict with Article II of the GATT. Thus,
Decree No. 1744/2016 responds to the rulings and recommendations of the DSB with respect to
Article II of the GATT, while Decree No. 1745/2016 responds to al l those of Colombia 's policy
considerations that sought to justify the restrictions on imports created by the compound tariff.156
7.1.2.2 Analysis by the Panel
7.48. As indicated in paragraph 7.5 above, the Panel 's first task will be to settle the question of
which measure is the one taken by Colombia to comply or whether there is more than one. Colombia
argues that the only "measure taken to comply" is the replacem ent of the inconsistent compound
tariff by an ad valorem one via Decree No. 1744/2016. In i ts opinion, the recommendations and
rulings of the DSB related exclusively to the compound tariff, which has been repealed and replaced
by new ad valorem tariffs established by Decree No. 1744/2016, the decree which Colombia has
notified as the measure taken to comply. 157 For its part, Panama does not dispute that the new
ad valorem tariffs established by Decree No. 1744/2016 constitute a measure taken by Colombia to
comply; however, for Panama, the specific bond and the special import regime with the
characteristics envisaged in Decree No. 1745/2016 are also measures taken to comply with the
DSB's recommendations and rulings.158
7.49. It should be pointed out that, ultimately, it is for the Panel and not the parties to decide which
are the measures taken to comply.159 Although Colombia's designation of a measure as one "taken
to comply", or not, is relevant, it cannot be conclusive.160 Hence, although characterizing an act by
Colombia as a measure taken to comply when the latter maintains otherwise is not something that
should be done lightly, "a panel, in examining the factual and legal circumstances within which the
implementing Member takes action, may properly reach just such a finding in some cases". 161 If it
were otherwise, an implementing Member would be able to avoid proceedings under Article 21.5 of
the DSU simply by deciding what measures to notify, or not to notify, to the DSB.162 Conversely, nor
is it up to the original complaining party alone, in this case Panama, to determine what constitutes
the "measure taken to comply".163
7.50. There is a close connection between a panel 's terms of reference and the request for its
establishment.164 In proceedings initiated under Article 21.5 of the DSU, as in the original dispute

155 Panama refers to "Se redujo en más del 90% el ingreso de calzado subfacturado en Colombia",
Vanguardia (Exhibit PAN-50). (Panama's second written submission as respondent, paras. 58-61.)
156 Panama's second written submission as respondent, paras. 63, 69 and 74.
157 Colombia's first written sub mission as respondent, paras. 21-23; and second written submission as
respondent, paras. 18-20.
158 Panama's first written submission as respondent, para. 32; and opening statement at the meeting of
the Panel, para. 37.
159 The Appellate Body in EC – Bed Linen (Article 21.5 – India) indicated that "[w]e agree with the Panel
that it is, ultimately, for an Article 21.5 panel – and not for the complainant or the respondent – to determine
which of the measures listed in the request for its establishment are 'measures taken to comply'". (Appellate
Body Report, EC – Bed Linen (Article 21.5 – India), para. 78.)
160 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 73. See also
ibid. para. 77 and Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 204.
161 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 74.
162 Panel Report, Australia – Automotive Leather II (Article 21.5 – US), para. 6.4. See also Appellate
Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 74 and footnote 111.
163 Appellate Body Reports, EC – Bed Linen (Article 21.5 – India), para. 78; and US – Softwood
Lumber IV (Article 21.5 – Canada), para. 73. See also Panel Reports, Australia – Automotive Leather II
164 The legal basis governing the panel request is Article 6.2 of the DSU, which states in relevant part
that panel requests "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". As summarized by the Appellate Body in
China – Raw Materials, Article 6.2 serves a "pivotal function" in WTO dispute settlement and sets out "two key
requirements" that a complainant must satisfy in its panel request, namely: (a) the identification of the specific
measures at issue; and (b) the provision of a brief summary of the legal basis of the complaint, i.e. the claims,
sufficient to present the problem clearly. (Appellate Body Reports, China – Raw Materials, para. 219.) To be

settlement proceedings165, the "matter" referred to the panel consists of two elements: the specific
measures at issue and the legal basis of the complaint (that is, the claim s).166 Thus, the panel
request defines and limits the scope of the dispute and hence the scope of the panel's jurisdiction.
This means that only the measures identified in the panel request may be examined by the
panel and only in relation to their consistency with the provisions of the WTO agreements expressly
mentioned in the request.
7.51. The complexity in the case of DSU Article 21.5 proceedings resides in the fact that the panel's
terms of reference are defined in relation not only to the panel request but a lso to the DSB's
recommendations and rulings in the original proceedings. This is because of the wording of
Article 21.5 of the DSU, which calls for the application of the dispute settlement procedures and
recourse to the original panel wherever possible "[w]here there is disagreement as to the existence
or consistency with a covered agreement of measures taken to comply with the
recommendations and rulings". Thus, although Article 6.2 of the DSU is, in general, applicable to
requests for the establishment of a panel under Article 21.5, it is necessary to adapt the
requirements of Article 6.2, applicable to the original panel request, to the Article 21.5 panel
request.167
7.52. In an Article 21.5 procedure, the "specific measures at issue" are measures "that have a
bearing on compliance with the recommendations and rulings of the DSB".168 This indicates that the
requirements of Article 6.2 of the DSU, as they apply to an Article 21.5 panel request, "must be
assessed in the light of the recommendations and rulings of the DSB in the original panel proceedings
that dealt with the same dispute". 169 However, when the measures actually "taken" by the
implementing Member are broader than the DSB's recommendations and rulings, there is no reason
why the scope of the DSB's recomm endations and rulings should necessarily limit the scope of the
"measures taken to comply".170 In fact, the scope of the Article 21.5 dispute settlement proceedings
cannot be reduced to the issue of whether or not the respondent has implemented the DSB
recommendation.171 On the contrary, these "proceedings involve, in principle, not the original
measure, but rather a new and different measure which was not before the original panel".172
7.53. In the present proceedings it is questioned whether the specific bond and the special import
regime with the characteristics envisaged in Decree No. 1745/2016 are part of the Panel's terms of
reference. There seems to be no doubt that they qualify as "specific measures at issue" in accordance
with the requirements of Article 6.2 of the DSU since, as noted in section 1.1.2 above, they are
identified in Panama's panel request.

precise, the Appellate Body maintains that the "matter" referred to the panel consists of two elements: (a) the
specific measures at issue; and (b) the legal basis of the complaint (or the claims). (Appellate Body Report,
Guatemala – Cement I, para. 72.)
165 Appellate Body Reports, Guatemala – Cement I, para. 72; US – Carbon Steel,
166 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 78. See also Appellate Body
Report, US – Upland Cotton) (Article 21.5 – Brazil), para. 201.
167 In US – FSC (Article 21.5 – EC II), the Appellate Body stated the following:
The Appellate Body has, to date, not been called upon to determine the precise scope of the
phrase "these dispute settlement procedures" in Article 21.5 and how it relates to Article 6.2 of
the DSU. We do not consider it necessary, for purposes of resolving the present dispute, to
determine the precise scope of this phrase. However, we are of the view that the phrase "these
dispute settlement procedures" does encompass Article 6.2 of the DSU, and that Article 6.2 is
generally applicable to panel requests under Article 21.5. At the same time, given that
Article 21.5 deals with compliance proceedings, Article 6.2 needs to be interpreted in the light of
Article 21.5. In other words, the requirements of Article 6.2, as they apply to an original panel
request, need to be adapted to a panel request under Article 21.5.
(Appellate Body Report, US – FSC (Article 21.5 – EC II), para. 59 (footnotes omitted)).
See also Appellate Body Report, US – Zeroing (Japan) (Article 21.5 – Japan), para. 109.
168 Appellate Body Report, US – FSC (Article 21.5 – EC II), para. 61. See also Appellate Body Report,
US – Zeroing (Japan) (Article 21.5 – Japan), para. 109.
169 Appellate Body Report, US – FSC (Article 21.5 – EC II), para. 61. See also Appellate Body Report,
US – Zeroing (Japan) (Article 21.5 – Japan), para. 109.
170 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 202.
171 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), para. 40.
172Ibid. para. 41. See also Appellate Body Reports, Mexico – Corn Syrup (Article 21.5 – US),
paras. 78 and 80; and EC – Bed Linen (Article 21.5 – India), para. 79.

7.54. The doubt that arises with respect to these measures is whether they are "measures taken to
comply" or, at least, measures "inextricably linked" and "clearly connected" 173 to the measure
declared to have been taken to comply by Colombia under Article 21.5 of the DSU, as Panama
claims. In this respect, the A ppellate Body has concluded that "[i]t will ordinarily be necessary to
consider first whether the measure at issue is in itself a measure taken to comply. Only if that
analysis cannot provide a clear answer, is the analysis of US – Softwood Lumber IV (Article 21.5 –
Canada) of application"174, that is to say, the analysis according to which it is determined whether
the measure at issue not declared by the original respondent as a measure taken to comply is
"inextricably linked" and "clearly connected" to the measure declared as having been taken to
comply by the original respondent. 175 The Appellate Body has stressed that the reasoning in
US – Softwood Lumber IV (Article 21.5 – Canada) concerned the identification of measures closely
connected with the declared "measure taken to comply" so as to avoid circumvention.176 Therefore,
"if the measure at issue is found to constitute in itself a measure taken to comply, it will not be
necessary to establish a 'particularly close relationship' of the measure at issue to th e declared
measure taken to comply in order to subject the measure at issue to the scope of Article 21.5 of the
DSU".177
7.55. In the present case, the only measure taken to comply "declared" by Colombia as such is the
ad valorem tariff imposed by Decree No. 1744/2016. Panama does not dispute that this tariff
constitutes a measure taken to comply. However, Panama maintains that the specific bond and the
special import regime with the characteristics envisaged in Decree No. 1745/2016 are also measures
taken to comply, although they have not been "declared" as such by Colombia.
7.56. The task of determining whether a measure at issue is a measure taken to comply by the
original respondent when the latter denies it and has declared that another measure is the only
measure taken to comply is not an easy one. Other panels, in similar situations, have opted to
examine whether the measure at issue in question satisfies the test identified by the Appellate Body
for establishing whether such a measure is "inextricably linked" and "clearly connected"178 to the
measure "declared" by the respondent as a measure taken to comply. In fact, some measures with
a particularly close relationship to the declared "measure taken to comply" and to the
recommendations and rulings of the DSB may also be susceptible to review by a panel acting under
Article 21.5 of the DSU. Determining whether this is the case requires a panel to scrutinize these
relationships, which may, depending on the particular facts, call for an examination of the timing,
nature and effects of the various measures. This also requires a panel to examine the factual and
legal background against which the measure declared by Colombia to constitute the "measure taken
to comply" has been adopted. Only then is a panel in a position to take a view as to whether there
are sufficiently close links to characterize the specific bond and the special import regime with the
characteristics envisaged in Decree No. 1745/2016 as measures "taken to comply".179
7.57. Panama has relied on the above-mentioned parameters, timing, nature and effects, to make
the case that both measures are measures taken to comply.180
7.58. The timing of a measure is a relevant factor in determining whether it is sufficiently closely
connected to a Member's implementation of the recommendations and rulings of the DSB.181 Thus,
the fact that a measure is adopted simultaneously with, shortly before, or shortly after specific
actions introduced by Members with a view to implementing the recommendations and rulings of

173 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), paras. 81 (referring to
Panel Report, US – Softwood Lumber IV (Article 21.5), para. 4.41) and 90.
174 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 244.
175 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), paras. 81 (referring to
Panel Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 4.41) and 90.
176 Appellate Body Reports, US – Upland Cotton (Article 21.5 – Brazil), para. 205; and EC – Bananas III
(Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), para. 245.
177 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III
(Article 21.5 – US), para. 245.
178 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), paras. 81 (referring to
Panel Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 4.41) and 90.
179 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77. See also
Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 207.
180 See paras. 7.26-7.32 above.
181 Appellate Body Reports, US – Softwood Lumber IV (Article 21.5 – Canada), para. 84; and US – Zeroing
(EC) (Article 21.5 – EC), para. 225.

the DSB may provide support for a finding that those measures are closely connected. Conversely,
there might be situations where the fact that the alleged "closely connected" measure was taken a
considerable time before the adoption of the recommendations and rulings of the DSB will be
sufficient to sever the connection between that measure and a Member 's implementation
obligations.182
7.59. As Panama points out 183, Decrees No. 1744/2016 and No. 1745/2016 were issued on the
same day, 2 November 2016, more than four months after the adoption of the rulings
and recommendations of the DSB and, coincidentally, on the same day as the signing of the
arbitrator's award in the arbitration under Article 21.3(c) of the DSU. Bearing in mind the observation
by the Appellate Body that the timing of a measure is a relevant factor in determining whether it is
sufficiently closely connected to a Member's implementation of the recommendations and rulings of
the DSB, the Panel considers that the measures contained in the two Decrees are closely related
with regard to their timing.
7.60. Likewise, the two D ecrees were recommended at the same session (the 299 th session of
7 October 2016) of the same Colombian regulatory body (Triple A Committee).184
7.61. The nature or subject matter of the measure is also relevant to this examination. In previous
proceedings consideration was given, within the nature analysis, to the fact that the related
measures involved the same products185 and the use of the same methodology; this was the precise
issue that was challenged in the original dispute, and which was the subject of the DSB rulings and
recommendations.186
7.62. In this respect, Decrees No. 1744/2016 and No. 1745/2016 apply to the same products 187,
namely, the products classified in Chapters 61, 62 and 64 (specifically headings 64.01, 64.02, 64.03,
64.04 and 64.05 and subheading 6406.10.00.00) of the Colombian Customs Tariff.
7.63. Moreover, as the decrees themselves make clear, they seek to achieve the same public policy
objectives as those pursued by the former Decree No. 456/2014. As Panama points out, the declared
objective of the compound tariff of Decree No. 456/2014 was to protect public morals by combating
money laundering and to secure compliance with Colombia's anti -money laundering legislation.188
The preambles to Decrees No. 1744/2016 and No. 1745/2016 are explicit in this respect.
7.64. On the one hand, the preamble to Decree No. 1744/2016 reads as follows:
Whereas, taking into account the fact that the implementation period provided for in
Article 5 of Decree 456 of 2014, as extended by Decrees 515 of 2016 and 1229 of 2016,

182 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 225. Although "[a] s a whole,
Article 21 deals with events subsequent to the DSB's adoption of recommendations and rulings in a particular
dispute". (Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 70 (original
emphasis). See also Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 222). The timing
of a measure cannot be determinative of whether it bears a sufficiently close nexus with a Member's
implementation of the recommendations and rulings of the DSB so as to fall within the scope of a compliance
proceeding. Since compliance with the recommendations and rulings of DSB can be
achieved before the recommendations and rulings of the DSB are adopted, a compliance panel may
have to review events pre-dating the adoption of those recommendations and rulings in order to
resolve a disagreement as to the 'existence' or 'consistency with a covered agreement' of such
measures". (Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 224.)
183 Panama's first written submission as respondent, paras. 42-43; second written submission as
184Decree No. 1745/2016 (Exhibit PAN -2), seventh preambular paragraph; and Decree No. 1744/2016
(Exhibits COL-1/PAN-1), second preambular paragraph.
185 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 240.
186 In US – Zeroing (EC) (Article 21.5 – EC), the methodology in question was zeroing in the calculation
of margins of dumping. (Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 241 (citing Panel
Report, US – Zeroing (EC) (Article 21.5 – EC), para. 8.104)). Similarly, in US – Softwood Lumber IV
(Article 21.5 – Canada), the Appellate Body found that the product that was subject to the three countervailing
duty proceedings was the same, and the "pass-through" methodology adopted by the USDOC was the same in
two cases. (Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 83).
187Decree No. 1744/2016 (Exhibits COL-1/PAN-1), Articles 1 and 2; and Decree No. 1745/2016
(Exhibit PAN-2), Article 2.
188 Panama's second written submission as complainant, paras. 30-31.

expires on 1 November 2016, it is necessary to implement the exception provided for
in Article 2, paragraph 2, of Law 1609 of 2013, in order to achieve on an ongoing basis
the policy objective pursued by this measure.189
7.65. Likewise, the preamble to Decree No. 1745/2016 states that:
Whereas, taking into account the fact that the implementation period envisaged in
Article 5 of Decree 456 of 2014, as extended by Decrees 515 and 1229 of 2016, expires
on 1 November 2016, it is necessary immediately to implement the exception provided
for in Article 2, paragraph 2 of Law 1609 of 2013, to the effect that the customs
measures provided for in this Decree are applied in order to achieve on an ongoing basis
the policy objective pursued by the measures provided for in Decree 456 of 2014 and
its amendments.190
7.66. On its website the Colombian DIAN emphasizes that it "combats the smuggling and
underinvoicing of clothing and footwear by implementing Decrees 1744 and 1745"191 and, with
reference to certain measures, notes that they were adopted "for the purpose of giving effect to
Decrees 1744 and 1745".192 This language shows that the DIAN considers Decrees
No. 1744/2016 and No. 1745/2016 to be measures having the same target, namely, to combat "the
smuggling and underinvoicing of clothing and footwear". This view appears to be reinforced by the
statements made by Colombian authorities in this respect. For example, on the same day the
decrees were adopted, Colombia 's Minister of Trade, Industry and To urism referred to
Decrees No. 1744/2016 and No. 1745/2016 as instruments to be applied jointly, asserting that "the
measures we designed will enable us to combat illegal practices effectively, but at the same time we
were careful not to adversely affect formal trade and to comply fully with the WTO mandate".193
7.67. In addition, this Panel considers that the structure or methodology used in the decrees is a
reflection of their shared nature. Both Decree No. 456/2014, which was examined in the original
proceedings and Decrees No. 1744/2016 and No. 1745/2016 establish tariffs or special measures
applicable to imports of certain products at a declared price equal to or lower than certain
predetermined thresholds. That is to say, the three decrees operate in accordance with thresholds
established by Colombia on the basis of which special treatment is generated for the imports
concerned.194 In all cases, moreover, Colombia considers that imports at or below the level of the
thresholds have a high risk of being unlawful in nature.
7.68. The Panel considers that the fact that Decrees No. 1744/2016 and No. 1745/2016 were
introduced under different legal regimes (the former in accordance with the Colombian Tariff Code
and the latter under Law No. 1762/2015), as indicated by Colombia, does not affect the
above-mentioned linkage. Likewise, the fact that one measure (Decree No. 1744/2016) is an
exclusively tariff measure whereas the other (Decree No. 1745/2016) consists of customs control
measures does not necessarily mean that they are unrelated in nature, as Colombia maintains. The
Panel agrees with Panama in considering that Decree No. 1745/2016 contains customs verification
measures for collecting the tariff in Decree No. 1744/2016, so that even from a strictly tariff
perspective, the measures of Decree No. 1745/2016 and the tariffs of Decree No. 1744/2016 are
"closely related" in nature.195
7.69. As far as effects are concerned, in previous proceedings consideration was given to whether
the effects of the measure were undermining the implementation of the DSB 's recommendations

189 Decree No. 1744/2016 (Exhibits COL-1/PAN-1), third preambular paragraph. (emphasis added)
190 Decree No. 1745/2016 (Exhibit PAN-2), eighth preambular paragraph. (emphasis added)
191 Extract from the DIAN web page (Exhibit PAN-10).
192 Panama's second written submission as complainant, para. 15.
193 "Dos decretos que fortalecen control aduanero de calzado y ropa", El Espectador (Exhibit PAN-46).
194 This is also the understanding of the European Union, as a third party, which notes that the new
mechanism is similar to that of the compound tariff, since it is also activated when the prices of imports fall
below certain thresholds fixed by Colombia. Moreover, for the European Union, the measures of the two decrees
are Colombia's response to the recommendations and rulings of the DSB. If the compound tariff had not been
declared inconsistent and unjustified under Article XX there would have been no reaso n to replace it with new
measures. (European Union's third-party written submission, paras. 11-20.)
195 Panama's second written submission as complainant, para. 32.

with respect to the measure originally challenged. 196 In fact, although there are some limits to the
scope of the compliance proceedings, "these limits should not allow circumvention by Members by
allowing them to comply through one measure, while, at the same time, negating compliance
through another".197
7.70. With respect to effects, Panama argu es that the trade restrictiveness mitigated by the new
tariff is again having an undermining effect through the measures of Decree No. 1745/2016. In the
original proceedings, Colombia argued that "the compound tariff leads to an increase in the unit
price of apparel and footwear imports, thereby reducing the artificially high profit margin". 198 In
Panama's opinion, the new measures have the same effect: they combine a price -sensitive
component (an ad valorem duty) with a price -insensitive component (specific duty or the
requirement of a specific bond and documentary requirements) for the purpose of discouraging the
importation of products at competitive prices in order to protect the domestic industry, using as
justification the aim of combating money laundering.199
7.71. According to Panama's reasoning, the Panel should conclude that the specific bond and the
special import regime are restrictive in nature so that these measures may be regarded as connected
with the measure taken to comply declared by Colombia. The analysis of the effects of the measure
at issue to establish its connection with the measure declared does not require such a prior finding.
The Panel's analysis should instead be concentrated on establishing whether not considering the
specific bond and the special import regime to be part of the Panel's terms of reference would enable
Colombia to circumvent the recommendations and rulings of the DSB.
7.72. The fact that Decrees No. 1744/2016 and No. 1745/2016 are constructed around the
suspicion that imports at or below the level of the thresholds have a high risk of being unlawful in
nature means that the effect of the specific bond and the special import regime under
Decree No. 1745/2016 is the same as the effect that the compound tariff had. This effect can be
better understood if the ad valorem tariff of Decree No. 1744/2016 is also taken into account. The
Panel agrees with the European Union that the combination of a price-sensitive aspect (ad valorem
tariff) and a price-insensitive one (bond and documentary requirements) could have the same effect
as the compound tariff system.200
7.73. Furthermore, the Panel considers that, if it were determined that the measures contained in
Decree No. 1745/2016 were inconsistent with the covered agreements, those measures could
actually undermine the implementation of the DSB's recommendations with respect to the measure
originally challenged. That is, if, as Panama maintains, the non-tariff elements of the measures were
to operate, for example, as restrictions on the importation of the restrictive products, the objective
sought by means of the recommendations and rulings of the DSB in the original proceedings would
not be achieved in practice. The limits of the compliance proceedings should not allow circumvention
by Members by allowing them to comply through one measure, while, at the same time, negating
compliance through another.201 Consequently, the Panel considers that the measures would also be
related with respect to their effects.
7.74. Once the timing, nature and effects have been examined, the Panel should likewise examine
the factual and legal background that formed the basis for the adoption of the measure which
Colombia has declared to constitute the "measure taken to comply". Only then will it be possible to
take a view as to whether there are sufficiently close links to characterize the specific bond, together
with the special import regime with the characteristics provided for in Decree No. 1745/2016, as
"measures taken to comply".202

196 In US – Zeroing (EC) (Article 21.5 – EC), the Appellate Body examined whether the use of zeroing in
subsequent determinations could undermine implementation in respect of original investigations.
(Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 250.)
197 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 71.
198 Appellate Body Report, Colombia – Textiles, para. 5.88 (referring to Panel Report, Colombia – Textiles,
para. 7.410).
199 Panama's second written submission as respondent, paras. 40-41.
200 European Union's third-party written submission, para. 16.
201 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 71.
202 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77. See also
Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 207.

7.75. There is factual and legal background that enables this Panel to determine that the measures
contained in Decrees No. 1744/2016 and No. 1745/2016 are closely related. First of all, the adoption
of the two decrees was recommended by the same Colombian aut hority, the Triple A Committee,
and at the same session (299th session held on 7 October 2016). This is confirmed by the preambles
to the two decrees.
7.76. On the one hand, the preamble to Decree No. 1744/2016 reads as follows:
Whereas, having examined the recommendation made by the Committee on Customs,
Tariffs and Foreign Trade at its 299 th session of 7 October 2016 , the National
Government resolved to establish … [.]203
7.77. On the other hand, in the preamble to Decree No. 1745/2016 it is stated that:
Whereas the Committee on Customs, Tariffs and Foreign Trade at its 299th session of
7 October 2016 recommended the adoption of the measures incorporated in the present
Decree.204
7.78. In the minutes of the said 299 th session of the Triple A Committee it is stated that "[t]he
Ministry presented a proposal for the collection of the tariff for imports of these goods, based on the
definition of a price threshold".205 According to the minutes, this proposal considered an MFN tariff,
a tariff bound with the WTO, and customs verification measures. The Panel notes that these latter
customs measures are not contained in Decree No. 1744/2016. Therefore, it can only be concluded
that, as indicated by Panama, these have to be the measures of Decree No. 1745/2016. In addition,
the Panel observes that according to the minutes:
Once the topics submitted by the DIAN and the Ministry of Trade, Industry and Tourism
had been discussed, the Committee recommended, as a policy matter, the adoption of
customs measures that make it possible to exercise more effective control over imports
of clothing and footwear products, in particular those imports where the values declared
are abnormal, inexplicably low or unjustifiable in relation to the thresholds established.
It also recommended that the tariff measures applied to these products be adjusted to
comply with the recommendations and rulings of the WTO Dispute Settlement Body.206
7.79. Moreover, the Panel notes that the preamble to Decree No. 1745/2016 mentions that the
adoption of the strategies envisaged therein was also recommended by another Colombian authority,
the Inter -Institutional Commission against Smuggling, at a special session held on
24 August 2016.207 A reading of the minutes of that special session shows that the measures of
Decree No. 1745/2016 are clearly related to the recommendations and rulings of the DSB in the
original proceedings. In this connection, after a brief summary of the original proceedings, the
minutes state the following:
Taking into account the above, since the WTO's decision became known, the Ministry of
Trade, Industry and Tourism and the DIAN have been working on a series of preliminary
strategies for implementing the recommendations of the DSB but which at the same
time are effective against the use of imports of footwear, textiles and clothing to launder
money. Today these strategies are being presented for consideration by the members
of the Commission in order to be discussed and, if appropriate, considered among the
possible implementation measures in relation to the WTO.208
7.80. Further on in the minutes it is noted that the situation has led the DIAN on a preliminary basis
to decide that work could be done on strategies that should be implemented by taking into account
three ranges or thresholds, and mention is made of different customs strategies that could be applied
to imports below the first threshold. These strategies include, inter alia, "[i]ntervening in the import

203 Decree No. 1744/2016 (Exhibits COL-1/PAN-1), second preambular paragraph. (emphasis added)
204 Decree No. 1745/2016 (Exhibit PAN-2), seventh preambular paragraph. (emphasis added)
205 Minutes of the Triple A Committee's 229th session (Exhibit COL-4), p. 7.
206 Ibid. p. 8.
207 Decree No. 1745/2016 (Exhibit PAN-2), sixth preambular paragraph.
208 Communications between the parties in the arbitration under Article 21(c), Minutes of the special
session of the Inter-Institutional Commission against Smuggling, p. 4. COL-ARB-02 (Exhibit PAN-83).

operation in the process of inward clearance on the basis of criteria derived from the customs risk
control system", "[s]trengthening the role of the observ er with respect to advance declarations",
and "[i]ntensifying the work of identifying enterprises that have performed inward clearance at
obviously low prices, for the purpose of carrying out a comprehensive analysis and generating inputs
which make it pos sible to frame special cases for transmission to the Financial Information and
Analysis Unit (UIAF) and the Attorney General's Office".209
7.81. For all of the above reasons, the Panel concludes that the specific bond and the special import
regime with the ch aracteristics provided for in Decree No. 1745/2016 are "inextricably
linked" and "clearly connected" to the measure declared by Colombia as having been taken to
comply, that is to say, the ad valorem tariff imposed by Decree No. 1744/2016.
7.82. In addition, althoug h the Panel recognizes that the statements made by the parties in an
arbitration proceeding under Article 21.3(c) of the DSU are not binding in subsequent procedures, it
seems relevant to point out that during the arbitration under that article Colombia stated that it
would "carry out the administrative processes required to enact the measures modifying the
compound tariff and implementing improvements to Colombia 's customs control and supervision
procedures" and that "[t]wo mutually supportive decrees woul d have to be issued. One regarding
the adjustment of tariffs and the other establishing the customs measures".210
7.83. The Panel observes that one of the arguments used by Colombia against the consideration of
the specific bond and the special import regime as pa rt of the Panel's terms of reference is that it
would seriously impair its rights by subjecting it to the possibility of suspension of concessions
without a reasonable period of time. 211 The Panel considers that, after the original proceedings,
Colombia was given a "reasonable period of time" to implement the recommendations and rulings
of the DSB and that in the review of its measure it could have confined itself to replacing the
compound tariff with an ad valorem one. However, Colombia decided to adopt, in addition, the
specific bond and the special import regime. In these circumstances, the lack of a new "reasonable
period of time" does not give rise to the serious impairment of its rights alleged by Colombia.
Moreover, it is a characteristic of compliance proceedings that "no reasonable period of time for
implementation is available if the new measure taken to comply with the DSB 's
recommendations and rulings is found to be WTO-inconsistent".212
7.1.2.3 Conclusion
7.84. For the reasons given above, the Panel concludes that the specific bond and the special import
regime with the characteristics described in Decree No. 1745/2016 are "inextricably
linked" and "clearly connected" to the measure declared by Colombia as taken to comply, that is to
say, the tariffs imposed by Decree No. 1744/2016.
7.85. Once it has been concluded that the specific bond and the special import regime with the
characteristics described in Decree No. 1745/2016 fall within the Panel's terms of reference, another
problem arises as a result of the fact that the Decree in question has been repealed and replaced by
Decree No. 2218/2017, as explained in Section 7.1.3.2.1 below. According to Panama, the spe cific
bond and the special import regime with the characteristics provided for in Decree No. 2218/2017,
which replaces and repeals Decree No. 1745/2016, are also within the Panel 's terms of reference.
This likewise raises the question of whether findings s hould be made with regard to a repealed
measure, as Panama requests.

209 Communications between the parties in the arbitration under Article 21.3(c), Minutes of the special
session of the Inter-Institutional Commission against Smuggling, pp. 6-7. COL-ARB-02 (Exhibit PAN-83).
210 Award of the Arbitrator, Colombia – Textiles (Article 21(c), para. 3.27.
211 Colombia's first written submission as respondent, para. 38.
212 Appellate Body Report, US – Upland Cotton) (Article 21.5 – Brazil), para. 207.

7.1.3 The question of which measures are the ones on which the Panel should rule
7.1.3.1 Arguments of the parties
7.1.3.1.1 Panama
7.86. Panama considers that the Panel could and should make findings and recommendations
concerning the measures in question on the basis of Decree No. 2218/2017.213 For Panama, the fact
that a regulation is introduced after a panel has been established does not deprive the panel of
procedural competence to rule on what has been defined as the measure at issue, regardless of the
formal "raiment" in which that measure may be clad. Otherwise, adds Panama, the respondents
could easily manipulate the outcome of disputes.214
7.87. Panama points out that Decree No. 2218/2017 merely replaces Decree No. 1745/2016
without changing the essence of the compliance measures, with regard to their nature as customs
controls. Panama asserts that it would be wrong to say that Decree No. 2218/2017 is a new
"measure", since it is merely a new "legislative act" that prolongs the applicability of already existing
measures. Panama maintains that the debate does not revolve around a "new measure" , since the
measures challenged by Panama have always been the same: the specific bond and the special
import regime. For Panama, since the essence of these measures was not changed by the adoption
of Decree No. 2218/2017, they continue to be the same undeclared compliance measures, and
Decree No. 2218/2017 constitutes the legislative instrument with respect to which the Panels should
make rulings and recommendations.215
7.88. Panama states that the Appellate Body in Chile – Price Band System confirmed that panels
may consider a measure that is the subject of legislative amendment in the course of the
proceedings, provided that three requirements are met: (a) that the legislative amendment does
not alter the essence of the measure; (b) that the panel 's terms of reference are sufficiently broad
to include amendments to a measure; and (c) that it may be relevant to examine whether the
inclusion of any changes to a panel's terms of reference is necessary to secure a positive solution to
the dispute.216
7.89. Panama maintains that the first requirement would be met in this case since the issuance of
Decree No. 2218/2017 did not change the essence of the measures at issue which remain essentially
the same in substance. For Panama, the present situation is very similar to that which arose in the
original proceedings when Colombia replaced Decree No. 074/2013 with Decree No. 456/2014. In
that ins tance, the original panel considered that the legislative change introduced by
Decree No. 456/2014 had not given rise to a change in the essence and character of the measure.
Panama maintains that, similarly, the amendments introduced by Decree No. 2218/2017 did not
change the essence of Decree No. 1745/2016 for the following reasons: (a) both decrees provide
for a specific bond and a special import regime; (b) both decrees apply to the same range of
products, with new products added under the second decree; (c) the two decrees contain the same
or very similar regulations; (d) both decrees were issued by the President of the Republic of Colombia
or delegated bodies with presidential functions citing the same basis in law; (e) the two decrees
have practically identical titles and were adopted by the President of the Republic of Colombia on
the basis of a recommendation issued by the Triple A Committee; (f) the two decrees are similar in
validity since they are to remain in force indefinitely; (g) in the course of the proceedings before the
panels, Colombia affirmed that both decrees pursue the same objective, namely, to combat
underinvoicing and money laundering; and (h) Decree No. 2218/2017 replaces and repeals
Decree No. 1745/2016.217
7.90. Panama asserts that the second requirement established in Chile – Price Band System is met,
since the terms of reference of the panels are broad enough to include amendments to a measure.
Panama points out that in its request it explicitly included "any amendments, extensions or

213 Panama's response to Panel question No. 52.
214 Panama's response to Panel question No. 53 and comments on Colombia's response to Panel
question No. 53.
215 Panama's opening statement at the meeting of the Panel, para. 40; and comments on Colombia's
response to Panel question No. 53.
216 Panama's response to Panel question No. 52.
217 Panama's response to Panel question No. 52.

additions" to Decree No. 1745/2016 and that, because Decree No. 2218/2017 amends, extends or
adds to Decree No. 1745/2016, Decree No. 2218/2017 is explicitly covered by the terms of
reference of the panel requested by Panama. Panama adds that, in specifying the legal consequences
of non-compliance with the special import regime, Decree No. 2218/2017 refines the provisions of
Decree No. 1745/2016. Panama also maintains that the text of Decree No. 2218/2017 itself
establishes that the decrees are closely related to each other, since Decree No. 2218/2017 replaces
Decree No. 1745/2016, pursuant to Article 12 of Decree No. 2218/2017.218
7.91. With respect to the terms of reference of the panel requested by Colombia, Panama maintains
that Decree No. 2218/2017 is implicitly covered under its terms of reference, since it is the legislative
act in force that reflects the undeclared compliance measure, covered by virtue of the close nexus.
Panama adds that it has demonstrated that the specific bond and the special import regim e are
compliance measures not declared by Colombia, so that a legislative change in those measures that
does not affect their essence does not alter that demonstration.219
7.92. Panama considers that the third requirement established in Chile – Price Band System is met
in this case since making findings with respect to the specific bond and special import regime on the
basis of Decree No. 2218/2017 would be of help in securing a positive solution to the dispute.
Panama considers that the usefulness of any finding w ould be limited if the panels were to ignore
the amendments of Decree No. 2218/2017 and base themselves exclusively on the specific bond
and special import regime in the way in which they were envisaged in the previous
Decree No. 1745/2016.220
7.93. Panama maintai ns that continuous legislative changes during the proceedings place the
complainant in a situation of uncertainty and procedural disadvantage as compared with the
respondent, which always has the possibility of changing its measures to avoid a guilty verdi ct. For
Panama, the position of the Appellate Body that a panel is not required to rule on measures that did
not exist at the time it was established makes sense in order to safeguard the procedural interests
of the complainant and spare it the obligation of constantly pursuing moving targets.221 The premise
of this position, according to Panama, is the protection of the procedural interests of the complainant,
so that if the complainant consents to a panel examining the same measure on the basis of a new
legislative instrument, the panel in question should carry out that examination.222
7.94. Panama maintains that if the Panels do not examine the measures in question under
Decree No. 2218/2017, Panama would have to request a second compliance proceeding to assess
the same measures, but with the clarifications or additions of Decree No. 2218/2017, which would
be an inefficient use of resources and the dispute settlement system and contrary to fundamental
principles such as that of achieving a satisfactory settlement of the matter in accordance with
Article 3.4 of the DSU and prompt settlement and prompt compliance in accordance with
Articles 3.3 and 21.1 of the DSU.223
7.95. Panama considers that the Panel should also make findings regarding the measures reflected
in Decree No. 1745/2016, since these were the measures in force at the time of establishment of
the panels. Panama states that the importance of making findings regarding the measures in force
at the time of establishment of the panels resides in a complaining party n ot having to adjust its
pleadings in the course of a dispute in order to contend with the variable content of a disputed
measure. Panama considers that making findings regarding the measures on the basis of
Decree No. 1745/2016 would lead to a positive solution to this dispute, since the legislative situation
in Colombia with respect to imports of the products in question is changing constantly and there is
a possibility of the Panel determining that it is not competent to make findings regarding the
measures on the basis of Decree No. 2218/2017.224

218 Idem.
219 Panama's response to Panel question No. 52.
220 Idem.
221 Panama refers to the Appellate Body report in Chile – Price Band System and the panel report in
Argentina – Footwear (EC). (Panama's response to Panel question No. 54.)
222 Panama's response to Panel question No. 54.
223 Panama's response to Panel question No. 54.
224 Panama's response to Panel question No. 52.

7.96. Panama maintains that the matter referred to the Panel consisted of the questions included
both in Colombia's request and in Panama's request. Panama asserts that the matter referred to the
Panel by Colombia in its request included Panama's concerns relating to Colombia's compliance with
the recommendations and rulings of the DSB, and that Panama 's request is explicit and describes
the measures at issue as part of the matter.225
7.1.3.1.2 Colombia
7.97. Colombia maintains that the bo nd and the special regime established in
Decree No. 2218/2017 are not compliance measures and therefore cannot be challenged under
Article 21.5 of the DSU. Colombia states that, as explained with respect to Decree No. 1745/2016,
the recommendations and rul ings of the DSB are limited to the compound tariff and have no
relationship with the measures implemented through Decrees No. 1745/2016 and
No. 2218/2017.226
7.98. Colombia considers that, in the event that the Panel determines that the measures contained
in Decrees No. 1745/2016 and No. 2218/2017 form part of its terms of reference, it agrees with
Panama that the Panel could and should formulate recommendations regarding the measures in
question reflected in Decree No. 2218/2017. Moreover, Colombia considers that the Panel should
avoid making findings and recommendations regarding Decree No. 1745/2016, since it is no longer
in force. Colombia requests the Panel to find that, as it is not in force, Decree No. 1745/2016 cannot
cause nullification or impairment.227
7.99. Colombia acknowledges that panels, within the framework of Article 21.5 of the DSU, have
examined measures enacted after they were established when those measures incorporated the
same conduct that was found to be WTO -inconsistent in the original proceedin gs. Colombia points
out, however, that this interpretation is valid only with respect to those aspects of the new measure
which are essentially identical with the previous measure and is not applicable to novel aspects of
the measure.228
7.1.3.2 Analysis by the Panel
7.100. The Panel's next task is to determine which measures it should examine: the specific bond
and the special import regime with the characteristics provided for in Decree No. 1745/2016, and
therefore "repealed"; the specific bond and the special import regi me with the characteristics
provided for in Decree No. 2218/2017, and currently in force; or both. Panama has requested the
Panel to make findings with regard to the repealed measures and findings and recommendations
with regard to the measures in force.
7.1.3.2.1 The question of whether the Panel can make findings with regard to repealed
measures
7.101. Panama requests the Panel to make findings with respect to the specific bond and the special
import regime with the characteristics provided for in Decree No. 1745/2016. These measures,
which are identified in Panama 's panel request, were in force at the time of establishment of this
Panel, but were repealed during the present proceedings. It is therefore necessary to examine
whether the Panel is empowered to make findings with regard to repealed measures.
7.102. Although we are engaged in compliance proceedings under Article 21.5 of the DSU, leaving
aside the question of which measures are "measures taken to comply", the requirements of
Article 6.2 of the DSU are applicable for d etermining the scope of the terms of reference of
compliance panels.229 This provision requires that the specific measures at issue be "identified" in
the panel request, but does not clarify whether they have to be in force at the time when the panel

225 Panama's response to Panel question No. 53.
226 Colombia's additional written submission, paras. 9 and 11.
227 Colombia's comments on Panama's responses to Panel questions Nos. 49, 52 and 53.
228 Colombia's response to Panel questions No. 53, paras. 241-242, and No. 54, paras. 243-244; and
comments on Panama's response to Panel question No. 54.
229 Appellate Body Reports, US – FSC (Article 21.5 – EC II), para. 59 and US – Zeroing (Japan)
(Article 21.5 – Japan), para. 109.

makes it findings. In this respect, the fact that a measure has been repealed does not settle the
question of whether a panel can examine claims with regard to that measure.
7.103. It is important to stress that the deference accorded to a Member's exercise of its judgment
in bringing a dispute is not entirely boundless, so that where a measure expires or is repealed during
the panel proceedings, the panel, in the exercise of its jurisdiction, must objectively assess whether
the "matter" before it, within the meaning of Article 7.1 and Article 11 of the DSU, has been fully
resolved or still requires to be examined.230
7.104. By virtue of Article 11 of the DSU, every panel has a margin of discretion in the exercise of
its inherent adjudicative powers. Thus, within this margin of d iscretion, it is for the panel to decide
how subsequent modifications to the measure at issue, including its repeal, are to be taken into
account.231
7.105. It is therefore appropriate to assess whether the matter before the Panel has been fully
resolved by the re peal of Decree No. 1745/2016. In this connection, the Panel observes that
Decree No. 1745/2016 has been repealed and replaced by Decree No. 2218/2017, which also
includes a specific bond and a special import regime. In fact, Panama is requesting the Panel to
make findings (and recommendations) in this respect. This implies that, in order to determine
objectively whether the repeal of Decree No. 1745/2016 has fully resolved the matter, it is first
necessary to determine whether the specific bond and the spec ial import regime with the
characteristics provided for in Decree No. 2218/2017 fall within the Panel's terms of reference and,
if so, whether the Panel should make findings in that respect.
7.1.3.2.2 The question of whether the specific bond and the special import regime with
the characteristics provided for in Decree No. 2218/2017 fall within the Panel's terms of
reference
7.106. As described in Section 7.1.3.2.1 above, Decree No. 2218/2017 not only repeals
Decree No. 1745/2016 but replaces it, thereby replacing certain aspects of the specific bond and the
special import regime. Thus, the repeal and replacement accomplished by Decree No. 2218/2017
may be likened to an amendment of Decree No. 1745/2016. Therefore, and in line with the approach
of previous panels, the jurisprudence relating to amendments made after the establishment of a
panel would also apply to superseding or replacement measures, such as Decree No. 2218/2017.232
7.107. It should be recalled in this respect that the Panel has powers to examine a legal instrument
adopted after its establishment that amends a measure identified in the panel request, provided that
the language of the panel request is broad eno ugh to include the amended measure and the
amendment does not change the "essence" of the measure identified.233
7.108. The Panel observes that the language of Panama 's panel request explicitly provides for the
inclusion in the panel's terms of reference of "any po ssible amendments, extensions or additions".
Thus, Panama intended that the request should cover amended or replaced measures.
7.109. The Panel also observes that Decree No. 2218/2017 does not transform the specific bond
and the special import regime into measur es different from the specific bond and special import
regime of Decree No. 1745/2016. Both measures continue to exist and entail the same legal
consequences. In fact, as described in paragraphs 2.38-2.39 above, Decree No. 2218/2017
continues to envisage the requirement of a specific bond for the relevant products (with some
changes in product coverage234), although some particular characteristics of the specific bond, such

230 In EU – PET (Pakistan), the Appellate Body used similar language to refer to measures that had
expired. (Appellate Body Report, EU – PET (Pakistan), para. 5.51.)
231 Appellate Body Report, EU – PET (Pakistan), para. 5.51.
232 The panel in China – Raw Materials considered that the legal approach originally developed in
connection with amendments enacted after a panel's establishment "should also apply to replacement
measures that are of the same essence as original measures specifically identified in the Panel Request."
(Panel Reports, China – Raw Materials, para. 7.16.)
233 Appellate Body Reports, Chile – Price Band System, paras. 135-139; EC – Chicken Cuts, para. 157;
and EC – Selected Customs Matters, para. 184.
234 Whereas Decree No. 1745/2016 covers clothing and footwear classified in Chapters 61, 62 and 64 of
the Colombian Customs Tariff when the declared f.o.b. price is lower than or equal to a certain threshold,
Decree No. 2218/2017 covers fibres, yarns, fabrics, clothing and footwear of Chapters 52, 53, 54, 55, 56, 58,

as the amount, have been modified. 235 Likewise, Decree No. 2218/2017 continues to envisage a
special import regime for the relevant products, although some specific aspects of the regime have
been modified.236 Thus, in the view of this Panel, the specific bond and the special import regime
continue to exist with some of their characteristics modified, but with no change to their "essence".
7.110. Therefore, the Panel considers that the specific bond and the special import regime with the
characteristics provided for in Decree No. 2218/2017 fall within the Panel 's terms of reference,
because the language of Panama's panel request is sufficiently broad and the essence of the original
measures has not changed as a result of their being replaced.
7.1.3.2.3 The question of whether the Panel should rule on the measures with the
characteristics of both decrees
7.111. Once it has been concluded that the specific bond and the special import regime with the
characteristics provided for in Decree No. 2218/2017 fall within the Panel's terms of reference, the
next step is to determine the measures on which findings should be made. It should be recalled that
Panama is requesting that the Panel make findings with regard to the repealed measures and with
regard to the measures that replace them.
7.112. In Section 7.1.3.2.1 above, it is explained that to determine whether the Panel should make
findings concerning a repealed measure it should be objectively assessed whether the "matter"
before it, within the meaning of Article 7.1 and Article 11 of the DSU, has been fully resolved through
such repeal or has still to be examined.237 The Panel believes that making findings on the repealed
measures would not resolve the matter before it, precisely because of the replacement of the
repealed measures with other measures that are of the same essence.
7.113. The Panel's conclusion is supported by the object and purpose of the dispute settlement
system, as laid down in Articles 3.4 and 3.7 of the DSU, to secure a positive solution to the dispute.238
Indeed, the Panel considers that it should examine the specific bond and the special import regime
with the characteristics provided for in Decree No. 2218/2017 "to 'secure a positive solution to the
dispute' and to make 'sufficiently precise recommendations and rulings so as to allow for prompt
compliance'".239 The Panel recalls that "[i]f the terms of reference in a dispute are broad enough to
include amendments to a measure —as they are in this case —and if it is necessary to consider an
amendment in order to secure a positive solution to the dispute—as it is here—then it is appropriate
to consider the measure as amended in coming to a decision in a dispute".240
7.114. Panama requests that the Panel rule on both measures (repealed and replacement). Panama
argues that making findings on the measures on the basis o f Decree No. 1745/2016 would provide
a positive solution to this dispute, because the regulatory situation in Colombia with respect to
imports of the products in question is changing constantly and there is a possibility that the Panel
might determine that it is not competent to make findings on the measures on the basis of

59, 60, 61, 62, 63 and 64 of the Customs Tariff, where the declared f.o.b. price is lower than or equal to the
established threshold. Likewise, the thresholds of Decree No. 2218/2017 were adjusted using the same
methodology as that used for establishing the thresholds of Decree No. 1745/2016.
235 The specific bond provided for in Article 7 of Decree No. 1745/2016 is required for release of the
goods covered by the decree; it must be provided by a bank or insurance company; its amount is 200% of the
unit price of the established "threshold" multiplied by the quantity imported; it must be for a three-year term
and its purpose will be to guarantee payment of such customs duties and penalties as may apply. As for the
specific bond provided for in Article 7 of Decree No. 2218/2017, it is required for release of the goods covered
by the decree if a dispute arises with respect to value in connection with the inspection or examination
process; it must be provided by a bank or insurance company; its amount is 200% of the difference between
the f.o.b. price declared by the importer and the result of multiplying the unit price of the established threshold
by the quantity imported; and it must be for a three-year term.
236 We note that the requirements concerning the presence of import operations observers and risk
management are identical in both decrees, the differences in the customs formalities are very minor, and
Decree No. 2218/2017 introduced a prohibition on the reshipment of the covered goods if they do not comply
with the customs formalities.
237 In EU – PET (Pakistan), the Appellate Body used similar language to refer to measures that had
expired. (Appellate Body Report, EU – PET (Pakistan), para. 5.51.)
238 Appellate Body Report, Chile – Price Band System, paras. 140-143.
239 Appellate Body Report, Chile – Price Band System, para. 143.
240 Appellate Body Report, Chile – Price Band System, para. 144. (original emphasis)

Decree No. 2218/2017.241 The Panel is not convinced by this argument of Panama. First, the Panel
has already determined that Decree No. 2218/2017 falls within its terms of reference, so th at
Panama's concern is baseless. Secondly, Panama has accepted that it is not necessary to make
recommendations with regard to Decree No. 1745/2016, and has thus recognized that these
measures are no longer producing effects. Moreover, in the Panel 's opini on, Panama has not
sufficiently demonstrated the risk of Colombia re-imposing the specific bond and the special import
regime with the characteristics provided for in Decree No. 1745/2016. Therefore, the Panel considers
that making findings on the repealed measures would amount to a purely academic exercise and
that, in order to fulfil its mandate to resolve the matter before it, it must examine and make findings
and, where appropriate, recommendations, with regard to the specific bond and the special impor t
regime with the characteristics provided for in Decree No. 2218/2017 and not those provided for in
Decree No. 1745/2016.
7.115. The Panel points out that, as indicated in paragraph 1.28 above, for the purpose of
safeguarding Colombia's procedural rights, it gave the latter the opportunity to submit an additional
written submission following the substantive meeting in order to respond to Panama 's claims
regarding the measures with the characteristics provided for in Decree No. 2218/2017. In fact,
Panama had presented its claims relating to that Decree in its second written submission as
respondent, at a point in the procedure at which the timetable for the P anel's proceedings did not
provide for further written submissions from the parties. The Panel believed that Panama could not
have presented these arguments earlier since Decree No. 2218/2017 entered into force during the
period between the second written submission of the parties as complainant and the second written
submission as respondent. Colombia made use of the opportunity provided by the Panel and on
20 April 2018 presented an additional written submission containing its arguments with respect to
Decree No. 2218/2017.
7.1.3.3 Conclusion
7.116. As indicated in paragraph 7.110 above, the Panel considers that the specific bond and the
special import regime with the characteristics provided for in Decree No. 2218/2017 fall within the
Panel's terms of reference, because the language of Panama's panel request is sufficiently broad and
the essence of the original measures has not changed as a result of their being replaced.
7.117. For the reasons set out above, the Panel concludes that, in order to fulfil its mandate to
resolve the matter before it, it must examine and make findings and, where appropriate,
recommendations with regard to the specific bond and the special i mport regime, with the
characteristics provided for in Decree No. 2218/2017 and not those provided for in
Decree No. 1745/2016.
7.1.4 The question of which claims are within the Panel's terms of reference
7.118. The Panel will now examine two issues: first, whether the claims included by Panama in its
written submissions but not identified in its panel request form part of its terms of reference; and
secondly, whether the claims included in Panama 's panel request fall within the terms of reference
of the panel established at Colombia's request.
7.119. As is the case with the measures, there is a close relationship between the claims that can
be invoked in a compliance proceeding and the panel request. The task of a compliance panel
consists of examining the "consistency with a covered agreement" of "measures taken to comply
with the recommendations and rulings" of the DSB. This "task is circumscribed by the specific claims
made by the complainant when the matter is referred by the DSB for an Article 21.5 proceeding".242
That is to say that "[i]t is not part of the task of a panel under Article 21.5 to address a claim that
has not been made".243 Therefore, Panama may not invoke claims of inconsistency with provisions
of WTO agreements that it did not include in its panel request. The Panel observes that Panama 's
panel request does not contain claims with respect to Article VIII:3 of the GATT 1994 nor with
respect to Article 7.2(g) of the Customs Valuation Agreement. Given that Panama did not include
these provisions in its panel request, they do not fall within this Panel's terms of reference.

241 Panama's response to Panel question No. 52.
242 Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia), para. 87.
243 Ibid. para. 87.

7.120. The claims to be considered by the compliance panel are also determined by the "measure
taken to comply". Thus, "[i]f a claim challenges a measure which is not a "measure taken to comply",
that claim cannot properly be raised in Article 21.5 proceedings". 244 The claims in relation to the
specific bond and the special import regime included by Panama in its panel request would fall within
its terms of reference, as this Panel has considered that they are closely connected with the measure
declared by Colombia as having been taken to comply.
7.121. The problem resides in the objection raised by Colombia with regard to the consideration of
the claims made in Panama 's panel request by the panel established at Colombia 's request. The
Panel recalls that if the original com plainant considers that the measure taken to comply is
inconsistent with provisions of the WTO agreements not covered in the request for the establishment
of a panel by the implementing Member, it may file its own request for the establishment of a panel
under Article 21.5 identifying those provisions that it considers should be examined by the
Article 21.5 panel. It would then be for the compliance panel to determine whether the implementing
measure violates the WTO agreements in ways different from the or iginal measure or whether
certain claims fall outside the scope of Article 21.5 proceedings.245 Indeed, the original respondent
that has taken a "measure taken to comply" cannot be expected to speculate as to the violations
that could possibly be raised against its measure by other Members, and this is not what the original
respondent is expected to do if it initiates Article 21.5 panel proceedings.246
7.122. In the present proceedings, Panama has filed a panel request that includes those claims
which it considers re levant in relation to the measures taken to comply. To accept Colombia 's
position would mean that the Panel would be creating an artificial situation within which two different
decisions would exist, one related to Colombia 's panel request, limited to the claims considered by
the original panel, and one related to Panama's request, with all the claims made by Panama. That
might lead, among other things, to a possible contradiction in the decisions, with one determining
that Colombia has brought its measures into conformity with the recommendations and rulings of
the DSU, and the other determining that Colombia has not yet done so. The Panel therefore rejects
Colombia's argument.
7.123. A final matter for examination in relation to the claims made by Panama is Col ombia's
argument according to which the Panel could not accept Panama 's arguments regarding the
inconsistency of Colombia's measures under the Customs Valuation Agreement because they were
included in its submissions as respondent. In particular, Colombia maintains that the consequence
of Panama having presented its arguments with respect to the claims of inconsistency with the
Customs Valuation Agreement for the first time in its second written submission as respondent is
that the claims must remain outsid e the Panel 's terms of reference. 247 Colombia contends that
Panama's claims with respect to the Customs Valuation Agreement lie outside the terms of reference
of the panel requested by Colombia because they would not be part of the "matter" submitted for
consideration by the panel in the corresponding panel request. For Colombia, these claims are not
directed against Decree No. 1744/2016 and were not identified by Colombia in its panel request, so
that there is no legal underpinning that would allow Panama to broaden the terms of reference of
the Panel by presenting claims in its written submission as respondent. 248 The Panel recalls its
conclusion according to which the inclusion by Panama of such claims in its panel request is sufficient
for them to be conside red as part of the terms of reference of the panel established at Colombia 's
request, since they refer to measures closely connected with the measure declared by Colombia as
taken to comply.
7.124. In its first written submission as respondent, Panama refers for the first time to its claims
under the Customs Valuation Agreement. 249 Subsequently, in its second written submission as
respondent, Panama develops its arguments concerning the inconsistency with the
Customs Valuation Agreement of the specific bond and the special import regime. However, as

244 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 78. (original emphasis)
245 Appellate Body Reports, Canada/US – Continued Suspension, para. 354.
246 Appellate Body Reports, Canada/US – Continued Suspension, para. 353.
247 Colombia's comments on Panama's response to Panel question No. 56.
248 Colombia's second written submission as complainant, para. 14; additional written submission,
para. 28; response to Panel question No. 56, para. 250; and comments on Panama's response to Panel question
No. 56.
249 Panama's first written submission as respondent, para. 66.

Panama points out, it presented the same arguments as complainant in its initial oral statement at
the meeting with the Panel.250
7.125. In the light of the foregoing, the Panel rejects Colombia's objection and considers Panama's
claims under the Customs Valuation Agreement to fall within the Panel's terms of reference for both
proceedings.
7.1.4.1 Conclusion
7.126. For all of the above reasons, the Panel concludes that Panama 's claims with respect to
Articles VIII:3 of the GATT 1994 and 7.2(g) of the Customs Valuation Agreement do not fall within
the Panel's terms of reference, since Panama did not include them in its request for the establishment
of a panel.
7.127. The Panel also concludes that Panama 's claims included in its panel request fall within the
Panel's terms of reference in both proceedings.
7.128. Below, the Panel proceeds to examine whether, as Colombia requests, the ad valorem tariff
imposed by Decree No. 1744/2016 is consistent with Article II:1 of the GATT 1994. The Panel 's
examination will continue with the analysis of Panama 's claims regarding the alleged inconsistency
of the specific bond and the special import regime with the characteristics of Decree No. 2218/2017
under Articles XI:1 and X:3(a) of the GATT and Articles 1, 2, 3, 5, 6 and 7.2(f) of the
Customs Valuation Agreement. Should the Panel find the specific bond or the special import regime
or both to be inconsistent with any of these provisions, it will consider the defence put forward by
Colombia under subparagraphs (a) and (d) of Article XX of the GATT 1994.
7.2 The question of whether the tariffs of Decree No. 1744/2016 are consistent with
Article II.1(a) and Article II.1(b), first sentence, of the GATT 1994
7.2.1 Introduction
7.129. In its panel request, Colombia indicated that, by means of Decree No. 1744/2016, it has
replaced the compound tariff declared inconsistent with Articles II.1(a) and Article II.1(b), first
sentence, of the GATT 1994, with an ad valorem tariff that does not exceed the tariff rates bound in
the WTO. Colombia maintai ns that it has there by brought the measure subject to the DSB 's
recommendations into conformity with its WTO obligations.251
7.130. In this connection, Colombia has identified the tariffs applicable under
Decree No. 1744/2016 as the measure taken to comply with th e recommendations of the DSB and
has requested, with respect to this Decree, that this Panel find that Colombia has complied with the
DSB recommendations and rulings in the original proceedings. 252 For its part, Panama does not
question that the tariffs provided for in Decree No. 1744/2016 are a measure taken to comply253 nor
does it make claims against these tariffs.254
7.131. This section will focus on Colombia's request with respect to Decree No. 1744/2016 that the
Panel find that Colombia has complied with the recom mendations and rulings of the DSB in the
original proceeding.

250 Panama's response to Panel question No. 55.
251 Colombia's request for the establishment of a panel, WT/DS461/17, p. 2.
252 Colombia's first written submission as complainant, para. 39.
253 See, for example, Panama's second written submission as complainant, para. 5.
254 Panama's response to Panel question No. 51.

7.2.2 Arguments of the parties
7.2.2.1 Colombia
7.132. Colombia states that on 2 November 2016 it issued Decree No. 1744/2016, which repealed
the compound tariff and modified the tariffs applicable to imports of the products classified in
Chapters 61, 62 and 63 and certain headings of Chapter 64.255
7.133. Colombia maintains that the bound rate in its Schedule of Concessions for products classified
in Chapters 61 and 62 is 40% and that Decree No. 1744/2016 sets an ad valorem MFN tariff of 40%
for imports of products classified in Chapters 61 and 62 of the Colombian Customs Tariff when the
declared f.o.b. import price is less than or equal to US$10 per gross kilogram. Colombia maintains
that the tariff is consistent with the le vels bound in Colombia 's Schedule of Concessions and is
therefore in conformity with the provisions of the first paragraph of Article II.1(b) of the
GATT 1994.256
7.134. Colombia also states that in those cases where the import price of the products classified in
Chapters 61 and 62 exceeds US$10, as in the case of imports of products classified in Chapter 63,
the MFN tariff will be that specified in Decree No. 4927/2011, or any amending decree, which
contains the Colombian Customs Tariff. Colombia maintains that in no case does the tariff rate
applied to such products exceed the tariff rates bound in Colombia 's Schedule of Concessions, and
that, therefore, the tariffs envisaged in Decree No. 1744/2016 are consistent with the first paragraph
of Article II:1(b) of the GATT 1994.257
7.2.2.2 Panama
7.135. For its part, Panama does not question that the tariffs applicable to the relevant products,
contained in Decree No. 1744/2016, are a measure taken to comply 258, nor does it bring claims
against those tariffs. 259 In fact, Panama accepts that the imports covered are subject to an
ad valorem tariff at the level bound by Colombia with the WTO.260
7.2.3 Analysis by the Panel
7.136. Before beginning its legal analysis, the Panel considers it appropriate to make
two clarifications, the first with respect to its terms of reference and the second with respect to its
function.
7.137. The Panel observes, first, with respect to its terms of reference, that Decree No. 1744/2016
is the measure declared by Colombia as taken to comply with the rulings and recommendations of
the DSB261 and that Panama does not question that the tariffs provided for in Decree No. 1744/2016
are part of the measures taken to comply. 262 In this respect, the Panel recalls its findings in
paragraphs 7.114 and 7.116 above that Decree No. 1744/2016 is one of the measure s taken to
comply with the recommendations and rulings of the DSB. Therefore, the Panel considers that
Decree No. 1744/2016 falls within its terms of reference.
7.138. Secondly, with respect to its function, the Panel notes that Panama does not refute
Colombia's claim that the tariffs provided for in Decree No. 1744/2016 are consistent with
Article II:1(b) of the GATT 1994. However, the lack of a refutation of Colombia 's claim on the part
of Panama does not exempt the Panel from its obligation under Article 11 of the DSU to make an
objective assessment of the matter before it.
7.139. In this connection, the Panel observes that, as has consistently been recognized within the
WTO's dispute settlement system, the burden of proving a challenged measure's inconsistency with

255 Colombia's first written submission as complainant, para. 19.
256 Colombia's first written submission as complainant, para. 30.
257 Colombia's first written submission as complainant, paras. 31-32.
258 See, for example, Panama's second written submission as complainant, para. 5.
259 Panama's response to Panel question No. 51.
260 Panama's response to Panel question No. 51.
261 Colombia's request for the establishment of a panel, WT/DS461/17, p. 2.
262 See, for example, Panama's second written submission as complainant, para. 5.

the invoked provisions of the covered agreements lies initially on the complaining party and, once
the complaining party has established a prima facie case for such inconsistency, the burden moves
to the defending party, which must in turn refute the claime d inconsistency.263 It has also been
consistently recognized that the burden of proof falls on the party who asserts a fact, whether the
claimant or the respondent.264
7.140. These compliance proceedings create a special situation due to the fact that Colombia, as
the respondent in the original proceedings, initiated its own proceedings under Article 21.5 of the
DSU, claiming that its measure declared as taken to comply had corrected the inconsistencies found
in the original proceedings. Therefore the burden of establ ishing a prima facie case for the claimed
consistency rests with Colombia.
7.141. In line with the above, the Appellate Body has considered that in Article 21.5 proceedings
the original respondent has an onus to show that its implementing measure has cured the de fects
identified in the DSB's recommendations and rulings265 and that, to this end, the original respondent
must give a clear description of its implementing measure and an adequate explanation regarding
how this measure rectifies the inconsistencies found in the original proceedings, so as to place the
panel in a position to make an objective assessment of the matter and, in the absence of rebuttal,
to rule in favour of the original respondent.266
7.142. Considering these principles, and in keeping with the approach adopted by other panels267,
even in the absence of any refutation on the part of Panama it is for the Panel to satisfy itself that
Colombia has discharged the burden of showing that Decree No. 1744/2016 is consistent with
Article II:1(b) of the GATT 1994 and with Article II:1(a) of the GATT 1994.
7.143. Having clarified its terms of reference and its function, the Panel points out that, in the
absence of claims by Panama against Decree No. 1744/2016, the only relevant legal provisions with
respect to that Decree are those that were the subject of findings of inconsistency on the part of the
panel in the original proceedings, that is, Article II:1(a) and Article II:1(b), first sentence, of the
GATT 1994.
7.144. Therefore it will be the Panel 's task to determine whether, as Colombia claims, the tariffs
provided for in Decree No. 1744/2016 are consistent with Article II:1(b) of the GATT 1994 and with
Article II:1(a) of the GATT 1994.
7.145. Article II:1(a) of the GATT 1994 reads as follows:
Each contracting party shall accord to the commerce of the other contracting parties
treatment no less favourable than that provided for in the appropriate Part of the
appropriate Schedule annexed to this Agreement.
7.146. As for the first sentence of Article II:1(b) of the GATT, it reads as follows:
The products described in Part 1 of the Schedule relating to any contracting party, which
are the products of territories of other contracting parties, shall, on their importation
into the territory to which the Schedule relates, and subject to the terms, conditions or
qualifications set forth in that Schedule, be exempt from ordinary customs duties in
excess of those set forth and provided therein.
7.147. While Article II:1(a) of the GATT 1994 requires Members to accord to the commerce of other
Members treatment no l ess favourable than that provided for in their Schedule of Concessions 268,
the first sentence of Article II:1(b) prohibits Members from subjecting the products of other

263 Appellate Body Reports, EC – Hormones, para. 98 and US – Wool Shirts and Blouses, p. 16.
264 Appellate Body Report, US – Wool Shirts and Blouses, pp. 14-18.
265 Appellate Body Reports, US/Canada – Continued Suspension, para. 362.
266 Idem.
267 This approach has been used by other panels. See, for example, Panel Reports, US – Shrimp
268 Appellate Body Report, Argentina – Textiles and Apparel, para. 47.

Members, on importation, to ordinary customs duties in excess of those set forth in their Schedule
of Concessions.
7.148. The first sentence of Article II:1(b) of the GATT 1994 prohibits a specific type of practice
which will always be inconsistent with Article II:1(a), namely, the imposition of ordinary customs
duties in excess of those set forth in the Schedule of Concessions. Therefore, if a measure is
inconsistent with Article II:1(b) of the GATT 1994, it will necessarily be inconsistent with
Article II:1(a).269
7.149. As already explained in paragraphs 7.152-7.154 above, Decree No. 1744/2016 establishes
a tariff of 40% on imports of products classified in Chapters 61 and 62 of the National Customs Tariff
when the declared f.o.b. price is less than or equal to US$10 per gross kilogram.
7.150. Decree No. 1744/2016 also establishes a tariff of 35% on imports with a declared f.o.b. price
lower than or equa l to US$6 per pair for headings 64.01, 64.02 and 64.04; US$7 per pair for
heading 64.05; US$10 per pair for heading 64.03; and US$5 per gross kilogram for
subheading 6406.10.00.00 ("uppers").270
7.151. In addition, for imports of products classified in Chapters 61, 62 and 64 of the Customs Tariff
which are not subject to the tariff established in Decree No. 1744/2016, the tariff applicable will be
that provided for in Decree No. 4927/2011. The tariffs applicable in that decree for Chapters 61 to
64 never exceed 15% ad valorem.271
7.152. On the other hand, as the Panel found in the original proceedings, the duties bound by
Colombia's Schedule LXXVI, its Schedule of Concessions, are 40% ad valorem for all subheadings of
Chapters 61, 62 and 63, except for those in subheading 6305.32, and for subheadings
6405.20 and 6406.10; and 35% ad valorem for headings 64.01, 64.02, 64.03, 64.04 and 64.05,
except for subheading 6405.20, and for subheading 6305.32.272
7.153. The Panel finds that the tariffs envisaged in Decree No. 1744/2016 in no case exceed the
bound ad valorem tariffs of 35% and 40% in Colombia's Schedule of Concessions. Accordingly, the
tariffs envisaged in Decree No. 1744/2016 are consistent with Colombia's obligation, under the first
sentence of Article II:1(b) of the GATT 1994, not to subject the products in question to ordinary
customs duties in excess of those set forth in its Schedule of Concessions.
7.154. Furthermore, because the finding of inconsistency with Article II:1(a) of the GATT 1994 in
the original proceedings derived from the finding of inconsistency with the first sentence of
Article II:1(b) of the GATT 1994, and in the absence of separate claims with respect to Article II:1(a)
of the GATT 1994, the Panel also f inds that the tariffs envisaged in Decree No. 1744/2016 are
consistent with Colombia 's obligation, under Article II:1(a) of the GATT 1994, to accord to the
commerce of the other Members treatment no less favourable than th at provided for in its
Schedule of Concessions.
7.2.4 Conclusion
7.155. For the reasons set out above, the Panel concludes that Colombia has demonstrated that
the tariffs provided for in Decree No. 1744/2016 are not inconsistent with Colombia 's obligations
under Articles II:1(a) and II:1(b), first sentence, of the GATT 1994.

269 Appellate Body Report, Argentina – Textiles and Apparel, para. 45. See also Panel Reports,
EC – IT Products, para. 7.747; EC – Bananas III (Article 21.5 – Ecuador II), para. 7.394; EC – Chicken Cuts
270 See para. 2.7 above.
271 See para. 2.7 above.

7.3 Panama's claims under Article XI:1 of the GATT 1994
7.3.1 Introduction
7.156. Panama has challenged both the specific bond and the special import regime, claiming that
they constitute restrictions on importation in contravention of Article XI:1 of the GATT 1994. 273
Colombia considers that Panama has failed to demonstrate that either of the two measures is
inconsistent with Article XI:1.274
7.157. The Panel will begin by examining the relevant legal provision and the applicable legal test.
It will then analyse Panama's claims with respect to the specific bond, starting with a summary of
the arguments of the parties and continuing with a legal analysis of each of the aspects challenged
by Panama. Finally, the Panel will examine Panama 's claims with respect to the special import
regime, again beginning with a summary of the arguments of the parties and continuing with an
analysis of each of the aspects challenged by Panama.
7.3.2 The text of Article XI:1 of the GATT 1994
7.158. The relevant part of Article XI of the GATT 1994 reads as follows:
General Elimination of Quantitative Restrictions
1. No prohibitions or restrictions other than duties, taxes or other charges, whether
made effective through quotas, import or export licences or other measures, shall be
instituted or maintained by any contracting party on the importation of any product of
the territory of any other contracting party or on the exportation or sale for export of
any product destined for the territory of any other contracting party.
7.159. By its terms, Article X:1 "lays down a general obligation to eliminate quantitative
restrictions" and prohibits Members "to institute or maintain prohibitions or restrictions other than
duties, taxes, or other charges, on the importation, exportation, or sale for export of any p roduct
destined for another Member".275
7.3.3 Legal test provided for in Article XI:1 of the GATT 1994
7.160. In the past, panels have examined alleged inconsistencies with Article XI:1 of the GATT 1994
by conducting a two -stage analysis. They have first examined whether the complainant has
demonstrated that the measure at issue is a measure of the same kind as those covered by
Article XI:1 and, if this has been demonstrated, have subsequently examined whether the
complainant has demonstrated that the measure at issue con stitutes a prohibition or restriction on
importation (or exportation). 276 Not all previous panels have considered a finding under this first
stage to be necessary. By way of example, in Argentina – Import Measures, the panel considered
that what is relevant in examining a measure within the context of Article XI:1 of the GATT 1994 is
whether the measure prohibits or restricts commerce and not the means by which that prohibition
or restriction is made effective.277 In any event, the analysis must be carried out on a case-by-case

273 Panama's request for the establishment of a panel, WT/DS461/22.
274 Colombia's first written submission as respondent, section B; second written submission as
275 Appellate Body Report, Argentina – Import Measures, para. 5.216.
276 Panel Reports, Argentina – Import Measures, para. 6.244; and India – Autos, para. 4.119 (referring
to GATT Panel Report, Japan – Semi-conductors, para. 104). See also Panel Report, India – Quantitative
Restrictions, para. 5.142.
277 The Panel reasoned as follows:
The expression "whether made effective through quotas, import or export licences or other
measures" used in Article XI:1 of the GATT 1994 implies that the provision covers all measures
that constitute import "prohibitions or restrictions" regardless of the means by which they are
made effective. The reference to "quotas, import or export licences" is only indicative of some
means by which import prohibitions or restrictions may be made effective. This does not imply
that the scope of Article XI:1 of the GATT 1994 is limited to prohibitions or restrictions that are
made effective through quotas or import or export licences. What is relevant when examining a
measure under Article XI:1 of the GATT 1994 is whether a measure prohibits or restricts trade,
rather than the means by which such prohibition or restriction is made effective. In light of this

basis, taking into account the import (or export) formality or requirement at issue and the relevant
facts of the case.278
7.161. Previous panels have considered that, in order to determine whether a measure falls within
the scope of Article XI:1 of the GATT 1994, it is necessary to examine the "nature" of the measure.279
The text of Article XI:1 begins by excluding various measures from its scope, namely, "duties, taxes
or other charges". Article XI:1 goes on to indicate that its scope extends to "quotas, import or export
licences", together with a residual category of "other measures". 280 With reference to this latter
category of other measures, other panels have found that the concept of import restriction includes
any measure that results in "any fo rm of limitation imposed on, or in relation to importation".281
However, although the expression "other measures" suggests that the coverage of Article XI:1 is
broad, the scope of application of this provision is not unfettered since it excludes "duties, taxes and
other charges", and "Article XI:2 of the GATT 1994 further restricts the scope of application of
Article XI:1 by providing that the provisions of Article XI:1 shall not extend to the areas listed in
Article XI:2".282
7.162. Article XI:1 also stipulates that the prohibition or restriction should be "made effective
through" quotas, import or export licences, or other measures . This has led to the interpretation
that Article XI:1 covers measures through which a prohibition or restriction is produced or becomes
operative.283
7.163. The term "prohibition" has been defined as a "legal ban on the trade or importation of a
specified commodity", and the term "restriction" as "[a] thing which restricts someone or something,
a limitation on action, a limiting condition or regula tion", and, thus, generally, as something that
has a limiting effect.284 As to whether a restriction is "on importation", the Panel agrees with previous
panels that "in the context of Article XI:1 [of the GATT 1994] the expression "restriction… on
importation" [may thus be appropriately read as] meaning a restriction "with regard to" or "in
connection with" the importation of the product ".285
7.164. As indicated by its title, "General Elimination of Quantitative Restrictions", Article XI relates
to "quantitative" restrictions. The use of the word "quantitative" indicates that only prohibitions and
restrictions that limit the quantity or size of an imported (or exported) product are included within

reasoning, the Panel will commence by examining the claims raised by the complainants under
Article XI:1 of the GATT 1994 irrespective of whether this measure constitutes an import licence.
(Panel Report, Argentina – Import Measures, para. 6.363.)
 This approach was also used by the panel in Indonesia – Import Licensing Regimes. (Panel
Report, Indonesia – Import Licensing Regimes, paras. 7.55 and 7.76.)
278 Appellate Body Report, Argentina – Import Measures, para. 5.245.
279 Panel Report, Brazil – Retreaded Tyres, para. 7.372. See also Panel Report, Indonesia – Import
Licensing Regimes, para. 7.42.
280 Panel Report, Argentina – Hides and Leather, para. 11.17. See also Panel Report, Argentina – Import
Measures, para. 6.246 (referring to GATT Panel Report, Japan – Semi-conductors, para. 104, and to Panel
Report, Argentina – Hides and Leather, para. 11.17.)
281 Panel Report, Colombia – Ports of Entry, para. 7.227 (referring to Panel Report, India – Autos,
paras. 7.254-7.263 and 7.265 and to Panel Report, Brazil – Retreaded Tyres, para. 7.371). (original emphasis)
282 Appellate Body Report, Argentina – Import Measures, para. 5.219.
283 The Appellate Body reasoned as follows:
Article XI:1 of the GATT 1994 prohibits prohibitions or restrictions other than duties, taxes,
or other charges "made effective through quotas, import or export licences or other measures".
The Appellate Body has described the word "effective", when relating to a legal instrument, as "in
operation at a given time". We note that the definition of the term "effective" also includes
something "[t]hat is concerned in the production of an event or condition". Moreover, the
Appellate Body has described the words "made effective", when used in connection with
governmental measures, as something that may refer to a measure being "operative", "in force",
or as having "come into effect". In Article XI:1, the expression "made effective through"
precedes the terms "quotas, import or export licences or other measures". This suggests to us
that the scope of Article XI:1 covers measures through which a prohibition or restriction is
produced or becomes operative.
(Appellate Body Report, Argentina – Import Measures, para. 5.218 (referring to Appellate Body Reports,
China – Raw Materials, para. 356 and US – Gasoline, p. 23) (footnotes omitted)).
284 Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body
285 Panel Report, India – Autos, para. 7.257. See also Panel Reports, Argentina – Import Measures,

the scope of this provision.286 Thus, Article XI:1 of the GATT 1994 only covers those prohibitions or
restrictions that have a limiting effect on importation (or exportation). Previous panels have also
similarly interpreted the concept of "restrictions" and have concluded that Article XI:1 is applicable
to conditions that are "limiting" or have a "limiting effect".287 As regards how to elucidate the limiting
effects of a measure, "[the] limitation [on importation or exportation] need not be demonstrated by
quantifying the effects of the measure at issue" 288; rather, such effects ca n "be demonstrated
through the design, architecture and revealing structure of the measure at issue considered in its
relevant context".289
7.165. Some panels, in examining whether certain measures have a limiting effect on importation,
have focused on whether thos e measures limited the competitive opportunities available for the
imported products. Thus, panels have attributed importance to such factors as the existence of
uncertainty affecting exp ortation, whether the measures affect investment plans, whether they
restrict access to import markets or make importation prohibitively costly or unpredictable, whether
they constitute disincentives for imports, or whether there are unfettered or undefined powers to
refuse an import licence.290

286 The Appellate Body in Argentina – Import Measures considered that:
The use of the word "quantitative" in the title of Article XI of the GATT 1994 informs the
interpretation of the words "restriction" and "prohibition" in Article XI:1, suggesting that the
coverage of Article XI includes those prohibitions and restrictions that limit the quantity or
amount of a product being imported or exported. This provision, however, does not cover simply
any restriction or prohibition. Rather, Article XI:1 refers to prohibitions or restrictions "on the
importation … or on the exportation or sale for export". Thus, in our view, not every condition or
burden placed on importation or exportation will be inconsistent with Article XI, but only those
that are limiting, that is, those that limit the importation or exportation of products. Moreover,
this limitation need not be demonstrated by quantifying the effects of the measure at issue;
rather, such limiting effects can be demonstrated through the design, architecture, and revealing
structure of the measure at issue considered in its relevant context.
(Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body Reports,
China – Raw Materials, paras. 319-320) (footnotes omitted)).
287 In India – Quantitative Restrictions the panel observed that the ordinary meaning of the word
"restriction" is "a limitation on action, a limiting co ndition or regulation" (Panel Report, India – Quantitative
Restrictions, para. 5.128). In India – Autos, the panel endorsed the interpretation of the term "restriction" used
by the panel in India – Quantitative Restrictions, and concluded that "any form of limitation imposed on, or in
relation to importation constitutes a restriction on importation within the meaning of Article XI:1" (Panel Report,
India – Autos, para. 7.265 (original emphasis). This panel also asserted that the expression "limiting condition"
used by the panel in India – Quantitative Restrictions "is helpful in identifying the scope of the notion in the
context of the facts before it. That phrase suggests the need to identify not merely a condition placed on
importation, but a condition that is limiting, i.e. that has a limiting effect. In the context of Article XI, that limiting
effect must be on importation itself." (Panel Report, India – Autos, para. 7.270.) The panels in Brazil – Retreaded
Tyres, Dominican Republic – Import and Sale of Cigarettes and Colombia – Ports of Entry cited with approval key
passages in the reports India – Quantitative Restrictions and India – Autos which clarified this rule. (Panel
Reports, Brazil – Retreaded Tyres , para. 7.371; Dominican Republic – Import and S ale of Cigarettes ,
paras. 7.252 and 7.258; and Colombia – Ports of Entry, paras. 7.233-7.235.) See also Panel Report, Indonesia –
Import Licensing Regimes, paras. 7.45 and 7.47-7.50.
288 Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body
Reports, China – Raw Materials, paras. 319-320.)
289 Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body
Reports, China – Raw Materials, paras. 319-320.)
290 For example, in Argentina – Hides and Leather, the panel stated that "Article XI:1, like Articles I, II
and III of the GATT 1994, protects competitive opportunities of imported products, not trade flows". (Panel
Report, Argentina – Hides and Leather, para. 11.20.) In Brazil – Retreaded Tyres, the panel found a violation of
Article XI.1 in which the fines did not per se impose a restriction on importation, but acted as an absolute
disincentive to importation by penalizing it and making it "prohibitively costly". (Panel Report, Brazil –
Retreaded Tyres, para. 7.370.) In Colombia – Ports of Entry the panel, referring to previous cases in which
Article XI.1 of the GATT 1994 had been discussed, affirmed that that provision was applicable to "measures
which create uncertainties and affect investment plans, restrict market access for imports or make importation
prohibitively costly, all of which have implications on the competitive situation of an importer". (Panel Report,
Colombia – Ports of Entry, para. 7.240 (referring to GATT Panel Reports, EEC – Minimum Import Prices and
Canada – Provincial Liquor Boards (EEC); and to Panel Reports, Argentina – Hides and Leather and Brazil –
Retreaded Tyres)). In China – Raw Materials, the panel, albeit in relation to export restrictions and in a finding
which the Appellate Body declared of no legal effect due to concerns related to the terms of reference
(Appellate Body Reports, China – Raw Materials, paras. 234 and 235), examined a licensing system and found
that "a licence requirement that results in a restriction additional to that inherent in a permissible measure
would be inconsistent with GATT Article XI:1. Such restriction may arise in cases where licensing agencies have

7.166. Before beginning, the Panel t akes note of Colombia 's suggestion291 that in analysing the
consistency of the specific bond and the special import regime with Article XI:1 of the GATT 1994
the context provided by a series of provisions should be taken into account. In particular,
Articles 13292 and 17293 of the Customs Valuation Agreement, Article 7.3294 of the Trade Facilitation
Agreement295, Article VIII296 of the GATT and the additional note to Article VI.1297 of the GATT 1994.

unfettered or undefined discretion to reject a licence application". (Panel Reports, China – Raw Materials,
para. 7.957.) In Argentina – Import Measures the panel found that some of the measures adopted by
Argentina were creating "uncertainty as to an applicant's ability to import, [did] not allow companies to import
as much as they desire[d] or need[ed], but condition[ed] imports to their export performance and impose[d] a
significant burden on importers that [was] unrelated to their normal importing activity". (Panel Report,
Argentina – Import Measures, para. 6.479; finding upheld in Appellate Body Report, Argentina – Import
Measures, para. 5.288.) Referring to the panel report in Dominican Republic – Import and Sale of Cigarettes,
the panel in Argentina – Import Measures observed that "not every measure affecting the opportunities for
entering the market would be covered by Article XI [of the GATT 1994], but only those measures that
constitute a prohibition or restriction on the importation of products, i.e. those measures which affect the
opportunities for importation itself". Panel Report, Argentina – Import Measures, para. 6.458 (referring to
Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.261). See also Panel Report,
291 Colombia's response to Panel question No. 61; comments on Panama's response to Panel question
No. 62.
292 Article 13 reads as follows:
If, in the course of determining the customs value of imported goods, it becomes necessary to
delay the final determination of such customs value, the importer of the goods shall nevertheless
be able to withdraw them from customs if, where so required, the importer provides sufficient
guarantee in the form of a surety, a deposit or some other appropriate instrument, covering the
ultimate payment of customs duties for which the goods may be liable. The legislation of each
Member shall make provisions for such circumstances.
293 According to Article 17:
Nothing in this Agreement shall be construed as restricting or calling into question the rights of
customs administrations to satisfy themselves as to the truth or accuracy of any statement,
document or declaration presented for customs valuation purposes.
294 This Article provides in relevant part :
7.3.2 As a condition for such release, a Member may require:
(a) payment of customs duties, taxes, fees, and charges determined prior to or upon arrival of
goods and a guarantee for any amount not yet determined in the form of a surety, a deposit, or
another appropriate instrument provided for in its laws and regulations; or
(b) a guarantee in the form of a surety, a deposit, or another appropriate instrument provided
for in its laws and regulations.
7.3.3 Such guarantee shall not be greater than the amount the Member requires to ensure
payment of customs duties, taxes, fees, and charges ultimately due for the goods covered by the
guarantee.
7.3.4 In cases where an offence requiring imposition of monetary penalties or fines has been
detected, a guarantee may be required for the penalties and fines that may be imposed.
7.3.5 The guarantee as set out in paragraphs 3.2 and 3.4 shall be discharged when it is no
longer required.
295 Although Colombia recognizes that the Trade Facilitation Agreement is not in effect for Colombia as it
has not deposited an instrument of acceptance, Colombia considers that its measures can be explained in the
light of that instrument and that therefore it has to be taken into account. (Colombia's response to Panel
question No. 61.)
296 Article VIII of the GATT 1994 relating to fees and formalities connected with importation and
exportation states in relevant part:
1. (a) All fees and charges of whatever character (other than import and export duties and other
than taxes within the purview of Article III), imposed by contracting parties on or in connection
with importation or exportation shall be limited in amount to the approximate cost of services
rendered and shall not represent an indirect protection to domestic products or a taxation of
imports or exports for fiscal purposes.
(b) …
(c) The contracting parties also recognize the need for minimizing the incidence and complexity
of import and export formalities and for decreasing and simplifying import and export
documentation requirements.*
297 The additional note to Article VI.2 and VI.3 of the GATT 1994, which provides as follows in relevant
part:
1. As in many other cases in customs administration, a contracting party may
require reasonable security (bond or cash deposit) for the payment of anti-dumping or
countervailing duty pending final determination of the facts in any case of suspected
dumping or subsidization.

In particular, Colombia maintains that these provisions explicitly authorize the use of customs bonds
and formalities such as those contested by Panama.
7.167. For its part, Panama considers that the inconsistency of a measure with Article XI:1 of the
GATT 1994 should be determined in the light of the limiting conditions which that measure imposes
on imports within the meaning of Article XI:1 of the GATT 1994, regardless of how the measure is
characterized.298 However, Panama also considers that in some cases, the provisions of other
covered agreements such as, for example, Article 7.3.3 of the Trade Facilitation Agreement can be
used to interpret the scope of the restrictions covered by Article XI:1 of the GATT 1994. In the
particular case of Article 7.3.3 of the Trade Facilitation Agreement, Panama argues that this provision
explains that the coverage of a customs guarantee should not be greater than that required or
necessary to ensure payment of the customs duties, taxes and other charges due for the goods
secured.299 Likewise, Panama considers that Articles I, II and III of the GATT 1994 could be context
for interpreting the terms of Article XI:1 of the GATT 1994 given that they all have in common the
purpose of protecting competitive opportunities for imported pro ducts.300 For Colombia, the object
and purpose of Articles I, II and III of the GATT 1994 are different and govern measures that are
different in nature, have different purposes and produce a non-comparable effect.301
7.168. Although the parties and third parties 302 do not fully agree on the interpretative value that
should be accorded to other provisions when examining whether a measure has limiting effects on
importation inconsistent with Article XI:1 of the GATT 1994, the Panel recalls that "the provisions of
the WTO covered agreements should be interpreted in a coherent and consistent manner, giving
meaning to all applicable provisions harmoniously". 303 For example, Article VIII:1(c) has already
been considered as context for the interpretation of Article XI:1 of the G ATT 1994, and for what
amounts to a restriction on importation within the meaning of the latter provision.304
7.169. In this respect, the Panel agrees that the findings under Article XI:1 of the GATT 1994 cannot
have as a consequence the prohibition of bonds and o ther customs formalities permitted by other
provisions of the covered agreements. Therefore the Panel will examine the context provided by
other provisions of the covered agreements in the event that the Panel 's interpretation might have
such consequences.
7.3.4 The question of whether the specific bond is inconsistent with Article XI:1 of the
GATT 1994
7.3.4.1 Arguments of the parties
7.3.4.1.1 Panama
7.170. Panama305 claims that the specific bond constitutes a "restriction[]" on "importation" in
violation of Article XI:1 of the GATT 1994, since its highly burdensome amount and the fact that it

298 Panama's response to Panel question No. 61.
299 Panama's response to Panel question No. 61.
300 Panama's response to Panel question No. 62(b) (referring to Panel Reports, Argentina – Hides and
Leather, para. 11.20, and Colombia – Ports of Entry, footnote 463).
301 Colombia's comments on Panama's response to Panel question No. 62(b).
302 United States' third-party written submission, para. 46; European Union's third-party response to
Panel question No. 10, para. 25; and Japan's third-party response to Panel question No. 10, para. 20.
303 Appellate Body Report, Argentina – Import Measures, para. 5.236 (referring to Appellate Body
Reports, EC – Seal Products, para. 5.123; US – Anti-Dumping and Countervailing Duties (China), para. 570;
and US – Upland Cotton, para. 549 (citing Appellate Body Report, Argentina – Footwear (EC), para. 81 and
footnote 72, referring, in its turn, to Appellate Body Reports, Korea – Dairy Products, para. 81; US – Gasoline,
p. 28; Japan – Alcoholic Beverages II, p. 15; and India – Patents (US), para. 45)).
304 Appellate Body Report, Argentina – Import Measures, para. 5.233.
305 The Panel notes that in Panama's first written submission as complainant, its first written submission
as respondent, and its second written submission as complainant, Panama refers to Decree No. 1745/2016.
After submitting Decree No. 2218/2017 as Exhibit PAN-43, Panama begins referring to that Decree. In this
connection, Panama explained in paragraph 11 of its second written submission as respondent that "[f]or the
sake of simplicity, Panama refers in a general manner in this rebuttal to the "specific bond" or the "special
import regime", on the understanding that these are the same measures as are contained in Decrees No. 1745
and No. 2218. Any reference it may make to a measure of the specific decree (i.e. the specific bond of Decree
No. 2218) is normally made to highlight specific aspects stemming from that decree." This summary of
arguments uses the form in which Panama set forth its arguments, so that reference is at times made solely to

is required for each and every shipment act as a condition limiting importation of the textile and
footwear products affected.306
7.171. Panama argues that Colombia imposes a "condition" on the importation of textiles and
footwear with a declared f.o.b. price lower than or equal to the thresholds established in Decree
No. 1745/2016 by introducing the requirement to post a specific bond for imports of those products.
This condition must be fulfilled for release and importation of the goods, and it is not an automatic
process since obtaining the bond is subject to conditions. 307 Panama considers that this condition
limits imports of the relevant products because it has an adverse impact on their "competitive
opportunities".308 It also maintains that it nullifies competitive and import opportunities for importers
which are ineligible for a bank or insurance guarantee and which, prior to Decree No. 1745/2016,
could import by merely paying the tariff, irrespective of their financial rating.309 The limiting nature
of the condition stems, according to Panama, from its cost and burdensomeness, the uncertainty it
creates in the import process and the arbitrariness of its coverage.310
7.172. For Panama, the specific bond is costly be cause posting it and keeping it in place for three
years has a financial cost and a negotiation cost. The financial cost varies as it depends on the
financing entity or insurance company issuing the bond, the importer's risk profile and the magnitude
of the insured transaction.311 In Panama's opinion, by imposing this cost on certain imports Colombia
is replicating the effect of the compound tariff because it imposes charges which, if converted into
tariffs, would exceed the bound tariff levels. 312 For Panama, the bond makes it prohibitively
expensive to import the products affected by the measures. 313 Panama maintains that, although
Decree No. 2218/2017 alters the bond 's coverage, the cost of the bond remains excessive and
discourages imports.314
7.173. Panama likewise argues that the obligation to post the specific bond also creates uncertainty
because compliance with this obligation does not depend solely on the will of the importer but on
the decision of a third party: the bank or insurance company that issues the bond subject to certain
conditions. 315 For Panama, importers cannot ensure they will always meet these conditions, so that
obtaining the bond, as well as not being an automatic process, becomes uncertain and, therefore,
access for the goods may be restricted. 316 According to Panama, the uncertainty also stems from
Colombia's continual and unexpected regulatory changes modifying both the list of products affected
by the measure and the import requirements.317
7.174. Panama considers that, by virtue of its design, the speci fic bond is arbitrary because its
coverage does not bear any relation to the obligations it seeks to guarantee. In this connection,
Panama points out that the specific bond's coverage amounts to 200% of the threshold, rather than
of the actual value of the goods, multiplied by the quantity imported (under Decree No. 1745/2016),
or to 200% of the difference between the declared value and the threshold price, multiplied by the
quantity imported (under Decree No. 2218/2017)318, which results in an amount far gre ater than

Decree No. 1745/2016, these being arguments presented prior to the submission of Decree No. 2218/2017.
However, the foregoing is without prejudice to the fact that arguments expressly referring to Decree
No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case, the Panel will
address those arguments in its analysis concerning Decree No. 2218/2017.
306 Panama's request for the establishment of a panel, WT/DS461/22.
307 Panama's first written submission as complainant, para. 36; first written submission as respondent,
para. 53; and second written submission as respondent, paras. 150-151.
308 Panama's second written submission as respondent, para. 136.
309 Ibid. paras. 161-162 and 171-172.
310 Ibid. paras. 136 and 147.
311 Panama's first written submission as complainant, para. 37; first written submission as respondent,
para. 54; second written submission as complainant, para. 72; and second written submission as respondent,
paras. 173-176.
312 Panama's second written submission as respondent, para. 180.
313 Ibid. para. 184.
314 Ibid. para. 188.
315 Panama's first written submission as complainant, para. 40; first written submission as respondent,
para. 55; and second written submission as complainant, paras. 97-99.
316 Panama's first written submission as complainant, para. 40; first written submission as respondent,
317 Panama's second written submission as respondent, paras. 199-211.
318 Ibid. para. 139.

the principal obligations that the bond seeks to cover. 319 Panama underlines that the bond lacks
proportionality or substantiation, especially in the case of import ers that already have a general
bond for all their import operations, since the gene ral bonds are constituted to cover the same
obligations.320 In such cases, Panama considers that when the obligations to be guaranteed go
beyond the scope of the general bond, the specific bond should only cover the excess that is not
already covered by the existing general bond.321
7.175. In response to Colombia 's arguments, Panama points out that the specific bond is not
permissible under WTO law a priori, that a claim in respect of the bond does not imply a particularly
heavy burden of proof for the complainant, that claims under Article XI:1 do not require the effects
of the measure to be quantified, and that there is a clear disproportion between the specific bond
and the obligations it secures.
7.176. On whether the specific bond is permissible a priori , Panama doubts that the bond is
permissible and, even if it were, does not consider that this leads to a higher burden of proof. In any
event, Panama points out that even if the specific bond did fall within the scope of application of
Article 7.3.4 of the Trade Facilitation Agreement, it would not be justified under that provision, since
it is required in all circumstances, whether or not there is an offence.322
7.177. Concerning quantification of the effects of the measure, Panama argues that it has submitted
evidence on the restrictive effects of the specific bond and the special import regime by explaining
in detail how Decrees No. 1744/2016 and No. 1745/2016 perpetuate the restrictive effect of the
compound tariff and by demonstrating that Decree No. 1745/2016 imposes specific charges
stemming from the costs of the specific bond and the costs of the documentary and personal
attendance requirements in the special import regime.323 In any event, Panama considers that this
requirement is at odds with Appellate Body jurisprudence, in particular in Argentina – Import
Measures. For Panama, it is not necessary to quantify the effects, but to demonstrate the limiting
effects "through the design, architecture, and revealing structure of the measure at issue considered
in its relevant context".324 Panama argues that the specific bond imposes limitations on the quantity
of imports because, these being high -demand, low-priced products, the extra cost resulting from
the bond has an impact on domestic demand and causes a contraction of the volume of low-priced
imports.325 Panama argues that the design, structure and architecture of the measure demonstrate
that it imposes a condition limiting imports for the reasons mentioned above.326
7.178. On the disproportion between the specific bond and the obligations which the bond seeks to
secure, Panama asserts that the customs duties, penalties and fines whose payment the bond seeks
to cover do not need to be guaranteed; and that there can be consistency between the coverage of
a bond and the actual contingencies to be covered only if the amou nt of the bond is set on a
case-by-case basis, and not a priori on the basis of a predetermined quantity.327 On the first point,
Panama asserts that the specific bond of Decree No. 1745/2016 could not guarantee the payment
of cust oms duties on the declared value (tariff and VAT) since these are paid at the time of
importation, as a prior condition for withdrawal of the goods. 328 According to Panama, nor does it
serve for instances of undervaluation of goods, since Colombian customs r ules already provide for
guarantees to address such cases; nor to cover penalties and fines, since bonds to cover the latter
may only be required when an offence has been detected. 329 On the second point, Panama argues
that the bond should not be based solely on the threshold, but the amount already paid on the basis

319 Panama's first written submission as complainant, paras. 37-38; and first written submission as
respondent, paras. 54 and 84. See also Panama's second written submission as respondent, paras. 196-197.
320 Panama's first written submission as complainant, para. 39; and second written submission as
respondent, paras. 139 and 192-193.
321 Panama's second written submission as complainant, paras. 93-94; and second written submission
as respondent, paras. 192-194.
322 Panama's second written submission as complainant, paras. 61-66.
323 Panama's second written submission as respondent, paras. 126-127.
324 Panama's second written submission as complainant, paras. 69-70; and second written submission
as respondent, para. 143.
325 Panama's second written submission as complainant, para. 70.
326 Ibid. paras. 69-70, 107 and 145.
327 Ibid. para. 80.
328 Panama's second written submission as respondent, para. 191.
329 Panama's second written submission as complainant, paras. 83-84 and 86-87; and second written
submission as respondent, para. 191.

of the declared value should be deducted.330 Further, it adds that Colombia has failed to explain the
reason justifying the rate of 200%.331
7.179. Panama concludes that Colombia limits competitive opportunities for textiles and footwear
with declared f.o.b. prices equal to or lower than the thresholds of Article 3 of Decree No. 1745/2016
by imposing a requirement that has a significant cost, is burdensome and creates uncertainty.
Accordingly, Panama claims that the obligation to post a specific bond is a "restriction" on
importation inconsistent with Article XI:1 of the GATT.332
7.180. With respect to the adoption of Decree No. 2218/2017, Panama considers that the limitation
on market access imposed by the bond has been extended in that it is applicable to a larger number
of products. Even if the text of Decree No. 2218/2017 provides that the bond is only required in
cases where there is a dispute concerning value, Panama maintains that, de facto, the specific bond
is applicable to all imports below the thresholds, which are considered as "artificially low" prices, and
therefore continues to be a "necessary condition" for importation.333
7.3.4.1.2 Colombia
7.181. Colombia334 considers that Panama has failed to demonstrate that the specifi c bond is
inconsistent with Article XI:1.335 Colombia contends that customs bonds are permissible instruments
under the WTO Agreements, such as for example Article 13 of the Customs Valuation Agreement or
Article 7.3 of the Trade Facilitation Agreement. 336 Colombia also points out that the Ad note (to
paragraphs 2 and 3) of Article VI of the GATT 1994 provides for the use of customs bonds in
connection with anti-dumping or countervailing duty proceedings.337 According to Colombia, the fact
that customs bonds are permissible measures under WTO law means that they cannot in themselves
constitute prohibited restrictions under Article XI:1 and that, should Panama wish to demonstrate
otherwise, the burden on Panama should be a "particularly heavy burden to discharge".338
7.182. Colombia adds that Panama has failed to substantiate the limiting effect of the measures at
issue on imports.339 For Colombia, Panama has not offered any evidence of the "actual trade impact"
of the specific bond, or that the specific bond limits the quant ity or amount of the imported
product340, has not identified any quantitative limitation on imports of the products subject to the
specific bond requirement, and has not provided evidence that the costs or uncertainty allegedly
associated with the import process result in a limitation on the quantities or amounts of the products
that may be imported.341 Colombia points out that the costs to which Panama refers are applied and
collected by private actors and, therefore, cannot be attributed to the Colombian Government. As
the alleged restrictive effects of the bond stem from private actors, Colombia maint ains that they

330 Panama's second written submission as complainant, para. 85.
331 Ibid. paras. 81 and 88.
332 Panama's first written submission as complainant, para. 41; and first written submission as
respondent, para. 56.
333 Panama's second written submission as respondent, paras. 153-155.
334 The Panel notes that in Colombia's first written submission as respondent and its second written
submission as complainant, Colombia refers to Decree No. 1745/2016. After Panama submitted Decree
No. 2218/2017 as Exhibit PAN-43, Colombia began referring to that Decree as well. This summary of
arguments uses the form in which Colombia set forth its arguments, so that reference is at times made solely
to Decree No. 1745/2016, these being arguments presented prior to the submission of Decree No. 2218/2017.
However, the foregoing is without prejudice to the fact that arguments expressly referring to Decree
No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case, the Panel will
address those arguments in its analysis concerning Decree No. 2218/2017.
335 Colombia's first written submission as respondent, section B.
336 Colombia's first written submission as respondent, paras. 53-56; second written submission as
complainant, paras. 48-51; and second written submission as respondent, paras. 41-42.
337 Colombia's first written submission as respondent, paras. 57-58; and second written submission as
complainant, paras. 52-53.
338 Colombia's first written submission as respondent, paras. 59-60; and second written submission as
complainant, para. 55.
339 Colombia's second written submission as respondent, para. 35.
340 Colombia's first written submission as respondent, paras. 61-62; second written submission as
341 Colombia's first written submission as respondent, para. 64; second written submission as
respondent, paras. 53, 56, 57 and 74; and second written submission as complainant, paras. 59 and 65.

cannot form the basis for a claim that the bond constitutes a "restriction" within the meaning of
Article XI:1.342
7.183. Colombia submits that Panama's arguments have not been corroborated, since Panama has
failed to substantiate the limiting effect of the measures at issue on imports. 343 For Colombia,
Panama has not offered any evidence of the "actual trade impact" of the specific bond, or that the
specific bond limits the quantity or amount of the imported product, has not identified any
quantitative limitation on imports of the products subject to the customs bond requirement, and has
not provided evidence that the costs or uncertainty supposedly associated with the import process
result in a limitation on the quantities or amounts of the products that may be imported.344
7.184. Further, Colombia argues that there is a relationship between the amount of the specific
bond and the obligations it seeks to guarantee. 345 It adds that the imports subject to the specific
bond are those suspected of having artificially low declared values, and that it is thus appropriate to
use the threshold for the purposes of calculating the amount of the specific bond so as to ensure
that importers do not avoid paying the applicable duties, fines or penalties.346
7.185. With respect to the application of the specific bond to importers that already have a general
bond, Colombia explains that the latter bond may be insufficient in the case of a high level of imports
at artificially low prices.347
7.186. With regard to the uncertainty that Panama claims is created by the specific bond, Colombia
responds that the involvement of persons other than the importer is customary in commercial
transactions and cannot be considered a restriction within the meaning of Article XI:1.348 Colombia
adds that Panama has failed to demonstrate that the requirements that the importer allegedly has
to meet to obtain a customs bond are indeed requirements to obtain a customs bond.349
7.3.4.2 Analysis by the Panel
7.187. As indicated in paragraph 7.157 above, the Panel 's task will be to determine whether, as
Panama claims, the specific bond provided for in Article 7 of Decree No. 2218/2017 is inconsistent
with Article XI:1 of the GATT 1994 because it constitutes a measure that has a limiting effect on the
importation of certain products comprising fibres, yarns, fabrics, clothing and footwear350 and limits
the competitive opportunities of the importers and imported products.
7.188. The Panel notes that Panama has not d efined the category of measures covered by
Article XI:1 in which the specific bond would fall. In this regard, Colombia, without prejudice to its
objection to the possible inconsistency of the specific bond 351, does not appear to have called into
question the fact that the bond may fall within the scope of Article XI:1.
7.189. The Panel recalls that the prohibition of quantitative restrictions provided for in Article XI:1
refers explicitly to prohibitions or restrictions on the importation or exportation of a product "whether

342 Colombia's second written submission as respondent, paras. 46-49.
343 Ibid. para. 35.
344 Colombia's second written submission as respondent, paras. 53, 56-57 and 74; and second written
submission as complainant, para. 65.
345 Colombia's first written submission as respondent, paras. 68-69; and second written submission as
complainant, paras. 58-60.
346 Colombia's first written submission as respondent, para. 73.
347 Colombia's first written submission as respondent, para. 74; and second written submission as
complainant, para. 64.
348 Colombia's first written submission as respondent, para. 76; second written submission as
complainant, paras. 62-63; and second written submission as respondent, para. 52.
349 Colombia's first written submission as respondent, para. 77.
350 As specified in the descriptive part, Article 2 of Decree No. 2218/2017 stipulates that the products
covered are imports consisting of fibres, yarns, fabrics, clothing and footwear under Chapters 52, 53, 54, 55,
56, 58, 59, 60, 61, 62, 63 and 64 of the Customs Tariff for which the declared f.o.b. price is lower than or
equal to the threshold established in Article 3 of that Decree.
351 However, according to Colombia, because customs bonds are permissible measures under WTO law,
they cannot in themselves constitute prohibited restrictions under Article XI:1 and, should Panama wish to
demonstrate otherwise, the burden on Panama should be a "particularly heavy burden to discharge"
(Colombia's first written submission as respondent, paras. 59-60; and second written submission as
complainant, para. 55).

made effective through quotas, import … licences or other measures". Given the broad scope of the
term "other measures" and in the absence of any discussion on this point between the parties, the
Panel considers it appropriate to examine whether Panama has demonstrated that the specific bond
is trade-restrictive.352
7.190. The Panel recalls that Panama claims that the requirement to post a specific bond in order
to obtain release of the imports covered by Decree No. 2218/2017 constitutes a condition that limits
imports of the products concerned. In Panama's opinion, this limitation arises because requiring such
a bond has an adverse impact on "competitive opportunities" 353 for imports and nullifies
opportunities to compete and import for importers that are ineligible for obtaining the bond. 354
Panama maintains that the limiting nature of this condition stems from its cost and burdensomeness,
the uncertainty it creates in the import process, and the arbitrariness of its coverage.355
7.191. Undoubtedly, the requirement t o post a specific bond to authorize release of the goods in
specified situations356 constitutes an import condition. However, the mere imposition of a condition
on the import process does not imply a violation of Article XI:1 of the GATT 1994. Indeed, "not every
condition or burden placed on importation … will be inconsistent with Article XI:1, but only those
that are limiting, that is, those that limit the importation … of products". 357 While the conditions
attached to the import of products often entail burdens on importation, it is no less certain that they
constitute a "routine aspect of international trade".358
7.192. Accordingly, the Panel's analysis must not be confined to merely ascertaining the existence
of an import condition, but must focus primarily on determining whether the said condition has the
limiting effects on the importation of products that Panama claims. Specifically, that the limiting
nature of the condition stems from its cost and burdensomeness, the uncertainty which it creates in
the import process, and the arbitrariness of its coverage.359 To this end, the Panel will examine the
measure in question in terms of its design, architecture and revealing structure in its relevant
context.360
7.193. As described in section 2.3.3.2 above, the specific bond consists in the requirement imposed
on the importer of clothing and footwear classified under Chapters 52, 53, 54, 55, 56, 58, 59, 60,
61, 62, 63 and 64 of the Colombian Customs Tariff, when a valuation dispute arises, to post a specific
bank or insurance company guarantee in order to obtain release of the imported goods when the
declared f.o.b. price is lower than or equal to a certain threshold. The specific bond is set forth in
Article 7 of Decree No. 2218/2017. From the wording of that text, the Panel may identify the
following features in the design, architecture and structure of the specific bond:
a. constitution of the specific bond is necessary for obtaining the release of goods under the
headings listed in Article 3 of Decree No. 2218/2017 only in cases where a dispute arises
with respect to value in connection with the inspection or examination procedure that leads

352 The Panel agrees with the panel in Argentina – Import Measures that what is relevant when
examining a measure under Article XI:1 of the GATT 1994 is whether the measure prohibits or restricts trade,
rather than the means by which such prohibition or restriction is made effective (Panel Report, Argentina –
Import Measures, para. 6.363). This approach was also used by the panel in Indonesia – Import Licensing
Regimes (Panel Report, Indonesia – Import Licensing Regimes, paras. 7.55 and 7.76).
353 Panama's second written submission as respondent, para. 136.
354 Ibid. paras. 161-162 and 171-172.
355 Ibid. paras. 136 and 147.
356 In the case of valuation disputes in connection with the inspection or examination process for imports
of fibres, yarns, textiles, clothing and footwear under Chapters 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63 and
64 of the Colombian Customs Tariff for which the declared f.o.b. price is lower than or equal to the threshold
established in Article 3 of Decree No. 2218/2017 (Decree No. 2218/2017 (Exhibit PAN-43), Article 2). It should
be pointed out that the parties disagree on whether the bond is required whenever the declared f.o.b. prices
are lower than or equal to the established thresholds (Panama's position) or only when the prices are lower
than or equal to the established thresholds and, in addition, a valuation dispute arises (Colombia's position).
357 Appellate Body Report, Argentina – Import Measures, para. 5.217. See also Panel Report,
Argentina – Import Measures, paras. 6.252-6.254 (referring to Panel Reports, India – Autos, para. 7.270 and
China – Raw Materials, para. 7.917).
358 Appellate Body Report, Argentina – Import Measures, para. 5.243.
359 Panama's second written submission as respondent, paras. 136 and 147.
360 Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body
Reports, China – Raw Materials, paras. 319-320).

to delaying the final determination of customs value with explicit reference to Article 13 of
the Customs Valuation Agreement;
b. the type of specific bond is confined to two categories: bank or insurance company
guarantee361;
c. the amount of the specific bond comes to 200% of the difference between the f.o.b. price
declared by the importer and the result of multiplying the unit price of the threshold
established in Article 3 of Decree No. 2218/2017 by the quantity imported;
d. the duration of the specific bond is three years;
e. the purpose of the specific bond is to guarantee payment of the customs taxes, penalties
and interest that may apply; and
f. the relationship of the specific bond with a general bond is one of primacy, since having a
general bond (or not being under the obligation to post one) does not exempt the importer
from the obligation to post a specific bond in the cases indicated in (a) above.
7.194. Having identified the main features of the specific bond regime, the Panel will analyse
Panama's claims in this regard.
7.3.4.2.1 The question of whether the specific bond is burdensome
7.195. Panama claims that the specific bond is costly and burdensome because posting it and
maintaining it for three years entails a financial cost and a negotiation cost which is excessive and
discourages imports below the thresholds. 362 In its arguments, Panama not only refers to the
financial cost of posting the bond as excessive, and variable depending on the conditions laid down
by the bank or insurance company issuing it, but also submits that its duration is excessive.
7.196. Colombia points out that Panama has not provided any evidence on the costs associated
with the specific bond, and that its assertions are speculative. Colombia adds that if the costs are
variable depending on factors such as the risk profile, then the costs are rationally related to such
factors and thus cannot be excessive.363 Colombia also argues that the costs to which Panama refers
are applied and collected by private actors and therefore cannot be attributed to the Colombian
Government. In its opinion, as the alleged restrictive effects of the bond stem from private actors,
they cannot form the basis f or a claim that the customs bond constitutes a "restriction" within the
meaning of Article XI:1.364
7.197. Before proceeding, the Panel believes it expedient to address this argument by Colombia
that the costs arising from posting such a bond with private actors c annot be attributed to the
Colombian Government, and would thus lie outside the scope of Article XI:1. The Panel understands
that this argument goes to the fact that only measures attributable to WTO Members, and not to
private actors, may be examined by t he Panel. Clearly, while the concept of "measure" subject to
WTO dispute settlement under Article 3.3 of the DSU is broad, any measure challenged must meet
the requirement of attribution to a Member in order to be subject to WTO dispute settlement.365
7.198. However, this does not exclude from scrutiny under the DSU those decisions of private actors
that are not independent of a measure of a Member. 366 Indeed, "the intervention of some element

361 Decree No. 2218/2017 explicitly rules out the possibility of the specific bond taking the form of a
monetary deposit.
362 Panama's second written submission as respondent, para. 188.
363 Colombia's first written submission as respondent, paras. 64-67.
364 Colombia's second written submission as respondent, paras. 46-49.
365 Appellate Body Report, Argentina – Import Measures, paras. 5.100 et seq.
366 Panel Report, Indonesia – Import Licensing Regimes, para. 7.6 and footnote 350. In that report, the
panel also explained that in Korea – Various Measures on Beef, the measure at issue required retailers to make
a choice as to what to sell. The panel found that "a government regulation contravenes a Member's
obligations … if … it forces economic operators to make certain choices" (Panel Report, Korea – Various
Measures on Beef, para. 635) (boldface original). This decision was upheld by the Appellate Body
(Appellate Body Report, Korea – Various Measures on Beef, para. 146). In Japan – Film, the panel found that

of private choice does not relieve [a Member] of responsibility under the GATT 1994".367 The Panel
hence considers that the fact that the costs of the specific bond, a measure imposed by Decree
No. 2218/2017, stem from importers negotiating with private entities would not exclude them from
the scope of the examination.
7.199. The Panel t hus proceeds with its analysis of the alleged burdensomeness of the financial
costs linked to the posting of the specific bond. The Panel recalls that, in order to elucidate the
limiting effects of a measure, "[the] limitation [on importation or exportatio n] need not be
demonstrated by quantifying the effects of the measure at issue" 368; rather, such limiting effects
can be demonstrated through the design, architecture, and revealing structure of the measure at
issue considered in its relevant context.369
7.200. Analysis of the wording of Article 7 of Decree No. 2218/2017 does not allow the Panel to
conclude that the financial cost of posting the specific bond is excessively burdensome. The provision
in question regulates only the formula to be used to determine t he amount to be guaranteed, and
not the costs, which will depend on each financial entity or insurance company. As Colombia points
out, customs bonds are permissible measures under WTO law 370 and are instruments which
Colombia uses in other situations in whi ch a valuation dispute may arise concerning any imported
product.371 Consequently, Panama must demonstrate that this bond in particular is excessively
burdensome such as to constitute a restriction on importation within the meaning of Article XI:1 of
the GATT 1994.
7.201. With regard to the financial cost of posting the bond, the parties have presented different
examples in which the relative weight of the bond in relation to the total cost of the import
transaction varies significantly. In some, the bond represents a considerable relative weight in
relation to the operation guaranteed; in others, a relatively low sum that might even not cover the
obligations it seeks to guarantee.
7.202. Panama submits examples that show the cost of the specific bond provided for in Decre e
No. 1745/2016 as having a substantial weight in relation to the rest of the costs incurred in respect
of the import transaction372 and emphasizes that, despite the changes in the calculation of the bond
introduced by Decree No. 2218/2017, the weight of the bond remains unchanged.373 According to
Panama, the costs incurred for posting the bond include: (a) payment of a premium or financial
commission that varies from institution to institution; (b) payment of a stamp tax amounting to
0.5% on the value contained in the document; (c) value added tax (VAT); and (d) ancillary costs for
processing of the request. 374 Panama uses the hypothetical example of a monthly commission of
0.75% on the total amount guaranteed plus VAT at 19%. If this 0.75% commission is multiplied by
the duration of the guarantee (3 years, or 36 months), adding in the 19% VAT and the 0.5% stamp
tax on the 36 months of commission, Panama contends that the effective tariff of the bank guarantee
would come to 32.27% of the amount guaranteed for a period of three years.

"administrative guidance that creates incentives or disincentives largely dependent upon governmental action
for private parties to act in a particular manner" may constitute a governmental measure (Panel Report,
Japan – Film, para. 10.45 (citing GATT Panel Report, Japan – Semi-conductors, para. 109)).
367 Appellate Body Report, Korea – Various Measures on Beef, para. 146.
368 Appellate Body Report, Argentina – Import Measures, para. 5.217 (referring to Appellate Body
Reports, China – Raw Materials, paras. 319-320.)
369 Idem.
370 Colombia's first written submission as respondent, paras. 59-60; and second written submission as
complainant, para. 55.
371 Colombia's response to Panel question No. 23, paras. 92-94.
372 Exhibits PAN-18, PAN-19 and PAN-20 and Panama's second written submission as respondent,
paras. 175-183.
373 Panama's second written submission as respondent, para. 187.
374 Ibid. para. 175.

Table 2: Example from Panama
Hypothetical example submitted by Panama
Monthly commission for the 36-month
period of validity of the bond
27 (0.75% monthly commission *
36 months) = 27)
VAT 5.13 (19% VAT on 27, i.e. the total
commission)
Stamp tax 0.135 (0.5% stamp tax on 27, i.e.
the total commission)
Total: 32.27% (32.265)
Source: Panama's second written submission as respondent, para. 176.
7.203. This percentage would be applied on the coverage required by Article 7 of Decree
No. 2218/2017, i.e. 200% of the difference between the f.o.b. price declared by the importer and
the result of multiplying the threshold unit price established in Article 3 of that Decree by the quantity
imported.375
7.204. Colombia, for its part, maintains that the costs of the bond are significantly lower than those
put forward by Panama and that the figures and calculations advanced by Panama are erroneous.376
Colombia produces data on a real case of importation where the declared f.o.b. price l ay below the
thresholds in Article 3 of Decree No. 2218/2017, in which the weight of the premium in relation to
the f.o.b. value is 1%377:
Table 3: Example from Colombia
Example submitted by Colombia
F.o.b. value (US$) 14,830.40
Guaranteed value (US$) 10,659.20
Premium (US$) 203.92
Premium as a percentage of the
f.o.b. value:
1.4%
Source: Colombia's oral statement at the Panel meeting as respondent, para. 26.
7.205. The examples provided by the parties confirm that the analysis of the degree of
burdensomeness of the bond in relation to the import transaction for which it is to be posted cannot
be carried out in abstracto but has to be made on a case-by-case basis
7.206. Beyond these conflicting examples, the Panel does not find in the record any explanation by
Panama addressing how these additional costs translate into a limitation on imports. The Panel
consequently has no evidence in the record to characterize the specific bond provided for in Article 7
of Decree No. 2281/2017 as "costly" or "burdensome" on account of excessive financial costs that
go beyond routine costs inherent in the import process to the point of constituting a limiting condition
on imports. The Panel recalls that the imposition of import conditions that may involve a charge is
a routine aspect of international trade and does not necessarily imply any violation of Article XI:1 of
the GATT 1994.378
7.207. Nor does the Panel have any arguments or factual elements allowing it to determine whether
the formula established by Colombia to set the bond (200% of the difference between the declared
f.o.b. value and the threshold price, multiplied by the quantity imported) results in a limitation on
imports. While the juris prudence has certainly established that it is not necessary to quantify the

375 Panama points out that when the declared value is equal to the threshold, the coverage of the bond
is zero. (Panama's second written submission as respondent, para. 187.)
376 Colombia's statement at the meeting of the Panel as respondent, paras. 25-26.
377 Actual cases of imports effected under the bond of the special regime (Exhibit COL-32). Colombia
provides information on more actual cases governed by Decree No. 1745/2016.
378 Appellate Body Report, Argentina – Import Measures, para. 5.217. See also Panel Report,
Argentina – Import Measures, paras. 6.252-6.254 (referring to Panel Reports, India – Autos, para. 7.270 and
China – Raw Materials, para. 7.917).

limiting effects to find a violation of Article XI:1, it has also been established that such quantification
may constitute a relevant factual element in a panel 's analysis under Ar ticle XI:1. In the present
case, the Panel considers that the example submitted by Panama does not provide sufficient
supporting evidence to conclude that the burdensomeness or cost of the specific bond in itself results
in a limiting effect on imports.
7.208. Furthermore, as Colombia has explained379, if there is a dispute concerning the value of the
goods with a suspicion of underinvoicing, it is natural and logical that the amount of the bond be
calculated on the basis of a reference value. In point of fact, the taxes and other charges would not
be calculated on the basis of the declared value, but on the basis of corrected values, so there is
de facto a prospect that the specific bond might not be sufficient to cover all the costs of release.
7.209. Therefore, in the Pa nel's opinion, Panama has failed to demonstrate that the costs arising
from posting of the specific bond discourage imports of the products in question below the
thresholds.
7.210. With regard to the three -year duration of the specific bond, Panama considers it t o be
excessive in comparison with other bonds provided for in Colombia 's customs legislation. Colombia
responds that the bond does not necessarily remain in place for three years, but is lifted when,
following the valuation review by the Colombian authorit ies, the declared value is accepted. 380
According to Colombia, the duration is set on the basis of the time -frame within which the import
declaration becomes firm, which is three years from the date of acceptance of the declaration. The
Colombian customs authority thus has three years to issue a Special Customs Demand.381
7.211. The Panel notes that Panama questions the duration of the bond but fails to explain how the
said duration impacts on the alleged restrictive nature of the bond within the meaning of Article XI:1
of the GATT 1994. Nor does Panama adduce arguments or evidence to substantiate the alleged
limiting effects of the bond on importation on account of its duration. Conversely, Colombia 's
explanation to the effect that the duration is set on the basis of the time-frame within which the
import declaration becomes firm appears reasonable. The Panel further notes that, although the
duration of the bond is three years, it only has to be posted once, paying the premium and relevant
expenses, but not the total amount guaranteed. It does not involve, for example, the retention of a
sum of money to be refunded after three years, as would be the case for a cash deposit for the total
value of the bond. Therefore, in the opinion of this Panel, Panama has failed to de monstrate that
the requirement to post the specific bond for a duration of three years is excessive such as to result
in a restriction on imports.
7.212. Consequently, the Panel rejects Panama 's claim that the specific bond provided for in
Article 7 of Decree No. 2218/2017 is "costly" or "burdensome" to the point of constituting a limiting
condition on imports.
7.3.4.2.2 The question of whether the specific bond creates uncertainty
7.213. Panama contends that the specific bond creates uncertainty because it is to be posted when
a valuation dispute is triggered in connection with the inspection or examination procedure and it is
granted subject to the conditions laid down by a bank or insurance company.382 Panama also points
to additional uncertainty stemming from constant regulatory changes.383
7.214. The Panel takes note of the difference of opinion between the parties as to when the posting
of the specific bond becomes obligatory. On the basis of the wording of Article 7 of Decree
No. 2218/2017, the bond would only have to be posted in the event of a valuation dispute.

379 Colombia's response to Panel question No. 18.
380 Colombia's response to Panel question No. 18, para. 83 (referring to Article 254 of Decree
No. 2685/1999 (Exhibit PAN-3) and Article 173 of Resolution No. 4240/2000 (Exhibit PAN-40)).
381 Colombia's response to Panel question No. 20, para. 89.
382 Panama's first written submission as complainant, para. 40; first written submission as respondent,
para. 55; and second written submission as complainant, paras. 97-99.
383 Panama's second written submission as respondent, paras. 199-211.

7.215. Panama contends, however, that in practice the specific bond is requested a priori for all
transactions covered by Decree No. 2218/2017.384 This would mean that the Colombian customs
authorities would necessarily determine the existence of a valuation dispute whenever clothing and
footwear classified under Chapters 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63 and 64 of Colombia's
Customs Tariff are imported below the relevant threshold. Panama finds support for this
interpretation of how the specific bond functions in practice under Decree No. 2218/2017 in the fact
that Colombia's own legislation stipulates that, in the case of ostensibly low prices, the declarant is
requested to post a bond or to opt to adjust the import declaration to the actual negotiated price.385
7.216. Panama further refers the Panel to an inspection report which, in its opinion, shows that the
bond is requested by virtue of the f.o.b. values of the imports lying below the thresholds in Article 3
of Decree No. 2218/2017, regardless of the existence of a valuation dispute.386
7.217. Colombia denies that the situation is as described by Panama. 387 In this respect, Colombia
reported the following:
According to the information supplied by the Subdirectorate for External Tra de of the
Customs Management Department, 138 import declarations were submitted at or below
the thresholds established in Decree No. 2218/2017. Of these, 105 declarations, or
76%, obtained release, among which a valuation dispute arose for 12 imports, givi ng
rise to the posting of 12 specific bonds. For the remaining 33 import declarations, or
24%, release was not authorized.
Above the threshold, 60,866 import declarations were submitted according to
information from the Economic Studies Unit.388
7.218. It does not appear to the Panel that the wording of the Colombian legislation to which
Panama refers or the aforementioned inspection report offer convincingly substantiate Panama 's
assertion that the specific bond is necessarily required whenever clothing and footwea r classified
under Chapters 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63 and 64 of Colombia's Customs Tariff are
imported into Colombia below the relevant threshold. In point of fact, the data submitted by
Colombia appear to contradict Panama's assertion.
7.219. Therefore, the Panel considers that Panama has failed to demonstrate that the posting of a
specific bond under Article 7 of Decree No. 2218/2017 is required for all importation of the relevant
products under the respective threshold. In any event, the Panel does not consider this aspect to be
dispositive as to whether the specific bond, by allegedly causing uncertainty, constitutes a limiting
condition on imports.
7.220. Another of the arguments put forward by Panama in respect of the alleged uncertainty
created by the posting of the specific bond is the fact that the bond is granted subject to conditions
set by a bank or insurance company.389
7.221. As in relation to the burdensomeness of the guarantee, Colombia responds that if Panama
is arguing that the alleged restrict ive effects of the bond stem from private actors, these cannot
form the basis for a claim that the bond constitutes a "restriction" within the meaning of
Article XI:1.390
7.222. In line with the Panel 's conclusions in paragraphs 7.197-7.198 above, the intervention of
some element of private choice does not relieve Colombia of responsibility under the GATT 1994.391

384 Panama's response to Panel question No. 52. See also Panama's comments on Colombia's response
to Panel question No. 1.
385 Panama's comments on Colombia's response to Panel question No. 1, para. 6 (referring to Decree
No. 2685/1999 (Exhibit PAN-3), Article 128, point 5.1.3.).
386 Panama's comments on Colombia's response to Panel question No. 8, para. 1 and response to Panel
question No. 52 (referring to the Colombiana Kimberly Colpapel insurance policy (Exhibit COL-17)).
387 Colombia's response to Panel questions Nos. 12, 15 and 21.
388 Figures for imports of goods under Decree No. 2218/2017 (Exhibit COL-61).
389 Panama's first written submission as complainant, para. 40; first written submission as respondent,
para. 55; and second written submission as complainant, paras. 97-99.
390 Colombia's second written submission as respondent, para. 51.
391 Appellate Body Report, Korea – Various Measures on Beef, para. 146.

Hence, the fact that importers negotiate the bond with private entities would not exclude it from the
scope of the review.
7.223. Coming back to examination of the alleged uncertainty caused by having to post the bond
through private actors, the Panel observes that it is quite common for customs bonds to be issued
by a bank or insurance company, and it is they that will set the conditions that the importer must
fulfil to obtain the bond. As will be seen in greater detail in section 7.3.4.2.3 below, and as some
third parties have pointed out, other provisions of WTO agreements provide for the possibility of
requesting importers to post customs bonds.392 This is the case in Article 13 of the Customs Valuation
Agreement and Article 7 of the Trade Facilitation Agreement, where provision is made for posting
guarantees in the form of sureties, deposits or other appropriate instruments provided for in th e
laws and regulations of the importing Member. In the Panel 's opinion, a banking or insurance
company bond is among the appropriate instruments provided for in Colombian legislation and in
that of many other WTO Members. Thus, the Panel does not believe that the mere fact that the bond
must be of one of the two types serves to create uncertainty.
7.224. The Panel understands that the fact that certain parties may not be able to fulfil certain
conditions attached to the import process does not turn them per se into conditions having limiting
effects on importation, in contravention of Article XI:1. As stated earlier, the imposition of import
conditions that may involve a charge is a routine aspect of international trade and does not
necessarily imply any violation of Article XI:1 of the GATT 1994.393
7.225. In this case, the Panel does not consider that Panama has sufficiently explained how the
posting of a bond through a bank or insurance company creates uncertainty for importers of the
products covered by Decree No. 2218/2017. Therefore, in the Panel's opinion, Panama has failed to
demonstrate that the posting of the specific bond through a bank or insurance company constitutes
a limitation on imports.
7.226. Another of the arguments put forward by Panama is the alleged addition al uncertainty
stemming from constant regulatory changes affecting the specific bond. Panama refers first to
Decree No. 074 of 23 January 2013, which introduced the compound tariff on the importation of
textiles, footwear and clothing, which was subsequently replaced by Decree No. 456 of 28 February
2014, declared inconsistent with WTO rules in the original proceedings. Panama then refers to
Decrees No. 1744/2016 and No. 1745/2016 and to the latter 's replacement by Decree
No. 2218/2017.394 The Panel notes, firstly, that the changes involved in these actions are changes
relating to the measures at issue, i.e. Decrees No. 1744/2016, No. 1745/2016 and No. 2218/2017.
In this respect, while Decrees No. 1744/2016 and No. 1745/2016 were issued on 2 November 2016,
Decree No. 2218/2017 was issued on 27 December 2017, i.e. more than a year later. The Panel
doubts, first of all, that the changes in the measures at issue can be considered as "constant".
Secondly, the Panel does not consider that Panama has demonstrated that the said regulatory
changes have created the uncertainty that Panama alleges.
7.227. Consequently, the Panel rejects Panama 's claim that the specific bond provided for in
Article 7 of Decree No. 2218/2017 creates uncertainty to the point of constituting a limiting condition
on imports.
7.3.4.2.3 The question of whether the specific bond is arbitrary
7.228. Panama argues that the specific bond is arbitrary because it lacks proportionality, since its
coverage bears no relation to the obligations it seeks to gua rantee. Panama also argues that the
lack of proportionality is more flagrant in those cases where the importer has already posted a
general bond. The Panel will examine these arguments below.
7.229. With regard to the lack of proportionality in relation to the risk covered, Panama claims that
the amount of the bond is not proportional to the obligations to be covered, as it is determined on

392 European Union's third-party written submission, para. 25; third-party statement, para. 17; and
United States' third-party written submission, paras. 45-47.
393 Appellate Body Report, Argentina – Import Measures, para. 5.217. See also Panel Report,
Argentina – Import Measures, paras. 6.252-6.254 (referring to Panel Reports, India – Autos, para. 7.270 and
China – Raw Materials, para. 7.917).
394 Panama's second written submission as respondent, paras. 199-211.

the basis of a fixed formula. 395 Panama points out that the coverage of the specific bond, which
amounts to 200% of the differe nce between the declared value and the threshold price, multiplied
by the quantity imported, is far greater than the principal obligations that the bond purports to
cover.396 Panama questions whether the specific bond is meant to guarantee payment of customs
taxes and penalties. This is because, according to Panama, customs duties are paid before a
valuation dispute is identified and bonds may not guarantee the payment of penalties before offences
are detected.397
7.230. Colombia, on the other hand, considers that all the elements of the bond (insurable interest,
insurable risk, amount of the insurable risk, parties involved, premium, etc.) have a direct
relationship with the import operation that is being guaranteed and the value recorded in the
corresponding customs declaration.398 Colombia points out that, since the obligation that it is sought
to guarantee (imposition of customs taxes, penalties and interest after a customs investigation) is a
future and uncertain one399, the guarantee is set on the basis of an indicati ve value, without there
being total certainty that the bond will cover 100% of those obligations.400
7.231. The indicative value to which Colombia refers is the 200% prescribed in the regulation, and
according to Colombia meets the criterion of sufficiency within the meaning of Article 13 of the
Customs Valuation Agreement and Article 7 of the Trade Facilitation Agreement. 401 By way of
example, Colombia indicates that in certain cases the penalties can be as high as 150 or 200% of
the valuation of the imported goods.402 Colombia also clarifies that the change in calculation of the
value of the bond following the entry into force of Decree No. 2218/2017 results in a lower guarantee
amount than had been provided for in Decree No. 1745/2016403, and thus correspon ds more
accurately to the value that would be generated by the risk of non-payment of the customs duties.404
7.232. The Panel concurs with Colombia as to the difficulty of establishing ex ante a bond that seeks
to guarantee future and uncertain aspects like duties and potenti al penalties and interest that will
be payable once the valuation dispute is settled. The Panel considers that there is an element of
uncertainty inherent in any valuation dispute, since it is not known at the start of the dispute what
the final determinat ion will be. This situation makes it difficult to be more precise at the time of
setting the amount of the bond. The Panel appreciates that in the event of a dispute concerning the
value of goods when there is a suspicion of underinvoicing, it is understandable that the amount of
the bond be calculated on the basis of a reference value, since the duties and other charges would
not be calculated on the basis of the declared value, but rather of corrected values, so there is
de facto a possibility that the specific bond may not be sufficient to cover all the costs of release.
7.233. Therefore, in the Panel 's opinion, Panama has failed to demonstrate the lack of
proportionality of the coverage in relation to the obligations it seeks to guarantee.
7.234. Panama also argues that the lack of proportionality is more flagrant in the case of importers
that already have a general bond to cover the same obligations. 405 Colombia, for its part, explains
that the specific bond forms part of a special regime that it applies preferentially over the general
regime of the Customs Statute.406 According to Colombia, the specific bond and other bonds provided
for in Colombia 's customs system, including the general bond, are unrelated. 407 Colombia asserts

395 Panama's response to Panel question No. 52.
396 Panama's first written submission as complainant, paras. 37-38; and first written submission as
respondent, paras. 54 and 84. See also Panama's second written submission as respondent, paras. 196-197.
397 Panama's comments on Colombia's response to Panel question No. 9.
398 Colombia's response to Panel question No. 9, para. 28.
399 Ibid. para. 29.
400 Ibid. para. 30.
401 Colombia's response to Panel question No. 18, para. 74.
402 Colombia's response to Panel question No. 9, para. 29.
403 The Panel recalls that while in Decree No. 1745/2016 the coverage of the bond amounted to 200% of
the threshold unit price multiplied by the quantity imported, in Decree No. 2218/2017 the coverage amounts to
200% of the difference between the f.o.b. price declared by the importer and the result of multiplying the
threshold unit price.
404 Colombia's response to Panel questions No. 13(c), para. 48 and 15(a)( i), para. 57 and comments on
Panama's response to Panel question No. 52.
405 Panama's first written submission as complainant, para. 39; and second written submission as
respondent, paras. 192-193.
406 Colombia's response to Panel question No. 15(a)(ii), para. 60.
407 Colombia's response to Panel question No. 17(b), para. 69.

that the specific bond was explicitly linked to the valuation dispute guarantee, pursuant to Article 13
of the Customs Valuation Agreement and consistent with Article 17 of that same instrument.408
7.235. With respect to the relationship with other bonds, the fact that there are other bonds that
cover similar situations does not necessarily imply that there is any duplication since, as Colombia
indicated, they may apply to different products in different circumstances. In this instance, Colombia
indicates that the specific bond is part of a special regime that prevails over the general regime. Nor
does the fact that other guarantees display different characteristics in terms of their amount,
duration, etc., support the conclusion that the coverage of the specific bond is arbitrary.
7.236. In the Panel 's opinion, Panam a has failed to explain how the allegedly arbitrary design of
the bond has a limiting effect on imports. Consequently, the Panel rejects Panama's contention that
the specific bond provided for in Article 7 of Decree No. 2218/2017 is arbitrary to the point of
constituting a limiting condition on imports.
7.3.4.3 Conclusion
7.237. Having examined the reasons put forward by Panama to substantiate the alleged
inconsistency of the specific bond with Article XI:1 of the GATT 1994, pertaining to its
burdensomeness, the uncertain ty it might create and its arbitrariness, as well as its design,
architecture and revealing structure in its relevant context, the Panel considers that Panama has
failed to adduce sufficient arguments and documentary evidence to enable it to find that the
obligation to constitute a specific bond with the characteristics of Article 7 of Decree No. 2218/2017
has limiting effects on imports.
7.238. For the reasons set out above, the Panel concludes that Panama has failed to demonstrate
that the specific bond provide d for in Article 7 of Decree No. 2218/2017 has limiting effects on
imports in a manner inconsistent with Article XI:1 of the GATT 1994.
7.3.5 The question of whether the special import regime is inconsistent with Article XI:1
of the GATT 1994
7.3.5.1 Arguments of the parties
7.3.5.1.1 Panama
7.239. Panama409 claims that the special import regime constitutes a "restriction[]"on "importation"
in violation of Article XI:1 of the GATT 1994, since the collective application of more onerous customs
and tariff measures to textile and footwear products with prices lower than or equal to the thresholds
established by Colombia has a paralysing effect on imports of the products concerned.410
7.240. Panama argues that the special import regime, by its design, structure and architecture,
limits the capacity of certain importers and affects the competitive position of imported products
priced at or below the thresholds, for the following reasons: (a) it excludes from the import process
importers that do not obtain the specific bond; (b) it limits the capacity of importers by imposing
burdensome requirements; (c) it ascribes a risk status to importers that declare goods at or below
the established threshold price; (d) it requires the presence of the importer, its legal representative

408 Colombia's comments on Panama's response to Panel question No. 52.
409 The Panel notes that in Panama's first written submission as complainant, its first written submission
as respondent, and its second written submission as complainant, Panama refers to Decree No. 1745/2016.
After submitting Decree No. 2218/2017 as Exhibit PAN-43, Panama begins referring to that Decree. In this
connection, Panama explained in paragraph 11 of its second written submission as respondent that "[f]or the
sake of simplicity, Panama refers in a general manner in this rebuttal to the "specific bond" or the "special
import regime", on the understanding that these are the same measures as are contained in Decrees No. 1745
and No. 2218. Any reference it may make to a measure of the specific decree (i.e. the specific bond of Decree
No. 2218) is normally made to highlight specific aspects stemming from that decree." This summary of
arguments uses the form in which Panama set forth its arguments, so that reference is at times made solely to
Decree No. 1745/2016, these being arguments presented prior to the submission of Decree No. 2218/2017.
However, the foregoing is without prejudice to the fact that arguments containing an express reference to
Decree No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case, the Panel will
address those arguments in its analysis concerning Decree No. 2218/2017.
410 Panama's request for the establishment of a panel, WT/DS461/22.

or its agent during the customs inspection or examination of the goods, with the attendant costs
that this entails; (e) it authorizes the presence of an import operations obse rver paid by the local
industry; (f) it prescribes a specific bond which entails a considerable cost; (g) it creates uncertainty
in terms of the restriction on ports of entry; and (h) if the requirements of Article 4 are not met, it
does not allow reshipme nt, recovery or legalization, with the result that the DIAN may dispose of
the goods after a period of "legal abandonment".411
7.241. Panama argues that the component conditions of the special import regime impose
significant monetary, logistical and, possibly, tra nsaction costs on the import process. The costs
stem from the requirement to post a specific bond of 200% of the threshold unit price multiplied by
the quantity imported, valid for three years 412, together with the requirement to produce five
documents and certificates one month in advance of importation for each shipment: (a) translation
costs for the five documents and certificates 413; (b) apostille or legalization costs for the
five documents and certificates, as appropriate; (c) logistical costs of complyin g with the
documentary and certification requirements involving various actors; (d) banking cost arising from
the rates charged by Colombian banks; and (e) additional costs stemming from the required
attendance of the importers themselves or the professional hired for the purpose during the physical
inspection of the goods for the release authorization .414 These costs are significant and have a
restrictive effect on imports. 415 The aforementioned costs are recurrent, since they apply to each
importation.416
7.242. In particular, regarding the costs associated with the translation requirement, Panama points
to the lack of availability of official translators for certain languages in Colombia, which effectively
restricts the importation of goods from countries with languag es for which no official translator is
available, as the submission of translated documentation is necessary for processing the entry of
goods into Colombia. 417 Panama adds that the lack of availability of official translators in the
importer's city has an impact on processing time and cost.418 Panama does not deem it reasonable
to require official translations from languages for which there are no official translators in Colombia,
and to require them multiple times, as in the case of certification of the exist ence of the supplier,
when they have been submitted recently. 419 Panama also calls into question the fact that such
translations are only requested for imports covered by Decrees No. 1745/2016 and
No. 2218/2017.420
7.243. With respect to the costs associated with the certification requirement, Panama considers
that they are costs arising from unnecessary red tape since the information appears in other import
documents.421 Panama points out that to the costs of certification per se must be added the hidden
logistical costs (i.e. planning and logistical organization costs and implementation costs) which push
up the transaction costs even further.422

411 Panama's first written submission as complainant, para. 56; and second written submission as
respondent, paras, 219 and 232. See also Panama's first written submission as complainant, para. 55.
412 Panama's second written submission as respondent, para. 280.
413 Panama's first written submission as complainant, para. 57; and second written submission as
respondent, paras. 241-246.
414 Panama's first written submission as complainant, paras. 57-58 and 60; first written submission as
respondent, para. 60; second written submission as complainant, para. 149; and second written submission as
respondent, paras. 281-285.
415 Panama's first written submission as complainant, para. 61; and second written submission as
respondent, para. 281.
416 Panama's first written submission as complainant, paras. 57-58; and first written submission as
respondent, para. 60.
417 Panama's second written submission as complainant, paras. 124-125. See also Panama's second
418 Panama's second written submission as complainant, para. 127. See also Panama's second written
submission as respondent, para. 242.
419 Panama's second written submission as complainant, para. 131; and second written submission as
respondent, paras. 245-246.
420 Panama's second written submission as respondent, para. 244.
421 Panama's second written submission as complainant, paras. 134-136; and second written submission
as respondent, para. 250.
422 Panama's second written submission as complainant, paras. 142-143; and second written submission
as respondent, para. 259.

7.244. Panama argues that these costs generated by the special import regime are unjustified and
make importation more difficult and more expensive, adversely affecting the competitive position of
the imported products. 423 The lack of justification concerns particularly importers with a general
bond, which are requested to post an additional specific bond.424
7.245. Panama adds that, inasmuch as Colombia requires that the quantity, price and port of entry
of the goods be set one month in advance of the importation, the special import regime deprives
importers of flexibility to respond to changing market circumstances or external factors, which
affects available competitive opportunities for the imported products. 425 According to Panama, this
limiting condition stems from the design of the regime, in particular the requirement to complete
the formalities of Article 4 of Decree No. 1745/2016.426 Panama explains that Colombian customs
law does not allow adjustments to the quantity with resubmission of the documentation. Prior
authorization may only be granted by the DIAN. 427 Any change in quantity, price or port of entry
that occurs during the 30 days prior t o the importation results in non -authorization of release and
subsequent importation of the goods.428 Panama considers that extra costs are created for importers
due to the penalties entailed by seizure of the goods 429, expropriation of the goods 430, or the
amendment and submission of new documents. 431 These extra costs would have an impact on
domestic demand such as to stifle exports.432 Furthermore, the fact that the documentation has to
be submitted one month in advance makes the importation commercially unviable in a high-turnover
market such as Colombia's.433
7.246. In addition to the limitations which the special import regime entails on account of its high
cost and rigidity, Panama argues that the uncertainty introduced by the regime gives rise to an
additional limi tation. Panama argues that the uncertainty stems from the frequent changes in
Colombia's customs regulations, the introduction of possible restrictions on ports of entry 434, and
the obtainment of certain documents and the necessary credit rating in order to obtain the specific
bond.435 With respect to the regulatory changes, Panama identifies the changeover from a compound
tariff regime to a hybrid one that includes an ad valorem tariff and a special import regime, and the
changes stemming from the adoption of Decree No. 2218/2017, which affect the products and tariff
headings covered by the measures, the thresholds, the calculation of the specific bond and the
penalties for failure to comply with the requirements set out in that Decree.436
7.247. Panama considers that the regime discourages the import of the relevant goods as it obliges
importers to decide between importing under a costly and uncertain import process; modifying the
declared values in order to pass the thresholds and avoid application of the regime; or not importing
and looking for an alternative domestic supplier.437 In Panama's opinion, the high turnover of imports
of clothing and footwear reinforces the limiting condition of the regime.438
7.248. With respect to the nature of its claim, Panama explains, in respons e to Colombia, that the
claim under Article XI:1 relating to the special import regime is distinct, independent and separate

423 Panama's first written submission as complainant, para. 60; first written submission as respondent,
424 Panama's first written submission as complainant, para. 60; and first written submission as
respondent, para. 61.
425 Panama's first written submission as complainant, paras. 62 and 67-68; and second written
submission as respondent, para. 268.
426 Panama's first written submission as complainant, para. 62; and first written submission as
respondent, para. 62.
427 Panama's second written submission as complainant, paras. 151-153.
428 Panama's first written submission as complainant, para. 63.
429 Panama's second written submission as complainant, para. 158; and second written submission as
respondent, para. 269.
430 Panama's second written submission as respondent, para. 271.
431 Panama's first written submission as complainant, para. 65.
432 Panama's second written submission as complainant, para. 158.
433 Panama's second written submission as respondent, para. 272.
434 Ibid. paras. 289-290.
435 Ibid. para. 291.
436 Ibid. paras. 286-288.
437 Panama's first written submission as complainant, para. 69; and first written submission as
respondent, para. 64.
438 Panama's first written submission as complainant, para. 71; and first written submission as
respondent, para. 64.

from the claim relating to the specific bond. Contrary to Colombia's assertion, Panama states that
the viability of each of the two claims is not dependent on the other.439
7.249. In response to Colombia 's statements on the burden of proof, Panama does not consider
that there are "permissible" measures that call for a particular burden of proof in the event of claims
against them.440 Panama recalls that the Appellate Body in Argentina – Import Measures did not
exclude formalities or requirements under Article VIII of the GATT 1994 from the scope of application
of Article XI:1.441
7.250. Panama insists on the fact that the present dispute relates to measur es that have limiting
effects on importation comparable to the measures analysed by the panels in Indonesia – Import
Licensing Regimes and Indonesia – Chicken, especially in regard to the requirement to set the
quantity, price and port of entry of the goods one month in advance without any possibility to change
them.442
7.251. Likewise, Panama maintains that Colombia is imposing a system of minimum import prices,
equal to the thresholds in Article 3 of Decree No. 1745/2016, which is inconsistent with Article XI:1
of the GATT 1994. According to Panama, the regime adversely affects the conditions of competition
for imports of products below the threshold because it creates a strong incentive for importers to
purchase goods above the minimum import price so as to escap e application of Decree
No. 1745/2016.443
7.252. Lastly, Panama concludes that the conditions imposed by the special import regime are
burdensome, are costly, give rise to unnecessary charges, introduce uncertainty, reduce flexibility
and discourage importation. T herefore, Panama claims that the special import regime imposes a
limiting condition on importation inconsistent with Article XI:1 of the GATT.444
7.3.5.1.2 Colombia
7.253. Colombia445 argues that Panama has improperly challenged the same measure twice, since
it is challenging under Article XI:1 both the specific bond and the special customs regime, of which
the said bond is a component.446
7.254. Colombia considers that Panama has not made a separate claim against the special import
regime excluding the specific bond. Thus, as Panama h as failed to demonstrate that the specific
bond is inconsistent with Article XI:1, and since the said bond is an integral part of the special import
regime, the Panel must dismiss the claim against the special import regime.447
7.255. Colombia argues that customs formalities are permissible under WTO law and that,
therefore, their imposition cannot in itself constitute a prohibited "restriction" under Article XI:1.
According to Colombia, the duties, costs or administrative fees associated with those formalities

439 Panama's second written submission as complainant, paras. 113-114; and second written submission
as respondent, para. 224.
440 Panama's second written submission as complainant, para. 118.
441 Ibid. para. 119 (referring to Appellate Body Report, Argentina – Import Measures, para. 5.237).
442 Panama's second written submission as complainant, paras. 160-163.
443 Panama's second written submission as complainant, paras. 171-175; and second written submission
as respondent, paras. 293-294.
444 Panama's first written submission as complainant, para. 72; and first written submission as
respondent, para. 65.
445 The Panel notes that in Colombia's first written submission as respondent and its second written
submission as complainant, Colombia refers to Decree No. 1745/2016. After Panama submitted Decree
No. 2218/2017 as Exhibit PAN-43, Colombia began referring to that Decree as well. This summary of
arguments uses the form in which Colombia set forth its arguments, so that reference is at times made solely
to Decree No. 1745/2016, these being arguments presented prior to the submission of Decree No. 2218/2017.
However, the foregoing is without prejudice to the fact that arguments expressly referring to Decree
No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case, the Panel will
address those arguments in its analysis concerning Decree No. 2218/2017.
446 Colombia's first written submission as respondent, para. 81; and second written submission as
complainant, para. 67.
447 Colombia's first written submission as respondent, paras. 83-84; second written submission as
complainant, paras. 69-70; and second written submission as respondent, paras. 56-57.

cannot, "without more", give rise to a prohibited restriction under Article XI:1.448 Panama has failed
to demonstrate that these costs have a limiting effect on imports.449 Colombia argues that, to prove
a violation of Article XI:1 in respect of instruments that are permissible under WTO law, the burden
on Panama should be a particularly heavy burden to discharge.450
7.256. On the requirement relating to the translation of certificates, Colombia argues that it is
reasonable and that the fees involved are not charged by th e Colombian Government.451 Colombia
considers that what is not reasonable is to expect there to be an official translator for every language
in every port. Colombia remarks that the lack of official translators for certain languages cannot be
attributed to the Colombian Government. In any event, Colombia points out that there is a procedure
in place to solve the problems arising from the lack of an official translator in a given language. 452
Lastly, in respect of this requirement, Colombia maintains that the fact that translation is requested
only for the import of certain products does not constitute a restriction within the meaning of
Article XI:1.453
7.257. Regarding the requirement for certification of documents, Colombia argues that this is
permissible under Article 8 of the GATT 1994, so this requirement and the associated costs do not
constitute prohibited restrictions under Article XI:1.454 Likewise, it points out that Panama refers to
certification costs that are determined and collected by Panama itself, which thu s cannot give rise
to a restriction on the part of Colombia under Article XI:1. Colombia explains that this requirement
is not unnecessary, since it is used to verify information contained in other documents; and considers
that the fact that Panama referred to this requirement as a "charge" places the requirement outside
the scope of application of Article XI:1.455
7.258. With respect to the requirement to indicate the type of economic relationship between the
supplier and the importer, Colombia asserts that it does not necessarily imply the hiring of an
external professional, with the attendant cost, and reiterates that this is necessary information that
may affect the reliability of the customs information provided.456
7.259. In regard to the requirement that the importer, its legal representative or an agent be
present during the inspection of the goods by Colombia's customs authorities, Colombia argues that
this is intended to safeguard the importer's due process rights and to ensure that the importers are
not in fact shell companies engaged in fraudulent operations. Colombia adds that Panama has failed
to prove that this requirement imposes additional costs; and, in the event that costs are incurred,
they are charged by private actors. Nor does Colombia consider that Panama has proven the limiting
effects of this requirement on imports.457
7.260. As regards the allegedly limited flexibility of the special import regime, Colombia responds
that the importer remains free to import the quantity it wants and to change this quantity.458

448 Colombia's first written submission as respondent, paras. 85-86 and 92; second written submission
as complainant, paras. 71-72; and second written submission as respondent, para. 59.
449 Colombia's first written submission as respondent, para. 94.
450 Colombia's first written submission as respondent, para. 87; and second written submission as
complainant, para. 73.
451 Colombia's first written submission as respondent, para. 89; and second written submission as
complainant, para. 42.
452 Colombia refers to Article 6 of Resolution No. 3269/2016, which stipulates in relevant part that:
"Where the document is drawn up in a language for which there is no official translator certified in Colombia,
the citizen shall request certification from the Ministry of Foreign Affairs that there is no official translator, in
order to be able to submit the translation of the document carried out by another translator, whose signature
must legalized before a public notary" (Colombia's second written submission as respondent, para. 64
(referring to Resolution No. 3269/2016 (Exhibit COL-10)).
453 Colombia's second written submission as respondent, paras. 60-66.
454 Colombia's first written submission as respondent, paras. 90-91; and second written submission as
complainant, para. 76.
455 Colombia's second written submission as respondent, paras. 67-69.
456 Ibid. para. 70.
457 Colombia's first written submission as respondent, paras. 95-96; second written submission as
complainant, paras. 81-82; and second written submission as respondent, paras. 72-74.
458 Colombia's first written submission as respondent, para. 97; and second written submission as
complainant, para. 83.

7.261. Colombia states that the measures challenged by Panama are of a different nature and have
different characteristics from the measures examined in Indonesia – Import Licensing Regimes ,
Indonesia – Chicken and Peru – Agricultural Products, so that there is no basis for the comparisons
that Panama draws between those disputes and the present dispute.459
7.262. Colombia concludes by asserting that Panama has failed to establish that the special import
regime in Decree No. 1745/2016 is inconsistent with Article XI:1 of the GATT 1994.460
7.3.5.2 Analysis by the Panel
7.263. As indicated in paragraph 7.157 above, the Panel's task consists in determining whether, as
Panama claims, the special import reg ime provided for in Article 7 of Decree No. 2218/2017 is
inconsistent with Article XI:1 of the GATT 1994 because it constitutes a measure that has a limiting
effect on the importation of certain products consisting of fibres, yarns, fabrics, clothing and
footwear461 and limits the competitive opportunities of the importers and imported products. It is
important to stress that Panama has challenged the special import regime as a whole462, rather than
the component requirements separately.
7.264. The Panel notes that Pa nama has not defined the category of measures covered by
Article XI:1 in which the special regime would fall. In this regard, Colombia, without prejudice to its
objection as to the possible inconsistency of the regime, does not appear to have called into question
the fact that the special regime may fall within the scope of Article XI:1.
7.265. The Panel recalls in this respect that the prohibition of quantitative restrictions provided for
in Article XI:1 refers explicitly to prohibitions or restrictions on the im portation or exportation of a
product "whether made effective through quotas, import … licences or other measures". Given the
broad scope of the term "other measures" and in the absence of any discussion on this point between
the parties, the Panel conside rs it appropriate to examine whether Panama has demonstrated that
the special import regime is trade-restrictive.463
7.266. Panama argues that the special import regime, by its design, structure and architecture,
limits the capacity of some importers and affects the competitive position of products imported at
prices below or equal to the thresholds.464 As previously explained, the Panel will keep in mind in its
analysis that "not every condition or burden placed on importation … will be inconsistent with
Article XI, but only those that are limiting, that is, those that limit the importation … of products".465
While the conditions attached to the import of products often entail burdens on importation, it is no
less certain that they are "a routine aspect of international trade".466
7.267. The Panel will proceed to examine the measure at issue on the basis of its design,
architecture and revealing structure in its relevant context.467

459 Colombia's second written submission as respondent, paras. 75-80.
460 Colombia's second written submission as complainant, para. 87; and second written submission as
respondent, para. 81.
461 As indicated in the descriptive part, Article 2 of Decree No. 2218/2017 stipulates that the products
covered are imports consisting of fibres, yarns, fabrics, clothing and footwear under Chapters 52, 53, 54, 55,
56, 58, 59, 60, 61, 62, 63 and 64 of the Customs Tariff for which the declared f.o.b. price is lower than or
equal to the threshold established in Article 3 of that Decree.
462 See, for example, Panama's first written submission as complainant, para. 70 and second written
submission as respondent, para. 33.
463 The Panel agrees with the panel in Argentina – Import Measures that what is relevant when
examining a measure under Article XI:1 of the GATT 1994 is whether the measure prohibits or restricts trade,
rather than the means by which such prohibition or restriction is made effective. (Panel Report, Argentina –
Import Measures, para. 6.363.) This approach was also used by the panel in Indonesia – Import Licensing
Regimes. (Panel Report, Indonesia – Import Licensing Regimes, paras. 7.55 and 7.76.)
464 Panama's first written submission as complainant, para. 56; and second written submission as
respondent, paras. 219 and 232. See also Panama's first written submission as complainant, para. 55.
465 Appellate Body Report, Argentina – Import Measures, para. 5.217. See also Panel Report,
Argentina – Import Measures, paras. 6.252-6.254 (referring to Panel Reports, India – Autos, para. 7.270 and
China – Raw Materials, para. 7.917).
466 Appellate Body Report, Argentina – Import Measures, para. 5.243.
467 Ibid. para. 5.217 (referring to Appellate Body Reports, China – Raw Materials, paras. 319-320).

7.268. As described in section 2.3.3.3 above, the special import regime challenged by Panama is
composed of different elements governed by Articles 4 to 8 of Decree No. 2218/2017:
a. documentary and certification requirements (Article 4.1 of Decree No. 2218/2017);
b. presence of the importer, its legal representative or the importing company's agent during
the process of customs inspection or examination of the goods (Article 4.2 of Decree
No. 2218/2017);
c. possibility of establishing cust oms controls on entry of the goods (Article 5 of
Decree No. 2218/2017);
d. participation of local observers in the import process (Article 6 of Decree No. 2218/2017);
e. posting of a specific bond in cases of valuation dispute to obtain release of the goods
(Article 7 of Decree No. 2218/2017); and
f. incorporation of information concerning import operations in the risk management system
(Article 8 of Decree No. 2218/2017).
7.269. Panama also refers to the provisions of Decree No. 2218/2017 relating to reshipment
(Article 9) and seizure and confiscation (Article 10). As Panama itself acknowledges, these are not
actually requirements linked to the import process, but rather the consequences ensuing from failure
to comply with certain documentary requirements prescribed in Decree No. 2218/2017.468 The Panel
considers it necessary to examine these aspects, too, since they are part of the design and structure
of the special import regime and, as such, may help us elucidate whether, as Panama argues, the
special import regime has limiting effects on imports that constitute a violation of Article XI:1 of the
GATT 1994.
7.270. Before examining each of the requirements that make up the special import regime
challenged by Panama, the Panel will address the parties' discussion on the consequences of the fact
that one of the requirements of the special import regime identified by Panama (the specific bond
provided for in Article 7 of Decree No. 2218/2017) has also been challenged as an independent
measure under Article XI:1 of the GATT 1994.
7.271. Indeed, Colombia maintains that Panama has improperly challenged the same measure twice
under Article XI:1 since it is challenging the specific bond as such and as a component of the special
import regime. For Colombia, Panama's claim against the special import regime is dependent on its
claim with respect to the specific bond. Hence, Colombia contends that the claims in respect of the
special import regime should be dismissed in the event that the Panel finds that the specific bond is
not inconsistent with Article XI:1.469
7.272. Panama, for its part, considers that the claim under Article XI:1 in respect of the special
import regime is distinct, independent and separate from the claim relating to the specific bond.470
7.273. In the Panel's opinion, as Panama argues, the specific bond, on the one hand, and the special
import regime (including the bond), on the other, constitute different measures on which Panama
may submit separate claims under Article XI:1 of the GATT 1994. It is not unusual for complainants
to challenge a me asure comprising various elements collectively and any of those elements
separately.471 In the instant case, Panama has challenged the special import regime, comprising
several requirements, collectively, and only one of those requirements, the specific bond, separately.
Hence the Panel considers that the findings with respect to one of the elements of the special import
regime (i.e. the specific bond) do not preclude it from examining and making findings on the whole
set of requirements that make up the spec ial import regime. In this sense, the Panel considers it
necessary to distinguish between the part and the whole: the fact that one part of a measure is not

468 Panama's second written submission as respondent, para. 421.
469 See paras. 7.253-7.254 above.
470 See para. 7.248 above.
471 See, for example, Indonesia – Import Licensing Regimes.

inconsistent with a particular provision does not necessarily imply that the whole of which it is a part
will receive the same legal assessment in the light of that provision.
7.274. In view of the foregoing, the Panel will analyse the constituent elements of the special import
regime so as to be able to assess whether, taken together, they constitute a measur e inconsistent
with Article XI:1 of the GATT 1994 as claimed by Panama.
7.3.5.2.1 Documentary and certification requirements
7.275. As described in section 2.3.3.3.1 above, Panama challenges as an integral part of the special
import regime a series of documentary and certification requirements that the importer of the
products covered by Decree No. 2218/2017 has to fulfil for each shipment at least one month in
advance of the arriv al of the goods on Colombian customs territory. Those requirements include
certification of intention to sell, certification of the existence of the foreign supplier, list of
distributors, declaration by the legal representative of the customs agency and d eclaration by the
importer or the importer 's legal representative, and they have to be submitted together with the
identity and liability form.
7.276. Below, the Panel will describe each of the documentary and certification requirements
contained in the special i mport regime challenged by Panama and the parties ' comments as to
whether the Colombian authorities have access to the requested information through other sources.
7.3.5.2.1.1 Certification of intention to sell
7.277. Article 4.1(a) of Decree No. 2218/2017 stipulates that th e importer shall submit for each
shipment, at least one month in advance of the arrival of the goods on Colombian customs territory,
the identity and liability form accompanied by, among other documents, the following certification:
Certification from the foreign supplier, apostilled or legalized, with an official translation
into Spanish, providing evidence of the intention to sell to the importer in Colombia and
indicating, where appropriate, the type of economic relationship with the importer in
accordance with the Tax Statute, also providing the address, telephone number and
email address of the supplier as well as the six -digit tariff subheading containing the
detailed description of the products to be exported, the quantity, and their respective
prices.
7.278. With respect to the information relating to the intention to sell, Panama states that it is found
in the supporting documents accompanying every customs declaration for importation and must be
presumed to be authentic and true unless there is evidence to the contrary.472
7.279. Colombia responds, for its part, that the information contained in the supporting documents
is different from that requested in Article 4.1(a) in that it is the customs agency or the importer that
registers the intention to sell in import declarations, whereas it is the exporter that issues the
certification of intention to sell. Colombia deems it essential to have this certification from the
exporter before the goods arrive in the country in order to detect and prevent operations linked to
money laundering since, for example, it can help avoid the use of foreign companies without their
knowledge or fictitious import companies in Colombia. Colombia adds that in the general customs
regime the authenticity of the supporting documents is determ ined after the goods have been
released, which would not enable money laundering operations to be prevented. Colombia
emphasizes that the purpose of requiring this information before the goods arrive on Colombian
customs territory is to compare the information provided by the importer with that provided by the
exporter, which must be presumed to be authentic and true unless there is evidence to the
contrary.473
7.280. With respect to the information relating to the type of economic relationship between the
supplier/exporter and the importer, Panama states that this information is required in the Andean
Declaration of Value (boxes 87, 88 and 89). Also, Panama notes that the fact that the information

472 Panama's response to Panel question No. 48 (referring to Decree No. 390/2016 (Exhibit PAN-4),
Article 215).
473 Colombia's comments on Panama's response to Panel question No. 48.

on economic relationship refers to the Colombia n Tax Statute probably implies recourse to the
services of an expert.474
7.281. Colombia responds that this information is not available in other import documents under
the general regime and that it is necessary in order to minimize the risks of money laundering using
chains of related companies. 475 Colombia explains that the information contained in the Andean
Declaration of Value has a different and more limited scope and purpose. Colombia identifies two
main differences between the information contained in the An dean Declaration of Value and that
required in Article 4.1(a) of Decree No. 2218/2017: (a) in the Andean Declaration of Value, it is the
customs agency or the importer that indicates the economic relationship, whereas in the case of the
requirement under Article 4.1(a) it is the exporter directly; and (b) the economic relationship criteria
in the Andean Declaration of Value are different from those provided for in the Colombian Customs
Statute, the latter being more specific and relevant for detecting and p reventing money laundering
through related companies acting as a front.476 Colombia again stresses that a highly relevant aspect
is that the information comes from the exporter and is used to compare it with that provided by the
importer. Colombia considers that the assistance of an expert would not necessarily be required to
comply with this requirement, and points to its right to exercise the supervisory authority of customs
administrations pursuant to Article 10 of Decision No. 379 of the Andean Community.477
7.282. With respect to the address, telephone number and email address of the supplier/exporter,
Panama states that this information is required in the import declaration 478 and points out that
Colombia acknowledges that the information required by Article 4.1 of the decrees in question may
be obtained from other documents, while disagreeing on the validity of the information those
documents provide.479 Colombia indeed recognizes that some of the information is available in the
import declaration and its supporting documents, but invokes its right to be able to compare, through
the exporter, the information provided by the importer. 480 As Colombia had mentioned before, one
of the main differences is that the information contained in the import declaration is provided by the
customs agency or the importer, whereas that required in Article 4.1(a) is provided directly by the
foreign supplier/exporter. Moreover, the information relating to the requirement under Article 4.1(a)
is received before the goods arrive, which make s it possible to activate the risk management
system.481
7.283. With respect to the information on the six-digit tariff subheading, detailed description of the
product, quantity and price, Panama states that it is required in the import declaration, in the Andean
Declaration of Value and in the commercial invoices and other supporting documents. 482 While
Colombia recognizes that some information is available in supporting documents submitted by the
customs agency or the importer, it deems it necessary to request the information from the
supplier/exporter in order to address possible false statements in the supporting documents
accompanying import declarations and the Andean Declaration of Valu e. Furthermore, Colombia
remarks that the information in the import declaration and the Andean Declaration of Value is
insufficient, having a different purpose and scope.483

474 Panama's response to Panel question No. 48.
475 Colombia's response to Panel question No. 48.
476 In this connection, Colombia compares, on the one hand, the criteria laid down in Article 15.4 of
Decision No. 378 and box 49 of the Annex to Decision No. 379 with, on the other, those provided for in
Article 260-1 of the Colombian Customs Statute (see Decision No. 378 (Exhibit COL-53), and Decision No. 379
(Exhibit COL-54)).
477 Colombia's comments on Panama's response to Panel question No. 48.
478 Panama's response to Panel question No. 48.
479 Panama's comments on Colombia's response to Panel question No. 48.
480 Colombia's response to Panel question No. 48 and comments on Panama's response to Panel
question No. 48.
481 Colombia's comments on Panama's response to Panel question No. 48.
482 Panama's response to Panel question No. 48 (referring to boxes 59, 77, 78 and 91 of the import
declaration and boxes 53, 54, 55, 57 and 58 of the Andean Declaration of Value).
483 Colombia's response to Panel question No. 48 and comments on Panama's response to Panel
question No. 48.

7.3.5.2.1.2 Certification of the existence of the foreign supplier
7.284. Article 4.1(b) of Decree No. 2218/2017 stipulates that the importer shall submit for each
shipment, at least one month in advance of the arrival of the goods on Colombian customs territory,
the identity and liability form accompanied by, among other documents, the following certification:
Certification of the existence of the foreign supplier, apostilled or legalized, with an
official translation into Spanish, which shall be issued by the entity in the country of
export that keeps the official register of producers or traders. Should n o such entity
exist, the importer must testify to that fact under oath, which shall be deemed to have
been taken with the signing of the document, without prejudice to the supervisory and
inspection powers of the National Customs and Excise Directorate.
7.285. Panama states that this information is found in the invoices and other supporting documents
accompanying the import declaration required under Article 215 of Decree No. 390/2106. Panama
points out that the fact that this certification may be replaced by a de claration from the importer
shows that the requirement is not imperative.484
7.286. Colombia responds that this information is not available in other import documents required
for the general regime, and points to the need to obtain this information directly from the
supplier/exporter before the goods arrive in Colombia in order to prevent criminal organizations from
using in their import declarations the names of foreign companies without their consent or using
foreign companies or importers that are shell compani es.485 Colombia emphasizes that the
information in the import declaration or the supporting documents is information provided by the
importer or the customs agency, whereas the information required by Article 4.1(b) of Decree
No. 2218/2017 comes directly from the foreign supplier/exporter. Colombia again invokes its right
to compare the information received from different sources for the purpose of preventing money
laundering.
7.287. As regards the possibility that the information from the supplier/exporter, like t hat in the
import declaration and supporting documents, may be falsified, Colombia explains that the
probability of falsification is lower because the certification is issued by the "[e]ntity in the exporting
country that keeps the official register of pro ducers or traders" and, in addition, the document has
to be apostilled. Colombia also disagrees with Panama on the added value of the apostille for the
purposes of detecting and preventing document fraud. Whereas Panama considers that the apostille
does no t add any value in terms of avoiding fraud, Colombia maintains the opposite, since the
apostille certifies not only the authenticity of the signature but also the capacity of the person signing
the document and, where applicable, the identity of the seal o r stamp the document bears. As to
the option allowing a sworn statement in lieu of the certification issued by the entity in the exporting
country that keeps the official register of producers or traders, Colombia asserts that this
requirement may discourage imports based on registers of non-existent exporters and deter criminal
organizations from using the names of companies in another country to engage in illegal activities.486
7.3.5.2.1.3 List of distributors
7.288. Article 4.1(c) of Decree No. 2218/2017 stipulates that the importer shall submit for each
shipment, at least one month in advance of the arrival of the goods on Colombian customs territory,
the identity and liability form accompanied by, among other documents, the following information:
[L]ist of distributors of the goods in Colombia indicating their tax identification number
(NIT), business name, address, telephone number and email address. [if the person
importing the goods will be selling them in the same state]
7.289. Panama acknowledges that this information cannot b e obtained by other means.
Nonetheless, Panama considers that this information should not be required and that, in any event,
it should not be made available to local import operations observers. Panama doubts whether the
importers are able to indicate the final destination of the products one month before the goods arrive

484 Panama's response to Panel question No. 48.
485 Colombia's response to Panel question No. 48.
486 Colombia's comments on Panama's response to Panel question No. 48.

in Colombia and points out that requesting this information creates unnecessary rigidity for
importers.487
7.290. Colombia, first of all, draws a distinction between this requirement and the one provided for
in Article 4.1(e) relating to the distribution chain. Then, Colombia explains that this information is
necessary in order to verify the existence of the distributors, since there have been cases in which
companies have faked the marketing of i mported products with fictitious dealers in Colombia. 488
Colombia considers that this information deters criminals from using shell companies in its territory
as well as enabling it to investigate possible offences. Colombia denies that this information is made
available to the local import operations observer. Colombia considers it likely that the importers
know who the potential distributors of their imports are, and reiterates that it does not ask for the
final destination of the products in the marketing chain, but solely the distributors that will be dealing
directly with the importer. Colombia concludes by specifying that the list of distributors can be
corrected after it has been submitted.489
7.3.5.2.1.4 Declaration by the legal representative of the customs agency
7.291. Article 4.1(d) of Decree No. 2218/2017 stipulates that the importer shall submit for each
shipment, at least one month in advance of the arrival of the goods on Colombian customs territory,
the identity and liability form accompanied by, among other documents, the following declaration:
Declaration signed by the legal representative of the Colombian customs agency for the
goods, indicating their tax identification number (NIT), business name, address,
telephone number and email address, where appropriate, certifying that they have
conducted a background check on the customer for the importer for which they are to
act as customs broker and established how long the parties have worked together.
7.292. Panama states that the NIT and the business name of the customs agency are required in
the import declaration (boxes 25 and 26). Panama points out that when the declaration is submitted
through a customs agency, the "customs mandate" will normally contain the NIT, business name
and principal place of business as well a s the identity card of the customs agency's legal
representative. Further, Panama points out that the DIAN has access to the address, telephone
number and email address of the customs agency's legal representative through the customs
agency's entry in the Single Tax Register (RUT), since all customs users, including customs agencies,
are obliged to register in the RUT. Regarding the customer background check, Panama asserts that
the law presumes compliance with the obligation to "know the customer" without the need for those
involved to have to confirm such compliance. 490 Moreover, customs agencies have the legal
obligation to preserve for five years, from the date of submission and acceptance of the declaration,
the supporting documents and official bank payment receipts and the customs mandate and power
of attorney contract, where granted, which for Panama means that the DIAN has access to the
relevant information on the relationship between customs agencies and importers.491
7.293. Colombia, for its part, states that the information in the import declaration is insufficient and
that neither the customs mandate nor the information in the RUT contain a declaration to the effect
that the customs agency has conducted a background check on the customer.492 Colombia explains
that Colombian regulations require that customs users obtain the requisite background information
on the customer in order, inter alia, to prevent illicit activities on the part of customs agencies.
According to Colombia, the certificate required by Artic le 4.1(d) ensures compliance with the
regulations.493

487 Panama's response to Panel question No. 48.
488 Colombia's response to Panel question No. 48.
489 Colombia's comments on Panama's response to Panel question No. 48 (referring to the provisions of
Decrees No. 2685/1999 and No. 390/2016 (Exhibits PAN-3 and PAN-4) and Articles 10 of Decree
No. 1745/2016 and 11 of Decree No. 2218/2017 (Exhibits PAN-2 and PAN-43)).
490 Decree No. 2685/1999 (Exhibit PAN-3), Article 27-1; Resolution 4240/2000 (Exhibit PAN-40),
Article 14-3; and Circular No. 0170/2002 (Exhibit PAN-104), para. 5.2.
491 Panama's response to Panel question No. 48.
492 Colombia's comments on Panama's response to Panel question No. 48.
493 Colombia's response to Panel question No. 48 and comments on Panama's response to Panel
question No. 48.

7.3.5.2.1.5 Declaration by the importer or the importer's legal representative
7.294. Article 4.1(e) of Decree No. 2218/2017 stipulates that the importer shall submit for each
shipment, at least one month in advance of the arrival of the goods on Colombian customs territory,
the identity and liability form accompanied by, among other documents, the following declaration:
Signed declaration by the importer or the importer's legal representative, certifying the
following:
(i)That the value to be declared for the goods being imported corresponds
to the price actually paid or payable.
(ii) The address of the storage facilities for the goods being imported.
(iii) Detailed information on the distribution and marketing chain i n
Colombia for the goods being imported.
(iv) That they are aware that the customs authority is entitled to submit
the documents related to the import transaction to the Attorney General's
Office and the Financial Information and Analysis Unit (UIAF).
7.295. In respect of the information on the value of the goods, Panama maintains that it is found
in the import declaration (box 78), in the Andean Declaration of Value (box 83), and in the invoices
and the supporting documents .494 Colombia does not contest this, but points to the importance of
having this information before the goods arrive in order to have time to examine the information in
the light of its risk management system and to compare it ex post facto with the value indicated in
the import declaration and the supporting documents.495
7.296. With reference to the address of the storage facilities, Panama considers that such detailed
information should not be required, since the importers already provide information on the
department or area of destination of the impor ts in the import declaration (box 56) and no similar
information is requested for products of domestic origin.496 Colombia, for its part, considers that this
information, which is not recorded in the import declaration, is necessary to avoid cases where the
company recorded in the import declaration as exporter does not exist or has no knowledge of the
transaction, or to identify import companies that are shell companies or, although mentioned, are
not participating in the import transaction. Likewise, Colomb ia clarifies that it does not request the
address of the warehouses, as Panama says, but the address of the places where the goods remain
stored pending delivery to the distributor.497
7.297. As far as the information on the distribution and marketing chain is concerned, Panama
considers that this information should not be required, and that Colombia fails to explain how it is
that the list of distributors is totally different from the information on the distribution chain. 498
According to Colombia, this requi rement, which is not to be confused with the provisions of
Article 4.1(c) (list of distributors), conforms to a legal mandate laid down in the new anti-smuggling
statute.499
7.298. With regard to the declaration of awareness that the Colombian customs authority is entitled
to submit the documents related to the import transaction to the Attorney General's Office and the
Financial Information and Analysis Unit, Panama asserts that this information serves no purpose,
since it repeats an objective fact, namely that Col ombian criminal law applies to everyone. 500
According to Colombia, the importance of this declaration resides in the fact that it warns persons
and customs agencies that are thinking of engaging in illicit transactions of the consequences
thereof.501

494 Panama's response to Panel question No. 48.
495 Colombia's comments on Panama's response to Panel question No. 48.
496 Panama's response to Panel question No. 48.
497 Colombia's comments on Panama's response to Panel question No. 48.
498 Panama's response to Panel question No. 48 and comments on Colombia's response to Panel
question No. 48.
499 Colombia's comments on Panama's response to Panel question No. 48.
500 Panama's response to Panel question No. 48.
501 Colombia's comments on Panama's response to Panel question No. 48.

7.3.5.2.1.6 The quest ion of whether the documentary and certification requirements
contribute to the alleged limiting effect of the special import regime
7.299. Panama maintains that the contribution of the documentary and certification requirements
described in the above sections to the limiting effect of the special import regime stems basically
from three factors: (a) the costs involved (translation, legalization or logistics); (b) the rigidity they
impose on the importer by obliging him to submit the documentation one month in adv ance; and
(c) the fact that the information furnished by the documents required under Article 4.1 of Decree
No. 2218/2017 may be obtained through other documents.502
7.300. Colombia responds that not only are the translation and certification requirements
permissible under WTO law, but they are also reasonable.503 Colombia asserts that the information
furnished by the documents required under Article 4.1 of Decree No. 2218/2017 cannot be obtained
through other documents requested in cases of imports subject to the ge neral regime. This is
because the information contained in the customs import declaration is not sufficient and does not
have the same purpose and scope as that requested under Article 4.1 of Decree No. 2218/2017. In
addition, Colombia stresses that the aim of the documentary requirements challenged by Panama is
to corroborate the information contained in the customs declaration ahead of the arrival of the goods
in Colombia, thus allowing it to conduct a prior risk analysis so that it may take action in cas es of
import transactions suspected of constituting money laundering.504
7.301. The Panel notes that there are significant differences between the parties in respect of
specific aspects such as the lack of availability of official translators in Colombia for some languages,
whether the same information required under Article 4.1 of Decree No. 2218/2017 is found in other
documents, or whether having to submit the documents one month in advance really does deprive
the importers of flexibility.
7.302. The Panel refers to Col ombia's explanations on the procedure laid down in Colombia 's
regulations for cases where there is no certified official translator for a given language in
Colombia505 and the fact that Panama admits that not all the information required under Article 4.1
of Decree No. 2218/2017 is always available in an import document. 506 Nor does Panama question
an aspect that Colombia qualifies as necessary, namely that the information be available in advance
of the arrival of the goods in order to leave time to analyse it and trigger the alerts that may be
necessary in each case.507
7.303. In the light of the foregoing, and focusing on the arguments submitted by Panama, which
refer to the costs, the rigidity of having to submit documentation one month in advance and the
availability of the information in other documents, the Panel considers that Panama has failed to
sufficiently demonstrate the contribution of these documentary and certification requirements to the
alleged limiting effect of the special import regime. The Panel also recalls that the existence of
general requirements for the importation of goods is a routine aspect of international trade, as is
the existence of special requirements for certain products, for purposes of risk analysis. Even if such
requirements constitute additional burdens for the importer, they are part of day -to-day foreign
trade operations.508
7.304. It should be made clear in this respect that the Panel makes no finding in relation to these
documentary and certification requirements, but confines itself to a nalysing them in the context of
a broader examination of the special import regime, as challenged by Panama, and its consistency

502 Panama's first written submission as complainant, para. 72; first written submission as respondent,
para. 65; and comments on Colombia's response to Panel question No. 48.
503 Colombia's first written submission as respondent, paras, 89-91; and second written submission as
complainant, paras. 75-76.
504 Colombia's response to Panel question No. 48 and comments on Panama's response to Panel
question No. 48.
505 See footnote 452 above.
506 See, for example, paras. 7.289 and 7.296-7.298 above.
507 See, for example, Colombia's second written submission as respondent, para. 133.
508 Appellate Body Report, Argentina – Import Measures, para. 5.217. See also Panel Report, Argentina
– Import Measures, paras. 6.252-6.254 (referring to Panel Reports, India – Autos, para. 7.270 and China –
Raw Materials, para. 7.917).

with Article XI:1 of the GATT 1994. The Panel will now move on the next element of the special
import regime.
7.3.5.2.2 Presence of the importer, its legal representative or the importing company 's
agent during the customs inspection or examination (aforo) of the goods
7.305. As described in section 2.3.3.3.1 above, one of the elements of the special import regime
challenged by Panama consists in the obligation for the importer, its legal representative or the
importing company's agent to be prese nt during the customs inspection or examination of goods
imported below the thresholds in Article 3 of Decree No. 2218/2017. If they are not present, release
of the goods will not be admissible or will not be authorized. This requirement is set forth in
Article 4.2 of Decree No. 2218/2017.
7.306. Panama maintains that this requireme nt entails additional costs that are significant and
recurrent, thus discouraging this type of imports. 509 Panama points out that, under the general
import regime, their presence is only required in cases of physical examination, and not for the
examination of documents.510 Panama questions Colombia's claim that this requirement guarantees
due process, considering that it is tantamount to admitting that due process is not guaranteed in
other import transactions where the presence of the importer, its legal representative or the import
company's agent is not required. Panama understands that this requirement and the explanation
given by Colombia relating to guaranteeing due process are linked to the presence of the local
observer during the inspection or examination process.511
7.307. Colombia responds that the costs or administrative burdens associated with customs
formalities do not in themselves constitute prohibited restrictions under Article XI:1 of the
GATT 1994, and considers that Panama has not succeeded in demonstrating the restrictive effects
of this requirement.512 Colombia argues that due process is guaranteed by allowing the importer, its
legal representative or the importing company 's agent to be present for the customs inspection or
examination of the goods and, thus, to observe the implementation of the process, defend their
position and provide information to the customs authorities, as appropriate. Colombia adds that
fulfilment of this re quirement enables it to verify that the companies involved in the import
transaction are not shell companies or companies usurping the identity of other legally incorporated
companies.513 Colombia indicates that the physical presence of the declarant, which in the majority
of cases is the importer, is required "since direct participation is permitted in Colombia".514
7.308. The Panel observes that Panama bases its entire argument in relation to this requirement
on the fact that it implies an additional cost in the import process; a cost which, in its opinion, does
not serve any purpose given that it is not requested in other import contexts. Colombia, for its part,
does not deny that this requirement entails a cost, but considers it to be linked to a customs formality
which is in itself not contrary to Article XI:1 of the GATT 1994.
7.309. The Panel does not find in the record sufficient explanation by Panama as to why and to
what extent this requirement contributes to the limiting effect of the special import regime. Panama
merely asserts that this requirement implies a cost, a fact that Colombia does not deny, but does
not provide the Panel with sufficient evidence to conclude that the cost arising from this requirement
exerts any limiting effect on importation. In the Pane l's opinion, Panama has failed to sufficiently
demonstrate the contribution of this requirement to the alleged limiting effect of the special import
regime. The Panel also recalls that the existence of general requirements for the importation of
goods is a routine aspect of international trade, as is the existence of special requirements for certain
products, for purposes of risk analysis. Even if such requirements constitute additional burdens for
the importer, they are part of day -to-day foreign trade ope rations. Therefore, the Panel does not

509 Panama's first written submission as complainant, paras. 57-61; and first written submission as
respondent, para. 60.
510 Panama's comments on Colombia's response to Panel question No. 35 (referring to Article 218 of
Decree No. 390/2016 (Exhibit PAN-4)).
511 Panama's comments on Colombia's response to Panel question No. 35.
512 Colombia's first written submission as respondent, paras. 85-86 and 92; second written submission
as complainant, paras. 71-72; and second written submission as respondent, para. 59.
513 Colombia's response to Panel question No. 35(a), paras. 189-191. Colombia indicates that cases
have been reported where the companies entered on the import declaration as importer are fictitious or
non-existent, or importers are named which are not involved in the import process.
514 Colombia's response to Panel questions Nos. 35(d) and 35(e), paras. 194-195.

consider it necessary to pursue its analysis by examining the parties ' disagreement as to whether
or not this requirement fulfils the function of guaranteeing due process in the customs inspection or
examination of goods imported under the thresholds, as Colombia explains.
7.310. It should be made clear in this respect that the Panel makes no finding in relation to this
requirement, but confines itself to analysing it in the context of a broader examination of the special
import regime, as challenged by Panama, and its consistency with Article XI:1 of the GATT 1994.
The Panel will now move on the next element of the special import regime.
7.3.5.2.3 Authorized entry controls
7.311. As described in section 2.3.3.3.2 above, one of the elements of the special import regime
challenged by Panama consists in the possibility of Colombia putting in place customs controls on
the entry of goods imported at prices b elow the thresholds in Article 3 of Decree No. 2218/2017,
which could lead to establishing measures restricting entry, whenever they are duly justified on the
basis of the risk management system. This requirement is set forth in Article 5 of Decree
No. 2218/2017.
7.312. Panama maintains that the possibility of establishing "measures restricting entry"
constitutes a "monitoring" requirement which creates uncertainty regarding the conditions of entry
of goods and which, when assessed together with the rest of the requirements in the special import
regime, discourages importation of the products covered by Decree No. 2218/2017 at prices equal
to or lower than the thresholds established in that Decree.515
7.313. Colombia indicates that the customs controls to which Article 5 of Decree No. 2218/2017
refers include a set of measures designed to combat money laundering, the financing of terrorism,
unfair competition and smuggling which are implemented at different stages of the customs control
process.516 According to Colombia, the "measures restricting entry" referred to in Article 5 of Decree
No. 2218/2017 come within the DIAN 's authority to carry out all actions it considers necessary on
the basis of its risk management criteria, be they controls, authorizations, physical inspect ions and
documentary examinations for goods that are entering via specified places, laboratory analysis,
scans, police operations, etc.517
7.314. The Panel observes that Panama founds its arguments in respect of this requirement on the
alleged uncertainty that is created for importers by the possibility of Colombia deploying "measures
restricting entry" of goods with declared f.o.b. prices below the thresholds. However, Panama fails
to explain why and to what extent this possibility contributes to the limiting effect of the special
import regime. The Panel considers that the mere possibility that a measure restricting entry may
be adopted, in abstrac to, without further explanation or substantiation, does not constitute a
sufficiently solid basis to conclude that the requirement creates such uncertainty as to contribute,
together with the rest of the challenged requirements in the special import regime , to limiting
imports. Therefore, in the Panel 's opinion, Panama has failed to sufficiently demonstrate the
contribution of this requirement to the alleged limiting effect of the special import regime.
7.315. As with the previous requirements, the Panel makes no finding in relation to this
requirement, but confines itself to analysing it in the context of a broader examination of the special

515 Panama's response to Panel question No. 50, and comments on Colombia's response to Panel
question No. 36. Specifically, Panama ascribes the uncertainty and lack of predictability to two factors: "the
conditions of geographical access to the Colombian market, and the transport costs associated with such
access".
516 Colombia's response to Panel question No. 37(a), para. 200. By way of example, Colombia mentions
possible applicable measures such as prior checks (physical or non-intrusive recognition of the goods and
means of transport entering Colombian customs territory in order to detect goods that are undeclared or whose
importation is prohibited); checks during the customs clearance process (physical or documentary inspection in
order to verify the data contained in customs declarations, the existence and legal requirements of supporting
documents, the nature of the goods, their description, state, quantity, weight, verification of origin, tariff
classification and collection of samples, among others); and subsequent checks or inspection (verifications,
studies, investigations seeking to establish customs compliance on the part of foreign trade operators,
declarants, the accuracy of the data recorded in customs declarations submitted by a declarant during a
specified period of time) (Ibid. para. 204).
517 Colombia's response to Panel question No. 37(b), para. 206.

import regime, as challenged by Panama, and its consistency with Article XI:1 of the GATT 1994.
The Panel will now move on the next element of the special import regime.
7.3.5.2.4 Import operations observers
7.316. As described in section 2.3.3.3.1 above, one of the elements of the special import regi me
challenged by Panama consists in the presence of observers from local industry in the process of
inspection or examination of goods imported below the price thresholds in Article 3 of Decree
No. 2218/2017. The role of these observers is to analyse the i nformation provided to them by the
DIAN518, generate alerts to the customs authority, and observe the implementation of the inspection
or examination process. This requirement is set forth in Article 6 of Decree No. 2218/2017.
7.317. For Panama, the import operatio ns observer has access to commercially sensitive
information contained in the import declaration and its supporting documents, without any measures
being applied to ensure confidentiality. Also, Panama points out that Colombia has failed to
demonstrate that the local observers are present in import operations for clothing, textiles and
footwear above the price thresholds in Article 3 of Decree No. 2218/2017.519
7.318. Colombia indicates that observers are also present for import operations above the
thresholds and imports of other products apart from those covered by Decree No. 2218/2017.520
Colombia explains that it is the trade associations which request the presence of observers, and that
the DIAN is the body responsible for authorizing such presence on the basis of a list put forward by
the trade associations to the Joint National Commission on Tax and Customs Management. 521
According to Colombia, the recommendations of these observers are not binding on customs officials
and the information on import operations that is provided to the observers is not subject to any
confidentiality protection mechanism given that in Colombia "the information in customs declarations
is not subject to the duty of reserve".522
7.319. The Panel understands that the role of the import observers i s not exclusive to the special
import regime instituted by Decree No. 2218/2017, but has existed since before that in the general
import regime in force.523 Indeed, the role of import observers is mentioned in various provisions of
Colombian customs legislation without restricting their presence to the imports covered by Decree
No. 2218/2017. For example, Article 4 of Resolution No. 2199/2005 states the following:
Authorization: The Subdirectorate for External Trade shall, by means of a reasoned
resolution, authorize Import Operations Observers, indicating the type of goods on
which they will work, the customs jurisdictions in which they will operate and the period
of validity of the authorization, on the basis of the lists of eligible officials approved by
the Joint National Commission on Tax and Customs Management.
Import Operations Observers may start performing duties within the scope of their
competence, subject merely to presentation of the authorizing resolution duly
accrediting them and prior coordinat ion with the respective Customs or Tax and
Customs Administrator.
The Observers' authorization may be cancelled before the term of its period of validity,
at the request of the trade association, the Joint National Commission on Tax and

518 The information that the DIAN provides to the observers:
[S]hall consist of the entries in the Import Declarations submitted by importers of products under
tariff headings 61, 62 and 64 of the Customs Tariff, comprising the Form number, Tax
identification number of the importer, Surnames and name or business name of the importer,
Tax identification number of the declarant, Business name of the authorized declarant, Type of
declaration, Name of the exporter or foreign supplier, Code of country of provenance, Exchange
rate, Tariff subheading, Code of country of origin, Agreement code, Gross weight in kilograms,
Net weight in kilograms, Physical unit code, Quantity, F.o.b. value in US$, Customs value, Self-
assessment and description of the goods, Declaration acceptance number and Date.
(Article 1 of Resolution No. 000017/2017 (Exhibit COL-46)
519 Panama's comments on Colombia's response to Panel question No. 38.
520 Colombia's response to Panel questions Nos. 38(b) and 38(c), paras. 210-211.
521 Colombia's response to Panel questions Nos. 35(d), para. 212 and 38(e), para. 214.
522 Colombia's response to Panel questions Nos. 38(a), para. 209 and 38(f), para. 215.
523 Decree No. 2685/1999 (Exhibit PAN-3), Article 74-1 (article added by Decree No. 2373/2004).

Customs Management or the Director -General of the National Customs and Excise
Directorate, and the cancellation shall be notified to the Observer and to the trade
association which nominated him/her.524
7.320. Article 183 of Decree No. 390/2016, for its part, provides as follows:
Import and/or export observers . The National Customs and Excise Directorate may
allow the presence of observers during the course of the import and/or export
examination process, at specific authorized points of entry and/or exit, as well as in
such cases as may be determined by the National Customs and Excise Directorate.
The observers shall be selected from lists of candidates put forward by the trade
associations, appro ved by the Joint National Commission on Tax and Customs
Management (or whichever service is acting on its behalf).
The observer's duties shall be confined to closely observing the implementation of the
process of examination of a specified type of goods. T he customs aut hority must
safeguard the legal confidentiality of information, taking into account the terms of
Article 497 of this Decree, and observers shall be given such access to information as
may be determined by the National Customs and Excise Directorate.
The observer shall provide collaboration and cooperation required by the customs
authority, including the technical report where appropriate, on the tariff classification,
description, identification, quantity, weight and price of the goods, among other
aspects.
The National Customs and Excise Directorate shall regulate the requirements governing
participation in this process.525
7.321. The Panel considers this point to be relevant, in that Panama, in arguing its claim as to the
restrictive nature of the sp ecial import regime, draws numerous comparisons with the general
customs regime. In this connection, from the evidence submitted, the role of import observers is
also framed within the general regime.
7.322. In any event, even if the presence of the import obser ver were confined to the imports
covered by Decree No. 2218/2017, Panama has failed to explain how such presence during the
process of inspection or examination of the goods and the fact that the observers have access to
certain information relating to imp ort operations within their area of operation might prompt the
Panel to find the special import regime to have a limiting effect. Therefore, in the Panel 's opinion,
Panama has failed to sufficiently demonstrate the contribution of this requirement to the a lleged
limiting effect of the special import regime.
7.323. As with the previous requirements, the Panel makes no finding in relation to this
requirement, but confines itself to analysing it in the context of a broader examination of the special
import regime, as challenged by Panama, and its consistency with Article XI:1 of the GATT 1994.
The Panel will now move on the next element of the special import regime.
7.3.5.2.5 Incorporation of information on certain import operations in the risk
management system
7.324. As described i n section 2.3.3.3 above, one of the elements of the special import regime
challenged by Panama consists in the incorporation in the risk management system of impor t
operations for goods under the headings listed in Article 3 of Decree No. 2218/2017 at prices lower
than or equal to the threshold in that article. This requirement is s et forth in Article 8 of
Decree No. 2218/2017.
7.325. Panama points out that the act of impo rting certain products at competitive prices
stigmatizes the importers of those products since their risk profile and rating are affected even

524 Resolution No. 2199/2005 (Exhibit PAN-63).
525 Decree No. 390/2016 (Exhibit PAN-4).

though the imports in question are not being underinvoiced or serving as a means of money
laundering.526
7.326. Colombia explains that the information incorporated in the risk management system is based
on the information contained in the import declarations and alerts. 527 According to Colombia, the
consequences of being part of the system relate to the foreign trade operators ' risk profiles and
ratings.528
7.327. The Panel does not find in the record any explanation by Panama as to why the incorporation
of information on certain import operations in the risk management system contributes to the
limiting effect of the special import re gime. Nor does it find evidence allowing it to reach any
conclusion in that regard or indicating what effects on the risk profile and rating are associated with
incorporation in the risk management system. Panama does not adduce arguments or evidence of
the alleged "stigma" attached to importers of goods at declared f.o.b. prices below the thresholds,
nor of the limiting effects of this stigma on importation. Moreover, it is usual for customs
administrations of the Members to feed their databases with infor mation on import operations, for
the purposes of risk analysis. Therefore, in the Panel 's opinion, Panama has failed to sufficiently
demonstrate the contribution of this requirement to the alleged limiting effect of the special import
regime.
7.328. As with the p revious requirements, the Panel makes no finding in relation to this
requirement, but confines itself to analysing it in the context of a broader examination of the special
import regime, as challenged by Panama, and its consistency with Article XI:1 of the GATT 1994.
The Panel will now move on the next element of the special import regime.
7.3.5.2.6 Specific bond
7.329. A final element identified by Panama as being an integral part of the special import regime
is the specific bond provided for in Article 7 of Decree No. 2218/2017. Unlike the other elements of
the special import regime, Panama has challenged the specific bond separately. The Panel recalls
that, after examining the latter claim in detail in section 7.3.4 above, the Panel found that Panama
had failed to make a prima facie case that the specific bond provided for in Article 7 of Decree
No. 2218/2017 is inconsistent with Article XI:1 of the GATT 1994. Therefore, as it has not been
demonstrated that the requirement to post a specific bond has limiting effects on imports, the Panel
does not consider it necessary to examine this requirement anew with a view to determining whether
it contributes to the alleged limiting effects of the special import regime.
7.3.5.2.7 Consequences of non -compliance with certain requirements provided for in
Decree No. 2218/2017
7.330. As previously mentioned, the special import regime contains provisions on reshipment
(Article 9 of Decree No. 2218/2017) and sei zure and confiscation (Article 10 of Decree
No. 2218/2017) of the imported goods. These provisions govern the consequences of failure to
comply with certain requirements provided for in Decree No. 2218/2017.529 More specifically,
Article 9 stipulates that non-compliance with the requirements of Article 4 of Decree No. 2218/2017
results in prohibition of reshipment of the imported goods. Similarl y, Article 10 provides that
non-compliance with one or other of the requirements of Decree No. 2218/2017 results in seizure
of the goods, which may not under any circumstances be legalized or retrieved.
7.331. Panama claims that the consequences of failing to comply with certain requirements, such
as not allowing reshipment of the goods, are disproportionate. Panama further em phasizes that
mere failure to comply with one or more of the requirements of Decree No. 2218/2017 does not turn
the import transactions in question into illicit transactions and that, even so, they are subjected to
measures such as prohibition of reshipment of the goods.
7.332. Colombia, for its part, explains that the prohibition of reshipment only applies to imports
below the price thresholds in Article 3 of Decree No. 2218/2017 which have failed to meet any of

526 Panama's comments on Colombia's response to Panel question No. 39.
527 Colombia's response to Panel question No. 39(a), para. 216.
528 Colombia's response to Panel question No. 39(b), para. 218.
529 Decree No. 2218/2017 (Exhibit PAN-43).

the requirements set forth in that Decree. According to Colombia, this requirement responds to some
high-risk importers' practice of asking for extensions of storage periods and making requests for
reshipment so that, once approved, the goods enter Colombia through other ports. Colombia
considers that the prohibition of reshipment does not limit the quantities or volumes of imported
goods, but constitutes a sanction provided for in Colombian customs law to deal with fraudulent
practices.530
7.333. The Panel notes that the wording of Articles 9 and 10 of Decree No. 2218/2017 appears to
leave little room for doubt as to the consequences of non -compliance with certain requirements:
(a) no reshipment of goods with declared f.o.b. prices below the thresholds which do not meet the
documentary and certification requirements provided for in Article 4 of the Decree (Article 9); and
(b) goods with declared f.o.b. prices below the thresholds which do not meet the requirements
provided for in Decree No. 2218/2017 will be seized (without any possibility of subsequent
legalization or retrieval).
7.334. The parties appear to differ on whether it is possible to amend or correct non-compliance.531
It can be inferred from Colombia 's responses that, in the event of non -compliance with the
documentary and certification requirements: (a) corrections may be made to the documentation
submitted to the customs authorities pursuant to Decrees No. 2685/1999 and No. 390/2016532; and
(b) there can be no rectification of errors pertaining to documentation not submitted or submitted
outside the deadline; this results in the non -admissibility or non-authorization of release, and the
goods consequently remain in a state of legal abandonment.533
7.335. In cases of legal abandonment of goods, the Panel notes that the general regime established
in Decrees No. 2685/1999 and No. 390/2016 provides for the possibility of retrieving them by
submitting a declaration of legalization.534 If the deadline for retrieval passes without a declaration
of legalization having been submitted, the DIAN may dispose of the goods, which become
government property.535
7.336. Analysing Colombia's customs legislation submitted by the parties and, in particular, Decrees
No. 2685/1999 and No. 390/2016, the Panel notes that Colombia has regulated other situations,
beyond those provided for in Decree No. 2218/2017, in which imported goods are not reshipped or
retrieved.536
7.337. Panama's principal claim refers to the lack of proportionality between the prescribed
penalties (no reshipment, legalization or retrieval of seized goods) and the infringements that give
rise to those penalties, which, according to Panama, may be very minor and e asy to deal with, for
example, a missing document relating to the import transaction or late presentation thereof.
7.338. Leaving aside the fact that, contrary to what Panama has claimed, small errors can be
corrected, in the Panel's opinion the severity of punishments for failure to comply with domestic law
is a prerogative of governments, and all importers have to know that they may face possible
sanctions if they fail to comply with particular customs obligations. The sanctions laid down in the
legislation of the WTO Members are not identical. In fact, in some countries customs fraud is
punishable by imprisonment; while in others, the punishment may take the form of monetary
penalties or other mechanisms. Thus, it is not the Panel's place to dictate to Colombia what type of
punishment should be included in its legislation.

530 See para. 2.45 above.
531 In its response to Panel question No. 33 and its additional written submission relating to Decree
No. 2218/2017, Colombia asserts that documentation may indeed be corrected or supplemented ("certain kind
of minor errors in the import documents") pursuant to Article 234 of Decree No. 2685/1999 (Exhibit PAN-3).
Panama asserts that it is not possible to make corrections (Panama's first written submission as complainant,
paras. 62-68; second written submission as complainant, paras. 150-158; and second written submission as
respondent, paras. 268-269 and 337-338).
532 Colombia's response to Panel question No. 33, para. 182.
533 Colombia's response to Panel question No. 34, paras. 183-184.
534 Decree No. 2685/1999 (Exhibit PAN-3), Article 115, para. 1 and Article 231.
535 Decree No. 2685/1999 (Exhibit PAN-3), Article 115, para. 1 and Decree No. 390/2016
(Exhibit PAN-4), Article 211.
536 Decree No. 390/2016 (Exhibit PAN-4), Articles 140 and 229.

7.339. In any event, the Panel does not find in the record sufficient factual elements to allow it to
enter into an assessment of the proportionality of the penalties in relation to the events that trigger
them. Nor does it find any explanation from Panama of the extent to which the existence of these
penalties contributes to the limiting effect on importation of the special import regime. What is more,
the Panel considers that the establishment of p enalties is usually geared primarily to discouraging
non-compliance with certain rules. While it undoubtedly cannot be ruled out that a very strict penalty
regime might create such rigidity as to ultimately discourage imports, the Panel considers that
Panama has failed to present arguments or sufficient evidence to allow it to conclude that the
provisions relating to reshipment (Article 9) and seizure and confiscation (Article 10) contribute to
the special import regime exerting limiting effects on imports.
7.340. Therefore, in the Panel 's opinion, Panama has failed to sufficiently demonstrate the
contribution of these penalties to the alleged limiting effect of the special import regime.
7.341. As in the previous cases, the Panel makes no finding in relation to the cons equences of
non-compliance, but confines itself to analysing it in the context of a broader examination of the
special import regime, as challenged by Panama, and its consistency with Article XI:1 of the
GATT 1994. The Panel will now move on the next element of the special import regime.
7.3.5.2.8 Collective assessment of the elements of the special import regime challenged
by Panama
7.342. In the previous sections, the Panel has analysed separately each of the different elements
of the special import regime challenged by Panama: the documentary and certification requirements;
the presence of the importer, its legal representative or the importing company 's agent during the
customs inspection or examination of the goods; entry controls; the presence of observers from
local industry during the process of inspection or examination of the goods; the incorporation of
information on certain import transactions in the risk management system; the specific bond; and,
in addition, the sanctions relating to reshipment and seizure and confiscation.
7.343. The Panel recalls that if an import formality or requirement does not itself limit the
importation of products independently of the limiting effects of another restriction, then that import
formality or requirement cannot be said to produce t he limiting effect and, thus, it will not amount
to a "restriction" captured by the prohibition in Article XI:1.537
7.344. In all cases, the Panel has taken the view that Panama has failed to sufficiently demonstrate
how these elements contributed to the alleged limiting effect on imports of the special import regime.
When it comes to examining the elements collectively, the Panel again considers that Panama has
failed to submit sufficient arguments or evidence to explain why it considers that the interaction of
all the elements of the special import regime identified results in an import regime that has limiting
effects on imports.
7.3.5.3 Conclusion
7.345. Having examined the set of claims submitted by Panama to substantiate that the special
import regime is inconsistent with Ar ticle XI:1 of the GATT 1994, the Panel considers that Panama
has failed to present sufficient arguments and documentary evidence to allow it to reach a finding
that the special import regime comprising the elements described in Articles 4 to 10 of Decree
No. 2218/2017 has limiting effects on imports.
7.346. For the reasons set out above, the Panel concludes that Panama has failed to demonstrate
that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 has limiting
effects on imports in a manner inconsistent with Article XI:1 of the GATT 1994.

537 Appellate Body Report, Argentina – Import Measures, para. 5.244.

7.4 Panama's claims under Article X:3(a) of the GATT 1994
7.4.1 Introduction
7.347. Panama claims that both the specific bond and the special import regime are not
administered in a uniform, impartial and reasonable manner, so that these measures are inconsistent
with Article X:3(a) of the GATT 1994. 538 Colombia replies that Panama has failed to demonstrate
that Colombia administers a legal instrument described in Article X:1 of the GATT 1994 in a
non-uniform, partial or unreasonable manner.539
7.348. The Panel will begin by examining the relevant legal provision and the applicable legal
standard. It will go on to clarify the scope of Panama's claims under this provision. It will then
analyse Panama's claims with respe ct to the specific bond, beginning with a summary of the
arguments of the parties and continuing with a legal analysis of each of the aspects challenged by
Panama. Finally, it will examine Panama's claims with respect to the special import regime, likewise
beginning with a summary of the arguments of the parties and continuing with an analysis of each
of the aspects challenged by Panama.
7.4.2 The text of Article X:3(a) of the GATT 1994
7.349. Article X:3(a) of the GATT 1994 provides in relevant part:
Publication and Administration of Trade Regulations
3.(a) Each contracting party 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.
7.350. This provision obliges Members to administer in a uniform, impartial and reasonable manner
a series of legal instruments as defined in Article X:1 of the GATT 1994. This obligation relates to
"certain minimum standards for transparency and procedural fairness in the administration of trade
regulations…".540 Hence, allegations of violation of this provision are serious and "should not be
brought lightly, or in a subsidiary fashion".541
7.4.3 The legal standard provided for in Article X:3(a) of the GATT 1994
7.351. In the Panel's opinion, in order to substantiate a claim of inconsistency with Article X:3(a)
of the GATT 1994, the complaining party must demonstrate th e following three elements:
(a) existence of a legal instrument of the kind described in Article X:1 of the GATT 1994; (b) that
the legal instrument in question is being administered by the respondent; and (c) that the
administration of that legal instrument by the respondent is not uniform, impartial or reasonable. In
fact, as is explained in paragraph 7.359 below, it would be sufficient to prove that the legal
instrument is not administered in any of the three manners (uniformly, impartially or reasonably) to
reach a conclusion of inconsistency with this provision. The Panel reviews below each of the
three elements mentioned.
7.4.3.1 The question of whether the legal instrument identified by the complainant is of
the kind described in Article X:1 of the GATT 1994
7.352. The first step in the Panel's analysis centres on establishing whether the complainant has
identified a law, regulation, judicial decisio n or administrative ruling of the kind referred to in
Article X:1 of the GATT 1994. This provision refers to "[l]aws, 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

538 Panama's request for the establishment of a Panel, WT/DS461/22.
539 Colombia's second written submission as complainant, para. 89; and second written submission as
respondent, para. 82.
540 Appellate Body Report, US – Shrimp, para. 183.
541 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 217.

inspection, exhibition, processing, mixing or other use", and to "[a]greements affecting international
trade policy which are in force between the government or a governmental agency of [a Member]
and the government or governmental agency of [another Member]".
7.353. The phrase "laws, regulations, judicial decisions and administrative rulings" reflects an
intention on the part of the drafters to include a wide range of measures that have the potential to
affect trade and tra ders. The instruments covered by Article X:1 of the GATT 1994 range from
imperative rules of conduct to the exercise of influence or an authoritative pronouncement by certain
authoritative bodies, and the coverage of Article X:1 of the GATT 1994 therefore extends to
instruments with a degree of authoritativeness issued by certain legislative, administrative or judicial
bodies.542
7.4.3.2 The question of whether the legal instrument identified by the complainant is
being "administered" by the respondent
7.354. If the examina tion under the first step reveals that the legal instrument identified by the
complainant is of the kind described in Article X:1 of the GATT 1994, the Panel would be called upon
to consider whether the complainant has demonstrated that the legal instrument in question is being
"administered" by the respondent.
7.355. It is important to emphasize that the obligation in Article X:3(a) of the GATT 1994 refers to
the "administration"543 of the rules identified by the complainant, rather than to their substantive
content.544 Therefore, the requirements of uniformity, impartiality and reasonableness do not relate
to the laws, regulations, judicial decisions and administrative rulings themselves, but rather to the
administration of those laws, regulations, decisions and rulings.545
7.356. Although normally the administration of a legal instrument is revealed by the way in which
it is put into practice by the relevant authorities, there are occasions where the legal instrument
concerned is administered by means of another legal instrum ent. In that case it is necessary to
distinguish between the legal instrument being administered and the legal instrument that regulates
the application or implementation of that instrument. While the substantive content of the legal
instrument being administered is not challengeable under Article X:3(a), it is possible to challenge
the legal instrument that regulates the application or implementation of the legal instrument being
administered, if it is alleged that the legal instrument regulating such application or implementation
leads to a lack of uniform, impartial or reasonable administration of the legal instrument being
administered.546
7.357. Accordingly, it is possible to challenge a legal instrument as such under Article X:3(a) of the
GATT 1994, when the su bstantive content of that legal instrument regulates the application or
implementation of rules covered by Article X:1 of the GATT 1994. In order to prove that the legal
instrument identified is inconsistent as such with Article X:3(a) of the GATT 1994, t he complainant
must demonstrate that the provisions of that legal instrument necessarily lead to a lack of uniform,
impartial, or reasonable administration. For that purpose, it would not be sufficient for the
complainant to merely to cite the provisions o f the legal instrument identified; rather, it must
discharge the burden of substantiating how and why those provisions necessarily lead to
impermissible administration of the legal instrument of the kind descr ibed in Article X:1 of the
GATT 1994.547
7.358. The administrative processes that govern the application of legal instruments of the kind
described in Article X:1 of the GATT 1994 may constitute relevant evidence for establishing whether
a legal instrument is administered in a manner consistent with Article X:3 (a) of the GATT 1994.548
Likewise, Article X:3(a) may cover violation claims based on an administrative process. In such

542 Panel Reports, EC – IT Products, paras. 7.1026-7.1027.
543 The Panel observes that, whereas the Spanish text of Article X:3(a) of the GATT 1994 uses the term
"aplicará", the term "shall administer" is used in the English text and the term "appliquera" is used in the
French text.
544 Appellate Body Report, EC – Poultry, para. 115. See also Appellate Body Report, EC – Selected
Customs Matters, para. 219.
545 Appellate Body Reports, EC – Bananas III, para. 200 and EC – Selected Customs Matters, para. 219.
546 Appellate Body Report, EC – Selected Customs Matters, paras. 200-201.
547 Idem.
548 Appellate Body Report, EC – Selected Customs Matters, para. 225.

cases, and similarly to when a legal instrument is challenged as such, it is not sufficient that the
complainant merely recites the featu res of the administrative process. The complainant will also
have to show how and why those features necessarily lead to impermissible administration of the
legal instrument of the kind described in Article X:1 of the GATT 1994.549
7.4.3.3 The question of whether the legal instrument identified by the complainant is not
being administered in a uniform, impartial or reasonable manner by the respondent
7.359. If the second stage review reveals that the complainant has shown that the legal instrument
in question is being "admi nistered" by the respondent, the Panel would be called upon to examine
whether the complainant has shown that the administration by the respondent of the legal
instrument identified by the complainant is not uniform, impartial or reasonable. The Panel agre es
with previous panels that the requirements of uniformity, impartiality and reasonableness are legally
independent and that the administration of the relevant rules must satisfy each and every one of
these criteria.550 This means that it would be sufficien t that the complainant demonstrate that the
administration of the legal instrument is not uniform or impartial or reasonable, in order for the
Panel to be required to find that the instrument is inconsistent with Article X:3(a) of the GATT 1994.
7.360. With regard to the requirement of uniform administration, the Panel observes that the term
"uniform" is defined as "of one unchanging form, character, or kind; that is or stays the same in
different places or circumstances, or at different times". 551 The Panel agrees with previous panels
that this requirement of uniform administration relates to "uniformity of treatment in respect of
persons similarly situated" 552 and to the fact that "their laws are applied consistently and
predictably".553
7.361. With regard to the requirement of impartial administration, the term "impartial" is defined
as "not favouring one party or side more than another; unprejudiced, unbiased; fair". 554 The Panel
agrees with previous panels in considering that this requirement of impartial administration relates
to an "application or implementation of the relevant laws and regulations in a fair, unbiased and
unprejudiced manner".555, 556
7.362. Lastly, with respect to the requirement of reasonable administration, the Panel observes that
the term "reasonable" is defined as "in accordance with reason", "not irrational or absurd",
"proportionate", "sensible", "not asking for too much", "within the limits of reason, not greatly less
or more than might be thought likely or appropriate" and "articu late".557 The Panel agrees with
previous panels in considering that this requirement of reasonable administration relates to
"administration that is equitable, appropriate for the circumstances and based on rationality".558 The
analysis of a claim of violation of the requirement of reasonableness entails a consideration of the
factual circumstances specific to each case, for which purpose it is necessary to examine the features
of the administrative act at issue, in the light of its objective, cause or the rationale behind it.559
7.4.4 Preliminary issue
7.363. Before beginning the analysis of Panama's claims under Article X:3(a) of the GATT 1994 with
respect to the specific bond and the special import regime, the Panel needs to clarify the scope of

549 Ibid. para. 226.
550 Panel Report, Argentina – Hides and Leather, para. 11.86.
551 Panel Report, US – COOL, para. 7.876 (referring to The Shorter Oxford English Dictionary
(Sixth Edition), Oxford University Press, Vol. II, p. 3440 (2007)).
552 Panel Rreport, US – Stainless Steel (Korea), 6.51.
553 Panel Report, Argentina – Hides and Leather, para. 11.83. See also Panel report, US – COOL,
para. 7.876.
554 Panel Report, Thailand – Cigarettes (Philippines), para. 7.899 (referring to The New Shorter Oxford
Dictionary (Fifth Edition), Oxford University Press, Vol. I, page 1325 (2002)).
555 Panel Report, Thailand – Cigarettes (Philippines), para. 7.899.
556 Panel Report, China – Raw Materials, para. 7.694. (The Appellate Body declared the Panel's analysis
moot and of no legal effect on procedural grounds.)
557 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.385 (referring to The New
Shorter Oxford English Dictionary (Fifth Edition), Oxford University Press, Vol. II, page 2496 (2002)).
558 Panel Reports, China – Raw Materials, para. 7.696. (The Appellate Body declared the Panel's analysis
moot and of no legal effect on procedural grounds.)

those claims. Colombia reque sts the Panel to reject Panama's claims under this provision because
the measure which, according to Panama, is being administered does not fall within the Panel's
terms of reference, as it is not mentioned in any of the panel requests and is not a measure taken
to comply with the recommendations and rulings of the DSB stemming from the original
proceedings.560
7.364. The Panel will begin by examining Panama's Panel request, in which it puts forward its claims
under Article X:3(a) of the GATT 1994 in the following manner:
(iii) Insofar as the security for release of the goods is not applied in a uniform, impartial
and reasonable manner, this measure is inconsistent with Article X:3(a) of the
GATT 1994.
…
(iii) Insofar as the customs and tariff regime applicable to go ods whose prices are less
than or equal to the thresholds established by Colombia is not applied in a uniform,
impartial and reasonable manner, this measure is inconsistent with Article X:3(a) of the
GATT 1994.
7.365. Panama is therefore apparently challenging t he consistency of the specific bond and the
special import regime with Article X:3(a), because they are allegedly not administered in a uniform,
impartial and reasonable manner.
7.366. In its written submissions, Panama has defined its claims differently: Panama asserts that
Colombia's general customs legislation is contained in Decrees No. 2685/1999 and No. 390/2016,
and that Decree No. 390/2016 is administered by means of Decrees No. 1745/2016 and
No. 2218/2017 in a manner that is not uniform, not impartial and not reasonable.561 Together with
this new configuration of its claims, Panama still includes arguments in which the challenged
administration is that of the specific bond and the special import regime.
7.367. In the Panel's opinion, the change of language used by P anama when arguing that the
administration of Decree No. 390/2016 by Decrees No. 1745/2016 and No. 2218/2017 is
inconsistent with Article X:3(a) transforms the nature of the claim, since it no longer appears to be
speaking of the administration as such of the specific bond and the special import regime in
accordance with the language of the panel request.
7.368. The Panel recalls that there is a close link between the terms of reference of a panel and the
request for its establishment submitted by the complaining party. Article 6.2 of the DSU provides,
in relevant part, that panel requests 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". 562 Taken
together, the specific measures at issue and the claims constitute the "matter referred to the DSB",
which is the basis for the terms of reference of panels under Article 7.1 of the DSU.563 Fulfilment of
these requirements "is not a mere formality"564, so that errors in the panel request cannot be "cured"

560 Colombia's additional written submission, paras. 30-31 and 94; opening statement as complainant at
the meeting of the Panel, paras. 17-18; and opening statement as respondent at the meeting of the Panel,
para. 45.
561 Panama's first written submission as respondent, paras. 76-78; second written submission as
complainant, paras. 271-273; second written submission as respondent, para. 301; and response to
Panel question No. 63.
562 The legal basis governing the panel request is Article 6.2 of the DSU. As outlined by the Appellate
Body in China – Raw Materials, Article 6.2 serves a "pivotal function" in WTO dispute settlement and sets out
"two key requirements" that a complainant must satisfy in its panel request, namely: (a) the identification of
the specific measures at issue; and (b) the provision of a brief summary of the legal basis of the complaint,
i.e. the claims, sufficient to present the problem clearly. (Appellate Body Reports, China – Raw Materials,
para. 219.) In particular, the Appellate Body holds that the "matter" referred to the Panel consists of
two elements: (a) the specific measures at issue; (b) the legal basis of the complaint (or the claims).
(Appellate Body Report, Guatemala – Cement I, para. 72.)
563 Appellate Body Reports, Guatemala – Cement I, para. 72; US – Carbon Steel, para. 125; and
US – Continued Zeroing, para. 160.
564 Appellate Body Reports, China – Raw Materials, paras. 219-220 and 233 (referring to Appellate Body
Reports, Brazil – Desiccated Coconut, p. 25; US – Carbon Steel, paras. 125-126; Australia – Apples, para. 416;

subsequently and, therefore, the measures not identified and claims not included or included
deficiently in the panel request cannot be the subject of consideration by the Panel.565
7.369. In this case, the Panel concludes that Panama 's claim that Decree No. 390/2016 is applied
in a manner inconsistent with Article X:3(a) of the GATT 1994 through Decree No. 2218/2017 does
not fall within the Panel's terms of reference. Therefore, the Panel will limit its analysis to the claims
made by Panama under Article X:3(a) of the GATT 1994, as defined in its panel request.
7.370. The Panel now turns to consider the question of whether, as Panama alleges, the
administration of the specific bond is inconsistent with Article X:3(a) of the GATT 1994.
7.4.5 The question of whether the administration of the specific bond is inconsistent with
Article X:3(a) of the GATT 1994
7.4.5.1 Arguments of the parties
7.4.5.1.1 Panama
7.371. Panama claims that the specific bond requirement is not administered by Colombia in a
uniform, impartial and reasonable manner in accordance with Article X:3(a) of the GATT 1994.566
7.372. Panama asserts that Colombia's general customs legislation is contained in Decrees
No. 2685/1999 and No. 390/2016, and that Decree No. 1745/2016 567 is a special rule within
Colombian customs legislation, which establishes specific requirements for imports of textiles and
footwear under headings 61, 62 and 64, with prices equal to or below the established thresholds.
Panama indicates that it is challenging Decree No. 1745/2016 as a legal instrum ent that governs
the administration of the specific bond requirement, but not the requirement of the bond as such.568
7.373. Panama argues, more specifically, that Article 8 of Decree No. 390/2016 is administered by
Decrees No. 1745/2016 and No. 2218/2017. Panama contends that Decree No. 390/2016 is the Tax
Statute of Colombia and is therefore a regulation of general application covered by Article X:1 of the
GATT 1994. Panama states that Decree No. 390/2016 establishes the guidelines that are to govern
the interaction between the customs administration and the interested parties in the import and

Guatemala – Cement I, paras. 72-73; US – Continued Zeroing, para. 160; US – Zeroing (Japan) (Article 21.5 –
Japan), para. 107; and EC and certain member States – Large Civil Aircraft, para. 786.)
565 Although defects in the panel request cannot be "cured" in the parties' subsequent submissions,
these submissions, and in particular the first written submission of the complainant, can be consulted to
confirm the meaning of the terms used in the panel request. (Appellate Body Reports, China – Raw Materials,
para. 220 (referring to Appellate Body Report, EC – Fasteners (China), para. 562, referring in turn to
Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 642; EC – Bananas III,
566 Panama's first written submission as respondent, para. 76; second written submission as
complainant, para. 271; second written submission as respondent, para. 335; and opening statement at the
567 The Panel notes that in Panama's first written submission as complainant, its first written submission
as respondent, and its second written submission as complainant, Panama refers to Decree No. 1745/2016.
After submitting Decree No. 2218/2017 as Exhibit PAN-43, Panama begins referring to that Decree. In this
connection, Panama explained in paragraph 11 of its second written submission as respondent that "[f]or the
sake of simplicity, Panama refers in a general manner in this rebuttal to the "specific bond" or the
"special import regime", on the understanding that these are the same measures as are contained in
Decrees No. 1745 and No. 2218. Any reference it may make to a measure of the specific decree (i.e. the
specific bond of Decree No. 2218) is normally made to highlight specific aspects stemming from that decree."
This summary of arguments uses the form in which Panama set forth its arguments, so that reference is at
times made solely to Decree No. 1745/2016, these being arguments presented prior to the submission of
Decree No. 2218/2017. However, the foregoing is without prejudice to the fact that arguments expressly
referring to Decree No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case,
the Panel will address those arguments in its analysis concerning Decree No. 2218/2017.
568 Panama's first written submission as respondent, paras. 76-78; and second written submission as
complainant, paras. 271-273.

export of goods in Colombia, for which reason the way in which the customs administration handles
this interaction is a matter of application of the Customs Statute.569
7.374. Panama argues that, in the context of the general provisions of the Customs Statute,
Article 8 of Decree No. 390/2016 establishes the so -called guarantee mechanism as an accessory
obligation to the customs obligation, to ensure payment of duties and taxes, penal ties and interest
deriving from the failure to comply with a customs obligation. 570 Panama points out that the same
rule does not stipulate how the guarantee is to be applied, but entrusts that function to the DIAN,
so that any act prescribing the type of gu arantee that is to be posted is an act of administration of
the Customs Statute.571
7.375. Panama adds that these decisions, which in normal circumstances should be the subject of
discretionary application, on a case -by-case basis, by the DIAN, are now taken a prio ri by
Decrees No. 1745/2016 and No. 2218/2017. Panama points out that Article 7 of both Decrees gives
practical effect to Article 8 of Decree No. 390/2016, by specifying the type of guarantee that must
be posted in respect of imports covered by these decrees in order to ensure payment of any duties
and taxes, penalties and interest that may apply, as a consequence of non -compliance with the
obligations and responsibilities set out in Colombia's Customs Statute.572
7.376. Panama argues that, in any case, if the Panel were to consider that Decrees No. 1745/2016
and No. 2218/2017 are not of the nature of acts administering Article 8 of Decree No. 390/2016,
this would mean that Decrees No. 1745/2016 and No. 2218/2017 would impose a substantive
requirement (i.e. posting of a specific bond for relevant imports) and, at the same time, the specific
parameters for its administration (i.e. the requirement that the specific bond be provided by a
banking entity or insurance company; and that it be valid for three years; and the a mount of
coverage). Panama considers that the fact that the substantive requirement and the parameters for
its administration are in the same instrument should not affect the applicability of Article X:3(a) to
Decrees No. 1745/216 and No. 2218/2017. Panama adds that the application of Articles XI:1 and
X:3(a) of the GATT 1994 is not mutually exclusive.573
7.377. Panama contends that there are two levels of administration of Article 8 of Decree
No. 390/2016: a first level of administration, which concerns the determi nation and regulation of
the kind of guarantee that must be posted, i.e., the specific bond; and a second level of
administration which concerns the administrative processes and specific procedures for obtaining
the specific bond, which is delegated to third parties (banks or insurance companies).574
7.378. With regard to the first level of administration, Panama alleges first of all, that the specific
bond requirement is not administered in a uniform manner, since it applies solely to textiles and
footwear of headings 61, 62 and 64 with prices equal to or lower than the thresholds established in
Article 3 of Decree No. 1745/2016, and not to imports of other products in a similar situation, such
as spirits and cigarettes. Panama considers that, in order to administer the specific bond requirement
uniformly, the importation of all products in a similar situation, namely those that can be used by
criminal organizations that engage in customs fraud, should be made subject to the same
requirement. Panama argues that it would appear that the only reason why Colombia does not apply
the specific bond requirement to imports of these other products is because the measure at issue
was designed to address the needs of the beneficiary industrial sectors.575

569 Panama's second written submission as respondent, para. 301, and response to
Panel question No. 63.
570 Panama's second written submission as respondent, para. 302, and response to
Panel question No. 63.
571 Panama's second written submission as respondent, para. 303, and response to
Panel question No. 63.
572 Panama's second written submission as respondent, paras. 304-305; and response to Panel question
No. 63.
573 Panama's second written submission as respondent, paras. 306-308; and response to Panel question
No. 63.
574 Panama's second written submission as respondent, para. 309.
575 Panama's first written submission as respondent, paras. 80-83; second written submission as
complainant, paras. 275-278; second written submission as respondent, paras. 312-313; and opening
statement at the meeting of the Panel, para. 21.

7.379. Panama also alleges a lack of uniform administration, since the coverage of the specific bond
does not apply uniformly. Panama maintains that when goods have a real f.o.b. price lower than the
threshold, an overestimation of the product's value is obtained by multiplying the quantity by the
threshold. In Panama's opinion, since the real (lower) value of the goods is ignored when calculating
the bond, and the (higher) threshold price is used, an artificially high base price is obtained which
must then be multiplied by 200%, so that Colombia treats in the same manner products with a
different value, i.e. products in different situations. Panama does not consider that the establishment
of fixed parameters for determining the coverage of the bond is consistent with an administration to
guarantee principal obligations with various amounts, as occurs with the entry of imports at different
prices.576
7.380. Panama also alleges a lack of uniform administration due to the fact that the specific bond
is activated on the basis of thresholds establi shed for individual four -digit tariff headings, despite
the existence within each heading of a multiplicity of diverse products of differing nature and differing
quality, for which reason Colombia applies the same treatment to products as dissimilar as men 's
and boys' suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts,
all of which have as their only common feature the fact of coming under heading 62.03.21.577
7.381. Panama claims, secondly, that the specific bond requirement is not applied impartially, owing
to the use of the figure of 200% to calculate the coverage of the bond. Panama contends that the
percentage is fixed irrespective of the characteristics and possible contingencies of each transaction,
and that to take it for granted that the value of the customs taxes together with possible penalties
will always be equivalent to 200% of the threshold price multiplied by the corresponding quantity of
shipped goods is prejudicial and inequitable.578
7.382. Panama claims, thirdly, that the specific bond requirement is not administered in a
reasonable manner, since a specific bond has to be constituted in cases where a general bond is
provided. Panama asserts that legal persons recognized as Regular Customs Users (UAP) will be able
to post a general bond to cover all their transactions as UAP with the DIAN, so that there is no
apparent reason why it might be appropriate to the circumstances that the UAP should additionally
post a specific bond.579
7.383. Panama also alleges a lack of reasonable adm inistration, owing to the fact that the specific
bond of Decree No. 2218/2017 covers the difference in prices and not the difference between the
taxes already paid and the taxes payable on the basis of the threshold. Panama asserts that, for
that reason, a much higher amount is guaranteed than is appropriate to ensure payment of the
customs taxes, penalties and interest that may apply.580
7.384. With regard to the second level of administration , Panama claims, firstly, that the specific
bond requirement is not admin istered uniformly, since Colombia delegates the processing and
management of the specific bond to banking entities and insurance companies, omitting to establish
general criteria for observance by these third parties of the requirements for applying for the bond,
and the considerations relevant to its approval. Panama contends that, as a result, each banking
entity or insurance company by itself determines the management fees, the credit requirements
applicable to the importer and the relevant factors for determining whether to approve or refuse the
granting of the bond.581
7.385. Panama claims, secondly, that the specific bond requirement is not administered reasonably,
because the guarantee has to come from a bank or insurance company. Panama sees no reason
why importers should have to lodge a bank or insurance guarantee instead of, for example, a cash
deposit, or not be given the opportunity to choose the kind of guarantee they wish to lodge in order

576 Panama's first written submission as respondent, para. 84; second written submission as
complainant, para. 279; and second written submission as respondent, paras. 314-315.
577 Panama's opening statement at the meeting of the Panel, para. 21.
578 Panama's written submission as respondent, paras. 85-86; second written submission as
complainant, paras. 280-281; second written submission as respondent, paras. 316-318; and opening
statement at the meeting of the Panel, para. 23.
579 Panama's first written submission as respondent, paras. 87-88; second written submission as
complainant, paras. 282-283; and second written submission as respondent, paras. 319-320.
580 Panama's second written submission as respondent, paras. 325-328.
581 Ibid. paras. 330-331.

to provide sufficient guarantee of payment of the principal debt, as is allowed by Article 221.3.2 of
Decree No. 390/216.582
7.4.5.1.2 Colombia
7.386. Colombia maintains that Panama has failed to demonstrate that Colombia administers a
legal instrument of the kind described in Article X:1 of the GATT 1994 in a non -uniform, partial or
unreasonable manner.583, 584
7.387. Colombia maintains that, although Panama submitted claims against Article 8 of
Decree No. 390/2016, the latter does not form part of the Panel's terms of reference since it is not
included in any of the panel requests. Colombia adds that the Customs Statute of Colombia, and in
particular Article 8 of Decree No. 390/2016, is not a measure taken to comply with the
recommendations and rulings of the DSB stemming from the original proceedings, as it was
published before the Appellate Bo dy report in the original proceedings was circulated, and is not
currently in force.585
7.388. Colombia asserts that, as is acknowledged by Panama, when a Party challenges a legal
instrument that administers another measure, the latter measure is excluded from the scope of
Article X:3 (a) of the GATT 1994. Colombia argues that Panama's claim is directed against the
customs guarantee of Decree No. 1745/2016, but Panama neither explains nor demonstrates that
Decree No. 1745/2016 administers another legal instrument. Colombia adds that, in Panama's own
description of the operation of the customs guarantee established in Decree No. 1745/2016, it does
not characterize Decree No. 1745/2016 as an instrument administering requirements established in
other instruments, rather , it describes Decree No. 1745/2016 as the measure establishing the
requirements.586
7.389. Colombia adds that general and specific bonds have been provided for in customs legislation
since well before the DSB decision, since Decree No. 2685/1999 already entailed a customs
guarantee regime. Colombia states that each of the special guarantees provided for in Colombia
legislation operates independently of the general regime. In Colombia's view, Article 8 of Decree
No. 390/2016 and Decrees No. 1745/2016 and No. 2218/2017 have separate applications and the
one is not dependent on the other. Colombia notes that Article 8 of Decree No. 390/2016 states that
"[f]or each of the types of guarantee listed in this article the special rules in force governing each of
them are to be applied", so that Article 8 allows the application of special rules such as Decree
No. 1745/2016 and Decree No. 2218/2017.587
7.390. For these reasons, Colombia requests that the Panel find that Panama has failed to establish
that Decree No. 1745/2016 falls within the scope of Article X:3(a) of the GATT 1994.588

582 Ibid. paras, 332-333.
583 Colombia's second written submission as complainant, para. 89; and second written submission as
respondent, para. 82.
584 The Panel notes that in Colombia's first written submission as respondent and its second written
submission as complainant, Colombia refers to Decree No. 1745/2016. After Panama submitted
Decree No. 2218/2017 as Exhibit PAN-43, Colombia began referring to that Decree as well. This summary of
arguments uses the form in which Colombia set forth its arguments, so that at times reference is made solely
to Decree No. 1745/2016, these being arguments presented prior to the submission of Decree No. 2218/2017.
However, the foregoing is without prejudice to the fact that the arguments expressly referring to
Decree No. 1745/2016 could also be applicable to Decree No. 2118/2017. Where that is the case, the Panel will
address those arguments in its analysis of Decree No. 2218/2017.
585 Colombia's additional written submission, paras. 30-31 and 94; opening statement as complainant at
the meeting of the Panel, paras. 17-18; and opening statement as respondent at the meeting of the Panel,
para. 45.
586 Colombia's second written submission as complainant, paras. 90-92; and second written submission
as respondent, paras. 83-85.
587 Colombia's additional written submission, paras. 96-97.
588 Colombia's second written submission as complainant, para. 94; and Panama's second written
submission as respondent, para. 86.

7.391. Colombia maintains that, in any event, even if Decree No. 1745/2016 fell within the scope
of Article X:3(a), it would be consistent with that provision.589
7.392. With respect to the requirement of uniform administr ation, Colombia contends that in
Argentina – Hides and Leather the Panel dismissed the complaining party's argument that it was
improper for Argentina to construct a special set of procedures for administering its export laws for
only one type of product (hides), and held that, as all exports of hides were uniformly subject to the
same procedures, there was no non-uniform administration.590
7.393. Colombia maintains that the same logic applies in the context of the customs bond
requirement, since the requirement app lies to all apparel and footwear under certain value
thresholds, and all importers of these products can expect treatment of the same kind, in the same
manner, both over time and in different places and with respect to other persons.591
7.394. Colombia thus affirms that the comparison with other products is not appropriate because it
is not required by Article X:3(a) of the GATT 1994. Colombia also contends that textiles, clothing
and footwear imported at prices below the thresholds differ from other products because of the high
risk of their being used to launder money through underinvoicing, for which reason they require
differential treatment, and uniformity of treatment does not require identical results when the facts
differ.592
7.395. Colombia adds that the guarantees established by Decrees Nos. 1745/2016 and 2218/2017
operate in a standardized and uniform manner since importers have available the entire bank and
insurance guarantee market operating in Colombia, and the rules for obtaining such legal guarantees
are clea rly defined and are not the fruit of a whim or arbitrary approach on the part of the
administration. Colombia also contends that the goods subject to the guarantee and the thresholds
are clearly defined in the decrees.593
7.396. With regard to the requirement of im partial administration, Colombia asserts that Panama
has not explained why it considers the measure to be partial and, more specifically, why the fact
that the percentage set out in the bond requirement is fixed means that the requirement is not
impartial. Colombia maintains, therefore, that Panama has not discharged its burden of
substantiating how and why those provisions necessarily lead to administration that is not impartial.
Colombia adds that the measure applies equally to all importers of covered apparel and footwear.594
7.397. Colombia also contends that the specific bond applies impartially to all importers of the
covered goods, irrespective of their origin, so that it does not favour any one country or party more
than another, and is unprejudiced, unbiased and fair. Colombia argues that textiles, clothing and
footwear imported at prices below the thresholds differ from other imports because they are at high
risk of being used for money laundering through underinvoicing, and require differential treatment.
Colombia also argues that a rigorous and objective method was used to determine the thresholds,
and that there is no evidence that that method was designed to favour any country in particular.595
7.398. With regard to the reasonable administration requirement, Colom bia maintains that the
criteria for determining the amount to be guaranteed, including the figure of 200%, are based on
reasonableness and sufficiency, in the light of the possible risks that may arise if the customs taxes
and any penalties that may apply are not collected. Colombia adds that the nature of general bonds
is totally different from that of the specific bond, since where imports at artificially low prices
constitute an important share of total imports, the general bond would be insufficient, and this makes
it necessary to request special bonds even when the importer has a general bond. Colombia asserts
that it used specific examples, in COL -22, COL-18 and COL-17, to show how general bonds might

589 Colombia's second written submission as complainant, para. 94 and second written submission as
respondent, para. 87.
590 Colombia's second written submission as complainant, paras. 96-97; second written submission as
respondent, paras. 89-90; and additional written submission, para. 101.
591 Colombia's second written submission as complainant, para. 98; second written submission as
592 Colombia's additional written submission, para. 105.
593 Colombia's additional written submission, para. 103.
594 Colombia's second written submission as complainant, paras. 99-100 and second written submission
as respondent, paras. 92-93.
595 Colombia's additional written submission, paras. 111-112.

not be sufficient to cover the payment of the customs taxes and penalties that might apply, and that
the penalties to be imposed could amount to 150% of the assessed value of the goods.596
7.399. Colombia points out that the specific bond meets the requirement of reasonableness, when
its features are examined in th e light of its objective, which is to guarantee the payment of any
customs taxes and penalties that may be due, and considering the high risk that exists that the
goods to be imported at ostensibly low prices are used for money laundering.597
7.400. With respect to Panama's claims concerning the requirements of uniform and reasonable
administration as regards the second level of administration, Colombia maintains that Panama does
not specify the uniformity criterion to which it refers; that the fact that the bond is provided by
insurance or banking entities is a logical consequence of the nature of the instrument (insurance
contract); and that if this type of instrument were prohibited by Article X:3(a) of the GATT 1994,
Article 13 of the Customs Valuation Agreement, Article VII of the GATT 1994 and Article 7 of the
Trade Facilitation Agreement would be inapplicable. Colombia adds that bonds are an instrument
used by many customs administrations around the world to guarantee payment of tariffs and other
taxes, and that bank guarantees and policies for the fulfilment of legal provisions are appropriate
instruments for the granting of bonds vis-à-vis customs authorities, which are widely used by
importers and traders. Colombia also alleges that the financial system operates freely and that the
insurance companies and banks grant similar treatment in respect of persons similarly situated,
depending on the risk.598
7.4.5.2 Analysis by the Panel
7.401. As indicated in paragraph 7.351. above, the Panel's task will be to determine whether, as
alleged by Panama, the specific bond is not administered by Colombia in a uniform, impartial and
reasonable manner in accordance with Article X:3(a) of the GATT 1994.599
7.402. As is explained in section 7.4.3.1 above, the Panel will begin by examining whether Panama
has identified a legal instrument of the kind described in Articl e X:1 of the GATT 1994. If so, it will
determine whether Panama has demonstrated that the legal instrument identified is being
administered by Colombia. If the answer to the latter question is also affirmative, it will examine
whether Panama has demonstrated that the legal instrument identified is not being administered in
a uniform, impartial or reasonable manner.
7.4.5.2.1 The question of whether the legal instrument identified by Panama is of the kind
described in Article X:1 of the GATT 1994
7.403. The first question th at the Panel has to consider is whether the legal instrument identified
by Panama is of the kind described in Article X:1 of the GATT 1994. Panama has identified two
instruments: first, Decree No. 390/2016 and, alternatively, Decree No. 2218/2017 itself.
7.404. With regard to Decree No. 390/2016, Panama explains that the Decree contains the Customs
Statute of Colombia and that it is therefore a regulation of general application covered by Article X:1
of the GATT 1994. 600 As was observed in section 7.4.4 above, the possible inconsistency of the
administration of the general customs regime with Article X:3(a) of the GATT 1994 does not fall
within the Panel's terms of reference. Irrespective of the foregoing, the Panel observes that Decree
No. 390/2016 is a legal instrument "establishing the customs statute". 601 Article 1 thereof, entitled
"Scope", indicates that the Decree "regulates the legal relationships established between the
customs administration and parties involved in the entry, duration, transfer and exit of goods to and

596 Colombia's second written submission as complainant, paras. 101-103; second written submission as
respondent, paras. 94-95; and additional written submission, paras. 119-123.
597 Colombia's additional written submission, para. 118.
598 Colombia's additional written submission, paras. 124-127.
599 Panama's first written submission as respondent, para. 76; second written submission as
complainant, para. 271; second written submission as respondent, para. 335; and opening statement at the
600 Panama's second written submission as respondent, para. 301, and response to Panel Question
No. 63.
601 Decree No. 390/2016 (Exhibit PAN-4).

from the [Colombian] customs territory. 602 In this respect, Decree No. 390/2016 undoubtedly falls
within the scope of Article X:1.
7.405. Panama identifies anothe r alternative instrument in case the Panel were to consider that
Decree No. 2218/2017 governing the specific bond is not of the nature of an act administering
Article 8 of Decree No. 390/2016. According to Panama, that instrument would be Decree
No. 2218/2017 itself, which imposes at the same time a substantive requirement and the specific
parameters for its administration.603
7.406. Decree No. 2218/2017 is a legal instrument "adopting measures for the prevention and
control of customs fraud in connection with impor ts of fibres, yarns, fabrics, clothing and
footwear".604 Article 1 thereof, entitled "Purpose" , states that the Decree "establishes mechanisms
to strengthen the risk management system and customs control in the face of possible situations of
customs fraud associated with imports of fibres, yarns, fabrics, clothing and footwear, irrespective
of the country of origin and/or provenance".605
7.407. In the Panel's opinion, by establishing mechanisms to strengthen the risk management
system and customs control in the face o f possible situations of customs fraud associated with
imports of fibres, yarns, fabrics, clothing and footwear, Decree No. 2218/2017 also falls within the
"laws, regulations, judicial decisions and administrative rulings of general application [which
Colombia has brought into force], 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 paym ents therefor, or affecting their sale,
distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or
other use".
7.408. For the foregoing reasons, the Panel considers that Panama has discharged the initial burden
of identifying a legal instrument of the kind described in Article X:1 of the GATT 1994.
7.4.5.2.2 The question of whether the legal instrument identified by Panama is being
"administered" by Colombia
7.409. Having established that the legal instruments identified by Panama are of the kind described
in Article X:1 of the GATT 1994 and, therefore, fall within the scope of Article X:3(a), the Panel will
examine whether Panama has demonstrated that those instrume nts are being "administered" by
Colombia.
7.410. As was observed in section 7.4.4 above, the possible inconsistency of the administration of
the general customs regime through the specific bond with Article X:3(a) of the GATT 1994 does not
fall within the terms of reference of the Panel. Irrespective of the foregoing, Panama's argument
that Article 8606 of Decree No. 390/2016, which regulates customs guarantees, is administer ed by

602 Idem.
603 Panama's second written submission as respondent, paras. 306-308, and response to Panel Question
No. 63.
604 Decree No. 221/2017 (Exhibit PAN-43).
605 Idem.
606 Article 8 of Decree No. 390/2016 states the following in relevant part:
Scope. The guarantee is an obligation ancillary to the customs obligation, which is used to ensure
payment of duties and taxes, penalties and interest resulting from non-compliance with a
customs obligation provided for in this decree.
Guarantees shall be managed through the electronic information services, under the terms and
conditions laid down by the National Customs and Excise Directorate.
Guarantees may be comprehensive or specific. Comprehensive guarantees cover the obligations
assumed by the declarant or foreign trade operator, in respect of various operations or customs
formalities; specific guarantees support compliance with obligations in connection with one
particular operation or formality.
Guarantees may take one of the following forms:
1. Monetary deposit or any other means of payment authorized by the National Customs and
Excise Directorate.
2. Insurance company guarantee.
3. Bank guarantee.

Decree No. 2218/2017 is not convincing. 607 In fact, Article 8 of Decree No. 390/2016 states that
"[the] guarantee is an obligation ancillary to the customs obligation, which is used to ensure payment
of duties and taxes, penalties and interest resulting from non-compliance with a customs obligation
provided for in this decree." 608 This article also states that guarantees may be comprehensive or
specific and that they may take the form of a monetary deposit, an insurance company guarantee,
a banking instit ution guarantee, an open promissory note with letter of instructions, a mercantile
trust guarantee, an endorsement of securities as collateral, or another form of guarantee that
provides sufficient security for compliance. It also stipulates that for each of the guarantees listed
in that provision, "the special rules in force governing each of them shall apply" and that the DIAN
"shall determine the type of guarantee that is to be constituted in accordance with the corresponding
customs obligation."
7.411. Article 7 of Decree No. 2218/2017, which governs the specific bond, prescribes that "[in]
the case of goods covered by the scope of application of this decree, if the valuation dispute arises
in connection with the inspection or examination procedure, and it beco mes necessary for that
reason to delay the final determination of the customs value of the goods… the importer may secure
release by posting a guarantee sufficient to ensure payment of any customs taxes, penalties and
interest that may apply." As explained in section 2.3.3.2 above, this provision prescribes the
particular features of the guarantee, i.e. that it will be accorded on a value equivalent to 200% of
the difference between the f.o.b. price declared by the importer and the result of multiplying the
established threshold unit price by the quantity imported; that it must be from a bank or insurance
company; and that it will have a term of three years.
7.412. The Panel observes that, even though Article 8 of Decree No. 390/2016 provides for
guarantees to ensure the payment of duties, taxes, penalties and interest stemming from a customs
obligation, and the form such guarantees may take, it does not specifically create a guarantee that
has to be administered. In fact, the same article provides for special rules to govern each of the said
guarantees and empowers the DIAN to establish the type of guarantee that is to be constituted.
7.413. This Panel considers, on the other hand, that it is Decree No. 2218/2017 itself which creates
a specific bond to be administered by the Colombian customs authorities. In other words, this specific
bond exists, in substance, by virtue of Decree No. 2218/2017, and not by virtue of Article 8 of
Decree No. 390/2016.
7.414. In effect, Decree No. 2218/2017 creates a special regime for a certain grou p of products,
namely, yarns, fibres, fabrics, clothing, made up textile articles and footwear priced at or below the
thresholds, which contains a set of special rules applicable to the import of such products, rules
which include the specific bond.609 This special regime exists by virtue of Decree No. 2218/2017 and

4. Open promissory note with letter of instructions, only for declarants and foreign trade
operators authorized or graded by the National Customs and Excise Directorate in accordance
with the provisions of Article 35 of this decree.
5. Mercantile trust guarantee.
6. Endorsement of securities as collateral.
7. Any other form of guarantee that provides sufficient security for the payment of duties and
taxes, penalties, and interest, where applicable, as required by the National Customs and Excise
Directorate.
For each of the types of guarantee listed in this article, the special rules in force governing each
of them are to be applied.
The National Customs and Excise Directorate shall determine the type of guarantee that is to be
posted in accordance with the corresponding customs obligation. In any event, in the case of
disputes concerning value, origin or tariff classification, only guarantees in monetary deposit
form shall be accepted, when persons with a high risk profile are involved.
…
Anyone who has posted a comprehensive guarantee shall not, as long as it remains in force, be
obliged to post specific guarantees, except where guarantees replacing a precautionary measure
are concerned.
607 Panama's second written submission as respondent, para. 301; and response to Panel question
No. 63.
608 Decree No. 390/2016 of (Exhibit PAN-4), Article 8.
609 Decree No. 2218/2017 is a decree "adopting measures for the prevention and control of customs
fraud in connection with imports of fibres, yarns, fabrics, clothing and footwear". Article 1 of the Decree,
entitled "Purpose", provides that the Decree "establishes mechanisms to strengthen the risk management and
customs control system in the face of possible situations of customs fraud associated with imports of fibres,
yarns, fabrics, clothing and footwear, irrespective of the country of origin and/or provenance."

not by virtue of Decree No. 390/2016. Thus, the administration by the DIAN of this special import
regime, including the administration of the specific bond, constitutes an administration of Decree
No. 2218/2017, and not an administration of Decree No. 390/2016.
7.415. In addition to the above, the Panel observes that Colombia submitted an official letter from
the DIAN Directorate of Legal Management, addressed to the Foreign Trade Directorate of the
Colombian Ministry of Industry and Tourism 610, which lists the articles of Decree No. 390/2016 in
force at 9 April 2018. The list does not include Article 8 of the latter Decree. Panama has not refuted
this evidence submitted by Colombia.
7.416. Panama has argued that, in any event, if the Panel were to consider that Decree
No. 2218/2017 is not of the nature of an act administering Article 8 of Decree No. 390/2016, this
would mean that Decree No. 2218/2017 would impose a substantive requirement and, at the same
time, the specific parameters for its administration.611
7.417. The Panel notes in this connection that Panama has challenged Decree No. 2218/2017, under
Article X:3(a) of the GATT 1994, as a legal instrument governing the administration of the specific
bond, but not the manner in which the Colombian customs authorities apply or administer the bond
in practice. In fact, Panama has submitted no evidence as to how the Colombian customs authorities
administer the specific bond requirement in practice. In other words, Pan ama argues that various
aspects of the specific bond, as contained in Decree No. 2218/2017 itself, give rise to the
non-uniform, partial and unreasonable administration of the specific bond.
7.418. The Panel recalls that, as was explained in paragraphs 7.356. -7.357. above, it is possible
to challenge a legal instrument as such under Article X:3(a) of the GATT 1994, when the substantive
content of that legal instrument regulates the application or implementation of the rules covered by
Article X:1 of the GATT 1994, but that, in order to establish such a claim, the complainant must
discharge the burden of substantiating how and why those provisions necessarily lead to
impermissible administration of the legal instrument in question. Therefore, the Panel cannot
disregard the possibility that some aspects of the specific bond, as contained in
Decree No. 2218/2017, may necessarily lead to the non -uniform, non-impartial or unreasonable
administration of that legal instrument and, in particular, of the specific bond.
7.419. For this reason, the Panel will now consider whether Panama has demonstrated that the
challenged aspects of the specific bond contained in Decree No. 2218/2017 necessarily lead to
impermissible administration of the specific bond contained in Decree No. 2218/2017.
7.4.5.2.3 The question of whether the specific bond in Decree No. 2218/2017 is not being
administered uniformly, impartially and reasonably
7.4.5.2.3.1 Introduction
7.420. As previously explained, Panama has made a series of claims of inconsistency with
Article X:3(a) of the GATT 1994, with respect to various aspects of the specific bond contained in
Decree No. 2218/2017.
7.421. The Panel observes that Panama has identified two levels of administration with respect to
the specific bond: (a) a first level, which, according to Panama, concerns the determination
and regulation of the type of bond required; and (b) a second level, which, according to Panama,
concerns the administrative processes and actual procedures for obtaining the specific bond.612
7.422. Without entering into an examination of the relevance of the classification used by
Panama, and with a view to facilitating the analysis of the various claims that have been made, the
Panel will use the classification proposed by Panama for the purposes of its analysis.

610 Official letter on Decree No. 390/2016 (Exhibit COL-58).
611 Panama's second written submission as respondent, paras. 306-308, and response to Panel question
No. 63.
612 Panama's second written submission as respondent, para. 309.

7.4.5.2.3.2 Panama's claims with respect to the "first level of administration"
 Claim with respect to the lack of uniform administration
7.423. Panama makes various claims according to which the specific bond requirement is not
administered uniformly because: (a) it only applies to the importation of textiles and footwear
classified in Chapters 61, 62 and 64 of Colombia's Customs Tariff at prices equal to or lower than
the established thresholds; (b) the amount of coverage of the bond disregards the real value of the
goods and uses the threshold price; and (c) the bond is activated on the basis of thresholds
established per four-digit tariff heading. The Panel will examine each of these arguments below.
7.424. With respect to the first argument, Panama claims that the administration of the specific
bond requirement is not uniform because it only applies to the importation of textil es and footwear
classified in Chapters 61, 62 and 64 of the Colombian Customs Tariff at prices equal to or lower than
the established thresholds. Panama argues that this bond does not apply to the importation of other
similarly situated products, as is the case with spirits and cigarettes, which can also be used by
criminal organizations that engage in customs fraud.613
7.425. For its part, Colombia maintains that the specific bond requirement is administered
uniformly, because it is applied to the importation of a ll apparel and footwear below specified
threshold values, and all importers of these products can expect treatment of the same kind, in the
same manner, both over time and in different places and with respect to other persons.614
7.426. Colombia adds that the factu al assumptions applicable to the textiles and footwear sector
are substantially different from those of other sectors exposed to illicit trade. According to Colombia,
the specific bond is of particular importance for counteracting money laundering through
underinvoicing, while other kinds of smuggling call for different strategies. Colombia asserts that
Panama's claim disregards the technical process and the practical reasons that led to the measure
being designed to have a limited scope of application. Colombia also maintains that the Colombian
authorities have been unable to establish that money laundering, as opposed to customs fraud, is
involved in other kinds of underinvoicing, and that Colombia has demonstrated its problem with the
laundering of money through the underinvoicing of footwear, textiles and clothing.615
7.427. Panama's argument with respect to the lack of uniformity of the specific bond appears to
relate to the lack of uniformity in the Colombian customs legislation, due to the fact that Colombia
does not apply the specific bond requirement to other products which, according to Panama, are
similarly situated. As observed in section 7.4.4 above, the possible inconsistency of the
administration of the general customs regime with Article X:3(a) of the GATT 1994 does not fall
within the Panel's terms of reference. Moreover, as explained in paragraph 7.410 above, Panama's
argument according to which Article 8 of Decree No. 390/2016 is being administered through
Decree No. 2218/2017 is not convincing.
7.428. Therefore, the Panel will confine itself to analysing Panama's argument according to which
it is the content of Decree No. 2218/2017 that is not uniformly administered. In this respect, as
previously explained, the Panel agrees with other previous panels in considering that the
requirement of uni formity means "uniformity of treatment in respect of persons similarly
situated"616 and that the laws are applied consistently and predictably. 617 In the specific
circumstances of the present dispute, this uniform administration obligation imposed by
Article X:3(a) of the GATT 1994 requires Colombia to apply the specific bond requirement in
Decree No. 2218/2017 consistently and predictably, by according uniform treatment to all the
operations covered by that Decree which are in a similar situation. It does not appear to this Panel
that the uniform administration requirement of Article X:3(a) of the GATT 1994 obliges Colombia to

613 Panama's first written submission as respondent, paras. 80-83; second written submission as
complainant, paras. 275-278; second written submission as respondent, paras. 312-313; and opening
statement at the meeting of the Panel, para. 21.
614 Colombia's second written submission as complainant, para. 98; second written submission as
615 Colombia's additional written submission, para. 130.
616 Panel Report US – Stainless Steel (Korea), para. 6.51.
617 Panel Report Argentina – Hides and Leather, para. 11.83.

impose the specific bond requirement on other products not included in the scope of application of
Decree No. 2218/2017 which, in Panama's opinion, are in a similar situation.
7.429. The Panel recalls that, in any case, the obligation in Article X:3(a) of the GATT 1994 relates
to the administration of the laws and regulations rather than to their substantive content. 618
Accordingly, the uniformity requirement does not relate to the substance of Decree No. 2218/2017
but to its administration. In this connection, in the Panel 's opinion, a claim with respect to the
coverage of products subject to the specific bond would have to do with a substantive characteristic
of the specific bond rather than with the way in which the specific bond is administered.619
7.430. For these reasons, the Panel rejects Panama's argument that the specific bond requirement
is not administered uniformly because of the product coverage.
7.431. Panama also claims that the specific bond requirement is not being administered uniformly,
because its amount of coverage is not uniformly applied. Panama maintains that if the goods have
a real f.o.b. price below the threshol d, multiplying the quantity by the threshold gives an
overestimated value for the product. For Panama, since for the calculation of the bond the real
(lower) value of the goods is disregarded and the (higher) threshold price is used, an artificially high
base price is obtained, which must then be multiplied by 200%, so that Colombia is treating in the
same way products with a different value, that is, in different situations.620
7.432. For its part, Colombia points out that the measure was modified by
Decree No. 2218/2017 and that, under this new decree, the value of the bond is determined in
accordance with the difference between the import value and the threshold, so that Panama's claim
is not relevant in the light of the new measure.621
7.433. The Panel observes that Panama challenges the coverage amount of the specific bond,
because "the real (lower) value of the goods is disregarded and the (higher) threshold price is used."
Firstly, it should be made clear that what Panama describes as the "real value" of the goods is
actually the declared value of the goods, which might not be their "real value" in the event of
underinvoicing or overinvoicing. The Panel understands that this argument relates to the specific
bond with the characteristics described in Decree No. 1745/2016, which, as described in
section 2.3.2.2 above, amounted to 200% of the threshold unit price multiplied by the quantity
imported. The Panel reca lls that, for the reasons set out in section 7.1.3.2 above, the Panel has
decided to rule only on the specific bond with the characteristics described in Decree No. 2218/2017.
7.434. The Panel also observes that, as described in section 2.3.3.2 above, the specific bond
provided for in Decree No. 2218/2017 no longer has the characteristic challenged by Panama, since
the coverage now amounts to 200% of the difference between the f.o.b. price declared by the
importer and the result of multiplying the unit price of the threshold. Thus, taking into consideration
the f.o.b. price declared by the importer, which Panama has described as the "real value" of the
goods, Panama's argument that the "real value" of the goods is disregarded no longer has any basis
in fact.
7.435. The Panel recalls that, in any event, the obligation in Article X:3(a) of the GATT 1994 relates
to the administration of the laws and regulations, rather than to their substantive content. 622
Therefore the uniformity requirement does not relate to the substance of Decree No. 2218/2017,
but to its administration. In the opinion of the Panel, a claim with respect to the amount of coverage
of the specific bond has to do with a substantive characteristic of the specific bond rather than with
the way in which the specific bond is administered.623

618 Appellate Body Report, EC – Poultry, para. 115. See also Appellate Body Report, EC – Selected
Customs Matters, para. 219.
619 Appellate Body Reports, EC – Bananas III, para. 200 and EC – Selected Customs Matters, para. 219.
620 Panama's first written submission as respondent, para. 84; second written submission as
complainant, para. 279; and second written submission as respondent, paras. 314-315.
621 Colombia's additional written submission, para. 131.
622 Appellate Body Report, EC – Poultry, para. 115. See also Appellate Body Report, EC – Selected
Customs Matters, para. 219.
623 Appellate Body Reports, EC – Bananas III, para. 200 and EC – Selected Customs Matters, para. 219.

7.436. Accordingly, this Panel rejects Panama's argument that the specific bond requirement is not
administered uniformly because of its amount of coverage.
7.437. Panama also argues that the specific bond requirement is not administered uniformly
because it is activated on the bas is of thresholds established per four -digit tariff heading, despite
the fact that each heading covers a variety of products that differ in nature and quality, so that
Colombia is treating dissimilar products in the same way.624
7.438. As previously explained, the P anel considers that the uniform administration obligation
requires Colombia to apply the specific bond requirement in Decree No. 2218/2017 consistently and
predictably, by according uniform treatment to all the covered operations in a similar situation.
7.439. It does not seem to the Panel that the uniform administration requirement of Article X:3(a)
of the GATT 1994 obliges Colombia to achieve a greater level of detail in the tariff headings with
regard to the respective thresholds upwards of four digits. In othe r words, the Panel does not
consider that the fact that Colombia has fixed the thresholds with respect to tariff headings
necessarily gives rise to the non -uniform administration of the specific bond contained in
Decree No. 2218/2017, within the meaning of Article X:3(a) of the GATT 1994.
7.440. In any event, the Panel recalls that the obligation in Article X:3(a) of the GATT 1994 relates
to the administration of the laws and regulations, rather than to their substantive content. 625
Therefore, the uniformity requir ement does not relate to the substance of Decree No. 2218/2017,
but to its administration. In this respect, in the Panel 's opinion, a claim with regard to the
determination of the thresholds has to do with a substantive characteristic of the specific bond rather
than with the way in which the specific bond is administered.626
7.441. In the light of the foregoing, the Panel rejects Panama 's argument that the specific bond
requirement is not administered uniformly because it is activated on the basis of thresholds
established per four-digit tariff heading.
7.442. For all the above reasons, with respect to the aspects of the specific bond which Panama
characterizes as the "first level of administration", the Panel concludes that Panama has failed to
demonstrate that the specific bond requirement in Decree No. 2218/2017 is being administered in
a non-uniform manner, inconsistent with Article X:3(a) of the GATT 1994.
Claim with respect to the lack of impartial administration
7.443. Panama claims that the specific bond requirement is not administered impartially, because
of the use of the 200% percentage for calculating the coverage amount. Panama argues that the
percentage is fixed independently of the characteristics and possible contingencies of each
transaction, and that to assume that the value of the customs taxes together with any penalties will
always be equivalent to 200% of the threshold multiplied by the quantity of the goods in the
corresponding shipment is prejudiced and unfair.627
7.444. For its part, Colombia maintains that Panama ha s not explained why the fact that the
percentage established in the specific bond requirement is fixed means that the requirement is not
impartial, and Panama has therefore failed to discharge the burden of substantiating how and why
those provisions necessarily lead to an administration that is not impartial. Colombia adds that the
measure is applied equally to all importers of the apparel and footwear covered.628
7.445. As previously explained, the Panel agrees with past panels in considering that the impartial
administration requirement in Article X:3(a) relates to the administration of the relevant laws and

624 Panama's opening statement at the meeting of the Panelg, para. 21.
625 Appellate Body Report, EC – Poultry, para. 115. See also Appellate Body Report, EC – Selected
Customs Matters, para. 219.
626 Appellate Body Reports, EC – Bananas III, para. 200 and EC – Selected Customs Matters, para. 219.
627 Panama's first written submission as respondent, paras. 85-86; second written submission as
complainant, paras. 280-281; second written submission as respondent, paras. 316-318; and opening
statement at the Panel meeting, para. 23.
628 Colombia's second written submission as complainant, paras. 99-100; and second written submission
as respondent, paras. 92-93.

regulations in a just, fair, objective, unbiased and unprejudiced manner.629 Therefore, the impartial
administration obligation imposed by Article X:3(a) of the GATT 1994, in the specific circumstances
of this dispute, requires Colombia to administer the specific bond requirement in
Decree No. 2218/2017 in a just, fair, objective, unbiased and unprejudiced manner.
7.446. In this respect, the Panel observes that Panama challenges the coverage amount of the
specific bond, due to the fact that it is equal to 200% of the threshold multiplied by the quantity of
the goods in the corresponding shipment. This Panel believes that this argument relates to the
specific bond with the characteristics described in Decree No. 1745/2016, which amounted to 200%
of the threshold unit price multiplied by the quantity imported. The Panel recalls that, for the reasons
given in section 7.1.3.2 above, the Panel has decided to rule only on the specific bond with the
characteristics described in Decree No. 2218/2017.
7.447. The Panel observes that the specific bond provided for in Decree No. 2218/2017 no longer
has the characteristic challenged by Panama, since, as described in section 2.3.3.2 above, the
coverage now amounts to 200% of the difference between the f.o.b. price declared by the importer
and the result of multiplying the threshold unit price. For these reasons, Panama 's argument no
longer has any basis in fact.
7.448. In any event, and as previously explained in analysing Panama 's claim concerning the lack
of uniform administration of the specific bond, the Panel considers that a claim with respect to the
coverage amount of the specific bond has to do with a substantive characteristic of the specific
bond rather than with the way in which the specific bond is administered.
7.449. For these reasons, the Panel rejects Panama's argument that the specific bond requirement
is not administered impartially, because of the coverage amount.
7.450. In conclusion, with respect to the aspects of the specific bond which Panama describes as
the "first level of administration", the Panel finds that Panama has failed to demonstrate that the
specific bond requirement in Decree No. 2218/2017 is administered in a manner that is not impartial,
inconsistently with Article X:3(a) of the GATT 1994.
Claim with respect to the lack of reasonable administration
7.451. Panama claims that the specific bond requirement is not administered reasonably, because:
(a) a specific bond has to be constituted in cases in which there is a general bon d; and (b) the
amount of the specific bond of Decree No. 2218/2017 covers the difference in prices and not the
difference between the taxes already paid and the taxes payable on the basis of the threshold. The
Panel will examine each of these arguments below.
7.452. With respect to the first argument, Panama claims that the specific bond requirement is not
administered reasonably because a specific bond has to be constituted in cases in which there is a
general bond. Panama argues that the legal persons recognized as regular customs users (UAP) will
be able to post a general bond that will cover all their transactions as a UAP with the DIAN, so that
there is no apparent reason why it might be appropriate to the circumstances for the UAP also to
have to lodge a specific bond.630
7.453. For its part, Colombia maintains that where imports at artificially low prices constitute an
important share of total imports, the general bond would be insufficient. Colombia asserts that it
has made clear with concrete examples, in COL-22, COL-18 and COL-17, how general bonds might
not be sufficient to cover the payment of customs taxes and any penalties that might apply, and
that the penalties to be imposed could amount to 150% of the assessed value of the goods.631
7.454. In this respect, Panama responds that Colombia implicitly recognizes that where it is not a
matter of cases in which artificially low prices constitute an important share of total imports, the

629 Panel Reports, Thailand – Cigarettes (Philippines), para. 7.899; and China – Raw Materials, para.
7.694. (The Appellate Body declared the panel's analysis moot and of no legal effect on procedural grounds.)
630 Panama's first written submission as respondent, paras. 87-88; second written submission as
complainant, paras. 282-283; and second written submission as respondent, paras. 319-320.
631 Colombia's second written submission as complainant, paras. 101-103; and second written
submission as respondent, paras. 94-95.

specific bond contingencies would normally be covered by the coverage of the general bo nd.632
Panama adds that even if because of the magnitude of the textiles and footwear transactions a
producer with a general bond was unable to cover the amount of the specific bond, there is no reason
why that producer should be required to surrender the wh ole of the specific bond if part of the
amount covered could still be covered by the general bond.633
7.455. As previously explained, the Panel agrees with past panels in considering that the reasonable
administration requirement relates to "administration that is equitable, appropriate for the
circumstances and based on rationality". 634 Therefore the obligation concerning reasonable
administration imposed by Article X:3(a) of the GATT 1994, in the specific circumstances of this
dispute, requires Colombia to administer the specific bond requirement in Decree No. 2218/2017 in
a manner that is equitable, appropriate for the circumstances and based on rationality.
7.456. The Panel recalls that Panama has challenged Decree No. 2218/2017 as a legal instrument
that governs the administration of the specific bond, so that it is for Panama to satisfy the obligation
to substantiate how and why the fact of requiring a specific bond when there is already a general
bond necessarily leads to unreasonable administration.
7.457. The Panel understands that, on some occasions, the general bond could be sufficient to cover
all of an importer's transactions with the DIAN as a UAP. However, as Colombia has explained and
Panama appears not to have contested, on other occasions, the bond could be insufficient. Moreover,
as Colombia has explained, the general bond is cross -cutting in its application, is an import
processing facility accorded to a certain type of importer, and is intended to ensure the total payment
of the duties, taxes, penalties and interes t that result from non -compliance with a customs
requirement. On the other hand, the specific bond, although also intended to ensure the total
payment of duties, taxes, penalties and interest that may apply, seeks to confront the problem of
money laundering in specific sectors. 635 In the Panel's opinion, the fact that Colombia additionally
requires the specific bond is not sufficient to conclude that the administration of that specific bond
is not appropriate for the circumstances or is not based on rationali ty. In other words, Panama 's
argument according to which the fact of requiring the specific bond in cases in which there is already
a general bond necessarily leads to unreasonable administration of the specific bond is unconvincing.
7.458. For these reasons, the Panel rejects Panama's argument that the specific bond requirement
is not being administered reasonably because the specific bond is required in those cases in which
there is already a general bond.
7.459. With respect to the second argument, Panama alleges lack of reasonable administration
because the amount of the specific bond in Decree No. 2218/2017 covers the difference in prices
and not the difference between the taxes already paid and the taxes payable on the basis of the
threshold. Panama asserts that, because of this, an amount much greater than that appropriate for
ensuring the payment of customs taxes, penalties and interest payable is being guaranteed.636
7.460. As already explained, this Panel considers that a claim with respect to the amount of
coverage of the specific bond has to do with a substantive characteristic of the specific bond rather
than with the way in which the specific bond is administered.
7.461. Assuming that the amount of coverage of the specific bond can be seen as a question of
administration, the Panel observes that Panama appears to suggest that a "reasonable" amount for
the specific bond would be that which covered the difference between the taxes already paid and
the taxes payable, on the basis of the threshold. The Panel recalls that, from Col ombia's point of
view, the values of the transactions covered by the specific bond are subject to a suspicion of
underinvoicing for money laundering. Therefore, they could be subject to a valuation dispute and
the correction of the declared prices. Panama 's argument appears to disregard the fact that at the
time of posting the specific bond it is impossible to know what will be the exact amount of the taxes
payable if the declared prices are corrected, apart from the need to cover any penalties and interest

632 Panama's second written submission as respondent, paras. 321-322.
633 Panama's second written submission as respondent, paras. 323-324.
634 Panel Reports, China – Raw Materials, para. 7.696. (The Appellate Body declared the Panel's analysis
to be moot and of no legal effect on procedural grounds.)
635 Colombia's response to Panel question No. 17(b), para. 70.
636 Panama's second written submission as respondent, paras. 325-328.

that might be incurred, which are also unknown at the time of posting the specific bond. Therefore,
the Panel considers that Panama has failed to demonstrate that the amount of coverage of the bond
chosen by Colombia necessarily gives rise to the unreas onable administration of Decree
No. 2218/2017.
7.462. For these reasons, the Panel rejects Panama's argument that the specific bond requirement
is not being administered reasonably because of its amount of coverage.
7.463. In conclusion, with respect to the aspects of the specific bond that Panama characterizes as
the "first level of administration", the Panel concludes that Panama has failed to demonstrate that
the specific bond requirement in Decree No. 2218/2017 is administered unreasonably, in a manner
inconsistent with Article X:3(a) of the GATT 1994.
7.4.5.2.3.3 Panama's claims with respect to the "second level of administration"
Claim with respect to the lack of uniform administration
7.464. Panama claims that the specific bond requirement is not administered uniformly because
Colombia delegates the processing and management of the specific bond to banks and insurance
companies, while omitting to establish general criteria for observance by these third parties of the
requirements for applying for the specific bond and the considerations relevant to its approval.
Panama maintains that, consequently, each bank or insurance company determines for itself the
management charges, the credit requirements for the importer, and the relevant factors for
determining whether the granting of a specific bond should be approved or refused.637
7.465. Colombia maintains that Panama does not specify the uniformity criterion in question.
Colombia explains that the fact that the bond is provided by insurance companies or banks is a
logical consequence of the nature of the instrument (insurance contract) and that if instruments of
this kind were prohibited by Article X:3(a) of the GATT, then Article 13 of the Customs Valuation
Agreement, Article VII of the GATT 1994 and Article 7 of the Trade Facilitation Agreement would be
inapplicable. Colombia also maintains that the financial system operates freely and that insurance
companies and banks accord similar treatment in respect of persons similarly situated, depending
on the risk.638
7.466. The Panel agrees with other previous panels in considering that the uniformity requirement
calls for "uniformity of treatment in respect of persons similarly situated" 639 and consistent and
predictable application of the laws. 640 Thus, the obligation concerning uniform administration
imposed by Article X:3(a) of the GATT 1994, in the specific circumstances of this dispute, requires
Colombia to administer the specific bond requirement in Decree No. 2218/2017 consistently and
predictably, by according uniform treatment to all the covered products that are in a similar situation.
7.467. The Panel is not convinced that the fact of requiring that the specific bond for guaranteeing
the payment of customs obligations be obtained from a bank or an insurance company is intrinsically
inconsistent or unpredictable and therefore inconsistent with Members ' obligations. A bank or
insurance company bond is established by means of a contractual relationship between private
parties, and it is customary for the bank or insurance company to scrutinize the particular situation
of the applicant in order to decide, firstly, whether to grant a bond and, secondly, the amount it will
charge for that service. It does not seem to the Panel that, in the light of Panama's arguments and
in the specific circumstances of this dispute, the requirement that the specific bond be administered
uniformly can be interpreted as requiring that Colombia establish a level of specific financial
regulation for banking or insurance institutions or limit the freedom of those financial institutions to
take decisions with respect to their potential customers, for the purpose of ensuring uniformity of
specific treatment. It is the Panel 's opinion that in these circumstances uniformity of treatment
relates to requiring the same kind of bond, that is, a bank or i nsurance company bond, for all
transactions covered by the obligation to post the bond.

637 Panama's second written submission as respondent, paras. 330-331.
638 Colombia's additional written submission, paras. 124-127.
639 Panel Report US – Stainless Steel (Korea), para. 6.51.
640 Panel Report Argentina – Hides and Leather, para. 11.83.

7.468. Therefore, the Panel rejects Panama 's argument that the specific bond requirement is not
administered reasonably because Colombia delegates the processing and manageme nt of the
specific bond to banks and insurance companies.
7.469. In conclusion, with respect to the aspect of the specific bond which Panama describes as
being the "second level of administration", this Panel concludes that Panama has failed to
demonstrate that t he specific bond requirement in Decree No. 2218/2017 is administered in a
non-uniform manner, inconsistently with Article X:3(a) of the GATT 1994.
Claim with respect to the lack of reasonable administration
7.470. Panama claims that the specific bond requirement is not administered reasonably because
of the requirement that the bond be obtained from a bank or insurance company. For Panama, there
is no reason why importers should have to lodge a bank or insurance company bond rather than,
for example, a monetary de posit, or not be given the opportunity to choose the kind of bond they
wish to lodge in order to provide a sufficient guarantee of payment of the principal obligation, as
allowed by Decree No. 390/2016.641
7.471. Colombia maintains that bonds are an instrument used by many of the world 's customs
authorities to ensure the payment of tariffs and other taxes and that bank bonds and policies
covering compliance with legal provisions are suitable instruments, widely used by importers and
traders, for providing guarantees vis-à-vis the customs authority.642
7.472. As previously explained, the Panel agrees with past panels in considering that, in the specific
circumstances of this dispute, the reasonable administration obligation imposed by Article X:3(a) of
the GATT 1994 requires C olombia to administer the specific bond requirement in
Decree No. 2218/2017 in a manner appropriate for the circumstances and based on rationality.
7.473. The Panel recalls that the obligation contained in Article X:3(a) of the GATT 1994 relates to
the administration of laws and regulations, rather than to their substantive content.643 Accordingly,
the uniformity requirement relates not to the substance of Decree No. 2218/2017, but to its
administration. In this respect, a claim with regard to the kind of bond reque sted has to do with a
substantive characteristic of the specific bond rather than with the way in which the specific bond is
administered.644 Even if it could be seen as a question of administration, the Panel observes that
Colombia has explained why it considers that requiring the specific bond to be obtained from a bank
or insurance company could help in achieving the objective of Decree No. 2218/2017 as follows:
"[t]he request for bonds in the knowledge that there is a prior risk study by the insurance company
or bank is effective in combating technical smuggling by underinvoicing, customs fraud and money
laundering, because the importers have to undergo a personal risk investigation by the insurance
company or bank."645 Moreover, the Panel agrees with Colombia that bank and insurance company
bonds are instruments used by many of the world 's customs authorities to ensure the payment of
customs obligations. In the light of these explanations, the Panel does not find any lack of rationality
in the regulatory choice made by Colombia.
7.474. Therefore, the Panel rejects Panama 's argument that the specific bond requirement is not
administered reasonably because the bond has to be obtained from a bank or insurance company.
7.475. In conclusion, with respect to the aspect of the specific bond which Panama describes as the
"second level of administration", this Panel concludes that Panama has failed to demonstrate that
the specific bond requirement in Decree No. 2218/2017 is administered unreasonably, in a manner
inconsistent with Article X:3(a) of the GATT 1994.

641 Panama's second written submission as respondent, paras. 332-333.
642 Colombia's additional written submission, paras. 124-127.
643 Appellate Body Report, EC – Poultry, para. 115. See also Appellate Body Report, EC – Selected
Customs Matters, para. 219.
644 Appellate Body Reports, EC – Bananas III, para. 200; and EC – Selected Customs Matters,
para. 219.
645 Colombia's response to Panel question No. 19(c), para. 86.

7.4.5.2.4 Conclusion concerning the consistency of the administration of the specific bond
with Article X:3(a) of the GATT 1994
7.476. For all the reasons given above, the Panel concludes that Panama has failed to demonstrate
that the specific bond provided for in Article 7 of Decree No. 2218/2017 is administered in a
non-uniform, non -impartial or unreasonable manner, inconsistently with Article X:3(a) of the
GATT 1994.
7.4.6 The question of whether the administration of the special import regime is
inconsistent with Article X:3(a) of the GATT 1994
7.4.6.1 Arguments of the parties
7.4.6.1.1 Panama
7.477. In its panel request, Panama claimed that the special import regime is not applied in a
uniform, impartial and reasonable manner, and is therefore inconsist ent with Article X:3(a) of the
GATT 1994. 646 Subsequently, Panama argued that the administration of the risk management
system and customs controls via the special import regime is inconsistent with Article X:3(a) of the
GATT 1994.647
7.478. Panama maintains that Dec ree No. 390/2016 is the Colombian Customs Statute and
therefore a regulation of general application covered under Article X:1 of the GATT 1994. Panama
asserts that, by means of the special import regime, Colombia administers Articles 493 and 486 of
Decree No. 390/2016, which govern the risk management system and customs control.648
7.479. Panama argues that the text of Article 1 of Decree No. 1745/2016 and
Decree No. 2218/2017 makes it clear that their purpose is to give practical effect to the risk
management syste m and customs control, where it is a question of imports covered by the
corresponding decrees.649
7.480. Panama points out that the administration of the risk management system and customs
controls comprises two levels: a first level, which concerns the determinati on and regulation of the
mechanisms for strengthening the risk management system and customs control in the face of
possible customs fraud situations associated with the relevant imports, that is, the requirements of
the special import regime such as documentary requirements, the participation of import operations
observers in customs controls, the limitation of the importer's capacity for action or horizontal rigidity
of the regime, and the specific bond; and a second level, which concerns the specific administrative
processes for satisfying these requirements, such as, for example, the procedures necessary for
establishing a specific bond, which partially involves the intervention of third parties (banks or
insurance companies, translators, lawyers and registry offices).650
7.481. With respect to the first level of administration , Panama claims, first of all, that the risk
management system and customs controls are not administered uniformly because, given that the
thresholds are determined on the basis of conversat ions between government officials and the
private sector, the customs risk management system is administered arbitrarily. Panama notes that,
for fixing the thresholds, Colombia uses the four -digit tariff heading, despite knowing that each
heading comprises a multiplicity of relevant products, so that Colombia is according the same
treatment to dissimilar products which have in common only the fact t hat they all fall under
heading 62.03.651

646 Panama's request for the establishment of a panel, WT/DS461/22.
647 Panama's second written submission as respondent, para. 339.
648 Panama's second written submission as respondent, paras. 340-344; and response to Panel question
No. 63.
649 Panama's second written submission as respondent, paras. 345-346; and response to Panel question
No. 63.
650 Panama's second written submission as respondent, para. 348.
651 Panama's second written submission as respondent, para. 351.

7.482. Panama also claims that applying the specific bond requirement only to imports with prices
equal to or lower than the thresholds and not to imports of other products liable to underinvoicing
and smuggling, means that the specific bond is not being uniformly administered.652
7.483. Panama maintains that concerns that Colombia is treat ing products with different values in
the same way are also generated by the application of the system of risk management and customs
controls, since when the value of the imported goods is less than the threshold price, Colombia
disregards the real (lower ) value of the goods and uses the (higher) threshold price, to obtain an
artificially high base price which must then be multiplied by 200%.653
7.484. Secondly, Panama claims that the risk management system and customs controls are not
administered impartially, because of the participation of import operations observers in the customs
control of the covered goods under Article 3 of Decrees No. 1745/2016 and No. 2218/2017.654
Panama maintains that the lack of inherent fairness of this aspect is sufficient to demonstra te the
existence of partial administration, due to the following:
a. the import operations observer represents the interests of the local industry association655;
b. the fees of the import operations observer are borne by the industry association so that
there is a contractual relationship, which places it objectively in a situation of conflict of
interest and seriously compromises the impartiality of any action taken during customs
controls on the relevant goods656;
c. considering the observer's experience and knowledge, it is reasonable to assume that his
or her alerts, technical opinions and recommendations will be taken seriously into account
by the customs officer responsible for customs inspection in his assessment of the
goods657;
d. the DIAN is obliged to inform the Joint Commission (which includes the association) about
the actions of the import operations observers658;
e. an expert representing the associations can submit an alert, technical opinion or
recommendation to the customs officer responsible for customs inspection systematically
as part of the decision-making structure659;
f. the import operations observers are able to raise alerts to the customs authority, closely
observe the conduct of the process of inspection or examination of the goods, offer
technical opinions and make recommendations they consider relevant to the inspector in
charge, so that the probability of the domestic industry interfering in the process of
verification of the imported goods is high660;
g. the import operations observer forms part of the DI AN's decision -making mechanism,
since the powers granted to the observer by the Colombian legislation contribute to the
DIAN's decision-making with respect to the release of the goods661; and
h. Panama has concerns with respect to the use which the import operations observer might
make of certain confidential information contained in some of the supporting documents
for the import declaration, such as the list of distributors and the certification of value,
storage and distribution.662

652 Ibid. para. 352.
653 Panama's second written submission as respondent, para. 353.
654 Ibid. paras. 354-358.
655 Panama's second written submission as respondent, para. 359.
656 Ibid. para. 360.
657 Ibid. paras. 361-363.
658 Panama's second written submission as respondent, para. 364.
659 Panama's second written submission as respondent, para. 365.
660 Panama's second written submission as respondent, paras. 366-367.
661 Ibid. para. 368.
662 Ibid. para. 369.

7.485. With respect to the specific bond requirement as an element of the special regime, Panama
also argues that Colombia 's presumption that the value of the customs taxes together with any
penalties (principal obligations) will always be equivalent to 200% of the threshold multiplied by the
quantity of goods in the corresponding shipment is a biased and unfair opinion and therefore results
in impartial administration.663
7.486. Thirdly, Panama claims that the risk management system and customs controls are not
administered in a reasonable manner because the requirement for an apostilled or legalized official
translation of the certification of existence abroad for each shipment is unreasonable. For Panama,
there is no apparent reason why such certification should be required for each shipment or why
copies should not be acceptable.664
7.487. Panama also alleges lack of reasonable administration because the requirement to provide
certification of intent ion to sell is unreasonable. Panama considers that the sales invoices already
ensure that the supplier declared by the importer is really the source of the imported products and
are much more relevant for obtaining this information than the certification of intent ion to sell
because they provide evidence of the final outcome of the transaction.665
7.488. Furthermore, Panama claims lack of reasonable administration due to the rigidity of the
special import regime, since importers cannot make changes in the quantity, price or port of entry
any later than 30 days before importation and since, in the event of these parameters being
modified, a declaration of correction will not be accepted, and the goods will be seized. Panama
questions what would be the sense of requiring such detailed information with respect to the quantity
and price of the goods 30 days in advance, considering that the advance declaration serves to give
early notice of the same information.666
7.489. In addition, Panama maintains that the special regime set out in Decree No. 2218/2017 is
worse, owing to the fact that non -compliance with the documentary requirements results in the
seizure of the goods, without the possibility of their being legalized, recovered or reshipped, so that
a minor error can result in the loss of the goods.667
7.490. With respect to the specific bond requirement as an element of the special import reg ime,
Panama maintains that this requirement is not being administered reasonably, since it is necessary
to post a specific bond in those cases in which there is already a general bond.668
7.491. With respect to the second level of administration of the risk managem ent system and
customs controls, Panama claims that the risk management system and customs controls are not
being administered reasonably because Colombia is delegating the processing and management of
the specific bond to banks and insurance companies, while omitting to establish general criteria for
compliance by these third parties with the requirements for applying for a specific bond and the
factors relevant for its approval.669
7.4.6.1.2 Colombia
7.492. With respect to Panama 's claim concerning the uniform administration requirement,
Colombia maintains that the methodology for calculating the thresholds was based on the use of
technical criteria and was not, as asserted by Panama, agreed with the private sector. Colombia
states that the methodology was socialized with the private sector, but at no point was determined
jointly with the private sector, and the criteria used were not the result of chance.670
7.493. Colombia also maintains that the factual circumstances in the textile and footwear sector
are substantially different from those in other sectors exposed to illicit trading. Colombia maintains
that the specific bond is of special importance for fighting money laundering through underinvoicing

663 Panama's second written submission as respondent, para. 371.
664 Panama's second written submission as respondent, paras. 372-373.
665 Panama's second written submission as respondent, para. 374.
666 Panama's second written submission as respondent, paras. 375-381.
667 Panama's second written submission as respondent, paras. 382-387.
668 Panama's second written submission as respondent, para. 388.
669 Panama's second written submission as respondent, para. 390.
670 Colombia's additional written submission, para. 129.

and that other kinds of smuggling require different strategies. Colombia asserts that Panama's claim
disregards the technical process and practical reasons that led to the measure being designed to
have a limited scope of application. Colombia also submits that the Colombian authorities were
unable to establish that money l aundering, if not customs fraud, is involved in other types of
underinvoicing, and that Colombia has demonstrated its problem with money laundering through
the underinvoicing of footwear, textiles and clothing.671
7.494. Colombia also points out that the measure was modified by Decree No. 2218/2017 and that,
under this new Decree, the value of the bond is determined in accordance with the difference
between the import value and the threshold, so that Panama 's claim is not relevant in the light of
the new measure.672
7.495. With respect to Panama 's claim concerning the impartial administration requirement,
Colombia maintains that Article 183 of Decree No. 390/2016 establishes that the import operations
observers do not represent the interests of traders opposed to importers or exporters, and that the
trade associations which propose such observers are also importers or exporters of the goods.
Colombia adds that the observers are selected from lists of candidates submitted by the associations,
approved by the Joint National Commission for Tax and Customs Management and that their function
is limited to closely observing the conduct of the process of evaluating a specific type of goods and
providing their collaboration and cooperation when requested by the customs authority, including a
technical report with respect to the tariff classification of the product, the identification and
description of the product, and the quantity, weight and price of the goods. Colombia indicates that,
in short, the observer provides support for the c ustoms inspector in carrying out the examination
process.673
7.496. Colombia adds that the function of the import operations observers is geared to offering
support for the work of combating smuggling, underinvoicing and any other kind of practice that
might constitute customs fraud, and that if what Panama means to say is that the risk management
system is discriminatory because it detects those presenting a risk of committing customs fraud by
means of underinvoicing and money laundering, it would be right, but thi s kind of discrimination is
not contrary to WTO rules.674
7.497. Colombia also asserts that the role of the observers has been envisaged in the Colombian
customs legislation since well before Decree No. 390/2016; that the observers are available for all
sorts of operations and are not restricted to any particular sector; that the use of observers is totally
voluntary; that they operate at the request of the importing trade association; that the association
pays their fees; and that in no way do they constitute a req uirement for the importation of goods.
Colombia argues that, for these reasons, the role of the observer in the importation of goods covered
under Decrees No. 1745/2016 and No. 2218/2017 does not favour one party or one side more than
another, is objective, unbiased, fair and just, as evidenced by Exhibits COL-16 and COL-21.675
7.498. With respect to Panama 's claim concerning the reasonable administration requirement,
Colombia states that it has amply demonstrated the necessity and reasonableness of the
requirement for an apostilled or legalized official translation of the "certification of existence abroad"
for each shipment in its fight against illicit trading. Colombia maintains that it is important to have
certification of existence because many front companies a broad offer to carry out fictitious
transactions and customs cooperation is currently insufficient to verify the existence of a foreign
supplier.676
7.499. With regard to the requirement to furnish certification of intention to sell, Colombia says that
it has shown that the sales invoice can easily be forged and does not provide the degree of certainty
that Colombia seeks to ensure in controlling its imports, and that numerous abuses in connection

671 Colombia's additional written submission, para. 130.
672 Colombia's additional written submission, para. 131.
673 Colombia's additional written submission, paras. 133-135.
674 Colombia's additional written submission, paras. 136-137.
675 Colombia's additional written submission, paras. 138-139.
676 Colombia's additional written submission, para. 141.

with the provision of false information in import documents have led Colombia to request more
information.677
7.500. With respect to Panama 's argument concerning the rigidity of the system, Colombia
maintains that under the Colombian customs regime it is possible to correct and amend a certain
kind of minor errors in the import docu ments, so that Panama is misreading the legislation in
question, in particular Article 234 of Decree No. 2685/1999, which permits the correction of the
import declaration.678
7.501. With regard to reshipment not being permitted and the seizure of the goods, Colombi a
maintains that Panama is forgetting that these goods are used for the purpose of carrying out illicit
trading operations and that allowing reshipment of the goods would lead to the same goods entering
through a different Colombian port with false papers. Colombia adds that, considering that the
objective of the measure and the reason for it is the control of goods deriving from illegal
transactions, the prohibition on reshipment is reasonable in the light of its objective, cause and
basis. Colombia adds t hat if Panama's claim is that the risk management system is unreasonable
because it makes it possible to detect violators of Colombian customs law, Panama 's argument
simply demonstrates the risk that Colombia is trying to prevent, namely that of there being importers
who go on deliberately violating the Colombian legislation by laundering money and doing violence
to society.679
7.4.6.2 Analysis by the Panel
7.502. As indicated in paragraph 7.143 above, the Panel's task will be to determine whether, as
Panama claims, the special import regime is not applied in a uniform, impartial and reasonable
manner and is therefore inconsistent with Article X:3(a) of the GATT 1994.680
7.503. As explained in section 7.4.3.1 above, the Panel will begin by examining whether Panama
has identified a legal instrument of the kind described i n Article X:1 of the GATT 1994. If so, it will
proceed to determine whether Panama has demonstrated that the legal instrument identified is being
administered by Colombia. If the reply to this last question is also affirmative, it will examine whether
Panama has demonstrated that the legal instrument identified is not being administered in a uniform,
impartial or reasonable manner.
7.4.6.2.1 The question of w hether Panama has identified a legal instrument of the kind
described in Article X:1 of the GATT 1994
7.504. The first question to be examined by the Panel is whether the legal instruments identified
by Panama are of the kind described in Article X:1 of the GATT 1994. As the Panel has already
explained with respect to the specific bond, Panama has identified Decree No. 390/2016 and, in the
alternative, Decree No. 2218/2017, as legal instruments of the kind described in Article X:1 of the
GATT 1994.681
7.505. For the same reasons as set out in its analysis concerning the specific bond in
Section 7.4.5.2.1 above, the Panel considers that Panama has met its initial burden of identifying a
legal instrument of the kind described in Article X:1 of the GATT 1994.
7.4.6.2.2 The question of w hether the legal instrument identified by Panama is being
"administered" by Colombia
7.506. Having established that the legal instruments identified by Panama fall within those
described in Article X:1 of the GATT 1994 and hence within the scope of Article X:3(a), the Panel
will examine whether Panama has demonstrated that those instruments are being "administered"
by Colombia.

677 Colombia's additional written submission, para. 142.
678 Colombia's additional written submission, para. 143.
679 Colombia's additional written submission, paras. 144-146.
680 Panama's request for the establishment of a panel, WT/DS461/22.
681 Panama's second written submission as respondent, paras. 340-344; and response to Panel question
No. 63.

7.507. As observed in Section 7.4.4 above, the possible inconsistency of the administration of the
general customs regime through the special import regime with Article X:3(a) of the GATT 1994
does not fall within the Panel's terms of reference. Irrespective of the foregoing, Panama's argument
that, by means of the special import regime, Colombia is administering Articles 493 and 486 of
Decree No. 390/2016, which regulate the risk management system and customs control, is not
convincing.682 Panama argues that the text of Article 1 of Decrees No. 1745/2016 and
No. 2218/2017 makes it clear that their purpose is to give practical effect to the risk management
system and customs control, where it is a question of imports covered by the corresponding
decrees.683
7.508. With respect to customs control, Article 486 of Decree No. 390/2016 684 provides that
customs control comprises a series of measures to be applied in order to ensure fulfilment of the
regulations within the remit of the customs administration, that customs control s shall bear on
foreign trade operations and the parties involved therein, and that such controls shall be carried out
selectively, using the most effective technological means, inspection equipment and risk
management techniques.
7.509. Article 486 further provi des that customs controls may in particular consist in examining
goods, taking samples, verifying customs declaration data and the existence and authenticity of
supporting documents, examining the accounts and other records of foreign trade operators,
inspecting means of transport, inspecting luggage and goods carried by persons, and carrying out
investigations and other similar acts.
7.510. Article 1 of Decree No. 2218/2017, entitled "Purpose", provides that the said Decree
"establishes mechanisms for strengthening the system of risk management and customs control in
the face of possible situations of customs fraud associated with imports of fibres, yarns, textiles,
clothing and footwear, irrespective of the country of origin and/or provenance."
7.511. The Panel notes that, although Article 486 defines the term customs controls and describes
the form that such customs controls can take, it does not specifically establish a form of customs
control that has to be applied.
7.512. In the Panel's opinion, it is Decree No. 2218/2017 itself which establishes a special system
of customs control to be applied by the Colombian customs authorities with respect to imports of
the products covered. In other words, the customs control system that applies to imports of the
products covered exi sts, in essence, by virtue of Decree No. 2218/2017, and not by virtue of
Article 486 of Decree No. 390/2016, as Panama claims.
7.513. With respect to the risk management system, Article 493 of Decree No. 390/2016685
provides that the DIAN: a) may use risk management practices and procedures in order to prevent

682 Panama's second written submission as respondent, paras. 340-344; and response to Panel question
No. 63.
683 Panama's second written submission as respondent, paras. 345-346; and response to Panel question
No. 63.
684 Article 486 of Decree No. 390/2016 provides as follows:
Customs control. Customs control comprises a series of measures to be applied in order to
ensure fulfilment of the regulations within the remit of the Customs Administration.
Customs controls shall bear on foreign trade operations and the parties involved therein. Such
controls shall be those that are essential to achieve the institutional objectives and shall be
carried out selectively, using the most effective technological means, inspection equipment and
risk management techniques to optimize the administrative effort. Electronic techniques shall be
used for exchanging information between customs administrations and with other official bodies.
Customs controls may in particular consist in examining goods, taking samples, verifying
customs declaration data and the existence and authenticity of supporting documents, examining
the accounts and other records of foreign trade operators, inspecting means of transport,
inspecting luggage and goods carried by persons, and conducting investigations and other similar
acts.
685 Article 493 of Decree No. 390/2016 provides as follows:
Risk management system. The National Customs and Excise Directorate may use risk
management practices and procedures with a view to preventing or combating the use or
directing of trade for purposes which undermine national security or breach customs legislation.
To this end, and with due observance of the rules on habeas data and the handling of personal
information, the National Customs and Excise Directorate shall use databases for holding

or combat the use or directing of trade for purposes which undermine national security or breach
customs legislation; b) shall use databases for holding information on, among other things,
operations and persons acting before it, in order to assess the security of the foreign trade logistics
chain; and c) shall, in implementing the risk management system to ensure the enforcement of
customs obligations, focus its control activities on high -risk operations. Article 493 of Decree
No. 390/2016 accordingly allows for the implementation of risk -monitoring mechanisms,
establishment of control measures at goods entry and exit points, and use of other duly recognized
international mechanisms.
7.514. Specifically with respect to, among other things, the control of money laundering, Article 493
of Decree No. 390/2016 provides for monitoring of the cross-border movement of high-risk goods
and allows for controls to be carried out within the framework of multilateral agreements ratified by
the Colombian Government.
7.515. The Panel observes that, although Article 493 authorizes the DIAN to use risk management
practices and procedures and provides for the form that such risk management can take, it does not
specifically establish a form of risk management that has to be applied.686
7.516. In the Panel's view, it is Decree No. 2218/2017 itself which establishes a special risk
management methodology to be applied by the Colombian customs authorities. In other words, the
risk management methodology that applies to imports of the products covered exists, in essence,
by virtue of Decree No. 2218/2017, and not by virtue of Article 486 of Decree No. 390/2016.
7.517. Decree No. 2218/2017 establishes a special regime for a specific group of products, namely
yarns, fibres, textiles, clothing, made up textile articles and footwear with prices below the
thresholds, which contains a set of special rules applicable to the import of said products and
including a special risk management and customs control methodology. This special regime exists
by virtue of Decree No. 2218/2017 and not by virtue of Decree No. 390/2016, as Panama claims.
Hence, the administration by the DIAN of this special import regime constitutes an administration of
Decree No. 2218/2017, and not an administration of Decree No. 390/2016.
7.518. Panama has argued, at least with respect to the specific bond, that, in any case, if the Panel
were to consider that Decree No. 2218/2017 is not an act administering Decree No. 390/2016, this
would mean that Decree No. 2218/2017 imposes a substantive requirement and, at the same time,
the specific parameters for its administration.
7.519. The Panel notes in this regard that Panama has, under Article X:3(a) of the GATT 1994,
challenged Decree No. 2218/2017 as a legal instrument which regulates the application of the special
import regime, and not the way in which the Colombian customs authorities apply or administer that
regime in practice. In fact, Panama has not furnished evidence as to how the Colombian customs

information on, among other things, operations and persons acting before the Entity, in order to
assess the security of the foreign trade logistics chain.
In implementing the risk management system, the National Customs and Excise Directorate
shall, with a view to ensuring the enforcement of customs obligations, focus its control activities
on high-risk operations, in the interests of safeguarding and facilitating international trade. It
may accordingly implement risk-monitoring mechanisms, establish control measures at goods
entry and exit points, and use other duly recognized international mechanisms.
With respect to environmental protection, health protection, agricultural health, border security,
preventing the proliferation of weapons, controlling money laundering and the funding of
terrorism, the cross-border movement of high-risk goods shall be monitored. Such monitoring
may be carried out within the framework of multilateral agreements ratified by the Colombian
Government.
Any allusion that other customs regulations may make to the risk administration system is to be
understood as referring to the risk management system established in this Decree.
Paragraph. The risk management system of the National Customs and Excise Directorate may
be coordinated with the risk management systems of the other control bodies related to customs
and foreign trade operations, such as Migración Colombia, ICA [Colombian Agricultural Institute],
INVIMA [National Food and Drug Surveillance Institute] and the National Police.
686 The Panel notes that whereas Article 493 of Decree No. 390/2016 provides that any allusion that
other customs regulations may make to the risk administration system is to be understood as referring to the
risk management system established in that decree, it does not see in said decree a risk management system
to be administered within the meaning of Article X:3(a) of the GATT 1994.

authorities apply the special import regime in practice. Panama argues that various aspects of the
special import regime, in Decree No. 2218/2017, give rise to the non -uniform, partial or
unreasonable administration of the risk management and customs control system under that regime.
7.520. The Panel recalls that it is possible to challenge a legal instrument as such under
Article X:3(a) of the GATT 1994, when the substantive content of that legal instrument regulates
the administration of the rules covered by Article X:1 of the GATT 1994, but that, to establish its
claim, the complainant must discharge the burden of substantiating how and why those provisions
necessarily lead to impermissible administration of the legal instrument in question. The Panel
cannot therefore exclude that some aspects of the special import regime in Decree No. 2218/2017
might necessarily lead to the non-uniform, non-impartial or unreasonable administration of that legal
instrument, and, in particular, of its risk management and customs control system. An examination
therefore follows as to whether Panama has demonstrated that the aspects of the special import
regime in Decree No. 2218/2017 that it is challenging necessarily lead to impermissible
administration of the provisions governing that regime, as contained in Decree No. 2218/2017.
7.4.6.2.3 The question of whether the special import regime in Decree No. 2218/2017 is
not being administered uniformly, impartially and reasonably
7.4.6.2.3.1 Introduction
7.521. As previously explained, Panama has made a series of claims of inco nsistency with
Article X:3(a) of the GATT 1994, with respect to various aspects of the customs control and risk
management system of the special import regime, as contained in Decree No. 2218/2017.
7.522. As in the case of the specific bond, Panama has identified two levels of administration with
respect to the customs control and risk management system of the special import regime: (a) a first
level of administration, which, according to Panama, concerns the determination and regulation of
the mechanisms for strengthening the risk management system and customs control in the face of
possible customs fraud situations associated with the relevant imports, that is, the requirements of
the special import regime such as documentary requirements, the participation of import operations
observers, the horizontal rigidity of the regime, and the specific bond; and (b) a second level of
administration, which, according to Panama, concerns the specific administrative processes for
satisfying these requirements, such as, for ex ample, the procedures necessary for establishing a
specific bond, which partially involves the intervention of third parties (banks or insurance
companies, translators, lawyers and registry offices).687
7.523. Without entering into an examination of the relevance o f the classification used by
Panama, and with a view to facilitating the analysis of the various claims that have been made, the
Panel will use the classification proposed by Panama for the purposes of its analysis.
7.4.6.2.3.2 Panama's claims with respect to the "first level of administration"
Claim with respect to the lack of uniform administration
7.524. Panama makes various claims according to which the special import regime, insofar as the
risk management system and customs controls are concerned, is not being administe red uniformly
because: a) the thresholds are determined on the basis of conversations between government
officials and the private sector; b) the thresholds are determined on the basis of four -digit tariff
headings; c) the specific bond applies only to the importation of textiles and footwear classified
under headings 61, 62 and 64 of Colombia 's Customs Tariff at prices equal to or lower than the
established thresholds; and d) the amount of coverage of the bond disregards the real value of the
goods and uses the threshold price. The Panel will examine each of these arguments below.
7.525. With respect to the first argument, Panama claims that the administration of the risk
management system and customs controls of the special import regime is not uniform because,

687 Panama's second written submission as respondent, para. 348.

given that the thresholds are determined on the basis of conversations between government officials
and the private sector, the customs risk management system is administered arbitrarily.688
7.526. For its part, Colombia maintains that the methodology was based on the use of technical
criteria and was not, as asserted by Panama, agreed with the private sector. Colombia states that
the methodology was socialized with the private sector, but at no point was determined jointly with
the private sector and the criteria used were not the result of chance.689
7.527. As previously explained, the Panel agrees with past panels in considering that the uniformity
requirement commits Members to "uniformity of treatment in respect of persons similarly
situated"690 and to consistent and predictable application of the laws.691
7.528. It is this Panel's understanding that Panama's argument with respect to the lack of uniformity
of the risk management system and customs controls relates to the lack of uniformity in the
Colombian customs legislation, owing to the fact that, in Panama's view, the thresholds of the special
import regime were established arbitrarily. As observed in Section 7.4.4 above, the possible
inconsistency of the administration of the general customs regime with Article X:3(a) of the
GATT 1994 does not fall within the Panel 's terms of reference. Moreover, as explained in
paragraph 7.507 above, Panama's argument according to which Articles 483 and 496 of Decree
No. 390/2016 are being administered through Decree No. 2218/2017 is not convincing.
7.529. In the Panel's opinion, the ob ligation concerning uniform administration in the specific
circumstances of this dispute requires Colombia to administer the risk management and customs
control system of the special import regime in Decree No. 2218/2017 consistently and predictably,
by according uniform treatment to all the covered operations that are in a similar situation. It does
not seem to the Panel that the uniform administration requiremen t of Article X:3(a) of the
GATT 1994 obliges Colombia to establish the thresholds of the special import regime in a particular
manner.
7.530. Furthermore, the Panel considers that the fact that Colombia announces the thresholds,
which correspond to the commercial risk profiles determined by the DIAN, may help to give greater
predictability to the special import regime.
7.531. As to the evidence submitted by Panama, the Panel does not consider that a newspaper
article relating to textiles, which reports that Colombia's Minister of Trade, Industry and Tourism
stated that "[t]he Government and textile companies are e xploring tools to assist the sector in the
area of customs control, as has been done in the clothing sector"692 is sufficient evidence to establish
that the thresholds are determined on the basis of conversations between government officials and
the private sector.
7.532. In any event, as already explained above, a claim with respect to the determination of the
thresholds has to do with a substantive characteristic of the special import regime rather than with
the way in which that regime is administered.
7.533. For the above reasons, the Panel rejects Panama's argument that the risk management
system and customs controls of the special import regime are not uniformly administered because

688 Panama presents as evidence an article published in the Vanguardia newspaper dated
17 August 2017, referring solely to textiles (yarns), in which the following is stated:
"The Government and textile companies are exploring tools to assist the sector in the area of
customs control, as has been done in the clothing sector", said the Minister.
Textile companies and the Government will work with the DIAN on the decree, which will set a
price threshold for the importation of textile products such that those entering below the
specified threshold will be subject to control by the customs authorities.
The Minister went on to explain that "[t]he limit has not yet been set, but the Ministry is working
on it as of now. In due course, the draft decree will be published for 15 days for comments by
the various stakeholders, after which, following any observations and adjustments, it will be
forwarded for the respective signatures".
("New decree on customs control for textiles to be issued", Vanguardia (Exhibit PAN-65)).
689 Colombia's additional written submission, para. 129.
690 Panel Report, US – Stainless Steel (Korea), para. 6.51.
691 Panel Report, Argentina – Hides and Leather, para. 11.83.
692 "New decree on customs control for textiles to be issued", Vanguardia (Exhibit PAN-65).

the thresholds are determined on the basis of conversations between government offic ials and the
private sector.
7.534. Panama also argues as to a lack of uniformity in the administration of the risk management
system and customs controls because the thresholds are determined on the basis of four-digit tariff
headings. According to Panama, Colombia accords the same treatment to dissimilar products which
have as their only common feature the fact of coming under heading 62.03.693 The Panel recalls that
it has already addressed a similar argument with respect to the specific bond. For the same reasons
as set out in paragraphs 7.439-7.441 above, in the context of the claims relating to the specific
bond, the Panel rejects Panama's argument.
7.535. Panama also claims that the fact of applying the specific bond requirement only to impo rts
with prices equal to or lower than the thresholds and not to imports of other products liable to
underinvoicing and smuggling, means that the specific bond, as an aspect of the special import
regime, is not being administered uniformly. 694 The Panel refe rs to its findings on this matter in
paragraphs 7.427-7.430 above, in the context of the claims concerning the specific bond, which are
equally applicable to consideration of the bond as part of the special import regime. The Panel
therefore rejects Panama's argument, in the context of the claims concerning the risk management
system and customs controls, that the specific bond requirement is not administered in a uniform
manner, owing to the fact that it applies solely to textiles and footwear under headings 61, 62 and
64 with prices equal to or lower than the thresholds, and not to other products similarly situated.
7.536. Panama maintains that concerns that Colombia is treating products with different values in
the same way are also generated by the application of the system of risk management and customs
controls, since when the value of the imported goods is less than the threshold price, Colombia
disregards the real (lower) value of the goods and uses the (higher) threshold price, to obtain an
artificially high base price which must then be multipl ied by 200%.695 For the same reasons as set
out in paragraphs 7.433-7.436 above in connection with the claims concerning the specific bond,
the Panel rejects Panama's argument, in the context of the claims concerning the risk management
system and customs controls, that the specific bond requirement is not being administered uniformly
because of the bond's amount of coverage.
7.537. In conclusion, with respect to the aspects of the special import regime which Panama
characterizes as the "first level of administration", the Panel concludes that Panama has failed to
demonstrate that the risk management system and customs controls of the special import regime,
as contained in Decree No. 2218/2017, are administered non -uniformly, in a manner inconsistent
with Article X:3(a) of the GATT 1994.
Claim with respect to the lack of impartial administration
7.538. Panama makes various claims according to which the special import regime is not being
administered impartially owing to: a) the participation of import operations observers in customs
controls; and b) the use of the 200% percentage for calculating the coverage amount of the specific
bond as part of the special import regime. The Panel will examine each of these arguments below.
7.539. With respect to the first argument, Panama claims that the risk management system and
customs controls are not administered impartially, because of the participation of import operations
observers in the customs control of the covered goods under Article 3 of Decrees No. 1745/2016
and No. 2218/2017.696 Panama maintains that the lack of inherent fairness of this aspect is sufficient
to demonstrate the existence of partial administration.697
7.540. For its part, Colombia maintains that Article 183 of Decree No. 390/2016 establishes that
the import operations obser vers do not represent the interests of traders opposed to importers or
exporters, and that the trade associations which propose such observers are also importers or
exporters of the goods. Colombia adds that the observers are selected from lists of candida tes
submitted by the associations, approved by the Joint National Commission for Tax and Customs

693 Panama's second written submission as respondent, para. 351.
694 Ibid. para. 352.
695 Panama's second written submission as respondent, para. 353.
696 Panama's second written submission as respondent, paras. 354-358.
697 Ibid. paras. 359-369.

Management and that their function is limited to closely observing the conduct of the process of
evaluating a specific type of goods and providing their collaboration and cooperation when requested
by the customs authority, including a technical report with respect to the tariff classification of the
product, the identification and description of the product, and the quantity, weight and price of the
goods. Colombia indicates that, in short, the observer provides support for the customs inspector in
carrying out the examination process.698 Colombia argues that the role of the observer in the
importation of goods covered under Decrees No. 1745/2016 and No. 2218/2017 does not favour
one party or one side more than another, is objective, unbiased, fair and just, as evidenced by
Exhibits COL-16 and COL-21.699
7.541. The Panel observes that, pursuant to Article 6 of Decree No. 2218/2017700, the DIAN shall
provide the import operat ions observers with certain information established by the DIAN itself.
Pursuant to Resolution No. 000017 of 22 March 2017701, issued by the DIAN itself, that information,
which is located in the records of the import declarations submitted by the importers of the covered
products, consists in: form number, the importer's tax identification number (NIT), the importer's
family name and first name or business name, the declarant's tax identification number, business
name of the authorized declarant, type of declaration, name of the exporter or supplier abroad, code
of the country of provenance, exchange rate, tariff subheading, code of the country of origin,
agreement code, gross weight in kilograms, net weight in kilograms, physical unit code, quantity,
f.o.b. value in dollars, customs value, self -assessment and description of the goods, declaration
acceptance number and date.
7.542. Article 6 of Decree No. 2218/2017 also indicates that the observer "shall provide cooperation
and collaboration required by the customs authority, including the technical report, where
appropriate, on the tariff classification, identification, quantity, description, weight and price of the
goods, among other aspects".
7.543. Furthermore, Article 6 of Decree No. 2218/2017 specifies that the role of the observer "shall
be confined to analysing the information and generating alerts to the customs authority, as well as
closely monitoring the conduct of the inspection or examination process" with respect to the covered
goods. It also specifies that the customs authority shall safeguard the confidentiality of the
information, taking into account the content of other relevant legal provisions.
7.544. Article 183 of Decree No. 390/2016702 and Article 74-1 of Decree No. 2685/1999703, for
their part, specify that the o bservers shall be selected from lists of candidates submitted by the
trade associations, approved by the Joint National Commission for Tax and Customs Management,
chaired by Colombia's Minister of Finance.
7.545. As previously explained, the Panel agrees with past panels in considering that the impartial
administration requirement in Article X:3(a) relates to the administration of the relevant laws and

698 Colombia's additional written submission, paras. 133-135.
699 Colombia's additional written submission, paras. 138-139.
700 Article 6 of Decree No. 2218/2017 provides as follows:
Import Operations Observers. The National Customs and Excise Directorate shall provide the
Import Operations Observers with information to be constituted by resolution of that entity,
which shall be issued within sixty (60) calendar days following the entry into force of this Decree;
the resolution in question shall also establish the procedure for the provision of the information
to the observers.
The observer shall provide cooperation and collaboration required by the customs authority,
including the technical report, where appropriate, on the tariff classification, identification,
quantity, description, weight and price of the goods, among other aspects.
For the purposes of this Decree, the role of the observer shall be confined to analysing the
information and generating alerts to the customs authority, as well as closely monitoring the
conduct of the inspection and examination process with respect to goods under the headings
listed in Article 3 of this Decree.
The customs authority shall safeguard the confidentiality of the information, taking into account
the provisions of the Political Constitution and Laws 863 of 2003 and 1712 of 2014 and other
amending or supplementary rules.
701 Article 1 of Resolution No. 000017/2017 (Exhibit COL-46).
702 Decree No. 390/2016 (Exhibit PAN-4).
703 Decree No. 2685/1999 (Exhibit PAN-3).

regulations in a just, fair, objective, unbiased and unprejudiced manner.704 Therefore, the impartial
administration obligation imposed by Article X:3(a) of the GATT 1994, in the specific circumstances
of this dispute, requires Colombia to administer its special import regime in Decree No. 2218/2017
in a just, fair, objective, unbiased and unprejudiced manner.
7.546. The Panel recalls that Panama has challenged Decree No. 2218/2017 as an instrument which
governs the administration of the special import regime, so that it is for Panama to discharge the
burden of substantiating how and why the existence of the role of the observ ers necessarily leads
to non-impartial administration of the special import regime in Decree No. 2218/2017.
7.547. On the basis of the relevant legal provisions, this Panel notes five important characteristics
of the role of the import operations observers:
a. They are selected from lists of candidates submitted by the trade associations and
approved by the Joint National Commission for Tax and Customs Management.
b. Their function is confined to analysing the information provided by the DIAN and
generating alerts to th e customs authority, as well as closely monitoring the conduct of
the inspection or examination process with respect to the covered goods.
c. As part of those functions, when so requested by the customs authority, they may submit
technical reports on the tari ff classification, identification, quantity, description, weight
and price of the goods, among other aspects.
d. Observers receive detailed information consisting in the importer's personal particulars
and information on the products to be imported.
e. The customs authority is duty bound to safeguard the confidentiality of the confidential
information, pursuant to Colombia's relevant legislation.
7.548. The Panel also notes that the import operations observers do not decide whether goods are
to be subject to the special import regime. In other words, the observers are not empowered to
have any say in the operations until the goods are declared to be below the thresholds and have
physically arrived in Colombia. When goods are presented to them, there is already, for the
Colombian authorities, a suspicion of underinvoicing. Their participation does not, therefore,
determine that the special import regime is to be applied.
7.549. The Panel understands that Panama has concerns as to the interests of the import operations
observers, their capacity to influence and how the information received is used. However, in the
Panel's opinion, the characteristics of the role of the import operations observers, as presented in
the relevant legislation, are not sufficient to demonstrate that the existence of that role necessarily
leads to non-impartial administration of the special import regime in Decree No. 2218/2017. To be
able to determine whether the intervention of the import operations observers leads to non-impartial
administration of the special import regime, the Panel would require evidence as to the manner in
which the observers are selected in practice, how they cooperate with the customs authority in
practice, how they are able to influence the actions of the customs officers, etc. Pa nama has not
provided relevant evidence in that regard. The Panel recalls that claims of violation of Article X:3(a)
are serious and "should not be brought lightly" 705, for which reason it rejects Panama's argument
that the risk management system and the cus toms controls of the special import regime are not
administered impartially because of the participation of import operations observers.
7.550. With respect to the specific bond requirement as an element of the special import regime,
Panama also claims that Colombia's presumption that the value of the customs taxes together with
any penalties (principal obligations) will always be equivalent to 200% of the threshold multiplied

704 Panel Reports, Thailand – Cigarettes (Philippines), para. 7.899 and China – Raw Materials,
para. 7.694. (The Appellate Body declared the Panel's analysis moot and of no legal effect on procedural
grounds.)
705 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 217. See also
Appellate Body Report, US – Shrimp, para. 183.

by the quantity of goods in the corresponding shipment is a biased and unfair opinion and therefore
results in impartial administration.706
7.551. For the same reasons as set out in paragraphs 7.445-7.449 above in relation to the claims
concerning the specific bond, the Panel rejects Panama's argument, in the context of the claims
concerning the risk management and customs control system, that the specific bond requirement is
not administered impartially, because of the coverage amount.
7.552. In conclusion, with respect to the aspects concerning the special import regime which
Panama characterizes as the "first level of administration", the Panel concludes that Panama has
failed to demonstrate that the risk management system and customs controls of the special import
regime in Decree No. 2218/2017 are administered in a non-impartial manner, inconsistently with
Article X:3(a) of the GATT 1994.
Claim with respect to the lack of reasonable administration
7.553. Panama makes various claims according to which the special import regime is not
administered reasonably owing to: (a) the requirement for an apostilled or legalized official
translation of the certification of existence abroad for each shipment; (b) the requirement to provide
certification of intention to sell; (c) its rigidity, since importers cannot make changes in the quantity,
price or port of entry any later than 30 days before importation and since, in the event of these
parameters being modified, a declaration of correction will not be accepted and the goods will be
seized; and (d) the requirement to furnish a specific bond in those cases in which there is already a
general bond. The Panel will examine each of these arguments below.
7.554. Panama cla ims that the risk management system and customs controls are not being
reasonably administered because the requirement for an apostilled or legalized official translation of
the certification of existence abroad for each shipment is unreasonable. For Panam a, there is no
apparent reason why such certification should be required for each shipment or why copies should
not be acceptable.707
7.555. Colombia states that it has amply demonstrated the necessity and reasonableness of the
requirement for an apostilled or legalized official translation of the "certification of existence abroad"
for each shipment in its fight against illicit trading. Colombia maintains that it is important to have
certification of existence because many front companies abroad offer to carry out fictitious
transactions and customs cooperation is currently insufficient to verify the existence of a foreign
supplier.708
7.556. As previously explained, the Panel agrees with past panels in considering that the reasonable
administration requirement relates to "a dministration that is equitable, appropriate for the
circumstances and based on rationality". 709 Therefore, the obligation concerning reasonable
administration imposed by Article X:3(a) of the GATT 1994, in the specific circumstances of this
dispute, requires Colombia to administer its special import regime in Decree No. 2218/2017 in a
manner that is appropriate for the circumstances and based on rationality.
7.557. The Panel recalls that Panama has challenged Decree No. 2218/2017 as an instrument which
governs the administration of the special import regime, so that it is for Panama to discharge the
burden of substantiating how and why the requirement to obtain an apostilled or legalized official
translation of the certification of existence abroad for each shipment necessarily leads to
unreasonable administration of the special import regime in Decree No. 2218/2017.
7.558. In the Panel's opinion, the fact of requiring an apostilled or legalized official translation of
the certification of existence abroad for each shipment does not appear to be inherently
unreasonable and as such inconsistent with WTO obligations. Panama considers it unreasonable for
Colombia to impose this requirement, when it could opt not to require certification for each shipment
or to accept copies of the certification. The Panel understands that Panama would prefer that its

706 Panama's second written submission as respondent, para. 371.
707 Panama's second written submission as respondent, paras. 372-373.
708 Colombia's additional written submission, para. 141.
709 Panel Reports, China – Raw Materials, para. 7.696. (The Appellate Body declared the Panel's analysis
moot and of no legal effect on procedural grounds.)

commercial operators not have to comply with the requirement to submit an apostilled or legalized
official translation of the certification of existence abroad for each shipment. Ho wever, it does not
find this argument to be sufficient to establish that the requirement in question necessarily leads to
unreasonable administration of the risk management and customs control system of the special
import regime.
7.559. Furthermore, Colombia has explained that it is important to have a certificate of existence
abroad since many front companies abroad offer to carry out fictitious transactions. In the light of
this explanation, the Panel does not consider the imposed requirement to be inappropriate for the
circumstances or not to be based on rationality.
7.560. For the above reasons, the Panel rejects Panama's argument that the risk management
system and customs controls of the special import regime are not being reasonably administered
because of the requirement to obtain an apostilled or legalized official translation of the certification
of existence abroad for each shipment.
7.561. Panama also alleges lack of reasonable administration of the special import regime because
of the requirement to provide certifica tion of intent ion to sell. Panama considers that the sales
invoices already ensure that the supplier declared by the importer is really the source of the imported
products and are much more relevant for obtaining this information than the certification of intention
to sell because they provide evidence of the final outcome of the transaction.710
7.562. Colombia says that it has shown that the sales invoice can easily be forged and does not
provide the degree of certainty that Colombia seeks to ensure in controlling its imports, and that
numerous abuses in connection with the provision of false information in import documents have led
Colombia to request more information.711
7.563. The Panel recalls once again that it is for Panama to discharge the burden of substantiating
how and why the requirement to provide certification of intent ion to sell necessarily leads to
unreasonable administration of the special import regime in Decree No. 2218/2017.
7.564. As in the previous instance, the Panel does not find the fact of requiring certifi cation of
intention to sell to be inherently unreasonable or incoherent and as such inconsistent with WTO
obligations. Panama considers it unreasonable for Colombia to impose this requirement, when it
could opt not to pursue this requirement and be satisfied with a sales invoice. The Panel understands
that Panama would prefer that its commercial operators not have to comply with the requirement
to submit certification of intent ion to sell. However, in its opinion, this argument is insufficient to
establish that the requirement in question necessarily leads to unreasonable administration of the
risk management and customs control system of the special import regime.
7.565. Furthermore, Colombia has explained that the sales invoice, as an alternative suggested by
Panama, can easily be forged and does not provide the degree of certainty that Colombia seeks to
ensure in controlling its imports, and that numerous abuses in connection with the provision of false
information in import documents have led Colombia to request more information. In the light of this
explanation, the Panel does not consider the imposed requirement to be inappropriate for the
circumstances or not to be based on rationality.
7.566. For these reasons, the Panel rejects Panama's argument that the risk manag ement and
customs control system is not administered reasonably because of the requirement to provide
certification of intention to sell.
7.567. Panama also alleges lack of reasonable administration due to the rigidity of the special import
regime, since importers cannot make changes in the quantity, price or port of entry any later than
30 days before importation and since, in the event of these parameters being modified, a declaration
of correction will not be accepted and the goods will be seized. Panama questions what would be the
sense of requiring such detailed information with respect to the qua ntity and price of the goods
30 days in advance, considering that the advance declaration serves to give early notice of the same
information.712 Comparing it with the regime that is governed by Decree No. 1745/2016, Panama

710 Panama's second written submission as respondent, para. 374.
711 Colombia's additional written submission, para. 142.
712 Panama's second written submission as respondent, paras. 375-381.

maintains that the special regime set out in Decree No. 2218/2017 is worse, owing to the fact that
non-compliance with the documentary requirements results in the seizure of the goods, without the
possibility of their being legalized, recovered or reshipped, so that a minor error can result in the
loss of the goods.713
7.568. Colombia maintains that under the Colombian customs regime it is possible to correct and
amend a certain kind of minor errors in the import documents, so that Panama is misreading the
legislation in question, in particular Article 234 of Decree No. 2685, which permits the correction of
the import declaration.714
7.569. With regard to reshipment not being permitted and the seizure of the good s, Colombia
maintains that Panama is forgetting that these goods are used for the purpose of carrying out illicit
trading operations and that allowing reshipment of the goods would lead to the same goods entering
through a different Colombian port under fa lse papers. Colombia adds that, considering that the
objective of the measure and the reason for it is the control of goods deriving from illegal
transactions, the prohibition on reshipment is reasonable in the light of its objective, cause and
basis. Colombia adds that if Panama 's claim is that the risk management system is unreasonable
because it makes it possible to detect violators of Colombian customs law, Panama 's argument
simply demonstrates the risk that Colombia is trying to prevent, namely that of there being importers
who go on deliberately violating the Colombian legislation by laundering money and doing violence
to society.715
7.570. The Panel recalls that Panama has challenged Decree No. 2218/2017 as an instrument which
governs the administration of th e special import regime, so that it is for Panama to discharge the
burden of substantiating how and why the requirement for information on the quantity, price or port
of entry of the goods, 30 days in advance and with subsequent modifications to that information not
being permitted, necessarily leads to unreasonable administration of the special import regime in
Decree No. 2218/2017.
7.571. In the Panel's opinion, the fact of requiring information on the quantity, price or port of entry
of the goods, 30 days in ad vance and with no subsequent modifications to the information being
permitted, does not appear to be inherently unreasonable or incoherent and as such inconsistent
with WTO obligations. Panama considers it unreasonable for Colombia to impose this requireme nt,
when it could opt not to require this information 30 days in advance or to allow modifications to the
information prior to the arrival of the goods in Colombia. The Panel understands that Panama would
prefer that its commercial operators not have to comply with this requirement. However, it does not
find this argument to be sufficient to establish that the requirement in question necessarily leads to
unreasonable administration of the risk management and customs control system of the special
import regime.
7.572. Furthermore, Colombia has explained that the purpose of imposing these documentary
requirements is to corroborate, before the arrival of the goods in Colombia, the information
contained in the customs declaration, thereby enabling it to conduct a prior risk analysis so that it
may take action in cases of import operations suspected of constituting money laundering, and that
it is possible to correct and amend a certain kind of minor errors in the import documents.716 In the
light of this explanation, the Panel does not consider the imposed requirement to be inappropriate
for the circumstances or not to be based on rationality.
7.573. For these reasons, the Panel rejects Panama's argument that the risk management system
and customs controls of the special import r egime are not being administered reasonably because
of the requirement to provide information on the quantity, price or port of entry of the goods 30 days
in advance and because subsequent modifications to that information are not permitted.
7.574. As regards the consequences in the event of failure to submit or the extemporaneous
submission of the documents, the Panel does not consider that the requirement of reasonableness
makes it incumbent on WTO Members to establish a certain level of penalties for failure to comply

713 Ibid. paras. 382-387.
714 Colombia's additional written submission, para. 143.
715 Colombia's additional written submission, paras. 144-146.
716 Colombia's response to Panel question No. 48, paras. 231-232; and comments on Panama's
response to Panel question No. 48.

with customs obligations. In the Panel's opinion, each WTO Member has the sovereign freedom to
establish the level of penalties it deems appropriate for non-compliance with customs obligations.
7.575. For the above reasons, the Panel rejects Panama's argu ment that the risk management
system and customs controls of the special import regime are not administered reasonably because
of the consequences of non-compliance.
7.576. Panama also alleges lack of reasonable administration of the special import regime because
of the requirement to constitute a specific bond in cases in which there is a general bond. 717 The
Panel has already had the opportunity to examine and reject this line of argument by Panama in the
context of the claims concerning the specific bond and ther efore refers to its reasoning in
paragraphs 7.455-7.458 above.
7.577. In conclusion, with respect to the aspects concerning the special import regime which
Panama characterizes as the "first level of administration", the Panel finds that Panama has failed
to demonstrate that the risk management system and customs controls of the special import regime
in Decree No. 2218/2017 are administered unreasonably, in a m anner inconsistent with
Article X:3(a) of the GATT 1994.
7.4.6.2.3.3 Panama's claims with respect to the "second level of administration"
Claim with respect to the lack of reasonable administration
7.578. Panama only presents an argument concerning the lack of reasonable administration of the
special import regime under Article X:3(a) of the GATT 1994 with respect to the second level of
administration. In particular, Panama claims that the risk management system and customs controls
are not administered reasonably, because Colombia delegates the processing and management of
the specific bond to banks and insurance companies, while omitting to establish general criter ia for
observance by these third parties of the requirements for applying for the specific bond and the
considerations relevant to its approval.718
7.579. Colombia maintains that the fact that the bond is provided by insurance companies or banks
is a logical consequence of the nature of the instrument (insurance contract); and that if instruments
of this kind were prohibited by X:3(a) of the GATT 1994, then Article 13 of the Customs Valuation
Agreement, Article VII of the GATT and Article 7 of the Trade Facilitation Agreement would be
inapplicable. Colombia also maintains that the financial system operates freely, and that insurance
companies and banks accord similar treatment in respect of persons similarly situated, depending
on the risk.719
7.580. As previously explained, the Panel agrees with past panels in considering that the obligation
concerning reasonable administration imposed by Article X:3(a) of the GATT 1994, in the specific
circumstances of this dispute, requires Colombia to administer the specific bond requireme nt in
Decree No. 2218/2017 in a manner that is appropriate for the circumstances and based on
rationality.
7.581. The Panel is not convinced that the fact of requiring that the specific bond for guaranteeing
the payment of the customs debts be obtained from a bank or an insurance company is intrinsically
unreasonable and therefore inconsistent with WTO Members ' obligations. A bank or insurance
company bond is established by means of a contractual relationship between private parties, and it
is customary for the bank or insurance company to scrutinize the particular situation of the applicant
in order to decide, firstly, whether to grant a bond and, secondly, the amount it will charge for that
service. Similarly to Panama's claim with respect to a lack of uniform ad ministration, it does not
seem that, in the light of Panama's arguments and in the specific circumstances of this dispute, the
requirement that the specific bond be administered reasonably can be interpreted as requiring that
Colombia establish a level of specific financial regulation for banking or insurance institutions or limit
the freedom of those financial institutions to take decisions with respect to their potential customers.

717 Panama's second written submission as respondent, para. 388.
718 Panama's second written submission as respondent, para. 390.
719 Colombia's additional written submission, paras. 124-127.

7.582. For the above reasons, the Panel rejects Panama's argument that the risk m anagement
system and customs controls of the special import regime are not administered reasonably because
Colombia delegates the processing and management of the specific bond to banks and insurance
companies.
7.583. In conclusion, with respect to the aspect co ncerning the special import regime which
Panama characterizes as the "second level of administration", the Panel notes that Panama has failed
to establish that the risk management system and customs controls of the special import regime in
Decree No. 2218/2017 are administered unreasonably, in a manner inconsistent with Article X:3(a)
of the GATT 1994.
7.4.6.2.4 Conclusion concerning the consistency of the administration of the special
import regime with Article X:3(a) of the GATT 1994
7.584. For all the reasons given above, the Panel concludes that Panama has failed to demonstrate
that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 is
administered in a non -uniform, non -impartial or unreasonable manner, inconsistently with
Article X:3(a) of the GATT 1994.
7.5 Panama's claims under the Customs Valuation Agreement
7.585. Panama has made claims of inconsistency with the Customs Valuation Agreement with
respect to the special import regime and the specific bond. In particular, Panama claims that: (a) the
special import regime is inconsistent with Articles 1, 2, 3, 5, 6 and 7.2 (f) of the Customs Valuation
Agreement because it operates in practice as an incentive to raise the prices of the goods artificially,
introducing de facto minimum customs values in v iolation of those provisions; and that (b) the
specific bond is inconsistent with Article 13 of the Customs Valuation Agreement insofar as it is
imposed because "it becomes necessary to delay the determination of the value" of the goods, since
it would exceed the amount necessary "to cover the ultimate payment of customs duties for which
the goods may be liable".720
7.586. The Panel will begin by examining the claims relating to the special import regime.
7.5.1 Panama's claims under Articles 1, 2, 3, 5, 6 and 7.2(f) of th e Customs Valuation
Agreement
7.5.1.1 Arguments of the parties
7.5.1.1.1 Panama
7.587. Panama claims that the special import regime is an instrument created to address import
valuation, and that the thresholds reflect what Colombia considers in effect to be a minimum, but
genuine, import value, irrespective of the application of the methodologies provided for in Articles 1,
2, 3, 5, 6 and 7 of the Customs Valuation Agreement. Panama maintains that Colombia is rejecting
a priori any declared value that is equal to or lower than the thresholds it has itself established.721
7.588. According to Panama, the facts indicate that Colombia authorizes the release of the goods
only if payment of the customs duties is assured for a hypothetical value that is not based on the
application of any of the valuation methods provided for in the Customs Valuation Agreement. This
would result in a customs valuation for the establishment of a guarantee for customs duties that are
to be paid, without this valuation being adjusted to the case -by-case analysis requir ed, based on
the particular conditions of each sale. Panama does not consider that Members have given "carte
blanche" for the national authorities to establish amounts of coverage not subject to any discipline.
Panama maintains that if that were the case, the disciplines of the Customs Valuation Agreement
could easily be circumvented by requiring guarantees with a coverage that bears no relation to the
primary obligation that has to be guaranteed.722

720 Panama's request for the establishment of a panel, WT/DS461/22, sections II.A(ii) and II.D(ii).
721 Panama's second written submission as respondent, paras. 436 and 450.
722 Panama's opening statement at the meeting of the Panel, paras. 26 and 29.

7.589. Panama bases part of its argument on the conclusions of the panel report in Colombia –
Ports of Entry, as it considers that the system of reference prices (indicative prices) in that dispute
has the same characteristics in terms of product scope and lack of sensitivity to product differences
or the specific circumstances of transactions as in this case.723 In Panama's view, the thresholds do
not reflect any of the valuation methods set out in the Customs Valuation Agreement or take into
account the individual circumstances of the imports. According to Panama, a n importer declaring a
value equal to or lower than the thresholds would inevitably be made subject to prohibitive
consequences for importation, and its options would be even more limited than in Colombia – Ports
of Entry, as "correction" and re-exportation would be impossible.724 Consequently, Panama contends
that either customs duties are collected on the basis of a value higher than the thresholds, or the
goods are not imported into Colombian customs territory. In practice, customs duties should not be
collected on the basis of a value equal to or below the thresholds, which amounts to saying that the
thresholds operate as "minimum prices" that are inconsistent with Article 7.2(f) of the Customs
Valuation Agreement.725 Panama therefore claims that by its design, structure and architecture, the
special import regime would penalize the importation of products for which the price actually paid
or payable, or another price resulting from the application of other valuation methods, is equal to or
below the thresholds.726
7.590. Panama adds that, in the context of this market, importing goods at higher prices would
certainly be a commercially viable option. Panama would not, however, consider this a legally viable
option for importers. In any case, Panama suggests that if Col ombia were to contend that such
"overvaluation" or "correction" took place with a view to avoiding the application of the special import
regime, it would take this as an acknowledgement that the effect of this regime is such that it has
led importers to ignore the "price actually paid or payable" for their goods and accept the minimum
value given by the thresholds.727
7.591. Panama also puts forward arguments regarding the specific bond, as, in its understanding,
this bond is systematically required on the basis of the thresholds for all imports, and is required in
consideration of the final collection of customs duties. 728 Panama takes the view that if a customs
authority considers it necessary to delay the final determination of the customs value, and thus to
require a guarantee if the importer decides to withdraw the goods, the establishment of this
guarantee must be subject to the disciplines of the Customs Valuation Agreement, in particular
Articles 1, 2, 3, 5, 6 and 7.729 In this respect, Panama states that the determination of the coverage
of the specific bond takes not the slightest account of the substantive provisions governing the
determination of the value of the goods. Panama points out that in Colombia – Ports of Entry, the
panel confirmed that the customs au thorities were required to apply the valuation methods on a
case-by-case basis, so as to reflect the particular conditions of the sale in question.730
7.592. Panama sees no reason why this principle does not apply to the determination of the
coverage of a guarantee under Article 13 of the Customs Valuation Agreement. Panama notes,
however, that this case -by-case consideration is impossible to observe when coverage is required
a priori for the specific bond, as this coverage is predetermined on a fixed basis in the text of Article 7
of Decree No. 2218/2017, which, by definition, does not take into consideration the particular
circumstances of each import. Panama takes the view that without making this evaluation, the
Colombian authorities would not have the necessary information to implement the valuation methods
of the Customs Valuation Agreement and establish whether or not it is necessary to delay the
valuation, and determine the appropriate scope of the guarantee.731 In Panama's view, establishing
two absolute, fixed and unique factors (both the figure of 200% and the threshold amount) for a
range of products and transactions of different types, with no possibility of adjusting them to the

723 Panama's second written submission as respondent, paras. 454-455 (referring to Panel Report,
Colombia – Ports of Entry, paras. 7.142 and 7.150).
724 Panama's second written submission as respondent, para. 456.
725 Ibid. para. 457.
726 Ibid. para. 458.
727 Panama's second written submission as respondent, paras. 459-460.
728 Ibid. para. 461.
729 Panama's comments on Colombia's response to Panel question No. 61.
730 Panama refers to Panel Report, Colombia – Ports of Entry, para. 7.142. (Panama's second written
submission as respondent, para. 462.)
731 Panama's second written submission as respondent, paras. 463-464.

circumstances of each transaction, would not allow for the use of the valuation methods provided
for in the Customs Valuation Agreement.732
7.593. Independently of this, Panama notes that Article 222 of Resolution No. 4240733 regulates the
time of valuation under Colombian law, which would be the date of physical inspection or the date
when the import declaration is submitted. Panama therefore maintains that by establishing a priori
that the coverage shall be established on the basis of criteria that do not form part of the
case-by-case analysis, Colombia is acting inconsistently with Articles 1 , 2, 3, 5, 6 and 7 of the
Customs Valuation Agreement.734
7.5.1.1.2 Colombia
7.594. Colombia argues that Panama's claim would not be supported by these provisions. According
to Colombia, while Articles 1 to 7 of the Customs Valuation Agreement establish customs valuation
methods, they do not regulate the time of the valuation or establish the exclusive criteria that could
result in a customs authority delaying the valuation; nor do they regulate the amount of the
guarantees that may be required by a customs authority. Colo mbia emphasizes that Decrees
No. 1745/2016 and No. 2218/2017 bear no relation to valuation methods and that the Colombian
customs authorities correctly apply the methods established in the Customs Valuation Agreement.735
7.595. According to Colombia, the methodolog ies established in Article 1 et seq. of the Customs
Valuation Agreement concerning transaction value are applicable to valuation disputes arising during
the process of inspection or examination referred to in Decree No. 2218/2017. Therefore, Panama's
assertion that the special import regime is an instrument created to address import valuation and
that the thresholds reflect a minimum import value regardless of the provisions of the Customs
Valuation Agreement is incorrect. Colombia maintains that the thresh olds established in Decrees
No. 1745/2016 and No. 2218/2017 do not constitute a price standard or minimum prices, and do
not judge the acceptability of the declared price.736
7.5.1.2 Analysis by the Panel
7.596. The Panel's task is to determine whether, as Panama alleges, the special import regime with
the characteristics described in Decree No. 2218/2017 is inconsistent with Articles 1, 2, 3, 5,
6 and 7.2(f) of the Customs Valuation Agreement because it operates in practice as an incentive to
raise the prices of the goods artificially, introducing de facto minimum customs values in violation
of these provisions. 737 Colombia submits that Panama's claim would not be supported by these
provisions because Decree No. 2218/2017 does not relate to valuation methods.738
7.597. The Panel therefore notes that the parties disagree with respect to the application of Customs
Valuation Agreement Articles 1, 2, 3, 5, 6 and 7.2(f) to the special import regime, specifically on the
question of whether Colombia would be conducting a customs valuation by using the thresholds in
Decree No. 2218/2017. Given that the provisions invoked by Panama (Articles 1, 2, 3, 5,
6 and 7.2(f) of the Customs Valuation Agreement) establish the various valuation methods
permitted under the Customs Valuation Agreement, it wil l be necessary to begin by resolving
whether Colombia's use of the thresholds constitutes customs valuation. If, indeed, the Panel were
to determine that it did not constitute customs valuation, the provisions invoked by Panama would
not be applicable, as maintained by Colombia.

732 Panama's opening statement at the meeting of the Panel, para. 28.
733 Article 222 provides that "[f]or the purpose of determining the customs value of imported goods, the
time of valuation shall be taken to be the date of physical inspection prior to release or, failing that, the date of
submission of the import declaration". (Resolution No. 4240/2000 (Exhibit PAN-40)).
734 Panama's comments on Colombia's response to Panel question No. 61.
735 Colombia's additional written submission, paras. 160-161 and 171; and statement as respondent at
the meeting of the Panel, paras. 52-53.
736 Colombia's additional written submission, paras. 169-170.
737 Panama's request for the establishment of a panel, WT/DS461/22, section II.D(ii).
738 Colombia's additional written submission, paras. 160-161 and 171; and statement as respondent at
the meeting of the Panel, paras. 52-53.

7.5.1.2.1 The question of whether the use of the thresholds of Decree No. 2218/2017
constitutes customs valuation
7.598. As indicated above, Articles 1, 2, 3, 5, 6 and 7.2(f) of the Customs Valuation Agreement
establish the various valuation method s permitted under the Agreement. Broadly speaking, these
valuation methods are to be used in sequential order, with the transaction value holding primacy as
a valuation method (Article 1). Where the transaction value of the imported goods cannot be used,
the valuation methods provided for in Article 2 (transaction value of identical goods), Article 3
(transaction value of similar goods), Article 5 (deducti ve method) and Article 6 (computed value)
must be used. Pursuant to Article 7 of the Agreement, if the customs value cannot be determined
using these valuation methods, the customs authorities have to determine the value using
reasonable means consistent w ith the principles and general provisions of the Customs Valuation
Agreement and the GATT 1994 and on the basis of data available in the country of importation. In
any event, the value may not be based on certain elements listed in paragraph 2 of the Artic le,
which include "minimum customs values" (Article 7.2(f)).
7.599. Regarding what is meant by "customs valuation", the Panel notes that the Customs Valuation
Agreement does not provide a definition for this concept. The term "customs value of imported
goods" is, however, defined in Article 15.1(a) of the Agreement as "the value of goods for the
purposes of levying ad valorem duties of customs on imported goods". The Panel agrees with the
analysis made by a previous panel in that "customs valuation" should be understood as the process
of determining the monetary worth or price of imported goods for the purpose of levying customs
duties.739 Therefore, the two central aspects within the concept of customs valuation are (a) the
value of the goods, which is used (b) for the purposes of levying ad valorem customs duties.740
7.600. The Panel will examine whether the thresholds established in Decree No. 2218/2017
represent the "value of the goods" and whether Colombia's customs authorities collect customs
duties on the basis of these thresholds.
7.601. The Panel notes that, according to Panama, there would be only two possible scenarios
when the declared f.o.b. import price for products subject to Decree No. 2218/2017 is equal to or
below the thresholds set out in that decree: either custom s duties are collected on the basis of a
value higher than the thresholds, or the goods do not enter Colombian territory.741
7.602. On examination, it is seen that the text of Decree No. 2218/2017 does not provide that
payable customs duties shall be calculated on the basis of the thresholds, or that these thresholds
shall replace the declared values for obtaining the transaction value. According to Article 3 of the
decree, as examined above in paragraph 2.35. of this Report, the thresholds are used to determine
whether the measures contemplated in the decree have to be applied to a particular import, that is,

739 In Colombia – Ports of Entry, the panel reasoned as follows:
The Panel notes that the Customs Valuation Agreement does not provide a definition for customs
valuation. Article 15 of the Customs Valuation Agreement does however include a definition of
"customs value". The term "customs value of imported goods" is defined in Article 15.1(a) of the
Customs Valuation Agreement as "the value of the goods for the purposes of levying ad valorem
duties of customs on imported goods". The Panel believes that this definition of customs value is
useful in understanding what customs valuation means within the Customs Valuation Agreement.
Following Article 31 of the Vienna Convention on the Law of Treaties" ("VCLT"), the Panel shall
look at the ordinary meaning of the relevant concepts present in this definition.
The Panel will first assess the concept of "valuation" which is defined as "[t]he action of
estimating or fixing the monetary value of something" or as "[t]he process of determining the
value of a thing or entity". The term "value", in turn, is defined in the Oxford English Dictionary
as "[t]hat amount of a commodity, medium of exchange, etc., considered to be an equivalent for
something else" and the term "value" is defined in the Black's Law Dictionary as "[t]he monetary
worth or price of something; the amount of goods, services or money that something will
command in an exchange".
In light of the dictionary definitions of valuation and value, as well as the definition of customs
value provided in Article 15 of the Customs Valuation Agreement, the Panel considers that the
ordinary meaning of the concept of customs valuation is straightforward. Essentially, customs
valuation involves the process of determining the monetary worth or price of imported goods for
the purpose of levying customs duties.
(Panel Report, Colombia – Ports of Entry, paras. 7.81-7.83 (footnotes omitted)).
740 This conclusion is also reached in Panel Report, Colombia – Ports of Entry, para. 7.84.
741 Panama's second written submission as respondent, para. 457.

whether the special import regime has to be applied. 742 As analysed in section 2.3.3.3 above, this
regime considers a number of aspects, including additional documentary and certification
requirements, the presence of import operations observers and the provision of the specific bond.
In the Panel's opinion, none of the aspects of the special import regime refer to the determination
of the customs value of imported goods within the meaning of Article 15.1 of the Customs Valuation
Agreement.
7.603. Regarding Panama's references to the panel report in Colombia – Ports of Entry, the Panel
notes that there are certain key differences between the role of the thresholds of Decree
No. 2218/2017 and the role of the indicative prices in that dispute. The main difference is that under
Decree No. 2218/2017, importers of goods are not required to pay customs duties in an amount
determined on the basis of the thresholds, as was the case with the indicative prices in that dispute.
On the contrary, in the present case, the ad valorem customs duties to be paid by an importer are
to be determined in accordance with the general rules of Colombian customs law.
7.604. Thus, the Panel does not consider there to be an a priori rejection of any declared valu e
equal to or below the thresholds established in the decree, nor does it consider that the special
import regime imposes on the imports concerned customs duties higher than those due. The Panel
finds no support for Panama's assertion that the thresholds e stablished in the decree operate as
minimum prices. The Panel considers that Panama has failed to provide evidence to demonstrate
that importers of the products classified in Decree No. 2218/2017 whose declared f.o.b. price was
equal to or below the established thresholds, have been required to pay ad valorem customs duties
higher than those that would be payable according to the respective transaction value or another
price resulting from the application of the valuation methods of the Customs Valuation Agreement.
7.605. As mentioned above in paragraph 7.217, Colombia's DIAN reported that since the entry into
force of Decree No. 2218/2017, a total of 105 imp ort declarations with declared prices equal to or
below the thresholds established in the decree (corresponding to 76% of total imports with values
equal to or below the thresholds) have obtained release authorization from the Colombian authorities
and that valuation disputes have arisen in only 12 of those cases.743 In the Panel's view, this means
that in all the other cases where no valuation dispute arose, the value declared by the importer was
ultimately the value accepted as the customs value and used to determine the ad valorem customs
duties payable. The existence of these imports would thus appear to prove that the thresholds
established in Decree No. 2218/2017 do not operate as "minimum prices".744
7.606. In light of the foregoing, it is the Panel's understand ing that the final amount of the
ad valorem customs duties accruing from the importation of the products classified in Decree
No. 2218/2017 with a declared f.o.b. price equal to or below the thresholds established therein, does
not depend on these thresholds. Therefore, the thresholds do not constitute the value of the goods,
which is used for the purposes of levying ad valorem customs duties.
7.607. Panama also argues that if a customs authority considers it necessary to delay the final
determination of customs value and to require a guarantee for the withdrawal of the goods, the
establishment of this guarantee should be subject to the disciplines of Articles 1, 2, 3, 5, 6 and 7 of
the Customs Valuation Agreement. In that case, Colombia would be in violation of this obligation,
since, according to Panama, the coverage of the specific bond would have been predetermined on
the basis of fixed absolute factors, without taking into account the specific circumstances of each
import.745
7.608. While there is a link between the guarantee and the valuation methods insofar as the final
amount of the customs duties in respect of which the guarantee assures paym ent will have to be
determined in accordance with these valuation methods, the Panel does not find any provision in
the text of the relevant articles of the Customs Valuation Agreement that requires a Member's

742 This is also noted by Panama when stating that "[t]he result of this comparison in the sense that the
declared value is equal to or lower than the threshold, will necessarily lead to the application of [the] special
import regime". (Panama's second written submission as respondent, para. 452.)
743 Figures for goods imports under Decree No. 2218/2017 (Exhibit COL-61).
744 Furthermore, during the period November-December 2017, the DIAN reported 802 clothing and
footwear declarations below the respective thresholds. Only 49 of these declarations are the subject of ongoing
valuation dispute investigations. (Colombia's response to Panel question No. 6(a), para. 20, and 6(c), para. 22;
and List of 802 import declarations (Exhibit COL-39)).
745 Panama's second written submission as respondent, paras. 463-464.

customs authorities to use the valuation metho ds established in Articles 1, 2, 3, 5, 6 and 7 of the
Agreement in order to determine the coverage of a guarantee that permits goods to be withdrawn.
The Panel is therefore not convinced by Panama's argument that a customs valuation is being
conducted for the establishment of the specific bond.
7.609. The Panel takes the view that the provision of a valuation dispute guarantee must be
requested, by definition, before the final value of the goods has been clarified in accordance with
the valuation methods established in the above-mentioned Articles. In the same way, Article 13 of
the Customs Valuation Agreement, for example, refers to the possibility of withdrawing imported
goods upon the posting of a guarantee "[i]f, in the course of determining the customs value of
imported goods, it becomes necessary to delay the final determination of such customs value". As
mentioned above in paragraph 7.232, in the event of a dispute concerning the value of the goods
where there is a suspicion of underinvoicing, the amount of the guarantee is understandably
calculated on the basis of an approximate reference value. In view of the foregoing, it is the Panel's
understanding that the determination of the coverage of the specific bond does not correspond to
customs valuation and does not therefore need to be subject to the valuation methods of Articles 1,
2, 3, 5, 6 and 7 of the Customs Valuation Agreement.
7.5.1.3 Conclusion
7.610. For the reasons set out above, the Panel concludes that Panama has failed to demonstrate
that the thresholds established in Decree No. 2218/2017 represent the "value of goods" by virtue of
which Colombia's customs authorities collect customs duties, or that the us e of the thresholds
corresponds to a customs valuation operation or that the special import regime operates as an
incentive to raise the prices of goods artificially.
7.611. The Panel therefore concludes that the special import regime provided for in Articles 4 to 10
of Decree No. 2218/2017 does not fall within the scope of Articles 1, 2, 3, 5, 6 and 7.2(f) of the
Customs Valuation Agreement in the manner described by Panama. Consequently, the Panel rejects
Panama's claims under each of those articles.
7.5.2 Panama's claims under Article 13 of the Customs Valuation Agreement
7.5.2.1 Arguments of the parties
7.5.2.1.1 Panama
7.612. Panama claims that the specific bond is inconsistent with Article 13 of the Customs Valuation
Agreement insofar as it is imposed because "it becomes necessary to delay the determination of the
value" of the goods, in that it would exceed the amount necessary "to cover the ultimate payment
of customs duties for which the goods may be liable".746
7.613. Regarding the inconsistency of the specific bond described in both decrees with Article 13 of
the Customs Valuation Agreement, Panama argues that the specific bond requirement and the bond's
coverage would not be in keeping with the case-by-case approach required by that article. Panama
argues that the coverage of the specific bond would not meet the requirement to cover the "ultimate
payment of customs duties for which the goods may be liable". In Panama's view, this provision
does not foresee the possibility of requiring a guarantee beyond that which relates to the payment
of customs duties. The 200% coverage required by Colombia would exceed the scope of Article 13,
as it would not take into account the circumstances of each and every case.747 According to Panama,
Article 13 would not authorize the requirement of a guarantee to cover penalties, for example, and
Article 7.3.4 of the Trade Facilitation Agreement would allow for a customs guarantee to be required
to cover penalties only "[i]n cases where an offence … has been detected".748
7.614. For Panama, the use of the threshold as reference value is not in keeping with specific import
characteristics and is not therefore a valid reference value for determining the coverage of the
guarantee. In Panama's view, if the threshold were the relevant criterion for determining acceptable

746 Panama's request for the establishment of a panel, WT/DS461/22, section II.A(ii).
747 Panama's second written submission as respondent, para. 468.
748 Ibid. para. 469; and Panama's opening statement at the meeting of the Panel, para. 30. (emphasis
original)

values, the coverage of the specific bond would have to be established for the amount of the duties
to be levied on the basis of a value slightly higher that the threshold, minus the customs duties paid
on the basis of the declared value. Panama concludes that, in that case, the coverage amount would
be less than the coverage of 200% of the threshold price for th e quantity imported (Decree
No. 1745/2016), or 200% of the difference between the threshold price and the value declared for
the imported quantity (Decree No. 2218/2017).749
7.615. Lastly, Panama also notes that Colombia might not require the collection of customs duties
for products entering from countries with which Colombia has signed economic integration
agreements. If the reason for the specific bond were the ne ed to ensure due payment of customs
duties, there would be no need to require this bond for imports to Colombia that receive duty -free
treatment, as those customs duties would not exist.750
7.5.2.1.2 Colombia
7.616. Colombia maintains, first of all, that Article 13 should be understood in the context of
Article 17 of the Customs Valuation Agreement, which stipulates that nothing in the Agreement may
be read as restricting the rights of customs administrations to check information presented in relation
to value.751
7.617. Colombia cites the panel report in US – Certain EC Products, stating that this clarified that
"Article 13 of the Customs Valuation Agreement allows for a guarantee system when there is
uncertainty regarding the customs value of the imported products, but is not concern ed with the
level of tariff obligations as such".752
7.618. Colombia adds that the guarantee under Decree No. 2218/2017 is also based on the criterion
of sufficiency. The uncertain future event of Decree No. 2218/2017 corresponds to the customs
taxes and penalties that may apply. The insured event is the potential payment of obligations that
forms part of the condition of uncertainty and that takes place after the release of the goods, and
for a period of up to three years, which ensures that the DIAN has effective control. As with any
other insurance contract, the future and uncertain event may result in the payment of an amount
less than, equal to or greater than the maximum amount of the guarantee.753
7.619. Colombia goes on to say that as with any other insurance contract, the future and uncertain
event is indeterminate, which is why a maximum reference value is needed; in this case, the
maximum reference value is the legal provision of 200%. This percentage is an indicator, as it is
impossible, when a dispute arises, to determine with millimetric precision a priori what the value to
be paid might be in the hypothetical event of a penalty being imposed for an administrative customs
offence, or an official value correction or revision assessment in accordance with the proced ure set
forth in the customs regulations. Colombia adds that in Decree No. 2218/2017, the amount of the
guarantee is reduced, which means that in some cases where the penalty is very high, it may not
be possible to cover the total payment of penalties.754
7.620. Colombia states that to read Article 13 of the Customs Valuation Agreement as a provision
that prohibits guarantees to cover other duties or penalties is very limited. The fact that Article 13
contemplates the use of guarantees expressly for the payment of c ustoms duties does not mean
that the use of guarantees to cover other taxes or penalties is prohibited. This reading would be
logical, since the purpose of the guarantee is to ensure that any obligations the importer may have
towards the customs authority are met.755

749 Panama's second written submission as respondent, paras. 470-471.
750 Panama's opening statement at the meeting of the Panel, para. 31.
751 Colombia's additional written submission, para. 174; and opening statement as respondent at the
meeting of the Panel, para. 55. Article 17 of the Customs Valuation Agreement reads as follows:
Nothing in this Agreement shall be construed as restricting or calling into question the rights of
customs administrations to satisfy themselves as to the truth or accuracy of any statement,
document or declaration presented for customs valuation purposes.
752 Colombia's additional written submission, para. 176 (citing Panel Report, US – Certain EC Products,
para. 6.77).
753 Ibid. paras. 178-179.
754 Ibid. paras. 184-186.
755 Colombia's additional written submission, para. 188.

7.621. Colombia adds that Members have not interpreted Article 13 in such a restrictive manner.
The Trade Facilitation Agreement is not in force for Colombia, and yet it is clear to Colombia that its
measures can also be explained in the light of that instrument. Article 7.3 of the Trade Facilitation
Agreement establishes that: "As a condition for such release, a Member may require […] a guarantee
in the form of a surety, a deposit, or another appropriate instrument provided for in its laws and
regulations". Article 7.3.3 provides that: "Such guarantee shall not be greater than the amount the
Member requires to ensure payment of customs duties, taxes, fees, and charges ultimately due for
the goods covered by the guarantee". Article 7.3.4 elaborates on this notion by addressing penalties
and, regarding this particular aspect, stipulates that a guarantee may be required for any penalties
and fines imposed by the customs authority, establishing that: "In cases where an offence requiring
imposition of monetary penalties or fines has been detected, a guarantee may be required for the
penalties and fines that may be imposed". In Colombia's view, this shows that WTO Members have
recognized that the customs authorities may require a guarantee not only to cover the payment of
customs duties, but also to cover taxes, fees and charges, and penalties. In short, Colombia contends
that its measures fulfil the obligation to establish the guarantee and its operation, while enabling
these guarantees to serve the purpose of covering customs duties and the penalties that may result
from offences committed during the conduct of these proceedings.756
7.622. Colombia maintains that claiming that Article 7.3.4 of the Trade Facilitation Agreement
allows a customs guarantee to be imposed to cover penalties only in "cases where an offence […]
has been detected" is an interpretation inconsistent with the very nature of a guarantee, the purpose
of which is to cover the eventuality provided for in the insurance contract. Customs offences cannot
be detected in advance, as the procedure required would be costly. The above-mentioned provisions
cannot be read to mean that the customs authority predicts the final value to be paid. The most it
can do is to make a reasonable estimate of what that final value would be, which in the case under
examination is established through the Colombian measures. A customs authority is not required to
perfectly anticipate the results of a value determination that has not yet been concluded, insofar as
it entails the application in time of an exhaustive valuation methodology.757
7.623. Colombia concludes that Article 13 of the Customs Valuation Agreement and Article 7.3 of
the Trade Facilitation Agreement expressly permit the use of guarantees to cover the payment of
tariffs, taxes and penalties.758
7.5.2.2 Analysis by the Panel
7.624. The Panel's task is to determine whether, as Panama claims, the specific bond is inconsistent
with Article 13 of the Agreement on Customs Valuation insofar as it is imposed because "it becomes
necessary to delay the determination of the value" of the goods, in that it would exceed the amount
necessary "to cover the ultimate payment of customs duties for which the goods may be liable". 759
Colombia contends that WTO Members are entitled t o require a guarantee for payment of customs
duties, fees and charges, and penalties, and that the specific bond is based on the sufficiency
criterion to cover these obligations.
7.625. The Panel will begin by examining the relevant legal provision and the applic able legal
standard.
7.5.2.2.1 Text of Article 13 of the Customs Valuation Agreement
7.626. Article 13 of the Customs Valuation Agreement stipulates the following:
If, in the course of determining the customs value of imported goods, it becomes
necessary to delay the final determination of such customs value, the importer of the
goods shall nevertheless be able to withdraw them from customs if, where so required,
the importer provides sufficient guarantee in the form of a surety, a deposit or some
other appropriate instrume nt, covering the ultimate payment of customs duties for

756 Colombia's additional written submission, para. 189; and opening statement as respondent at the
757 Colombia's additional written submission, para. 190; and Colombia's opening statement as
respondent at the meeting of the Panel, para. 60. (emphasis original)
758 Colombia's closing statement as respondent at the meeting of the Panel, para. 1.
759 Panama's request for the establishment of a panel, WT/DS461/22, section II.A(ii).

which the goods may be liable. The legislation of each Member shall make provisions
for such circumstances.
7.627. This provision therefore enables importers to withdraw goods in situations where their value
is questioned, through the provision of a guarantee.
7.5.2.2.2 The legal standard under Article 13 of the Customs Valuation Agreement
7.628. Article 13 of the Customs Valuation Agreement enables importers to withdraw imported
goods on which a determination is pending, upon provision of sufficient guarantee where so required
by the customs authority. 760 In customs administration, security is required upon entry of
merchandise when there is some uncertainty about the actual amount of liability that may be lawfully
owed by the importer. Such a security is intended to provide a protection against the non-payment
risk that might arise from the differences between the amount collected at the time of importation
and the liability that may be finally determined.761
7.629. The Panel notes that the Article 13 guarantee is not concerned with the level of tariff
obligations as such, since the guarantee is provided specifically when there is uncertainty regarding
the ultimate actual amount of the customs duties due, for the purpose of securing their payment.762
7.630. It follows from the text of Article 13 of the Customs Valuation Agreement that the guarantee
must be sufficient, take the form of a surety, a deposit or some other appropriate instrument, and
cover the ultimate payment of customs duties for which the goods may be liable.
7.631. The Panel will analyse whether the specific bond fails to meet the requirements of Article 13
of the Customs Valuation Agreement.
7.5.2.2.3 The question of whether the specific bond is inconsistent with Article 13 of the
Customs Valuation Agreement
7.632. Article 13 of the Customs Valuation Agreement gives importers the right to withdraw goods
from customs even where it has been necessary "to delay the final determination of such customs
value". The Panel notes that Panama does not claim that this possibility does not exist for importers
or that the Colombian customs authorities do not allow such withdrawal. Panama's claims relate to
the second aspect of this article. That is, the obligation of importers to provide sufficient guarantee
in the form of a surety, a deposit or some other appropriate instrument, covering the ultimate
payment of customs duties for which the imported goods may be liable, where so required.
7.633. As stated in paragraph 7.630 above, the guarantee must be sufficient, take the form of a
surety, a deposit or some other appropriate instrument, and cover the ultimate payment of customs
duties for which the goods may be liable. T he focus of Panama's claims is that the coverage of the
specific guarantee would not meet the requirement of "covering the ultimate payment of customs
duties for which the goods may be liable". Panama considers that the calculation of the guarantee's
coverage does not take into account the circumstances of each case. Panama also claims that
Article 13 of the Customs Valuation Agreement does not foresee the possibility of requiring a
guarantee amount beyond that which relates to the payment of customs duties , to cover possible
penalties, for example. Regarding the latter claim by Panama, the Panel observes that Panama refers

760 In Thailand – Cigarettes (Philippines), the panel reasoned that:
The determination to impose a guarantee under Article 13 of the Customs Valuation Agreement
is not a mandatory procedural step that needs to be taken to arrive at a final customs value.
Rather, as the text of Article 13 stipulates, a guarantee is a tool in the form of a surety or a
deposit that enables importers to withdraw their goods from customs when it becomes necessary
for a customs office to delay the final determination of the customs value of the imported goods.
The guarantee should also be sufficient to cover the customs duties for which the goods may
ultimately be liable.
In this context, we consider that the imposition of a guarantee is a distinct decision purported to
play a specific role, namely to secure the payment of final customs duty.
(Panel Report, Thailand – Cigarettes (Philippines), para. 7.1039.)
761 Appellate Body Report, US – Shrimp (Thailand) / US – Customs Bond Directive, para. 221.
762 Panel Report, US – Certain EC Products, para. 6.77.

to provisions of the Trade Facilitation Agreement to interpret the obligations under Article 13 of the
Customs Valuation Agreement.
7.634. Colombia, for its part, claims that the fact that Article 13 of the Customs Valuation
Agreement contemplates the use of guarantees expressly for the payment of customs duties does
not mean that the use of guarantees to cover other taxes or penalties is prohibited. A textual analysis
of the provision and the absence of exceptions or prohibitions therein would appear to indicate that,
as argued by Colombia, such a prohibition does not exist. Furthermore, an analysis of the immediate
context of Article 13, that i s, the other provisions of the Customs Valuation Agreement, supports
such a conclusion.
7.635. Panama requests that the Panel interpret the scope of Article 13 of the Customs Valuation
Agreement taking into account the wording of Article 7.3.4 of the Trade Facili tation Agreement.
According to Panama, this would lead the Panel to conclude that Article 13 of the Customs Valuation
Agreement should be interpreted as prohibiting the imposition of guarantees that cover possible
penalties in cases where an offence has not yet been detected. Leaving aside the question of whether
a provision of the Trade Facilitation Agreement may serve as context for the interpretation of a
provision of the Customs Valuation Agreement when one of the parties has not ratified the former,
it does not seem to the Panel that the wording of Article 7.3.4 supports Panama's conclusion. Indeed,
the article in question provides that "[i] n cases where an offence requiring imposition of monetary
penalties or fines has been detected, a guarantee may be required for the penalties and fines that
may be imposed ." The provision allows a guarantee to be required where an offence has been
detected. It does not indicate that a guarantee may be required only in that situation.
7.636. The Panel agrees with Colombia in that the fact that Article 13 of the Customs Valuation
Agreement contemplates the use of guarantees expressly for the payment of customs duties does
not mean that the use of guarantees to cover other taxes or penalties is prohibited under that article.
7.637. Regarding Panama's claims relating to the calculation of the coverage of the guarantee, the
Panel reiterates that, in accordance with Article 7 of Decree No. 2218/2017, the amount of the
specific bond corresponds to 200% of the difference between the declared f.o.b. price and the result
of multiplying the unit price of the respective threshold by the quantity imported. In the Panel's
view, this shows that the amount of the specific bond is not a fixed value for all cases, but that it
actually varies for each import, since a key element in its calculation is the difference between the
declared f.o.b. price and the respective threshold. As is logical, the declared f.o.b. price is specific
to each import and does not depend on the customs authorities, which makes it a factor determined
on a case-by-case basis.
7.638. Panama maintains that the use of the threshold as a reference value is not in keeping with
specific import characteristics and that it is not therefore a valid reference value for determining the
coverage of the guarantee. According to Panama, if the threshold were the relevant criterion for
determining acceptable values, the coverage of the specific bond would have to be established for
the amount of the duties to be levied on the basis of a value slightly h igher than the threshold,
minus the customs duties paid on the basis of the declared value.
7.639. In this regard, the Panel notes that, as indicated above, Article 13 of the Customs Valuation
Agreement refers to "sufficient" guarantee. Colombia in fact claims that the guarantee under Decree
No. 2218/2017 is based precisely on the criterion of sufficiency. In this respect, Colombia explains
that the future event insured by the guarantee is the payment of customs taxes and any penalties
that may apply, and that, as with any other insurance contract, the future and uncertain event may
result in the payment of an amount less than, equal to or greater than the maximum amount of the
guarantee.763
7.640. The Panel echoes the Appellate Body's ruling in this respect in that "in cu stoms
administration, security is required upon entry of merchandise when there is some uncertainty about
the actual amount of liability that may be lawfully owed by the importer". 764 Strictly speaking,
practically any hypothetical exercise could demonstrate that the guarantee will hardly ever coincide

763 To support this assertion, Colombia provides an actual example of a clothing import under
heading 62.10 with a declared f.o.b. price lower than the respective threshold. (Colombia's additional written
submission, paras. 180-183; and Colombiana Kimberly Colpapel insurance policy (Exhibit COL-17)).
764 Appellate Body Report, US – Shrimp (Thailand) / US – Customs Bond Directive, para. 221.

exactly with the amount ultimately payable by an importer. As pointed out by Colombia, it is
impossible, when a dispute arises, to determine with millimetric precision a priori what the value to
be paid might be in the hypothetical event that a penalty were to be imposed. It cannot be excluded
that in some cases where penalties are very high, the guarantee might not cover their payment.
This would occur in particular where the difference between the declared f.o .b. price and the
respective threshold was small. In this regard, it should be noted that, according to Colombia, the
penalties for non-compliance in certain cases can be as high as 150% or 200% of the assessed value
of the imported goods.765
7.641. The Panel recalls that Article 13 of the Customs Valuation Agreement is not concerned with
the level of tariff obligations pending determination, but merely allows for a guarantee system when
there is uncertainty regarding the customs value of the respecti ve goods. The Panel also reiterates
the arguments already made in section 7.5.1.2.1 above, to the effect that, for the reasons explained
therein, the determination of the coverage of the specific bond, while linked to the value of the
goods, is not a customs valuation operation. Hence, the determination of its coverage cannot be
expected to coincide exactly with the customs duties ultimately due.
7.642. Furthermore, the Panel is not convinced by Panama's argument that the specific bond should
not be required for goods from countries with which Colombia has signed economic integration
agreements. The products might not be covered by the agreement or might not be entirely exempt
from duties. It may also be that the final determination of the origin of imported goods forms part
of the customs valuation process and is therefore pending at the time when the guarantee is
requested. This means that there will not ne cessarily be certainty as to the applicability of the
respective exemptions at that particular time. Furthermore, it should be noted that the specific bond
under Decree No. 2218/2017 also serves to cover any possible penalties and that imports of goods
from countries with which Colombia has signed economic integration agreements may also be
subject to penalties if an offence is detected.
7.643. The foregoing is particularly important if it is considered that the provisions of the Customs
Valuation Agreement are to be understood in the context of Article 17 of that Agreement. That is,
that none of these provisions should be construed "as restricting or calling into question the rights
of customs administrations to satisfy themselves as to the truth or accuracy of an y statement,
document or declaration presented for customs valuation purposes".
7.5.2.3 Conclusion
7.644. For all the reasons given above, the Panel concludes that Panama has failed to demonstrate
that the specific bond provided for in Article 7 of Decree No. 2218/2017 is inconsistent with Article 13
of the Customs Valuation Agreement.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, the Panel concludes as follows:
8.2. With respect to its terms of reference, the Panel concludes that:
a. the specific bond and the special import regime with the characteristics described in Decree
No. 1745/2016 are "inextricably linked" and "clearly connected" to the measure declared
by Colombia as taken to comply, that is, the tariffs imposed by Decree No. 1744/2016;
b. the specific bond and the special import regime with the characteristics provided for in
Decree No. 2218/2017 fall within the Panel's terms of reference, as the language of
Panama's panel request is sufficiently broad and the replacement of the original measures
has not changed their essence;
c. in order to fulfil its mandate to resolve the matter before it, it has to examine and make
findings and, where appropriate, recommendations, concerning the specific bond and the

765 Colombia's response to Panel question No. 9, para. 29.

special import regime with the characteristics provided for in Decree No. 2218/2017, not
the characteristics provided for in Decree No. 1745/2016;
d. Panama's claims regarding Article VIII:3 of the GATT 1994 and Article 7.2(g) of the
Customs Valuation Agreement do not fall within the Panel's terms of reference, as Panama
did not include these provisions in its panel request; and
e. Panama's claims in its panel request fall within the Panel's terms of reference in both
proceedings.
8.3. With regard to Decree No. 1744/2016, the Panel concludes that Colombia has demonstrated
that the tariffs provided for in that Decree are not inconsistent with Colombia's obligations under
Articles II:1(a) and II:1(b), first sentence, of the GATT 1994.
8.4. Regarding Panama's claims under XI:1 of the GATT 1994, the Panel concludes that:
a. Panama has failed to demonstrate that the specific bond provided for in Article 7 of Decree
No. 2218/2017 has limiting effects on imports in a manner inconsistent with Article XI:1
of the GATT 1994; and
b. Panama has failed to demonstrate that the special import regime provided for in Articles 4
to 10 of Decree No. 2218/2017 has limiting effects on imports in a manner inconsistent
with Article XI:1 of the GATT 1994.
8.5. With regard to Panama's claims under Article X:3(a) of the GATT 1994, the Panel concludes
that:
a. Panama's claim that Decree No. 390/2016 is administered in a manner inconsistent with
Article X:3(a) of the GATT 1994 through Decree No. 2218/2017 does not fall within the
Panel's terms of reference;
b. Panama has failed to demonstrate that the specific bond provided for in Article 7 of Decree
No. 2218/2017 is administered in a non-uniform, non-impartial or unreasonable manner,
inconsistently with Article X:3(a) of the GATT 1994; and
c. Panama has failed to demonstrate that the special import regime provided for in Articles 4
to 10 of Decree No. 2218/2017 is administered in a non -uniform, non -impartial or
unreasonable manner, inconsistently with Article X:3(a) of the GATT 1994.
8.6. Regarding Panama's claims under the Customs Valuation Agreement, the Panel conclude s as
follows:
a. the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 does
not fall within the scope of application of Articles 1, 2, 3, 5, 6 and 7.2(f) of the Customs
Valuation Agreement in the manner described by Panama. The Pa nel therefore rejects
Panama's claims under each of those Articles; and
b. Panama has failed to demonstrate that the specific bond provided for in Article 7 of Decree
No. 2218/2017 is inconsistent with Article 13 of the Customs Valuation Agreement.
8.7. In view of the foregoing, having found that the tariffs provided for in Decree No. 1744/2016
are not inconsistent with Colombia's obligations under Articles II:1(a) and II:1(b), first sentence, of
the GATT 1994, and that Panama has failed to demonstrate that the spe cific bond and the special
import regime are inconsistent with the WTO Agreement, the Panel concludes that Colombia has
implemented the recommendations and rulings of the DSB in Colombia – Measures Relating to the
Importation of Textiles, Apparel and Footw ear to bring its measure into conformity with its
obligations under the WTO Agreement.

8.8. Having found that Panama has failed to demonstrate that Colombia has acted inconsistently
with its obligations under the WTO Agreement, the Panel considers that no recom mendation under
Article 19.1 of the DSU is necessary, and makes none.