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Complaint by Panama.
On 12 July 2007, Panama requested consultations with Colombia on (i) indicative prices applicable to specific goods and (ii) restrictions on ports of entry for certain goods.
Panama's request concerning indicative prices relates to a series of resolutions promulgated in June 2007 which establish a mechanism of indicative prices. More specifically, Colombia is alleged by Panama to require that importers of specific goods pay customs duties and other duties or charges and taxes based on the indicative prices, rather than on the valuation methods set out in Article VII of the GATT 1994 and the Agreement on Customs Valuation.
Moreover, Panama alleges that the tax base for Colombia's sales tax on imported products is based on the indicative price whereas the tax base for the sales tax on the like domestic products is based on the transaction value. According to Panama, the difference in tax bases therefore results in the imposition of a sales tax burden on imported products higher than that borne by the domestic like products.
Panama claims that imposition of indicative prices in the above-mentioned circumstances results in possible inconsistencies with Articles 1-7 and 13 of the Agreement on Customs Valuation as well as Article VII, Article II:1(a) and (b). and Article III:2 (or III:4) of the GATT 1994.
Panama further alleges that Colombia has not published the methodology for the establishment of the indicative prices. Panama considers that this is inconsistent with Colombia's obligations under Article X:1 of the GATT 1994.
Finally, Colombia's administration of its customs laws and the indicative prices is alleged to be conducted in a manner that is inconsistent with Colombia's obligations under Article X:3(a) of the GATT 1994.
In relation to restrictions on ports of entry, Panama's request for consultations is directed at a resolution of June 2007 which provides that all goods classifiable in Chapters 50-64 of the Customs Tariff coming from the Free Zone of Colon in Panama shall be entered and imported exclusively through the jurisdictions of the Special Customs Administration of Bogota and the Barranquilla Customs Office. This requirement does not apply to goods arriving directly from third countries. The regulation provides that with respect to these goods, the authorization of the customs transit procedure will not be appropriate. Furthermore, the import declaration applicable to these imports shall be presented prior to their arrival in the national customs territory but not more than 15 days in advance. If an importer does not comply with these requirements, it is subject to special procedures under Colombia's Customs Code, including the detention of goods.
Panama considers that these restrictions are inconsistent with Colombia's obligations pursuant to Articles XI:1, XIII:1, V:2, V:6 and I:1 of the GATT 1994.
On 24 July 2007, Honduras requested to join the consultations. On 25 July 2007, Guatemala requested to join the consultations. On 27 July 2007, Chinese Taipei requested to join the consultations. Subsequently, Colombia informed the DSB that it had accepted the requests of Guatemala, Honduras and Chinese Taipei to join the consultations.
On 14 September 2007, Panama requested the establishment of a panel. At its meeting on 28 September 2007, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 22 October 2007, the DSB established a panel. Ecuador, the European Communities, Guatemala, Honduras, India, Chinese Taipei and the United States reserved their third-party rights. Subsequently, China and Turkey reserved their third-party rights.
On 8 February 2008, the panel was composed.
On 9 September 2008, the Chairman of the panel informed the DSB that the panel would not be able to complete its work within six months and that the panel expects to issue its final report to the parties early in 2009.
On 27 April 2009, the panel report was circulated to Members. The panel upheld Panama's claims that that Articles 128.5 e) of Decree No. 2685 and 172.7 of Resolution No. 4240, as well as the various resolutions establishing indicative prices, are inconsistent “as such” with the obligation established in the Customs Valuation Agreement to apply, in a sequential manner, the methods of valuation provided in Articles 1, 2, 3, 5 and 6 of the Customs Valuation Agreement and with Article 7.2(b) and (f) of the Customs Valuation Agreement.
The panel declined to rule separately on Panama's claims that these measures are “as such” inconsistent with Article 7.2(g) of the Customs Valuation Agreement and Article III:2, first sentence, and III:4 of the GATT 1994 and on Panama's “as applied” claims pertaining to the consistency of Colombia's indicative prices regime with the Customs Valuation Agreement, as well as Article III:2, first sentence, and III:4 of the GATT 1994.
The panel upheld Panama's claims that the ports of entry measure is inconsistent with Article I:1, the first and second sentences of Article V:2, the first sentence of Article V:6, and Article XI:1 of the GATT 1994, and declined to rule separately on Panama's claims that this measure is inconsistent with Articles I:1 and XIII:1 of the GATT 1994. The panel further rejected Colombia's defence that the ports of entry measure is justified under Article XX(d) of the GATT 1994.
The panel concluded that to the extent that Colombia has acted inconsistently with the provisions of the Customs Valuation Agreement and the GATT 1994, it has nullified or impaired benefits accruing to Panama thereunder and recommended that Colombia bring its measures into conformity with its obligations under the Customs Valuation Agreement and the GATT 1994.
On 20 May 2009, the DSB adopted the panel report.
Implementation of adopted reports
At the DSB meeting on 19 June 2009, Colombia informed the DSB of its intention to comply and that it needed a reasonable period of time to comply with the DSB recommendations. On 7 July 2009, Panama requested binding arbitration under Article 21.3(c) of the DSU. On 30 July 2009, pursuant to the request received on 24 July 2009 from Panama, 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 3 August 2009 to Panama and Colombia. On 2 October 2009, the award of the Arbitrator was circulated. The Arbitrator determined that the reasonable period of time for Colombia to implement the recommendations and rulings of the DSB is eight months and 15 days from the date of the adoption of the panel report. The reasonable period of time will thus end on 4 February 2010. At the DSB meeting on 18 February 2010, Colombia said that it had undertaken measures to comply with the DSB recommendations and rulings well in advance of the expiration of the reasonable period of time. On 23 February 2010, Panama and Colombia notified the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.