DISPUTE SETTLEMENT

DS: Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

See also:

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Current status

 

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Key facts

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 27 November 2015
Appellate Body Report circulated: 7 June 2016
Article 21.3(c) Arbitration Report circulated: 15 November 2016
Article 21.5 Panel Report circulated: 5 October 2018

  

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Latest document

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Panama.

On 18 June 2013, Panama requested consultations with Colombia with respect to the imposition by Colombia of a compound tariff affecting the importation of textiles, apparel and footwear from Panama. The measure at issue is a compound tariff that Colombia has allegedly imposed by Presidential Decree No. 074 of 23 January 2013 (Decree 074/2013). Panama claims that this measure at issue is contained in:

  1. Decree 074/2013;
     
  2. Decree 1497/2011 as regards the definition of the products covered by the nomenclature of Chapters 61, 62, 63 and 64 of the Tariff Schedule; and
     
  3. Memorandum No. 000165 of 30 April 2013 from the Customs Management Department of the Directorate of National Taxes and Customs on “measures to control compliance with Decree 074 of 2013”.

Panama claims that the measure at issue is inconsistent with:

  • Articles II:1(a), II:1(b), VIII:1(a), and X:3(a) of the GATT 1994.

On 28 June 2013, Guatemala requested to join the consultations.

 

Panel and Appellate Body proceedings

On 19 August 2013, Panama requested the establishment of a panel. At its meeting on 30 August 2013, the DSB deferred the establishment of a panel.

At its meeting on 25 September 2013, the DSB established a panel. China, Ecuador, El Salvador, the European Union, Guatemala, Honduras and the United States reserved their third-party rights.  Subsequently, the Philippines reserved its third-party rights. On 20 December 2013, Panama requested the Director-General to compose the panel. On 15 January 2014, the Director-General composed the panel.

On 4 November 2014, the Chair of the panel informed the DSB that the start of the panel proceedings had been deferred owing to the unavailability of senior Secretariat lawyers and the panel therefore expected to issue its final report to the parties in August 2015 at the latest.

On 27 November 2015, the panel report was circulated to Members.

This dispute concerns a compound tariff imposed by Colombia to imports of textiles, apparel and footwear, consisting of: (i) a 10% ad valorem component and (ii) a specific component, which varies according to the import value and customs classification of the merchandise.

Panama challenged the compound tariff in certain situations where, in its view, the measure necessarily results in duties in excess of those set forth in Colombia's Schedule of Concessions (35% or 40% ad valorem, depending on the product), in a manner inconsistent with Article II:1(a) and (b), first sentence, of the GATT 1994.

In response, Colombia argued that the imports affected by the compound tariff constitute “illicit trade” as they are imported at “artificially low prices” in order to launder money. In Colombia's view, Article II of the GATT 1994 does not apply to illicit trade and, therefore, the Panel should reject Panama's claims under this provision. In addition, Colombia argued that Panama failed to make a prima facie case that the compound tariff is inconsistent with Article II:1(a) and (b), first sentence, of the GATT 1994.

Colombia also argued that, if the compound tariff were found to be inconsistent with Article II of the GATT 1994, it is justified under Article XX(a), as a measure necessary to protect public morals, or under Article XX(d), as a measure necessary to secure compliance with Colombia's laws against money laundering.

The Panel refrained from making a finding on whether Article II of the GATT 1994 applies to “illicit trade”. In the Panel's view, such a finding would not be necessary or useful to secure a positive resolution of the dispute. The Panel noted that Colombia's compound tariff applies to all imports of the products at issue, without distinguishing whether those imports constitute “licit” or “illicit” trade, or are being used for money laundering.

The Panel found that the compound tariff results in duties in excess of the bound rates set forth in Colombia's Schedule of Concessions in certain circumstances, and is, therefore, inconsistent with Article II:1(b), first sentence, of the GATT 1994. The compound tariff was also found to be inconsistent with Article II:1(a) of the GATT 1994, as it accords less favourable treatment than that provided for in Colombia's Schedule of Concessions.

With regard to Colombia's defences, the Panel found that Colombia failed to demonstrate that the compound tariff is a measure necessary to protect public morals within the meaning of Article XX(a) of the GATT 1994. More precisely, the Panel found that Colombia failed to demonstrate that the compound tariff was either “designed” or “necessary” to fight money laundering.

The Panel also found that Colombia failed to demonstrate that the compound tariff is a measure necessary to secure compliance with Colombia's laws against money laundering within the meaning of Article XX(d) of the GATT 1994. More precisely, the Panel found that Colombia failed to demonstrate that the compound tariff was “designed” or “necessary” to secure compliance with Colombia's laws against money laundering.

Finally, the Panel found that, in light of the different exemptions to its application, the compound tariff is not applied in a manner consistent with the chapeau of Article XX of the GATT 1994.

On 22 January 2016, Colombia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.

On 22 March 2016, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that the circulation date of the Appellate Body report in this appeal would be communicated to the participants and third participants shortly after the oral hearing, in the light of the scheduling of parallel appeals and the availability of translation services. On 11 April 2016, the Chair of the Appellate Body notified the DSB that the Report in this appeal would be circulated to Members no later than 7 June 2016.

On 7 June 2016, the Appellate Body report was circulated to Members.

Colombia appealed the Panel's findings that the measure was inconsistent with Article II:1(a) and (b) of the GATT 1994, and that Colombia had failed to demonstrate that its measure satisfied the requirements of Article XX(a) and Article XX(d) of the GATT 1994.

Concerning the Panel's findings under Article II:1 of the GATT 1994

With respect to Article II:1(a) and (b) of the GATT 1994, the Appellate Body considered that the basis upon which the Panel refrained from interpreting Article II:1 was flawed. Specifically, the Appellate Body did not consider that the Panel could have refrained from ruling on the interpretative issue before it simply because the challenged measure did not “solely” cover the type of transactions that Colombia maintained was “illicit trade” and therefore outside the scope of Article II:1. For the Appellate Body, the Panel's statement implied that the measure at issue applies, or could apply, to some transactions considered by Colombia to be illicit trade, and thus the Panel was required to address the interpretative issue before it. The Appellate Body therefore found that the Panel acted inconsistently with the obligation in Article 11 of the DSU to make an objective assessment of the matter, including an objective assessment of the applicability of the relevant covered agreements, and reversed the Panel's finding that it was unnecessary for the Panel to issue a finding on whether Article II:1 applies to “illicit trade”.

In completing the legal analysis, the Appellate Body ruled that the scope of Article II:1(a) and (b) does not exclude what Colombia classifies as "illicit trade" from the requirements to respect tariff bindings. The Appellate Body also considered that a Member may seek to address concerns regarding money laundering through the exceptions contained in Article XX of the GATT 1994. The Appellate Body saw no grounds to disturb the Panel's findings that the compound tariff necessarily exceeds Colombia's bound tariff rates in the instances set out in the Panel Report, and upheld the Panel's findings that the compound tariff is inconsistent with Article II:1(a) and (b) of the GATT 1994.

Concerning the Panel's findings under Article XX of the GATT 1994

With respect to Article XX(a) of the GATT 1994, the Appellate Body found that the Panel erred in concluding that Colombia had failed to demonstrate that the compound tariff is a measure “designed” to protect public morals given the Panel's recognition that the compound tariff is not incapable of combating money laundering, such that there is a relationship between that measure and the protection of public morals. The Appellate Body considered that the Panel, contrary to the legal standard under Article XX(a), prematurely concluded its analysis without assessing the degree of contribution of the measure to its objective, and its trade-restrictiveness, together with the other factors relevant to a weighing and balancing exercise with a view to assessing the “necessity” of the measure. The Appellate Body therefore reversed the Panel's finding that Colombia had failed to demonstrate that the compound tariff is “designed” to combat money laundering.

In completing the legal analysis, the Appellate Body found that the measure is indeed “designed” to protect public morals in Colombia within the meaning of Article XX(a). However, in examining whether the compound tariff is “necessary” to protect public morals, the Appellate Body stated that the Panel's findings revealed that there was a lack of sufficient clarity with respect to key aspects of the “necessity” analysis, particularly regarding the degree of contribution of the measure at issue to the objective of combating money laundering and the degree of trade-restrictiveness of the measure. The Appellate Body therefore found that Colombia had not demonstrated that the compound tariff is a measure “necessary to protect public morals” within the meaning of Article XX(a).

After setting out and applying the legal standard under Article XX(d) of the GATT 1994, the Appellate Body reached similar conclusions in respect of the Panel's analysis under that provision. The Appellate Body found that the Panel erred in concluding that Colombia had failed to demonstrate that the measure is “designed” to secure compliance with the relevant provision of laws or regulations that are not GATT-inconsistent, given its recognition that the compound tariff is not incapable of securing compliance with Article 323 of Colombia's Criminal Code, and reversed the Panel's findings in that regard. The Appellate Body completed the legal analysis and found that the measure at issue is “designed” to secure compliance with relevant provisions of the laws or regulations that are not GATT‑inconsistent. However, the Appellate Body found that Colombia had not demonstrated that the compound tariff is a measure “necessary” to secure compliance with Article 323 of Colombia's Criminal Code, within the meaning of Article XX(d).

In the light of the above findings, the Appellate Body did not consider it necessary to examine additional claims of error by Colombia, including that the Panel erred in its “necessity” analysis under Article XX(a); that the Panel acted inconsistently with its duty to conduct an objective assessment of the matter under Article 11 of the DSU in its analysis under Article XX(a); and that the Panel erred in its analysis under the chapeau of Article XX.

At its meeting on 22 June 2016, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.

 

Reasonable period of time

At the DSB meeting on 21 July 2016, Colombia stated that it intended to implement the DSB's recommendations and rulings in a manner that respects its WTO obligations and that it would need a reasonable period of time to do so. On 8 August 2016, Panama requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 30 August 2016, the Director-General appointed Mr Giorgio Sacerdoti as the Arbitrator pursuant to Article 21.3(c) of the DSU. On 5 September 2016, Mr Sacerdoti accepted the appointment.

On 15 November 2016, the Award of the Arbitrator was circulated to Members. The Arbitrator determined the reasonable period of time to be 7 months. The reasonable period of time will thus expire on 22 January 2017.

 

Implementation of adopted reports

On 13 December 2016, Colombia informed the DSB that it had complied with the DSB's recommendations and rulings by issuing Decree 1744 of 2016, which modified the tariffs applicable to imports of products classified in Chapters 61, 62 and 63 of the Customs Tariff, and certain items in Chapter 64. Colombia further noted that as from 2 November 2016, the applicable tariff to other products that were subject to the compound tariff, was the MFN ad valorem tariff set forth in Decree 4927 of 2011.

On 27 February 2017, Colombia requested the Chair of the DSB to circulate to all WTO Members the draft procedures under Articles 21 and 22 of the DSU (sequencing agreement) it had proposed to Panama on 22 February 2017.

 

Proceedings under Article 22 of the DSU (remedies)

On 9 February 2017, Panama requested the authorization of the DSB to suspend concessions or other obligations pursuant to Article 22.2 of the DSU alleging that Colombia had failed to comply with the recommendations and rulings of the DSB in this dispute within the reasonable period of time for implementation. On 17 February 2017, Colombia objected to the level of suspension of concessions or other obligations requested by Panama. At the DSB meeting on 20 February 2017, the matter was referred to arbitration pursuant to Article 22.6 of the DSU.

The Arbitrator was composed by the original panelists.

 

Compliance proceedings (recourse by Colombia)

On 9 February 2017, Colombia requested the establishment of a compliance panel. Colombia maintained that it had brought the compound tariff subject to the DSB's recommendations into compliance with the GATT 1994. At its meeting on 20 February 2017, the DSB deferred the establishment of a compliance panel.

On 27 February 2017, in response to statements made by Panama at the DSB meeting on 20 February 2017, Colombia requested consultations with Panama pursuant to Article 21.5 of the DSU with respect to certain measures adopted by Colombia to comply with the DSB's recommendations and rulings in this dispute.

At its meeting on 6 March 2017, the DSB agreed, pursuant to Article 21.5 of the DSU, to refer to the original panel, if possible, the matter raised by Colombia. Australia, China, Ecuador, the European Union, Guatemala, Honduras, India, Korea, the Russian Federation, Chinese Taipei and the United States reserved their third-party rights.

The compliance panel was composed by the original panelists. On 22 September 2017, the Chair of the compliance panel informed the DSB that the panel expected to issue its final report to the parties by September 2018. The Chair referred to the fact that the panelists in these proceedings under Article 21.5 of the DSU are also serving in the proceedings initiated at the request of Panama pursuant to the same provision and that both sets of proceedings are being conducted simultaneously, and to the parties' agreement regarding the deadlines for their written submissions.

On 5 October 2018, the Compliance panel report was circulated to Members.

This dispute concerns certain measures adopted by Colombia subsequent to the adoption of the DSB's rulings and recommendations in the original proceeding.

The parties disagreed as to which measures adopted by Colombia were measures taken to comply with the DSB's rulings and recommendations within the meaning of Article 21.5 of the DSU.

Colombia argued that it had replaced the compound tariff at issue in the original proceeding with an ad valorem tariff, contained in Decree No. 1744/2016, which did not exceed its WTO bound tariffs, and in that sense, it had brought the measure subject to the DSB's recommendations into compliance with its WTO obligations. Colombia claimed that the ad valorem tariff was its only measure taken to comply with the DSB's rulings and recommendations within the meaning of Article 21.5 of the DSU.

Panama, on the other hand, argued that the ad valorem tariff was not the only measure taken by Colombia to comply, and also identified as measures at issue the specific bond and the special import regime, both provided for in Decree No. 1745/2016, applicable to imports of apparel and footwear priced at or below the thresholds established by Colombia.

Decree No. 1745/206 was repealed and replaced during the Panel proceedings by Decree No. 2218/2017. As a result, the specific bond and the special import regime with the characteristics contained in Decree No. 1745/2016 were replaced with the specific bond and the special import regime with the characteristics contained in Decree No. 2218/2017.

Panama claimed that the specific bond and special import regime with the characteristics contained both in Decree No. 1745/2016 and in Decree No. 2218/2017 were inconsistent with: (a) the obligation of the general elimination of quantitative restrictions provided for in Article XI:1 of the GATT 1994; (b) the obligation to administer in a uniform, impartial and reasonable manner all laws, regulations, decisions and rulings contained in Article X:3(a) of the GATT 1994; and (c) the customs valuation provisions contained in Article VIII:3 of the GATT 1994 and Articles 1 to 7.2 of the Customs Valuation Agreement.

Colombia maintained that the specific bond and special import regime did not fall within the Panel's terms of reference. Colombia also argued that even if the specific bond and the special import regime did fall within the Panel's terms of reference, they would be consistent with Colombia's obligations under the GATT 1994 and the Customs Valuation Agreement. Finally, Colombia adduced that if the specific bond and the special import regime were found to be inconsistent with WTO rules, they would be justified under Article XX(a) of the GATT 1994 as measures necessary to protect public morals, or under Article XX(d) of the GATT 1994 as measures necessary to secure compliance with Colombia's laws relating to customs and money laundering.

FINDINGS:

With respect to their terms of reference, the Panels concluded that:

  1. the specific bond and special import regime with the characteristics described in Decree No. 1745/2016 were “inextricably linked” and “clearly connected” to the measure declared to have been taken by Colombia to comply, that is, the tariffs imposed by Decree No. 1744/2016;
  2. the specific bond and the special import regime with the characteristics provided for in Decree No. 2218/2017 fell within the Panel's terms of reference, as the language of Panama's panel request was sufficiently broad, and the replacement of the original measures had not changed their essence;
  3. in order to fulfil its mandate to resolve the matter brought before it, it had to examine and make findings and, where appropriate, recommendations, concerning the specific bond and the special import regime with the characteristics provided for in Decree No. 2218/2017, not the characteristics provided for in Decree No. 1745/2016;
  4. Panama's claims regarding Article VIII:3 of the GATT 1994 and Article 7.2(g) of the Customs Valuation Agreement did not fall within the Panel's terms of reference, as Panama did not include these provisions in its panel request; and
  5. Panama's claims in its panel request fell within the Panel's terms of reference in both proceedings.

With regard to Decree No. 1744/2016, the Panels concluded that Colombia had demonstrated that the tariffs provided for in that Decree were not inconsistent with Colombia's obligations under Articles II:1(a) and II:1(b), first sentence, of the GATT 1994.

Regarding Panama's claims under Article XI:1 of the GATT 1994, the Panels concluded that:

  1. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 had limiting effects on imports in a manner inconsistent with Article XI:1 of the GATT 1994; and
  2. Panama had failed to demonstrate that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 had limiting effects on imports in a manner inconsistent with Article XI:1 of the GATT 1994.

With regard to Panama's claims under Article X:3(a) of the GATT 1994, the Panels concluded that:

  1. Panama's claim that Decree No. 390/2016 was administered in a manner inconsistent with Article X:3(a) of the GATT 1994 through Decree No. 2218/2017 did not fall within the Panel's terms of reference;
  2. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 was administered in a non‑uniform, non‑impartial or unreasonable manner, inconsistently with Article X:3(a) of the GATT 1994; and
  3. Panama had failed to demonstrate that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 was administered in a non‑uniform, non‑impartial or unreasonable manner, inconsistently with Article X:3(a) of the GATT 1994.

Regarding Panama's claims under the Customs Valuation Agreement, the Panels concluded as follows:

  1. The special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 did 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 Panel therefore rejected Panama's claims under each of those Articles; and
  2. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 was inconsistent with Article 13 of the Customs Valuation Agreement.

Having found that the tariffs provided for in Decree No. 1744/2016 were not inconsistent with Colombia's obligations under Articles II:1(a) and II:1(b), first sentence, of the GATT 1994, and that Panama had failed to demonstrate that the specific bond and the special import regime were inconsistent with the WTO Agreement, the Panels concluded that Colombia had implemented the recommendations and rulings of the DSB in Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear to bring its measure into conformity with its obligations under the WTO Agreement.

Having found that Panama had failed to demonstrate that Colombia had acted inconsistently with its obligations under the WTO Agreement, the Panels considered that no recommendation under Article 19.1 of the DSU was necessary, and made none.

On 20 November 2018, Panama notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.

 

Compliance proceedings (recourse by Panama)

On 9 March 2017, Panama requested joint consultations with Colombia pursuant to Articles 4 and 21.5 of the DSU on certain measures, some of which are included in Colombia's request for consultations and others which, allegedly, are not.

On 10 May 2017, Panama requested the establishment of a compliance panel. At its meeting on 22 May 2017 the DSB deferred the establishment of a compliance panel.

At its meeting on 19 June 2017, the DSB agreed, pursuant to Article 21.5 of the DSU, to refer to the original panel, if possible, the matter raised by Panama. 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. 

The compliance panel was composed by the original panelists. On 22 September 2017, the Chair of the compliance panel informed the DSB that the panel expected to issue its final report to the parties by September 2018. The Chair referred to the fact that the panelists in these proceedings under Article 21.5 of the DSU are also serving in the proceedings initiated at the request of Colombia pursuant to the same provision and that both sets of proceedings are being conducted simultaneously, and to the parties' agreement regarding the deadlines for their written submissions.

On 5 October 2018, the Compliance panel report was circulated to Members.

This dispute concerns certain measures adopted by Colombia subsequent to the adoption of the DSB's rulings and recommendations in the original proceeding.

The parties disagreed as to which measures adopted by Colombia were measures taken to comply with the DSB's rulings and recommendations within the meaning of Article 21.5 of the DSU.

Colombia argued that it had replaced the compound tariff at issue in the original proceeding with an ad valorem tariff, contained in Decree No. 1744/2016, which did not exceed its WTO bound tariffs, and in that sense, it had brought the measure subject to the DSB's recommendations into compliance with its WTO obligations. Colombia claimed that the ad valorem tariff was its only measure taken to comply with the DSB's rulings and recommendations within the meaning of Article 21.5 of the DSU.

Panama, on the other hand, argued that the ad valorem tariff was not the only measure taken by Colombia to comply, and also identified as measures at issue the specific bond and the special import regime, both provided for in Decree No. 1745/2016, applicable to imports of apparel and footwear priced at or below the thresholds established by Colombia.

Decree No. 1745/206 was repealed and replaced during the Panel proceedings by Decree No. 2218/2017. As a result, the specific bond and the special import regime with the characteristics contained in Decree No. 1745/2016 were replaced with the specific bond and the special import regime with the characteristics contained in Decree No. 2218/2017.

Panama claimed that the specific bond and special import regime with the characteristics contained both in Decree No. 1745/2016 and in Decree No. 2218/2017 were inconsistent with: (a) the obligation of the general elimination of quantitative restrictions provided for in Article XI:1 of the GATT 1994; (b) the obligation to administer in a uniform, impartial and reasonable manner all laws, regulations, decisions and rulings contained in Article X:3(a) of the GATT 1994; and (c) the customs valuation provisions contained in Article VIII:3 of the GATT 1994 and Articles 1 to 7.2 of the Customs Valuation Agreement.

Colombia maintained that the specific bond and special import regime did not fall within the Panel's terms of reference. Colombia also argued that even if the specific bond and the special import regime did fall within the Panel's terms of reference, they would be consistent with Colombia's obligations under the GATT 1994 and the Customs Valuation Agreement. Finally, Colombia adduced that if the specific bond and the special import regime were found to be inconsistent with WTO rules, they would be justified under Article XX(a) of the GATT 1994 as measures necessary to protect public morals, or under Article XX(d) of the GATT 1994 as measures necessary to secure compliance with Colombia's laws relating to customs and money laundering.

FINDINGS:

With respect to their terms of reference, the Panels concluded that:

  1. the specific bond and special import regime with the characteristics described in Decree No. 1745/2016 were “inextricably linked” and “clearly connected” to the measure declared to have been taken by Colombia to comply, that is, the tariffs imposed by Decree No. 1744/2016;
  2. the specific bond and the special import regime with the characteristics provided for in Decree No. 2218/2017 fell within the Panel's terms of reference, as the language of Panama's panel request was sufficiently broad, and the replacement of the original measures had not changed their essence;
  3. in order to fulfil its mandate to resolve the matter brought before it, it had to examine and make findings and, where appropriate, recommendations, concerning the specific bond and the special import regime with the characteristics provided for in Decree No. 2218/2017, not the characteristics provided for in Decree No. 1745/2016;
  4. Panama's claims regarding Article VIII:3 of the GATT 1994 and Article 7.2(g) of the Customs Valuation Agreement did not fall within the Panel's terms of reference, as Panama did not include these provisions in its panel request; and
  5. Panama's claims in its panel request fell within the Panel's terms of reference in both proceedings.

With regard to Decree No. 1744/2016, the Panels concluded that Colombia had demonstrated that the tariffs provided for in that Decree were not inconsistent with Colombia's obligations under Articles II:1(a) and II:1(b), first sentence, of the GATT 1994.

Regarding Panama's claims under Article XI:1 of the GATT 1994, the Panels concluded that:

  1. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 had limiting effects on imports in a manner inconsistent with Article XI:1 of the GATT 1994; and
  2. Panama had failed to demonstrate that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 had limiting effects on imports in a manner inconsistent with Article XI:1 of the GATT 1994.

With regard to Panama's claims under Article X:3(a) of the GATT 1994, the Panels concluded that:

  1. Panama's claim that Decree No. 390/2016 was administered in a manner inconsistent with Article X:3(a) of the GATT 1994 through Decree No. 2218/2017 did not fall within the Panel's terms of reference;
  2. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 was administered in a non‑uniform, non‑impartial or unreasonable manner, inconsistently with Article X:3(a) of the GATT 1994; and
  3. Panama had failed to demonstrate that the special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 was administered in a non‑uniform, non‑impartial or unreasonable manner, inconsistently with Article X:3(a) of the GATT 1994.

Regarding Panama's claims under the Customs Valuation Agreement, the Panels concluded as follows:

  1. The special import regime provided for in Articles 4 to 10 of Decree No. 2218/2017 did 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 Panel therefore rejected Panama's claims under each of those Articles; and
  2. Panama had failed to demonstrate that the specific bond provided for in Article 7 of Decree No. 2218/2017 was inconsistent with Article 13 of the Customs Valuation Agreement.

Having found that the tariffs provided for in Decree No. 1744/2016 were not inconsistent with Colombia's obligations under Articles II:1(a) and II:1(b), first sentence, of the GATT 1994, and that Panama had failed to demonstrate that the specific bond and the special import regime were inconsistent with the WTO Agreement, the Panels concluded that Colombia had implemented the recommendations and rulings of the DSB in Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear to bring its measure into conformity with its obligations under the WTO Agreement.

Having found that Panama had failed to demonstrate that Colombia had acted inconsistently with its obligations under the WTO Agreement, the Panels considered that no recommendation under Article 19.1 of the DSU was necessary, and made none.

On 20 November 2018, Panama notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.

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