DS457: Peru — Additional duty on imports of certain agricultural products.

The DSB adopted the Appellate Body Report contained in WT/DS457/AB/R and Add. 1 and the Panel Report contained in WT/DS457/R and WT/DS457/R/Add.1, as modified by the Appellate Body Report.

Guatemala reiterated that, as was noted by the Panel and Appellate Body (AB), it had acted in a manner consistent with the principle of good faith in this dispute. There was nothing in the Free Trade Agreement with Peru that prevented it from initiating a dispute with respect to Peru’s price band system. Guatemala was pleased with the Panel and AB Reports finding that the measure in question was in violation of the Agreement on Agriculture and the GATT 1994. Guatemala noted that this was the first time the AB had not summarised the arguments of the parties which were, instead, annexed to the Report. Guatemala welcomed this practice and noted that such small actions could serve as temporary solutions on how best to use the limited resources. Guatemala trusted that Peru would promptly comply with the recommendations and findings in this dispute.

Peru said that it did not share the AB’s conclusions and recommendations in this dispute. In its view, this dispute showed Guatemala’s inconsistent conduct in that, having clearly consented to the application of the measure when it had signed the bilateral agreement with Peru, Guatemala subsequently initiated a dispute at the multilateral level, contrary to the principle of good faith. Peru regretted that the AB had limited its evaluation of good faith and did not consider the clear contradiction in Guatemala’s actions. Peru believed that the measure at issue is compatible with its WTO obligations and it does not violate the GATT 1994 or the Agreement on Agriculture. Despite its views on this dispute, Peru indicated that it will implement the recommendations and rulings within a reasonable period of time.

The US noted that the Panel and AB provided important guidance on the meaning and application of the terms “variable import levies” and “minimum import prices” as mentioned in the Agreement on Agriculture. The US further noted the Appellate Body’s rejection of Peru’s argument that it was permitted to maintain its WTO-inconsistent price range system based on the terms of the Peru-Guatemala FTA, which was not in force. The US said that, as noted by the AB, an FTA cannot amend or modify provisions of the WTO Agreements. The proper route of assessing whether a provision in an FTA may permit a departure from WTO rules are the legal provisions specifically addressing FTAs.

The next regular meeting of the DSB is scheduled for the 31 of August 2015.