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Report of the Panel

TABLE OF WTO CASES CITED IN THIS REPORT

Short TitleFull Case Title and Citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515
Argentina – Footwear (EC) Panel Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/R, adopted 12 January 2000, as modified by Appellate Body Report, WT/DS121/AB/R, DSR 2000:II, 575
Argentina – Hides and Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, DSR 2001:V, 1779
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327
Australia – Salmon Panel Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/R and Corr.1, adopted 6 November 1998, as modified by Appellate Body Report, WT/DS18/AB/R, DSR 1998:VIII, 3407
Brazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, 167
Brazil – Desiccated Coconut Panel Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/R, adopted 20 March 1997, upheld by Appellate Body Report, WT/DS22/AB/R, DSR 1997:I, 189
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007
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
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377
Canada – Aircraft Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20 August 1999, upheld by Appellate Body Report, WT/DS70/AB/R, DSR 1999:IV, 1443
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, 2985
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate Body Report, WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, 3043
Canada – Dairy (Article 21.5 – New Zealand and US II) Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2, adopted 17 January 2003, DSR 2003:I, 213
Canada – Dairy (Article 21.5 – New Zealand and US II) Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/RW2, WT/DS113/RW2, adopted 17 January 2003, as modified by Appellate Body Report, WT/DS103/AB/RW2, WT/DS113/AB/RW2, DSR 2003:I, 255
Canada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, 449
Canada – Periodicals Panel Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/R and Corr.1, adopted 30 July 1997, as modified by Appellate Body Report, WT/DS31/AB/R, DSR 1997:I, 481
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, 2739
Canada – Wheat Exports and Grain Imports Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, adopted 27 September 2004, upheld by Appellate Body Report, WT/DS276/AB/R, DSR 2004:VI, 2817
Chile – Alcoholic Beverages Appellate Body Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I, 281
Chile – Alcoholic Beverages Panel Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/R, WT/DS110/R, adopted 12 January 2000, as modified by Appellate Body Report, WT/DS87/AB/R, WT/DS110/AB/R, DSR 2000:I, 303
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, 3045, and Corr.1
Chile – Price Band System Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, adopted 23 October 2002, as modified by Appellate Body Report, WT/DS207AB/R, DSR 2002:VIII, 3127
Chile – Price Band System (Article 21.5 – Argentina) Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/AB/RW, adopted 22 May 2007
Chile – Price Band System (Article 21.5 – Argentina) Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/RW and Corr.1, adopted 22 May 2007, upheld by Appellate Body Report, WT/DS207/AB/RW
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts, WT/DS339/R, WT/DS340/R, WT/DS342/R and Add.1 and Add.2, adopted 12 January 2009, as upheld (WT/DS339/R), and as modified (WT/DS340/R, WT/DS342/R) by Appellate Body Reports WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R
Dominican Republic – Import and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005, DSR 2005:XV, 7367
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, 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, 591
EC – Bananas III (Ecuador) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Ecuador, WT/DS27/R/ECU, adopted 25 September 1997, as modified by Appellate Body Report, WT/DS27/AB/R, DSR 1997:III, 1085
EC – Bananas III (Guatemala and Honduras) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras, WT/DS27/R/GTM, WT/DS27/R/HND, adopted 25 September 1997, as modified by Appellate Body Report, WT/DS27/AB/R, DSR 1997:II, 695
EC – Bananas III (Mexico) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Mexico, WT/DS27/R/MEX, adopted 25 September 1997, as modified by Appellate Body Report, WT/DS27/AB/R, DSR 1997:II, 803
EC – Bananas III (US) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by the United States, WT/DS27/R/USA, adopted 25 September 1997, as modified by Appellate Body Report, WT/DS27/AB/R, DSR 1997:II, 943
EC – Bananas III(Article 21.5 – Ecuador II / 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 / Recourse to Article 21.5 of the DSU by the United States, WT/DS27/AB/RW2/ECU / WT/DS27/AB/RW/USA, adopted 11 December 2008,
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 Reports, WT/DS27/AB/RW2/ECU / WT/DS27/AB/RW/USA
EC – Bananas III(Article 21.5 – US) Panel Report, 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/RW/USA and Corr.1, adopted 11 December 2008, as modified by Appellate Body Reports, WT/DS27/AB/RW2/ECU / WT/DS27/AB/RW/USA
EC – Computer Equipment Appellate Body Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, DSR 1998:V, 1851
EC – Computer Equipment Panel Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted 22 June 1998, as modified by Appellate Body Report, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, DSR 1998:V, 1891
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, 135
EC – Hormones (Canada) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), Complaint by Canada, WT/DS48/R/CAN, adopted 13 February 1998, as modified by Appellate Body Report, WT/DS26/AB/R, WT/DS48/AB/R, DSR 1998:II, 235
EC – Hormones (US) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), Complaint by the United States, WT/DS26/R/USA, adopted 13 February 1998, as modified by Appellate Body Report, WT/DS26/AB/R, WT/DS48/AB/R, DSR 1998:III, 699
EC – Trademarks and Geographical Indications (US) Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII, 3499
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, 3767
Guatemala – Cement I Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/R, adopted 25 November 1998, as modified by Appellate Body Report, WT/DS60/AB/R, DSR 1998:IX, 3797
India – Autos Appellate Body Report, India – Measures Affecting the Automotive Sector, WT/DS146/AB/R, WT/DS175/AB/R, adopted 5 April 2002, DSR 2002:V, 1821
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, 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, 9
India – Patents (US) Panel Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, Complaint by the United States, WT/DS50/R, adopted 16 January 1998, as modified by Appellate Body Report, WT/DS50/AB/R, DSR 1998:I, 41
India – Quantitative Restrictions Appellate Body Report, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/AB/R, adopted 22 September 1999, DSR 1999:IV, 1763
India – Quantitative Restrictions Panel Report, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/R, adopted 22 Sep tember 1999, upheld by Appellate Body Report, WT/DS90/AB/R, DSR 1999:V, 1799
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1 and 2, adopted 23 July 1998, and Corr. 3 and 4, DSR 1998:VI, 2201
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, 97
Japan – Alcoholic Beverages II Panel Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by Appellate Body Report, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, 125
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391
Japan – Apples Panel Report, Japan – Measures Affecting the Importation of Apples, WT/DS245/R, adopted 10 December 2003, upheld by Appellate Body Report, WT/DS245/AB/R, DSR 2003:IX, 4481
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, 1179
Korea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3
Korea – Alcoholic Beverages Panel Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/R, WT/DS84/R, adopted 17 February 1999, as modified by Appellate Body Report, WT/DS75/AB/R, WT/DS84/AB/R, DSR 1999:I, 44
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, 3
Korea – Dairy Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/R and Corr.1, adopted 12 January 2000, as modified by Appellate Body Report, WT/DS98/AB/R, DSR 2000:I, 49
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, 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, 59
Mexico – Anti-Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, 10853
Mexico – Anti-Dumping Measures on Rice Panel Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as modified by Appellate Body Report, WT/DS295/AB/R, DSR 2005:XXIII, 11007
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 DSUby the United States, WT/DS132/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6675
Mexico – Corn Syrup (Article 21.5 – US) Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSUby the United States, WT/DS132/RW, adopted 21 November 2001, upheld by Appellate Body Report, WT/DS132/AB/RW, DSR 2001:XIII, 6717
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5 April 2001, as modified by Appellate Body Report, WT/DS122/AB/R, DSR 2001:VII, 2741
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice, WT/DS334/R, adopted 22 October 2007
Turkey – Textiles Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19 November 1999, DSR 1999:VI, 2345
Turkey – Textiles Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/R, adopted 19 November 1999, as modified by Appellate Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, 4793
US – 1916 Act (EC) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by the European Communities, WT/DS136/R and Corr.1, adopted 26 September 2000, upheld by Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4593
US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan , WT/DS162/R and Add.1, adopted 26 September 2000, upheld by Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4831
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, 3779
US – Carbon Steel Panel Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/R and Corr.1, adopted 19 December 2002, as modified by Appellate Body Report, WT/DS213/AB/R, DSR 2002:IX, 3833
US – Certain EC Products Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373
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, 413
US – Corrosion-Resistant Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3
US – Corrosion-Resistant Steel Sunset Review Panel Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/R, adopted 9 January 2004, as modified by Appellate Body Report, WTDS244/AB/R, DSR 2004:I, 85
US – DRAMS Panel Report, United States – Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabit or Above from Korea, WT/DS99/R, adopted 19 March 1999, DSR 1999:II, 521
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619
US – FSC Panel Report, United States – Tax Treatment for "Foreign Sales Corporations", WT/DS108/R, adopted 20 March 2000, as modified by Appellate Body Report, WT/DS108/AB/R, DSR 2000:IV, 1675
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, 5663, and Corr.1
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report, WT/DS285/AB/R, DSR 2005:XII, 5797
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3
US – Gasoline Panel Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body Report, WT/DS2/AB/R, DSR 1996:I, 29
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, 3257
US – Oil Country Tubular Goods Sunset Reviews Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/R and Corr.1, adopted 17 December 2004, as modified by Appellate Body Report, W/DS/268/AB/R, DSR 2004:VIII, 3421
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815
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, 6481
US – Shrimp (Article 21.5 – Malaysia) Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/RW, adopted 21 November 2001, upheld by Appellate Body Report, WT/DS58/AB/RW, DSR 2001:XIII, 6529
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
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
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1, adopted 17 February 2004, as modified by Appellate Body Report, WT/DS257/AB/R, DSR 2004:II, 641
US – Steel Safeguards Panel Reports, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/R, WT/DS249/R, WT/DS251/R, WT/DS252/R, WT/DS253/R, WT/DS254/R, WT/DS258/R, WT/DS259/R, and Corr.1, adopted 10 December 2003, as modified by Appellate Body Report, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, DSR 2003:VIII, 3273
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, 3
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Corr.1, and Add.1 to Add.3, adopted 21 March 2005, as modified by Appellate Body Report, WT/DS267/AB/R, DSR 2005:II, 299
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, 323
US – Wool Shirts and Blouses Panel Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/R, adopted 23 May 1997, upheld by Appellate Body Report, WT/DS33/AB/R, DSR 1997:I, 343

TABLE OF GATT CASES CITED IN THIS REPORT

Short TitleFull Case Title and Citation
Canada – Provincial Liquor Boards (EEC) Panel Report, Canada – Import, Distribution and Sale of Alcoholic Drinks by Canadian Provincial Marketing Agencies, adopted 22 March 1988, BISD 35S/37
Canada – Provincial Liquor Boards (US) Panel Report, Canada – Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies, adopted 18 February 1992, BISD 39S/27
EEC – Animal Feed Proteins Panel Report, EEC – Measures on Animal Feed Proteins, adopted 14 March 1978, BISD 25S/49
EEC – Apples (US) Panel Report, European Economic Community – Restrictions on Imports of Apples – Complaint by the United States, adopted 22 June 1989, BISD 36S/135
EEC – Apples I (Chile) Panel Report, EEC Restrictions on Imports of Apples from Chile, adopted 10 November 1980, BISD 27S/98
EEC – Apples II (Chile) Panel Report, EEC – Restrictions on Imports of Apples, 20 June 1994, unadopted, DS39/R
EEC – Minimum Import Prices Panel Report, EEC – Programme of Minimum Import Prices, Licences and Surety Deposits for Certain Processed Fruits and Vegetables, adopted 18 October 1978, BISD 25S/68
EEC – Oilseeds I Panel Report, European Economic Community – Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, adopted 25 January 1990, BISD 37S/86
Japan – Leather II (US) Panel Report, Panel on Japanese Measures on Imports of Leather, adopted 15 May 1984, BISD 31S/94
Japan – Semi-Conductors Panel Report, Japan – Trade in Semi-Conductors, adopted 4 May 1988, BISD 35S/116
US – Canadian Tuna Panel Report, United States – Prohibition of Imports of Tuna and Tuna Products from Canada, adopted 22 February 1982, BISD 29S/91
US – Non-Rubber Footwear Panel Report, United States – Countervailing Duties on Non-Rubber Footwear from Brazil, adopted 13 June 1995, BISD 42S/208
US – Tobacco Panel Report, United States Measures Affecting the Importation, Internal Sale and Use of Tobacco, adopted 4 October 1994, BISD 41S/I/131
US – Section 337 Panel Report, United States Section 337 of the Tariff Act of 1930, adopted 7 November 1989, BISD 36S/345
US – Superfund Panel Report, United States – Taxes on Petroleum and Certain Imported Substances, adopted 17 June 1987, BISD 34S/136

I. INTRODUCTION

1.1.
On 12 July 2007, Panama requested consultations with Colombia pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and Article 19.1 and 19.2 of the Agreement on Implementation of Article VII of the GATT 1994 ("Customs Valuation Agreement") with respect to enacted Colombian customs regulations on the importation of certain textiles, apparel and footwear classifiable under HS Chapters 50‑64 of Colombia's Tariff Schedule and arriving from Panama.1 Panama and Colombia held consultations on the measures on 31 July 2007. However, no mutually agreed solution was found.
1.2.
On 14 September 2007, Panama requested the establishment of a panel pursuant to Article 19.1 of the Customs Valuation Agreement, and Article 6.2 of the DSU.
1.3.
At its meeting on 22 October 2007, the DSB established a panel pursuant to the request of Panama in document WT/DS366/6, in accordance with Article 6 of the DSU.
1.4.
The Panel's terms of reference are the following:

"To examine, in the light of the relevant provisions of the covered agreements cited by Panama in document WT/DS366/6, the matter referred to the DSB by Panama in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."2

1.5.
The parties agreed to the following composition of the Panel effective as of 8 February 2008:

Chairman: Mr Gary Horlick

Members: Mr Gonzalo Biggs

Mr Miguel Rodriguez Mendoza

1.6.
China, Ecuador, the European Communities, Guatemala, Honduras, India, Chinese Taipei, Turkey and the United States reserved their rights to participate in the Panel proceedings as third parties.
1.7.
The Panel held its first substantive meeting with the parties on 21 and 22 May 2008. The session with the third parties was held on 22 May 2008. The second substantive meeting was held on 29 July 2008.
1.8.
On 10 October 2008, the Panel issued the descriptive part of its Panel report to the parties in both English and Spanish. The Panel issued its interim report to the parties on 4 March 2009. The Panel issued its final report to parties on 15 April 2009.

II. FACTUAL ASPECTS

A. BACKGROUND

2.1.
This dispute concerns several Colombian customs measures affecting certain textiles, apparel and footwear classifiable under HS Chapters 50–64 of Colombia's Tariff Schedule that are exported and re‑exported from the Colon Free Zone ("CFZ") and Panama to Colombia.3 These measures include the use of indicative prices in customs procedures and restrictions on ports of entry available to subject textiles, apparel and footwear.
2.2.
On 29 June 2005, Colombia's customs authority, the Dirección de Impuestos y Aduanas Nacionales de Colombia ("DIAN"), issued the first of several resolutions establishing indicative Free On Board ("f.o.b.") prices for a number of products, including certain textiles, apparel and footwear classifiable under HS Chapters 50–64, and arriving from Panama, China and other countries.4 Shortly thereafter, on 12 July 2005, Colombia introduced a measure requiring those subject textiles, apparel and footwear originating in or arriving from Panama and China to enter only at Bogota airport or Barranquilla seaport.5
2.3.
On 20 July 2006, Panama requested consultations under the DSU with Colombia concerning the use of indicative prices and restrictions on ports of entry.6 On 1 December 2006, Panama notified the DSB that it had reached a Mutually Agreed Solution with Colombia in accordance with Article 3.6 of the DSU7, under which Colombia repealed the measures at issue and the parties concluded a customs cooperation agreement, entitled the "Protocol of Procedure for Cooperation and Exchange of Customs Information between Customs Authorities of the Republic of Panama and the Republic of Colombia" ("Customs Cooperation Protocol").8 Under the Customs Cooperation Protocol, which entered into force in November 20069, the parties agreed to launch a programme of cooperation and mutual assistance for the purpose of investigating and preventing customs law infringements in both countries. Additionally, officials agreed to hold periodic meetings to assess the effectiveness of the Customs Cooperation Protocol.
2.4.
On 26 June 2007, Colombia enacted several customs measures similar in nature to those enacted previously in June and July of 2005, despite the earlier enactment of the Customs Cooperation Protocol. These measures also established indicative prices for textiles, apparel and footwear arriving into Colombia from all countries, except those with which Colombia had signed free trade agreements, as well as port restrictions on importation of textiles, apparel and footwear arriving from the CFZ and Panama. On 12 July 2007, Panama requested consultations with Colombia concerning the latest application of indicative prices and restrictions on entry of textiles, apparel and footwear arriving from Panama and the CFZ. Panama also requested consultations concerning a requirement that importers provide an advance declaration and clear customs for all textiles, apparel and footwear arriving from Panama prior to their arrival in Colombia.10 These measures are the subject of the present dispute and are discussed in further detail below.
2.5.
Textiles, apparel and footwear imported from the CFZ and Panama into Colombia are significant both in terms of volume and value.11 Colombia has reported significant ongoing problems with under-invoicing and smuggling in relation to these products, with particular emphasis placed on those arriving from the CFZ and Panama.12 The Colombian Unidad de Información y Analisis Financiero (UIAF)13 has established links between money-laundering, contraband and under-invoicing in Colombia arising from the introduction of goods into Colombia purchased in the CFZ with illicit US currency.14 The United Nations, International Monetary Fund and other Member countries have also assessed the relationship between the CFZ and the Colombian Black Market Peso Exchange, a trade-based laundering mechanism.15

B. THE USE OF INDICATIVE PRICES IN RELATION TO TEXTILE, APPAREL AND FOOTWEAR

2.6.
Colombia amended its Customs Statute and introduced indicative prices as a subcategory of reference prices on 30 December 2004.16 On 29 June 2005 and subsequently, on 26 June 2007, Colombia enacted a number of resolutions mandating the use of indicative prices with respect to certain textile, apparel and footwear imports originating in all countries, except those with which Colombia had signed free trade agreements.17
2.7.
Colombian legislation defines an indicative price as a reference price18 established by administrative act for use as a control mechanism on the declared f.o.b. value of imported goods.19 Indicative prices are applied according to the type of goods and are calculated based on the average production costs of the imported goods, when available, or otherwise, on the lowest price actually negotiated or offered for importation of the good into Colombia. Indicative prices may be imposed (i) upon petition by domestic producers or importers of like products that are affected by unfair competition; (ii) when customs authorities identify unfair competition practices; or (iii) when the DIAN or the Directorate for Customs determines that indicative prices are necessary, based on sectoral studies, risk profiles or in pursuance of a particular policy.20
2.8.
Indicative prices are used at the time of presentation of the customs declaration. Pursuant to Colombian customs law, foreign goods imported into Colombia must remain in customs custody, and thus will not be released, until an importer presents an import declaration and pays customs duties, sales tax and penalties.21 Under Colombian tax law, sales tax on imported goods is calculated based on the same value used to determine customs duties.22 Sales tax for domestic goods is based on the transaction value.23 Upon presentation of the import declaration for goods subject to indicative prices, if the declared f.o.b. value is lower than the indicative price, release of the goods will not be authorized unless the importer corrects the value on the declaration on the basis of the indicative price and pays customs duties and sales tax on this basis.24
2.9.
An importer is allotted a maximum of five days to correct the declared value and pay customs duties and sales tax, and is not given any opportunity at this time to submit evidence to demonstrate that the declared value represents the actual transaction value of the goods.25 If the importer does not correct the declared value or pay customs duties and sales tax based on the indicative price, the importer will need to reship the goods in question within a period of one month or the goods will be considered "legally abandoned".26 Whenever an importer opts to correct the import declaration and pays customs duties and sales tax based on indicative prices, the goods will be released and the relevant documents are submitted to the División de Fiscalización Aduanera.27 This initiates the "control posterior" process.28
2.10.
The declared purpose of the "control posterior" process is to verify, after the release of the goods, the customs value declared by the importer, in order to determine the correct dutiable base.29 Upon receipt of the declaration and documentation, the División de Fiscalización will conduct the "estudio de valor" in order to assess the declared customs value of the imported goods.30 According to Colombian legislation, this assessment is based on the value at the time of physical inspection or presentation of the import declaration31 and is conducted in accordance with the principles set forth in Articles 1 to 8 of the Customs Valuation Agreement.32 The conclusions of the "estudio de valor" are presented in a report which includes, inter alia, the "definitive" customs value resulting from that assesment and an explanation of the methods applied in determining such customs value.33
2.11.
The "control posterior" process allows for two possible outcomes. If the División de Fiscalización determines through the estudio de valor that the final customs value corresponds to the value originally declared by the importer, the importer will be entitled to a refund of the payment in excess made at the time of the release.34 The importer must file a request for reimbursement.35 No timeline is provided for provision of the refund, although in three specific cases presented in this dispute, importers did not receive refunds for more than two years since the initiation of the control posterior.36 Alternatively, if the División de Fiscalización determines that the final customs value is higher than the value originally declared by the importer, it will issue a "Requerimiento Especial Aduanero"37 including a proposed "Liquidación Oficial".38 At this time, the importer may dispute the proposed liquidation and provide further evidence supporting the value originally declared.39 If the importer successfully disputes the proposed liquidation, the importer is entitled to a refund of the sums paid in excess during the initial presentation of the import declaration.40 However, if the importer does not respond to the Requerimiento, or the response is considered to be unsatisfactory, the Customs Administration will issue a "Liquidación Oficial de Revisión de Valor", which contains the final determination of the customs value.41 To the extent that the importer is not satisfied with the Customs Administration's determination as published in the "Liquidación Oficial de Revisión de Valor", the importer may challenge this administrative act before the administrative authorities through a "Recurso de Reconsideración".42

C. RESTRICTION ON PORTS OF ENTRY AND INTERNATIONAL TRANSIT RULES APPLICABLE TO TEXTILES, APPAREL AND FOOTWEAR ARRIVING FROM PANAMA

2.12.
Colombian customs law permits customs authorities to limit access to ports of entry whenever authorities are not satisfied of their ability to fully exercise their powers of control and verification.43 On these grounds, although Colombia has 26 ports of entry for international trade44, it has limited imports of textile and apparel imports to 11 ports of entry.45
2.13.
Textiles, apparel and footwear classifiable under Chapters 50‑64 of the Colombian Tariff Schedule originating in or arriving from Panama and the CFZ, which are imported into Colombia, are subject to additional temporary limitations. Under Article 2 of Resolution No. 7373 of 22 June 200746, as modified by Resolution No. 7637 of 28 June 200747, subject textiles, apparel and footwear may only be entered at Bogota airport or Barranquilla seaport.48 However, the general restriction on ports of entry under Article 2 is subject to several exceptions. In relation to goods with a destination outside of Colombia, Article 4 of Resolution No. 7373 provides that goods in transit from Panama, which are submitted for trans-shipment and do not have Colombia as their final destination may enter at any of the 11 authorized ports open for textile, apparel and footwear imports.49 Additionally, Article 4 further exempts goods consigned or endorsed to the State50; goods imported for specific state or emergency uses: goods arriving by travellers or postal traffic, or in route to Leticia, San Andrés or Santa Catalina51; goods consigned to industrial users of free trade zones52; and goods classifiable under subheadings 64.01 to 64.05 of Colombia's Tariff Schedule that arrive at any of the 11 ports designated in Article 39, paragraph 1 of Resolution No. 4240.53 Resolution No. 8603 of 24 July 200754 establishes an additional exemption for footwear classifiable under sections 6406 of Colombia's Customs Schedule, and Resolution No. 7637 of 28 June 200755 further exempts goods consigned to "Highly Exporting Users" and "Permanent Customs Users".56
2.14.
The stated aim of Resolution No. 7373, as amended, is to strengthen and improve customs controls related to the importation of certain textile, apparel and footwear goods, which are described as constituting an important national industry in Colombia.57 Non-compliance with the obligation to enter and import goods from Panama and the CFZ exclusively at those ports, will subject the goods to seizure and forfeiture.58
2.15.
Resolution No. 7373, as amended, supersedes the regular transit regime under Colombian law, which permits the transportation of merchandise of national or foreign origin from one customs office to another located within the national territory of Colombia.59 Resolution No. 7373 was orignially implemented for a period of approximately six months beginning 1 July 2007.60 However, the period of application of the measure has been extended on two occasions at the time of this writing61, and is currently set to expire on 31 December 2008.

D. THE REQUIREMENT TO PRESENT AN ADVANCE IMPORT DECLARATION AND PAY CUSTOMS DUTIES AND SALES TAX ON THE BASIS OF THE ADVANCE DECLARATION APPLICABLE TO IMPORTS OF TEXTILES, APPAREL AND FOOTWEAR ARRIVING FROM PANAMA

2.16.
Under Article 119 of Decree No. 2685 of 1999, applicable to imported goods of all origins, an importer may present an import declaration as early as 15 days prior to arrival of the goods, or may delay presentation of the import declaration until one month after the goods' arrival into Colombia or up to two months following arrival, subject to authorization by Colombia's customs authority.62 In combination with the requirement to present an import declaration, importers of goods are required to pay customs duties and sales tax at the time an import declaration is presented.63 Under this regime, importers therefore are generally not required to present an import declaration in advance of arrival of the goods, and as such, are not required to pay customs duties and taxes prior to the goods' release from customs, although the option exists to do so.64
2.17.
In the case of textile, apparel and footwear imports arriving from Panama, Resolution No. 7373 of 22 June 2007, as modified by Resolution No. 7637 of 28 June 2007, requires importers of textile, apparel and footwear goods classifiable under Chapter 50–64 of Colombia's Tariff Schedule and arriving from Panama or the CFZ to present an advance import declaration not more than 15 days prior to the goods' arrival in Colombia65 and accordingly pay customs duties and taxes in advance.66 Article 1 of Resolution No. 9859 of 23 August 2007 additionally requires importers of all goods from Panama or the CFZ that are subject to the 15-day advance import declaration requirement to declare the goods not less than five days prior to the arrival of the goods in Colombia.67 Since all importers must pay customs duties and sales tax at the time an import declaration is presented, importers of subject goods from Panama and the CFZ, which are required to present an import declaration in advance, therefore, must also pay customs duties and sales tax in advance.
2.18.
An importer of textile, apparel and footwear goods arriving from Panama or the CFZ that fails to present an advance import declaration upon entry at Bogota or Barranquilla may only proceed with importation if he or she submits a legalization declaration and pays a fee for the "rescate" of the goods in addition to all customs duties and any accrued warehouse storage charges. Otherwise, the importer may elect to re-ship the goods from Colombian territory.6869 If the importer does not submit a legalization declaration and pay a fee, or does not re-ship the goods in question, the goods will be considered as legally abandoned and subject to seizure within a one month period.70 An importer may pay a "rescate" fee equal to 15 per cent of the value of the goods to recover goods that are classified as legally abandoned.71

E. THE REQUIREMENT TO PAY A FEE TO RECTIFY AN IMPORT DECLARATION APPLICABLE TO TEXTILE IMPORTS ARRIVING FROM PANAMA

2.19.
In addition to the requirement to present an advance import declaration, importers of textiles classifiable under Chapters 50‑60 of Colombia's Tariff Schedule that arrive from Panama, are also required to pay a fee to correct certain errors appearing in the advance import declaration. In particular, under Article 3 of Resolution No. 7373, importers of subject goods must pay a fee to correct an import declaration in situations where differences in the weight per square metre or width of the textile exceed 7 and 10 per cent, respectively.72 Article 128.7 of Decree No. 2685 of 1999, as modified by Decree No. 1232 of 2001, generally established a fee of three per cent of the value of the goods to correct errors in the description of the goods, within a period of five days after a declaration is presented.73 Under Article 153 of Resolution No. 4240 of 2000, as modified by Article 1 of Resolution No. 8038 of 2005, all imports classifiable under Chapters 50–60 of Colombia's Tariff Schedule for which an advance import declaration is submitted, are subject to the same legalization requirement (and are similarly exempt in cases where differences in the weight per square metre or width of the textile do not exceed 7 and 10 per cent, respectively).74 However, as noted in paragraphs 2.16 and 2.17 above, only importers of subject textiles arriving from Panama are required to submit and advance import declaration. All other importers of subject textiles retain the option to submit an advance declaration.

III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1.
Panama requests the Panel to find that:

(a) Colombia's determination of the customs value of textiles, footwear and other products on the basis of indicative prices is inconsistent with Articles 1, 2, 3, 5, 6 and 7.2 (b), (f) and (g) of the Customs Valuation Agreement;

(b) Colombia's use of indicative prices to determine the tax base for the purpose of levying the sales tax on imported textiles, footwear and other products, when the transaction value is used to determine the tax base of like domestic products for the same purpose, is inconsistent with Article III:2, first sentence, or, alternatively, with Article III:4 of the GATT 199475;

(c) Colombia's prohibition of the importation of textiles, footwear and apparel from Panama except at the ports of Bogota and Barranquilla is inconsistent with Article XI:1 of the GATT 1994;

(d) Colombia's prohibition of the importation of textiles, footwear and apparel from Panama except at the ports of Bogota and Barranquilla, while the importation of like products from other countries is not similarly restricted, is inconsistent with Article XIII:1 of the GATT 199476, or alternatively, with Article I:1 of the GATT 199477;

(e) Colombia's suspension of the transit regime for textiles, footwear and apparel coming from Panama is inconsistent with Article V:2 of the GATT 1994;

(f) Colombia's imposition of ports of entry and transit restrictions to textiles, footwear and apparel that have been in transit through Panama, while no such restrictions are imposed on these products when transported from their country of origin to Colombia without going through Panama, is inconsistent with Article V:6 of the GATT 1994;

(g) The requirements that importers of textiles, footwear and apparel originating in Panama submit an advance import declaration and pay customs duties before the arrival of the products at customs and the limited options available for the presentation of the legalization declaration without payment of a fee, when no such requirements or limitations are imposed on importers of like products originating in other countries, are inconsistent with Article I:1 of the GATT 1994;

3.2.
Colombia requests that the Panel reject all of Panama's claims for the reasons provided in its submissions.78
3.3.
In the event that the Panel were to uphold some or all of Panama's claims under Articles I:1, V:2, V:6, XI:1 or XIII:1 of the GATT 1994, Colombia requests the Panel to find that the measure is justified under the general defence of GATT Article XX(d).

IV. ARGUMENTS OF THE PARTIES

A. EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF PANAMA

1. Introduction

4.1.
The following table provides a brief summary of the specific measures at issue, their legal basis in Colombian law, and the relevant provisions of the Customs Valuation Agreement and the GATT 1994 under which Panama challenges each of the measures.

IssueSpecific measure at issueLegal basis under domestic lawApplicable WTO law
A. Customs valuation methods and procedures for textile, footwear and other products subject to "indicative prices". Customs valuation of textile, footwear and other products is based on indicative prices. Article 128.5 e) of Decree No. 2685 Article 172.7 of Resolution No. 4240. Articles 1, 2, 3, 5, 6 and 7.2(b), (f) and (g) of the Customs Valuation Agreement.
The sales tax for imported products subject to indicative prices is based on the indicative price, whereas the sales tax for like domestic products is based on the transaction value. Article 447 of the Tax Statute in connection with Article 128.5 e) of Decree No. 2685. Article III:2 of the GATT 1994.
B. Port of entry and transit restrictions and customs regulations for textile products coming from Panama. The entry and importation of textile products from Panama is restricted to the ports of Bogota and Barranquilla. Article 2 of Resolution No. 7373 (modifying Article 39 of Resolution No. 4240). Articles XI:1 and XIII:1 of the GATT 1994.
The transit regime is suspended for textile products coming from Panama. Article 2 of Resolution No. 7373 (modifying Article 39 of Resolution No. 4240). Article V:2 of the GATT 1994.
The port of entry restrictions accord products that have been in transit through Panama treatment less favourable than that accorded to products that have not been in transit through Panama. Article 2 of Resolution No. 7373 (modifying Article 39 of Resolution No. 4240). Article V:6 of the GATT 1994.
The requirement to complete customs procedures and pay customs duties prior to the arrival of the goods at customs, and the limited options available for the presentation of a legalization declaration without the payment of a fee, are applied only to textile products from Panama. Articles 1 and 3 of Resolution No. 7373, Article 119 of Decree No. 2685 and Article 1 of Resolution No. 9859. Article I:1 of the GATT 1994.

2. The measures at issue

(a) Customs valuation of textiles, footwear and other products on the basis of "indicative prices"

4.2.
Colombia's Schedule of Concessions to the GATT 1994 provides that its customs duties shall be applied on an ad valorem basis. An ad valorem customs duty is based on the customs value of the goods. Colombia does not use the transaction value as the basis for the determination of the customs value of those goods. Instead, it uses indicative prices, which are unrelated to the transaction value of the goods.
4.3.
According to Article 128.5 e) of Decree No. 2685 of 1999 and Article 172.7 of Resolution No. 4240 of 2000, an importer whose goods have a transaction value lower than the indicative price must correct the import declaration to reflect the indicative price or a higher amount to obtain release of the goods. The failure to correct the transaction value to reflect the indicative price within a period of five-days from the presentation of the import declaration leads to the subsequent legal abandonment of the goods, and their eventual forfeiture.
4.4.
Furthermore, the sales tax on imported products is determined on the basis of the indicative price when the transaction value is below the indicative price. In contrast, for domestic products, the sales tax is based on the actual value of the sale.

(b) Port of entry and transit restrictions and customs regulations for textiles from Panama

4.5.
Out of the 11 ports of entry that are enabled for the importation of textiles in Colombia, textiles originating in, or transiting through, Panama may be imported and entered at only two of these 11 ports; namely, the airport of Bogota and the sea port of Barranquilla. In terms of transportation costs, these ports are not always the most convenient and viable entry points for textiles from Panama destined for different locations in Colombia.
4.6.
Furthermore, textiles from Panama are prohibited from transiting through Colombia. Even if the final destination is a country other than Colombia, textiles from Panama cannot be transported by land through Colombia. Instead they must be cleared for importation as soon as they arrive in Bogota or Barranquilla.
4.7.
In addition, only with respect to textiles from Panama, all customs formalities must be completed and customs duties and sales tax must be paid in full prior to the arrival of the goods.

3. Legal argument

(a) Colombia's use of indicative prices to determine the customs value of textiles, footwear and other products is inconsistent with Articles 1, 2, 3, 5, 6 and 7.2 (b), (f) and (g) of the Customs Valuation Agreement

(i) Colombia's use of indicative prices is inconsistent with Article 1 of the Customs Valuation Agreement

4.8.
Article 1 of the Customs Valuation Agreement provides that the customs value of imported goods "shall" be the transaction value (i.e. the price actually or payable), as the primary means of determining the customs value of imported goods.
4.9.
In principle, the price actually paid or payable for the goods can be known with certainty only by the parties to the transaction, i.e. the buyer and the seller. It is, therefore, necessary for customs authorities to rely upon the information provided by the buyer, (normally the importer) as to the transaction value of the goods. The determination of the transaction value of goods must take into account the specific circumstances of the purchase and sale of those particular goods.
4.10.
A WTO Member could argue that it cannot use the transaction value to determine the custom value of goods because the conditions set out in the relevant sub-paragraphs (a) to (d) of Article 1 have not been met. However, such a conclusion could be reached only after customs has conducted an assessment of the individual circumstances surrounding the transaction in question. It cannot be based on an a priori assumption that, for all imports, the relevant conditions have not been met. Panama understands that Colombia is not basing its non-acceptance of the transaction value for textiles, footwear and other products and its use of indicative prices on the grounds that the conditions set out in sub-paragraphs (a) to (d) of Article 1 have not been met
4.11.
Article 128.5 e) of Decree No. 2685 of 1999 and Article 172.7 of Resolution No. 4240 of 2000, DIAN systematically rejects the transaction value for goods subject to indicative prices on an a priori basis without any examination of the particular circumstances surrounding the sale. Indeed, it departs from the transaction value in every single case involving goods subject to indicative prices.
4.12.
For such goods, an importer is not afforded any opportunity to demonstrate that the declared value (when lower than the indicative price) corresponds to the transaction value of the product. Rather, Article 128.5 e) of Decree No. 2685 of 1999 and Article 172.7 of Resolution No. 4240 of 2000 state that a declarant of goods subject to indicative prices can only: (i) "correct" the declared value in the import declaration to reflect the applicable indicative price and (ii) pay the customs duties and sales tax based on that price.
4.13.
If, at the end of the five-day period established in Article 128.5 e), the declarant does not "correct" the import declaration accordingly, and does not pay the corresponding customs duties and sales tax thereon, the importation process is considered to be terminated and the goods are kept in a warehouse. In the absence of any subsequent action by the declarant, the goods are considered as legally abandoned after a period of one month. One month after the expiry of the period of legal abandonment, the goods may be disposed of by DIAN.
4.14.
In the light of the consequences that would result if an importer does not "correct" the import declaration to reflect the indicative price, an importer is effectively forced to declare the indicative price, instead of the transaction value of the goods, and pay customs duties and sales tax thereon. This is confirmed by the fact that in 87 per cent of relevant cases, the importer has opted to "correct" the import declaration.
4.15.
Panama notes that, in any event, Colombia does not follow the appropriate procedures in situations where there are doubts as to the truth or accuracy of the declared the transaction value, as stated in the Decision Regarding Cases Where the Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value. This Decision is based on the assumption that those doubts arise in the context of case-by-case assessments of the declared transaction value. Furthermore, it provides for opportunities to the importer in order to present arguments and evidence demonstrating the truth and accuracy of the declared value. In contrast, DIAN rejects the declared transaction value on a systematic basis. It does not undertake a case-by-case assessment of the circumstances surrounding the transaction at issue in order to determine whether there are valid grounds to doubt the truth or accuracy of the declared value.

(ii) Colombia's use of indicative prices is inconsistent with the methodologies set out in Articles 2, 3, 5, and 6 of the Customs Valuation Agreement

4.16.
In those cases where Article 1 cannot be used, Articles 2, 3, 5 and 6 of the Customs Valuation Agreement provide a series of sequential and hierarchical alternative means for determining the customs value of goods. The application of these subsidiary methods of valuation must be carried out on a case-by-case basis.
4.17.
The methodologies established in Articles 2, 3, 5 and 6 to determine the custom value of a consignment require the assessment of multiple factors, such as the transaction value of identical goods sold at about the same time as the transaction in question, taking into account sales at the same commercial level, or sales at similar levels, or the unit price at which imported goods are sold in the greatest aggregate quantity, at or about the time of the importation of the goods being valued. Time specifications in alternative customs valuations implies that the methodologies must be used in the appropriate sequence on a case-by-case basis so as to replicate most closely the conditions of the sale of the product in question.
4.18.
Indicative prices applied by Colombia for Customs Valuation purposes are neither based on the transaction value nor determined using any of the methodologies set out in Articles 2, 3, 5 and 6 of the Customs Valuation Agreement. Instead, they are determined based on surveys carried out by DIAN on a fixed basis, in accordance with the "Methodology for the Determination of Reference Prices". These prices are not determined using any of the methodologies set out in Articles 2, 3, 5 and 6 of the Customs Valuation Agreement, as DIAN does not undertake an examination of the specific circumstances surrounding the transaction at issue.
4.19.
Furthermore, Article 128.5 e) of Decree 2658 of 1999 and Article 172.7 of Resolution No. 4240 of 2000 do not permit DIAN to use the methodologies set out in Articles 2, 3, 5 and 6 of the Customs Valuation Agreement at the time of inspection. Each of these methodologies requires that customs authorities conduct their investigations on a case-by-case basis, a possibility that is not contemplated in those provisions of Colombian law.

(iii) Colombia's use of indicative prices is inconsistent with Articles 7.2(b), (f) and (g) of the Customs Valuation Agreement

4.20.
Article 7.1 provides that if the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, the customs value shall be determined using reasonable means consistent with the principles and general provisions of the Customs Valuation Agreement and Article VII of the GATT 1994, and on the basis of data available in the country of importation. The flexibility granted under Article 7.1 are subject to certain limitations under Article 7.2. In particular, WTO Members cannot resort to: (i) a system which provides for the acceptance for customs purposes of the higher of two alternative values (Article 7.2 (b)), (ii) minimum customs values (Article 7.2(f)), or arbitrary or fictitious values (Article 7.2(g)).
4.21.
In this case, Colombia determines the customs value of goods on the basis of either the indicative price (if the declared value is lower than the indicative price), or the transaction value (if the price negotiated for the product is higher than the indicative price). Furthermore, indicative prices are also minimum customs values because products subject to indicative prices will not be permitted to be imported in Colombia unless this minimum value is declared by the declarant. In addition, indicative prices are arbitrary and fictitious values as the customs value of goods subject to those prices is not based on the actual circumstances of the sale, but rather on the basis of a general survey based on the grouping of various products within the applicable tariff heading.

(iv) The payment of customs duties based on indicative prices is not a "guarantee" within the meaning of Article 13 of the Customs Valuation Agreement

4.22.
Panama notes that, on several occasions, Colombia has argued that the payment of customs duties based on indicative prices merely constitutes a "guarantee." Colombia's characterisation of such payments may be considered as an attempt to bring its measure within the scope of Article 13 of the Customs Valuation Agreement.
4.23.
However, the payment of customs duties based on indicative prices is not a "guarantee" within the meaning of Article 13 of the Customs Valuation Agreement. As noted above, a declarant correcting its import declaration must pay the relevant customs duties and sales tax on the basis of the indicative prices. Under Colombian law, a payment is the primary means of extinguishing a tax obligation. Once this payment is made, the importation process is terminated, and the goods are released. In contrast, a guarantee is a provisional instrument that secures the ultimate payment of customs duties for which the goods may be liable during the period of the valuation controversy. The guarantee does not, in and of itself, liquidate the tax obligations at issue. Therefore, the payment of the customs duties based on the indicative price cannot be considered as the posting of a guarantee.
4.24.
Furthermore, Colombian law itself distinguishes between the correction of an import declaration and payment of the customs duties and taxes owing on that basis and the posting of a guarantee.

(b) Colombia's reservation under the Customs Valuation Agreement to use minimum values has expired

4.25.
On the basis of Article 20.1 and Annex III of the Customs Valuation Agreement, on 30 March 2000 Colombia made a request for a reservation allowing it to maintain officially-established minimum values for a period of five years for certain products.
4.26.
On 10 May 2000, the Committee on Customs Valuation noted "good cause for Colombia's request and its intention to make this reservation on a limited and transitional basis" and "that this reservation will apply only to the products identified in Annex I, Annex II and Annex III". It further noted "Colombia's indication that this would be a single request to maintain minimum values" and, therefore, decided that "Colombia may continue to maintain officially-established minimum values for the valuation for customs purposes" until 30 April 2001, 30 April 2002 and 30 April 2003 for the goods listed in Annexes I, II and III, respectively.
4.27.
The reservation, now lapsed, applied to many of the same products that are now subject to indicative prices. 73 per cent of the products (59 out of 81 products) for which Colombia was granted a waiver to maintain minimum prices until 30 April 2002 (Annexes I and II) are currently subject to indicative prices.

(c) Colombia's use of indicative prices to determine the value of imported textiles, footwear and other products for the purpose of levying sales tax when the transaction value is used to determine the value of like domestic products for that purpose is inconsistent with Article III:2, first sentence, of the GATT 1994

4.28.
Article III:2 of the GATT 1994 prohibits WTO Members from subjecting imports to internal taxes in excess of those applied, directly or indirectly, to like domestic products. Panama notes that imported products subject to indicative prices have at least a potential like domestic product that may be treated more favourably than the imported product.
4.29.
An imported product with a transaction value lower than the applicable indicative price will be taxed on the basis of the higher indicative price plus the customs duties charged on the basis of that indicative price. On the other hand, like domestic products are subject to sales tax on the basis of the actual sale price of the product. Thus, imported products subject to indicative prices incur sales tax in excess of that imposed on like domestic products.

(d) Colombia's prohibition of the importation of the importation of textiles from Panama except at the ports of Bogota and Barranquilla is inconsistent with Article XI:1 of the GATT 1994

4.30.
Article XI:1 of the GATT 1994 provides that no prohibition or restriction, other than duties, taxes or other charges, shall be instituted or maintained by any Member on the importation of any product of the territory of any other Member.
4.31.
In the light of Resolutions No. 7373 of 2007 and No. 7637 of 2007, the importation of textiles in Colombia is prohibited unless the goods are entered and imported at the two designated ports of Bogota and Baranquilla. This requirement to enter and import textiles at these two ports constitutes a "restriction" within the meaning of Article XI:1 of the GATT 1994. Furthermore, it is a "limiting condition" on the importation of the listed products in Colombia, and makes importation more onerous than if the condition had not existed. As noted above, Colombia has 11 customs offices at which textiles normally may be entered. However, textiles coming from Panama are prohibited from being imported at 9 out of these 11 customs offices.
4.32.
Panamanian exporters of goods destined for markets such as Cali incur additional costs as the goods can only be entered at Bogota (for air shipments) or Baranquilla (for sea shipments). Goods arriving by sea need to be transported from the port of Barranquilla to Cali. The cost of transporting cargo up to 7 tons for a 20 ft container by truck from Buenaventura to Cali is US$350 as compared to US$990 to transport the same goods by truck from Baranquilla to Cali. These additional costs create significant transaction costs and a disincentive to import textiles from Panama destined for Colombian cities that are not located near the two designated ports.

(e) The port of entry restrictions are applied in a manner that is inconsistent with Article XIII:1 of the GATT 1994

4.33.
Article XIII:1 provides that any quantitative restrictions applied by a WTO Member must be imposed on a non-discriminatory basis.
4.34.
In this case, the requirement to enter and import textiles at the ports of Bogota or Baranquilla constitutes a restriction on imports. Colombia applies the restrictions in Resolutions 7373, 7637 and 16100 only to textile imports from Panama. Colombia does not require that textiles originating in third countries be imported at the ports of Bogota and Barranquilla. Therefore, Colombia does not similarly restrict the importation of such products from third countries.

(f) Colombia's suspension of the transit regime for textiles from Panama is inconsistent with Article V:2 of the GATT 1994

4.35.
Article V:2, first sentence, provides that there shall be freedom of transit through the territory of each Member, via the routes most convenient for international transit, for traffic in transit to or from the territory of other Members. In turn "traffic in transit" is defined as the transit across the territory of a Member when the passage across such territory, with or without trans-shipment, warehousing, breaking bulk, or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the Member across whose territory the traffic passes. This definition applies to goods starting their journey in Panama, transiting through the territory of Colombia, and reaching their final destination in another country.
4.36.
Article 2 of Resolution No. 7373 of 2007 provides that for textiles coming from Panama and entering Bogota or Barranquilla, authorization will not be granted under the normal customs transit regime. Instead, Colombia requires that textiles coming from Panama must be entered and imported at the ports of Barranquilla or Bogota. Thus, Colombia restricts the ability of these products to transit through Colombia.
4.37.
Furthermore, the port of entry restrictions make distinctions based on the place of origin or departure of the goods. Article V:2, second sentence provides that no distinction shall be made based on, inter alia, the place of origin, departure, entry, exit or destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport. In this case, if textiles originate in, or transit through, Panama, they must be entered at Bogota or Baranquilla. However, if the same goods come directly from third countries without going through Panama, they may be entered at any eligible port in Colombia.

(g) The port of entry restrictions that accord treatment less favourable to goods in transit through Panama than that which they would have been accorded had they been transported from their place of origin without going through Panama are inconsistent with Article V:6 of the GATT 1994

4.38.
Article V:6 of GATT 1994 provides that products which have been in transit through the territory of any other Member shall be accorded treatment no less favourable than that which would have been accorded to such products had they been transported from their place of origin to their destination without going through the territory of such other Member.
4.39.
Colombia permits textiles from other WTO Members to be entered at any eligible port in Colombia, but prohibits the importation of the same products except at the ports of Bogota and Baranquilla if they were in transit through Panama. For example, a textile product going directly to Colombia from a third country may be entered at any eligible port in Colombia. However, if the same textiles were transported through Panama, they would have to be entered and imported at the ports of Bogota or Barranquilla.

(h) The requirement to present an advance declaration and pay customs duties and sales tax for textiles originating in Panama is inconsistent with Article I:1 of the GATT 1994

4.40.
Article I:1 of the GATT 1994 obliges Members to provide non-discriminatory treatment with respect to the matters falling within the scope of that Article, such as "rules and formalities in connection with importation and exportation". In this case, the requirement to present an advance import declaration and to pay customs duties and sales tax on the basis of the advance declaration is a rule in connection with importation.
4.41.
Importers of products originating in countries other than Panama are permitted to import into Colombia without having to submit an advance declaration and without having to pay customs duties and sales tax on that basis. This is an advantage within the meaning of Article I:1 of the GATT 1994. In contrast, Article 1 of Resolution No. 7373 of 2007 provides that the import declaration for the listed products must be presented in advance of the arrival of the goods in Colombia. Moreover, the customs duties and sales tax must be paid in full for those products.
4.42.
Furthermore, Article 3 of Resolution No. 7373 of 2007 restricts the options available for the rectification of the import declaration without the payment of a fee (rescate) where the differences between the actual goods and what is stated in the import declaration with respect to the weight per square metre or the width exceed 7 per cent and 10 per cent, respectively. This is a rule in connection with importation. The importation of like products from other countries is not subject to this limitation, and they therefore enjoy an advantage.
4.43.
In the light of the above, products originating in Panama are not accorded immediately and unconditionally the advantages that are accorded to like products originating in other countries.

4. Panama's request for findings and recommendations

4.44.
In the light of the considerations set out above, Panama requests the Panel to make the following findings:

· Colombia's determination of the customs value of textiles, footwear and other products on the basis of indicative prices is inconsistent with Articles 1, 2, 3, 5, 6 and 7.2 (b), (f) and (g) of the Customs Valuation Agreement.

· Colombia's use of indicative prices to determine the value of imported textiles, footwear and other products for the purpose of levying the sales tax, when the transaction value is used to determine the value of like domestic products for that purpose, is inconsistent with Article III:2, first sentence, of the GATT 1994.

· Colombia's prohibition of the importation of textiles from Panama except at the ports of Bogota and Barranquilla is inconsistent with Article XI: 1 of the GATT 1994.

· Colombia's suspension of the transit regime for textiles coming from Panama is inconsistent with Article V:2 of the GATT 1994.

· Colombia's imposition of ports of entry and transit restrictions to textiles that have been in transit through Panama, while no such restrictions are imposed on these products when transported from their country of origin to Colombia without going through Panama, is inconsistent with Article V:6 of the GATT 1994.

· The requirements that importers of textiles originating in Panama submit an advance import declaration and pay customs duties before the arrival of the products at customs and the limited options available for the presentation of the legalization declaration without payment of a fee, when no such requirements or limitations are imposed on importers of like products originating in other countries, are inconsistent with Article I:1 of the GATT 1994.

4.45.
Panama requests the Panel to recommend, in accordance with Article 19.1 of the DSU, that the DSB request Colombia to bring the measures at issue into conformity with the Customs Valuation Agreement and the GATT 1994.

B. EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF COLOMBIA

1. Request for preliminary ruling

4.46.
Colombia submits that Panama's Request for Establishment of a Panel (the "Request") fails to comply with the due process requirements of Article 6.2 DSU. Colombia requests a preliminary ruling by the Panel to exclude such claims from its terms of reference that are not set forth in a sufficiently clear manner in the Request for Establishment or that were not the subject of consultations between the Members.
4.47.
First, Colombia considers that Panama's request challenging the indicative price measure on an "as such" and "as applied" basis is inconsistent with Article 6.2 DSU. Panama's Request fails to refer to any specific application of such a measure. Colombia thus requests the Panel to rule that Panama's Request in respect of the "as applied" claim fails to "identify the specific measure at issue" as required by Article 6.2 DSU.
4.48.
Second, Colombia submits that the Request further fails to identify the specific measures at issue as it refers to indicative prices that are established and applied in accordance with, inter alia, "framework legislation such as Colombia's Customs Statute (Decree No. 2685 of 1999, in particular Titles V and VI), Resolution No. 4240 of 2000 and Colombia's Tax Code (Decree No. 624 of 1989)". It is clear that these "measures" cover several hundreds of pages and a wide range of legal provisions, the relationship of which to indicative prices is not always obvious, to say the least. Colombia thus requests that the Panel rule that Panama's general references to "framework legislation such as Colombia's Customs Statute and Colombia's Tax Code" do not satisfy the requirements of Article 6.2 DSU.

2. Panama's claims with respect to the indicative price measure are to be rejected

(a) Panama's claims under the Customs Valuation Agreement are to be rejected as indicative prices are not a customs valuation method but only a customs control and verification mechanism

4.49.
Panama's "as such" allegation that Article 128.5 e) of the Decree No. 2685 of 1999 (the "Customs Statute") and Article 172.7 of Resolution No. 4240 of 2000 violate Articles 1, 2, 3, 5, 6 and 7.2 (b), (f) and (g) of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the "Customs Valuation Agreement") is unsubstantiated.
4.50.
First, Panama errs in its allegation that Colombia uses the indicative prices as a mechanism to value goods. Colombia uses indicative prices as a customs control mechanism, not as a customs valuation method. Indicative prices are used to test the veracity of the declared value in the course of a "control previo," while the customs value of the goods is determined using one of the methods of the Customs Valuation Agreement in a "control posterior".
4.51.
The challenged provisions of the relevant Colombian legal instruments, Article 128.5 e) of Colombia's Customs Statute and Article 172.7 of Resolution No. 4240 of 2000 provide that if an issue or dispute (a "controversia") arises as a consequence of the fact that the declared f.o.b. value is below the indicative price as established by DIAN, the Colombian customs authority, the goods will be released if the importer corrects its import declaration to reflect indicative prices and provisionally pays, by way of deposit, customs duties and relevant taxes on the basis of those indicative prices. Article 128 of Colombia's Customs Statute and Article 172.7 of Resolution No. 4240 deal with the "release" ("levante") of the goods, not with the final "liquidation" ("liquidación") of the goods for customs purposes. It is only following release of the goods and the posting of this deposit that the División de Fiscalización Aduanera will determine the actual customs value of the imported good for the purpose of assessing the duties. Such customs valuation will always be conducted on the basis of the methods provided for by the Customs Valuation Agreement, and following the hierarchy of such methods established by the Customs Valuation Agreement. Colombia presents specific examples of cases in which, following the posting of a deposit on the basis of indicative prices, the customs value was determined to correspond with the declared value and the deposit was refunded. Such a customs control and verification mechanism which does not affect the determination of the customs value of imported goods cannot be inconsistent with Articles 1 to 7 Customs Valuation Agreement, which clearly relate to the "determination of the customs value" of imported goods. Panama's claims in this respect are therefore to be rejected.
4.52.
Colombia submits that Panama's legal arguments based on the text of the challenged provisions are flawed. First, the requirement of Article 128.5 e) of the Customs Statute and Article 172.7 of Resolution No. 4240 to correct the import declaration and provisionally pay duties accordingly only constitutes a "guarantee" mechanism and does not represent valuation, as erroneously submitted by Panama. This becomes evident from reading the challenged provisions in their proper legal context. Both provisions are included in the sections of Colombia's laws and regulations dealing with customs control and verification, and are not part of the separate provisions dealing with customs valuation. Moreover, the definition of the term "indicative prices" in Colombia's Customs Statute confirms that indicative prices are a customs control mechanism. Practical examples demonstrate that the system actually operates as a guarantee mechanism.
4.53.
Second, Panama does not provide even one specific example in which duties were finally assessed on the basis of the indicative prices. Rather, it presents its claims exclusively on the basis of its understanding (incorrect) of the challenged provisions. Panama has assumed the risk that its understanding of the legal provisions might be incorrect, and that its claim would therefore fail. This is what has occurred. By not providing examples of how the laws and regulations are actually applied, Panama has failed to establish a prima facie case.
4.54.
Third, Panama's suggestion that indicative prices are a continuation of a terminated system of minimum import values is equally without merit. There is an important distinction between the way indicative values operate and the way minimum customs values operated in the transition period following Colombia's accession to the WTO. Colombia urges the panel not to accept the simplistic argument presented by Panama based on a perceived but misguided resemblance between indicative prices and minimum import values.
4.55.
In sum, Panama has not demonstrated that the identified measures are inconsistent with the Customs Valuation Agreement. The challenged provisions of Colombia's laws and regulations relating to indicative prices do not govern valuation, they do not require WTO‑inconsistent behavior, and they do not prevent WTO-consistent actions. Colombia thus requests the Panel to reject all of Panama's claims in this respect.

(b) Panama's claim of discrimination under GATT Article III:2 is to be rejected as it lacks a factual and legal basis

4.56.
Panama's claim under Article III:2 in respect of the use of indicative prices as the basis for assessing internal taxes is to be rejected. First, Panama fails to identify exactly which legal provision of Colombia's laws and regulations it considers to be the "measure" which is allegedly inconsistent with GATT Article III:2. As this implies that the matter is not clearly identified, the Panel is unable to make an objective assessment of the matter before it, as required by Article 11 DSU.
4.57.
Second, Panama has failed to meet its burden of proof. Panama merely alleges that a different taxable base is used for the determination of internal taxes, without attempting to demonstrate that such a difference results in the imposition of internal taxes with respect to imports "in excess of" the tax burden on domestic products as required by GATT Article III:2.
4.58.
Third, Panama's legal argument is built on the same flawed premise as its claims under the Customs Valuation Agreement: that indicative prices are used to determine the customs value. Nothing in Colombian law requires the sales tax on imported products to be imposed on the basis of indicative prices, even in those cases in which the declared value is below the indicative price. Article 459 of the Tax Code merely states that the taxable base for imported products shall be the same as the dutiable base for liquidation of import duties. Article 468 of Colombia's Tax Code imposes the same 16% tax on both domestic and imported products. There is therefore no "obvious" violation of Article III:2, first sentence. Moreover, Panama errs when it alleges that for domestic products the internal taxes are always determined on the basis of the transaction value, while this is not the case with respect to imported products. Article 453 of Colombia's Tax Code permits the Colombian tax authorities to equally disregard the transaction value or sales price of domestic products as the taxable base in the event that such products are undervalued. Therefore, the premise that discrimination exists is incorrect. With respect to both imported and domestic products alike, undervaluation can lead to tax assessments based on a value other than the declared value.
4.59.
For all of the above reasons, Colombia requests the Panel to reject Panama's claim that Colombia's use of indicative prices to determine the value of certain products for the purpose of levying the sales tax is inconsistent with Article III:2, first sentence, of the GATT 1994.

3. Panama's claims in respect of the port of entry measure are to be rejected

4.60.
Panama's second set of claims relates to Colombia's specification of the ports of entry for imports of textile, apparel and footwear products imported from Panama as provided for in Resolution No. 7373 of 22 June 2007, as modified by Resolution No. 7637 of 28 June 2007 (the "port of entry" measure). Colombia took this measure for reasons relating to customs control and customs specialization and in response to the persistent problem of contraband trade in such products from Panama. The evidence reveals that smuggling and under-invoicing are particularly problematic with respect to imports shipped from Panama, and that contraband involving textiles, apparel, and footwear is particularly important in this respect. The problem is exacerbated by the lack of control exercised over Panama's Free Trade Zone of Colon, which is recognized internationally as a focal point of illicit trade.

(a) Panama's claim under GATT Article XI is without merit as the port of entry measure does not constitute a prohibited quantitative restriction

4.61.
Panama's claim that the port of entry measure makes importation more burdensome and thus constitutes a de facto import restriction, in violation of Article XI of the GATT 1994 should be rejected.
4.62.
First, GATT Article XI provides for the elimination of quantitative restrictions. While the terms used at the beginning of the paragraph 1 of Article XI are "prohibitions or restrictions" without further qualification, it is clear from the context in which these terms are used that the kind of "limitation" or restriction addressed in this provision refers to a limitation on the quantity of imports. Colombia therefore submits that Panama's interpretation of the GATT Article XI as setting forth "a comprehensive ban of all types of limitations on the importation of products other than duties, taxes or other charges" is overly broad. Panama's interpretation is not consistent with the text of Article XI and is not supported by the case law referred to by Panama when read in its proper context.
4.63.
Second, Panama fails to meet its burden of proof. Panama has failed to provide any evidence that the referenced measures restrict trade. Panama only offers one quotation by one transporter about internal transportation costs in Colombia, and it makes no attempt to show that the internal transportation cost differential affects trade. This is simply insufficient to establish a prima facie case in respect of a measure which, on its face, does not impose a quantitative limitation on imports. In addition, Colombia presents evidence that shows that the value of imports of the relevant products from Panama actually increased in the course of the period in time during which the measure was in place, further disproving Panama's allegation.
4.64.
For all of the above reasons, Colombia requests the Panel to reject Panama's claim in respect of the port of entry measure under GATT Article XI:1.

(b) Panama's claim that the port of entry measure is applied in a manner that is inconsistent with GATT Article XIII:1 is to be rejected because Article XIII:1 does not apply to the situation at hand

4.65.
Panama's claim that the port of entry measure is inconsistent with GATT Article XIII:1 is to be rejected because GATT Article XIII is not applicable to the case at hand. A proper reading of GATT Article XIII in its context shows that this provision prohibits discrimination in the administration of quantitative restrictions that (1) would normally be prohibited by Article XI; but (2) are expressly permitted by the provisions of GATT Articles XI.2 and XII (as well as the relevant part of Article XVIII for developing countries). In other words, there are a limited number of situations described mainly in the two Articles preceding Article XIII that allow for the use of otherwise prohibited quantitative restrictions. Article XIII adds a non-discrimination obligation with respect to such permitted quantitative restrictions.
4.66.
Colombia considers that GATT Article XIII does not apply to measures, such as the challenged port of entry measure, that are not quantitative restrictions prohibited by GATT Article XI:1 (Colombia's view) or those that are in fact prohibited by Article XI:1, but not otherwise authorized (Panama's view). Any other interpretation of the scope and coverage of this provision would conflict with the text and defy common sense. There simply is no reason to provide for a detailed and specific requirement of non-discriminatory administration of a measure which is already prohibited by GATT Article XI:1.
4.67.
As the port of entry measure is not covered by GATT Article XIII:1, Colombia submits that Panama's claim of inconsistency with GATT Article XIII is to be rejected.

(c) Panama's claim that the port of entry measure is inconsistent with the requirements of GATT Articles V.2 and V.6 lacks a factual basis as the port measure does not apply to goods in transit

4.68.
Panama's claim that the port of entry measure restrict the freedom of transit through the Colombian territory inconsistently with Articles V:2 and V:6 of the GATT 1994 must be rejected. The port of entry measures do not apply to goods in transit within the meaning of Article V. GATT Article V applies only to goods destined for sale outside of the country through which it is passing and the obligations of Article V, such as those set forth in GATT Articles V.2 and V.6, are thus limited to goods that are destined for sale outside the transiting country.
4.69.
However, the challenged port of entry measure does not apply to traffic in transit in the sense of GATT Article V. The entries of textiles and other covered products that are in international transit through Colombia in the sense that their final destination lies outside of Colombia are exempted from the measure and can enter Colombia at any port of entry. Panama errs when it relies on Article 2 of the challenged Resolution No. 7373, which states that the normal customs transit regime no longer applies to the covered goods from Panama. This is merely a reference to the internal transit regime which concerns transportation of goods from one customs house to another customs house "located within the national territory of Colombia". It does not restrict international transit. In order to avoid any misunderstanding, Article 4, paragraph 3 of Resolution No. 7373 provides that Article 2 disallowing the normal transit regime to covered goods "does not apply to goods that are submitted for transshipment, since those goods do not have as their final destination Colombia". Colombia provides a specific example to confirm that the measure is not applied to goods in international transit. This contrasts with the fact that Panama has failed to provide even one case in which a good in international transit from Panama was not allowed to enter Colombia through a port other than the two ports designated by Resolution No. 7373.
4.70.
For these reasons, Colombia requests the Panel to reject Panama's claim under GATT Articles V:2 and V:6.

(d) Panama's claim that the requirement to present an advance import declaration and pay customs duties and sales taxes for textiles originating in Panama violates Colombia's MFN obligation under GATT Article I:1 lacks merit

4.71.
Panama's argument of violation of GATT Article I:1 due to a specific aspect of the port measure relating to the requirement to complete customs procedures and to pay customs duties prior to the arrival of the goods at customs, and the limited options available for the presentation of the legalization declaration without the payment of a fee, is without merit.
4.72.
First, Panama fails to demonstrate that this aspect of the measure constitutes "an advantage" in the sense of GATT Article I:1. Panama does not provide any evidence with respect to the alleged negative impact of such requirements on competitive opportunities for covered products imported from Panama. Colombia considers that GATT Article I:1 does not prohibit any and all differences in conditions that apply to Members' imports as long as such differences do not offer imports from certain Members a competitive advantage over other Members' imports. Panama simply assumes that these requirements affect a product's "competitive opportunities", but does not present any evidence to this effect. There is nothing "obviously" advantageous in terms of competitive opportunities about the very limited conditions imposed on Panama in this respect.
4.73.
Second, and even assuming that the exemption of such requirements with respect to products from other Members, constituted an advantage, this does not per se imply that such an advantage was not "extended unconditionally" to Panama. Panama's argument is based on the erroneous assumption that GATT Article I does not allow a Member to impose legitimate conditions on importation. The MFN obligation of GATT Article I requires Members to extend any advantage immediately and unconditionally to all WTO Members. Colombia submits that the requirement to extend such advantages unconditionally does not imply that no conditions may be attached to the granting of the advantage in the first place. Colombia's laws and regulations condition the formalities and ordinary customs procedures on the need for the customs authorities to be able to control and verify imported merchandise and to avoid circumvention of such laws and regulations through under-invoicing, fraud and smuggling. This is a general policy condition which applies to all goods irrespective of their origin. Article 41 of the Customs Statute provides that DIAN has the power to take measures relating to the entry of the products for reasons of customs control. This provision of the Customs Statute is of general application and conditions the formalities on the discretionary authority of DIAN to determine what is necessary for customs control and verification purposes. The specific aspects of the port measure challenged by Panama in the context of its GATT Article I:1 claim were simply the result of the fact that certain textile, apparel, and footwear products from Panama proved problematic in this light. The alleged advantage was granted under certain conditions (satisfaction of customs control and verification), and since these conditions were not met in respect of the covered products from Panama, the alleged advantage was amended with respect to such products from Panama. Since it is not so that an advantage was conferred to other Members, which was not extended unconditionally to products from Panama, Colombia considers that Panama's claim is to be rejected.
4.74.
Also, Colombia considers that GATT Article I:1 applies to products originating in a Member and that GATT Article I:1 is thus based on the origin of the product, not on its place of exportation. Panama trades in the covered goods but does not produce all of the goods under discussion, and their origin thus lies elsewhere. For that reason as well, Panama cannot claim that an advantage was not extended unconditionally and immediately to products originating in Panama.
4.75.
For all of the above reasons, Colombia request the Panel to reject Panama's claim under GATT Article I:1 with respect to the challenged aspects of the port of entry measure.

4. Colombia's port of entry measure is in any case justified under the general defence of GATT Article XX(d)

4.76.
Colombia is of the view that it has sufficiently rebutted the arguments made by Panama in respect of its port of entry measure and considers that all of Panama's claims should therefore be rejected by the Panel.
4.77.
However, in the event that the Panel were to be of a different view and were to uphold some or all of Panama's claims in respect of the port of entry measure, Colombia submits that the general defence of GATT Article XX(d) justifies the port of entry measure, which is a temporary measure necessary to secure compliance with Colombia's customs laws and regulations. The specific application of such a measure in respect of imports from Panama is justified on the basis of the evidence available to Colombia, and the measure is therefore not applied in a manner which constitutes arbitrary or unjustifiable discrimination.

(a) The port measure is provisionally justified under paragraph (d) of GATT Article XX

4.78.
Colombia considers that the port of entry measure meets the conditions for being provisionally justified under paragraph (d) of Article XX as it is (i) a measure designed to secure compliance with Colombia's customs laws and regulations which themselves are deemed to be WTO‑consistent; and (ii) is necessary to secure such compliance.
4.79.
First, as becomes clear from the preamble of Resolution No. 7373 of 2007, the port of entry measure is clearly designed to secure compliance with Colombia's laws relating to customs enforcement.
4.80.
Second, Colombia submits that the port of entry measure is "necessary" to secure compliance with Colombia's laws relating to customs enforcement. In its most recent assessment of the meaning of the term "necessary" in Article XX, the Appellate Body in its report on Brazil – Tyres stated that a measure is to be considered as "necessary" if it is "likely to bring a material contribution" or "apt to produce a material contribution" to the achievement of the policy objective. The determination of whether a measure is "necessary" involves in every case a process of weighing and balancing a series of factors which prominently include the importance of the common interests or values protected by that law or regulation, the contribution made by the compliance measure to the enforcement of the law or regulation at issue, and the accompanying impact of the law or regulation on imports or exports.

(i) The port of entry measure concerns a very important set of interests or values

4.81.
There can be no dispute about the importance of combating under-invoicing, tax evasion, smuggling, and money laundering, which are all relevant in this context. Colombia notes that in the case of Dominican Republic – Import and Sale of Cigarettes, the fight against tax evasion and smuggling was accepted as "a most important interest for any country and particularly for a developing country". Unfortunately, the revenue lost due to contraband from Panama is very significant. In addition to a loss of revenue which is of key importance to a developing country like Colombia, these illegal activities undermine the political and economic stability of Colombia in its present context. Colombia is not like every other country in this respect. It is faced with an important domestic problem of drug trafficking and public order. The values protected by the measure in question are clearly very important.

(ii) The port of entry measure is apt to contribute in a material way to the achievement of the objective

4.82.
The port of entry measure contributes significantly to customs enforcement through improved customs control and specialization. First, it is difficult to deny that a measure which requires that products be imported through the limited number of ports that are best equipped to control imports in the most effective manner is a measure which, in the words of the Appellate Body, is "apt to make a material contribution" to the achievement of the policy objective of combating smuggling. Second, the positive effects that the measure has had thus far, as demonstrated by the significant increase in contraband related seizures with respect to textile related products from Panama in 2007 compared to 2006, confirms the potential significant contribution of the measure to the achievement of the policy objective. In sum, the challenged measure clearly has the potential to be very effective in strengthening customs enforcement as it leads to further specialization and an increased focus and improved knowledge in a limited number of ports.

(iii) The port of entry measure does not have a significant adverse impact on legitimate trade

4.83.
The port of entry measure does not have a significant negative impact on legitimate trade, while it is effective in combating smuggling and under-invoicing. First, Colombia emphasizes the limited character of the restriction imposed. The port of entry measure is not an import ban; it simply requires that certain products be shipped through two specific ports. Second, the two specified ports are among the most modern ports of Colombia, which, even before the port measure was adopted, were among the most important ports of entry for trade in the covered products from Panama. Third, there are a number of exemptions from the application of the measure which ensure that legitimate trade in the covered products from Panama is, to the extent possible, not at all affected by the measure imposed to curb illegal trade. Finally, the available evidence shows that the value of imports of the covered products from Panama and its Free Zone de Colon did not actually decrease due to the implementation of the measure; the value increased over the period.

(iv) There were no reasonably available alternative measures

4.84.
Colombia considers that it has sufficiently established that the port of entry measure is necessary to secure compliance with Colombia's laws and regulations relating to customs enforcement. The Appellate Body has stated that it is for the complainant, in this case Panama, to demonstrate that other alternative measures were reasonable available to Colombia which would be as effective as the measure taken.
4.85.
Nevertheless, Colombia points to two alternatives which either proved to be unsuccessful or were not practicable in the context of the products in question. First, Colombia has consistently tried to improve the cooperation with Panama's customs authorities in order to secure compliance with its customs laws and regulations. However, both in the multilateral context of the Convention on Cooperation and Mutual Assistance between the Customs Administrations of Latin America, Spain and Portugal ("COMALEP"), and under the October 2006 bilateral Protocol for the Exchange of Information between the Customs authorities of Colombia and Panama (the "Customs Cooperation Protocol") with Panama, such efforts proved to be fruitless. The frequent failures of the authorities of Panama to respond to requests for assistance, and the numerous inconsistencies in respect of the answers received affected the credibility of the cooperation offered by Panama and thus undermined an important element of the regional system of customs enforcement.
4.86.
Second, in other sectors also prone to smuggling and under-invoicing such as cigarettes and electrical appliances, Colombia was able to conclude agreements with the private sector to jointly fight contraband. The limited number of importers and distributors of such products allowed the government to require the cooperation of these private parties in combating smuggling, something which is not possible in the case of the covered products due to the number of importers and traders in such products.
4.87.
For all of the above reasons, Colombia submits that the port measure satisfies the requirements to be considered provisionally justified under GATT Article XX(d).

(b) The port of entry measure complies with the chapeau of Article XX

4.88.
Colombia submits that, as required by the chapeau of GATT Article XX, the port measure is not applied in a manner that constitutes arbitrary or unjustifiable discrimination or a disguised restriction on trade. The evidence demonstrates that Colombia's concern over the covered imports from Panama is justifiable and that the exclusive focus on Panama bears a clear "rational connection" to the objective falling within the purview of paragraph (d) of Article XX. Colombia faces a serious problem of contraband coming from Panama, linked to money-laundering and drug trafficking which has an obvious destabilizing effect on the country's economy. The difference in the data from the export side compared to what has been declared by the importer reveals that the amount of contraband from Panama to Colombia is two to three times the value of the formal trade between the two countries. Colombia considers that the differentiation in the application of the measure is therefore clearly justifiable.
4.89.
Colombia submits that for much the same reasons, the port of entry measure cannot be considered to have been applied in a manner which would constitute a disguised restriction on trade. Colombia refers once again to the objective of customs enforcement, customs control and specialization pursued by the port measure, which even Panama acknowledges to underlie the measure. The measure is thus clearly not about restricting trade for protectionist purposes at all. And, again, the statistics show that the measure has not, in fact, restricted trade.
4.90.
For all of the above reasons, the port measure challenged by Panama is a measure necessary to secure compliance with Colombia's laws and regulations relating to customs enforcement which is not applied in a manner which would constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade. Therefore, even if the Panel were to uphold some or all of Panama's claims in respect of the port measure, Colombia requests the Panel to find that the measure is justified under GATT Article XX(d).

5. Request for findings

4.91.
For all of the above reasons, Colombia requests the Panel to reject all of Panama's claims.

C. EXECUTIVE SUMMARY OF THE REBUTTAL SUBMISSION OF PANAMA

1. Legal argument

(a) Colombia has failed to demonstrate that it uses indicative prices as a customs control mechanism and not for customs valuation purposes

4.92.
Colombia notes that Article 128 is part of Chapter VI "Ordinary Importation" in Title V "Regimen de Importación" and not part of Title VI "Customs Valuation"; and that Article 172.7, is in Chapter II "Control of Customs Valuation" and not in Chapter III "Determination of Customs Valuation". It uses the placement of these provisions to argue that they are a customs control mechanism and not a customs valuations method. In Panama's view, the placement of a provision in a particular chapter is not determinative of the nature of that measure. As the Appellate Body has made clear, for purposes of WTO law, a domestic instrument must be assessed on the basis of its content and substance and not the label given to it under domestic law. Therefore, the manner in which Colombia classifies the challenged provisions in its law cannot be determinative of their consistency with the Customs Valuation Agreement. It is necessary for the Panel to examine the design, structure and architecture of the law itself in order to make such a determination.
4.93.
The purpose of customs valuation is to determine the value of the goods for the purpose of levying ad valorem custom duties on imported goods. Generally, goods will be valued as soon as they are presented for customs clearance so that the appropriate duties may be levied and the goods may be released. For products subject to indicative prices, the value of the goods for the purpose of levying ad valorem custom duties on imported goods is determined when the importer submits its import declaration. The customs valuation of such products is based on the values established in the applicable Resolutions and not on the declared transaction value. It is at this point that the customs value is determined as Customs reviews the declared value to ascertain whether it is above or below the indicative price for that product. If the declared value is equal to or above the indicative prices, then that declared value will be accepted as the value of the goods for the purpose of levying ad valorem custom duties. The documents are not sent to the División de Fiscalización Aduanera for further review as valuation takes place at the time of inspection. Accordingly, the customs duties for such goods are levied on the basis of the indicative price or a higher amount.
4.94.
If, however, the declared value is lower than the indicative price, then the declared value is not accepted as the customs value for the purpose of levying customs duties. The importer is required to "correct" the value of the goods in the import declaration and pay the customs duties based on that corrected custom value.
4.95.
If an importer decides not to "correct" the import declaration, the documents are not sent to the División de Fiscalización Aduanera for review. In these circumstances, Customs has already made a determination that it will not accept the declared transaction value and thus, valuation of the product has taken place. Colombia confirms that "if the importer decides not to comply with the legal requirements... the goods will have to be removed from the port (i.e., re-shipped), and, if not, after 1 month, they will be considered as abandoned". The fact that the documents are not sent to the División de Fiscalización Aduanera demonstrates that, in such cases there is no valuation undertaken at a later stage.
4.96.
Colombia argues that "the release of the goods [subject to indicative prices] is subject to further verification/post-importation control ("control posterior") during which the actual customs value for the purpose of assessing the duties will be determined." However, despite a specific request from the Panel to identify the legal basis for the "control posterior" or liquidation procedure, Colombia failed to do so. Furthermore, the Panel asked Colombia to indicate which legal provisions govern the "estudio de valor". In its response, Colombia stated that Title VI of Decree No. 2685 deals with customs valuation ("estudio de valor"). However, the term "estudio de valor" does not appear anywhere in Title VI, so the basis for Colombia's assertion is unclear.
4.97.
Even though Colombia did not identify the legal basis for the "control posterior" or the "estudio de valor", it provided a narrative explanation that the "control posterior" starts with the "estudio de valor" (valuation) and ends with either the "liquidación oficial" (Article 514) or the refund of the cash payment made at the time of the release (Article 548). Article 514, which provides for the "liquidación oficial de revisión de valor correspondiente", is for the review of the customs value determined at the time of inspection. The term used is that of revisión or review of the value. Consequently, the forwarding of the documents to the División de Fiscalización Aduanera is for the review of the customs value in the corrected import declaration and not for the purpose of conducting the original determination of the customs value. Moreover, by its very terms, a "control posterior" would serve as a "control" mechanism and not as a valuation mechanism.
4.98.
Article 548 contemplates the possibility of an importer requesting DIAN for the reimbursement of customs taxes and other amounts paid in excess in the following situations:

(a) When the import declaration has been liquidated and an amount higher than that due for custom taxes has been paid;

(b) When an amount higher than that liquidated and due for customs taxes has been paid;

(c) When the import declaration has been presented and the customs taxes have been paid without obtaining the authorization for the release of the merchandise or if the authorization has been partially obtained; or,

(d) When the payment for provisional anti-dumping or countervailing duties has been effected and these duties are not definitively imposed.

4.99.
First, Article 548 applies only in situations where the importer seeks the reimbursement of custom taxes that have been paid. Most significantly, Article 548(a) applies in situations where the importer has liquidated the import declaration and has paid an amount higher than that due for customs taxes. As noted by Colombia, Article 548 a) applies to situations involving indicative prices. This confirms that Article 128.5 e) contemplates the payment of customs taxes for which the importer may seek reimbursement at a later stage. It does not refer to the refund of a guarantee. Second, Colombia claims that when "the declared f.o.b. value is below the indicative price established by DIAN, the goods will be released (levante)... if the importer provisionally posts a deposit on the basis of those indicative prices." The text of Article 128.5 e) does not contain a reference to a "provisional" payment. Article 548 clearly distinguishes between payments and provisional payments. Article 548(d) is applicable in situations involving payment of provisional anti-dumping duties. Therefore, when the reimbursement applies to a provisional payment, Article 548 specifically notes the provisional nature of the payment.

(b) Colombia has failed to demonstrate that the correction of the import declaration and the payment of the customs taxes provided for in Article 128.5 e) of Decree No. 2685 are a guarantee mechanism within the meaning of Colombian Law and Article 13 of the Customs Valuation Agreement

4.100.
Colombia argues that the "correction" of the import declaration followed by the payment of duties "is no more than the imposition of a requirement to provide a guarantee in the form of a deposit". Colombia's reasoning is as follows: Andean law provides that a guarantee can be provided in the form of a "fianza, depósito u otro medio apropiado". Andean Community Regulation 846 implementing Andean Decision 571 which is directly applicable in Colombian law expressly states that an importer is always allowed to obtain the release of the goods, if the importer provides a guarantee in the form of a security, deposit or any other form. Article 128.5 e) provides that an importer must correct and make a payment. Colombia construes this payment as a "deposit". As a guarantee may be provided in the form of a deposit under Andean law, Colombia submits that the payment referred to in Article 128.5 e) is a deposit which is the form that the guarantee takes. Colombia's reasoning is flawed. First, it assumes that the payment made is a "deposit" and not a payment. However, there is no textual basis for Colombia to argue that the payment of the customs duties in Article 128.5 e) is merely a deposit. The clear wording of Article 128.5 e) is that the importer must correct the import declaration and pay the customs taxes on the basis of the indicative price. It does not say that the importer must "provide a deposit" or "provisionally pay the customs taxes pending final determination." Most significantly, it does not offer an importer the opportunity to post a "guarantee".
4.101.
Second, Colombia refers to various provisions of Andean law and Colombian law to demonstrate that the guarantee may take the form of a "fianza, depósito u otro medio apropiado" and that the guarantee may constitute 100 per cent of the duties owing. However, Panama notes that all the provisions cited by Colombia specifically refer to the posting of a "guarantee". The term "guarantee" is a technical term. Thus, these provisions only apply in those cases where the law specifically allows an importer to post a "guarantee", such as in Article 128.5 a) to d). They do not apply when the term "guarantee" is not used in the law, as in the case of Article 128.5 e). Moreover, although the provisions of Andean law cited by Colombia contemplate a guarantee being provided in the form of a bond, deposit or other appropriate means, Article 496 of Resolution No. 4240 provides for only two types of guarantees: global or specific that can be bank or insurance company guarantees. It does not contemplate the possibility of a "deposit".
4.102.
Colombia claims that the challenged provisions "clearly set forth a guarantee mechanism as allowed for by Article 13 and 17 of the Customs Valuation Agreement". Colombia bears the burden of proof in this regard, which it has not met. A careful examination of the facts and the law at issue demonstrates that the correction and payment required in Article 128.5 e) do not meet the requirements of Article 13 of the Customs Valuation Agreement. A condition precedent for the application of Article 13 is that it is "necessary to delay the final determination of [the] custom value". Colombia asserts that it is up to the "domestic customs authorities to decide when they consider that such a delay is necessary. Such discretion has to be exercised within reason of course." Panama considers that Article 13 cannot be construed in such a deferential manner. It is not solely up to the customs authorities to decide at their discretion that a delay is necessary. Whether it is necessary to delay the final determination of the customs value must be decided on an objective basis, taking into account the particular facts of the case at hand. Colombia refers to Exhibit COL-6 to submit that the Technical Committee of the WCO has noted that "delays" in determining the final customs value of a product are "very frequently the case." Panama notes that this assertion made by Colombia in the text of its submission does not correspond to the text in Advisory Opinion 18.1 of the Technical Committee of the WCO. There is no reference in Opinion 18.1 to delays in the final determination of the customs value occurring frequently. The Advisory Opinion provides an example of when it may be considered "necessary" to delay the final determination: where adjustments in accordance with Article 8 should be made but the relevant data at the time of importation is not available. Thus, an objective criterion to determine whether it is "necessary" to delay the final determination of the customs value would be whether the relevant data or documents were not available. This is not the situation with respect to the imports of products subject to indicative prices.
4.103.
Article 13 provides that where a Member allows the withdrawal of goods from customs subject to the provision of a guarantee, that guarantee must be sufficient to cover the ultimate payment of customs duties for which the goods may be liable. In order to determine whether a guarantee is "sufficient", a Member is obliged to assess the "ultimate payment of customs duties for which the goods may be liable". In Panama's view, the assessment of the ultimate payment for which the goods may be liable must be carried out in the light of the specific circumstances of each case and must be undertaken in accordance with the rules on customs valuation set out in the Customs Valuation Agreement. For the purposes of Article 128.5 e), the "ultimate payment of the customs duties for which the goods may be liable" intended to be secured by the alleged guarantee is not determined on the basis of any of the methods of customs valuation set out in the Customs Valuation Agreement for each specific importation involving goods subject to indicative prices. Rather, it is determined on the basis of a minimum customs values or arbitrary or fictitious values. Colombia itself notes that it has the "right to examine whether the declared value is truthful or accurate, including through the use of objective benchmarks to indicate whether undervaluation has taken place for example through the use of indicative prices". Thus, Colombia acknowledges that it uses objective benchmarks of indicative prices to determine the ultimate payment of customs duties for which the goods may be liable and does not follow the valuation methods set out in the Customs Valuation Agreement. Furthermore, as Colombia does not conduct a case-by-case analysis, it requires the payment of customs duties in all instances including those in which the payment of a smaller amount would constitute a sufficient guarantee.
4.104.
The payment of customs taxes or "deposit" does not qualify as an appropriate instrument to provide a guarantee. Colombian law limits the form in which guarantees may be made. Article 496 of Resolution No. 4240 in Title XVIII (Garantías) only provides for two types of guarantees: global or specific, which can be bank or insurance company guarantees. Thus, the specific provision of Colombian law governing guarantees does not contemplate the possibility of a "deposit" as a guarantee. This is further confirmed by the text of Articles 523 and 527 of Resolution No. 4240 which provide that the validity of a guarantee will be for a period of one year. This qualification would only be applicable to bank or insurance company guarantees, and not to cash deposits.

(c) Colombia has failed to demonstrate that its use of indicative prices is an action taken pursuant to Article 17 of the Customs Valuation Agreement and the Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value

4.105.
Colombia claims that "the use of the transaction value of the good for the determination of its customs value does not restrict or call into question the right of Colombia to examine whether the declared value is truthful or accurate, including by using objective benchmarks to indicate whether undervaluation has taken place for example through the use of indicate prices." In Panama's view, while nothing in Article 17 of the Customs Valuation Agreement limits the right of customs authorities to satisfy themselves as to the truth and accuracy of the declared value, it is also clear that nothing in Article 17 suggests that, in the exercise of that right, customs authorities can automatically reject the declared value and instruct the importer to use a different value without previously examining, on a case-by-case basis, the facts to determine the truth and accuracy of the declared value.
4.106.
The right of customs authorities to satisfy themselves as to the truth or accuracy of the declared value must be construed in the light of paragraph 6 of Annex III of the Customs Valuation Agreement and the Decision Regarding Cases Where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value (the "Decision") which confirms that the right provided under Article 17 of the Customs Valuation Agreement must be exercised on a case-by-case basis. Colombia admits that when a declared value is below the indicative price, it has doubts about the veracity of that declared value (i.e. "suspiciously low"). In such circumstances, Colombia's customs authorities should satisfy themselves as to the truth or accuracy of the declared value in accordance with paragraph 6 of Annex III of the Customs Valuation Agreement and the special procedures set out in the Decision. Instead, Colombia improperly opts to reject the declared transaction value on its face,and requires its automatic correction to reflect the indicative price.
4.107.
Colombia claims that the Decision must be applied "at the time of valuation of the goods" and that such a time is "when the declared value … is being rejected and the decision is made to base the valuation on one of the other methods of Articles 2‑7 Customs Valuation Agreement". It further argues that "[i]n the Colombian system of customs valuation, this decision is taken for some transactions only at the time of the control posterior, and not at the time of the release of the goods under a guarantee". Panama considers that the Decision must be applied in accordance with the conditions set out therein, i.e.as soon as "a declaration has been presented and … the customs administration has reason to doubt the truth or accuracy of the particulars or of documents produced in support of this declaration." This must refer to the moment of importation or presentation of the import declaration for customs clearance, and not an alleged control posterior that may take place afterwards, even months or years later.

(d) Colombia has failed to rebut Panama's argument that the indicative prices are a continuation of minimum customs values

4.108.
Panama made a claim in its first submission that Colombia had requested a reservation to maintain minimum values for textile and footwear products until 30 April 2002. Despite the fact that the reservation has now lapsed, Colombia continues to impose indicative prices on 73 per cent of the products that were previously subject to the reservation. Colombia's only response is that "there is an important distinction between … a system of minimum import values that existed in the as a customs valuation method and the current mechanism of using indicative prices as benchmarks only". Although Colombia has attempted to cast the indicative prices system as one of "custom control" or a "benchmark", it is clear from the analysis provided above that the system is one of customs valuation. In that sense, it is the same as the previous system of minimum customs values, for which Colombia considered it necessary to request a reservation from its obligations under the Customs Valuation Agreement.

(e) Colombia has failed to demonstrate that it does not use indicative prices for the determination of the base for the sales tax for imported products in a manner inconsistent with Article III:2 and Article III:4 of the GATT 1994

4.109.
Colombia claims that Panama failed to identify the measure with sufficient clarity. Panama's challenge under Article III:2 of the GATT 1994 is based on the ground that the sales tax on imported goods subject to indicative prices (when the declared value is below the relevant indicative price) is "in excess" of the sales tax imposed on like domestic goods. The difference in tax burdens arises from the application of different rules for the determination of the tax base for imported and domestic goods. It is evident from Colombia's first written submission that Colombia has been able to identify the measure at issue as Colombia's use of indicative prices to determine the value of imported textiles, footwear and other products for the purpose of levying the sales tax, as implemented by Article 459 of the Tax Code in connection with Article 128.5 e) of Decree No. 2685 and Article 172.7 of Resolution No. 4240, whereas for like domestic products, Colombia uses the valor de operación pursuant to Article 447 of the Tax Code. Furthermore, third parties such as the European Communities, Guatemala and Ecuador have also been able to identify the measure at issue, and accordingly, have put forward arguments with respect to Panama's claim.
4.110.
Colombia argues that Panama has failed to meet its burden of proof with respect to its claims that the use of indicative prices as the basis for taxing imported products is inconsistent with Article III:2. Panama recalls that in Argentina – Hides and Leather, the Panel found that "even where imported and like domestic products are subject to identical tax rates, the actual tax burden can still be heavier on imported products. This could be the case, for instance, where different methods of computing tax bases lead to a greater actual tax burden for imported products."
4.111.
For Panama, it is clear that if the tax base for domestic goods is the actual sales value, whereas for imported goods the tax base is a higher indicative price, the application of the same tax rate of 16 per cent will lead to the imposition of a sales tax on imported goods greater than the sales tax on the like domestic products. As noted by the European Communities, a system whereby indicative prices are systematically used to determine the value of imported products for the purpose of levying sales taxes when the transaction value is used instead to determine the value of domestic like products for that purpose is, on its face, contrary to Article III:2, first sentence, of the GATT 1994. Therefore, contrary to Colombia's assertion, Panama has met its burden of proof with respect to its challenge under Article III:2 of GATT 1994.
4.112.
Colombia also argues that Panama has failed to submit evidence of specific instances of violation of Article III:2. Panama notes that a previous panel has made clear that the "quantum and nature" of the evidence required for a complaining party to discharge its burden of establishing a violation of Article III:2 depends "on the structure and design of the measure in issue". The panel in Indonesia – Autos stated that "an origin-based distinction in respect of internal taxes suffices in itself to violate Article III:2, without the need to demonstrate the existence of actually traded like products". In the present case, the different tax treatment is provided on the basis of the origin of the goods. Therefore, Panama submits in this instance that the challenged provisions in themselves are sufficient evidence of discriminatory treatment inconsistently with Article III:2 of GATT 1994.
4.113.
The tax base for imported goods is always based on the indicative prices whereas the tax base for domestic goods is based on the actual sales price unless demonstrated otherwise. As noted by the European Communities, "the fact that, as a result of a posteriori verification procedure, the invoiced transaction value of domestic products can be considered inaccurate due to likely undervaluation, does not change the basis for the application of the general rule, i.e., sale tax on imports is based on indicative prices, whereas like domestic products are levied on the basis of transaction values."
4.114.
If the Panel were to consider that the measure at issue does not fall under Article III:2 of GATT 1994, the Panel should find that the measure is inconsistent with Article III:4 of GATT 1994. Panama submits that Article 459 of the Tax Code, Article 128.5 e) of Decree No. 2685 and Article 172.7 of Resolution No. 4240 accord to imported products subject to indicative prices treatment less favourable than that accorded to domestic products under Article 453 of the Tax Code, within the meaning of Article III:4 of the GATT 1994. In Korea – Various Measures on Beef, the Appellate Body stated that, in order to establish a violation of Article III:4, three elements must be satisfied "that the imported and domestic products at issue are 'like products'; that the measure at issue is a 'law, regulation, or requirement affecting their internal sale, offering for sale, purchase, transportation, or use'; and that the imported products are accorded 'less favourable' treatment than that accorded to like domestic products". First, Panama notes that, with respect to the question of likeness between imported and domestic products, Colombia has conceded that the indicative price measures apply to imported products that are like domestic products. Second, Panama claims that the provisions of Colombia's law according differential treatment between imported products and domestic products are in the nature of "laws, regulations and requirements" affecting the internal sale, offering for sale, purchase, and use of the imported products subject to indicative prices. Third, the differential treatment that is accorded to imported products subject to indicative prices pursuant to Article 459 of the Tax Code in connection with Article 128.5 e) of Decree No. 2685 and Article 172.7 of Resolution No. 4240 is less favourable than that accorded to like domestic products under the regular rules and procedures of the Tax Code. When an imported product that is subject to indicative prices is presented for the liquidation of customs taxes, Article 128.5 of Decree No. 2685 and Article 172.7 of Resolution No. 4240 contemplate the sole possibility of correcting the declared value if it is lower than the applicable indicative price, and requires the payment of the customs taxes on that basis. In contrast, in the case of the like domestic products, a taxpayer is entitled to base its tax declaration on the actual sales price or value of the transaction, as he determines, and liquidate and pay the sales tax on this basis. Furthermore, Article 453 allows the demonstration of the transaction value, a possibility that is precluded for imported goods subject to indicative prices. Therefore, the rules and procedures governing the determination of the tax base for the sales tax on imported products subject to indicative prices are inconsistent with Article III:4 of the GATT 1994.

(f) Colombia has failed to rebut Panama's claim that the port of entry restrictions are inconsistent with Article XI:1 of the GATT 1994

(i) The port of entry restrictions do not have the characteristics of a genuine customs enforcement measure

4.115.
Colombia claims that the port of entry restrictions were implemented in order to ensure compliance with Colombian customs law and combat contraband and money-laundering. However, the limited product coverage of the port of entry restrictions, their exclusive application to Panama and the many exemptions serving domestic economic interests clearly demonstrate that the measure is not a genuine customs enforcement measure. Moreover, there is no justification for singling out Panama as the target of the port of entry restrictions. Chart 3 in Exhibit COL-38 indicates that imports from Panama with incidents of "distorsions" amount to US$906,354 while those from the United States amount to US$2,902,809 and those from ALADI as a whole US$2,500,876. Colombia has stated that "when a government is faced with information that shows that particular imports from one particular country were particularly problematic, it is only reasonable and appropriate that this government takes particular measures in order to improve the customs control in respect of measures from that particular country". Applying this reasoning, it is not clear why Colombia has not applied the port of entry restrictions to other countries that have proven to be "problematic".

(ii) Colombia's interpretation that Article XI:1 prohibits only measures that impose a restriction on the quantity of imports is not supported by the text of Article XI:1 or the jurisprudence

4.116.
Colombia submits that the title and the text of Article XI:1 make clear that this provision applies only to the elimination of quantitative restrictions. It reasons that because the port of entry restrictions do not impose a quantitative restriction on imports, they cannot fall within the scope of Article XI:1. Thus, Colombia's whole defence rests on the issue of whether the ports of entry restriction impose a quantitative restriction. Colombia does not offer a defence to Panama's claim that the ports of entry restrictions constitute a "restriction" within the meaning of Article XI:1. Thus, if Panama can demonstrate that Article XI:1 is not limited in its coverage to quantitative restrictions, then Colombia's whole defence must fail.
4.117.
The term "quantitative restrictions" appears only in the heading of Article XI. The text itself uses the terms "prohibitions" and "restrictions". Panama notes the existence of the term "quantitative" to modify restrictions in the heading of Article XI is not determinative of the scope of Article XI:1. There are several GATT articles in which the heading does not fully describe the scope of the article. For example, Article X is entitled "Publication and Administration of Trade Regulations". Nevertheless, the text in Article X:1 refers to "laws, regulations, judicial decisions and administrative rulings of general application". Similarly, Article XIII is entitled "Non-discriminatory administration of quantitative restrictions" but it contains provisions on the administration of tariff rate quotas which are not quantitative restrictions.
4.118.
Colombia's argument that Article XI is limited to quantitative restrictions does not find any support in GATT/WTO jurisprudence. Contrary to Colombia's argument, there have been several cases in which panels have found that a non-quantitative restriction was in violation of Article XI. Most recently, in Brazil – Retreaded Tyres, the panel stated that "fines" were a restriction within the meaning of Article XI:1. In EEC – Minimum Import Prices, a GATT panel found that the "minimum import price system was a restriction within the meaning of Article XI:1", even through imports were not restricted on a quantitative basis. In Canada – Provincial Liquor Boards, the panel found that limitations on the points of sale available to imported beer were restrictions within the meaning of Article XI:1.

(g) Colombia has failed to rebut Panama's claim that the ports of entry restrictions are inconsistent with Article XIII:1 of the GATT 1994

4.119.
Colombia states that a "proper reading... clearly limits the application of Article XIII to those quantitative restrictions that are in principle prohibited by Article XI:1, but which are covered by the exceptions to this prohibition under Article XI:2, Article XIII and Article XVIII". However, the text of Article XIII:1 does not qualify its application to permitted restrictions. It provides that no prohibition or restriction shall be applied by any WTO Member on the importation of any product from another WTO Member unless the importation of the like product of all third countries is similarly prohibited or restricted. As is clear from the text of Resolution No. 7373, the port of entry restrictions apply only to goods from Panama. They do not apply to goods from other sources. Thus, the measure is applied on a discriminatory basis. In the light of the above clarifications, Panama asks the Panel to find that the port of entry restrictions are restrictions within the meaning of Article XI and that like products from other countries are not similarly restricted within the meaning of Article XIII:1 of the GATT 1994.

(h) If the Panel were to find that Article XI:1 is not applicable, then Panama requests that the Panel find that the discriminatory features of the port of entry measures are in violation of Article I:1 of the GATT 1994

4.120.
In its request for the establishment of a Panel, Panama claimed that the port of entry restrictions were inconsistent with Articles XI:1 and XIII:1 as well as Article I:1 of the GATT 1994. If the discriminatory aspects of the measure were found to be inconsistent with Article XIII, there would be no need to have recourse to Article I:1. However, should the Panel find that the port of entry restrictions do not fall within Article XI (and consequently Article XIII), then Panama requests that the Panel find that discriminatory aspects of the port measures are inconsistent with Article I:1. The requirement to enter textile and footwear products at Barranquilla and Bogota is a rule in connection with importation. While textiles and footwear coming from Panama are limited to entry and importation at these two ports, textiles and footwear coming from other countries may enter at any eligible port in Colombia. Thus, products of non-Panamanian origin enjoy the advantage of being able to be entered and imported at several ports. The advantage of being able to enter and import textiles and footwear at more than two designated ports is not extended immediately and unconditionally to imports from Panama. The port of entry restrictions that are applicable exclusively to goods from Panama are, therefore, inconsistent with Article I:1 of the GATT 1994.

(i) Colombia has failed to rebut Panama's claim that it imposes limitations on freedom of transit in a manner inconsistent with Article V:2 of the GATT 1994

4.121.
Article 4 of Resolution No. 7373 provides that "[t]he provisions of Article 2 of this Resolution No. shall not apply to goods that are to be subjected to the transhipment procedures, considering that in this case the goods do not have Colombia as their final destination." "Transhipment" is a defined term in Colombian law which means that the goods must be transferred from the means of transportation used for the arrival of the goods in Colombia to another means of transportation used for the departure of those goods from Colombia. The transfer must take place within the same customs office. However, Colombia appears to focus on whether the goods in question have Colombia as their final destination or not. However, by virtue of Article 4, the provisions of Article 2 do not apply when the goods are subject to the transhipment procedure, as, in that case, the goods do not have Colombia as their final destination. The question to be answered is whether the goods in question are subject to the transhipment procedure, not whether the goods in question do not have Colombia as their final destination. If transhipment were not a limitation, then Article 4 would have read that the ports of entry restrictions would not apply to "goods that do not have Colombia as a final destination". It does not so read. The failure of Colombia to permit freedom of transit to all goods in transit, not only those that are transhipped, is inconsistent with its obligations under Article V:2.

(j) Colombia has failed to rebut Panama's claim that it accords treatment less favourable to goods that have been in transit through Panama in a manner inconsistent with its obligations under Article V:6 of the GATT 1994

4.122.
As noted in Panama's first written submission, Colombia permits textiles from other WTO Members to be entered and imported at any eligible port in Colombia, but prohibits the entry and importation of the same products except at the ports of Barranquilla or Bogota if they had been in transit through Panama.
4.123.
Colombia has interpreted Article V:6 to apply to goods that are in transit through Colombia. Article V:1 provides that the term "traffic in transit" describes goods that begin and terminate their journey beyond the frontier of the WTO Member across whose territory the traffic passes. Thus, goods may originate in Member A, transit through Member B and terminate in Member C. Colombia assumes that Article V contains obligations for Member B only as it is the country of transit. However, while Article V:2 (as well as paragraphs 3, 4 and 5) refers to the obligation imposed on Member B to provide freedom of transit through its territory, Article V:6 refers to the obligation imposed on Member C to not discriminate against goods arriving in its territory that have been in transit through Member B. The fact that Article V:6 imposes an obligation on the Member in whose territory the goods terminate their journey (i.e., the country of importation) is made clear by the second sentence of Article V:6 which refers to the conditions of "eligibility for entry of goods". In effect, Article V:6 is a provision that establishes that a most-favoured-nation-requirement that must be observed by the country of destination.
4.124.
Thus, Article V:6 provides that a Member cannot provide treatment less favourable to goods "that have been in transit" through Member B. The obligation set out in Article V:6 as applied to the facts of this case would be as follows: Colombia (Member C) (the country in which the goods terminate) cannot accord products that have been in transit through Panama (Member B) treatment less favourable than it would have accorded those products had they come from the country where the goods began their journey (Member A). Thus, the description of "traffic in transit" in Article V:1 is still applicable.

(k) Colombia has failed to rebut Panama's claim that the requirements to present an advance declaration and pay customs duties for textiles originating in Panama are inconsistent with Article I:1 of the GATT 1994

4.125.
Colombia agrees that the customs requirements of the ports measures are covered by Article I:1 as they are "rules and formalities connected with importation". Colombia, however, disagrees that the customs requirements constitute an "advantage". Even though Colombia acknowledges that WTO panels and the Appellate Body have given a wide interpretation to the term "advantage" based on a textual interpretation, it insists that an "advantage" must "affect commercial opportunities" in such a way as to create "more favourable opportunities for certain products." There is no textual basis in Article I:1 for this conclusion. The text refers to "any" advantage; not any "commercial" advantage. Indeed, as the Appellate Body stated in Canada – Autos, "[t]he words of Article I:1 refer not to some advantages granted..., but to 'any advantage'; not to some products, but to 'any product'; and not to like products from some other Members, but to like products originating in or destined for 'all other' Members". While the Appellate Body has made clear that Article I:1 should be interpreted in a broad and expansive manner, Colombia rejects this interpretation in favour of a narrow and restrictive reading of this Article.
4.126.
It is important to note that importers of products originating elsewhere have the option to decide whether or not to file an import declaration, whereas importers of products originating in Panama are required to do so. Under normal importation procedures, Article 119 provides that an import declaration shall be presented within the time frame provided in Article 115 [up to one or two months after the goods arrive, if approved by Customs authorities] or in advance, no earlier than 15 days prior to entry of the goods. There is flexibility afforded to importers to determine when to present the import declaration. The importer can wait to verify the goods that have actually arrived before submitting the import declaration for those goods.
4.127.
However, for goods subject to the restrictions on the ports of entry, the importer has no choice – it is obliged to present the import declaration within a short window of opportunity, namely 10 days. Therefore, the importer is deprived of the flexibility to choose when to present the import declaration. A practical consequence of this is that the importer is not able to inspect goods before submitting the import declaration. This is particularly problematic for two reasons. First, if there are any discrepancies between the information declared on the import declaration and the goods actually entered, then the importer has to file a Declaración de Legalización (Article 6 of Resolution No. 7373). Second, if those discrepancies are above 7 per cent (weight) or 10 per cent (width), the importer will also have to pay a rescate or fee of 15 per cent of the customs value of the merchandise (Article 231 of Decree No. 2685). These consequences indicate that importers of products subject to the ports of entry restrictions are disadvantaged as a result of being forced to file their import declaration in advance. Importers of products from Panama must present an advance declaration and must comply with the other customs requirements while importers of like products from other countries do not. That advantage that is accorded to other countries is not accorded immediately and unconditionally to Panama. In the light of previous jurisprudence, that is sufficient to demonstrate a violation of Article I:1.
4.128.
Colombia argues that Article I:1 is based on the origin of the product, not on its place of exportation, and as Panama does not produce the goods in question that it exports to Colombia it has no grounds to claim a violation of Article I:1. Once again, Colombia focuses on the trade effects of the measure, rather than the design, structure and architecture of the measure itself and its potential consequences. The amount of goods of Panamanian origin that are currently exported to Colombia is not relevant in determining whether the measure at issue is inconsistent with Article I:1. Article I:1 governs the regulatory framework that governments must apply. This provision protects the conditions of competition between suppliers of different origin, irrespective of actual volumes of trade; it protects not only current but also potential future trade.

(l) Colombia has failed to demonstrate that its port of entry restrictions are justified under Article XX(d) of the GATT 1994

4.129.
Colombia submits that if the Panel were to uphold some or all of Panama's claims, then it further submits that the "general defence of Article XX(d) justifies the port of entry measure, which is a temporary measure necessary to secure compliance with Colombia's laws and regulations". Colombia acknowledges that it bears the burden of proof as the party invoking the Article XX exception. Panama considers that Colombia has not discharged that burden. In order for Colombia to establish that the ports of entry restrictions are justified under Article XX(d), it must demonstrate that it meets the "two-tiered" test established by the Appellate Body: it must fall within paragraph (d) in order to be provisionally justified and it must meet the conditions of the chapeau.

(i) The ports of entry restrictions are not provisionally justified under paragraph (d) of Article XX

4.130.
In its first written submission, Colombia states that the ports of entry measures were designed to secure compliance with its customs laws as well as its laws against smuggling and money-laundering. However, Colombia has not identified any specific laws or regulations related to combating contraband or fighting money-laundering with which the ports of entry restrictions are intended to secure compliance. Colombia's failure to do so is in stark contrast with the actions taken by other respondents that have invoked an Article XX(d) defence in WTO dispute settlement proceedings, for example, in Canada – Wheat Exports and Grain Imports and in US – Shrimp. In an Article XX(d) defence, it is necessary for a panel to identify the laws or regulations the compliance with which the measure is aimed at securing, to determine whether those laws and regulations are not themselves WTO-inconsistent, and whether the measure is designed to secure compliance with the relevant laws or regulations.
4.131.
Colombia repeatedly refers to the port measure as "clearly designed to secure compliance with Colombia's laws related to customs enforcement", or "clearly a measure designed to secure compliance with Colombia's laws relating to customs enforcement". However, Colombia never identifies the precise customs laws and regulations with which the ports of entry restrictions are designed to secure compliance. Thus, it is not possible for the Panel to complete the analysis required in the first part of the test in an Article XX(d) defence.
4.132.
The identification of the specific laws and regulations is a pre-requisite to assist the Panel in determining whether the laws and regulations are themselves GATT-consistent. In its first written submission, Colombia claimed that "a WTO Member's laws and regulations are presumed to be GATT/WTO‑consistent" and that, as Panama has not challenged Colombia's laws and regulations, "Colombia's laws and regulations are therefore deemed to be consistent with the provisions of the GATT". However, a mere claim of a presumption of WTO-consistency is not sufficient to demonstrate that all Colombia's customs laws and regulations in question are themselves GATT-consistent. Moreover, it may be safely assumed that Colombia's customs laws and regulations total thousands of pages, therefore, it is not possible for the Panel to know which provisions of Colombia's customs laws and regulations it must examine in order to determine whether they are GATT-consistent.
4.133.
As the party bearing the burden of proof in an Article XX(d) defence, the respondent must demonstrate that all conditions of the defence are met, including the condition that the laws and regulations with which the measure at issue is designed to secure compliance are not themselves GATT-inconsistent. This Colombia has not demonstrated. Therefore, it is not possible for the Panel to complete the second part of the test set out in Article XX(d) namely, the determination that the laws or regulations that the measure is intended to secure compliance with are themselves not GATT-inconsistent.
4.134.
Even if the Panel were to find that Colombia has correctly identified laws and regulations for customs enforcement generally, Panama submits that Colombia has not demonstrated how the ports of entry restrictions are designed to secure compliance with those laws and regulations. The ports of entry restrictions apply only to a limited range of products whereas Colombia has customs enforcement problems with respect to a wide range of products such as "máquinas y aparatos eléctricos" and vehicles and vehicle parts that are not subject to the ports of entry restrictions. A measure truly designed to secure compliance with customs enforcement would apply to all products known to be problematic. Furthermore, Colombia applies the port of entry restrictions only to Panama, even though it experiences significant problems with contraband técnico, subfacturación and sobrefacturación with the United States, Europe, Asia and the rest of the ALADI countries as indicated by the data contained in Chart 3 of Exhibit COL-38. If Colombia's intention were to secure compliance with its customs laws and regulations, it would apply the measures to all imports giving rise to customs irregularities.
4.135.
In accordance with the Appellate Body's statements in Korea – Various Measures on Beef, there are three relevant factors in determining whether a measure is "necessary" to secure compliance with a WTO-consistent law or regulation within the meaning of Article XX(d), namely: the relative importance of the common interests or values that the underlying law or regulation to be enforced is intended to protect; the extent to which the measure contributes to securing compliance with the end pursued, namely the underlying law or regulation at issue; and the extent to which the measure has a restrictive impact on international commerce, i.e., intense or broad restrictive effects on imported goods.
4.136.
In order for a measure to be considered as "necessary" within the meaning of Article XX(d), it must be close to "indispensable" to secure compliance with GATT-consistent laws and regulations. As demonstrated below, given the lack of effectiveness of previous similar measures in combating contraband, Colombia cannot demonstrate the port of entry restrictions are close to "indispensable" to securing compliance with its customs laws and regulations. While the fight against tax evasion and smuggling may be an important interest for a developing country, Panama considers that Colombia has not established how the restrictions contribute in a material way to securing compliance with the applicable laws. Colombia maintained similar port of entry restrictions from 7 July 2005 to 31 October 2006. Resolution No. 5796 of 7 July 2005 provided that all goods classifiable under Chapters 50 to 64 of the Customs Tariffs (textiles and footwear) coming from or originating in, Panama had to be entered and imported exclusively at the ports of Bogota (if by air) and Barranquilla (if by sea). Evidence cited byColombia shows that, for 10 months in 2006, when the previous ports of entry restrictions were in force, the percentage of contraband trade was over 84.27 per cent generally and 89 per cent for textiles. These statistics demonstrate that the ports of entry restrictions are completely ineffective in combating contraband. In these circumstances, Colombia's argument that its ports of entry restrictions are now necessary to ensure compliance with its customs law and to combat contraband is unsustainable.
4.137.
In the light of these statistics, the Panel asked Colombia how it would consider the "port of entry restrictions imposed at that time as "necessary" and "mak[ing] a material contribution to the objective of securing compliance with Colombian laws relating to customs enforcement against customs fraud". In its response, Colombia merely noted that it disagreed that the figures showed that the similar measures in place between July 2005 and October 2006 were not effective. In addition, Colombia argues that "it is not because a measure is not immediately able to resolve the problem, especially in a case as complex and persistent as this one, that the measure is... not apt to materially contribute to the achievement of the objective". It notes that "it is only normal that it takes some time for such measures to have the intended effect" and that "the challenged measure clearly has the potential to be very effective in strengthening customs enforcement". In Panama's view, the measure is of such a nature – the prohibition of the entry of textiles at all ports except Baranquilla and Bogota - that it should be possible to detect the immediate impact of the measure and to assess its effectiveness. The fact that contraband was continuing at high levels in the 10 months of 2006 when the previous port restrictions were in place clearly demonstrates that such port restrictions do not make a material contribution to the policy objectives of combating contraband trade and enhancing customs enforcement. It is for a very similar reason that the Panel in Dominican Republic – Import and Sale of Cigarettes found that the measure at issue was not effective because despite the efforts made to curb smuggling though the imposition of the tax stamp, there were still documented cases of smuggling. The Panel concluded therefore that the tax stamp was of limited effectiveness in preventing tax evasion and cigarette smuggling. Colombia cannot convincingly argue that the ports of entry restrictions make a material contribution to the policy objective of combating contraband when the levels of contraband at the time the previous measures were in place were so high.
4.138.
Colombia refers to the Appellate Body's statement that the "[a] measure with a relatively slight impact upon imported products might more easily be considered as 'necessary' than a measure with intense or broader restrictive effects", and submits that the measure "does not have a significant negative impact on legitimate trade, while it is effective in combating smuggling and under-invoicing". Colombia notes that imports of the covered products from Panama and its Colon Free Zone have increased. Colombia recalls that the Appellate Body stated that "a measure with a relatively slight impact upon imported products might more easily be construed as 'necessary' than a measure with intense or broader restrictive effects." Panama submits that Colombia's approach to what constitutes an "adverse impact on trade" or "restrictive effects on trade" is flawed. This phrase cannot be used as a test to assess whether levels of imports have increased despite the imposition of the measure at issue. In Panama's view, therefore, the "restrictive effects" referred to by the Appellate Body in Korea – Various Measures on Beef must be viewed as meaning the effects on the conditions of competition of the imported product, rather than the restrictive effects on the trade flows of imported products.
4.139.
The Appellate Body in Korea – Various Measures on Beef stated: "It was clear to the Panel that a contracting party cannot justify a measure inconsistent with another GATT provision as "necessary" in terms of Article XX(d) if an alternative measure which it could reasonably be expected to employ and which is not inconsistent with other GATT provisions is available to it." Panama agrees that it has the burden of identifying other less trade-restrictive alternatives reasonably available that would achieve the desired level of protection with respect to the objective pursued by Colombia. However, it is not possible to provide specific alternatives as Colombia has not clearly identified which of its customs laws and regulations it is seeking to ensure compliance with through the ports of entry restrictions. Panama notes that Colombia has experienced problems of contraband, under-invoicing, money-laundering, and smuggling with many countries as indicated in Chart 3 of Exhibit COL-38. It applies its general customs laws and regulations to all other countries. Therefore, a reasonably available less-trade restrictive alternative to the port of entry restriction would be for Colombia to apply its general customs laws and regulations to Panama. This would of course be an alternative that is reasonably available and would not impose an undue burden on Colombia.

(ii) The ports of entry restrictions do not meet the requirements set out in the chapeau to Article XX

4.140.
If the Panel were to conclude that the ports of entry restrictions fall within the scope of Articles XX(d) of the GATT 1994, it would then need to carry out an analysis of the measure in accordance with the requirements of the chapeau of Article XX of the GATT 1994.
4.141.
The port of entry restrictions are a "disguised restriction" on international trade. Panama considers that port of entry restrictions were imposed in order to protect fragile domestic industries. As indicated in the introduction to the First Submission of Panama, the design, structure and architecture of the port of entry restriction reveal that its true purpose it to protect domestic industries, not to enforce customs law. That conclusion is confirmed by the statements made by the Ministry of Commerce, Industry and Tourism in several Final Anti-Dumping Determinations. The Ministry further found that despite the application of trade remedies on the importation of the subject products originating in China which was complemented from October 2005 with the adoption of customs controls for the entry into Colombia of these products, which allowed the domestic industry to show certain signs of recovery especially in 2005, overall the domestic industry continues to show evidence of serious injury which was aggravated during the first semester of 2006. The statements made by the Ministry of Commerce, Industry and Tourism are an admission that the port of entry restrictions do not serve customs enforcement purposes but constitute a "disguised restriction on international trade".
4.142.
The discrimination in the application of the ports of entry restrictions between goods from Panama and those from other countries is "arbitrary" and "unjustifiable" within the meaning of the chapeau of Article XX. As noted from Exhibit COL-36, Colombia has experienced various customs problems, such as technical contraband, under-invoicing, over-invoicing, and open contraband from many countries including the United States and the rest of ALADI countries. Yet, Colombia applies the port of entry restrictions only to Panama. This is clearly "arbitrary" within the meaning of the chapeau.
4.143.
That type of discrimination cannot be justifiable under the chapeau of Article XX. The chapeau refers to discrimination "between countries where the same conditions prevail". This makes clear that discrimination between imports from different countries can be justified only if it is based on differences in conditions prevailing in those countries, such as discrimination against imports of plants from countries with a plant disease. The law instituting the port of entry restrictions makes no distinction related to conditions prevailing in Panama and the exempted countries.

D. EXECUTIVE SUMMARY OF THE REBUTTAL SUBMISSION OF COLOMBIA

1. Claims relating to Colombia's indicative pricing mechanism as a customs valuation method under the Customs Valuation Agreement

4.144.
Colombia has explained on several occasions the role played by indicative prices. They are not, as erroneously stated by Panama, used "to determine the value of products for the purpose of levying customs duties and internal taxes."79 Rather, indicative prices are used as a customs control mechanism, which does not affect customs valuation. Customs valuation in Colombia is entirely consistent with the principles of Articles 1‑7 of the Customs Valuation Agreement, and is not related to indicative prices.80

(a) Panama fails to meet its burden of proof

4.145.
Colombia recalls that from the standpoint of international law, "municipal laws are merely facts".81 Determining the meaning of a Member's domestic law may require more than simply a reading of the text; it may require recourse to other interpretative aids, such as evidence of the law's consistent application in practice, the pronouncements of domestic courts, or the opinions of legal experts and the writings of recognized scholars. This principle is well-established in GATT jurisprudence, including the GATT panel on US – Tobacco. In this case, Panama has limited itself to the text of the Colombian measures, and, as a result, has misinterpreted Colombia's indicative prices. Panama has failed to adduce any evidence of the practical application of the challenged laws and regulations, and therefore has failed to meet its burden of proof.

(b) A proper interpretation of the challenged provisions concerning indicative prices shows that the indicative prices are not used for customs valuation purposes

4.146.
Panama has even misinterpreted the text. The text of Article 128.5 e) of Decree No. 2685 and Article 172.7 of Resolution No. 4240 does not support Panama's argument that these provisions provide for the use of indicative prices as a customs valuation method. An ordinary reading of the text of these provisions leads to the following conclusions. First, these provisions deal with customs inspection ("inspección aduanera") and the release of the goods ("el levante"), not the determination of the customs value for purposes of duty assessment. Second, the challenged provisions themselves expressly require the customs inspector to forward all documentation to the División de Fiscalización Aduanera in order to determine the customs value of the imported good for the purpose of assessing the duties.82Third, both of the challenged legal provisions are included in the sections of Colombia's laws and regulations dealing with customs control and verification, and are not part of the separate provisions of the Customs Statute or Resolution No. 4240 setting forth the provisions dealing with customs valuation. Colombia is of the view that this is a "significant" element in determining the meaning of the domestic legal provisions challenged.83Fourth, the definition of the term "indicative prices" in Article 237 of Colombia's Customs Statute confirms that indicative prices are a customs control mechanism ("mecanismo de control"), and not a customs valuation method. Fifth, the relevant provisions in the Customs Statute (Title VI, Articles 237‑259) and the Resolution No. 4240 (Chapter III, Articles 174‑217) that do actually deal with customs valuation clearly state that customs valuation will be conducted on the basis of the methods provided for by the Customs Valuation Agreement. The "correction" called for by Articles 128.5 e) and 172.7 imply a ticking of the box "ajustes" in the import declaration and does not imply a requirement to amend the all-important Declaración Andina del Valor. The "payment" of duties ("paga los tributos") is a general reference to a cash payment in the amount of the duties under discussion and does not refer to the final liquidation of duties as referred to in other provisions, such as Article 128.8 in respect of precios oficiales ("se liquide los mayores tributos dejados de pagar").
4.147.
Moving beyond the text further shows the interpretative errors committed by Panama. Andean Community law forms the legal context in which to read the challenged provisions of Decree No. 2685 and Resolution No. 4240 and confirms that indicative prices operate as a customs control and guarantee mechanism only. Andean Community ("CAN") Decisions and Resolutions are directly applicable and enforceable in Colombia and even prevail over domestic laws in case of conflict. Most importantly, they are part of the legal framework in which to analyse the challenged provisions. When read in this legal context, the reference in Article 128.5 (a provision dealing exclusively with the release of goods) to the term "correction" and "payment of duties" alongside a bank or insurance guarantee suggests strongly that this cash payment is the kind of cash deposit envisaged by the Customs Valuation Agreement, and by the CAN Decisions and Resolutions which allow for such a type of guarantee.
4.148.
Also, the consistent application of the challenged provisions fully supports the interpretation of these provisions offered by Colombia. Panama failed to produce any example of a case in which the customs value of the good was determined on the basis of the indicative prices. The one specific example (PAN‑53) that Panama did provide in response to question 33 from the Panel confirms all of Colombia's arguments in this respect, and clearly contradicts its assertion that the challenged provisions "prevent the DIAN from using the methodologies" of the Customs Valuation Agreement. Panama's evidence demonstrates only that, in Colombia, release of the subject goods from customs is conditioned upon an administrative correction and the payment of a cash guarantee if the declared price is below the indicative price. Colombia has not asserted otherwise. But, that does not mean that indicative prices are used as a customs valuation method. Quite the contrary is shown by all of the examples provided by Colombia (including COL‑49, which includes documents which Panama did not include in PAN‑53). In each case, after the importer made the required payment to release the goods, the Colombian authorities conducted a valuation of the merchandise, applied the Customs Valuation Agreement, and found that the importer was entitled to a refund.
4.149.
Colombia requests that the Panel reject all of Panama's claims under the Customs Valuation Agreement in respect of the challenged provisions, Article 128.5 e) of Decree No. 2685 and Article 172.7 of Resolution No. 4240. These provisions do not determine the customs value of the subject goods on the basis of the indicative price, as erroneously asserted by Panama.

2. Panama's claims on indicative prices under GATT Article III

4.150.
Panama's claim in respect of indicative prices under GATT Article III is built on the same flawed premise as its claims under the Customs Valuation Agreement: that indicative prices are used to determine the customs value. The Panel should reject this claim.

(a) Panama's claim under GATT Article III:2 is flawed

4.151.
First, there is no provision in Colombian law which requires the sales tax on imported products to be imposed on the basis of indicative prices, even in those cases in which the declared value is below the indicative price. Article 459 of Colombia's Tax Code, which in response to question 6 from the Panel Panama has clarified to be the basis for its GATT Article III claim, merely states that the basis for assessing internal taxes on imported products is the same as the basis that is used to determine customs duties. Because it is clear from the above explanation that the dutiable value is determined on the basis of one of the methods of the Customs Valuation Agreement, and not on the basis of indicative prices, Panama's argument fails. Second, Panama fails to prove that the sales tax on imported products imposes a tax burden in excess of that imposed on domestic products. Colombia emphasizes that this has nothing to do with the question whether Article III protects competitive opportunities or is based on trade effects; this is simply a question which relates to the determination of whether a violation exists in a case where the nominal tax rate imposed on like domestic and imported products is identical, and yet a complainant alleges a violation of Article III:2, first sentence, which prohibits imported products from being taxed in excess of like domestic products.

(b) Panama's unsubstantiated new claim under GATT Article III:4 is to be rejected

4.152.
In its oral statement, Panama introduced a claim under GATT Article III:4 as an alternative to its GATT Article III:2 claim.84 In essentially one paragraph in the oral statement, Panama "develops" the argument.85 First, Colombia submits that this statement in one paragraph of the oral statement, repeating in the body of the text what was a footnote in Panama's first written submission86, is not sufficient to establish a prima facie case. Panama fails to develop any legal or factual arguments. Second, even the one-paragraph argument offered by Panama demonstrates a problem: the legal basis for Panama's argument is once again the erroneous assertion that in the case of imported products subject to indicative prices, importers cannot demonstrate that the declared value corresponds with the transaction value, while such an opportunity is offered for sellers of domestic products. This is not correct. As explained by Colombia and demonstrated through Colombia's evidence, importers have the same opportunities as domestic producers, as customs valuation is not determined by indicative prices, and such declared prices may equally prevail over the "corriente en plaza". For all of the above reasons, Colombia requests the Panel to reject all of Panama's claims under GATT Article III.

3. Panama's claims in respect of the ports of entry measure

(a) Panama's claim under GATT Article XI is without merit as the port of entry measure does not constitute a prohibited quantitative restriction.

4.153.
First, Colombia disagrees with the legal interpretation given by Panama to the prohibition of quantitative restrictions under GATT Article XI. Colombia considers that Panama's interpretation of GATT Article XI as setting forth "a comprehensive ban of all types of limitations on the importation of products other than duties, taxes or other charges" is overly broad. Panama's interpretation is not consistent with the text of Article XI, which prohibits quantitative restrictions, and is not supported by the case law referred to by Panama when read in its proper context. A correct interpretation of Article XI allows Members to impose certain justified conditions on access to their markets as long as the fundamental thrust and effect of these measures is not to limit the amount of imports in terms of volume or value.
4.154.
Second, Panama's challenge of the ports of entry measure as de facto imposing a quantitative restriction is not supported by sufficient evidence, as Panama has failed to provide any evidence that the measure which is not designed or structured in such a way as to limit the amount of imports actually restricts trade between Panama and Colombia or has the alleged limiting effect on trade. Panama's de facto challenge of the measure requires Panama to demonstrate that the "total configuration of facts" leads to the conclusion that the measure is in fact a quantitative restriction.87 Panama does not meet this burden of proof because it does not even refer to any alleged low levels of imports or to the causal link between the specific measure challenged and such low level of exports. Actually, in response to question 56 of the Panel, Panama submits exhibit PAN‑56 which tends to confirm that there is no restrictive effect as imports increased in terms of value during the period of application of the measure. Nor does the measure impose higher shipping costs. Colombia presents in COL‑50 two different estimates of shipping costs which it obtained from independent sources. The UPS estimate shows that the "all in" cost of shipping goods from the Free Zone de Colon to Cali by two different routes is roughly the same, with the additional cost of the Panama Canal and additional ocean freight costs even making the Buenaventura route seemingly preferred by Panama slightly more expensive.
4.155.
Third, even if Panama had submitted some evidence of a restrictive effect, that evidence is not necessarily sufficient to establish a de facto violation of GATT Article XI. Colombia considers that the showing of trade effects will not be sufficient without showing a causal link between this measure which does not present such a restrictive design and its alleged effects.88
4.156.
In sum, looking at the "fundamental thrust and effect of the measure" or its "design, architecture, and revealing structure", the ports of entry measure is designed to ensure effective customs control. It is "quantity-neutral" by design. The choice of the two ports is perfectly in line with the aim of customs control and the strengthening of customs enforcement. Moreover, the proximity of these ports to the Free Zone de Colon, their state-of-the art equipment and efficient processing of imports, and the fact that these were precisely the ports most used by Panamanian exporters even prior to the measure argue against the allegation that the ports of entry measure imposes a quantitative restriction on imports. Quite the contrary is true, the structure of the ports of entry measure is indeed "revealing" of the fact that the ports of entry measure is a genuine customs enforcement measure, and not a quantitative restriction. The Panel should therefore reject Panama's claim under GATT Article XI:1.

(b) The Panel should reject Panama's claim that the port of entry measure is applied in a manner that is inconsistent with GATT Article XIII:1 because Article XIII:1 does not apply to the situation at hand

4.157.
GATT Article XIII does not apply to measures, such as the challenged port of entry measure, that are not quantitative restrictions prohibited by GATT Article XI:1 (Colombia's view) or those that are in fact prohibited by Article XI:1, but not otherwise authorized (Panama's view). In sum, the port of entry measure is not covered by GATT Article XIII:1 and cannot therefore be inconsistent with this provision. Panama's claim in respect of Article XIII must therefore fail. Colombia notes that, at the oral hearing, Panama was basically unable to respond to Colombia's common sense arguments in respect of the non-applicability of GATT Article XIII to the ports of entry measure.

(c) Panama's new claim of inconsistency of the ports measure with GATT Article I:1 is to be rejected

4.158.
At the oral hearing, Panama introduced through a short, one paragraph statement a new claim in respect of the ports of entry measure under GATT Article I:1.89 Colombia objects to the inclusion of this new claim and considers that the failure to develop any legal and factual arguments in respect of such claims implies that Panama failed to make a prima facie case of violation under GATT Article I:1. Colombia will not present any substantive rebuttal arguments at this stage as there simply is no case to answer at the moment in the absence of any development of this new claim by Panama. Colombia reserves the right to present such rebuttal arguments at a later stage in the proceedings, if necessary.
4.159.
Colombia considers that the Panel should not examine this claim, as it is not properly before the Panel. First, Colombia submits that this claim was not part of Panama's request for establishment and is therefore not part of the Panel's terms of reference. Colombia acknowledges that GATT Article I:1 is mentioned in Panama's request for establishment. However, such an Article I:1 claim was developed in a particular and different manner in Panama's first written submission, which clarified the extent to which the narrative present in the request for establishment was linked to each of the legal provisions listed in the request. Second, Colombia submits that Panama was required to have presented its claims and arguments in its first written submission, and it failed to do so. Paragraph 4 of the panel's working procedures clearly required Panama to do so, in line with well-established WTO case law that a party must present its arguments at the earliest opportunity, which, in this case was at the time of the first written submission.90 The absence of any legal or factual arguments in the first stage of the proceedings is a third reason why the Panel should refuse to entertain Panama's claim under Article I:1. Panama merely asserts that the ports measure is inconsistent with Article I.1 but does not provide any factual or legal arguments in support of its specific claims tying the description of the measure to the specific elements that need to be demonstrated in order to establish a prima faciecase of violation under Article I.1. Colombia recalls that the Appellate Body has made it clear in its report on US – Gambling that Article 11 DSU prevents a panel from ruling on a claim in the absence of supporting arguments.91

(d) Panama's claim that the port measure is inconsistent with the requirements of GATT Articles V:2 and V:6 lacks a factual and legal basis

4.160.
The basic premise of Panama's claims under GATT Article V is erroneous because the ports of entry measure does not apply to goods in transit; rather, the measure applies only to those goods which are shipped from Panama and have Colombia as their final destination. Thus, the ports measure does not apply to traffic in transit as defined in GATT Article V, and therefore, it does not violate Article V, which relates to traffic in international transit. This is clear from Article 4, paragraph 3 of the Resolution, which expressly adds that the measure "does not apply to '[b]ienes que se pretendan someter a la modalidad de transbordo, considerando que en este caso la mercancia no tiene como destino final Colombia' ('goods that are submitted for trans-shipment, since those goods do not have as their final destination Colombia')."92 The choice of the term "trans-shipment" in respect of this Panama-specific measure can be explained easily if one takes into account the reality in respect of trade with Panama. Any product from Panama that is in international transit through Colombia will have to be trans-shipped.
4.161.
Furthermore, Colombia considers that Article V:6 forms no exception to the scope of Article V and does not impose on Members the obligation described by Panama relating to goods that are not in transit. In Colombia's view, the text of Article V:6 when read in its context applies, like the rest of Article V, only to goods in "transit". Colombia's interpretation of Article V:6 is not novel. In fact, as recently as 2005, the WTO Secretariat set forth the same view as Colombia.93 Scholars have taken a similar position.94 This was also the view taken by Turkey, a third party in this case to whom the Article V issues have a special significance.95 In sum, Resolution No. 7373 does not apply to merchandise that transits Colombia for consumption elsewhere. Therefore, Resolution No. 7373 is not inconsistent with Articles V:2 or V:6, as Panama alleges.

(e) The requirement to present an advance import declaration and pay customs duties and sales taxes for textiles originating in Panama does not violate Colombia's MFN obligation under GATT Article I:1

4.162.
Panama fails to demonstrate that the advanced import declaration and consequent payment of duties constitutes "an advantage" (or disadvantage) in the sense of GATT Article I:1. Colombia does not dispute the fact that the term "advantage" has to be interpreted in a broad manner. However, in the context of an economic agreement such as GATT, this term has an economic meaning which implies that it refers to an advantage in economic terms, i.e., in terms of economic, competitive opportunities. It therefore should come as no surprise that the Appellate Body in its report on EC – Bananas III equated the term advantage to that of a "competitive advantage".96 Panama has failed to demonstrate that the advanced declaration requirement, which is optional for other importers as well and which is regularly used by importers to accelerate the importation process, imposes such a competitive disadvantage.
4.163.
Colombia adds that the advanced payment requirements and the limited legalization opportunities do not apply on an origin basis, and the latter is not even Panama-specific. It is for these reasons that Colombia argued that Panama should do more to demonstrate that "products originating from certain Members" are granted alleged advantages that are not immediately and unconditionally extended to those originating from other Members.

4. Colombia's general defence under GATT Article XX(d)

4.164.
In the event that the Panel were to uphold some or all of Panama's claims relating to the port of entry measure, Colombia submits that GATT Article XX(d) justifies the measure.

(a) The port measure is provisionally justified under paragraph (d) of GATT Article XX

4.165.
Colombia's laws and regulations relating to customs enforcement are deemed to be consistent with the provisions of the GATT. As explained in the first written submission, the preamble of Resolution No. 7373 of 200797 makes clear that the port measure was designed to secure compliance with Colombia's laws relating to customs enforcement. The fact that Colombia agreed to remove the first ports measure on the basis of the promise of increased customs cooperation shows that the concern of the Colombian Government is customs enforcement. The purpose of the ports of entry measure and the Protocol is the same, ensuring compliance with Colombia's customs laws.
4.166.
Panama suggests that the Government of Colombia is somehow more constrained to act against a problem that affects important industrial sectors as to do so would be "protectionist". Such a suggestion is contradicted by the evidence submitted, which all points in the same direction: it was the fight against contraband and thus a design to secure compliance with customs laws that drove the Colombian Government to take these actions. If non-compliance with its customs law affects both "important" and "non-important" sectors, a government is not somehow limited in its ability to take action in the important sector.
4.167.
In addition, the ports measure is "necessary" to secure compliance with Colombia's customs laws and regulations.
4.168.
First, the ports measure concerns a very important set of interests or values. Combating under-invoicing, tax evasion, smuggling, and money laundering are important to the Colombian Government. In addition to a loss of revenue which is of key importance to a developing country such as Colombia, these illegal activities undermine the political and economic stability of Colombia in its present context. The conversion of illicit funds outside of Colombia into pesos often involves the importation of goods into Colombia and, as noted in the UIAF analysis in COL-43, the imported merchandise is typically consumer items that can be sold easily, including apparel and footwear. It is noteworthy that these are precisely the products that are also listed in exhibit COL‑38 in respect of the "Caso Panama" as being among the most important products subject to contraband from Panama.98 In this respect, Exhibit COL‑51 provided in the second submission provides more detailed information, showing that in 2006, imports from Panama under chapter 62 (certain textile products) and 64 (footwear) alone accounted for about $160 million of under-invoicing, and approximately the same amount was of other textile and apparel products that arrived in Colombia as "contrabando abierto" or smuggling.
4.169.
Second, the ports measure is apt to contribute in a material way to the achievement of the objective as demonstrated through evidence submitted in the first written submission, the oral statement and in response to questions from the Panel. The ports of entry measure is only one measure that has to be seen as part of a comprehensive strategy and as part of a set of measures that have been put in place by the Colombian government to attack contraband trade. Other measures include the use of customs observers, the requirement to make an advanced import declaration, automatic licensing, contraband agreements with the private sector, customs cooperation, modernization of ports and various measures to fight internal corruption. Panama has acknowledged the seriousness of the problem of contraband trade, admitting that most of its trade with Colombia can be characterized as contraband. Colombia considers that the Panel should not lose sight of this concession when examining the contribution potentially and actually made by the ports of entry measure.
4.170.
The ports measure contributes significantly to customs enforcement through improved customs control and specialization. No one disputes that it is easier to control importation and verify the accuracy of the import declaration when imports are entering the country at two points of entry only, compared to eleven such points. The increased exposure of customs officials to potential contraband products also provides important experience in respect of the techniques applied by the contrabandistas. Colombia considers that this qualitative assessment of the potential of the measure should already suffice to establish a prima facie case that this measure is apt to contribute in a material way to the achievement of the policy objective. In addition, however, Colombia considers that there are sufficient indications that the ports of entry measure is having a positive effect in terms of combating contraband. In addition to the evidence discussed in the first written submission, Colombia refers to the fact that in its response to question 83 from the Panel, Colombia presented as Exhibit COL‑42 a number of reports pursuant to the "Seguimiento Resolución 7373" – monitoring that it performs regularly to gauge the effectiveness of this particular measure in the fight against contraband. Panama asserted in the oral hearing that the high level of contraband trade coming from Panama during the operation of a similar measure in 2006 shows that such a measure is "completely ineffective in combating contraband".99 This is a simplistic and static analysis of the situation. The evidence provided in COL‑42 shows that progress is being made. In addition, as explained in the answers to questions, it is inevitable that certain measures will take some time before they become effective.100
4.171.
Third, the ports measure does not have a significant adverse impact on legitimate trade. The ports of entry measure is not in any way a ban on imports, or even a restriction on imports. It simply requires that certain products be shipped through a certain number of ports. Also, the two ports of entry imposed by the ports measure are among the most modern ports of Colombia and are the closest to Panama's Free Zone de Colon, which, like the port of Barranquilla, is located on the Atlantic coast. Further, the ports measure provides for a number of exemptions from the application of the measure. The reason for these exemptions is linked to the objective pursued by the measure as it is considered that importation by certain importers or "users" or under certain circumstances does not present a customs risk. Finally, the available evidence shows that there simply is no negative impact on trade in respect of the covered products from Panama. In response to question 56 of the Panel, Panama submits exhibit PAN‑56 which confirms that the valued of the goods subject to the measure sold in 2007 (503 million USD) was higher than in 2006 (483 million USD), and higher than ever before.
4.172.
Fourth, there were no reasonably available and equally effective alternative measures that Colombia could have taken. The burden of proof of the existence of equally effective reasonably available alternative measures rests with Panama.101 Colombia made a conscious decision in 2005 to attack contraband trade and, while it had no illusion that it would be able to eradicate contraband completely and immediately, its efforts are clearly intended to have a meaningful impact. In this respect, the port measure cannot be examined in isolation from the other measures that are taken at the same time to combat customs fraud. Colombia requests the Panel to examine any potential alternatives also in this context of a comprehensive policy of combating customs fraud. Colombia discusses two types of measures which seem to have been suggested as alternatives, increased customs cooperation and agreements with the private sector.
4.173.
First, Colombia recalls the failed attempt at increased cooperation between customs authorities. In its first written submission, Colombia discussed the lack of cooperation received from the Panamanian authorities under COMALEP as evidenced in exhibit COL-32:102 of the 455 Colombian requests for assistance from Panama from 2001-2005, only 3 responses were provided, a cooperation rate of 0.65 per cent. Of the total 1234 requests for assistance made between 2001 and 2007, only 372 responses were provided by the Panamanian authorities. The COMALEP customs cooperation process was not working. This conclusion is implicit in the fact that the two countries signed a bilateral Protocol for the Exchange of Information between the Customs authorities of Colombia and Panama (the "Customs Cooperation Protocol"), which was concluded in October 2006. The Protocol is not a separate agreement that operates in a vacuum; rather, it was an attempt at enhanced commitments and the acceptance of specific guidelines for cooperation by Panama in light of the unsuccessful cooperation under the COMALEP. With no other COMALEP country has it been necessary to conclude such a supplemental Protocol to ensure a proper understanding of the customs cooperation obligations of COMALEP countries. Unfortunately, the data for the entire period of customs cooperation including that of the Protocol reveal the failure of such attempts at addressing the problem through increased customs cooperation.103 At any rate, in Colombia's view, customs cooperation is not really an alternative, but rather a supplementary means of fighting contraband. Actually, such customs cooperation has existed since 1990 between the two countries, and it has clearly not been able to prevent or even contain the problem of contraband trade from Panama. Customs cooperation still exists under COMALEP, and Colombia continues to seek the assistance of the Panamanian authorities.
4.174.
Second, and while Panama has not referred to this alternative, Colombia informed the panel in its first written submission of the way it has dealt with similar problems of contraband in respect of other products. Colombia never suggested that smuggling, under-invoicing and money laundering are limited to the covered products.104 As part of its set of measure to combat contraband in other products, Colombia has sometimes resorted to agreements with the private sector. Such agreements are not, however, feasible in the context of textile, apparel, and footwear products. Colombia adds in this respect that one must be careful with making comparisons in respect of the treatment of a similar problem in respect of entirely different products that operate under different conditions and present different customs enforcement problems.105

(b) The ports measure complies with the chapeau of Article XX

4.175.
The ports measure is not applied in a manner that constitutes arbitrary or unjustifiable discrimination between countries where the same conditions prevail. Colombia submits that the evidence clearly demonstrates that Colombia's concern over the covered imports from Panama is justifiable and that the exclusive focus on Panama bears a clear "rational connection" to the objective falling within the purview of paragraph (d) of Article XX. This evidence was set forth in detail in paragraphs 193 and following of the first written submission and in the answers to various questions of the Panel to which Colombia refers the Panel. The problem of contraband with Panama has taken such forms and is practiced at such a scale that an additional and particular country-specific measure was considered necessary to gain control over the situation and bring this problem within normal proportions such that this country-specific measure will no longer be necessary. That is why the measure is of a temporary nature, while the indicative prices and other measures relating to customs control that have been taken (and which are not country-specific) may well be in place for a longer period of time. Exhibit COL‑38 that Colombia submitted at the oral hearing discusses in detail the particular problem raised by trade from Panama, addressing specifically the "Caso Panama".
4.176.
Second, the ports measure is not applied in a manner that constitutes a disguised restriction on trade. Colombia has already referred to the objective of customs enforcement, customs control and specialization pursued by the ports measure, which even Panama acknowledges to underlie the measure. The measure is thus clearly not about restricting trade for protectionist purposes. The choice of the products in question relates to the rationale of the measure of fighting contraband as these products are among the most important products subject to contraband and money-laundering.

5. Request for findings

4.177.
For all of the above reasons, Colombia requests the Panel to reject all of Panama's claims.

V. ARGUMENTS OF THE THIRD PARTIES

A. ECUADOR

5.1.
Ecuador takes no position on the measures at issue. However, Ecuador does have a systemic interest in the questions under consideration by the Panel.
5.2.
Ecuador understands that the measures challenged by Panama in this proceeding are Colombia's use of indicative prices to determine the custom value of textiles, footwear and other products, and the restriction of the import of certain products from Panama into Colombia unless they are made through the airport of Bogota and the sea port of Barranquilla.
5.3.
According to Panama, the use of indicative prices by Colombia is incompatible with Articles 1, 2, 3, 5, 6 and 7.2 (b), (f) and (g) of the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade, also known as the Customs Valuation Agreement and Article III:2 of the GATT 1994. The port of entry restrictions, on the other hand, would be incompatible with a number of provisions of the GATT 1994, in particular Articles I, V, XI and XIII. In Ecuador's view, the panel's findings of the Articles of the GATT 1994 and the Customs Valuation Agreement issues before it in this dispute will be of significance for Members.
5.4.
Although Ecuador will not refer to each of the articles above mentioned, we will make the following general comments.
5.5.
With regard to the use of indicative prices, there seems to be a disagreement between the Parties as to an appropriate description and functioning of this measure. While Panama states that Colombia uses the indicative prices as a mechanism to value goods (when lower that the indicative price), with the consequent liquidation of the goods for customs purposes, Colombia argues that they serve as a custom control mechanism to test the veracity of the declared value in the course of a "control previo". Moreover, Colombia affirms that after the "control previo" there is a procedure in place by which the importer is entitled to demonstrate to the custom authority the correct value of the goods; in this "control posterior" the custom value of the goods is determined using one of the methods of the Customs Valuation Agreement. Panama refutes this assertion as the importer is not offered any opportunity to demonstrate that the declared value (when lower that the indicative price) corresponds to the transaction value of the product.
5.6.
Although there are other elements the Panel should take into account when determining the consistency of the use of indicative prices with certain provisions of the Customs Valuation Agreement and the GATT, is Ecuador's view that the central point on this issue is whether the payment made by the importer when the declared price of the good is lower than the list of indicative prices constitutes a guarantee mechanism, or represents in fact a valuation, regardless of the existence of a posteriori mechanism to repay the duties paid in excess.
5.7.
It is not our intention to decide which of the above stated possibilities is correct. The resolution of this question will require the Panel to determine complex factual and legal issues. In undertaking this task, Ecuador encourages the Panel to evaluate carefully the factual evidence before it.
5.8.
Panama's second set of claims relates to Colombia's prohibition of the importation of textiles, apparel and footwear products from Panama except at the airport of Bogota and the seaport of Barranquilla. According to Colombia, this prohibition is aimed at fighting contraband, smuggling and under-invoicing and therefore is not inconsistent with Articles I:1, V:2-6, XI:1 and XIII:1 of the GATT. Furthermore, it would be justified under paragraph (d) of GATT Article XX.
5.9.
In relation to this claim, Ecuador considers that the Panel's work should concentrate in determining whether the measure being challenged meets the conditions for being provisionally justified under paragraph (d) of GATT Article XX as well as the two requirements set forth on its "chapeau". Due to the critical significance of Article XX of the GATT, which permits a Member to deviate from the GATT rules on trade in goods, we encourage the Panel to make a careful examination of its proper application.
5.10.
Ecuador would also like to note the negative effects contraband, smuggling, under-invoicing and circumvention by exporting through a third country (triangulation) have in the economy of all WTO Members, especially among developing countries. Unfortunately, many developing countries do not have the resources nor the capacity to put in place an adequate mechanism to tackle these issues in all its ports of entry. Ecuador considers that this fact should be taken into account by the Panel when issuing its ruling.

B. EUROPEAN COMMUNITIES

1. Customs valuation methods based on indicative prices

(a) The measure at issue

5.11.
The European Communities notes that there is disagreement between the parties to this dispute as to the correct description and functioning of the measure at issue. On the one hand, Panama considers that Colombia has a system whereby customs duties and sales tax due on imports of textiles, footwear and some other products are not based on the actual value of the products (i.e., the transaction value as declared in the customs declaration); rather, with respect to these products Colombia has a list of indicative prices which acts as minimum values of reference to impose customs duties and collect sales tax.
5.12.
On the other hand, Colombia considers that the indicative prices are a mechanism of control in order to detect products which have been the subject of under-invoicing, smuggling and money-laundering.
5.13.
The European Communities considers that, in accordance with Article 11 of the Dispute Settlement Understanding ("DSU"), this Panel should make an objective assessment of the matter before it, including an objective assessment of the facts. While not taking a final position on the facts of this case – task which corresponds to this Panel – the European Communities observes that the crucial element in question is whether, in order to obtain their release in the Colombian market, imports of textiles, footwear and other products must pay customs duties based on indicative prices (rather than on the declared values), regardless of any other a posteriori mechanisms to repay the duties paid in excess. If that is the case, those indicative prices would be used as the basis for customs valuation in the sense of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, also known as the Customs Valuation Agreement.
5.14.
A preliminary analysis of the provisions invoked in this case shows that imports subject to indicative prices must pay customs duties and sale tax in order to be released. Then, a posteriori mechanism allows for the repayment of the duties paid in excess, if the importer provides evidence that the transaction price paid was actually lower than the indicative price.

(b) Indicative Prices and the Customs Valuation Agreement

5.15.
A first question which arises from the measure at issue is whether indicative prices are used to establish customs values in the sense of the Customs Valuation Agreement. In this respect, the European Communities observes that Article 15.1(a) of the Customs Valuation Agreement defines "customs value of imported goods" as "the value of the goods for the purposes of levying ad valorem duties of customs on imported goods". In the case of imports subject to indicative prices, goods can only be released (and, thus, effectively imported into Colombia) if the importer pays customs duties based on those prices. Therefore, it can be concluded that those indicative prices serve as relevant values to impose customs duties and obtain the release of the products.
5.16.
In view of the European Communities, a system where the value of the goods for levying customs duties is based on indicative prices, as the one described above, can be examined in light of the provisions contained in the Customs Valuation Agreement.
5.17.
The European Communities is of the view that the text, context and purpose of the Customs Valuation Agreement show that the transaction value is the first method for customs valuation which WTO Members must apply. Whenever the conditions are such that the customs value cannot be determined under the transaction value method, Articles 2 to 7 of the Customs Valuation Agreement provide for alternative customs valuation methods which may be applicable, but always respecting the sequential order therein.
5.18.
The use of indicative prices as the basis for levying ad valorem customs duties (i.e., for the purpose of customs valuation in the sense of Article 15.1(a) of the Customs Valuation Agreement) is contrary to Articles 1 to 6 of the Customs Valuation Agreement. Indeed, the reference to indicative prices (or minimum values) as a valid customs valuation method does not even appear in Articles 1 to 6 of the Customs Valuation Agreement and, thus, their use as an alternative to Article 1 of the Customs Valuation Agreement (which appears to be the case of the system in place in Colombia), is inconsistent with the Customs Valuation Agreement. Furthermore, such a customs valuation method cannot be regarded as a reasonable test provided for in Article 7 of the Customs Valuation Agreement.
5.19.
Consequently, the European Communities considers that the use of indicative prices as the basis for levying customs duties is contrary to Articles 1 to 7 of the Customs Valuation Agreement.
5.20.
Finally, Article 13 of the Customs Valuation Agreement allows for delays in the final determination of customs values if it is necessary for the customs authority to establish the correct values. However, in those cases, the importer must be able to release the goods by providing sufficient guarantee to cover the ultimate payment of customs duties for which the goods may be liable.
5.21.
In view of the European Communities, as explained above, Colombia requires the full payment of the duties based on indicative prices to release the goods in the Colombian market, while a posteriori customs review proceeding allows for subsequent reimbursement of the duties paid in excess. Should the importer provide sufficient evidence that the actual value of the goods is lower than the indicative price, the result of such a proceeding is the repayment of the duties paid in excess. Since the importer in any way cannot seek the release of the goods by providing a guarantee, this would also be contrary to Article 13 of the Customs Valuation Agreement.
5.22.
In light of the foregoing, while not taking a definite position on the facts of this case, the European Communities considers that, in the case at hand, the key element to establish whether the measure at issue amounts to a customs valuation method contrary to the provision of the Customs Valuation Agreement is the payment of customs duties and sale tax based on indicative prices as a condition to have the imports released in the Colombian market. In contrast, if the imports subject to indicative prices can be released in the Colombian market by providing sufficient guarantee and, then, the correct values are promptly liquidated in light of the evidence of actual values provided by the importer to the competent customs authorities, the payment of customs duties would take place at a later stage.

(c) Indicative Prices and Article III:2 of the GATT 1994

5.23.
The European Communities understands that the amount of sales tax levied on imported products subject to indicative prices is also calculated on the basis of the same indicative prices, whereas the sales tax for like domestic products is based on actual transaction values.
5.24.
In the European Communities' view, a system whereby indicative prices are systematically used to determine the value of imported products for the purpose of levying sales taxes when the transaction value is used instead to determine the value of like domestic products for that purpose is, on its face, contrary to Article III:2, first sentence, of the GATT 1994.
5.25.
In this respect, in cases where the imported product is based on indicative prices higher than the transaction value originally declared by the importer, the sales tax levied on those imports is "in excess of those applied … to the like domestic products" based on a transaction value lower than the indicative price, in the sense of Article III:2, first sentence, of the GATT 1994.
5.26.
Therefore, in the European Communities' view, in cases where the measure on its face (because of its structure and design) necessarily results in imported products being subject to internal taxes in excess of those applied to like domestic products, Article III:2, first sentence, of the GATT 1994 is infringed. This is the case when indicative prices are taken as the basis for levying sales tax on imported products, whereas lower actual values are considered as the basis for levying the same tax on like domestic products.
5.27.
The same conclusion stands even if there may be cases where the indicative price of the imports is the same as either the transaction value of those imports or the transaction value of the like domestic products. In other words, even if there are some imports which are not levied in excess of the sales tax levied on like domestic products, the structure and design of the measure result in the violation of Article III:2, first sentence, of the GATT 1994.
5.28.
The European Communities therefore considers that the use of indicative prices to determine the value of imported products for the purpose of levying sales taxes when the transaction value is used instead to determine the value of like domestic products for that purpose is, on its face, contrary to Article III:2, first sentence, of the GATT 1994. Therefore, the examination as to whether a measure violates Article III:2, first sentence, of the GATT 1994 should take into account its design and structure, which should lead to a discrimination between imported products and (potential) like domestic products.

2. Restrictions on ports of entry

(a) Restrictions on the number of ports available for imports of textiles from Panama: Article XI of the GATT 1994

5.29.
The European Communities understands that imports of textiles from Panama can only be imported through two ports in Colombia: the airport of Bogota and the sea port of Barranquilla. Since imports of textiles from Panama have to be channelled through these two ports (rather than through the 11 ports normally available for imports of textiles from other countries), Panama claims that this measure amounts to a restriction contrary to Articles XI and XIII of the GATT 1994.
5.30.
According to Panama, the term "restriction" in Article XI of the GATT 1994 also covers situations where a measure amounts to a "limiting condition" on the importation of products in broad terms. Panama bases its conclusions on statements made by the panels in India – Quantitative Restrictions and India – Autos, suggesting that the term "restriction" requires identifying a "condition that has a limiting effect … on importation itself". In the case at hand, Panama claims that the ports of entry restrictions impose a limiting condition (i.e., there are only two ports of entry available) and make importation more onerous.
5.31.
Colombia, on the other hand, is of the view that "Panama's interpretation of Article XI is overly broad as it would imply that any measure which imposes a condition on importation is considered to be a prohibited quantitative import restriction". In order to argue against Panama's broad interpretation of the term "restriction" in Article XI, Colombia points out that Panama accepts that the fact that textile products may be imported through 11 ports only, whereas Colombia has 26 ports of entry for international trade, does not amount to a "restriction" in the sense of Article XI of the GATT 1994. Through reference to the title and text of Article XI as well as the panels mentioned by Panama, Colombia argues that, in its view, Article XI of the GATT 1994 only provides for the elimination of quantitative restrictions, i.e., if a measure imposes de iure or de facto a limitation on the amounts of imports that are allowed into a country.
5.32.
In this respect, the European Communities observes that Article XI of the GATT 1994 does not define the term "restrictions". The panel in India – Autos suggested that the types of measures which can fall under this provision is broad.
5.33.
The panel in that case also stressed that, despite this broad scope of the measures falling within Article XI of the GATT 1994, not any condition placed on importation is relevant for a measure to fall under this provision.
5.34.
Thus, although Article XI:1 of the GATT 1994 has undoubtedly a broad scope, not any condition on importation is capable of falling under this provision. There must be a particular kind of condition, i.e., one which has a limiting effect on importation itself.
5.35.
It may appear strange that imports of textiles from Panama must pass through two ports while imports of the same products from other WTO countries can use other ports as well. However, the European Communities considers that this is an issue to be considered in the context of Article I of the GATT 1994 and is not relevant to an analysis of the measure under Article XI of the GATT 1994.
5.36.
Therefore, without entering into the factual details of this case, the European Communities considers that the term "restriction" in Article XI of GATT 1994 does not refer to "any" condition on importation, but rather to those having a limiting effect on importation itself.

(b) Requirement to present an advance declaration to pay customs duties and sales tax for textiles originating in Panama: Article I of the GATT 1994

5.37.
The European Communities understands that Panama challenges the requirement to present an advance declaration (between 15 and 5 days prior to the arrival of the goods in Colombia) to pay customs duties and sales taxes for textiles originating in Panama. If no advance declaration is submitted on time, importers must pay a special fee to obtain the release of the goods. Minor discrepancies in the customs declaration (i.e., less than 7% in the weight per square meter or less that 10% in the width of the fabrics) are allowed to be corrected without paying any special fee. Otherwise, the special fee is also levied in order to import the goods. Panama claims that this measure violates Article I:1 of the GATT 1994.
5.38.
As the Appellate Body confirmed in EC – Bananas III, in order to establish a violation of Article I:1, (i) there must be an advantage, of the type covered by Article I, and (ii) which is not accorded unconditionally to all like products of all WTO Members. The object and purpose of Article I:1 supports this interpretation. That object and purpose is to prohibit discrimination among like products originating in or destined for different countries. Thus, Article I:1 of the GATT 1994 does not permit balancing more favourable treatment under some procedure against a less favourable treatment under others. Following this analysis, it should be examined in the case at hand whether there are advantages of the types covered by Article I, and whether the advantages are offered to all like products unconditionally.
5.39.
In light of the description given to the measures by Panama and Colombia, the European Communities considers that the requirement to present advance import declarations as well as the penalties imposed otherwise in order to have the imports cleared amount to a violation of Article I:1 of the GATT 1994.

(c) Restrictions on the transit regime for textiles from Panama: Article V:2 and V:6 of the GATT 1994

5.40.
The European Communities understands that there is disagreement between the parties as to whether the transit regime applies to textiles from Panama in Colombia. The European Communities agrees with the interpretations made by Panama of these provisions.
5.41.
First, Article V:2 of the GATT 1994 allows for choosing the "routes most convenient for international transit". If a measure limits the entry ports for goods in transit to two, such a measure will restrict the freedom of transit in the sense of Article V:2 of the GATT 1994.
5.42.
Second, it follows from Article V:6 of the GATT 1994 that Member must apply MFN treatment. In the case at hand, the contested measure seems to imply that a product in transit in Panama originating from a third country is subject to the ports of entry restrictions when arriving in Colombia, whereas the same product directly imported (or in transit) from any other Member would escape from them. Thus, this would be contrary to Article V:6 of the GATT 1994.

(d) Justification of the ports of entry restrictions based on Article XX(d) of the GATT 1994

5.43.
Colombia argues that Article XX(d) of the GATT 1994 justifies the port of entry measure, in particular because it is necessary to secure compliance with Colombia's customs laws and regulations. In this respect, the European Communities would like to comment on one specific element of the justification under Article XX(d) of the GATT 1994 provided by Colombia.
5.44.
The European Communities does not dispute the fundamental importance of tackling such illegal activities. However, the European Communities expresses doubts on the phenomenon of money-laundering necessarily falling within the scope of the enforcement of customs laws and regulations. It would appear to the European Communities that in relation to the phenomenon of money-laundering, the relevant laws and regulations the measures might be designed to secure compliance with are those relating to general law enforcement rather than customs enforcement, unless money laundering is an illegal activity criminalised or otherwise addressed in the customs laws of Colombia. Whether this is the case has not been identified by Colombia.

C. GUATEMALA

5.45.
Guatemala observes that the relevant provisions invoked by Panama in this case are Article 128.5 e) of Colombia's Customs Code and Article 172.7 of Resolution No. 4240 of 2000 and Article 447 of the Tax Statute in connection with Article 128.5 e) of Decree No. 2685.106
5.46.
In Panama's view, according to these provisions, an importer whose goods have a transaction value lower than the indicative price must correct the import declaration to reflect the indicative price or a higher amount to obtain the release of the goods from customs. The failure to correct the transaction value and the failure to reflect the indicative price (or a higher amount) in the declaration within a period of five-days from the presentation of the import declaration, leads to the legal abandonment of the goods, and their eventual forfeiture.107 Furthermore, Panama claims that the sales tax on imported products is determined on the basis of the indicative price when the transaction value is below the indicative price. Panama adds that, in contrast, for domestic products, the sales tax is based on the actual value of the sale.108 In this regard, according to Panama, Colombia's use of indicative prices is inconsistent with Articles 1, 2, 3, 5, 6, 7.2 b), (f), (g) and 13 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, also known as the Customs Valuation Agreement (hereinafter the "Customs Valuation Agreement"), as well as with Article III:2, first sentence of GATT 1994.
5.47.
Guatemala understands that the main reasoning of Panama is that Colombia does not accept the transaction value as the primary mean of determining the customs value of imported goods and fails to follow the methodologies set out in Articles 2 through 6 of the Customs Valuation Agreement. Moreover, Panama argues that payment of customs duties based on indicative prices is not a "guarantee" within the meaning of Article 13 of the Customs Valuation Agreement. Finally, Panama also asserts that the use of indicative prices is inconsistent with the first sentence of Article III:2 of GATT 1994 since the calculation of internal taxes based on indicative prices are "in excess" of those applied, directly or indirectly, to like domestic products, calculated on the basis of the actual sale price.
5.48.
In response, Colombia considers that Panama errs in its allegation that Colombia uses the indicative prices as a mechanism to value goods. According to Colombia, the indicative prices are used "to test the veracity of the declared value in the course of a 'control previo' while the customs value of the goods are determined using one of the methods of the Customs Valuation Agreement in a 'control posterior'. In other words, Colombia asserts that the indicative prices are a "control mechanism" and not a "customs valuation method".109 Moreover, Colombia equates the payment of taxes to the guarantee provided for in Article 13 of the Customs Valuation Agreement by asserting that it is in the form of a surety or deposit while the final determination of value is done.110 Finally, regarding Article III:2 claim, Colombia argues that Colombia's Tax Code does not require that indicative prices be used as the taxable base for the imported products in question. According to Colombia, the mere fact that a difference in the taxable base between imported and domestic products may exist in some cases does not suffice for a violation of Article III to be established. Colombia considers that Panama failed to demonstrate that this difference necessarily leads to a higher tax burden on imported products distorting competitive opportunities for such products.111
5.49.
In this respect, Guatemala acknowledges that Members of the WTO should have the necessary policy space to address their particular concerns or even, as asserted by Colombia, to "prevent illicit trade from distorting normal trading relations". However, such policy space must be framed within WTO Agreements and this is, precisely, the task of the Panel in this case. Guatemala remains unconvinced with Colombia's characterization of its customs control mechanism, for the following reasons:
5.50.
Firstly, Colombia asserts that indicative prices are not a "customs valuation method" but a "customs control mechanism" and, therefore that they do not violate the Customs Valuation Agreement rules governing customs valuation. In that regard, Colombia argues that:

"Indicative prices are used to detect under-invoicing and customs fraud and are used as the basis of a deposit paid to secure release of the goods pending a determination of the actual customs value of the good in question based on the methods set forth in the Customs Valuation Agreement."112

5.51.
Colombia adds that Article 128 of Colombia's Customs Statute deals with the "release" ("levante" in Spanish) of the goods, not with the final "liquidation" of the goods for customs purposes or the determination of their customs value for such purposes.113 Moreover, Colombia asserts that a proper reading of the relevant provisions in their legal context reveal that the "correction" requirement is simply a guarantee requirement in the form of a deposit before the release of the goods and does not impact on the determination of the customs value. According to Colombia, the word "correction" has a different meaning in Article 128.5 e) of Colombia's Customs Statute. Also, Colombia is of the view that this Article and Article 172.7 of Resolution No. 4240 of 2000 provide that if an issue or dispute (a "controversia" in Spanish) arises as a consequence of the fact that the declared f.o.b. value is below the indicative price as established by DIAN, the goods will be released if the importer corrects its import declaration to reflect indicative prices and provisionally posts a deposit on the basis of those indicative prices.114
5.52.
If Guatemala understands correctly, Colombia is arguing with regard to indicative prices the following:

(a) Firstly, that the indicative prices are a "control mechanism" and not a "customs valuation method".115

(b) Secondly, that the "correction" of the declaration is a guarantee requirement, in the form of deposit, and does not affect the determination of the customs value.116

(c) Thirdly, that the custom valuation occurs in a "control posterior", after the payment of the "guarantee" and the release of the goods.117

5.53.
While Guatemala does not intend to interpret Colombia's legislation, Guatemala considers that Article 128.5 e) of Colombia's Customs Statute, read in conjunction with Articles 1, 112, 234, 252, 254, 514, 515, 548, 551, 554 and 555 of the same Statute, among others, may give another characterization of the distinction made by Colombia with regard to "control previo" and "control posterior".
5.54.
Article 1 of Colombia's Customs Statute provides for some definitions. Two of them are important to mention here:

"PROCESO DE IMPORTACIÓN: Es aquel que se inicia con el aviso de llegada del medio de transporte y finaliza con la autorización del levante de la mercancía, previo el pago de los tributos y sanciones, cuando haya lugar a ello. Igualmente finaliza con el vencimiento de los términos establecidos en este Decreto para que se autorice su levante.

LIQUIDACIÓN OFICIAL: Es el acto mediante el cual la autoridad aduanera determina el valor a pagar e impone las sanciones a que hubiere lugar, cuando en el proceso de importación o en desarrollo de programas de fiscalización se detecte que la liquidación de la Declaración no se ajusta a las exigencias legales aduaneras. La liquidación oficial también puede efectuarse para determinar un menor valor a pagar en los casos establecidos en este Decreto."

5.55.
The definition of "proceso de importación" is used in Article 112 of Colombia's Customs Statute which provides that:

"Sin perjuicio de lo previsto en el artículo 101 de este Decreto, la mercancía de procedencia extranjera permanecerá durante el proceso de su importación, en depósitos habilitados para el efecto."

5.56.
According to the last cited Article, read in conjunction with the definition of "PROCESO DE IMPORTACIÓN", it is clear that the payment of duties and the "release" of the goods finalize the importation process. In this regard, Guatemala does not see how these provisions could be reconciled with Colombia's argument that there is a "control posterior" during which the "actual customs value for the purpose of assessing the duties will be determined", if the importation process has already finished.118
5.57.
Guatemala neither sees what would be the difference between "corrección" in Article 128.5 e) of Colombia's Customs Statute and the "Declaración de Corrección" mentioned in other relevant provisions in Article 128.
5.58.
Article 234 of Colombia's Customs Statute provides in its relevant part the following:

"DECLARACIÓN DE CORRECCIÓN: La Declaración de Importación se podrá corregir voluntariamentesólo para subsanar los siguientes errores: subpartida arancelaria, tarifas, tasa de cambio, sanciones, operación aritmética, modalidad, tratamientos preferenciales, valor f.o.b., fletes, seguros, otros gastos, ajustes y valor en aduana, y sólo procederá dentro del término previsto en el artículo 131 del presente decreto.

… La Declaración de Corrección provocada por la autoridad aduanera procederá, como consecuencia de los resultados de una inspección aduanera, o cuando se notifique requerimiento especial aduanero de corrección o de revisión del valor, en cuyo caso, la base para corregir será la determinada oficialmente por la autoridad aduanera, o a solicitud del declarante o del importador, cuando se pretenda corregir errores en el diligenciamiento de la Declaración de Importación, diferentes a los contemplados en el inciso primero del presente artículo, en cuyo caso, deberá mediar autorización previa por parte de la autoridad aduanera.

No procederá Declaración de Corrección cuando la autoridad aduanera hubiere formulado liquidación oficial de corrección o de revisión del valor."

5.59.
According to this provision, Guatemala considers that the provocation by the customs authorities to submit a "Declaración de Corrección" is one of the cases provided for in Article 128.5 e) of the Customs Statute. If that is not the case, Guatemala also has difficulties in reconcile Articles 128.5 e) and 234 of Colombia's Customs Statute.
5.60.
Regarding the alleged payment of the guarantee under Article 128.5 e), Guatemala observes that Article 252 of Colombia's Custom Statute provides for "valores provisionales" meaning, the cases where the custom value may be provisionally declared. Looking at this provision, Guatemala does not see reflected, as one of these cases, the so-called "control previo" alleged by Colombia.
5.61.
Moreover, Article 254 states the following:

"Cuando exista controversia respecto al valor en aduana declarado y/o los documentos que lo justifican, o cuando no sea posible la determinación del valor al momento de la importación, se podrá otorgar el levante de las mercancías, previa constitución de garantía, en los términos del Artículo 13 del Acuerdo y artículo 128º numeral 5 de este Decreto y conforme a las condiciones y modalidades que señale la autoridad aduanera."

5.62.
Although it seems that the reference made in this provision to Article 128.5 would permit the interpretation advanced by Colombia, a further reading of Article 128.5 allows to see that, unlike the rest of the provisos in this particular provision, paragraph e) requires the "payment" of custom duties instead of constituting "garantía bancaria o de compañía de seguros".
5.63.
Finally, Guatemala considers that the so-called "control posterior" alleged by Colombia is, in fact, a set of legal proceedings provided for in Colombia's legislation to review administrative resolutions, instead of being part of a "customs valuation method". As a matter of fact and at least on its face, the custom valuation method provided for in Articles 237 to 259 of Colombia's Customs Statute seems to be different from the proceedings established in Articles 514, 515, 548, 551, 554 and 555.
5.64.
The Articles just mentioned establish a proceeding for the devolution or compensation when an amount of money has been paid in excess.
5.65.
Consequently, for the reasons expressed before, Guatemala sees difficulties in considering that the payment of customs duties may be considered as a guarantee and that "control posterior", as described by Colombia, is the moment when the customs authorities determine the value of the goods.
5.66.
To the contrary, Guatemala considers, at least on its face, that Colombia, whatever characterization it may give to this issue, in fact is requesting the payment of customs duties on a minimum amount equal to the indicative prices and allowing, if the interested so it wish, the challenge of the decision through administrative proceedings.
5.67.
For this particular reason, Guatemala would concur with Panama in the sense that Colombia's use of indicative prices is inconsistent with Articles 1, 2, 3, 5, 6, 7.2(b), (f), (g) and 13 of the Customs Valuation Agreement, since Colombia does not accept the transaction value as the primary mean for determining the customs value of imported goods and, consequently that Colombia fails to follow the methodologies set out in Articles 2 through 6 of the Customs Valuation Agreement. Moreover, in the light of what has been expressed before, it is difficult for Guatemala to accept that the payment of custom duties, even providing legal administrative means to request the devolution of the duties paid in excess, could be considered as "guarantee" within the meaning of Article 13 of the Customs Valuation Agreement.

D. HONDURAS

5.68.
Honduras is grateful for the opportunity to attend this meeting of the third parties with the parties and the Members of the Panel.
5.69.
Honduras is not taking position on the substance of this matter. Our decision to participate was motivated by our systemic interest in the matter, bearing in mind that this was the first time that a panel would be making an interpretation of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (Customs Valuation Agreement). We are also highly interested in the outcome of this case as regards the interpretation of Article V of the GATT, which deals with the subject of the freedom of transit, and the possible relationship with the negotiations to conclude a trade facilitation agreement.

E. SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU

1. Introduction

5.70.
The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei") appreciates this opportunity to present its views as a third party. Chinese Taipei will, in this submission, address some issues of legal interpretation, in particular those relating to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 ("Customs Valuation Agreement"),the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), and the Understanding on Rules and Procedures Governing the Settlement of Dispute ("DSU").

2. Claims relating to the indicative prices used by Colombia

5.71.
Panama in this dispute asserted that the indicative prices at issue ("Indicative Prices") were employed to determine customs values and that the payment based on the calculation of the Indicative Prices was final in character. By contrast, Colombia stated in its defence that the Indicative Prices simply acted as an administrative mechanism allowed under Article 13 of the Customs Valuation Agreement and that the payment based thereon was provisional. In view of the conflicting assertions of the role of the Indicative Prices, Chinese Taipei would encourage both Panama and Colombia to produce further evidence in order to demonstrate the exact nature of the Indicative Prices at issue.
5.72.
Moreover, should the Panel find that the Indicative Prices were only a control mechanism and were not for determining customs values, Chinese Taipei would maintain that Colombia was in any case not allowed to establish the Indicative Prices in an arbitrary manner that was inconsistent with Article 13 of the Customs Valuation Agreement.
5.73.
Panama in its submission explained at great length that Colombia's establishment of the Indicative Prices was inconsistent with the Customs Valuation Agreement, in particular Articles 1 through 7 thereof. In this regard, Chinese Taipei is inclined to find that Colombia's Indicative Prices were not established in conformity with the methodologies set out in Articles 1, 2, 3, 5 and 6 of the Customs Valuation Agreement. The only possibility left to justify the employment of the Indicative Prices was for them to be categorized as the methodology provided under Article 7 of the Customs Valuation Agreement.
5.74.
However, were Colombia allowed to invoke Article 7 to establish the Indicative Prices, Chinese Taipei observed that Colombia not only may have failed to first demonstrate that customs values cannot be determined under Articles 1 through 6, but also may have misused Article 7 by violating the positive condition in Article 7.1 and negative conditions in Article 7.2.

3. Colombia's measures restricting ports of entry for certain Panama products cannot be justified under the GATT 1994

5.75.
It was not disputed that Colombia enacted resolutions restricting the import of certain textiles from Panama into Colombia unless they were made through Bogota and Barranquilla. These restrictions not only created significant transaction costs to textile imports from Panama, but also brought about unavailability of delivery in "real time" which would certainly discourage customers who are not located near the two designated ports from purchasing these products.
5.76.
All these facts indicated that Colombia's restrictions on ports of entry made the importation of certain Panama textiles much more onerous than if these restrictions had not existed, and therefore were inconsistent with Articles XI:1 and XIII:1 of the GATT 1994.
5.77.
Colombia tried to employ Article XX(d) of the GATT 1994 in order to justify its restrictions on ports of entry. In this respect, Chinese Taipei suggests that the Panel should first examine the factors including the importance of the interests protected by these restrictions, their trade impact and their contribution to the realization of the end pursued. The Panel should also consider whether a WTO-consistent alternative measure was reasonably available to secure compliance with laws or regulations that were not themselves inconsistent with some provisions of the GATT 1994 appropriate to the level of enforcement pursued by Colombia.
5.78.
However, even if the Panel finds that these restrictions were provisionally consistent with Article XX(d), these restrictions undoubtedly could not be justified under Article XX due to a clear inconsistency between these restrictions and the chapeau of Article XX which prohibits a measure from being applied in a manner that would constitute arbitrary or unjustifiable discrimination.
5.79.
Colombia in this case adopted resolutions restricting ports of entry only for certain products from Panama. It follows that discrimination was resulted from the application of these resolutions.
5.80.
Colombia argued that these restrictions were taken as part of a series of measures for the purposes of combating under-invoicing, smuggling, money-laundering and other illicit activities. In consideration of the relationship between Colombia's comprehensive purposes of these restrictions and the manner in which Colombia implemented them, Chinese Taipei would add that any discrimination caused by these restrictions was random. Consequently, the discrimination resulting from these restrictions could be constituted as arbitrary in the sense of the chapeau of Article XX.
5.81.
On the issue of whether the discrimination caused by Colombia's restrictions at issue was unjustifiable, Chinese Taipei notes the above-mentioned objectives could not be reached by introducing these restrictions alone. It is difficult to understand how the discrimination caused by Colombia's restrictions might be viewed as complying with the chapeau of Article XX when they do not relate to the pursuit of Colombia's declared objectives. Chinese Taipei therefore submits that Colombia's restrictions at issue constituted unjustifiable discrimination in the sense of the chapeau of Article XX.

4. Members should resolve disputes in good faith

5.82.
In view of Articles 3.7 and 3.10 of the DSU, Chinese Taipei submits that the WTO dispute settlement mechanism prefers a mutually agreed solution to litigation. In addition, a Member intending to reach a settlement with another Member in a proceeding shall conduct consultation or negotiation in "good faith." Following the application of the good-faith principle, Chinese Taipei is of the view that any Member party to an agreed settlement shall perform all terms and conditions contained in that settlement in a bona fide manner.
5.83.
This case lodged by Panama against Colombia was a particular case. It was the second time that Panama had filed a WTO case against Colombia, and on measures almost identical to those in the previous proceeding. However, the previous proceeding ended shortly after its initiation on the ground that Panama and Colombia had arrived at a mutually agreed settlement.
5.84.
Viewed from the perspective of Articles 2 and 26 of the Vienna Convention on the Law of Treaties ("VCLT"), this mutually agreed settlement is an international agreement concluded between Panama and Colombia and shall be construed as an treaty that must be performed by both Parties in good faith. Without new facts contrary to the circumstances, the failure of either party to enforce it is not only inconsistent with the principles of "positive solution to a dispute" and "good faith" provided in Articles 3.7 and 3.10 of the DSU, but also have violated the party's obligation under the VCLT and the customary international law embodied in its relevant provisions.
5.85.
Chinese Taipei is aware that Panama and Colombia provided opposite scenarios with respect to the enforcement of the above-mentioned settlement. For the benefit of the Panel, it is Chinese Taipei's suggestion that both Colombia and Panama should produce more convincing evidence demonstrating new facts in support of their arguments, rather than merely maintaining the set of facts currently put forward.

F. UNITED STATES

5.86.
It is a pleasure to appear before you today to present the views of the United States concerning certain issues in this dispute. We would like to make a few brief points on Panama's claims related to Colombia's use of indicative prices and the proper legal interpretation of certain provisions of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the "Customs Valuation Agreement"). We recognize that many of the issues in this dispute are factual in nature, and from the outset we would like to emphasize that the United States takes no position as to whether Colombia has or has not complied with its obligations under the Customs Valuation Agreement.
5.87.
This dispute raises an important issue concerning the proper application of the Customs Valuation Agreement. The provisions of the Agreement addressed by Panama have not previously been analysed by a WTO dispute settlement panel nor by the Appellate Body, and the issue of indicative prices has not been a subject of a panel or Appellate Body report.
5.88.
Reports of widespread use by WTO Members of indicative prices (or database prices) in connection with customs valuation are troubling and a source of serious concern. Reliance on indicative prices or database prices as a substitute for following the customs valuation process prescribed by the Customs Valuation Agreement is inconsistent with the Agreement.
5.89.
The United States welcomes the general agreement of Panama and Colombia in this dispute on the legal interpretation of the Customs Valuation Agreement. In particular, Panama and Colombia both note that "[t]he primary basis for customs value under this Agreement is 'transaction value' as defined in Article 1."119 Article 1 of the Agreement provides that "[t]he customs value of imported goods shall be the transaction value, that is the price actually paid or payable when sold for export to the country of importation" except under certain specified conditions. Where customs value cannot be determined under Article 1, Articles 2 through 7 of the Customs Valuation Agreement establish a hierarchical process for determining customs value on the basis of alternative means, including the transaction value of identical or similar goods (Articles 2 and 3), the unit price of identical or similar goods sold in the country of importation (Article 5), a computed price (Article 6), or other "reasonable means" (Article 7).120
5.90.
Using an indicative price to determine customs value is not permitted under Articles 1 through 6 of the Customs Valuation Agreement. Each of these articles prescribes a specific methodology for determining customs value that excludes the possibility of using indicative prices. Only where customs value cannot be determined under Articles 1 through 6 may customs value be determined, under Article 7, "using reasonable means consistent with the principles and general provisions of [the Customs Valuation Agreement] and of Article VII of GATT 1994 and on the basis of data available in the country of importation."121
5.91.
Article 7 goes on to prohibit certain practices, for example, the use of minimum customs values (Article 7.2(f)) and the use of arbitrary or fictitious values (Article 7.2(g)). If an indicative price is used to determine customs value, and it is impossible for imports to clear customs at any value lower than the indicative price, this would constitute a minimum value inconsistent with Article 7.2(f). If an indicative price is based on data insufficient to determine customs value under Articles 2 through 6 of the Customs Valuation Agreement, this would strongly suggest that the indicative price is arbitrary or fictitious, which would be inconsistent with Article 7.2(g).
5.92.
While it is not necessary for the Panel to determine in this dispute the precise scope of what would be permissible under Article 7 of the Customs Valuation Agreement, in any event, the United States recalls that Colombia appears to agree with Panama that, as a general legal matter, substituting an indicative price for declared value to determine customs value would be inconsistent with Articles 1 through 7 of the Customs Valuation Agreement.122
5.93.
In this dispute, Panama and Colombia differ primarily on the nature and extent of Colombia's use of indicative prices, with Panama alleging that Colombia uses indicative prices to determine customs value and Colombia responding that it does not use indicative prices for that purpose. This is a factual matter on which the United States does not take a position. The United States looks forward to the Panel's examination of these factual questions and to the Panel's report.
5.94.
Mr. Chairman, I wanted to add one thought briefly on an issue related to Article 6.2 of the DSU. As I understood a comment by the EC in its third-party oral statement, the EC explained that it would be sufficient to satisfy Article 6.2 of the DSU to say in a panel request that a measure is challenged "as such" and "as applied", without any further reference to those applications of the measure on which findings are sought. A preliminary reaction would be that the United States does not agree with the approach set out by the EC
5.95.
Specifically, it is not clear that measures that are applications of another measure would themselves, if not identified in the panel request at all, be measures within the Panel's terms of reference and therefore susceptible to findings and possible recommendations under Article 19.1 of the DSU by the Panel. We therefore invite the Panel to consider this issue further.

VI. INTERIM REVIEW

6.1.
On 4 April 2009, the Panel issued its Interim Report to the parties. On 18 April 2009, both parties submitted written requests for the review of precise aspects of the Interim Report. The parties submitted written comments on the other party's comments on 25 April 2009. Neither party requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Panel's Report sets out the Panel's response to the arguments made at the interim review stage, wherever the Panel felt that explanations were necessary. The Panel has also modified certain aspects of its Report in light of the parties' comments wherever it considered appropriate. Finally, the Panel has made a limited number of editorial corrections to the Interim Report for the purposes of clarity and accuracy. References to sections, paragraph numbers and footnotes in this Section VI relate to the Interim Report. Where appropriate, references to paragraphs and footnotes to the Final Report are included.

A. PANAMA'S COMMENTS ON THE INTERIM REPORT

1. Descriptive part

6.3.
Regarding paragraph 2.5 of the Interim Report, Panama requests the Panel to include additional statements by the United States Drug Enforcement Agency describing the Black Market Peso Exchange operations to more fully reflect its arguments. The Panel considers the Panel's description within this section is adequate and thus declines to do so. In addition, the Panel notes that Panama had a previous opportunity to request changes to the Descriptive Part of the report.
6.4.
Regarding footnote 14 of the Interim Report, Panama requests the Panel to delete text discussing findings by the Colombian Unidad de Información y Análisis Financiero (UIAF) regarding participants in contraband activities. The Panel does not consider this deletion appropriate.

2. Panama's claims under the Customs Valuation Agreement

6.5.
Regarding paragraph 7.9 of the Interim Report, Panama suggests replacing in the second line "to the best of its ability" with "as well as the legislation and regulatory framework giving effect to the indicative prices." The Panel does not consider this change appropriate.
6.6.
Regarding paragraph 7.10 of the Interim Report, Panama suggests adding the following sentence: "In particular, Panama refers to Thailand – H-Beams that clarified the fundamental issue in a claim of prejudice is whether the defendant party was made aware of the claims presented by the complainant party sufficient to allow it to defend itself". Panama also suggests adding a footnote to include the relevant reference. The Panel does not consider this change appropriate.
6.7.
Regarding paragraph 7.88 of the Interim Report, Panama suggests At the beginning of the paragraph, add "Panama argued that without any textual basis in Article 128.5 e), Colombia equates the notion of a payment with that of a guarantee or deposit." Panama further suggests to insert at the end of this sentence a footnote with the text: "Panama's second written submission, para. 43." The Panel does not consider these changes appropriate.
6.8.
Regarding paragraph 7,128 of the Interim Report, Panama requests the Panel to replace "there is a review mechanism in which Colombian customs authorities determine a customs value" with "there is a review mechanism in which Colombian customs authorities determine a revised customs value". Colombia however rejects characterization of the review mechanism as a revision. The Panel declines to make the requested changes as it considers the statement adequate.

3. Panama's claim under Article III:2 of the GATT 1994

6.9.