## Facts

- Argentina challenged Chile’s border measures affecting imports of wheat, wheat flour, and edible vegetable oils.
- Chile operated a “Price Band System” (PBS) that set a floor and ceiling price using international reference prices.
- When the reference price fell below the floor, Chile applied an additional specific duty; when it rose above the ceiling, duties were reduced.
- The PBS functioned as a variable duty component added to Chile’s ordinary ad valorem tariff, aiming to keep domestic prices within a targeted range.
- Chile also imposed provisional and definitive safeguard measures (additional duties) on the same products; the appeal largely centered on the PBS.
- A WTO panel found the PBS inconsistent with Agreement on Agriculture Article 4.2 and GATT 1994 Article II:1(b), second sentence.
- Chile appealed, arguing (among other points) that the panel failed to make an objective assessment under DSU Article 11 and that the panel used an improper order of analysis.

## Issues

1. Whether the panel failed to make an objective assessment of the matter under DSU Article 11 in its characterization and legal evaluation of the PBS.
2. Whether the panel’s choice to analyze Agreement on Agriculture Article 4.2 before GATT 1994 Article II:1(b) was erroneous or prejudicial.
3. Whether the PBS was a prohibited “variable import levy” or “similar border measure” under Agreement on Agriculture Article 4.2 (including its footnote).
4. Whether PBS-generated duties constituted unrecorded “other duties or charges,” or otherwise caused applied duties to exceed Chile’s bound rates, contrary to GATT 1994 Article II:1(b), second sentence.

## Decision

- The Appellate Body rejected Chile’s DSU Article 11 claim, finding no failure by the panel to make an objective assessment.
- The Appellate Body found no DSU violation in the panel’s order of analysis, emphasizing panels have discretion absent prejudice or due process concerns.
- The Appellate Body upheld the finding that the PBS was inconsistent with Agreement on Agriculture Article 4.2 because it operated as a variable import levy or similar prohibited border measure.
- The Appellate Body upheld, with modifications to aspects of the panel’s reasoning, the finding that Chile acted inconsistently with GATT 1994 Article II:1(b), second sentence, because the PBS added duties not recorded in Chile’s tariff schedule and could result in duties above bound levels.
- The Appellate Body recommended that Chile bring its measures into conformity with its WTO obligations.

## Legal Principles

- DSU Article 11 claims require showing a serious, clear departure from the duty to make an objective assessment; disagreements over evidence weighing or legal interpretation, without more, are insufficient.
- The DSU does not mandate a fixed sequence for addressing claims; panels may choose an order of analysis so long as claims are addressed and due process is preserved.
- Agreement on Agriculture Article 4.2 prohibits maintaining border measures such as “variable import levies” and “similar border measures” that replicate pre-Uruguay Round non-tariff devices and impede transparent, predictable market access.
- A duty mechanism that varies in response to world prices to stabilize domestic prices can qualify as a prohibited variable levy-like measure under Article 4.2 based on its design and operation.
- Under GATT 1994 Article II:1(b), second sentence, “other duties or charges” imposed in addition to bound ordinary customs duties must be recorded in the member’s schedule; unrecorded additional charges that cause applied duties to exceed bindings breach tariff concessions.

## Conclusion

The Appellate Body affirmed that Chile’s price band system, by imposing price-responsive additional specific duties to stabilize domestic prices, was a prohibited border measure under Agreement on Agriculture Article 4.2 and also resulted in unbound charges inconsistent with GATT 1994 Article II:1(b), second sentence, while rejecting Chile’s procedural objections under DSU Article 11 and to the panel’s order of analysis.


Chile—Price Band System & Safeguard Measures Relating to Certain Agricultural Products, WTO Doc. WT/DS207/AB/R (App. Body Oct. 23, 2002)