## Facts

- Panama challenged Colombia’s “compound tariff” on certain textiles, apparel, and footwear (Customs Tariff Chapters 61–64).
- The measure combined an MFN ad valorem tariff with an additional specific duty (USD per kilogram) that increased the total duty for lower-priced imports.
- Colombia stated the measure targeted under-invoicing, customs fraud, and money laundering linked to trade in the covered goods.
- A WTO panel found that, in identified instances, the compound tariff produced duties above Colombia’s bound tariff commitments and thus breached GATT 1994 Article II:1(a) and (b).
- Colombia invoked GATT 1994 Article XX(a) (public morals) and Article XX(d) (securing compliance with laws or regulations) to justify the Article II breach.
- Colombia appealed, including arguments that the panel failed to make an objective assessment under DSU Article 11.

## Issues

1. Whether Colombia’s compound tariff imposed “ordinary customs duties” in excess of its bound rates, contrary to GATT 1994 Article II:1(a) and (b).
2. Whether the measure was “necessary to protect public morals” under GATT 1994 Article XX(a).
3. Whether the measure was “necessary to secure compliance” with non-GATT-inconsistent laws or regulations under GATT 1994 Article XX(d).
4. Whether the panel committed a reviewable error under DSU Article 11 in its assessment of the facts and evidence.

## Decision

- The Appellate Body upheld the panel’s finding that the compound tariff, as applied in identified instances, resulted in duties exceeding Colombia’s bound rates and violated GATT 1994 Article II:1(a) and (b).
- The Appellate Body rejected Colombia’s Article XX(a) defense, concluding Colombia did not establish the measure was “necessary” to protect public morals.
- The Appellate Body rejected Colombia’s Article XX(d) defense, agreeing the measure was designed to secure compliance with certain laws, but concluding Colombia did not establish “necessity.”
- The Appellate Body rejected Colombia’s claims of panel error under DSU Article 11.
- Because the measure did not fall within Article XX(a) or XX(d), the Appellate Body did not need to resolve justification under the Article XX chapeau.

## Legal Principles

- GATT 1994 Article II:1 prohibits WTO Members from applying ordinary customs duties in excess of the bound rates in their schedules; compliance must hold for situations covered by the concession, including low-priced imports affected by specific components of a compound tariff.
- A compound tariff that functions as a customs duty is assessed against tariff bindings by examining whether the combined components can produce duties above the bound ceiling.
- Under GATT 1994 Article XX(a), combating trade-related money laundering and customs fraud may qualify as a “public morals” objective, but the respondent must prove the challenged measure is “necessary,” including evidence of a meaningful contribution to the objective and consideration of reasonably available, less trade-restrictive alternatives.
- Under GATT 1994 Article XX(d), it is not enough that a measure is designed to secure compliance with qualifying laws; the respondent must also prove the measure is “necessary,” including by showing adequate effectiveness and addressing less trade-restrictive enforcement options.
- DSU Article 11 requires objective assessment; disagreement with the panel’s weighing of evidence does not, without more, establish a violation.

## Conclusion

The Appellate Body confirmed that Colombia’s compound tariff on certain textiles, apparel, and footwear exceeded Colombia’s bound tariff commitments in specific applications, breaching GATT Article II, and held that Colombia failed to justify the measure as necessary under GATT Article XX(a) or XX(d).


Colombia—Measures Relating to the Importation of Textiles, Apparel & Footwear, WTO Doc. WT/DS461/AB/R (2016)