## Facts

- Panama challenged Colombian measures affecting imports of textiles, apparel, footwear, and certain other goods originating in or shipped from Panama.
- Colombia used “indicative prices” as reference values in customs administration when declared transaction values fell below specified benchmarks.
- Importers were, in practice, required to pay duties and certain taxes based on indicative prices when values were questioned.
- Colombia limited entry of specified goods from Panama to a small number of designated ports and imposed special customs formalities on those goods.
- Additional requirements for covered goods from Panama included an advance import declaration, advance payment of duties and sales tax tied to that declaration, and a fee to rectify certain declaration errors.
- Colombia defended the measures as anti-fraud tools aimed at combating under-invoicing, smuggling, and tax evasion, including as “necessary” to secure compliance with customs laws.

## Issues

1. Whether Colombia’s indicative price system was inconsistent with the Agreement on Customs Valuation (including Articles 1–7 and 13) by functioning as minimum or reference values that displaced transaction value and the required valuation sequence.
2. Whether Colombia’s port-of-entry limitations and related formalities for goods from Panama constituted prohibited import restrictions under GATT 1994 Article XI:1.
3. Whether the Panama-focused application of the port restrictions and procedures violated GATT 1994 Article I:1 (MFN).
4. Whether the port-of-entry restrictions were justified under GATT 1994 Article XX(d), including the chapeau’s non-discrimination requirements.
5. Whether the advance declaration, advance payment, and rectification fee requirements were independently inconsistent with WTO obligations.

## Decision

- The panel found Colombia’s indicative price system, as applied, inconsistent with the Customs Valuation Agreement because it operated as a de facto minimum import value system and bypassed the required hierarchy of valuation methods.
- The panel rejected Colombia’s claim that collecting duties based on indicative prices constituted a permissible “guarantee” under Article 13 of the Customs Valuation Agreement.
- The panel found the port-of-entry limitations for specified goods from Panama were “restrictions” on importation inconsistent with GATT 1994 Article XI:1.
- The panel found the Panama-specific application of port limitations and related procedures accorded less favorable treatment to Panama than to other Members, violating GATT 1994 Article I:1.
- The panel held Colombia failed to justify the port-of-entry restrictions under GATT 1994 Article XX(d) because Colombia did not demonstrate “necessity” and, in any event, the measures were applied in a manner constituting unjustifiable or arbitrary discrimination under the chapeau.
- The panel found certain additional formalities (including advance declaration/payment requirements and a rectification fee) also breached Colombia’s WTO obligations.
- The panel recommended Colombia bring the inconsistent measures into conformity with its WTO commitments.

## Legal Principles

- Under the Customs Valuation Agreement, customs value must be based on the transaction value unless rejected for specified reasons; authorities must then apply alternative methods in the prescribed sequence (Articles 1–7).
- Customs valuation systems that, in operation, impose minimum values or fixed reference prices as valuation floors are inconsistent with the Agreement’s prohibitions on arbitrary or fictitious customs values (including limits reflected in Article 7.2).
- A “guarantee” under Customs Valuation Agreement Article 13 is distinct from requiring payment of duties calculated on an impermissible valuation basis; Article 13 does not authorize collection based on reference values that displace proper valuation methods.
- GATT 1994 Article XI:1 covers a broad range of measures that restrict importation; port-of-entry limitations can qualify as prohibited restrictions even without explicit quantitative caps.
- GATT 1994 Article I:1 (MFN) is violated where like products from one Member are subject to port limitations and special procedures not imposed on like products from other Members.
- For a defense under GATT 1994 Article XX(d), the responding Member must show the measure is “necessary” to secure compliance with qualifying laws or regulations and must also satisfy the chapeau by avoiding arbitrary or unjustifiable discrimination and disguised trade restrictions.

## Conclusion

The panel concluded that Colombia’s indicative price regime functioned as an impermissible minimum-value system under the Customs Valuation Agreement and that Colombia’s Panama-targeted port-of-entry restrictions and related formalities violated GATT Articles XI:1 and I:1; Colombia’s Article XX(d) justification failed, and Colombia was directed to align its measures with WTO rules.


Colom.—Indicative Prices & Restrictions on Ports of Entry (Pan.), WT/DS366/R (WTO Panel 2009)