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Legal Update

WTO Appellate Body Finds Fault With Peru’s Import Duty “Price Range System”

21 July 2015
Mayer Brown Legal Update

The World Trade Organization (“WTO”) Appellate Body has upheld in part and reversed in part a WTO panel ruling that Peru’s Price Range System (“PRS”) for import duties on several key agricultural products violates Peru’s treaty obligations. The complaint was brought by Guatemala on behalf of its agricultural exporters on June 13, 2013.

Under the PRS, Peru maintains a floor price and a ceiling price for several agricultural products, which it updates every two weeks to reflect changes to reference prices in international markets. Guatemala claimed that the PRS creates an impermissible variable levy and a minimum import price in violation of Article 4.2 of the WTO Agreement on Agriculture, and that it results in duties in excess of the ordinary customs duties that are not a part of Peru’s scheduled concessions in violation of Article II:1(b) of the General Agreement on Tariffs and Trade (“GATT 1994”).

The Appellate Body upheld all of the panel’s findings, with the exception of its finding that the PRS does not constitute a “minimum import price” or similar border  measure within the meaning of footnote 1 of Article 4.2 of the Agreement on Agriculture.1 In reversing the panel’s ruling on this provision, the Appellate Body found that the panel failed to adequately assess the relevant elements of the design, structure and operation of the measure at issue.

Although the Appellate Body was unable to complete the legal analysis under Article 4.2 of the Agreement on Agriculture and determine whether the measure at issue constitutes a “minimum import price” or a border measure “similar” to a “minimum import price,” it recommended that the WTO’s Dispute Settlement Body request Peru to bring its measure into conformity with the its obligations under the afore-mentioned WTO “covered” agreements.

1 For more information about the WTO panel’s ruling, see our legal update “WTO Panel Rejects Peru’s ‘Price Range System’ For Import Duties.

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