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WORLD TRADE
ORGANIZATION

WT/DS207/R
3 May 2002

(02-2373)

Original: English

CHILE - PRICE BAND SYSTEM AND
SAFEGUARD MEASURES RELATING TO
CERTAIN AGRICULTURAL PRODUCTS

Report of the Panel
 

(Continued)


(c) Relation between Article II:1(b) of the GATT 1994 and Article 4.2 of the Agreement on Agriculture

4.85 Chile points out that all parties to the dispute agree that "ordinary customs duties" has the same meaning in Article 4.2 and its footnote as in Article II:1(b) of the GATT 1994. It further states that Argentina, however, never faces up to the contradiction in the Argentine position under Article II:1(b) and Article 4.2. Chile explains that, under Article II:1(b), Argentina complains that the PBS duties have resulted and could result in a breach of Chile's bindings - the bindings on ordinary customs duties. Under Article 4.2, however, to avoid conceding that the Chilean PBS duties are ordinary customs duties exempt from Article 4.2, Argentina attempts to invent a new definition of what is an ordinary customs duty as opposed to a "variable import levy" or "similar" measure. The Argentine definitions, however, are simply fabricated by Argentina, without foundation in the text of the Agreement, and without logic and coherence as a matter of treaty interpretation.218

4.86 Chile submits that Argentina's complaint under Article II:1(b) properly treats the PBS duties as "ordinary customs duties", even though Argentina has tried to ignore the implications of its own claim. Chile argues that Argentina's claim under Article II of the GATT is that the PBS duties and the ad valorem duties can potentially result in total applied rate of duty above the bound rate. Chile contends that, if Argentina had considered, erroneously, that the price band duties were an "other" duty or charge, then Argentina would have claimed that the price band duties were flatly prohibited, regardless of whether the binding is breached. The reason is that Article II:1(b) unconditionally prohibits "other" duties and charges that have not been scheduled, without regard to whether those "other" duties and charges, when added to ordinary customs duties, would result in a breach of the binding on ordinary customs duties. Because the PBS duties are ordinary duties, Chile naturally has never scheduled the price band duties as an other duty or charge. In Chile's view, it is puzzling that Argentina asserts in paragraph 24 of its second submission that the price band duties are not an ordinary customs duty but rather a "surcharge" (sobretasa) - a term not used in Article II:1(b). However, it adds, even in paragraph 24, Argentina does not claim that the PBS duties are therefore prohibited under Article II:1(b), as would be the case if they were unscheduled "other" duties or charges. Rather, Argentina simply argues that the "sobretasa" together with the ad valorem duty can potentially result in a breach of the binding.219

4.87 Chile submits that the nature of Argentina's complaint and argumentation under Article II:1(b) demonstrates that, for purposes of Argentina's complaint under Article II:1(b), Argentina regards the PBS duties as ordinary customs duties. Chile argues that if Argentina considered PBS duties to be "other" duties, then it would make no sense for Argentina to concede that the PBS duties do not necessarily breach the binding, but rather are only "potencialmente violatorio".220 Likewise, there would have been no need for Argentina in its first submission to set out an elaborate formula for determining when the PBS duties would have the effect of breaching the 31.5 per cent binding because under Article II:1(b) and the Understanding, "other" duties or charges are prohibited at any level, if they were not properly and timely inscribed in a Member's schedule. Chile affirms that it is transparent in its schedule that Chile made no attempt to list the PBS duties as other duties or charges, because, of course, the PBS duties are ordinary customs duties and have always been so treated.221

4.88 Argentina, in reference to the above argument by Chile to the effect that it did not register its PBS because the duties resulting from it were "ordinary customs duties", states that, in fact, Chile is merely recognizing that while the resulting duties could be ordinary customs duties222, the PBS as such cannot, since it does not have any limit as to the duties it is capable of imposing and varies over a wide range - both above and below the bound level - with a frequency that makes it incomparable to ordinary customs duties.223 Argentina explains that what counts under Article 4.2 of the Agreement on Agriculture, which is a lex specialis vis-�-vis Article II:1(b) of the GATT 1994, is that the price band system, as its name suggests, is a "system" (a series of elements which interact to produce a result) and not an "ordinary customs duty". Argentina submits that the PBS, by its very nature - "variable levy" or "similar measure" - is one of the "measures of the kind" which have been required to be converted into "ordinary customs duties". It contends that it is the system that was required to be converted (the PBS) that is inconsistent with Article 4.2 of the Agreement on Agriculture, and not the duties resulting from that system. Chile itself has said that "Chile's price band system duties are not variable import levies within the meaning of Article 4.2 of the Agriculture Agreement".224 Regardless of the status of the duties resulting from the application of the PBS, Argentina submits, the system as such has been shown by Argentina to be "a variable levy" or similar measure within the meaning of Article 4.2 of the Agreement on Agriculture.225

4.89 Argentina submits that the obligation contained in the first part of Article II:1(b) of the GATT 1994 is a separate obligation and different from the obligation laid down in Article 4.2 of the Agreement on Agriculture.226 It further explains that Article 4.2 of the Agreement on Agriculture prohibits certain measures involving restriction of market access independently of any breach of Article II:1(b) of the GATT 1994 (Schedules of Concessions).227 It will later specify that Article 4.2 of the Agreement on Agriculture is lex specialis vis-�-vis Article II:1(b) of the GATT 1994.228

4.90 Chile considers that the prohibitions in Article 4.2 apply without regard to whether the measures breach a tariff binding. In Chile's view, for example, it is obvious on the face of the Agreement that one of the main purposes of Article 4.2 was to prevent a Member who had had the privilege of converting a non-tariff measure into an often prohibitively high tariff from then proceeding to restore that or some other non-tariff barrier at a later date. However, Chile argues, a measure that could violate Article II of the GATT 1994 is not likely to be a non-tariff measure prohibited under Article 4.2, unless the measure has non-tariff components as well.229

4.91 Argentina argues that the only way of evaluating whether a measure which was maintained is inconsistent with Article 4.2 of the Agreement on Agriculture, particularly if it is a measure similar to those listed in footnote 1, is by analysing its economic effects as compared to ordinary customs duties. Consequently, Argentina submits, not having been tariffied and the results of the process not having been included in the corresponding schedule, failing a waiver or renegotiation of the commitments, the price band system is clearly in violation of Article 4.2 of the Agreement on Agriculture, even without exceeding the bound level.230 Argentina further claims that Chile itself admits that Article 4.2 of the Agreement on Agriculture can be violated without violating Article II:1(b) of the GATT 1994.231

4.92 Argentina does not agree with the argument developed by the European Communities whereby a measure that would meet the test set out by the Appellate Body in Argentina - Footwear, Textiles and Apparel, and would therefore not be contrary to Article II of GATT 1994, would not be subject to any further obligation in Article 4.2 of the Agreement on Agriculture. The European Communities consider that such a conclusion would stand even if the measure in question resulted in the application of a "duty that varies" - inasmuch as this "variation" is maintained below the ceiling written in the Member's tariff binding. Thus, in the European Communities' view, the decisive element which distinguishes an "ordinary customs duty" from a "variable levy" is the existence of a ceiling in the tariff binding. Argentina considers that the European Communities are trying to link different obligations laid down in different agreements. In Argentina's view, Article II:1(b) of the GATT 1994 lays down the obligation to refrain from levying "ordinary customs duties" in excess of the bound duties set forth in the national schedules. On the other hand, Argentina explains, Article 4.2 of the Agreement on Agriculture lays down the obligation to change all "measures of the kind which have been required to be converted into ordinary customs duties", as well as the obligation to refrain from maintaining, resorting to, or reverting to any measures of the kind set forth in the non-exhaustive list in the footnote. Argentina notes that, at the same time, the difference between the application of specific duties - in the case cited by the European Communities (violation of the bound level, Article II:1(b) of the GATT 1994) - and the Chilean PBS (Article 4.2 of the Agreement on Agriculture) lies in the total predictability and transparency for the purposes of commercial planning in the first case (application of specific duties with a ceiling), and the total absence of predictability and transparency for the purposes of commercial planning in the second case (application of a variable duty or similar measure). Argentina concludes that the European Communities' interpretation of the obligations under Article 4.2 of the Agreement on Agriculture deprives of its effectiveness a provision that was painstakingly negotiated by Members. As stated in Article 21 of the Agreement on Agriculture, Argentina submits, the obligations under the GATT 1994 apply with respect to agricultural trade to the extent that the specific Agreement concluded on agriculture does not provide otherwise.232 Argentina explains that the Members agreed, in the case of agriculture, that a certain kind of measures would be "required to be converted into ordinary customs duties", i.e. tariffied with a view to eliminating their distortionary effects and lack of transparency and predictability. These effects, Argentina asserts, which distinguish the "measures of the kind" that must be tariffied from "ordinary customs duties", are independent of any ceiling.233

4.93 In Chile's view, the above argument of the European Communities may be correct, although it would note that Chile has pointed out several bases for concluding that the Chilean PBS is not prohibited by Article 4.2, so it is not necessary to resolve the issue whether the existence of a binding by itself is sufficient to make a duty that varies not a prohibited measure under Article 4.2. While it is obvious that the mere existence of a binding on a product does not permit resorting or reverting to a prohibited non-tariff barrier on such product, Chile contends, the European Communities' distinction is salient for a measure whose only protection is achieved via a duty, where the degree of variation does not add any protection greater than that achieved if the duty were applied at the bound level. Chile believes that the logic behind accepting the European Communities' argument lies in three points: First, as Argentina has conceded, not every duty that varies is banned, since that would imply a rule that countries cannot change their applied rates, even to reduce them, even if bound rates are respected. Chile's annual reduction of its applied rates would become a prohibited variable levy, by such an absurd test. Argentina arguments notwithstanding, there is nothing in the WTO establishing rules about degree, frequency or predictability of variations. Second, the most important objective characteristic of the "conversion" of the European Communities' variable levies appears to be the binding of duties, and the European Communities' conversion was subject to ample discussion and negotiation by all parties before the WTO agreements went into force. It thus would seem to Chile that the European Communities were entitled to think all parties understood its conversion to be adequate. Indeed, Chile explains, the only complaints about the European Communities' conversion were that the levy did not vary enough. Chile considers that, while the European Communities' system is certainly not at issue in this dispute, it is reasonable to look at the practice of such a major Member, and the attitude of other Members toward that practice in establishing how it would implement the obligations even before the entry into force of the WTO agreement. Third, and most important, varying the applied rate below the bound level is less, not more protective than a perfectly legal system in which the applied rate is simply maintained at the bound level. According to Chile, while Argentina has tried to suggest that the variability of a duty is an additional barrier to trade, Argentina has no evidence for that proposition. Chile submits that it is undeniable that every Member has a right to apply its duties at all times at the level of its bindings. Chile claims that, in theory and in fact, it is impossible to see how it can be less advantageous to trade of other countries if instead of constantly applying duties at the bound rate, a Member maintains a system in which the duties assessed are usually less than the permissible bound rate, at least so long as the ceiling binding is honoured or an appropriate exception invoked. In Chile's view, the variation of the applied rates below the bound rates may mean that Members cannot rely on always having the benefit predictability of the voluntary benefit of lower rates than the tariff binding, but Members have no right to such lower rates in any event. Thus, Chile concludes, it is reasonable to assert that, in the case of measures whose only protective effect is through a duty, there is no basis for complaint about a duty that varies, so long as the ceiling binding and other obligations such as MFN are respected.234

(i) Other issues of interpretation relating to Article 4.2 of the Agreement on Agriculture

Relevance of the Chile-Mercosur Economic Complementarity Agreement No. 35

4.94 Chile refers to Article 24 of its Economic Complementarity Agreement ("ECA") No. 35 with Mercosur after the Uruguay Round where it is stated that the parties, Mercosur (including Argentina) and Chile recognize the existence of the PBS and establish certain rules to the effect that Chile will not add new products to the system nor modify it with the intention of imposing more stringent restrictions. Chile claims that, according to the principles of international law, therefore, Argentina recognized and accepted the existence of the system that it is now trying to contest in a different legal framework.235 In response to a question by the Panel, Chile clarifies that, by "the principles of international law", it means any collection of standards which, although not necessarily a treaty or a conventional source of rights and obligations, governs and determines international relations between States and other subjects of international law. In this particular case, Chile adds, it was referring to the following principles: the principle of good faith: "good faith shall govern the relations between states", as well as the performance of treaties concluded by them. According to Chile, Argentina is one of the States that participated in the Uruguay Round negotiations, and when the trade agreements were adopted, although it definitely knew of the PBS, it never suggested, in this forum, that it be eliminated, modified or replaced by a system of the bound duties. Chile submits that it is hardly in a position to do so since Argentina itself has its own PBS with respect to sugar imports. Subsequently, during the negotiation of ECA 35 between Mercosur and Chile, Argentina, although aware of the existence of the PBS and its technical aspects, did not suggest or require its elimination, modification or replacement by Chile with a system of bound duties. Even more importantly, Chile claims, the PBS was one of the trade issues that was expressly discussed and negotiated between Chile and members of Mercosur. Chile submits that the parties expressed their explicit and unequivocal acceptance of the price band and its technical aspects by including in Article 24 of ECA 35236 a provision which directly mentions the system. Nevertheless, Chile adds, four years later Argentina itself tried to challenge the very system whose consistency with the WTO it had already accepted internationally, under a different legal framework. In Chile's opinion, this international behaviour clearly contradicts the principle of good faith which should govern international relations and the performance of treaties that have been negotiated, signed and ratified.237

4.95 Chile further mentions the principle of pacta sunt servanda: every treaty in force is binding upon the parties to it and must be performed by them in good faith. According to Chile, this principle has a natural, complementary and explicit link with the principle of good faith, and hence the above remarks fully apply. Chile contends that Argentina and the other members of Mercosur undertook, in ECA 35, to respect the PBS unless Chile, following the entry into force of the Agreement, were to include new products, to modify the mechanisms or to apply them in such a way as to undermine Mercosur's market access conditions. Although none of the above has occurred, Chile stresses, Argentina has challenged the system, using a different legal framework to do so. Under the rules of international law on interpretation of treaties, Chile explains, ECA 35 constitutes an additional relevant context for interpreting the conformity of the PBS with the WTO and its Agreements. In conclusion, Chile asserts, the conduct of Argentina and the other participants in the negotiation of ECA 35 suggests that all of the Mercosur member countries viewed the PBS as a legitimate measure that was permitted under the WTO and required disciplines under ECA 35 so that the member countries of Mercosur could obtain a benefit beyond what they had already obtained as Members of the WTO as a result of Chile's tariff concessions. According to Chile, this is obvious, since if members of Mercosur had felt that the entire PBS was illegal under the WTO Agreement on Agriculture (as Argentina is now claiming in this dispute), then it would have been unnecessary and indeed pointless to negotiate limitations, as they did, on the use of the system under the ECA. Chile indicates that it does not claim or even attempt to argue that Argentina is not entitled to submit its complaint before the WTO on the basis of its new theory that the PBS is illegal under Article 4.2 on the Agreement on Agriculture (although Chile obviously considers that this theory is absolutely without merit). What Chile does maintain is that Argentina's prior conduct - both during the Uruguay Round negotiations and during the negotiation of ECA 35 - shows that Argentina did not, and does not, understand Article 4.2 to be a rule that prohibits the PBS, but on the contrary, it understands that Article to be a rule which permits the PBS. In Chile's view, this understanding constitutes a relevant context under the rules of international law for interpreting the meaning of Article 4.2. Chile clarifies that it is not asking the Panel to decide on the interpretation of ECA 35, as this would not be within its jurisdiction and competence. What Chile has done, it explains, is to introduce this Agreement merely as yet another element in the relevant context substantiating Chile's understanding of the interpretation of Article 4.2 in relation to its PBS. Chile further clarifies that it is not suggesting that the interpretation of WTO rules depends on who the parties to a dispute are. In Chile's view, the ECA is a relevant context because it shows that prominent Members of the WTO, including those that are parties to this dispute, negotiated another agreement immediately following the negotiation of the WTO Agreements, on a basis which suggests that they understood the WTO Agreements did not, and do not, prohibit the Chilean PBS.238

4.96 Argentina rejects the above argument that it bases its claim on a "new theory that the PBS is illegal under Article 4.2 of the Agreement on Agriculture".239 Argentina is not aware of the existence of different theories concerning the obligations under Article 4.2 of the Agreement on Agriculture. Argentina assumes that there are measures that are either consistent or inconsistent with the provisions of the Agreement on Agriculture in general, and measures that are inconsistent with Article 4.2 of the Agreement on Agriculture in particular. Consequently, Argentina submits that all that is needed is to apply the Vienna Convention to the interpretation of the scope of the obligations.240 Argentina contends that, in its international relations and in respect of treaties it has concluded with other States, it acts in conformity with the general principles of public international law. Argentina submits that, contrary to what Chile has claimed241, in bringing its complaint concerning the inconsistencies of the PBS with Article 4.2 of the Agreement on Agriculture before the WTO, Argentina acted in conformity with the principle of good faith and the principle of pacta sunt servanda. However, Argentina submits, Chile's conduct in maintaining provisions under its domestic legal system which violate Article XVI.4 of the Marrakesh Agreement Establishing the WTO after accepting the covered agreements is contrary to the principle of good faith in the fulfilment of agreements and in the actions of States, particularly when Chile has recognized that it has done this "deliberately".242

4.97 Chile clarifies that the ECA 35 did not deal directly with the issue of whether the PBS was or was not, for the purposes of the WTO, an ordinary customs duty or some other kind of duty, charge or tax. However, it is clear that none of the parties considered that the duties under the PBS were "other duties" under the WTO, since Chile did not include them as such in its tariff schedule, and the other Members did not attack them as such under the WTO.243 It further clarifies that it has never said that Argentina's acceptance of the price band in ECA 35 was an exception to the WTO. Chile explains that what it has said is that Argentina, through WTO, wants to upset the balance of rights and obligations assumed under their bilateral agreement, since Argentina made Chile pay to retain the price band in the bilateral agreement as if Argentina also considered the price band valid under WTO.244

4.98 Argentina considers that Chile's argument that Argentina recognized and accepted the existence of the [price band] system245 in the framework ECA 35 ignores the essence of the WTO obligations contained in the "covered agreements" whose "enforcement" is achieved through the DSU. In this respect, Argentina submits that WTO precedent makes it clear that it is the commitments assumed under the WTO and not the bilateral agreements that constitute the relevant obligations of a Member under that Agreement. In other words, there are different legal frameworks: in one of them, the WTO, paragraph 4 of Article XVI lays down the obligation for Members to bring all of their legislation into conformity with the WTO Agreements, while in another, completely different framework - the regional Latin American Integration Association (LAIA) - relations between Mercosur and Chile are governed by ECA 35, which covers an ambitious agenda and in which the provisions cited by Chile could be given any number of meanings, as has been recognized by Brazil, another member of ECA 35, in its third party submission.246 Argentina submits that a simple reference to the PBS in the framework of a regional agreement can in no way be understood as a waiver of WTO obligations. Argentina declares that if a Member could be released from its WTO obligations and could obtain a sort of immunity against scrutiny of its measures on the basis of provisions to which it has adhered in other legal frameworks, such as regional agreements, the very basis of the multilateral trading system would be affected.247

4.99 Argentina submits that each international treaty is an independent legal instrument and should therefore be considered as a self-sufficient entity based on the principle of pacta sunt servanda. Argentina stresses that the ECA 35 does not have an auxiliary or complementary nature with respect to the WTO agreements: the ECA 35 does not clarify, complement, amend or modify the agreements covered by the Marrakesh Agreement. Argentina further submits that Chile is wrong to invoke ECA 35 in its defence in that ECA 35 does not say that Argentina "recognized and accepted" the Chilean PBS. On the contrary, Argentina contends, as Chile itself admits, the ECA 35 is the result of negotiations which led to the application of certain restrictions, albeit insufficient, to the PBS.248 Argentina claims that, as Chile recognizes, the ECA 35 requires Chile to refrain from increasing the market distortions caused by the PBS by not adding new products or making it more stringent and more restrictive of trade. In Argentina's understanding, far from accepting the PBS, Mercosur, through the ECA 35, tried to limit and restrict it. Argentina concludes that Chile's249 comments ultimately lead to the conclusion with respect to the ECA 35 that by permitting the PBS to operate at full regime, making the system more restrictive, in spite of Mercosur's attempts to impose limits on the system, Chile has in fact violated ECA 35, the very Agreement behind which it is now trying to hide.250

4.100 According to Argentina, WTO Members cannot opt to disregard their WTO obligations simply because they have signed less restrictive agreements. A contrario, Argentina argues, if one was to consider, for the sake of argument, that we are not dealing with two separate and distinct legal frameworks, as Argentina contends, and if ultimately, although nothing prevented Argentina from filing a complaint with the WTO, the ECA 35 served as a context for the analysis of the inconsistency of the Chilean price band system vis-�-vis Article 4.2 of the Agreement on Agriculture, in Argentina's view, it would have to begin by pointing out that Chile explicitly recognizes that the "ECA No. 35 did not deal directly with the issue of whether the price band system was or was not, for the purposes of the WTO, an ordinary customs duty or some other kind of duty, charge or tax � ".251 Argentina further argues that, if ECA 35 were even considered an "additional relevant 'context, Chile itself has also recognized that it did not include the PBS' as such in its tariff schedule"252 either in the WTO, or in the Annex and Additional Notes to ECA 35. Argentina considers that, "if the ECA 35 did not 'deal directly with the issue', and if there is an opinion to the effect that the PBS does not constitute another duty", and if Chile also failed to include the PBS as such in its tariff schedule and in the Annexes and Additional Notes to ECA 35, it is difficult to see how ECA 35 can serve as a context for the interpretation of obligations under Article 4.2 of the Agreement on Agriculture. Argentina further argues that if the Panel were to consider that the ECA 35 provides a guide, because Chile itself excluded the PBS from its tariff schedule and because it takes the view that no preferences - the very purpose of ECA 35 - are applicable to the price band system, this reinforces the idea that the PBS is not a tariff - in WTO terms, "an ordinary customs duty" - but rather, it is what Argentina has been claiming it to be from the beginning of these proceedings, i.e. a "variable levy" or a "similar border measure" which is inconsistent with Article 4.2 of the Agreement on Agriculture.253

Prior knowledge, negotiating history and subsequent practice

4.101 Chile submits that the PBS has been in effect since 1983, having been established by law, and that the system is used by some countries of the Andean Community and was used by some Central American countries. It explains that, throughout the late 80s and early 90s, the World Bank encouraged countries, at least in Latin America, to convert their quantitative restrictions to price bands, which are more market oriented schemes. Chile contends that Argentina has a system similar to Chile's price band for imports of sugar that considers an additional duty that is the result of the difference of two prices; one called �Gu�a de Base� which is the result of the average international prices of the last eight years and the other called �Gu�a de Comparaci�n� which is the London price.

4.102 Argentina considers that Chile's vague and general argument concerning the existence of PBSs in Latin America is irrelevant in justifying the kind of violation resulting from the Chilean PBS. Argentina is of the view that Chile's statement is not based on any concrete evidence of the existence of several PBSs in the region, and even if there were several, their mere existence would not suffice to make the Chilean system consistent with WTO rules - that, after all, is the subject of this proceeding.254 It further argues that the prior existence of the Chilean PBS and its subsequent maintenance following the entry into force of the Agreement on Agriculture does not preclude the fact that the system was contrary to Article 4.2 and its footnote. In Argentina's view, Article 28 of the Vienna Convention clearly states that the "provisions [of a treaty] do not bind a party in relation to any act or fact which took place � before the date of entry into force of the treaty with respect to that party." In this regard, Argentina considers that there was no possibility of filing a complaint prior to the entry into force of WTO Agreements on 1 January 1995. Argentina therefore concludes that Chile's argument that neither Argentina nor any other Member filed a complaint previously is without foundation. On the other hand, Argentina adds, as from the entry into force of the Agreements - i.e. the date on which the Members assumed the positive obligation to bring their domestic regulations into conformity with the system (pursuant to Article XVI.4 of the WTO Agreement) and to put an end to any measure that is inconsistent with the system - the Chilean measure has been liable to questioning under the DSU, not only as a result of previous rules, but because of what is expressly stipulated in Article 4.2 of the Agreement on Agriculture itself, since Chile has continued to maintain a measure which should have been converted into a regular customs duty. Argentina submits that this provision must be interpreted in the light of Article XVI.4 of the WTO Agreement, which also lays down an obligation for Members to act, in the following terms: "Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements." Argentina considers that the fact that prior to the complaint filed by Argentina there had not been any other complaints lodged by Argentina or any other Member of the WTO does not lead to a presumption that the PBS is consistent with Article II.1(b) of the GATT 1994 or with Article 4.2 of the Agreement on Agriculture since there is no WTO rule precluding Argentina's right to file a complaint for violation of both Article 4.2 and Article II.1(b) of the GATT 1994. If there had been such a rule, Argentina submits, it would have been up to Chile to include it in these proceedings as a legal basis for its general assertions.255

4.103 Chile agrees that there is no doctrine of estoppel in the WTO nor any other rule or practice in the WTO that provides that a measure cannot be challenged if its removal was not specifically addressed in negotiations or if the challenge is not made within some specific period after entry into force. However, Chile contends that Argentina misunderstands Chile's argument. Chile argues that there is no evidence that PBS were considered measures that had to be converted into ordinary customs duties, while the context of other parts of the WTO agreement, the negotiating history, and subsequent practice all support Chile's view that the PBS duties are not prohibited.256 Chile further indicates that, under Article 32 of the Vienna Convention, the negotiating history is a valid tool for interpretation in case of doubt. Chile insists that Chile's negotiators recall that both the Secretariat and other delegations confirmed orally that the price band system was not a measure requiring conversion to ordinary duties, and claims that neither Argentina nor any interested party has offered any evidence to the contrary. Chile also stresses that subsequent practice supports Chile's view that the price band system is not a measure prohibited by Article 4.2. Chile mentions that Argentina has a sugar import duty system that Chile is confident Argentina would not maintain if it believed the validity of any of the interpretations it asserts against Chile. Chile submits that, while it might be argued that Chile's system or that of other Andean countries, or Argentina's sugar system is too small in its effects to be worth a challenge, the same could hardly be said of the EC's system. In Chile's view, the reason that PBS or the systems of the European Communities or Argentina were not challenged in the WTO has nothing to do with forbearance. Rather, it is because these measures are ordinary customs duties that are subject to the disciplines of Article II:1(b), but are not prohibited by Article 4.2.257

4.104 Argentina asserts that following the end of the Uruguay Round, "subsequent practice" (within the meaning of Article 31 of the Vienna Convention ) - if any - relevant to define the content of the provisions of the text of Article 4.2 of the Agreement on Agriculture, which are not ambiguous, is the practice of the Members of the WTO. In this sense, Argentina submits, the only existing practice within the WTO, provides precisely the opposite outcome to what Chile has submitted before this Panel. Argentina quotes paragraphs 47 and 48 of document WT/L/77, containing the Report of the Working Party on the Accession of Ecuador to the WTO and indicates that the excerpt clearly shows that the overwhelming majority of WTO Members has agreed, within a formal context (that is, during the discussions leading to the accession of Ecuador to WTO) - reflected in a WTO official instrument - that PBSs are incompatible with WTO rules. Argentina concludes that this is the only relevant WTO practice258 in the sense of Article 31.3(b) of the Vienna Convention , since it reflects the opinio juris of all WTO Members and not that of isolated Members.259

4.105 In response to a question by the Panel, Chile indicates that it believes that the text and context leave no ambiguity that the Chilean PBS is not a measure prohibited by Article 4.2. However, it adds, if the Panel is in doubt, the negotiating history and state practice are legitimate supplementary interpretive aids, and these all support Chile's position that Article 4.2 does not prohibit the Chilean PBS. Chile contends that there are four elements of this practice: first, the existence of similar measures to those of Chile in other countries (including Argentina and the European Community); second, the absence of "conversion" except by binding of the duty by any other Member having such a measure; third the absence of any challenge of such measures under Article 4.2, and fourth, the initiation of dispute settlement challenges of the European Community's system in 1995-1997 by Canada, the United States, Thailand and Uruguay under provisions of the GATT 1994 and the Ccustoms Valuation Agreement, but never on grounds of a violation of Article 4.2. Chile submits that this practice, like the negotiating history and the tariff negotiations, does not by itself prove that the negotiators of Article 4.2 did not intend to prohibit duties that vary in the sense of the Chilean, Andean, Argentine or European Communities system. However, it argues, the practice, context and negotiating history all support the logical reading of Article 4.2, i.e. that the Article does not prohibit the Chilean PBS, at least so long as it operates within a system of bound ordinary customs duties.260

4.106 In response to a question by the Panel as regards Argentina's reference to the Working Party Report on Ecuador's accession to the WTO, Chile submits that it includes the comment that "some members of the working party" thought that Ecuador's price band system was contrary to WTO rules. However, it argues, the discussion in paragraphs 42 to 48 of the Working Party Report does not reveal any general agreement that Ecuador's system was inconsistent with WTO rules. Chile submits that, even among those who voiced the view that Ecuador's system was inconsistent with the WTO, there does not even appear to have been agreement on what rules might be infringed, and in no case is there a specific reference to Article 4 of the Agreement on Agriculture. Chile contends that it is recorded that one Member thought that Ecuador should tariffy under the Agricultural Agreement. On the other hand, it explains, it is also noted that members of the Working Party who questioned Ecuador's system thought that it should either be eliminated or brought into conformity with WTO rules, which implies that even these Members, or at least some of them, thought that price bands per se are not illegal. Chile claims that Ecuador itself ultimately committed to phase out its price band system over time "in order to comply with the provisions of the WTO Agreement on Agriculture." The Working Party took note of that commitment, but taking note of such a commitment, Chile argues, does not constitute acceptance that eliminating the price band system was required by the WTO. Chile submits that it is well known that it is a normal part of the accession process for existing Members to request an acceding Members to undertake changes in policies and practices, even if such changes are not required by the general rules of the WTO.261

Secretariat's advice

4.107 Chile claims that it has received advice from the GATT Secretariat according to which the PBS would not be inconsistent with its obligations under either the GATT or the draft Agreement on Agriculture then under negotiation. Chile qualifies this statement by explaining that, during the 80s and the beginning of the 90s, i.e. during the Uruguay Round negotiations, the World Bank encouraged various countries, at least in Latin America, to convert their quantitative restrictions into price bands, which are mechanisms that permit competition. Chile claims that, on at least one occasion, during a seminar for Central American countries, in response to the concern that had been expressed over the maintenance of these mechanisms, a letter was presented originating in the GATT Secretariat arguing that it was not necessary to tariffy price bands since they were unrelated to the domestic price - provided the price bands were maintained within the bound levels.262 Chile later clarifies that it was not a participant in the seminar (though some Chileans were present in their capacity as consultants or representatives of intergovernmental organizations) and that, since the letter was not addressed to Chile, Chile has been unable to get a copy of the said letter. It further adds that the date of the seminar is equally unclear but it could have taken place in 1993.263 Chile further claims that the advice given in that letter was subsequently endorsed orally by the delegations with which Chile was engaged in direct negotiations (United States, European Communities and New Zealand, among others) as well as in oral opinions provided by the Secretariat prior to the conclusion of the Uruguay Round.264

4.108 Argentina responds that Chile has not submitted any documentary evidence regarding the above alleged advice by the Secretariat. Secondly, the Chilean argument in paragraph 31 of its second written submission refers simply to an oral confirmation rather than to a letter, and speaks not only of the Secretariat but of other delegations that allegedly stated that there was no need to tariffy the PBS. Argentina can merely state that evidence that has not been brought cannot be refuted, and takes the view that the Panel cannot accept the Chilean argument that evidence that has not been brought can be an additional tool for interpretation under Article 32 of the Vienna Convention .265 Argentina contends that, in view of Chile's alleged "letter � from an authority of the GATT Secretariat arguing that it was not necessary to tariffy price bands", the value of the report by the Secretariat in the 1997 Trade Policy Review of Chile takes on particular importance. That report, Argentina explains, is an institutional opinion by the WTO Secretariat, and it recognizes that "the [Chilean] price stabilization mechanism works as a valuable levy �".266 Argentina further indicates that the Trade Policy Review Mechanism (TPRM) undeniably provides for a thorough examination of the trade policies of Members and the extent to which they have adapted or failed to adapt to GATT/WTO rules. It claims that there can be little doubt as to its relative weight and value in trying to understand whether the PBS constitutes a variable levy or a similar border measure, since unlike the elusive mention of an alleged letter that Chile has not identified or submitted during these proceedings, it represents a respectable technical opinion, made available to all WTO Members in the form of a report.267

4.109 Chile contends that the above-mentioned statement by the TPRM does not represent a legal conclusion let alone a conclusion under Article 4.2. Further, the Secretariat did not say that the price band system is a variable levy but that it "works as" a variable levy, because the levy varies according to the import price. In Chile's view, statements in the TPRM are not supposed to be used in dispute settlement, under explicit WTO rules.268

  1. Arguments relating to Chile's Safeguard Measures

1. Procedural arguments

(a) Terms of reference

(i) Measures which are no longer in force

4.110 Chile notes that Argentina requested consultations with Chile on 5 October 2000 under the WTO's dispute settlement procedure concerning the consistency of the provisional and definitive safeguard measures applicable to imports of wheat, wheat flour and edible vegetable oils. Chile states that the provisional measures ceased to have effect on 22 January 2000, the date on which the definitive measures on the same products entered into force. The Chilean authority decided to extend the safeguard measures as of 26 November 2000269 for a period of one year from the date of their expiry.270 Chile contends that, although the mechanism for applying the extension measures is the same as that determined in the previous decree on definitive measures, this does not constitute grounds for asserting that this is the same measure that has been extended over a period of time as though they were one and the same. Chile submits that these new extended measures are the result of the receipt of new information, interested parties were given a hearing, which concluded with a recommendation on extension, and this was adopted under a new decree. Chile argues that the Chilean authorities might not have decided on an extension. If that had been the case, Chile affirms, the definitive measures would have ceased to have effect simply because the time-limit had been reached as according to Chilean legislation, the maximum duration of a safeguard measure, (including the period of the provisional measure) is one year, without prejudice to extension, which also may not exceed one year.271 Chile explains that an extension cannot take effect automatically, it requires a new decision adopting it, which constitutes a new measure, meaning that it is a new measure whether or not it is substantially identical to the definitive measure that preceded it.272

4.111 Chile submits that when, on 19 January 2001, Argentina requested the establishment of a panel on this dispute, neither the provisional nor the definitive measures were in effect. Chile argues that, if it is presumed that the Chilean provisional and definitive safeguard measures were inconsistent with certain provisions of the Agreements, then the objective of the dispute settlement mechanism invoked by Argentina should be to conclude that the measures must be withdrawn by Chile. Chile refers to the line of reasoning adopted by the Appellate Body in the dispute United States - Import Measures on Certain Products from the European Communities when it determined that a panel erred in recommending that the DSB request the Member to bring into conformity with its WTO obligations a measure which the Panel found no longer existed.273 For these reasons, Chile considers that Argentina should have respected the provision in Article 3.7 of the DSU: "Before bringing a case, a Member shall exercise its judgement as to whether action under these procedures would be fruitful."274

4.112 Chile refers to Argentina's statement whereby it "requests the Panel to rule on all of the claims made so as to avoid any unnecessary future proceedings if the findings are eventually overturned, bearing in mind that the Appellate Body exercises procedural economy".275 Chile submits that the application of the principle of judicial economy by a panel means that it is not necessary to address all the claims made by the parties but only those that must be addressed in order to resolve the matter, in which case a finding is necessary to enable the DSB to make sufficiently precise recommendations and rulings to allow prompt compliance by a Member with those recommendations and rulings.276 Chile wonders how would it be possible for the Panel to recommend that Chile bring its provisional and definitive safeguard measures into conformity if such measures are not being applied. Hence, Chile requests the Panel to find that the provisional safeguard measures (adopted under Decree No. 339, published on 19 November 1999) and the definitive safeguard measures (adopted under Decree No. 9, published on 22 January 2000) were not in effect so it is not possible to make a recommendation that Chile bring these measures into conformity with its WTO obligations.277

4.113 Argentina considers that the provisional and definitive safeguard measures, even though they may have been repealed following their extension in some cases (specifically, in the case of wheat and wheat flour), require a specific ruling by the Panel because they form part of its terms of reference. Argentina argues that, since they come under the Panel's terms of reference, the Panel is required, under Article 7.1 of the DSU, to examine them, in the light of the relevant provisions in the Agreement, as part of the matter referred to the DSB. Argentina contends that the fact that the definitive measure was repealed is irrelevant for the purposes of a ruling, since Chile explicitly recognized that it resorted to safeguards "to obtain the required legal backing in accordance with the WTO's relevant provisions".278 Argentina submits that safeguard measures may only be applied in accordance with procedures of the Agreement on Safeguards and in conformity with the strict standards established therein. It considers that Chile's recognition that it only sought to "obtain the required legal backing" is in fact a negation of the multilateral commitment to apply safeguards only in conformity with the provisions of the Agreement on Safeguards.279 In Argentina's view, no interpretation of the Safeguard Agreement, however broad, would enable it to conclude that the "extension" is a new safeguard measure. Argentina contends that extension is not a notion that exists independently of other provisions of the Agreement on Safeguards. Argentina further submits that the Agreement must be interpreted as a single whole, and not as a series of separate articles. Argentina argues that when a Member, by a resolution or some other administrative act, decides to "extend" an existing measure, it is not converting it into a new measure.280

4.114 Argentina argues that Chile continues to apply a safeguard measure on oils for precisely the same reason it applied all of its previous measures (including their extensions), i.e. because there was a PBS that was inconsistent with the WTO and caused it to violate its tariff binding. Argentina claims that, as long as the PBS is in force, the same situation can recur. In Argentina's view, if there is no ruling by the DSB establishing the inconsistency of the safeguard measures, the situation could recur, since the attempt at ex-post facto justification will have escaped the scrutiny of the DSB. Argentina submits that it is this very possibility of reintroducing measures for the same reasons that caused them to be adopted originally that has led to consistent rulings on repealed measures both prior to the WTO and under the WTO.281

(ii) The decision on extension was not the subject of consultations between the parties

4.115 Chile claims that Argentina, when requesting consultations under the WTO dispute settlement procedure, only identified the provisional and definitive safeguard measures applied to certain goods subject to price bands. Chile indicates that the consultations were held on 21 November 2000 but, when requesting the establishment of a panel, as noted in its communication of 19 January 2001282, Chile explains that Argentina nonetheless included in its request the provisional measures, the definitive measures and the decision to extend the safeguards. Chile notes that Argentina included in its request Chilean measures (the extension of the safeguards) that were not the subject of prior discussion during a WTO consultation procedure and this was recognized by Argentina itself in its request for the establishment of a panel. Chile considers that such recognition does not constitute sufficient grounds in terms of a WTO Member's obligation to respect the DSU. Chile submits that this is not a minor question nor simply a formality, but concerns respect for a basic guarantee of due process in the defence of the interests of a Member of the WTO.283

4.116 Chile recalls that, on 1 February 2001, at the first meeting of the DSB at which Argentina requested the establishment of a panel, Chile drew attention to this anomaly284 and Argentina replied that "the subject of the extension of the measure was included in the request for consultations since there was a legal similarity between the original measure and the subsequent extension thereof".285 Subsequently, Chile continues, at the DSB meeting on 12 March 2001286, Argentina again requested the establishment of a panel and mentioned the various consultations held by the parties287, which, combined with its theory of the "legal similarity" of the definitive measures and the extension, intimate that Chile tacitly accepted that the extension measure was included in the consultations. Chile explains that the DSB decided to establish a panel with the standard terms of reference contained in Article 7 of the DSU288 to examine the matter brought up by Argentina in its communication requesting the establishment of the panel. Chile questions whether these terms of reference could allow examination of another matter that was not included in the consultations. Chile further questions whether the DSB, with its terms of reference, can disregard certain provisions in the DSU that require a panel only to consider a matter that has previously been discussed in valid consultations at the WTO. Chile submits that, like all WTO Members, it is seeking to resolve the dispute with Argentina in good faith and considers that its good faith cannot lead to neglect of important provisions in the DSU that guarantee proper defence.289

4.117 Argentina submits that, contrary to what Chile maintains, the then possible extensions of the definitive measures were in fact discussed during the consultations held with Chile. In this regard, Argentina claims that, between 5 October 2000 when Argentina requested consultations, and 21 November 2000 when the consultations were actually held, Argentina learned that the Chilean Ministry of Agriculture had requested the extension of the measures (3 November 2000), after which, on 13 November 2000, Argentina participated in the hearing before the Commission. Subsequently, Argentina explains, on 17 November 2000, the Argentine Mission in Geneva transmitted to the Chilean Mission a written questionnaire in which some of the questions referred to the extension of the definitive measures.290 Argentina argues that, even if the extension of the definitive measures were not considered to have been properly addressed, this would not prevent them from being rightly subject to the jurisdiction of the Panel, as was recently confirmed by the Appellate Body.291

4.118 Chile argues that the DSU states the following: the dispute settlement system is a central element in providing security and predictability to the multilateral trading system (Article 3.2); no solution to a dispute should nullify or impair benefits accruing to any Member (Article 3.5); any request for consultations (to be valid in the WTO) must be submitted in writing and identify the measures at issue, the reasons and basis for the complaint and, lastly, be notified to the DSB (Article 4, paragraphs 2 and 4); the intervention of a panel may only be requested within a period calculated from the date of receipt of the request for the holding of consultations (Article 4, paragraphs 7 and 8); and the request for establishment of a panel must refer to the consultations (Article 6.2). It further argues that, in the report of the Appellate Body in Brazil - Export Financing Programme for Aircraft, it is stated that: "Articles 4 and 6 of the DSU � set forth a process by which a complaining party must request consultations, and consultations must be held, before a matter may be referred to the DSB for the establishment of a panel."292 Chile explains that it has met with Argentina on a number of occasions in order to find a comprehensive solution to this dispute. Nevertheless, it says, this does not mean that, quod non, Argentina had called for valid consultations in the WTO on the extension measures because it did not request such consultations in writing and made no notification to the WTO to this effect.293 Chile submits that, for a question to be considered as properly addressed in a consultation proceeding under the WTO, the measure at issue first has to be identified in writing, and that document must be notified to the DSB. Chile submits that Argentina never submitted a written request for consultations with Chile, nor provided the DSB notification thereof, in which it mentioned the extension measures at issue. Chile considers that, if due process is to be guaranteed, it is essential that the DSU requirements with respect to the formalization of a claim under the dispute settlement system be respected, since this is what enables a Member to whom a claim is addressed to lay the foundations for its defence on the basis of the indications contained in the written request for consultations.294

4.119 Chile submits that, in this particular case, the extension measures contain the same provisions as the definitive safeguard measures. In this respect, there is similarity, which Chile does not deny. Nevertheless, Chile argues, the extension was the result of a new request that gave rise to a new process, with a public hearing, and to subsequent determinations based on the evidence considered on that occasion. Chile contends that, even though the content of the final measure (extension) is identical to that in the previous measure, the new measure only exists because the competent Chilean authority formally had to issue a new administrative act that completed and validated the extension, otherwise the previous measure would have expired, and nothing more. Chile submits that the situation would have been different if the original measure had been automatically extended within a specified period without any interested party contesting it, as this would have lent weight to the Argentine theory of an alleged "legal similarity", but quite clearly this is not the case.295

4.120 Argentina argues there are absolutely no legal grounds for accepting, as a possible interpretation of Article 6.2 of the DSU, that the extensions of Chile's definitive measures lack a legal identity with the safeguard measures, nor does such a suggestion make any sense. In Argentina's view, the fact that they were extended through a new decree is the logical result of the fact that the definitive measure had an expiry date. Otherwise, Argentina affirms, it would have violated various paragraphs of Article 7 of the Agreement on Safeguards (7.1, 7.2, 7.3 and 7.6). Argentina contends that the legal identity of the measure is confirmed by the fact that the same authority issued the extension, through the same Commission, because the measure applies to the same products and because the measures apply exactly the same remedy.296

4.121 Argentina claims that to agree on the issue raised by Chile would be to negate "due process", to the detriment of Argentina, by restricting access to jurisdiction. It considers that the security and predictability of the multilateral trading system would be seriously undermined since this could lead to a situation in which a safeguard measure which is extended will never be subject to scrutiny by the DSU.297

4.122 Argentina argues that, given that under the Safeguards Agreement, "extension" is not an independent notion, it goes without saying that if the definitive measure is inconsistent, that inconsistency does not cease with the extension of the measure. Argentina points out that if the original measure had been repealed, and if Exempt Decree No. 349 adopting the extension had been a new measure, Chile's way of proceeding would still be inconsistent with Article 7.5 of the Agreement on Safeguards which prohibits new measures from being reintroduced until a specified period of time has elapsed.298

4.123 Chile submits that Argentina is attempting to establish an innovative theory resting on the existence of a legal identity between the extension measures and the definitive safeguard measure and in this way make up for its failure to refer to these extensions anywhere in its request for consultations under the DSU. Accordingly, Chile adds, it states that this identity exists because the extensions were adopted by the same authority, through the same Commission, that they apply to the same products and that they apply the same remedy. Chile contends that these elements on which Argentina bases its theory of legal identity do not prove that identity. According to Chile, the construction of Article 7.2 points to the contrary of Argentina's argument, i.e. that extensions, from a substantive point of view, are measures that are distinct from the definitive measures. Indeed, an examination of the paragraph reveals that the reference to Articles 2, 3, 4 and 5 merely imposes procedural or formal requirements in circumstances for which the substantive aspects are laid down in the paragraph itself and consist in the competent authority finding that a safeguard measure continues to be necessary to prevent or remedy serious injury and that there is evidence that the industry is adjusting.299

(iii) Withdrawal of some of the extension measures

4.124 Chile informs that, following this First Written Submission, the extension measures for wheat and for wheat flour were withdrawn by Exempt Decree No. 244 of the Ministry of Finance published on 27 July 2001. On these grounds, Chile submits that there is no point, from the legal point of view, in the Panel issuing recommendations on the consistency of these measures with the WTO obligations contained in the WTO Agreements, having found that the measures are no longer in force. Chile submits that, as stipulated in Article 3.7 of the DSU, "[t]he aim of the dispute settlement mechanism is to secure a positive solution to a dispute", and "[i]n the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements." Thus, Chile argues, where a panel concludes that a measure is inconsistent with a covered agreement, it recommends that the Member concerned bring the measure into conformity with that agreement. This is stipulated in Article 19.1 of the DSU, which goes on to say that the panel may suggest ways in which the Member concerned could implement the recommendations. Chile argues that the entire reasoning behind Article 19.1 presupposes the existence of a measure, one that is in force. According to Chile, if the measure does not exist, the panel does not have the authority to ask that a Member be recommended to bring the measure into conformity with a provision of the WTO Agreements, much less suggest ways in which the recommendation could be implemented.300

4.125 Argentina, on the contrary, considers that a ruling by the Panel on the inconsistency of the safeguard measures, even those that were recently repealed, would in fact have practical consequences in that as long as the price band system remains in force there is a possibility that these measures could be re-introduced - i.e. as long as the same reasons that caused them to be adopted in the first place remain.301 Argentina refers to Chile's explicit acknowledgement that it resorted to safeguards "to obtain the required legal backing"302 and submits that this constitutes a negation of the multilateral commitment to apply safeguards only in conformity with the Agreement on Safeguards and Article XIX of the GATT 1994 and demonstrates that as long as the price band system exists, there will be a risk of the situation recurring. Argentina contends that Chile continues to apply safeguard measures for the same reason that it applied the previous measures, i.e. because of a price band system that is inconsistent with the WTO and which, by its structure, design and mode of application causes it to violate its binding.303

4.126 Chile considers that the above argumentation is fundamentally at odds with the foundations of the WTO dispute settlement system, in that it presumes that a WTO Member is acting in bad faith with the intention of taking advantage of the system. In Chile's view, this argument disregards the nature of the dispute settlement system, the aim of which is to "secure a positive solution to a dispute", clearly preferring a "solution mutually acceptable to the parties to a dispute".304

(b) Burden of proof

4.127 Argentina alleges that each one of Chile's violations of the GATT 1994 and the Agreement on Safeguards, establish prima facie presumption that the safeguard measures applied by Chile are in violation of their obligations under those Agreements. Hence, according to the general rules of application of the burden of proof, it is up to Chile to demonstrate that it has not violated them. Argentina submits that Chile has not supplied a single argument to refute that presumption but that, on the contrary, it has recognized that the safeguard measures were inconsistent with its WTO obligations.305

4.128 Chile submits that, in every statement made before this Panel, Argentina has based the above argument on a serious error of law. In Chile's view, Argentina considers that in a prima facie presumption, what is presumed is the violations committed by a Member of its obligations under the Agreements covered by the dispute. However, Chile argues, according to Article 3.8 of the DSU, this clearly is not the case: Chile contends that what is presumed is not the violations or inconsistencies, but something quite different, the nullification or impairment of the benefits accruing under the covered agreements that these inconsistencies may cause with respect to the Member or Members bringing the complaint. Chile stresses that the consequences of this error of law committed by Argentina are not insignificant. In this regard, Chile submits that, if the fact to be presumed were the violation of the obligations laid down in the WTO Agreements, the mere presentation of claims and arguments would suffice to establish the presumption, and there would be no need to submit precise, concordant and complete evidence to the Panel of the irrefutable truth of these claims. Chile further submits that this would of course be inadmissible under the DSU, since it would free the complaining Member from the obligation and burden of proving the facts on which its arguments rest, and the report of the Panel would be based on mere presumption. In addition, Chile contends that Argentina has neither produced nor brought before the Panel sufficient, precise and concordant evidence to establish irrefutably that Chile violated its obligations under Article XIX of the GATT 1994 and the Agreement on Safeguards. Consequently, Chile argues, Argentina can hardly be presumed to have suffered nullification or impairment of the benefits accruing to it under those Agreements as a result of Chile's safeguard measures. Chile submits that it has submitted complete and sufficient evidence during these proceedings of the full consistency of its measures with the mentioned Agreements. Chile objects to Argentina's statement to the effect that Chile recognized that its safeguard measures were inconsistent with its obligations under the WTO. Chile claims that Argentina has clearly taken a hypothetical statement out of its context in order to use it for its own purposes since this statement was made by Chile in connection with its position on the Panel's lack of jurisdiction to rule on measures that were not in force, and not with any violation of or inconsistency with a covered agreement.306

4.129 Argentina argues that this prima facie presumption exists because of the proofs submitted in these proceedings and not - as Chile argues - by a mere presentation of claims and arguments in connection with Article 3.8 of the DSU, which Argentina has not argued.

2. Substantive arguments

4.130 Argentina claims that Chile initiated the safeguards investigation on imports of vegetable oils, wheat and wheat flour in order to provide a legal justification for its PBS. According to Argentina, the safeguards case served to confirm that the PBS violated Chile's obligations under the WTO, since Chile acknowledged that, under that system, it exceeded its bound tariff. Given the true objective behind its investigation, Argentina argues, it comes as no surprise that the Commission (i.e. the competent Chilean authority) was unable to comply with any of the requirements of the Agreement on Safeguards.307 In particular, Argentina submits that the Chilean investigation to impose definitive safeguard measures and the identical extension of those measures on imports of edible vegetable oils, wheat and wheat flour, is inconsistent with Article XIX of the GATT 1994 and with Articles 2, 3, 4, 5, 6 and 12 of the Agreement on Safeguards.

4.131 Chile submits that the object and purpose of the investigation initiated by Chile for the application of the provisional safeguard measure, the definitive measure and subsequently the extension thereof, as well as the adoption of those measures, was not in any way to provide a legal justification of its price band system. The object and purpose of the measures was to enable Chile to readjust, temporarily, the balance between itself and, without distinction as to origin, other exporting countries, in respect of the level of concessions, in the wake of unexpected and unpredicted developments as a result of which imports of agricultural products under the band genuinely and substantially threatened to cause serious injury to the domestic industry producing like or directly competitive products. These unexpected developments essentially consisted of an unusual and unpredicted persistence of very low international prices which affected agricultural products, including those covered by the price band, and which, in their turn, had such an impact on import trends that Chile was faced with a threat of serious injury to the domestic industry in question.308 Chile submits that it is not correct to state, as Argentina does, that the purpose of the safeguard measures is to justify the PBS as such because the purpose of a safeguard is to give the domestic industry temporary protection and, in Chile's particular case, this is limited to a period that may not exceed one year. Chile submits that it could hardly try to "justify" a longstanding permanent mechanism known to all Chile's trade partners - including Argentina - which had been notified to the WTO and appeared in many free trade agreements - including one signed with Argentina - by means of a temporary safeguard measure for such a limited period.309

(a) Compliance with the notification and prior consultation requirements

4.132 Argentina claims that Chile violated Article XIX.2 of the GATT 1994 and Article 12.1(a) of the Agreement on Safeguards by failing to comply with the notification requirements laid down in Article 12.1(a) and 12.2 and by not holding prior consultations with Members having a substantial interest as exporters of the product concerned, as required by Article 12.3 and 12.4.

4.133 Argentina claims that the Appellate Body has already ruled on the criteria for the application of Article 12.1(a) that must be met in order to comply with the text.310 In Argentina's view, Chile's conduct does not, however, comply with the provisions of Article 12.1 of the Agreement on Safeguards nor with the Appellate Body's conclusions on application of this Article . Argentina explains that this can be seen simply by comparing the date on which the Committee on Safeguards was notified of the initiation of the investigation and the date on which the initiation effectively commenced. Argentina indicates that the notification was in fact made on 25 October 1999, whereas the investigation was initiated on 30 September 1999.311 In view of this, Argentina argues that it is obvious that Chile did not comply with the requirements in Article 12.1(a) of the Agreement on Safeguards. This means that the requirement on "immediacy", which must be met if the notification is to be considered as having been made in due form, was not respected. Argentina says that the result was that the Committee on Safeguards and the Members of the WTO were not given sufficient time to examine the notification.312

4.134 As regards the infringement of Article 12.2 of the Agreement on Safeguards, Argentina argues that it is clear that the elements which the Appellate Body considers to be minimum requirements for the notification were not present as far as the product and the definition of domestic industry are concerned, and there was no analysis of the factors.313 314 Argentina argues that Chile did not submit any argument to rebut the fact that its notification did not contain "all pertinent information".315

4.135 Argentina claims that Chile violated Article 12.3 and 12.4 of the Agreement on Safeguards. It did not give Argentina, which is a substantial supplier of wheat, wheat flour and edible vegetable oils, the opportunity to hold consultations, either immediately after the imposition of the provisional measure or prior to the application of its definitive measure. Argentina argues that Chile failed to comply with these requirements in the Agreement on Safeguards inasmuch as the date of application of safeguard measures was 26 November 1999 whereas the notification to the Committee on Safeguards was dated 1 December 1999. It should also be noted that Argentina had to request the consultations indicated in the last sentence of Article 12.4.316 317

4.136 Reading Argentina's claim regarding notifications and consultations318, Chile submits that Argentina only referred to the following measures by Chile: (a) notice of initiation of the investigation in 1999; (b) the provisional measure; and (c) the definitive measure adopted in January 2000. Chile argues that this clarification is necessary because, if Argentina wishes the Panel to make a concrete ruling, it should have made clear to which Chilean notifications it was referring and in what way it considered that these violated the actual provisions of the WTO Agreements, which Argentina does not specify at all. If the Panel should rule on the conformity of the timing of Chile's notification of initiation of the procedure, (rather than the provisional and definitive measures, which were not yet in effect), Chile recalls that a recommendation by the Panel may only refer to the conformity of the measure as regards Chile's obligations under the WTO Agreements. Consequently, Chile argues, the Panel cannot conclude, as Argentina indicates - that "Chile's conduct does not, however, comply with the provisions of Article 12.1 of the Agreement on Safeguards nor with the Appellate Body's conclusions on application of this Article ."319 Chile submits that, when the DSB adopts findings by the Appellate Body in the context of a specific dispute, it does so in order to require a WTO Member to bring the disputed measures into conformity with its obligations under certain provisions of the WTO Agreements. Consequently, Chile contends, Argentina's assertion that "Chile's conduct does not comply � with the Appellate Body's conclusions" in the text mentioned above can only constitute Argentina's own opinion, but not a recommendation by the Panel. Chile then refers to Argentina's statement that "Chile's notification did not provide 'all pertinent information', in violation of Article 12.2 �".320 Chile argues that, as Argentina does not specify to which Chilean notification it refers, Chile is obliged to assume, by reading the next paragraph in the submission, that the measures in question are only the provisional and definitive measures. In this context, Chile emphasizes that the extension measure was not the subject of a WTO consultation procedure. Chile submits that Argentina tries to restrict the scope of the Agreement on Safeguards so that measures are only adopted on the basis of definition of a like product321, but not including directly competitive products. In any event, Chile points out that Article 12.2 refers to "all relevant information" on the one hand and, on the other, specifically states "precise description of the product involved". Chile argues that this precise description of the product is the identification of the product (like or directly competitive) to which the safeguard measure applies. According to Chile, all Chile's notifications determine quite clearly which products are the subject of the procedure and, subsequently, the measures.322

4.137 Chile explains that it notified the WTO Committee on Safeguards of its intention to apply a provisional measure on 2 November 1999.323 It further explains that this provisional measure was eventually applied as of 26 November 1999. Chile affirms that it complied with the requirement to notify the intended measure before it was adopted, as called for by Article 12.4 of the Agreement on Safeguards and, at the same time, gave the Members of the WTO the opportunity to examine the measure, as required by Article XIX:2 of the GATT. Chile contends that Argentina's assertion that, on 1 December 1999, Chile notified the provisional measure adopted on 26 November 1999324 is not relevant because, as already stated, Article 12.4 requires notification of the intention to adopt a provisional measure before it is imposed, which Chile did. Chile further adds that it subsequently notified the decree by which the provisional measure was adopted, something that Article 12.4 does not require. Chile also refers to Argentina's statement that Chile "did not give � the opportunity to hold consultations, � immediately after the imposition of the provisional measure � ."325 Chile disagrees with this Argentine reasoning because it goes beyond the actual requirements in Article 12.3 in relation to Article 12.4 of the Agreement on Safeguards. According to Chile, Article 12.4 of the Agreement on Safeguards in fact deals exclusively with the obligations to notify and consult with regard to those provisional safeguard measures referred to in Article 6 of the Agreement on Safeguards. Chile submits that, when Argentina claims that it "had to request the consultations indicated in the last sentence of Article 12.4"326, this appears to suggest - although it is not expressly stated - that Chile should have indicated in its notification that it would give sufficient opportunity to hold consultations. Chile claims that this assumption is not admissible because it is not a requirement of the Agreement on Safeguards. The last part of Article 12.4 provides that "Consultations shall be initiated immediately after the measure is taken", and here the imperative tone is directed both at the Member imposing the provisional measure and any other WTO Member interested in holding consultations, so responsibility in this respect does not only lie with the notifying Member. Chile submits that it has always been ready to hold consultations with any Member who shows an interest and understands that, in the light of the provisions in the Agreement on Safeguards, notification to the Committee on Safeguards suffices to show its willingness to hold consultations with any party that so requests. Chile submits that the Agreement on Safeguards does not provide for an obligation to "offer consultations" which must be performed by providing a written statement to that effect to WTO Members.327

4.138 As regards Chile's claim that by merely notifying the measures, it had complied with its obligation under the provisions of Article 12 to offer to hold consultations, Argentina contends that the obligation to provide adequate opportunity for consultations both prior to and following the adoption of the measure to be a separate obligation under the Agreement. Argentina submits that Chile violated the above-mentioned Articles by failing to indicate expressly its readiness to offer these consultations. Argentina considers that there are no grounds for considering that the mere notification of measures is tantamount to offering to hold consultations.328

4.139 In response to the above argument, Argentina recalls that Article XIX.2 of the GATT 1994 expressly stipulates the following: "Before any contracting party shall take action � it shall give notice in writing to the CONTRACTING PARTIES � and shall afford the CONTRACTING PARTIES and those contracting parties having a substantial interest � an opportunity to consult with it in respect of the proposed action." Argentina contends that this clearly shows that the obligation to notify and to offer consultations are two different obligations for which, contrary to what Chile has claimed, mere notification is not equivalent to offering consultations. Indeed, Argentina adds, the obligation to "afford � an opportunity" does not constitute and cannot constitute, "an obligation of immediate availability", as Chile contends, nor can it be considered to have been met merely because "Chile was � ready to hold consultations".329

(b) Unforeseen developments

4.140 Argentina claims that Chile has infringed Article XIX:1(a) of the GATT 1994 and Article 3.1 of the Agreement on Safeguards by not identifying or making any findings with respect to unforeseen developments justifying the imposition of safeguard measures.

4.141 Argentina explains that, pursuant to Article XIX:1(a), safeguard measures (emergency measures) shall be taken as a result of unforeseen developments. In this regard, Argentina refers to various examples of the Appellate Body's interpretation of the concept of "unforeseen developments".330 Argentina submits that, as established by the Appellate Body in US - Lamb331, the requirement of increased imports resulting from "unforeseen developments" is a fundamental characteristic of a safeguard measure because it lies at the beginning of a "logical continuum" of events justifying the invocation of a safeguard measure.332 In Argentina's view, for a Member to apply a safeguard measure in a manner consistent with its WTO obligations, it must, before applying the measure, have demonstrated as a matter of fact that as a result of unforeseen circumstances there has been an increase in imports which causes or threatens to cause serious injury to the domestic industry, and that consequently, the adoption of an emergency measure is justified. This demonstration of fact and of law, and the findings and reasoned conclusions, must be included in the report of the competent authority in accordance with Article 3.1 of the Agreement on Safeguards.333 Argentina claims that neither the investigation conducted by the Commission, nor the WTO notifications, reveal that Chile demonstrated, as a matter of fact, that the safeguard measure in question was applied, inter alia, "as a result of unforeseen developments".334

4.142 Chile points out that the reason why the Commission recommended the application of safeguards on products subject to price bands was the continued existence of unusually low prices over a period that could not be considered transitory. Chile contends that the unforeseen developments correspond to this special situation of global prices. Chile submits that the level of the bound tariff had been exceeded on previous occasions, but only for very short periods that did not justify the introduction of changes. On this occasion, Chile argues, the period was much longer and made it necessary to find a solution. Chile submits that keeping the band within the bound tariff would result in the serious injury explained in the submission. In Chile's view, the unforeseen development in this case is the continued existence of very low international prices for much longer periods, which greatly exceeded the forecasts by experts. Chile argues that a fall in international prices to such low levels over such a long period is unusual and unpredictable, especially in the case of products whose price fluctuates considerably. Chile submits that the trend in international prices of wheat (hard red winter No. 2, Gulf, and Argentine bread wheat), and soya bean oil (Illinois crude soya bean oil and Buenos Aires crude soya bean oil) show marked and persistent decreases between 1997 and 2000.335

4.143 Argentina submits that the fall of international prices was not an unforeseen development, nor was it unexpected or unusual. In Argentina's view, the creation of the price band system in 1986 clearly shows that Chile knew of, and had even tried to regulate, the alleged negative effects of these economic developments (variations in international commodity prices). Argentina concludes that the developments that led to the application of the safeguards were not unforeseen developments under the terms of Article XIX.1(a) of the GATT 1994.336

4.144 Chile notes that the purpose of the price bands has always been simply to moderate the strong short-term fluctuations in international prices of the products subject to the system, and not to compensate for medium- and long-term trends in those prices, so that the "fall in international prices to such low levels and for such a long period � " was a development that could not reasonably be foreseen.337 However, Chile argues, the preliminary question of fact which led Chile to adopt its safeguard measures was not these short-term fluctuations; quite to the contrary, it was the continued persistence of very low international prices over a long period of time. Chile submits that it is these developments that were obviously entirely unforeseen, and that Chile was not reasonably in a position to foresee. In Chile's view, these circumstances therefore fall outside the object and scope of the price band system.338

4.145 As regards Argentina's claim that there is no mention of unforeseen developments as a preliminary question in the Minutes of the Commission, Chile submits that the relevant examination and finding is recorded in the last part of the penultimate paragraph on page 3 of the Minutes of Session No. 193.339 Argentina affirms that none of the Commission records even mention unforeseen developments.340

(c) Appropriate investigation

4.146 Argentina claims that Chile has infringed paragraphs 1 and 2 of Article 3 of the Agreement on Safeguards on the grounds that the competent Chilean authorities did not conduct an appropriate investigation.

4.147 Argentina submits that it did not have the opportunity to participate fully in the investigation. In this connection Argentina stresses that it did not have access to any public summary of any confidential information on which the Chilean authorities may have relied.341 Argentina states that Chile failed to conduct an appropriate investigation because none of the Minutes of the Commission contain any reference suggesting that the information submitted by the Argentine exporters was analysed.342

4.148 As regards Argentina's argument that it did not have the opportunity to participate fully in the investigation, Chile argues that for it to be relevant, Argentina should have explained to the Panel the reason why it did not have the opportunity to participate in the investigation conducted by the Chilean authorities. Chile issued a Law (and regulations) giving the competent authority powers regarding safeguards. This Law was published in full in the Chilean Official Journal in May 1999 and the relevant regulations were published in the Chilean Official Journal in June 1999. These two notifications, which were public, are acknowledged by Argentina in its first written submission.343 In addition, Chile argues, all this Chilean legislation was notified to the WTO on 23 July 1999, as can be seen from document G/SG/N/1/CHL/2, as Argentina acknowledges in its first written submission. Chile further submits that the safeguards investigation into goods subject to price bands was initiated in accordance with the notice published by the investigating authority in the Chilean Official Journal on 29 September 1999, which clearly showed that the investigation was initiated on 30 September 1999. This fact is recognized by Argentina in its first written submission.344 On 29 October 1999, the Government of the Argentine Republic became party to the investigation, submitting a document setting out its position and requesting to take part in the public hearing. During the procedure, the Chilean investigating authority held a public hearing on 25 November 1999, as can be seen from the Minutes of Session No. 189. The notice of a public hearing was published in the Official Journal and was contained in Chile's notification to the WTO.345 On 23 November 1999, in a letter from the Technical Secretariat, the Embassy of Argentina was given confirmation of the public hearing and asked to confirm whether it would attend, which Argentina did on 24 November. The Argentine Embassy in Chile took part in the hearing and presented its arguments. Its charg� d'affaires ad interim, a Minister and two Counsellors were present. A representative of the Argentine Milling Industry Federation and a representative of the Chamber of the Argentine Oil Industry (CIARA) also participated. Furthermore, Chile states, when the investigating authority decided to examine the request for an extension of the safeguard measures, it announced in the Official Journal346 that a public hearing would be held on Monday, 13 November 2000.347 Chile submits that the following took part in the public hearing before the investigating authority and put forward their arguments: the Argentine Embassy in Chile, represented by a Minister and a Counsellor; the Attorney for Molinos R�o de la Plata (Argentine oil exporter); the Argentine Cereals Exporters Center; and the Executive Director of the Argentine Milling Industry Federation.348 Chile therefore argues that the foregoing shows that Argentina had sufficient opportunity to participate in the proceedings of the investigating authority.349

4.149 Chile contests Argentina's argument whereby, in the investigation, the Chilean Authority based itself on confidential information. Chile points out that the investigating authority collected information and reached its conclusions on the basis of all the information gathered in the public record, that besides the information of the petition, contains the information and opinions rendered by the interested parties to the investigation - public hearing included - and the information gathered from other sources such as the Chilean Customs Service, the Central Bank of Chile and sectorial information from official sources (Office of Agricultural Studies and Policies (ODEPA).350 According to Chile, there are thus no non-confidential summaries of confidential information because there was no confidential information discussed. Consequently, Chile submits, the situation envisaged in paragraph 1 of Article 3 of the Agreement on Safeguards did not exist, as Argentina claims. Chile adds that the information on these products is fully available to the public through an official body, the Office of Agricultural Studies and Policies (ODEPA), which keeps public statistics for the agricultural sector that are used by the Commission. Chile claims that Argentina also had an opportunity for access to the relevant file, which contained the submissions by other interested parties, and examined and obtained copies of all the information it requested.351

(d) Whether Chile failed to publish a report setting forth reasoned conclusions and findings

4.150 Argentina claims that Chile has infringed Articles 3.1 and 4.2(c) of the Agreement on Safeguards on the grounds that the competent Chilean authorities did not publish a report setting forth their reasoned conclusions and findings reached on issues of fact and law.

4.151 According to Argentina, Articles 3.1 and 4.2(c) lay down very specific requirements concerning the content of the determination that the competent authorities must publish. Article 3.1 stipulates that "... the competent authority shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law." whilst Article 4.2(c) refers to Article 3.1, and lays down the additional requirement that the "competent authorities shall publish promptly, in accordance with the provisions of Article 3, a detailed analysis of the case under investigation as well as a demonstration of the relevance of the factors examined". Argentina submits that the Appellate Body in Argentina - Footwear (EC)352 and US - Wheat Gluten 353 has ruled that the national authorities must explain how they arrived at their conclusions, based on the information and that the findings of the competent authorities must be contained in the decision itself.354

4.152 Argentina submits that the verb "to publish" implies "to make public" through a report, published in some official medium, setting forth the investigating authority's findings of fact and law in accordance with Article 3.1 of Agreement on Safeguards. The Agreement on Safeguards uses the verb "publish" instead of referring to a "public" document. There may be documents which by their nature are "public", and hence accessible to anyone, but which are not "published" in any medium - an act designed to facilitate consultation of the said document.355

4.153 Argentina argues that the Chilean Commission did not publish any report showing that it had examined all of the relevant information and including either a demonstration of the critical circumstances justifying the provisional measure or an examination of the relevant information and of the conclusions with respect to increase in imports, like product, domestic industry, analysis of factors, threat of serious injury, causal link and unforeseen circumstances, either for the provisional measure or for the definitive measure, as required by Articles 2 and 4 of the Agreement on Safeguards. In Argentina's opinion, the findings of law of the Commission (Minutes of Session Nos. 181, 185, 193 and 224) serving as a basis for its investigation and its conclusions merely cite numbers and figures relating to imports and economic and financial indices of the "industries". Argentina submits that all of the information supplied is taken directly from the Ministry of Agriculture's application for the initiation of an investigation, but was apparently never verified by the Commission and there was never the slightest confirmation of its accuracy.

4.154 In fact, Argentina claims, the Commission never submitted any review or analysis of the documentation backing its estimates, nor did it seek out any evidence that might shed doubt on its information or seriously consider the arguments of the parties in evaluating the imports or the state of the domestic industry. On these grounds Argentina submits that the Commission of Chile infringed Articles 3.1 and 4.2(c) of the Agreement on Safeguards, and failed to provide a reasoned and adequate explanation of how the facts support their determination. Argentina contends that neither the investigation conducted by the Commission, nor its findings and conclusions of fact and of law can back any safeguard measure, either provisional or definitive - as originally applied - or their identical extension.356 In particular, Argentina stresses that the Minutes of the Commission which according to Chile constitute the public official report do not contain any report demonstrating the existence of critical circumstances justifying the provisional measures, nor do they contain an examination of the relevant information and the conclusions concerning increased imports, the like product, the domestic industry, the analysis of the factors, the threat of serious injury, causality and unforeseen developments, either in the case of the provisional measures or in the case of the definitive measures, as required by Articles 3.1 and 4.2(c) of the Agreement on Safeguards.357

4.155 Chile submits that, to make the procedure consistent with the provision of the Agreement on Safeguards, what the Commission does is to make the Minutes public, placing them at the disposal of the interested parties once the decree or the excerpt from the resolution, as appropriate, has been published.358 Chile explains that the examination made by the investigating authority, as a whole, as well as its findings359 and recommendations, are contained in the respective records, which are public. Chile contests Argentina's claim that the investigating authority did not publish any report containing its findings and submits that all the Minutes of its sessions are public and that any interested party may obtain a copy of the records.360 In this regard, Chile indicates that the Commission published prior notice in the Chilean Official Journal of both the initiation of the investigation and the various public hearings conducted throughout the course of the investigation. As a result, Chile continues, Argentina had the opportunity to become an interested party to the investigation and thus was able to fully participate in all public hearings related to the safeguard measures. Chile further states that, although Argentina claims that the Commission violated the Agreement on Safeguards by not publishing a single document, the Commission did in fact make available to the public all Minutes from the case which contained the Commission's complete "findings and reasoned conclusions reached on all pertinent issues of fact and law." Moreover, Chile argues, contrary to Argentina's allegations, the data on which these findings were based were all verified with the official records of the National Customs Service, the Central Bank, Reuters and official publications of ODEPA361, thereby ensuring the accuracy of the data. Chile also indicates that the Commission made available all Minutes in this case to the public which include the Commission's findings of both fact and law. Chile contends that although the Commission did not publish one consolidated report, nothing in Article 3 of the Agreement on Safeguards requires that the findings to be all contained in one document as opposed to a series of documents.362

4.156 Chile further submits that, by stating that "apparently" no verification was done, Argentina highlights the weakness of its argument. Moreover, the word "appearance" is alien to the concept of "findings of fact and of law". Chile submits that, in any case that comes before it, the Chilean authority must verify the information submitted and, in this particular case, it verified the information with the official records of the National Customs Service, the Central Bank and the sectoral information in official sources such as those published by the Office of Agricultural Studies and Policies (ODEPA), which are widely known in Chile, so Argentina's assumption that the authority did not take the trouble to carry out a responsible verification of the information in question is without foundation. Chile argues that Argentina notes the existence of "incomprehensible" differences in data but that these are simply the result of the revision and verification of the information between the time the investigation was initiated and the time the measures were adopted because there were marginal corrections to the information on oil imports on the basis of official information from the National Customs Service.363

4.157 Argentina argues that the law establishes seven members of the Commission, two of whom are members of the Central Bank. Moreover, Law 19.612 stipulates that the approval of three quarters of the members of the Commission is required for decisions on safeguards. Argentina submits that, when the Commission of Chile voted to recommend the application of provisional and definitive safeguard measures, the relevant legal Minutes (Minutes of Session Nos. 185 and 193) reveal that the "majority" of the members of the Commission approved the decision, with the representatives of the Central Bank abstaining. Argentina argues that, if one checks the attendance of these sessions as established in the records, given the abstention of the Central Bank representatives, these measures appeared not to have met the requirement of approval by the competent Chilean authority as provided for in Chile's own legislation.364

4.158 Chile365 points out that Law No. 19.383, published in the Official Journal of 5 May 1995, introduces an amendment to Article 11 of Law No. 18.525 to allow the participation of a representative of the Ministry of Agriculture in the Commission. Consequently, there are eight, not seven, members of this Commission; Chile assumes that Argentina based its argument on an old text of the Chilean Law, an issue that is relevant because the current Chilean law was duly notified to the WTO on 23 July 1999.366 Regarding the quorum for attendance and voting at sessions Nos. 185 and 193, Chile notes that on both occasions the eight members were present and that the respective votes were taken with the sole abstention of the two members representing the Central Bank, which means that six out of eight members voted in favour of the measure, representing 75 per cent or three quarters. Chile also notes that this is an essential requirement of Chilean law when a proposed safeguard measure exceeds the bound tariff and that these three quarters also constitute a "majority", as shown by the records. Chile therefore considers that the statements by the complainant have no foundation, and this is confirmed by the lack of conviction with which Argentina claims in this connection, that the Chilean measures "appeared not to have met" the legal requirement.367

4.159 In response to a question from the Panel, Chile explains that the Commission gathers together all of the information submitted by the interested parties both during the public hearing and in the course of the investigation, and prepares a technical report, which is examined during a final meeting of the Commission (to take place within 90 days of the initiation of the investigation), after which the Commission decides whether or not to recommend the application of definitive measures.368

4.160 Argentina claims that, although Chile asserts that it is a condition for all safeguards investigations, a technical report was not prepared prior to the recommendation to apply provisional measures, or another one prepared prior to the recommendation to apply definitive measures.369 Argentina further claims that, despite the above, Chile had already replied that the Minutes of the Commission "constitute the only official report of the investigating authority". Argentina considers that this contradiction suggests that in the present case, these technical reports were not prepared, or that they do not form part of the official report of the investigating authority.370

4.161 Chile, in reference to Argentina's statement that the Minutes constitute the only official report of the investigating authority and that they do not appear to have met any of the requirements for resorting to the application of measures371, considers that it should be borne in mind that the Commission bases its recommendations on all of the information gathered and evaluated in the course of the investigation. Chile explains that, for each stage of the investigation, the Commission receives a technical report prepared by its Technical Secretariat, in addition to the public Minutes which contains all of the information gathered during the process, including the public versions of confidential information. The technical report is a supporting document which helps the Commission in making decisions and summarizes the information pertaining to the case. This report, together with the initial application and all of the documents supplied by the other interested parties and the information gathered by the Technical Secretariat itself throughout the investigation, including the information from the public hearing, makes up the information used by the Commission as a basis for its decisions. The technical report is classified as restricted since it is an internal working document, and above all because it is not binding vis-�-vis the decisions taken by the Commission.372

4.162 Argentina states that in spite of what Chile argues, the Commission based its recommendations on all the facts analysed during the investigation, and that argument does not alter the fact that the only Chilean official report does not contain the requirements set forth in the Agreement on Safeguards.

4.163 Chile states that the report is also restricted because it includes all of the confidential information contributed by the interested parties as such, on condition that it will not be disclosed. Chile indicates that this explains why the report is not placed at the disposal of any of the interested parties in the procedure. In the case at issue, Chile adds, although there was no confidential information, the non-binding nature of the report vis-�-vis the final recommendation of the Commission was maintained, and hence, the report was not made available to the parties. Chile adds that this report does not constitute the document containing the findings and reasoned conclusions reached on issues of fact and law whose publication is required under Article 3.1 of the Agreement on Safeguards. The report required under that Article, as stated, is made up of the Minutes of the Commission. Chile explains that these Minutes contain its recommendations and the findings of fact and law supporting those recommendations. Chile further submits that, as part of the investigation process, the Technical Secretariat, an entity which assists the Commission - i.e. the investigating authority - in its work, assumes an active investigative role, establishing and verifying the accuracy and relevance of the evidence submitted, gathering additional information, clarifying different elements and supplementing the information provided by the parties with information available from other sources. Consequently, Chile submits, the Commission plays a pro-active role in verifying the information supplied by the parties and supplementing it where necessary.373 


To continue with (e) Like product Return to Table of Contents
 

218 See Chile's Second Oral Statement, para. 23.

219 See Chile's Second Oral Statement, paras. 13-14.

220 Chile refers to para. 21 of Argentina's Oral Statement.

221 See Chile's Rebuttal, paras. 18-20.

222 Argentina refers to para. 20 in fine of Chile's Rebuttal.

223 See Argentina's Second Oral Statement, para. 14.

224 Argentina refers to Chile's Rebuttal, title preceding para. 23.

225 See Argentina's Second Oral Statement, para. 15.

226 See Argentina's Rebuttal, para. 13.

227 See Argentina's response to question 4 (ALL) of the Panel.

228 See Argentina's Second Oral Statement, para. 15.

229 See Chile's response to question 4 (ALL) of the Panel.

230 See Argentina's Rebuttal, paras. 50-51.

231 Argentina refers to Chile's response to question 4 (ALL) of the Panel.

232 Argentina refers to Article 21 of the Agreement on Agriculture and quotes para. 353 of the Panel report in Korea - Measures Affecting Imports of Fresh, Chilled and Frozen Beef (WT/DS161/R, WT/DS169/R) adopted on 10 January 2001, as modified by the Appellate Body report, as follows: "the provisions of the GATT 1994 apply to market-access commitments concerning agricultural products, except to the extent that the Agreement on Agriculture contains specific provisions dealing with the same matter."

233 See Argentina's response to question 5 (ALL) of the Panel.

234 See Chile's response to question 5 (ALL) of the Panel.

235 See Chile's First Written Submission, para. 36.

236 Chile quotes Article 24 of ECA 35 which reads as follows: "In using the PBS foreseen in its domestic legislation for the import of goods, Chile undertakes, in the framework of this Agreement, not to include new products or to modify the mechanisms or apply them in such a way as may undermine Mercosur's market access conditions."

237 See Chile's response to question 13 (CHL) of the Panel.

238 See Chile's response to question 13(a) (CHL) of the Panel.

239 Argentina refers to Chile's response to question 13(a) (CHL) of the Panel.

240 See Argentina's Rebuttal, paras. 36-37.

241 Argentina refers to Chile's response to question 13(a) (CHL) of the Panel.

242 See Argentina's Rebuttal, paras. 84-85.

243 See Chile's response to question 13(a) (CHL) of the Panel.

244 See Chile's First Oral Statement, para. 65.

245 Argentina refers to para. 36 of Chile's First Written Submission by Chile.

246 Argentina refers to p. 4 of Brazil's Third Party Submission.

247 See Argentina's First Oral Statement, paras. 59-61.

248 Argentina refers to para. 36 of Chile's First Written Submission.

249 Argentina refers to para. 25 of Chile's First Written Submission

250 See Argentina's Rebuttal, paras. 86-91.

251 Argentina refers to Chile's response to question 13(c) of the Panel.

252 Argentina refers to Chile's response to question 13(c) of the Panel.

253 See Argentina's Rebuttal, paras. 92-96.

254 See Argentina's First Oral Statement, para. 58.

255 See Argentina's First Oral Statement, paras. 52-57.

256 See Chile's Second Oral Statement, para. 30.

257 See Chile's Rebuttal, paras. 30-34.

258 Argentina adds as defined by the Appellate Body on Japan - Alcoholic Beverages II (WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R) adopted on 1 November 1996 (DSR 1996:I, 97).

259 See Argentina's response to question 41 (ARG) of the Panel.

260 See Chile's response to question 42 (CHL) of the Panel.

261 See Chile's response to question 42 (CHL) of the Panel.

262 See Chile's response to question 14 (CHL) of the Panel.

263 See Chile's response to question 40 (CHL) of the Panel.

264 See Chile's response to question 14 (CHL) of the Panel.

265 See Argentina's Second Oral Statement, para. 28.

266 Argentina refers to the Trade Policy Review Body, Trade Policy Review of Chile, Report by the Secretariat, WT/TPR/S/28 (7 August 1997), para. 38.

267 See Argentina's Rebuttal, paras. 76-78.

268 See Chile's First Written Submission, para. 39,. See also para. 41 of Chile's First Oral Statement.

269 Exempt Decree of the Ministry of Finance No. 349, published on 25 November 2000.

270 See Chile's First Written Submission, paras. 74-78.

271 Chile refers to Law No. 18.525, Article 9. Law notified in Document G/SG/N/1/CHL/2.

272 See Chile's First Written Submission, paras. 79-82.

273 Chile refers to document WT/DS165/AB/R, para. 81.

274 See Chile's First Written Submission, paras. 83-88.

275 Chile refers to para. 266 of Argentina's First Written Submission.

276 Chile refers to the Appellate Body report on United States - Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia ("US - Lamb") (WT/DS177/AB/R, WT/DS178/AB/R) para. 191, adopted on 16 May 2001.

277 See Chile's First Written Submission, paras. 89-91.

278 Argentina refers to Chile's First written submission, para. 25 in fine.

279 See Argentina's First Oral Statement, paras. 65-67.

280 See Argentina's First Oral Statement, paras. 82-85.

281 See Argentina's First Oral Statement, paras. 67-69 and footnote 19; Argentina's Second Oral Statement, para. 36 and footnote 28.

282 Chile refers to WT/DS207/2.

283 See Chile's First Written Submission, paras. 92-94.

284 Chile refers to WT/DSB/M/98, para. 83.

285 Ibid., para. 84.

286 Chile refers to WT/DSB/M/101.

287 Ibid., para. 52.

288 Ibid., para. 57.

289 See Chile's First Written Submission, paras. 95-97.

290 See Argentina's First Oral Statement, paras. 78-80.

291 See Argentina's Second Oral Statement, para.37 and footnote 32.

292 Chile refers to WT/DS46/AB/R, adopted on 20 August 1999, para. 131.

293 See Chile's First Written Submission, paras. 98-100.

294 See Chile's response to question 30(a) (ARG, CHL) of the Panel.

295 See Chile's First Written Submission, paras. 101-103.

296 See Argentina's First Oral Statement, paras. 75-76.

297 See Argentina's First Oral Statement, para. 77.

298 See Argentina's First Oral Statement, paras. 88-89.

299 See Chile's Second Oral Statement, paras. 56-60.

300 See Chile's response to question 16 (ARG, CHL) of the Panel.

301 See Argentina's Rebuttal, para. 102.

302 Argentina refers to para. 25 in fine of Chile's First Written Submission.

303 See Argentina's response to question 16 (ARG, CHL) of the Panel.

304 See Chile's Rebuttal, paras. 41-42.

305 See Argentina's Rebuttal, paras. 100-101.

306 See Chile's Second Oral Statement, paras. 48-52.

307 See Argentina's First Written Submission, para. 76.

308 See Chile's Second Oral Statement, paras. 43-45.

309 See Chile's First Written Submission, paras. 120-122.

310 Argentina refers to the Appellate Body report on US -Wheat Gluten, (WT/DS166/AB/R) adopted on 19 January 2001, paras. 105 and 106.

311 Argentina refers to Chile's notification to the Committee on Safeguards, dated 25 October 1999, G/SG/N/6/CHL/2.

312 See Argentina's First Written Submission, paras. 253-257.

313 Argentina refers to the Appellate Body report on Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products (Korea - Dairy), WT/DS98/AB/R adopted on 12 January 2000, paras. 107, 108 and 109.

314 See Argentina's First Written Submission, para. 258.

315 See Argentina's Second Oral Statement, para. 40 and footnote 34.

316 Argentina refers to its notification to the Committee on Safeguards, dated 28 December 1999, G/SG/20.

317 See Argentina's First Written Submission, paras. 259-265.

318 Chile refers to paras. 253-265 of Argentina's First Written Submission.

319 Ibid., para. 255.

320 Ibid., para. 263.

321 Ibid., para. 263.

322 See Chile's First Written Submission, paras. 212-216.

323 Chile refers to G/SG/N/7/CHL/2.

324 Chile refers to para. 265 of Argentina's First Written Submission.

325 Chile refers to para. 264 of Argentina's First Written Submission.

326 Ibid., para. 265.

327 See Chile's First Written Submission, paras. 217-221.

328 See Argentina's First Oral Statement, para. 110.

329 See Argentina's Second Oral Statement, para. 40.

330 See Argentina's First Written Submission, para. 78.

331 Argentina refers to the Appellate Body report on US - Lamb (WT/DS177/AB/R, WT/DS178/AB/R) adopted on 16 May 2001, paras. 71-74.

332 See Argentina's First Written Submission, para. 79.

333 See Argentina's First Written Submission, para. 83.

334 See Argentina's First Written Submission, paras. 80-82.

335 See Chile's First Written Submission, paras. 141-144.

336 See Argentina's First Oral Statement, para. 95.

337 See Chile's Rebuttal, para. 67.

338 See Chile's Second Oral Statement, para. 65.

339 See Chile's Second Oral Statement, para. 66.

340 See Argentina's Second Oral Statement, para. 42.

341 See Argentina's First Written Submission, paras. 84-86.

342 See Argentina's Rebuttal, para. 109.

343 Chile refers to para. 66 of Argentina's First Written Submission.

344 Ibid., para. 68.

345 Chile refers to G/SG/N/6/CHL/2.

346 Chile refers to the Official Journal of 4 November 2000.

347 Chile submits that this was notified to the WTO on 9 November 2000 in document G/SG/N/10/CHL/1/Suppl.2.

348 Session of the Commission on Distortions No. 223 of 13 November 2000.

349 See Chile's First Written Submission, paras. 126-133.

350 See Chile's response to question 17 of the Panel.

351 See Chile's First Written Submission, paras. 134-137.

352 WT/DS121/R, adopted 12 January 2000, as modified by the Appellate Body report.

353 WT/DS166/R, adopted 19 January 2001, as modified by the Appellate Body report.

354 See Argentina's First Written Submission, paras. 87-94 and footnotes 50 and 51.

355 See Argentina's response to question 18 (ARG, CHL) of the Panel.

356 See Argentina's First Written Submission, paras. 91-94.

357 See Argentina's Rebuttal, para. 106.

358 See Chile's response to question 18 (ARG, CHL) of the Panel.

359 Chile refers to para. 92 of Argentina's First Written Submission.

360 Chile refers to Annex 6 to its First Written Submission.

361 See Chile's response to question 17 of the Panel.

362 See Chile's First Oral Statement, para. 72.

363 See Chile's First Written Submission, paras. 145-150.

364 See Argentina's First Written Submission, footnote 54.

365 Chile refers to footnote 54 of Argentina's First Written Submission.

366 Chile submits that the updated text of its Law was notified to the WTO in document G/SG/N/1/CHL/2.

367 See Chile's First Written Submission, para. 139.

368 See Chile's response to question 17 (CHL) of the Panel.

369 Argentina refers to Chile's response to question 17 of the Panel.

370 See Argentina's Rebuttal, para. 108.

371 Chile refers to paras. 91 and 92 of Argentina's First Oral Statement

372 See Chile's Rebuttal, paras. 60-62.

373 See Chile's Rebuttal, paras. 63-65.