"Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties1, except as otherwise provided for in Article 5 and Annex 5."

1 These measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state-trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties, whether or not the measures are maintained under country-specific derogations from the provisions of GATT 1947, but not measures maintained under balance- of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.

7.12 The Appellate Body explained in its report on EC - Bananas III⁵⁶⁹ that a panel should start with an examination of the claims under the agreement which "deals specifically, and in detail," with the matter at issue.⁵⁷⁰ Consequently, in determining under which agreement we should proceed with first - GATT 1994 or the Agreement on Agriculture -, we will examine which agreement deals specifically and in detail with the matter at issue.

7.13 We note in this respect that the Chilean PBS applies exclusively to agricultural products, as defined in Annex 1 to the Agreement on Agriculture. Consequently, the provisions of the Agreement on Agriculture are applicable to the Chilean PBS.

7.14 The general aim of the Uruguay Round negotiations on agriculture was to "achieve greater liberalisation of trade in agriculture and bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines".⁵⁷¹ As explained by the Panel in Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products, the object and purpose of the resulting Agreement on Agriculture is:

"to 'establish a basis for initiating a process of reform of trade in agriculture' ⁵⁷² in line with, inter alia, the long-term objective of establishing 'a fair and market-oriented agricultural trading system'.⁵⁷³ This objective is pursued in order 'to provide for substantial progressive reductions in agricultural support and protection sustained over an agreed period of time, resulting in correcting and preventing restrictions and distortions in world agricultural markets'."^{574 575}

7.15 We consider that Article 4.2 is central to the establishment and protection of a fair and market-oriented agricultural trading system in the area of market access. Members "committed to achieving specific binding commitments [on, inter alia,] market access".⁵⁷⁶ In particular, following Ministerial Mid-term review of the Uruguay Round negotiations and the December 1991 Draft Final Act, the negotiations on agricultural market access were undertaken on the premise that trade in agriculture was to be conducted on the basis of bound ordinary customs duties and that border measures other than ordinary customs duties would be prohibited.⁵⁷⁷ This involved the conversion of a wide range of border measures into ordinary customs duties, a process which has commonly been referred to as "tariffication". In general terms, the purpose of this exercise was to enhance transparency and predictability in agricultural trade, establish or strengthen the link between domestic and world markets, and allow for a progressive negotiated reduction of protection in agricultural trade. Article 4.2 of the Agreement on Agriculture, by prohibiting Members from maintaining, resorting to, or reverting to any measures of the kind which have been required to be converted into ordinary customs duties, accordingly provides the legal underpinning for what, in ordinary parlance, is referred to as a "tariff-only" regime for trade in agriculture.

7.16 We note that Article 4.2 of the Agreement on Agriculture and Article II:1(b) of GATT 1994 both use the phrase "ordinary customs duties". Provided this phrase has the same meaning in both provisions,⁵⁷⁸ neither provision can therefore be interpreted independently from the other. However, having regard to the above, we believe that Article 4.2 of the Agreement on Agriculture deals more specifically and in detail with measures affecting market access of agricultural products.⁵⁷⁹ We will therefore start our analysis with an examination of the Chilean PBS under Article 4.2 of the Agreement on Agriculture.

4. The Chilean PBS and Article 4.2 of the Agreement on Agriculture

(a) Is the Chilean PBS a measure of the kind which has been required to be converted into ordinary customs duties?

7.17 This dispute revolves mainly around the question of what "kind" of measures have been required to be "tariffied", i.e. converted into ordinary customs duties, at the end of the Uruguay Round. Argentina and Chile disagree as to whether the Chilean PBS is such a measure "of the kind which [has] been required to be converted into ordinary customs duties". According to Argentina, although the Chilean PBS duties constitute ordinary customs duties for the purpose of Article II:1(b) of GATT 1994, the Chilean PBS per se constitutes a measure of the kind which has been required to be converted into ordinary customs duties. According to Chile, the Chilean PBS duties are ordinary customs duties. Chile argues that the phrase "of the kind which have been required to be converted" and the illustrative list in footnote 1 contain two separate conditions to be met for a measure to be prohibited under Article 4.2: only those measures listed in footnote 1 which effectively "have been required to be converted into ordinary customs duties" would be prohibited under Article 4.2. Chile argues that no other Member has ever requested Chile to "tariffy" its PBS during the Uruguay Round negotiations, and that, therefore, its PBS is not a measure "of the kind which [has] been required to be converted into ordinary customs duties".

7.18 Substantial elements of Article 4.2 would in our view be rendered void of meaning if that provision were to be read as only prohibiting those specific measures which other Members actually and specifically required to be converted and which were in practice converted at the end of the Uruguay Round. We believe that such an interpretation, which would imply that Members decided to forego their right to challenge measures which had not been specifically identified and converted at the end of the Uruguay Round, is not tenable. Pursuant to Article 4.2, measures of the kind which have been required to be converted cannot be maintained, resorted to or reverted to by any Members, whether or not the Member concerned in fact took advantage of the tariffication modalities. Thus, firstly, the insertion of the phrase "of the kind" between "measures" and "which have been required" in Article 4.2, as well as the reference to "similar border measures" in footnote 1, indicates that the drafters of the Agreement were aware of the fact that all the specific measures subject to tariffication might not be precisely identified at the time of the conclusion of the Uruguay Round in April 1994 or, in some cases, could be subject to the provisions of Annex 5 of the Agreement. On the other hand, what was clear at that time by virtue of Article 4.2 was that all measures "of the kind" would become prohibited for all Members as from the subsequent entry into force of the WTO, whether or not the measures concerned had or had not in fact been converted into ordinary customs duties in accordance with the Uruguay Round "tariffication" modalities. A fortiori, the mere fact that Members did not single out a specific measure at the end of the Uruguay Round and requested its tariffication at such time does not imply that the measure enjoys thereafter immunity from challenge in WTO dispute settlement. Secondly, by prohibiting all Members from maintaining such measures, the drafters of the Agreement also clearly envisaged the possibility that a Member at the end of the Uruguay Round had in place measures "of the kind which have been required to be converted", but decided not to convert those measures. The decision whether to tariffy a particular border measure, to eliminate that measure, or to adopt some other course, was a matter for each participant in the negotiations to decide. It can therefore not be argued that only those measures which in practice were "tariffied" in accordance with the Uruguay Round tariffication modalities are measures "of the kind which have been required to be converted" for the purposes of Article 4.2.

7.19 Furthermore, we note that "measures of the kind which have been required to be converted" include the measures listed in footnote 1. The measures listed in footnote 1 are therefore not exhaustive, rather they are examples of "measures of the kind" and serve an illustrative purpose. We also note in this respect that footnote 1 is inserted in the text of Article 4.2 at the end of the phrase "measures of the kind which have been required to be converted into ordinary customs duties". The first sentence of footnote 1 reads "[t]hese measures include [�]". Consequently, the phrase "these measures" in footnote 1 refers back to the entire phrase "measures of the kind which have been required to be converted into ordinary customs duties", and the specific measures listed in footnote 1 are all example of "measures of the kind which have been required into ordinary customs duties", provided they are not "maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement". In our view, Chile's position that a measure listed in footnote 1 is only prohibited under Article 4.2 if such a measure, in addition, had been singled out, or challenged, by other negotiators and "been required to be converted into ordinary customs duties" would logically only be tenable if footnote 1 had been inserted immediately following the term "measures" in the text of Article 4.2, rather than following the entire phrase ending with "ordinary customs duties". If that were the case, the specific measures listed in footnote 1 could indeed have been examples of measures susceptible to being considered of the kind which have been required to be converted, and not of measures necessarily being of such a kind. As we explained, however, the text provides differently.

7.20 Argentina has argued that the Chilean PBS is a "variable import levy", a "minimum import price", or, in any event, a "similar border measure other than ordinary customs duties", within the meaning of footnote 1. As explained above, if the Chilean PBS constitutes a measure listed in footnote 1, including such a "variable import levy", "minimum import price" or "similar border measure", it will be a measure "of the kind which [has] been required to be converted into ordinary customs duties", provided it is not "maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement". Thus, pursuant to footnote 1, for a measure to be considered "of the kind which [has] been required to be converted into ordinary customs duties" and thus prohibited for the purposes of Article 4.2, we need to establish that:

(a) it is a quantitative import restriction, a variable import levy, a minimum import price, discretionary import licensing, a non-tariff measure maintained through state-trading enterprises, a voluntary export restraint, or a similar border measure other than ordinary customs duties;

(b) it is not maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.

7.21 Below we will address each of these requirements separately.

(i) Is the Chilean PBS a border measure similar to those listed in footnote 1?

7.22 Argentina argues that the Chilean PBS is a "variable import levy", a "minimum import price", or a border measure similar to these measures. Chile argues that its PBS does not constitute any of those measures.

7.23 We note that the illustrative list of footnote 1 contains, on the one hand, specific measures (i.e. "quantitative import restrictions", "variable import levies", etc.), and, on the other hand, a residual category of measures ("similar border measures other than ordinary customs duties"). Consequently, if the Chilean PBS is a border measure other than an ordinary customs duty which is similar to any of the preceding examples, it would be a measure of the kind which has been required to be converted for the purposes of Article 4.2, provided it is not maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.

7.24 We recall that, subject to the proviso that it is not maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement, a measure explicitly listed in footnote 1 will ipso facto be of the kind which has been required to be converted into ordinary customs duties. Consequently, such measure is necessarily not, at the same time, an ordinary customs duty. For the same reason, we consider that a measure which is "similar to" any of the measures listed in footnote 1 will also be "other than ordinary customs duties". Our findings regarding one of those two aspects can therefore be expected to reinforce our findings regarding the other. For the sake of clarity and comprehensive analysis, however, we will address each of those two aspects in separate sections.

"Border measure"

7.25 The Chilean PBS applies exclusively to imported goods and is enforced at the border by Chilean customs authorities. It is therefore clear that the Chilean PBS is a border measure.

"Similar to" a "variable import levy" or a "minimum import price"

Determination of the meaning of "similar to a variable import levy or a minimum import price"

7.26 First, as regards the term "similar", dictionaries define this term as "having a resemblance or likeness"⁵⁸⁰, "of the same nature or kind"⁵⁸¹, and "having characteristics in common".⁵⁸² Two measures are in our view "similar" if they share some, but not all, of their fundamental characteristics. If two measures share all of their fundamental characteristics, they are identical rather than similar. A border measure should therefore have some fundamental characteristics in common with one or more of the measures explicitly listed in footnote 1. It is then a matter of weighing the evidence to determine whether the characteristics are sufficiently close to be considered "similar".

7.27 Second, as regards the measures in footnote 1 referenced by Argentina, it has been pointed out by Chile that the exact features of terms of art such as "variable import levy" and "minimum import price" may be difficult to establish on the basis of the text of the Agreement. We note in that respect that "variable import levy" and "minimum import price" are terms which may often be understood by the drafters of trade agreements in reference to one or more particular schemes used by one or more Members. In that sense, they could indeed be referred to as "terms of art". Nonetheless, we recall that these terms are subject to the rules of treaty interpretation laid down in Articles 31, 32 and 33 of the Vienna Convention. According to Article 31 of the Vienna Convention, we should first determine the ordinary meaning of the terms, in their context, and in light of the Agreement's object and purpose. Pursuant to that same provision, we should also take into account certain other international agreements and relevant rules of international law, as well as subsequent practice. Only if necessary to resolve ambiguity or to confirm the ordinary meaning determined using the tools offered by Article 31, Article 32 instructs us to take recourse to supplementary means, including the preparatory work and the circumstances of the treaty's conclusion. Accordingly, below we will proceed by first examining the ordinary meaning of these terms. In addition, we will draw, as appropriate, on other means of interpretation, including those categorized by the Vienna Convention as supplementary means.

7.28 As a preliminary matter, we note Chile's statement that "the obligations in Article 4.2 only relate to non-tariff barriers"⁵⁸³ whereas "the PBS only covers the payment of customs duties".⁵⁸⁴ Although Chile concedes that there is no such test in the language of the Agreement on Agriculture, it also asserts that "it might be considered that the defining characteristic should be whether the measure has the effect of a quantitative limitation".⁵⁸⁵ This would seem to imply that Article 4.2 was not meant to prohibit measures taking the form of duties levied by customs authorities but only "non-tariff barriers" or quantitative restrictions.^{586 587} Along those lines, "similar border measures" would need to have the effect of a quantitative restriction.

7.29 We cannot agree with the proposition that only measures with the effect of a quantitative restriction are measures of the kind which have been required to be converted into ordinary customs duties. Such a proposition rests on the assumption that the generic term "tariffs" can be equated with the specific phrase "ordinary customs duties". This assumption is in our view flawed: Article II:1(b) of GATT 1994 makes clear that the universe of "tariffs" is not made up of "ordinary customs duties" alone, but also includes "other duties". By deliberately limiting the mandatory result of the conversion required by Article 4.2 to "ordinary customs duties", the drafters of the Agreement on Agriculture did not exclude the possibility that certain other types of "tariffs" would need to be converted as well. If the drafters of the Agreement on Agriculture would have wanted to require conversion of only measures "other than tariffs", they would have said so, and they would not have used the specific phrase "ordinary customs duties". If they only wanted to require conversion of quantitative restrictions, they could have drawn on the language of Article XI:1 of GATT 1994, for instance, which prohibits "prohibitions or restrictions other than duties, taxes or other charges", without distinguishing between "ordinary customs duties" and other types of duties or charges.⁵⁸⁸

7.30 Certainly, there may be some degree of co-extensiveness between the scope of "restrictions other than duties, taxes or other charges" with the scope of "similar border measures other than ordinary customs duties". We consider that "restrictions other than duties, taxes or other charges" will be apprehended by the measures referred to by footnote 1 to the Agreement on Agriculture, including "similar border measures other than ordinary customs duties".⁵⁸⁹ However, this does not imply that, therefore, all "similar border measures other than ordinary customs duties" need to have the effect of a quantitative restriction. In our view, the scope of footnote 1 to the Agreement on Agriculture certainly extends to measures within the scope of Article XI:1 of GATT 1994, but also extends to other measures than merely quantitative restrictions. The group of measures included in "duties, taxes or other charges" is clearly broader than only "ordinary customs duties", and includes in our view "other duties or charges of any kind" (or, at least, "other duties") within the meaning of Article II:1(b), second sentence, of GATT 1994. Consequently, the fact that a measure is not a "restriction other than duties, taxes or other charges" within the meaning of Article XI:1 of GATT 1994 does not prevent that measure from being a "similar border measure other than ordinary customs duties" within the meaning of footnote 1 to the Agreement on Agriculture. The "restrictions other than" referred to in Article XI:1 of GATT 1994 constitute a narrower category than the "similar border measures other than" in footnote 1 to the Agreement on Agriculture.

7.31 We find our reasoning confirmed in Annex 5 to the Agreement on Agriculture. Paragraphs 6 and 10 of that Annex both provide that "ordinary customs duties" "shall be established on the basis of tariff equivalents to be calculated in accordance with the guidelines prescribed in the attachment hereto" (emphasis added). This language makes clear that the generic term "tariff" is to be distinguished from the phrase "ordinary customs duties", in that the former merely refers to the numerical form of any duty, whereas the latter connotes a specific type of duty. Put simply, all ordinary customs duties are tariffs, but not all tariffs are ordinary customs duties.

7.32 Finally, we see no reason why all the measures listed in footnote 1 should a priori be considered restrictions within the meaning of Article XI:1 of GATT 1994. On the contrary, it is clear that the measures listed in the footnote to Article 4.2 include a number of measures whose status under Article XI:1 was never definitively resolved under the GATT 1947. These measures included price-related measures such as variable levies, as well as measures which could be used to the same effect, such as voluntary restraint agreements and non-tariff measures applied through state trading enterprises. Moreover, one of the principal objectives of the Uruguay Round negotiations on agriculture, as stated in the 1986 Punta Del Este Declaration, was strengthened and more operationally effective GATT rules and disciplines, in line with Recommendations adopted by the Contracting Parties at their Fortieth Session in November 1984. In these recommendations explicit reference was made to the elaboration of approaches, as a basis for possible negotiations, of appropriate rules and disciplines "relating to voluntary restraint agreements, to variable levies and charges, to unbound tariffs, and to minimum import price arrangements", and in so doing made a distinction between these measures (for which there were no specific and explicit GATT rules and disciplines)⁵⁹⁰ and "quantitative restrictions and other related measures".⁵⁹¹ In our view the object and purpose of Article 4.2 is to bring measures whose definitive legal status had long remained unresolved, including price-related border restrictions, under more effective GATT disciplines on the basis of an explicit prohibition, in order to protect a regime for agricultural products based on the use of ordinary customs duties which resulted from the Uruguay Round negotiations. Accordingly, we consider that the scope of the Article 4.2 prohibition is broader than that of Article XI:1.

7.33 We will now turn to an interpretive analysis of the specific measures in footnote 1 with which Argentina argues, the Chilean PBS is similar: "variable import levy" and "minimum import price".

7.34 As regards the literal meaning of "variable import levy", we note that a levy is a duty or charge; an import levy is a duty assessed upon importation; a levy is variable when it is "liable to vary".⁵⁹² These features can of course not be conclusive as to what constitutes a "variable import levy", since any "ordinary customs duty" could also fit this description: Members may periodically change the level or type⁵⁹³ of their applied rates, provided they remain below the bound rate. Thus, mere variability does not distinguish ordinary customs duties from "variable import levies". As regards the literal meaning of "minimum import price", on the other hand, this phrase would logically refer to a certain price level below which imported products may not enter a Member's market.⁵⁹⁴ As regards the context of those terms in footnote 1, we note that all the measures listed there are instruments which are characterized either by a lack of transparency and predictability, or impede transmission of world prices to the domestic market, or both.

7.35 We consider, however, that the text and context of "variable import levy" and "minimum import price" alone do not enable us to determine the meaning of those terms without ambiguity. The determination of their meaning should therefore include an analysis which "go[es] beyond a purely grammatical or linguistic interpretation".⁵⁹⁵ Pursuant to Article 32 of the Vienna Convention, we will take recourse to supplementary means of interpretation. In this case, we consider that certain documents, which predate the entry into force of the Agreement on Agriculture but are strictly speaking not part of the preparatory work⁵⁹⁶, can shed light on what the WTO Members meant to express by using those "terms of art".⁵⁹⁷

7.36 Both variable levies and minimum import price arrangements, along with other border restrictions, were the subject of extensive examination in bodies established by the GATT Contracting Parties. These included Committee II (1958-1962); the post-Kennedy Round Agriculture Committee (1967-1973); and the Committee on Trade in Agriculture (1982-1986) which developed the parameters for negotiations in the Uruguay Round on improved and more operationally effective GATT rules and disciplines for trade in agriculture. The work of these Committees was undertaken on the basis, inter alia, of notifications by Members covering all instruments of support and protection. Thus, in the case of the 1982-1986 Committee on Trade in Agriculture, reference was made in the information provided by the Contracting Parties to the GATT 1947 provisions under which individual border measures were being maintained.⁵⁹⁸ On the basis of the notifications submitted on variable levies and minimum import prices, as well as the related examinations undertaken by Contracting Parties, it appears to us that such measures can be analysed as generally having the following fundamental characteristics:⁵⁹⁹

(a) Variable levies generally operate on the basis of two prices: a threshold, or minimum import entry price and a border or c.i.f. price for imports. The threshold price may be derived from and linked to the internal market price as such, or it may correspond to a governmentally determined (guide or threshold) price which is above the domestic market price. The import border or price reference may correspond to individual shipment prices but is more often an administratively determined lowest world market offer price.

(b) A variable levy generally represents the difference between the threshold or minimum import entry price and the lowest world market offer price for the product concerned. In other words, the variable levy changes systematically in response to movements in either or both of these price parameters.

(c) Variable levies generally operate so as to prevent the entry of imports priced below the threshold or minimum entry price. In this respect, i.e. when prevailing world market prices are low relative to the threshold price, the protective effect of a variable levy rises, in terms of the fiscal charge imposed on imports, whereas this charge declines in the case of ad valorem tariffs or remains constant in the case of specific duties.

(d) In addition to their protective effects, the stabilization effects of variable levies generally play a key role in insulating the domestic market from external price variations.

(e) Notifications on minimum import prices indicate that these measures are generally not dissimilar from variable levies in many respects, including in terms of their protective and stabilization effects, but that their mode of operation is generally less complicated. Whereas variable import levies are generally based on the difference between the governmentally determined threshold and the lowest world market offer price for the product concerned, minimum import price schemes generally operate in relation to the actual transaction value of the imports. If the price of an individual consignment is below a specified minimum import price, an additional charge is imposed corresponding to the difference.

7.37 These fundamental characteristics of variable import levies and minimum import prices, which can be distilled from the pre-Uruguay Round notifications and examination thereof by the GATT Contracting Parties, provide in our view a useful indication of what GATT Contracting Parties understood to constitute variable import levies and minimum import prices. To that extent, we believe that they are also helpful in interpreting those terms as they appear in Article 4.2 of the Agreement on Agriculture. In conclusion, we consider that a measure will be similar to a variable import levy or minimum import price if, based on a weighing of the evidence before us, it shares sufficiently the fundamental characteristics outlined above.

Application of the Panel's interpretation of "similar to a variable import levy or a minimum import price" to the Chilean PBS

7.38 We now turn to an examination of the Chilean PBS in light of the meaning of "similar border measures other than ordinary customs duties", as determined above. In particular, we will examine whether the Chilean PBS is similar to a variable import levy or a minimum import price, taking into account the fundamental characteristics of those measures outlined above.

7.39 We will first recall the rather complex structure and operation of the Chilean PBS. When a product covered by the Chilean PBS arrives at the border for importation into Chile, Chilean customs authorities will determine whether the total amount of applicable duties declared by the importer corresponds to the amount due under Chilean legislation, and, if necessary, revise the amount accordingly. In application of the Chilean PBS, they will levy an 8 per cent ad valorem duty, plus an "additional specific duty" if an administratively determined lowest offer price from a selected foreign market (hereinafter referred to as "the Reference Price") falls below the lower threshold of the PBS. They will apply only the 8 per cent ad valorem duty if the same Reference Price is between the lower and upper thresholds of the PBS. They will grant a "rebate" on the 8 per cent ad valorem duty if the Reference Price is above upper threshold of the PBS. The PBS is determined annually on the basis of f.o.b. prices observed on a particular international market over the course of the preceding 60 months⁶⁰⁰, which are adjusted in accordance with a Central Bank of Chile index, and listed in descending order. The lower and upper thresholds of the PBS are obtained by discarding 25 per cent at the bottom and at the top of that list and adding "usual import costs" to the prices.⁶⁰¹ The lowest and highest prices which are obtained after these operations constitute the lower and upper thresholds of the PBS. The specific duties and rebates corresponding to different f.o.b. prices are published in the Official Journal of Chile. The Reference Price is determined weekly, every Friday, using the lowest f.o.b. price for the covered products on foreign "markets of concern to Chile".⁶⁰² Unlike the prices used for the composition of the PBS, it is not subject to adjustment for "usual import costs".⁶⁰³ The applicable Reference Price for a particular shipment is determined in reference to the date of the bill of lading. The Reference Price is not published, but can be consulted by the public at the offices of the Chilean customs authorities.⁶⁰⁴ As indicated, if the Reference Price falls below the lower threshold of the PBS, an "additional specific duty" will be levied in addition to the 8 per cent ad valorem applied rate. We will term this additional duty the PBS duty. The PBS duty will equal the difference between the Reference Price applicable on the date of the bill of lading and the lower threshold of the PBS.

7.40 The stated objective of the Chilean PBS is to "ensur[e] a reasonable margin of fluctuation of domestic wheat, oil-seed, edible vegetable oil and sugar prices in relation to the international prices for such products"⁶⁰⁵, by "introducing a controlled distortion which maintains a minimum import cost if the international price is too low [�]".⁶⁰⁶ As explained below, on the basis of the evidence before us, we consider that the Chilean PBS has many fundamental characteristics of both a variable import levy and a minimum import price.

7.41 The Chilean PBS operates on the basis of two prices: the lower threshold of the PBS and the Reference Price. The variable PBS duty represents the difference between the lower threshold of the PBS and the lowest relevant market price for the product concerned. Generally, a covered product will not be able to enter the Chilean market at an import cost below the lower threshold of the PBS.⁶⁰⁷ Indeed, for all practical purposes, and subject to the exceptional instance where the total applied duties would exceed Chile's 31.5 per cent bound rate in the absence of an effective cap,⁶⁰⁸ the PBS duty will equal the difference between the lower threshold of the PBS and the Reference Price. As a result, whenever the Reference Price falls below the lower PBS threshold, and subject to the exceptional instance where the total applied duties would exceed Chile's 31.5 per cent bound rate in the absence of an effective cap, a duty will be applied equalling the difference between those two values. The Reference Price is the lowest f.o.b. price observed at the time of the shipment in the markets of concern to Chile. Consequently, if we take the example of an exporter from a "market of concern to Chile" for the purpose of setting a particular week's Reference Price, unless he exports his product at such a low price below the lower threshold of the PBS that the total applied duties would exceed Chile's bound rate in the absence of an effective cap, he will generally not be able to export his product at a duty-paid price below the lower PBS threshold, because even if he can export at a lower price than exporters from other markets of concern, a PBS duty will still be applied for an amount equal to the difference between the weekly Reference Price, set on the basis of the fob price in his market (which is the lowest among the markets of concern to Chile), and the lower threshold of the PBS. Imports from other markets will, by operation of the system, normally come in at higher f.o.b. prices. Thus, the Chilean PBS operates to insulate the Chilean market from world market prices.⁶⁰⁹

7.42 This insulation of the Chilean market from world market prices is accentuated by the fact that the PBS thresholds are determined, inter alia, after discarding 25 per cent of "atypical observations" at the bottom and at the top. By eliminating the lowest quarter of prices observed, Chile substantially increases the likelihood that the lower threshold of the PBS will equal or exceed the higher internal price. Chile admits that "25 per cent may seem excessive", but explains that "this percentage is linked to the actual purpose of the [PBS], which is to maintain a domestic price that is related to international prices in the medium term".⁶¹⁰ In our view, by discarding 25 per cent of the lowest 60-month values observed, the PBS clearly eliminates much more than just "atypical observations". In fact, by not accounting for the lowest of each four observed prices over the course of five years, the PBS may result in the imposition of highly trade-distortive duties.⁶¹¹

7.43 For example, an Argentinean wheat exporter will generally not be able to export wheat at an f.o.b. price below the Reference Price, since Argentina is "a market of concern to Chile". If the Argentinean wheat exporter becomes more efficient and can export at lower f.o.b. prices to Chile, the Reference Price will fall accordingly. The lower the Reference Price, the larger the gap between the lower threshold and the Reference Price, and the greater the PBS duty. If Argentinean wheat exporters happen to export at the Reference Price level, their wheat will normally enter Chile at a total import cost equal to the lower threshold of the PBS. If Argentinean wheat exporters can only export at an f.o.b. price above the applicable Reference Price - because exporters from other relevant markets produce more efficiently - their wheat will come in at a total import cost which normally exceeds the lower threshold of the PBS.

7.44 Moreover, we observe that several crucial stages of the operation of the Chilean PBS are characterized by a considerable lack of transparency and predictability. For instance, exporters can be expected to have difficulties knowing how the applicable Reference Price is arrived at. No legislation or regulation in Chile specifies which international markets are used for the calculation of the Reference Price. Chile's replies to the Panel's questions indicate that these are "markets of concern to Chile". Chile has informed the Panel that it uses the lowest f.o.b. price on these markets of concern to determine the Reference Price. None of these practices appear to be provided for in Chilean legislation or regulation. Article 12 of Law 18.525 only provides that the relevant date is the date of the bill of lading. When asked whether the Reference Prices, determined on a weekly basis, are published, Chile informed the Panel that they are "available to the public at the National Customs Service". In its comments on the descriptive part of our report, however, Chile has added that they are also available now through a Chilean governmental website.⁶¹² Moreover, as regards the application of the Chilean PBS to the edible vegetable oils identified by reference to 25 tariff lines, Chile has stated that "[i]n general, the Reference Price has coincided with the price of crude soya bean oil, but in some cases it has corresponded to that of crude sunflowerseed oil".⁶¹³ Apparently, there is no means of knowing when one or the other Reference Price will be used. Furthermore, although the PBS values themselves are published each year, exporters have no means of knowing how the PBS values are actually arrived at: no published legislation or regulation in Chile sets out which international markets are used for the determination of the PBS values, or how the "usual import costs" which are added to the f.o.b. prices are calculated. It appears to us that exporters can be expected to encounter serious difficulties in their commercial planning efforts in a system where weekly variations in duties are based on factors unknown, i.e. the future evolution of prices in "markets of concern to Chile". Such lack of predictability must affect the competitive conditions of imports vis-�-vis domestic production.

7.45 We recognize that, on the face of it, the Chilean PBS does not share all the characteristics of both "variable import levies" and "minimum import prices". First, whereas a "variable import levy" will generally use as a reference price an administratively determined lowest world market offer price, a "minimum import price" will generally use the actual transaction value of the imported good. The Reference Price used in the context of the Chilean PBS is clearly disconnected from the actual transaction value, unlike minimum import price schemes. It does use a lowest "market of concern" price, however, similar to the lowest market offer price generally used in variable import levy schemes. Second, the lower threshold of the Chilean PBS is not explicitly derived from, or linked to, an internal market-related price, as is often the case in variable import levy schemes. Instead, it corresponds to an administratively determined threshold price which may, but will not necessarily, be equal to or above the domestic market price. Nonetheless, we consider that, on the basis of the evidence before us, it cannot be excluded that the lower threshold of the PBS, given the way in which it is designed, particularly with the many adjustments made by the administering agencies to the basic world market price quotations employed, including for inflation, operates in practice as a "proxy" for such internal prices. It should be recalled in this respect that the PBS thresholds are determined, inter alia, after discarding 25 per cent of "atypical observations" at the bottom and at the top⁶¹⁴, hence substantially increasing the likelihood that the lower threshold of the PBS will equal or exceed the higher internal price.

7.46 We consider that the Chilean PBS is a hybrid instrument, which has most, but not all, of its characteristics in common with either or both a variable import levy and a minimum import price. After careful assessment of the evidence before us, however, we consider as a factual matter that the Chilean PBS shares sufficient fundamental characteristics with those schemes for it to be considered similar to them, and that the observed differences between the Chilean PBS and either of those schemes are not of such a nature as to detract from this similarity.

7.47 We therefore find that the Chilean PBS is a border measure "similar to" both a "variable import levy" and a "minimum import price".

"Other than ordinary customs duties"

Determination of the meaning of "ordinary customs duties"

7.48 We have already noted above that our findings regarding "similar to variable import levy and minimum import price" and "other than ordinary customs duties" are mutually reinforcing.⁶¹⁵ We also note that, in Chile's view, the Chilean PBS duties constitute "ordinary" customs duties.

7.49 We recall that the use of the phrase "ordinary customs duties" is common to Article II:1(b) of GATT 1994 and Article 4.2 of the Agreement on Agriculture. Given the central place of this phrase in both provisions, it would appear that the scope of the obligations resulting from these provisions is, in part, determined by the interpretation of that phrase. We note in this respect that the parties⁶¹⁶ and third parties to this dispute all agree that the phrase must have the same meaning in both provisions. We see no reason to disagree with this proposition. Nothing in the text of either GATT 1994 or the Agreement on Agriculture suggests that this identical phrase should be given a different meaning in each of those two provisions. On the contrary, it appears from the drafting history of Article 4.2 of the Agreement on Agriculture that the drafters of that Agreement actually drew on Article II:1(b) of GATT 1947 with respect to the use of the term "ordinary".⁶¹⁷ Article II:1(b) of GATT 1994 provides therefore relevant context for the interpretation of this phrase in Article 4.2 of the Agreement on Agriculture.

7.50 Neither Article II:1(b) of GATT 1994 nor Article 4.2 of the Agreement on Agriculture, however, defines explicitly what should be understood by "ordinary" customs duties. Both provisions do give some indication as to what is not an "ordinary" customs duty. On the one hand, Article II:1(b) of GATT 1994 distinguishes "ordinary" customs duties in its first sentence from "all other duties or charges of any kind imposed on, or in connection with, the importation" in its second sentence. The latter category of "other duties or charges of any kind" appears to be a residual category, encompassing duties or charges imposed on or in connection with importation which cannot be considered "ordinary" customs duties.⁶¹⁸ On the other hand, Article 4.2 prohibits Members from maintaining, resorting to, or reverting to any measures of the kind which have been required to be converted into ordinary customs duties. As indicated above, all the measures listed in footnote 1 are, by definition, not "ordinary" customs duties.

7.51 We note that "ordinary customs duties" appear in the co-authentic French and Spanish versions as "droits de douane proprement dits" and "derechos de aduana propiamente dichos". The dictionary meaning of "ordinary" is "occurring in regular custom or practice", "of common or everyday occurrence, frequent, abundant", "of the usual kind, not singular or exceptional, commonplace, mundane".⁶¹⁹ "Propiamente dicho" has been translated as "true (something)" or "(something) in the strict sense".⁶²⁰ "Proprement dit" has been explained as "au sens exact et restreint, au sens propre" and "stricto sensu".⁶²¹ It appears from these dictionary meanings that the English text, on the one hand, and the French and Spanish texts, on the other, differ in terms of the perspective from which they define "ordinary": the use of "ordinary" in the English text appears to define a particular kind of "customs duties" in reference to the frequency with which such customs duties can be found, whereas the French and Spanish texts suggest that the narrow sense of the term "customs duties" is being referred to. Thus, the English version describes a particular kind of customs duty from an empirical perspective, whereas the French and Spanish versions describe it from a normative perspective. We will therefore proceed to examine what should be considered "ordinary" both on an empirical and a normative basis.⁶²²

7.52 Article II:1(b), first sentence, of GATT 1994 provides that Members cannot impose "ordinary customs duties" in excess of those listed in their Schedules. As an empirical matter, we observe that Members, in regular practice, invariably express commitments in the ordinary customs duty column of their Schedules as ad valorem or specific duties, or combinations thereof.⁶²³ All "ordinary" customs duties may therefore be said to take the form of ad valorem or specific duties (or combinations thereof).⁶²⁴ As a normative matter, we observe that those scheduled duties always relate to either the value of the imported goods, in the case of ad valorem duties, or the volume of the imported goods, in the case of specific duties. Such ordinary customs duties, however, do not appear to involve the consideration of any other, exogenous, factors, such as, for instance, fluctuating world market prices. We therefore consider that, for the purpose of Article II:1(b), first sentence, of GATT 1994 and Article 4.2 of the Agreement on Agriculture, an "ordinary" customs duty, that is, a customs duty senso strictu, is to be understood as referring to a customs duty which is not applied on the basis of factors of an exogenous nature.

7.53 The above determination of the ordinary meaning of "ordinary customs duties" confirms that there is a normative dimension to the term "ordinary", and that a "tariff" must have certain fundamental characteristics for such a "tariff" to be considered an "ordinary" customs duty. For this reason, we disagree with an argument presented by the European Communities, apparently endorsed by Chile.⁶²⁵ According to this position:

"(�) the decisive element which distinguishes an 'ordinary customs duty' from a 'variable import levy' is the existence of a ceiling in the tariff binding." ⁶²⁶

7.54 This position appears to be based on the proposition that the phrase "ordinary customs duties" in the first sentence of Article II:1(b) would have been interpreted by the Appellate Body in its report on Argentina - Textiles and Apparel as including any kind of duties on imports, and that, according to that report, the imposition of any kind of duties is consistent with Article II:1(b) provided that such duties do not exceed the bound rate for "ordinary customs duties".⁶²⁷

7.55 We disagree with the proposition that the imposition of any kind of duties is consistent with Article II:1(b) provided that such duties do not exceed the bound rate for "ordinary customs duties". In our view, the cited Appellate Body report cannot be read as suggesting that any duty or charge can be considered an "ordinary customs duty" as long as the total amount of applied duties does not exceed the bound rate for "ordinary customs duties". As already indicated, whether or not a duty can be considered "ordinary" is not merely and simply a function of whether or not a Member applies a total amount of duties and charges in excess of the bound rate for "ordinary customs duties". If this view were to be accepted, the distinction between "ordinary" and "other" duties in the first and second sentence of Article II:1(b), and the corresponding existence of two separate columns in the Schedules, would be rendered void of all meaning, particularly in light of the Uruguay Round Understanding on the Interpretation of Article II:1(b) of the GATT 1994. We do not believe either that this view was espoused by the Appellate Body in the cited report. In that report, the question of whether or not the duties at issue constituted "ordinary customs duties" was not even addressed by the Appellate Body. The Appellate Body merely stated:

"The principal obligation in the first sentence of Article II:1(b) [�] requires a Member to refrain from imposing ordinary customs duties in excess of those provided for in that Member's Schedule. However, the text of Article II:1(b), first sentence, does not address whether applying a type of duty different from the type provided for in a Member's Schedule is inconsistent in itself, with that provision."⁶²⁸

7.56 Thus, the Appellate Body stated what the obligation of the first sentence of Article II:1(b), regarding the application of "ordinary customs duties", entails. The Appellate Body recalled that there may be various "types" of duties within the category of "ordinary customs duties", and that applying a "type" of duty different from the "type" recorded in the Schedule is not necessarily inconsistent with the first sentence of Article II:1(b). By different "types" of duties, however, the Panel and the Appellate Body were merely referring to the distinction between ad valorem and specific duties.⁶²⁹ Both parties, as well as the Panel and the Appellate Body, agreed in that case that the specific and ad valorem duties in question were all "ordinary" customs duties. Thus, the issue was not whether Argentina's applied duties were "ordinary", but rather whether Argentina could apply one type of ordinary customs duty even though its WTO Schedule identified another type of ordinary customs duty. In our view, therefore, it is clear that the cited Appellate Body report has no bearing on the question before us, i.e. what distinguishes an "ordinary" customs duty from other duties and charges.

7.57 We find our interpretation of what constitutes an "ordinary" customs duty confirmed by our analysis of the object and purpose of the Agreement on Agriculture. The object and purpose of this Agreement is, according to the Panel in Canada - Dairy,

"to 'establish a basis for initiating a process of reform of trade in agriculture'⁶³⁰ in line with, inter alia, the long-term objective of establishing 'a fair and market-oriented agricultural trading system'.⁶³¹ This objective is pursued in order 'to provide for substantial progressive reductions in agricultural support and protection sustained over an agreed period of time, resulting in correcting and preventing restrictions and distortions in world agricultural markets.⁶³²

The general aim of the Uruguay Round negotiations on agriculture was to 'achieve greater liberalization of trade in agriculture and bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines'."⁶³³ [�]⁶³⁴

7.58 As indicated earlier, an important aspect of this exercise was the "tariffication" process, involving the conversion of certain, particularly distortive trade barriers into ordinary customs duties. Key objectives of tariffication were to make agricultural market access conditions more transparent and predictable, and establish or strengthen the link between national and international agricultural markets. As stated in the Punta del Este Ministerial Declaration on the Uruguay Round:

"Contracting Parties agree that there is an urgent need to bring more discipline and predictability to world agricultural trade by correcting and preventing restrictions and distortions including those related to structural surpluses so as to reduce the uncertainty, imbalances and instability in world agricultural markets."⁶³⁵

7.59 As explained by the Panel in Turkey - Textiles, this object and purpose is based on the premise that ordinary customs duties "are GATT's border protection 'of choice'" because they "permit the most efficient competitor to supply imports", and are "more transparent price-based" measures.⁶³⁶

7.60 In our view, customs duties of the ordinary kind scheduled by the GATT Contracting Parties since 1947 and thereafter the WTO Members, which are exclusively based on either the value or the volume of the goods or a combination thereof (i.e. not based on exogenous factors), were considered by the Uruguay Round negotiators to be most amenable to achieving the objectives of progressively reducing protection in agricultural markets through tariff reductions and ensuring predictability and more transparent, price-based competition. By no longer allowing for instruments of protection which, through the use of exogenous factors⁶³⁷, result in highly uncertain and unstable levels of protection often isolating the domestic market from international price competition, the drafters of the Agreement on Agriculture decided to bring such instruments under "strengthened and more operationally effective GATT rules and disciplines", in pursuit of the long-term objective of establishing a fair and market-oriented agricultural trading system.

Application of the Panel's interpretation of "other than ordinary customs duties" to the Chilean PBS

7.61 In our analysis of whether the Chilean PBS is a border measure similar to a variable import levy and a minimum import price, we have already highlighted the features of the Chilean PBS which reveal its intrinsically unstable, intransparent and unpredictable nature, as well as the insulation of the domestic market from international price competition which it achieves. Nonetheless, in furtherance of our analysis, we will more explicitly contrast some other aspects of the structure and operation of the Chilean PBS with those of an "ordinary" customs duty.

7.62 Most importantly, we note that the Chilean PBS duties are neither in the nature of ad valorem duties, nor specific duties, nor a combination thereof⁶³⁸, in the sense that they are not just assessed on the transaction value of individual shipments, nor just on the volume of the goods. The amount of the applicable duty is a function of a price which is disconnected from the actual transaction value of the imported good. In fact, the applicable duty is determined on the basis of exogenous price factors, i.e. the lower threshold of the PBS and the Reference Price.⁶³⁹

7.63 We also note that several features of the Chilean PBS are bound to artificially inflate this margin between the lower threshold of the PBS and the Reference Price, and, consequently, the level of the applicable PBS duty. Most strikingly, the level of the lower threshold of the PBS is considerably raised over that of the Reference Price by discarding the lowest 25 per cent of all observed international market prices over the preceding 60 months. The prices observed on "markets of concern" used for the calculation of the Reference Price do not undergo the same operation. Second, as confirmed by Chile, the f.o.b. prices used for the PBS values are adjusted, inter alia, for "usual import costs", whereas the f.o.b. prices used for the Reference Prices are not.⁶⁴⁰ These differences can in our view only result in increasing the margin between the lower threshold of the PBS and the Reference Price, and thus the applicable PBS duty.⁶⁴¹ We find that those aspects of the structure and operation of the Chilean PBS do not reflect the structure and operation of an "ordinary" customs duty.

7.64 Finally, we note that under the Chilean PBS, the Reference Price, and therefore the applicable duty or rebate, is determined in reference to the date of the bill of lading. Consequently, when two shipments from two different exporting Members leave their respective port of origin on two different dates, but arrive at the Chilean port of entry at the same time, they can be assessed a different duty, to the extent that the Reference Price may very well vary as regards those two shipments. We are fully aware that Argentina did not present any claim under Article I of GATT 1994, and that no such claim is therefore within our Terms of Reference. Whereas we cannot and do not make any finding of law regarding the consistency of the Chilean PBS with Article I of GATT 1994, we do find, as a matter of fact, that the Chilean PBS inherently carries the risk of resulting in higher duties on one shipment than on another, despite the fact that those shipments arrive at the same time at the Chilean border, which is not consistent with the characteristics of an "ordinary" customs duty.

Conclusion

7.65 In light of our findings above, we conclude that the Chilean PBS is a border measure similar to a variable import levy and a minimum import price, other than ordinary customs duties, within the meaning of footnote 1 to the Agreement on Agriculture.

(ii) Is the Chilean PBS "maintained under balance-of-payment provisions or under other general, non-agriculture specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement"?

7.66 Chile has not asserted a defence of the Chilean PBS under Article 4.2 of the Agreement on Agriculture in reference to the balance-of-payment provisions of GATT 1994 or other general, non-agriculture specific provisions of the Multilateral Trade Agreements in Annex 1A other than GATT 1994. Regarding the relationship between Article 4.2 of the Agreement on Agriculture and Article II:1(b) of GATT 1994, Chile has stated that "[t]he prohibitions in Article 4.2 of the Agreement on Agriculture apply without regard to whether the measures breach a tariff binding".⁶⁴² At the same time, however, Chile has also stated that the following position, expressed by the European Communities in the course of these proceedings, "may be correct":⁶⁴³

"(�) 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. This conclusion stands 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, the decisive element which distinguishes an "ordinary customs duty" from a "variable levy" is the existence of a ceiling in the tariff binding."⁶⁴⁴

7.67 In light of Chile's position, we consider that we should address the argument advanced by the European Communities.

7.68 According to the European Communities, Article II:1(b) of GATT 1994 is a "non-agriculture-specific" provision of GATT 1994 under which a measure such as the Chilean PBS could be maintained, provided it does not exceed the "ordinary customs duties" binding. Consequently, if the measure is consistent with Article II:1(b) of GATT 1994, it would not be subject to the obligation laid down in Article 4.2 of the Agreement on Agriculture. We cannot agree. First, the text of footnote 1 makes clear that the drafters of the Agreement on Agriculture did not mean to exempt from the obligation of Article 4.2 all measures maintained under any "general, non-agriculture-specific" provision of GATT 1994. Footnote 1 only excludes from the scope of Article 4.2 measures maintained under balance-of-payment provisions or under other general, non-agriculture specific provisions of GATT 1994. The use of the term "other" before "general, non-agriculture specific provisions" makes clear that balance-of-payment provisions are one example of what is meant by the category of "general, non-agriculture-specific" provisions of GATT 1994 and the other Annex 1A Agreements. Balance-of-payment measures can be adopted in accordance with Article XII of GATT 1994. Article XII is clearly in the nature of an exception to the general obligations of GATT 1994. In our view, therefore, footnote 1 was meant to exclude from the scope of Article 4.2 only those measures which are maintained on the basis of GATT 1994 provisions which allow Members, subject to certain conditions, to act inconsistently with their general obligations under GATT 1994. Article XIX regarding safeguard measures⁶⁴⁵ and Article XX regarding general exceptions, for instance, would in our view provide other examples of such "general, non-agriculture-specific provisions".

7.69 Second, we note that Article 21.1 of the Agreement on Agriculture provides,

"The provisions of GATT 1994 and of other Multilateral Trade Agreements in Annex 1A to the WTO Agreement shall apply subject to the provisions of this Agreement."

7.70 In commenting on this provision, the Appellate Body stated in EC - Bananas III:

"Therefore, 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 specifically with the same matter."⁶⁴⁶

7.71 If the general rule is that the provisions of GATT 1994 only apply to market access commitments concerning agricultural products to the extent that the Agreement on Agriculture does not contain specific provisions dealing specifically with the same matter, it is difficult to see why the drafters of the Agreement on Agriculture would have turned that rule in effect upside down in footnote 1 by excluding from the scope of the Agreement on Agriculture's market access obligations those measures maintained in accordance with the general obligations of GATT 1994. If this view were to be accepted, footnote 1 would be rendering Article 21.1 void of meaning as regards the Agreement on Agriculture's market access provisions. A treaty interpreter, however, may not adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.⁶⁴⁷ In our view, such an interpretation requires us in this case to read footnote 1 as excluding from the scope of Article 4.2 those measures which Members are allowed to maintain in accordance with the provisions in GATT 1994 laying down exceptions to the general obligations of GATT 1994, such as its balance-of-payment provisions.

7.72 We find this interpretation confirmed by the preparatory work of the Agreement on Agriculture. The agriculture section of the 1991 Draft Final Act provides:

"The policy coverage of tariffication shall include all border measures other than ordinary customs duties* such as [�]."⁶⁴⁸

* Excluding measures maintained for balance-of-payments reasons or under general safeguard and exception provisions (Articles XII, XVIII, XIX, XX and XXI of the General Agreement).

7.73 We consider that this language confirms that the drafters of the Agreement on Agriculture did not intend to include Article II of GATT in the category of "other general, non-agriculture specific provisions of GATT 1994".

7.74 We note that, in any event, the question of whether or not the Chilean PBS duties have exceeded the "ordinary customs duties" binding of 31.5 per cent only becomes relevant after it has been determined that the Chilean PBS duties do indeed constitute such "ordinary" customs duties. As we have indicated earlier, in our view, the Chilean PBS is a border measure similar to a variable import levy and a minimum import price, other than ordinary customs duties. The corresponding binding of 31.5 per cent is therefore irrelevant for the purpose of assessing the Chilean PBS duties' consistency with Article II:1(b) of GATT 1994. We will revert to this matter below, in our discussion of Argentina's claim under Article II:1(b) of GATT 1994.