Report of the Appellate Body

(Continued)

III. Arguments of the Participants and Third Participants

A. Claims of Error by Chile - Appellant

1. Article 11 of the DSU

31. Chile submits that the Panel exceeded its mandate and acted inconsistently with Article 11 of the DSU in finding that the duties imposed under its price band system are "other duties or charges" that are prohibited under the second sentence of Article II:1(b) of the GATT 1994, because Argentina made no claim or argument under the second sentence of Article II:1(b).

32. Chile maintains that the Panel's finding under the second sentence of Article II:1(b) goes against Article 3.2 of the DSU, which in Chile's view is the "central element" of the dispute settlement system that ensures "security and predictability in the multilateral trading system."⁴² Chile stresses that the dispute settlement system can hardly be deemed predictable if panels find it within their discretion to make claims and arguments for the parties, and to proceed to make findings based on legal claims and arguments not presented without providing the parties with an opportunity for rebuttal.

33. Chile submits that the Panel's erroneous decision to make a finding under the second sentence of Article II:1(b) of the GATT 1994 deprived it of a fair right of response. Moreover, the Panel's approach resulted in inadequate argumentation of an issue of considerable importance to all WTO Members. Chile maintains that because the issue was never claimed or argued before the Panel, Chile made only "highly summary comments" in response to comments made by the United States (a third party) with respect to the second sentence of Article II:1(b).

34. Chile concedes that Argentina asked the Panel to rule on the consistency of the price band system with Article II:1(b) of the GATT 1994, but maintains that Argentina had made clear that its claim was for a violation of the first sentence of Article II:1(b), and that Argentina had never requested a finding or made any such claim or argument with respect to the second sentence of Article II:1(b). Chile asserts that all of Argentina's claims and arguments were predicated on the view that the duties resulting from Chile's price band system are "ordinary customs duties" that had led or could lead to a violation of the first sentence of Article II:1(b).⁴³ Chile argues that, had Argentina sought to maintain that the duties resulting from Chile's price band system were "other duties or charges", it would simply have requested a finding under the second sentence of Article II:1(b), because Chile obviously had not scheduled anything in the column for "other duties and charges" and the price band duties would thus have been prohibited.

35. Chile asserts that the Panel made the same error as did the panel in United States - Import Measures on Certain Products from the European Communities ("US - Certain EC Products"). Chile points out that in that case, the Appellate Body concluded that the panel had erred under Article 11 of the DSU when it determined that the United States violated a provision for which the European Communities did not make a claim.⁴⁴ Chile recognizes that in that case, the Appellate Body also held that a panel could develop its own legal reasoning related to a claim or defence that had been properly put before the panel by one of the parties to the dispute. However, according to Chile, that finding applies only in cases where the complainant has made a claim, and has argued for a finding on an issue, even though the argument used to justify the claim may not have corresponded precisely to the interpretation ultimately adopted by the panel. Chile submits that, here, Argentina did not make a claim or submit legal arguments under the second sentence of Article II:1(b) of the GATT 1994, and thus the Panel was not entitled to develop its own legal reasoning with respect to such claim or argument.

2. Order of Analysis

36. Chile contends that the Panel erred in choosing to examine Article 4.2 of the Agreement on Agriculture before examining Article II:1(b) of the GATT 1994, on the ground that Article 4.2 "deals more specifically and in detail with measures affecting market access of agricultural products."⁴⁵ The Agreement on Agriculture may, in some respects, be more specific and detailed than the GATT 1994, but Article 4.2 is clearly not more specific or detailed than Article II:1(b) with regard to tariff commitments.

37. Chile recalls, moreover, that the term "ordinary customs duties" was first used in Article II:1(b), which clearly pre-dates the Agreement on Agriculture . The drafters of Article 4.2 borrowed the term "ordinary customs duties" from Article II:1(b). To understand the meaning of that term, it would thus have been appropriate for the Panel to begin its analysis with Article II:1(b). Had the Panel done so, Chile suggests, it would most likely have avoided the error of inventing a new definition of ordinary customs duties that has no apparent basis in the text of Article II:1(b).

3. Article 4.2 of the Agreement on Agriculture

38. Chile submits that the Panel erred in concluding that the price band system is inconsistent with Article 4.2 of the Agreement on Agriculture . The Panel should have analyzed the text of Article 4.2 and the tariff schedules as concluded as part of the Uruguay Round Agreements, instead of basing its conclusions on pre-Uruguay Round documents. According to Chile, by doing so, the Panel would have found that the price band system is not a measure "of a kind which has been required to be converted" into ordinary customs duties, but rather is merely a system for determining the level of ordinary customs duties that will be applied up to the bound rate.

39. Chile considers that it was an error for the Panel to first decide that the price band system was a "similar measure" under footnote 1 of Article 4.2 before examining the main text of Article 4.2, in particular the phrase "measures of the kind which have been required to be converted into ordinary customs duties" contained therein. By doing so, the Panel did not attach sufficient weight to evidence of what was and what was not converted. In this respect, Chile notes that no country with a price band system in fact converted that system, no Member asked Chile to convert its price band system, and Argentina itself maintains a price band system for sugar.

40. Chile agrees with the Panel that the mere fact that a measure was not converted by a Member into an ordinary customs duty does not prove that the measure was not "of a kind which had been required to be converted". According to Chile, "the absence of conversions is a highly relevant fact", however⁴⁶, and the way in which the European Communities converted its variable import levy is particularly relevant because it involved binding the tariff, but left in place a system similar to Chile's price band system.⁴⁷ Thus, the European Communities converted its levies in a way that made it "crystal clear"⁴⁸ that the tariffs would continue to vary, although subject to a high absolute cap. Chile maintains that the Panel should have taken this evidence into account. It proves that the drafters of the Agreement on Agriculture accepted that a variable import levy could be converted into an ordinary customs duty by imposing a "cap" on the amount of duties that could be levied, even when those duties would fluctuate below that "cap" in relation to a domestic target price.

41. Although Chile agrees with the Panel that footnote 1 is significant in discerning the meaning of Article 4.2 of the Agreement on Agriculture , it does not agree that all the measures listed therein "are characterized either by a lack of transparency and predictability, or impede transmission of world prices to the domestic market, or both."⁴⁹ In this respect, Chile submits that transparency and predictability are clearly not the defining characteristics for what is illegal and legal under footnote 1 of Article 4.2.

42. Chile suggests, moreover, that the Panel acted inconsistently with Articles 31 and 32 of the Vienna Convention on the Law of Treaties ("the Vienna Convention")⁵⁰ , by considering that it could "distill" the meaning of the terms "variable import levy" and "minimum import price" from selected Reports of GATT Committees and notifications of individual GATT Contracting Parties during a period before the launch of the Uruguay Round, although the Panel itself conceded that those documents do not constitute "preparatory work" within the meaning of Article 32 of the Vienna Convention . In making its "distillation", the Panel did not cite any evidence that the negotiators of the Agreement on Agriculture had even referred to the documents on which the Panel relied to "distill" its opinion of what was intended by the negotiators of that Agreement. The only justification provided by the Panel was that all GATT Contracting Parties "had access" to these documents. Chile concludes that the Panel appears to have "simply decided to invent its own definition of a variable import levy and minimum import price system, using pre-Uruguay Round documents developed for a different purpose."⁵¹

43. In Chile's view, the Panel then proceeded to assess incorrectly Chile's price band system by the standards it had "distilled" from those pre-Uruguay Round documents. It did not take proper account of the fact that the price band system tracks changes in world prices, moderating relatively high or low prices on a temporary basis, but always subject to a tariff binding, which prevents Chile from using the price band system to exclude goods below a target price. Chile stresses in this respect that it does not maintain target or support prices such that the lower threshold of the price band system operates as a "proxy" for internal prices.⁵²

44. Moreover, in Chile's view, the Panel introduced its own objectives of transparency and predictability when interpreting Article 4.2 of the Agreement on Agriculture and Article II:1(b) of the GATT 1994, rather than focusing on the Agreement on Agriculture , which makes no mention of such objectives. Instead, its preamble clearly states that the long-term objective of the Agreement on Agriculture is "to provide for substantial progressive reductions in agriculture support and protection sustained over an agreed period of time, resulting in correcting and preventing restrictions and distortions in world agricultural markets."⁵³ According to Chile, the Panel's finding thereby produces an absurd result: contrary to the objective of obtaining lower tariffs in the Agreement on Agriculture and the GATT 1994, the Panel, in effect, finds the higher bound rate preferable to the lower applied rate under Chile's price band system.

45. For these reasons, Chile concludes that its price band system is consistent with Article 4.2 of the Agreement on Agriculture .

4. Article II:1(b) of the GATT 1994

46. Chile argues that the Panel erred in finding that the duties imposed under Chile's price band system are not "ordinary customs duties" within the meaning of the first sentence of Article II:1(b) of the GATT 1994, but rather are "other duties or charges" prohibited by the second sentence of that provision, unless scheduled according to the Understanding on the Interpretation of Article II:1(b) of the GATT 1994 (the Understanding on Article II:1(b)). Chile submits that, under the Panel's reading of Article II:1(b), it would be prohibited from applying a duty at rates that vary between zero and its bound rate of 31.5 per cent, but at the same time, it would be free to be more protectionist by applying a constant duty at its bound rate. Chile argues that, under the Panel's reasoning, it would also be free to change its applied rate from time to time for whatever reason it might decide, so long as the change in duty is not based on a formula.

47. Chile maintains that the Panel's approach to Article II:1(b) of the GATT 1994 appears to have been based primarily on the fact that the Panel had already decided that duties applied under the price band system were not "ordinary customs duties" within the meaning of Article 4.2 of the Agreement on Agriculture. On that basis, the Panel found that the duties resulting from Chile's price band system could not constitute "ordinary customs duties" under Article II:1(b) of the GATT, and thus had to be "other duties or charges".

48. Chile notes in this respect that, assuming the duties applied under the price band system were "other duties or charges", they would have been in violation of Article II:1(b) of the GATT 1994 from their inception in 1983, because Chile introduced the price band system after binding its duties on all the products concerned in 1980.

49. Chile submits that the Panel erred in finding a normative content to "ordinary" customs duties on the grounds that Members' bindings of "ordinary customs duties" are always stated in ad valorem or specific terms. According to Chile, the Panel also erred in finding that "ordinary customs duties" must not take account of any other, exogenous, factors, such as, for instance, fluctuating world market prices.⁵⁴

50. Chile sees no basis in logic or law for the Panel's conclusion that the existence of an "exogenous" basis for setting the level of part of the duty within the binding somehow renders the resulting duty other than "ordinary". In Chile's view, bindings set a ceiling on ordinary duties that can be applied to a product, but, as the Appellate Body found in Argentina - Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items ("Argentina - Textiles and Apparel "), they do not thereby prescribe what form the bound duties must take.⁵⁵ Further, nothing in Article II:1(b) limits how the level of ordinary customs duties can be determined and expressed up to the level of the binding, so long as the binding is respected.

51. Chile further maintains that the purpose of Article II:1(b) and the Understanding on Article II:1(b) was not to create some new class of charge that, although applied at a rate below the tariff binding, was nonetheless forbidden because it was not the right type or kind of duty. Rather, Chile contends, the purpose of the second sentence of Article II:1(b) and the Understanding on Article II:1(b) was to ensure that bindings on "ordinary customs duties" could not be circumvented by the creation of new types of duties or charges on imports or by increasing existing "other duties or charges".

52. Chile further argues that the Panel erred in finding that "PBS duties are neither in the nature of ad valorem duties, nor specific duties nor a combination thereof"⁵⁶ and points out that the decision to apply a duty at less than the bound rate will always be based on exogenous factors. Thus, there is no basis for saying that "exogenous factors" make applied duties not "ordinary".

53. Chile criticizes the statement of the Panel that the disallowance of the lowest 25 per cent of the monthly average prices makes the applied duty higher than it would be if all prices were included in the calculation of the price band. Chile argues that there is no legal basis in the WTO for asserting that the amount of the duty applied under the price band system is relevant in determining whether or not these duties are ordinary customs duties.

54. Finally, Chile objects to the Panel's observation whereby the fact that the duty resulting from Chile's price band system is determined as of the date of exportation of the merchandise would violate Article I of the GATT 1994. Article I does not prohibit it from using the date of exportation to determine the applicable duty because using this date does not result in discrimination based on the origin of the products. Chile further submits that a "duty does not become an 'other duty or charge' because it may be applied in violation of the MFN rule".⁵⁷

B. Arguments of Argentina - Appellee

1. Article 11 of the DSU

55. Argentina disputes Chile's contention that the Panel's findings on the second sentence of Article II:1(b) are not within the Panel's mandate and are inconsistent with Article 11 of the DSU. Argentina takes the view that it properly set out a claim that the price band system violates Article II:1 of the GATT 1994 in its request for establishment of a panel. Argentina claims that its reference, in its request for establishment of a panel, to Chile's breach of "its commitments on tariff bindings" was recognized by the Panel, both parties and all third parties to refer to the obligations of Article II:1(b) of the GATT 1994.

56. Argentina asserts that it fully satisfied the requirements of Article 6.2 of the DSU, which requires that the request for the establishment of a panel identify the specific measures at issue and provide a brief summary of the legal basis of the complaint. Argentina contends that it clearly identified the measures at issue, namely Law 18.525 as amended by Law 18.591 and Law 19.546, as well as the regulations and complementary provisions and/or amendments, and that it identified the obligations of Article II as the legal basis for its claim.

57. Relying on the Appellate Body reports in European Communities - Regime for the Importation, Sale and Distribution of Bananas ("EC - Bananas III")⁵⁸ and Korea - Definitive Safeguard Measures on Imports of Certain Dairy Products ("Korea - Dairy")⁵⁹, Argentina argues that Article 6.2 of the DSU does not require a complainant to spell out the full text of the Articles of the GATT 1994 or other covered agreements supporting a particular claim⁶⁰, and that "whether the mere listing of the articles claimed to have been violated meets the standard of Article 6.2 must be examined on a case-by-case basis ... tak[ing] into account whether the ability of the respondent to defend itself was prejudiced ... ".⁶¹

58. Argentina contends that Chile's allegation as to the lack of a claim, under the second sentence of Article II:1(b), in Argentina's request for the establishment of a panel, is in fact a complaint relating to the alleged lack of arguments relating to the two sentences of Article II:1(b). Argentina recalls that the Appellate Body has clarified that, as opposed to claims, which must be set out in the panel request, "arguments" supporting those claims may be set out and progressively clarified during the course of the panel proceedings.⁶² Argentina contends that this is what occurred in the proceedings before the Panel. Argentina argues that this appeal presents a different situation from that in US - Certain EC Products, where the panel made a finding on an issue for which a claim had not been made.

59. Argentina argues that, even if the Appellate Body determines that Article II:1(b) of the GATT 1994 sets forth more than one legal basis, it correctly identified the relevant specific legal basis. Argentina refers to Thailand - Antidumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland ("Thailand - H Beams"), a case involving multiple obligations stemming from the same article, where the Appellate Body concluded that whenever a paragraph informs the rest of an article, it suffices for the complainant to refer to the language of that paragraph in order for the claims under other sub-paragraphs of the article to be properly before the Panel.⁶³ The Appellate Body considered sufficient the simple listing of the article in question "[i]n view of the inter-linked nature of the obligations ... " in that article.⁶⁴ Argentina argues that the same conclusion applies in this case because the obligations in the first and second sentences of Article II:1(b) are inter-linked, as is evident from the use of the word "also" connecting the second sentence to the first. Argentina contends that Chile's assumption that the first and second sentences of Article II:1(b) are independent obligations is incorrect, because both sentences relate to the obligation of Members not to exceed their tariff bindings. Therefore, according to Argentina, the examination of Chile's price band duties' consistency with Article II:1(b) cannot exclude consideration of the second sentence of that Article.

60. Argentina maintains that, because the structure of Article II:1(b) is similar to that of Article III:2 of the GATT 1994, the statements of the Appellate Body in Canada - Certain Measures Concerning Periodicals ("Canada - Periodicals")⁶⁵ are relevant. Argentina recalls that the Appellate Body found in that case that it could move from an examination of the first sentence of Article III:2 of the GATT 1994 to an examination of the second sentence as "part of a logical continuum."⁶⁶

61. Argentina stresses that the fact that the second sentence of Article II:1(b) of the GATT 1994 is not specifically mentioned in the terms of reference did not impair the ability of Chile to defend itself. Although Argentina concedes that it directed most of its arguments to the first sentence of Article II:1(b), it maintains that Chile had ample notice of the claim because the issue of whether the duties resulting from Chile's price band system are ordinary customs duties or not was discussed during the Panel proceedings. Argentina contests Chile's allegation that it did not raise the issue of an infringement of the second sentence of Article II:1(b), and points to paragraphs 23 and 24 of its rebuttal submission to the Panel, where, in the context of its claim under Article II:1(b) of the GATT 1994, it stated that the duties resulting from Chile's price band system are not "ordinary customs duties". In addition, Argentina addressed the second sentence in its response to Question 3 posed by the Panel.⁶⁷

62. Argentina adds that two third parties-the European Communities and the United States-provided arguments regarding the second sentence of Article II:1(b) in responding to Question 3 of the Panel. According to Argentina, the arguments of the United States and the European Communities, supplementing its own arguments, provided a more than sufficient basis for the Panel to decide Argentina's claim under Article II:1(b). Moreover, Argentina argues that Chile's claim that it was deprived of a fair right of response regarding the second sentence of Article II:1(b)⁶⁸ is belied by the facts because Chile, like Argentina and the third parties, was itself asked to respond to Question 3 of the Panel on "other duties or charges" referred to in the second sentence of Article II:1(b). Accordingly, Chile was fully aware of the Panel's interest in the second sentence of Article II:1(b).

63. Argentina argues that, in any event, even if none of the parties had advanced arguments regarding the second sentence of Article II:1(b), the Panel would have had the right, indeed the duty, to develop its own legal reasoning to support the proper resolution of Argentina's claim. Argentina recalls that in European Communities - Measures Concerning Meat and Meat Hormones ("EC - Hormones"), the Appellate Body explicitly ruled that nothing in the DSU limits the faculty of a panel freely to use arguments submitted by any of the parties-or to develop its own legal reasoning-to support its own findings and conclusions on the matter under its consideration.⁶⁹

64. Argentina asserts that the Panel did no more than discharge its duty to make an objective assessment of the matter before it, by developing its legal reasoning on the basis of arguments advanced by the parties and third parties. Thus it did not breach its duty under Article 11 of the DSU. The standard for breaches of that provision is very high, as articulated by the Appellate Body in Australia - Measures Affecting Importation of Salmon ("Australia - Salmon ").⁷⁰ In Argentina's view, Chile has not demonstrated that the Panel in this case committed any error or abused its discretion in a manner that comes even close to the level of gravity required to sustain a claim under Article 11 of the DSU.

2. Order of Analysis

65. Argentina asks the Appellate Body, as a preliminary matter, to reject Chile's "claim" that the Panel erred in choosing to examine Article 4.2 of the Agreement on Agriculture before examining Article II:1(b) of the GATT 1994. That claim is not properly before the Appellate Body because Chile failed to include it in its Notice of Appeal. Argentina notes that it was first made aware of "this aspect of Chile's challenge" when it received Chile's appellant's submission. According to Argentina, "the rules regarding notice of claims are designed to protect against precisely this type of situation."⁷¹

66. Argentina submits that-even if the Appellate Body were to find that Chile's "claim" was properly before it as a procedural matter�t should nevertheless reject the claim on substantive grounds. Argentina recalls the finding of the Appellate Body in EC - Bananas III that a panel should start its examination of a claim under the agreement which "deals specifically, and in detail" with the measure being challenged.⁷² Argentina agrees with the Panel that Article 4.2 of the Agreement on Agriculture "deals more specifically and in detail with measures affecting market access of agricultural products"⁷³ because Chile's price band system applies only to agricultural products, whereas Article II:1(b) applies generally to trade in goods.

67. According to Argentina, Chile's argument that Article 4.2 of the Agreement on Agriculture is not a specific or more detailed way of addressing the prohibition against exceeding tariff bindings under Article II:1(b) of the GATT 1994 is "flawed" because the obligation contained in Article 4.2 would be rendered meaningless if it were reduced, as Chile proposes, to a simple tariff measure.⁷⁴ Article 4.2 has nothing to do with the obligation to respect tariff bindings. Argentina submits that this has been recognized by all participants in these proceedings, even by Chile, which concedes that the prohibitions in Article 4.2 of the Agreement on Agriculture apply without regard to whether the measures breach a tariff binding.

3. Article 4.2 of the Agreement on Agriculture

68. Argentina endorses the Panel's finding that Chile's price band system is inconsistent with Article 4.2 of the Agreement on Agriculture . According to Argentina, the Panel also came to the correct conclusion when it found that the duties resulting from Chile's price band system are not "ordinary customs duties" within the meaning of Article 4.2 and footnote 1 thereto.

69. Argentina submits that the Panel correctly applied the rules of interpretation under the Vienna Convention in its analysis of Article 4.2 and footnote 1 of the Agreement on Agriculture . Contrary to Chile's contention, the Panel did not proceed to analyze footnote 1 until after it had completed the analysis of the main text of Article 4.2 (on a textual and a contextual basis) and accounted for its object and purpose.

70. Argentina adds that the Panel acted consistently with Articles 31 and 32 of the Vienna Convention by resorting to the notifications of the GATT Contracting Parties and the Reports of the GATT Committees as supplementary means of interpretation. In doing so, the Panel examined documents which predated the entry into force of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement"). In Argentina's view this was the correct way to proceed because those documents form part of the GATT acquis⁷⁵ and also fall into the category of all material which the parties had before them when drafting the final text.⁷⁶

71. Argentina points out that Chile fails to address the core issue of the Panel's findings that the price band system as such-the measure challenged by Argentina in these proceedings-is not simply a duty. Rather, it is a mechanism that imposes burdens on trade-such as lack of predictability and transparency-that are distinct from and, indeed, different in kind from ordinary customs duties. Argentina argues that Chile attempts to bridge the gap between ordinary customs duties and duties resulting from its price band system by arguing that a duty that varies by a formula is more predictable than one that varies by political decision. Argentina points out that the formula is itself based on a political decision and, moreover, the key is the variability of the duties imposed under the price band system. With the price band system one cannot know the actual duty. All that is known is a formula which will provide a number which changes over transactions. Thus Argentina concludes that, while Chile does have the power to set ordinary customs duties at or below its bound rate, this does not confer upon Chile the power to create an opaque mechanism by which it constantly varies its duties.

72. Argentina points out that, even without exceeding the bound level, the lower the applied ad valorem tariff (currently 7 per cent), the higher the additional specific duties resulting from the price band system. Consequently, when international prices are low, uncertainty increases, and the price band system's defective transmission of world prices insulates the domestic market from world market prices, up to the break-even prices. This inhibition of the transfer of world prices could be possible only through the application of something that is different from ordinary customs duties. According to Argentina, this is exactly the case of variable duties under the price band system, which are an exclusive function of exogenous factors, irrespective of either the transaction value, a characteristic of the product (that is, weight), or a combination thereof.

73. Argentina notes that, after making a finding as to what are the main characteristics of variable import levies and minimum import prices, the Panel concluded that a measure is similar "if, based on a weighing of the evidence before us, it shares sufficiently the fundamental characteristics outlined above."⁷⁷ Consequently, the Panel compared the price band system with the characteristics of those two listed measures in footnote 1 of Article 4.2 and found the price band system to be a "hybrid instrument."⁷⁸ According to Argentina, this clearly refutes Chile's assertion that the Panel decided to "invent its own definition"⁷⁹ of "variable import levy" and "minimum import price".

74. Finally, Argentina rejects Chile's assertion that the price band system and measures listed in footnote 1 to Article 4.2 are not similar. Argentina disagrees with Chile's contention that the Panel incorrectly assessed the price band system when it found that the lower threshold of the price band system can operate in practice as a "proxy" to a minimum import price. This is a factual finding arising from the factual evidence put forward by Chile and Argentina during the Panel proceeding and, as such, is not subject to appellate review. Argentina believes that Chile fails to show that the measures are not "similar."

4. Article II:1(b) of the GATT 1994

75. Argentina endorses the Panel's finding that Chile's price band system is "similar" to both a "variable import levy" and a "minimum import price," and that, therefore, the price band duties are not "ordinary customs duties", but, rather, are "other duties or charges of any kind". Argentina, moreover, agrees with the Panel that Chile's price band system is in violation of the second sentence of Article II:1(b) because Chile failed to record the duties resulting from its price band system in the "other duties and charges" column of its Schedule, as it should have done in the light of the Understanding on Article II:1(b).

76. Argentina submits that, for purposes of Article II:1(b), the Panel did not need to address the specific legal nature of the duties resulting from Chile's price band system because the legal nature of such duties would have become relevant only if the price band system were found to be consistent with Article 4.2 of the Agreement on Agriculture . Moreover, Argentina argues that the Panel could not have, in any event, analyzed the WTO-consistency of the price band duties in isolation from the price band system without infringing its obligations under Article 11 of the DSU.

77. Argentina also notes that, in the Panel proceedings, it did not only challenge the "duties" resulting from Chile's price band system. Rather, it challenged the price band system as such by arguing that the price band system "does not ensure certainty in respect of market access for agricultural products"⁸⁰ and "caused Chile to breach its commitments on tariff bindings in relation to the concessions set forth in its national schedule".⁸¹ In addition to the fact that the price band system infringes Article 4.2, Argentina argues that a separate violation under Article II:1(b) can and should be found since Chile-by its own admission-has imposed duties in excess of its tariff binding.

78. Argentina thus asks the Appellate Body to uphold the Panel's finding that duties resulting from Chile's price band system constitute "other duties or charges" within the meaning of the second sentence of Article II:1(b).

79. However, if the Appellate Body were to reverse the Panel's findings under Article 4.2 that the price band system constitutes a similar border measure which had to be converted into an "ordinary customs duty", and to find that the price band system does not impose an "other duty or charge" within the meaning of the second sentence of Article II:1(b), Argentina requests the Appellate Body to complete the Panel's analysis by making a finding that Chile's price band system, and the variable duties resulting from it, are inconsistent with the first sentence of Article II:1(b).⁸² According to Argentina, the Appellate Body would be able to complete the legal analysis in the case at hand because the factual findings of the Panel and the undisputed facts in the Panel record provide a sufficient basis for it to do so. In particular, Argentina notes that Chile has itself conceded that it has applied price band duties in excess of its tariff bindings.⁸³ Thus, Argentina concludes that the Appellate Body could find a violation of the first sentence of Article II:1(b) even if it were to find that the price band duties are "ordinary customs duties".⁸⁴

42 Chile's appellant's submission, para. 24.

43 Panel Report, paras. 4.5-4.7.

44 Appellate Body Report, WT/DS165/AB/R, adopted 10 January 2001, paras. 110-114.

45 Panel Report, para. 7.16.

46 Chile's appellant's submission, para. 81.

47 Ibid., para. 95.

48 Ibid., para. 92.

49 Panel Report, para. 7.34.

50 Done at Vienna, 23 May 1969, 1155 U.N.T.S. 331; 8 International Legal Materials 679.

51 Chile's appellant's submission, para. 104.

52 Panel Report, para. 7.45.

53 Agreement on Agriculture , Preamble, para. 3.

54 Panel Report, para. 7.52.

55 Appellate Body Report, WT/DS56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998:III, 1003, para. 46.

56 Panel Report, para. 7.62.

57 Chile's appellant's submission, para. 76.

58 Appellate Body Report, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, 591, para. 141.

59 Appellate Body Report, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, 3, paras. 124 and 127.

60 Argentina's appellee's submission, para. 20.

61 Appellate Body Report, Korea - Dairy, supra, footnote 59, para. 127.

62 Appellate Body Report, EC - Bananas III, supra, footnote 58, para. 141.

63 Appellate Body Report, WT/DS122/AB/R, adopted 5 April 2001, paras. 90-93 and para. 106; Argentina's appellee's submission, para. 27.

64 Appellate Body Report, Thailand - H Beams, supra, footnote 63, para. 93.

65 Appellate Body Report, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449.

66 Ibid., at 469.

67 Argentina's appellee's submission, para. 35.

68 Chile's appellant's submission, para. 23.

69 Appellate Body Report, WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, para. 156.

70 Appellate Body Report, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327, para. 266.

71 Argentina refers more specifically to Rule 20(2)(d) of the Working Procedures for Appellate Review, which provides in pertinent part that:

A Notice of Appeal shall include the following information:

�

(d) a brief statement of the nature of appeal, including the allegations of errors in the issues of law covered in the panel report and legal interpretations developed by the Panel."