Report of the Appellate Body

(Continued)

VI. Article 11 of the DSU

145. We next ask whether the Panel acted inconsistently with Article 11 of the DSU. Chile argues that the Panel did so because the Panel made a finding under the second sentence of Article II:1 (b) of the GATT 1994, even though Argentina made no claim or argument under that sentence.

146. The first sentence of Article II:1(b) of the GATT 1994 reads as follows:

The products described in Part I of the Schedule relating to any Member, which are the products of territories of other Members, shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set forth and provided therein. (emphasis added)

The second sentence of that provision states:

Such products shall also be exempt from all other duties or charges of any kind imposed on or in connection with the importation in excess of those imposed on the date of this Agreement or those directly and mandatorily required to be imposed thereafter by legislation in force in the importing territory on that date. (emphasis added)

147. The Panel's reasoning and findings under Article II:1(b) of the GATT 1994 may be summarized as follows. The Panel began by finding that the first sentence of Article II:1(b) is not applicable to the Chilean price band duties, because the Panel had already found that they are not "ordinary customs duties":

We have found above that the Chilean PBS is a border measure "other than an ordinary customs duty", which is prohibited under Article 4.2 of the Agreement on Agriculture. We have also found that "ordinary customs duties" must have the same meaning in Article 4.2 of the Agreement on Agriculture and Article II:1(b) of GATT 1994. Consequently, the Chilean PBS duties not constituting ordinary customs duties, their consistency with Article II:1(b) cannot be assessed under the first sentence of that provision, which only applies to ordinary customs duties.¹²⁸ (emphasis added)

148. Having determined that the duties resulting from Chile's price band system could not be assessed under the first sentence of Article II:1(b), the Panel then proceeded to examine those duties under the second sentence of Article II:1(b). The Panel stated:

The next question is whether the Chilean PBS duties could be considered as "other duties or charges of any kind" imposed on or in connection with importation, under the second sentence of Article II:1(b). We have already indicated that all "other duties or charges of any kind" should in our view be assessed under the second sentence of Article II:1(b). Pursuant to the Uruguay Round Understanding on the Interpretation of Article II:1(b), such other duties or charges had to be recorded in a newly created column "other duties and charges" in the Members' Schedules.¹²⁹

The Panel observed that Chile did not record its price band system in its Schedule under the column for "other duties and charges" as governed by the second sentence:

If other duties or charges were not recorded but are nevertheless levied, they are inconsistent with the second sentence of Article II:1(b), in light of the Understanding on the Interpretation of Article II:1(b). We note that Chile did not record its PBS in the "other duties and charges" column of its Schedule.¹³⁰ (emphasis added)

The Panel concluded that:

� the Chilean PBS duties are inconsistent with Article II:1(b) of the GATT 1994.¹³¹

149. Chile appeals this finding, and argues that the Panel ruled on a claim that was neither made nor argued. Chile maintains that the Panel exceeded its mandate and deprived Chile of a "fair right of response".¹³² In addressing this issue, we will examine, first, whether Argentina made a claim under the second sentence of Article II:1(b) of the GATT 1994, and, next, whether the Panel acted inconsistently with Article 11 of the DSU in making a finding under that sentence. To determine whether Argentina made a claim under the second sentence of Article II:1(b), we look first to Argentina's request for the establishment of a panel, which determines the Panel's terms of reference. Argentina's request reads in relevant part:

Under Law 18.525, as amended by Law 18.591 and subsequently by Law 19.546, as well as the regulations and complementary provisions and/or amendments, Chile applies a PBS which is inconsistent with various provisions of the GATT 1994 and with the Agreement on Agriculture .

The price band system does not ensure certainty in respect of market access for agricultural products and has caused Chile to breach its commitments on tariff bindings in relation to the concessions set forth in its national schedule. Argentina submits that the said legislation is inconsistent with Article II of the GATT 1994 and with Article 4 of the Agreement on Agriculture .¹³³ (emphasis added)

150. The Panel request refers to Article II of the GATT 1994 in general terms. No specific reference is made to any of the seven paragraphs or eight subparagraphs of Article II of the GATT 1994. Argentina's request clearly does not limit the scope of Argentina's claims to the first sentence of Article II:1(b). Therefore, we find that Article II in its entirety-including the second sentence of Article II:1(b)-is within the Panel's terms of reference.

151. This, however, is not the end of our inquiry on this issue. Chile does not dispute that Argentina included Article II:1(b) in the request for the establishment of a panel.¹³⁴ However, Chile submits that making a general reference to Article II in the Panel request is not dispositive of whether Argentina has actually made a claim under the second sentence of Article II:1(b), and, thus, of whether the Panel was entitled to make a finding under that provision.

152. Chile argues that Argentina did not make a claim under Article II:1(b) because Argentina did not articulate such a claim in any of its submissions before the Panel. In making this argument, Chile relies on our Report in US - Certain EC Products, where we said, with respect to a claim relating to another provision of the covered agreements:

� the fact that a claim of inconsistency with Article 23.2(a) of the DSU can be considered to be within the Panel's terms of reference does not mean that the European Communities actually made such a claim.¹³⁵

153. The question before us in this appeal is whether the claim that Argentina actually made before the Panel was limited to the first sentence of Article II:1(b), or whether that claim also included the second sentence of that provision.

154. According to the Panel, Argentina contended, in its first written submission that:

The PBS as such violates Article II:1(b) since its application has led Chile in specific cases to collect duties in excess of the rates bound in its National Schedule No. VII and

The PBS also violates Article II:1(b) because, by its structure, design and mode of application, it potentially leads to the application of specific duties in violation of the bound tariff of 31.5 per cent.¹³⁶ (emphasis added)

155. Argentina's contentions, in its first submission to the Panel, referred to Article II:1(b) in general; no explicit reference is made either to the first or the second sentence. However, despite this general language, a close examination of Argentina's first submission reveals that Argentina addressed only the obligation set out in the first sentence of Article II:1(b), and not that in the second sentence.

156. In its first submission, Argentina focused on the argument that Chile exceeded its bound rate of 31.5 per cent in imposing price band duties. Argentina must necessarily have been referring in this submission only to Chile's obligations under the first sentence of Article II:1(b), because 31.5 per cent is the rate that Chile has bound in the column of its Schedule for ordinary customs duties. Ordinary customs duties are governed by the first sentence of Article II:1(b); they are not relevant to the second sentence. Argentina could not have been referring in this submission to Chile's obligations under the second sentence of Article II:1(b), because Chile has not scheduled any other duties or charges governed by that sentence. Argentina refered also in this submission to the "structure, design and mode of application"¹³⁷ of Chile's price band system as being potentially violative of the 31.5 per cent bound rate, but this rate applies only to duties falling under the first sentence of Article II:1(b).

157. We conclude, therefore, that Argentina did not articulate a claim under the second sentence of Article II:1(b) in its first submission.

158. However, as Argentina points out, we ruled in EC - Bananas III that:

There is no requirement in the DSU or in GATT practice for arguments on all claims relating to the matter referred to the DSB to be set out in a complaining party's first written submission to the panel.

�

We do not agree with the Panel's statement that a "failure to make a claim in the first written submission cannot be remedied by later submissions or by incorporating the claims and arguments of other complainants".¹³⁸ (emphasis added)

For this reason, it is necessary to determine whether Argentina articulated a claim under the second sentence of Article II:1(b) in subsequent submissions to the Panel.

159. Argentina concedes that it directed most of its arguments during the Panel proceedings to the first sentence of Article II:1(b).¹³⁹ However, Argentina states that it addressed the second sentence of that provision in its response to Question 3 posed by the Panel, which reads in relevant part as follows:¹⁴⁰

[Response to Question 3(b):] Under Article II:1(b) of the GATT 1994, other duties or charges are merely those that do not constitute "ordinary customs duties", such as the other duties or charges which appear in columns 6 and 8 of the national schedules, as appropriate.

[Response to Question 3(c):] "Other duties or charges of any kind" within the meaning of Article II:1(b) of the GATT 1994 cannot be considered as "similar border measures other than ordinary customs duties".

[Response to Question 3(d):] The bound duty level for what is considered to be "other duties and charges of any kind" is the rate registered in that column. Consequently, that level is the one to be considered in determining inconsistency with Article II:1(b) of the GATT 1994, without prejudice to the consistency of other duties or charges with other obligations under the GATT 1994.

160. Argentina contends that, in this response to Question 3 of the Panel, there are arguments relating to a claim under the second sentence of Article II:1(b). Yet this response sets out only a general description of Argentina's interpretation of the second sentence of Article II:1(b), and one that was offered by Argentina only because the Panel asked for it. There is, in this response, no discussion whatsoever of Chile's price band system, or of how it relates to the obligation in that sentence. Nor is there any suggestion in this response that Chile's price band system is in violation of the second sentence of Article II:1(b). Furthermore, Argentina expresses no view in this response as to how the concept of "other duties or charges", within the meaning of the second sentence of Article II:1(b), could or would relate to the claims it raised. We note as well that Argentina did not refer at all to these responses in subsequent proceedings before the Panel.

161. Argentina also asserts that it articulated a claim under the second sentence of Article II:1(b) in its rebuttal submission¹⁴¹, where Argentina argues:

23. Argentina repeats once again that it does not question and never has questioned Chile's right to apply specific duties, as long as those duties are consistent with multilateral rules and regulations. However, the Chilean PBS is not a specific duty. Indeed, by its structure, design and mode of application, the PBS violates Article II:1(b) of the GATT 1994, since it has the potential to cause Chile to exceed its tariff binding. (underlining in original)

24. This is so because, as just stated, we are not dealing with a specific duty which constitutes an "ordinary customs duty" - a duty which, since it does not result in the levying of duties in excess of the bound rate, would not be the subject of a complaint by Argentina with respect to Article II:1(b) of the GATT 1994. Here, we are dealing with a surcharge whose structure, design and mode of application potentially leads to a violation of Chile's binding.

162. Neither of these paragraphs cited by Argentina from its rebuttal submission even mentions the second sentence of Article II:1(b). Moreover, these paragraphs appear at the beginning of a section in the rebuttal submission, entitled "Potential violation", in which Argentina seeks to explain its argument that Chile's price band system potentially violates the bound 31.5 per cent tariff rate. As we have already noted, that argument cannot be related to the second sentence of Article II:1(b), because that sentence has nothing to do with the bound 31.5 per cent tariff rate. Moreover, Chile concedes that it did not schedule its price band system under the column for "other duties or charges" governed by the second sentence of Article II:1(b). Therefore, if a violation of the second sentence were in issue, it would not be "potential," but certain.

163. Argentina contends also that two third parties-the United States and the European Communities-"provided argumentation regarding the second sentence of Article II:1(b)."¹⁴² In support of this contention, Argentina cites those third parties' responses to Question 3 posed by the Panel. However, even if these responses could be interpreted in the way Argentina would have us do-an issue which we need not decide in this appeal-these responses could not, in any event, assist Argentina in making a claim under the second sentence of Article II:1(b). These are the statements of third parties to this dispute. Third parties to a dispute cannot make claims. It was for Argentina, as the claimant, to make its claim; Argentina cannot rely on third parties to do so on its behalf. Moreover, we note that Argentina did not adopt these arguments of the third parties in subsequent proceedings.

164. In addition, Argentina contends that it made a claim under the second sentence of Article II:1(b) in the context of its arguments to the Panel under Article 4.2 of the Agreement on Agriculture , where it argued that duties resulting from Chile's price band system were not ordinary customs duties for the purposes of Article 4.2.¹⁴³ With this argument, Argentina appears to suggest that a claim may be made implicitly, and need not be made explicitly. We do not agree. The requirements of due process and orderly procedure dictate that claims must be made explicitly in WTO dispute settlement. Only in this way will the panel, other parties, and third parties understand that a specific claim has been made, be aware of its dimensions, and have an adequate opportunity to address and respond to it. WTO Members must not be left to wonder what specific claims have been made against them in dispute settlement. As we said in India - Patent Protection for Pharmaceutical and Agricultural Chemical Products (India - Patents):

All parties engaged in dispute settlement under the DSU must be fully forthcoming from the very beginning both as to the claims involved in a dispute and as to the facts relating to those claims. Claims must be stated clearly.¹⁴⁴

165. For all these reasons, we conclude that, although Argentina's request for the establishment of a panel was phrased broadly enough to include a claim under both sentences of Article II:1(b) of the GATT 1994, a close examination of Argentina's submissions reveals that the only claim made by Argentina was under the first sentence of Article II:1(b).

166. We are mindful that Argentina argues that, "[e]ven if none of the parties had advanced arguments regarding the second sentence of Article II:1(b) of the GATT 1994, 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."¹⁴⁵ (emphasis added) Argentina purports to find support for this position in our ruling in EC - Hormones, where we said 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.¹⁴⁶

167. However, Argentina's reliance on our ruling in EC - Hormones is misplaced. In EC - Hormones¹⁴⁷, and in US - Certain EC Products¹⁴⁸, we affirmed the capacity of panels to develop their own legal reasoning in a context in which it was clear that the complaining party had made a claim on the matter before the panel. It was also clear, in both those cases, that the complainant had advanced arguments in support of the finding made by the panel-even though the arguments in support of the claim were not the same as the interpretation eventually adopted by the Panel. The situation in this appeal is altogether different. No claim was properly made by Argentina under the second sentence of Article II:1(b). No legal arguments were advanced by Argentina under the second sentence of Article II:1(b). Therefore, those rulings have no relevance to the situation here.

168. Contrary to what Argentina argues, given our finding that Argentina has not made a claim under the second sentence of Article II:1(b), the Panel in this case had neither a "right" nor a "duty" to develop its own legal reasoning to support a claim under the second sentence. The Panel was not entitled to make a claim for Argentina¹⁴⁹, or to develop its own legal reasoning on a provision that was not at issue.¹⁵⁰

169. With all this in mind, we turn next to examine whether the Panel acted inconsistently with Article 11 of the DSU, as claimed by Chile. Article 11 of the DSU provides:

Article 11

Function of Panels

The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution. (emphasis added)

170. Chile argues that the Panel made a finding on a provision under which no claim or argument was made, and that this "deprived Chile of a fair right of response".¹⁵¹ Therefore, according to Chile, the Panel exceeded its mandate and, thus, acted inconsistently with Article 11.

171. In contrast, Argentina argues that the Panel acted consistently with Article 11. Argentina submits that the standard for breaches of Article 11 is "very high"¹⁵², and asserts that the Panel did not "deliberately disregard" or "refuse to consider" or "wilfully distort" or "misrepresent" the evidence before it.¹⁵³ Argentina also claims that Chile did not "demonstrate in any way that the Panel committed an 'egregious error that calls into question the good faith' of the Panel."¹⁵⁴ In Argentina's view, Chile has not demonstrated that the Panel in this case 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.

172. We agree with Argentina that the Panel did not refuse to consider, did not distort, and did not misrepresent any evidence relating to Chile's alleged violation of the second sentence of Article II:1(b). Indeed, there was no such evidence before the Panel. Nor, in our view, did the Panel commit an error that in any way calls into question the Panel's good faith. But the obligations under Article 11 of the DSU go beyond a panel's appreciation of the evidence before it. Article 11 obliges panels not only to make "an objective assessment of the facts of the case", but also "an objective assessment of the matter before it."

173. In this case, the Panel made a finding on a claim that was not made by Argentina. Having determined that the duties resulting from Chile's price band system could not be assessed under the first sentence¹⁵⁵ of Article II:1(b) of the GATT 1994, the Panel then proceeded to examine the measure under the second sentence of that provision. In so doing, the Panel assessed a provision that was not a part "of the matter before it". As we have explained, the terms of reference were broad enough to have included a claim under the second sentence of Article II:1(b). However, Argentina did not articulate a claim under that sentence; nor did Argentina submit any arguments on the consistency of Chile's price band system with the second sentence. Therefore, as with our finding in US - Certain EC Products, the second sentence of Article II:1(b) was not the subject of a claim before the Panel. Because it made a finding on a provision that was not before it, the Panel, therefore, did not make an objective assessment of the matter before it, as required by Article 11. Rather, the Panel made a finding on a matter that was not before it. In doing so, the Panel acted ultra petita and inconsistently with Article 11 of the DSU.

174. There is, furthermore, the requirement of due process. As Argentina made no claim under the second sentence of Article II:1(b) of the GATT 1994, Chile was entitled to assume that the second sentence was not in issue in the dispute, and that there was no need to offer a defence against a claim under that sentence. We agree with Chile that, by making a finding on the second sentence-a claim that was neither made nor argued-the Panel deprived Chile of a "fair right of response".¹⁵⁶

175. As we said in India - Patents, "� the demands of due process � are implicit in the DSU".¹⁵⁷ And, as we said in Australia - Salmon on the right of response, "[a] fundamental tenet of due process is that a party be provided with an opportunity to respond to claims made against it".¹⁵⁸ Chile contends that this fundamental tenet of due process was not observed on this issue.

176. As we said earlier, Article 11 imposes duties on panels that extend beyond the requirement to assess evidence objectively and in good faith, as suggested by Argentina. This requirement is, of course, an indispensable aspect of a panel's task. However, in making "an objective assessment of the matter before it", a panel is also duty bound to ensure that due process is respected. Due process is an obligation inherent in the WTO dispute settlement system. A panel will fail in the duty to respect due process if it makes a finding on a matter that is not before it, because it will thereby fail to accord to a party a fair right of response. In this case, because the Panel did not give Chile a fair right of response on this issue, we find that the Panel failed to accord to Chile the due process rights to which it is entitled under the DSU.

177. For these reasons, we find that, by making a finding in paragraph 7.108 of the Panel Report that the duties resulting from Chile's price band system are inconsistent with Article II:1(b) of the GATT 1994 on the basis of the second sentence of that provision, which was not part of the matter before the Panel, and also by thereby denying Chile the due process of a fair right of response, the Panel acted inconsistently with Article 11 of the DSU. Therefore, we reverse that finding.

VII. Order of Analysis

178. Chile argues that the Panel erred in choosing to examine Argentina's claim under Article 4.2 of the Agreement on Agriculture before examining its claim under Article II:1(b) of the GATT 1994. Argentina, on the other hand, endorses the order of analysis followed by the Panel.

179. Before addressing the substance of Chile's argument, we note that Argentina raises a procedural objection, alleging that Chile introduced this point for the first time in its appellant's submission, when, as Argentina sees it, Chile should have included this "allegation of error" in its

Notice of Appeal pursuant to Rule 20(2)(d) of the Working Procedures for Appellate Review.¹⁵⁹

180. We addressed a similar issue in United States - Import Prohibition of Certain Shrimp and Shrimp Products. There, we stated that:

The Working Procedures for Appellate Review enjoin the appellant to be brief in its notice of appeal in setting out "the nature of the appeal, including the allegations of errors". We believe that, in principle, the "nature of the appeal" and "the allegations of errors" are sufficiently set out where the notice of appeal adequately identifies the findings or legal interpretations of the Panel which are being appealed as erroneous. The notice of appeal is not expected to contain the reasons why the appellant regards those findings or interpretations as erroneous. The notice of appeal is not designed to be a summary or outline of the arguments to be made by the appellant. The legal arguments in support of the allegations of error are, of course, to be set out and developed in the appellant's submission.¹⁶⁰ (underlining added, emphasis in original)

181. Further, in EC - Bananas III, we stated, in the context of Article 6.2 of the DSU, that:

In our view, there is a significant difference between the claims identified in the request for the establishment of a panel, which establish the panel's terms of reference under Article 7 of the DSU, and the arguments supporting those claims, which are set out and progressively clarified in the first written submissions, the rebuttal submissions and the first and second panel meetings with the parties.

�

Article 6.2 of the DSU requires that the claims but not the arguments, must all be specified sufficiently in the request for the establishment of a panel � .¹⁶¹ (emphasis in original)

182. In our view, this distinction between claims and legal arguments under Article 6.2 of the DSU is also relevant to the distinction between "allegations of error" and legal arguments as contemplated by Rule 20 of the Working Procedures. Bearing this distinction in mind, we do not agree with Argentina that Chile's arguments regarding the order of analysis chosen by the Panel amount to a separate "allegation of error" that Chile should have�or could have�included in its Notice of Appeal. In fact, we do not see, nor has Argentina explained, what separate "allegation of error" could have been made, or what legal basis for such "allegation of error" there could have been. Rather than making a separate "allegation of error", Chile has, in our view, simply set out a legal argument in support of the issues it raised on appeal relating to Article 4.2 of the Agreement on Agriculture and Article II:1(b) of the GATT 1994.¹⁶²

183. Therefore, we reject Argentina's procedural objection, and we turn next to the substantive question before us, which is whether the Panel erred in deciding to address Argentina's claims under Article 4.2 of the Agreement on Agriculture before addressing Argentina's claims under Article II:1(b) of the GATT 1994.

184. On this substantive question, we observe first that, in approaching the analysis the way it did, the Panel relied on our ruling in EC - Bananas III. In that appeal, we stated that:

Although Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement both apply, the Panel, in our view, should have applied the Licensing Agreement first, since this agreement deals specifically, and in detail, with the administration of import licensing procedures. If the Panel had done so, then there would have been no need for it to address the alleged inconsistency with Article X:3(a) of the GATT 1994.¹⁶³ (underlining added)

Applying this reasoning, the Panel concluded that it should begin by examining Argentina's claims under Article 4.2 of the Agreement on Agriculture , because that Agreement "deals more specifically and in detail with measures affecting market access of agricultural products".¹⁶⁴

185. On appeal, Chile questions this decision by the Panel, and maintains that Article 4.2 of the Agreement on Agriculture "clearly is not specific or more detailed than Article II:1(b) with regard to tariff commitments". In Chile's view, Article II:1(b) deals with tariff bindings, whereas Article 4.2 deals with non-tariff measures.¹⁶⁵ Thus, as Chile sees it, the two provisions deal with different subjects. Accordingly, Chile appears to argue that the approach we articulated in EC - Bananas III does not apply to a relationship between two provisions that do not concern the same subject.

186. It is clear, as a preliminary matter, that Article 4.2 of the Agreement on Agriculture applies specifically to agricultural products, whereas Article II:1(b) of the GATT applies generally to trade in all goods. Moreover, Article 21.1 of the Agreement on Agriculture provides, in relevant part, that the provisions of the GATT 1994 apply "subject to the provisions" of the Agreement on Agriculture. In our Report in EC - Bananas III, we interpreted Article 21.1 to mean that:

� 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.¹⁶⁶

187. With these considerations in mind, we turn now to Chile's contention 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)".¹⁶⁷ Our consideration of this argument requires a comparison of these two provisions in these two covered agreements. Article 4.1 of the Agreement on Agriculture explains that market access concessions for agricultural products relate to tariff bindings and to reductions of tariffs, as well as to other market access commitments that can be found in Members' Schedules. Article 4.2 requires Members not to maintain "any measures of the kind which have been required to be converted into ordinary customs duties", and provides an illustrative list of measures "other than ordinary customs duties". Article 4.2 prevents WTO Members from circumventing their commitments on "ordinary customs duties" by prohibiting them from "maintaining, reverting to, or resorting to" measures other than "ordinary customs duties". The first sentence of Article II:1(b) of the GATT 1994 also deals with "ordinary customs duties", by requiring Members not to impose "ordinary customs duties" in excess of those recorded in their Schedules. Thus, the obligations in Article 4.2 of the Agreement on Agriculture and those in the first sentence of Article II:1(b) of the GATT both deal with "ordinary customs duties" and market access for imported products. As we see it, the difference between the two provisions is that Article 4.2 of the Agreement on Agriculture deals more specifically with preventing the circumvention of tariff commitments on agricultural products than does the first sentence of Article II:1(b) of the GATT 1994. Thus, in our view, this argument by Chile is flawed.

188. Chile argues, as well, that the drafters of Article 4.2 of the Agreement on Agriculture borrowed the term "ordinary customs duties" from Article II:1(b) of the GATT 1947, and that, therefore, Article II:1(b) of the GATT 1994 should be addressed before addressing Article 4.2 of the Agreement on Agriculture . Certainly it is true that Article 4.2 of the Agreement on Agriculture and Article II:1(b) of the GATT 1994 both refer to "ordinary customs duties". And we agree with the Panel that the term "ordinary customs duties" should be interpreted in the same way in both of these provisions. However, Article 4.2 of the Agreement on Agriculture and Article II:1(b) of the GATT 1994 must be examined separately to give meaning and effect to the distinct legal obligations arising under these two different legal provisions. The obligations arising from either of these provisions must not be read into the other. Therefore, the mere fact that the term "ordinary customs duties" in Article 4.2 derives from Article II:1(b) of the GATT 1947 does not suggest that Article II:1(b) should be examined before Article 4.2. Thus, we find no merit in this additional argument by Chile.

189. As these two provisions, in these two covered agreements, establish distinct legal obligations, it is our view that the outcome of this case would be the same, whether we begin our analysis with an examination of the issues raised under Article 4.2 of the Agreement on Agriculture , or with those raised under Article II:1(b) of the GATT 1994. Indeed, Chile itself concedes that the Panel could have come to a correct interpretation of both Article 4.2 and Article II:1(b) even by following the order of analysis that the Panel chose to adopt.¹⁶⁸ Chile, moreover, concedes that the Panel's decision to proceed first with an assessment of Argentina's claim under Article 4.2 would "not, by itself, be a reversible error".¹⁶⁹ We understand Chile to mean by this that the order of analysis would not, taken alone, alter the outcome of the case.

190. Finally, as a practical matter, even if we were to begin our analysis with Article II:1(b) of the GATT 1994-as Chile suggests-and were to find no violation of that provision because duties were not imposed in excess of a tariff binding-we would, nonetheless, be required to examine thereafter the consistency of Chile's price band system with Article 4.2 of the Agreement on Agriculture . Even if the duties resulting from the application of Chile's price band system did not exceed Chile's tariff binding, that system could nonetheless constitute a measure prohibited by Article 4.2. Indeed, and as we have already pointed out, Article 21.1 of the Agreement on Agriculture mandates that the provisions of the GATT 1994 apply subject to the provisions of the Agreement on Agriculture . Hence, any finding under Article II:1(b) of the GATT 1994 would be subject to further inquiry under the Agreement on Agriculture . In contrast, if we were to find first that Chile's price band system is inconsistent with Article 4.2 of the Agreement on Agriculture , we would not need to make a separate finding on whether the price band system also results in a violation of Article II:1(b) of the GATT 1994 in order to resolve this dispute. This is because a finding that Chile's price band system as such is a measure prohibited by Article 4.2 would mean that the duties resulting from the application of that price band system could no longer be levied�no matter what the level of those duties may be. Without a price band system, there could be no price band duties.

191. We therefore conclude that the Panel did not err in choosing to examine Argentina's claim under Article 4.2 of the Agreement on Agriculture before examining Argentina's claim under Article II:1(b) of the GATT 1994. Our own analysis will follow the same order.

128 Panel Report, para. 7.104.

129 Panel Report, para. 7.105.

130 Ibid., para. 7.107.

131 Ibid., para. 7.108.

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

133 WT/DS207/2, 19 January 2001.

134 We note that Chile has not challenged the sufficiency of the request for establishment of a panel under Article 6.2 of the DSU. This was confirmed by Chile at the oral hearing. Therefore, we need not and do not decide whether the request for establishment of a panel would or would not be sufficient under Article 6.2 of the DSU.

135 Appellate Body Report, supra, footnote 44, para. 112. We also stated in that case: "An analysis of the Panel record shows that, with the exception of two instances during the Panel proceedings, the European Communities did not refer specifically to Article 23.2(a) of the DSU � Our reading of the Panel record shows us that, throughout the Panel proceedings in this case, the European Communities made arguments relating only to its claims that the United States acted inconsistently with Article 23.1 and Article 23.2(c) of the DSU." (footnotes omitted, emphasis in original). Appellate Body Report, para. 112. We noted as well that: "The Panel record does show that the European Communities made several references to what it termed the 'unilateral determination' of the United States. However, � [a]t no point did the European Communities link the notion of a 'unilateral determination' on the part of the United States with a violation of Article 23.2(a)." Appellate Body Report, para. 113.

136 Panel Report, paras. 4.5.-4.7; Argentina's first written submission to the Panel, pp. 8 and 16.

137 Argentina's second oral statement to the Panel, para. 4. Panel Report, para. 4.7.

138 Appellate Body Report, supra, footnote 58, paras. 145, 147.

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

140 The following parts of Question 3 relate to the second sentence of Article II:1(b):

Question 3(b): Please discuss the difference between ordinary customs duties and other duties and charges of any kind.

Question 3(c): If "similar border measures other than ordinary customs duties" within the meaning of Footnote 1 to Article 4.2 of the Agreement on Agriculture cannot be considered "ordinary customs duties" within the meaning of Article II:1(b), first sentence, of GATT 1994, please state whether in your view some of those measures could be considered "other duties or charges of any kind" within the meaning of Article II:1(b), second sentence, of GATT 1994.

Question 3(d): The Understanding on the Interpretation of Article II:1(b) of GATT 1994 ("the Understanding") provides, in paragraph 1, that "the nature and level of any 'duties or charges' levied on bound tariff items [�] shall be recorded in the Schedules of concessions annexed to GATT 1994 against the tariff items to which they apply. Paragraph 2 of the Understanding provides that "[t]he date as of which 'other duties or charges' are bound, for the purposes of Article II, shall be 15 April 1994. (emphasis added) Thus, at the end of the Uruguay Round, pursuant to the Understanding, 'other duties or charges' were for the first time bound in the Schedules, in a separate column. In the light of the Understanding, are "other duties or charges of any kind" in your view inconsistent with Article II:1(b) of GATT 1994 because they exceed the bound tariff rate recorded in the bound rate column of the Schedule, or, rather, because they exceed the bound rate in the "other duties and charges" column of the Schedule? [On p. 4 of Chile's Schedule (Arg-10), for instance, these columns would correspond to columns Nos 4 ("Tipo Consolidado del Derecho") and 8 ("Demas Derechos y Cargas"), respectively.]