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WTO Rules On Peruvian Agricultural Duties

by Mike Godfrey,, Washington

04 December 2014

The World Trade Organization (WTO) has ruled against Peru's imposition of additional duties on imports of certain agricultural products.

Peru applies an additional duty on imports of dairy products, corn, rice, and sugar when international prices for these products fall below a certain level determined by a mechanism known as the price range system (PRS).

Guatemala disputed the measure, arguing that it violates WTO rules, and a WTO panel was set up in July 2013 to arbitrate in the dispute.

Guatemala had also argued that the measures contravened the terms of a free trade agreement between the two countries. However, Peru argued that, under the FTA, signed in December 2011, provisions were included to allow Peru to maintain its PRS, and also to prevent Guatemala from challenging the PRS in WTO dispute settlement proceedings.

The panel ruled on November 27, 2014, that the additional duties resulting from the PRS are inconsistent with the Agreement on Agriculture and the General Agreement on Tariffs and Trade (GATT) 1994.

Further, the Panel said that it had found no evidence that Guatemala brought these proceedings in a manner contrary to the terms of provisions concerning the PRS in the two countries' FTA. It also noted that, since the FTA has not entered into force, the FTA provisions were not binding on the parties at the time of the panel report.

The panel recommended that Peru should be required to bring the additional duties into conformity with its WTO obligations. However, it did not request the elimination of the underlying PRS mechanism.

TAGS: tariffs | World Trade Organisation (WTO) | food | trade disputes | Guatemala | Peru | import duty | trade

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