Chile – price band system and safeguard measures relating to certain agricultural products

Abstract

This paper addresses the dispute brought to the World Trade Organization (WTO) by Argentina concerning certain Chilean measures affecting the importation of wheat, wheat flour, oil seeds, edible vegetable oils and sugar. The complaint by Argentina challenged two types of policies – a ‘price band system’ that was applicable to four of those product categories, and safeguard measures that were applicable to three of them. The WTO panel ruled in favor of Argentina on both sets of measures. It found that the price band system violated Article IV of the Agriculture Agreement and Article II of GATT 1994. The safeguard measures, according to the panel, violated various provisions of the Safeguards Agreement, as well as Article XIX of GATT 1994. Chile elected not to appeal the panel ruling regarding the safeguard measures, but did appeal the adverse finding as to the price band system. The Appellate Body subsequently affirmed in substantial part the finding that the price band system violated Article 4 of the Agriculture Agreement, but reversed the finding of a violation under Article II of GATT 1994. Chile has since indicated an intention to comply with the ruling, and an arbitration pursuant to Article 21.3 of the DSU determined that the reasonable period of time for compliance would expire on December 23, 2003.