The “Regionalism vs Multilateralism” Issue in International Trade Law: Revisiting the Peru–Agricultural Products Case

Abstract

1. On 31 July 2015, the Dispute Settlement Body of the World Trade Organization (WTO) adopted the panel and appellate reports on Peru—Agricultural Products.1 In this dispute, Guatemala challenged additional duties on imports of milk, maize, rice and sugar that Peru had imposed under a so-called “Price Range System” (PRS)—a stabilization mechanism for neutralizing fluctuations of international prices. The PRS enables the Peruvian government to apply variable duties additional to the tariff if the international reference prices for the subject products are lower than certain floor price levels, and tariff rebates if those reference prices are higher than certain ceiling price levels.2 The PRS operates under Supreme Decree No. 115-2001-EF published on 22 June 2001.3 2. The Appellate Body agreed with the panel that Peru violated Article 4.2 of the Agreement on Agriculture by maintaining a measure which constituted, or was similar to, a “variable import levy” that was required, under that provision, to be converted into ordinary customs duties. It also confirmed that the additional duties resulting from the PRS amounted to “other duties or charges” which were not recorded in Peru’s schedule of concessions, contrary to Article II:1(b) of the General Agreement on Tariffs and Trade (GATT). Peru countered that the PRS was in fact allowed by a free trade agreement (FTA) with Guatemala and thus represented a lawful measure, but the Appellate Body denied this claim.