As previously reported, a World Trade Organisation dispute settlement panel ruled earlier this year in favour of Panama in a dispute with Colombia regarding certain import measures and port restrictions that allegedly inhibit the access of Panamanian goods to the Colombian market. On the one hand, Panama argued that Colombia’s use of indicative prices for certain products - including apparel, fabrics, textile made-ups and footwear - is inconsistent with WTO customs valuation requirements because duties and charges are assessed on the basis of those indicative prices rather than the product’s transaction value. Panama also contended that the imposition of indicative prices as the basis for the calculation of customs duties was likely to result in various instances in the imposition of duties in excess of applicable bound rates, which would be inconsistent with Colombia’s obligations under the GATT. In addition, Panama challenged a decision by Colombia to require goods classified under HS Chapters 50 through 64 coming from Panama’s Free Zone of Colon to be imported exclusively through the jurisdictions of the Special Customs Administration of Bogota and the Barranquilla Customs Office, in addition to being subject to certain other requirements. 

The WTO panel agreed with Panama that (1) the various resolutions establishing indicative prices are inconsistent as such with the obligations established in the Customs Valuation Agreement, and (2) the ports of entry restrictions are inconsistent with Article I:1, the first and second sentences of Article V:2, the first sentence of Article V:6, and Article XI:1 of the GATT 1994. The two sides subsequently sought arbitration to determine the reasonable period of time for the implementation of the panel’s recommendations and the arbitrator recently ruled that Colombia has until 4 February 2010 to implement those recommendations.

In general, any action by Colombia to eliminate the existing port restrictions would be expected to have a positive effect on Hong Kong and mainland Chinese-origin merchandise exported to Colombia through Panama’s Free Zone of Colon. Similarly, the elimination of indicative prices, which are thought to be targeted primarily at lower-priced Asian textiles, apparel and footwear, could have a similarly favourable effect on trade with Hong Kong and China.