[WTO Case Review Series No.17] Peru—Additional Duty on Imports of Certain Agricultural Products (WT/DS457): Certain implications on the variable tariff system and the relationship between the WTO Agreement and regional trade agreements

This case is a dispute over the consistency of additional duties by Peru on certain agricultural products with the WTO Agreement of Agriculture (AoA) and the General Agreement on Tariffs and Trade (GATT), which are levied based on price ranges varying in relation to movements in the world market prices of these products. Both the panel and the Appellate Body found the measure in question in violation of the relevant provisions in accordance with the interpretation established by the precedents. The panel/Appellate Body ruling in this respect revealed political/economic implication of art.4.2 of AoA, and gave significant implication to Japan's tariff system on pork as well.

This case has drawn more attention by the legal academic circle to the arguments in its admissibility, rather than its substantive issues. Peru, a complained party, claimed that Guatemala, a complainant, due to conclusion of a free trade agreement (FTA) between both countries, consented to the former's maintenance of the measure in question, so that the latter's bringing of the case to the WTO violated the good faith principle. Peru also argued the FTA had amended partially the WTO Agreement between both counties, or that it is permissible to maintain the measure in question, provided one interprets the relevant provisions of the WTO Agreement taking the FTA into consideration. While the Appellate Body considers roles played by FTAs in interpretation or inter se modification of the WTO Agreement as very limited, and consequently dismissed Peru's claims, this dispute again has posed to us a question as to how to reconcile a legal relationship between the WTO Agreement and regional economic agreements.