Colombia launches appeal arbitration in EU dispute over frozen French fries tariffs

11 Oct 2022 --- The Colombian government has decided to maintain its legal battle to protect domestic potato farmers against the alleged dumping practices carried out by Belgium, Dutch and German exporters. The government believes that the EU-based farmers are selling their frozen fries at a loss – pricing their products below market value – a threat to local produce that led Colombia to impose an anti-dumping tariff of 3% to 8%.

Colombia had applied duties to 85% of the frozen fries exported by the three European countries, which amounted to €19.3 million (US$18.73 million) in 2019, according to the European Commission. 

The Commission believes that Colombia did not conduct its investigation in “full respect of the WTO rules,” however the Commission also says that the decision still needs to be confirmed by the appellate body.

“The [WTO] panel decided that Colombia’s anti-dumping investigation was flawed in several respects, including the calculation of the dumping margin and the injury analysis,” says the Commission. 

The Commission also highlights that the duties “are in breach of WTO rules and unfairly restrict access to the Colombian market for EU producers.”

The WTO recommends Colombia remove the tariffs. However, Germán Umaña Mendoza, minister of Commerce, Industry and Tourism of Colombia has announced the country will maintain the duties as a “defensive” measure for the sector that allows “fair trade competition”.

The Commission highlights that the duties unfairly restrict EU producers access to the Colombian market.Long litigation
In 2018, after a one year investigation, Colombia started applying duties on imported frozen potatoes after the Colombian Federation of Potato Producers (Fedepapa) warned of the sudden increase in imports. 

Fedepapa has since tried to further pressure the South American countries’ government to keep raising tariffs, stating in 2020 that they would like to see a 20% and even a 30% duty on frozen potato imports.

In 2019, the EU requested consultations with Colombia. A WTO panel was formed to deal with the issue in 2020 which reached a decision this September. In response, Colombia filed an appeal this week.

The appeal will not be carried by the WTO appellate body.

Appeal outside WTO
Colombia has appealed to the Multi-Party Interim Appeal Arbitration Arrangement body (MPIA), a recently created organization that has seen few cases but serves as an alternative to the WTO appellate court.

“This is the first arbitration proceeding based on the MPIA to which both Colombia and the European Union are participants,” says the WTO.Colombia will retain its 3% to 8% antidumping duties.

The WTO appellate court has been in limbo for two years as the court doesn’t have enough members to rule cases due to the US blocking nominees to the court. This has created instances where countries have filed appeals and received no answer.

In December 2021, the WTO ruled against India’s sugar subsidies, deeming them to exceed the limits marked by the international trade organization. India tried to appeal the decision only to get no answer from the WTO courts.

“Given the ongoing lack of agreement among WTO members regarding the filling of Appellate Body vacancies, there is no Appellate Body Division available at the current time to deal with the appeal,” noted the WTO.

India is not part of the MPIA – neither are the US, UK, Russia or Japan, among other countries.

By Marc Cervera