Panama has filed an appeal at the World Trade Organization (WTO) against the intergovernmental body’s rejection of a claim by the country for sanctions against Colombia over clothing, textiles, and footwear tariffs it had imposed to fight money laundering from Panama.

Colombia had initially imposed higher tariffs on garments textiles and footwear imports from Panama because it said the imports constituted “illicit trade” as they were imported at “artificially low prices” in order to launder money.

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In 2016 Panama won a judgement at the WTO to change the tariffs.

Colombia replaced the compound tariff with a 35%-40% tariff on textiles, clothing and footwear valued at less than $10 per kilogram, which it argues puts it in compliance with the WTO tariff schedule.

Panama argued the changes did not go far enough to comply with WTO rules, and in a filing in February last year said it wanted to impose $210m of annual trade sanctions on Colombia as a result.

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Colombia subsequently called for the WTO to form a panel to investigate its compliance. That panel rejected the claim last month.

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Panama filed its latest appeal on 20 November in the case: ‘Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear (Recourse to Article 21.5 of the DSU by Colombia and Panama)’, claiming Colombia’s reasoning breaks WTO rules.

The WTO says each appeal is heard by three members of an Appellate Body comprising persons of recognised authority and unaffiliated with any government. Each member of the body is appointed for a fixed term. Generally, it has up to three months to conclude its report.