Brussels, 25/08/2014 (Agence Europe) - The World Trade Organisation (WTO) ruled on 22 August that Argentina has breached international trade rules by introducing a series of import barriers to European, Japanese and US goods. The WTO added that Argentina “will have to bring itself into compliance by changing these measures”.
Karel De Gucht, European Commissioner for Trade, welcomed the decision by an independent panel at the World Trade Organisation (WTO) that certain conditions which Argentina introduced for firms wishing to import goods into the country break WTO rules.
In a press release, the commissioner stated: “I've made standing up to protectionism one of the hallmarks of my term as EU Trade Commissioner. This case sends an important signal that protectionism is not acceptable. I call on Argentina to move quickly to comply with the ruling of the WTO panel and remove these illegal measures, and open the way for EU goods to compete fairly on the Argentinian market”.
The US also welcomed this ruling and Michael Froman, US Secretary for Trade, said that it was a victory for American workers, businesses and farmers, adding that Argentina's protectionist measures had an effect on a large segment of US exports worth billions of dollars a year.
Together with the US and Japan, the EU lodged an official complaint about the measures in May 2012 (see EUROPE 10621). The WTO panel ruling found clearly in favour of these claims: Argentina may not require local importers or foreign firms to accept various practices forced by the Argentinean authorities as a condition for being allowed to import goods into the country.
These different practices include requirements to: offset the value of their imports into Argentina with at least the equivalent in exports; limit their imports, either in volume or in value; reach a certain level of local content in their domestic production; invest in Argentina and keep any profits made in Argentina in the country.
According to the special WTO panel, “the Argentine authorities' imposition on economic operators of one or more of the five trade-related requirements identified by the complainants as a condition to import or to obtain certain benefits, operates as a single measure (the TRRs measure) attributable to Argentina; the TRRs measure constitutes a restriction on the importation of goods and is thus inconsistent with Article XI: 1 of the GATT 1994”.
The WTO panel also ruled against a procedure known as the Advanced Sworn Import Declaration (“Declaración Jurada Anticipada de Importación”, or DJAI). This requires firms to secure the approval of the Argentine authorities before importing goods. According to the WTO, the DJAI procedure “constitutes a restriction on the importation of goods and is thus inconsistent with Article XI: 1 of the GATT 1994”.
Argentina introduced the measures as part of its so-called “managed trade” policy. This aims to replace imports with locally-sourced products and to reduce or eliminate the trade deficits with other countries or regions. The WTO's ruling ensures that Argentina cannot apply this policy ignoring its obligations as part of the WTO. The measures have put a severe burden on importers of EU products into Argentina and also impair the capacity of foreign firms to operate in the country.
The EU, Japan and the US launched a WTO dispute settlement case in May 2012. Initial consultations with Argentina in July 2012 did not lead to an amicable solution. As a result, the WTO set up a panel in January 2013. All the parties now have 60 days in which to appeal against the panel's ruling if they wish. If there is no appeal, or once an appeal is completed, Argentina will have to comply by changing these measures, either immediately or within a reasonable period of time. That period of time will either be negotiated between Argentina, the EU, the US and Japan, or fixed by a WTO arbitrator. (LC)