On August 21, 2012, Japan and the United States separately notified the World Trade Organization (WTO) of a request for consultations with Argentina on alleged import restrictions caused by a system of non-automatic import licensing and other related measures.

According to both Japan and the US, “these measures restrict imports of goods and discriminate between imported and domestic goods”. The measures, according to both complainants, “do not appear to be related to the implementation of any measure justified under the WTO Agreement”.

As confirmed by the United States Trade Representative (USTR) Ron Kirk, the Argentinean measures under dispute include the broad use of non-transparent import licensing requirements that have the effect of unfairly restricting US exports. "Argentina’s protectionist measures adversely affect a broad segment of US industry, which exports billions of dollars in goods each year to Argentina. These exports support jobs and businesses here at home,” he said.

It is pointed out that, since 2008, Argentina has greatly expanded the list of products subject to non-automatic import licensing requirements. Import licenses are required for approximately 600 tariff lines in Argentina’s goods schedule. The affected products include, but are not limited to, laptops, home appliances, air conditioners, tractors, machinery and tools, autos and auto parts, plastics, chemicals, tires, toys, footwear, textiles and apparel, luggage, bicycles and paper products.

In February 2012, Argentina adopted an additional licensing requirement that applies to all imports of goods into the country. It is alleged that Argentina’s regulations now require pre-registration, review and approval of each and every import transaction, creating long delays and resulting in huge costs for many exporters. It appears that this new system is operating as a de facto import restricting scheme on all products.

It is also said that, in conjunction with these licensing requirements, Argentina has adopted informal trade balancing requirements and other schemes, whereby companies seeking to obtain authorization to import products must agree to export goods of an equal or greater value, make investments in Argentina, lower prices of imported goods and/or refrain from repatriating profits.

Through these measures, the USTR concludes that Argentina appears to have acted inconsistently with its WTO obligations. In particular the measures appear to violate the articles of the General Agreement on Tariffs and Trade 1994 that generally prohibit restrictions on imports of goods, including those made effective through import licenses, and the provisions of the Agreement on Import Licensing Procedures, which contains requirements related to the administrative procedures used to implement import licensing regimes.

In fact, in a statement at the Council for Trade in Goods meeting on March 30, 2012, fourteen WTO members jointly expressed their deepening concern about Argentina’s import-licensing measures, which were said to have significantly restricted trade flows. Australia, the European Union, South Korea, Norway, Switzerland, Taiwan and Thailand signed the statement, in addition to the US and Japan, while concerns were also expressed by China, Mexico, Chile, Colombia, Peru, Singapore and Malaysia.

Consultations are the first step in the WTO dispute settlement process. Under WTO rules, if the matter is not resolved through consultations within 60 days the US and Japan may request the establishment of a WTO dispute settlement panel. The EU had already requested consultations in May this year, and the dispute can now be expected to escalate further.

August 24, 2012

Source: Tax News

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