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U.S., Japan Ask Argentina for WTO Consultations on Import Restrictions

08/21/12

Source: BNA Snapshot
Related Topics: International Trade

U.S., Japan Ask Argentina for WTO Consultations on Import Restrictions
BNA Snapshot
Argentina Import Restrictions.
Key Development: United States and Japan separately ask Argentina for WTO consultations on allegedly trade-restrictive import measures. Argentina responds swiftly, threatening its own WTO action.
Next Steps: The United States and/or Japan can seek a WTO dispute settlement panel in 60 days if the dispute is not resolved.

By Rossella Brevetti and David Haskel
The United States and Japan Aug. 21, in separate filings, asked Argentina for World Trade Organization consultations on measures the Southern Cone country applies to imports, including import licensing requirements that allegedly unfairly restrict U.S. exports.

In an apparent tit-for-tat move, Argentina's Foreign Ministry rushed out a statement saying it will take action of its own at the WTO against the United States on grounds that it is blocking access of Argentine lemons and beef in violation of the organization's rules.

Both the United States and Japan are charging that the Argentine measures “restrict imports of goods and discriminate between imported and domestic goods,” the WTO said on its website. The measures, both complainants alleged, “do not appear to be related to the implementation of any measure justified under the WTO Agreement.”

Consultations are the first step in the WTO dispute settlement process. If the parties do not resolve the dispute within 60 days, the complainant may request the establishment of a WTO dispute settlement panel.

“Argentina's protectionist measures adversely affect a broad segment of U.S. industry, which exports billions of dollars in goods each year to Argentina. These exports support jobs and businesses here at home,” U.S. Trade Representative Ron Kirk said in a press statement announcing the U.S. action.

U.S. exports are also hampered by Argentine requirements that importers agree to export as much as they import or undertake other burdensome commitments to get authorization to import goods, USTR said.

According to USTR, Argentina has “greatly expanded” the list of products subject to nonautomatic import licensing requirements since 2008. Approximately 600 eight-digit tariff lines in Argentina's goods schedule are subject to import license requirements. Among the affected products are 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.

Action Follows EU Consultation Request
The European Union also has requested consultations with Argentina on the import measures, charging on May 25 that Argentina's preregistration and preapproval scheme for imports delay or block imports on nontransparent grounds (103 DER A-13, 5/30/12).

The EU said at the time that the actions do not appear related to the implementation of any measure justified under the WTO agreement but appear to be aimed at advancing the Argentinean government's stated policies of reindustrialization, import substitution, and elimination of trade balance deficits.

Subsequently, Argentina Aug. 17 requested WTO consultations against Spain's biofuel import curbs, saying they violate WTO rules and badly hurt Argentina's exports (161 DER A-26, 8/21/12).

Argentina adopted an additional licensing requirement in February 2012 that applies to all imports of goods into the country. Argentina has also adopted informal trade balancing requirements and other schemes, whereby companies seeking 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 to get authorization to import, USTR said. “Through these measures, Argentina appears to have acted inconsistently with its WTO obligations,” USTR said.

Argentina Responds
The Argentine Foreign Ministry statement said that Washington is resorting to “illegal protectionist practices” by using sanitary and phytosanitary concerns as an excuse for not accepting lemons and beef from Argentina. It did not say when exactly the complaint would be filed.

Buenos Aires is a major exporter of beef and lemons. The country's meat was barred from the United States and most other markets after a major outbreak of the bovine foot-and-mouth disease (FMD) in 2001.

Whereas Argentina has regained access to most other markets, the United States remains closed to fresh Argentine beef. Washington does accept cheaper, cooked meats from the South American country, as the cooking process eliminates the risk of infection.

The ministry complained that although the World Organization for Animal Health declared southern Argentina free of FMD without vaccination in 2003, and the rest of the country free of FMD with vaccination in 2007, Washington has continued to bar fresh Argentine beef.

“The unjustified closure of the American meats market has caused … hundreds of millions of dollars in losses,” it said.

The U.S. lemon market has also remained closed since 2001. The ministry said that Argentina shipped 20,000 metric tons of lemons to the American market in 2000 before U.S. producers' lobbies managed to reinstate a previous ban based on phytosanitary concerns.

Kirk said that the Obama administration insists that U.S. trading partners play by the rules and uphold their WTO obligations so that U.S. workers receive the benefits negotiated in trade agreements. The Interagency Trade Enforcement Center (ITEC), established by President Obama earlier this year to strengthen trade agreement enforcement (39 DER A-1, 2/29/12) , provided key support for this WTO action and will continue to do so, Kirk added.

USTR said that the Argentine measures appear to violate Article XI:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), which generally prohibits restrictions on imports of goods including through import licenses. USTR also said the measures appear to violate various provisions of the Agreement on Import Licensing Procedures containing requirements on administrative procedures used to implement import licensing regimes.

Argentina Criticized Earlier
The Argentine measures came under fire in March in Geneva when Deputy U.S. Trade Representative Michael Punke read a statement signed by 40 nations criticizing Argentina's “import-restrictive measures.” Signatories included the United States, the 27 EU members, Australia, Israel, Japan, Korea, Mexico, and China (62 DER A-2, 4/2/12 ).

Argentina's Foreign Minister Hector Timerman—after learning of the impending EU WTO challenge—charged that industrial nations were putting heavy pressure on developing nations to lower their import tariffs on manufactured goods while keeping high import duties and subsidies on farm products in place.

In the wake of the EU request for consultations, Argentina May 28 tightened import controls on big mining companies. Under two resolutions issued by the Mining Secretariat, mining firms including Canada's Barrick Gold and Yamana Gold, the Anglo-Swiss Xstrata, and the Johannesburg-based AngloGold Ashanti, will have to present their import plans with 120-day notification and update them quarterly. They will also be required to get government permits for every import; set up their own “import substitution” offices to boost the purchase of domestic equipment, supplies, and services; and use local companies for land, sea, river, and air cargo (103 DER A-13, 5/30/12).

For More Information
The WTO noted in announcing the actions that further information will be available online within the next few days in documents at http://www.wto.org, WT/DS444/1, WT/DS445/1.







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