Argentina's tryst with the WTO - Justified or Protectionist?

The issue of Argentina's import licensing policy and measures being violative of it's obligations under the WTO has been raised consistently by a few WTO members. I have blogged about it earlier here. In the Import Licencing Committee meeting held recently at the WTO, certain members continued to raise the issue of Argentina's non-automatic licensing requirements alleging that they are against its commitments under the WTO. Earlier in a meeting of the Committee in October 2011, Argentina had this defence:

"2.23     The delegate of Argentina, in response to the previous speakers, indicated that the implementation of automatic import licensing in his country was the result of changes in international trade flows in recent years.  Resolution 45/2011 which, as many delegations indicated, was notified by Argentina on 21 March 2011, extended the coverage of products subject to licensing to 581; however, tariff lines subject to non-automatic licensing only represented 7 per cent of the total number of tariff lines in Argentina's Schedule of Concessions.

2.24     With regard to the concern voiced by the EU, he stated that the application of non-automatic licensing did not, in any way, lead to incompatibility with Argentina's commitments in the G-20 and in the WTO since this was a valid trade policy measure as provided for in Article 3.3 of the Agreement.  Additionally, importation of products subject to NAL indicated that the system was not ultimately intended to protect national domestic industry by controlling imports; if the imports trends of products subject to NAL were compared to those which are not subject to such licences the following conclusions could be drawn: (i)  in 2009, as a result of the international economic crisis, there was a decrease in imports both in terms of total numbers and for those subject to NAL;  (ii) in 2010, the total increase in imports also saw an increase in the number of imports subject to NAL as a result of the recovery of the world economic activity and; (iii) imports subject to NAL increased by 110 per cent in 2010 in comparison with 2006, whilst there was a 65 per cent increase of total imports over the same period.  Therefore, NALs did not operate as a protective trade measure to favour domestic industry.

2.25     With regard to the concerns voiced previously by Peru, Japan and Turkey, he stated that the predictability and transparency of the NAL system had enabled normal trading flows to continue. 

2.26     Regarding the concern already voiced by Korea on the exclusion of national treatment, Argentina pointed out that all imports subject to NAL, regardless of their origin, received the same treatment when applying the measures; the same requirements and processing time were also applied for requests and renewals thereof.

2.27     As to the concerns expressed by Switzerland and Australia in previous occasions concerning the functioning of NAL, he indicated that processing of applications did not exceed 60 days according to the period set for in Article. 3.5(g) and (h) of the Agreement.  As already conveyed to Members, since March 2011 the "Sistema Integrado de Comercio Exterior" (SISCO) had been implemented through various resolutions of the Ministry of Trade in order to increase transparency and predictability.  SISCO's objective was to ensure fair and equitable administration of import licensing through an on-line management system for applications.  In conclusion, he stated that the NAL system had been set up on the basis of the provisions of, and in compliance with the WTO Agreement on ILPs."

India has decided to take up the issue with Argentina bilaterally and not join the other countries. Are the measures leading to a case against Argentina in the DSM? The case would bring up many issues of law and fact regarding the interpretation of the Import Licensing Agreement, the actual factual measures of Argentina, its compatibility with the Agreement's provisions as well as interpretations regarding whether it is more burdensome than necessary as well as being transparent and neutral. Would it be considered within Argentina's legitimate domestic policy space or considered more restrictive than necessary. Will it be considered "protectionist" or legitimate exercise of a countries rights under the WTO agreements? These are complex questions of law and fact. Unless, a political solution is found, this case has all the characteristics of going right up to the Appellate Body!