Friday, May 11, 2012

EU cries foul against Argentina, yet again

Reports of the EU considering a trade dispute against Argentina are trickling in. Reuters reported  that a WTO  complaint is a few weeks away. 
"The European Union is planning to lodge a complaint at the World Trade Organization over Argentina's import restrictions and is seeking other trading partners to back its suit, a source familiar with the situation said on Tuesday.

"This is a process that is advancing but it will take some time before it becomes official. We will naturally look at others that could accompany us," the source said.

It is likely to be "a matter of weeks" before the EU launches the case, the source said." 
As reported here, EU Trade Commissioner Karel De Gucht proclaimed in this speech:
"We have a comprehensive trade enforcement strategy that employs all tools, from diplomacy to dispute settlement proceedings at the WTO, to promote market openness around the world." 
I had earlier blogged here  about a joint statement by a number of countries against Argentina's import licensing policies. Are these measures against the Agreement on Import Licensing Procedures ? A number of cases  have been filed earlier with respect to this Agreement in the WTO DSM. The Committee on Import Licensing  too has addressed this issue of Argentinian non-automatic import licensing procedures.

The Joint statement seemed to imply that the procedures violate the Agreement.
"A non-automatic licensing requirement is WTO incompatible unless it is necessary to implement measures which are imposed in conformity with the relevant WTO rules and does not have trade-restrictive or trade-distortive effects on imports beyond those caused by the underlying restriction. The non-automatic licensing requirement must comply with all relevant provisions of the Agreement on Import Licensing Procedures, including a maximum processing period of 60 days.

• Companies from many of the Members that support this statement report that Argentina’s non-automatic import licensing scheme has a trade-restrictive effect on imports and that there are long delays in the issuance of import licenses. Many companies have reported wait periods of up to six months and longer. In some instances, companies are denied import licenses altogether, without justification or explanation.

• The lack of transparency in Argentina’s implementation and administration of its import licensing regime creates profound uncertainty both for exporters and potential exporters to Argentina, as well as for investors in Argentina.

• In January 2012, Argentina announced regulations that went into effect on February 1, requiring pre-registration, review and approval of each and every import transaction. These regulations are creating long delays and resulting in huge costs for many of the exporters from Members supporting this statement.

• It appears that this new system is operating as a de facto import restricting scheme, on all products."
The first step for the EU would be to seek consultations under the WTO DSM. I will be watching this space to see Argentina's official response. Would the dispute be a threadbare interpretation of the Agreement on Import Licensing procedures? Would the dispute go the whole way to the Appellate Body? Would Argentina argue that its procedures are within its domestic policy space consistent with its WTO obligations? The last Trade Policy Review  of Argentina  was in 2007. Would the next review throw up violations of WTO obligations? If found in violation of its WTO commitments, would Argentina continue to maintain the restrictions and face retaliation? After all, if a country is "protectionist" it should be ready to face similar treatment to its goods in other countries.

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