It is Argentina's turn now

Argentina had requested for consultations with the EU and US in 3 cases regarding importation of lemons, beef and biodiesel. I have blogged about the rising tensions between Argentina and its trading partners here. Now it seems that the consultations have not borne fruit and reports of Argentina deciding to file a WTO complaint in this regard. The three disputes where the request for consultation were made are DS 443, DS 447 and DS 448. News reports of Argentina going ahead with the complaints are found here and here.

Argentina has been criticized for putting up protectionist measures about which I have blogged here.Panama recently filed a dispute (DS 453/1) against Argentina at the dispute settlement  body. These cases seem to be in retaliation to those allegations.I have done a detailed piece about the possible WTO violations in the case of biodiesel here.

We again see the WTO dispute settlement mechanism playing out as a forum for resolution of disputes without being seen as causing a "trade war" or "imbroglio". Argentina has been active in the WTO dispute settlement process being a complainant in 20 cases beginning in 1996. 

Things are heating up at the dispute settlement forum with more countries seeking trade remedies and taking on their trading partners. News of EU contemplating a WTO complaint against the new member Russia is the topic of my next post. Good news for a rule based resolution of disputes?

Dollar, Peso and Argentina - More "protectionist"?

I found this piece on a techie website regarding Argentina. Though not a technology buff myself, I found this piece interesting since the piece highlighted the trend in Argentina. Titled "Argentina's Currency Clampdown:What does it mean for Startups?" it discussed the alleged currency controls imposed by Argentina in recent times and its impact on technology start ups in Argentina.

"The politics of currency exchange in Argentina have done a complete 180 in under a year. The exchange of Argentine pesos for dollars, reals or euros was once a simple process. Today, however, it requires the approval of the AFIP (Federal Administration of Public Revenue) and is only allowed for those traveling abroad. Thus, in Argentina, it is impossible to save in a currency other than the peso. 

Moreover, Banks are now required to report the credit card charges of all of its clients, and all purchases made outside of Argentina are subject to a 15% surcharge. And funds transferred or deposited from abroad are automatically converted into pesos, a process that costs a minimum of US$60 and may take several days to complete. 

The government has claimed that such macroeconomic policies are aimed at increasing revenues, reducing fraud, and “un-dolarizing” the local economy."

FT reported about these curbs here. I have blogged about the growing "protectionist" trend in Argentina that countries are complaining about. Is this an indication of that trend? Or is this an exercise of domestic, developmental priorities? is it a valid management of macro-economic policies related to foreign exchange or is their a international trade law element? Is there sufficient domestic policy space to undertake these measures or do international trade rules violated? Are any of the WTO Agreements violated? Does TRIMS come into the picture here?

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!