10 December 2012

4 minute read

The EU said it is taking this action, along with Japan and the United States, to force Argentina to lift these measures, which have been harmful to European trade and investment for more than 18 months.

These measures potentially affect all EU exports to Argentina, worth €8.3 billion in 2011.

The move follows efforts by the EU to find a solution with Argentina through WTO dispute settlement consultations during the summer which ended without success.

"Argentina's import restrictions violate international trade rules and harm EU exports. The consultations we held with Argentina at the World Trade Organisation did not bring any positive solution. Today's decision is also the outcome of close co-operation with the US, Japan and Mexico. It is the EU's last resort to see Argentina's unfair trade practices lifted and free and fair trade re-established according to the WTO rules to which Argentina has subscribed," said EU Trade Commissioner Karel De Gucht.

Argentina's import measures have been systematically imposed with a view to pursuing Argentina's stated policy of import substitution and elimination of trade balance deficits, which is inconsistent with WTO rules.

These measures take the form of the following:

1. As of February 2012, Argentina has subjected the import of all goods to a pre-registration and pre-approval regime called the "Declaración Jurada Anticipada de Importación";
2. Hundreds of goods also need a non-automatic import license. On the pretence of this requirement, imports are systematically delayed or refused on non-transparent grounds. As of March 2011, more than 600 product types have been affected by this licensing regime.
3. Argentina also requires importers to balance imports with exports; to increase the local content of the products they manufacture in Argentina; or not to transfer revenues abroad. This practice is systematic, unwritten and non–transparent. Acceptance by importers to undertake this practice appears to be a condition for allowing them to import their goods into Argentina. These measures delay or block goods at the border and inflict major losses to industry in the EU and worldwide.

The restrictions, which were in place in 2011, affected about €500 million of exports in the same year. As of 2012, the extension of the measures to all products raised the magnitude of the potentially affected trade to all EU exports to Argentina, which amounted to €8.3 billion in 2011. The long-term impact of a negative trade and investment climate is significantly higher.

The EU, together with other major world trading partners, has raised the issue with Argentina repeatedly over the past years without success.

Today, also thanks to a close and constructive co-operation, the EU decides to pursue the dispute at the same time as the United States and Japan. Mexico has already requested the establishment of a panel over the same measures on 21 November 2012. All complainants aim at a joint panel proceeding.

EU imports from Argentina primarily consist of agricultural products (food and live animals, 53 per cent); chemicals (16 per cent); and raw materials (14 per cent), while the EU mainly exports to Argentina manufactured goods such as machinery and transport equipment; cars and car parts (50 per cent); and chemicals (20 per cent).

Since dispute settlement consultations held on 12 and 13 July 2012 between the EU and Argentina did not resolve the issue, the EU has decided to take the next step in the dispute and today asked the WTO to rule over the legality of Argentina's trade-restrictive measures.

The request for the establishment of a panel will be discussed for the first time at the meeting of the Dispute Settlement Body (DSB) of 17 December 2012. At that meeting, Argentina can, under the dispute settlement rules of the WTO, object to the establishment of the panel.

If the complainants table this issue again at the following DSB meeting (to be held sometime in January 2013) Argentina will be unable to block the request and, consequently, the panel would be established. After the establishment of the panel, the parties and/or the WTO Director-General will compose the panel by selecting three persons serving as panellists who will then start the actual adjudication procedure.

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