Argentina Trade Rows Escalate at WTO

12 December 2012

Tensions between Argentina and some of its major trading partners became further strained last week, as consultations over various contested trade policies failed to produce agreement. Buenos Aires has now requested that a WTO dispute settlement panel examine complaints it had filed earlier this year on Washington's curbs on imports of Argentine beef and lemons and Brussels' rules regarding biodiesel imports. Meanwhile, the EU, US, and Japan have joined Mexico in formally asking the global trade arbiter to hear their complaints over Argentina's import policies.

US, EU, Japan join Mexico in advancing challenge to Argentine import restrictions

The requests by the US, EU, and Japan for the WTO to form a panel to rule on the Argentine import controls follow a similar request by Mexico last month, and signal the next stage in the WTO's dispute settlement process(DS438, DS444, DS445, and DS446). First launched by Brussels in May, the initial action challenging the Argentine measures was subsequently supported by Washington, Tokyo, and Mexico City, who all decided in August to file similar complaints of their own. (See Bridges Weekly, 30 May 2012 and 12 September 2012)

Representing some of Argentina's biggest trading partners, the complainants criticise the measures for discriminating between imported and domestic goods and for being based on policies which they say are protectionist.

"Argentina's persistent use of import restrictions broadly impacts all US exporters of goods to Argentina," US Trade Representative Ron Kirk said in a statement. "Today's step reflects the Obama Administration's commitment to ensuring that our trading partners play by the rules so that our companies can compete on a level playing field."

Since February 2012, Buenos Aires has subjected all imports to a registration and pre-approval regime. Meanwhile, the list of products subjected to non-automatic import licensing requirements has been expanded significantly, the complainants say. In addition, they note, imports into Argentina are systematically delayed or refused on non-transparent grounds.

While import licenses are permitted under WTO rules, they must be approved automatically; any non-automatic import licenses must comply with specific WTO requirements, including that they be issued within 60 days.

Detractors also complain of informal trade balancing requirements adopted by the Argentine government, under which local importers must agree to export goods of equal value, increase local content of the products they manufacture in Argentina, or refrain from transferring revenues abroad.

The Argentine measures are said to affect products ranging from cars and clothes to agricultural goods and chemicals.

"Argentina's import restrictions violate international trade rules and harm EU exports," EU Trade Commissioner Karel de Gucht said in a statement. "The consultations we held with Argentina at the World Trade Organization did not bring any positive solution. Today's decision is also the outcome of close co-operation with the US, Japan, and Mexico."

Argentine spat with EU, US over biofuels, lemons, and beef ramps up

Argentina, for its part, had also last week already formally requested panels in its own WTO complaints launched earlier this year (DS443, DS447, and DS448). Describing the subsequent action by the EU and US as "regrettable," the Argentine government dismissed the request for panels as a distraction from its own complaints against the US, and EU, in particular.

"[Argentina] laments the untimely, but obviously coordinated, complaints made against our country at the World Trade Organization (WTO). These are the best demonstrations of how - when faced with specific demands made by our own country - they respond with a generalised action that looks to distract public opinion rather than resolve the trade barriers that are hurting Argentine products," the Argentine Foreign Ministry said in a press release.

The complaints, brought by Argentina against the EU on its rules regarding non-EU biofuels and the US over its ban on Argentine beef and lemons, only add to the growing tensions between President Cristina Kirchner's government and some of Argentina's trading partners.

The US stands accused by the South American country of blocking imports of Argentine beef and lemons without justification, while the EU is called on to defend a Spanish law that specifically favours biofuels produced in the EU and is said to, in effect, discriminate primarily against Argentine-produced biofuels. (See Bridges Weekly, 12 September 2012)

Both are being denounced by Buenos Aires as amounting to protectionist measures, with the timing of the Spanish legislation in particular being described by some observers as a direct response to the nationalisation earlier this year of the Argentine subsidiary of Spanish-owned oil and gas company Repsol YFP. (See Bridges Weekly, 18 April 2012)

"The measures against Argentine exports that led to this demand have generated a lot of damage to Argentine producers and thousands of job losses," the Argentine Foreign Ministry said in a statement.

The respective requests for the establishment of a panel are likely to be addressed at the next meeting of the Dispute Settlement Body, which is scheduled for 17 December. Under WTO rules, defending countries are entitled to object to the establishment of a panel on the first occasion, but will be unable to block the same request a second time.

In the case of the complaints against Argentina over its import restrictions, a single panel would be established to hear the four cases of the EU, US, Mexico, and Japan. The beef, lemons, and biofuels cases, however, would be heard by separate panels.

ICTSD reporting; "Update 3 - EU, US step up WTO action in Argentina trade row," REUTERS, 6 December 2012.

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