EU Trade Commissioner, Karel De Gucht, today welcomed a ruling by an independent panel at the World Trade Organisation (WTO) that certain conditions which Argentina introduced for firms wishing to import goods into the country break WTO law. Commenting on the ruling, Commissioner De Gucht said:
'I've made standing up to protectionism one of the hallmarks of my term as EU Trade Commissioner. This case sends an important signal that protectionism is not acceptable. I call on Argentina to move quickly to comply with the ruling of the WTO panel andremove these illegal measures, and open the way for EU goods to compete fairly on the Argentinian market.'
The EU submitted an official complaint about the measures in May 2012, along with the US and Japan. Today's WTO panel ruling upholds these claims and gives a clear verdict: Argentina may not require local importers or foreign firms to accept various practices forced upon them by the Argentinean authorities as a condition for being allowed to import goods into the country.
These practices include requirements to:
(a) offset the value of their imports into Argentina with at least the equivalent in exports;
(b) limit their imports, either in volume or in value;
(c) reach a certain level of local content in their domestic production;
(d) invest in Argentina; or
(e) keep any profits made in Argentina in the country.
The WTO panel also ruled against a procedure known as the Advanced Sworn Import Declaration ('Declaración Jurada Anticipada de Importación', or DJAI). This requires firms to secure approval by the Argentine authorities before importing goods.
Argentina introduced the measures as part of its so-called 'managed trade' policy. This aims to substitute imports for locally-sourced products and to reduce or eliminate the country's trade deficits with other countries or regions. The WTO's ruling ensures that Argentina cannot apply this policy by ignoring its obligations under the WTO. The measures have imposed a severe burden on importers of EU products into Argentina and also impair the capacity of foreign firms to operate in the country.
The EU, Japan and the US launched a WTO dispute settlement case in May 2012. Initial consultations with Argentina in July 2012 did not bring an amicable solution. As a result, the WTO set up a panel in January 2013. All parties now have 60 days in which to appeal against the panel's ruling if they wish. If there is no appeal, or once an appeal is completed, Argentina will have to bring itself into compliance by changing these measures, either immediately or within a reasonable period of time. That period of time will either be negotiated between Argentina, the EU, the US and Japan, or fixed by a WTO arbitrator.