Bridges Weekly Trade News DigestVolume 16Number 21 • 30th May 2012

Argentine Import Policies Face EU Challenge at WTO

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The EU has lodged a formal complaint at the WTO regarding Argentina’s import policies, the European Commission announced on Friday 25 May. The complaint comes after weeks of increasingly heated rhetoric between the two sides over a range of commercial issues, most recently regarding the South American country’s import restrictions and its controversial expropriation of Spanish-owned oil company Repsol YPF.

EU cites import delays, “non-transparent” processes

“Argentina’s import restrictions violate international trade rules and must be removed,” EU Trade Commissioner Karel De Gucht said on Friday. “These measures are causing very real damage to EU companies - hurting jobs and our economy as a whole.”

Back in January, Buenos Aires announced that it would be requiring importers to file online affidavits and wait for government approval before importing. The requirement, known as the “Declaración Jurada Anticipada de Importación,” entered into force on 1 February and received a wary response from Argentina’s trading partners, along with domestic industry groups. (See Bridges Weekly, 18 January 2012)

Many imports entering Argentina also require an import license, a rule that the EU claims is causing imports to be “systematically delayed or refused on non-transparent grounds.” Brussels further alleges that more than 600 product types have been affected by the license regime, including electrical machinery, auto parts, and chemical products.

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.

Also at issue in the WTO complaint is Buenos Aires’ controversial requirement that Argentina importers must balance imports with exports, increase local content of the products they manufacture in Argentina, or refrain from transferring revenues abroad - rules that the EU says are “systematic, non-written, and non-transparent.”

“I strongly urge Argentina to see sense and use this opportunity to sit down with us and find an acceptable solution. Failing that, a WTO panel will rule on the legality - or perhaps I should say illegality - of Argentina’s trade restrictive measures,” De Gucht said at a press conference on Friday.

Argentina’s import policies have come under fire by a number of WTO members in recent months, 14 of which jointly criticised Buenos Aires at a meeting of the WTO Council for Trade in Goods in March. (See Bridges Weekly, 4 April 2012) The group - which included the US, EU, and Japan - dubbed Buenos Aires’ measures as “unbefitting any WTO member, particularly a member of the G-20 who has committed to refrain from raising new barriers to trade and investment,” a charge that Argentina sharply refuted at the time.

The import policies have widely been seen as part of Buenos Aires’ efforts to combat a falling trade surplus, with Argentina’s overall trade balance dropping by 13 percent to US$10 billion during the first 11 months of 2011.

“It is very clear to us that the government is applying a policy of administering foreign trade to seek to maintain a trade surplus and to stimulate substitution of imports with domestic production,” Diego Pérez Santisteban, head of the Argentine Chamber of Importers, told the Financial Times when the February policy was announced.

The EU’s goods exports to Argentina amounted to 8.3 billion euros in 2011; meanwhile, the EU imported 10.7 billion euros worth of Argentine goods in the same year.

Repsol YPF seizure a symptom of a broader protectionist problem, De Gucht says

Earlier this year, Buenos Aires made headlines when President Cristina Fernández de Kirchner announced her plan to nationalise the Argentine-based operations of Spanish-owned oil company SRepsol YPF. (See Bridges Weekly, 18 April 2012) The decision - which Kirchner justified as necessary due to the Spanish company allegedly not investing enough in new oil production, in turn causing Argentina to have to import more oil - was quickly enacted into law, raising questions about the investment climate in the South American country.

The EU complaint at the WTO does not address the Repsol YPF seizure, as investment protection pledges are not included in WTO rules; however, EU officials have stressed that the expropriation is part of a wider protectionist trend.

“Argentina has had restrictive trade measures in place, in some form or another, since 2005,” De Gucht told reporters. “The recent expropriation of Repsol is clear proof of that.”

“It was perhaps the most visible protectionist action by Argentina making headlines across the world, but dig a little bit deeper and you’ll find that Argentina’s trade policy has become rooted in unfair trade practices,” the EU trade chief continued.

Buenos Aires: Developed country policies “transferring the crisis” to developing economies

Argentina, for its part, has defended its policies, arguing that certain measures being taken by developed countries have had adverse impacts of their own on the competitiveness of both Buenos Aires and other developing economies.

Along these lines, Argentine Foreign Minister Héctor Timerman, speaking at the Organisation for Economic Co-operation and Development’s (OECD) annual ministerial meeting in Paris last week, sharply rebuked the EU and other developed economies for their own trade policies.

“Developing countries are being put under unjustified pressure to revise their legitimate trade policies that are being implemented in line with their multilateral obligations,” he said. “Unfortunately, this criticism neglects to recognise the extraordinary contribution toward global growth and demand made by emerging economies during these difficult economic times.”

Furthermore, he claimed, Argentina is one of the G-20 countries that most increased its imports last year, while facing allegedly high tariffs when trying to export its own products to the EU, US, or Japan, among other developed economies.

“It is unacceptable that, by media or political pressures, developing countries have to receive those surpluses of production from the leading economies, in effect transferring to [developing countries] their own crisis,” the Argentine official said.

“It’s as if there was a legal form of protectionism, the one that developed countries engage in, and a populist one when it involves emerging economies,” President Kirchner told an audience in San Carlos de Bariloche on Friday, echoing Timerman’s comments. “[Protectionism] is also being confused with the concept of patriotism and defense of our own interests.”

Next steps

The request for consultations is the first stage in the WTO dispute settlement process. Should the parties to the dispute be unable to reach a resolution following 60 days of talks, the EU will have the right to ask that the global trade arbiter establish a panel to hear the complaint.

ICTSD reporting; “Cristina defendió con fuerza las trabas a las importaciones,” CLARÍN, 26 May 2012; “La UE denuncia a Argentina ante la Organización Mundial del Comercio,” EL PAÍS, 25 May 2012; “Argentina tightens import controls,” FINANCIAL TIMES, 11 January 2012.

One response to “Argentine Import Policies Face EU Challenge at WTO”

  1. Argentina Trade Tensions Escalate with Six New WTO Cases

    [...] Over the past few weeks, the US, Japan, and Mexico have each filed separate WTO complaints over Argentina’s import controls (DS444,DS445, and DS446). Coming less than three months after the EU launched proceedings in connection with the same Argentine measures, Washington, Tokyo, and Mexico City argue that the policies pursued by Buenos Aires are protectionist and amount to a violation of international trade rules. (See Bridges Weekly, 30 May 2012) [...]

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