Argentine Protectionism


[author: T. Augustine Lo]

On August 21, 2012, the United States and Japan both initiated complaints against Argentina at the WTO because of Argentina’s use of trade protectionist measures. The two complainant nations took particular exception to Argentina’s import licensing requirements that discriminate against foreign imports. On August 27, Mexico initiated its own complaint against Argentina citing the same discriminatory rules. The European Union initiated a similar complaint against Argentina in May 2012.

These complaints generally perceive Argentina’s measures as an effort at import substitution, i.e., the displacement of foreign imports with domestically produced goods through the use of laws and governmental measures. Seven of the most recent eleven consultations at the WTO have involved Argentina. In response, Argentina filed complaints at the WTO against the United States on August 31 and September 3 regarding U.S. restrictions on Argentine imports of beef and lemons.

The latest WTO disputes follow a series of actions by President Cristina Fernandez de Kirchner of Argentina that antagonized the country’s trading partners worldwide. In May, the Fernandez government seized and nationalized YPF, S.A., a local oil producer that was a subsidiary of Repsol, S.A., a Spanish oil company. There are no indications that Argentina will compensate Repsol for this expropriation. As Argentine relations with Spain, a historic diplomatic ally, deteriorated, the Fernandez government imposed a $43 million payment in restitution and fines against Telefonica, a Spanish telecommunications firm, for a recent interruption in cellular service.

Argentina has also refused to pay outstanding arbitral awards against it for earlier expropriations of foreign investments within the country. Argentina has lost a number of investment arbitration cases before the World Bank’s International Center for the Settlement of Investment Disputes in which foreign investors brought claims under bilateral investment treaties. In response to Argentina’s failure to pay two such awards to U.S. companies, the United States suspended its preferential tariff treatment of Argentine imports under the Generalized Systems of Preferences in May 2012. Under that program, Argentine imports had benefited from $17 million in reduced import duties in 2011.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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