USTR Accepting Public Comments Regarding WTO Dispute with Argentina

by Holland & Knight LLP
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The United States Trade Representative (USTR) has issued a request for public comment regarding a World Trade Organization (WTO) dispute with Argentina. The United States, along with other trading partners such as Japan and the European Union, are objecting to a number of restrictive trade practices employed by the Argentine government to reduce the flow of imports. The USTR notice calls for businesses and exporters who have been affected by these trade restrictions to comment on this dispute, which could significantly affect trade relations with Argentina.

Background

Argentina, which suffered a calamitous sovereign debt default in 2001, has enjoyed a commodities-fueled rise in economic activity over the past decade. It is currently the world's 27th largest economy with a gross domestic product in 2011 of $447 billion. It is also an important export market for the United States. Even though Argentina is the United States' 43rd largest trading partner, the U.S. trade surplus with Argentina in 2011 was $4.1 billion, ranking 13th among all countries. In 2011, total U.S. exports to Argentina totaled $9.9 billion — a 34.1 percent increase from 2010. This was the fourth largest increase, behind only those with Chile, Hong Kong and the United Arab Emirates.

However, since 2011 Argentina has gradually imposed a number of regulations to restrict imports. The Argentine administration of President Cristina Fernández deKirchner has adopted these measures in response to a worsening balance of trade and increasing outflows of hard currency. These measures have sparked controversy domestically, but have been staunchly defended by the Argentine government as necessary.

Alleged Violations of WTO Rules

The United States contends that Argentina has breached its obligations under the WTO. The regulations at the core of this dispute are alleged to violate a number of WTO principles, including those relating to non-discrimination of foreign goods and transparency. First, Argentina has subjected all imports to a Declaración Jurada Anticipada de Importación (DJAI), requiring an importer to fill out a sworn affidavit prior to completing a purchase order. Additionally, goods classified in over 600 different tariff codes are subject to a Certificado de Importación (CI), a non-automatic license that can take up to six months to process. Furthermore, Argentina often requires importers to engage in other activities that have the effect of impeding the flow of trade. For example, importers are often asked to match imports with an equivalent level of exports. This has resulted in importers in the automobile industry trying to export wine and olive oil in order to gain authorization to import urgently needed spare parts. Other importers have been instructed to voluntarily limit imports or to increase the local contents of products manufactured in Argentina. The Argentine government has also banned electronic billing in U.S. dollars and made it more difficult for businesses to transfer currency out of the country. Finally, many of these limitations are informal and rely on opaque, often unwritten and frequently arbitrary rules.

The USTR is claiming that Argentina's actions violate numerous components of the WTO, including Articles III, X and XI of the General Agreement of Tariffs and Trade (GATT); Article 2 of the Agreement on Trade-Related Investment Measures (TRIMs); Articles 1, 3 and 5 of the Import Licensing Agreement; and Article 11 of the Safeguards Agreement.

The First Step: USTR's Request for Consultations

The USTR's request for consultations with the Argentine government is the first step in the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), which governs trade conflicts between parties in the WTO. Once a formal request for consultations has been entered, Argentina will have 60 days to resolve the dispute. During this period, the parties may also seek mediation. If no resolution is reached, the United States may request the formation of a panel to formally adjudicate the dispute.

Public Comments Due by September 28

Public comments must be submitted prior to September 28, 2012, in order to ensure timely consideration by the USTR. Comments, which can include supporting documents, may be submitted either electronically or in an alternative manner as provided on a case-by-case basis by the office of the USTR. Additionally, parties may request that certain information and documents be treated as business confidential and not made publicly available.

Holland & Knight's international trade lawyers have extensive experience in WTO and other trade regulatory matters. We have represented numerous parties before the USTR and the Court of International Trade, and can help ensure that our clients' interests are protected throughout this process.

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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