Argentina – measures affecting the importation
of goods

Reports of the Panel

·             Addendum

This addendum contains Annexes A to D to the Reports of the Panel to be found in document WT/DS438/R, WT/DS444/R, WT/DS445/R.

 

 

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LIST OF ANNEXES

ANNEX A

Working Procedures of The Panel

Contents		Page
Annex A	Working Procedures of the Panel	A-1

ANNEX B

Arguments Of The Parties

·             EUROPEAN UNION

Contents		Page
Annex B-1	First part of the executive summary of the arguments of the European Union	B-2
Annex B-2	Second part of the executive summary of the arguments of the European Union	B-13

·             UNITED STATES

Contents		Page
Annex B-3	First part of the executive summary of the arguments of the United States	B-25
Annex B-4	Second part of the executive summary of the arguments of the United States	B-37

·             JAPAN

Contents		Page
Annex B-5	First part of the executive summary of the arguments of Japan	B-48
Annex B-6	Second part of the executive summary of the arguments of Japan	B-60

·             ARGENTINA

Contents		Page
Annex B-7	First part of the executive summary of the arguments of Argentina	B-72
Annex B-8	Second part of the executive summary of the arguments of Argentina	B-83

 

ANNEX C

Arguments of the Third Parties

Contents		Page
Annex C-1	Executive summary of the arguments of Australia	C-2
Annex C-2	Executive summary of the arguments of Canada	C-6
Annex C-3	Executive summary of the arguments of Israel	C-9
Annex C-4	Executive summary of the arguments of the Republic of Korea	C-10
Annex C-5	Executive summary of the arguments of Norway	C-12
Annex C-6	Executive summary of the arguments of the Kingdom of Saudi Arabia	C-16
Annex C-7	Executive summary of the arguments of Chinese Taipei	C-19
Annex C-8	Executive summary of the arguments of Turkey	C-21

ANNEX d

PRELIMINARY RULINGS

Contents		Page
Annex D-1	Preliminary Ruling by the Panel, 16 September 2013	D-2
Annex D-2	Preliminary Ruling by the Panel, 20 November 2013	D-14

 

 

 

 

ANNEX A

working procedures of THE PANEL

Adopted on 14 June 2013

 

 

1.     In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following Working Procedures shall apply.

 

General

 

2.     The deliberations of the Panel and the documents submitted to it shall be kept confidential. Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter "party") from disclosing statements of its own positions to the public. Members shall treat as confidential information submitted to the Panel by another Member which the submitting Member has designated as confidential. Where a party submits a confidential version of its written submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential summary of the information contained in its submissions that could be disclosed to the public. The Panel may, after consultation with the parties, adopt additional procedures for the protection of business confidential information (BCI) provided by the parties in the course of these proceedings.

 

3.     The Panel shall meet in closed session. The parties, and Members having notified their interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter "third parties"), shall be present at the meetings only when invited by the Panel to appear before it.

 

4.     Each party and third party has the right to determine the composition of its own delegation when meeting with the Panel. Each party and third party shall have the responsibility for all members of its own delegation and shall ensure that each member of such delegation acts in accordance with the DSU and these Working Procedures, particularly with regard to the confidentiality of the proceedings.

 

Submissions

 

5.     Before the first substantive meeting of the Panel with the parties, each party shall submit a written submission in which it presents the facts of the case and its arguments, in accordance with the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the second substantive meeting of the Panel, a written rebuttal, in accordance with the timetable adopted by the Panel.

 

6.     A party shall submit any request for a preliminary ruling at the earliest possible opportunity and in any event no later than in its first written submission to the Panel. If any of the complainants requests such a ruling, the respondent shall submit its response to the request in its first written submission. If the respondent requests such a ruling, the complainants shall submit their responses to the request prior to the first substantive meeting of the Panel, at a time to be determined by the Panel in light of the request. Exceptions to this procedure shall be granted by the Panel upon a showing of good cause.

 

7.     Each party shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttal, answers to questions or comments on answers provided by any of the other parties. Exceptions to this procedure shall be granted by the Panel upon a showing of good cause. Where such exception has been granted, the Panel shall accord the other party or parties a period of time for comment, as appropriate, on any new factual evidence submitted after the first substantive meeting.

 

8.     Where the original language of an exhibit is not a WTO working language, the submitting party or third party shall simultaneously submit a translation of the exhibit into a WTO working language. Any objection as to the accuracy of a translation should be raised promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following the submission which contains the translation in question. Any objection shall be accompanied by a detailed explanation of the grounds of objection and an alternative translation. The Panel may grant a reasonable extension of time for filing an objection as to the accuracy of a translation, upon a showing of good cause.

 

9.     In order to facilitate the work of the Panel, each party and third party is invited to make its submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as an Annex, to the extent that it is practical to do so.

 

10.   To facilitate the maintenance of the record of the dispute and maximize the clarity of submissions, each party and third party shall sequentially number its exhibits throughout the course of the dispute. For example, exhibits submitted by the complainants shall be numbered, respectively, EU-1, EU-2, etc., or US-1, US-2, etc., or JPN-1, JPN-2, etc. Exhibits submitted by the respondent shall be numbered ARG-1, ARG-2, etc. If the last exhibit in connection with the first submission was numbered, for example, EU-5, the first exhibit of the next submission shall be numbered EU-6. Any joint exhibits submitted by the complainants shall be numbered JE-1, JE-2, etc.

 

Questions

 

11.   The Panel may at any time pose questions to any of the parties or third parties, orally or in writing, including prior to any substantive meeting. Each party shall respond to those questions within the deadlines determined by the Panel.

 

Substantive meetings

 

12.   Each party shall provide to the Panel the list of members of its delegation in advance of each meeting with the Panel and no later than at 5.00 p.m., local Geneva time, the previous working day.

 

13.   The first substantive meeting of the Panel with the parties shall be conducted as follows:

 

a.       The Panel shall invite each of the complainants to make an opening statement to present its case first. Subsequently, the Panel shall invite the respondent to present its point of view. Before each party takes the floor, it shall provide the Panel and other participants at the meeting with a provisional written version of its statement. In the event that interpretation is needed, each party shall provide additional copies for the interpreters, through the Panel Secretary. Each party shall make available to the Panel and the other parties the final written version of its statement, preferably at the end of the meeting, and in any event no later than at 5.00 p.m., local Geneva time, on the first working day following the final day of the meeting.

 

b.       After the conclusion of the statements, the Panel shall give each party the opportunity to ask each other questions or make comments, through the Panel. Each party shall then have an opportunity to answer these questions orally. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions posed to the other party or parties to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to the written questions posed by another party or parties within a deadline to be determined by the Panel.

 

c.       The Panel may subsequently pose questions to the parties. Each party shall then have an opportunity to answer these questions orally. The Panel shall send in writing, within a timeframe it will determine, any questions to the parties to which it wishes to receive a response in writing. Each party shall respond in writing to such questions within a deadline determined by the Panel.

 

d.       Once the questioning has concluded, the Panel shall afford each party an opportunity to present a brief closing statement; the complainants shall present their closing statements first.

14.   The second substantive meeting of the Panel with the parties shall be conducted as follows:

 

a.       The Panel shall ask the respondent if it wishes to avail itself of the right to present its case first. If so, the Panel shall invite the respondent to present its opening statement, followed by the complainants. If the respondent chooses not to avail itself of that right, the Panel shall invite each of the complainants to present its opening statement first. Before each party takes the floor, it shall provide the Panel and other participants at the meeting with a provisional written version of its statement. In the event that interpretation is needed, each party shall provide additional copies for the interpreters, through the Panel Secretary. Each party shall make available to the Panel and the other parties the final written version of its statement, preferably at the end of the meeting, and in any event no later than at 5.00 p.m., local Geneva time, on the first working day following the final day of the meeting.

 

b.       After the conclusion of the statements, the Panel shall give each party the opportunity to ask each other questions or make comments, through the Panel. Each party shall then have an opportunity to answer these questions orally. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions posed to the other party or parties to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to the questions posed by another party or parties within a deadline to be determined by the Panel.

 

c.       The Panel may subsequently pose questions to the parties. Each party shall then have an opportunity to answer these questions orally. The Panel shall send in writing, within a timeframe it will determine, any questions to the parties to which it wishes to receive a response in writing. Each party shall respond in writing to such questions within a deadline determined by the Panel.

 

d.       Once the questioning has concluded, the Panel shall afford each party an opportunity to present a brief closing statement; the party that presented its opening statement first, shall present its closing statement first.

 

Third parties

 

15.   The Panel shall invite each third party to transmit to the Panel a written submission prior to the first substantive meeting with the parties, in accordance with the timetable adopted by the Panel.

 

16.   Each third party shall also be invited to present its views orally during a session of this first substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list of members of its delegation in advance of this session and no later than at 5.00 p.m., local Geneva time, the previous working day.

 

17.   The third party session shall be conducted as follows:

 

a.    All parties and third parties may be present during the entirety of this session.

 

b.       The Panel shall first hear the arguments of the third parties in alphabetical order. Third parties present at the third party session and intending to present their views orally at that session, shall provide the Panel, the parties and other third parties with provisional written versions of their statements before they take the floor. In the event that interpretation is needed, each third party shall provide additional copies for the interpreters, through the Panel Secretary. Third parties shall make available to the Panel, the parties and other third parties the final written versions of their statements, preferably at the end of the session, and in any event no later than at 5.00 p.m., local Geneva time, on the first working day following the session.

 

c.       After the third parties have made their statements, the parties may be given the opportunity, through the Panel, to pose questions to any of the third parties for clarification on any matter raised in the third parties' submissions or statements. The respective third party shall then have an opportunity to answer these questions orally. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions to a third party to which it wishes to receive a response in writing. Each third party shall be invited to respond in writing to these questions within a deadline to be determined by the Panel.

 

d.       The Panel may subsequently pose questions to the third parties. The respective third party shall then have an opportunity to answer these questions orally. The Panel shall send in writing, within a timeframe it will determine, any questions to the third parties to which it wishes to receive a response in writing. Each third party shall be invited to respond in writing to such questions within a deadline determined by the Panel.

 

Descriptive part

 

18.   The description of the arguments of the parties and third parties in the descriptive part of the Panel report shall consist of executive summaries provided by the parties and third parties, which shall be annexed as addenda to the report. These executive summaries shall not in any way serve as a substitute for the submissions of the parties and third parties in the Panel's examination of the case.

 

19.   Each party shall submit executive summaries of the facts and arguments as presented to the Panel in its written submissions and oral statements, in accordance with the timetable adopted by the Panel. These summaries may also include a summary of responses to questions. Each such executive summary shall not exceed 15 pages. The Panel will not summarize in the descriptive part of its report, nor annex to its report, the parties' responses to questions.

 

20.   Each third party shall submit an executive summary of its arguments as presented in its written submission and statement in accordance with the timetable adopted by the Panel. This summary may also include a summary of responses to questions, where relevant. The executive summary to be provided by each third party shall not exceed 6 pages.

 

Interim review

 

21.   Following issuance of the Panel's interim report, each party may submit a written request to review precise aspects of the interim report and may request a further meeting with the Panel, in accordance with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no later than at the time the written request for review is submitted.

 

22.   In the event that no further meeting with the Panel is requested, each party may submit written comments on the written requests for review filed by any of the other parties, in accordance with the timetable adopted by the Panel. Such comments shall be limited to commenting on the written requests for review filed by any of the other parties.

 

23.   The Panel's interim report, as well as the final report prior to its official circulation to the Members, shall be kept strictly confidential and shall not be disclosed.

 

Service of documents

 

24.   The following procedures regarding service of documents shall apply:

 

a.       Each party and third party shall submit all documents to the Panel by filing them with the DS Registry (office No. 2047).

 

b.       Each party and third party shall file seven (7) paper copies of all documents it submits to the Panel. However, when exhibits are provided on CD‑ROMS/DVDs, three (3) CD‑ROMS/DVDs shall be filed; in that case, where appropriate, three (3) paper copies of those exhibits shall also be filed. The DS Registrar shall stamp the documents with the date and time of the filing. The paper version shall constitute the official version for the purposes of the record of the dispute.

 

c.       Each party and third party shall also provide, at the same time as it files the paper versions, an electronic copy of all documents it submits to the Panel, preferably in Microsoft Word format, either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is provided by e-mail, it should be addressed to *****@wto.org, with a copy to *****.*****@wto.org, *****.*****@wto.org, and *****.*****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the DS Registry.

 

d.       Each party shall serve any document submitted to the Panel directly on the other parties in paper form and electronically at the time that it transmits such document to the Panel. Each party shall, in addition, serve directly on all third parties its written submissions in advance of the first substantive meeting with the Panel at the time that it transmits such document to the Panel. Each third party shall serve any document submitted to the Panel directly on the parties and all other third parties in paper form and electronically at the time that it transmits such document to the Panel. A party or third party may submit its documents to other parties or third parties only electronically, subject to the prior written approval of the recipient party or third party and provided that the Panel Secretary is notified of this arrangement. Each party and third party shall confirm, in writing, that copies have been served as required at the time it provides each document to the Panel.

 

e.       Each party and third party shall file its documents with the DS Registry and serve copies on the other parties (and third parties, where appropriate) by 5.00 p.m., local Geneva time, on the due dates established by the Panel.

 

f.        The Panel shall provide the parties with an electronic version of the descriptive part, the interim report and the final report, as well as of other documents as appropriate. When the Panel transmits to the parties or third parties both paper and electronic versions of a document, the paper version shall constitute the official version for the purposes of the record of the dispute.

 

 

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ANNEX B

Arguments Of The Parties

·             EUROPEAN UNION

Contents		Page
Annex B-1	First part of the executive summary of the arguments of the European Union	B-2
Annex B-2	Second part of the executive summary of the arguments of the European Union	B-13

·             UNITED STATES

Contents		Page
Annex B-3	First part of the executive summary of the arguments of the United States	B-25
Annex B-4	Second part of the executive summary of the arguments of the United States	B-37

·             JAPAN

Contents		Page
Annex B-5	First part of the executive summary of the arguments of Japan	B-48
Annex B-6	Second part of the executive summary of the arguments of Japan	B-60

·             ARGENTINA

Contents		Page
Annex B-7	First part of the executive summary of the arguments of Argentina	B-72
Annex B-8	Second part of the executive summary of the arguments of Argentina	B-83

 

 

ANNEX B-1

first part of the executive summary
of the arguments of the european union

1.     INTRODUCTION AND FACTUAL BACKGROUND

 

1.     In its first written submission the European Union challenges certain instruments used by Argentina in order to pursue its policy of "managed trade", which includes protecting the domestic industry against imports and promoting import substitution. The European Union challenges two main measures (i) the non-automatic import license system known as the Declaration Jurada Anticipada de Importacion ("DJAI system"); and (ii) the Restrictive Trade-Related requirements ("RTR requirements") imposed by Argentina. The European Union then shows that these measures infringe fundamental principles enshrined in the GATT and the Import Licensing Agreement.

1.1. DJAI system

2.     The main elements of the DJAI system are: (a) no product can be imported into Argentina without the prior authorisation of the Argentinean Government; (b) traders are obliged to request this authorisation through the submission of an electronic "sworn declaration", in advance of any importation; (c) various bodies of the Argentinean Government and, most prominently, the Secretariat for Domestic Trade of the Ministry of Economy (the "Secretariat for Domestic Trade"), have the right to block the authorisation of the requested importation, through the placing of the mention "Observation" ("Observada") in the electronic system; (d) if the prospective importer wishes to continue with its plan to import the goods, then he/she must contact directly the governmental body that has registered its objection and make an effort to convince that governmental body to remove that objection; (e) there are no limits on the discretion of the governmental bodies to block imports, or on the duration of the blockage; (f) the Argentinean Customs authorities would not allow the release of the imported goods and the Central Bank of Argentina will not authorise the payment in foreign currency for the imported goods (nor the opening of a letter of credit, or the issue of a guarantee in favour of the importer) unless all governmental bodies have recorded into the electronic system their approval of the importation, or have not registered into the system any objection.

 

3.     The DJAI system covers virtually all goods. This is expressly stated in the Preamble of Resolution 1/2012 issued by the Secretariat for Domestic Trade. Likewise, the DJAI system covers all types of persons and entities wishing to import goods into Argentina.

 

4.     There are a number of Argentinean governmental entities that have the right to review and block importation through the DJAI system. The European Union understands that these are: the Secretariat for Domestic Trade, ANMAT, AFIP, SEDRONAR, DGRSS, SENASA and INV. Argentina has not published any legal instruments authorising any other governmental bodies to review imports through the DJAI system. However, there are press releases issued by the Ministry of Industry, which indicate that the National Institute of Industrial Technology ("INTI") may also be reviewing and blocking imports.

 

5.     Argentina has not published the grounds on the basis of which the Secretariat for Domestic Trade and the other governmental entities listed above may block a specific importation. In relation to the Secretariat for Domestic Trade, Resolution 1/2012 describes its mandate in very broad and vague terms: the Secretariat for Domestic Trade is granted the power to review imports in order to "ensure that the domestic market of Argentina is not adversely affected" by inter alia the "quantity of the imports" and their "repercussions on domestic trade". It also states that (a) the Secretariat for Domestic Trade has the power to review and block the importation of all goods into Argentina; and (b) there is no limitation on the Secretariat's broad and unfettered discretion to block imports. Argentina does not publish the number of imports that it blocks through the DJAI system. However, publicly available information indicates that Argentina has used the DJAI system extensively in order to block a very significant number of imports. For example, according to news reports, of blocked imports has been estimated at 65% of all applications, or as having reached the number of 130.000.

 

6.     In addition, the Argentinean courts have rendered a number of judgments confirming that the DJAI system constitutes a non-automatic import licensing system and that the Secretariat for Domestic Trade, in particular, enjoys unfettered discretion to block imports.

 

7.     The Secretariat for Domestic Trade often uses the DJAI system in order to impose on importers commitments that are often trade restrictive themselves. These commitments typically include the obligation to import lower quantities of goods than previously planned, or the obligation to export goods from Argentina. If the prospective importers refuse to accept those commitments, then their imports are altogether prohibited.

 

8.     The Secretariat for Domestic Trade's use of the DJAI system is also evidenced in a Note, which the Secretariat for Domestic Trade distributed to various business associations around the 22 February 2012. As clarified in the European Union's response to question 27 of the Panel, the European Union understands that this Note has been distributed in a "generic" form to a large number of trade associations and import facilitating-brokerage companies in Argentina so that it would be publicly available to all interested applicants. This Note lists, inter alia, the types of information that importers should submit to the Secretariat for Domestic Trade, once the latter has registered into the DJAI system its objection for a particular import. The information must include the prices for all products sold by the importer in Argentina during the previous three years (including goods not related to the products to be imported) and the development of the prices from one year to another. Most importantly, the Note requires the importer to provide information on the quantities of products that the importer "proposes to export" from Argentina, in order to "establish the trade balance". If the importer is not involved in the exportation of goods from Argentina, then the Note obliges him to "indicate all the explanations that enable the Secretariat for Domestic Trade to understand the reasons for which the company does not export". The Note concludes by stating that "it is clarified that, until such time as the companies comply with the requirements, the DJAI will not be authorised".

1.2. RTR Requirements

9.     The RTR requirements imposed by Argentina, inter alia, include to (i) export a certain value of goods from Argentina related to the value of imported products, as a condition to import products into Argentina ("one-to-one requirement"); (ii) limit the volume of imported products, as a condition to continue importing some products into Argentina ("import reduction requirement"); (iii) freeze or reduce the prices of products sold locally, as a condition to import products into Argentina ("price control requirement"); (iv) increase the local content of domestically produced goods, by replacing imported products with domestic products, either as a condition to import products into Argentina or, more generally, as a condition to do business in Argentina and/or obtain an advantage ("import substitution requirement") and (v) make investments in Argentina and/or refrain from repatriating profits abroad, as a condition to import products into Argentina ("investment requirement").

 

10.   The RTR requirements are not stipulated formally in any published law or regulation, and are usually conveyed orally to economic operators in Argentina in their dealings with the relevant Argentine authorities. However, the European Union provides ample evidence of their existence recorded in public statements, where high-ranked government officials announce the implementation of such requirements. Also, the European Union also provides ample evidence of unofficial sources (namely press clippings) attesting the same facts. In addition, the European Union adduces a copy of the document of a notary public confirming the existence of eight documents reflecting agreements between the Argentine Government and economic operators in Argentina containing undertakings to comply with one-to-one as well as with investment requirements.

 

11.   In its first written submission Argentina objects validity and relevance of the evidence submitted by the European Union in the form of information provided by certain sources of information in Argentina, in particular Clarín and La Nación newspapers. The European Union addresses this objection in its opening oral statement. First, the European Union disagree with Argentina's suggestion that the European Union is supporting its claims on evidence consisting on "press releases and newspapers articles … which cannot be considered as anything more than journalistic opinion tinged with ideology". The European Union submits that due to the lack of transparency (i.e., the absence publication of the overreaching measure the European Union is challenging) it is necessary to rely on a variety of evidence, including newspapers, to show the existence of such measure. Moreover, as it is mentioned in section 0 above, in addition to information contained in newspapers from various sources, the European Union has provided, inter alia, official press releases, official documents produced by Argentine authorities, a document made by notary public and surveys by industry associations.

 

12.   Second, with respect to Argentina's request to withdraw all information taken from Clarín and La Nación newspapers from the record of these panel proceedings, the European Union notes that such information is only a minimal part of all the evidence provided by the European Union in this case. Further, the European Union observes that the Panel is free to admit and evaluate evidence of every kind, and to ascribe to it the weight the Panel sees fit. This was also the finding of Panel in US-Hot-Rolled Steel. Moreover, the European Union notes that it has only cited twice the information provided by Clarín in its first written submission and most of the references made to specific sets of facts contained in information provided by Clarín and La Nación have been confirmed by other sources, including other means of communication (newspapers, radios, TVs, magazines, blogs, etc) as well as official press releases by the Argentine authorities.

 

13.   We agree with Argentina that, with respect to the information provided in newspapers, a distinction should be made between the facts described therein and the journalistic colouring of these facts. However, the information provided by those newspapers in this case confirms that an event or fact took place in the past, thereby confirming the existence of the overarching measure as well as the separate measures the European Union is challenging in this case. Moreover, such an event or fact, or similar events or facts, are reported in very similar terms in other sources of information, such as other newspapers or official press releases. Thus, the European Union considers that the Panel should ascribe a value to the information provided by those newspapers (as well as others) when considering the totality of the evidence put forward by the European Union about the existence and content of the measures it is challenging as RTR requirements. In this respect, the European Union also notes that previous panels and the Appellate Body have taken into account evidence provided by newspapers, without the need to demonstrate factual assertions through contemporaneous sources of information. Specially, panels have been inclined to accept the information provided by newspapers in cases like the present one, where the respondent did not challenge the truth of the facts reported. The European Union would also invite the Panel to draw the necessary inferences, where appropriate, from Argentina's refusal to engage in the rebuttal and substantive discussion of the facts and arguments raised by the European Union in its first written submission about the RTR requirements.

 

14.   Finally, with respect to the Argentina's objection against the submitted evidence, the European Union observes that in numerous press releases published by official authorities in Argentina, mainly the Ministry of Industry and the Ministry of Economy, references are made to agreements being signed between the relevant Argentine authorities and economic operators, containing the RTR requirements the European Union is challenging in this case. The European Union has seen many of those agreements and their content. However, the European Union has not been authorised by those economic operators to disclose them in these proceedings. Therefore, the European Union invites the Panel to seek those agreements directly from Argentina, if necessary by following the BCI proceedings already foreseen in the Panel's Working Procedures. We believe that such a request would facilitate the Panel's tasks of making an objective assessment of the matter.

 

15.   The RTR requirements are comprehensively and systematically imposed across economic operators and sectors. Naturally, economic operators in Argentina are more or less affected by the RTR requirements depending on their potential contribution to eliminating trade balance deficits and achieving the import substitution objectives pursued by the Argentine Government.

 

16.   As the European Union clarify in the response to question 9 and 11 of the Panel, the way the Argentine Government enforces compliance with the RTR requirements is not uniform and may take a variety of forms. While the RTR requirements often operate in concert with certain published trade measures—such as the DJAI system—the RTR requirements have also been imposed by other coercive means: from exercising pressure, such as insinuating the nationalization of private companies to freezing the operations of companies (by retaining the identification number for tax purposes, i.e. CUIT). In addition to "sticks" to induce compliance with the RTR requirements, Argentina also employs "carrots" such as providing awards to comply with the requirements (such as the increase in the value of imports that is permitted), and providing incentives to companies complying with import substitution requirements. In any event, the European Union observes that this list is not exhaustive.

 

17.   In the response to question 11, the European Union further clarifies that it is incorrect to assume that to each type of RTR requirement corresponds a specific type of enforcement mechanism. For instance, it is not that the one-to-one requirement is always enforced through the DJAI system. RTR requirements may be enforced by all mechanisms available to the Argentine Government, from the DJAI system to other coercive means mentioned before which affect the regular business activities of economic operators in Argentina. Those other means of enforcement, including sticks and carrots, may not impose a limitation on the ability to import products. For instance, if a government exercises pressure to comply with the one-to-one requirement, companies may be subject to dawn raids interfering with their operations while continue importing. Similarly, companies may not benefit from any support scheme if they do not comply with the import substitution policy by achieving certain local content thresholds; however, those companies would continue importing products.

 

18.   Last, the European Union would like to recall that the enforcement mechanisms must be distinguished from the RTR requirements themselves. The overarching measure the European Union is challenging consists in the imposition of one or more of the RTR requirements which themselves restrict the importation of products or the use of imported products. In other words, the RTR requirements contain limiting conditions which are contrary in themselves to Articles XI:1 and III:4 of the GATT. The enforcement mechanism in case of non-compliance with the RTR requirements, either in the form of a "stick" or a "carrot", is what makes the RTR requirements to be "requirements". In some cases, the enforcement instrument chosen to induce compliance with the RTR requirement may be incompatible with Article X1:1 of the GATT 1994 (i.e., in cases where the DJAI system is used).

1.2.1.   One-to-one requirement

19.   This requirement suggests that, for every dollar spent on imports, an importer must engage in export activities for at least one dollar. However, this "parity" is not always what is required as the Argentine Government often compels companies to increase their level of exports compared to the previous year, while maintaining imports at a lower level (and thus achieve a trade surplus). Also, the Argentine Government requires companies to even out their trade balance on an annual basis. Even if an entity achieved a positive trade balance in one year, next year such entity is required to even out its trade balance starting from zero in the export side. In turn, if a company did not even out its trade balance in one year, next year imports are not allowed until such a company exports the value required to even out its trade balance.

 

20.   Companies in Argentina have addressed the one-to-one requirement in various ways. Sometimes, companies devise export plans based on their own production capacities, which often leads to altering their production plans to increase their production capacity in Argentina with a view to exporting the required values. In some other cases, companies partner with domestic producers to export domestic products (mostly unrelated to their own imports or production in Argentina) under the name of the importing firm. In most cases, however, companies need to hire exporters in order to assume entitlement over such exports and thus, meet the export commitments. The last is the most recurrent case especially by small and medium importers which, due to their limited capacities, are unable to engage in export activities by themselves. This has created an emerging market of exporters offering their exports to importers in exchange of a percentage of the value of exports needed. Also, other companies compensate the lack of agreed exports by making irrevocable capital contributions.

 

21.   The European Union in its first written submission illustrates how the Argentine Government has imposed the one-to-one requirement to the present day, and the way in which economic operators have committed to it by referring to the one-to-one requirement applied in the sectors of automobiles, trucks, motorcycles, cultural products, tyres, agricultural products, electronic products/appliances, clothing, pharmaceuticals, pork meat and toys.

1.2.2.   Import reduction requirement

22.   The Argentine Government also requires economic operators to limit the volume of imported products, as a condition to continue importing some products into Argentina. This requirement may be asked separately or may also be a part of a broader set of requirements (often the one-to-one requirement) that economic operators must undertake. In all cases, compliance with the import reduction requirement serves as a "permission" to continue importing products in the future. Like the rest of RTR requirements, the import reduction commitments are unrelated to the essence, composition or performance of the product being imported, but respond to Argentina's objectives to control trade deficits and substitute imports.

 

23.   The European Union illustrates the implementation of the import reduction requirement by commitment by supermarket chains to limit the volume of imported products, commitment by automobile importers to reduce imports, commitment by motorcycle importers to reduce imports and commitment by Argentine pork associations to stop and limit imports of pork meat products.

1.2.3.   Price control requirement

24.   Either separately or together with other RTR requirements, the Argentine Government requires economic operators to freeze or reduce their prices in order to continue importing products. Compliance with the price control requirement serves as a "permission" to continue importing products in the future but also, compliance with the price control requirement is used as a "reward" to companies, in the sense that companies abiding by it are permitted to increase the levels of imported products they are allowed to achieve. The European Union illustrates the price control requirement by commitments by supermarket chains to freeze or reduce their prices and by certain premium clothing companies to halt prices.

1.2.4.   Import substitution requirement

25.   Over the last years, the Argentine Government also requires economic operators in Argentina to incorporate local content to their products by substituting imported products by products that are or can be produced in Argentina. Sometimes the import substitution requirement is imposed as a condition to continue importing some products. The import substitution requirement is often imposed together with other RTR requirements, specially the one-to-one requirement. In those cases, in order to reach the necessary trade surplus, an import substitution requirement is also imposed to lower the level of imported products. In other cases, the import substitution requirement is not necessarily a condition to the importation of products but, more generally, is seen as a requirement to do business in Argentina or to benefit from tax incentives or other types of support.

 

26.   The Argentine Government has set up sectorial working groups bringing together producers of manufactured goods and local (potential) suppliers of inputs with a view to enjoining the former to substitute imports for domestically produced goods in the production of the downstream product. In many cases, the Argentine Government has required relevant stakeholders to identify inputs or products that can be replaced by domestic sources and to commit to an import substitution plan. The sectors for which a working group has been set up are: (i) leather and footwear; (ii) wood; (iii) textile and apparel; (iv) automotive-autoparts; (v) construction materials; (vi) software; (vii) agricultural machinery; (viii) medicines for human consumption; (ix) capital goods; (x) poultry, pork and dairy; and (xi) chemical and petrochemical.

 

27.   The European Union describes how the Argentine Government has implemented the import substitution requirement in several key sectors, such as the mining, automotive, agricultural machinery, motorcycle, electronics, and bicycles sectors. In these sectors, the Argentine Government has explicitly made it clear that the import substitution requirement is not an option but an obligation with which producers of downstream products and local suppliers of inputs must engage. Yet, the import substitution requirement is not confined only to these sectors. Argentine is progressively broadening the scope of the industries over which import substitution requirements are imposed.

1.2.5.   Investment requirement

28.   The Argentine Government also requires companies to invest in Argentina in existing or new production facilities, as a condition to import products. Specifically, the Argentine Government requires companies to make or increase investments in Argentina by bringing new capital and/or by refraining from repatriating profits abroad. By imposing such a requirement, the Argentine Government seeks to even out trade deficits and achieve import substitution (i.e., the investment would increase local production which, in turn, is sold locally replacing imports or is exported, thereby evening out trade balances).

 

29.   This requirement may be imposed separately or together with other RTR requirements. For example, in some cases, the Argentine Government imposes the one-to-one requirement and the investment requirement in order to oblige the company to obtain a positive trade balance surplus. In other cases, the Argentine Government does not require a specific export target or trade balance surplus but merely "efforts" to even out trade balance deficits to acceptable levels by imposing the investment requirement. In many cases, however, investments are also undertaken together with the obligation to increase the local content in the production of goods in Argentina.

 

30.   The European Union exemplifies several cases where the Argentine Government has required, and the companies have undertaken investment commitments as a condition to import products.

2.     LEGAL ARGUMENT CONCERNING DJAI SYSTEM

2.1. The DJAI system is inconsistent with the GATT

2.1.1.   The DJAI system is inconsistent with Article XI:1 of the GATT

31.   The European Union argues that the DJAI system is a "governmental measure" and a "limiting condition on importation" and therefore inconsistent with Article XI of the GATT. The European Union discusses the design and structure of the DJAI system: (a) all importers must submit the "sworn affidavit" prior to the importation of any and all goods into Argentina; (b) the importation can take place only if it is authorised by the Argentinean authorities through the DJAI system; (c) there are a number of Argentinean governmental authorities, which have the right to block the importation through the DJAI system; (d) for as long as the importation is blocked on the DJAI system, the importation cannot take place and the Argentinean Customs Authorities refuse to allow the release of the goods into the Argentinean market and the Central Bank of Argentina refuses to authorise the opening of letters of credit, the issuance of bank guarantees, or the payment in foreign currency for the imported goods; (e) there is no limit on the time period during which the Argentinean authorities may continue to block the importation through the DJAI system and (f) there are no limits on the Argentinean authorities' discretion to block an importation, or continue to block the importation indefinitely.

2.1.2.         Argentina has acted inconsistently with its obligations under Article X:1 of the GATT

32.   Argentina has acted inconsistently with its obligations under Article X:1 of the GATT because Argentina has failed to publish promptly and in a manner such as to enable governments and traders to become acquainted with them, all laws, regulations and administrative rulings of general application (legal instruments) relating to the operation of the DJAI system. First, Argentina has failed to publish a complete list of all governmental entities that have the right to inspect and block imports through the DJAI system. For instance, there are press releases which indicate that INTI may be reviewing and blocking imports through the DJAI system. However, Argentina has not published any legal instrument providing INTI with such right. Second, Argentina has failed to publish the complete list of the goods that each governmental entity can review and block through the DJAI system. The Manual for DJAI Operations only lists the goods that the Secretariat for Domestic Trade, AFIP and ANMAT may review and block, however it does not list the goods the importation of which may be blocked by any other governmental entity. The fact that Argentina has published the specific list of goods for only some entities, confirms that it has intentionally omitted to publish the list of goods for the other entities. Third, Argentina has failed to publish the conditions on the basis of which the Secretariat for Domestic Trade, the ANMAT, the SEDRONAR, the DGRSS, the SENASA, the INV and the INTI can block imports through the DJAI system. Argentina has published in the Manual for DJAI Operations only the grounds on the basis of which AFIP may block specific imports. The fact that Argentina has published these conditions for only one entity, confirms that it has intentionally omitted to publish the corresponding conditions for the other governmental entities. Fourth, Argentina has failed to publish the grounds on the basis of which the deadline for "Withdrawn-Expired" status ("Anulada") of a DJAI application may be extended. Lastly, Argentina requires the submission of the Note discussed above. However, Argentina has not published any legal instrument that provides for the existence of that Note.

2.1.3.         Argentina's administration of the DJAI system is inconsistent with Article X:3(a) of the GATT

33.   The European Union submits that Argentina's administration of the DJAI system does not meet the requirements of Article X:3(a) of the GATT. First, given the absence of any published grounds or conditions on the basis of which the Secretariat for Domestic Trade, in particular, would block imports, there is no "consistency" or "predictability" in Argentina's administration of the DJAI system. The absence of such published grounds or conditions means that the Secretariat for Domestic Trade could block the imports of one importer, while authorise the imports of another importer (despite the fact that the two importers would be of the same type and size) or that an importer could see its imports being authorised at one point in time, but blocked at another point in time. The European Union also showed that the Secretariat for Domestic Trade, in particular, is requiring importers to undertake various trade-restrictive commitments, in order to allow them to import into Argentina. This element alone suffices to render Argentina's administration of the DJAI system non-uniform. Second, in the absence of any published grounds or conditions on the basis of which the Secretariat for Domestic Trade, in particular, would block imports, the DJAI system does not contain any "adequate safeguards" that could ensure the "impartial" and fair treatment of all prospective importers. Third, the publicly available information establishes that the Secretariat for Domestic Trade, in particular, routinely requires applicants to undertake trade-restrictive obligations and conditions, in order to allow their imports through the DJAI system. For as long as the applicants have not agreed to undertake these obligations and conditions, the Secretariat for Domestic Trade continues to block the applicants' imports, sometimes even for months, as established by the Argentinean Court judgments. An administration with such characteristics is definitely not "reasonable", "proportional" or "sensible" and it is definitely "asking for too much".

2.2.    The DJAI system is a non-automatic import licensing system, which is inconsistent with the provisions of the Import Licensing Agreement and the GATT

34.   The European Union considers the DJAI system as an "import licensing" regime, which falls within the scope of both Article XI of the GATT and of the Import Licensing Agreement.

2.2.1.   The DJAI system is inconsistent with Article XI:1 of the GATT

35.   WTO Panels have already found that an import licensing system falls within the prohibition of the GATT Article XI:1 when it is "discretionary or non-automatic". The DJAI system is such a non-automatic import license system. First, because the DJAI system does not grant the approval of the "application" in all cases. Second, there are numerous examples of applications for importation which have been blocked through the DJAI system, as evidenced both by the Argentinean court judgments and the other publicly available information. In addition, the DJAI system is designed and structured to grant authorisations for imports with important time delays. As mentioned, once a governmental entity has blocked the importation through the DJAI system, there is no deadline within which the importation will be authorised. The Argentinean Court judgments also establish that the actual operation of the DJAI system involves very important time delays in the granting of DJAI authorisations, if such authorisations are ever granted. Consequently, the important time delays in the granting of DJAI authorisations are an additional element showing that the DJAI system is inconsistent with Article XI:1 of the GATT.

2.2.2.         Argentina has acted inconsistently with its obligations under Article 1.3 of the Import Licensing Agreement

36.   The Appellate Body in EC-Bananas III has found that "the provisions of Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement have identical coverage". Therefore, to the extent that the Panel finds that the DJAI system constitutes an import licensing system which falls within the scope of the Import Licensing Agreement, the European Union requests the Panel to find that Argentina has acted inconsistently with Article 1.3 of that agreement, for the reasons discussed in this Submission, under the Section on Article X:3(a) of the GATT.

2.2.3.         Argentina has acted inconsistently with its obligations under Article 1.4(a) and Article 3.3 of the Import Licensing Agreement

37.   The European Union has not received any information indicating that Argentina has provided the requisite publications to the WTO Committee on Import Licensing or the WTO Secretariat. Moreover, Argentina has failed to publish in the manner required by Article 1.4(a) of the Import Licensing Agreement, (a) the complete list of all Argentinean governmental entities that have the right to review and block the DJAI applications; and (b) the complete list of goods, the importation of which can be reviewed and blocked by each of the governmental entities "affiliated" with the DJAI system. Therefore, Argentina has acted inconsistently with its obligations under Article 1.4(a) of the Import Licensing Agreement. In addition, Argentina has not published any laws or regulations imposing quantitative restrictions on imports, nor has its published any laws or regulations stating that the DJAI system is linked to the implementation of such quantitative restrictions on imports. Therefore, there is no evidence that the DJAI system has the purpose of implementing quantitative restrictions. In these circumstances, Article 3.3 of the Import Licensing Agreement obliges Argentina to publish "sufficient information" on the "basis for granting and/or allocating licenses". Argentina has failed to do so.

2.2.4.         The DJAI system is inconsistent with Article 1.6 of the Import Licensing Agreement

38.   The DJAI "application procedure" (a) involves multiple levels of applications at different points in time; (b) requires additional and separate contacts and applications with numerous different governmental entities; (c) requires the submission of documents and information that are not related to the specific goods to be imported; and (d) requires the submission of documents and information on the applicant's export activities while the applicant is actually requesting the authorisation to import goods, and therefore is not "as simple as possible" for purposes of Article 1.6 of the Import Licensing Agreement. Moreover, once an application is blocked, applicants may be obliged to contact separately up to seven or eight different "administrative bodies" and submit additional documents and "applications" separately to each of them. Therefore, the total number of "administrative bodies" that applicants may be forced to "approach" exceeds by far the number of three provided in Article 1.6 of the Import Licensing Agreement.

2.2.5.         The DJAI system is inconsistent with Article 3.2 of the Import Licensing Agreement

39.   The European Union considers that the DJAI system is not used in order to "implement" some other "measure" within the meaning of Article 3.2 of the Import Licencing Agreement: the DJAI system itself is the measure that restricts imports, in breach of Argentina's obligations under Article XI of the GATT.

2.2.6.         The DJAI system is inconsistent with Article 3.5(f) of the Import Licensing Agreement

40.   Each application by a prospective importer, submitted through the DJAI system, is considered by the Argentinean authorities "as and when received". This means that the period for processing the applicant's request should not exceed 30 days. However, the DJAI system is designed to grant authorisation during a period which is much longer than 30 days. In fact, the application remains in the blocked "Observed" status for as long as the relevant governmental entity has not removed its objection. The only time "limit" provided for in the Argentinean legislation is that 180 days after the date of the application's registration into the electronic system, the application goes automatically into the "Withdrawn-Expired" status. This deadline can be further extended, but the Argentinean legislation does not describe the conditions that must be met in order for such an extension to be granted. In other words, an application may remain in the blocked "Observed" status indefinitely.

 

3.     LEGAL ARGUMENT ON RESTRICTIVE TRADE-RELATED REQUIREMENTS

 

41.   In this dispute, the European Union challenges the imposition of one or more of the RTR requirements upon economic operators in Argentina as a part an overarching measure inconsistent with Articles XI:I and/or III:4 of the GATT. Since these requirement have not been published promptly in a manner to enable governments and traders to become acquainted with them, the European Union submits that Argentina also violated its obligations under Article X:1 of the GATT 1994. In the alternative, should the Panel find that the RTR requirements, each on its own or any combination thereof, are not inconsistent with these Articles as a part of an overreaching measure, the European Union challenges as separate measures certain specific instances where Argentina has applied one or more of these requirements with respect to individual economic operators.

3.1. The RTR requirements are inconsistent with Articles XI:1 and/or III:4 GATT 1994

42.   The European Union will demonstrate that each of the requirements which conform the measure at issue is inconsistent with Articles XI:1 and/or Article III:4 of the GATT 1994 since they prohibit or restrict the importation and/or the use of imported products in Argentina. Consequently, the RTR requirements, defined as an overarching measure pursuant to which the Argentine Government requires economic operators to commit to take one or more of the actions described above, is also contrary to Articles XI:1 and/or III:4 of the GATT 1994.

3.1.1.         The one-to-one requirement is inconsistent with Article XI:1 of the GATT 1994

43.   The European Union submits that a similar "trade balancing requirement" was found inconsistent with Article XI:1 of the GATT 1994 in India – Autos. Also, a similar type of restrictive measure, in the particular context of measures affecting investment, was included in the Illustrative List contained in the Annex to the TRIMs Agreement as "inconsistent" with Article XI:1 of the GATT 1994.

3.1.2.         The import reduction requirement is inconsistent with Article XI:1 of the GATT 1994

44.   The European Union submits that the import reduction requirement imposes a limiting condition on the importation of products and, thus, is inconsistent with Article XI:1 of the GATT 1994. Indeed, the importation of certain products is totally banned (like the case of the pork industry) or restricted (like the case of automobiles and motorcycles) as a condition to continue importing the same or other products into Argentina.

3.1.3.         The price control requirement is inconsistent with Article XI:1 of the GATT 1994

45.   The European Union submits that the price control requirement is inconsistent with Article XI:1 of the GATT 1994. If the entity concerned does not commit to freeze or reduce the prices of the products it sells in Argentina, the entity is prevented from importing products. If the entity agrees to freeze or reduce those prices, the entity is allowed to continue importing products into Argentina and is also rewarded by benefiting from less import restrictions. In this sense, the price control requirement makes importation contingent upon compliance with certain selling prices.

3.1.4.         The import substitution requirement is inconsistent with Articles XI:1 and III:4 of the GATT 1994

46.   The European Union submits that the import substitution requirement, insofar as it imposes a limiting condition on the importation of products is contrary to Article XI:1 of the GATT 1994 and to Article III:4 of the GATT 1994 insofar as it imposes a limitation on the use of imported products, is contrary to Article III:4 of the GATT 1994.

 

47.   To elaborate on the latter, the European Union submitted that, first, the import substitution requirement is based exclusively on the products' origin. Thus, the goods manufactured in Argentina and imported from elsewhere are like products within the meaning of Article III:4 of the GATT 1994. Second, the import substitution requirements are "requirements" in the sense of Article III:4 of the GATT 1994. In particular, entities in Argentina must accept them in order to continue their activities in Argentina and the Argentine Government exercises pressure on these entities to reach local content targets and replace their imported products by other products sourced locally. In some cases, the Argentine Government also imposes the import substitution requirement in order to obtain an advantage (such as a subsidy). Third, in the light of the findings of Appellate Body and Panels in Turkey – Rice, Canada  – Autos, China – Auto Part, the import substitution requirements "affect" the "internal sale, purchase, or use" of imported products within the meaning of Article III:4. Fourth, the import substitution requirement accord less favourable treatment to imported products than the treatment granted to like domestic products. In fact, by setting local content targets as a condition to operate in Argentina or to have access to an advantage, the Argentine Government alters the conditions of competition in Argentina negatively affecting the possibilities for imported products to be used in Argentina (e.g., in the local production). Finally, the European Union observes that paragraph 1(a) of the Illustrative List of the TRIMs Agreement provides that measures like import substitution requirements are inconsistent with Article III:4 of the GATT 1994 and that similar import substitution requirements have been found inconsistent with Article III:4 of the GATT 1994 in other cases, such as India – Autos, Korea – Various Measures on Beef, US – Malt Beverages or Canada - FIRA.

3.1.5.         The investment requirement is inconsistent with Article XI:1 of the GATT 1994

48.   The Argentine Government requires companies to make investments in Argentina as a condition to import products. If the companies do not comply with it, the Argentine Government employs legal instruments such as the DJAI or other coercive means to impede the importation of products. In most cases, however, companies accept such a commitment in order to avoid import restrictions. In either way, the investment requirement imposes a limiting condition on the importation of products and, thus, is inconsistent with Article XI:1 of the GATT 1994.

3.2.    Argentina violated its obligations under Article X:1 of the GATT 1994 when failing to publish the RTR requirements promptly

49.   The European Union maintains that the RTR requirements are inconsistent with Article X:1. First, the RTR requirements apply to a range of situations, to a variety of economic operators and sectors. Thus, the RTR requirements are not isolated cases, but an overarching measure applied to a wide range of situations and, thus, amounts to a measure of general application in the sense of Article X:I of the GATT 1994. Second, the RTR requirements are made effective by Argentina. Official government statements and press releases, unofficial press clippings, industry surveys and the WTO Secretariat itself all confirm the existence, nature and operation of the RTR requirements. Third, the European Union has also shown that the RTR requirements restrict the importation of products as well as the use of imported products, when imposing at least one of those requirements as a condition to import products and/or as a condition to use imported products in Argentina. Last, Argentina has failed to publish the RTR requirements promptly as required by Article X:1 of the GATT 1994. These requirements are not stipulated in any published law or regulation and, in practice, they are usually communicated orally to individual economic operators, either by telephone or in face-to-face meetings.

3.3. Specific instances of application of the RTR requirements

50.   In the alternative, should the Panel find that the RTR requirements, each on its own or any combination thereof, are not inconsistent with Articles XI:1 and/or III:4 of the GATT 1994 as part of an overarching measure, the European Union challenges as separate measures specific instances where Argentina has applied one or more of these requirements with respect to individual economic operators as follows:

 

Case	Entity(/ies) affected	Approx. Date	Requirement	Claim
1	Renault Trucks	7/02/2012	One-to-one Import substitution Investment	Articles XI:1 and III:4 of the GATT 1994
2	Volkswagen	18/03/2011	One-to-one Import substitution	Articles XI:1 and III:4 of the GATT 1994
3	Porsche	30/03/2011	One-to-one	Article XI:1 of the GATT 1994
4	Mercedes Benz	6/04/2011	One-to-one Import substitution Investment	Articles XI:1 and III:4 of the GATT 1994
5	Peugeot-Citroën	20/04/2011 17/11/2011	One-to-one	Article XI:1 of the GATT 1994
6	Alfa Romeo	20/04/2011	One-to-one	Article XI:1 of the GATT 1994
7	General Motors	2/05/2011	One-to-one Import substitution Investment	Articles XI:1 and III:4 of the GATT 1994
8	Fiat	5/05/2011	One-to-one Import substitution Investment	Articles XI:1 and III:4 of the GATT 1994
9	Ford	23/05/2011	One-to-one Import substitution	Articles XI:1 and III:4 of the GATT 1994
10	Renault	5/08/2011	One-to-one Import substitution	Articles XI:1 and III:4 of the GATT 1994
11	BMW	13/10/2011	One-to-one	Article XI:1 of the GATT 1994
12	Cámara Argentina de Publicaciones and its affiliated entities	31/10/2011	One-to-one	Article XI:1 of the GATT 1994
13	Cámara Argentina del Libro and its affiliated entities	11/11/2011	One-to-one	Article XI:1 of the GATT 1994
14	Scania	21/11/2011	One-to-one Investment	Article XI:1 of the GATT 1994
15	Pirelli	9/03/2012	One-to-one	Article XI:1 of the GATT 1994
16	Pork meat associations	7/05/2012	One-to-one Import reduction	Article XI:1 of the GATT 1994
17	Sociedad Bíblica Argentina (SBA)	22/11/2011	One-to-one	Article XI:1 of the GATT 1994
18	Certain producers of medicines	01-05/2011	One-to-one Investment	Article XI:1 of the GATT 1994
19	Airoldi	7/03/2012	One-to-one	Article XI:1 of the GATT 1994
20	Zanella	03, 10/2011	One-to-one Import substitution	Articles XI:1 and III:4 of the GATT 1994
21	Indesit	07/2012	One-to-one	Article XI:1 of the GATT 1994
22	Michelin	11/04/2013	One-to-one Import substitution Investment	Articles XI:1 and III:4 of the GATT 1994
23	Ermenegildo Zegna	2/08/2012	One-to-one	Article XI:1 of the GATT 1994

 

4.     CONCLUSIONS AND REQUEST FOR FINDINGS

 

51.   For the reasons set out in its first written submission, the European Union requests the Panel to find that:

 

(1)         with respect to the DJAI System, Argentina has acted inconsistently with its obligations under Articles X:1; X:3(a); and XI:1 of the GATT, as well as with Articles 1.3; 1.4(a); 1.6; 3.2; 3.3; and 3.5(f) of the Import Licensing Agreement;

 

(2)         with respect to the RTR requirements, that:

 

·         the RTR requirements are inconsistent with Articles XI:1 and/or Article III:4 of the GATT 1994;

·         Argentina violated its obligations under Article X:1 of the GATT 1994 by failing to publish the RTR requirements promptly in a manner to enable governments and traders to become acquainted with them;

·         in the alternative, that Argentina acted contrary to Articles XI:1 and/or Article III:4 of the GATT 1994 in each of the measures separately identified in this submission.

ANNEX B-2

second part of the executive summary
of the arguments of the european union

1.     INTRODUCTION

 

1.     This executive summary summarizes the arguments of the European Union in its second written submission and the Oral Statement in the Second Hearing. It reiterates the position of the European Union and rebuts Argentina's arguments related first to the DJAI Requirement and then to the RTR requirements. On the DJAI, the European Union first identifies the factual points that Argentina does not contest and then explain the reasons for which Argentina's legal assertions should be rejected. On the RTR requirements, the European Union discusses the reasons for which Argentina's assertions are baseless and provides comments on Argentina's responses to the Panel's written questions. The European Union also provides some comments on the Panel's communication of 6 November 2013.

 

2.     DJAI REQUIREMENT

 

2.1.     Points that Argentina has Acknowledged

 

2.     Through its first written submission, its oral statements during the first Hearing and its responses to the written questions of the Panel, Argentina has acknowledged the accuracy of a number of facts presented by the European Union in its own submissions. Argentina has generally confirmed the European Union's description of the DJAI system's design, structure and operation. Argentina has also confirmed that no importation can take place for as long as the DJAI system is at "observed" status and that a number of Argentinean governmental entities have the power to block imports through the DJAI system. Most importantly, Argentina has confirmed that the Secretariat for Domestic Trade has the power to block the imports of all goods through the DJAI system. Likewise, Argentina has implicitly acknowledged the Secretariat for Domestic Trade's broad discretion in blocking imports and the lack of publication of a specific list of reasons for which this Secretariat may block imports. Also, Argentina has failed to address a number of issues, such as the role of the INTI; and the lack of publication of the legal instruments through which SEDRONAR, SENASA and INV have been given the power to review and block imports through the DJAI System. In addition, Argentina has made confusing statements as to whether SENASA and INV actually have the power to review and block imports through the DJAI System. Therefore, as a result of Argentina's failure to publish promptly all relevant legal instruments in accordance with the provisions of Article X:1 of the GATT, there is uncertainty as to which governmental entities actually review and block imports through the DJAI system. In conclusion, the European Union considers that Argentina's submissions and statements in these proceedings, in combination with the evidence placed at the disposal of the Panel, have served to establish the facts that justify the European Union's claims under Article X:1, Article X:3(a) and Article XI:1 of the GATT, irrespective of whether the DJAI system is considered an "import license", or not.

 

2.2.     Points that Argentina Contests

 

3.    The European Union noted that Argentina does not contest the main facts presented by the European Union. Rather, Argentina has based its defence on a number of legal interpretations and assertions. These legal interpretations and assertions are wrong and should be rejected, for the reasons discussed by the European Union in the following paragraphs.

 

2.2.1.    Issues relating to the GATT

 

2.2.1.1     Argentina's assertions in relation to Article XI:1 of the GATT

 

4.     Argentina's defence is based on one main assertion: that a type of measure that Argentina calls "customs formalities" falls outside the scope of Article XI of the GATT, because it allegedly falls only within the scope of Article VIII of the GATT. Argentina further asserts that Article XI of the GATT covers only "substantive" provisions and not "procedural" provisions. According to Argentina, the latter fall only within the scope of Article VIII of the GATT. These assertions run against both the text of the relevant provisions of the GATT and the consistent jurisprudence of past Panels and the Appellate Body.

 

2.2.1.1.1             Argentina's assertions in relation to Article VIII of the GATT are wrong

 

5.     Argentina asserts that it cannot be the case that customs formalities that are permitted under Article VIII are prohibited quantitative restrictions under Article XI. Argentina also asserts that the potential trade-restrictive effects of customs formalities are governed by Article VIII and because Article VIII contemplates by its terms that such effects may occur, it cannot be the case that these same effects render a customs formality a prohibited quantitative restriction under Article XI.  Otherwise, Members would not be able to maintain customs formalities, because they would be prohibited under Article XI.  Argentina's assertions are wrong for a number of reasons.

 

6.     First, Argentina fails to explain which provision of Article VIII of the GATT allegedly "permits" those "customs formalities".

 

7.     Second, the text of Article VIII does not even mention the term "customs formalities". Article VIII:3 simply provides that there should not be "substantial penalties" for "minor breaches of customs regulations or procedural requirements". Moreover, as the European Union noted in paragraph 13 of its Opening Statement in the Second Hearing, the debate that took place during the First Hearing showed that, as a matter of fact, the DJAI requirement does not constitute a "customs formality".  In consequence, Argentina subtly shifted terminology in its second written submission and replaced the term "customs formalities" with the term "import formalities".

 

8.     Third, no provision of Article VIII or Article XI of GATT states that "import and export formalities" are "permitted". Article VIII:1(c) simply imposes on WTO Members the obligation to "minimize their incidence and complexity". Argentina's assertion, if accepted, would open an enormous loophole in the GATT.

 

9.     Fourth, the fact that "import and export formalities", as well as other "quantitative restrictions" and "licensing" are mentioned in the text of Article VIII of the GATT does not mean that these measures fall only within the scope of Article VIII and fall outside the scope of Article XI of the GATT. The "restrictions on the importation of goods" are also mentioned in other provisions of the GATT, such as Article XIII. For example, the fact that Article XIII provides a very elaborate set of rules on how import restrictions should be administered does not imply that such import restrictions are "permitted" by Article XIII and fall outside the scope of Article XI of the GATT. If that erroneous interpretation was accepted, then Article XI would have no scope. The proper interpretation of Article XI, Article XIII and Article VIII:1(c), which would give meaning to all three Articles, is that import prohibitions and restrictions are generally prohibited by Article XI:1 of the GATT. WTO Members may impose such import prohibitions or restrictions, only if they are justified by one of the exceptions provided in the GATT. In the event that a WTO Member is authorised to impose such import restrictions by virtue of some exception, then the WTO Member must further ensure that these measures and their administration also comply with the provisions of Article XIII and Article VIII:1(c) of the GATT. Therefore, Argentina's erroneous assertion must be rejected. Article XI of the GATT covers "customs formalities", just like it covers all other measures other than duties, taxes and other charges.

 

2.2.1.1.2             Argentina's distinction between "substantive" and "procedural" provisions for purposes of Article XI of the GATT is wrong

 

10.   Argentina asserts that "Article XI prohibits quantitative restrictions, but not the means by which they are made effective". Argentina asserts that Article XI relates to substantive rules of importation that limit or restrict trade, whereas Article VIII and the ILP Agreement relate to import procedures, including the trade effects of those procedures. Argentina's assertions are wrong. This is made clear by the following considerations.

 

11.   First, there is nothing in the text of Article XI:1 of the GATT that could support Argentina's erroneous assertion. Quite to the contrary, the text of Article XI of the GATT expressly provides that it covers all measures that may restrict imports, with the exception of duties, taxes and other charges. Likewise, Article XI:1 uses language which is all-encompassing.  The combination of the fact that the text of Article XI:1 uses such general and all-encompassing language with the fact that Article XI contains its own exceptions, confirms that all measures may fall within the scope of Article XI, irrespective of whether they could be characterised as "substantive" or "procedural".

 

12.   Second, Argentina is wrong when it draws a distinction between, on the one hand, "quantitative restrictions" and, on the other hand, the "means by which they are made effective". The text of Article XI:1 reads: "…made effective through quotas, import or export licenses or other measures".  If Argentina's erroneous assertion was accepted, then "quotas" should be considered as a "means" by which some other, undefined "quantitative restriction" would allegedly be "made effective". The consequence would be that quotas would fall outside the scope of Article XI of the GATT and would fall only within the scope of Article VIII of the GATT. However, this outcome is denied by the consistent WTO jurisprudence including the Panel Reports on which Argentina relies.

 

13.   Third, Argentina's interpretation of the findings of the Panel in China-Raw Materials is wrong. Argentina asserts that the Panel in that case allegedly "recognizes that the trade-restrictive effects of substantive rules…cannot be attributed to the procedures that are used to implement those rules". This assertion is wrong for a number of reasons. Firstly, the Panel in China-Raw Materials did not find that the challenged export licences constituted a "procedure".  The Panel does not even use the word "procedure" in the relevant Sections of its Report.  Quite to the contrary, the Panel considered the export licenses simply as a type of measure that may fall within the scope of Article XI:1 of the GATT, where, by their nature, they have a limiting or restrictive effect.  This finding is fully consistent with the legal interpretation of Article XI:1 of the GATT proposed by the European Union, which focuses the analysis on whether the challenged measure (a) is a governmental measure; and (b) prohibits or restricts the importation of goods. Consequently, the basis, on which Argentina's assertion lies, is false. Secondly, the Panel in China-Raw Materials found that licenses would constitute a "quantitative restriction" that would breach Article XI:1 of the GATT, where the licensing authorities retained some discretion on whether to grant the licenses or not. In that particular case, the facts showed that the Chinese authorities retained the discretion to refuse the grant of the export licenses that were imposed on goods which were not subject to export quotas. The Panel also found that this discretion stemmed from the power of the Chinese authorities to request undefined documents from the applicants. The Panel went on to confirm the consistent jurisprudence on Article XI:1 of the GATT on "discretionary", or "non-automatic" licenses, and found that these export licenses breached Article XI:1 of the GATT. In the present case, the facts are very similar to the facts of these export licenses in China-Raw Materials. Argentina imposes the DJAI system on all goods to be imported into Argentina.  Argentina has not asserted that it imposes any quota on these goods in addition to the DJAI. And, Argentina's legislation allows to the Secretariat for Domestic Trade the discretion to block imports on the basis of undefined criteria. As the Panel in China-Raw Materials found, the authority to deny the license is ever present because the conditions for granting it are subject to the demands of the particular governmental entity.  Therefore, this uncertainty amounts to a restriction that is inconsistent with Article XI:1 of the GATT.

 

14.   In conclusion, Argentina's assertions are wrong and should be rejected.  The European Union has already presented in its First Written Submission the proper interpretation of Article XI:1 of the GATT, as consistently followed by both the Appellate Body and the Panels in the past.  The European Union respectfully requests the Panel to apply this correct legal interpretation on the facts of the present case and to find that the DJAI system breaches Article XI:1 of the GATT.

 

2.2.1.1.3             The notions of "prohibition" and "restriction" in Article XI of the GATT

 

15.   Argentina asserts that "a proper interpretation of Article XI:1 requires…a showing that the measure at issue limits imports or exports in a quantifiable way and that this quantitative limitation on imports or export is a result of the measure".  Argentina also asserts that the co-complainants "have presented no evidence at all that the DJAI procedure has had a quantifiable limiting effect on imports into Argentina, let alone a quantifiable limiting effect that can be separated and distinguished from the alleged RTRRs that the DJAI procedure is allegedly used to implement". Argentina's assertions are wrong.

 

16.   In its first written submission, the European Union has already presented a concise description of the WTO jurisprudence on the notion of "quantitative restriction" for purposes of Article XI of the GATT. Argentina seems to disagree and it seems to assert that the Appellate Body Report in China­-Raw Materials has introduced a notion of "restriction", which is different from the interpretation given to that term by the Panel in the same case (consistently with the interpretation of other panels in previous cases). However, on the facts of that case, the Appellate Body actually approved the Panel's interpretation of the notions of "prohibition" and "restriction" in Article XI:1 of the GATT. This is because, the Appellate Body found that a measure could be analysed under Article XI:2(a) of the GATT only if it fell within the scope of Article XI:1 of the GATT. If the Appellate Body disagreed with the Panel's interpretation of Article XI:1 of the GATT, then it would have found that there is no reason to analyse the measure under Article XI:2(a): the measure would fall outside the scope of both Article XI:1 and Article XI:2(a). Therefore, the Appellate Body's Report confirms the Panel's interpretation of the notion of "restriction" in Article XI:1 of the GATT and the Panel interpretation is fully consistent both with the interpretation followed by the other panels in previous cases and with the interpretation suggested by the European Union in the present case. The European Union also noted in the paragraphs 26 to 30 of the Opening Statement in the Second Hearing that Argentina interprets the Appellate Body statements in order to devise a legal test which would include words and notions that the Appellate Body has never used. For instance, the Appellate body has not stated that to fall within the scope of Article XI of the GATT, a measure needs to be "expressed in the terms of quantity".

 

2.2.1.1.4     Is the DJAI a "customs formality"?

 

17.   Article XI of the GATT covers all measures (with the exception of duties, taxes and charges).  This includes both "import formalities and requirements" and what Argentina calls "customs formalities". Consequently, the Panel does not need to determine whether the DJAI requirement constitutes a "customs formality", or not.  Even if the DJAI system was a "customs formality", it would still fall within the scope of Article XI of the GATT and would be contrary to Article XI:1 of the GATT as an "other measure". In any event, the European Union has summarised in its first written submission the facts that establish that the DJAI requirement is not a "customs formality".

 

2.2.1.1.5             Is the WCO SAFE Framework relevant for the Panel's analysis in the present dispute?

 

18.   The European Union considers that Argentina's alleged compliance with the SAFE Framework is irrelevant for the Panel's analysis of the DJAI system under the GATT. An important legal reason for this is that Argentina has not raised any defence under Article XX(d) of the GATT. As a result, any potential similarity between DJAI and any WCO standards would be irrelevant for the present case: such similarity (even if it existed) would fail to bring the DJAI requirement outside the scope of XI:1 of the GATT. In its Opening Statement in the Second Hearing, the European Union stated that Argentina has, in essence, acknowledged that WCO standards are irrelevant for the present case. The European Union also pointed out that the Letter of the WCO Secretary General basically confirmed that the DJAI does not comply with the WCO standards.

 

2.2.1.2     Argentina's assertions in relation to Article X:1 of the GATT

 

19.   Argentina is simply factually wrong. It asserts that the European Union's challenge is directed against the "observations that each agency may make" in relation to each specific import application, depending on the "good as it relates to the agency's regulatory authority".  However, this is not what the European Union is challenging under Article X:1 of the GATT.  The European Union's first written submission lists the types of legal instruments that Argentina has failed to publish in accordance with Article X:1 of the GATT.  These do not include the "observations that each agency may make" in a "specific case". Quite to the contrary, the European Union challenges Argentina's failure to publish, in accordance with Article X:1 of the GATT, the complete list of governmental bodies that may block imports; the legal instruments through which certain governmental bodies have been given the power to block imports; the list of goods the importation of which each governmental body can block; the conditions on the basis of which the 180 days deadline may be extended, etc.

 

20.   Argentina also asserts that "there is no 'universal' set of criteria that applies to all goods". Argentina's assertion is factually inaccurate.  Argentina itself has published in the Manual for DJAI Operations the "set of criteria" on the basis of which AFIP may block imports.  The fact that Argentina has been able to publish a "universal set of criteria" on the basis of which one governmental body would block imports conclusively establishes that Argentina is also able to publish similar "sets of criteria" for the other bodies and, most importantly, for the Secretariat for Domestic Trade.

 

21.   Argentina also expressly acknowledges that it has not published the actual agreements that establish each agency's powers in relation to the DJAI system; it has only published a "standardised model". Therefore, Argentina acknowledges that it has not published the relevant legal instruments in accordance with Article X:1 of the GATT. Moreover, Argentina acknowledges that the only documents that have been published are the "statutory regulatory authorities" of the participating governmental bodies. However, these legal instruments contain no reference to the respective body's powers in the DJAI system.  Therefore, they provide no information on the operation of the DJAI system.

 

2.2.1.3      Argentina's assertions in relation to Article X:3(a) of the GATT

 

22.   Argentina's main defence is to assert that the European Union's claims under Article X:3(a) of the GATT relate to "substantive rules" and not to the "administration" of rules. Argentina's assertion is wrong. First, Argentina's assertion contradicts the entire content of Argentina's submissions in the present case.  Argentina repeatedly asserts that the DJAI system is a "procedure" and not a "substantive rule". It is instructive for the coherence of Argentina's arguments that the DJAI is presented as a "procedure" when Argentina looks at it from the angle of Article XI of the GATT, but becomes a "substantive rule", when Argentina looks at it from the angle of Article X:3(a) of the GATT. In any event, according to the Panel Report in Argentina-Hides and Leather a complaining party may challenge under Article X:3(a) even the substance of a domestic measure, where that measure is administrative in nature. 

 

23.   Second, the European Union is actually challenging the administration of the DJAI.  The European Union's first written submission has explained the reasons for which, in particular, the Secretariat for Domestic Trade administers the DJAI in a manner that is not predictable and consistent and, ultimately, not uniform, impartial and reasonable.

 

2.2.2.    Issues relating to the Import Licensing Procedures Agreement

 

2.2.2.1  Argentina's defence in relation to the Import Licensing Procedures Agreement

 

24.   Argentina in its submissions did not present specific responses to the European Union's claims under Articles 1.3, 1.4(a), 1.6, 3.3 and 3.5(f) of the Import Licensing Procedures Agreement. Rather, Argentina's defence is based on two main assertions addressing the scope of the ILP Agreement. First, Argentina asserts that the co-complainants have followed an "overly expansive" interpretation of the term "import license" in Article 1.1 of the ILP Agreement. Second, Argentina asserts that, in any event, the "application and documentation" which the DJAI "collects and processes are clearly for customs purposes" and, therefore, the DJAI is "not covered by the ILP Agreement under any circumstances". Argentina also asserts that "the Panel has to begin its analysis with the complainants' claims under the ILP Agreement", which allegedly "operates as lex specialis in relation to the provisions of both Article VIII and XI with respect to customs formalities".

 

2.2.2.1.1             The notion of "import license" in Article 1.1 of the Import Licensing Procedures Agreement

 

25.   Argentina's assertion on the alleged "overly expansive" interpretation of Article 1.1 of the ILP Agreement is wrong for a number of reasons. First, Argentina's definition of "import license" is circular. Argentina asserts that Article 1.1 of the ILP Agreement defines "import licenses" as "import licensing regimes".  This is tautology, which deprives the text of Article 1.1 of the ILP Agreement of any interpretative value.

 

26.   Second, the European Union notes that the footnote to Article 1.1 expressly expands the notion of "import licensing" to administrative procedures that are not called "licensing".  Moreover, the European Union notes the absence of a comma after the words "import licensing regimes" in the body of Article 1.1. This shows that the words "requiring the submission of an application or other documentation" are directly linked to, and inform the meaning of, the words "import licensing regimes". The proper understanding of this phrase is that the "regimes" that are covered by Article 1.1 are those which require the submission of an application or other documentation, as a prior condition for importation.  Those "regimes" do not need to fulfil any other condition in order to fall within the scope of Article 1.1.

 

27.   Third, Argentina is wrong when it asserts that these "regimes" need to be related to the administration of "quantitative restrictions or other similar measures". Firstly, there is no reference to "quantitative restrictions" in the text of Article 1.1.  Secondly, Article 3.3 of the ILP Agreement expressly provides that non-automatic import licensing may be used "for purposes other than the implementation of quantitative restrictions".   Thirdly, and most importantly, Article 1.1 expressly mentions the "submission of an application or other documentation" as the only "prior condition" preventing the importation.

 

2.2.2.1.2             Is the DJAI "application and documentation" for "customs purposes"?

 

28.   Argentina has not denied that the DJAI legislation is separate from its customs legislation. Neither Argentina has denied the involvement on non-customs governmental bodies in the DJAI system. Likewise, Argentina has not denied that, when the Secretariat for Domestic Trade blocks a particular importation, it requires the applicant to provide it with documents and information on the applicant's exports and prices of unrelated goods. Argentina has simply asserted that these documents and information are for "customs clearance purposes" and "entirely within the parameters of the SAFE Framework and WCO Data Model". This assertion is wrong.

 

29.   No WCO document includes in its "parameters" information on the importer's exports and prices on unrelated goods. Also, as the European Union noted in its second written submission and in the paragraph 68 of its Opening Statement in the Second Hearing, Argentina has also acknowledged, in essence, that the legal effects of a DJAI authorisation are different from the legal effects of customs clearance.  Moreover, as was discussed during the First Hearing, the purpose of "advanced electronic information procedures" that are based on "risk assessment and management" is to expedite and facilitate the selection of the cargoes that should be inspected physically by the customs officials of the importing country, upon the cargoes' arrival at the ports of the importing country. However, this is not what the DJAI achieves. Quite to the contrary, the DJAI prevents the arrival of the cargoes into the ports of Argentina. As identified during the First Hearing, this element alone suffices to establish that the DJAI is not for "customs purposes".

 

2.2.2.1.3             Argentina's assertions on the nature of the Import Licensing Procedures Agreement as "lex specialis"

 

30.   Argentina has asserted that the ILP Agreement "operates as lex specialis in relation to the provisions of both Article VIII and XI with respect to customs formalities". (sic)  It is difficult to see how the ILP Agreement can operate as "lex specialis in respect to customs formalities", when Argentina expressly acknowledges that customs matters are excluded from that Agreement's scope. In any event, the Appellate Body in EC-Bananas III has confirmed that both the GATT and the ILP Agreement may apply on specific measures. Consequently, Argentina's assertions are legally baseless and should be rejected. The Panel should first examine the European Union's claims under the GATT. If the Panel finds that the DJAI constitutes a non-automatic import license, then the Panel should analyse the European Union's claims under Article 1.3 of the Import Licensing Procedures Agreement, before the claims under Article X:3(a) of the GATT.

 

3.     RESTRICTIVE TRADE-RELATED REQUIREMENTS

 

31.   The European Union notes that Argentina has failed to engage in rebutting the evidence provided by the European Union showing the existence of the RTR requirements, despite of the fact that the Panel has posed several questions directly to Argentina. The European Union requests the Panel to draw appropriate inferences from Argentina's refusal to provide the requested documents. Further, and importantly, the European Union observes that Argentina has actually recognised the facts as evidenced by the European Union when acknowledging their existence as "unrelated 'one-off' actions". However, Argentina disagrees with the legal characterisation of those actions as a single, unwritten overarching measure with precise content, and with general and prospective operation. Below is the summary of the European Union submission showing that Argentina's arguments are without merit together with the with the summary of the European Union comments on Argentina's responses to some of the Panel's Questions after the first meeting and of the European Union comments to the Panel's communication dated 6 November 2013 relating to the European Union's decision not to adopt special procedures under Article 13 of the DSU.

 

3.1.        The European Union has identified the precise content of the RTR requirements as an overarching measure

 

32.   Argentina's assertion that the European Union has failed to establish the precise content of the RTR requirements as an overarching measure must fail. Following the description of the measures at issue as identified in the EU Panel Request, the European Union included Section 4.2.1 in its first written submission, where the European Union describes the measures at issue as including (1) the RTR requirements as an overarching measure, and (2) 23 separate measures where Argentina has imposed one or more of the RTR requirements.

 

33.   From the description of the RTR requirement as an overarching measure, it becomes obvious that the European Union is challenging a measure attributed to Argentina ("measure established by Argentina"), whereby Argentina requires certain economic operators to undertake one or more of the five actions. i.e., i.e., the one-to-one requirement, import reduction requirement, the price control requirement, the import substitution requirement, investment requirement. (and referred to as "RTR requirements") that prohibit or restrict the importation of products and/or the use of imported products in Argentina. The European Union further identifies the objectives pursued by the overarching measure, as eliminating trade balance deficits and/or substituting imported products by domestic products. The European Union further confirms that the measure has a general scope, since Argentina decides to impose one or more of those requirements depending on how the economic operator or sector in Argentina can best contribute to achieving Argentina's trade balance and import substitution objectives. In this sense, the measure at issue is "overarching", "all-embracing" or "in extended use" in Argentina since the RTR requirements apply to a range of situations, to a variety of economic operators and sectors, as evidenced in the EU's first written submission. Thus, the RTR requirements are not isolated cases, but an overarching measure applied to a wide range of situations, and has become the "rule" for companies doing business in Argentina. Such a "rule" will apply or will likely apply in the future in Argentina, insofar as Argentina continues pursuing its trade balancing and import substitution objectives. This is why the European Union "challenges the overarching measure established by Argentina". Challenging each of the RTR requirements as isolated cases will not get rid of the problem faced by the EU industry. Finally, the European Union indicates that the measure is unwritten, in the sense that "these requirements have not been published". In sum, by identifying the specific actions (RTR requirements) that prohibit or restrict the importation of products and/or the use of imported products in Argentina, the objectives pursued by the overarching measure, the unwritten nature of the measure and its general and prospective application, all attributable to Argentina, the European Union considers that it has identified the measure at issue with sufficient precision.

 

3.2.        The RTR requirements as a single overarching measure is different from the five requirements individually identified by the European Union

 

34.   Contrary to what Argentina states, the RTR requirements as an overarching measure is not simply a series of distinct and unrelated actions; rather, the imposition of RTR requirements on economic operators is part of a systemic approach adopted by Argentina to prohibit or restrict the importation of products and/or the use of imported products in Argentina with a view to achieving its trade balancing and import substitution objectives. As Argentina observes, the existence of the overarching measure depends on showing, inter alia, that Argentina has imposed one or more of the five RTR requirements. However, this is not the same as saying that the content of each RTR requirement is the same as the content of the RTR requirements as an overarching measure. The content of the overarching measure is different from the five types of RTR requirements. Indeed, the overarching measure implies the existence of a single unwritten measure whereby Argentina seeks to impose certain trade-restrictive actions on economic operators with a view to achieving two specific objectives.

 

35.   That Argentina is pursuing those objectives stands from the multiple official statements the European Union has put on the record and that Argentina does not appear to contest. Indeed, in its response to Question 8, Argentina does not provide any evidence that the official statements cited therein are incorrect. Argentina has not disputed its policy of "managed trade" either. Thus, it is undisputed that Argentina employs multiple instruments, including the limitation of imports, in order to pursue its objectives of eliminating trade balance deficits and achieving import substitution. The objectives of eliminating trade balance deficits and replacing imported products by domestic products could not be achieved by "unrelated 'one-off' actions", as Argentina asserts, but through a coordinated action.

 

36.   The panel in Japan – Apples similarly treated nine inter-related and cumulative legal and administrative requirements actually applied by Japan to the importation of US apple fruit as comprising one single sanitary and phytosanitary measure for the purpose of evaluating the US complaint against those requirements. In following the same approach, the implementation panel explained that the original panel had treated "the requirements imposed by Japan as several elements of one single measure, essentially because all the requirements were presented as part of a systemic approach". In the present case, the imposition of RTR requirements on economic operators is part of a systemic approach and coordinated action seeking to achieve the trade balance and import substitution objectives pursued by Argentina.

 

3.3.        The European Union has shown that the RTR requirements as an overarching measure has a general and prospective application

 

37.   As part of its challenge of the RTR requirements as an overarching measure, the European Union is challenging the existence of an unwritten measure which has a general and prospective application, rather than a set of unrelated actions taken by Argentina. In other words, the European Union is challenging the "rule or norm" that is not expressed in the form of a written document whereby Argentina requires economic operators to undertake one or more of the five types of actions with a view to achieving its trade balancing and import substitution objectives.

 

3.3.1.    The RTR requirements as an overarching measure has general application

 

38.   The European Union has shown that the RTR requirements as an overarching measure is a generally applicable rule or norm governing the importation and/or sale of goods in Argentina. Contrary to what Argentina asserts, the European Union does not need to show that such a rule applies to the importation and/or sale of "all" goods in Argentina. As explained before, the European Union has not defined the measure at issue in that manner. Rather, the European Union has stated that the Argentine Government decides to impose one or more of these requirements depending on how the economic operator or sector in Argentina can best contribute to achieving Argentina's trade balance and import substitution objectives. In this sense, the overarching measure potentially applies to all goods in Argentina. This does not mean that such a measure indeed applies to all goods in Argentina in the sense that all goods are subject to one or more RTR requirements.

 

39.   In any event, for a measure to be of "general application" it is not necessary that such a measure applies to all goods in Argentina. In this respect, the panel in US – Underwear found that insofar as the restraint at issue affected an unidentified number of economic operators, the administrative order was a measure of general application. In the present case, the European Union has shown that this overarching measure applies to many economic operators and sectors in Argentina (such as automobiles, auto parts, motorcycles, trucks, tires, metallurgical products, agricultural machinery, retail apparel, books and other publications), which are required to comply with one or more of the RTR requirements. Argentina has not denied the existence of any of them. Consequently, the European Union has shown that the RTR requirements as an overarching measure amounts to a measure of general application. 

 

3.3.2.    The RTR requirements as an overarching measure has prospective application

 

40.   Moreover, the European Union has shown that the RTR requirements as an overarching measure is a "rule" with prospective application. Contrary to what Argentina argues, the RTR requirements are not isolated or unrelated "one-off" actions. As mentioned before, they are part of a systemic approach and coordinated efforts to achieve Argentina's trade balancing and import substitution objectives. Until Argentina does not announce a change in its policy objectives, it should be presumed that Argentina will continue taking similar actions which prohibit or restrict the importation of products and/or the use of imported products in Argentina with a view to achieving its trade balancing and import substitution objectives.

 

41.   The evidence that the European Union has put before the Panel to demonstrate the prospective application of the unwritten rule is manifold. The evidence consists of considerably more than a string of cases, or repeat action, based on which the Panel could simply "divine" the existence of a measure in the abstract. In addition to information contained in newspapers from various sources, the European Union has provided, inter alia, official press releases by the Argentine authorities, official documents produced by the Argentine authorities, documents made by public notaries and surveys by different industry associations speaking to the existence of the overarching measure as part of a systemic approach and coordinated efforts by the Argentine authorities to achieve their stated objectives. In any event, "repeated course of action" can, in certain circumstances, be evidence of an unwritten measure with future applicability. Indeed, when completing the analysis and assessing the existence of the measures asserted by the European Communities in US – Continued Zeroing, the Appellate Body emphasised that it was looking for evidence of future applicability. Thus, the Appellate Body assessed the "repeated course of action" as evidence of an unwritten measure that would "likely continue to be applied". Similarly, in Thailand – Cigarettes, the panel noted that "the actual application of an unwritten general rule will clearly qualify as evidence of the existence of such a rule". Thus, the fact that Argentina has repeatedly imposed various RTR requirements on a variety of economic operators in Argentina also speaks to the existence of an unwritten rule with prospective application. In this respect, the European Union observes that Argentina has not contested the facts as evidenced by the European Union; nor has Argentina stated that the same actions, still taking place today, will not continue also in the future. In addition, the European Union observes that Argentina wrongly posits that the alleged commitments described by the European Union do not have normative content at all since they neither require nor commit prospective courses of action. This is incorrect. As a matter of fact, the agreements signed between economic operators and the Argentine authorities as well as the commitments provided by many economic operators all require a prospective course of action.

 

3.3.3.    Argentina's reliance on EC – Large Civil Aircraft is misplaced

 

42.   Finally, contrary to what Argentina asserts, the panel in EC – Large Civil Aircraft does not support Argentina's arguments in this case. In fact, Argentina is relying on a section of the panel report that was declared moot by the Appellate Body. In any event, the European Union is very aware of the consequences of challenging the RTR requirements as a single unwritten measure. However, unlike the United States in EC – Large Civil Aircraft, the European Union has met its burden of showing the existence of such an overarching measure as described by the European Union. Indeed, in EC – Large Civil Aircraft, the panel found that the alleged unwritten LA/MSF Programme as described by the United States did not exist. The United States had described the alleged unwritten LA/MSF Programme as a measure that "creates expectations among the public and among private actors, demonstrating that it has normative value". Specifically, the panel found that the United States failed to show that "LA/MSF, by definition, involves below-market financing" and that "any LA/MSF granted in the future will involve non-commercial interest rates". The panel reasoned that below-market interest rates were not an explicit feature of the LA/MSF contracts; that there was nothing inherent in the LA/MSF contracts rendering them a form of financing that by definition will always involve below-market interest rates; and that interest rate advantage obtained by Airbus varied across the different LA/MSF contracts, in general diminishing with every new model of LCA. According to the panel, "to the extent that past instances of LA/MSF might be argued to evidence a broader co-ordinated financing programme, they do not support a conclusion that such a programme would necessarily involve the provision of loans in the future at below-market interest rates". In the present case, the European Union has shown that Argentina imposes one or more of the five types of RTR requirements as part of a systemic and coordinated approach to prohibit or restrict the importation of products and/or the use of imported products in Argentina with a view to achieving its trade balancing and import substitution objectives. Thus, the European Union has demonstrated all the elements of the precise content of the RTR requirements as a single unwritten measure.

 

3.4.        EU's comments on Argentina's responses to the Panel's Questions after the first meeting

 

3.4.1.    Question 7 – Value of the Plan Estratégico Industrial 2020

 

43.   Argentina criticises the value that the European Union grants to the Plan Estratégico Industrial 2020 as establishing basic guidelines of Argentina's industrial policy over the current decade. However, this is what the document in question indisputably states several times. Argentina does not dispute the content of the pages the European Union has referred to either.

 

44.   Argentina further argues that the objectives described therein are pursued in a manner that is consistent with the covered agreements. The European Union does not question the fact that Argentina can use instruments such as anti-dumping duties, in order to defend its industry against injurious dumping. The European Union does not question either any natural process where a domestic industry increases its competitiveness and it is able to replace imports on a qualitative basis. Instead, the European Union has shown that in pursuing those objectives Argentina has adopted the DJAI system and the RTR requirements which are in breach of several covered agreements. The European Union also wonders about statements contained in the Plan Estratégico Industrial 2020 where the application of non-automatic import licenses is mentioned as "one of the instruments that have allowed the sector to substitute imports". The European Union disagrees with Argentina that the use of non-automatic import licenses could be a legitimate instrument according to the covered agreements to favour the replacement of imported products by domestic products.

 

3.4.2.    Question 8 – Objectives pursued by Argentina through its managed trade strategy

 

45.   Argentina rejects seeking to preserve the internal market for domestic products. Argentina further rejects seeking a limitation on imports. The European Union notes that Argentina does not provide any evidentiary support to those statements. In contrast, the European Union has provided evidence, including the Exhibits listed in the Panel's Question, showing that Argentina pursues those objectives. Quite tellingly, Argentina does not deny having actively pursued a strategy of so-called "managed trade" ("comercio administrado") since 2003. Contrary to what Argentina asserts, such "managed trade" does not allow for a "virtuous convergence" ("convergencia virtuosa") of public and private interests. The European Union has provided abundant evidence of this to the Panel where, far from willingly agree with the actions suggested by the Argentine authorities, economic operators are forced to e.g. export unrelated products in order to even out their trade balance. Argentina has not disputed these facts as presented by the European Union.

 

3.4.3.    Questions 13 and 14 - Value of certain evidence produced by means of documents signed by a Notary Public, including affidavits

 

46.   Argentina considers that the statements made by Mr. Richard Rodriguez, a Notary Public in Geneva, do not have any value if the Panel cannot verify the accuracy of those statements. This is disingenuous, at least on two grounds. First, the fact that the Notary Public is confirming the existence of agreements signed between economic operators and the Argentine authorities and containing RTR requirements and that Argentina refuse provide these documents upon the Panel's request could be sufficient for the Panel to conclude the existence of those agreements and commitments. Second, those agreements and commitments have been heralded by the Argentine authorities themselves in official press releases, as well as echoed by unofficial sources. This may also provide the basis for the Panel to conclude that such documents, as confirmed by the Notary Public, do exist. Argentina appears to dismiss the value of the statements made by Mr. Richard Rodriguez, a Notary Public in Geneva. As a Notary Public, Mr. Rodriguez has given public faith and thus certified that it has seen copies of the agreements and commitments showing the existence and content of some RTR requirements. The Notary Public provided a general timeframe where those agreements and commitments were signed since mentioning a specific date per agreement could allow Argentina to identify the specific companies cooperating with the European Union in these proceedings. As mentioned in the EU's Response to Question 19, those companies have not authorised the European Union to disclose those agreements in view of the risk of retaliation. The Notary Public could not either disclose the names or origin of the companies providing those documents. Thus, Argentina's observations with respect to the alleged deficiencies contained in the document produced by the Notary Public are explained because of the need to keep the identity of those companies confidential in view of the risk to suffer from retaliation. In any event, the European Union considers that the document contained in Exhibit EU-14 evidences the existence of those agreements and commitments. By its part, Argentina has not denied the existence of those agreements and commitments. And indeed many have been heralded in official press releases.

 

47.   With respect to affidavits, the European Union observes that affidavits signed by a Notary Public are instruments regularly used in panel proceedings to adduce the existence of facts. And indeed panels and the Appellate Body have regularly accepted declarations contained in affidavits as evidence.

 

3.4.4.    Questions 16 to 17 – Argentina's refusal to provide certain documents to the Panel

 

48.   The European Union notes that Argentina's lack of response to these questions is very telling. The Panel asked Argentina for very precise documents as evidenced in numerous exhibits submitted by the European Union. However, Argentina does not provide the requested information; rather, Argentina states that, even acknowledging the facts as evidenced by the European Union, that would not be sufficient to establish the existence of the RTR requirements as a single unwritten overarching measure. In other words, Argentina goes as far as not contesting the factual evidence adduced by the European Union and relies on a legal characterisation of those facts as not showing the existence of the measure at issue as described by the European Union. As explained before, such allegation must fail. As the Appellate Body has explained in US-Continued Zeroing, a particular piece of evidence, even if not sufficient by itself to establish an asserted fact or claim, may contribute to establishing that fact or claim when considered in conjunction with other pieces of evidence. Also, the Appellate Body has explained that a prima facie case is one which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima facie case. Therefore, the European Union considers that the Panel should also take into account Argentina's lack of rebuttal of the facts as presented by the European Union when weighing the totality of the evidence in this case. In the European Union's view, the only conclusion that the Panel should reach when making an objective assessment of the matter is that the European Union has demonstrated the existence of the RTR requirements as an overarching measure.

 

3.4.5.    Question 26 – Nota de Pedido

 

49.   Once again, the European Union observes that Argentina does not rebut the existence of the "Nota de Pedido" as described by the European Union in its submissions. As mentioned before, there is ample evidence that the generic "Nota de Pedido" (i.e., the form that needed to be sent together with the DJAI request) as well as the "Nota de Pedido DJAI Observada" (i.e., the information that was needed to be provided to the Secretary for Domestic Trade once a DJAI had been "observed") began in January and February 2012, as well as that such a mechanism still exists. In addition, since December 2012, another "Note", this time referred to as an "Export Declaration Form", was distributed to economic operators as proof of complying with their trade balancing commitments. Even without a DJAI observed an operator may be requested to fill in an "Export Declaration Form". "Export Declaration Forms" are separate from the DJAI itself but are a condition sine qua non to receive any DJAI, i.e. if an operator is requested to fill in "Export Declaration Form" and does not do it, its DJAIs will never be cleared.

 

3.4.6.    Question 42 – Value of unofficial press clippings

 

50.   First, Argentina maintains that none of the evidence provided by the European Union is relevant for the interpretation of the measures at issue. Argentina does not support such a statement. Rather, it appears that Argentina confuses issues of "interpretation" of the meaning of the measure at issue (i.e. its precise content) with issues of proof (i.e., showing the existence of the RTR requirements as an overarching measure). Second, Argentina restates its argument that none of the journalistic material, regardless of its source, can be considered to have any probative value. The European Union already addressed this argument in its Opening Statement in the First Hearing. Panels have been inclined to accept the information provided by newspapers, and especially in cases like the present one, where the respondent did not challenge the truth of the facts reported by those newspapers. Third, Argentina rejects the recurrent use of print media linked directly or indirectly to the monopolistic structure of Grupo Clarin SA, in partnership with the newspaper La Nación. The European Union has already expressed its views about this. The facts reproduced by those media have been reported by many different media as being the same, and Argentina has not disputed those facts. Moreover, Argentina wrongly claims that the European Union recurrently provided Grupo Clarin and La Nación press clippings. Press clippings from Clarin, La Nación and connected media are only a small part (less than 25 %) of all written press clippings provided by the European Union in its first written submission, and obviously an even smaller part (less than 10 %) of all evidence submitted. In addition, the European Union would like to note that Argentine legislation ensures press freedom. Although there is concentration in the written press sector, there are still sufficient newspapers to guarantee access to information by the public. In fact, Argentine society still trusts the press as a credible source of information. Finally, the European Union observes that of the 24 different media listed in the Panel's Question, Argentina has only provided evidence of its relationship with Grupo Clarin SA with respect to two: Diario "Los Andes" and "La Voz del Interior". Argentina has not supported its vague assertion ("etc") with respect to other media that they are related to Grupo Clarin SA. The Panel should draw the pertinent consequences accordingly.

 

3.5.     EU's comments on the Panel's communication dated 6 November 2013

 

51.   The European Union clarifies that, as noted in the EU's comments on the suggested special procedures, the adoption of such special procedures under Article 13 of the DSU was not necessary in view of the particular circumstances of this case. On the one hand, the Panel already has on the record evidence showing the existence of letters containing RTR requirements (e.g. the letter of four industry associations of pork producers provided to Secretary Guillermo Moreno). Furthermore, there is also evidence of the existence and content of the agreements signed between private operators in Argentina and the Argentine authorities, as heralded by the Argentine authorities themselves in numerous official documents (and listed in Annex 1 of the Panel's first set of questions). On the other hand, Argentina is in possession of such documents and is in a better position to provide them to the Panel. However, Argentina has decided not to provide such information to the Panel upon its request pursuant to a direct question posed to Argentina. Further, Argentina has decided not to address the evidence produced by the European Union. That being said, the European Union welcomes the Panel's initiative to propose the suggested special procedures under Article 13 of the DSU. In this respect, the European Union observes that the suggested procedures were similar to the steps taken by the European Union to produce Exhibit EU-14. The main concern was, however, to ensure that the responses provided by the independent expert did not reveal somehow the identity of the companies at issue. Hence, the European Union provided its comments to that effect.

 

52.   The European Union considers that, other than the special procedures suggested by the Panel including all guarantees not to disclose any information relating to the identity of the companies at issue, there may not be any alternative means for the Panel to protect the requested information in a manner that would enable the submission of such information.

 

4.     CONCLUSION

 

53.   The European Union respectfully requests the Panel to find that the DJAI Requirements and the RTR requirements are inconsistent with the covered agreements and to recommend that Argentina brings itself into compliance with its obligations under the covered agreements.

 

ANNEX B-3

first part of THE executive summary
of the arguments of the United States

FIRST WRITTEN SUBMISSION

 

1.     Argentina imposes licensing procedures which it uses to restrict imports of goods with the aim of protecting the domestic economy. Argentina often withholds approval of these licenses unless the importer agrees to take actions to restrict imports, export goods, make investments, refrain from repatriating profits, or use local content in its production.

 

2.     Argentina declines to publish many of the rules related to their operation, as required by the WTO agreements. However, the evidence presented by co-complainants in this dispute reveals their existence and widespread operation. Argentina's licensing regime and the requirements it places on importers restrict imports in violation of Article XI:1 of the GATT 1994. In addition, Argentina's import regime is non-transparent and arbitrary, failing to comply with the publication, administration and notification provisions of Articles X:1 and X:3(a) of GATT 1994, as well as Articles 1.4(a), 3.2, 3.3 and 5 of the Import Licensing Agreement. Finally, Argentina's licensing procedures fail to meet the requirements of Articles 1.6 and 3.5(f) of the Import Licensing Agreement related to the operation of a licensing regime.

 

I.     FACTUAL BACKGROUND

 

3.     Argentina pursues aggressive policies of "trade management" and "import substitution" to protect domestic industry by restricting the importation of foreign products and to promote a shift to local production. To further these goals, Argentina subjects imports to the DJAI Requirement and the RTRRs.

 

A.     DJAI REQUIREMENT

 

4.     Argentina's Federal Administration of Public Revenue (Administracíon Federal de Ingresos Públicos, or "AFIP") issued Resolution 3252 establishing the DJAI Requirement, which became effective February 1, 2012. Through legal instruments and guidelines, Argentina maintains the DJAI Requirement as a discretionary non-automatic import licensing system. Until the last workday before the establishment of the Panel, Argentina maintained product-specific non-automatic import licenses on over 600 tariff lines ("CIs"). The DJAI Requirement continues and expands the licensing requirements previously imposed through the CIs.

 

5.     Under the DJAI Requirement, importers of goods into Argentina must submit an application on the DJAI page of AFIP's website "prior to issuance of an order form, purchase order, or similar document used to purchase items from abroad." Approval of the DJAI application is a prerequisite to any import transaction in Argentina, and in order to make foreign payments for imports, the importer must have an approved DJAI in "exit" status. The information submitted by the importer is made available to participating government agencies. These agencies must "issue a decision" … "within the time frame indicated in [each agency's] respective accession instrument." A DJAI is placed in "observation" status whenever an agency registers an "observation," which suspends the approval process.

 

6.     Six agencies have acceded to the DJAI system. Different agencies are prescribed different time periods for placing an observation on an application, from 72 hours to 15 calendar days (where published). If the time periods expire without observation, the application enters the "exit" status and the importer may proceed with the transaction. When an observation is made that prevents the application from being assigned the "exit" status, the importer must separately contact the agency making the observation in order to resolve the agency's concern. The importer bears the burden of determining how to make contact. The DJAI application remains effective for 180 days from the date of its "registration." If any observations have not been resolved within 180 days, the DJAI application is automatically voided unless it is extended.

 

7.     The relevant instruments contain few – if any – details on, among other things:  (a) the bases upon which a DJAI application may be granted or denied; (b) what types of "observations" may be made; (c) what additional information or actions may be required of importers to obtain approvals; and (d) the timeframe for resolution of observations. The evidence demonstrates that, in practice, approvals are often only granted after lengthy delays.  

 

8.     With respect to AFIP, a DJAI User Manual provides a list of thirteen codes representing reasons that AFIP may "observe" a DJAI application. The reasons AFIP may observe an application are related to the status of the importer's tax identification number (the CUIT), and various tax-related issues. With respect to SCI, the preamble to SCI Resolution 1 by which SCI joined the DJAI system, explains that SCI will look to protecting the domestic market as part of SCI's participation. Legal instruments and other guidance relating to the DJAI system provides no information with respect to the participation of other agencies.

 

9.     Official Argentine press releases and statements of Argentine officials, as well as instructions issued by Secretary Moreno to customs brokers, provide evidence of otherwise unpublished information regarding the granting or denial of DJAI applications.

 

10.   The DJAI process operates separately from Argentina's customs clearance procedure. Argentina's customs regime predates, and is separate from, the DJAI system. The Argentine customs regime is administered by the Directorate-General of Customs. For each import transaction, the importer must fill out a Despacho de Importación. In addition, the importer must submit supplementary documentation for the goods in question.   

 

B.    RESTRICTIVE TRADE-RELATED REQUIREMENTS

 

11.   The Argentine government has adopted a series of RTRRs on the importation of goods. The RTRRs are often communicated orally to individual importers, or groups of importers, by Argentine authorities. The RTRRs are imposed in conjunction with the DJAIs, and previously the CI Requirement, and approvals are withheld until the importer complies with the RTRRs. The RTRRs take the form of commitments to:  (1) compensate imports with an equivalent amount of exports—the "one-to-one" policy; (2) limit the volume or value of imports; (3) incorporate local content into domestically produced goods; (4) make or increase investments in Argentina; and (5) refrain from repatriating funds from Argentina to another country.

 

12.   Argentina requires importers to offset the value of their imports with an equivalent value of exports – often referred to as the "one-to-one" policy. Although typically the importer compensates the entire value of imports with exports, in some cases an importer may only partially offset the value of its imports and undertake another type of RTRR to compensate for the remainder. Argentine government agencies and officials have made numerous statements describing the one-to-one policy, and examples of its application are in the following sectors:  automobile manufacturing; trucks and motorcycles; agricultural machinery; books and other publishers, audiovisual products, tires, agricultural products, white goods, electronic products, clothing, retail, toys, pharmaceuticals, and auto software and services.

 

13.   Often together with requirements to balance the value of imports with exports, Argentina also requires importers to limit the volume of imports or – less frequently – to limit the unit price of imports. Argentina has also required importers in certain industries to increase their incorporation of local content in the goods they purchase or produce in order to receive permission to import. Some companies are given the option of compensating for part or all of their imports through making or increasing their investments in Argentina, in addition to or instead of, undertaking export or import substitution commitments. The final RTRR placed on importers is the requirement that they refrain from repatriating profits made in Argentina. This requirement appears aimed primarily at controlling the outflow of foreign reserves.

II.   LEGAL DISCUSSION

A.      THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE XI:1 OF THE GATT 1994

 

1.     The DJAI Requirement is a "Restriction" Prohibited by Article XI:1

 

14.   The DJAI Requirement is a "restriction" within the meaning of Article XI:1. The term "restriction" is defined as "[a] thing which restricts someone or something, a limitation on action, a limiting condition or regulation." Further, Article XI:1 applies to any "restriction," "whether made effective through quotas, import or export licenses or other measures," excluding only "duties, taxes or other charges." Past panels have noted that the scope of the term "restriction," is broad. The DJAI Requirement constitutes a "restriction" – it imposes "limiting conditions" on importation because (a) approvals are not granted in all cases; (b) approvals are made contingent upon the RTRRs; and (c) approvals are granted after delay.

 

15.   A measure is a restriction under Article XI:1 if approval for importation is not granted in all cases. This fact is confirmed by the ordinary meaning of "restriction": if not all imports are allowed to enter a country as a result of measure, that measure is "a limiting condition." The DJAI Requirement restricts imports because agencies may lodge "observations" for any number of reasons, effectively denying the import application unless and until the observation is lifted. If an agency does not lift the "observation," the application enters the "voided" status after 180 days – effectively denying the application. The failure to grant the license in the operation of the DJAI Requirement is described in domestic Argentine court cases. Statements by government officials confirm that the purpose of the DJAI Requirement is to restrict imports and protect domestic industry.

 

16.   The DJAI Requirement is also a "restriction" because it is highly discretionary. If an import licensing system is "discretionary" the authority has latitude to grant or deny licenses. Thus, in a discretionary licensing system, licenses may be denied, resulting in a restriction, or limitation, on imports. The DJAI requirement is highly discretionary, because (1) the implementing measures contain no criteria for approval or denial and no basis for denials; (2) importers must provide unspecified additional information in order to satisfy an "observation"; and (3) there is no stated timeframe for processing applications. Through this system, SCI is able to place an "observation" while refusing to explain the reasons to the importer.

 

17.   The panel in India – Quantitative Restrictions concluded that India's licensing requirement constituted a non-automatic licensing system and Article XI:1 restriction because licenses were "not granted in all cases, but rather on unspecified 'merits'." In China – Raw Materials, the panel observed that "if a licensing system is designed such that a licensing agency has discretion to grant or deny a license based on unspecified criteria" it would be discretionary and not consistent with Article XI:1. The absence of any procedures or criteria for evaluating licenses, or of demanding additional action or information from importers, leaves the various participating agencies with wide discretion to grant or deny the licenses. The DJAI Requirement is therefore discretionary (and non-automatic), and a restriction under Article XI:1.

 

18.   The DJAI requirement also restricts imports because Argentine authorities use the discretion afforded in their approval of the applications to impose RTRRs as conditions for import. The RTRRs "restrict" imported within the meaning of that term under Article XI:1 because importers may only import goods to the extent that they satisfy the RTRRs imposed by Argentina. Because the DJAI Requirement affords Argentine authorities the discretion to place such conditions on importation, it is a restriction on importation.

 

19.   Finally, the DJAI Requirement also restricts imports because licenses are only granted after delay. Importers must wait an unspecified period of time, which can extend to months, to receive approvals for their import licenses. The Import Licensing Agreement provides context for understanding how delays serve as "restrictions" under Article XI:1. "Automatic import licensing" is defined in Article 2.1 "as import licensing where approval of the application is granted in all cases, and which is in accordance with the requirements of paragraph 2(a)." According to the introductory clause of Article 2.2(a), certain characteristics of a licensing procedure are presumed to have "restricting" effects, even if licenses are granted in all cases. One such feature is a delay in processing of over ten working days. It is not enough for a license to be granted in all cases in order for it to "not administered in such a manner as to have restricting effects on imports," the license must also be granted in a timely manner.

 

20.   The time period for the SCI to consider whether to place an observation on a DJAI application is 15 days, exceeding the ten days set out in Article 2.2(a)(iii). Further, after an observation is made by any participating agencies, there is no timeline for a decision on whether to grant the application. Because the importer must reach out to the agency, provide further information, and the agency must then consider whether to remove the observation, the total time elapsed would far exceed the "immediate" approval (or a maximum of ten working days) described in the definition of "automatic" import licensing. As is demonstrated by the evidence, importers experience significant delays in the processing of their DJAI applications.

 

21.   In several disputes under the GATT 1947, panels made a connection between the timing of application approvals and whether or not a license requirement constitutes a prohibited restriction under Article XI:1, using the terms "non-automatic" and "automatic" to describe prohibited restrictions and permitted licensing measures, respectively.

 

22.   The evidence regarding the implementation of the DJAI Requirement confirms what is apparent on the face of the legal instruments – that the applications are not approved in all cases, and that the DJAI Requirement is a highly discretionary and non-transparent restriction enabling Argentine officials to condition approval on compliance with RTRRs, and that importers experience lengthy delays in receiving approvals. All of these factors independently support a finding that the DJAI Requirement is inconsistent with Article XI:1 of the GATT 1994.

 

2.     The DJAI Requirement Is an Import License or Other Measure  

 

23.   The DJAI Requirement is a restriction made effective through an import license or other measure within the meaning of Article XI:1. More specifically, the DJAI Requirement is a restriction made effective through "import … licenses." The ordinary meaning of "license" is "'[f]ormal, usu[ally] printed or written, permission from an authority to do something … or to own something … ; a document giving such permission; a permit'." Thus, an "import license" is permission granted by a competent authority to bring merchandise into a Member. Article 1.1 of the Import Licensing Agreement defines "import licensing" for purposes of that agreement and provides context for the interpretation. Footnote 1 to Article 1.1 explains that "administrative procedures" qualifying as import licensing procedures include "[t]hose procedures referred to as 'licensing' as well as other similar administrative procedures." A procedure that (a) requires "the submission of an application" (b) as "a prior condition for importation" satisfies the definition.

 

24.   The DJAI Requirement falls within both the ordinary meaning of the phrase "restriction … made effective through … import … licenses", as well as the definition of import licensing set forth in the Import Licensing Agreement. In particular, an importer must submit an electronic application for an import in the DJAI system, and obtain an approval, demonstrated by the "exit" status in that system, as a prior condition for import. More specifically, the various agencies determine, based on the application information, whether to allow the application to pass to the "exit," or to lodge an observation, moving the application into the "observed" status. Once that happens, an importer must contact the agency making the comment to determine what further action, whether the submission of additional information or something else, is required. The importer may not import the goods until the agency is satisfied and approval is obtained and the status moves to "exit." This procedure meets all of the requirements of an import licensing procedure, and therefore the DJAI approval is an "import … license" under Article XI:1.

 

25.   Furthermore, the DJAI application and other documentation is not "required for customs purposes" and therefore is not of the type excluded from the definition of "import licensing" in the Import Licensing Agreement. Argentina has separate customs procedures, whereby customs information is collected and duties and other fees are assessed. In addition, although AFIP participates in the DJAI system, it does so for tax reasons, not reasons related to customs administration. Other agencies also participate in the DJAI system, none of whom have customs administration responsibilities. Where the purposes of an agency's evaluation—and therefore the documentation and other information the agency might request in order to satisfy an "observation"—is set out it is for other than "customs purposes." Thus, the DJAI Requirement constitutes a restriction made effective through an "import license" under Article XI:1.

 

B.     THE IMPOSITION OF RTRRS IS INCONSISTENT WITH ARTICLE XI:1 OF GATT 1994

 

26.   Argentina's use of RTRRs to condition import approvals under the DJAI system demonstrates that the DJAI Requirement is an import restriction, resulting in a breach of Argentina's obligations under Article XI:1. In addition to considering Argentina's RTRRs in conjunction with the DJAI system, the RTRRs are distinct measures that cause trade restrictions, and result in a separate breach of Argentina's obligation under Article XI:1. Argentina has not published its RTRRs. This failure, however, does not shield these measures from challenge under the WTO Agreement. To the contrary, where the record establishes that a Member has adopted an unpublished measure, the measure may be examined for its consistency with the substantive provisions of the WTO Agreement, and with procedural transparency obligations.

 

27.   Argentine authorities enforce RTRRs by withholding approvals of imports such as through the DJAI Requirement, and previously the CI Requirement. Authorities implement these licensing requirements in a highly discretionary manner, including by withholding approvals until an importer complies with RTRRs. Argentina has imposed RTRRs in conjunction with a licensing requirement in sectors including the auto, agricultural machinery, clothing, and white goods. The United States has presented many examples of the imposition of RTRRs across product groups and sectors. Coupled with the statements by Argentine officials, these examples demonstrate that Argentina imposes RTRRs on importers, whether in conjunction with DJAI Requirements, the predecessor CI Requirements, or separately.

 

28.   Argentina's imposition of RTRRs constitutes a "restriction" within the meaning of Article XI:1 because it serves as a "limitation" on imports. Importers are restricted in the amount of goods that they may import based on their ability to satisfy the RTRRs. The ­India – Autos panel determined that India required importers to balance the value of imported auto kits and components with the value of exports from India, and that this requirement was a restriction under Article XI:1. The panel concluded that, even though an importer could theoretically import an unlimited amount of goods, so long as the value of the imports was balanced by that of exports, this requirement imposed a practical limitation on imports. Similarly, RTRRs impose a practical limit on the volume of imports due to the conditions Argentina places on importation. The measure acts as a disincentive to importation by imposing additional costs on importers and, where the importer is unable to fulfill the condition, preventing imports. Other panels have found that a restriction within the meaning of Article XI:1 may operate through the measure's impact on  transaction costs or market access.

 

29.   The various RTRRs that Argentina imposes on importers impose burdens on the importation of foreign goods, creating disincentives to importation and limiting the volume of imports. For these reasons, Argentina's imposition of RTRRs constitutes a "restriction" prohibited by GATT 1994 Article XI:1.

 

30.   Argentina's RTRRs make effective a restriction on importation though "quotas, import … licenses or other measures." The scope of "other measures" in Article XI:1 includes any measure that restricts imports, "excluding from its coverage only 'duties, taxes, or other charges.'"  Other obligations in the GATT 1994 relate more narrowly to "laws and regulations" or "laws, regulations, judicial decisions and administrative rulings." In contrast, Article XI:1 applies to the broader scope of "measures".

 

31.   For these reasons, the RTRRs are a "restriction" within the meaning of Article XI:1 and are inconsistent with that provision.

 

C.      THE DJAI AND RTRR REQUIREMENTS ARE INCONSISTENT WITH TRANSPARENCY OBLIGATIONS UNDER THE IMPORT LICENSING AGREEMENT AND THE GATT 1994

 

1.      Argentina Has Failed to Publish Sufficient Information Regarding the Basis for Granting or Allocating Licenses, as required by Article 3.3 of the Import Licensing Agreement

 

32.  Article 3.3 of the Import Licensing Agreement applies to the DJAI Requirement, because the DJAI Requirement is (a) an import licensing procedure, (b) is non-automatic, and (c) is a licensing requirement for purposes other than the implementation of quantitative restrictions. First, for the reasons described at Section IV.A.2, the DJAI Requirement is import licensing within the meaning of Article 1.1 of the Import Licensing Agreement.

 

33.   Based on the ordinary meaning of Import Licensing Agreement Article 3.3, when read in context and light of the object and purpose of the Import Licensing Agreement, the obligation to "publish sufficient information for other Members and traders to know the basis for granting and/or allocating licenses" requires that Members disclose the "set of underlying principles" or the "determining principle" upon which import licenses are granted and/or allocated, and do so in an appropriate medium for other Members and traders to become familiar with them.

 

34.   The DJAI resolutions and related measures do not provide sufficient information for Members or traders to know the basis for granting DJAI approvals. The relevant legal instruments contain little, if any, information regarding the permissible bases upon which SCI or other agencies may lodge an observation. Argentine officials have provided little guidance other than general statements appearing in official press announcements such as: (a) "protect[ing] Argentine industry;" (b) whether a DJAI applicant has agreed to comply with RTRR commitments, including those relating to "import substitution"; (c) national "economic stability;" and (d)  the DJAI applicant's "balance of foreign exchange" and "the pace of the company's prices." These statements do not contain sufficient information to allow governments and traders to know the basis for the decisions, and are not published in a manner that would allow them to do so.

 

35.   In sum, the Argentine authorities have failed to publish the relevant bases in the DJAI resolutions or any other measures. As a result, it is impossible for traders and Members to know the "set of underlying principles" or the "determining principle" upon which DJAI approvals are granted.

 

2.      Argentina Has Failed to Publish All Relevant Rules and Information Regarding Application Procedures and Other Features of the DJAI Requirement as Required by Import Licensing Agreement Article 1.4(a)

 

36.   Argentina has violated Article 1.4(a) by failing to publish – in a manner that would enable governments and traders to become acquainted with them – the rules and all information that relate to the process for securing consideration of, and a decision on, a DJAI application, or any exceptions, derogations or changes to such rules.

 

37.   For example, Argentina has failed to publish sufficient information for governments and traders to become familiar with the procedures that a DJAI applicant must follow (e.g., information submission requirements, deadlines, etc.) to resolve Argentine agency "observations" and thereby secure final decision on a DJAI application. In this respect, Argentina has also failed  to publish sufficient information for governments or traders to become familiar with at least the following:

 

·      The type of submissions (written, oral, mode of transmission), as well as the content of submissions that DJAI applicants are required to provide in response to agency "observations";

·      As part of the DJAI application process, the type of communication to which DJAI applicants are entitled when an agency lodges an "observation" in the course of considering a DJAI application – e.g., whether the relevant agency is required to provide a communication in writing that describes their reasoning, underlying factual and legal grounds, and the steps the company must take to resolve the situation.

·      Which importation transactions (that is, of which goods) may be blocked by each of the participating agencies, in connection with the DJAI application process.

·      The complete list of agencies participating in the DJAI system and the reasons they may place an observation on a DJAI, in connection with the DJAI application process.

·      What types of requirements Argentine authorities are authorized to impose on DJAI applicants in connection with the DJAI application process as a condition of releasing an "observation" and thereby allowing the DJAI application to be granted; and

·      The time periods that apply to DJAI "observations," including any time periods for agencies to respond to additional information provided by applicants, in connection with the DJAI application process.

 

3.      Argentina Has Failed to Promptly with GATT 1994 Article X:1 Publication Requirements with Respect to the RTRR Requirement

 

38.   With respect to the RTRRs, Argentina has failed to fulfill the GATT 1994 Article X:1 obligation to publish "promptly" and "in such a manner as to enable governments and traders to become acquainted with them," the "laws, regulations, judicial decisions and administrative rulings of general application" "pertaining to … requirements, restrictions, or prohibitions on imports ..." that a Member has "made effective."

 

39.   The RTRRs, which pertain on their face to "requirement, restriction or prohibition on imports …," constitute "regulations" or "administrative rulings of general application" because they are rules prescribed for controlling importation and regulating the conduct of importers broadly, and because they are imposed and enforced by Argentine officials with authority, control and influence over such import transactions and importers. The evidence demonstrating that Argentine officials widely apply the aforementioned RTRRs vis-à-vis DJAI applicants and their prospective importations also makes clear that that these unpublished rules are "of general application."

 

40.   The RTRRs have not been "published." Insomuch as Argentina has simply issued official press statements that reflect the existence of the RTRRs but not the actual RTRRs themselves, Argentina has not satisfied the GATT Article X:1 requirement to publish the RTRRs in a manner that would enable governments and traders to become familiar with them.

 

41.   Argentina has failed to publish the RTRRs promptly, as required by Article X:1 of the GATT 1994. As discussed above, Argentine authorities made the RTRRs "effective" in conjunction with the DJAI Requirement no later than the effective date of the DJAI regulation, February 1, 2012, and made the RTRRs effective in conjunction with the CIs from at least 2010. To date, the RTRRs remain unpublished. An extended period of delay in publishing a measure for at least 18 months, and as much as three years, does not meet the requirement of "prompt" publication.

 

D.      ARGENTINA HAS FAILED TO ADMINISTER ITS DJAI REQUIREMENT IN A UNIFORM AND REASONABLE MANNER AS REQUIRED BY GATT ARTICLE X:3(A)

 

42.   Argentina has failed to meet the GATT Article X:3(a) requirements of reasonable and uniform administration. This conclusion is supported by extensive evidence showing, among other things, that Argentine authorities act without regard to directly relevant legal authorities, and treat similarly situated importers with great variance in terms of the delays, disposition and other aspects of their administration of the DJAI system.

 

E.       THE DJAI REQUIREMENT IS INCONSISTENT WITH ARGENTINA'S OBLIGATIONS UNDER ARTICLE 3.2 OF THE IMPORT LICENSING AGREEMENT

 

43.   As a non-automatic import licensing requirement, the DJAI Requirement is subject to Article 3.2 of the Import Licensing Agreement. The first sentence of Article 3.2 requires an identification of the "restriction" being implemented by the non-automatic licensing procedures. However, the legal instruments and guidance concerning the DJAI Requirement, reference no such restriction or limiting condition implemented through the DJAI system, other than that imposed by the DJAI procedures themselves. Because the DJAI Requirement does not impose an underlying "restriction," it necessarily has "additional" "trade-restrictive" or "trade-distortive" effects, in violation of the first sentence of Article 3.2 of the Import Licensing Agreement.

 

44.   The second sentence of Article 3.2 states, in part, that "non-automatic import licensing procedures … shall be no more administratively burdensome than absolutely necessary to administer the measure." However, the DJAI Requirement imposes excessive administrative burdens on importers and does not implement any identifiable measure. The DJAI system requires the importer to make an initial application, and contact any number of the six or seven agencies participating in the DJAI system that may lodge an "observation" without any guidance about how to contact those agencies, or what additional information or action an importer may be required to undertake. In contravention of the second sentence of Article 3.2 of the Import Licensing Agreement, this system is highly burdensome for the importer and is not necessary, as there is no identified measure implemented by the DJAI system.

 

F.       THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE 1.6 OF THE IMPORT LICENSING AGREEMENT

 

45.   The DJAI Requirement is inconsistent with Article 1.6 because importers must separately approach up to seven agencies – AFIP, SCI, ANMAT, SEDRONAR, SENASA, INV, and INTI – in order to resolve observations and receive authorization to import; Article 1.6 provides that applicants may be required to approach more than one administrative body only if it is "strictly indispensable." From the purposes of the DJAI Requirement described in relevant legal instruments, there is no basis for requiring an applicant to approach more than one administrative body. None of the stated objectives of the DJAI Requirement render "absolutely necessary or vital" a system in which applicants must approach more than one agency. Further, Article 1.6 provides that a licensing system may not require an applicant to approach more than three administrative bodies under any circumstances. Under the DJAI system, an importer may be required to approach up to seven agencies.

 

G.      ARGENTINA ADMINISTERS THE DJAI REQUIREMENT IN A MANNER INCONSISTENT WITH ARTICLE 3.5(F) OF THE IMPORT LICENSING AGREEMENT

 

46.   The 30-day time limit in Article 3.5(f) applies to the DJAI Requirement, because applications are not considered simultaneously, but rather on a first-come first serve basis. The individual agencies have up to 15 days to lodge observations, and once an observation has been made, there is no time limit for the resolution of the observation. In practice, as demonstrated by the evidence, Argentine officials frequently fail to abide by the 15 day time limit.

 

H.      ARGENTINA HAS ACTED INCONSISTENTLY WITH ARTICLES 5.1, 5.2, 5.3, AND 5.4 OF THE IMPORT LICENSING AGREEMENT BY FAILING TO PROVIDE NOTIFICATIONS

 

47.   Argentina has not notified the DJAI licensing procedure, or any changes thereto, including changes made by Resolution 3255 and the Updated Annex to Resolution 3255. As a result, Argentina has acted inconsistently with Articles 5.1, 5.2 and 5.3. In addition, Argentina has not notified the Committee of the publications in which the information required in Article 1.4 of the Import Licensing Agreement is published. For these reasons, Argentina has acted inconsistently with Articles 5.1, 5.2, 5.3, and 5.4 of the Import Licensing Agreement.

 

III.         CONCLUSION

 

48.   The United States respectfully requests that the Panel find that the DJAI Requirement is inconsistent with Articles X:3(a) and XI:1 of the GATT 1994 and Articles 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the Import Licensing Agreement, and that the RTRRs are inconsistent with Articles X:1 and XI:1 of the GATT 1994.

 

OPENING STATEMENT AT THE FIRST SUBSTANTIVE MEETING

 

49.   Argentina has adopted a system for limiting the importation of goods and for extracting concessions from importers and foreign companies that restrict trade. Argentina's actions and its lack of transparency, breach Argentina's WTO obligations. Unjustified delays in, and denials of, approvals to import goods, and the imposition of unpublished requirements that restrict their importation, are squarely prohibited by the WTO Agreement. In response to the U.S. submission establishing prima facie breaches WTO obligations, Argentina does not directly dispute any of the facts. Rather, Argentina attempts to avoid scrutiny of its measures.

 

I.     ARGENTINA'S DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE XI:1

 

50.   In its first written submission, Argentina abandons the text of the agreement, as well as the reasoning of multiple past panels, and asserts that Article XI:1 does not apply to measures of a procedural nature. No such limitation exists on the Article's scope.

 

51.   The DJAI Requirement is not merely procedural but is itself a restriction on importation. In addition, nothing in the text of Article XI:1 limits its coverage in the manner Argentina contends. Any restriction made effective through any measure (other than duties, taxes or other charges) is within the provision's scope. Argentina's approach would undermine Article XI:1 by permitting a Member to restrict as much trade as it likes as long the means is "procedural."

 

52.   A licensing requirement, which Argentina characterizes "procedural," is itself a "restriction" where it is non-automatic. That was the case with the licensing procedure at issue in India – Quantitative Restrictions. Even where an import licensing procedure may implement other identifiable restrictions, this does not mean the import licensing procedure is not a restriction itself. It may simply mean that the import licensing procedure should be examined according to the same justification as the underlying WTO-consistent restriction it implements. But that is not the case here; the DJAI system does not implement a WTO-consistent restriction.  

 

53.   The DJAI Requirement is a discretionary non-automatic licensing system that operates as an import restriction. The analysis may end there as the DJAI Requirement does not implement a substantive rule. Authorities use the DJAI Requirement to restrict the imports in a discretionary manner, including through imposing the RTRRs. Without a separate restriction implemented in accordance with a justification under the WTO Agreement, the Panel need only examine the restriction imposed by the DJAI Requirement itself.

 

54.   It is not the case that the RTRRs should be evaluated as the substantive "restriction" imposed by the DJAI Requirement. First, the RTRRs are not related to a WTO-consistent restriction and so do not provide a justification for the DJAI Requirement. Second, the RTRRs are not necessarily implemented through the DJAIs. Rather, the discretion afforded agencies participating in the DJAI system enables SCI to implement the RTRRs. The DJAI Requirement is a "restriction" because (1) the DJAI Requirement is non-automatic; (2) authorities use the discretion to impose RTRRs; and (3) approvals may be granted only after delay.

 

55.   Argentina also argues that the scope of Article XI:1 is more narrow than was found by past panels because they did not take into account the term "quantitative" in the title to Article XI:1. However, the carve-out of "duties, taxes, or other charges" from "prohibitions or restrictions" demonstrates that the obligation of Article XI is not limited to quantitative restrictions. The phrase "whether made effective through" confirms that the same logic applies to other types of measures that similarly may impose "restrictions."

 

56.   Finally, Argentina's argument that co-complainants must demonstrate the "trade-restricting effects," of the DJAI Requirement is unfounded. That term is nowhere to be found in Article XI:1. Argentina relies on the Appellate Body's statement in China – Raw Materials to support its position. However, the Appellate Body's use of the term "limiting effect" is not materially different from the "limiting condition" referred to by the India – Quantitative Restrictions panel, and it does not ascribe a new meaning to the term. The DJAI Requirement has a limiting effect because Argentine officials have full discretion to approve or deny applications.

 

II.   ARTICLE VIII IS NOT RELEVANT TO THE PANEL'S ANALYSIS UNDER ARTICLE XI:1

 

57.   Argentina argues that the DJAI Requirement is a "formality" under Article VIII and that Articles VIII and XI are mutually exclusive. Argentina argues that Article XI:1 therefor does not apply at all. This argument is untenable. Argentina takes an expansive view of "restriction" in arguing that the "formalities" described in Article VIII would be prohibited under Article XI:1 if both provisions apply to the same set of measures. It is not the case that all "formalities" are "restrictions." To the extent that they are, Article XI:1 does discipline their imposition. Further, co-complainants are not challenging a "formality." It is not the "formal" aspects of the import licensing procedure that are at issue; it is the fact that importers cannot import until they have permission under the DJAI system – permission which Argentine officials have wide discretion to withhold. Finally, there is nothing in the text of either Article VIII or Article XI:1 that exempts licensing requirements from Article XI:1. Accordingly, Article VIII is not material to the Panel's consideration of the claims at issue in this dispute.

 

58.   For the foregoing reasons, the co-complainants have made a prima facie case that the DJAI Requirement is inconsistent with Article XI:1 of the GATT 1994, and Argentina has offered no defense or facts to refute that conclusion under a correct interpretation of Article XI:1.

 

III.  THE DJAI REQUIREMENT IS AN IMPORT LICENSE REQUIREMENT

 

A.      The DJAI Requirement Is Not a Customs Formality Adopted in Conformity with the WCO SAFE Framework

 

59.   Argentina argues that the DJAI Requirement is not a license requirement, but is instead "an advance electronic information customs formality specifically designed in accordance with the World Custom's Organization's ('WCO') SAFE Framework of Standards to Secure and Facilitate Global Trade ('SAFE Framework')." However, WCO Members established the SAFE Framework to "enhance security and facilitation of international trade" in order to counter vulnerabilities in the global trading system to "terrorist exploitation." In contrast, the DJAI system has nothing to do with a system of border security. Rather, it is a discretionary licensing system, untied to border-security measures. The SAFE Framework is built around four "core elements." The DJAI system departs markedly from each one.

 

B.     The DJAI Requirement Is an Import Licensing Procedure

 

60.   Argentina misreads Article 1.1 of the Import Licensing Agreement and mischaracterizes of the purpose of the DJAI Requirement. Argentina employs circular reasoning in support of a narrow definition of "import licensing," arguing that the phrase "used for the operation of import licensing regimes" in Article 1.1 informs the scope of "import licensing" in that provision. The fact that "import licensing" is "used for the operation of import licensing regimes" reveals little or nothing about the meaning of the term "import licensing."

 

61.   As the Appellate Body observed, if a procedure requires "the submission of an application" for an import license as "a prior condition for importation," it is a licensing procedure. An "import license" involves a permission granted by a competent authority to bring merchandise into a Member from another Member. The exclusion in Article 1.1 of applications or documentation submitted for "customs purposes" demonstrates that import licensing procedures include all procedures other than those that are for "customs purposes." The footnote to Article 1.1 explains that licensing procedures include "[t]hose procedures referred to as 'licensing' as well as other similar administrative procedures."

 

62.   Under the DJAI Requirement, an importer must submit an application for an import, and obtain an approval, demonstrated by the "exit" status, as a prior condition for import. The participating agencies determine whether to lodge an observation and thereby withhold approval for the importation to proceed. There are – undisclosed – bases for the withholding of approvals, even if the DJAI is filled out appropriately.

 

63.   The DJAI is not for "customs purposes." Argentina's interpretation of "customs purposes" would swallow any procedure that could be considered import licensing. Argentina looks to the definition of "customs," in the sense of a governmental agency, which notes that customs services implement customs laws as well as other laws and regulations. Argentina uses this definition, to argue that any application or documentation required for the administration of customs laws, or any "other laws and regulations related to importation, exportation, or the movement or storage of goods" relates to "customs purposes." Article 1.1 does not relate to what customs, as an agency of government does, but whether a procedure has a "customs purpose," that is, whether it relates to a customs law or regulation. A customs agency may enforce aspects of an import licensing procedure or other measure on behalf of another agency. The question of who enforces a measure at the border is immaterial to the consideration of whether or not an application or document is submitted for customs purposes or for obtaining approval to import.

 

64.   Argentina fails to refute the features of the DJAI system which demonstrate that it is used for purposes other than "customs purposes." That is, Argentina maintains separate customs procedures; AFIP, the only agency participating which has explained the reasons an observation may be lodged, has only listed tax reasons; and the other agencies participating in the DJAI system do not have customs administration responsibilities.

 

65.   For these reasons, the DJAI Requirement is an import licensing procedure subject to the disciplines in the Import Licensing Agreement. Further, the DJAI Requirement is inconsistent with several provisions of that agreement, namely Articles 1.4(a), 1.6, 3.2, 3.3, 3.5(f), and 5.

 

IV.   ORDER OF ANALYSIS

 

66.   Argentina appears to argue that the Import Licensing Agreement is lex specialis in relation to GATT Article XI:1 (and Article VIII), and therefore that the Panel must consider the provisions of the Import Licensing Agreement before, and to the exclusion of, Article XI:1. However, Argentina is incorrect in its assertion that the Panel is precluded from considering Article XI:1 first. Not only could the Panel reach the claim under GATT 1994 even if it starts its analysis with the Import Licensing Agreement, we consider and respectfully request that the Panel should start its analysis with the GATT 1994. The logical relationship between Article XI:1 and Article 3.2 indicates that it is appropriate for the Panel to start with Article XI:1.

 

67.   The DJAI Requirement is not so much as a set of procedures imposing import licensing than as a restriction on imports imposed through import licensing. As a result, the Import Licensing Agreement is not the more specific agreement in relation to the claims at issue. Rather, Article XI more specifically and in detail deals with the matter raised in this dispute. In Turkey – Rice, the panel began "its analysis of the substantive content of the measure," noting that "[i]f the Panel finds that the measure at issue is in breach of substantive obligations under either Article XI:1 of the GATT 1994 or Article 4.2 of the Agreement on Agriculture, then the question of how the measure has been administered by Turkey becomes irrelevant."

 

68.   Implicit in the Import Licensing Agreement is that WTO-compatible non-automatic import licensing measures are adopted to secure compliance with other measures. The Import Licensing Agreement assumes that there is an underlying measure or restriction, and does not question the WTO compatibility of that measure or restriction. It is thus logical for the Panel to start its inquiry under Article XI:1 to determine whether (1) there is a restriction and (2) what is its content. If the Panel starts with an Article XI:1 analysis, it will find that the entire DJAI Requirement is inconsistent with Argentina's WTO commitments.

 

69.   Argentina's conclusion that there is "no claim under Article XI" if the Import Licensing Agreement is examined first is incorrect. Argentina's argument rests on a faulty premise:  simply because a measure is examined first under one agreement because it appears more specific, does not mean that the measure cannot be examined under the less specific agreement.

 

70.   The Appellate Body has observed that "[a]s a general principle, panels are free to structure the order of their analysis as they see fit. In so doing, panels may find it useful to take account of the manner in which a claim is presented to them by a complaining Member." The Panel should consider the logical relationship between Article XI:1 of the GATT 1994 and the Import Licensing Agreement; this assessment will lead to the conclusion that the Panel should start its inquiry under Article XI of the GATT.  

 

V.      THE UNITED STATES HAS ESTABLISHED A PRIMA FACIE CASE THAT ARGENTINA HAS ACTED INCONSISTENTLY WITH ARTICLE X:3(A) OF THE GATT 1994

 

71.   Argentina has failed to administer in a reasonable or uniform manner the DJAI system – which applies to all imports and importers – is a law, regulation or administrative ruling of general application that pertains to requirements, restrictions or prohibitions on imports and that has been made effective by Argentina since early 2012. Company affidavits and other evidence also reflect the unreasonable and non-uniform administration of the DJAI system. Argentine officials fail to follow domestic legal requirements; fail to explain the reasons for "observations" or delays; fail to provide effective contact points; and fail to administer the system in a consistent, predictable or reasonable manner – with wide variations in delays and the ultimate disposition of applications. This lack of uniformity occurs with respect to particular importers, and more broadly as well. Argentine officials also exercise their discretion by arbitrarily altering and adding to the demands they make of importers to secure release of an "observed" DJAI application, even after the importer has taken steps to meet the authorities' original demands. This evidence typifies administration that is neither reasonable nor uniform.

 

VI.   THE RTRRS ARE INCONSISTENT WITH ARTICLES XI:1 AND X:1 OF THE GATT 1994

 

72.   The evidence related to the RTRRs demonstrates that Argentina imposes this measure on a widespread basis across sectors of importers. Argentina requires compliance with the RTRRs as a condition for importation, either through the DJAI or another mechanism. This measure serves as a "restriction" on imports because goods may only be imported to the extent that the importer is able to comply with the RTRRs. For that reason, the RTRRs are inconsistent with Article XI:1 of the GATT 1994. Likewise, WTO Members and traders would search Argentine legal sources in vain for any publication of the RTRRs consistent with GATT Article X:1. Despite the evidence found throughout hundreds of exhibits that Argentina is, in fact, imposing such RTRRs on importers, Argentina has failed to meet GATT Article X:1 publication obligations.

 

 

 

ANNEX B-4

second part of the executive summary
of the arguments of the united states

SECOND WRITTEN SUBMISSION

 

1.     The United States has challenged two restrictions – the advance import affidavit ("DJAI") Requirement and the Restrictive Trade-Related Requirements ("RTRRs"). The DJAI Requirement is a discretionary, non-automatic import licensing procedure, and Argentine government officials (in particular the Secretaría de Comercio Interior or "SCI") have the ability to withhold approvals of applications for virtually any reason. With respect to the RTRRs measure, the United States has demonstrated a prima facie case as to its existence and inconsistency with Articles XI:1 and X:1, which Argentina has failed to rebut.

 

I.     THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE XI:1 OF THE GATT 1994

 

A.      THE DJAI REQUIREMENT IS A RESTRICTION UNDER ARTICLE XI:1 OF THE GATT 1994 AND IS INCONSISTENT WITH THAT PROVISION

 

2.     The DJAI Requirement is a non-automatic licensing system that operates as an import restriction; it allows officials to deny a license for discretionary reasons. Extensive evidence shows that, in fact, Argentine officials use this discretion to enforce the RTRRs.

 

3.     Argentina appears to argue that the DJAI Requirement is not discretionary because "the basis on which a reviewing agency would consider a DJAI [application]" … "will depend upon the customs-related laws and regulations that it and other intervening agencies administer." Argentina has no factual basis for this assertion; none of the laws and regulations cited by Argentina contain criteria applicable to DJAI applications, the reasons an observation may be placed, or what further information or action may be needed. Argentina also argues that Article XI:1 cannot apply generally to non-automatic discretionary import licensing because if this is so, any time an importer fails to provide customs documentation, a Member denying importation will have violated Article XI:1. This argument is a non sequitor. Under the DJAI system, the denial is not conditioned on a failure to provide customs documentation. Even if an importer submits all required information, the application may be denied.  

 

4.     Article XI:1 applies to all restrictions, whether characterized as "procedural" or "substantive." Nothing in the text requires an artificial distinction between "procedural" and "substantive" measures, nor provides for the exclusion of measures characterized as "procedural." Article XI:1 prohibits "prohibitions or restrictions other than duties, taxes or other charges," however made effective. The DJAI Requirement is not merely "procedural;" it is a restriction because importers cannot import unless and until they receive approval, which can be withheld for undisclosed reasons. This constitutes a discretionary, non-automatic licensing regime. Whether the DJAI Requirement is "substantive" or "procedural," it is a restriction.

 

5.     Contrary to Argentina's assertions, the India – Quantitative Restrictions panel correctly explained that discretionary import licensing may be used where one of the exceptions to Article XI applies. If an exception applies, a Member may apply discretionary import licensing procedures. Argentina argues that the panel should have considered the licensing measure under Article 3.2 of the Import Licensing Agreement, instead of Article XI:1. The Import Licensing Agreement disciplines the procedural aspects of licensing and not whether a restriction imposed by import licensing is consistent with the GATT 1994 under Article XI:1. A discretionary, non-automatic import licensing requirement is a restriction under Article XI:1 and prohibited under that provision. If another provision exempts the requirement, then the procedures must comply with the Import Licensing Agreement. As a result, it is appropriate for a panel to begin its analysis of a non-automatic import licensing requirement with Article XI:1.

 

6.     The Import Licensing Agreement does not support the proposition that "procedural" aspects of a licensing regime are outside the scope of Article XI:1. Procedural features of an import licensing regime may be inconsistent with both Article XI:1 as well as the Import Licensing Agreement, which provides additional obligations for procedures. The DJAI Requirement is inconsistent with Article XI:1 both because it is a non-automatic, discretionary import licensing procedure and because the procedures render it restrictive.

 

7.     The Korea – Beef and China – Raw Materials panel reports are consistent with a correct understanding of Article XI:1 and India – Quantitative Restrictions. In all three disputes, the panels recognized that discretionary import licensing systems that do not implement any restrictions are inconsistent with Article XI:1. The China – Raw Materials panel observed that discretionary import licensing procedures "would not meet the test … to be permissible under Article XI:1 … if a licensing system is designed such that a licensing agency has discretion to grant or deny a licence based on unspecified criteria." There is no underlying measure implemented through the DJAI Requirement. Further, decisions to grant or deny approvals are based on unspecified criteria.

 

8.     Argentina advances a "subsidiary" or "alternative" argument that Article XI:1 should apply to import formalities or other import procedures only to the extent that (1) "they limit the quantity or amount of imports to a material degree that is separate and independent of the trade-restrictive effect of any substantive rule of importation that the formality or requirement implements, and (2) this separate and independent trade-restricting effect is greater than the effect that would ordinarily be associated with a formality or requirement of this nature." Argentina's formulation is aimed at different factual situation than the one present in this dispute. To the extent a licensing procedure implements another identifiable restriction, that procedure should be examined according to the same justification as the underlying WTO-consistent restriction it implements. But, there is no WTO-consistent underlying restriction implemented by the DJAI Requirement.

 

9.     Argentina argues that co-complainants are required to demonstrate that the DJAI Requirement has a limiting effect that is separate from the RTRRs, and that the U.S. arguments are flawed because some of the same evidence presented by the complainants relates to both the DJAI Requirement and RTRRs. Neither of these arguments have merit. The DJAI Requirement is a non-automatic, discretionary licensing measure. Argentine authorities may deny permission to import until an importer complies with RTRRs or for no reason at all. Similarly, RTRRs may be enforced by the withholding of permission to import, whether through the Certificado de Importacion ("CI") Requirement, the DJAI Requirement, or another measure. Because the two measures are distinct, the body of evidence with respect to the two is also distinct and only overlaps as it relates to both. It is false for Argentina to state that the evidence related to the two measures is "indistinguishable" or the "same," and Argentina has not explained what the relevance would be if that were the case. Further, the claims under Article XI:1 with respect to the measures are distinguished.

 

B.     ARTICLE XI:1 DOES NOT REQUIRE A DEMONSTRATION OF "TRADE EFFECTS"

 

10.   Argentina relies on the Appellate Body report in China – Raw Materials to support its argument that a party asserting a violation of Article XI:1 must demonstrate "quantitative" or "trade" effects on imports. This reliance is misplaced. The Appellate Body did not address "trade effects." Argentina ignores the Appellate Body's elaboration on "restriction" in subsequent reports which confirms that there is no requirement to show trade effects. The term "quantitative restrictions" does not appear in the text of Article XI:1. The carve-out of "duties, taxes, or other charges" from "prohibitions or restrictions" demonstrates that Article XI is not limited to "quantitative restrictions" in the strict sense of the term. Similarly, there is no basis in the text to conclude that the restrictions must have "quantitative effects." The word "effects" does not appear.

 

11.   The Appellate Body and past panels have found that trade effects are not a necessary or sufficient factor in determining whether a measure is inconsistent with WTO obligations, including those under Article XI. Argentina points to the statement by the Appellate Body in China – Raw Materials. The Appellate Body did not state that such an "effect" must be demonstrated through trade data. No panel which has endorsed the term "limiting effect" to describe "restriction" concluded that trade effects are part of an Article XI:1 analysis. The Appellate Body considered "trade-restrictiveness" in US – COOL and US – Tuna II (Mexico), and concluded that trade effects were not part of the analysis. This is despite the fact that, in US – Tuna II (Mexico), the Appellate Body relied on its consideration of "restriction" in China – Raw Materials, and in turn, in US – COOL referred to the US – Tuna II (Mexico) discussion.

 

12.   The enforceability of commitments in the WTO agreements does not turn on whether a Member's current trade is directly impacted. Quantitative data may or may not demonstrate trade effects, but that does not excuse a Member's maintenance of a measure that is inconsistent with the WTO Agreement.

 

C.     ARTICLE VIII DOES NOT LIMIT THE APPLICATION OF ARTICLE XI:1

 

13.   Argentina puts forth a flawed interpretation of Article XI:1 in arguing that Article VIII and Article XI:1 of the GATT 1994 are "mutually exclusive" in their application. Article XI:1 is broad in its scope, and nothing in Article VIII limits, or creates an exception to, Article XI:1. The U.S. claim under Article XI:1 does not relate to the "formalities" connected to the DJAI requirement, but rather with the fact that import transactions cannot be completed until an importer receives approval, which may be withheld for nontransparent, discretionary reasons. As a result, the question of whether or not "formalities" are excluded from the scope of Article XI:1 is not directly relevant.

 

14.   Article XI:1 relates to any prohibitions or restrictions on imports and carves out only  "duties, taxes or other charges." Article XI:1 is definitive; it states that "no prohibitions or restrictions … shall be maintained." Nothing in the text exempts any overlapping coverage of Article VIII. It is not the case that "formalities" are "permitted" by Article VIII. Aspirational-type language, such as the Article VIII language, does not permit or prohibit anything. Argentina's reading of Articles VIII and XI:1 is inconsistent with principles of treaty interpretation and fails to give effect to the definitive language in Article XI:1; that "no prohibitions or restrictions other than duties, taxes or other charges," may be maintained.

 

15.   Formalities may or may not restrict trade; to the extent they do, Article XI:1 disciplines their use. There is nothing inconsistent with the simultaneous application of the mandatory requirements in Article XI:1 and the aspirational language in Article VIII. Argentina essentially argues that Article VIII creates an exception to Article XI, even though the text of neither article describes such an exception. Further, Argentina's logic does not make sense when applied to other provisions of Article VIII. Article VIII:1(b) states that Members "recognize the need for reducing the number and diversity of fees and charges." Under Argentina's theory, this language would create an exception to Article XI:1 for "fees and charges." If that were the case, the carve-out for "charges" would be surplusage because they are already excluded in Article XI:1.

 

16.   Contrary to Argentina's assertions, the Import Licensing Agreement is not "in essence, an elaboration upon Article VIII in the specific context of import licensing procedures." The preamble to the Import Licensing Agreement recognizes "provisions," plural, "of GATT 1994 as they apply to import licensing procedures" and states that Members desire "to ensure that import licensing procedures are not utilized in a manner contrary to the principles and obligations of GATT 1994." Thus by its terms, the Import Licensing Agreement acknowledges that various provisions of the GATT 1994 relate to import licensing procedures, not just Article VIII.  

 

17.   Argentina cites the panel in China – Raw Materials. However, that panel considered Article VIII:1(a), with respect to "fees and charges," and not formalities. So, it is unclear that the discussion in China – Raw Materials is applicable. That panel stated that "it seems appropriate to construe Article VIII as regulating something different from … GATT Article XI:1." However, the panel did not state that the provisions were mutually exclusive; but concluded that the scope of Article VIII:1(a) was narrower than Article XI:1.

 

D.      THE PRINCIPLE OF LEX SPECIALIS DOES NOT BAR THE EVALUATION OF THE DJAI REQUIREMENT UNDER ARTICLE XI OF THE GATT 1994

 

18.   Argentina misapplies the principle of lex specialis in arguing that it bars the evaluation of the DJAI Requirement under Article XI. The principle of lex specialis concerns situations where there is a conflict between two provisions such that they cannot be applied simultaneously. There is no conflict between Article XI:1 of the GATT 1994 and Article 3.2 of the Import Licensing Agreement. In this dispute, considering the logical relationship between Article XI:1 and Article 3.2, the United States submits that it would be appropriate for the Panel to first consider claims under Article XI:1 before turning to Article 3.2. The United States is challenging the DJAI Requirement as a restriction on imports imposed through import licensing. As a result, Article XI more specifically and in detail deals with the nature of the matter raised in this dispute.

 

II.     THE DJAI REQUIREMENT IS AN IMPORT LICENSING PROCEDURE SUBJECT TO THE IMPORT LICENSING AGREEMENT

 

19.   Argentina does not dispute the essential characteristics of the DJAI Requirement, which demonstrate that the requirement it is an import licensing procedure. Rather, Argentina presents untenable l arguments and attempts to shield the DJAI Requirement from scrutiny under the Import Licensing Agreement. Argentina's reliance on the SAFE Framework is misplaced; that instrument does not create any exceptions to the WTO agreements, and the DJAI Requirement does not share the features of a procedure implemented according to the SAFE Framework.

 

A.     THE DJAI REQUIREMENT IS AN IMPORT LICENSING PROCEDURE

 

20.   The DJAI is an import licensing procedure because it (a) requires the "submission of an application or other documentation" (b) as a "prior condition for importation." An importer must submit an application for each import through the DJAI system and wait 15 days to determine whether an approval is granted ("exit" status) or withheld ("observed" status). If approval is withheld, the importer must approach the relevant agency and submit further, unspecified, information or documentation in the hope of obtaining the "exit" status.

 

21.   Complainants are not required to "demonstrate that the DJAI procedure is ‘used for the operation of import licensing regimes.'" Article 1.1 makes clear that "import licensing" is a procedure, and an "import licensing regime" is one "requiring the submission of an application or other documentation … as a prior condition for importation." The DJAI procedures are "used for the operation" of the DJAI regime, or system, as a whole, whereby Argentine agencies can review and either grant or block DJAI applications required as a prior condition of importation.

 

22.   Not all applications or documentation submitted as a prior condition for importation are for import licensing. The Import Licensing Agreement explicitly carves out those required for "customs purposes." The DJAI is not for customs purposes. Argentina is not correct that additional (unspecified) application and documentation requirements are excluded. Such an interpretation of Article 1.1 is contrary to the text, which includes one carve-out for customs purposes. The examples of documents Argentina alleges would be covered by complainants' "overly expansive" interpretation of import licensing are not at issue in this dispute.   

 

B.     THE DJAI REQUIREMENT IS NOT FOR "CUSTOMS PURPOSES"

 

23.   Argentina advocates for an overly broad interpretation of those applications and documentation which are for "customs purposes" and thereby excluded from the definition of import licensing procedures at Article 1.1 of the Import Licensing Agreement. Argentina argues that any application or document required for the administration of customs laws, or "any other laws and regulations related to importation, exportation, or the movement or storage of goods" is for "customs purposes." This interpretation contradicts the plain meaning of Article 1.1. Argentina's definition would prevent the application of the Import Licensing Agreement to any procedures whatsoever, as by definition, import licensing laws and regulations are "related to importation." "Customs purposes" relates to the implementation of a customs law or regulation. The ordinary meaning of the word "customs" in this context is "duty levied by a government on imports." Thus, "customs purposes" relates to the accurate identification, classification, valuation, determination of origin and ultimately levying of duties.

 

24.   The DJAI Requirement is not maintained for customs purposes. First, Argentine agencies with no customs purpose whatsoever participate in the DJAI system and may place observations, withholding permission to import. Second, at the stage at which the DJAI submission must be made – prior to the issuance of a purchase order, information that is needed for "customs purposes" to determine classification, origin and valuation of an item is not even available.     Third, Argentina maintains separate customs procedures which require the submission of more detailed data much later in the importation process. Fourth, the only guidance published by AFIP states that it intervenes for internal tax administration purposes, and does not list any "customs risks" of the type it purports to monitor under the SAFE Framework. Even if AFIP does make "customs control" observations, the vast majority of reasons that AFIP, let alone any other agency, places an observation is for non-customs reasons. Finally, the DJAI Requirement is not a formality implemented in accordance with the SAFE Framework.

 

C.      THE DJAI REQUIREMENT IS NOT IMPLEMENTED ACCORDING TO THE SAFE FRAMEWORK

 

25.   Argentina argues that the DJAI Requirement is not a license requirement, but is instead "an advance electronic information customs formality specifically designed in accordance with the SAFE Framework." Argentina's arguments are legally irrelevant and factually incorrect. First, Argentina's arguments cannot justify a WTO-inconsistent measure, and so they do not have any direct legal relevance to the Panel's evaluation. Second, Argentina's arguments are factually incorrect, because the DJAI is not "specifically designed in accordance with the SAFE Framework." The DJAI system has nothing to do with a system of border security.

 

26.   The DJAI Requirement does not "allow AFIP to determine, in advance of the arrival of the goods, whether a particular consignment should be targeted for physical inspection, non-intrusive inspection methods, or not be screened at all." The DJAI system is designed and operates in a manner that is disconnected from, and possibly detrimental to, the management of supply chain security risk in the global trading system or other import cargo risks. First, the DJAI system lacks any substantive basis upon which to manage supply chain security risk or to identify high-risk consignments. It contains no criteria relating to supply chain security risk; it does not reflect the standards set forth under the four "core components" the SAFE Framework; and it does not specify other criteria for identifying other "risks" associated with imported cargo shipments. Second, nothing in Argentina's response explains why or how the DJAI Requirement (and all of its trade restrictive and non-transparent features) is necessary or relevant to ascertaining risk on imports from other countries. Third, the DJAI system requires the submission and approval of an application before an importer can place an order for, or secure foreign exchange financing for, the goods – a point in time at which insufficient information would exist to allow a customs authority to "identify high-risk consignments" or to select "particular consignment[s for]… physical inspection, [or] non-intrusive inspection methods."

 

III.   THE UNITED STATES HAS DEMONSTRATED THAT THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE 3.2 OF THE IMPORT LICENSING AGREEMENT

 

27.   Argentina argues that both Article XI:1 of the GATT 1994 and Article 3.2 of the Import Licensing Agreement cannot apply to the DJAI Requirement. Further, Argentina argues that the United States must show that the DJAI Requirement is more trade-restrictive than the RTRRs in order to prevail under Article 3.2. Both provisions apply to non-automatic import licenses such as the DJAI requirement, and the principle of lex specialis does not prevent either claim.

 

28.   The DJAI Requirement and the RTRRs are separate measures, each of which restricts the importation of goods. The DJAI Requirement is a discretionary, non-automatic import licensing requirement that serves as a restriction because Argentine officials may withhold permission for virtually any reason whatsoever, including compliance with the RTRRs. The RTRRs impose requirements that restrict the ability to import goods, and are enforced through the withholding of permission to import through the DJAI system, and previously the CIs. Because the RTRRs and DJAI Requirement are separate, and because a WTO-inconsistent measure cannot justify the restrictions imposed by an import licensing measure, the United States is not required to show that the DJAI Requirement imposes trade-restrictive effects additional to those caused by the RTRRs. Because the DJAI Requirement does not impose an underlying "restriction," it necessarily has "additional" "trade-restrictive" or "trade-distortive" effects inconsistent with Article 3.2 of the Import Licensing Agreement.

 

IV.     THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE X:3(A) OF THE GATT 1994

 

29.   Argentina has failed to rebut the evidence demonstrating that it has not administered the DJAI Requirement in a reasonable, uniform manner, consistent with GATT 1994 Article X:3(a). Argentina has failed to respond to the evidence showing, among other things, that Argentine authorities act without regard to legal authorities and treat similarly situated importers with great variance in their administration of the DJAI system as detailed in Exhibit US-1.

 

V.      THE UNITED STATES HAS ESTABLISHED A PRIMA FACIE CASE OF THE EXISTENCE OF THE RTRRS MEASURE

 

30.   There is no separate and higher burden on a party that alleges the existence of an unwritten measure. The burden is on complainants to provide sufficient evidence the RTRRs measure exists; the United States and co-complainants have done so.

 

31.   Argentina's reliance on the Appellate Body report in US – Zeroing (EC) and the panel report in EC – Large Civil Aircraft to support a higher standard of proof for unwritten measures is misplaced. The evidence required in US – Zeroing (EC) must be considered in the context of that dispute. That case concerned a "rule or norm" relating to how a particular law or regulation is applied. Similarly, the panel in EC– Large Civil Aircraft examined the "existence of an alleged unwritten measure with ‘normative value.'" It is in this context that the panel and Appellate Body stated that a "high threshold" applies. In this dispute, the measure being challenged is not a "norm or rule", but a measure in the form of a decision by Argentina to impose the RTRRs. The facts are similar to those in EC – Biotech. The panel observed that "[i]t is … necessary to examine in detail whether the evidence supports the Complaining Parties' assertion." In EC – Biotech, the panel considered the evidence and concluded it was sufficient to establish the existence of the moratorium.

 

32.   In some cases, the only evidence necessary to establish the existence of a measure is a written instrument that promulgates it, and in others additional evidence may be required. Complainants have submitted a large volume of evidence supporting the existence of the RTRRs measure. However, the fact that a larger volume of evidence is often involved where a complainant challenges an unwritten measure does not mean that a higher standard of proof applies. The Panel must examine this evidence and evaluate whether it is sufficient to meet the complainants' burden. Considered in its totality, this evidence meets this standard.

 

33.   Argentina argues that complainants have failed to establish a prima facie case because they have not demonstrated the "precise content of the alleged ‘overarching' RTRR measure." Argentina bases this argument on conclusory statements about the evidence submitted in this dispute and the creation of non-existent evidentiary hurdles. The RTRR measure is the decision by high-level Argentine officials to require commitments of importers as a prior condition for permission to import goods. The RTRR measure is demonstrated by statements of Argentine officials describing the measure and a large number of sources substantiating the application of the measure across sectors and product groups. The evidence amply demonstrates its content.

 

34.   Argentina does not discuss individual pieces of evidence, claiming generally that sources published by La Nación and Clarín and related companies are less probative because of past actions and reporting. This evidence makes up only a small portion of the evidence submitted, and Argentina has not explained how past events impact the probity of the information.  Argentina has not presented any grounds for the Panel to disregard any of the evidence. As part of its analysis of the factual issues, the Panel will accord probative weight to the various pieces of evidence and determine whether complainants have established their prima facie case.

 

35.   Argentina obscures the questions before this Panel when it argues that the U.S. case is deficient because it has not "demonstrated whether and to what extent the precise content of such overarching [RTRR] measure is any different than the content of the various unwritten alleged requirements that supposedly comprise it." Argentina places significance on the term "overarching," but the United States cannot discern what that significance may be, how it relates the U.S. evidentiary burden, or why it is necessary to demonstrate a "difference" between the RTRR measure and the five types of requirements.

 

36.   Argentina further argues that complainants have failed to demonstrate that the RTRR measure "has general and prospective application." Argentina again misplaces its reliance on the evaluation of the Appellate Body in US – Zeroing (EC) and the Panel in EC – Large Civil Aircraft. Even if the United States did need to demonstrate "general and prospective application," this element would be evidenced by statements of Argentine officials and the repeated imposition across sectors of the RTRRs up to, and after, the establishment of this Panel. The United States has satisfied its burden of proof as to the existence of the RTRRs measure, and Argentina has offered no facts or legal arguments which rebut the prima facie case.

 

VI.   THE RTRRS MEASURE IS INCONSISTENT WITH ARTICLES X:1 AND XI:1

 

37.   Argentina's RTRRs are a distinct measure that causes trade restrictions, and results in a separate breach of Article XI:1. The imposition of RTRRs constitutes a "restriction" under Article XI:1 because it serves as a "limitation" on imports. In particular, Argentina limits the importation of goods on the importer's ability to export goods, make investments in Argentina, produce or source locally, limit the volume or value of imports, or repatriate profits.

 

38.   Argentina has failed to fulfill the Article X:1 obligation to publish "promptly" and "in such a manner as to enable governments and traders to become acquainted with them," the "laws, regulations, judicial decisions and administrative rulings of general application" "pertaining to … requirements, restrictions, or prohibitions on imports …" that a Member has "made effective." The RTRRs, which pertain to "requirement, restriction or prohibition on imports …," constitute "regulations" or "administrative rulings of general application." The evidence demonstrates that Argentine officials widely apply the RTRRs to DJAI applicants and their prospective importations and also makes clear that that these unpublished rules are "of general application." The RTRRs have not been "published" in a manner that would enable governments and traders to become familiar with them. Argentine authorities made the RTRRs "effective" from at least 2010. To date, the RTRRs remain unpublished. An extended period of delay in publishing a measure does not meet the requirement of "prompt" publication.

 

SECOND OPENING STATEMENT

 

I.     THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE XI:1 OF THE GATT 1994

 

39.   Argentina mischaracterizes the U.S. positions and raises irrelevant matters. Argentina implies that complainants have accepted Argentina's categorization of measures as "procedural" or "substantive" in nature. The DJAI Requirement is not merely procedural but rather is itself a restriction on the importation of goods. Moreover, there is no basis for the procedural-substantive distinction. Further, there are no rules under the DJAI Requirement or elsewhere that limit the discretion of Argentine officials to restrict imports through the DJAI system. Argentina has pointed to no criteria for the evaluation of a DJAI application, potential reasons for denial, or requirements for resolution of an observation in Argentina's laws. Argentina enforces the RTRRs measure by withholding approvals in the DJAI system, which demonstrates the discretionary nature of the licensing requirement. However, this does not mean that the two measures are the same. DJAI approvals may be withheld for virtually any reason, or none at all. And, compliance with RTRRs may be a prior condition for approval of other import permissions.

 

A.    The DJAI Requirement is Subject to Article XI of the GATT

 

40.   The U.S. claim under Article XI:1 does not relate to the "formalities" connected to the DJAI requirement, but to the fact that import transactions cannot be completed unless and until an importer receives approval, which may be withheld for non-transparent, discretionary reasons. Argentina argues that, under the U.S. interpretation of Article X1:1, "any burden on trade" would be a "restriction" under Article XI:1. That is not the U.S. position. The U.S. claims do not relate to "any burden," but rather the DJAI Requirement.

 

41.   Argentina cites negotiating text of the trade facilitation agreement in support of its position that "formalities" are excepted from Article XI. Argentina has not explained how the trade facilitation agreement has any interpretive relevance in this dispute. Argentina's approach ignores the interaction of the provisions of the GATT 1994. Article XI is independent from the trade facilitation text. The trade facilitation provision does not speak to whether a measure amounts to a restriction within the meaning of Article XI. In addition, Argentina ignores the fact that Members can and do impose restrictions that are inconsistent with Article XI:1 but that are excepted from that provision under Article XX or another provision. Argentina's argument that Article VIII creates an exception to Article XI:1 for "formalities" is without merit.

 

B.    Article XI:1 Does Not Require a Demonstration of "Trade Effects"

 

42.   Argentina reiterates its novel theory that Article XI:1 requires a statistical demonstration of quantifiable trade effects to show that a measure is inconsistent with that provision. The ordinary meaning of Article XI:1 does not support Argentina's theory. Article XI:1 states that no … restrictions … shall be maintained. As a number of WTO panels have found, this obligation is not limited to quantitative restrictions or those with actual trade effects.   

 

43.   Article XI:1 does not contain any indication that it is limited to restrictions that can be demonstrated through quantifiable effects. Article XI:2(b) carves out from Article XI:1 "prohibitions or restrictions necessary to the application of standards or regulations … ." "Standards" or "regulations" can serve as "restrictions" inconsistent with Article XI:1. But, standards and regulations are not "quantitative" or "quantifiable." The title of Article XI does not support Argentina's position, and Argentina places far too much interpretive weight on the title. In each dispute cited by Argentina, the Appellate Body or panel noted that the title was consistent with the interpretation of the relevant article; the title did not imbue the article with a new and different meaning.

 

44.   Within the context of Article XI:1, including the title, a restriction is not just any burden on an import transaction. Many documentation requirements may burden trade transactions, but they do not all limit or restrict. The DJAI Requirement does limit or restrict trade; even where all information is submitted, permission may be withheld. This interpretation is consistent with the Appellate Body's consideration of "restriction" in China – Raw Materials and subsequent disputes. The Appellate Body said in China – Raw Materials that Article XI covers prohibitions and restrictions that have a limiting effect. The logical leap, from China – Raw Materials, to the conclusion that a complainant must demonstrate trade effects contradicts the findings of the Appellate Body and past panels that the enforceability of commitments in the WTO agreements does not turn on whether a Member's current trade is directly impacted.  

 

45.   Argentina has put forward Exhibit ARG-65 to support its argument that the DJAI Requirement is not having a restrictive effect on trade. This evidence is not relevant to resolving the legal issue, but in any event, the exhibit is flawed and fails to demonstrate what Argentina contends. First, the analysis fails to include an adequate assessment of the impact of the DJAI Requirement. Second, the report examines the relationship between imports and Argentine economic growth using a simple model specification which does not adequately control for other variables that could impact imports. Third, aggregate trade data is not useful for understanding how trade flows across sectors and time are impacted. Finally, Argentina's approach cannot be expected to fully demonstrate a credible impact of the DJAI Requirement on imports.

 

C.      The Evidence Presented by the United States Establishes a Prima Facie Case that the DJAI Requirement is Inconsistent with Article XI:1

 

46.   The United States has presented more than sufficient evidence to establish a prima facie case that the DJAI Requirement is inconsistent with Article XI:1. Argentina mischaracterizes this dispute when it states that the "principal evidence relied on by the complainants" to support the claims related to the DJAI Requirement are the surveys conducted by the U.S. Chamber of Commerce and the Government of Japan. The surveys are one element of the extensive evidence submitted by the United States. The primary evidence consists of the legal instruments establishing the DJAI Requirement, and related guidance issued by the Argentine government. This evidence alone demonstrates that the DJAI Requirement is a discretionary, non-automatic import licensing requirement inconsistent with Article XI:1 of the GATT 1994.

 

47.   The U.S. Chamber of Commerce survey is not scientific in nature; it is an informal voluntary survey. That said, it includes responses from 45 companies across a variety of sectors which, together, applied for a minimum of 2,650 DJAI approvals. The information contained therein is probative of the experience of U.S. companies. The United States has submitted extensive additional evidence, which is consistent and mutually supportive and confirms that Argentina does use the DJAI Requirement to restrict imports.

 

III.   THE DJAI REQUIREMENT IS INCONSISTENT WITH THE IMPORT LICENSING AGREEMENT

 

48.   Argentina speculates that the United States has "distanced" itself from its claims under the Import Licensing Agreement. The reason that the second U.S. submission does not contain new material on these claims is that Argentina has failed to respond to the U.S. prima facie case. The United States is interested in receiving findings on Articles 1.4(a), 1.6, 3.3, 3.5(f), and 5 of the Import Licensing Agreement, in addition to Article 3.2.

 

A.     The DJAI Requirement Is an Import Licensing Procedure

 

49.   Argentina fails to present a viable argument for why the Import Licensing Agreement does not apply to the DJAI Requirement. Argentina argues that import licensing is an administrative procedure "used for the operation of import licensing regimes" – which is "understood as the administration of quantitative restrictions or other measures similarly aimed at regulating the importation of goods." Argentina presents no textual support for this position. Even under Argentina's proposed definition, the DJAI Requirement would be subject to the Import Licensing Agreement. Argentina also argues that the Appellate Body report in EC – Bananas III does not support the interpretation of Article 1.1 as explained by the United States. Argentina's logic is flawed. The Appellate Body "note[d]" that Articles 3.2 and 3.3 of the Import Licensing Agreement make clear that the Agreement is not limited to quantitative restrictions but relates to other "restrictions." This finding supports the conclusion that an import licensing procedure is one that (a) requires "the submission of an application" (b) as "a prior condition for importation."

 

B.     The DJAI Procedure Is not for Customs Purposes

 

50.   Argentina advocates for an overly broad interpretation of those applications and documentation which are for "customs purposes." If accepted, this definition would create an exception that would swallow the rule – rendering the entire Import Licensing Agreement meaningless. The DJAI Requirement is not maintained for "customs purposes," as it is does not relate to the implementation of a customs law or regulation.

 

51.   Argentina's second written submission contains assertions as to the reasons the various agencies participate in the DJAI system. These assertions are unsupported by any legal instrument or other documentation that would limit the review of the participating agencies to the reasons cited. Moreover, Argentina only purports to provide examples of the reasons agencies participate in the DJAI system. Argentina's unsupported assertions – if credited – would support the conclusion that agencies' participation in the DJAI system goes well beyond "customs purposes." Moreover, nowhere does Argentina indicate how the information collected by agencies is evaluated or for what reasons a participating agency may make an observation.

 

52.   Finally, the World Customs Organization ("WCO") Secretariat's letter helps to confirm that the DJAI Requirement does not implement the SAFE Framework. The SAFE Framework "focuses on the security risk related to terrorism;" "aims to facilitate – as much as possible – legitimate trade;" "contains very specific time limits for the submission of advance cargo data to Customs;" and sets out "data elements strictly limited to the maximum that should be required." The DJAI Requirement does not focus on security risks related to terrorism; it does not facilitate, but rather impedes trade. "None" of the purported reasons that agencies participate in the DJAI system are "covered by the SAFE Framework as interpreted by the (majority of) Members."

 

IV.   THE DJAI REQUIREMENT IS INCONSISTENT WITH ARTICLE X OF THE GATT 1994

 

53.   As regards Article X, Argentina argues with respect to the DJAI Requirement that complainants must meet novel proof standards that have no basis in the GATT 1994. Argentina asserts that complainants must demonstrate that each of the thousands of individual instances in which the DJAI Requirement has been applied to an import transaction constitutes a separate measure of "general application." Argentina's proposed legal standard is inconsistent with the ordinary meaning of Article X:1, which disciplines inter alia "laws, regulations [and] … administrative rulings of general application" – not their individual instances of application. The DJAI Requirement is such a measure of general application.

 

54.   Argentina persists in misrepresenting the U.S. claim under GATT Article X:3(a), characterizing that claim as a challenge to the underlying DJAI Requirement, rather than as a challenge to the administration of that requirement. This is not correct. The U.S. claim challenges the unreasonable and non-uniform administration of the DJAI Requirement by (as substantiated in Exhibit US-1) – not the DJAI Requirement itself. Argentina has not attempted a rebuttal addressed to the U.S. showing that the DJAI requirement breaches Article X:3(a).

 

V.      THE UNITED STATES HAS CARRIED ITS BURDEN TO ESTABLISH THE EXISTENCE OF THE RTRRS MEASURES

 

A.      The Evidence Presented by Argentina Does Not Rebut Evidence Presented by the United States

 

55.   Argentina appears to argue that the limited evidence it has submitted demonstrates that companies are investing in Argentina not because of the need to comply with RTRRs, but because of favorable "economic opportunities." This argument is flawed. First, Argentina relies on general statements from corporate officials regarding investment in Argentina. Such explanations do not refute the claims of the United States. The United States has identified, at Exhibit US-6, statements by company officials, and from Argentine government sources, which specifically describe the RTRRs imposed on each company discussed by Argentina. Second, Argentina overreaches in its characterization of certain public statements. Third, the statements cited by Argentina must be viewed in context. Corporate officials have an incentive to publicly emphasize the positive factors for investment in Argentina to avoid retaliatory restrictions on imports. Finally, the volume of evidence demonstrating the existence and operation of the DJAI Requirement and the RTRRs far outweighs the citations raised by Argentina.

 

B.    There Is no Special "Higher" Burden of Proof Applicable to Unwritten Measures

 

56.   The United States has not characterized the RTRRs as "a single overarching unwritten measure whose content consists of various other measures." There is no basis for Argentina's assertions that the United States must explain how "disparate requirements … come together to form the ‘overarching measure.'" There is only one measure at issue.

 

57.   There is no special higher burden of proof on complainants who allege an unwritten measure. It is likely that a greater volume of evidence is necessary to demonstrate the existence of an unwritten measure than a written measure, which in many cases may be demonstrated by a statute or regulation alone. That does not mean that there is a higher standard of proof or that a party must do more than present sufficient evidence to raise a presumption of the existence of that measure.

 

58.   Not all unwritten measures are subject to the three-element evidentiary standard on which Argentina bases its argument. Argentina's reliance on the Appellate Body report in US – Zeroing (EC) and the panel report in EC – Large Civil Aircraft, both of which address "norms or rules," is misplaced. Argentina cites two additional panel reports in its second written submission, US – Zeroing (Japan) and Thailand – Cigarettes (Philippines), both of which also concern "norms or rules" of administrative application. The United States is not challenging a "norm or rule" that governs the administrative application of another measure. The facts presented in this dispute are more analogous to those in EC – Biotech. The panel noted that the relevant question was "whether the evidence supports the Complaining Parties' assertion." The evidence submitted by the United States in this dispute meets the EC – Biotech standard and establishes the existence of the RTRRs measure.

 

C.      The United States Has Submitted Sufficient Evidence to Meet the Burden Articulated by Argentina

 

59.   Even under the standard articulated by Argentina, the United States has submitted more than enough evidence to establish a prima facie case. The United States has demonstrated:  (1) that the RTRRs measure is attributable to Argentina; (2) the precise content of the RTRRs measure; and (3) that the RTRRs measure has general and prospective application. It is important to note that, although the Appellate Body has noted that "[p]articular rigour is required" of panels that examine whether an unwritten "rule or norm" exists, and has proposed the three elements for determining the existence of a rule or norm where it is alleged to govern the administrative application of another measure, the Appellate Body has not said that there is a higher evidentiary burden on the demonstration of a prima facie case. Rather, the "high threshold" is the application of the three evidentiary elements and a complainant must put "forth sufficient evidence with respect to each of these elements" i.e., evidence sufficient to establish a prima facie case with respect to each element.

 

60.   The evidence in this dispute demonstrates the existence of the RTRRs measure, its enforcement through the DJAI Requirement, and the fact that both measures are restrictions within the meaning of Article XI:1. With respect to the first element, Argentina does not even argue that the measure is not attributable to Argentina. The evidence submitted by the United States fulfills the second element – it demonstrates the precise content of the RTRRs measure. Pursuant to the RTRRs measure, Argentine officials require, as a prior condition for importation, commitments to export a certain dollar value of goods; reduce the volume or value of imports; incorporate local content into products; make or increase investments in Argentina; and/or refrain from repatriating profits. This measure has "precise content." The evidence with respect to the content is summarized at Section III.B of the U.S. first written submission.

 

61.   Argentina argues that the United States must satisfy each of the three elements with respect to each of the five requirements imposed pursuant to the RTRRs measure. However, that is not the case. In no other dispute has a panel or Appellate Body required a complainant to demonstrate separately each part of the alleged rule or norm. Argentina claims that the evidence related to the requirement that importers make or increase investments in Argentina, incorporate local content into their products, and reduce the volume or value of imports is insufficient to demonstrate they are part of the RTRRs measure. That is not the case.

 

62.   Finally, the RTRRs measure satisfies the third element; it has general and prospective application. Argentina asserted the complainants have only provided evidence of discrete one-off actions. However, the statements of Argentine officials indicate that the measure is both general and prospective, applying broadly to all types of goods and applying into the future. The hundreds of additional exhibits provided by complainants demonstrate that the RTRRs measure applies generally across products and sectors. The prospective application of the RTRRs measure is further supported by evidence of its repeated and continuing systematic application to importers. As the Appellate Body observed, evidence of prospective application "may include proof of the systematic application of the challenged ‘rule or norm'."

 

D.      The Evidence Submitted by the United States is Sufficient in Light of Prior Disputes Applying the Standard Advocated for by Argentina 

 

63.   The evidence that the United States has submitted is, at a minimum, comparable to the evidence submitted in US – Zeroing (EC) and US – Zeroing (Japan) and far exceeds that which was submitted in Thailand – Cigarettes (Philippines) and EC– Large Civil Aircraft. Argentina argues that the evidentiary case of the United States in this dispute is weaker than that in the zeroing disputes because zeroing was applied in all instances. It also argues that it suffers from the fact that it is not based on related written procedures or contracts. Argentina would have the Panel reward it for flouting its transparency obligations. None of these arguments are persuasive; the Panel should reject them and should reject Argentina's argument that the United States has not met its burden in demonstrating the existence of the RTRRs measure.

 

64.   Argentina makes no attempt to rebut complainants' legal claims demonstrating that the measure is inconsistent with Articles X:1 and XI of the GATT 1994. Accordingly, if the panel finds that complainants have demonstrated the existence of the RTRRs measure, the panel should also find the measure to be inconsistent with Articles X:1 and XI.

 

 

 

ANNEX B-5

FIRST PART OF THE executive summary of the arguments of Japan

FIRST WRITTEN SUBMISSION

 

I.     FACTUAL BACKGROUND

 

1.     In this dispute, Japan challenges two protectionist, trade-restrictive measures imposed by Argentina to stimulate domestic production, localize investment, and keep imports out: the Declaración Jurada Anticipada de Importación (the "DJAI Requirement") and Argentina's Restrictive Trade Related Requirements ("RTRR").

 

2.     In order to place a purchase order or initiate a foreign exchange transaction to purchase foreign goods, importers into Argentina must first electronically submit a DJAI, which six Argentine government entities then have an opportunity to review. If any of the government entities lodges a comment (observación) on the DJAI, then the importer may not proceed with the import transaction until the entity decides that it is satisfied with the importer's response. There are practically no legal constraints on the government entities' discretion, and in practice DJAIs often remain in an "observed" (observada) status for long periods of time without explanation. As such, they have a substantial impact on importers' abilities to import their goods into Argentina in a timely, effective, and cost-efficient manner.

3.     The approval of DJAIs is often conditioned on compliance with the RTRR. The RTRR is a generally applicable measure that conditions the right to import goods upon the importer's compliance with certain conditions aiming to achieve Argentina's policy of trade-balancing and import substitution.

4.     The existence and operation of the RTRR have been confirmed by the Argentine government's own statements and official press releases, its communications with industry associations, numerous press reports, and industry surveys. Indeed, the evidence confirms that Argentina has applied the RTRR to major importers in several industries.

5.     The imposition of trade-restrictive requirements reflects a broader protectionist turn in Argentine economic policy since the mid-2000s. In an attempt to stimulate domestic production and keep imports out, Argentina has resorted to restrictions on imports, such as the RTRR as well as several non-automatic licensing schemes used to enforce it: the DJAI Requirement and Certificados de Importación ("CIs").

A.   DJAI Requirement

 

1.  Overview of the DJAI and Related Legal Instruments

 

6.     Argentina's Federal Administration of Public Revenue (Administracíón Federal de Ingresos Públicos, or "AFIP") issued Resolution 3252 on 5 January 2012. Resolution 3252 established the DJAI Requirement for all imports of goods into Argentina. The DJAI Requirement became effective as of 1 February 2012. On 20 January 2012, AFIP issued Resolution 3255, which sets out guidelines for managing and processing DJAI applications.

7.     Under the DJAI Requirement, importers of goods into Argentina must submit certain application information on the DJAI page of AFIP's website "prior to issuance of an order form, purchase order, or similar document used to purchase items from abroad."

8.     Article 2 of Resolution 3255 provides that a submitted DJAI transitions to "observed" ("observada") status, i.e., pending indefinitely, if any agency comments on the DJAI within 13 days. Six agencies have the power to submit "observations" on DJAIs: AFIP, the Secretariat of Commerce (Secretaría de Comercio Interior, or "SCI"), the National Administration of Medicine, Food, and Medical Technology (Administración Nacional de Medicamentos, Alimentación y Tecnología Médica, or "ANMAT"), the Secretariat for the Prevention of Drug Abuse and Drug Trafficking (La Secretaría de Programación para la Prevención de la Drogadicción y la Lucha contra el Narcotráfico, or "SEDRONAR"), the National Services of Food Quality and Safety (Servicio Nacional de Sanidad y Calidad, or "SENASA"), and the National Institute of Viniculture (Instituto Nacional de Vitivinicultura, or "INV"). Once a DJAI becomes "observed", the DJAI applicant bears the burden of contacting each relevant agency to persuade it to withdraw its observations.

9.     Resolution 3256/2012 sets out further provisions regarding the mechanism through which Argentine government agencies comment on DJAIs, and thus delay or deny approval of the DJAI. In addition, Central Bank Communication "A" 5274 prevents banks from processing purchase orders and currency exchange transactions for foreign imports unless a DJAI-based approval is obtained for the relevant import beforehand.

2.  Non-Automatic Nature of the DJAI Approval Process

 

10.   DJAIs are granted on a discretionary, non-automatic basis. Resolution 3255 explicitly provides that participating governmental entities may suspend approval of DJAI requests by submitting an "observation" related to the DJAI. In addition, ANMAT, SEDRONAR, SENASA, and INV have not issued any explanation or information regarding the criteria they apply – as a matter of their own autonomous, agency-level policy – in determining whether to comment on DJAI submissions. Official data (as discussed in a press report), industry surveys, and anecdotal evidence all confirm that DJAIs are regularly not approved, and that the DJAI system is entirely unpredictable.

3.  Scope and Purpose

 

11.   Argentine government officials have repeatedly linked the use of the DJAI to the policy of managing trade, including through the RTRR. For example, the Secretary of Internal Commerce Guillermo Moreno stated: "When we study the DJAI, we are going to consider the balance of foreign exchange, as well as the pace of the company's prices. We will do this on a company-by-company basis. And business owners understand what the right road is." Similarly, the head of the Argentine Chamber of Importers concluded: "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."

4.  License Delays

 

12.   In practice, the Argentine government authorities' unfettered discretion in determining whether to suspend DJAI applications has led to widespread delays in the transitioning of DJAIs from formalized status to exit status. Although the DJAI system only dates to the beginning of 2012, several court cases involving lengthy delays in DJAI applications have already appeared. Broad industry surveys similarly confirm the same facts.

B.      Restrictive Trade Related Requirements ("RTRR" or "Trade Balancing Requirement")

 

1.  Overview of the RTRR

 

13.   The RTRR require key importers to undertake certain actions in order to obtain Argentine government approval for DJAIs and license applications. As noted above, these actions include but are not necessarily limited to any of the following:

(1)  export a certain value of goods from Argentina related to the value of imports;

 

(2)  limit the volume of imports and/or reduce their price; 

 

(3)  refrain from repatriating funds from Argentina to another country; 

 

(4)  make or increase investments in Argentina (including in production facilities);  and/or

 

(5)  incorporate local content into domestically produced goods.  

 

14.   Thus, the RTRR effectively functions as a trade balancing or localization requirement. This "one-to-one" requirement entails an overwhelming burden on importers whose business is to import but not to export.  

2.  Local Content Requirement

 

15.   Over the last several years, and as part of the RTRR in general, the Argentine Government has required economic operators in Argentina to incorporate local content in their products by substituting imported products with products that are or can be produced in Argentina. Sometimes the local content requirement is imposed as a condition to continue importing some products. Indeed, the local content requirement is often imposed together with other RTRR requirements, especially the one-to-one requirement. In those cases, in order to reach the necessary trade surplus, a local content requirement is also imposed to lower the level of imported products. In other cases, the local content requirement is not necessarily a condition for the importation of products but, more generally, is seen as a requirement to do business in Argentina or to benefit from tax incentives or other types of support.

3.  Methods of Enforcing the RTRR

 

16.   The Argentine government enforces the RTRR, including the local content requirement, through a variety of legal tools, including DJAIs, CIs, and other legal and paralegal means. When importers fail to comply with the RTRR, Argentina responds by denying the right to import.

a. Enforcement Through DJAIs

 

17.   As mentioned above, Argentina requires importers to undertake certain commitments in order to obtain Argentine government approval for DJAIs. The Argentine government has explicitly connected the application of the DJAI Requirement to the RTRR. For example, Secretary Moreno has told customs brokers that importers who wish to obtain government approval for DJAIs must begin by submitting price lists and an export program/project to the Secretary of Domestic Trade. Industry surveys also confirm that companies are systematically denied the approval of DJAIs until they agree to comply with the RTRR.

b. Enforcement Through Other Import License Requirements

 

18.   In addition to securing compliance with the RTRR by withholding the issuance of DJAIs, the Argentine government has also ensured compliance by withholding the issuance of import licensing approvals, such as CIs, a non-automatic license requirement. Until 25 January 2013, CIs were required for the importation of goods falling in over 600 tariff lines,  ranging from footwear and screws to automobiles. The Argentine government's use of CIs included practically no legal constraints on the Argentine government's discretion of whether to grant or deny CI applications. In practice, the Argentine government exercised this discretion to enforce the RTRR, as Argentine government officials have confirmed on many occasions.

c. Enforcement Through Paralegal Means and Threats

 

19.   In addition to enforcement through the DJAI Requirement that importers have to meet and other import licensing and import-related requirements, Argentina has also implemented and enforced the RTRR through other, paralegal, and non-regulatory or official means.

20.   One comment made by Secretary Moreno in March 2009 is particularly telling. "For every dollar that you demand to buy goods abroad," he said, "you will have to generate another locally. If it's not convenient for you, bring me the keys to the company and I will take over." Another report notes that Secretary Moreno "once put a handgun on a conference table during a meeting to show he meant business." Indeed, the prevalence of face-to-face meetings for enforcing the RTRR requirement allows the Argentine government to communicate threats to businesses behind closed doors and makes the entire situation all the more intransparent, threatening, and confusing.

4.  Application of the RTRR in Specific Sectors

 

21.   In applying the RTRR, the Argentine government has targeted importers of foreign-origin goods, including in the automobile, auto parts, motorcycle, agricultural machinery, metallurgical, mining, publishing, electronic, audiovisual, pharmaceutical, toy, and musical instrument sectors. This is confirmed by a wide range of evidence from official government press releases, press reports in domestic and international news media, official statements of Argentine government economic policy, industry surveys, and other evidence.

II.    LEGAL ANALYSIS

 

A.      The DJAI Requirement Is Inconsistent with Articles XI:1, X:3(A), and X:1 of the GATT 1994

 

22.   Argentina has established the DJAI Requirement in such a way that, in its application, as well as by its very design, structure and operation, it is inconsistent with core WTO rules.

1.      The DJAI Requirement Is Inconsistent with Article XI:1 of the GATT 1994

 

23.   The DJAI Requirement is a restriction on importation within the meaning of Article XI:1 because it is a non-automatic import licensing requirement. Therefore, it is inconsistent with Argentina's obligations under Article XI:1.

24.   Article XI:I of the GATT 1994 states:

No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

Previous panels and the Appellate Body have interpreted Article XI:1 broadly to cover a wide range of restrictions and have noted that discretionary or non-automatic licensing systems are by their very nature inconsistent with Article XI:1.

25.   As discussed above, under the DJAI, (i) at least six agencies have authority to suspend and prevent importation and the granting of an importation license, simply by making comments; (ii) the criteria for suspension or approval of importation are not specified; (iii) no meaningful explanation must be provided to importers for either suspension of the license application or rejection; (iv) the DJAI Requirement covers all or virtually all categories of goods; (v) the actual operation of the DJAI Requirement results in substantial delays in or suspension of importation (and the law itself allows and enables such delays and suspensions); (vi) in practice, Argentine agencies and officials will often make the grant of importation rights (including through DJAIs) contingent on trade balancing, import substitution, or local content requirements, as further detailed in section II below; and (vii) there is no indication that Argentina imposes any of these requirements for any reason other than to prevent or suspend importation and trade, and to encourage local investment, trade balancing and import substitution. The operation of the DJAI Requirement in practice confirms this assessment, as it has led to frequent and lengthy delays in importation.   

26.   In light of the foregoing, the DJAI Requirement, by its very design, structure and operation, as well as in practice, constitutes a non-automatic import licensing measure and is thus "by its very nature" prima facie inconsistent with Article XI:1 of the GATT 1994. In addition, the DJAI Requirement provides for open-ended discretion to the relevant Argentina government agencies to restrict imports and is thus inconsistent with Article XI:1 of the GATT 1994.

2.      The Argentine Government's Administration of the DJAI Requirement Violates Article X:3(a) of the GATT 1994

 

27.   Article X:3(a) of the GATT 1994 prohibits the administration of laws, regulations, judicial decisions and administrative rulings of general application in any manner that is not "uniform, impartial, and reasonable". Argentina has structured the DJAI Requirement in a way that affords at least six Argentine government agencies open-ended discretion in determining whether to approve or deny DJAI applications. In practice, moreover, this is precisely what they do. As a result, Argentina administers the DJAI Requirement in a manner that is neither uniform, nor impartial, nor reasonable, contrary to Article X:3(a) of the GATT 1994.

a.       Article X:3(a) of the GATT 1994 Prohibits the Non‑Uniform, Partial, and/or Unreasonable Administration of the Type of Measures Described in Article X:1 of the GATT 1994

 

28.   The scope of Article X:3(a) of the GATT 1994 covers not only acts of administering covered measures under Article X:1, but also "legal instruments" that regulate the application or implementation of such measures. The obligations of Article X:3(a) of the GATT 1994 do not apply to the substantive content of covered measures, but rather to the administration of such measures, which includes not only acts of administering such measures, but also legal instruments that regulate the application or implementation of such measures.

b.       The Administration of the DJAI Requirement Is Non‑Uniform, Partial, and Unreasonable

 

29.   Resolutions 3252/2012, 3255/2012, and 3256/2012, and Central Bank Communication "A" 5274, require importers to obtain import approval pursuant to a DJAI in order to import goods into Argentina, and they make it possible for multiple government agencies to prevent DJAI approval or to delay it indefinitely. Moreover, they do not impose any substantive constraints on government agencies' authority to do so, nor do they impose any requirement for consistency across government agencies, or from one application to the next, with respect to the criteria for commenting on DJAI applications or withdrawing such comments.

30.   Through its DJAI Requirement, the Argentine government has created a regulatory maze of unknown and unpublished regulatory requirements and discretionary authority on the part of authorized government agencies that allows it to keep imports out or allow them to enter at its and the individual agencies' discretion.

i.        The DJAI Requirement as reflected in Resolution 3255/2012 and Other Instruments is the Type of Law and/or Regulation Covered By Article X:1 of the GATT 1994

 

31.   Article X:1 of the GATT 1994 applies to "{l}aws, regulations, judicial decisions and administrative rulings of general application" that pertain to "restrictions or prohibitions on imports." Laws and regulations of "general application" are those that "affect … an unidentified number of economic operators". Resolution 3252/2012, Resolution 3255/2012, Resolution 3256/201, Central Bank Communication "A" 5274, and Resolution SCI 1/2012 all (i) affect an unidentified number of importers of goods into Argentina, as well as foreign exporters, and (ii) pertain to the DJAI Requirement itself, which is a restriction on imports. Consequently, the DJAI Requirement composed of these legal instruments constitutes a "law" and/or "regulation" under Article X:1 of the GATT 1994.

ii.       The Legal Instruments and/or the Features of the Administrative Process Governing the Implementation of the DJAI Requirement Lead to the Unreasonable, Partial, and/or Non-Uniform Administration of the DJAI Requirement

 

32.   The DJAI Requirement and the various legal instruments related to it and that implement it, result in tremendous uncertainty and unpredictability for importers. As such, the legal instruments implementing the DJAI Requirement, and/or the features of the administrative process governing the application of the DJAI Requirement, by their very nature, structure, and design, lead to unreasonable, partial, and/or non-uniform administration.

33.   The DJAI Requirement and its associated legal instruments lack definitions, guidelines or standards to guide the agencies involved in their administration of the measure. Argentine government agencies, moreover, are virtually unconstrained in their discretionary authority to apply the DJAI Requirement and to make "observations", i.e., impose a halt on importation of a particular product or import. As such, this necessarily leads to the unreasonable administration of the DJAI Requirement, inconsistent with Article X:3(a) of the GATT 1994.

34.   Resolution 3256/2012 permits a multiplicity of agencies to participate in the review of DJAIs and Resolution 3255/2012 gives government agencies the power to suspend DJAI applications without setting out any safeguards to guarantee that the agencies will exercise their administrative power in a consistent or uniform manner. Accordingly, both the legal instruments regulating the implementation of the DJAI Requirement, and the specific features of the administrative process governing the administration of the DJAI Requirement, lead to the risk of non-uniform administration of the DJAI Requirement.

35.   The specific legal instruments implementing the DJAI Requirement and the DJAI-related administrative process also result in the partial administration of the law, not only (i) for all of the reasons mentioned above with respect to the lack of uniformity and reasonableness in the DJAI Requirement's administration; but also (ii) because Argentina administers the DJAI Requirement in a manner that systematically favors parties that comply with the RTRR.

3.         Argentina's Failure to Publish the Laws, Regulations, Judicial Decisions, and Administrative Rulings Pertaining to the DJAI Requirement Is Inconsistent with Article X:1 of the GATT 1994

a.         The Criteria for Deciding Whether to Comment on DJAI Applications, and Whether to Withdraw Such Comments, Fall Within the Scope of Article X:1

36.   Article X:1 applies to laws, regulations, judicial determinations, and administrative rulings affecting an unidentified number of economic operators. The criteria according to which the DJAI are commented on and according to which such comments are withdrawn, affect an unidentified number of economic operators, because they determine whether and how quickly the importation of any good will be permitted under Argentine law. Therefore, they fall within the scope of Article X:1.

b.         The Criteria for Deciding Whether to Comment on DJAI Applications, and Whether to Withdraw Such Comments, Have Not Been "published promptly in such a manner as to enable governments and traders to become acquainted with them."

37.   Of the six agencies involved, five have not published any documents whatsoever that might illuminate the criteria they apply to DJAI applications. This is the case for SCI, ANMAT, SEDRONAR, SENASA, and INV. There is no legislative or other, broader, government guidance on this issue either. Although the DJAI User Manual issued by AFIP lists thirteen codes that may be displayed when a DJAI application is commented on, these codes are so vague as to be uninformative. Finally, the government of Argentina requires the submission of a nota de pedido in parallel with the DJAI application, even though no formal law or regulation mentions this requirement.

B.         The DJAI Requirement is Inconsistent with Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3 and 5.4 of the ILA

1.         The DJAI Requirement is a Non-Automatic Import Licensing Procedure Under Article 1.1 of the ILA

38.   The procedures that Argentina uses for the operation of the DJAI Requirement "require the submission of an application or other documentation … as a prior condition" for importation into Argentine customs territory. Therefore, the DJAI Requirement falls squarely within the definition of Article 1.1, and thus, subject to the provisions of the ILA.

39.   Argentina does not grant approval of DJAI applications in all cases and  the maximum time period that Argentina takes to approve DJAI applications exceeds 10 working days. Therefore, the DJAI Requirement is properly characterized as a non-automatic import licensing procedure, and it is subject to the provisions of Article 3 of the ILA. Furthermore, the application and other documentation required to fulfill the DJAI Requirement is not "required for customs purposes" and therefore is not of the type excluded from the definition of "import licensing" in the ILA.

2.         Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Article 1.3 of the ILA

40.   Argentina fails to administer the DJAI Requirement in a uniform, impartial and reasonable manner under Article X:3(a) of the GATT 1994. For those same reasons, and consistent with the Appellate Body, the DJAI Requirement is also inconsistent with Article 1.3 of the ILA.

3.         Argentina Administers the DJAI Requirement In A Manner That Is Inconsistent With Article 1.4(a) of the ILA

41.   Article 1.4(a) requires Members to publish "rules and all information concerning procedures for the submission of applications … in such a manner as to enable governments and traders to become acquainted with them." In addition, the publication must be performed in "sources notified to the Committee on Import Licensing".

42.   Argentina has failed to publish the criteria for determining the eligibility of particular goods and/or exporters for DJAIs and has not notified any publications relevant to DJAIs to the Committee on Import Licensing. For both reasons, therefore, Argentina has breached Article 1.4(a) of the ILA.

4.         Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Article 1.6 of the ILA

43.   The DJAI Requirement is inconsistent with Article 1.6 of the ILA application procedures because the procedures are not "as simple as possible," given that importers may need to approach more than three government bodies to remedy comments on DJAIs.

5.         Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Article 3.2 of the ILA

44.   The design, structure and operation of the DJAI Requirement have created tremendous uncertainty for foreign exporters and Argentine importers. Argentina's failure to institute any safeguards limiting agencies' discretion to decide whether to approve DJAI applications, and the complete lack of transparency surrounding the entire process have distorted and restricted imports. Accordingly, the DJAI Requirement has trade-restrictive or distortive effects on imports, and only this fact is enough to be "additional to those caused by the imposition of the restriction" under Article 3.2 of the ILA.

6.         Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Article 3.3 of the ILA

45.   Argentina has not imposed explicit quotas for imports of all of the goods subject to the DJAI Requirement. Therefore, pursuant to Article 3.3, Argentina has an obligation to publish sufficient information with respect to the DJAI Requirement for other Members and traders to know the basis for granting and/or allocating DJAIs, which it has failed to do. Consequently, the DJAI Requirement is inconsistent with Article 3.3 of the ILA.

7.         Argentina administers the DJAI Requirement in a Manner That Is Inconsistent with Article 3.5(f) of the ILA

46.   Under Article 3.5(f), the default time limit to consider non-automatic license applications is 30 days, but a 60-day time limit may apply if all applications are considered simultaneously and there is an announced "application period" with a specific closing day.

47.   In the case of the DJAI Requirement, the 30-day time limit applies because applications are not considered simultaneously, nor is there an announced "application period". Because Argentina frequently fails to abide by this time limit, it has administered the DJAI Requirement in a manner that is inconsistent with Article 3.5(f) of the ILA.

8.         Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Articles 5.1, 5.2, 5.3, and 5.4 of the ILA

48.   Argentina has failed to comply with the requirements of Articles 5.1, 5.2, 5.3, and 5.4 of the ILA because it has never notified the DJAI Requirement or the associated regulations implementing the Requirement to the Committee on Import Licensing, despite the fact that it is a non-automatic licensing requirement within the meaning of the ILA.

C.         Argentina's Restrictive Trade Related Requirements ("RTRR") is Inconsistent with Articles XI:1, III:4 and X:1 of the GATT 1994

49.  The RTRR, including the local content requirement it specifically imposes, is inconsistent, both as such and as applied, with Articles XI:1, III:4 and X:1 of the GATT 1994.

1.         The RTRR Is Inconsistent with Article XI:1 of the GATT 1994

50.   As discussed above, Article XI:1 of the GATT 1994 broadly prohibits restrictions on importation. The prohibition extends to measures like the RTRR that make the right to import contingent on export performance, domestic investment, and the satisfaction of other limiting conditions.

51.   The RTRR requirements, both on their own and collectively, operate as practical thresholds on the importer's ability to import. In addition, they function as a disincentive to importing by increasing the financial and bureaucratic burden on importing, for example through the use of trade balancing requirements and the requirement to navigate the DJAI application and observation process. Thus, Argentina's RTRR violates Article XI:1 both as such and as applied.

2.         The RTRR Is Inconsistent with Article III:4 of the GATT 1994

52.   To determine whether Argentina's RTRR is inconsistent with Article III:4 of the GATT 1994, it is necessary to examine whether (1) the goods at issue are like products, (2) the RTRR constitutes a "law, regulation or requirement"; (3) the RTRR affects the internal sale, offering for sale, purchase, transportation, distribution or use of imported products; and (4) imported products are accorded less favorable treatment than the treatment accorded to like domestic products. The answer to all four questions is yes. Thus, the RTRR, as well as the local content requirement that it incorporates and reflects, insofar as they impose limitations on the use of imported products, are contrary to Article III:4.

a.         Argentina's Measures Satisfy the Like Product Requirement

53.   It is well established in WTO jurisprudence that measures distinguishing between goods solely on the basis of national origin satisfy the "like product" requirement. Under the RTRR and the local content requirement it embodies, the Argentine government makes the granting of importation rights conditional on, inter alia, the purchase of domestically produced goods. This requirement is based exclusively on the products' origin. Thus, the goods manufactured in Argentina and imported from elsewhere are like products within the meaning of Article III:4 of the GATT 1994.

b.         Argentina's Measures Constitute "Requirement[s]"

54.   Panels interpreting Article III:4 have stated that the term "requirement" encompasses not only conditions that are mandatory, but also conditions whose fulfillment is necessary to obtain a commercial advantage.

55.   Under the RTRR, and the local content requirement in particular, companies that want to obtain the right to import goods into Argentina must agree to undertake certain actions such as limiting the volume of their imports, reducing their prices, or incorporating local content into the goods they produce in the country. Even if one characterizes these commitments towards the government as conditions that importers "voluntarily" accept in order to obtain the "advantage" of being permitted to import, they constitute a "requirement" within the meaning of Article III:4 of the GATT 1994.

c.         Argentina's Measures Affect the Internal Sale of Goods

56.   Panels and the Appellate Body have interpreted this criterion as applying to measures which, like Argentina's RTRR, require the purchase of domestically produced goods.

57.   Argentina's RTRR influences domestic manufacturers' choice between imported and domestic input products, because only domestic products count towards the RTRR, and purchases of domestically produced goods do not need to be offset with exports, purchases of local content, etc. Thus, the RTRR, and the local content requirement, adversely modify the conditions of competition between domestic and imported goods, and therefore affect the internal sale of goods.

d.         Under Argentina's Measures, Imported Products Are Accorded Less Favorable Treatment Than Domestic Products

58.   By setting local content targets as a condition to operate in Argentina or to have access to an advantage, the Argentine government alters the conditions of competition in Argentina, negatively affecting the possibilities for imported products to be used in Argentina.

59.   First, Argentina's measures impose a burden on purchasers of goods only to the extent that they purchase imported goods, i.e., they tilt the competitive landscape in favor of domestic products, because purchases of domestically produced goods do not need to be offset with exports, local investments, refraining from repatriating currency, etc. Second, Argentina's measures tilt the competitive landscape in favor of domestic products by conferring import "credits" for purchases of domestically produced goods, but not foreign goods. Thus, for example, firms that already import certain goods but are making a purchasing decision about other types of goods would prefer to purchase domestic rather than foreign-origin goods, because only domestic goods would enable the company to offset imports and thus continue importing.  Both aspects modify the conditions of competition in favor of domestically produced goods, in violation of Article III:4. Moreover, this conclusion is confirmed by Paragraph 1(a) of the Illustrative List of the TRIMs Agreement, which provides that measures like local content requirements are inconsistent with Article III:4 of the GATT 1994.

3.         Argentina's Failure to Publish the RTRR Promptly in Such a Manner as to Enable Governments and Traders to Become Acquainted with Them Is Inconsistent with Article X:1 of the GATT 1994

60.   There are two relevant questions that a panel must address in determining whether a particular measure is consistent with Article X:1: (i) does the measure fall within the scope of Article X:1, and (ii) if so, has it been published promptly in such a manner as to enable governments and traders to become acquainted with them. For the RTRR, the answer to (i) is yes, and the answer to (ii) is no.

61.   The RTRR falls within the scope of Article X:1, as interpreted by panels and the Appellate Body. At a minimum, the RTRR constitutes the "exercise of influence" by Argentine administrative bodies, because Argentine administrative authorities induce or guarantee compliance with the RTRR through the allocation of importation rights.

62.   In addition, Argentina has failed to publish the RTRR in "such a manner as to enable governments and traders to become acquainted with them." Moreover, Argentina has also failed to publicly articulate the methods it uses to enforce the RTRR. Rather, Argentina often avoids the strictures of Article X:I by communicating the RTRR to individual companies verbally, thus avoiding public scrutiny to some degree. For all of these reasons, Argentina's adoption and maintenance of the RTRR is inconsistent with Article X:1.

III.  CONCLUSION

 

63.   For the reasons set out above, Japan respectfully requests the Panel to find that the DJAI Requirement is inconsistent with Articles XI:1, X:3(a) and X:1 of the GATT 1994, and Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA, and that the RTRR, both as such and as applied, is inconsistent with Articles XI:1, III:4, and X:1 of the GATT 1994.

ORAL STATEMENT AT THE FIRST SUBSTANTIVE MEETING

I.         ARGENTINA FAILS TO REBUT JAPAN'S PRIMA FACIE CASE THAT THE DJAI REQUIREMENT IS WTO‑INCONSISTENT, BOTH AS SUCH AND AS APPLIED

1.     Japan's First Written Submission established a prima facie case that the DJAI Requirement is inconsistent with Articles XI:1 and X:3(a) of the GATT, as well as numerous provisions of the Import Licensing Agreement (ILA). Argentina responds with two arguments:  First, Argentina advances the factual argument that the DJAI Requirement is an "advance electronic information procedure" adopted in conformity with the WCO SAFE Framework standards and best practices. Second, Argentina advances the legal argument that the DJAI Requirement falls under Article VIII of the GATT, and therefore cannot fall under any of the other provisions of the GATT or the ILA that the Complainants have invoked. Neither of these two arguments is persuasive.

A.         The DJAI Requirement Is Designed and Functions as a Non-Automatic Import License Requirement

2.     The DJAI Requirement is designed and functions as a discretionary, non-automatic import licensing requirement, and its trade restrictive effects have been widely reported in the press. It is a general condition for the importation of goods into Argentina. Upon submission of a DJAI through Argentina's MARIA information system, no less than six Argentine government agencies have the opportunity to review and submit comments on the DJAI within 15 days. Nothing constrains their decision to comment, other than the laws providing their general agency-wide mandates (which do not address DJAIs specifically). Agency comments automatically trigger the indefinite suspension of DJAI approval, which amounts to an indefinite suspension of the right to import the good. The burden is on the importer to remedy the situation by attempting to persuade the relevant government agency to withdraw its comment, and there are no clear guidelines governing this process.

3.     Argentina does not contest any of these or most other facts on the record. Rather, Argentina seeks to shift the focus of the conversation to an issue that is essentially irrelevant: the WCO SAFE Framework. In truth, however, the SAFE Framework is an international set of guidelines to facilitate customs-to-customs cooperation in identifying and inspecting shipments that may pose national security risks. It has nothing to do with the problematic features of the DJAI Requirement, which is a far cry from the discretionary, trade-restrictive DJAI Requirement. Japan has no concerns with the WCO SAFE Framework itself.

B.         The DJAI Requirement Is Inconsistent with Argentina's Obligations under Article XI:1 GATT and the ILA

4.     Argentina argues that the DJAI Requirement is subject to Article VIII of the GATT and, therefore, cannot also be subject to Article XI:1. Argentina also argues that, to the extent that the DJAI Requirement is an import license requirement and quantitative restriction, Article XI:1 of the GATT does not apply – says Argentina – because the ILA is a lex specialis. However, an analysis of the WTO agreements confirms that Argentina's reading of the relevant provisions is fundamentally flawed.

5.     Under the text of Article XI:1, any prohibition or restriction on importation or exportation falls within the ambit of Article XI:1 unless it is a "duty, tax, or other charge[]". In other words, the only limitation or exception specifically contained in Article XI:1 is that they cannot be duties, taxes, or other charges. The DJAI Requirement is not a duty, it is not a tax, and it is not another type of charge, and therefore, by the plain language of Article XI:1 itself, it falls under Article XI:1 as long as it is a "prohibition[] or restriction[] … on the importation of any product or … the exportation or sale for export of any [such] product …". Therefore, it is subject to, and inconsistent with, the disciplines of Article XI:1.

6.     In addition, the DJAI Requirement is subject to the ILA. There are two criteria for determining whether a measure is subject to the ILA: (i) whether it is an administrative procedure for the operation of import licensing regimes, and (ii) whether it entails the submission of documentation to an administrative body, other than that required for customs purposes, as a prior condition for importation.  The DJAI Requirement satisfies both criteria.

7.     Furthermore, neither Article XI:1 nor the ILA contains any indication that the two are mutually exclusive, as Argentina incorrectly argues. Indeed, the text of the ILA itself contradicts this proposition. Argentina's interpretation is further undermined by the case law, and by its misunderstanding of the lex specialis principle. In fact, this principle is triggered where two laws conflict, but it need not be invoked otherwise. In this case, Article XI:1 and the ILA overlap but do not conflict, and therefore the lex specialis principle does not apply.

II.        ARGENTINA HAS FAILED TO REBUT JAPAN'S ARGUMENTS REGARDING THE RTRR

8.     Like the DJAI Requirement, the RTRR is also inconsistent with several provisions of the GATT. The RTRR requires economic operators to satisfy one or more of the following five conditions in order to obtain approval of imports:

(1)        exporting a certain value of goods from Argentina related to the value of imports;

(2)        limiting the volume of imports and/or reducing their price;

(3)        refraining from repatriating funds from Argentina to another country;

(4)        making or increasing investments in Argentina (including in production facilities); and/or

(5)        incorporating local content into domestically produced goods.

9.     To implement the RTRR, Argentina uses and has used a variety of different legal instruments, including not only DJAIs but also Certificados de Importación (CIs), another variety of non-automatic license that Argentina eliminated shortly before the establishment of this Panel,  as well as other legal and paralegal means. Argentina has applied the RTRR to major importers in several industries, including importers and manufacturers of automobiles, auto parts, motorcycles, agricultural machinery, retail apparel, books and other publishers, and the metallurgical industry.

10.   These requirements severely constrain the ability of importers to import goods into Argentina and create enormous uncertainty and unpredictability in the marketplace. The RTRR requirements, both on their own and collectively, operate as practical thresholds on the importer's ability to import. Moreover, through its local content and import substitution requirements in particular, the RTRR violates Article III:4 of the GATT as well.

11.   Rather than responding substantively to these arguments, Argentina accuses the Complainants of relying on two media sources, La Nación and El Clarín, whose owners and/or managers allegedly have an anti-government bias, engage in monopolistic practices, and have even been involved in "crimes against humanity." Argentina also accuses the Complainants of citing "quotes and statements intended to discredit and insult public officials of different ranks."

12.   To be clear, Japan does not have the "political intent" that Argentina imputes to it. The history of this dispute demonstrates that Japan's interest lies not in attacking the Argentine government, but in achieving a mutually acceptable solution involving the removal of Argentina's import restrictions – the DJAI Requirement and the RTRR. Furthermore, the two news sources that Argentina accuses of having an anti-government bias account for only 17 of these 734 exhibits provided by Japan. Moreover, the content of these news stories is corroborated by other evidence from domestic and international press reports and other types of evidence. Argentina has not contested the accuracy of any of this evidence thus far.

13.   Japan did, as Argentina observes, submit evidence that relates to the conduct of certain high-ranking officials. Japan believes that such evidence demonstrates and helps confirm the nature, structure, and overall design and objectives of the RTRR measure. Furthermore, such evidence confirms that the RTRR is authorized by the top levels of the Argentine government.

III.      ARTICLES X:1 AND X:3(A) GATT

14.   Japan's First Written Submission explains that Argentina has acted inconsistently with Articles X:1 and X:3(a) of the GATT through the imposition of the DJAI Requirement and the RTRR. These shortcomings point to a general lack of transparency that Argentina continues to exhibit through its arguments and litigation tactics in this dispute.

15.   With respect to the DJAI Requirement, the criteria for determining whether to comment on DJAI applications, and whether to withdraw such comments, are rules of general application, as they apply to all importers and all imported goods. Argentina has failed to publish these criteria, and therefore has acted inconsistently with Article X:1. In response, Argentina attempts to defend its failure to be transparent by its own lack of transparency, arguing that the criteria used to grant or deny DJAIs are in fact not "universal" but rather vary according to the "nature of the goods concerned and the agency's regulatory authority." Argentina fails to explain precisely what it has in mind in making this statement, but in any event it is Argentina's burden to identify any such facts and explain how they are supposedly relevant.

16.   Japan's First Written Submission also explains that the administration of the DJAI Requirement is inconsistent with Article X:3(a) both as such and as applied. Under the DJAI Requirement, Argentine government agencies have open-ended discretion to determine whether to approve or deny DJAI applications. Argentina responds by arguing that Japan's claims refer "to substantive rules" rather than "the administration of rules of general application." However, the Appellate Body has stated that the term "administration" as used in Article X:3(a) includes not only the act of administering the measures described in Article X:1, but also legal instruments that regulate the application or implementation of such measures. It also held that the features of an administrative process governing the application of laws and regulations described in Article X:1 may constitute relevant evidence for making a case under Article X:3(a). Accordingly, Japan's claims under Article X:3(a) properly target the legal instruments through which Argentina administers the DJAI Requirement, and the features of the administrative process governing the application of the DJAI Requirement.

17.   With respect to the RTRR, Japan's First Written Submission explains that Argentina's failure to publish the Requirements and the consequences for not satisfying them is inconsistent with Article X:1. Argentina has so far responded only with silence.

18.   Overall, Argentina's approach with respect to both the DJAI Requirement and the RTRR simply reconfirms and further emphasizes the very lack of transparency that is at the core of this dispute. Argentina meanwhile has not provided any contrary evidence as to RTRR. Argentina has not denied that it has made any of the requirements related to the RTRR to individual companies, neither has it denied that it has concluded agreements related to the RTRR with individual companies.

ANNEX B-6

second part of the executive summary of the arguments of japan

SECOND WRITTEN SUBMISSION

 

I.        INTRODUCTION

 

1.     The measures challenged in this dispute have transformed Argentina into one of the most difficult places for importers and other traders to operate. According to press reports, the DJAI Requirement and the RTRR have led to severe supply chain shortages, layoffs, and an endless sequence of agreements between the Argentine government and importers to offset imports with exports, investments, price-decreases, etc.

 

2.     A range of other domestic and international press reports all confirm that Argentina is restricting imports across the board by means of the DJAI Requirement – and to the extent that it deliberately lifts these restrictions, it is to reward compliance with the RTRR.

 

3.     The Complainants have submitted more than 750 exhibits, which go well beyond the evidentiary standard required to establish a prima facie case that the DJAI Requirement and the RTRR are WTO-inconsistent. Moreover, Argentina has so far decided not to attempt to rebut this body of evidence with additional evidence, nor has Argentina even denied its accuracy.

 

4.     One of the main themes in Argentina's defense is that it attempts to turn its own lack of transparency against the Complainants. In particular, Argentina faults the Complainants for not providing evidence that is in its sole possession. However, Argentina is the party that should provide this evidence to the Panel – and if it persists in its refusal to do so, then the Panel can infer that such evidence, if provided, would confirm the claims that Complainants have already substantiated through other evidence.

 

II.      SCOPE OF THE FINDINGS SOUGHT

 

5.     This dispute involves two measures: (i) the DJAI Requirement; and (ii) the Restrictive Trade Related Requirements (RTRR).

 

6.     Japan has previously stated that it is seeking separate as such and as applied findings that the RTRR is inconsistent with Articles III:4, X:1, and XI:1 of the GATT 1994. With respect to the DJAI Requirement, Japan is not seeking separate as such and as applied findings. Rather, Japan is seeking findings that the measure as such is inconsistent with Articles XI:1, X:3(a), and X:1 of the GATT 1994, and Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA.

 

7.     It is in the interest of an effective resolution of this dispute for the Panel to issue separate findings on each of these claims. If the Panel were only to address some claims but not others, this could hamper the Appellate Body's ability to complete the analysis on appeal and could jeopardize or be interpreted by Argentina to jeopardize Complainants' ability to ensure that Argentina complies with the DSB's eventual recommendations and rulings.

 

A.       Japan's Request for As Such and As Applied Findings with Respect to the RTRR

 

8.     Panels and the Appellate Body can make findings against measures as such, and such findings have important implications for a Member's obligations to ensure compliance with the DSB's recommendations and rulings. Japan specifically requests the Panel to issue three different sets of findings regarding the RTRR: (i) findings against the RTRR as an unwritten rule or norm as such; (ii) findings against the RTRR as an unwritten practice or policy, as confirmed by the systematic application of the measure; and (iii) findings against individual applications of the RTRR, as outlined in Japan's and the other Complainants' submissions.

 

B.       Japan's Request for Findings Against the DJAI Requirement

 

9.    Japan also requests that the Panel make findings that the DJAI Requirement as such is inconsistent with Articles XI:1, X:3(a), and X:1 of the GATT 1994, and Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA. Such findings would obligate Argentina to eliminate the requirement to obtain a DJAI in order to import goods into Argentina.

 

10.   It is important to issue recommendations and rulings with respect to both the RTRR and the DJAI Requirement, so as to create a clear compliance obligation for Argentina to both (i) allow companies to import freely, without having to offset imports through exports, domestic investment, import substitution, etc.; and (ii) to remove any elements of the DJAI Requirement that make it non-automatic and/or discretionary.

 

III.    EVIDENTIARY ISSUES

 

11.   Complainants' First Written Submissions established that the DJAI Requirement subjects imports to a non-automatic licensing procedure, in which multiple Argentine government authorities have open-ended discretion in delaying and/or denying DJAIs. In addition, the Complainants established that Argentina imposes the RTRR, a general and prospective measure, by concluding ad hoc agreements with individual economic operators, as a condition for them to import goods into Argentina. The Complainants have also established that the DJAI Requirement has trade-restrictive effects independent of the RTRR, and that the RTRR is implemented through tools other than the DJAI.

 

12.   All of these facts are further confirmed by Argentina's responses and non-responses to the Panel's questions. For example, Argentina's response to Question 23 indicates that nine Argentine government entities failed to identify whether (i) more than 9 entities may make observations in the DJAI procedure; (ii) the reasons why the 9 entities identified or any other Argentine government agencies may place an observation; (iii) the specific provision in the relevant legal instruments that explains the reasons for an observation to be filed by each of these entities; and (iv) the specific information required by these entities to lift an observation. Argentina has also failed to provide any substantive response to Questions 13-14, 16-18, and 26.

 

13.   In light of Argentina's refusal to provide the information requested by the Panel, the Panel may infer that the evidence submitted by the Complainants, and referred to in the Panel's questions, is entirely accurate, and would if submitted confirm the existence and general and prospective nature of the RTRR. The Panel may also infer that any information that is absent or is not clearly specified in Argentina's responses to the Panel's questions means that the information does not exist, and thus (i) more than 9 Argentine government entities may make observations in the DJAI procedure; (ii) the 9 entities identified, and any other Argentine government involved in the DJAI process, may place an observation for any reason whatsoever; (iii) there are no specific provisions in the relevant legal instruments that explains the reasons for an observation to be filed by each of these entities; and (iv) there is no limitation on the specific information required by these entities to lift an observation.

 

A.       Continued Application of the DJAI Requirement

 

14.   Argentina continues to apply the DJAI Requirement to restrict imports. For example, in an interview on 17 July 2013, Aquiles Guillermo Arús, an Argentine customs broker, described that approximately 30% of DJAIs overall are being approved, and all sectors of the economy are affected. Importers state that the DJAI Requirement is part of the Argentine government's broader policy of import substitution, which previously was implemented through the CI Requirement.

 

B.       Continued Application of the RTRR

 

15.   Argentina has also continued applying the RTRR in an effort to promote its policies of balancing trade deficits and import substitution. For example, in September, Secretary of Internal Commerce Guillermo Moreno began denying DJAIs for imports of agrochemicals and raw materials for processing them. Also, within the past year and a half, Secretary Moreno has asked executives in the agrochemical business to submit plans to offset their imports. In addition, the Argentine government has continued pursuing its policy of import substitution in the hydrocarbon exploration and refining sector and the automobiles and auto parts sectors.

 

C.       Burden of Proof and Possession of Relevant Government Documents

 

16.   A key issue in this dispute is which party has the burden to provide the documents that are responsive to the Panel's Questions 16-19 and 26. These documents corroborate other evidence already before the Panel showing the content of the RTRR, its attribution to the government of Argentina, and its general and prospective nature.

 

17.   The Appellate Body has recognized that when one party has relevant evidence in its sole possession, the burden to provide that evidence must fall to that party. In this particular dispute, the information requested by the Panel is either in the sole possession of Argentina or, where it is not, Complainants have already diligently exhausted all means to acquire it and provide it to the Panel. Complainants have also demonstrated that there is a legitimate limit to information that they are able to provide, because individual economic operators have a legitimate concern about retaliation at the hands of the Argentine government. Such information is of the type that "a party cannot reasonably be expected" to adduce.

 

18.   Argentina has failed to provide the requested information, but has not identified any justifiable cause. It is clear that Argentina does have direct possession of the information and does not have, nor has it claimed to have, any legitimate excuse not to provide it. It is thus Argentina's burden to provide the information – and its failure to do so only confirms the Complainants' prima facie case.

 

IV.      ARGENTINA HAS FAILED TO REBUT JAPAN'S PRIMA FACIE CASE AGAINST THE DJAI REQUIREMENT

 

19.   In its First Written Submission, Japan established a prima facie case that the DJAI Requirement was inconsistent with Articles XI:1, X:3(a), and X:1 of the GATT 1994, and that Argentina administers the DJAI Requirement in a manner that is inconsistent with Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA. The DJAI functions as a non-automatic, highly discretionary license requirement that restricts importation. Therefore, it is per se inconsistent with Article XI:1 of the GATT 1994.

 

20.   Argentina does not attempt to argue that the DJAI Requirement satisfies the requirements of Article XI:1 of the GATT 1994 or of the ILA. Rather, Argentina argues that customs formalities are subject only to the disciplines of Article VIII of the GATT 1994. However, Argentina's arguments fail to demonstrate that the DJAI Requirement is WTO-consistent.

 

A.       The DJAI Requirement is Subject to – and Inconsistent With – Article XI:1 of the GATT 1994

 

21.   The DJAI Requirement is inconsistent with Article XI for two reasons: (i) it functions as a discretionary, non-automatic import license requirement, and (ii) it inherently creates open-ended discretion and uncertainty in the DJAI process, which not only leads to a denial of DJAI applications but also deters importers from applying at all.

 

22.   Argentina attempts three counterarguments: (i) that Japan's argument would improperly allocate the burden of proof; (ii) that Article VIII shields the DJAI from review under Article XI, and (iii) that the DJAI Requirement is exempt from Article XI because it is a licensing procedure. However, all three attempted counterarguments fail.

 

1.    It is Argentina's burden to establish any Article XX defense that it might invoke – not the Complainants' burden to establish that no such defense applies

 

23.   Japan challenges the DJAI, which is an open-ended, discretionary, non-automatic import licensing procedure. If a Member imposes an import formality or requirement that constitutes a "non-automatic licensing requirement" or otherwise restricts imports, such a measure is inconsistent with Article XI:1. At that point, the Responding Member will bear the burden of establishing any affirmative defense, including under Article XX(d).

 

24.   In this case, given that the DJAI Requirement violates Article XI, it is Argentina's burden to establish that it is nonetheless GATT-consistent by invoking an affirmative defense. Furthermore, the Complainants have established a prima facie case that the DJAI Requirement violates Article XI:1 of the GATT 1994. Therefore, it is up to Argentina to invoke any affirmative defense and bear the burden to establish a prima facie defense in that respect. Argentina has not done so, and indeed has not even invoked Article XX. Therefore, Argentina fails to rebut Japan's prima facie case that the DJAI Requirement is inconsistent with Article XI:1.

 

2.    Article VIII does not shield the DJAI Requirement from review under Article XI:1

 

25.  Argentina argues that Articles XI:1 and VIII are mutually exclusive, with customs formalities falling under Article VIII. Argentina argues further that the DJAI Requirement is a customs formality, so it falls under Article VIII rather than Article XI:1. However, these assertions are wrong, as is evident from the text of these two provisions, as well as evidence regarding the nature of the DJAI Requirement.

 

a.     Articles XI:1 and VIII are not mutually exclusive.

 

26.   The text of Articles XI and VIII shows that they in fact have overlapping coverage. Article XI:1 is very broad in scope, providing for a general ban on import or export restrictions "other than duties, taxes, or other charges". This ban specifically covers not only "quotas" but also "import [and] export licenses" – two terms to which the text of Article XI:1 specifically refers. Moreover, the inclusion of the term "other measures" means that, under the text of Article XI:1, any prohibition or restriction on importation or exportation falls within the ambit of Article XI:1 unless it is a "duty, tax, or other charge[]".

 

27.   Argentina argues that customs formalities are a priori excluded from the scope of Article XI:1. Such an interpretation has no basis in the treaty text, which does not distinguish between substantive rules and procedures. It would also lead to a dangerous imbalance between the GATT's treatment of "fees and charges" connected with importation and exportation on the one hand, and its treatment of "formalities and requirements" connected with importation and exportation on the other.

 

b.     Even if Articles VIII and XI were mutually exclusive, the DJAI Requirement would fall under Article XI, because – contrary to Argentina's assertions – it is not a customs formality

 

28.   Argentina is wrong to characterize the challenged measure as a customs formality. Argentina's argument starts from the false premise that the challenged measure is the "DJAI procedure," as opposed to the DJAI Requirement. However, the Complainants' Panel Requests identify the DJAI Requirement as the challenged measure, and the Panel's terms of reference are defined accordingly.

 

29.   Argentina's invocation of the WCO SAFE Framework ("SAFE") only shows how far removed the DJAI Requirement is from customs formalities. Whereas SAFE provides for automated, security-based screening mechanisms of international cargo shipments, DJAIs are granted on a non-automatic, discretionary basis, at the whims of six or more government agencies. Whereas SAFE provides for inspection of potentially risky cargo in the least intrusive manner possible, the DJAI Requirement uses the bluntest, most trade-restrictive approach. Therefore, even if, as a legal matter, customs formalities fall under Article VIII but not Article XI – which is incorrect – this would be irrelevant, because the DJAI Requirement is not a customs formality, but rather a tool for administering Argentina's policy of restricting imports, trade balancing, and import substitution, both in and of itself, and also in support of and through the RTRR.

 

3.    There is no exemption from Article XI for import licensing procedures

 

30.   Argentina argues in the alternative that if the DJAI Requirement is not a mere customs formality, then it is a licensing procedure rather than a substantive rule restricting importation. Furthermore, Argentina argues that Article XI:1 does not apply to such procedures, by virtue of the lex specialis principle and the ILA. However, Argentina's syllogism relies on two false premises: (i) that the Article XI:1 analysis should be driven by Argentina's proposed rule/procedure distinction; and (ii) that the ILA and the GATT 1994 conflict. Accordingly, Argentina's argument in the alternative fails.

 

B.       The DJAI Requirement is Subject to – and Inconsistent with – the ILA

 

31.   Japan made a prima facie case that the DJAI Requirement is inconsistent with multiple provisions of the ILA. In response, Argentina has not mounted any specific arguments or defenses under any of the specific provisions of the ILA that Japan and the other Complainants have invoked. Rather, Argentina argues that the DJAI Requirement is not subject to the ILA, because it is not a license requirement. However, this argument is incorrect.

 

1.    The DJAI Requirement Is an Import Licensing Procedure Subject to the Import Licensing Agreement

 

32.   There are two criteria for determining whether a measure is subject to the ILA: (i) whether it is an administrative procedure for the operation of import licensing regimes, or a similar administrative procedure, and (ii) whether it entails the submission of documentation to an administrative body, other than that required for customs purposes, as a prior condition for importation. The DJAI satisfies both criteria, and thus is subject to the ILA.

 

2.    Argentina's reliance on Turkey – Rice is misplaced

 

33.   Argentina attempts to argue that Turkey – Rice shows that the DJAI Requirement is not an import license requirement. In fact, however, Turkey – Rice indicates that a measure's structure, design, and operation determine whether it is, or is similar to, an administrative procedure for the operation of import licensing regimes. In this case, the DJAI Requirement is an import license requirement by virtue of its structure, design, and operation – and thus Turkey – Rice in fact confirms the Complainants' claims against the DJAI Requirement.

 

3.    The DJAI Requirement is not for customs purposes

 

34.   Argentina argues that the DJAI Requirement is for customs purposes. However, Argentina's responses to the Panel's questions indicate that each DJAI is subject to observation by at least eight Argentine government-related agencies, for reasons unrelated to customs. Argentina also fails to articulate a coherent account of what customs-related purpose the DJAI supposedly serves. Accordingly, Argentina's own responses to the Panel's questions contradict its argument that the DJAI Requirement is for customs purposes.

 

C.       The DJAI Requirement is Subject to – and Inconsistent with – Article X:1 of the GATT 1994

 

35.   Japan established a prima facie case that the DJAI Requirement is inconsistent with Article X:1, because the criteria governing whether agencies comment on DJAI applications, and whether they withdraw such comments, are rules of general application, and Argentina has not published them. In response, Argentina argues that it published the statutory authority for the DJAI Requirement. However, this is insufficient to satisfy the requirements of Article X:1. Accordingly, Argentina's argument fails.

 

D.       The DJAI Requirement is Subject to – and Inconsistent with – Article X:3 of the GATT 1994

 

36.   Japan also made a prima facie case that the administration of the DJAI Requirement is inconsistent with Article X:3(a). Under the DJAI Requirement, Argentine government agencies have open-ended discretion to determine whether to approve or deny DJAI applications. Once an agency merely comments upon a DJAI, the importation is halted indefinitely, until the importer persuades the agency/-ies involved to remove the comments. This process is inherently non-uniform, partial, and unreasonable, contrary to Argentina's obligations under Article X:3. Argentina simply fails to engage with these points, and accordingly, it fails to rebut Japan's prima facie case.

 

V.       ARGENTINA HAS FAILED TO REBUT JAPAN'S PRIMA FACIE CASE AGAINST THE RTRR.

 

A.       Japan Has Established a Prima Facie Case that the RTRR is Inconsistent with Articles III:4, X:1, and XI:1 of the GATT 1994, Both As Such and As Applied

 

37.   Japan and the co-Complainants have submitted over 750 exhibits illustrating the substantive content of the RTRR, as well as examples of instances where it has been applied. Japan also demonstrated that these instances of the RTRR's application are instances of systematic application of a broader measure that applies both generally and prospectively. In particular, the RTRR applies generally in the sense that it is not applied in particular instances only, but with respect to companies across sectors, over a substantial period of time. In addition, Japan has demonstrated that the RTRR applies prospectively, i.e., on an ongoing basis since 2009.

 

38.   Previous panels have recognized that measures with general and prospective application may be WTO-inconsistent as such, even if they are de facto and/or unwritten measures. They have also recognized that de facto policies or practices may constitute violations of WTO provisions, on either an as such or as applied basis. In this case, there is a repeated pattern of imposing a range of import-restrictive requirements, the RTRR. Thus, the RTRR is challengeable as such and as applied as a de facto or unwritten practice or policy.

 

B.       Argentina Fails to Undermine Japan's Prima Facie Case That the RTRR is WTO-Inconsistent, Both As Such and As Applied.

 

39.   Argentina does not actually contest or deny most of the evidence as to the actual operation of the RTRR. When the Panel gave Argentina the opportunity to comment on the instances of the RTRR's application, Argentina did not deny that any of them had occurred, nor did it provide evidence to rebut them. When the Panel asked Argentina for copies of agreements with individual economic operators pursuant to the RTRR, as well as other information identified in Questions 16‑18 and 26, Argentina did not deny that the requested information exists.

 

40.   Furthermore, the evidence fully supports the proposition that the RTRR exists, that it has the precise content that Complainants articulated in their Panel Requests, that it has a general and prospective character, and that it can be attributed to the government of Argentina.

 

41.   Argentina argues that the Complainants have not defined the RTRR sufficiently clearly. Argentina also questions the credibility of a limited set of evidence demonstrating ten particular instances of the RTRR's application. However, these arguments are incorrect and, in any event, fail to undermine Japan's and the other Complainants' claims.

 

1.    Argentina fails to establish that the Complainants have not defined the RTRR with sufficient precision

 

42.   Argentina argues that the Complainants have defined the RTRR in such a way that it "include[s] virtually any aspect of [Argentina's] economic policies."  However, there is no support for this assertion. Japan's response to Question 10 already clarified that Japan is not challenging Argentina's overall economic policies. Rather, Japan is challenging the RTRR itself (as well as the DJAI Requirement).

 

43.   Moreover, there is no legal support for Argentina's position that an unwritten measure must be defined with perfect precision in order to be subject to a WTO legal challenge. Indeed, the Appellate Body has made clear that complainants challenging an unwritten or de facto measure are not required to specify its "precise contours" in ways that are necessarily the same as one might expect for a written, de jure measure.

 

2.    Argentina's Attacks on the Credibility of Evidence Fail – and Would in Any Event be Insufficient to Undermine Complainants' Prima Facie Case.

 

44.   In its efforts to undermine the evidence, Argentina has accused Complainants of forming a "coalition of world powers against the Argentine Republic" with "political objectives" rather than a "trade interest". It insinuated several times that Complainants "waived" "crimes against humanity". It has dismissed one exhibit as "a worthless piece of evidence, which can be characterized as a legal puppet[]". Yet, despite all this rhetoric, Argentina has not pointed to any specific inaccuracy in the factual statements submitted by the Complainants, nor has it identified any inaccuracies in the underlying exhibits, let alone provided any evidence to the contrary.

 

a.     EU-14 (Question 13)

 

45.   The evidence that Argentina described as "worthless legal puppet" is Exhibit EU-14, an affidavit signed by a notary public, Richard Rodriguez, who practices in Geneva, Switzerland. Exhibit EU-14 identifies the name of the declarant, the eight documents presented to him, and it notes that Argentine government officials signed all eight documents. Nothing about the notary certification appears on its face to be "inappropriate", as Argentina incorrectly asserts, nor does Argentina identify any specific defect. Accordingly, Argentina fails to establish that there are actually any flaws in Exhibit EU-14.

 

46.   Furthermore, Argentina does not deny the accuracy of the information in the affidavit, nor does it deny that the underlying agreements exist. At the very least, this confirms that the description of the documents in the affidavit matches others with which Argentina is familiar.

 

b.     JE-306 and JE-307 (Question 14)

 

47.   Argentina also attempted to cast doubt on the credibility of Exhibits JE-306 and JE-307, two affidavits submitted by employees of U.S. companies. Argentina did not identify any specific flaws with the documents, but rather speculated about the way that notarized documents in general could be inaccurate. Argentina also did not deny the accuracy of the information in these two exhibits. Therefore, at the very least, Argentina's response to Question 14 in fact confirms that employees working on behalf of Secretary Moreno and the Argentine government have reached out to foreign companies and their Argentine branches to have discussions similar to those described in the affidavits of Company X and Company Y.

 

c.     Press reports (Question 42)

 

48.   Previously, Argentina criticized the Complainants for including press reports published by La Nación and El Clarín as 17 of 734 exhibits supporting their First Written Submissions. Now, in its written responses to the Panel's Questions, Argentina implicitly acknowledges that most of the press reports cited by the Complainants do not have any connection to these two newspapers. However, Argentina belatedly made the much more sweeping argument that "none of the journalistic material [submitted by Complainants to support their demonstration of the existence of the RTRR], regardless of its source, can be considered to have any probative value."

 

49.   Argentina does not cite any legal basis for this extreme assertion – and indeed, panels have been inclined to accept the information provided by newspapers, and especially in cases like the present one, where the respondent did not challenge the truth of the facts reported by those newspapers. Furthermore, in this particular case, there is other evidence confirming the accuracy of the press reports. Accordingly, Argentina's argument fails.

 

C.       Japan's As Applied Claims Against the RTRR are Within the Scope of This Dispute, Contrary to Argentina's Assertions.

 

50.   Previously, Argentina argued that Japan's claims against the RTRR were outside the scope of the dispute because they were not identified in Japan's Consultation Request. The Panel rejected this argument, finding that "The so-called ‘Restrictive Trade Related Requirements' (RTRRs) were identified by the complainants as a measure at issue in their respective requests for consultations; therefore, the inclusion of the RTRRs in their panel requests is not inappropriate and these measures are within the Panel's terms of reference[]". However, Argentina continues to argue that Japan's as applied claims against the RTRR are outside the scope of the dispute.

 

51.   There is no basis for Argentina to persist in arguing that Japan's Consultation Request was somehow defective. The Panel has already found that the Consultation Request properly identified the RTRR as a measure subject to consultations. There is no legal requirement that requests for consultations specify whether a measure is being challenged on an as such or an as applied basis. Because Japan's Consultation Request identified the RTRR, and Japan's Panel Request did not expand the scope of the dispute by challenging the RTRR on an as applied (as well as an as such) basis, Japan's as applied claim against the RTRR (as well as its as such claim against the RTRR) is properly within the scope of this dispute.

 

VI.      CONCLUSION

 

52.   Argentina fails to point to any evidence that would undermine Complainants' legal claims. In most instances, Argentina has not even tried to rebut Complainants' claims on their merits. It has not denied the existence of the RTRR or the basic facts underlying the Complainants' DJAI-related claims.

 

53.   Japan continues to respectfully request that the Panel find that the DJAI Requirement is inconsistent, both as such and as applied, with Articles XI:1, X:3(a) and X:1 of the GATT 1994, and Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA, and that the RTRR is inconsistent, both as such and as applied, with Articles XI:1, III:4, and X:1 of the GATT 1994.

 

ORAL STATEMENT AT THE SECOND SUBSTANTIVE MEETING

 

I.        INTRODUCTION

 

1.     Japan will first review the evidence thus far provided by the Complainants and, to a much lesser extent, the Respondent. Next, Japan will discuss compliance-related issues. Finally, Japan will turn to the DJAI Requirement, emphasizing again why separate findings are important, and demonstrating why each of Argentina's attempted rebuttal arguments fails.

 

II.      PRIMA FACIE BURDEN AND EVIDENTIARY ISSUES RAISED BY THIS DISPUTE

 

2.     Argentina has thus far failed to even try to rebut many of the core facts at issue in this dispute. The Panel asked Argentina a series of questions, including Questions 13-14, 16-18, 23, and 26. Argentina again responded by not responding. The Panel noted Argentina's non-responsiveness in its communication to the Parties of 6 November 2013.

 

3.     The Panel then again instructed Argentina to provide responses to Questions 13-14, 16-18, 23, and 26 in its Second Written Submission. Argentina once again demurred and its Second Written Submission failed to respond to the Panel's questions for a third time.

 

4.     The Panel has issued two preliminary rulings rejecting Argentina's procedural objections to Japan's claims against the RTRR. If Argentina continues in its refusal to cooperate, then Japan considers it would be reasonable to interpret such a failure to cooperate as further confirmation of the extensive prima facie evidence provided by complainants. With respect to the DJAI Requirement, the Panel can then infer from Argentina's failure to respond that there are no relevant limitations on the reasons why each of the government entities participating in the DJAI system may place observations; and there are no specific provisions in any legal instruments explaining the reasons for an observation, or the information required to lift it.

 

III.    DEFINITION OF THE RTRR MEASURE AND SPECIFIC REQUEST FOR SEPARATE FINDINGS ON EACH OF JAPAN'S THREE TYPES OF RTRR CLAIMS

 

5.     Japan has made a specific request for findings on each of three separate types of RTRR claims that it has raised: (i) as such; (ii) a broader as applied finding, and (iii) findings with respect to each instances of the RTRR's application. Japan reiterates that it has established a prima facie case with respect to each.

 

A.       Definition of the RTRR Measure

 

6.     Japan defined the RTRR in its Panel Request and First Written Submission as an Argentine government measure requiring economic operators to undertake certain actions with a view to pursuing Argentina's stated policy objectives of elimination of trade balance deficits and import substitution. Japan identified the five types of actions Argentina requires as a prior condition for permission to imports.

 

7.     Japan's Panel Request also noted that the requirements comprising the RTRR are not themselves stipulated in any published law or regulation. Thus, the RTRR is itself "unwritten", and Argentina has failed to "published [it] promptly in such a manner as to enable governments and traders to become acquainted with [it]."  By the same token, however, Argentine government writings explicitly describe the "one-to-one" requirement, which is one element of the RTRR, and a range of other evidence confirms the same thing. It would be systemically harmful if a WTO Member were able to hide behind the lack of transparency of its own legal system in order to defend against the kinds of claims at issue in this dispute, particularly because that very lack of transparency is part of the problem at hand.

 

B.       Japan Has Established a Prima Facie Case That the RTRR is WTO-Inconsistent As Such

 

8.     Japan requests that the Panel find that the RTRR, as such, is inconsistent with Argentina's obligations under Articles XI:1, III:4, and X:1 of the GATT 1994. This type of finding would indicate that the RTRR as a whole is inconsistent with WTO law. Accordingly, as such findings would require that for compliance, Argentina withdraw the RTRR as a whole, and cease any instances of its application by Argentina including those might occur in the future.

 

9.     Argentina has contested whether the Complainants have identified the RTRR with sufficient precision. Japan recalls its observations about the appropriate definition of the measure at issue, the very intransparency, arbitrariness and lack of a formal, written basis that characterize it, and the implications this has for Complainants' obligations to define the measure as precisely as possible. Japan also recalls the Appellate Body's findings in US – Zeroing (EC) recognizing the uncertainty as to the content of unwritten measures. And Japan notes, finally, the Panel's second preliminary ruling, which found that the Complainants "have identified the alleged RTRRs in a ‘sufficiently precise' manner so as to ‘present the problem clearly'". The second preliminary ruling also found that Japan's definition of the RTRR does not prejudice Argentina's ability to defend itself. These preliminary findings should put to rest Argentina's arguments about the Complainants' identification of the RTRR.

 

10.   Argentina also contests whether the Complainants have established the general and prospective nature of the RTRR. However, the Complainants' Second Written Submissions demonstrated that there is ample evidence showing the general and prospective nature of the RTRR. In particular, the measure is general, in the sense that Argentina could apply it across all sectors of the Argentine economy. The RTRR has applied prospectively, i.e., on an ongoing basis since 2009 and continuing into the future.

 

11.   Finally, the absence of specific RTRR-related agreements from the record does not detract from the Complainants' prima facie case of as such inconsistency. If anything, Argentina's unwillingness to provide them can be interpreted as further confirmation of the Complainants' prima facie case.

 

12.   A panel's determination as to whether the prima facie threshold has been met should be informed, inter alia, by what it is reasonable for the complainants to provide, in light of the particular circumstances of a dispute. Argentina has sole possession of the specific RTRR-related agreements and there are real impediments for the Complainants to provide any further information. Complainants have "diligently exhausted" all other possible ways to substantiate the content and purpose of these agreements. Accordingly, Japan and the other Complainants have established that the RTRR is as such inconsistent with Articles XI:1, III:4 and X:1 of the GATT 1994, and Argentina has not rebutted this argument.

 

C.       Japan Has Established That the Systematic Application of the RTRR Is WTO-Inconsistent

 

13.   Japan also asks the Panel to make as applied findings regarding the RTRR's application collectively. This type of finding would indicate that application of the RTRR has been and continues to be inconsistent with Argentina's obligations under Articles XI:1, III:4, and X:1 of the GATT 1994, including those instances that the Complainants have not specifically identified and including any future application of the RTRR.

 

14.   The unwritten or de facto character of Argentina's RTRR should not prevent the Panel from making findings against the systematic application of the RTRR. Argentina does not allege that any instances of the RTRR's application are consistent with Articles XI:1, III:4, and X:1 of the GATT 1994. The evidence supporting Japan's as such claim, and to the extent necessary for an as applied claim such as the one raised by Japan in this dispute, also supports this broad as applied claim.

 

D.       The Individual Instances of the RTRR's Application Including Those Identified by Japan and the Other Complainants Are WTO-Inconsistent

 

15.   Japan also asks the Panel to find that each and every instance of the RTRR's application is inconsistent as applied with the various legal provisions identified in Japan's Panel Request. Argentina has not attempted to rebut these claims with regard to individual instances of the RTRR's application.

 

E.        The Interrelationship Between the Three Types of Findings Regarding the RTRR

 

16.   Having each of the three types of findings requested by Japan would ensure that the Panel's findings collectively have the broadest possible coverage, and leave as little room as possible for Argentina to attempt to implement its compliance obligations in a manner that would continue to nullify or impair benefits accruing to Japan under the covered agreements. In addition, the three types of findings would ensure that the Panel develops its factual and legal findings to the maximum extent possible, which could be important in the event of an appeal. Thus, even though the requested findings would overlap, they are required to fully resolve this dispute. Japan reiterates its request that the Panel make separate findings on each.

 

IV.      FINDINGS REQUESTED WITH REGARD TO THE DJAI REQUIREMENT AND ARGENTINA'S FAILURE TO REBUT JAPAN'S CLAIMS

 

A.       Japan's Requested Findings With Respect to the DJAI Requirement

 

17.   Japan requests as such findings with respect to the DJAI Requirement. Such findings would obligate Argentina to eliminate the requirement to obtain a DJAI in order to import goods into Argentina. Japan is not requesting separate as applied findings for the DJAI Requirement.

 

18.   In some instances Argentina uses the DJAI Requirement as a tool for implementing the RTRR, but this is not always the case. They are separate measures and independent of each other.

 

B.       Argentina Has Failed to Rebut Japan's Argument with Respect to the DJAI Requirement.

 

19.   Argentina has either not rebutted or failed to rebut Japan's and the other Complainants' arguments with respect to the DJAI Requirement. Japan will address some of Argentina's most recent statements and submissions in particular.

 

20.   First, the DJAI functions like a non-automatic import license requirement, which a certain number of Argentine government entities have the power to deny.

 

21.   Second, Argentina has failed to articulate a coherent explanation of the customs purpose that the DJAI Requirement supposedly serves.

 

22.   Third, the DJAI Requirement is not a conformity assessment procedure aimed at ensuring compliance with Argentina's domestic regulations in other areas. Indeed, if it were, then Argentina would presumably need to impose a parallel DJAI-like scheme for domestic goods. Argentina does not even argue that it has done so.

 

23.   Fourth, the DJAI Requirement is not a mere formality. Rather, it is a non-automatic, discretionary, often arbitrary system for allocating the right to import, which is, if anything, the very opposite of a mere customs "formality".

 

24.   Fifth, the DJAI Requirement does not implement the SAFE Framework, as recently confirmed by the WCO's 2 December 2013 letter to the Panel.

 

25.   Sixth, in its Second Written Submission, Argentina attempted to demonstrate that the DJAI Requirement does not have trade effects. As a legal matter, this argument is irrelevant. Article XI:1 is designed to protect the competitive opportunities of foreign products – not to guarantee actual trade results. Moreover, as an empirical matter, it is false that the DJAI has not restricted imports.

26.   Thus, all of Argentina's attempted arguments fail.

 

C.       The DJAI Requirement Is Inconsistent with Article XI:1 of the GATT 1994

 

27.   Given that the DJAI Requirement is a non-automatic, highly discretionary import licensing requirement, the analysis under Article XI:1 is relatively straightforward. The text states that "No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any [Member] on the importation of any product". The DJAI Requirement restricts imports by making the right to import conditional on obtaining a DJAI. Furthermore, the DJAI Requirement is not a duty, tax, or other charge. Accordingly, the DJAI Requirement is prohibited by Article XI:1.

 

1.    Article XI:1 is not limited to quantitative restrictions expressed in numerical terms

 

28.   According to Argentina, a measure is only a "restriction . . . on importation" within the meaning of Article XI:1 if it is "expressed in terms of quantity or that are quantifiable in nature." Argentina acknowledges that this interpretation is inconsistent with the panel reports in India – Quantitative Restrictions, India – Autos, and Colombia – Ports of Entry.

 

29.   Argentina's interpretation is also contradicted by the text of Article XI. If Article XI only covered quantitative restrictions "expressed in terms of quantity or that are quantifiable in nature", then the phrase "duties, taxes or other charges" would have been superfluous.

 

30.   Argentina's argument is also not supported by Appellate Body's statements in China – Raw Materials. In particular, the (quantitative) "limiting effect" discussed by the Appellate Body can flow either from a numerical restriction on imports, or from a measure which has a restrictive or limiting effect on importation. The DJAI Requirement fails in the latter category, and thus is inconsistent with Article XI.

 

2.    The trade facilitation negotiations do not indicate that Article VIII shields the DJAI Requirement from the disciplines of Article XI:1

 

31.   Argentina also argues that the recent multilateral negotiations over a possible trade facilitation agreement support its argument that Article VIII circumscribes Article XI. Because the text that Argentina refers to was under negotiation as of the establishment of the Panel, it cannot be taken into consideration. Moreover, contrary to Argentina's arguments, there is nothing in the negotiating text that is inconsistent with Japan's interpretation. Thus, Argentina's arguments regarding the trade facilitation negotiations also fail.

 

D.       Argentina Administers the DJAI Requirement in a Manner That Is Inconsistent with Its Obligations under Articles 1.3, 1.4(a), 1.6, 3.2, 3.3, 3.5(f), 5.1, 5.2, 5.3, and 5.4 of the ILA.

 

32.   Argentina's Second Written Submission does not discuss Japan's ten claims under the ILA in any meaningful way. Japan reiterates its request that the Panel issue specific findings on each of its claims under the ILA.

 

V.       CONCLUSION

 

33.  Argentina's overall approach in this dispute has been to avoid engaging with the facts and evidence before the Panel, and instead to resort to distractions. The real issue in this dispute is that Argentina's policies are fundamentally trade-distortive and raise deep commercial, economic and indeed, even systemic trade concerns – for example about the degree to which a WTO Member's own intransparency can shield it from WTO legal disciplines and how best to deal with unwritten measures and de facto policies in terms of a Panel's findings and the implications these will have for the compliance phase. In the context of the EC – Approval and Marketing of Biotech Products dispute, Argentina urged the Panel to take a strict line on these issues, and to interpret the law in a manner that would not permit circumvention in the future. Japan wishes to echo these same concerns in this dispute.

 

 

 

ANNEX B-7

first part of the executive summary of the arguments of Argentina^*

I.     Introduction

1.     The complainants in this dispute have advanced claims in respect of: (1) the Advance Sworn Import Declaration (Declaración Jurada Anticipada de Importación – DJAI), a customs formality that Argentina has established in accordance with Article VIII of the GATT 1994 to implement the SAFE Framework of Standards to Secure and Facilitate Global Trade ("SAFE Framework") adopted by the World Customs Organization (WCO); and (2) the alleged "restrictive trade‑related requirements" (RTRRs). As the complainants have failed to establish a prima facie case of inconsistency, either in respect of the DJAI procedure or in respect of the alleged RTRRs, Argentina respectfully requests that the Panel reject the claims of the complainants in their entirety.

2.     In respect of the DJAI procedure, the complainants have wrongly interpreted the relevant legal provisions and have brought claims under multiple provisions of different covered agreements without clearly distinguishing between the measures, claims and evidence relevant to each. Moreover, the complainants have failed to meet their burden of proof with regard to showing that the DJAI procedure has trade‑restricting effects on imports which are separate and distinct from the trade‑restricting effects that they seek to attribute to the alleged RTRRs.

3.     In relation to the alleged RTRRs, the complainants have failed to prove the existence of an unwritten "overarching" measure of general and prospective application. Instead, they have opted simply to ignore the relevant legal standard applicable to their claims.

II.     Argentina Objects to the Politically Motivated Arguments of the Complainants and their Disdainful/Disparaging Tone

4.     The Argentine Republic is a founding Member of the World Trade Organization (WTO), its actions comply with the principles and commitments arising from its capacity as a Member and it actively participates in all of the Organization's bodies, as has been stressed on several occasions by other Members of the WTO. In the present dispute, Argentina has participated fully in the consultation process and has addressed the concerns expressed by third party Members.

5.     In spite of this, the complainants continue to misrepresent Argentina's trade policy and business environment and set forth their claims in a politically hostile and offensive tone while disparaging Argentina's good faith participation in the WTO. This insulting attitude and the political motivations behind it go far beyond the limits of a complaint submitted under the WTO's Dispute Settlement Understanding.

6.     Furthermore, much of the evidence adduced by the complainants is tendentious, unfounded, inadmissible and irrelevant for the interpretation of the measures at issue. Accordingly, all the documentary evidence on which the complainants seek to base their claims should be rejected and removed from the case file.

III.   The Panel should take into Consideration Argentina's Economic/Trade Performance, its Development Model and its Bilateral Trade Relationship with the Complaining Countries

7.     The absence from the complainants' written submissions of any mention of objectively verifiable data on Argentina's international trade amounts to a significant concealment. The data on Argentina's international trade reveal the growing openness of the Argentine economy and the increase in its imports, including in bilateral trade with the European Union, the United States and Japan. Given this trade information, the argument that the Argentine Republic is seeking to prevent trade deficits by promoting exports and limiting imports is untenable and does not stand up to the slightest logical analysis.

8.     The reality is that, since 2003, Argentina has pursued a macroeconomic policy based on the growth of foreign demand and the domestic market, supported by strong industrial and productive development; a dynamic trade policy; and an income policy that promotes social inclusion.

9.     The significant increase in imports is objective proof that Argentina is not restricting its external purchases. The complainants have yet to show how a country can increase its openness coefficient and its imports, above and beyond comparable benchmarks, while at the same time restricting international trade.

10.   In fact, the Argentine Republic has increased its imports from all sources by more than those of the complaining Members and by more than the global average. Moreover, the increase in its imports from the complaining Members has been as much as four times greater than the increase in its exports to those Members.

11.   In view of the economic and commercial realities, the complainants' allegations are particularly damaging for Argentina and other developing countries, since the present dispute is one in which three developed country Members have brought a case against an emerging country. It would appear that the complainants have filed their claims as a warning to developing countries that dare to decide their own policies and take measures independently of those dictated by the developed countries.

IV.     The Complainants have Failed to Establish a Prima Facie Case of Inconsistency in Respect of the DJAI Procedure

A.      The complainants have not accepted the operation of the covered agreements and the distinction between substantive rules and procedures in relation to their claims in respect of the DJAI procedure

12.   The complainants have based their case on a misunderstanding of the relevant provisions in relation to the DJAI procedure.

13.   The covered agreements draw a sharp distinction between prohibitions and restrictions on imports, on the one hand, and the administrative procedures, formalities, and requirements in connection with importation, including those by which such prohibitions and restrictions are implemented, on the other. This is a distinction between the substantive rules that determine whether imports are permitted into the territory of a Member (and in what amounts) versus the procedures that are used to implement those substantive rules.

14.   Broadly speaking, Article VIII of the GATT governs formalities or requirements imposed in connection with importation, while Article XI of the GATT governs substantive rules of importation that give rise to a quantitative restriction on imports. To the extent that a formality or requirement imposed in connection with importation constitutes an import licensing procedure, other than an import procedure required for customs purposes, this procedure is governed by the Agreement on Import Licensing Procedures (ILP Agreement) as lex specialis relative to the more general provisions of Article VIII and Article XI.

15.   Another difference between these provisions of the covered agreements is that they are quite different in terms of the disciplines that they impose upon a Member's conduct. To the extent that a particular rule of importation constitutes a quantitative restriction or prohibition on imports, it is prohibited altogether by Article XI, subject only to the exceptions set forth in Article XI itself and the general exceptions set forth in Article XX. Article VIII, by contrast, affirmatively recognizes the need for Members to maintain formalities and requirements in connection with importation, including import licensing procedures.

16.   The distinction between substantive rules of importation and the procedures by which they are implemented becomes most apparent in the ILP Agreement, which distinguishes between the trade‑restrictive impact of a substantive rule of importation (which is not governed by the ILP Agreement) and the trade‑restrictive impact of an import licensing procedure that is used to implement such a rule (the subject matter of the ILP Agreement).

17.   In light of these differences in their respective scope and content, the proper application of Articles VIII and XI of the GATT and of the ILP Agreement requires careful attention to how these provisions relate to any particular set of measures and claims. Above all, it is essential to distinguish between those measures and claims that pertain to substantive rules of importation, on the one hand, and those measures and claims that pertain to formalities, requirements, and procedures connected with importation, on the other. To the extent that a complainant alleges that a substantive rule of importation and the procedures used to implement that rule violate particular provisions of the covered agreements, it is necessary first to differentiate between the rule and the procedure (e.g. in terms of which measures implement the rule and which measures implement the procedure), and then to assess the rule and the procedure in relation to their respective disciplines.

18.   The need to separate and distinguish between different measures and claims is particularly important where, as in the present dispute, the complainant alleges that both the substantive rules of importation and the procedures used to implement those rules have trade‑restricting effects. In such case the complainant must prove that the substantive rule imposes a restriction or prohibition on imports (e.g. in order to demonstrate that the substantive rule constitutes a quantitative restriction prohibited by Article XI of the GATT), and separately demonstrate that the procedures used to implement that rule have trade‑restricting effects that are distinguishable from the trade‑restricting effects of the rule itself. To prove a violation with respect to the trade effects of the procedures, as opposed to the substantive rule, the complainant must show that these trade effects violate the relevant discipline found within the covered agreements.

19.   The fundamental problem with the complainants' claims and arguments, as reflected in their first written submissions, is that they have failed to separate and distinguish between the DJAI as a procedure, on the one hand, and the alleged RTRRs, on the other. In fact, their claims and arguments are intrinsically contradictory. The complainants repeatedly characterize the DJAI as a procedure that is used to implement and enforce the alleged RTRRs, which the complainants consider to be distinct measures that limit or restrict trade in violation of Article XI. At the same time, the complainants contend that the DJAI procedure is itself a quantitative restriction that violates Article XI. At no point do the complainants distinguish between the alleged trade‑restricting effects of the DJAI as a procedure and the alleged trade‑restricting effects of the alleged RTRRs that the DJAI supposedly implements.

20.   Proper delimitation is also crucial with respect to Articles VIII and XI of the GATT, since, as noted by the panel in China – Raw Materials, it is "appropriate to construe Article VIII as regulating something different from that addressed by GATT Article XI:1".^[1] It is clear from the context of GATT Articles VIII and XI that these are provisions that are mutually exclusive within their respective disciplines and spheres of application. Article VIII expressly acknowledges the need for Members to maintain customs formalities, while Article XI prohibits any measure that constitutes a quantitative restriction (within the meaning of that provision). It cannot be the case that customs formalities that are permitted under Article VIII are prohibited quantitative restrictions under Article XI.

21.   In addition, the mutually exclusive relationship between Article VIII and Article XI is further evidenced by the fact that Article VIII already contemplates that customs formalities can have at least some restrictive effect on trade. In acknowledging "the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements", the drafters of Article VIII were aware that customs formalities are potentially an impediment to trade. Because the potential effects of customs formalities are governed by Article VIII (including as they may be modified by the trade facilitation negotiations), and because Article VIII envisages that such effects may occur, it cannot be the case that these same permitted effects render a customs formality a prohibited quantitative restriction under Article XI. Otherwise, Members could not maintain customs formalities, since they would be prohibited under Article XI.

22.   Moreover, because Article VIII recognizes that formalities and requirements will have at least some degree of trade‑limiting effect, the separate and independent trade effect of the procedure must be greater than the trade effect that one would ordinarily associate with a procedure of its nature. The stringent application of these standards is required to ensure that import formalities and requirements – which are an ordinary and necessary feature of international trade and expressly permitted under Article VIII – are not classified as prohibited quantitative restrictions.

B.   The DJAI procedure is a customs formality under Article VIII of the GATT

23.   The DJAI procedure is a formality or requirement imposed by governmental authorities in connection with importation and is therefore subject to Article VIII of the GATT, which covers all formalities and requirements imposed "in connection with importation", including "documents, documentation and certification". Article VIII recognizes the need for Members to maintain import formalities and requirements for the purposes of implementing and enforcing their domestic laws, and recognizes "the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements".

24.   It is an undisputed fact that the DJAI procedure is a procedure. The DJAI is an advance electronic information procedure aimed at facilitating the customs control functions of the Directorate‑General of Customs (Dirección General de Aduanas – DGA), a subdivision of the Federal Public Revenue Administration (Administración Federal de Ingresos Públicos – AFIP), on the basis of the concepts of risk assessment and management, thereby allowing it to address and mitigate risk, in accordance with the SAFE Framework of the WCO, without unnecessarily hindering international trade.

25.   Through the DJAI procedure, AFIP collects advance information that is relevant to the exercise of its customs control function, such as the identity of the importer and its agent, the volume, value, and origin of the merchandise, and its customs classification. On the basis of such advance information, AFIP, in conjunction with other participating agencies with complementary control authority, assesses and manages risk. The DJAI essentially allows AFIP to identify high‑risk consignments in advance, and allocate resources more efficiently. The DJAI procedure also informs AFIP's work in developing and implementing a more robust risk management system. Prominent among the changes implemented on the basis of information collected through the DJAI procedure is the development of a scoring system for risk assessment. The DJAI procedure also allows AFIP to allocate its resources more efficiently.

26.   The complainants mistakenly attribute to the DJAI procedure a number of import‑restrictive objectives which are completely alien to the instrument. The DJAI procedure does not contain any substantive rules governing the importation of goods into Argentina. On the contrary, the DJAI procedure is linked to laws and regulations contained elsewhere in Argentina's legal regime. The DJAI procedure simply anticipates customs information that previously would have been provided only upon the initiation of customs clearance procedures.

27.   It is important to note that, contrary to the complainants' suggestion, the DJAI procedure does not provide participating agencies with "unfettered" discretion to make "observations" and prevent imports. Their participation is confined to the functions assigned to each specific agency by law.

28.   Given that the complainants have brought no claims under Article VIII in this dispute, this should end the Panel's analysis in respect of the DJAI procedure.

C.      The DJAI procedure is not an import licensing procedure subject to the disciplines of the ILP Agreement

29.   The complainants have alleged that the DJAI procedure is a non‑automatic import licensing procedure used for other than customs purposes that is subject to the ILP Agreement. However, Article 1.1 of the ILP Agreement makes clear that, in order to constitute an "import licence", a given measure has to fulfil two cumulative requirements. First, it must be "administrative procedures [defined as 'licensing' or other similar procedures] used for the operation of [an] import licensing regime". Second, these administrative procedures must require "the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for importation".

30.   With respect to the first requirement, the DJAI procedure is not a "licence" of any kind, and thus there should be no issue as to whether it is an "import licensing procedure" subject to the provisions of the ILP Agreement.

31.   As recognized by the panel in Turkey – Rice, importation is a very complex process in which a number of different documents, certificates, invoices, and other paper or electronic formalities are required for the purpose of verifying compliance with a wide variety of legal requirements. Without these documents, certificates, or electronic formalities WTO Members will not allow importation to be effected. This does not automatically convert any formalities which operate as a prerequisite for importation into "licences" under Article 1.1 of the ILP Agreement.

32.   In Argentina's view, the term "licences" under the ILP Agreement must be used for the operation of "import licensing regimes", which relates to the administration of quantitative restrictions or other similar measures. The complainants have failed to demonstrate that the DJAI procedure is "used for the operation of import licensing regimes" and therefore have failed to demonstrate that it constitutes a "licence" subject to the disciplines of the ILP Agreement.

33.   With respect to the second requirement, even if the Panel were to find that the DJAI procedure could be considered a "licence", as previously explained, the DJAI was created, and is used, by the AFIP "for customs purposes" and hence does not fall within the scope of the ILP Agreement.

34.   Finally, even if the Panel were to conclude that the DJAI procedure is a licensing procedure that is within the scope of the ILP Agreement, under Article 3.2 of this Agreement, to establish a prima facie case the complainants would need to demonstrate that the DJAI procedure has trade‑restrictive or distortive effects on imports additional to those caused by the imposition of the underlying restriction, which the complainants consider (at least implicitly) to be the alleged RTRRs.

35.   This is where the complainants' claims and arguments become particularly incoherent. Notwithstanding their repeated assertions that the DJAI procedure is a non‑automatic import licensing procedure used to implement the alleged RTRRs, the United States and the European Union argue that the DJAI procedure is per se inconsistent with Article 3.2 because it is not used to implement any restriction at all. In their view, this means that any trade‑restricting effects of the DJAI procedure can be attributed entirely to the DJAI procedure, and not to any underlying restriction that it is used to implement. This internal contradiction is illustrated by the European Union's assertion in one part of its written submission that the DJAI procedure is used "as a tool in order to impose on importers commitments that are often trade‑restrictive themselves", and its contradictory assertion in a later part of its submission that the DJAI procedure "is not a 'tool' used for the implementation of an 'underlying' quantitative restriction".

36.   Japan, for its part, does not even attempt to distinguish between the DJAI procedure and the alleged RTRRs that it is allegedly used to implement. Instead it employs the arguments made under GATT Article XI:1 about the DJAI procedure, including the assertion that it restricts trade because it is used to implement the alleged RTRRs. It then asserts, quite categorically, that the DJAI procedure "has trade‑restrictive or distortive effects on imports", and that "this fact alone is enough to be 'additional to those caused by the imposition of the restriction'" under the standard prescribed by Article 3.2 of the ILP Agreement. At no point does Japan distinguish between the effect of the DJAI procedure and the effect of the alleged RTRRs that it allegedly implements, let alone present any evidence of the separate and additional trade‑restricting effects of the DJAI procedure, as required by Article 3.2.

37.   Once again, the complainants cannot have it both ways. For their part, the United States and the European Union cannot seek to attribute the trade‑restricting effects of the alleged RTRRs to the DJAI procedure for the purpose of arguing that the DJAI procedure is a quantitative restriction under Article XI:1, but then argue under Article 3.2 of the ILP Agreement that the alleged trade‑restricting effects of the DJAI procedure result entirely from the procedure itself and not from the alleged RTRRs. If, as they claim, the DJAI procedure is a non‑automatic import licensing procedure used to implement the alleged RTRRs, then the complainants must demonstrate under Article 3.2 of the ILP Agreement that the DJAI procedure has trade‑restricting effects additional to those caused by the alleged RTRRs. The United States and Japan have not even attempted to make this showing, and the European Union has sought to make this showing only in misleading and circular terms.

38.   To sum up, the Panel must require the complainants to assume the burden of establishing a prima facie case under Article 3.2 of the ILP Agreement to show that the DJAI procedure has trade‑restrictive effects additional to those caused by the alleged underlying RTRRs which the DJAI procedure is allegedly used to implement. The complainants have failed to satisfy this burden of proof.

D.      The complainants have failed to establish a prima facie case of inconsistency under Article XI:1 of the GATT in respect of the DJAI procedure

39.   As previously discussed, Article XI:1 governs substantive rules of importation or exportation. It is an undisputed fact that the DJAI procedure is not a substantive rule of importation but a procedure. This is the necessary foundation for the complainants' claims under the ILP Agreement, which "relates to import licensing procedures and their administration, not to import licensing rules". If the complainants maintain that the DJAI procedure is a non‑automatic import licensing procedure subject to the ILP Agreement, then they cannot simultaneously maintain their claims under Article XI in respect of the DJAI procedure, because the ILP Agreement is lex specialis in relation to the trade effects of import licensing procedures. Moreover, the complainants have not alleged, let alone demonstrated, that the measures establishing the DJAI procedure contain any substantive rules that affect importation. Consequently, the DJAI procedure is not subject to Article XI:1 of the GATT.

40.   Furthermore, as explained in the preceding paragraphs, the DJAI procedure is a customs formality used to monitor the risk of non‑compliance with substantive rules of importation set forth elsewhere in Argentine law. As was pointed out, Argentina does not consider that customs formalities can be assessed under Article XI of the GATT. To the extent that customs formalities have some effect on the quantity or volume of imports, that effect must be assessed under Article VIII or, where appropriate, under the ILP Agreement. Nevertheless, if the Panel were to conclude that customs formalities are subject to assessment under Article XI:1 of the GATT, then the Panel would have to determine how to assess the alleged trade‑restrictive effects of the DJAI procedure under Article XI:1.

41.   Article XI:1 of the GATT relates to the "general elimination of quantitative restrictions". Import formalities and requirements can be considered a prohibited quantitative restriction under Article XI to the extent that: (1) they limit the quantity or volume of imports to a material degree that is separate and independent of the trade‑restricting effect of any substantive rule of importation that the formality or requirement implements; and (2) this separate and independent trade‑restricting effect is greater than the effect that would ordinarily be associated with a formality or requirement of this nature.

42.   This is the basis for the distinction between Articles VIII and XI of the GATT suggested by the reports of the panels in Korea – Various Measures on Beef and China – Raw Materials. Article VIII governs the procedures used to implement substantive rules – with the aim of "minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements", whereas Article XI:1 is concerned with the trade‑restricting effects of the substantive rules of importation (or exportation). Article XI:1 clearly distinguishes between the quantitative "prohibitions" and "restrictions" that are the subject of this provision and the manner in which such prohibitions and restrictions are "made effective". What is prohibited under Article XI:1 are the quantitative restrictions and prohibitions themselves, not the means by which they are made effective. As is evident from the reference to "other measures", the method by which a particular quantitative restriction or prohibition is implemented is immaterial to Article XI:1.

43.   Thus, for a procedure to be inconsistent with Article XI, the complainant must prove that the procedure limits the quantity or volume of imports (or exports) separately and independently of the trade‑limiting effect of the underlying measure which it implements. With respect to the DJAI procedure, any assessment under Article XI:1 would require the complainants to demonstrate, at a minimum, that the DJAI procedure has a limiting effect on the quantity or volume of goods imported into Argentina, separate and apart from the limiting effects that the complainants seek to attribute to the alleged RTRRs under Article XI:1, and separate and apart from the ordinary and incidental effects of such formalities. The complainants have failed to demonstrate such an effect.

44.   In addition, Article XI:1 of the GATT relates to prohibitions and restrictions that are "quantitative" in nature. The Appellate Body in China – Raw Materials observed that "the use of the word 'quantitative' in the title of the provision informs the interpretation of the words 'restriction' and 'prohibition'" and, consequently, it is appropriate to consider that Article XI of the GATT 1994 covers "those prohibitions and restrictions that have a limiting effect on the quantity or amount of a product being imported or exported".^[2] It follows that a complainant making claims under this provision must show that a particular measure institutes or maintains a "prohibition" or "restriction" on imports or exports that has a "limiting effect on the quantity or amount of a product being imported or exported". The complainants have not provided any evidence in this respect.

E.       The complainants have failed to establish a prima facie case under Articles X:1 and X:3(a) of the GATT with respect to the DJAI procedure

45.   The complainants have also failed to establish a prima facie case that Argentina has acted inconsistently with Articles X:1 and X:3(a) of the GATT with respect to the publication and administration of certain aspects of the DJAI procedure.

46.   In order to show a violation of Article X:1, the complainants must demonstrate that Argentina has made effective "laws, regulations, judicial decisions and administrative rulings of general application", and that it has not "published [them] promptly" in such a manner as to enable governments and traders to become acquainted with them. The complainants have failed on both counts.

47.   The complainants have failed to establish that specific aspects of the DJAI procedure which they challenge under Article X:1 are measures "of general application". There is no "universal" set of criteria that applies to all goods, because distinct goods and distinct import transactions pose distinct risks. The observations made by each participating agency are not therefore measures of "general application", but rather administrative requests for supplementary information that are made on a case‑by‑case basis, depending on the information provided by the declarant.

48.   Moreover, Argentina has promptly published the statutory authority of each agency that participates in the DJAI procedure and has adopted a standardized model of the accession instrument (Convenio de Adhesión) on the basis of which each agency may accede to the DJAI procedure. Information concerning the agencies that participate in each DJAI is readily available to the customs broker or importer in the "My Customs Operations" (Mis Operaciones Aduaneras – MOA) window of the AFIP website.

49.   As regards the complainants' claims under Article X:3(a), they reflect the same misunderstanding of the basic obligations that apply, on the one hand, to substantive rules governing importation into Argentina and, on the other hand, to the administration of those rules. These claims should be rejected in their entirety.

50.   In EC – Bananas III, the Appellate Body held that the text of Article X:3(a) "clearly indicates that the requirements of 'uniformity, impartiality, and reasonableness' do not apply to the laws, regulations, decisions and rulings themselves, but rather to the administration of those laws, regulations, decisions and rulings".^[3] To the extent that a Member's challenge relates to the substantive content of these types of measure, "the WTO consistency of such substantive content must be determined by reference to provisions of the covered agreements other than Article X of the GATT 1994".^[4] The Appellate Body underscored the gravity of allegations that a Member acted in a biased or unreasonable manner, and for this reason "the evidence adduced by the complainant in support of it, should reflect the gravity of the accusations inherent in claims under Article X:3(a)".^[5]

51.   Applying these standards against the complainants' claims under Article X:3(a) and supporting evidence, it becomes clear that the complainants have failed to meet this burden. To begin with, Argentina's alleged failure to publish the criteria pursuant to which each participating agency may make observations under the DJAI procedure could only entail an inconsistency under Article X.1 of the GATT, which deals with publication requirements, and not under Article X:3(a), which establishes disciplines for the administration of measures of general application.

52.   More importantly, the complainants' claims concerning Argentina's alleged exercise of discretion to authorize imports by operators that have undertaken to comply with certain trade‑restrictive requirements do not refer to the administration of rules of general application, but rather to substantive rules which allegedly govern importation of goods into Argentina. As mentioned above, the Appellate Body has indicated that the WTO consistency of such substantive rules must be assessed under other provisions of the covered agreements.

53.   Finally, the United States adds, on the basis of a single "sworn affidavit" by an anonymous company executive, that Argentina's administration of the DJAI procedure is not uniform, impartial and reasonable because the same importer has had DJAIs "exited" and DJAIs "observed" in comparable situations. However, as the Appellate Body stated in EC — Selected Customs Matters, "… non‑uniformity or differences in administrative processes do not, by themselves, constitute a violation of Article X:3(a)".^[6]

V.      The Complainants have Failed to Establish a Prima Facie Case of Inconsistency in Relation to the Alleged "Restrictive Trade-Related Requirements"

A.      The European Union, Japan and the United States have impermissibly expanded the scope of the dispute in relation to the alleged "Restrictive Trade‑Related Requirements" or "RTRRs"

54.   There is a glaring inconsistency between the complainants' requests for consultations and their panel requests. The European Union, Japan, and the United States each have entire sections of their panel requests devoted to what they call "Restrictive Trade‑Related Requirements" (RTRRs). This is a term which does not appear in any of the complainants' requests for consultations, and seems to have been jointly invented by the complainants for purposes of their panel requests. The new measures are separate and legally distinct from the measures included in the complainants' consultations requests, inasmuch as they bear no relationship whatsoever to the measures actually identified in those requests.

55.   The measures identified by the complainants in their requests for consultations are confined to the DJAI and Import Certificates (Certificados de Importación – CI). In their requests for consultations the complainants explain that these "measures" are maintained through specific "legal instruments", which are identified in the Annexes to each of the consultations requests. The complainants also mention in their consultations requests certain "commitments" that Argentina allegedly requires importers to undertake, as well as the alleged relationship between these "commitments" and the issuance of CIs and the approval of DJAIs.

56.   There is no reference whatsoever by any of the complainants to the alleged "commitments" as independent "measures" that might be subject to challenge, or to any other "legal instruments" – written or unwritten – providing for such measures. Rather, the complainants' description of the "commitments" appears to be nothing more than a discussion of purported evidence relating to the allegedly "non‑transparent" issuance of CIs and approval of DJAIs.

57.   Thus, nothing in the text of the consultations requests gives any indication that the complainants would be bringing claims in respect of measures related to the alleged "Restrictive Trade‑Related Requirements". Thus, the complainants' requests for consultations did not allow Argentina to anticipate reasonably the scope of the dispute or prepare its defence in relation to the alleged "Restrictive Trade‑Related Requirements" that the complainants are now seeking to challenge.

58.   In relation to the complainants' uniform failure to identify in their consultations requests the broad unwritten measure that they are all now attempting to challenge, Argentina considers this omission to be particularly problematic given both the nature of the measure and the nature of the complainants' claims in respect of that measure. In light of the Appellate Body's statements about the clarity with which unwritten measures should be identified in the context of a panel request, it is difficult to imagine that a responding party would not, at the very least, be entitled to notice in the request for consultations that such a measure was potentially subject to challenge in the dispute. This is precisely the case in the present dispute in which the unwritten measure is subject to "as such" or other equally broad claims.

59.   Under the provisions of Articles 4 and 6 of the DSU and pursuant to the interpretation of previous panels and the Appellate Body, the addition of these new measures impermissibly expands the scope of the dispute and changes its essence and, accordingly, the measures are outside the Panel's terms of reference.

B.      Argentina was surprised by the Panel's decision to issue a preliminary ruling on whether the alleged "RTRRs" are within its terms of reference before the First Substantive Meeting

60.   In light of the well‑founded arguments developed in its first written submission, Argentina was surprised to hear of the Panel's very summary decision to issue a preliminary ruling on whether the alleged "RTRRs" are within its terms of reference before the First Substantive Meeting, without Argentina having first been offered an opportunity to respond to the complainants' submissions concerning its timely jurisdictional objections. It is a sign of the importance of jurisdictional challenges that the clear trend in recent dispute settlement proceedings has been to allow for comprehensive briefing on such issues before the panel renders its preliminary ruling.

61.   The Argentine Republic disagrees with the Panel's decision to defer a ruling on other jurisdictional objections. Considering that this question is of crucial importance within the context of this case, Argentina respectfully requests the Panel to rule as a matter of urgency on the following: (1) with respect to the "as applied" claims, and (2) on how the alleged 23 separate measures which the EU identifies "in the alternative" could possibly be within the terms of reference when, although they predate the consultations request, they were not the subject of consultations.

62.   The settling of these questions will provide the necessary certainty with respect to the points at issue. This will undoubtedly make it easier to address them within the context of the present case.

C.      The complainants have failed to establish a prima facie case with respect to the alleged RTRRs

63.   Notwithstanding its concerns with the Panel's preliminary rulings, the Argentine Republic considers that the ruling in question has provided some needed clarity with regard to the nature of the complainants' challenges. In its preliminary ruling, the Panel referred to the claims relating to a "single overarching RTRR measure" and considered that all of the complainants were challenging this measure "as such".

64.   The complainants expressly acknowledge that the "overarching RTRR measure" they are challenging is an "unwritten measure". When an unwritten measure is challenged within the WTO, the burden of proof on the complaining party to establish the existence of that measure is a great deal more exacting than when it is a written measure that is being challenged. In particular, the practice of "zeroing" on the part of the United States remains the only instance in the history of the WTO dispute settlement mechanism in which an unwritten measure was found to be the proper subject of a WTO challenge. Given this history, and the complainants' leading role in it, it is nothing short of remarkable and reflects a striking omission that not one of them has even acknowledged the legal standards and heavier burden of proof that govern the claims in respect of the unwritten "overarching RTRR measure" made in their first written submissions.

65.   The most recent instance of a panel being faced with a claim regarding an unwritten measure was in EC – Aircraft. In that case, drawing on relevant Appellate Body rulings, the panel explained that a panel "must not lightly assume [the] existence" of an unwritten measure.^[7] Rather, a panel must "carefully and rigorously" examine the evidence and arguments advanced by the complainant, with a view to assessing whether "at least the precise content of the alleged unwritten measure, that it is attributable to the responding Member and that it has general and prospective application" has been clearly established.^[8] It is only by satisfying this "high threshold" that a complainant will succeed in establishing the existence of the challenged measure.^[9] Conversely, where any one of the above elements cannot be established, the complaining party will have failed to make its case.^[10]

66.   On applying this evidentiary standard to the alleged "overarching" RTRR measure, Argentina considers that the complainants have failed to meet their burden in at least two crucial respects. Firstly, the complainants have failed to establish the precise content of the alleged "overarching" RTRR measure. According to the complainants, the unwritten "overarching" measure they seek to challenge consists of various requirements that Argentina allegedly imposes on various "economic actors", all of which, in their turn, "are not stipulated in any published law or regulation". Thus, the validity of the case depends, firstly, on establishing the existence of each of these various different unwritten requirements and, secondly, on demonstrating that these unwritten requirements somehow constitute a distinct "overarching" measure of general and prospective application. The mere articulation of the case framed by the complainants illustrates the complexity of the burden of proof with which they are faced.

67.   In its first written submission, Argentina explained the reasons why the Panel should discount the evidentiary weight of the merely circumstantial and speculative evidence produced by the complainants in their effort to establish the existence of the alleged overarching RTRR measure. What is more, even if despite its blatant weaknesses all of the evidence produced were to be taken into account, the complainants could only hope to demonstrate a series of unrelated "isolated" actions whose content varies so widely that it is insufficient even to demonstrate the content of a series of distinct requirements, let alone a single "overarching" RTRR measure.

68.   In fact, rather than demonstrating the existence of an "overarching" RTRR measure, the evidence on the record demonstrates that no such measure exists. By seeking to transform a series of alleged distinct and unrelated "isolated" commitments, first into a series of individual unwritten "requirements", and then into a single "overarching" measure, the complainants are seeking to avoid their burden of proof with respect to the alleged "single, overarching" RTRR measure that is the subject of their claims. Remarkably, among the 734 exhibits jointly produced by the complainants there is not a single piece of evidence seeking to demonstrate whether and to what extent the precise content of this overarching measure differs from the content of the various alleged unwritten requirements that supposedly comprise it. Argentina therefore respectfully requests that the Panel find that the complainants have failed to meet their burden of proof in this respect.

69.   Secondly, the complainants have failed to demonstrate that the alleged single overarching "RTRR" measure they challenge has general and prospective application. The evidence produced by the complainants clearly falls short of demonstrating the existence of a generally applicable rule or norm governing the importation or sale of all goods in Argentina. More importantly, the Panel will search the record in vain for evidence that the alleged overarching "RTRR" measure is meant to have prospective application. As anticipated, even assuming that all of the evidence were to be taken into account, in spite of its blatant shortcomings, that evidence would reflect nothing more than a number of "isolated" actions and would fail to show that the Argentine Government was enforcing any sort of prospective measure. In and of themselves, the alleged commitments described by the complainants do not have any normative content at all, since they neither require nor entail prospective courses of action.

70.   Finally, the Argentine Republic emphasizes and reiterates that the complainants cannot ignore the consequences of their decision to advance claims against a single unwritten "overarching" RTRR measure. The Argentine Republic therefore respectfully requests that the Panel reject in limine the complainants' attempt to assert into existence an amorphous and ill‑defined "overarching" RTRR measure.