The European Commission welcomed a World Trade Organization ruling that Argentinian import conditions for companies trying to import goods into the country are breaking World Trade Organization (WTO) law.
EU Trade Commissioner, Karel De Gucht, said regarding the WTO ruling:
“I’ve made standing up to protectionism one of the hallmarks of my term as EU Trade Commissioner. This case sends an important signal that protectionism is not acceptable.”
“I call on Argentina to move quickly to comply with the ruling of the WTO panel and remove these illegal measures, and open the way for EU goods to compete fairly on the Argentinian market.”
Several nations complained in 2012
In May 2012, the European Union had submitted a formal complaint regarding the measures imposed by Argentine authorities, along with Australia, Canada, China, Ecuador, Guatemala, India, Israel, Japan, South Korea, Norway, Saudi Arabia, Switzerland, Chinese Taipei, Thailand, Turkey and the United States..
The WTO panel ruling upholds these claims with a clear verdict, the European Commission said.
The WTO ruled “Argentina may not require local importers or foreign firms to accept various practices forced upon them by the Argentinean authorities as a condition for being allowed to import goods into the country.”
Argentine practices include requirements to:
- offset the value of goods entering Argentina from abroad with at least the equivalent in goods leaving the country,
- limit their imports, either in value or in volume,
- attain a certain level of local content in their domestic production,
- carry out investments in Argentina,
- profits made within Argentina must remain in the country.
Argentina’s Advanced Sworn Import Declaration (‘Declaración Jurada Anticipada de Importación’, or DJAI), which requires companies to get approval by Argentine authorities before being able to pass goods through, also breaks WTO law, the ruling said.
Protectionism to reduce trade deficits
Argentina had imposed these measures in its efforts to reduce trade deficits with other countries or regions, which was part of its so-called “managed trade” policy.
If Argentina wants to adhere to WTO regulations, it must comply with the ruling.
According to the European Commission:
“The measures have imposed a severe burden on importers of EU products into Argentina and also impair the capacity of foreign firms to operate in the country.”
All parties have 60 days to appeal against the WTO panel’s ruling.
Argentina “will appeal”
The Buenos Aires Herald says Argentina will appeal the WTO ruling.
Emanuel Alvarez, Argentina’s Economy Vice-Minister, said that his country will “immediately appeal” the ruling. He added that the Argentine borders are “not closed to commerce but carefully cared to protect businesses.”
Mr. Alvarez told reporters on Saturday:
“Every measure we take is to protect importers and benefit the country. The WTO usually just asks for some adjustments.”
If Argentina fails to appeal and continues applying the current trade legislation, the plaintiffs could request that the WTO apply financial penalties.
It has been a bad year for rulings from abroad, as far as Argentina is concerned. A US court has ruled that the Argentine plan to alter the terms with creditors to swap their defaulted bonds for new debt issued locally is against the law.
