On January 15th, the World Trade Organization (WTO) Appellate Body issued a ruling in favor of the United States, the European Union, and Japan in a dispute challenging various restrictions maintained by Argentina on the importation of goods. The Appellate Body affirmed an earlier WTO dispute settlement panel report that found Argentina’s import licensing requirement and other import restrictions in violation of international trade rules.
One of the measures challenged by the United States was Argentina’s import licensing requirement (the Declaración Jurada Anticipada de Importación (“DJAI”)) that requires firms operating in Argentina to obtain approval in advance from governmental authorities to import goods into Argentina. The dispute also targeted various trade-related requirements as conditions to import, such as (1) offsetting the value of the goods to be imported with, at least, an equivalent value of exports; (2) limiting the volume of imports and/or reductions in their prices; (3) incorporating a certain level of local content into domestically produced goods; (4) making or increasing investments in Argentina (including in production facilities); and (5) refraining from repatriation of funds in Argentina to another country.
A press release from the Office of the U.S. Trade Representative (USTR) states that the Appellate Body upheld the WTO panel’s finding that the DJAI requirement restricts market access for imported products, creates uncertainty as to whether importation will be allowed, does not allow companies to import as much as they desire, and imposes a significant burden on importation. The Appellate Body also affirmed the panel’s finding that the other restrictive trade-related requirements identified above impose conditions on importation that have a limiting effect on imports that is contrary to Argentina’s obligations as a member of the WTO.
This is a significant victory for the United States and should provide better access for U.S. companies exporting to Argentina. According to the USTR, the United States exported nearly $11 billion in the first 11 months of 2014. Top U.S. exports included energy products, electronics and machinery, aerospace and parts, pharmaceuticals, precision instruments and medical devices, miscellaneous chemicals, motor vehicles and vehicle parts, and agricultural products.
Under the WTO rules, the panel and appellate reports will be adopted by the WTO within 30 days of the report’s issuance at the request of any party to the dispute. Argentinian officials, however, have stated in a recent press conference that there are unlikely to be immediate changes to its trade policy. Rather, Argentina will likely seek bilateral negotiations with the United States, as well as the EU and Japan, to resolve the dispute.