Argentina may soon take action to increase the value-added tax applicable to numerous types of electronic and other products from 10.5% to 21% (the list includes cellular phones, portable computers, monitors, televisions, GPS devices, digital cameras, video recorders, MP3 players, air conditioners and microwaves). If implemented, the increased value-added tax would apply to imported goods and some goods produced in Argentina. However, similar goods produced in the Tierra del Fuego special economic zone in southern Argentina (which is an important location for electronics manufacturing in Argentina) would not be subject to the tax increase.

WTO law and internal taxes

Argentina is a WTO Member. While WTO law does permit Members to apply value-added tax to imported goods, it prohibits discrimination between imported and domestic products. More specifically, Article III:2 of the 1994 General Agreement on Tariffs and Trade (GATT 1994) prohibits WTO Members from applying internal taxes to imported products which are in excess of those applied to "like" domestic products.

In its current form, the proposed measure would make imported products subject to a higher value-added tax than similar goods produced in the Tierra del Fuego special economic zone, resulting in a violation of Article III:2 of the GATT 1994.

Available remedies

If Argentina does decide to impose discriminatory value-added taxes, such action could be challenged by other WTO Members in a proceeding before the WTO. While private actors are not able to lodge a complaint directly before the WTO, many WTO Members, including the EU, have a system in place through which companies are given indirect access to the rights deriving from the WTO Agreements.

In the EU, this is done via the "Trade Barriers Regulation" or "TBR". Put briefly, the TBR establishes a procedure whereby European companies can complain about violations of WTO law by third countries that damage their commercial interests. Upon receipt of a complaint, the European Commission will investigate the alleged WTO-inconsistent action. If the Commission agrees that the other country violates WTO law, it will seek to remedy the situation through consultations and, if necessary, by bringing a WTO case. In the past, many companies have successfully secured market access in third countries using the EU TBR complaint procedure.