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Complaint by the European
On 24 December 1998, the European Communities requested consultations with Argentina concerning certain measures taken by Argentina on the export of bovine hides and the import of finished leather. The European Communities alleged that the de facto export prohibition on raw and semi-tanned bovine hides (which is implemented in part through the authorization granted by the Argentinian authorities to the Argentinian tanning industry to participate in customs control procedures of hides before export) is in violation of GATT Articles; XI:1 (which outlaws de jure export prohibitions and measures of equivalent effect); and X:3(a) (which requires uniform and impartial administration of laws and regulations) to the extent that personnel of the Argentinian Chamber for the tanning industry are authorized to assist Argentinian customs authorities. The European Communities also claimed that the “additional value added tax” of 9 per cent on imports of products into Argentina and the “advance turnover tax” of 3 per cent based on the price of imported goods imposed on operators when importing goods into Argentina are in violation of Article III:2 of the GATT 1994 (which prohibits tax discrimination of foreign products which are like, directly competitive or substitutable to domestic products).
On 31 May 1999, the European Communities requested the establishment of a panel. At its meeting on 16 June 1999, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
Further to a second request to establish a panel by the European Communities, the DSB established a panel at its meeting on 26 July 1999. On 31 January 2000, the panel was composed.
On 19 December 2000, the panel report was circulated to Members. The panel concluded that:
- it has not been proved that Resolution (ANA) No. 2235/96 is inconsistent with Argentina’s obligations under Article XI:1 of the GATT 1994;
- Resolution (ANA) No. 2235/96 is inconsistent with Argentina’s obligations under Article X:3(a) of the GATT 1994;
- General Resolution (DGI) No. 3431/91 is inconsistent with Article III:2, first sentence, of the GATT 1994;
- General Resolution (DGI) No. 3543/92 is inconsistent with Article III:2, first sentence, of the GATT 1994;
- General Resolutions (DGI) No. 3431/91 and 3543/92, although they fall within the terms of paragraph (d) of Article XX of the GATT 1994, fail to meet the requirements of the chapeau of Article XX and are therefore not justified under Article XX as a whole;
- there is nullification or impairment of the benefits accruing to the European Communities under the GATT 1994.
The DSB adopted the panel report on 16 February 2001.
Reasonable period of time
At the DSB meeting of 12 March 2001, Argentina stated its intention to implement the DSB‘s recommendations and indicated that it would need a reasonable period of time to do so. On 14 May 2001, the European Communities requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c). On 17 May 2001 the parties, noting that the 90-day period from the date of the adoption of the DSB recommendations and rulings for the binding arbitration under Article 21.3(c) was about to expire, notified their agreement that the award of the arbitrator, made within the agreed time period, shall be deemed to be the award of the arbitrator for the purposes of Article 21.3(c) of the DSU in determining the reasonable period of time for Argentina to implement the recommendations and rulings of the DSB. The parties agreed to extend the deadline for arbitration allotted by Article 21.3(c) of the DSU, and requesting that this arbitration be completed no later than 90 days after the date of the appointment of the arbitrator. On 31 August 2001, the Arbitrator circulated its award whereby the reasonable period of time was fixed at 12 months and 12 days from 16 February 2001. This period was therefore to expire on 28 February 2002.
Implementation of adopted reports
On 25 February 2002, the parties notified the DSB of their Agreement on procedures under Articles 21 and 22 of the DSU. In view of the measures regarding customs procedures applicable to the export of bovine hides and to the regulations governing the system of IVA advance payments adopted by Argentina to comply with the DSB recommendations and rulings during the reasonable period of time in this dispute, and in light of the economic problems that Argentina is currently facing, the parties agreed on the following procedures: the parties would pursue their discussions on compliance by Argentina with the DSB recommendations and rulings; and the European Communities would retain the right to make a request for authorization to suspend concessions or other obligations under the DSU at any time after the expiry of the reasonable period of time, but only after completion of proceedings under Article 21.5 of the DSU. The procedural agreement of 25 February 2002 was discussed at the DSB meeting of 8 March 2002. In that meeting, the European Communities stated that the procedural agreement under consideration was a result of two factors. First, during the implementation period, which had ended on 28 February 2002, Argentina had taken major steps towards meeting its international obligations. Second, the exceptional seriousness of the economic crisis facing Argentina had prompted the European Communities to make this gesture towards the Member with whom it had close ties. The European Communities requested the DSB to take note of such agreement.
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