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B. Violation of Article II "In All Cases"

57. Argentina claims that the Panel erred in finding that it had infringed its obligations under Article II of the GATT 1994 "in all cases" in which it applied the DIEM. Argentina argues that the United States submitted evidence with respect to only 118 out of the approximately 940 relevant tariff categories in the Nomenclatura Común MERCOSUR ("N.C.M.").³⁸ Argentina further asserts that, had evidence in respect of the remaining tariff categories been examined, it would have shown that the application of the DIEM, on average over all tariff categories, had not exceeded the maximum level of binding in Argentina's Schedule.³⁹ On another ground, Argentina appeals the Panel's late admission into evidence of certain invoices and customs documents submitted by the United States relating to specific import transactions in six additional tariff categories.⁴⁰ We examine this separate ground of appeal in Part VI of this Report.

58. The Panel concluded that:

In the light of the foregoing, we find that the United States has provided sufficient evidence that Argentina has effectively imposed duties on imports of textiles and apparel above 35 per cent ad valorem, that indeed the total amount of duties collected annually on these items leads to the conclusion that duties above 35 per cent ad valorem on the average transaction value have been imposed on the same items, and that in any case, as we found in paragraph 6.47 above, the very nature of the minimum specific duty system imposed in Argentina on the items at issue will inevitably lead, in certain instances, to the imposition of duties above 35 per cent ad valorem.⁴¹

59. We note that the Panel did not make a finding that Argentina had infringed its obligations under Article II of the GATT 1994 "in all cases" in which it applied the DIEM. In fact, the Panel stated that:

As Argentina did not provide any affirmative evidence to the contrary, we consider that this US evidence provides reliable information that, on a tariff line basis, duties above the bound rate of 35 per cent ad valorem have been imposed. We agree that, if an average calculation shows duties above 35 per cent, this is evidence of a sufficient number of transactions which were subject to duties imposed above the 35 per cent ad valorem. The United States was able to demonstrate that Argentina had imposed and collected duties on the effective price of the import transactions at levels well above the bound rate of 35 per cent ad valorem.⁴²

60. It is our understanding that Argentina is objecting to the Panel's conclusion that the application of the DIEM is inconsistent with Argentina's obligations under Article II of the GATT 1994 to the extent that this conclusion was based on the Panel's examination of evidence relating to only 118, or at most 124, tariff categories out of approximately 940 relevant tariff categories for textile and apparel products. We note that Argentina did not challenge the methodology employed by the Panel in examining the evidence submitted by the United States identifying 118 tariff categories which led it to conclude, on the basis of statistical data relating to the average value of transactions, that the ad valorem equivalents of Argentina's specific duties exceeded 35 per cent ad valorem in a "sufficient number of transactions".⁴³

61. The real issue posed here by Argentina is whether the United States had adduced sufficient evidence to establish a prima facie case of inconsistency with Article II:1 of the GATT 1994 for all tariff categories covered by Chapters 51 to 63 of the N.C.M.. As we have noted above, the Panel stated that the statistical data submitted by the United States on the average import price of certain products in relation to the total amount of duties collected, "... provides reliable information that, on a tariff line basis, duties above the bound rate of 35 per cent ad valorem have been imposed." ⁴⁴(emphasis added) Furthermore, the Panel agreed with the United States that, "... if an average calculation shows duties above 35 per cent, this is evidence of a sufficient number of transactions which were subject to duties imposed above the 35 per cent ad valorem."⁴⁵ (emphasis added) The Panel also noted that Argentina had not submitted "any affirmative evidence to the contrary".⁴⁶ Argentina, in other words, did not successfully overcome the prima facie case established by the United States. We cannot find any error of law in the findings of the Panel based on the evidence submitted by the United States on average calculations relating to 118 tariff categories out of approximately 940 tariff categories for textile and apparel products.

62. As noted above, the Panel stated that "... the very nature of the minimum specific duty system imposed in Argentina on the items at issue will inevitably lead, in certain instances, to the imposition of duties above 35 per cent ad valorem."⁴⁷ (emphasis added) This reference to "in certain instances" indicates that the Panel did not conclude that there was infringement "in all cases". We recall our finding that the DIEM regime, by its structure and design, results in the application of specific duties with ad valorem equivalents exceeding 35 per cent for all textile and apparel products imported at prices below the relevant "break-even" prices in the relevant tariff categories.⁴⁸ At the same time, products imported at prices above such "break-even" prices will be subject to a duty equivalent to 35 per cent or less ad valorem. This proposition holds for all relevant tariff categories relating to textile and apparel products to which the DIEM are applied. It is the result of Argentina requiring its customs officials to collect the higher of two values: the applicable ad valorem duty or the DIEM. It follows that, under such a system, the rate of duty applicable to any import transaction depends on the position of the imported product within the prevailing price range in any relevant tariff category. Thus, some transactions will fall within a price range where the application of the DIEM results in ad valorem equivalents exceeding 35 per cent. Other transactions, on the other hand, will fall within a price range where the application of the DIEM results in ad valorem equivalents less than, or equal to, 35 per cent. We agree with Argentina, therefore, that the application of the DIEM does not result in a breach of Article II for each and every import transaction in a given tariff category. At the same time, however, we agree with the Panel that there are sufficient reasons to conclude that the structure and design of the DIEM will result, with respect to a certain range of import prices within a relevant tariff category, in an infringement of Argentina's obligations under Article II:1 for all tariff categories in Chapters 51 to 63 of the N.C.M..

63. For these reasons, we find no legal basis on which to reverse the Panel's findings in paragraph 6.65 of the Panel Report.

V. The Statistical Tax and Argentina's Stated Commitments to the IMF

64. At the time the Panel proceeding commenced, there was in effect in Argentina an ad valorem tax of 3 per cent on imports, without a minimum or a maximum charge, which was called a "statistical tax" and was described as designed to cover the cost of providing a statistical service intended to provide a reliable data base for foreign trade operators.⁴⁹ In respect of this statistical tax, the Panel found as follows:

Consequently, following the GATT practice on the subject matter, we conclude that Argentina's statistical tax of three per cent ad valorem, in its present form, is in violation of Article VIII:1(a) of GATT to the extent it results in charges being levied in excess of the approximate costs of the services rendered as well as being a measure designated for fiscal purposes.⁵⁰

65. Argentina does not appeal the Panel's finding that the statistical tax is inconsistent with the substantive requirements of Article VIII of the GATT 1994. Rather, Argentina submits that the Panel erred in law in failing to take into account Argentina's obligations to the IMF in the Panel's interpretation of Article VIII. Argentina refers to the Memorandum on Economic Policy⁵¹, that forms part of the panel record in this case, as a "Memorandum of Understanding" between Argentina and the IMF. Argentina states that this "Memorandum of Understanding" is a "simplified agreement" which includes an "undertaking" or an "obligation" on its part to collect a specified amount in the form of a statistical tax.⁵² This obligation is said to be set out or reflected in the statement on page 7 of the Memorandum on Economic Policy that the fiscal measures to be adopted by Argentina include "... increases in import duties, including a temporary 3 per cent surcharge on imports".⁵³

66. Argentina argues that in failing to consider its arguments about its obligations to the IMF and in failing to provide any reasons for not taking these arguments into account, the Panel disregarded its duty to make "an objective assessment of the matter" under Article 11 of the DSU. It is furthermore contended that the Panel, in ruling that the statistical tax is not consistent with Article VIII of the GATT 1994, failed to comply with the requirement in Article 12.7 of the DSU that "a panel shall set out ... the basic rationale behind any findings and recommendations that it makes."⁵⁴ Argentina argues still further that the Panel erred in law in failing to consider certain "subsequent legislative developments" -- namely, the Agreement Between the IMF and the WTO and the Declaration on Coherence.⁵⁵ Paragraph 10 of the Agreement Between the IMF and the WTO and paragraph 5 of the Declaration on Coherence require, in the view of Argentina, that "the imposition on governments of cross-conditionality or additional conditions"⁵⁶ must be avoided.⁵⁷

67. In the "Findings" section of the Panel Report, the Panel said:

We find no exception in the WTO Agreement that would excuse Argentina's compliance with the requirements of Article VIII of GATT. Moreover, we see nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund and the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking that suggests that we should interpret Article VIII as argued by Argentina.⁵⁸

68. In Part V of its Report, under the heading "Interim Review", although not in its "Findings" section, the Panel offers some explanation as to why it did not address Argentina's arguments concerning cross-conditionalities or conflicts between Argentina's commitments to the IMF and its obligations under the WTO Agreement. The Panel stated:

We see no reason to address this wider issue since, in the situation before the Panel, there is no evidence that Argentina was requested by the International Monetary Fund ("IMF") to impose an import tax that would violate the provisions of the WTO Agreement. Moreover, we see nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund and the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking that suggests that we should change our approach.⁵⁹ (emphasis added)

69. Implicit in the above statement is the Panel's belief that Argentina had not successfully shown that it was required under an agreement with the IMF to impose the statistical tax.⁶⁰ Indeed, the Panel does not appear to have been convinced that Argentina had a legally binding agreement with the IMF at all. From the panel record in this case, it does not appear possible to determine the precise legal nature of this Memorandum on Economic Policy, nor the extent to which commitments undertaken by Argentina in this Memorandum constitute legally binding obligations. We note that page 7 of the Memorandum on Economic Policy refers to "a temporary 3 percent surcharge on imports", which is not necessarily the same thing as the 3 per cent statistical tax levied on imports. Argentina did not show an irreconcilable conflict between the provisions of its "Memorandum of Understanding" with the IMF and the provisions of Article VIII of the GATT 1994. We thus agree with the Panel's implicit finding that Argentina failed to demonstrate that it had a legally binding commitment to the IMF that would somehow supersede Argentina's obligations under Article VIII of the GATT 1994.

70. We also agree with the Panel that there is nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the WTO with the IMF or the Declaration on Coherence which justifies a conclusion that a Member's commitments to the IMF shall prevail over its obligations under Article VIII of the GATT 1994. The 1994 Declaration on Coherence is a Ministerial decision that articulates the objective of promoting increased cooperation between the WTO and the IMF in order to encourage greater coherence in global economic policy-making. This objective is more explicitly recognized in the treaty language of the WTO Agreement in Article III:5, which states:

With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies. (emphasis added)

71. In furtherance of the WTO's mandate to "cooperate, as appropriate" with the IMF, the Agreement Between the IMF and the WTO was concluded in 1996.⁶¹ This Agreement provides for specific means of administrative cooperation between the two organizations. It provides for consultations and the exchange of information between the WTO Secretariat and the staff of the IMF in certain specified circumstances, and grants to each organization observer status in certain of the other's meetings.⁶²

72. The Agreement Between the IMF and the WTO, however, does not modify, add to or diminish the rights and obligations of Members under the WTO Agreement, nor does it modify individual States' commitments to the IMF. It does not provide any substantive rules concerning the resolution of possible conflicts between obligations of a Member under the WTO Agreement and obligations under the Articles of Agreement of the IMF or any agreement with the IMF. However, paragraph 10 of the Agreement Between the IMF and the WTO contains a direction to the staff of the IMF and the WTO Secretariat to consult on "issues of possible inconsistency between measures under discussion".

73. In the 1994 Declaration on the Relationship of the WTO with the IMF, Ministers reaffirmed that, unless otherwise provided for in the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, "the relationship of the WTO with the International Monetary Fund, with regard to the areas covered by the Multilateral Trade Agreements in Annex 1A of the WTO Agreement, will be based on the provisions that have governed the relationship of the CONTRACTING PARTIES to the GATT 1947 with the International Monetary Fund." We note that certain provisions of the GATT 1994, such as Articles XII, XIV, XV and XVIII, permit a WTO Member, in certain specified circumstances relating to exchange matters and/or balance of payments, to be excused from certain of its obligations under the GATT 1994. However, Article VIII contains no such exception or permission.

74. We agree, therefore, with the Panel that there is "nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund and the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking"⁶³ that modifies Argentina's obligations under Article VIII of the GATT 1994. We also agree with the Panel that there is "... no exception in the WTO Agreement that would excuse Argentina's compliance with the requirements of Article VIII of GATT."⁶⁴ There does not appear to be anything in the WTO Agreement or in the other legal instruments cited by Argentina that would relieve a Member from its obligations under Article VIII of the GATT 1994. For these reasons, we uphold the Panel's findings in paragraphs 6.79 and 6.80 of the Panel Report.

VI. Objective Assessment of the Matter Under Article 11 of the DSU

75. Argentina makes two claims under Article 11 of the DSU. It submits that the Panel acted inconsistently with Article 11 in: (i) admitting certain evidence submitted by the United States two days before the second substantive meeting of the Panel with the parties, and granting Argentina only two weeks to respond; and (ii) not seeking information from, and consulting with, the IMF to obtain its opinion on specific aspects of the matter relating to the statistical tax imposed by Argentina.⁶⁵ We examine each of these arguments in turn.

76. Article 11 of the DSU states in part:

The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. ...

A. Admission of Certain Evidence

77. Argentina submits that the Panel acted inconsistently with Article 11 of the DSU by admitting certain evidence offered by the United States two days before the second substantive meeting of the Panel with the parties. This evidence consisted of approximately 90 invoices and customs documents purporting to show specific cases in which Argentina had applied duties in excess of its 35 per cent ad valorem tariff binding.⁶⁶ At the second substantive meeting of the Panel with the parties, Argentina requested the Panel to reject this evidence on the grounds that it had been submitted too late in the panel process and that, because of the blacking-out of certain information from these documents, it would be impossible for Argentina to respond to this evidence. These documents related to customs operations or transactions carried out using the manual customs clearance system rather than the MARIA computerized system which, Argentina states, made it impossible to verify the information within the time period granted by the Panel.⁶⁷ The Panel ruled that it would admit this evidence, but allowed Argentina two weeks to respond to it.

78. Paragraph 6.55 of the Panel Report reads, in part, as follows:

We note that the rules of procedures of panels do not prohibit the practice of submitting additional evidence after the first hearing of the Panel. Until the WTO Members agree on different and more specific rules on this regard, our main concern is to ensure that "due process" is respected and that all parties to a dispute are given all the opportunities to defend their position to the fullest extent possible. In light of the difficulties faced by Argentina in responding to this evidence on such a short notice, we decided to accept this additional evidence on the understanding that Argentina would have a period of two weeks to provide further comments on these additional invoices and customs documents. Argentina informed the Panel that it would not be submitting any further comment.

79. Article 11 of the DSU does not establish time limits for the submission of evidence to a panel. Article 12.1 of the DSU directs a panel to follow the Working Procedures set out in Appendix 3 of the DSU, but at the same time authorizes a panel to do otherwise after consulting the parties to the dispute. The Working Procedures in Appendix 3 also do not establish precise deadlines for the presentation of evidence by a party to the dispute.⁶⁸ It is true that the Working Procedures "do not prohibit" submission of additional evidence after the first substantive meeting of a panel with the parties. It is also true, however, that the Working Procedures in Appendix 3 do contemplate two distinguishable stages in a proceeding before a panel. Paragraphs 4 and 5 of the Working Procedures address the first stage in the following terms:

4. Before the first substantive meeting of the panel with the parties, the parties to the dispute shall transmit to the panel written submissions in which they present the facts of the case and their arguments.

5. At its first substantive meeting with the parties, the panel shall ask the party which has brought the complaint to present its case. Subsequently, and still at the same meeting, the party against which the complaint has been brought shall be asked to present its point of view.

The second stage of a panel proceeding is dealt with in paragraph 7 which states:

7. Formal rebuttals shall be made at a second substantive meeting of the panel. The party complained against shall have the right to take the floor first to be followed by the complaining party. The parties shall submit, prior to that meeting, written rebuttals to the panel.

Under the Working Procedures in Appendix 3, the complaining party should set out its case in chief, including a full presentation of the facts on the basis of submission of supporting evidence, during the first stage. The second stage is generally designed to permit "rebuttals" by each party of the arguments and evidence submitted by the other parties.

80. As noted above, however, the Working Procedures in their present form do not constrain panels with hard and fast rules on deadlines for submitting evidence. The Panel could have refused to admit the additional documentary evidence of the United States as unseasonably submitted. The Panel chose, instead, to admit that evidence, at the same time allowing Argentina two weeks to respond to it. Argentina drew attention to the difficulties it would face in tracing and verifying the manually processed customs documents and in responding to them, since identifying names, customs identification numbers and, in some cases, descriptions of the products had been blacked out. The Panel could well have granted Argentina more than two weeks to respond to the additional evidence. However, there is no indication in the panel record that Argentina explicitly requested from the Panel, at that time or at any later time, a longer period within which to respond to the additional documentary evidence of the United States. Argentina also did not submit any countering documents or comments in respect of any of the additional documents of the United States.

81. Accordingly, while another panel could well have exercised its discretion differently, we do not believe that the Panel here committed an abuse of discretion amounting to a failure to render an objective assessment of the matter as mandated by Article 11 of the DSU.

B. Consultation with the IMF

82. Argentina also argues that the Panel failed to make "an objective assessment of the matter", as required by Article 11 of the DSU, by not acceding to the request of the parties to seek information from, and consult with, the IMF so as to obtain its opinion on specific aspects of the matter concerning the statistical tax.⁶⁹ The DSU gives panels different means or instruments for complying with Article 11; among these is the right to "seek information and technical advice" provided in Article 13 of the DSU. Argentina maintains that the Panel did not make use of this right, which would have allowed it to verify the information provided by the parties, and which might have altered the Panel's findings regarding the statistical tax.⁷⁰

83. During the panel proceedings, the United States argued that Argentina had not demonstrated that the imposition of a 3 per cent statistical tax was required, or even requested, by the IMF, and invited the Panel to consult with the IMF to ascertain whether it had asked Argentina to impose the tax.⁷¹ In its appellant's submission, Argentina states that it too requested "consultations" with the IMF by the Panel.⁷²

84. The only provision of the WTO Agreement that requires consultations with the IMF is Article XV:2 of the GATT 1994. This provision requires the WTO to consult with the IMF when dealing with "problems concerning monetary reserves, balances of payments or foreign exchange arrangements".⁷³ However, this case does not relate to these matters. Article 13.1 of the DSU gives a panel "... the right to seek information and technical advice from any individual or body which it deems appropriate." (emphasis added) Pursuant to Article 13.2 of the DSU, a panel may seek information from any relevant source and may consult experts to obtain their opinions on certain aspects of the matter at issue. This is a grant of discretionary authority: a panel is not duty-bound to seek information in each and every case or to consult particular experts under this provision. We recall our statement in EC Measures Concerning Meat and Meat Products (Hormones) that Article 13 of the DSU enables a panel to seek information and technical advice as it deems appropriate in a particular case, and that the DSU leaves "to the sound discretion of a panel the determination of whether the establishment of an expert review group is necessary or appropriate."⁷⁴ Just as a panel has the discretion to determine how to seek expert advice, so also does a panel have the discretion to determine whether to seek information or expert advice at all.

85. As in the WTO Agreement, there are no provisions in the Agreement Between the IMF and the WTO that require a panel to consult with the IMF in a case such as this. Under paragraph 8 of this latter Agreement, in a case involving "exchange measures within the Fund's jurisdiction", the IMF "shall inform in writing the relevant WTO body (including dispute settlement panels) ... whether such measures are consistent with the Articles of Agreement of the Fund." This case does not, however, involve "exchange measures within the Fund's jurisdiction". Paragraph 8 also provides that the IMF "may communicate its views in writing on matters of mutual interest to the [WTO] or any of its organs or bodies (excluding the WTO's dispute settlement panels) ..." (emphasis added). Evidently, the IMF has not been authorized to provide its views to a WTO dispute settlement panel on matters not relating to exchange measures within its jurisdiction, unless it is requested to do so by a panel under Article 13 of the DSU.

86. In this case, we find that the Panel acted within the bounds of its discretionary authority under Articles 11 and 13 of the DSU in deciding not to seek information from, nor to consult with, the IMF. While it might perhaps have been useful for the Panel to have consulted with the IMF on the legal character of the relationship or arrangement between Argentina and the IMF in this case, we believe that the Panel did not abuse its discretion by not seeking information or an opinion from the IMF. For these reasons, we find that the Panel did not violate Article 11 of the DSU by not seeking information from, and consulting with, the IMF so as to obtain its opinion on specific aspects of the matter concerning the statistical tax imposed by Argentina.

VII. Findings and Conclusions

87. For the reasons set out in this Report, the Appellate Body:

(a) modifies the Panel's findings in paragraphs 6.31 and 6.32 of the Panel Report by concluding that the application of a type of duty different from the type provided for in a Member's Schedule is inconsistent with Article II:1(b), first sentence, of the GATT 1994 to the extent that it results in ordinary customs duties being levied in excess of those provided for in that Member's Schedule. In this case, Argentina has acted inconsistently with its obligations under Article II:1(b), first sentence, of the GATT 1994, because the DIEM regime, by its structure and design, results, with respect to a certain range of import prices in any relevant tariff category to which it applies, in the levying of customs duties in excess of the bound rate of 35 per cent ad valorem in Argentina's Schedule;

(b) concludes that the Panel did not err in finding that Argentina had acted inconsistently with its obligations under Article II of the GATT 1994 "in all cases" in which Argentina applied the DIEM, and, therefore, upholds the findings of the Panel in paragraph 6.65 of the Panel Report;

(d) concludes that the Panel did not violate Article 11 of the DSU in: (i) admitting certain evidence submitted by the United States two days prior to the second substantive meeting of the Panel with the parties, and granting Argentina two weeks to respond; and (ii) not seeking information from, and consulting with, the IMF so as to obtain its opinion on specific aspects of the matter concerning the statistical tax imposed by Argentina.

Signed in the original at Geneva this 11th day of March 1998 by:

Said El-Naggar
Presiding Member

Florentino Feliciano
Member

Mitsuo Matsushita
Member

Notes:

¹ WT/DS56/R, 25 November 1997.
² See Argentina's Schedule LXIV, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, 15 April 1994.
³ In Spanish, Derechos de Importaci�n Espec�ficos M�nimos.
⁴ Bolet�n Oficial de la Rep�blica Argentina, No. 27.692 of 2 August 1993.
⁵ Bolet�n Oficial de la Rep�blica Argentina, No. 27.797 of 30 December 1993.
⁶ As further described in Panel Report, paras. 2.7-2.18, these extensions and modifications are found in: Presidential Decree No. 2275/94 of 23 December 1994, Bolet�n Oficial de la Rep�blica Argentina, No. 28.050 of 30 December 1994; Resolution No. 304/95 (textiles and apparel) and 305/95 (footwear) of the Ministry of Economy and Public Works and Services of 22 September 1995; Presidential Decree No. 998/95 of 28 December 1995, Bolet�n Oficial de la Rep�blica Argentina, No. 28.301 of 29 December 1995; Resolution Nos. 103/96 of 6 September 1996 and 23/97 of 7 January 1997 of the Ministry of Economy and Public Works and Services, Bolet�n Oficial de la Rep�blica Argentina, No. 28.561 of 10 January 1997 (footwear); and Resolution Nos. 299/96 of 20 February 1996, 22/97 of 7 January 1997, Bolet�n Oficial de la Rep�blica Argentina, No. 28.561 of 10 January 1997 and 597/97 of 14 May 1997 of the Ministry of Economy and Public Works and Services, Bolet�n Oficial de la Rep�blica Argentina, No. 28.650 of 20 May 1997 (textiles and apparel).
⁷ Panel Report, para. 6.15.
⁸ Bolet�n Oficial de la Rep�blica Argentina, No. 26.652 of 12 June 1989.
⁹ Bolet�n Oficial de la Rep�blica Argentina, No. 28.050 of 30 December 1994.
¹⁰ Panel Report, para. 7.1.
¹¹ Panel Report, para. 7.2.
¹² WT/DS56/8, 21 January 1998.
¹³ Pursuant to Rule 21(1) of the Working Procedures for Appellate Review.
¹⁴ Done at Marrakesh, Morocco, 15 April 1994.
¹⁵ Done at Vienna, 23 May 1969, 1155 U.N.T.S. 331; 8 International Legal Materials 679.
¹⁶ Paragraph 1(b)(iv) of the language of Annex 1A incorporating the GATT 1994 into the WTO Agreement.
¹⁷ This includes evidence with regard to six tariff lines in the documentation submitted by the United States prior to the second meeting with the Panel. We note that Argentina challenges the Panel's acceptance of this evidence under Article 11 of the DSU. See Part VI of this Report.
¹⁸ Exhibit S to the United States' first written submission to the Panel.
¹⁹ Agreements between the WTO and the IMF and the World Bank, Report by the Director-General on Implementation of the Agreements, WT/GC/W/68, 13 November 1997. Annex I to Argentina's appellant's submission.
²⁰ Adopted 20 May 1996, WT/DS2/AB/R, p. 23.
²¹ Panel Report, paras. 6.31-6.32.
²² Panel Report, para. 6.32.
²³ Ibid.
²⁴ Panel Report, para. 6.24.
²⁵ Ibid.
²⁶ Working Party Report, Rectifications and Modifications of Schedules, adopted 24 October 1953, BISD 2S/63, para. 8; Working Party Report, Transposition of the Schedule XXXVII - Turkey, adopted 20 December 1954, BISD 3S/127; and Working Party Report, Fourth Protocol on Rectifications and Modifications, adopted 3 March 1955, BISD 3S/130.
²⁷ Adopted 20 November 1984, BISD 31S/114.
²⁸ DS38/R, 11 February 1994, unadopted.
²⁹ Panel Report, para. 6.31.
³⁰ See, for example, Australian Subsidy on Ammonium Sulphate, adopted 3 April 1950, BISD II/188.
³¹ As the Panel observed in paragraph 6.26 of the Panel Report, we note that the working party report in Transposition of Schedule XXXVII - Turkey, adopted 20 December 1954, BISD 3S/127, stated in paragraph 4:

The obligations of contracting parties are established by the rates of duty appearing in the schedules and any change in the rate such as a change from a specific to an ad valorem duty could in some circumstances adversely affect the value of the concessions to other contracting parties. Consequently, any conversion of specific into ad valorem rates of duty can be made only under some procedure for the modification of concessions.

This working party report, which examined a proposal by Turkey to change into ad valorem duties the specific duties provided for in its Schedule, did not address whether or not such a modification would be inconsistent with Article II of the GATT 1947.
³² We note that the Panel on Newsprint, adopted 20 November 1984, BISD 31S/114, stated in paragraph 50:

... under long-standing GATT practice, even purely formal changes in the tariff schedule of a contracting party, which may not affect the GATT rights of other countries, such as the conversion of a specific to an ad valorem duty without an increase in the protective effect of the tariff rate in question, have been considered to require renegotiations.

It should be noted that the issue before the Panel on Newsprint was not whether a change in the type of customs duty applied by a contracting party from a specific duty to an ad valorem duty was consistent with Article II of the GATT 1947, but whether a reduction in a tariff-rate quota from 1.5 million tonnes to 0.5 million tonnes was consistent with Article II of the GATT 1947. For this reason, we consider the above statement to be obiter.
³³ Adopted 1 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, pp. 14-15.
³⁴ Argentina's response to questioning at the oral hearing.
³⁵ As the Panel observed, Resolution No. 811/93 of 29 July 1993, expressly stated in Article 3 that "the specific import duties established by Article 1 of this decision shall operate as a minimum of the corresponding ad valorem import duty". See Panel Report, para. 6.19 and footnote 171.
³⁶ See Panel Report, para. 3.125.
³⁷ Panel Report, para. 6.69.
³⁸ We note that the Panel appears to use the terms "category", "HS category", "line-item" and "tariff line" interchangeably. (See e.g. Panel Report, paras. 6.48, 6.52 and 6.54.) We also note that the parties, in their submissions to the Panel, sometimes used these terms interchangeably. (See e.g. pp. 8-10 of the United States' second written submission to the Panel.) In this Report, we use the term "tariff category" to refer to the relevant 6 or 8-digit subheading in the Nomenclatura Com�n MERCOSUR ("N.C.M.") applied by Argentina through Decree No. 2275/94 of 23 December 1994, as subsequently modified.
³⁹ Argentina's appellant's submission, paras. 70-72.
⁴⁰ Argentina's appellant's submission, paras. 106-110.
⁴¹ Panel Report, para. 6.65.
⁴² Panel Report, para. 6.51.
⁴³ Ibid.
⁴⁴ Ibid.
⁴⁵ Ibid.
⁴⁶ Ibid.
⁴⁷ Panel Report, para. 6.65.
⁴⁸ See paras. 51-53 of this Report. We note that this "break-even" price will be the representative international price when the DIEM are calculated on the basis of the 35 per cent bound ad valorem rate. However, when the DIEM are calculated on the basis of a lower, applied rate, the "break-even" price will be lower than the representative international price.
⁴⁹ According to Argentina's statement at the oral hearing on 23 February 1998, this ad valorem statistical tax was modified to 0.5 per cent in December 1997.
⁵⁰ Panel Report, para. 6.80
⁵¹ Exhibit S to the United States' first written submission to the Panel.
⁵² Argentina's appellant's submission, para. 76.
⁵³ Argentina's appellant's submission, para. 82, and response of Argentina to questioning at the oral hearing.
⁵⁴ Argentina's appellant's submission, paras. 80-87.
⁵⁵ Argentina's appellant's submission, para. 91.
⁵⁶ Declaration on Coherence, para. 5.
⁵⁷ Argentina's appellant's submission, paras. 95-96.
⁵⁸ Panel Report, para. 6.79.
⁵⁹ Panel Report, para. 5.3.
⁶⁰ We note that the Panel's statement in paragraph 6.79 of the Panel Report that Argentina "... does not argue that it is required to impose this specific tax in order to meet its commitments to the IMF" is not, strictly speaking, accurate, as it does not reflect Argentina=s arguments before the Panel or before the Appellate Body in this appeal. See Panel Report, para. 3.276, and Argentina's appellant's submission, paras. 73-105.
⁶¹ Done at Singapore, 9 December 1996.
⁶² Excluding the DSB and dispute settlement panels, except where "matters of jurisdictional relevance to the Fund are to be considered". The WTO may invite a member of the staff of the Fund to attend a meeting of DSB "when the WTO, after consultation between the WTO Secretariat and the staff of Fund, finds that such a presence would be of particular common interest to both organizations." Agreement Between the IMF and the WTO, para. 6.
⁶³ Panel Report, para. 6.79.
⁶⁴ Ibid.
⁶⁵Argentina's apellant's submission, paras. 106-114.
⁶⁶ See Panel Report, paras. 3.179 and 6.55.
⁶⁷Argentina's appellant's submission, paras. 107-108.
⁶⁸ As we have observed in two previous Appellate Body Reports, we believe that detailed, standard working procedures for panels would help to ensure due process and fairness in panel proceedings. See European Communities - Regime for the Importation, Sale and Distribution of Bananas, adopted 25 September 1997, WT/DS27/AB/R, para. 144; India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, adopted 16 January 1998, WT/DS50/AB/R, para. 95.
⁶⁹ Argentina's appellant's submission, para. 111.
⁷⁰ Argentina's appellant's submission, paras. 111-112.
⁷¹ Opening statement of the United States at the first meeting of the Panel with the parties, p. 8 and second submission of the United States to the Panel, pp. 25-26. Also see Panel Report, para. 3.281.
⁷² Argentina's appellant's submission, para. 90, referring to Panel Report, para. 3.294.
⁷³ Furthermore, Article XV:2 states that, in such consultations, the WTO "... shall accept all findings of statistical and other facts presented by the Fund relating to foreign exchange, monetary reserves and balances of payments, and shall accept the determination of the Fund as to whether action by a Member in exchange matters is in accordance with the Articles of Agreement of the International Monetary Fund ...".
⁷⁴ Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 147.