3. Nature of the claim before the Panel

11.15 The European Communities claims that Argentina maintains an export restriction which is "made effective" through Resolution 2235. The European Communities recognizes that nothing on the face of Resolution 2235 restricts exports of bovine hides. The European Communities maintains, rather, that Resolution 2235 constitutes a de facto restriction.

11.16 Argentina has responded that the participation of the private sector representatives in the inspection of raw bovine hide exports cannot contravene Article XI, which specifically refers to quantitative restrictions attributable to government action. Nor, in Argentina's view, is there any contravention here in the form of de facto government restrictions. Argentina argues that "other measures" in the sense of Article XI cannot be just any kind of measures. GATT/WTO practice provides that the requirements of Article XI be met by authorization for private action that is mandatory or binding in nature and those requirements are not met here.

11.17 There can be no doubt, in our view, that the disciplines of Article XI:1 extend to restrictions of a de facto nature.³³²  It is also readily apparent that Resolution 2235, if indeed it makes effective a restriction, fits in the broad residual category, specifically mentioned in Article XI:1, of "other measures".³³³  

11.18 Furthermore, and notwithstanding Argentina's assertion to the contrary, Resolution 2235 is, in our view, a legally binding governmental measure.³³⁴  It is well-established in GATT/WTO jurisprudence that only governmental measures fall within the ambit of Article XI:1. This said, we recall the statement of the panel in Japan – Measures Affecting Consumer Photographic Film and Paper to the effect that:

[P]ast GATT cases demonstrate that the fact that an action is taken by private parties does not rule out the possibility that it may be deemed governmental if there is sufficient governmental involvement with it. It is difficult to establish bright-line rules in this regard, however. Thus, that possibility will need to be examined on a case-by-case basis. ³³⁵

11.19 We agree with the view expressed by the panel in Japan – Film. However, we do not think that it follows either from that panel's statement or from the text or context of Article XI:1 that Members are under an obligation to exclude any possibility that governmental measures may enable private parties, directly or indirectly, to restrict trade, where those measures themselves are not trade-restrictive. ³³⁶

11.20 Finally, as to whether Resolution 2235 makes effective a restriction, it should be recalled that Article XI:1, like Articles I, II and III of the GATT 1994, protects competitive opportunities of imported products, not trade flows.³³⁷  In order to establish that Resolution 2235 infringes Article XI:1, the European Communities need not prove actual trade effects. However, it must be borne in mind that Resolution 2235 is alleged by the European Communities to make effective a de facto rather than a de jure restriction. In such circumstances, it is inevitable, as an evidentiary matter, that greater weight attaches to the actual trade impact of a measure.

11.21 Even if it emerges from trade statistics that the level of exports is unusually low, this does not prove, in and of itself, that that level is attributable, in whole or in part, to the measure alleged to constitute an export restriction. Particularly in the context of an alleged de facto restriction and where, as here, there are possibly multiple restrictions,³³⁸  it is necessary for a complaining party to establish a causal link between the contested measure and the low level of exports.³³⁹  In our view, whatever else it may involve, a demonstration of causation must consist of a persuasive explanation of precisely how the measure at issue causes or contributes to the low level of exports.

4. Mere presence of tanners' representatives as an export restriction

11.22 The European Communities acknowledges that the representatives of the tanning industry do not have the de jure ability to halt bovine hide exports. However, according to the European Communities, having such representatives present during the export clearance process in itself restricts exports in the context of the facts of the case. The European Communities has advanced several reasons why this might be so. The European Communities refers to the GATT dispute of Japan – Semiconductors for the proposition that there can be export restrictions without overt actions by the government to physically stop exports. According to the European Communities, in that case it was sufficient for the government to set up a system where peer pressure was used to discourage exports. In the present case, the European Communities urges that Argentina be found to have violated Article XI by encouraging – as a consequence of allowing CICA/ADICMA presence – that pressure be applied by the tanneries on a frigorífico not to export. In this case it is not peer pressure from other exporters of hides. Rather, frigoríficos will be inhibited by the more powerful pressure from customers who might refuse to buy hides domestically from a frigorífico found to be exporting hides.

11.23 The European Communities also asserts that by participating in the process, the tanners can pressure Customs officials to prevent shipments of hides. The European Communities further argues that the ADICMA representatives can operate to delay shipments for weeks or even months and that such delays can be very harmful commercially. Indeed, delays can result in unacceptable physical deterioration of the products.

11.24 The European Communities has argued that the extraordinarily low levels of shipments of bovine hides from Argentina serves to support these allegations. The European Communities argues that export statistics demonstrate that a mere 1/1500 of Argentina's production of bovine hides are exported raw and that this is extraordinarily low particularly in light of the price differential between Argentinean domestic prices and those available on the international market. The European Communities cites information from an investigation by the United States International Trade Commission as well as some other evidence for the proposition that Argentina's domestic raw hide prices are 30 percent lower than what would be available in the export market. Even the 15 percent export duty (which has declined to 10 percent and is scheduled to decline further to five percent) would not make up for this differential. The European Communities claims that the quality levels are comparable and also would not account for the price differential. The European Communities notes that the frigoríficos are active exporters of meat and that there is thus no lack of knowledge or expertise which should operate to inhibit them from taking advantage of these higher international prices.

11.25 Argentina has responded that there are in fact exports of bovine hides, so it remains unproved by the European Communities that there is any such pressure mechanism in effect. Moreover, according to Argentina, the European Communities' assertions do not make sense. Hides represent only about ten percent of the value of a slaughtered animal. They are only by-products. It is illogical that frigoríficos would be intimidated by the mere presence of an ADICMA representative with respect to the export of something of only residual value to them. There is no leverage. Furthermore, even if the tanners did refuse to buy hides domestically from frigoríficos that exported, the exporters would, according to the European Communities' own arguments find ample international customers for their products. In such a case, all of that frigorífico's hides could be exported and it would not be reliant on the domestic tanning industry. Again, there is no pressure mechanism.

11.26 Argentina has responded to the other arguments of the European Communities by stating that it would be contrary to Argentinean law for Customs officials to prevent exports pursuant to the pressure of ADICMA. As for ADICMA causing delays of shipments, Argentina cites the lack of either legal authority or factual evidence for such occurrences.

11.27 With respect to the export levels, Argentina has challenged the data presented by the European Communities. Argentina disagrees that it has an extraordinarily low level of exports, claiming that its exports of raw hides are not dissimilar from EC member States' exports to non-EC markets. Furthermore, according to Argentina, there is demand in Argentina for more hides than can be produced by the domestic industry and, therefore, the local supply is absorbed almost completely rather than exported. Argentina also claimed that there are significant quality differences that explained the discrepancy in prices. Furthermore, the cost of exporting could be as much as 20 percent higher than selling locally, according to Argentina.

11.28 The European Communities has advanced several theories as to why the presence alone of ADICMA representatives might result in export restrictions. However, the European Communities as complainant cannot rely on mere theories alone. This should not be construed to mean that a complaining party may not establish the existence of an export restriction largely on the basis of circumstantial evidence. It clearly may. However, in our view, a panel cannot, consistently with its obligation to make an objective assessment of the matter before it, draw inferences from the circumstantial evidence placed on record, unless that evidence clearly and convincingly sustains the complainant's suggested conclusion. ³⁴⁰

11.29 We are not persuaded by the circumstantial evidence presented to us by the European Communities. This evidence simply does not lead to the conclusion that there is a restriction on exports by reason of the mere presence of ADICMA personnel. It seems to us that the exports of hides from Argentina may be lower than what could normally be expected. This is particularly so in light of the evident price premium that frigoríficos could obtain by exporting even taking into account the export duties. We recognize that there almost certainly are higher costs in exporting rather than selling domestically, although the 20 percent cited by Argentina may be too high. There may also be some quality differences, but we do not think the evidence supports Argentina's contention that the differences are dramatic. Thus, we are of the view that, overall, there would be some, albeit undefined, price premium to the frigoríficos for exporting which may not be consistent with the low levels of exports. But that is not enough to show that there are export restraints or, if there were, that this measure in dispute is the way in which such export restriction is "made effective".

11.30 For example, there is no evident reason why ADICMA needs the right to be present at the Customs inspection of specific export shipments for it to be able to exert pressure on Customs officials. ADICMA and the individual tanners themselves also could attempt to influence the decisions of Customs officials from outside the Customs house, i.e. without being present during the Customs inspection of export shipments of raw hides.

11.31 It must be stated, in addition, that if an attempt on the part of ADICMA to put pressure on the Customs officials in charge of a particular inspection were successful, those officials would act unlawfully under Argentinean law.³⁴¹  However, absent evidence to the contrary, it cannot simply be presumed that Customs officials bow to possible pressure from ADICMA. Even disregarding that, if we were to find that Argentina violates Article XI:1 on the basis that uncondoned, unlawful conduct by its Customs officials would have a trade-restrictive effect we would be engaging in a most expansive reading of Article XI that is not justified by either the text of that Article nor the GATT/WTO jurisprudence that has developed with respect to it.³⁴²
 
11.32 It is clear from the foregoing that, for it to carry weight, the European Communities' argument that ADICMA representatives may attempt to put pressure on Customs officials must be buttressed by sufficient factual evidence. The European Communities, however, has not submitted any such evidence. Furthermore, in reply to a question of the Panel, the European Communities stated that it was not aware of any instances where a specific export shipment was unjustifiably refused clearance by Customs officials.

11.33 On the basis of the above considerations, we are unable to accept the European Communities' argument that the mere presence of ADICMA representatives during Customs inspections constitutes an export restriction because those representatives may attempt to exert pressure on the Customs officials in charge. We also do not agree that there is an inherent "chilling effect" on the exporter in this factual situation that rises to the level of an export restriction under Article XI.³⁴³

11.34 The European Communities' other argument in support of its claim is that export shipments may be delayed in the event of disagreement between the Customs officials performing the inspection and the ADICMA representatives acting in accordance with their support function. The European Communities refers to delays of several weeks or one month as being particularly harmful. The European Communities does not explain, however, why a disagreement over product classification should give rise to a delay of several weeks. We note in this respect that it is the sole legal responsibility of Customs officials to carry out the Customs clearance. Whether or not ADICMA representatives agree with the decisions reached has no legal relevance.³⁴⁴  We note further, based on information supplied by Argentina, that in case of disagreement ADICMA representatives cannot hold up the export shipments in question, but may only initiate administrative or criminal proceedings. Furthermore, we must add that the European Communities has not adduced any evidence which would show that disagreement between Customs officials and ADICMA representatives have ever occurred. In reply to a question of the Panel as to whether the European Communities had any evidence of instances where export shipments were unduly delayed by Customs officials, the European Communities stated that it had no knowledge of such instances.³⁴⁵

11.35 We agree that it is unusual to have representatives from a downstream consuming industry involved in the Customs process of export clearance. As noted above, it seems to us that the levels of exports of raw hides from Argentina may be low. The European Communities has stated the matter to us in the form of a rhetorical question – what other purpose could these downstream industry representatives have in this government process of export clearance than restricting exports? However, it is up to the European Communities to provide evidence sufficient to convince us of that. In this instance, we do not find that the evidence is sufficient to prove that there is an export restriction made effective by the mere presence of tanners' representatives within the meaning of Article XI.

5. Presence of tanners' representatives along with access to information as an export restriction

11.36 The European Communities argues that ADICMA and its members have access to certain confidential business information of the frigoríficos. The European Communities alleges that a broad range of information is made available to the tanners through ADICMA. This includes prices, quantities, destination and, most significantly, the identity of the exporter. The European Communities offered as evidence a two page document³⁴⁶  the first page of which shows the name of the exporter and the second of which was signed by an ADICMA representative. The European Communities also referred to a statement made by the frigoríficos complaining that their commercial secrets were being compromised as a result of Resolution 2235. ³⁴⁷

11.37 According to the European Communities, the frigoríficos, like any businesses, do not want to give up confidential business information to their customers. This results in an inhibition to export in light of the sensitivity of information made available and the parties to whom it is provided.

11.38 Argentina denies that confidential business information of the frigoríficos is being provided to the tanners. Argentina states that the document with the ADICMA signature is not relevant to the dispute. It is an ADICMA document rather than a government document and it deals with exports of wet blue splits from a tannery rather than raw hides from a frigorífico. Argentina also stated that it was a two-sided document and argued that a signature on the second page does not mean that the person signing it saw any allegedly confidential information on the first page.

11.39 With respect to the press statement by the frigoríficos, Argentina simply questions its probative value. In response to a direct question from the panel, Argentina argues that ADICMA no longer has access to the name of the exporter or importer.³⁴⁸  However, FOB price information as well as the country of destination and the means of transport are available. According to Argentina, these data are available through on-line services and are in the public domain. ADICMA does not have access to them by reason of the measure in question.

11.40 Obviously, there is a disagreement between the parties as to exactly what information is made available to the tanners and under what conditions. With respect to the identity of the exporter, we have seen a document³⁴⁹  that is related to the export of products from tanners. While we note that this document addresses exports of downstream products and not hides shipped by frigoríficos, we also recognize that it seems to be a document generated generally with respect to Resolution 2235. Argentina argued that this was not an "official" document. However, it was signed by an Argentinean Customs official on the bottom of the first page, so we fail to see the significance of Argentina's point in this regard. Finally, Argentina argued that this was a two-sided document and that the ADICMA representative signed only the second page, thereby not proving that he had actually seen the first page.³⁵⁰  Even though we have some concerns with Argentina's explanations, we nonetheless must note that, in our view, this single exhibit is not sufficient evidence to reach a conclusion that the identities of the exporters have actually been revealed in specific instances.

11.41 As for the other information, it does appear to be made available to ADICMA, but not necessarily by reason of this measure. The European Communities has argued that this does not justify the release of confidential information pursuant to Resolution 2235 because that information is improperly made available elsewhere. The question here is whether this measure results in an export restraint contrary to Article XI. It cannot be the case that exporters will feel inhibited by this measure letting ADICMA be present and having access to certain confidential business information when that information is not actually confidential because it is otherwise available. There can be no export inhibition from this measure in this regard. ³⁵¹

11.42 That leaves us with only the question of the identity of the exporter. Argentina has argued that its Customs laws are balanced in that the exporters themselves can be present during the Customs process. Thus, it seems clear to us as a general matter (as opposed to specific instances, of which we have no definitive proof) that in exercising their right to be personally present, the exporters will, at least potentially, give up the confidentiality of their identity. Does the revelation of this information along with the presence of ADICMA personnel result in prohibited export restrictions? Again, we are in the situation described in the previous Section where we are drawing inferences from circumstantial evidence. The question is whether such circumstantial evidence clearly and convincingly leads us to the conclusion proposed by the complainant and, effectively, no other. Even if we were to assume that information, including the name of the exporter, is released during the Customs clearance process, we are not convinced that this has resulted in an export restriction in this case. In the absence of additional evidence, we remain unconvinced that releasing such information in and of itself necessarily leads to export restrictions. Indeed, it is often an affirmative public relations goal of companies to describe their export activities. If an exporter does not want its name revealed for some purposes, confidentiality may be appropriate as a matter of Customs practice, but we will address that subsequently. Just the fact of presence of ADICMA personnel as well as the potential for revelation of the name of an exporter cannot suffice to prove that there is an export restriction.

11.43 We are not convinced by the evidence before us that the presence of the tanners' representatives along with the alleged access to information results in a chilling effect on exporters resulting in an export restriction. There must be some other proven allegation as to why such revelation of information leads to a conclusion of an export restriction for us to find a violation of Article XI on these grounds. We address the further allegations of the European Communities in this regard in the next Section.

6. Presence of tanners' representatives, access to confidential information and abuse of such information as an export restriction

11.44 The European Communities has argued that, in fact, the Argentinean tanners do abuse the information to which they have access. According to the European Communities, there is a reason for the frigoríficos to be concerned about the release to their domestic customers of their confidential business information, particularly the name of the exporters. The European Communities alleges that there is a cartel of tanners operating in the Argentinean market and that this cartel has as one of its objects the stifling of exports of its raw materials, bovine hides.

11.45 The European Communities has supported these allegations by introducing several pieces of information. Among these are a trade magazine article describing the structure of the Argentinean tanning industry as being concentrated.³⁵²  Also, a statement has been provided from the president of the association of frigoríficos to the effect that price collusion is taking place.³⁵³  The European Communities also point in particular to an explanation offered by a member of the Congreso de la Nación regarding a draft law introduced in 1992 to the effect that there was a pricing cartel among the tanners.³⁵⁴  The European Communities points out that the member who provided this explanation is now Argentinean Secretary of State for Agriculture. The European Communities also provided a copy of a recent newspaper editorial referring to these restrictions. ³⁵⁵

11.46 The European Communities also argues that the Panel must take into account the historical context for the measures in question. The European Communities notes that in 1972 Argentina imposed a prohibition on exports of raw (wet salted) bovine hides with the stated objective of "protect[ing] the adequate supplies of bovine hides to the tanning industry".³⁵⁶  In 1979, following a Section 301 petition filed with the U.S. government by the U.S. Tanners council, Argentina committed itself to convert the export prohibition into an export tax which was to have been phased out within a certain time-frame. In 1985, Argentina introduced a "suspension" on exports of raw hides and semi-finished leather in order "to maintain the volume of supply in raw materials adequate to the needs of the domestic market of the leather tanning and manufacturing sector facilitating a smooth flow of supplies while avoiding any undue increase in prices".³⁵⁷  In 1992, the "suspension" was replaced by an export duty of 15 percent on the exports of raw bovine hides and bovine wet blue as well as an additional tax which was later abolished.³⁵⁸  In 1993, Argentina authorized the presence of CICA representatives during customs inspection of raw bovine hides and wet blue bovine hides destined for export.³⁵⁹  This authorization applied to the same products that were subject to the aforementioned export duty. Finally, in 1994, Argentina for the first time authorized ADICMA representatives to participate in the customs inspection not only of raw hides and wet blue hides destined for export, but also of products destined for export which fall under customs position 4104, which includes finished leather and furs.³⁶⁰  

11.47 According to the European Communities, in light of both the current cartelized tanning industry and the stated goals of the industry as they have been implemented historically, there is a great incentive for the frigoríficos not to export their products and risk losing their domestic customers. The European Communities argues that the measure in question, Resolution 2235, provides the means for making effective these export restrictions.

11.48 Argentina responds to the European Communities' allegations by claiming that the European Communities has provided no specific evidence to support the allegations. A self-serving statement by the frigoríficos does not suffice to prove anything. The frigoríficos do not even provide any evidence themselves of the allegations they are making. Argentina points out that no complaints have been received by the Argentinean competition authority. Furthermore, the European Communities' allegations are not logical. The tanners and the frigoríficos have essentially equal bargaining power, particularly in light of the fact the value of the raw hides is only about 10 percent of the value of the slaughtered animal. Because hides are a mere by-product for the frigoríficos, that is the real reason they have not paid much attention to exporting; the risks and costs are not worth the rewards in an ancillary line of business. Furthermore, the frigoríficos have larger overall sales than the tanners, hardly making them presumptively subject to pressure from the tanners not to export their raw hides.

11.49 We begin by noting that it is possible that there is a cartel operating among the tanners. It is possible that they collude to set prices. But this leads to another question. Namely, it is not at all clear what the relationship is between an alleged price cartel (operating either vertically or horizontally – the European Communities has been vague about this) and the alleged export restrictions. Indeed, even assuming we are looking at a vertically operating cartel (i.e., an agreement by cartel members not to pay more than a certain price for raw materials) imposed on the suppliers of raw hides, there is no direct link to a quantitative export limitation resulting therefrom. More analytical steps are needed to move from one to the other (e.g., the price cartel has created and enforced a surplus domestic supply of hides by restricting exports) and each step would need to be supported by some evidence. The allegations by a parliamentarian (even one who is now a Secretary of State) and the various mentions in newspaper articles do not serve to prove that there is a cartel operating, much less how it operates and why such operation leads to export restrictions.

11.50 It is the case, as we have discussed above, that the levels of exports of hides from Argentina seem to be unusually low. It also seems that the price of hides in Argentina is lower than the world price and does not seem to correlate to the low level of exports. However, this is not enough. As we also discussed, in situations where circumstantial evidence is used, it must lead clearly and convincingly to the conclusion sought. Reasonable alternatives must be eliminated. It is simply not sufficient for the European Communities to assert that there is no ratio legis for Resolution 2235 other than for it to be designed to restrict exports. The European Communities must prove it and, in our view, it has not.

11.51 In our view, it is possible that a government could implement a measure which operated to restrict exports because of its interaction with a private cartel. Other points would need to be argued and proved (such as whether there was or needed to be knowledge of the cartel practices on the part of the government) or, to put it as mentioned above, it would need to be established that the actions are properly attributed to the Argentinean government under the rules of state responsibility. But we have not reached that stage here. It may be the case that it will be difficult for one Member to prove that there is a cartel operating within the jurisdiction of another Member. Nonetheless, we cannot ignore the need for sufficient proof of a party's allegations simply because obtaining such proof is difficult.

11.52 The evidence before us is quite thin. We have a newspaper article and opinion piece, a press release from the frigoríficos and a statement by a member of the Congreso de la Nación. Such evidence would certainly not support a case in a domestic court. While it may be an open question whether the same quantum of evidence is necessary to support such allegations in a WTO dispute under Article XI of the GATT 1994, surely the difference cannot be that great. What is clear is that whatever level of proof may be required, it was not reached here. And we note again that there is no obligation under Article XI for a Member (Argentina in this instance) to assume a full "due diligence" burden to investigate and prevent cartels from functioning as private export restrictions.

11.53 It remains a possibility that individual tanners might abuse the information obtained through participation in the Customs process. However, as the European Communities has implicitly acknowledged in the way its argument has been presented, only collective action can result in an export restriction. If one tanner misuses the information, a frigorífico may always sell to another.³⁶¹  We must also emphasize that the European Communities has also not provided sufficient evidence to support a claim even of a chilling effect which results in a restriction on exports due to the potential for individual tanners to abuse information.

11.54 As we discussed above, the European Communities must prove that this measure is taken to make an export restriction effective. Indeed, it is entirely possible to conclude that such an export limiting cartel could operate wholly independently of this measure. The European Communities would have had to prove that there was a causal relationship rather than a coincidental one here. Even if we were to agree that there were a cartel operating in this industry, there is simply no proof that Resolution 2235 is what is causing (or making effective) the export restriction.

11.55 Thus, in conclusion, we do not find that the evidence is sufficient to prove that there is an export restriction made effective by the measure in question within the meaning of Article XI of the GATT 1994.

B. CLAIM UNDER ARTICLE X:3(A) OF THE GATT 1994

1. Measure at issue and overview of the parties' arguments

11.56 Article X:3(a) of the GATT 1994 provides as follows:

Each contracting party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.

11.57 Article X:1 of the GATT 1994, as referenced by Article X:3(a), provides as follows:

Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any contracting party, pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. Agreements affecting international trade policy which are in force between the government or a governmental agency of any contracting party and the government or governmental agency of any other contracting party shall also be published. The provisions of this paragraph shall not require any contracting party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

11.58 The European Communities' claim under Article X:3(a) relates to Argentina's Resolution 2235, i.e. the same Resolution which the European Communities is challenging under Article XI:1. The European Communities argues that the presence of "partial and interested" representatives of the tanning industry makes an impartial application of the relevant customs rules impossible.³⁶²  The European Communities also considers that it is not "reasonable" within the meaning of Article X:3(a) that the interested industry is informed of all attempts at exports by those from whom they wish to obtain the exclusive right to purchase hides.³⁶³  The European Communities argued that the Argentinean administration of its laws also was not "uniform". According to the European Communities it was improper for Argentina to construct a special set of procedures for administering its export laws for only one type of product. Other products are subject to export duties or are eligible for export "refunds". In light of this, hides should not be singled out.

11.59 Argentina considers that the European Communities' claim under Article X:3(a) should fail. First, Argentina notes that the European Communities has failed to explain what is not reasonable about industry participation in the customs procedures at issue.³⁶⁴  The law was impartial because the exporter has a right to be present as well. Also, the law was not administered in a non-uniform manner because other industries in a similar position could obtain such treatment, but no such requests had been received. Moreover, Argentina argues that, in any event, Article X:3(a) only applies where a Member applies its trade rules vis-à-vis other Members. Thus, Argentina could only be found to be violating Article X:3(a) if, for instance, Resolution 2235 required industry presence only when hides were exported to the European Communities.³⁶⁵  The Resolution, however, governs exports of bovine hides to all countries.

2. How Article X:3(a) relates to other provisions of the GATT 1994

(a) General

11.60 Regarding the relationship of Article X:3(a) to other provisions of the GATT 1994, the Appellate Body has made the following statement:

The context of Article X:3(a) within Article X, which is entitled "Publication and Administration of Trade Regulations", and a reading of the other paragraphs of Article X, make it clear that Article X applies to the administration of laws, regulations, decisions and rulings. To the extent that the laws, regulations, decisions and rulings themselves are discriminatory, they can be examined for their consistency with the relevant provisions of the GATT 1994. ³⁶⁶

11.61 Thus, it is incumbent upon us to ensure that in our analysis we focus on the administration of the Customs laws of Argentina. We must not look at issues which would constitute violations of the "substantive" provisions of the GATT 1994. In this dispute, those involved allegations of inconsistency with Article XI and have already been examined.

(b) Article X:3(a) and MFN

11.62 Argentina has argued that Article X:3(a) only applies in situations when there is discrimination in treatment with respect to, in this case, exports to two or more Members. Argentina cites the European Communities' appeal in European Communities – Bananas, wherein Argentina notes that the European Communities appealed on the issue of:

[W]hether the requirements of uniformity, impartiality and reasonableness set out in Article X:3(a) preclude the imposition of different import licensing systems on like products imported from different Members. ³⁶⁷

11.63 According to Argentina, the European Communities has not demonstrated that there is such differential treatment taking place. Indeed, there is none according to Argentina as can be seen from an examination of Resolution 2235. It is completely neutral on its face and in its application. It applies equally to exports destined to any Member.

11.64 The European Communities responded that there is no requirement that Article X:3(a) apply only in situations where there is non-MFN treatment. Indeed, such a requirement would be counter to the point that Article X does not apply in situations where there is a violation of a substantive provision of the GATT 1994. The European Communities also stated that it could, in any event, be argued that such non-MFN application of Customs laws and regulations could be considered inconsistent with the requirement of Article X:3(a) that such application be "uniform", but to make that the only basis for a complaint would effectively nullify the other requirements of impartiality and reasonableness.

11.65 In our view, in the appeal of the European Communities in European Communities – Bananas, the European Communities was not arguing to the Appellate Body in that case that Article X:3(a) was limited to situations where there was non-MFN application of Customs laws and regulations. The European Communities was actually arguing exactly the opposite and claimed that the error was to read an MFN requirement into Article X:

According to the European Communities, the Panel distorted the interpretation of this provision in such a way that the Article is now equivalent to a repetition on the most-favoured-nation ("MFN") provision in Article I:1 of the GATT 1994.³⁶⁸  

11.66 In fact, the Appellate Body agreed with the position of the European Communities in this regard.³⁶⁹  Furthermore, this is precisely what Argentina has argued when it claims that Article X:3(a) does not apply in this case because it is a substantive rule which must be addressed exclusively under the substantive provisions of the GATT 1994.

11.67 In our view, there is no requirement that Article X:3(a) be applied only in situations where it is established that a Member has applied its Customs laws and regulations in an inconsistent manner with respect to the imports of or exports to two or more Members.

11.68 Furthermore, Article X:3(a), by its terms, calls for a uniform, impartial and reasonable administration of trade-related regulations. Nowhere does it refer to Members or products originating in or destined for certain Members' territories, as is explicitly contained in other GATT 1994 Articles such as I, II and III. Indeed, Article X:1 requires the prompt publication of trade-related regulations "so as to enable governments and traders to become acquainted with them." Similarly, Article X:3(b) requires Members to provide for domestic review procedures relating to customs matters to which normally only private traders, not Members would have access.³⁷⁰  These references undercut Argentina's argument that Article X can only apply in situations where there is discrimination between WTO Members.

(c) Substantive rules versus administration

11.69 Argentina has argued that the European Communities has no grounds for alleging a violation of Article X:3(a) because the European Communities essentially is challenging the substance of a regulation and not its administration. According to Argentina, this is explicitly contrary to the Appellate Body's holdings in European Communities – Bananas and European Communities – Poultry. According to Argentina, Resolution 2235 is a substantive rule that is not subject to Article X:3(a) as such.
 
11.70 We are not persuaded by Argentina's arguments in this regard. In our view, Argentina has attempted to stretch the Appellate Body finding that Article X is not applicable when the alleged inconsistency involves the substance of another GATT 1994 provision, to argue that Article X cannot be referred to when challenging the substance of any measure. Of course, a WTO Member may challenge the substance of a measure under Article X. The relevant question is whether the substance of such a measure is administrative in nature or, instead, involves substantive issues more properly dealt with under other provisions of the GATT 1994.

11.71 If the substance of a rule could not be challenged, even if the rule was administrative in nature, it is unclear what could ever be challenged under Article X. First, there is no requirement in Article X:3(a) that it apply only to "unwritten" rules. Again, this would be contrary to that provision's own language linking it to Article X:1. Second, such an approach would also likely run counter to the other aspect of the Appellate Body's holding in European Communities – Poultry regarding Article X, to the effect that it applies to rules of general application and not to specific shipments.³⁷¹  Looking only to individual Customs officers' enforcement actions, rather than measures such as Resolution 2235, as Argentina implies, would almost certainly require a review of a specific instance of abuse rather than the general rule applicable.³⁷²  This would effectively write Article X:3(a) out of existence, which we cannot agree with.³⁷³
 
11.72 Thus, we are left with a situation where we have a written provision, Resolution 2235, and we need to determine whether this Resolution is substantive or administrative. In our view it is administrative in nature and therefore properly subject to review under Article X:3(a). Resolution 2235 does not establish substantive Customs rules for enforcement of export laws. Argentina has pointed out that those are contained primarily in the Customs Code (Law No. 22415), Resolution (ANA) No. 1284/95 and Resolution (ANA) No. 125/97.³⁷⁴  Rather, Resolution 2235 provides for a means to involve private persons in assisting Customs officials in the application and enforcement of the substantive rules, namely, the rules on classification and export duties. Resolution 2235 does not create the classification requirements; it does not provide for export refunds; it does not impose export duties. It merely provides for a certain manner of applying those substantive rules. This measure clearly is administrative in nature.

³³²  See the Panel Report on Japan – Trade in Semi-Conductors, adopted on 4 May 1988, BISD 35S/116, at paras. 105-109. In other contexts, see the Appellate Body Report on European Communities – Regime for the Importation, Sale and Distribution of Bananas (hereafter "European Communities – Bananas"), adopted on 25 September 1997, WT/DS27/AB/R, at paras. 232-234, citing European Economic Community – Imports of Beef from Canada, adopted on 10 March 1981, BISD 28S/92; Spain – Tariff Treatment of Unroasted Coffee, adopted on 11 June 1981, BISD 28S/102, and Japan – Tariff on Imports of Spruce-Pine-Fir (SPF) Dimension Lumber, adopted on 19 July 1989, BISD 36S/167.
³³³ RG 2235 neither establishes a "quota" nor sets up a regime of "export licences".
³³⁴ We note that, even though the measure merely authorizes presence, it is still binding in the sense that it gives a right to be present to a private entity, ADICMA, which right cannot be retracted at the discretion of the government.
³³⁵ Panel Report on Japan – Measures Affecting Consumer Photographic Film and Paper (hereafter "Japan – Film"), adopted on 22 April 1998, WT/DS44/R, para. 10.56.
³³⁶ As we understand it, Article XI:1 does not incorporate an obligation to exercise "due diligence" in the introduction and maintenance of governmental measures beyond the need to ensure the conformity with Article XI:1 of those measures taken alone.
³³⁷ See the Appellate Body Reports on Japan – Taxes on Alcoholic Beverages (hereafter "Japan – Alcoholic Beverages II"), adopted on 1 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at p.16; Korea – Taxes on Alcoholic Beverages, adopted on 17 February 1999, WT/DS75/AB/R, WT/DS84/AB/R, at paras. 119-120 and 127.
³³⁸ For example, it will be recalled that in the present case there is an export duty on raw hides which has not been challenged.
³³⁹ The Appellate Body in European Communities – Measures Affecting the Importation of Certain Poultry Products similarly required of the complaining party in that case a demonstration of a causal relationship between the imposition of an EC licensing procedure and the alleged trade distortion. See the Appellate Body Report on European Communities – Measures Affecting the Importation of Certain Poultry Products (hereafter "European Communities – Poultry"), adopted on 23 July 1999, WT/DS69/AB/R, at paras. 126-127. While this interpretation related to a claim under the Agreement on Import Licensing Procedures, it is not apparent why the logic should be any different in the case of a claim under Article XI:1 of the GATT 1994.
³⁴⁰ For an analogous approach to the proper weight to be given to circumstantial evidence see the judgement of the International Court of Justice (ICJ) in the Corfu Channel Case (Merits), Judgement of 9 April 1949, ICJ Rep. 1949, p. 18. We recognize that there are distinctions between that case and the present dispute. In the Corfu Channel case, the question was whether circumstantial evidence could support a finding with respect to a factual aspect of the case rather than a legal conclusion as here. However, as that factual point was so central and led so directly, if established, to the legal conclusion, we believe the reference is useful.
³⁴¹ See paras. 4.61-4.62 of this report.
³⁴² For instance, as an additional matter, the European Communities would also need to prove that this private action was attributable to the Argentinean government under the doctrine of state responsibility, but because the initial factual point has not been established, we do not need to reach that issue here.
³⁴³ EC reply to Panel Question 6.
³⁴⁴ Argentina has acknowledged that Customs officials in practice like to have evidence, in the form of a signature, attesting to the presence of ADICMA representatives. Argentina has, however, stated that such signatures are not relevant for purposes of Customs clearance. In any event, the European Communities has not argued that this practice gives rise to delays in Customs clearance.
³⁴⁵ See paras. 4.60 and 4.63 of this report.
³⁴⁶ Exhibit EC I.35.
³⁴⁷ Exhibit EC I.28.
³⁴⁸ Argentina acknowledges that such information may have been available as recently as May 1999, but that it was no longer being provided by Customs.
³⁴⁹ Exhibit EC I.35.
³⁵⁰ We note that it is difficult to see why the ADICMA representative would sign a document on its empty second page apparently in attestation of the information on the first page which he allegedly has not seen. Nonetheless, we must acknowledge that there was no direct evidence presented to us to contradict Argentina's assertion.
³⁵¹ We note that this conclusion is distinct from the issue of whether it is reasonable to reveal such information as a part of the Customs process. That will be dealt with in Section XI.B.3(c) of this report.
³⁵² Exhibit EC I.26.
³⁵³ Exhibit EC I.28.
³⁵⁴ Exhibit EC I.36.
³⁵⁵ Exhibit EC I.56. Argentina contested the Panel's decision to accept this exhibit because it was submitted after the deadlines set out in the working procedures and without the necessary showing of good cause. However, we were informed that the article in question was only published after the passing of the initial deadlines. In light of this and considering the paucity of probative information provided in this dispute, we considered it appropriate to accept the exhibit. Also, Argentina had the opportunity to comment on the article and did so.
³⁵⁶ Decree No. 2861/72.
³⁵⁷ Resolution No. 321/85 (Exhibit EC I.6).
³⁵⁸ Resolution (MEyOSP) No. 537/92 (Exhibit EC I.7).
³⁵⁹ Resolution (ANA) No. 771/93 (Exhibit EC I.11).
³⁶⁰ Decree No. 2275/94 (Exhibit EC I.8).
³⁶¹ With respect to abuse of the information in a manner other than imposition of export restrictions, we will deal with that possibility in the Section XI.B.3 of this report.
³⁶² See para. 4.166 of this report.
³⁶³ See para. 4.167 of this report.
³⁶⁴ See para. 4.178 of this report.
³⁶⁵ See paras. 4.187-4.188 of this report.
³⁶⁶ Appellate Body Report on European Communities – Bananas, supra, at para. 200 (emphasis in the original). See also the Appellate Body Report on European Communities – Poultry, supra, at para. 115, wherein the Appellate Body emphasized that to the extent Brazil's appeal related to the substantive content of the EC rules rather than to their publication or administration, it fell outside of Article X.
³⁶⁷ European Communities – Bananas, supra, at para 199.
³⁶⁸ Ibid., at para. 32.
³⁶⁹ Ibid., at para. 201.
³⁷⁰ In fact, Article X:3(b), in its second sentence, uses the word "importer".
³⁷¹ In European Communities – Poultry, the Appellate Body further stated that Article X is relevant only to measures "of general application" and not to the particular treatment of each individual shipment. See the Appellate Body Report on European Communities – Poultry, supra, at paras. 111 and 113.
³⁷² We make this statement arguendo and do not imply agreement with Argentina's implicit assumption of no violation in such instances.
³⁷³ See the Appellate Body Reports on United States – Standards of Reformulated and Conventional Gasoline (hereafter "United States – Gasoline"), adopted on 20 May 1996, WT/DS2/AB/R, at p. 23; Japan – Alcoholic Beverages II, supra, at p. 12; Argentina – Safeguard Measures on Imports of Footwear, adopted on 12 January 2000, WT/DS121/AB/R, at para. 81.
³⁷⁴ Even some of these provisions arguably are procedural in nature.